Philadelphia Construction Law Blog

We covered the coming changes to Pennsylvania’s Mechanic’s Lien Law at our most recent Seminar Series program. As a follow up to that presentation, the following is a primer on the coming changes.

A plethora of laws have been passed in recent years attempting to put more strict regulation on the construction industry – particularly residential construction – as it relates to payment and fraud. While there are voices on both sides of the debate as it relates to whether the laws are necessary and reasonable, there should be little doubt that the repercussions for failing to heed the recent trend are potentially serious.

n an opinion issued in July, the Pennsylvania Supreme Court categorically declared the award of attorneys’ fees and penalties under the Pennsylvania Prompt Pay Act to be discretionary. While the statute itself contains language which suggests such an outcome, the Court’s decision in Scott Enterprises, Inc. v. City of Allentown formally settles an issue which many construction practitioners understood differently and argued differently in litigation.

One of the most misunderstood concepts in construction contracts is the interplay between indemnification clauses and the immunity provided for employers under the Pennsylvania Workers’ Compensation Act. Because it is almost always the case – emphasis on almost – contractors and subcontractors assume they are immune from further liability as soon as payments are made to an injured employee under the workers’ compensation policy. The statute and Pennsylvania case law, however, say otherwise.

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.

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.

While it’s not a change in the law, a recent holding by the Pennsylvania Superior Court provides a friendly reminder to suppliers in the construction industry. When goods are being sold, the UCC applies; and, importantly, terms and conditions in prior offers not included in the accepted offer are not part of the agreement.

A recent Pennsylvania Commonwealth Court opinion indicated a possible change in how the Court’s view certain construction related claims under the Public School Code in Pennsylvania. In F. Zacherl, Inc. v. Flaherty Mechanical Contractors, LLC, the Court ruled that an agreement with a completion contractor to finish the original prime contractor’s scope of work did not require separate approval from the School Board.

Pennsylvania House Bill 1357 is presently before the Professional Licensure Committee in the House of Representatives. The legislation, which is scheduled for a committee hearing next month, would impose a state wide licensure system on the plumbing trades in Pennsylvania if passed.

Although regular risk assessments and re-evaluations of insurance coverage are generally a good idea, it’s not uncommon for construction companies to take the approach of renewing their existing insurance policy when it comes up for renewal. Some policies – particularly specialty policies – have renewal clauses in them that sophisticated companies should be aware of when renewing their insurance though. A recent decision by the Third Circuit Court of Appeals in Philadelphia sheds some light on this issue.