The private and public prompt pay acts both provide contractors and subcontractors with the right to stop work if an owner or upstream contractor fails to pay an undisputed amount. With H.B. 3485, the Texas legislature has now extended this right when the contractor or subcontractor is waiting on large dollar value change orders.
Continue Reading Texas Legislature Expands Suspension Rights Under the Prompt Pay Acts
Orignally published in ABC Houston’s Build Houston Magazine
Construction companies spend countless hours drafting agreements requiring indemnification and insurance for their projects. These obligations are prevalent for all tiers of construction industry members— from subcontractors and suppliers, to project owners. The purpose of this article is to address some considerations in anticipation of a claim being made after an incident on a construction project.
Continue Reading Basic Indemnity and Insurance Considerations in the Construction Context
Co-author: Stephanie Snyder-Zuasnabar
In James Construction Group, LLC v. Westlake Chemical Corporation, the Texas Supreme Court clarified the standard necessary to satisfy notice provisions in a construction contract. The Court’s opinion reached two key holdings: (1) substantial compliance is sufficient to satisfy a party’s obligation under a contractual notice requirement; (2) however, if the contract requires written notice, then the notice must be in writing to substantially comply even when there is actual notice. This opinion is important for the construction industry because it clarifies a gray area, and unequivocally enforces contract provisions requiring written notices. This opinion illustrates the importance of complying with notice provisions and the consequences of failing to do so. The owner’s failure to comply with notice provisions deprived it of more than one million dollars in damages awarded by a jury.
Continue Reading Texas Supreme Court: Actual Notice Does Not Satisfy Written Notice Requirement
One the most litigated or disputed issues in construction is that of the change order. Almost every experienced contractor has dealt with either defending against or pursing change orders relating to additional work, time and costs since owners asking for extra or changed work in the midst of a lump sum project is not an unusual occurrence. But, what happens when the owner thinks that the work is already within the scope of the project and won’t approve a change order to pay more?
Continue Reading The Change Order Conundrum
Co-author: Trenton Patterson
It has been months since you have been paid and the general contractor or the owner continues to demand that you perform extra work, perform in changed conditions or work on a compressed timeline with no promise of payment in sight. At this point you have a decision to make. Do you continue to perform work and submit claims for the extra work and changed conditions? Or do you suspend work or terminate the contract?
Continue Reading To Perform or Not Perform, That is the Question
The winter storm that brought snow, freezing temperatures, power outages, frozen water lines and bursting pipes to Texas, shutting down most construction projects in the process, forced many contractors and owners to take a look that their contracts to determine who is responsible for the ensuing delays and the costs to repair any damage.
Continue Reading Excusable Delay and Builder’s Risk: A Reminder to Weatherproof Your Contracts
Co-author: Trevor Lawhorn
As evidenced by the unprecedented arctic weather last week and the resulting fallout, emergency construction services are essential. Freezing temperatures, hurricanes, tornadoes and other natural disasters lead to a high demand for remediation and reconstruction services. Contractors are often best positioned to provide the necessary emergency construction services to rebuild businesses, residences and communities. Emergency contractors must always be mindful of certain laws that impact how they conduct business after a disaster. Understandably, Texas has implemented a number of laws to protect disaster victims against predatory or otherwise unsavory business practices. Here are a few essential Texas laws that both owners and contractors must consider when contracting for emergency construction services.
Continue Reading Texas Laws Emergency Contractors Must Know
The general prohibition against waiving lien rights under Chapter 53 of the Texas Property Code has been written about extensively, and is well known through the industry. However, the Construction Trust Fund Act (Ch. 162 of the Texas Property Code) does not contain any such prohibition. From the Act itself, it is not clear whether construction trust fund rights can be waived or not. Less than two years ago, the Texas Fourteenth Court of Appeals considered this issue, among several others, in Mesa Southern CWS Acquisition, LP v. Deep Energy Exploration Partners, LLC. In that case, the Court considered the following provision:
Continue Reading Can the Trust Fund Act be Waived?
Co-author: Trevor Lawhorn
Published in Build Houston Magazine
When non-payment occurs, suppliers and service providers often first seek relief by suing for breach of contract. Unfortunately, many companies are undercapitalized or otherwise “judgment proof.” A personal guaranty might mitigate this risk by providing an additional target, but guarantees are often difficult to obtain. Even if one is signed, the guarantors may lack assets, perhaps deliberately so. Judgement proof debtors and guarantors are especially frustrating when the case involves misappropriations of construction project funds or wrongful transfers of assets. Texas law provides at least two statutory tort claims in these circumstances: the Texas Uniform Fraudulent Transfer Act (TUFTA) and the Texas Construction Trust Funds Act (the Trust Fund Statute).
Continue Reading Establishing Personal Liability Without a Guaranty
Co-authors: Russell Jumper and Tim Fandrey
Published in Cleaning & Restoration Magazine
Just as the Texas coast assessed the magnitude of Hurricane Harvey’s damage, Hurricane Irma was taking shape in the Atlantic. Fewer than two weeks later, Irma would crash into the Florida Keys. Estimates put Harvey and Irma’s combined impact in excess of $275 billion. No small part of that amount will be required for cleaning and restoration services. Before Irma made landfall, even as Harvey hovered over the Houston area, restoration professionals from around the country arrived along the Texas coast to kick-start Texas’ recovery. For the people who lost their homes, possessions, and even family or friends, the focus turned to recovery. For some of the restoration professionals who helped, and continue to help, a second storm is forming: owner and insurer payment disputes. Like boarding up windows and setting out sandbags, there are some steps cleaning and restoration professionals can take in an effort to minimize the damage from the approaching payment dispute storm.
Continue Reading The Storm After the Storm