Risk Management

March 25, 2020

Mass Governor’s Legal Office’s Letter to Municipalities: Withdraw Conflicting City/Town Policies Suspending Essential Construction Services

COVID-19, Delay, Risk Management

Authors:

R. Thomas Dunn

Practice area:

Construction

On March 25, 2020, the Massachusetts Governor’s Legal Office issued a letter to Municipal Chief Executive Officers in the Commonwealth that “provides guidance regarding the effect of the Governor’s March 23, 2020 Order ‘Assuring Continued Operation of Essential Services in the Commonwealth, Closing Certain Workplaces, and Prohibiting Gatherings of More than 10 People’ insofar as the Order intersects with municipal efforts to address the COVID-19 crisis.”

The Governor’s order deemed construction services as essential services, but some Cities/Towns have issued temporary suspensions of construction projects in their locale. The letter emphasizes the importance that “public officials avoid conflicting directives and duplication of efforts.” The Chief Legal Counsel stated:

Then, the letter confirms that the Governor’s March 23, 2020 Order included such a superseding provision “to ensure unitary management of this crisis.” The letter concludes, after reciting that constructions services were included as “essential services” in the list of essential services of the March 23 Order,

Accordingly,

March 25, 2020

Project Suspended or Payment Delays? Don’t Lose Your Mechanic’s Lien Rights!

COVID-19, Litigation, RI Mechanic's Lien, Risk Management

While many construction projects are advancing in a safe manner during the COVID-19 pandemic, some have been suspended by governmental order, like the Cities of Boston and Cambridge, or based upon the direction of the Owner and/or general contractor.

In a recent survey by the AGC (March 17-19), 28% of the respondents reported a project delay ordered by owners and/or governmental bodies. Of the delays and disruptions, respondents reported various causes including:

- 16% material/equipment shortage
- 11% labor shortages (including subcontractor laborers)
- 18% labor shortages from authorities having jurisdiction (AHJ) for inspections, permits, certificates of occupancy

(The AGC is proving to be an invaluable resource with a 8 part webinar series on COVID-19 related issues plus excellent e-blasts and an online resource page. Locally, the AGC of Massachusetts and CIM are also on the forefront of COVID-19 related construction industry issues. I encourage you

March 23, 2020

Rhode Island Issues Work from Home Order “If You Can”

COVID-19, Delay, Risk Management

On March 22, 2020, Governor Raimondo issued the Seventh Supplemental Emergency Declaration that ordered “[a]ll business service personnel that can work from home are required to do so.” The order was effective immediately and operates through March 30, 2020.

At the time of preparing this post, Rhode Island has not suspended business activities for “essential businesses.” Based upon this policy, field construction services cannot be performed remotely so they can continue provided the following practices are in place:

Gatherings of ten (10) or more people in public or private spaces in Rhode Island are prohibited. In addition, businesses that remain open must post notices of these policies as noted in paragraph 5 below.

For Rhode Island news and updates about COVID-19, visit https://health.ri.gov/diseases/ncov2019/.

March 23, 2020

Massachusetts Closes In-Person Non-Essential Businesses Effective March 24 — Construction Designated Essential

COVID-19, Delay, Risk Management

Effective March 24th at 12:00 noon, Massachusetts is closing all non-essential businesses “physical workplaces and facilities (“brick-and-mortar premises”) through April 7, 2020. See COVID-19 Order No. 13.

As an update to my post from Friday on Non-Essential Businesses, Massachusetts did not adopt the CISA Guidelines, but appears to have followed the structure of them.

The essential services list for Massachusetts can be found HERE. Construction services is included as “essential” servcies as follows:

All indication is that MassDOT, MBTA, and MassPort projects are continuing (as noted by the above-referenced public works inclusion as an essential service. During a board meeting of MassDOT, the Commissioner stated that the work is continuing but each project will be reviewed on a case-by-case basis. Below is a letter Construction Industries of Massachusetts received from MassDOT on March 23, 2020 stating

March 20, 2020

Current Guidance on Whether Construction Services Are “Essential” or “Life-Sustaining” Businesses Under Governmental Business Suspensions

COVID-19, Risk Management

State governments are issuing orders suspending the full or partial operations of “non-essential” or “non-life-sustaining” businesses. At the time of writing this post, these states include Nevada, Pennsylvania (Order of PA Secretary of Health), New York (50% no later than 8pm today – March 20th). Some cities, such as Los Angeles are issuing similar orders. Other states and local municipalities are considering such measures and it appears inevitable that more will come today and through next few days.

To what extent will construction companies qualify to continue operations as “essential” or “life-sustaining” businesses? What is the current guidance?

New York’s guidance provides for construction “skilled trades such as electricians, plumbers” and “other related construction firms and professionals for essential infrastructure or for emergency repair and safety purposes.” “Essential infrastructure” includes:

- utilities including power

March 19, 2020

Signing a Construction Contract in the Middle of the Coronavirus Pandemic . . . Two Contract Clauses to Consider

ADR, Contract Documents, COVID-19, Risk Management

There is rightfully a lot of buzz in the construction industry about force majeure clauses. Authors are writing about how far and how much they protect contracting parties from unforeseen and uncontrollable events that cause delay.

While the standard AIA, ConsensusDocs, or other industry form contract time extension and/or force majeure clauses will likely provide some relief as to time extensions in appropriate situations, contracting parties may be best served to acknowledge the uncertainties our industry is confronting by crafting specific language for delays and increased costs resulting from the COVID-19 pandemic.

Sample language for consideration:

Notwithstanding the requirements and obligations set forth in the Contract Documents and this Agreement, Contractor shall be entitled to an extension of the Contract Time and an equitable adjustment of the Contract Price, due to labor shortages, material escalation, or otherwise, for the performance of Subcontractor’s Work due to events and conditions beyond Contractor’s control, including the present

March 19, 2020

Steps to Take if You Receive a Subcontractor’s COVID-19 Work Suspension Notice

COVID-19, Delay, Risk Management

There are increasing reports that some subcontractors have decided to suspend operations during the COVID-19 outbreak. The subcontractors made this difficult decision even though the construction projects for which the general contractor has a continuing performance obligation remain ongoing with CDC health and safety measures in place.

What should a general contractor do if it receives such a notice (assuming the project is still moving forward)? My thoughts are below recognizing that our present environment changes from day to day based upon news reports and governmental orders.

1. Reply to the subcontractor. Confirm receipt of the notice and inquire about the subcontractor’s reasons for suspension and corporate policies regarding COVID-19 if not clear from the notice letter. If not already established, provide a contact person for the subcontractor to provide updates as to the subcontractor’s policies and work plan schedule. Include a reservation of rights so that it is clear that you are preserving claims arising from the suspension and state that

March 17, 2020

Contractors: Its Time to Send Your COVID-19 Notice

COVID-19, Delay, Risk Management

The day-to-day professional and personal impact of the COVID-19 pandemic is substantial. The global event will have dozens of common legal implications that we will address in this blog over the coming days, but for now I wanted to start with the basic starting point for any event of delay and/or additional cost on a construction project — THE NOTICE!

The time is now to send your notice.

This is not an adversarial notice. Your contracting party will understand the impacts experienced and should appreciate the proactive approach in communicating the COVID-19 impacts. If discussions have occurred between with your contracting party, I would still send a formal notice as to avoid further legal defenses down the line. Also, providing the formal notice creates a structure that is helpful in creating a productive communication pathway regarding the delays/costs incurred and ways to mitigate them.

No matter what the legal theory, the COVID-19

March 17, 2020

City of Boston’s Press Release on Suspending Construction in Boston Effective March 17th

COVID-19, Delay, Risk Management

Below is the City of Boston’s Press Release suspending all regular activity at construction sites in Boston as of today – March 17, 2020. Sites need to be made safe by March 23, 2020. Policy will be revisited in two weeks.

CONSTRUCTION SITES

Effective tomorrow, Tuesday, March 17, 2020, the City is suspending all regular activity at construction sites in Boston. Employers should maintain the necessary crews to keep their sites safe and secure, keep any materials from blowing away, and prevent trespassing. This work needs to be completed in the next week, by Monday, March 23, 2020. After sites have been secured, skeleton crews will be permitted for the remainder of this suspension to ensure safety. The only work that will be permitted moving forward will be emergency work, which will need to be approved by the City of Boston’s Inspectional Services Department.

That essential work includes:

emergency utility, road or building work, such as

October 22, 2019

The Intersection of Workers’ Compensation Immunity and Contractual Indemnity

Contract Documents, Indemnity, Litigation, Risk Management

The workers’ compensation statute in many states provides that the workers’ compensation benefits received by an injured employee is the employee’s exclusive remedy. The benefits are paid based on a no-fault basis and the injured employee is barred from bringing a lawsuit against his or her employer. The degree in which the exclusive remedy provision applies varies in different jurisdictions. An ABA 50-State Survey on the exclusive remedy provisions can be found by clicking HERE.

In many construction contracts, a contractor indemnifies an owner for personal injury and property damage caused by the contractor’s negligence.

Here is the fact scenario: A contractor’s employee gets injured on a jobsite. The employee receives workers’ compensation benefits but has incurred additional damages beyond those benefits. The contractor employee cannot bring a lawsuit against the his employer based on the workers’ compensation exclusive remedy provision, but the employee may bring a lawsuit against the owner for the personal injury damages. Owner

Our blog focuses on providing practical information and guidance relating to construction risk management and dispute resolution. We intend to highlight and summarize relevant state and federal cases, construction industry developments, newly published construction law publications to provide a meaningful resource to assist our in-house counsel, risk manager, or outside counsel readers to avoid, mitigate, or efficiently resolve disputes relating to the construction industry.

While many of our topics will have a national focus, specialized attention will be devoted to state-specific topics and developments in the jurisdictions in which our construction attorneys practice: Massachusetts, Rhode Island, Maine, and New Hampshire.

Risk Management

Mass Governor’s Legal Office’s Letter to Municipalities: Withdraw Conflicting City/Town Policies Suspending Essential Construction Services

Project Suspended or Payment Delays? Don’t Lose Your Mechanic’s Lien Rights!

Rhode Island Issues Work from Home Order “If You Can”

Massachusetts Closes In-Person Non-Essential Businesses Effective March 24 — Construction Designated Essential

Current Guidance on Whether Construction Services Are “Essential” or “Life-Sustaining” Businesses Under Governmental Business Suspensions

Signing a Construction Contract in the Middle of the Coronavirus Pandemic . . . Two Contract Clauses to Consider

Steps to Take if You Receive a Subcontractor’s COVID-19 Work Suspension Notice

Contractors: Its Time to Send Your COVID-19 Notice

City of Boston’s Press Release on Suspending Construction in Boston Effective March 17th

The Intersection of Workers’ Compensation Immunity and Contractual Indemnity

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