K&L Gates Construction Law Blog : Construction and Engineering Lawyers & Attorneys : K&L Gates Law Firm : Financing, Development, Dispute Resolution, Government Contracting

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By Andrew R. Stanton, Frederic J. Giordano, David R. Osipovich

Introduction

Construction contractors and subcontractors, as well as commercial policyholders generally, will wish to take note of a recent Supreme Court of Minnesota decision that lends insight into the scope of coverage provided by additional insured endorsements in insurance policies, the scope of protection afforded by indemnity provisions in construction contracts, and the reach of anti-indemnity state statutes.

In Eng’g & Const. Innovations, Inc. v. L.H. Bolduc Co., Inc., 825 N.W.2d 695 (Minn. 2013), the Court held that an endorsement making a contractor an additional insured on its subcontractor’s general liability policy only to the extent that damage was caused by the subcontractor’s acts or omissions, and which further expressly stated that the contractor did not qualify as an additional insured with respect to its independent acts or omissions, provides additional insured coverage only for the contractor’s vicarious liability for the subcontractor’s negligence.  Because a jury found that the subcontractor was not negligent, the Supreme Court held that no basis existed to hold the contractor vicariously liable and that the contractor did not qualify as an additional insured on the subcontractor’s policy.

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Welcome to the 22nd edition of Arbitration World, a publication from K&L Gates' International Arbitration Group that highlights significant developments and issues in international and domestic arbitration for executives and in-house counsel with responsibility for dispute resolution.

To view Arbitration World in our new online magazine format, click here.

To download a printable PDF of the publication, open the link above and click on the far right icon in the magazine toolbar at the top of the page.

We are delighted to be able to include in this edition a guest contribution from Rubini Ventouras, Group Executive Legal Affairs, Asia Pacific, of Newmont Mining Corporation.  In her article, Rubini offers her perspectives on the challenges associated with the management of disputes in multiple, widely varying jurisdictions and explains why arbitration remains her preferred process for the resolution of international commercial disputes.

We are also pleased to welcome a contribution from James Blick, Director at TheJudge Limited, a leading broker of litigation and arbitration funding and after-the-event insurance.  In his article, James offers some practical tips and insights on how to get the best deal when negotiating with potential third-party sources of funding for arbitration.

This edition also includes our usual update on developments from around the globe in both international commercial arbitration and investment treaty arbitration, along with specific articles covering some of those developments and other topics of interest in more detail, authored by members of K&L Gates' International Arbitration Group.  This edition includes a contribution from our new colleagues in Melbourne, Australia (following the combination of K&L Gates LLP with Middletons, effective 1 January 2013) describing a recent constitutional challenge to the international arbitration regime in Australia.

We hope you find this edition of Arbitration World of interest, and we welcome any feedback (email ian.meredith@klgates.com or peter.morton@klgates.com).

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L&W Supply Corp. v. DeSilva, 429 N.J. Super. 179 (N.J. Super. Ct. App. Div. 2012)

In this case, a New Jersey appellate panel expands and clarifies a material supplier’s obligations to determine the source of payments made by purchasers of materials and allocate the payments properly under the New Jersey Construction Lien Law, N.J.S.A. 2A:44A-1, et. seq. (the “Lien Law”).

Pursuant to the Lien Law, a contractor or supplier who is owed payment for work or materials is permitted to file a lien against the real property on which the improvements were constructed. L&W Supply, 2012 WL 6599966 at *1.  The purpose of the Lien Law is two-fold. First, it ensures that suppliers are paid for materials supplied during construction.  Second, it protects owners from paying more than once for the same work or materials.  In order to facilitate the second purpose of the Lien Law, the value of a materials supplier’s lien fund is limited to the unpaid portion of the contract price for the contract for which the unpaid materials were utilized.

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By Brian P. Evans & Samuel T. Reaves, K&L Gates, Charlotte

Significant changes in North Carolina’s mechanics’ lien statute take effect on Monday, April 1, 2013.  These changes impose new duties on property owners regarding the designation of a private lien agent for almost every real estate construction project.  An owner’s failure to comply may result in the inability to obtain grading and building permits and also in mechanics' and materialmen's liens being given added priority or validity, so it is important that parties involved in North Carolina real estate construction projects become familiar with the new procedures under the statute.

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Sunset Presbyterian Church v. Brockamp & Jaeger, Inc., 254 Or. App. 24 (Or. Ct. App. 2012)

In 2009, plaintiff church sued defendants, a general contractor and a number of subcontractors, alleging negligence claims for defective work on a new church, where services began in 1999.  The trial court granted summary judgment to the defendants based on expiration of statute of limitation and statute of repose time periods.

The general contractor “contended that the two-year statute of limitation . . . had begun to run in 1999 and barred plaintiff’s claims against it.”  It relied on a contractual provision that provided that all statutes of limitation for claims arising from the construction “would begin to run from the ‘date of substantial completion,’” which the contractor asserted occurred in 1999 “when plaintiff occupied and used the facility for its intended purpose.”  The trial court granted the contractor summary judgment dismissing the case.  The appellate court reversed, finding the general contractor failed to produce evidence of the certificate of substantial completion (distinguished from substantial completion by occupancy) as required by the contract, which was critical to commence of the statute of limitations.

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Welcome to the 21st edition of Arbitration World, a publication from K&L Gates' International Arbitration Group that highlights significant developments and issues in international and domestic arbitration for executives and in-house counsel with responsibility for dispute resolution.

We are delighted to be able to include in this edition a guest contribution from David Burt, Corporate Counsel for E.I. du Pont de Nemours and Company (DuPont).  In his article, David describes the way in which DuPont's "Global ADR Guide", for use by DuPont's 200 in-house lawyers across the world, came to be developed.

We are also pleased to include an article by Mick Smith, Partner & Co-Founder of Calunius Capital LLP, one of the leading providers of third party funding.  Third party funding is becoming ever more prevalent in both litigation and arbitration. In his article, Mick describes the processes of case assessment and case monitoring from the funder's perspective.  This is the first of what will be a short series of articles on the important topic of third party funding in international arbitration.

We also include in this edition our usual update on developments from around the globe in international arbitration and investment treaty arbitration, along with specific articles covering some of those developments and other topics of interest in more detail, authored by members of K&L Gates' International Arbitration Group.

We hope you find this edition of Arbitration World of interest, and we welcome any feedback (email ian.meredith@klgates.com or peter.morton@klgates.com).

In this Issue:

• DuPont Navigates ADR Worldwide
• News from around the World
• World Investment Treaty Arbitration Update
• Third Party Funding: Case Assessment and Monitoring
• U.S. Supreme Court Fires Shot across Oklahoma’s Bow
• What Qualifies as an Investment? A Primer on Protecting Foreign Investments (Part 2)
• Astro: Affirming Singapore’s Position on Challenging Awards on Jurisdictional Grounds
• No Dispute About It – Dispute Boards are Hot in Chinese Construction Projects
• A Comparative Analysis of the “Choice of Law” Approaches to Privilege in International Proceedings
• UAE Arbitration Insight – New York Convention Shifts Enforcement Approach

To view the entire edition, click here.

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Josh M. Leavitt, K&L Gates LLP and Daniel G. Rosenberg

It is not unusual to see contracts in the construction industry that shift risks downstream.  Especially in markets where new projects are scarce, contractors and design professionals often have little leverage beyond their particular expertise or their relationships to modify contract provisions that shift significant risk to them.

Legislatures have responded by passing a variety of construction specific statutes designed to “level the playing field.”  Examples of such legislation include Prompt Payment Acts (which are designed to protect contractors from slow payers), anti-indemnity acts (which limit the effectiveness of contractual indemnity clauses) and other construction “fairness” legislation.

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By Jacquelyn S. Bryan & Hayes C. Stover, K&L Gates, Pittsburgh

Effective January 1, 2013, all contractors and subcontractors working on Pennsylvania public works projects will be required to verify the employment eligibility of any newly hired workers through the federal E-Verify program.  Designed to preserve local jobs, this new legislative measure will impose new burdens on contractors and subcontractors and will subject them to potentially stiff penalties in the event of non-compliance.

The Public Works Employment Verification Act was signed into law by Governor Tom Corbett on July 5, 2011.  As a precondition to being awarded a public works contract, contractors and subcontractors will be required to supply the Pennsylvania public agency that awarded the contract with a signed verification certifying that they have verified or will verify the employment eligibility of any “new” employee to be assigned to the public work using the federal E-Verify program.

To view the complete alert online, click here.

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