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Philadelphia Construction Law Blog

$45 Million Project Proposed In Allentown

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

The Neighborhood Improvement Zone, otherwise known as the "NIZ" in the Lehigh Valley, is serving as the springboard for another large development in downtown Allentown. J.B. Reilly is planning to build a $45 million 12 story office project in the NIZ by 2018.

Called Tower 6, the project will be built at the corner of Hamilton and Sixth Streets in Allentown. The plan presented to the Allentown Neighborhood Improvement Zone Development Authority Board calls for 145,000 square feet with 11 floors of office space. The ground floor is presently designed to contain retail space that would make the project mixed use.

This project presents one of the first new construction office spaces within the NIZ. Plans will be submitted separately to Allentown's Planning Commission and site plans are already begin developed.

A quick fix to help the construction industry make more money

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

People working in the construction industry, like any other business enterprise, are in it to make money. While some enjoy their work and get "payment" in the form of loving what they do, we don't need to take a poll to know that participants in the construction industry would all be agreeable to making more money.

IRS Logo.pngThe numbers suggest that the construction economy is recovering since the crash in 2008. It remains a matter of debate among the experts as to the rate of the recovery and whether it has recovered completely. If one were to rely on circumstantial evidence though, it would seem safe to assume that the recovery has not proceeded at a rate that anyone prefers. This might be due to one simple fact: taxes.

A recent Treasury Department report ranks the construction industry as having the highest effective tax rate of any industry. The construction industry pays an effective corporate tax rate of 30.3%. The majority of other corporations pay closer to a 23% rate. This results from various tax breaks provided to other industries to lower the statutory corporate tax rate of 35%. This rate discrepancy becomes even more pronounced when one considers that many construction companies are S-Corporations that file their "corporate returns" as part of their personal tax returns.

OSHA Hits New Jersey Builder With Huge Fine

Posted by:  Josh Quinter (jquinter@kaplaw.com)

OSHA logo.pngThe Occupational Safety and Health Administration announced on April 7, 2016, that it was levying a huge fine on New Jersey contractor Berlin Builders. The citations and fines relate to multiple projects, the two most recent of which are the Springford Estates development in Limerick Township, Pennsylvania, and the American House project in Perkasie.

Citing multiple violations relating to fall hazards and fire risks, OSHA imposed fines and penalties of $385,836 on Berlin. Among the problems alleged to have been uncovered at the inspection were a failure to provide fire extinguishers for employees where flammable liquids were being used, an unprotected floor opening while employees were framing a 3 story building, and misuse of a ladder. According to the news reports, OSHA imposed heavy fines on Berlin because it is a repeat offender in multiple jurisdictions.

This represents another example of OSHA's increased work site enforcement activity to ensure worker safety. Employers should be taking affirmative steps to ensure their employees are working safe and following OSHA guidelines, as an employee that goes home safely each night will arrive the next day for work; and employers should also be prepared to demonstrate what they are doing to ensure safety when OSHA inspectors arrive on site in order to avoid enforcement actions.

Villanova Was Philly Strong

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

The City of Philadelphia and its people take a great deal of pride in any number of things - and rightly so. From great food and fantastic culture to a history older than America itself, there is so much to appreciate about the place we call home. But ask any Philadelphian what they are most proud of and they will tell you, perhaps in their own way, it's the City's indomitable spirit.

Villanova logo.pngLast night, the Villanova Wildcats men's basketball team embodied that spirit and showed it to the world. The North Carolina Tarheels were bigger, faster, and more talented according to all the pundits. To be fair, no one claimed Villanova did not belong in the title game; but most thought the coronation of North Carolina was imminent. They were just too good.

But the people that had the most to say about that - the Villanova players - had yet to have their say. And did they ever have their say.

Pennsylvania School Construction Spending Still An Issue

Posted by:  Sandy Feltes (sfletes@kaplaw.com)

Funding for public school construction and maintenance projects has been delayed by the months- long budget gridlock in Pennsylvania. Although the Commonwealth's budget was recently approved, a related funding bill providing for more than $306 million in construction reimbursements due to Pennsylvania school districts was vetoed. School districts may now be faced with getting, or extending, financing for past and ongoing construction projects until legislation authorizing the reimbursements is finalized. It is unclear how this may affect future construction projects planned by Pennsylvania schools.

DO NOT DISREGARD CONTRACT-MANDATED MEDIATION CLAUSES

Posted by:  Robert Korn  (rkorn@kaplaw.com)

Many contracts provide that before a party can arbitrate or litigate a dispute, a mediation must occur. Often a party will choose not to submit a dispute to mediation believing that a mediation will not resolve the dispute. Many parties proceed directly to arbitration or litigation, dismissive of the contract language requiring mediation.

mediation clause.jpgIn MB America, Inc. v. Alaska Pacific Leasing Company, a decision of the Nevada Supreme Court, the lower court dismissed the Plaintiff's lawsuit because it had not first submitted the dispute to mediation as required by contract. The parties' contract provided that if the mediation does not result in a resolution of the dispute, then either party has a right to enforce the terms of the contract through litigation. In dismissing the Complaint, the Supreme Court, referring to the law of other jurisdictions, said that a pre-litigation mediation provision in the parties' contract is an enforceable condition precedent to the right to litigate. Because no mediation occurred, the Complaint was dismissed.

While Pennsylvania courts may stay litigation pending the outcome of a mediation, it is important that a party not unilaterally decide to ignore the obligation to mediate. Instead, if a party believes that mediation will be a futile exercise, it should attempt to secure from the other party a written waiver of the contract language requiring pre-ligation/arbitration mediation.

Construction of the Constitution Pipeline Delayed

Posted by:  Andy Cohn  (acohn@kaplaw.com)

The developer of the Constitution Pipeline, designed to carry natural gas from the Marcellus Shale areas in northeastern Pennsylvania to New York State and New England, has been delayed. The pipeline was to have been placed in service by the end of this year, but now will not be completed until at least the second half of 2017. The 124 mile pipeline would help ease a shortage of pipelines carrying abundant natural gas from Northeastern Pennsylvania to customers in New York and New England. When constructed, it would be the first direct path linking the Marcellus basin with New York and New England consumers.

The current reason for the delay is the developer's inability to complete tree cutting by a March 31 federal deadline that was designed to protect migratory birds. However, the pipeline has also been delayed by residents in Susquehanna county who have opposed eminent domain proceedings to access land for the pipeline construction and because of problems securing water quality certificates from New York State and the U.S. Army Corps of Engineers.

COURT CLARIFIES REQUIREMENTS FOR A CONTRACTOR'S MISREPRESENTATION CLAIM AGAINST A DESIGN PROFESSIONAL

Posted by:  Andy Cohn  (acohn@kaplaw.com)

In a recent decision, the Pennsylvania Superior Court clarified the legal requirements for a contractor's direct claim for economic losses against a design professional caused by defective design. In Gongloff Contracting v L. Robert Kimball & Associates, a sub-subcontractor steel erector brought an action directly against a public project design professional (Kimball) for "misrepresentations" in the design documents. Gongloff claimed that the architect/engineer's structural design was inadequate in that the steel roof structure and trusses could not safely sustain all required construction loads. As a consequence of those deficiencies, project shutdowns ensued, and multiple change orders were issued resulting in substantial additional cost to Gongloff. When the steel subcontractor and general contractor refused to pay those additional costs, Gongloff commenced an action against the design professional.

In 2005, the Pennsylvania Supreme Court had held (for the first time) in the Bilt-Rite Contractors case that a contractor could bring a direct claim for purely economic losses against a design professional caused by design defects based on a theory of "negligent misrepresentation" in the design documents, even if the contractor did not have a direct contract with the design professional. But decisions subsequent to Bilt-Rite had suggested that the negligent misrepresentation needed to be "explicit" in order to support such a claim.

In Gongloff, the design professional claimed that the subcontractor's claim against it did not allege an "actual" or "explicit" misrepresentation. In other words, the design professional claimed that an allegation only that the design itself was deficient was alone legally insufficient to assert a Bilt-Rite claim.

Kaplin Stewart Construction Lawyers Quinter and Corbett to Speak at National MBCEA Conference

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

The Metal Building Contractors and Erectors Association will be hosting its annual national conference in Clearwater Beach, Florida, in May. We are pleased to announce that both Josh Quinter and Karin Corbett of our Construction Law Department will be speaking at the convention.

Thumbnail image for Josh Quinter.jpgMr. Quinter, a partner at the firm, will be presenting two programs. The first, entitled "Leading the Way - Leadership Skills For Effective Management", will focus on strategies and skills company leaders can use to develop an innovative and constructive culture that positively impacts employee productivity and, ultimately, revenue. A second program called "Document Your Project" will be presented for the benefit of field personnel to emphasize the importance of documenting the project and how best to accomplish this goal.

Thumbnail image for Karin Corbett.jpgMs. Corbett will provide a program on the key construction contract clauses that are typically the subject of litigation. Topics will include payment clauses, insurance and indemnity, and change orders. Ms. Corbett's program is entitled "Contract Clauses That Kill".

The Metal Building Contractors & Erectors Association serves participants in the metal building industry, including contractors, erectors, and suppliers. Its goal is to provide exceptional training and education that allows its members to succeed and raises the profile of the metal building industry.

Kaplin Stewart Now Has a Surety Blog!

Posted by:  Josh Quinter  (jquinter@kaplaw.com)

At Kaplin Stewart, we strive every day to add value to the businesses of our clients and potential clients.  We are thrilled to announce the start of another one of these efforts - our construction surety law blog!  The surety industry is one which we represent regularly; and we believe that it is a niche with specific issues that merit a special comment from time to time.  So we hope you will read the blog and join the conversation.

Take a look at the blog at http://www.philadelphiasuretylawblog.com/ and let us know what you think!

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