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November 2018

Construction Law Update

Fourth Quarter 2018

Gordon & Rees' 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.

INSIDE THIS ISSUE
  1. SB 721 – California Multi-Family Buildings New Require Inspections of “EEEs”

  2. Statutory Period for Expiration of Building Permits Doubled in California

  3. Massachusetts SJC Clarifies “Strict Compliance” Standard in Construction Contracts

  4. Gordon & Rees Construction Attorneys Making Headlines

  5. Gordon & Rees Construction Law Blog

  6. About Gordon & Rees' Construction Group

I. SB 721 – California Multi-Family Buildings New Require Inspections of “EEEs”
     
  By Brenda K. Radmacher
   

Many in the construction industry and multi-family development field have been closely following Senate Bill 721, or the “Balcony Bill,” regarding new requirements for building owners associated with decks and balconies. After almost a dozen amendments, the “Balcony Bill” finally passed in the state legislature with an overwhelming majority and was signed into law September 17th, 2018, by Governor Jerry Brown.

Balconies and decks, called “Exterior Elevated Elements” (“EEE”) in the statute, are common features in most multi-family buildings in California – where better to enjoy the California sun? However, many of the structures have proven to be problematic at best due to complex intersections of construction trades and design issues as well as limited understanding and effectuation of maintenance. Indeed, the “Balcony Bill” arose largely out of an outcry following the 2015 balcony collapse in Berkeley in 2015, which left six young people dead and another seven injured.

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

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II. Statutory Period for Expiration of Building Permits Doubled in California
     
  By Amy Kuo Alexander
   

In California, AB2913 now doubles the statutory period for the expiration of building permits. Previously, work must have been commenced within 6 months after issuance of a permit. However, effective September 21, 2018, AB2913 provides that if work on a job site is authorized by a permit, that it remains valid if work is commenced within 12 months after its issuance (unless of course, the work was abandoned). This bill also allows permittees to request (in writing) extensions up to 180 days upon demonstration of justifiable cause. In the ever evolving construction labor market, this bill provides some relief to developers and owners who need to make revisions to their plans.

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III. Massachusetts SJC Clarifies “Strict Compliance” Standard in Construction Contracts
     
  By Jacob Goodelman
   

In Massachusetts, it is well established that a contractor cannot recover damages from a construction contract without first showing that the contractor completely and strictly performed on all of the contract’s terms. Recently, the Massachusetts Supreme Judicial Court narrowed the rule by concluding that complete and strict performance is only required for contract terms relating to the design and construction itself. The high Court explained that non-design / non-construction contract terms are governing by “ordinary contract principles, including the traditional Massachusetts materiality rule.”1

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

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IV. Gordon & Rees Construction Attorneys Making Headlines

Gordon & Rees Los Angeles partner Brenda Radmacher recently negotiated a successful resolution on a case for her construction client. We were able to resolve a high six-figure breach of contract case where our client had not been paid for its work within 3 months, garnering the client 95% of its claim through skilled negotiations without having to resort to litigation.

Gordon & Rees New Orleans and Houston partners David Bland and Brian Comarda, as well as associate Jack Byrom, obtained a significant appellate victory for a major offshore services company when the Fifth Circuit Court of Appeals upheld a $12 million judgment in its favor. The dispute arose out of a contract in which the offshore services company engineered and fabricated two compression modules for installation on an oil platform in the Gulf of Mexico. The issues involved the interpretation of the contract’s “hybrid pricing model” and whether evolution in the design of the modules constituted changes to the scope of work. The Court ruled that the design evolution was part of the original work scope, and that the builder must therefore be paid in full. The Fifth Circuit also rejected the arguments of the customer that the payment provision of the contract contained a “condition precedent” under Texas law, finding that the provision contained no conditional language.
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Los Angeles partner Brenda Radmacher will present "Legalization of Marijuana and its Impact on General Contractors" for the ABA Forum on Construction, Division 5 (General Contractors) monthly call on December 18, 2018.

Louisville partner Angela Richie presented “What Fabricators Need to Know About Providing Early Involvement Pre-Construction Services versus Engaging in a Design-Assist Contract,” for the Early Involvement & Marketing Workshop for the Structural Steel Industry, American Institute of Steel Construction on November 14, 2018 and "Livin on a Prayer”: What Due Diligence Do You Need To Do Before You Bid or Start Work?," at the AISC Future Leaders Ideas Lab on October 11, 2018.

San Francisco associate John Castro's Construction Law Blog post, Teaching an Old Dog New Tricks: The Spearin Doctrine and Design-Build Projects, was recently picked up by the National Association of Credit Management and published in two parts in their newsletter. To read the article, click here and here.

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V. Gordon & Rees Construction Law Blog

The Gordon & Rees Construction Law Blog continues to post new content addressing topical issues affecting the construction industry throughout the country. From analysis of new court decisions, discussions of timely legislation, and commentary on real-world, project-specific issues, Gordon & Rees’ Construction Law Blog provides insight on the issues that affect the construction industry now.

We invite you to visit the blog at www.grconstructionlawblog.com and see for yourself what we are up to. If you like what you see, do not hesitate to subscribe under the “Stay Connected” tab on the right side of the blog. There you can choose how you would like to be informed of new content (Twitter, LinkedIn, email, etc.). If you have any questions about the blog or would like to discuss further any of its content, please do not hesitate to contact us.

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VI. About Gordon & Rees' Construction Group

Gordon & Rees' Construction Group consists of more than 120 lawyers in 52 offices throughout the nation. The firm continues to expand, opening five new offices in 2018 which include Detroit, Louisville, Missoula, Nashville, and New Orleans.

Gordon & Rees’ 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 partner Tom Cronin.

Thomas G. Cronin
Gordon & Rees, LLP
1 North Franklin
Suite 800
Chicago, IL 60606
(312) 980-6770
tcronin@grsm.com

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