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September 2015

Construction Law Update

Third Quarter 2015

Gordon & Rees's Construction Group is pleased to publish the latest issue of our Construction Law Update, a quarterly take on trends of interest to design professionals, contractors, and developers throughout the country.

  1. Increased Regulations and Potential Pitfalls in a Drought State

  2. A Note from the Field: Sureties Beware of Attempts to Extend the Miller Act’s One Year Limitation Period Using the Reaching Back Doctrine

  3. Show Me the 998 Money – Under New California Law, Who Pays the Post-998 Expert Fees and Costs is Irrelevant

  4. Gordon & Rees Construction Attorneys Making Headlines

  5. Gordon & Rees Construction Law Blog

  6. About Gordon & Rees's Construction Group

I. Increased Regulations and Potential Pitfalls in a Drought State
By Kimberly A. Blake

As the drought in California and across the West Coast continues, the construction industry faces new regulations and environmental risks. Although the drier weather prolongs the building season and the strong rebound of the housing market offers large rewards for the bold, the construction industry in California should be wary of the regulations and drought-related risks described below.

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

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II. A Note from the Field: Sureties Beware of Attempts to Extend the Miller Act’s One Year Limitation Period Using the Reaching Back Doctrine
By Ronan J. McHugh and Gobriella M. Davis

While it is well settled that the one year period for the filing of a Miller Act payment bond lawsuit may be extended in only very limited circumstances, if at all, in a recent case in which we were involved, a subcontractor raised the doctrine of relating back to assert that its late-filed Miller Act suit was valid. This was done in order to leverage a settlement. As extension of the Miller Act’s one-year deadline for payment bond suits alters the risk profile of projects both for sureties and general contractor indemnitor, attempted application of the relating back doctrine - a federal rules of civil procedure rule - particularly if it allows litigation to continue with its attendant costs, is worthy of note, if only to discredit it as a shameless red-herring assertion in most jurisdictions. And, to recommend to sureties who may be considering interpleading bond money into a court to think about waiting until after one year has expired from the last date of work and supplies before doing so - assuming they can do so without becoming subject to bad faith arguments. Doing such, may make it virtually impossible, even in those minority jurisdictions where relating back is acknowledged on affirmative positive counterclaims, for Miller Act bond claimants to leverage the theory for settlement or to preserve litigation. In sum, put the burden on the claimant, as the Miller Act intended it, to file timely.

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

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III. Show Me the 998 Money – Under New California Law, Who Pays the Post-998 Expert Fees and Costs is Irrelevant
By Christine D. Barker

California Code of Civil Procedure (“CCP”) section 998 is a nifty cost transferring tool wherein if an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment, the plaintiff cannot recover their post-offer costs and instead must pay the defendant’s costs from the time of the offer. Such “costs” also may include expert fees and costs actually incurred and reasonably necessary. Ordinarily, one would assume that the phrase “actually incurred” meant actually incurred by the offeror. According to a recent California Court of Appeal opinion, such is not the case. Apparently an offeror can recover expert fees and costs paid by a third party.

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

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IV. Gordon & Rees Construction Attorneys Making Headlines

Gordon & Rees recently acted as counsel in a $110 Million Government-to-Government contract for a port infrastructure project in west Africa.

Gordon & Rees acted for defendants in TJGEM LLC v. Republic of Ghana, et. al., where the U.S. Court of Appeals for the District of Columbia affirmed the lower court’s decision to dismiss Plaintiff’s $500 Million suit relating to a construction project in Ghana.

Gordon & Rees successfully settled an interpleader matter pending in the SDNY relating to payment bond proceeds concerning a U.S. Army Corps of Engineers project in Afghanistan. The matter involved twelve bond claimants with claims of $15 Million against a $5.3 Million bond. Gordon & Rees secured for two clients nearly half the bond proceeds.

Gordon & Rees successfully overturned a pre-existing default ruling against a client in Gilbane Federal v. United Infrastructure Projects FZCO in the U.S. District Court for the Northern District of California in connection with a NAVFAC project in Djibouti.

Gordon & Rees successfully settled an outstanding debt owed and payable to a client, a provider of solar modules, on a project. By filing a mechanics lien, a UCC 1 statement, and with litigation about to be filed, our client secured 100% recovery on the amount due, plus legal fees, plus interest.

Gordon & Rees Philadelphia associate, Joshua H. Romirowsky, will speak at an upcoming legal expert discussion titled, "Understanding Risk & Liability Issues in Residential Construction." The discussion will address key liability issues for businesses, developers and investors involved in residential construction. More

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V. Gordon & Rees Construction Law Blog

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’s Construction Law Blog provides insight on the issues that affect the construction industry now.

We invite you to visit the blog at 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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VI. About Gordon & Rees's Construction Group

Gordon & Rees's Construction Group consists of more than 80 lawyers covering the nation in 35 offices. In 2014, the firm opened offices in Oakland, Calif.; Tampa, Fla.; and Birmingham, Ala.

Gordon & Rees’s 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 Tom Cronin.

Thomas G. Cronin
Gordon & Rees, LLP
1 North Franklin
Suite 800
Chicago, IL 60606
(312) 980-6770

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