Construction Law – Page 2 – Construction Law Musings- Richmond, VA

Contractors and Green Building: I feel the need … the need for LEED!

Originally posted 2010-12-03 09:00:24.

For this week’s Guest Post Friday, Musings welcomes Ryan Bowers (@ryanbbowers). Ryan is a construction law attorney and business litigator. Ryan’s construction practice draws on his years of hands-on experience in the construction field, which predates his practice of law. He also maintains Law under Construction, a blog built for Indiana construction professionals to monitor legal news and developments. Ryan is an attorney at Kroger, Gardis & Regas, LLP in Indianapolis, Indiana, a full service law firm founded in 1937.

First and foremost, I would like to thank Chris for the opportunity to guest post on Construction Law Musings. Earlier this year, I finally had the opportunity to pursue a blog that combined by two passions: construction and hockey the law. After stumbling across Musings in the wee hours following one too many coke zeros and a half finished fireplace remodel, I was both impressed and inspired. Law under Construction was born. I am honored to take my blog on the road so soon in its rookie season.

I am a construction junkie. Having a father who is a master plumber, licensed builder, and owner of a mechanical construction company will do that to you. Learning to solder at 15 will do that to you. Installing fire suppression systems at 19 will do that to you. Remodeling a 1929 house will…. So, I have found inspiration for my blog posts (many yet unfinished, like my house…) in the practical experiences of my past.

A recent thanksgiving post-turkey, pre-nap, conversation with my brother, the president of the aforementioned contractor, sparked one such idea. When the topic of LEED came up, he said, and I (sort of) quote “man, I am seeing LEED everywhere, should I get LEED accredited?” Honestly, I was a little stumped. Good thing the tryptophan set in.

I have since pondered the question: should contractors and subs seek LEED accreditation for someone on staff (or at least gain a working understating)? Fortunately, in the interim, I also had the opportunity to attend a wonderful event put on by SMPS Indiana, where owners who led green projects gave their post-LEED certification perspectives, which provided some very useful information (referred to herein as the “panelists”). Given the lack of litigation involving LEED issues, there is no clear answer. However, I am hopeful that you (and my bro) will find my insights useful.

The pros…

Obtaining projects: I recently read that the “green movement” is no longer a movement, but rather here to stay. Indeed, one of the panelists confirmed that her university has committed all future new construction or significant renovations to LEED silver certification (or higher). And it’s not just buildings anymore – “green” will encompass other critical infrastructure projects (see here). Thus, in order to obtain work on “green” projects, contractors may need to obtain accreditation or, at least, become knowledgeable. Although this applies more in the context of integrated project delivery, design-build, etc., it will likely only increase as green building increases. The economics of these project structures demand quality and skilled contractors. One of the panelists noted that one of their first steps was to bring in a LEED accredited contractor familiar with the local skill set and local supplies. Another noted getting novice subcontracts to understand the LEED process proved difficult.

Less potential for construction defects: Geothermal heating and cooling. Vegetative roofs. Mini-wind turbines. Hal 9000. Ok, I am kidding about the last one. But these are new, sophisticated, and often unproven technologies (especially with Platinum certification). It takes a careful reading of the spec manual. There is a risk of noncompliance and the need to allocate risk. LEED accreditation, as well as the required continued education that follows, may help a contractor’s understanding of these technologies and avoid future defect claims.

Fewer delays: Working on a LEED project with no prior experience may lead to project delays, such as the inability to follow the site-specific LEED action plan or unfamiliarity with submittals for LEED or the unique materials. One panelist noted that, although the project was publically bid, they were lucky enough to land a LEED contractor, as it was extremely beneficial. On the flipside, another had a demolition contractor with zero prior experience, who had to be constantly educated on LEED. This inevitably led to delays.

Equal (and green) footing: Often, the architect on a LEED project is accredited and leads the overall effort. Having equal knowledge of various LEED related processes, designs, technologies, etc. may be helpful. For instance, when you submit a LEED related claim to the architect, LEED knowledge may help you decide how to proceed after a denial. One of the panelists pointed out a situation where engineers on a project had designed to traditional specs, which the contractor caught thanks to LEED knowledge.

Likewise, the cost increases on LEED projects can range from 2-10% (based on various sources). One panelist noted a 3% increase. Knowing and recognizing these differences can help ensure accurate project bids and help maintain already thin profit margins. Furthermore, if you know LEED, you may actually be able to bid lower if you don’t have to add “risk” costs to your bid. Always a good result.

Finally, with guarantees of LEED certification popping up in contracts, new provisions affecting rights and liabilities on green projects may also pop up (i.e. for failure to achieve LEED certification or later decertification). There may also be special warranties for green products. Understanding these concepts prior to executing contract documents (or associating with a qualified attorney) will help minimize unknown risks.

Obtaining project bonds: Although not a current concern, it may be in the future. With the emergence of more green projects (and of greater value), the way sureties handle such projects may change. Since the surety is guaranteeing completion in accordance with plans and specifications, and given the concerns raised above, having a LEED AP on staff may become a prerequisite to qualify for a bond on a green project. Green insurance products are already emerging, this could be next. Remains to be seen. (thanks to my co-blogger, and resident surety expert, Jennifer Watt for the input here).

Safety: As a result of the way debris is handled on a LEED project (reuse, recycling, salvaging, etc.) one panelist noted a 0 accident site. And a healthy employee is a productive employee. On the flipside, I don’t often hear contactors complain about fewer workman’s comp claims.

Goodwill and peace on earth: Just as the panelists remarked that their green projects have resulted in an overall better public image (better recruiting of employees / students), a more eco-friendly image for a contractor can be a positive.

On to the cons…

Competing standards: Although the most widely recognized, LEED is not the only player in the game. Other “green” standards include Green Globes and Energy Star. Further, recently an individual filed a class action against the USGBC attacking LEED. (see here) Ignoring the merits (or lack thereof) to the case, why invest resources into something that may not stand the test of time. For example, one panelist noted that, while they achieved LEED certification with one project, on a subsequent project they were pursuing the LEED elements generally, but not seeking the formal certification due to time and money concerns. Another panelist was now pursing Energy Star on a project. One should also consider the new International Green Construction Code (IGCC). If the code achieves widespread adoption, simply building to the code may alleviate the concerns above, and separate LEED knowledge may become superfluous.

It is hard: As a lawyer studying for the LEED Green Assoc. exam right now, I can attest to this fact. Several of the most skilled plumbers and sharpest mechanical minds I know have had difficulty with the testing aspect of their master’s exam. Putting in the time (and money) may not result in accreditation. Plus, you need to maintain continuing education hours, an additional burden.

Enough actual “green” projects?: I don’t have any real data on this one, but it is worth considering whether you even want to get involved in this area.

Sub it out: There appear to be myriad LEED consultants out there (and likely one is already involved in your LEED project). Get the information from someone else when you need it.

Image: The “green movement” raises red flags in some people’s minds. For anyone with this mindset, I leave you with these thoughts: a hospital represented on the panel stated that it did not seek LEED certification to “save the world;” but rather to “save the sanity” of the staff with a better workspace (via incorporation of daylight). Further, many of the elements of the LEED project (no formaldehyde / no voc) were things that everyone already wanted – so there was no hard sell. Green building may simply be what people already want, but just don’t realize.

Thanks for reading. If interested in LEED accreditation, continue on to the Green Building Certification Institute (GBCI), which administers the LEED Professional Credentials. Great info located on the USGBC website as well.

As always, Ryan and I welcome your comments below. Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.

OSHA/VOSH Roundup

Originally posted 2015-08-03 09:00:14.

In an unusual flurry of occupational safety related activity, the Virginia courts decided two cases in the last week relating to either the review of occupational safety regulations themselves or their enforcement.

In Nat’l College of Business & Technology Inc. v. Davenport (.pdf), the Virginia Court of Appeals considered what constitutes a “serious” violation of the exposure to asbestos Virginia Occupational Safety & Health (VOSH) regulations. The facts found by the Salem, Virginia Circuit Court were that employees of the petitioner college were exposed to asbestos insulation when they were required to enter a boiler room to retrieve paper files. However, no evidence was presented regarding the length of time or level of exposure at the Circuit Court level. Despite the lack of evidence regarding the level or extent of exposure, the Circuit Court upheld the VOSH citation for exposure and the level of violation at a “serious” level with the attendant penalty.

The Virginia Court of Appeals disagreed with the second finding. The appellate court determined that the lack of evidence regarding the level of exposure (whether length or extent) made the serious level violation an error. The Court stated that merely presenting evidence that asbestos is a carcinogen is not enough given the number of carcinogenic materials in existence and then remanded the case back to Circuit Court to reconsider the penalty level.

In a second case, Steel Erectors Ass’n of America v OSHA (.pdf ), the petitioner, SEAA, challenged a 2010 directive from OSHA regarding the enforcement of 2001 safety standards regarding steel construction, claiming that the enforcement change was an illegal regulation. The 4th Circuit Court of Appeals, in an exercise of discretion, determined that SEAA or one of its members would need to challenge any attempt at enforcement when OSHA tried to invoke its new policy. What the 4th Circuit said SEAA could not do was to challenge the enforcement policy without any pending enforcement action.

What these two cases show, aside from the fact that, yes, the Courts will occasionally look at these types of cases, is that not all cases are cut and dried. With the assistance of an experienced Virginia construction lawyer, a construction professional may be able to challenge an administrative enforcement action. Also, the help of such an attorney can certainly help head off a failed challenge such as that by SEAA with its attendant expense and headaches.

As always, I welcome and encourage your comments below, please share your thoughts. Also, please subscribe to keep up with the latest Construction Law Musings.

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Fraud, the VCPA and Construction Contracts

Originally posted 2014-11-10 09:36:15.

I’ve discussed the economic loss rule here at Musings on several occasions. The economic loss rule basically states that where one party assumes a duty based in contract or agreement, the Virginia courts will not allow a claim for breach of that duty to go forward as anything but a contract claim. This doctrine makes fraud claims nearly, though not absolutely, impossible to maintain in a construction context. In a majority of instances, fraud and construction contracts are very much like oil and water, leaving parties to fight it out over the terms of a particular contract despite actions by one party or the other that non-lawyers would clearly see as fraud.

However, a recent case decided by the Virginia Supreme Court gives at least some hope to those who are seemingly fooled into entering a contract that they would not other wise have entered into. In Philip Abi-Najm, et. al, v Concord Condominium, LLC, several condominium purchasers sued Concord under for breach of contract, breach of the Virginia Consumer Protection Act (VCPA) and for fraud in the inducement based upon flooring that Concord installed that was far from the quality stated in the purchase contract. Based upon these facts, the Court looked at two questions: 1. Did a statement in the contract between Concord and the condo buyers create a situation in which the merger doctrine barred the breach of contract claim, and 2. Did the economic loss rule bar the VCPA and fraud claims?

After analyzing the merger claim and determining that the merger doctrine did not bar the breach of contract claim, the Court moved on to its analysis of the VCPA and fraud in the inducement claims. In both instances, the Court determined that the causes of action would stand. It reasoned that the VCPA created an independent statutory requirement making it unlawful to misrepresent that goods are of a particular quality. Because this duty arose independent of the contract, the claim was not barred by the economic loss rule.

Similarly, the fraud in the inducement claim was not barred because the plaintiffs alleged that Concord deliberately misrepresented the quality of the flooring knowing that it would likely cost Concord the sales if it disclosed the actual quality of the floors. In short, the fraud, as alleged, was independent of the contract because it was conceived to bring buyers in despite Concord’s having no intention to follow through on the quality of the floors.

The lesson here is that pleading matters and that not all is lost for a consumer or home buyer that thinks that he or she is subject to fraud. However, the devil is in the details and in the details put into the pleadings. Without pleading some independent duty outside of the contract, any fraud or other non-contract claim will fail. The advice of an experienced Virginia construction attorney will help you parse through the facts and properly package them for presentation to the Court.

As always, I welcome and encourage your comments below, please share your thoughts. Also, please subscribe to keep up with the latest Construction Law Musings.

Bankruptcy and the Virginia Mechanic’s Lien

Originally posted 2015-04-06 09:00:30.

: Image via Wikipedia

Unfortunately, developer bankruptcies are very much in the news these days. This news, while unsurprising in today’s economy and given the housing issues that hit last year, can give heartburn to those contractors that perform the site work, pave the roads, and of course build the houses at these developments. Like Musings has discussed before, bankruptcy of an owner or developer is a real possibility for which contractors and subcontractors must prepare.

However, contractors in Virginia may have a silver lining for the bankruptcy cloud. Virginia mechanic’s liens, being creatures of statute, survive bankruptcy and remain in force even after the owner of the property files for bankruptcy. Even more importantly, the 6 month statute of limitations on filing a case to enforce your mechanic’s lien stops running as of the date that bankruptcy is filed.

Even more importantly, aside from certain specific situations, mechanic’s liens in Virginia gain priority over all other secured liens.

In short, in today’s climate, contractors should not feel that they are completely helpless in the bankruptcy fight. Filing a mechanic’s lien after consultation with an experienced attorney can put a contractor or subcontractor in as good a position as possible should he owner of a project file for bankruptcy.

Please comment below, or subscribe to Musings if you find this of interest.

Changes and Claims: Make Sure You Actually Ask for What You Want

Originally posted 2014-08-22 09:20:27.

For this weeks Guest Post Friday, Musings welcomes Matthew DeVries. Matt is the author of www.bestpracticesconstructionlaw.com, is a construction attorney in Nashville, Tennessee. He is a father of five energetic children and he often uses his family experiences to shed light on the green building, sustainable design, technology and project management issues discussed in his blog. You can reach him at (615) 742-8577, mdevries@smithcashion.com, or on Twitter: @matthewdevries.

You’ve already met my eleven year old Princess. Many months ago, I was teaching my kids about grace … undeserved merit or favor. Well, my daughter was stalling and delaying on eating her meal … by almost an hour. So, naturally, I saw this as a teachable moment.

“Honey, do you remember when we were talking about grace this week? Although you should eat all your food, I am going to show you some grace tonight. Even though you don’t deserve it, I am going to eat the rest of your chili for you.” How nice of me. I proceeded to spoon the rest of her chili into my bowl. Happy tummy!

Without skipping a beat, my inquisitive daughter asked, “Dad . . . You got any grace for my broccoli?” Nice.

While we continue to joke about that evening, I am reminded that too many times we fail to get something because we fail to “ask” for it. And when we ask for it, we sometimes fail to ask for it properly. Having litigated construction disputes for many years, the issue of entitlement often turns on whether the contractor properly submitted its claims in accordance with the terms of the parties’ contract. Whether the dispute involves a change order, delay damages, or time extension, I have litigated too many claims for additional compensation or time where: (a) the request was never made; (b) the request was not timely made; or (c) the request was not properly made.

As an attorney, I try to teach all my clients that proper documentation primarily serves as a claim preservation method—whether to provide notice of the claim or to document the claim impact. No matter the size of the project, proper documentation will eliminate a number of disputes. For example, consider the following claim provision: “Any claim for additional time must be given within seven days of the event given rise to the delay.” Best Practices would teach you to outline and highlight these types of provisions in your contract documents before you start contract performance. Make a spreadsheet with key provisions. And when one of those “events” arise, you should immediately send your letter “asking” for additional time or, at a minimum, “preserving” your right to later seek additional time and money. Don’t wait until the lawsuit or demand for arbitration before giving notice of your claim.

In other words, if you want someone else to eat your broccoli … you have to ask for it!

As always, please join the conversation and subscribe if you want to keep up with this and other Guest Post Friday posts.