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January 2014

Construction Law Update

Gordon & Rees’s Construction Group is pleased to publish the latest issue of our Construction Law Update, a quarterly take on trends of interest to design professionals, contractors, and developers throughout the country. And to start 2014 with an even bigger bang, we have launched the Gordon & Rees Construction Law Blog (, which enhances our quarterly newsletter to bring you additional timely and insightful information about legal developments in the construction industry.

In this edition of the Construction Law Update, we discuss costly issues surrounding prime contractors and subcontractors; project-related electronically stored information; the ins and outs of asbestos litigation; what general contractors need to know about property damage claims; and risk limitations for design professionals.

In 2014, Gordon & Rees’s Construction Group looks forward to bringing you essential analysis and information on the impact of legal changes in the industry.

  1. There’s Always “Hope” When a Public Construction Contract Contains Ambiguous Terms 

  2. Protect How You Document a Project in the Age of ESI

  3. Asbestos in Construction Practice – 2014

  4. Defending Against a High-Stakes, Bet-the-Company, Multimillion-Dollar Property Damage Claim

  5. Gordon & Rees Construction Attorneys Making Headlines

  6.  About Gordon & Rees's Construction Group
I. There’s Always “Hope” When a Public Construction Contract Contains Ambiguous Terms

 Carl Gebo



By Carl Gebo - Atlanta Office

The Georgia Court of Appeals’ Nov. 19, 2013, decision in Hope Electric Enterprises, Inc. v. Schindler Elevator Corp., A13A1586 (Ga. Ct. App. 2013) illustrates the costly effects of using construction contracts that prime contractors “have always used.” 

Schindler won a prime contract from the Metropolitan Atlanta Rapid Transit Authority (MARTA) in October 2007 to rehabilitate escalators in MARTA stations throughout the Atlanta area.  Schindler then subcontracted to Hope in 2008 to perform certain electrical portions of the scope of work.  The subcontract agreement between Schindler and Hope incorporated by reference provisions from Schindler’s contract with MARTA relating to performance of the work, safety precautions, incidents of default, opportunities to cure, and termination.  Among the provisions incorporated into the Hope subcontract was language commonly found in construction subcontracts:

The Subcontractor shall take reasonable safety precautions with respect to performance of the Subcontract, shall comply with safety measures initiated by the Contractor and with applicable laws, statutes, ordinances, codes, rules and regulations, and lawful orders of public authorities for the safety of persons and property in accordance with the requirements of the Prime Contract.

If the Subcontractor repeatedly fails or neglects to carry out the Work in accordance with the Subcontract Documents or otherwise perform in accordance with this Subcontract and fails within a ten-day period after receipt of written notice to commence and continue correction of such default or neglect with diligence and promptness, the Contractor may, by written notice to the Subcontractor and without prejudice to any other remedy the Contractor may have, terminate the Subcontract and finish the Subcontractor’s Work by whatever method the Contractor may deem expedient. . . .  

  To read a full, expanded version of this article, click here.

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II. Protect How You Document a Project in the Age of ESI 

 Ian Williamson


By Ian G. Williamson - San Diego Office

Project-related electronically stored information (ESI) can be the savior or the bane of any construction litigator’s practice.  Long gone are the days when boxes full of paper files were the only source of hard information on a project.  Today, those boxes are more digital and spread across laptops, servers, smartphones and the data cloud.  The scope of discovery of ESI on a project can be daunting, as can the related costs.  While attorneys, clients and their insurers will continue to work together to manage the litigation aspects of ESI, there are key actions taken years earlier that can have dramatic effects on the outcome of future litigation.  Actions that take only moments and cost little in real time can save hours and thousands of dollars in costs later.

Data in the Cloud – Lost Forever?

More projects use digital vaults for project data.  Unless you control the vault, you run the risk of not having access to key data to prove your point.  As a rule of thumb, download and save any document that you are relying upon to bid a project or to perform your work.  We very strongly recommend that you keep digital copies of any communication you originate or that is directed to you in a format that you control.  The cost of a DVD to download and copy a complete set of the project plans is cheap insurance against not having access to the plans later.

Smartphones and Text Messages

Smartphones and text messages are ubiquitous.  The problem for construction litigation is that the record of what is done is too easy to lose.  An architect could text approval to the superintendent for a key change.  An owner could easily text a “written” approval to proceed with a change.  These are key communications that need to be “documented” in the project file.  How you do that depends on your own technology systems.  Some robust systems will let you copy files automatically to a server.  Others take more deliberate effort.

To read a full, expanded version of this article, click here.

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III. Asbestos in Construction Practice – 2014

  Ian Williamson


By Ian G. Williamson - San Diego Office

Most plaintiff-oriented experts agree that asbestos was essentially removed from all new construction materials by the late 1970s.  Why, then, do contractors and construction-industry materials suppliers still regularly find themselves embroiled in asbestos litigation?  The answers are multifold.

First, most states allow plaintiffs to bring their asbestos injury claims within a set period after they become ill, not determined by when they were allegedly exposed.  In California, the limitations period does not start to run until the plaintiff is disabled from work due to his or her asbestos injury.  It is not at all uncommon for plaintiffs in their 60s and 70s to make claims that they have only recently learned they suffer from asbestosis arising from exposure in the 1950s and 1960s.  Further, strict liability theories in most states allow plaintiffs to pursue suppliers of materials in addition to manufacturers.  Some plaintiffs’ experts opine that the latency period (time between exposure and developing a disease) from some cancers can run as long as 40 years or more.

In private projects, contractors are not insulated from liability by the fact that particular products were specified by the designer or owner.  There also is little solace in the fact that all the products of a particular class on the market at the time contained asbestos.

We routinely see contractors sued under theories that they oversaw the daily cleanup on projects or employed the laborers who did the sweeping.  The mere act of creating airborne dust in an environment where an asbestos-containing product was used is enough to become embroiled in litigation.

To read a full, expanded version of this article, please click here.

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IV. Defending Against a High-Stakes, Bet-the-Company, Multimillion-Dollar Property Damage Claim


 Rosemary Carson

Christine Baker


By Rosemary K. Carson and Christine D. Barker – Orange County Office

California Constructor, a bimonthly magazine for members of the Associated General Contractors of California, recently published an article by Gordon & Rees partner Rosemary K. Carson and senior counsel Christine D. Barker of Orange County. In the article, Carson and Barker discussed what general contractors need to know when faced with property damage claims.

To read the article, click here.

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V. Gordon & Rees Construction Attorneys Making Headlines


 Julie Haddon




 Mark Russell


Gordon & Rees partner Thomas G. Cronin of the Chicago office recently presented to more than 175 underwriters, claims handlers, and adjusters from Lloyd’s of London, Hiscox USA, and several other insurance companies on the topic of risk limitations for design professionals in Illinois.  The presentation seminar was held in the Claudia Cassidy Theater at the Chicago Cultural Center on Michigan Avenue.  Attendees received three hours of continuing education credit.

To view the presentation, click here.

Gordon & Rees partner Mark Russell of the San Francisco office was recently elevated to practice group leader for the San Francisco office’s Complex Commercial Litigation Group. Mark’s practice encompasses all aspects of construction and real estate counseling and dispute resolution.


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VI. About Gordon & Rees's Construction Group

Gordon & Rees's Construction Group consists of more than 80 lawyers covering the nation in 30 offices. Indeed, in September the firm opened a Raleigh, N.C., office and this month it launched an office in Charleston, S.C.

Gordon & Rees’s construction attorneys focus their practice on the comprehensive range of legal service required by all participants in the construction industry – architects, engineers, design professionals, design joint ventures, owners, developers, property managers, general contractors, subcontractors, material suppliers, product manufacturers, lenders, investors, state agencies, municipalities, and other affiliated consultants and service providers.

We serve clients who design, develop, or build all types of structures, including commercial buildings, single and multifamily residential projects, industrial facilities, universities, hospitals, museums, observatories, amusement parks, hotels, shopping centers, high-rise urban complexes, jails, airports, bridges, dams, and power plants. We also have been involved in projects for tunnels, freeways, light rail, railway stations, marinas, telecom systems, and earth-retention systems. Our experience includes private, public, and P3 construction projects.

If you have questions about this issue of the Construction Law Update or our nationwide construction practice, click here to visit our practice group page or contact Mark Russell or George Milionis.


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