Publication

Here are some recent Texas legislative amendments and Texas Supreme Court cases from the past year concerning the construction industry in Texas.

1) Recent Legislative Amendments Concerning the Construction Industry:

a) The Texas Legislature throws a “Spear” in the Lonergan Doctrine to reduce general/subcontractor liability for owner-provided plans and specs:

Forty-nine out of the fifty states follow the Spearin Doctrine under which owners warrant the accuracy and sufficiency of owner-provided plans and specs in construction contracts. On the other hand, for over a century, Texas has followed the Lonergan Doctrine under which, absent contractual language to the contrary, a general contractor/subcontractor, instead of the owner, bears the risk of deficiencies in owner-provided design documents, once they started construction. Texas Senate Bill 219, which went into effect on September 1, 2021, finally changed that and brought Texas in line with the rest of the country, with a few exceptions.

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

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In United Concrete Prods. v. NJR Constr., LLC, 207 Conn. App. 551, 263 A.3d 823 (2021), the Connecticut Appellate Court has issued a decision that should be of interest to the Connecticut construction industry and the construction bar. The lawsuit arose out of the late delivery of materials on a construction project, which is a frequent problem on construction projects. In United Concrete Products, the defendant general contractor, NJR Construction, LLC (“NJR”) was retained by the State of Connecticut Department of Transportation (“DOT”) to replace a bridge over the Hockanum River (“Project”). Id. at 555-58 (2021). The Prime Contract provided that NJR with an eight-week time-frame to perform the work, at which time the road would be closed to traffic. Id. The Prime Contract also provided for a bonus of $3,000 for each day the road was opened to traffic prior to the eight week deadline of August 8, 2016, and for liquidated damages of $3,000 for each day the road remained closed beyond the deadline. Id.

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

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Summary of Changes to the 50 State Survey Matrices for 2022. Click on a chart title to download.

(1) Statute of Limitations
Our review of the applicable legal authorities did not indicate any notable or substantive changes for the upcoming year. Minor stylistic changes are referenced below for two states. Additionally, we added distinctions for each state to provide the statutory limit for libel and slander. These distinctions are provided in the personal injury column.

• Alabama: Revised with minor stylistic change to the citation of the applicable code section, Ala. Code § 6-2-30 et seq.
• Connecticut: Revised with minor stylistic change to the citation of the applicable code section, Conn. Gen. Stat. Ann. § 52-275 et seq.

(2) Statutes of Repose
The survey’s overall format has been updated to reflect relevant distinctions for each state’s Statutes of Repose. As a result of the format change, distinctions and applicable descriptions are now included for Arkansas, California, Indiana, Louisiana, Maryland, and Texas.

• Arkansas: Updated to show the statutory distinctions between actions regarding personal injury and property damage.
• California: Updated to show the statutory distinctions between actions regarding latent and patent defects.
• Indiana: Updated to show the statutory distinctions between actions brought due to personal injuries sustained during the ninth or tenth year after substantial completion.
• Louisiana: Updated to show the statutory distinctions between actions regarding personal injury and those that are design defects arising from a contractor or architect.
• Maryland: Updated to show the statutory distinctions between actions against a professional defendant (i.e. architect, professional engineer, or contractor) compared to those against all other parties.
• Texas: Updated to include the statutory distinctions for governmental entities, that must bring suit not later than eight (8) years after substantial completion. Also, the update provides that contracts entered into by TXDOT, claims involving the state highway fund or federal funds for mass transit, or claims arising out of civil works are not subject to this governmental exception.

(3) Right to Repair Statutes

• Iowa: Updated with codified corollary to the general right to repair in I.C.A. § 686.3, which requires potential claimants to serve written notice of their claim at least 120 days prior to commencing any action that alleges a construction defect.

(4) Anti-Indemnity Statutes

• Our review of the applicable legal authorities did not indicate any notable or substantive changes for the upcoming year.

(5) General Contractors Licensing & Contract Requirements

• Our review of the applicable legal authorities did not indicate any notable or substantive changes for the upcoming year.

(6) Insurance Carrier Record Retention Requirements

• Illinois: Revised to indicate that Public Insurance Adjusters are required to maintain records for at least seven (7) years after the termination of a transaction.
• Nebraska: Updated to include the statutory distinctions for Accident & Sickness as well as Life Insurance & Annuities carriers, that must maintain records of its advertisements in the manner specified for at least five (5) years.
• Virginia: Updated to include the statutory distinctions for Accident & Sickness carriers, that must maintain records of its advertisements in the manner specified for at least four (4) years, as well as Life Insurance & Annuities carriers, that must do so for at least five (5) years.
• West Virginia: Updated to include statutory distinction for Long-Term Care insurance carriers, that must maintain these records for at least three (3) years.
• Wisconsin: Updated to include statutory distinctions for Life Insurance carriers, that must maintain advertisement records in the manner specified for at least three (3) years, Accident & Sickness carriers that must do so for at least four (4) years, and carriers of Funeral Insurance, that must do so for at least three (3) years.

(7) Licensing, Examination and Continuing Education Requirements for Independent Insurance Adjusters (New!)

• We are pleased to introduce our new 50 State Survey for 2022, pertaining to the licensing, examination and continuing education requirements for Independent Insurance Adjusters. Insurance Claims Adjusters are licensed and regulated, if at all, by the state in which they are providing services. Most states have distinct regulatory requirements for Insurance Adjusters, based on whether they 1) adjust claims on behalf of an insurer, or 2) adjust claims on behalf of a claimant. The attached matrix focuses on state requirements intended for Insurance Adjusters who adjust claims on behalf of insurers, typically referred to as Independent Claims Adjusters. This matrix outlines the licensing, examination, and continuing education requirements for Independent Claims Adjusters as well as exemptions for licensure for each state. Please note that two hyperlinks exist within the Licensing Requirements column, which can be accessed by clicking the word “HERE” in both the Definition section as well as the Exemptions section.

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Boston Partner Jay Gregory and Associate Shaun Loughlin obtained a summary judgment for their client, the plaintiff’s project manager, on a major construction defect case involving the University of Massachusetts. The client served as the Owner’s Project Manager on a campus dining hall renovation project. The project achieved substantial completion in September 2014. In 2018, the kitchen exhaust system failed, prompting the university to shut the dining hall down for repairs. In December 2020, the university filed suit against all relevant project participants, including the OPM-client, alleging claims of negligence, breach of contract, and indemnification for the defective exhaust system. The university claimed it incurred approximately $3 Million in damages. The co-defendants all simultaneously moved for summary judgment on largely the same grounds. First, that Massachusetts’ statute of repose (M.G.L. c. 260, § 2B) places an absolute bar on all construction defect claims filed more than six years after substantial completion occurs. Because the project achieved substantial completion in September 2014, the university should have filed suit by September 2020, and failed to do so. Second, the breach of contract action failed as well, because the university merely mimicked the same allegations asserted in its negligence action. Under Massachusetts law, a plaintiff cannot dress up a tort claim as a contract claim in order to circumvent the statute of repose. And finally, the university’s indemnification claim sought to obtain damages as a result of the co-defendants’ negligent acts/omissions. Even though the co-defendants expressly agreed to indemnification obligations in their agreements with the university, the indemnification obligations only arose as a result of negligence. Because the co-defendants could not be found negligent as a result of the statute of repose, they also could not be liable to indemnify the university. Again, the Court rule that one cannot advance an indemnification claim in an effort to circumvent the statute of repose. A copy of the decision can be found here.

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On February 9, 2022, Spokane Partner Meredith Thielbahr was a co-panelist for a webinar entitled, "Change Order Disputes and Recovering Payment for Your Project," sponsored by Levelset.

Louisville Partner Angela Richie shared "20 Tips for Better Contracts in Structural Fabrication" in Steel Fabricator Publication. Read more

On February 1, 2022, Angela Richie and Of Counsel Denise Motta presented a client webinar entitled, "Out With the Old, In With the New: Downstream Contracts." A link to the presentation can be found here.

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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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Gordon & Rees' Construction Group consists of more than 170 lawyers in offices nationwide. In 2019, the firm opened its 68th office, creating the world’s first 50-state law firm. The full list of Gordon & Rees' offices and local contacts can be found here.

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 Daniel Evans.

Daniel E. Evans
Gordon Rees Scully Mansukhani
555 Seventeenth St.
Suite 3400
Denver, CO 80202
(303) 200-6863
deevans@grsm.com

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