Archive: August 2016

1
Building from the Sky Down: New FAA Rules Affect Use of Drones in Construction Industry
2
Interim Payments – No Automatic Entitlement to Interim Payments Beyond the Last Date in the Agreed Payment Schedule
3
Picerne Constr. Corp. v. Castellino Villas
4
New Jersey Supreme Court Gives Supreme Win to Policyholders
5
Modern Slavery and Human Trafficking in the Construction Industry

Building from the Sky Down: New FAA Rules Affect Use of Drones in Construction Industry

By Gregory R.  Andre, K&L Gates, Chicago and Thomas R. DeCesar, K&L Gates, Harrisburg

On August 29, 2016, the Federal Aviation Administration’s (FAA) long-awaited final rules regarding the commercial operation of small unmanned aircraft (a.k.a. drones) become effective.[1] The FAA’s new rules, which will primarily be codified under Part 107 of the Federal Aviation Regulations, are a major step for the eventual integration of unmanned aircraft into business operations nationwide. Part 107 represents the FAA’s first comprehensive regulation of unmanned aircraft operations.

Before Part 107, companies had to obtain preapproval through the lengthy Section 333 exemption process (named for Section 333 of the FAA Modernization and Reform Act of 2012) before conducting commercial unmanned aircraft operations. The Section 333 exemption process imposed significant restrictions on unmanned aircraft operations and required operators of unmanned aircraft to have a pilot’s certificate. The new rules, however, generally permit companies to use unmanned aircraft in commercial operations without obtaining preapproval from the FAA and with fewer restrictions than were required under Section 333 exemptions.  In addition, the rules create a new class of pilot’s certificate specific to unmanned aircraft that is easier to obtain than a typical pilot’s certificate.

The construction industry will stand to benefit from Part 107, as unmanned aircraft can be employed in a variety of operations helpful to construction companies, including: topographical surveys, access to hard-to-reach locations, job progress tracking, videography/marketing, building and structure inspections, site security, safety, and general construction site troubleshooting. In fact, in an early survey of companies seeking FAA authority to use unmanned aircraft, nearly half of applicants identified the construction industry as a field where they would use their device.[2] This post summarizes the new FAA rules and highlights a few issues of particular importance in the construction industry.

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Interim Payments – No Automatic Entitlement to Interim Payments Beyond the Last Date in the Agreed Payment Schedule

By Nita Mistry, K&L Gates, London

In Grove Developments Limited v Balfour Beatty Regional Construction Limited [2016] EWHC 168 (TCC), the contract (JCT Design and Build Contract, 2011 edition with bespoke amendments) contained an agreed schedule of 23 interim valuation and payment dates. The last date in the schedule coincided with the date of practical completion. The works completed after the contractual date for completion of the works. The contractor issued an interim application number 24. This interim application was outside of the agreed payment schedule. The contract did not contain a provision regarding payment beyond the 23 scheduled payments. The employer argued that the contractor was not entitled to issue further applications beyond interim application 23, and the judge, Mr Justice Stuart-Smith, agreed. The contractor was not entitled to further interim payments.

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Picerne Constr. Corp. v. Castellino Villas

By Hector H. Espinosa and Benjamin Kussman, K&L Gates, Los Angeles

Under California’s mechanic’s lien laws, a general contractor has 90 days from “completion” of its work to record a claim of mechanic’s lien. Ca. Civ. Code §8412.  Previously, it remained unsettled as to when this 90-day period began to run because some California courts held that the 90-day clock was triggered upon substantial completion of contractor’s work.  In Picerne Constr. Corp., the California Court of Appeal rejected this interpretation of Ca. Civ. Code §3115[1], ruling that completion (for purposes of the 90-day window) only occurs upon “actual completion” of the work of improvement as defined by statute.

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New Jersey Supreme Court Gives Supreme Win to Policyholders

By Frederic J. Giordano, Robert F. Pawlowski, Denise N. Yasinow, K&L Gates, Newark

On August 4, 2016, the Supreme Court of New Jersey unanimously affirmed the Appellate Division’s holding that consequential damages caused by a subcontractor’s faulty workmanship constitute “property damage” and an “occurrence” under the 1986 Insurance Services Office, Inc. (“ISO”) form commercial general liability (“CGL”) insurance policy.  This holding is welcome news to real estate developers, general contractors, and commercial policyholders who may seek coverage for damage caused by the faulty work of their subcontractors.

To read the full alert, click here.

Modern Slavery and Human Trafficking in the Construction Industry

By Camilla A. de Moraes, K&L Gates, London

Background

With an estimated 35.8 million people enslaved today,[1] it is undeniable that modern slavery and human trafficking is a significant global problem.  The construction industry in particular, with its high demand for migrant labour and complex procurement processes, has the potential for exploitation, and there have been high-profile cases such as in relation to the construction work for the 2022 football World Cup in Qatar.  However, in recent years, steps have been taken, both domestically and internationally, to tackle such human rights abuses.

In the United Kingdom, the Modern Slavery Act 2015 (the “Act”) is now in force and an Independent Anti-Slavery Commissioner has been appointed as a result.  There have also been amendments to the UK Companies Act 2013, which requires companies quoted on the London Stock Exchange to report on their human rights performance, and a new Immigration Act, which proposes changes to the way the current Gangmasters Licensing Authority operates.  On the European stage, the EU Non-Financial Reporting Directive requiring disclosure of human rights policies is in force, with member states required to bring into force laws to comply with it by 6 December 2016, and globally, a target to end modern slavery and human trafficking has been included as Target 8.7 of the Sustainable Development Goals, which will help shape development policy worldwide.

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