Builders Beware: Georgia Court Rejects Suit by Unlicensed Contractor for Unpaid Work Unlicensed contractors in Georgia recently were dealt a blow by the state’s Court of Appeals when three judges held that a contractor’s failure to possess a valid state contractor’s license precluded the contractor from bringing a lawsuit for unpaid fees. In Fleetwood v. Lucas, __ S.E.2d __, 2020 WL 1149734 (Ga. Ct. App. March 10, 2020), a panel of judges ruled against a contractor, who completed extensive repair and renovation work on two properties, because the contractor was not properly licensed by the state government.   Property owners…

Language in Performance Bond Critical in Determining Surety’s Rights to Complete If an owner terminates a contractor due to a contractor default on a bonded project, can the surety hire the same contractor to complete the work under the bond?  Depending on the language of the bond, it may be permissible in Florida. Recently, in Seawatch at Marathon Condominium Association, Inc. v. The Guarantee Company of North America, No. 3D18-1337, 2019 WL 4850194 (Fla. 3d DCA Oct. 2, 2019), a Florida appellate court ruled that the unambiguous terms of an AIA A312 Performance Bond permitted a surety to propose a…

Developer is Not Indemnified for its Own Conduct Without an Express Agreement in the Indemnification Clause In a case where the jury found both the Architect and the Developer separately responsible for Plaintiff’s damages, an Appellate Division of the New Jersey Superior Court recently held that the Developer is not entitled to be indemnified by the Architect.  See Grandview at Riverwalk Port Imperial Condo. Ass’n, Inc. v. K. Hovnanian at Port Imperial Urban Renewal II, LLC, No. A-2308-17T2, 2019 WL 3798427 (N.J. Super. Ct. App. Div. Aug. 13, 2019)(unpublished decision). The appellate court agreed with the Developer’s argument that the…

Utah Appellate Court: Homeowners’ Claim for Defective Construction Against Geotechnical Engineer Dismissed Due to Lack of Contract and the Economic Loss Rule A recent Utah Appellate Court upheld the dismissal of a homeowners’ claims against a geotechnical engineer because the homeowners did not have a contract with the geotechnical engineer and therefore their claims were barred by the economic loss rule. See Hayes v. Intermountain Geoenvironmental Services, Inc., 2019 UT App 112, 2019 WL 2621931.  In Utah, the economic loss rule only allows lawsuits for defective design or construction to be based on a breach of contract.  Such a claim…

Each year, hurricane season presents a challenge to contractors and developers along the Gulf and Atlantic coasts as they face the risk of impacts from significant weather.  Hurricanes Michael, Irma, Harvey and Florence are only the most recent reminders of how devastating one of these storms can be.  With the construction industry being as active as it is, projects in storm-prone areas should be prepared to deal with and minimize the physical and financial risks that come along with these storms.  I was recently able to share my insight about what project teams can do to deal with a storm…

Owners of a Massachusetts waste collection, recycling and removal company recently were held personally liable for their failure to pay their employees at prevailing wages.  See Donis v. American Waste Services, LLC, 95 Mass.App.Ct. 317 (2019).  Under Massachusetts law, wage violations are subject to triple damages and payment of attorney’s fees.     The waste services company entered into contracts with several Massachusetts towns that required compliance with prevailing wage laws at hourly rates of $20 — $24.  However, the company paid workers $16 — $17 an hour, or at flat day rates.  The company tried several unsuccessful defenses: (1) the…

New Sustainability Ordinances for Construction Enacted in Florida and Colorado Cities  The City of St. Petersburg, Florida is one of the latest municipalities to incorporate the concepts of sustainable construction, sometimes referred to as “green building”, into the requirements of their municipal code.  On April 26, 2019, the City adopted Ordinance No. 359-H; which requires City-owned buildings over 5,000 square feet, which are either existing and being substantially modified or are being newly constructed, to achieve a rating of LEED Gold from the U.S. Green Building Council.   The new ordinance makes clear that the purpose of adopting the sustainability…

In a case of first impression, Maryland’s intermediate appellate court recently held that a subrogation waiver in an owner’s prime contractor contract does not bar a subcontractor claim for contribution against the prime contractor.  See Gables Constr., Inc. v. Red Coats, Inc., No. 907, SEPT.TERM, 2017, 2019 WL 2067348 (Md. Ct. Spec. App. May 10, 2019).  Upper Rock, Inc. (Owner) filed a $22 million claim against Red Coats, Inc., a “security and fire watch company” (Subcontractor), for fire damage to a building under construction.  Red Coats filed a third-party claim against the prime contractor, Gables Construction, Inc. (Contractor), for contribution…

Construction contracts often contain agreements requiring mediation before a party may file a lawsuit.  However, a party may not want to wait through the mediation process and instead may prefer to go straight to a lawsuit.  Given that mediation is not binding and does not guarantee a resolution, can a party ignore a contractual agreement to mediate and instead go right to litigation?  A recent Kentucky federal court decision said no, a party cannot ignore a previous contractual agreement to mediate. See Mitsui Mumitomo Insurance USA, Inc. v.  Denham-Blythe Company Inc., et al., No. 5:18-CV-152-JHM, 2019 WL 1938791 (E.D. Ky.…

A recent article in the Baltimore Business Journal on a Maryland construction industry survey reports that tight labor markets and rising materials costs are influencing the opinion of Maryland contractors that there may be a downturn coming in the near future.  While contractors are individually optimistic about their own businesses, they recognize that the labor crisis is growing.  Fewer young people are entering the construction industry and over 80 percent of contractors surveyed responded that “finding and retaining quality employees” is their top concern.  Although salaries are generally on the rise, corporate culture appears to be a greater concern to…

Illinois Considers Following Trend Toward Making General Contractors Liable for Wages of Subcontractors A bill pending in the Illinois legislature (HB2838) exemplifies a nationwide trend in the construction industry to hold a contractor who has a direct contract with an owner (“Direct Contractor”) liable for the unpaid wage and fringe benefit obligations of its subcontractors on a private project. Direct Contractors already have liability for employee wages owed by their subcontractors on public projects covered by the Davis Bacon Act, and the same responsibility is owed under the prevailing wage acts of many states. Direct Contractors may also have liability…