Nevada – Commercial design professionals protected from professional negligence claims by economic loss doctrine

The Nevada Supreme Court held in Terracon Consultants Western, Inc. v. Mandalay Resort Group, 206 P.3d 81 (2009) that, “in a commercial property construction defect action in which the plaintiffs seek to recover purely economic losses through negligence-based claims, the economic loss doctrine applies to bar such claims against design professionals who have provided professional services in the commercial property development or improvement process.”  This holding arises out of a question certified under NRAP 5 from the United States District Court for the District of Nevada.

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Posted by Anthony Golden at 5:01 PM | Email Post
Categories: Construction | Design Professional | Economic Loss Doctrine

Colorado Construction Payment Reform Act of 2009

In an attempt to shorten the time owners have to pay contractors and subcontractors, the Colorado Legislature introduced Colorado Senate Bill 09-095 (the “Construction Payment Reform Act of 2009” (“Act”)). While the Act is designed to protect contractors and subcontractors, it will require that everyone in the construction and development industry – including lenders and owners – adapt.

I. THE ACT

A. Who and what will be impacted?
As currently drafted, the Act applies to all private construction contracts worth more than $100,000, except contracts for the construction of “single-family or multi-family dwellings with no more than two units.” It also exempts construction contracts that take less than one month to complete, single payment and unit-price contracts, and contracts payable in installments or upon completion.

B. How the Act works?
The Act requires that all contractors and subcontractors be paid within thirty days after the end of each “billing cycle”, which is a cycle agreed upon by the contractor and owner under the general contract. Surprisingly, however, the term “billing cycle” is not currently defined by the Act. Instead, the Act provides flexibility for the general contractor and owner to negotiate appropriate billing cycles on a project by project basis.

Payment terms that conflict with the Act are “unenforceable and void.”

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Posted by FC Admin at 12:58 PM | Email Post
Categories: Colorado | Construction

CASE ALERT—New Arizona Appellate Decision Enforces Narrow Form Indemnity Clause Against General Contractor

On November 13, 2008, the Arizona Court of Appeals issued its decision in MT Builders, LLC v. Fisher Roofing, Inc., interpreting a “narrow form” subcontract indemnity provision which reads, in part as follows: “the [Subcontractor] shall indemnify and hold harmless [General Contractor] ... from and against all claims . . . arising out of [Subcontractor’s] work . . . to the extent caused in whole or in part by any negligent act or omission of the [Subcontractor]...”. The case involved a construction defect lawsuit filed by a condominium association against MT Builders (MTB), the general contractor, and at least nineteen subcontractors, including Fisher Roofing, Inc. MTB tendered defense of the case to its subcontractors and filed cross-claims for indemnity against the subcontractors. The subcontractors declined to defend MTB. Eventually, MTB settled the association's claims. In turn, MTB then settled its claims against all of the subcontractors except Fisher, the roofing subcontractor. The trial court considered competing motions for summary judgment filed by Fisher and MTB, and ruled in MTB’s favor on the indemnity claims, establishing $240,523 as the portion of the settlement attributable to Fisher. The appeals court reversed and issued three rulings that substantially impact owners, developers, contractors and subcontractors relating to indemnity obligations on construction projects.

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Posted by Jeffrey Steffen at 9:04 AM | Email Post
Categories: Construction

Arizona Supreme Court Rules on Contract Provisions Capping Damages

Professional service contracts often include provisions that limit the service providers’ liability to the amount received under the contract.  In a decision earlier this year, the Arizona Court of Appeals ruled that, under the Arizona constitution, the decision whether and how to enforce such provisions must be made by the jury, rather than the judge.  1800 Ocotillo, LLC v. The WLB Group, Inc., No. 1 CA-CV 07-0037. In reaching this conclusion, the Court of Appeals analogized the provision to the defense of “assumption of risk,” which, under the Arizona Constitution, must be submitted to the jury.Fennemore Craig addressed this decision in a litigation update on February 25, 2008.  In that update we noted that, “[i]t will be challenging for defendants, seeking to rely upon such provisions, to persuade juries to apply them in situations where the injured party’s damages greatly exceed the limit in the contract.”

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Posted by Christopher L. Callahan at 12:08 PM | Email Post
Categories: Construction

Bovis Strikes Back - Nevada Supreme Court Takes Mulligan On Pay-if-Paid

In June, the Nevada Supreme Court released its opinion in Bovis v. Bullock, 124 Nev. Adv. Op. 39, 185 P.3d 1055 (June 2008).  See this blog post on the case for details of the facts.  In the Court's June opinion, it held that pay-if-pay provisions in subcontract agreements violate Nevada public policy.  Although the subcontract at issue was entered into before the 2001 amendments to NRS Chapter 624, the Court declared in Footnote 33 that the prompt payment sections included in the 2001 amendments render pay-if-paid provisions unenforceable for contracts entered into after the amendments.

Now, the Supreme Cout has withdrawan its June opinion and replaced it with Bovis v. Bullock, 124 Nev. Adv. Op. 92 (Oct. 30, 2008). 

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Posted by Anthony Golden at 4:02 PM | Email Post
Categories: Construction | Nevada | Pay-if-Paid | Pay-when-Paid

Is a Lien Claimant Entitled to Post-Judgment Attorney Fees?

Nevada Supreme Court Clarifies its Definition of a "New Residence" for NRS Chapter 40

Court Holds Discretionary Immunity Protects Governmental Entity from Tort Liability in Accepting or Rejecting Bids for Public Works Projects

Contractor's License is Intangible Personal Property that is Subject to a Claim for Conversion