Volume 6 - Number 41 | October 20, 2008
Recent Issues
EDITOR'S NOTES | Issue 6-41
A lawsuit involving multiple parties boils down to two main contract questions: Must the construction manager get approval from the payment surety before releasing payments to the contractors? And, can the owner?s retainage dip below 5 percent? The answers are in this week?s first case.
Indemnity and liability come into play in this week?s other two cases, respectively. In the former, an engineering firm?s work is called into question nine years after project completion, raising questions of indemnity and statutes of limitation. In the latter case, a construction company owner is held personally liable for withholding payments from his subcontractors.
CONTRACT DOCUMENTS ALLOWED REDUCTION OF RETAINAGE BELOW FIVE PERCENT
Construction documents do not entitle a project owner to retain a full five percent of the value of the completed work until after final payment, rules a federal appeals court. Further, the construction manager is not liable to the owner for certifying payment applications that reflect less than the disputed five percent.
CLAIM AGAINST ENGINEER EXTINGUISHED 5 YEARS AFTER COMPLETION
An indemnification claim filed by a contractor nine years after project completion fails to pass muster with the court. A statute passed six years after project completion retroactively precludes the suit.
CONTRACTOR?S OWNER HELD PERSONALLY LIABLE FOR VIOLATION OF STATE PROMPT PAYMENT ACT
The owner of a limited liability construction corporation cannot avoid personal liability after a mediator determines he acted in bad faith by withholding timely payment from a subcontractor.
