Industry News:
- Pennsylvania enacts new Home Improvement Consumer Protection Act
Enacted in July of 2009, this new law (73 P.S. §§ 517.1 et seq.), among other things, requires residential contractors to register with the state, provides for certain mandatory provisions in residential improvement contracts and identifies the types of clauses that will be unenforceable, and defines what constitutes fraud on the part of the contractor.
- “ENGINEER” is not the “Owner's Representative” for purposes of giving notice of a claim
Bruce L. Phillips recently represented a Northeastern Pennsylvania site work/utility contractor in the successful prosecution of a claim for payment for rock excavation. The case was tried to the Luzerne County Court of Common Pleas and resulted in a judgment in favor of the contractor and against the Luzerne County Flood Protection Authority. One of the central issues in the case was whether the Authority’s independent, consulting “ENGINEER” could be considered the “Owner’s Representative” for all purposes having to do with administration of the contract during construction, particularly with regard to giving notice to the contractor that the owner was claiming for an adjustment of the unit price for rock excavation. The court rejected the arguments of both the “ENGINEER” and the Authority, and agreed with Mr. Phillips' argument on behalf of the contractor that the “ENGINEER” was not the “Owner’s Representative” for purposes of giving notice of a claim.
- 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.
- New Jersey enacts UTCA's proposed law regarding asphalt and fuel escalation on public works projects
In January 2010, Governor Corzine signed this new law which, according to UTCA's January 13, 2010 Construction Advisory publication, "will bring relief to contractors and subcontractors concerning the escalation of fuel and asphalt material prices on local and county public construction projects. The new Law, P.L.2009, Chapter 187, requires that specifications for public works projects that are governed by Local Public Contracts Law must contain a pay item for asphalt and fuel escalation. The NJDOT Asphalt and Fuel Index will be the reference by which the material price adjustment is to be calculated. The requirement for the use of the asphalt and fuel adjustment clauses are for public works projects that contain 1,000 tons of asphalt and/or 500 gallons of fuel. A provision is included in the measure to account for change orders or extra work that would result in the 1,000 ton or 500 gallon threshold being met. This new law applies to all new projects bid on or after May 1, 2010." For a copy of the new law, click here.
- 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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