Construction Contracts

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

Two Construction Workers Discussing at construction site

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

big bulldozer removing snowThe 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

Drain pipe with frozen stream of water near brick wall of a cottage outdoors in winterCo-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

Construction lawyers routinely deal with delay claims. I have presented or defended more of them than I can remember.  That is why I was curious when, earlier this year, I received a series of email invitations to presentations on the use of “concurrent delay” as a defense to contractor or owner claims for delay damages on construction projects.  I’ve written about the subject in the past and wondered what, if anything, had changed.

Continue Reading A Myth About Delay – Revisited

Co-authors: Russell Jumper and Tim Fandrey

Hurricane Harvey caused severe destruction in Texas with its significant winds and historic rainfall. But Harvey may also prove to be a costly lesson for many project owners and contractors. As Texas begins to focus on recovery in the coming weeks, Harvey will further serve as a reminder to all construction industry stakeholders that hurricanes, and other “acts of God”, are risks that must be effectively managed during the pre-construction and construction phases of every project. While it is difficult to effectively avoid the risks attendant to a highly-destructive, low probability event that occurs on short notice, owners and contractors have two primary tools at their disposal to mitigate the effects of such an event: (i) contractual force majeure provisions; and (ii) builder’s risk insurance.
Continue Reading Softening a Hurricane’s Blow: Force Majeure and Builder’s Risk