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Construction Consultant Permitted to Pursue Unjust Enrichment Claim against Homeowner

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The Superior Court of Pennsylvania, in a "non-precedential" opinion, recently remanded a case to allow a construction consultant to pursue a claim for unjust enrichment against a homeowner, in spite of the lack of either a written or oral contract between the parties.

In Karden Construction Service, Inc. v. D'Amico, 1351 MDA 2015 (Pa. Super. 2016), the court found that plaintiff had no claim against a homeowner for litigation support services rendered to plaintiff's counsel. The court held that the attorney for plaintiff retained the consultant for that purpose and accordingly there was a contract between the attorneys and plaintiff for that retention. Moreover, the court held the litigation was still pending so there could be no claim for those services based on an unjust enrichment claim. However, the court remanded the case to the trial court to proceed on an unjust enrichment claim for services that plaintiff rendered directly to the homeowner defendant that were unrelated to the litigation but were in the nature of construction management of the work on the homeowners new home.

A Quick Look into the Statutory Employer Defense

Reiner, Amber 143 .jpgIn a recent case filed in the US District Court for the Middle District of PA, a general contractor and subcontractor agreed to pay $1.2 million to settle claims after a worker fell at a construction site. In short, the plaintiff fell while walking across a 17 foot high wall on a construction site on the Misericordia University campus in Luzerne County, suffering serious injuries to his ankles and feet.

"Litigation is the New Game of Kings"

Owen-J-Mcgrann-profile.jpgThe Commonwealth Court of Pennsylvania recently issued an important opinion in the municipal construction field: F. Zacherl, Inc. v. Flaherty Mech. Contrs., LLC, 2016 Pa. Commw. LEXIS 22 (Pa. Cmwlth. 2016). Zacherl is a trip down the rabbit hole of construction litigation on public projects.

Injured Worker Not a Borrowed Employee Entitled to Workers' Compensation Coverage but a Leased Worker Under CGL Policy Leaving Facility Operator Uninsured

In Westfield Ins. Co. v. Astra Foods Inc., 2016 PA Super 31 (Pa. Super. Feb. 12, 2016) (opinion by Stabile, J.), the Superior Court of Pennsylvania held that an injured worker who was previously determined by a Workers' Compensation Judge ("WCJ") to not be a "borrowed employee" at the time of his injury and, in turn, barred from workers' compensation coverage, was held to be a "leasedBrandonMcCullough--Insurance Blog Photo 2.jpg worker" under the facility operator's Commercial General Liability ("CGL") policy resulting in coverage being excluded by the employer's liability exclusion in the CGL policy, thereby leaving the facility operator without coverage for the loss.

Jose Noe Castillo Ramos ("Ramos"), an employee of BK Packaging Services, Inc. ("BK"), suffered a severe injury to his hand and arm while cleaning an exhaust fan at a facility operated by Astra Foods Inc. ("Astra"). Ramos filed a workers' compensation claim for his injuries. The WCJ issued a decision finding that Ramos was not a "borrowed employee" of Astra at the time of the injury. As a result of the ruling, there was no coverage for Astra under its workers' compensation policy issued by Westfield Insurance Company ("Westfield"). Ramos filed a personal injury action against Astra in which he received a jury verdict award of $763,413. Westfield, who also issued a CGL to Astra, filed a declaratory judgment action seeking a declaration that the employer's liability exclusion in the CGL policy barred coverage because Ramos was an employee of Astra's by satisfying the definition of "leased worker" in the CGL policy. The trial court granted summary judgment in favor of Westfield finding Ramos was a "leased worker" and, thus, the employer's liability exclusion precluded coverage.

Caution Required in Drafting Additional Insured Provisions in Subcontract

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In Kreamer v. Lobar (Carbon County 2015), the Court of Common Pleas found that subcontractor Chowns Fabrication and Rigging did not breach its obligation under its subcontract with general contractor Lobar Inc. in spite of Chowns' failure to secure liability insurance to protect Lobar from any claim arising out of Chowns' operations.

As part of its subcontract, Chowns was required to have Lobar named as an additional insured to Chowns' Commercial General Liability Policy " for claims 'caused in whole or in part by' the subcontractor's negligent acts or omissions." Chowns did in fact obtain a certificate of insurance so providing. However, when the underlying claim was tendered to Chowns' carrier, the claim was denied.

In his complaint, Plaintiff, an employ of Chowns, alleged injury as the result soley of Lobar's alleged negligence. The complaint alleged that Lobar failed to: establish safety standards and policies for the erection of plywood structures; implement a safety plan; appoint sufficient supervisors; adequately train personnel; require workers to remove plywood structures; adequately inspect the job site; inform Kreamer of the dangers of removing the plywood structure; and provide him with assistance and means of doing so.

Superior Court Reaffirms Oral Change Orders Are Effective Despite Contractual Provisions Requiring Written Approval

Owen-J-Mcgrann-profile.jpgIn C.E. Pontz Sons, Inc. v. Purcell Constr. Co., 2015 Pa. Super. Unpub. LEXIS 3192 (Pa. Super 2015), the Pennsylvania Superior Court addressed the often disputed question regarding whether oral modifications to construction contracts have effect despite a contractual provision requiring written amendments to the contract. (A copy of this case is attached HERE) Holding with the prevailing case law, the Court found that oral modifications are enforceable for contracts that are not for the sale of goods.

Prepare for New Notices Under the Amended Pennsylvania Mechanics Lien Law.

In just a little over a year, the new provisions of Act 142 of 2014, which substantially amend Pennsylvania's Mechanic's Lien Law, will go into effect. As if the filing and timing requirements of the Mechanic's Lien Law weren't already complicated enough, now four (4) more notices have been established which either must or may be filed within appropriate time frames to secure mechanic's liens.

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Under Act 142, the new notice provisions become effective on December 31, 2016. Prior to Act 142, owners had no means to identify what subcontractors may have been working on a project in order to contact them to determine if they had received payment, before the owner would make payment in full to the contractor. General contractors faced the same problem with respect to second-tier subcontractors or materialmen. The intent of the new notice provisions of Act 142 is to give owners a better opportunity to protect against the danger of facing double payment which arises when they pay their direct contractor and then are faced with a mechanic's lien when that contractor has failed to pay its subs. Often a contractor will be called upon to defend and indemnify its owner from a lien claim filed by a second tier subcontractor whose has not been paid by a first tier subcontractor. Accordingly, general contractors also will benefit from having second-tier subcontractors identified through this new process so they can avoid the double payment problem arising from these defense and indemnification claims.

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