Category: Construction

Appellate Division Affirms: Binding Dispute Resolution Provisions in Standard AIA Construction Contracts Are Enforceable

In a recent unpublished opinion, the New Jersey Appellate Division held that an agreement to arbitrate set forth in the binding dispute resolution provision in a standard form American Institute of Architects (AIA) construction contract between a condominium association and contractor was enforceable. The binding dispute resolution provision appears in the AIA standard form as a series of checkboxes in which the parties may select arbitration, litigation, or another dispute mechanism by placing an “X” in one of the boxes. The AIA standard form also contains language that applies if the parties have selected arbitration as the method of binding dispute resolution, including the rules for conducting that arbitration and finalizing an award. Arbor Green Condo. Ass’n, Inc. v. Start 2 Finish Restoration & Bldg. Servs., LLC et al. arose out of Start 2’s alleged deficient workmanship under a construction contract to restore two buildings damaged by a storm, which resulted in Arbor Green terminating the contract. Start 2 subsequently filed two construction liens and two demands for arbitration (one for each building) in accordance with the selected dispute resolution method in the parties’ AIA form agreement. Arbor Green failed to answer the demands for arbitration, resulting in awards in Start 2’s favor. Start 2 then filed two orders to show cause and verified complaints that...

Governor Murphy Signs Executive Order Number 142 Allowing Resumption of Non-Essential Construction, Curbside Pick-Up from Non-Essential Retail Stores, and Gatherings in Vehicles

Given the decrease in the rate of reported new cases of COVID-19 in New Jersey, on May 13, 2020, Governor Phil Murphy signed Executive Order Number 142 (2020) (“EO 142”) permitting, among other things, the resumption of non-essential construction, curbside pickup at non-essential retail businesses, and gatherings in vehicles. The construction and non-essential retail provisions of EO 142 went into effect at 6:00 a.m. on Monday, May 18, and the provisions allowing for gatherings in vehicles took effect when the order was signed on May 13. EO 142 is part of New Jersey’s “Road Back” strategy to begin the careful restart of the economy. Resumption of “Non-Essential” Construction and Requirements for All Construction Projects While Governor Murphy’s Executive Order Number 122 (“EO 122”) allowed only “essential construction projects” to continue, subject to adhering to certain restrictions, EO 142 provides that all construction projects in New Jersey (“essential” and “non-essential”) may proceed, provided they adopt policies that include, at minimum, the following requirements: Exclude non-essential visitors from the worksite. Restrict project meetings and workgroups to fewer than ten individuals. Follow social distancing requirements of six feet or more distance between individuals wherever possible, including when picking up or delivering materials or equipment. Stagger work start and stop times and lunch breaks where practicable. Identify congested and...

Governor Murphy Signs Executive Order Number 122 to Cease All Non-Essential Construction Projects and Impose Additional Mitigation Requirements

On April 8, 2020, New Jersey Governor Phil Murphy signed Executive Order Number 122 (2020) (“EO 122”), which marks the twenty-first consecutive Order issued in response to the COVID-19 pandemic. EO 122 requires all non-essential construction projects to cease and imposes additional mitigation requirements on essential retail businesses, construction projects, and industries to reduce the rate of community spread of COVID-19 in New Jersey. EO 122 took effect beginning at 8:00 p.m. on Friday, April 10, 2020 (the “Effective Date”), and remains in effect until revoked or modified by the Governor. “Essential” vs. “Non-Essential” Construction Projects and Requirements for Manufacturing and Warehousing Businesses and Essential Construction EO 122 requires the physical operations of all “non-essential” construction projects to cease as of the Effective Date but, subject to certain requirements discussed below, allows “essential construction projects” to continue. “Essential construction projects” is defined broadly to include the following 14 categories of projects: Healthcare projects at hospitals, other healthcare facilities, and pharmaceutical manufacturing facilities Transportation projects involving roads, bridges, airports, seaports, and mass transit facilities or physical infrastructure Utility projects Residential affordable housing projects Schools projects from kindergarten through higher education Projects already started involving individual single-family homes or apartments already occupied, with a construction crew of five or fewer Projects already started involving residential homes or...

Governor’s New Executive Order Halts Non-Essential Construction Projects Throughout New Jersey

On April 8, 2020, Governor Murphy issued Executive Order 122 (EO 122), which further limited non-essential business operations throughout the state during the COVID-19 pandemic. This Executive Order halts all non-essential construction as of 8:00 PM on Friday, April 10, 2020. The Executive Order expressly identifies those limited projects that may continue construction during the state of emergency. Of note, these include: Projects necessary for the delivery of healthcare services, including, but not limited to, hospitals, other healthcare facilities, and pharmaceutical manufacturing facilities Transportation projects, including roads, bridges, and mass transit facilities or physical infrastructure, including work done at airports/seaports Utility projects, including those necessary for energy and electricity production and transmission, and any decommissioning of facilities used for electricity generation Residential projects that are exclusively designated as affordable housing Schools projects Projects involving single-family homes that are under contract, or a project underway on a single-family home or single apartment where an individual already resides Projects involving facilities for the manufacture, distribution, storage, or servicing of goods sold by online retailers or essential retailers Projects involving data centers or facilities that are “critical” to a business’s ability to function Projects necessary for the delivery of essential social services, including homeless shelters Projects necessary to support law enforcement agencies or first responder units in response...

New Jersey Department of Community Affairs Temporarily Relaxes Construction Code Provisions Relating to Minor Work, Inspections, and Certificate Requirements

In response to the COVID-19 pandemic, Governor Phil Murphy issued Executive Order No. 107 (“EO 107”) on March 21, 2020, mandating that all non-essential brick-and-mortar retail businesses close to the public as long as EO 107 remains in effect. EO 107 does not require closure of construction projects. Not only does EO 107 identify “construction workers” as an example of employees who need to be physically present at their work sites in order to perform their duties, but also, shortly after issuing EO 107, Governor Murphy sent a tweet confirming that work at construction sites may continue. On the same date that Governor Murphy issued EO 107, he issued Executive Order No. 108 (“EO 108”), which provides that local officials may not enact or enforce rules or regulations that conflict with EO 107. Although work at construction sites continues in New Jersey, there are myriad ways in which construction projects can be adversely impacted by the COVID-19 virus. One potential impact concerns ongoing inspections of construction work performed by local construction code officials pursuant to the Uniform Construction Code (UCC), N.J.A.C. 5:23. Construction code officials routinely inspect ongoing projects at various points during construction and issue Certificates of Occupancy for structures when requirements for same are satisfied. From a legal perspective, as a result of...

Preparing for and Addressing Potential Impacts of COVID-19 on the Construction Industry

As the number of COVID-19 cases increases exponentially in the United States, the impact on the construction industry will inevitably continue to rise. Although projects in many states continue to progress at this time, some jurisdictions have taken drastic measures. For example, the Pennsylvania Department of Transportation recently suspended all construction projects until further notice in response to COVID-19. Similarly, all construction projects in Boston were ordered to stop for at least 14 days. In addition to shutdowns that may possibly be imposed by potential government action in response to the virus, ancillary issues could adversely impact parties to a construction project and the labor, goods, services, and materials used on projects. Such issues may include disruptions to construction supply chains in the U.S. and abroad, employees becoming ill and under quarantine, a workforce adjusting to changes resulting from school closings and other evolving societal changes flowing from COVID-19, and a rapidly changing and uncertain economic situation. While the current situation is essentially unprecedented, there are some actions parties in the construction industry can take to help prepare for, and address, potential impacts to their business and ongoing projects. Review Construction Contracts: Whether it is a standard form construction contract such as those published by the American Institute of Architects, a contract that has been...

Pennsylvania Supreme Court Holds that General Contractor was Immune from Suit by Employee of Subcontractor Under Workers’ Compensation “Statutory Employer” Doctrine

In a case which has attracted a great deal of attention from construction and insurance industry groups, and prodded the filing of numerous amici curiae briefs, the Pennsylvania Supreme Court in Patton v. Worthington Associates, overturned a $1.5 million jury verdict and ruled in favor of the defendant general contractor based on the “statutory employer” immunity doctrine under Pennsylvania’s Workers’ Compensation Act (the “Act”).

New Jersey Appellate Division Issues Two Opinions Clarifying Local Public Contracts Law

In recent months the New Jersey Appellate Division issued two opinions clarifying aspects of the New Jersey Local Public Contracts Law, which generally mandates that contracts above a specified amount be awarded by municipalities to the lowest responsible bidder after public advertising for bids and bidding, N.J.S.A. § 40A:11-4, and also sets forth specific, non-waiveable bid requirements, the absence of which will result in a per se disqualification of the bid. N.J.S.A. § 40A:11-23.2.

New Jersey’s Prompt Payment Act Does Not Apply to Contracts for the Upkeep and Maintenance of Land

New Jersey’s Prompt Payment Act (“PPA”) can be a valuable tool available to contractors, subcontractors, sub-subcontractors, and product suppliers that are owed money on New Jersey construction projects, as aggrieved parties can recover interest on unpaid amounts at prime plus one (1%) percent in the event payment is not made within the time period provided by the PPA and attorneys’ fees. N.J.S.A. § 2A:30A-2. In TBI Unlimited, LLC v. Clearcut Lawn Decisions, LLC, the United States District Court for the District of New Jersey considered the scope of the PPA, which is only the subject of a handful of written opinions.

Expert Witness Selection: Choosing an Expert Without the Right Experience Can Be Fatal to a Claim

The selection of an expert witness can be critical to the outcome of a construction dispute. A well-qualified and strong expert witness can be essential to a party prevailing on its claim or defense. Conversely, as the recent New Jersey Appellate Division decision in Wellinghorst v. Arnott, highlights, retaining the wrong expert can have significant negative consequences and potentially result in the dismissal of a claim.