Construction Law Blog - Topics of Interest to the Construction Industry

Technology is talked a lot about in my house. My husband is a tech junkie and is even trying to design his own app. I have my own iPhone but I don't really take advantage of the apps as much as I could. With all of this talk about apps, I found this quick little story on construction apps interesting from Constructech Magazine.

It discussed how construction based applications are on the rise and increasing in popularity. It raised the question to me of how important is technology to your business. I have a client who uses technology very well. They provide mostly residential based construction services and use technology as a way to keep the client involved and completely informed. They use a google calendar which is constantly updated with the subcontractors that are on the site that day and what the schedule is. Invoices can all be found there. Finally, the company takes pictures and video of the work and progress that was completed that day. I think this use of technology helps keep the consumer fully informed and aware of the process. It will be very difficult for them to say they were not aware of things.

However, if there are any issues, the homeowner will be made aware of it immediately.

What has been your experience with technology? Does it make it easier for you?

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Julie D. Goldstein is an attorney with the law firm Fox Rothschild LLP.  Julie practices in Fox Rothschild's Warrington, PA office. You can reach Julie at 215-918-3558 or jgoldstein@foxrothschild.com

In a recent Superior Court Opinion in the matter of Riverbend Community, LLC, et al. v. Green Stone Engineering, LLC, et al., Judge Johnston examines the scope and enforceability of a General Release of Claims. The release at issue was executed in connection with civil and environmental engineering services provided for the planning and construction of a residential development. Plaintiffs claim that Defendants breached its contract with Plaintiffs by failing to identify a regulated wetland area. Defendants argue that Plaintiffs’ breach of contract claim is barred by a general release signed by Plaintiffs (the Opinion also addresses negligence claims that were found to be barred by the economic loss doctrine).

Plaintiffs executed a general release exculpating Defendants from any liability in connection with engineering services provided. Plaintiffs assert three bases for invalidating the Release, "First, Plaintiffs claim that the release is ambiguous because it is subject to differing interpretations. Secondly, Plaintiffs contend that they executed the release under economic duress. Finally, Plaintiffs claim the parties were operating under a mutual mistake when the Release was signed."

1. AMBIGUITY

Initially, the Court found that the release was valid and unambiguous. The Court based its ruling on Plaintiffs' failure to present any evidence to suggest that they did not understand the terms of the release, or that the release was "reasonably or fairly susceptible of different interpretations." Moreover, the Court stated that "[w]here the language of the release is clear and unambiguous, it will only be set aside where there is fraud, duress, coercion, or mutual mistake concerning the existence of the party’s injuries."

2. ECONOMIC DURESS

Plaintiffs claim that the release should be invalidated because Defendants refused to release any designs, plans, or specifications unless Plaintiffs executed the release exculpating Defendants from all liabilities. The Court was not convinced by this argument. "Economic duress exists where one is deprived of the free exercise of will through wrongful threats or acts directed against a party’s business interests. A claim for economic duress will not lie, however, where the party has a reasonable alternative to succumbing and fails to take advantage of it." Further, in ruling that the release was not executed under economic duress, the Court explained that,

While Defendants may have driven a hard bargain in refusing to release work product unless Plaintiffs executed the Release, aggressive negotiation is insufficient to constitute duress. In every contract negotiation there is an implied threat that the party will not perform unless his terms are accepted. This type of implied threat is a necessary part of the bargaining process.

Additionally, the Court notes that Plaintiffs’ principal, a sophisticated and seasoned businessman, executed the Release. Further, Plaintiffs were free to consult an attorney prior to executing the Release. Therefore, it cannot be said that Plaintiffs were under economic duress at the time they signed the Release.

3. MUTUAL MISTAKE

Finally, Plaintiffs argue that the release should be invalidated because at the time it was executed, the parties were mutually mistaken as to the existence of potential wetlands violations. "A mutual mistake occurs when both parties are under substantially the same erroneous belief as to the facts." Mutual mistake is determined by evaluating the facts as they existed at the time the release was signed. The Release in question "unambiguously releases Defendants of liability for all claims, including those which were known or unknown, suspected or unsuspected, past, present, and future." As such, the Court was not persuaded by Plaintiffs' arguments that the parties did not intend to release Defendants of future unknown claims. "The Release plainly covers the claims that Plaintiffs now raise, which, the Court notes, were not wholly unforeseeable. The alleged failure of the parties to understand the scope and effect of the Release, despite the unambiguous language, does not support a finding of mutual mistake."

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Seth Niederman is an attorney with the law firm Fox Rothschild LLP. Seth practices in Fox Rothschild's Wilmington, Delaware office. You can reach Seth at 302-622-4238, or sniederman@foxrothschild.com.

Last week, the bankruptcy estate of Orleans Homebuilders filed over 250 complaints to recover alleged preferential transfers (see our previous post on the Orleans bankruptcy here, as well as a post on bankruptcy preference actions here).  A large number of the complaints were filed against materialmen, subcontractors, suppliers and industry related professionals.  Those that were named in a suit may be asking what happens next.

First, Orleans will need to serve the complaint.  Typically, service will occur by certified mail. Based upon a Procedures Order previously entered in the Orleans bankruptcy, service must occur within 180 days of filing the Complaint.  An answer is due within 30 days of service, however this deadline may be extended by the parties by up to 90 days.  After an answer is filed, the Procedures Order requires that the parties participate in a mediation process, which is an attempt to resolve the matter outside of Court.  The Procedures Order provides a list of potential mediators to chose from.  Mediations are to occur in Wilmington, Delaware and require that counsel and a party representative attend the mediation in person, however the mediator and the parties may agree to allow a party representative to appear telephonically.  Those matters that are not resolved at mediation will proceed through discovery and eventually the Court will enter a trial scheduling order.

Although suits have now been filed, the Procedures Order does permit significant time extensions, which may allow the parties to discuss defenses and possible settlement.  Notably, although settlement of claims in bankruptcy typically require Bankruptcy Court approval, the Procedures Order provides that settlement of claims less than $500,000 do not require Court approval.

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Seth Niederman is an attorney with the law firm Fox Rothschild LLP. Seth practices in Fox Rothschild's Wilmington, Delaware office. You can reach Seth at 302 622 4238, or sniederman@foxrothschild.com.

On January 18, 2012, Armstrong County, PA Judge Kenneth G. Valasek ruled that the construction of an addition to a house may be a "home improvement" and therefore governed by the Home Improvement Consumer Protection Act ("HICPA"). Click here for a pdf of the law.

Judge Valasek was ruling on preliminary objections in the case of Gelacek v. Lunz, Armstrong County Court of Common Pleas, Docket No. 2011-0745.

The parties have alleged that this is the first decision on HICPA since its inception in 2009, and there was no other case law interpreting HICPA.

In this matter, the Plaintiffs (the homeowners) alleged the contractor violated HICPA by increasing the total price for construction of the addition by almost $170,000 without getting a signed written change order from the homeowners.

The contractor alleged that because the definition of "home improvement" did not contain the word "addition" and that the "construction of a new home" is specifically excluded from the act that the construction of an addition was not covered under HICPA.

The Court disagreed and held that an addition is not the construction of a new home. The definition for home improvement is quite expansive and includes:

"repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting" and

"Construction, replacement, installation or improvement of driveways, swimming pools, pool houses, porches, garages, roofs, siding, insulation, solar energy systems, security systems, flooring, patios, fences, gazebos, sheds, cabanas,....painting, doors and windows and waterproofing."

73 P.S. Section 517.2.

Certainly the drafters of HICPA intended the definition of home improvement to be quite expansive. Based on this definition, I was actually surprised that someone would even make the argument that an addition was not considered a home improvement under HICPA.

HICPA goes on to provide exclusions such as the construction of a new home, work by a landscaper that doesn't involve real construction. So the landscaper that mows your lawn would not need to comply with this law.

What else could possibly be done at a residential home that is NOT a home improvement?

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Julie D. Goldstein is an attorney with the law firm Fox Rothschild LLP.  Julie practices in Fox Rothschild's Warrington, PA office. You can reach Julie at 215-918-3558 or jgoldstein@foxrothschild.com

Villanova University proposes to expand its campus to include four additional residence halls, a performing arts center, retail space, and an 1,800-vehicle parking garage.  Villanova estimates that the proposed expansion will involve expenditures of more than $200 million.  The proposed expansion calls for construction on the main parking lots adjacent to Lancaster Avenue.

As referenced in the linked Philadelphia Business Journal article, the project is in its early stages.  Detailed plans for the proposed project can be found on Villanova's website.  The tentative timeline for the project calls for starting the construction of the new parking garage in May 2013 and completing it within one year.  Villanova anticipates beginning construction of the new residence halls in May 2014.

This significant construction project, if it moves forward, is great news for the industry in the Delaware Valley.  It also is great news for the students and alumni of a great university (in the interest of full disclosure, the author admits to attending law school at Villanova).  We will keep you updated on the progress of this project.