WEBINAR HOW LONG IS A ROOFING CONTRACTOR TO BE LIABLE FOR ROOF PERFORMANCE June 4 2015 Stephen M Phillips Hendrick Phillips Salzman amp Flatt PC 230 Peachtree Street Suite 2500 Atlanta GA 30303 ID: 583183
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NERCA WEBINAR
HOW LONG IS A ROOFING CONTRACTOR TO BE LIABLE FOR ROOF PERFORMANCE?
June 4, 2015
Stephen M. Phillips
Hendrick, Phillips, Salzman & Flatt, P.C.
230 Peachtree Street, Suite 2500
Atlanta, GA 30303
(404) 522-1410
smp@hpsf-law.comSlide2
Hostile Playing Fields: Contractors Facing More and Longer Liability in Certain Arenas
Problematic Specifications, Warranties and Nullum TempusSlide3
Dealing With Problematic Specifications and Warranty Requirements
Normal Measure of Liability for Roof Contractor
Perform the work in a good and workmanlike mannerComply with the contract requirements, which includes all provisions in specifications
Ignore a provision in specifications at your peril
Subject to suit for applicable statutes of limitation and respose in your state
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Theories of Roofing Contractor Liability
Roofing contractor could be liable for:
Breach of contractNegligence (tort)Breach of warranty
Negligent misrepresentation
East theory potentially has a different statute of limitations both with regard to length and start date.
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Warranty – An Additional Remedy or an Exclusive Remedy?
Consider making your warranty the Owner’s sole
and exclusive remedy and your sole liability post-completion
Consider adding a dispute resolution provision in your contract and warranty setting a time period for a legal claim to be filed and establishing arbitration as the dispute resolution procedure
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Shortening Statutes of Limitation and Arbitration
Parties can by contract shorten the statute of limitations in most states. A provision along these lines could be inserted in the construction contract:
Any legal claim against Roofing Contractor alleging breach of this contract or negligence by Roofing Contractor shall be resolved through arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association and must be initiated no later than ___ years after Roofing Contractor performed the roofing installation covered by this contract.
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Statute of Limitations - Massachusetts
Contract – Mass. Gen. Laws Ann., ch
260 § 2Time: 6 years Begins to run: In commercial construction cases, after the breach of contract occurs, even if damages are unknown.
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Statute of Limitations for Tort Claims and Repose - Massachusetts
Statute of Repose – Mass. Gen. Laws Ann., ch
260 § 2BThis statute applies only to claims based in tort or implied warranty. It does not apply to contract actions and does not apply to third party actions based upon an express indemnification agreement.
Private property – 3 years, running from date cause of action accrues. 6 year statute of repose from the earlier of (1) the opening of the improvement to use or (2) the substantial completion of the improvement and the taking of possession for occupancy by the owner.
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Statute of Limitations - Massachusetts
Shortening – yes, as long as reasonable. One year contractual limitations period has been upheld.
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Statute of Limitations - Connecticut
Contract - Conn. Gen. Stat. Ann. § 52-576
Time: 6 years (written or oral); 3 years (executory)A contract is executory when neither party has fully performed its contractual obligations, and is executed when one party has fully performed its contractual obligations.
Begins to run: From the date an injury is inflicted. For defective workmanship claims, this generally is the date of the completion of the work.
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Statutes of Limitation and Repose
Connecticut
Shortening – yes, as long as reasonable. One year contractual limitations period has been upheld. It appears that, under Connecticut law, the parties may contractually provide for a reasonable limitation period for filing suit that is shorter than the applicable statute of limitations and that a one-year contractual limitations period is reasonable.
Gianetti
v. Greater Bridgeport Individual Practice
Ass'n
, 2005 WL 2078546, 3 (
Conn.Super.,2005
)
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Statutes of Limitation and Repose
Connecticut
Conn
. Gen. Stat. Ann. §
38a
-290
No insurance company doing business in this state shall limit the time within which any suit shall be brought against it or any claim shall be submitted to arbitration on (1) a fidelity or surety bond to a period less than three years from the time when the loss insured against occurs; (2) a construction performance bond to a period less than three years from the date on which the principal last performed work under
the
contract;
(3) a construction payment bond to a period less than three years from the date on
which
the claimant last performed work or supplied material for which the claim is made; and (4) all other policies to a period less than one year from the time when the loss insured against occurs.
12Slide13
Statute of Limitations – New York
Contract - N.Y. Civ. Prac. L. & R. 213(2)
Time: 6 yearsBegins to run: Cause of action accrues, and statute of limitations begins to run, from time of breach.
Sunbeam Products, Inc. v. Wing
Shing
Products (BVI) Ltd.
, 311 B.R. 378 (2004). In construction cases, claims against contractors for defects in construction generally accrue upon substantial completion of physical work. On public works projects, a contractor may specify the completion date by giving appropriate notice to the state agency under Section 138-a of the New York State Finance Law.
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Statute of Limitations – New York
Statute of Repose - None generally applicable. Statute of repose
for claims against architects/engineers, and for personal injuries arising out of exposure to toxic substances.14Slide15
Statute of Limitations – New York
Shortening – Yes. N.Y. Civ. Prac. L&R § 201 provides “An action, including one brought in the name or for the benefit of the state, must be commenced within the time specified in this article unless a different time is prescribed by law
or a shorter time is prescribed by written agreement.”
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Statute of Limitations – New Jersey
Contract - N.J. Stat. Ann. 2A:14-1
Time: 6 yearsBegins to run: When a person knew or should have known he had a cause of action against the party to be sued.
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Statute of Limitations – New Jersey
Statute of Repose - N.J. Stat. Ann.
2A-14-1.1Time: 10 years
Begins to run: After the date of substantial completion of the structure.
Shortening – Yes. “Generally, contract provisions limiting the time parties may bring suit have been held to be enforceable, if reasonable.”
Mirra
v. Holland America Line
, 331
N.J.Super
. 86, 751
A.2d
138 (2000).
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Statute of Limitations – Pennsylvania
Contract - 42 Pa. C.S.A. §
5525Time: 4 yearsBegins to run: From the date of the alleged breach of contract. For breach of construction contracts involving latent defects, from the date a person became aware, or through the exercise of reasonable diligence should have become aware, of the defect. In a case involving a leaky roof, one court held that the statute began to run after the leaks proved to be persistent, occurred in a variety of locations and repeated repair efforts proved futile. If a patent defect involved, the statute runs from the date of the breach of the contract.
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Statute of Limitations – Pennsylvania
Statute of Repose - 42 Pa. C.S.A.
5536Time: 12 years. 14 years if injury occurs between 10th to 12th year.
Begins to run; After the date of substantial completion of a project.
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Statute of Limitations – Pennsylvania
Shortening – Yes. Permitted if reasonable. 42 Pa. C.S.A. § 5501(a) provides “An action, proceeding or appeal must be commenced within the time specified in or pursuant to this chapter unless, in the case of a civil action or proceeding, a different time is provided by this title or another statute
or a shorter time which is not manifestly unreasonable is prescribed by written agreement.”
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Statute of Limitations – Pennsylvania
Repair Doctrine" -- In a 1991 case, the Superior Court of Pennsylvania adopted "the repair doctrine," which in effect suspends the running of the statute of limitations. In cases where (1) the defendant undertook continuous repair; (2) the defendant represented that the repairs would cure the defect; and (3) the plaintiff relied upon the representation that the repairs would cure the problem, the repair doctrine will preclude the defendant from asserting that the statute of limitations ran during the period the defendant was attempting the repairs.
Amodeo v. Ryan Homes, Inc.
, 595
A.2d
1232 (Pa. Super. 1991)
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Statute of Limitations – Rhode Island
Contract – R.I. Gen. Laws §9-1-13
Time: 10 years.Begins to run when the plaintiff discovers, or with reasonable diligence should have discovered, the wrongful conduct of the defendant
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Statute of Repose – Rhode Island
Statute of Repose – R.I. Gen. Laws §9-1-29
Time: 10 yearsBegins to run: After substantial completion of the improvement
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Shortening Statute of Limitations – Rhode Island
Shortening – Not settled. In
Gilbane Building Co v. Ocean State Building & Wrecking, Inc., 748 A.2d 826 (R.I. 2000), the Supreme Court of Rhode Island suggested it would have enforced a one year statute of limitations contained in a
warranty;
however the question was moot because the action sounded in breach of the underlying contract, not breach of warranty.
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Contractual Shortening of Statute of Limitations
Allowed –
Connecticut – performance and payment bond limitation cannot be less than 3 years Massachusetts
New Hampshire
New Jersey
New York
Pennsylvania
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Contractual Shortening of Statute of Limitations
Not Allowed - Vermont
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The Problem – Public Projects
Nullum Tempus Occurrit
Regi - “No Time Runs Against the King”State v. Lombardo Brothers Mason Contractors
2012 Decision of Connecticut Supreme Court
1992 – State of Connecticut hired design and construction management firms to build
a
law library at
U
Conn
1994 – Construction commences. Gilbane is Construction Manager
1996 – Construction completed
1996 – Water intrusion problems begin; contractors attempted repairs
2000 – State hires forensic engineers
State undertakes $15 million corrective work
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Nullum Tempus– Public Projects
2008 - - States sues 28 contractors, designers, construction professionals seeking recover of $15 million
All 28 defendants seek dismissal of suit based on expiration of Connecticut’s 6 year contract statute of limitations and 7 year statute of repose
Trial court grants defendants’ motion for dismissal
State of Connecticut appeals. Argues that the State is immune for statutes of limitation and repose and all claims could be prosecuted regardless of passage of time based on
nullum
tempus.
Gilbane argued that, even
if
nullum
tempus
doctrine still existed, language in its contract with the State indicating that the statutory period of repose applicable to design work applied,
should
that the State had waived
nullum
tempus.
2012 – Connecticut Supreme Court rules says doctrine of
nullum
tempus
is
alive
and well and cannot be waived by contract; only the state legislature can eliminate
nullum
tempus
.
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Nullum Tempus – Public Projects
States
differ in their approaches toward the nullum tempus doctrine.Only four states have completely abolished nullum
tempus
: New Jersey, South Carolina, West Virginia and Colorado
Some states apply
nullum
tempus
only to claims brought by the State itself and state agencies.
Other states apply the doctrine to political
subdivisions
and units of local government.
Some states distinguish whether the government unit bringing the suit is performing a
governmental
or proprietary function.
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Nullum Tempus– Public Projects
New York – Nullum tempus
applies if the public entity is exercising uniquely sovereign rights and would not apply when the state agency is asserting ordinary property rightsPennsylvania - Claims by school districts against contractors, architects and others are not subject to a statute of limitations defense, but parties can waive
nullum
tempus
by contract
language. Case decision ruling that language
in the AIA A201 General
Conditions,
which defined when the statute of limitation would run for claims that arose before and after substantial
completion, was sufficient to show waiver of
Nullum tempus
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Nullum Tempus– Public Projects
New Hampshire – nullum
tempus applies to the State, making it exempt for statute of limitationsNew Jersey – has abolished nullum
tempus
by
court decision
Massachusetts –
appears to have abolished
nullum
tempus
in most situations
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The Problem – Public Projects
What Can Contractors Do About Nullum Tempus?
Be aware of possible applicationCheck if doctrine would apply to your project
Seek to include language in your contract that would indicate parties have waived the doctrine, possibly as indirect as language in AIA 201 relied upon by Pennsylvania court
Lobby for legislative reform
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Potential Performance Bond Liability Extending to Warranty
When does the Performance Bond Obligation End?
Performance bonds pose a risk of personal liability exposure depending upon who signed the General Agreement of Indemnity with the bonding company/surety
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Long-term Contractor Warranties and Performance Bonds
Milwaukee Board of School Directors v. Bitec
, Inc.2002 contract between Milwaukee Board of School Directors and Specialty Associates (roofing contractor) for new roof for $361,495
Performance bond contained no time limitation for suit to be initiated on bond
Contract called for contractor to correct defects for one year and contractor was required and issued a separate 5-year roof warranty
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Long-term Contractor Warranties and Performance Bonds
Milwaukee Board of School Directors v. Bitec
, Inc.School District filed suit in 2007 against contractor, manufacturer and contractor’s surety
Surety contended its obligation was over when job was completed and 5 year warranty was separate obligation which the contractor satisfied by issuing the warranty
Wisconsin Court of Appeals ruled surety was liable for performance of warranty obligations
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Long-term Contractor Warranties and Performance Bonds
Always be sure that the performance bond itself contains a time limitation stating when the suit on the bond must be initiated
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Long-term Contractor Warranties and Performance Bonds
AIA A 311 Performance Bond states: “Any suit under this bond must be instituted before the expiration of two (2) years from the date on which final payment under the Contract falls due.”
AIA A 312 Performance Bond states: “Any proceeding, legal or equitable under this Bond…shall be instituted within two years after Contractor Default or within two years after the Contractor ceased working or within two years after the Surety refuses or fails to perform under this Bond, whichever comes first.
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Problematic Specifications, Performance Specifications and Expansive WarrantiesSlide39
Hopedale Memorial Elementary School 07 54
00-2
1.05 Performance Requirements
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Hopedale Memorial Elementary School 07 54 00-6
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Montview Middle School
07 54 19-7
1.5 Warranty A. Deliver to the Owner upon completion of the work of this Section, a conditional warranty for the roofing system, agreeing to promptly repair the roofing as necessary to prevent penetration of water through it.
1. Warranty shall cover product quality, performance and workmanship for a period of 20 years.
a. Warranty shall include total roofing system, and membrane flashings.
b. Warranty shall provide coverage for maximum peak gust wind speed of 105 miles per hour.
2. Insulation warranty shall cover product quality, performance and workmanship including reuse for a period of 40 years.
3. Applicator shall supply Owner with a separate 5 year workmanship warranty. In the event any work related to roofing, flashing, or metal is found to be within the Applicator warranty term, defective or otherwise not in accordance with Contractor Documents, the Applicator shall repair that defect at no cost to Owner. Applicator’s warranty obligation shall run directly to Owner.
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2.2 – System Description
B. Performance Requirements
1. Design roofing system for peak wind speed (3 second gust) of 110 miles per hour.42
Problematic Specifications and WarrantiesSlide43
Problematic Specifications and Warranties
General Recommendations
No silver bulletAct EARLY – give yourself as much time as you can to deal with the problem
Need to ACT – take steps to avoid being liable to comply with an unreasonable specification or problematic specification
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Problematic Specifications and Warranties
General Recommendations
ACT EARLYLook at specifications as soon as they are available, not close to bid date
If you know an architect or consultant has an unreasonable specification, seek to cause that architect or consultant to modify his or her “standard” specification prior to issuance of next project
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Problematic Specifications and Warranties
General Recommendations
ACT EARLYPromptly after problematic specification comes out, communicate the problem
For public projects, must act before you submit a bid
For private projects, must act before you sign a contract
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Problematic Specifications and Warranties
General Recommendations
Approach in same way you should act upon an unreasonable contract provisions – try to get it changed or clarifiedMay need to walk away from some jobs
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Problematic Specifications and Warranties
Take Affirmative Action – Early Actions
Alert designer, general contractor and/or owner regarding the problematic provisionBe well prepared to explain why the provision is unreasonable
Listen to what the architect or owner is trying to accomplish
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Problematic Specifications and Warranties
Take Affirmative Action – Early Actions
Explain how the problematic provision may not meet the architect’s or owner’s objectiveWork with the architect and other parties to develop alternative language that is consistent with Owner’s legitimate needs and is reasonable
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Unreasonable Warranty Language
Take Affirmative Language
Seek clarification that long-term warranty is to be manufacturer’s warrantyIf long-term specified warranty is inconsistent with manufacturer’s warranties, alert architect to the discrepancy
You will need either to get the specification or the warranty revised or you will have a breach of contract liability
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Problematic Specifications
Be Especially Wary of Performance Specifications
Sometimes the prescribed materials do not satisfy the performance requirementNeed to go on record and obtain clarification or revision prior to executing a contract
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Problematic Specifications
What to Do With Expansive Performance RequirementsPress the Architect or other design professional to do the design rather than delegating design to the contractor
Go on record to point out design omissions and discrepancies
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Unreasonable Specifications and Warranty Requirements
Actions To Take – Private Jobs
Qualify your proposal to address the unreasonable specification provisionPossibly submit two prices to account for the additional risk and/or expense of an unreasonable specification
Disparity may get the Owner’s attention
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Unreasonable Specifications and Warranty Requirements
Actions To Take – Public Jobs
Notify Architect of problem as soon as you see it is impossible to satisfy or unreasonable specificationInvolve manufacturer
Raise issue at pre-bid meeting
Request a pre-bid meeting
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Problematic Specifications
Actions to TakeArrange to have manufacturer’s representative attend the pre-bid meeting
Insist that an addendum be issued
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Problematic Specifications
Public ProjectsUse the pre-bid meeting to alert the architect and owner’s representatives to unreasonable or problematic specifications including inconsistencies between specifications and performance requirements or omissions in specifications (e.g. lack of provision for air barriers)
Follow-up pre-bid meeting with pre-bid inquiry to architect
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Unreasonable Specifications and Warranty Requirements
Performance Bonds
Bonding companies do not want to knowingly have performance bond liability beyond two yearsUse bonding company’s position to aid in your negotiations
Be sure performance bond includes a time limitation
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Problematic Specifications
Major Problems for Roofing Contractor: Wind Warranties and Liabilities
Huge disparity between manufacturers standard warranty coverage for wind (perhaps 55 mph) vs. code requirementsSeek to obtain an enhanced wind warranty from the manufacturer that is the same as your obligation in your contract
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Problematic Specifications
Major Problems for Roofing Contractor: Wind Warranties and Liabilities
Press the designer to calculate required uplift pressure and to specify products and system that are represented to designer as meeting that uplift requirementBe certain that you are installing a complete system that meets the required uplift pressure
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Problematic Specifications
Major Problems for Roofing Contractor: Wind Warranties and Liabilities
Pay particular attention to workmanship that affects wind uplift resistance (i.e. spacing of ribbons of adhesive, thickness of adhesive ribbons, number of spacing of fasteners, walking in boards, undulations in deck, securement of wood nailers, securement and quality of edge detail)
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Potential Anti-Trust Ramifications
Just as two or more contractors cannot agree on pricing, contractors should not agree to act jointly regarding contract terms, including warranties
Each contractor should and needs to act individually when dealing with a general contractor, architect or owner in the market place
NERCA’s
role is to educate
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