Category Archives: Damages

Play Nicely in the Sandbox (or, Why GC’s and Subs Should Get Along) (guest post)

Posted on by

Chris HillToday’s guest post is from Christopher G. Hill, lawyer, Virginia Supreme Court certified General District Court mediator and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC, a LEED AP. Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals. Additionally, Chris is active in the Associated General Contractors of Virginia and a member of the Board of Governors for the Construction Law and Public Contracts Section of the Virginia State Bar.

———
First off, thanks to Melissa for this opportunity to post here at Construction Law in North Carolina. Having co-presented with her and discussed construction contracting from all perspectives, I can safely say she’s good at what she does and shares great insight here at her blog.

Now that the formalities are out of the way, I thought I’d share my thoughts as one who represents many subcontractors and general contractors on the topic of good relationships meaning good business. I am always a bit surprised at the failure of either side of the GC/Sub dynamic to act in a businesslike manner.

Remember, the General Contractor and the subs are in the boat together in many ways. They both have a job to do and, ultimately, an owner at the top of the payment food chain that is looking to get a project done on time. Ultimately, they both have an architect/engineer representing the owner that may or may not be up on the job (sorry Melissa) and may not be trained in project management. If the general and its subs aren’t “playing well in the sandbox” together, the relationships up and down the project chain get all out of whack and cause delays in completion and importantly in payment.

Another phenomenon that happens more frequently than I would like is the general contractor “burning” good subcontractors in an area through making payment (particularly final payment) difficult to receive. While this type of activity occurs on what I am sure is the minority of projects (and fully acknowledging that my practice makes me think that Murphy was an optimist) I am always flabbergasted by this sort of treatment given to a subcontractor that should be helping pull the boat.

While it is obvious that subs need to play nice with GC’s because they have the money, it may seem less obvious how the above can hurt a general contractor. The short answer (and don’t worry I won’t be going into the long one) is that burning good subs eventually means that good subs won’t work with you. Subs talk to each other. Your reputation will precede you. Eventually the economy will improve and you won’t be the only game in town. Not to mention that such actions are the stuff of which claims are made.

In short, getting along costs your local construction lawyer money because he or she doesn’t get to go to court for you. It is almost always less expensive to get along, finish the job and work out payment than to get we attorneys involved in the construction claims process.

To make a long story somewhat less long, GC’s work with the subs and subs, play nice with the GC’s. It’s the best way to a lower stress project and a higher monetary payoff.

Thanks, Chris, for your insights from the contractor’s side of things.  Even if you did (politely) slam the hard-working design professionals.  Reader, now it’s your turn.  Share your thoughts, comments, or questions with Chris or me in the comment section, below.

Latent Defects: extending the statute of limitations (law note)

Posted on by

defective-tools-cause-injuriesAs we’ve previously discussed, the statute of limitations for construction claims in North Carolina is generally three years.  That is, once 3 years have passed, you are generally protected from any lawsuit filed after that time.

Does that mean that no lawsuit can be filed against you subsequent to that time?  No.  First, the statute of limitations is an affirmative defense, meaning that you must timely assert the defense as part of your response to the lawsuit.

Secondly, it is sometimes not apparent when the three year period begins to run.  Substantial completion or final completion?  What if your work is finished, but the project is not– does the three year period not start until project completion?  The issue of whether the statute of limitations has run is complex, and a mixture of law and fact questions.  See, Lord et al v. Customized Consulting Specialty, Inc. et al, 182 N.C. App. 635, 643 S.E.2d 28 (2007).

Finally, be aware of the hidden danger of hidden dangers. 

The three years does not start to run until it becomes obvious that there is damage stemming from your professional negligence.  The applicable statute states that the three years “shall not accrue until bodily harm to the claimant or physical damage to his property becomes apparent or ought reasonably to have become apparent to the claimant, whichever event first occurs.” N.C. Gen.Stat. § 1-52 (2005).

In other words, if there is a defect that is not readily observable and visual, the three years may not start to run until it becomes observable (e.g., through destructive testing, repair work, or renovation work).  This is what is known as a “latent defect”, and it can impose liability far beyond the initial 3 years.

Does the latent defect rule extend liability indefinitely?  No, it does not.  The statute of repose (6 years in NC; other states vary) will impose an absolute final date on real property improvements, after which no further liability can successfully be claimed.

Questions?  Drop me a comment, below.  Also, be sure to sign up for regular email updates and our free Construction Professional newsletter by entering your contact information on the top right of the homepage.

Photo “Defective Tools Cause Injuries” – NARA – 514107 

Something to Hang Your Hat On… (Limitation of Liability clauses) (law note)

Posted on by

hat rackIn the past on this blog, I have pointed out the benefits of Limitations of Liability clauses.  These are the clauses that state that the most damages that your Firm can be responsible for is capped at a certain dollar amount or your contracted fee.

Do you have a limitations of liability clause in your professional services contract?  You should.  Best practice would be to have such a clause that limits damages against you to a set amount.  For example:

Engineer’s liability to Client for any and all injuries, claims, losses, expenses, damages or claim expenses arising out of this agreement, from any cause or causes, shall not exceed the total amount of $50,000 or the amount of Engineer’s fee, whichever is greater.

While best practice is to have such a provision, it is not always enforced.  In a case arising out of the Western District of North Carolina, the court noted that such provisions will not be enforced where the result would be unconscionable and “elicit a profound sense of injustice.” See  Performance Sales & Mktg., LLC v. Lowe’s Companies, Inc.,2010 WL 2294323 (W.D.N.C. June 4, 2010).

What does this mean in practical terms?  It means that you should endeavor to include a limitation of liability clause, but don’t necessarily think that if you have that you’ve capped your risk.  A court can always decide that the clause is unconscionable.  But, such a limitation is one more thing to “hang your hat on” if and when you find yourself staring down the barrel of litigation*.

* If, however, you are facing litigation, make sure you sign up for regular blog updates.  Starting next week, I am writing a new series on the anatomy of a construction lawsuit, so stick around! 

 

Photo:  (c) BabbNet via CC.

Understanding & Modifying Key Construction Contract Terms

Posted on by

As I mentioned, I  was one of three amigos who spoke on a Construction Contract webinar last week.  We had a good turn out and lots of very astute questions during the Q&A portion.  While you will miss all of my witty insightful helpful commentary, you can check out the slides for my portion, on understanding and modifying key terms, here:

Drafting Construction Contracts

My comrades’ presentations can be found by visiting Chris’s blog (for payment provision issues) and Craig’s blog (for damages and dispute resolution issues).  Happy viewing!

Explaining Negligence in the Construction Industry (Guest post)

Posted on by

Today, a guest post by Anne Roberts.  Anne Roberts is a freelance writer. She writes blog posts, how-to articles, SEO copies, and many other types of content for several websites. Anne is currently a web content writer for personal injury attorneys.  (But we like her anyway!!)

Explaining Negligence in the Construction Industry

The construction world can be regarded as one of the most dangerous industries to work in. Because of the inherent hazards that come with working on a construction or repair project, both construction professionals and laborers uphold certain standards to ensure a safe working environment.

Contractors, surveyors, engineers, project managers to employers–all have a duty of care to observe. They make sure that assessments of risks involved in any facet of construction are made. Laborers, on the other hand, benefit from the assessments by exercising preventive measures.

Still, accidents happen.

Acrobatic_Construction_Workers

Some of the most common accidents that occur in construction sites involve six-feet-or-more falls from ladders or stairs. Other accidents are caused by the failure to implement safety precautions, such as improper building of scaffolding, use of dangerous tools and unsafe machinery, and other hazardous issues.  Without proper implementation of safety precautions, working on an elevated surface may result to debilitating injuries and even death.

According to the Bureau of Labor Statistics (BLS), it has been estimated that fatal accidents involving construction workers accounted for 15 percent of all job-related deaths in the U.S.  Such injuries or deaths may not have happened if a certain construction or repair project employed safety rules or standards of care. Such occurrence is categorized as construction negligence.

Determining Liability

When a serious accident happens, usually all parties involved are brought into the litigation, as cross-allegations of construction safety issues, construction defects, and construction administration/observation/inspection issues.  In North Carolina, an employee cannot sue his employer for a workplace accident (but instead seek a workers’ compensation recovery).  The employee can, however, bring a negligence action against any/all (other) responsible third parties.  [Editor’s Note: The parties may have rights to recover against each other if one is actively negligent and one is only passively negligent.  Otherwise, joint & several liability applies.]

To establish negligence, the injured party must prove the following four factors:

  1. The construction professionals involved have a duty of care;
  2. They breached or violated that duty of care;
  3. The breach of duty of care resulted to an injury; and
  4. The injury was the result of the construction professionals’ negligence.

[Editor’s Note:  The injured party also must not have been contributorily negligent.]

Other than in a construction or repair project site, construction negligence also happens on highway construction and post-construction efforts. Unsafe conditions during roadwork can be considered negligence, especially if workers, as well as motorists, consequently sustained certain injuries.

Even a complete building can be a source of negligence, in which the contractor or subcontractor failed to adhere to building codes. Construction defects, such as low structural integrity of the building, mechanical and electrical failure, and low-quality finishes, may lead to injuries and deaths.

Melissa again:  Thanks Anne for your post!       Readers:  Watch this space– I’m planning on posting an infographic tomorrow that will show construction accidents & related statistics.  Stay tuned.  In the meantime, please leave any questions or thoughts in the comment section, below.

Photo of workers on bamboo scaffolding (c) Terrance TS Tam.