Industry News:
- Federal agency can be a “Person” and “Owner” under the Pennsylvania Contractor and Subcontractor Payment Act and the availability of a federal Miller Act claim does not preclude other state law remedies
In the October 2006 decision in Scandale Associated Builders & Engineers, Ltd. v. Bell Justice Facilities Corp., 455 F.Supp.2d 271 (M.D.Pa. 2006), the United States District Court for the Middle District of Pennsylvania held that the United States Department of Justice - Federal Bureau of Prisons, a federal agency, was a “person” and “owner”, as that term is defined in the Pennsylvania Contractor and Subcontractor Payment Act (“Act”), 73 P.S. §501 et. seq., and therefore subject to liability under the Act. The court also held that the availability of a claim under the federal Miller Act, 40 U.S.C. §3131 et. seq., did not preclude other claims under state law remedies.
- Accrual of an unjust enrichment claim under Section 374 of the Restatement (Second) of Contracts arises immediately after the termination of any rights under the contract
In the February 2007 decision in Sevast v. Kakouras, 915 A.2d 1147 (Pa. 2007), the Pennsylvania Supreme Court held that a cause of action based on unjust enrichment under Section 374 of the Restatement (Second) of Contracts begins to accrue for the purposes of its four year statute of limitations when the rights to enforce an agreement have ceased or are terminated and not when the other party is actually enriched.
- House Bill 558, sponsored by Rep. Craig Dally (R-Northampton), is a new piece of legislation creating the Construction Disputes Act. If passed, the Act would provide for civil actions or arbitration proceedings for damages or indemnity for injury or loss to a dwelling or personal property arising out of or relating to the design, construction, condition, and sale or remodeling of a dwelling, etc. The purpose of the Bill is to establish an alternative method to resolve legitimate construction disputes that would reduce litigation while protecting the rights of homeowners. The legislation would not apply to actions arising out of claims for personal injury or death.
- New Jersey's Statute of Repose begins to run when the work is done
In the June 2007 decision in Daidone v. Buterick Bulkheading, A-60, 2007 N.J. LEXIS 706 (N.J. June 26, 2007), the New Jersey Supreme Court held that New Jersey's Statute of Repose clock begins to run, as to any given defendant, as of the date on which such defendant last performed services on the project, even if the whole of the project is not complete as of that date and a certificate of occupancy has not yet been issued. More specifically, the Court held that the Statute of Repose commences on the date of issuance of the certificate of occupancy only where the designer's or contractor's services continue up to that date. Where, however, the particular defendant's design or construction services are completed before a certificate of occupancy is issued, and such defendant performs no further functions, then the Statute of Repose commences as of the date the designer or contractor defendant completed his or her portion of the work. This case dispels the notion that the Statute of Repose commences, in all cases and for all involved contractors and design professionals, on the date of issuance of the certificate of occupancy. Note however that the Supreme Court did not overrule the case of Russo Farms, which held that the Statute of Repose commences upon substantial completion. Therefore, both of these cases now stand for the proposition that the Statute of Repose commences on the earlier of the date of substantial completion of the improvement at issue, or the last date on which the particular defendant rendered a service on the project.
- New Jersey's Bid-Naming Statutes absolutely bar any substitution of the subcontractors named in the bid prior to the execution of the subcontracts
In O'Shea v. New Jersey School Construction Corp., 388 N.J. Super. 312 (App.Div. 2006), the Appellate Division of the New Jersey Superior Court held that New Jersey's bid-naming statutes absolutely bar substitution for the bid-named subcontractors prior to the execution of subcontracts. New Jersey's public bidding statutes require each bidder to name the major trade subcontractors (i.e., plumbing, HVAC, electrical and steel/iron) with whom the bidder will subcontract, on all projects to be awarded to a single prime contractor. However, the plaintiffs pointed out to the trial court that substitutions and bid-shopping were common on SCC projects. The Court held that requiring the prime contractor to use the subcontractors listed in the bid gives meaning to the statutory language requiring the contractor to contract with the subcontractors named in its bid, fosters competition and decreases bid shopping. Thus, as a result of this case, it seems that substitutions are now barred, under all of New Jersey's various public bidding statutes, during the period between bid submission and execution of subcontracts. The prime contractor's inability to shop the bid will ensure a measure of price protection for named subcontractors. However, the Court's holding is not intended to affect a prime contractor's remedies if a named subcontractor breaches after the subcontract is signed.
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