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Inside This Issue:
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Survey of Statutes of Repose Applicable
to Construction Industry
An excellent, comprehensive survey of five major provisions of each
state’s statute of repose limiting the time period to bring legal
action against parties involved in construction projects is available in
the Summer 2001 issue of the "Construction Lawyer," published
by the American Bar Association, Forum on the Construction Industry.
This easy-to-use, two-page table covers all 48 states that have enacted
statutes of repose, and includes: the type of action affected, length of
actionable period, savings clause, triggering events, and class of
people protected (e.g., architects, engineers, contractors, or other
persons). Only New York and Vermont do not currently have such
legislation. The table was prepared by attorneys Allen Holt Gwyn and
Paul E. Davis of the law firm Conner Gwyn Schenck PLLC, P.O. Box 20744,
Greensboro, NC 27420; Phone: 336-691-9222; e-mail: ahgwyn@cgsplc.com.
The ABA Construction Forum contact is Carol Albrecht, Director,
312-988-5660.
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Architect Wins Entitlement to Damages, but Recovers Nothing, Because it
Failed to Keep Adequate Cost Records
An architect performed both design and construction administration
services under its contract with a school district. When the
construction contractor completed the project eight months late, the
architect alleged that it was entitled to recover compensation for the
additional services it was forced to perform as a result of the
contractor’s delay. The school district failed to pay, arguing that
under the terms of the contract the architect was obligated to perform
basic services until 60 days after substantial completion of the work.
The court held that the architect had proved entitlement to payment for
additional services due to the contractor’s failure to perform.
However, the architect failed to prove the cost of its additional
services, and, therefore, could recover nothing. The court explained
that the architect’s computerized cost records showed the individual
days and hours spent on the project, but identified them generally as,
"Construction Contract Administration." Because the architect
failed specifically to identify the tasks performed, the court was
unable to determine which were compensable additional services. Belot
v. Unified School District, No. 497, Douglas County, 4 P.3d 626 (
Kan. App., 2000.)
* This article, and the one that follows, was written by
Suzanne Harness, Esq., of the Seyfarth
Shaw law firm, and originally published in the Spring 2001 issue of that firm’s
Construction Practice Group newsletter, entitled: "Construction Law
Report." The firm has a national and international practice with
emphasis on construction and governmental contracting. For further
information: 815 Connecticut Ave., N.W., Suite 500, Washington, D.C.
20006, phone: 202-463-2400.
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party as well as third party coverage for contractors that have claims
against their A/E subcontractors due to professional acts, errors and
omissions. For more information on this or other Zurich products, contact
webmaster@constructionrisk.com
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Failure to Attend Pre-Bid Site Visit Proves Fatal to Contractor's
Differing Site Conditions Claim
A government repair and alteration contract required installing new
shower units to existing supply piping. Upon demolishing the shower
wall, the contractor discovered that due to the location of the existing
supply lines it would have to remove and replace the pipes. The
contractor, who had not attended the government’s pre-bid site visit,
claimed a differing site condition and asserted that the condition would
not have been visible at a site visit. Other contractors, however, who
had attended the pre-bid site visit testified that the government had
removed a portion of the shower wall exposing the condition in question.
Given this testimony, the Armed Services Board of Contract Appeals found
that the condition was neither unforeseeable nor unknown, thus
preventing the contractor’s recovery for either a Type I or Type II
differing site condition. American Construction & Energy, Inc., ASBCA
No. 1770972 (November 27, 2000). (* Article by Suzanne Harness, Esq., Seyfarth
Shaw law firm.)
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Insurance Carrier Had No Duty to Defend Engineer in Wrongful Death
Action Based on Trench Collapse
By: J. Kent Holland, Jr.
An engineer’s general liability insurance carrier ("Utica
Insurance") refused to defend a suit against the engineer arising
out of the death of a laborer ("Lindsley") in a trench
collapse. It contented that the claim was excluded from coverage. The
trial court’s declaratory judgment in favor of the engineer against
the insurance carrier was reversed on appeal because the court found the
policy exclusion to be clear and unambiguous, particularly with
reference to what constitutes professional services.
The survivors of the deceased laborer alleged that the engineer was
negligent in that the engineer allegedly (1) failed to make daily
inspections of excavations, failed to be present during all excavations
and failed to make inspections after every rainstorm; (2) negligently
designed the system for excavation, negligently drafted the plans and
negligently failed to indicate in the slope of the spoil pile adjacent
to the excavation; and (3) misrepresented its qualifications to prepare
the safety requirements and design the excavation system, and
misrepresented that it would properly inspect and monitor the
excavation.
The engineer’s general liability policy contained the following
exclusion: "This insurance does not apply to ‘bodily injury,’
‘property damage,’ ‘personal injury’ or ‘advertising injury’
arising out of the rendering or failure to render any professional
services by or for you, including: (1) The planning , approving, or
failing to prepare or approve maps, drawings, opinions, reports,
surveys, change orders, designs or specifications; and (2) Supervisory,
inspection or engineering services."
In an apparent effort to avoid this policy exclusion, the Lindsleys
amended their complaint against the engineer to allege acts and
omissions against non-engineering personnel as well as engineering
personnel, with the intent of characterizing the services as
nonprofessional. Although the trial court was apparently persuaded by
this argument, the appellate court was not. It stated that the court
must look at the facts alleged in the complaint rather than the legal
theories alleged. The facts in the underlying complaint, says the court,
were that the engineer negligently performed services that were
explicitly defined in the policy exclusion as professional services, and
thus the claim was excluded from coverage under Utica’s policy. Utica
Lloyd’s of Texas v. Sitech Engineering Corporation, 38 S.W.3d 260
(Tex. App. 2001).
** Risk Management
Note: This case provides a good example of the
value gained from carrying design professional insurance if you are
providing services as either a contractor, construction manager or
design professional that may be deemed "professional
services."
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Wrap Ups & Construction Liability Conference
September 10 - 11, 2001 - Westin Tabor Center - Denver, CO
Presented by: Strategic Research Institute, L.P., 888-666-8514
or 646-336-7030. http://www.srinstitute.com/ci226.
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marketplace by learning to implement protocols and players for effective
claims management; Manage environmental risks on construction projects;
and Control insurance costs with alternative program structures.
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Disclaimer
This newsletter is independent of any insurance company, law firm, or
other entity, and is distributed with the understanding that
ConstructionRisk.com, LLC, and the editor and writers, are not hereby
engaged in rendering legal services or the practice of law. Further, the
content and comments in this newsletter are provided for educational
purposes and for general distribution, and cannot apply to any single
set of specific circumstances. If you have a legal issue to which you
believe this newsletter relates, we urge you to consult your own legal
counsel. ConstructionRisk.com, LLC, and its writers and editors,
expressly disclaim any responsibility for damages arising from the use,
application, or reliance upon the information contained herein.
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Copyright 2001, ConstructionRisk.com, LLC
Editor: J. Kent Holland, Jr., J.D.
1313 Dolley Madison Blvd.
Suite 333
McLean, VA 22101
703-623-1932
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