California's ambitious plan to build a high-speed rail system linking San Francisco and Los Angeles has been getting quite a lot of attention lately. Although the plan has some high-powered supporters in Secretary of Transportation Ray LaHood and California Governor Jerry Brown, the level of enthusiasm in Congress has been mixed, as reported by the San Francisco Chronicle's Carolyn Lochhead.
Earlier this month the California High Speed Rail Authority approved a revised business plan, slashing its previous $98.5 billion estimate by nearly a third to $68.4 billion, with much of the savings coming from "blended infrastructure." Translation: rather than construct new track for the entire route, the CHSRA's revised plan now includes upgrades to existing track at the San Francisco and Los Angeles ends of the route.
We reported last month that Maryland was on the verge of modernizing its statutory framework for P3s, legislation heavily backed by Governor O'Malley's administration. The proposed legislation was projected to increase the State's capital budget by as much as $315 million and create as many as 4,000 jobs.
Unfortunately for Maryland's infrastructure and residents, the bill fell victim to partisan fights over the State's budget and failed to pass before the General Assembly session ended at midnight on April 9th. Although there is a chance Governor Martin O'Malley could call a special session to work on the budget and other measures, the P3 legislation will most likely have to wait another year. It looks like Jeffrey Gans, a partner in Pillsbury's Construction practice and among those leading Pillsbury's P3 practice, will have to return to Maryland's legislature to testify once again on the importance of Maryland taking advantage of P3 opportunities.
A federal court in Louisiana denied a subcontractor's coverage action against Ace Insurance because the subcontractor did not enroll in the Contractor Controlled Insurance Program. The case is Williams v. Traylor-Massman-Weeks, LLC, et al., EDLA No. 10-2309 and you can look at the pdf of the opinion here: Williams v. Traylor-Massman-Weeks.pdf
The Corps of Engineers entered into a contract with Shaw, which had a Contractor Controlled Insurance Program (known as a "CCIP" which is a type of "wrap up" because its "wraps up" various types of insurance into one place. Shaw entered into a contract with Eustis and at the time, Shaw planned to sponsor a CCIP, but had not created it yet. So, Shaw's subcontract directed Eustis to enroll -- presumably when the CCIP was created.
The trouble was, Eustis didn't enroll. And wouldn't you know it, of all the projects where they forgot to enroll in the CCIP, that was the one where they had a lawsuit? Eustis came up with several creative theories for coverage, but couldn't escape its fundamental problem: It simply didn't enroll in the CCIP.
Aside from the obvious lesson here -- if you are a potential enrollee on a wrap up, make sure you have actually enrolled -- there are other less obvious lessons. If you sponsor a CCIP, do two things: (a) try to make sure your subs get their paper work in; and (b) structure your contracts so that if they don't, the risk to you is minimized.
On March 30, 2012, New Jersey's Appellate Division issued a ruling in the case of New Jersey v Perini Corp. which explains how New Jersey's 10 year statute of repose applies to projects using phased construction.
New Jersey's statute of repose essentially provides that no action may be brought to recover damages for any deficiency in the "design, planning, surveying, supervision or construction" of a project "more than 10 years after the performance or furnishing of such services and construction." Earlier cases have already established that the statute of repose runs from the date that one's services for the project are substantially complete. So, the statute of repose will prohibit a claim against an early trade subcontractor once 10 years has elapsed after that subcontractor completed its work on the project even though the entire project may not yet be substantially complete for more than 10 years. However, the general contractor will remain on the hook until 10 years has elapsed from the date of substantial completion for the entire project.
The Perini case required the court to apply these concepts to phased construction. The state sued the general contractor, designer and pipe supplier for problems that developed with the underground hot water piping at a new state prison. The suit was filed on April 28, 2008. By contract, the prison was constructed in three separate phases - each with its own contractual substantial completion date. By April 27, 1998, 10 years before the state filed suit, the state had issued substantial completion certificates for the entirety of the first two phases of the project and for all but two buildings included in the third phase - a garage and a housing unit located outside the main perimeter. However, no certificate of substantial completion was issued specifically for the hot water system.
The court held that "multiple phases of a construction project that are clearly identified and documented can trigger separate periods of repose, even for the general contractor and other contractors that continue to work on the entire project." However, the court rejected the notion that there can be "separate trigger dates of repose for components of a project, whether multi-phase or not, that are not clearly identified in the documentary record as distinguishable improvements." In this case, the court found that the hot water system was not a clearly distinguishable component of the construction and was not substantially complete by April 27, 1998. As such, the state's claim was not untimely under the statute of repose.
After three years of development, on March 28, 2012, the International Code Council ("ICC") announced the release of its 2012 International Green Construction Code ("IgCC"). The IgCC, a milestone for bringing sustainability into the mainstream, will enable state and local governments to codify green building practice. The IgCC was developed by the ICC in cooperation with key industry partners - the AIA, ASTM International, ASHRAE, the U.S. Green Building Council ("USGBC"), and the Illuminating Engineering Society ("IES").
The ICC touts the IgCC as the first model code to address sustainability issues throughout the entire life of a construction project - from design to certificate of occupancy. Richard P. Weiland, CEO of the ICC, described the IgCC to GlobeSt.com as "a baseline document or regulatory framework that different jurisdictions can use for sustainable construction practices." Wieland further explained that the ICC incorporates the 2011 version of the ANSI/ASHRAE/IES/USGBC Standard 189.1 but allows state and local governments to be flexible in implementation.