ReedSmith
The January 2001
CriticalPath Message from the Editor-in-Chief…
A New Year, A New Look Inartful Drafting and Arbitration Clauses – Traps for the Unwary—Page 2 Did I Agree to That? The Pitfalls of Incorporation by Reference—Page 6 Taxpayer Standing to Challenge Public Contract Award – Not a “Fiction” After All—Page 8 Pennsylvania’s Implementation of the Uniform Construction Code Slowly but Surely Proceeds—Page 9 Adarand Addendum: An Update—Page 12 As BUILT… And the Clock Ticks: Maryland’s Courts Weigh in with Several Time-Related Decisions—Page 14
Delaware New Jersey New York Pennsylvania
United Kingdom Virginia Washington, DC
r e e d s m i t h . c o m
As you can clearly see, we have a new look for The Critical Path as we enter into a new year. In this year just past, the courts were quite active in matters involving the construction industry. In the areas of affirmative action, taxpayer standing to pursue bid protests, the enforceability of arbitration provisions and statutes of limitation, among others, the decisions have provided us with a wealth of material to convey to you, The Critical Path readers. The legal landscape facing architects, contractors, engineers, owners, subcontractors, sureties and suppliers alike continues to change rapidly. We trust that in this past year, the articles of The Critical Path have allowed you to keep abreast of those more significant developments and decisions. Along with our new look, we will continue our efforts to bring future developments and decisions to you in a timely and informative manner so that you may better or equally enjoy the new year as you have this year past. Also, we look forward to bringing you updates on international construction developments through our new United Kingdom venture, Reed Smith Warner Cranston. Edward B. Gentilcore Pittsburgh Office
ReedSmith Inartful Drafting and Arbitration Clauses — Traps for the Unwary I.
This article will briefly discuss three areas where parties can create serious problems for themselves by not carefully considering the impact of contract language where an arbitration clause is concerned. These situations include (1) the potential impact of an arbitration clause on the ability to obtain preliminary, emergency relief, (2) the scope of an ambiguous arbitration clause, and (3) the potential of agreeing to arbitration, inadvertently, by referencing or incorporating another document containing an arbitration clause.
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Introduction
The use of alternative dispute resolution (“ADR”) clauses, including arbitration clauses, is becoming increasingly popular in the construction industry and elsewhere. However, inartful drafting associated with arbitration clauses can pose traps for the unwary. This article will briefly discuss three areas where parties can create serious problems for themselves by not carefully considering the impact of contract language where an arbitration clause is concerned. These situations include (1) the potential impact of an arbitration clause on the ability to obtain preliminary, emergency relief, (2) the scope of an ambiguous arbitration clause, and (3) the potential of agreeing to arbitration, inadvertently, by referencing or incorporating another document containing an arbitration clause. II. Arbitration Clauses and Preliminary, Emergency Relief On some occasions, a legal dispute regarding a construction project or another commercial endeavor may require immediate, emergency action to prevent harm that cannot adequately be addressed later by money damages. In such situations, parties who have not agreed to an arbitration clause may swiftly seek the aid of a court and potentially have the matter heard and resolved preliminarily within a matter of days by seeking a temporary restraining order or a preliminary injunction.1 This may not be the case, however, for a party who has agreed to a normal arbitration clause, such as that contained in American Institute of Architects (“AIA”) Document A201, General Conditions of the Construction
Contract, which calls for use of the standard American Arbitration Association (“AAA”) rules.2 Although the AAA rules currently allow for preliminary relief, weeks can pass while the parties initiate the process and select arbitrators.3 In the meantime, the party wanting emergency relief is left in a state of limbo. On the one hand, no emergency relief will be available from the normal arbitration process for many weeks. On the other hand, if the party needing emergency relief tries to go to court, the arbitration clause stands as an obstacle. This is because courts have recognized an arbitration clause as an adequate remedy at law that is cause enough to deny preliminary injunctive relief.4 Persons designating arbitration under a group other than the AAA may even face more of a problem. Organizations that are not as well staffed and established as the AAA may take even longer in selection of arbitrators. Three commonly used techniques exist to avoid the dilemma of the unavailability of prompt, emergency relief under a standard arbitration clause. These are, briefly stated, the express exception technique, the AAA Optional Rules for Emergency Measures of Protection technique, and the preselection of arbitrators technique. The first technique is to carve out an express exception in the contract to the arbitration clause for claims for injunctive relief, or for certain categories of claims for injunctive relief. This technique is commonly used for claims relating to intellectual property and similar rights. Such a carve-out provision typically might add the following language to the contract:
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Notwithstanding the arbitration clause at paragraph x or any other provision of this Agreement, the parties hereto agree that money damages would not be a sufficient remedy for a breach of this Agreement relating to the intellectual property rights at paragraph A or the confidentiality obligations at paragraph B, and that a party may immediately seek from a court of competent jurisdiction injunctive relief, specific performance, or other purely equitable relief as a remedy for such breach, without resorting to arbitration. However, care must be taken when using this technique to consider, and if appropriate, to address by contract language, issues such as (1) whether damage claims ancillary to the claim for injunctive relief are decided by the court deciding the injunction matter or by arbitration; and (2) what res judicata and collateral estoppel effects (i.e., what, if any, binding or preclusive effects) will be given to a court decision regarding injunctive relief. The second technique is one that has become available through the AAA in recent years under its Commercial Dispute Resolution Procedures. In 1999, the AAA adopted Optional Rules for Emergency Measures of Protection as part of its Commercial Dispute Resolution Procedures.5 These optional rules give parties the ability to obtain the arbitration equivalent of a quick, preliminary injunction hearing through a special AAA panel of emergency arbitrators. However, these procedures are not available under the standard AAA arbitration clause language. Parties using Commercial Dispute Resolution Procedures must use the following addi-
tional language to make these procedures available: The parties also agree that the AAA Optional Rules for Emergency Measures of Protection shall apply to the proceedings. Because the AAA has not included the Optional Rules for Emergency Measures of Protection as part of its Construction Industry Dispute Resolution Procedures,6 parties using the construction procedures and wishing to use these optional rules to address emergencies should modify the language they add to their arbitration clause to read as follows: The parties also agree that the AAA Optional Rules for Emergency Measures of Protection provided for in the AAA Commercial Dispute Resolution Procedures shall apply to the proceedings. If the parties plan to use the AAA Optional Rules for Emergency Measures of Protection in a construction project context, they should also decide and address in their contract language the impact that these rules will have on the architect’s or engineer’s role in addressing claims and disputes.7 If the parties plan to use an arbitration service other than the AAA, consideration should be given to whether that service has procedures similar to the AAA Optional Rules for Emergency Measures of Protection, has adequate administrative support, and has a sufficient panel of qualified arbitrators on call to promptly carry out these procedures. Parties would also need to revise the language of their arbitration clause to authorize such procedures. The third technique is to agree specifically in advance upon a
particular arbitrator or panel of arbitrators who will decide disputes relating to the contract and a detailed, binding mechanism for prompt resolution of emergency situations. Under the AAA rules, for example, there are procedures for pre-selection of arbitrators.8 Because selection of arbitrators creates the longest delay in obtaining emergency relief in an arbitration, this step alone would go a long way toward solving the problem of delay in obtaining emergency relief. Further, the parties can craft in advance their own rules for the preselected arbitrators to follow in an emergency. Each technique has its advantages and disadvantages. The express exception technique may introduce some of the undesirable aspects of litigation into disputes and also may create confusing issues regarding the effect of the court’s ruling on the carved-out issue upon related matters being arbitrated. Also, the judge hearing the matter may lack any expertise in the subjectmatter area. Nonetheless, with this technique, (1) a decisionmaker will be promptly available for any emergency issue to which the carve-out provision applies, (2) the preliminary decision will be immediately enforceable by court order and the power to punish disobedience by contempt, and (3) the preliminary decision can be immediately appealed. In contrast, in arbitration, unlike in litigation, there is no right to immediately appeal an adverse decision regarding what amounts to a preliminary injunction. Also, arbitrators do not have the contempt power of a court to enforce a preliminary injunction order. Further, in using the AAA Optional Rules for Emergency Measures of Protection for a construction continued on page 4
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ReedSmith “Inarftul Drafting and Arbitration Clauses” – continued from page 3 dispute, the arbitrator provided may not be knowledgeable in construction matters and may not be as satisfactory as an arbitrator selected in the normal manner. However, any of these techniques is better than agreeing to an arbitration clause without deciding upon a means to deal with emergency situations where immediate, preliminary relief may be needed.
While ADR clauses, including arbitration clauses, have become increasing popular in the construction industry and elsewhere, inartful drafting associated with them can pose traps for the unwary.…Such traps can be avoided by careful review before signing any contract that has an arbitration clause or that references another document that has an arbitration clause and by clear language that precisely defines the scope of arbitration obligations and provisions for emergency relief.
III. The Scope of an Ambiguous Arbitration Clause Sometimes parties draft their own arbitration clauses and create ambiguities. Consider one example recently encountered: The arbitration clause essentially said, “Any dispute shall be subject to arbitration under the rules of the American Arbitration Association.” Does this mean just any dispute under the contract containing the clause, does it mean any dispute that the parties ever have until the end of time, or does it mean something in between? In many cases, the Federal Arbitration Act (“FAA”)9 applies to arbitration clauses.10 When the FAA does apply, it demands arbitration clauses be construed to have a very wide scope. Essentially, when the FAA applies, as a matter of Federal law, all doubts regarding the scope of a written arbitration clause agreed to by the parties are to be resolved in favor of arbitration, and arbitration will be compelled unless it can be said with “positive assurance” that the arbitration clause does not apply.11 Thus, courts have construed arbitration clauses with broad language to apply to disputes between parties involving other agreements that do not contain arbitration clauses.12 Accordingly, a party wanting to agree only to arbitration of a limited set of
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disputes bears the burden of having an arbitration clause that is clearly worded and definite in scope.13 The arbitration clause language recommended by the AAA, for example, is limited to disputes “arising under or relating to” the contract.14 While this language is more limited than the “any dispute” example just discussed, it is still quite broad in scope, given the rules of construction required by the FAA. This language would include tort claims and most statutory claims, for example.15 A party not wishing to arbitrate such claims should insist on an arbitration clause and language which specifically excludes such claims. IV. Inadvertently Agreeing to Arbitration by Referencing or Incorporating Another Document Containing an Arbitration Clause Parties who are not careful may also find themselves inadvertently agreeing to arbitration by referencing or incorporating another document that has an arbitration clause. An example of this is the Fourth Circuit’s recent decision in Kvaerner ASA v. Bank of Tokyo–Mitsubishi, Ltd.,16 which is discussed in more detail in this issue’s “Did I Agree to That? The Pitfalls of Incorporation by Reference” (see page 6). Briefly stated, the court in that case concluded a bank was obligated to arbitrate claims against guarantors because of the reference in the guaranty agreement to the construction contract. A number of courts have likewise found that language in performance or payment bonds was sufficient to bind sureties to arbitration proceedings where the bonds in question incorporated a contract containing an arbitration clause.17 The same can be said for
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Contract for Construction—1997 edition provides in part as follows:
subcontractors and subcontracts which incorporate a general contract containing an arbitration clause.18 For a party not wishing to arbitrate, the safest technique is to expressly state in one’s contract that reference or incorporation of another document does not constitute agreement by that party to arbitrate or to incorporation of the arbitration clause from the referenced document into the document being executed. Conclusion
Any Claim arising out of or relating to the Contract, except claims relating to aesthetic effect and except those waived as provided for in Subparagraphs 4.3.10, 9.10.4 and 9.10.5, shall after decision by the Architect or 30 days after submission of the Claim to the Architect, be subject to arbitration. Paragraph 4.6.2 further provides that AAA rules apply to the arbitration. 3
While ADR clauses, including arbitration clauses, have become increasing popular in the construction industry and elsewhere, inartful drafting associated with them can pose traps for the unwary. Three potential traps discussed here are (1) the inability to obtain immediate and preliminary emergency relief, (2) the unintended, potentially broad scope of arbitration clauses, and (3) the potential to agree to arbitration inadvertently by referencing or incorporating another document containing an arbitration clause. Such traps can be avoided by careful review before signing any contract that has an arbitration clause or that references another document that has an arbitration clause, and by clear language that precisely defines the scope of arbitration obligations and provisions for emergency relief.
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1
See, e.g., Fed. R. Civ. p. 65.
2
Paragraph 4.6.1 of American Institute of Architects (“AIA”) Document A201, General Conditions of the
See, e.g., Weaver v. Florida Power & Light Co., 172 F.3d 771, 774 (11th Cir. 1999).
5
American Arbitration Association, Commercial Dispute Resolution Procedures, viewed at http:// www.adr.org/rules/commercial/ commercial rules.html on February 8, 2000 (hereinafter AAA Commercial Procedures).
6
American Arbitration Association, Construction Industry Dispute Resolution Procedures, (as amended and effective on September 1, 2000), viewed at http://www.adr.org on November 20, 2000.
7
See, e.g., AIA Document A201 ¶4.4 (1997).
8
AAA Construction Industry Procedures, ¶ R-14.
9
9 U.S.C. § 1, et seq.
10
See Allied Bruce Terminix Companies, Inc. v. G. Michael Dobson, 513 U.S.
Thomas R. Folk Falls Church Office
Endnotes
See American Arbitration Association, Construction Industry Dispute Resolution Procedures (Including Mediation and Arbitration Rules), ¶¶ R-6 (Initiation), R-13 (Appointment), R18 (Notice to Arbitrator of Appointment), R-19 (Disclosure and Challenge Procedure), R-34 (Interim Measures of Protection) (as amended and effective on September 1, 2000), viewed at http://www.adr.org on November 20, 2000 (hereinafter AAA Construction Industry Procedures).
265, 270 (1995) (FAA extends to any commerce within Congress’ Commerce Clause power). 11
See, e.g., Moses H. Cone Meml. Hosp. v. Mercury Constr. Corp., 460 U.S.1, 24-25 (1983); AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 650 (1986).
12
See, e.g., Cara’s Notions, Inc. v. Hallmark Cards, Inc., 140 F. 3d 566 (4th Cir. 1998).
13
See, e.g., Brown v. ITT Consumer Financial Corp., 211 F. 3d 1217, 1221–22 (11th Cir. 2000).
14
See AAA Construction Industry Procedures, pp. 5–6, “ADR Clauses,” “Arbitration.”
15
See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999); Pennzoil Exploration & Prod. Co. v. Ramco Energy, Ltd., 139 F. 3d 1061, 1067-68 (5th Cir. 1998).
16
210 F.3d 262 (4th Cir. 2000).
17
See, e.g., Fireman’s Ins. Co. v. Edgewater Beach Owners Assn., 1996 WL 509720 (N.D. Fla. 1996).
18
See, e.g., Commercial Union Ins. Co. v. Gilbane Building Co., 992 F. 2d 114 (1st Cir. 1993); Maxum Foundations, Inc. v. Salus Corp., 779 F.2d 974, 978 (4th Cir. 1985) (“It is well settled that, under the Federal Arbitration Act, an agreement to arbitrate may be validly incorporated into a subcontract by reference to an arbitration provision in a general contract.”).
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ReedSmith Did I Agree to That? The Pitfalls of Incorporation by Reference
Contractors—and even owners—are occasionally surprised to learn what the other contracting party considered to be part of the deal. Such was the case in Kvaerner ASA/J.A. Jones, Inc. v. Bank of TokyoMitsubishi, LTD, 210 F.3d 262 (4th Cir. 2000). There, the lender Bank was surprised to learn that it had agreed to arbitrate disputes it in fact had intended to litigate, and all because of an incorporated document.
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A construction contract typically incorporates many documents. Among the obvious documents incorporated by reference are plans and specifications, general and special conditions, and references and standards which may establish accepted criteria for workmanship. Subcontracts often incorporate the entirety of a general contractor’s agreement with the owner, including all the documents incorporated into that contract by reference. Many times, contractors, and particularly subcontractors, don’t give a second thought—much less a detailed review—to all the documents which are included as part of their agreement. However, each of these components of a contract is considered to be part of the whole. It is of little or no consequence that one, or even both, of the parties have failed to read an incorporated document, or even have it in their possession at the time of contracting. What is important is what that referenced document says and what obligations it places on the contracting parties.
Inc., a subsidiary of J.A. Jones, Inc. (“Jones”). A syndicate of New York branch banks, with the Bank of Tokyo acting as lead agent, financed the project. Kvaerner and Jones each executed a Guaranty Agreement to “irrevocably and unconditionally guarantee[ ] the punctual performance of each and every obligation of [the joint venture] under the [Construction] Agreement.” The Bank of Tokyo signed the Guaranty on behalf of the banks.
Contractors—and even owners—are occasionally surprised to learn what the other contracting party considered to be part of the deal. Such was the case in Kvaerner ASA/J.A. Jones, Inc. v. Bank of Tokyo-Mitsubishi, LTD, 210 F.3d 262 (4th Cir. 2000). There, the lender Bank was surprised to learn that it had agreed to arbitrate disputes it in fact had intended to litigate, and all because of an incorporated document.
Construction and acceptance testing of the project was completed in 1996. BCH and the joint venture contractor had a dispute about the project before completion. Nevertheless, BCH took possession of the project. However, in September 1996, the Owner sent the joint venture a notice of default, and in December 1996 completely shut down the operation of the project. As a consequence, the Owner was unable to make payments on the Bank financing. BCH was forced into bankruptcy. The Bank filed suit against one guarantor, Jones, in the Federal District Court in New York. Thereafter, Kvaerner and Jones filed a demand for arbitration with the American Arbitration Association, seeking to arbitrate the Bank’s claims against them. They also filed a petition to compel arbitration in the United States Eastern District of North Carolina. That court granted the petition and ordered the Bank to arbitrate. The order compelling arbitration was affirmed on appeal.
BCH Energy, L.P., the Owner of the project—a waste-to-energy plant in North Carolina—entered into a turnkey design/build agreement with a joint venture formed by Kvaerner Environmental Technologies, Inc. (“Kvaerner”), and Metric Contractors,
The Guaranties—which were the basis for this suit—did not themselves specifically contain any clause which required, or even addressed, arbitration of disputes. Rather, the basis for the court’s ruling compelling arbitration was the incorporation by refer-
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ence of portions of another document into the Guaranties. The construction agreement with BCH, the Owner, included a broad arbitration clause requiring that any dispute “arising out of or relating to” the construction agreement be arbitrated in North Carolina. The trial court held, and the appellate court agreed, that this arbitration clause in the construction agreement was incorporated by reference into the Guaranty and, accordingly, the Bank was required to arbitrate the disputes “related to” the construction agreement. The Guaranties signed by Kvaerner and Jones expressly gave them the same “rights” and “remedies” as were available to their joint venture under the construction agreement. The specific clause in the Guaranties relied on by the court was: Each and every default or failure by [the joint venture] in making payment or otherwise discharging or performing any of the Guaranteed Obligations shall give rise to a separate liability of [the joint venture] to [the Bank] and a separate cause of action hereunder and a separate suit may be brought hereunder as each liability of cause of action arises. Upon receipt of notice of default, [Kvaerner and Jones] shall have the same rights and remedies of [the joint venture] under the [Construction] Agreement, including without limitation the benefit of any remaining cure periods granted to [the joint venture] pursuant to the [Construction] Agreement. (Emphasis added.) The court observed that this provision of the Guaranties operated to incorporate the rights and remedies available to the joint venture under the construction agreement, and that one of those “rights” was the right to arbi-
trate disputes “arising out of or relating to” the construction agreement. The court then found that the broad—and typical—arbitration clause in the construction agreement included the dispute between the Bank and the guarantors. The central dispute between the Bank and Kvaerner and Jones was the Bank’s contention that the joint venture had never actually Substantially Completed the project under the construction agreement. Thereafter, concluding that Substantial Completion of the project directly related to the construction agreement, the court ordered arbitration to proceed because the technical issues in dispute were clearly “arising out of or relating to” the construction agreement. The Bank unsuccessfully argued that this construction agreement arbitration requirement was neither a “right” nor a “remedy,” as those terms were used in the Guaranties, but was merely a process to resolve disputes. There was no definition of “rights and remedies” in either the Guaranties or the construction agreement. The court found that a “right” as commonly understood in the contract context includes “the right to arbitrate disputes” arising out of or relating to the construction agreement. The Bank also unsuccessfully argued that the Guaranties contemplated litigation, not arbitration, referencing an express provision of the Guaranty which said: For the purposes of this Guaranty only and for no other purposes, [Kvaerner and Jones] hereby irrevocably submit [ ] to the jurisdiction of any Federal court sitting on the United States of America in any action or proceeding arising out of or relating to this Guaranty, and [Kvaerner and Jones] hereby irrevocably agree [ ] that all claims in respect
of such action or proceeding may be heard and determined in such Federal court. The guarantors argued that this provision showed an agreement by the guarantor to “litigate” in New York and that the specific agreement to litigate superceded any general incorporation of rights and remedies from the construction agreement. The court held that this clause was merely a consent to jurisdiction in the event that the Bank brought suit in federal court in New York. The Bank could sue in Federal court if there was a dispute not related to or arising out of the construction agreement—e.g., a question over financing or interest. However, because the current dispute between the parties did arise out of or relate to the construction agreement, the guarantors were entitled to enforce the arbitration provision. The Kvaerner case was not the first time the Fourth Circuit has gone beyond the basic agreement to an incorporated document to find a duty to arbitrate. In Maxum Foundations, Inc. v. Sales Corp., 779 F.2d 974, 978 (4th Cir. 1985), an arbitration provision in a general contract became part of the subcontract through incorporation by reference. The subcontract simply indicated that among the additional documents to be considered part of the “Contract Documents” were the “General Conditions of the Contract for Construction.” Those General Conditions expressly required that all disputes “between the Contractor and the Owner” were to be decided by arbitration. The disputes between the Contractor and its subcontractor became subject to arbitration by another provision of the incorporated General Conditions. Article 5.3.1 said: [E]ach Subcontractor, to the extent of the Work to be performed by the Subcontractor continued on page 8
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ReedSmith “Did I Agree to That?” – continued from page 7 [shall] be bound to the Contractor by the terms of the Contract Documents, and to assume toward the Contractor all the obligations and responsibilities which the Contractor, by these documents, assumes toward the Owner and Architect. Said agreement…shall allow to the Subcontractor, unless specifically provided otherwise in the Contractor-Subcontractor agreement, the benefit of all rights, remedies and redress against the Contractor that the Contractor, by these Documents, has against the Owner. In contrast to the Kvaerner case, the court in Maxum found that “arbitration” was one of the “obligations and responsibilities” that Salus, the Contractor, had to the Owner, and accordingly Maxum, the subcontractor, had the same obligation and responsibility to Salus. Thus, Maxum, the subcontractor, was ordered to arbitrate its disputes. The fundamental legal principles which underlie the court’s decisions in Kvaerner and Maxum are well known. A complex contract—such as
one for a construction project—may be contained in several instruments. A court will read all of those documents together as part of its effort to construe them as one agreement. Courts will not make a new contract for parties, but will strive where possible to give meaning to every clause in a contract signed by the parties. All words in a contract mean something, and, to the extent possible, the court will give meaning to every clause. Thus, the provision in Kvaerner giving the Guarantors “the same rights and remedies” as the joint venture meant something, and the court found that they meant the Bank had agreed to arbitration. The lesson from the Kvaerner and the Maxum decisions is relatively simple. Be aware of the content of your contracts, and be particularly wary of those “incorporation” clauses which reference generalized rights or impose broad duties and obligations set out in another document. Make certain you know how those responsibilities apply to your contractual relationship. Joseph S. Luchini Falls Church Office
Taxpayer Standing to Challenge Public Contract Award — Not a “Fiction” After All Most states, counties and local municipalities have enacted legislation requiring that public construction contracts be awarded to the lowest responsible bidder following a competitive bidding process. Nevertheless, the lowest responsible bidder is not always declared the winner of the public construction contract sweepstakes. Additionally, improprieties in the bid and award process
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have been known to occur. In either instance, a bid protest typically, if not always, results. Nearly all bid protest actions are instituted at the behest of a disappointed bidder. Generally, however, only a taxpayer has standing to assert such an action in the Commonwealth of Pennsylvania.1 Taxpayer standing derives from the fact that “a disappointed bidder has sustained no
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personal injury which entitles him to redress in court” because if there is “a loss in such a situation, it is the loss of the public.” Noonan, 400 Pa. at 394, 162 A.2d at 625. Consequently, it is not uncommon for a disappointed bidder to “recruit” an otherwise disinterested taxpayer through whom a bid protest may be lodged. In light of his or her detached status, a taxpayer plaintiff typically does not appreciate the legal battle he or she has agreed to start.2 As a result, commentators and jurists alike occasionally refer to a taxpayer plaintiff as “nominal” and to a tax-
payer action as merely a “legal fiction” through which a disappointed bidder may attack the public bidding process. The Commonwealth Court of Pennsylvania’s decision in Engle v. Beaver County, 754 A.2d 729 (2000),3 however, is a clear warning to all that this taxpayer standing requirement should not be taken lightly and that you better make certain your taxpayer “recruit” is on board—for better or for worse—for the long haul. In Engle, the County of Beaver (the “County”) solicited bids for the prime contracts for construction and renovation of the Beaver County
Courthouse Annex (the “Project”). During a public bid opening on December 10, 1999, Nello Construction Company (“Nello”) was identified as the low bidder for the Project’s general construction contract (the “Contract”). Following bid opening, the Project architect, Wallover, Mitchell, Bontempo & Associates, Inc. (“WMB”), contacted Nello to confirm that Nello’s bid did not contain any mistakes and that the bid was based on the products identified in the Project plans and specifications. continued on page 10
Pennsylvania’s Implementation of the Uniform Construction Code Slowly but Surely Proceeds Administrative regulations necessary to carry out Pennsylvania’s Uniform Construction Code (“UCC”) are being developed slowly, but surely. The UCC statute, Act 45 of the 1999 session, mandates the International Building Code (“IBC”) as the building code for all municipalities, but the IBC does not take effect until implementing administrative regulations have been approved. Developing the implementing regulations has taken longer than expected. The following is an unofficial timetable for completing the work of developing and approving the necessary regulations: (1) The Training and Certification (of Code Administrators) regulations are now completed and will be published in the Pennsylvania Bulletin and sent to the Independent Regulatory Review Commission (“IRRC”) the fourth week in January. These draft regulations have been changed since the stakeholders’
meeting in July, but those changes have not yet been posted on the Department of Labor and Industry’s UCC web site. Among the changes are new definitions for elevators, auto lifts, belt manlifts, and conveyors. Previously these were all combined under elevators. Changes were also made in the provisions on inspectors and their duties to reflect that in addition to elevator inspectors, there will be manlift, auto lift and conveyor inspectors. (2) An internal working draft of the new elevator regulations should be completed by mid-December and posted to the UCC web site in January. The Department reserved the right, under Act 45, to regulate elevators separately from other items covered by the IBC. (3) The Administrative provisions (Chapter 1) for the Department to administer the IBC should be posted to the web site in late January 2001.
(4) Regulations on energy will be developed after January 2001. For the IBC to replace the existing building codes, these implementing regulations must pass final regulatory review and be published as final in the Pennsylvania Bulletin. Based on the foregoing, this is not likely to happen before Labor Day 2001. You can follow the progress of these regulations by going to the Department’s UCC web site: www.li.state.pa.us/ucc/.* Franklin L. Kury Harrisburg Office
* Editor’s Note: Also, if you have any questions on the UCC or other state government matters, feel free to contact the author at
[email protected] or 717.257.3045. The author has been tracking the UCC implementation process and serves on the stakeholders’ committee.
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ReedSmith “Taxpayer Standing to Challenge Public Contract Award” – continued from page 9
What lesson does the Engle decision provide? First, the Commonwealth Court’s rejection of Engle’s invitation to ignore procedure technicalities and hear the merits of the appeal establishes that the taxpayer standing requirement is alive and well in Pennsylvania public bid dispute cases. Second, the Engle decision offers the following reminder to those intent on pursuing a public bid protest action: Make sure the taxpayer plaintiff is committed and will not cave under the inevitable pressure and scrutiny associated with such actions, especially when a high-profile public project is at issue.
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Nello confirmed with WMB that Nello’s bid was based on all specified products including the windows and window wall system specified for the Project, Wausau Window and Wall Systems Custom 3250H Heritage Series (“Wausau”). On December 29, 1999, having previously confirmed that Nello’s bid was accurate and based upon all specified products, the County awarded the Contract to Nello. On February 17, 2000, a County taxpayer named Cheryl Eckhardt (“Eckhardt”) filed a Complaint in Equity and Motion for Preliminary Injunction (the “Motion”) against the County to overturn the award of the Contract to Nello. Eckhardt’s primary contention was that WMB and the County failed to follow mandatory “post-bid submission” procedures which raised the appearance of impropriety with regard to the bid and award process. Specifically, Eckhardt alleged that, contrary to the Project specifications, (1) WMB improperly approved Nello’s supplier/ material list, (2) WMB failed to request post-bid submission data from the other two lowest bidders for the Contract and (3) Nello failed to submit an experience and qualifications statement. Eckhardt further alleged that Nello did not bid upon and did not intend to install the specified Wausau windows, yet no substitute windows had been approved by WMB prior to bid. On March 2, 2000, the trial court held an evidentiary hearing on the Motion. Eckhardt did not testify during the hearing and was notably absent from the entire proceeding.4 On March 6, 2000, the trial court heard Eckhardt’s, Nello’s and the County’s closing arguments. A day later, counsel for Eckhardt filed a Notice of Voluntary Substitution of
Party Plaintiff (the “Substitution Notice”) pursuant to which another County taxpayer, Paul Engle (“Engle”), attempted to “voluntarily” substitute himself for Eckhardt as the taxpayer plaintiff. According to counsel for Engle, Eckhardt no longer wanted to be involved “after she began to receive unwanted attention from the press regarding this action.”5 On March 15, 2000, the trial court issued a Memorandum and Order (the “Order”) denying all relief requested by Eckhardt and dismissing the Motion. The trial court noted that although considerable evidence focused on the apparent deficiencies in the post-bid information either not requested by WMB and/or that actually submitted by Nello, Eckhardt could not establish “that the bid submission process was flawed” or that Nello had gained any competitive advantage over other Contract bidders. At the time the Order was issued, the Substitution Notice had yet to be ruled upon by the trial court. On March 27, 2000, Engle appealed the Order to the Commonwealth Court of Pennsylvania. The County subsequently moved to quash the appeal on the basis that Engle was not properly substituted as plaintiff in the underlying Action nor as the appellant on appeal. Substitution Notice was premised upon Rule 2352 of the Pennsylvania Rules of Civil Procedure which allows a “successor” to step in and substitute for a party in a pending action. However, elsewhere in the Rules a “successor” is defined as “anyone who by operation of law, election or appointment has succeeded to the interest or office of a party to an action.” Pa.R.C.P. 2351. Accordingly, the County and Nello asserted that Engle’s voluntary substitution was
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improper because Engle did not qualify as a “successor” within the definition of Rule 2351. In response, Engle asserted that “as a taxpayer he had the right to commence this suit in his own name like Eckhardt or any of the other nearly 200,000 residents of Beaver County.” Engle, 754 A.2d at 731. Engle further asserted that “even if his voluntary substitution was improper the granting of Beaver County’s motion to quash would be in derogation of the judiciary’s primary concern with dispensing justice.” Id. In fact, Engle went so far as to assert that “[t]he very idea that a taxpayer—rather than an aggrieved bidder—must serve as a plaintiff in a bid protest is based on a legal fiction which is rapidly becoming outmoded.”6 The Commonwealth Court of Pennsylvania rejected Engle’s contentions. In particular, the Court noted the following: It is clear that Engle was not a ‘successor’ to any interest or office of Eckhardt within the meaning of Rule 2351. Further, the Court rejects the suggestion that a former stranger to an action should be permitted to insert himself into proceedings at the trial level or on appeal through voluntary substitution simply by claiming that he has a similar interest or that he could have pursued a similar action in his own right. Engle did not file an action in his own name. Nor did he seek to intervene in the action filed by Eckhardt pursuant to applicable Rules of Civil Procedure. Even when intervention is properly sought, it is not an absolute right but rather may be denied on various grounds. In the present case the record demonstrates, as Beaver County and Nello contend, that the purported substitution of Engle for Eckhardt was entirely improper.
other than the lowest responsible bidder); Conduit and Foundation Corp. v. City of Philadelphia, 41 Pa. Commw. 641, 644-45, 401 A.2d 376, 377 (1979) (having “an interest in public funds,” the taxpayer has standing to maintain an action aimed at preventing the unlawful spending of tax dollars); American Totalisator Co., Inc. v. Seligman, 27 Pa. Commw. 639, 643, 367 A.2d 756, 758 (1976) (“where bids for public contracts are invited and promised to be let to the lowest responsible competing bidder, a disappointed bidder who is also a taxpayer has standing to seek to enjoin the award of a public contract contrary to the promise.”). For projects subject to the Code’s provisions, however, anyone “aggrieved” by a public contract award including, but not limited to, a disappointed bidder, may initiate a bid protest. 62 Pa. C.S.A. § 1711(a).
Engle, 754 A.2d at 732. Because Engle could not properly become a party to the underlying action or appeal and because Eckhardt had long since vanished, Engle’s appeal was quashed. What lesson does the Engle decision provide? First, the Commonwealth Court’s rejection of Engle’s invitation to ignore procedure technicalities and hear the merits of the appeal establishes that the taxpayer standing requirement is alive and well in Pennsylvania public bid dispute cases. Second, the Engle decision offers the following reminder to those intent on pursuing a public bid protest action: Make sure the taxpayer plaintiff is committed and will not cave under the inevitable pressure and scrutiny associated with such actions, especially when a high-profile public project is at issue. All too often, the fortitude of the “nominal” taxpayer plaintiff is overlooked in the race to the courthouse. After Engle, that scrutinizing selection becomes critical. John M. Tedder Pittsburgh Office
Endnotes 1
Prior to the enactment of the Commonwealth Procurement Code, 62 Pa.C.S.A. §§ 101 et seq. (1998) (the “Code”), having an aggrieved taxpayer as plaintiff was clearly necessary. See, e.g., R.S. Noonan, Inc. v. School District of City of York, 400 Pa. 391, 393, 162 A.2d 623, 624-25 (1960) (statute requiring award of public contract to lowest responsible bidder “does not vest in a disappointed low bidder a cause of action, but gives to the public, in a taxpayer’s suit the right to demand that the lowest responsible bidder be awarded the contract.”); General Crushed Stone Co. v. Caenarvon Twp., 146 Pa. Commw. 306, 309, 605 A.2d 472, 473 (1992) (a taxpayer has standing to seek to enjoin the award of a public contract to anyone
2
Pennsylvania courts do not punish a taxpayer’s ignorance of the law or facts giving rise to a bid protest action. To the contrary, bid protests are proper even where the taxpayer plaintiff cannot “exhibit a thorough comprehension or knowledge of the complaint” or where the taxpayer lacks “knowledge of the precise legal basis for claiming that the [public body] had not followed the legal bidding process.” Rainey v. Borough of Derry, 163 Pa. Commw. 606, 612-13, 641 A.2d 698, 701 (1994).
3
Editor’s Note: Reed Smith LLP attorneys, Robert A. King, Bruce E. Stanley and the author, represented the prevailing party in Engle, the County of Beaver, during the trial and appellate proceedings.
4
Michael Coates of Mike Coates Construction Company, Inc. (“Coates”) was Eckhardt’s primary witness during the hearing. Not surprisingly, Coates submitted the second lowest bid for the Contract in the amount of $11,622,835.00, a difference of $332,835.00 from Nello’s bid.
5
Engle’s Reply Brief dated May 18, 2000, at p. 7.
6
Engle’s Reply Brief dated May 18, 2000, at p. 9.
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ReedSmith Adarand Addendum: An Update
Predictable as the rising sun, Adarand is back knocking on the Supreme Court’s door. In a brief filed November 3, 2000, Adarand asks the Court to revisit the issue, arguing that (1) the evidence of actual discrimination in this case was not sufficiently compelling to warrant the application of a raceconscious set-aside remedy, and (2) the Government failed to prove that this remedy was a necessary “last resort,” that alternative race-neutral remedies were not available, and that the selected companies under the program were in fact “disadvantaged.”
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In the June edition of this publication, we wrote about the long and tortured history of the litigation over affirmative action programs which focus on Federally subsidized highway construction projects. “The Saga Continues: Adarand, Its Antecedents And Its Aftermath.” (The Critical Path, June 2000) This follow-up will reassure you that the controversy remains a “work in progress.” To recap, Adarand is a case in which the low bidder on a highway project subcontract, Adarand Constructors, Inc., lost out to another bidder which was certified as a “Small Disadvantaged Business” (“SDB”) pursuant to a “set-aside” program under federal procurement regulations. Adarand filed suit challenging the regulations which presumed that small businesses owned by minorities are “disadvantaged” for purposes of SDB qualification and which paid additional compensation to prime contractors to hire SDBs. Adrarand lost the suit at the United States District Court and Court of Appeals levels, but won at the United States Supreme Court. The lower courts followed other Federal case-law in holding that the set-aside programs are constitutionally valid because the federal government has a “compelling interest” in eradicating discrimination in the awarding of government contracts. The Supreme Court did not dispute that finding as such but found that any attempt to remedy such discrimination through the imposition of raceconscious set-aside programs, which carry their own form of discrimination, must be viewed with “skepticism.” The Supreme Court thus sent the case back down to the District Court with instructions that it reconsider the issue under the “strictest judicial scrutiny” standard of
review. In other words, in the Supreme Court’s view, the discrimination which is sought to be eradicated must be clear and specific and of significantly greater impact than any discrimination which might flow from the application of the set-aside program in any particular case. Taking a second look at the case, this time within the guidelines prescribed by the Supreme Court, the District Court ruled for Adarand. It held that the set-aside program was not, as is required, “narrowly tailored” because the presumption under the regulations that all minorities are competitively disadvantaged is factually unsupportable. Accordingly, the District Court awarded summary judgment to Adarand and invalidated the setaside program as unconstitutional. The Government appealed to the 10th Circuit Court of Appeals which refused to review the case on its merits because, during the intervening years, Adarand itself became certified as a Disadvantaged Business Enterprise (“DBE”) under revised State regulations which had eliminated the controversial presumption. The 10th Circuit Court of Appeals found that as a certified DBE under State regulations, Adarand should be qualified for setaside consideration under the Federal regulations, thus “mooting” its claim. Although Adarand’s “victory” at the District Court remained undisturbed by the Court of Appeals’ “mootness” ruling, the precedent of a single District Court would in all likelihood have little impact on the administration of Federal procurement set-aside policies. It was
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important to get a ruling on the underlying issues from a Circuit Court of Appeals. Accordingly, Adarand took the case back to the United States Supreme Court which, once again, ruled in Adarand’s favor and remanded the case back to the 10th Circuit Court of Appeals for consideration on the merits. That is where we left off in the June article. The following is what has happened since: On September 25, 2000, the 10th Circuit Court of Appeals ruled both for and against Adarand, mostly against. Insofar as Adarand’s individual claim was concerned, the court agreed with Adarand’s position that the set-aside program, in effect at the time it was denied the contract, was unconstitutional. Presumptively, then, this opinion preserves Adarand’s claim for an individual remedy. But the pursuit of an individual remedy is not what has driven this interminable litigation. This litigation took dead aim at any and all race-conscious government set-aside programs. On that score, the 10th Circuit ruled against Adarand. It reaffirmed that the Government could continue to try to eradicate specifically provable discrimination in awarding government contracts, or the effects of discrimination, through the use of narrowly tailored set-aside programs even under the “strict judicial scrutiny” standard imposed by the Supreme Court. The Court found that the regulations governing such programs had been significantly changed since the District Court first ruled on this case (1992) to provide more flexibility, discretion, choice and individual assessments of discriminatory impact, and thus were more “narrowly tailored” remedies than
they had been in the past. The Court found it was particularly important that the former presumptions of social and economic disadvantage for minority companies had yielded to a requirement that there be an individual analysis and actual proof of discrimination in every case. Accordingly, current day set-aside programs were given a seal of approval. Predictable as the rising sun, Adarand is back knocking on the Supreme Court’s door. In a brief filed November 3, 2000, Adarand asks the Court to revisit the issue, arguing that (1) the evidence of actual discrimination in this case was not sufficiently compelling to warrant the application of a race-conscious set-aside remedy, and (2) the Government failed to prove that this remedy was a necessary “last resort,” that alternative raceneutral remedies were not available, and that the selected companies under the program were in fact “disadvantaged.”
tries to be used in determining disparate impact, or the criteria to be used in determining whether a proposed set-aside is sufficiently “narrowly tailored,” or whether its proposed duration is appropriate, or sufficiently flexible, or the factors to consider in determining whether alternative race-neutral remedies are available. The truth is no one can confidently predict what the Court will do. Stay tuned. Bernard J. Casey Washington, D.C. Office
The Supreme Court accepts for review only a tiny fraction of the petitions it receives. While it has shown a keen interest in this particular case and in this issue over the years, it might conclude that the overriding constitutional questions presented in this case have been sufficiently resolved and that the remaining issues are too factspecific to warrant further review at this level. Or the Court could continue to use this case as a vehicle for establishing further guidelines governing the administration of this complex balancing of inherently conflicting rights. Potential issues abound. The Court could, for example, focus on the methodology of determining the existence of actual discrimination, the relevant geographical or market areas or indus-
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ReedSmith
As
BUILT… And the Clock Ticks: Maryland’s Courts Weigh in with Several Time-Related Decisions
Overall, from a review of these cases, the courts in the State of Maryland have spoken loud and clear: Contractual limitation periods in construction contexts must be given strict attention or significant and valuable rights may be irretrievably lost.
As we begin to wind down and review the events of the year, it is rather appropriate to examine four recent decisions of the state and Federal courts of Maryland on a number of time-related issues implicated on construction projects. Each of these decisions individually and all of these decisions together express a basic but critical message to all participants in Maryland construction projects, namely, claims must be pursued in a timely fashion in order to have any chance of succeeding. The first of these decisions was rendered by the United States Court of Appeals for the Fourth Circuit (the “Fourth Circuit”) in Hartford Insurance Company of the Mid-West v. American Automatic Sprinkler Systems, Inc., 201 F.3d 538 (4th Cir. 2000). At issue in that case was whether a subcontractor was entitled to protection as a “contractor” under the 10-year statute of repose in Maryland. In plaintiff’s effort to avoid the preclusive effect of the statute of repose in a subrogation action against a sprinkler installer for alleged, breach of contract, strict liability, and negligence arising out of and relating to a failure of the sprinkler system, plaintiff contended that a subcontractor was not appropriately included within the scope and coverage of the term “contractor” as used in the statute of repose. As a part of this contention, plaintiff submitted differing definitions of “contractor” and “subcontractor” contained in other documents and statutes involved in construction
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matters, namely, the American Institute of Architects (“AIA”) form documents and under Maryland’s mechanics’ lien statute. The Fourth Circuit rejected this contention concluding that the examples provided by the plaintiff were not appropriately considered in the context of the statute of repose which sought to adjust the rights and responsibilities as between the owner and a contractor, contrasted with the examples proffered by plaintiff which adjusted the rights and responsibilities as between a contractor and a subcontractor, thereby requiring that a distinction be made between those contracting entities. Accordingly, having concluded that the subcontractor was in fact included within the scope and coverage of the statute of repose, the Fourth Circuit held that claims relating to the original installation were time-barred. The next decision came from the Court of Appeals of Maryland in the case of County Commissioners of Caroline County v. J. Roland Dashiell & Sons, Inc., 358 Md. 83, 747 A.2d 600 (2000). In that matter, Dashiell, a general contractor, had filed suit against the County Commissioners of Caroline County (the “County”) seeking damages in excess of $2.3 million for delays and monies inappropriately withheld from Dashiell by the County. Following initiation of this action, the County filed a Motion to Dismiss asserting that Dashiell’s claims were barred by Dashiell’s failure to file them in a timely manner as required by the AIA
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form contract utilized on the project at issue. In particular, the County relied on provisions in the AIA documents which stated that claims for additional costs or claims for additional time would be invalid unless they were asserted within twenty-one (21) days after the occurrence of the event giving rise to the claim or within twenty-one (21) days after the claimant first recognized the condition giving rise to the claim, whichever is later. Applying this contractual claim restriction, it was apparent to the court which had initially reviewed this matter, as well as to the Court of Appeals of Maryland, that the claims asserted by Dashiell were not timely under the AIA documents. Likewise, the Court of Appeals rejected Dashiell’s attempt to avoid the impact of the time limitations contained in the AIA documents by suing the County for unjust enrichment and in quasi-contract for the amounts which Dashiell claimed as due and owing. In reaching this conclusion, the Court of Appeals noted the subject matter of Dashiell’s claim was covered by several specific, valid and enforceable provisions contained in the written contract between the parties. The Court of Special Appeals of Maryland was not far behind in issuing the next decision of College of Notre Dame of Maryland, Inc. v. Morabito Consultants, Inc., 132 Md. App. 158, 752 A.2d 265 (2000). In this matter, the court was called upon to evaluate claims by a building owner against a structural engineer for allegedly deficient structural engineering work performed by the defendant as a consultant to the owner’s architect. The court on
appeal was evaluating whether a claim accrual provision contained in the construction contracts between the owner and the architect and the architect and the structural engineer were applicable and binding on the owner for claims against the structural engineer. The significance of these provisions was that the defendant/ structural engineer contended any discovery rule tolling of the applicable limitation period was not appropriate considering the provisions in the AIA documents utilized which specified when claims would accrue. After analyzing cases which discussed the parties’ rights to negotiate and agree to provisions affecting the accrual of causes of action under the contract, the court held that the AIA provisions, in the absence of duress, fraud, misrepresentation or unequal bargaining power, would be enforced to preclude the application of any equitable tolling doctrines. However, the court quickly noted that their decision was not intended to reach to claims for damages to person or property sustained by a contracting party or for contribution/indemnity by a contracting party as a result of action brought against the contracting party by a third party. The court also left room for negligence claims being separate and apart of the impact of the AIA documents. As such, the question of whether the building owner’s negligence claims were appropriately and timely filed was not before the court on appeal. The final decision from the State of Maryland came from the Court of Appeals of Maryland in Lumsden v. Design Tech Builders, Inc., 358 Md. 435, 749 A.2d 796 (2000). That case involved an action by a number of homeowners against the builder for peeling and scaling of their concrete
driveways. The court was confronted with two sections of Maryland’s Code dealing with implied warranties and expiration of warranties. Ultimately, however, the critical issue in this case became when the discovery rule, which would operate to toll the statute of limitation from running, was no longer available to the plaintiffs. Initially, the court observed its prior decision in which it summarized the discovery rule: Therefore, in simple terms, a plaintiff is only on inquiry notice, and thus the statute of limitations will begin to run, when the plaintiff has ‘knowledge of circumstances which would cause a reasonable person in the position of the plaintiff [ ]with reasonable diligence, would have led to knowledge of the alleged [tort].’ Id. at 446, 749 A.2d at 802. The court continued, concluding “the clock for a statute of limitations begins to run when a claimant gains knowledge sufficient to put him or her on inquiry notice. From that date forward, a claimant will be charged with knowledge of facts that would have been disclosed by a reasonably diligent investigation.” Id. at 447, 749 A.2d at 803. As such, because the driveways in question had already peeled and scaled and that peeling and scaling should have put a reasonable person on notice of the deficiencies claimed by plaintiffs in the complaint against the driveway builder, the court reached the conclusion that the homeowners’ actions were timebarred. The court did leave open a window through its acknowledgment and continued on page 16
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ReedSmith “Maryland’s Courts Weigh In” – continued from page 15 discussion of the case of Baysinger v. Schmid Products Co., 307 Md. 361, 514 A.2d 1 (1986). In that case, involving a medical products liability claim, even a doctor consulted by the plaintiff did not have knowledge of the cause of plaintiff’s injuries despite plaintiff’s symptomatic reaction to the medical device. In that case, the court concluded that it could not hold the plaintiff to knowledge that even a trained physician was not able to ascertain. Accordingly, a more accommodating statute of limitation discovery rule analysis was applied. However, with these driveway matters, the plaintiffs had believed that another defendant may have caused the problems they experienced with their respective driveways. Because the plaintiffs had reached a determination that someone was at fault, the court concluded that the discovery rule would no longer apply once plaintiffs became aware of information sufficient to know that the peeling and scaling was the result of someone’s conduct.
Overall, from a review of these cases, the courts in the State of Maryland have spoken loud and clear: Contractual limitation periods in construction contexts must be given strict attention or significant and valuable rights may be irretrievably lost. So when evaluating the possibility of pursuing any construction-related claim, it is essential that the claiming party evaluate its contract to determine whether any terms contained in it preclude recovery or establish preconditions to enforcement of claims. Thereafter, it is equally important to initiate claims timely utilizing a conservative analysis of the statutes of limitation and an expansive reading of the statute of repose. That way, claimants will be in a much better position to be able to recover on timely asserted claims and will be able to keep building for the future!
Pittsburgh
412.288.4274
Bernard J. Casey Washington, DC 202.414.9214
[email protected] Thomas R. Folk Falls Church, VA 703.641.4294
[email protected] Edward B. Gentilcore Pittsburgh, PA 412.288.4274
[email protected] Franklin L. Kury Harrisburg, PA 717.257.3045
[email protected] Joseph S. Luchini Falls Church, VA 703.641.4274
[email protected] John M. Tedder Pittsburgh, PA 412.288.8596
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Edward B. Gentilcore Pittsburgh Office
The Critical Path Editor-in-Chief Edward B. Gentilcore
CONTRIBUTORS
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The Critical Path Regional Editors Bernard J. Casey
Washington
202.414.9214
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Thomas R. Folk
Falls Church
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James A. Kosch
Newark
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Bruce E. Stanley
Pittsburgh
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Jonathan Young
New York
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The Critical Path is published and distributed by Reed Smith for the general information of its clients, friends and newsletter recipients. The opinions expressed in The Critical Path are those of the individual authors and not necessarily those of Reed Smith. The contents of The Critical Path are not designed or intended to be, nor should they be considered or used as, the sole source of analyzing or resolving any legal problems. If you have, or think you may have, such a legal problem or issue related to any of the matters discussed in The Critical Path, consult legal counsel. You may contact Edward B. Gentilcore, Editor-inChief, or any one of the lawyers in our Construction Group at the numbers listed herein should you have any questions regarding these or any other construction matters. “Reed Smith” refers to Reed Smith LLP and related entities. ©Reed Smith LLP, 2001. All rights reserved.
Construction Group Steering Committee S. Miles Dumville
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Edward B. Gentilcore
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Robert A. King
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Joseph S. Luchini
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