An important case for contractors and subcontractors has surfaced at the Michigan Supreme Court. Skanska USA Building, Inc. v. M.A.P. Mechanical Contractors, Inc. raises the question: is property damage coverage under a standard commercial general liability policy when the damage results from a...
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Indemnity Obligations: the “In-Law” That Won’t Move Out
Contractors and subcontractors should be aware of their lingering liability under contractual indemnity provisions that might currently be overlooked. These obligations and the potential for liability can outlast other types of contract claims because they might not accrue until long after the project is done.
Consequential Damages Reign Supreme, But Cannot be Included in a Construction Lien
In the recent case of TSP Services v National-Standard, LLC (Court of Appeals, Sept. 2019), the Michigan appellate court affirmed an arbitrator’s award of consequential damages to a contractor for lost profits, but rejected the arbitrator’s ruling that such damages could be included in a...
Revisions to Indiana’s Anti-Indemnity Statute Impacts Architects, Engineers, and Design Builders
Indemnity provisions are common in most construction contracts as they shift certain risks from one party to another. Anti-indemnity statutes are now also common, and most have a common theme: the person giving the indemnity (Indemnitor) cannot be held responsible for the other party’s...
Up in Smoke: Michigan’s Marijuana Law and its Applicability to the Construction Industry
Regardless of your personal views on Marijuana use, it is here to stay. For the construction industry, it is important to understand the implications. To summarize the 2019 Michigan Regulation and Taxation of Marihuana Act, it is now legal in the State of Michigan (as opposed to under Federal...
Is Retainage Reform Around the Corner in Michigan?
By: Benjamin H. Hammond, Attorney Andy Hilger, Law Clerk Retainage is often thought of as a necessary evil in the construction industry. General contractors and owners see it as a guarantee on a subcontractor’s work in the event of non-performance. Subcontractors often view retainage...
Captive Insurance Opportunities Using Contractor Controlled Insurance Programs (CCIPs)
By: Mark A. Rysberg Captive insurance within the building construction industry is well established. Such programs are generally developed to reduce insurance premium costs and to approach risk management from a strategic perspective. Captive insurance programs can provide additional strategic...
Changes to the 2017 AIA A201 General Conditions: Section 1.1.8 on Initial Decision Maker
This is part 1 of a 15-part series on the changes to the AIA A201 General Conditions. This part deals with section 1.1.8.
In the 2017 changes, particularly section 1.1.8, there are some fairly significant changes to the Initial Decision Maker clause. The changes are as follows:
First, in my humble opinion, the whole Initial Decision Maker process is a bad idea. It usually ends up, by default, being the Architect under section 15.2.1 because people generally do not change the language and select a third-party. So, you basically have the fox guarding the chicken coop. The Architect, as the Initial Decision Maker, has a lot of control over the outcome of the dispute.
This scenario was attempted to be worked out by the language that “the Initial Decision Maker shall not show partiality to the Owner or Contractor…” but that does not fix the problem. How do you deal with a breach of this provision?
Construction Disputes: Arbitration or Litigation?
This is Part 1 in a 20-part series of articles dealing with issues of arbitration in the construction industry.
The question of whether to arbitrate or litigate disputes comes up fairly frequently in the construction industry. From my humble perspective, with respect to construction disputes, there are very few circumstances where I would choose litigation over arbitration. Why?
Choice of Decision Maker
With arbitration, in general, you pick the decision maker(s) as opposed to being assigned a judge through a blind draw in the court system. That level of arbitrator selection may range from picking from a list under the American Arbitration Association Rules to hand picking a blue-ribbon panel of arbitrators or even a single arbitrator through private arbitration. If you are assigned a judge through the courts, you may end up with a judge who does criminal proceedings in the morning, divorce proceedings before lunch, and then handles your complex construction law dispute in the afternoon, in 15-minute increments, along with multiple other disputes in what looks to an outsider like a giant cattle call. Unless your contract provides otherwise, you may also be in the unlucky position to try your complex construction disputes to a jury.
AIA 2017 – What’s New About The Old?
In April 2017, the American Institute of Architects (AIA) released the 2017 editions of its flagship agreements, including the Owner-Contractor Agreement (A101), Owner-Contractor Agreement, Cost Plus a GMP (A-102), the General Conditions of Contract (A201) and the Contractor-Subcontractor Agreement (A401). Significantly, AIA also created a new comprehensive insurance and bonds Exhibit (Exhibit A) to be used with these agreements.
Some interesting changes to note:
Liquidated Damages. Liquidated Damages are now expressly identified with a new provision. In prior revisions, LDs were merely suggested in a “prompt” as an insertion. Furthermore, the Owner is not required to file a Claim to impose liquidated damages. Prior AIA versions were silent on whether Owner was required to file a formal claim; courts addressing the question reached differing results.
Captive Insurance Costs. Contractor must obtain Owner’s prior approval of Contractor’s costs for insurance provided through a captive insurer owned or controlled by Contractor.
Allocation of GMP. Adopting a revision commonly made by the parties, if a GMP is given, allocation of the GMP does not constitute a separate GMP for each individual line item on the Schedule of Values.