Construction Law

Mark McInerney and Ellen Hoeppner recently obtained dismissal of a contentious lawsuit filed against Clark Hill’s client United States Steel. In October 2014, the plaintiff filed a lawsuit against U. S. Steel, alleging disability discrimination, interference under the Family and Medical Leave Act, and workers’ compensation retaliation. The plaintiff’s claims all stemmed from a workplace injury plaintiff suffered in July 2013, in which the tip of his finger was caught in a machine and nearly severed. Over the next two days, the plaintiff twice failed to appear at U. S. Steel Plant Medical for evaluation as directed, and misrepresented his medical condition by telling Plant Medical personnel that his finger had to be surgically “cut off” due to infection. When the true facts came to light, U. S. Steel determined the plaintiff’s misconduct warranted termination.  

These relatively straightforward facts, however, were made very complicated by a zealous plaintiff’s attorney, who propounded a theory of wide-spread discrimination against disabled employees because such employees posed a liability risk to the company for the purposes of workers compensation and OSHA reporting. Mark and Ellen filed a Motion for Summary Judgment, carefully separating the unsupported theories from the undisputed facts. The Court dispensed with oral argument, and on the strength of the briefs, United States District Judge Linda Parker recognized the theory for what it was, and dismissed the plaintiff’s case. 

Christopher Hossack and Heather Seiferth, with the assistance of paralegal, Therese Mayo, defeated a wrongful death claim filed against one of Clark Hill’s national architect/engineer clients in which the Plaintiffs demanded $3,000,000 to settle our client’s alleged liability. The final settlement demand against all defendants in this litigation was $20,000,000, as the deceased was a young man who left minor children behind at his passing.  

Clark Hill’s client was responsible for drafting, auditing and enforcing safety programs during construction administration work for a mine owner preparing to re-open a copper mine in rural Arizona.  As the construction work was winding down, our client’s services were reduced and the mine owner assumed more responsibility for the completion of construction. On a day when our client’s safety technicians were directed by the mine owner to stand down, the deceased, a rookie miner who had only worked six days in this mine allegedly stepped into an un-barricaded chute and fell to his death.  Plaintiffs sought to hold our client, along with the mine owner and its other contractors, jointly and severally liable for failing to enforce safety rules and MHSA mine safety standards on the day of the accident. The mine owner also demanded indemnification from our client under its contract.  

Shortly before trial was due to start, Chris and Heather persuaded the trial court to reconsider a summary judgment motion that had previously been denied. The motion argued that our client could not have proximately caused this accident because the chute was properly barricaded and marked on the client’s last site visit, and no employee of our client was present on the day of the accident.  After the second argument, the trial judge ruled from the bench to dismiss all claims against our client.  Not only was this architect/engineer firm spared the expense and risk of a three week jury trial, but also the mine owner’s indemnity claim was extinguished by this ruling.

The firm was contacted by an attorney in Canada. His client owns an architectural company in Canada. One of the architects was looking for license reciprocity in Nova Scotia to do work for a large project they were awarded recently. To comply with that province’s reciprocity rule, the client needed proof of his architect licensure from the states wherein he is licensed – MI and AZ. And he needed it yesterday! We got the call late Wednesday October 7th. Doug Folk got AZ to send the licensure information to Nova Scotia on Thursday the 8th, and Val Lawver had to work a little harder with MI, but got them to issue it late Friday – and it was Fed Ex’d Monday the 12th. The Nova Scotia License board met Tuesday the 13th in the morning – and everything was in – reciprocity approved!

With assistance from  Kristi Gauthier,  Ed Hammond, Peter Domas and Bishop Bartoni, Kevin Hendrick and Nicole Tersigni successfully defended an insurance priority dispute, resulting in an extremely favorable judgment for firm client, United States Steel Corporation’s ERISA-governed Retiree Benefits Plan.  U. S. Steel Retirement Plan was joined as a third-party defendant in a pending dispute by a No-Fault Automobile Insurance carrier,  which had been sued by a healthcare service provider for unpaid patient attendant care fees.  The No-Fault Carrier claimed that the obligation to pay for these services under Michigan No-Fault law  fell to U. S. Steel Retirement Plan, which covered the patient (who was a former U. S. Steel employee).  Ed, Bishop, Kristi and Peter lent their expertise to Kevin and Nicole in interpreting alleged conflicting insurance priority provisions and explanations of benefits.  Kevin and Nicole crafted a legal argument that ultimately led to summary disposition in favor of U.S. Steel Plan, and against the No-Fault carrier, saving U.S. Steel Plan from payment of the healthcare fees, and also reimbursing U.S. Steel Plan for benefits it had earlier paid by mistake, out of priority.  As the No-Fault carrier had rejected the Case Evaluation award prior to the filing of cross motions for summary disposition, it also appears that attorney  fees are recoverable for our client.  Kristi and Ed on Employee Benefit law, Bishop on Michigan No-Fault law, and Pete on Health Care issues, proved to be unbeatable resources.

Our client, Daniels Building Company, was the successful awardee of a U.S. Department of Veterans Affairs construction contract to renovate existing kitchen and food storage areas at the Battle Creek VA Medical Center in Battle Creek, MI.  The procurement was set aside for award only to service-disabled veteran-owned small businesses (“SDVOSB”) approved through the VA’s Center for Verification and Evaluation (“CVE”).  After announcement of the award, a disappointed unsuccessful offeror filed a SDVOSB status protest challenging whether Daniels Building was actually a SDOVSB and thus ineligible for the contract award.  Daniels Building engaged Clark Hill to defend this protest, which if sustained could have potentially destroyed our client’s business due to its dependency on federal SDVOSB set-aside contracts.

The protestor alleged that, through two separate joint ventures with two different companies with no connection to the VA’s procurement award, that Daniels was (1) controlled by a large company and thus no longer small; and/or (2) was controlled by non-veterans in conflict with the VA’s regulations.  The protestor also alleged that Daniels Building fraudulently obtained its SDVOSB certification by intentionally filing false information with, and withholding key information from, the VA.  The Clark Hill team of Bret Wacker, Stuart Schwartz and Nicole Tersigni prepared, in the mandated 5 day response period, a detailed brief demonstrating Daniels Building is in fact owned and controlled by a service disabled veteran; and that the protestor’s attempts to defame and discredit Daniels Building Company were without basis in fact or law.  The VA agreed with Daniels Building that its joint venture relationships had no bearing on the ownership or control of our client, and that the protestor’s evidence was not compelling enough to overturn Daniels Building Company’s SDVOSB certification.  Our client is now able to move forward with contract performance at the Battle Creek VA Medical Center.

In a pro bono case, Nicole Tersigni (under the supervision of Jordan Bolton and Stuart Schwartz) successfully prosecuted our clients’ primary breach of contract claim, and successfully defended our clients’ fraud claims through summary disposition proceedings. In short, our clients hired the defendant contractors to remodel our clients’ modest 900 square foot home, so the main level would be accessible to their severely disabled son. The defendant contractors took our clients’ money, completed a portion of the work, then walked off the job, claiming fraud in the inducement. After taking a significant supporting role in discovery, and a lead role in getting the defendant contractors’ counterclaims dismissed as a sanction for their discovery abuses, Nicole took a lead role in the briefing related to competing motions for summary. The Court dispensed with oral argument, granted our clients’ motion on their breach of contract action, and denied the defendant contractors’ request to dismiss our clients’ fraud claims.

Congratulations to Nicole Tersigni of the Construction Practice Group for her successful bid protest before the U.S. General Accountability Office on behalf of firm client Daniels Building Company (“DBC”).  DBC, a service-disabled veteran-owned small business, was blocked from bidding on a multi-million dollar U.S. Department of Veterans Affairs (“VA”) contract opportunity for construction services in Ann Arbor, Battle Creek, Detroit, and Saginaw, Michigan, due to ineffective publishing of the contract solicitation by the VA.  

This protest offered significant challenges to achieve the client’s objectives.  Under prior GAO precedence, all potential offerors for federal contracts are deemed to have constructive notice of any solicitation posted on the Government’s FedBizOpps website.  In addition, the U.S. Court of Federal Claims has held that such constructive notice cannot be rebutted.  With guidance and assistance from Bret Wacker of the Government & Public Affairs Practice Group, Nicole crafted an argument that the VA’s publishing of the solicitation on Fed BizOpps was so flawed that it was legally invalid from the start.  Nicole submitted evidence that the VA knew of the flaws, which it attempted to mitigate by selectively mailing copies of the solicitation to certain favored contractors in direct contravention of the Competition in Contracting Act and the Federal Acquisition Regulations.  Upon receipt of the protest, rather than risk an adverse decision with potentially widespread impact, the VA chose to take corrective action by re-opening the procurement, allowing DBC to compete for this valuable opportunity.  

1800 Ocotillo, LLC v WLB Group, Inc., 219 Ariz. 200, 196 P.3d 222 (2008) – Confirmed that contractual limitations of liability are not against public policy and may be enforced as agreed by a design professional and its client.

Flagstaff Affordable Housing Limited Partnership v. Design Alliance, Inc., 223 Ariz. 320, 223 P.3d 664 (2010) – As between a design professional and its client, contractual remedies for recovery of economic loss will bar tort claims seeking the same damages, which enables proper risk allocation through contract negotiations.

Sullivan v. Pulte Home Corporation 232 Ariz. 344, 306 P.3d 1 (2013) – Held that a subsequent purchaser’s construction defect claim is not barred by the economic loss doctrine or statute of repose, but purchaser may not have a cause of action for negligent construction.

Albano v. Shea Homes Ltd. P’ship, 227 Ariz. 121, 254 P.3d 360 (2011) – Held that Arizona’s statute of repose is not tolled by the filing of a class action complaint in construction defect litigation.

Represented a general contractor in all property damage cases arising out of the Pittsburgh subway construction.

Obtained defense verdict in extra work claim in AAA arbitration proceeding.

Member of the AAA Mediation Panel and Federal District Court for the Western District of Pennsylvania Mediation Panel. Mediation training was obtained by attending the Federal Bar Association’s mediation training (40 hours) and “A Systematic Approach to Mediation Strategies (STARS)” and “Mediating Construction Disputes”, both at Pepperdine University School of Law, Straus Institute for Dispute Resolution. I have served as a mediator in dozens of construction cases. Construction projects included: power plants, water plants, sewage plants, airport, courthouse, schools, commercial buildings, office buildings, apartment buildings, restaurant and residences.

Defended Allegheny County in a $75 million construction litigation involving the County jail, resulting in mediated settlement.

Represented a Korean EPC contractor in an action to recover amounts on a letter of credit for a $320 million power plant project in Israel.

Member of the AAA Construction Arbitration Panel, the Allegheny County Bar Association’s Construction Dispute Resolution Group and the Federal Court for the Western District of Pennsylvania Arbitrator and Early Neutral Evaluation Panel. Conducted Ace Training for AAA arbitrators. Served as chair, panelist, party-appointed, neutral and sole arbitrator in arbitrations, including large complex cases. Extensive experience in handling construction cases involving claims for delay, acceleration, loss of productivity, default termination, extra work, defective specifications, design errors and omissions and differing site conditions, as well as the drafting of construction contracts.

Tried various multimillion-dollar construction cases to verdict in West Virginia State and Federal Courts involving a cogeneration plant.

Obtained a TRO in state court and settlement in international arbitration in excess of $2 million for an engineering/automation contractor of two continuous pickling and annealing lines.

Recovered $1 million for the Allegheny County Airport Authority from demolition contractors and an engineering firm related to the release of asbestos during the demolition of the old Pittsburgh International Airport.

Obtained a favorable ruling from Justice Souter of the United States Supreme Court permitting the demolition of the old Pittsburgh International Airport.

Represented precast subcontractors in a $60 million litigation involving the construction of the Pittsburgh International Airport, resulting in a mediated settlement. Client paid nothing on the claim against it and received $100,000 on the counterclaim.

Obtained a directed verdict in Pennsylvania State Court in a $13 million property damage case involving construction of the Pittsburgh Subway.