Sendai Isn’t Unique: Seattle’s Older Buildings at Serious Risk if the Big One Happens Here

A frequent news peg whenever disaster strikes elsewhere is: Can it happen here? When it comes to the Japan earthquake last March, it most certainly can.

The more important question is: Are we ready? From the standpoint of buildings constructed before 1994, the answer may be a sobering no.

Washington Supreme Court Upholds Validity of Sample Claim of Lien Form in the Lien Statute

The Washington Supreme Court has ruled that a Claim of Lien conforming to the sample form in the statute, even though the sample does not contain all the provisions required by the statute, is sufficient to make the claim valid. In Williams v. Athletic Field, Inc., issued on September 15, the Court took the opposite approach from the state Court of Appeals, which had invalidated a Claim of Lien because it lacked a proper acknowledgment required under the lien statute, RCW 60.04. In its decision reversing the appeals court and reinstating the Claim of Lien, the Court recognized that the statute is ambiguous with respect to the contents of and the persons authorized to acknowledge the validity of a lien claim, but chose to liberally construe the statute to achieve its intended purposes. While the Court’s ruling is a victory for pragmatism and substance over form, it also runs contrary to the oft-stated rule of strict construction of the lien statute and could raise questions about how other provisions in the statute will be construed in future cases.

Obesity and Building Design

As the U.S. population’s obesity rates rise, what should builders and developers do to comfortably accommodate this population?

Court Limits Design Professionals’ Immunity Under Workers’ Comp Law

Design professionals “retained to perform professional services on a construction project” in Washington are generally immune from third-party workers’ compensation lawsuits, unless the design professional contractually assumes responsibility for the safety of others or negligently prepares design plans or specifications. The state Supreme Court limited this statutory immunity last week when it held that an engineering firm was not entitled to the Industrial Insurance Act’s immunity for the death of a sewage treatment plant worker.

Property Owners Not Entitled to Interest on Relocation Benefits Following Condemnation Proceedings

Washington property owners’ right to recover interest on relocation assistance benefits following an eminent domain case was short-lived, as the Washington Supreme Court has reversed last year’s Court of Appeals decision granting that right. The Supreme Court’s ruling in Union Elevator & Warehouse Co. v. Department of Transportation means that property owners are no longer entitled to seek interest on relocation assistance benefits and, therefore, will bear the cost of any delays if a dispute arises over entitlement to the award.

Sendai Earthquake: Is the Pacific Northwest Next?

Sendai, Japan, has just experienced a horrific subduction earthquake and tsunami arising from its proximity to the so-called “Japan Trench.” Some geologists think that Seattle and Portland have a 10 to 14 percent chance of experiencing a similar M 9.0 subduction earthquake in the next 50 years because of their proximity to the so-called “Cascadia Subduction Zone.” Such an earthquake would have a catastrophic effect on the Washington and Oregon Coast (compounded by a tsunami) and would cause major damage along the I-5 Corridor, destroying infrastructure and many buildings.

Washington’s Stricter Building Energy Code Withstands Legal Challenge

A federal court judge in Tacoma has ruled that revisions to Washington’s building energy code properly set energy efficiency standards for new residential construction in the state that are more strict than federal rules. The decision by Judge Robert Bryan rejected the Building Industry Association of Washington’s (“BIAW”) lawsuit that asserted the federal Energy Policy and Conservation Act (“EPCA”) preempts state imposition of higher standards. The decision now clears the way for implementation of the new state code.

Court: Pre-Construction Work Not Subject to Lien

The Washington Court of Appeals is continuing the recent trend of invalidating mechanic’s liens for lack of strict compliance — this time by concluding that the work provided by the contractor was not subject to the state’s lien statute because it was performed in connection with preparing a bid, not an improvement of the property, and was not done at the direction of the owner.

Washington Appellate Court Rules Pre-Construction Work is Not Subject to Lien

The Washington Court of Appeals is continuing the recent trend of invalidating mechanic’s liens for lack of strict compliance – this time by concluding that the work provided by the contractor (drilling test pits and obtaining storm water permits) was not subject to Washington’s lien statute because the work was performed in connection with preparing a bid, not an improvement of the property, and was not done at the direction of the owner.

Washington Supreme Court Recasts the Economic Loss Rule to Allow Third Party Tort Claims Against Design Professionals

A sharply divided Washington Supreme Court has held that an engineering firm owes a “duty of reasonable care encompassing safety risks of physical damage” to a party not in privity with the engineering firm. The decision in Affiliated FM Ins. Co. v. LTK Consulting Servs., Inc., could lead to a departure from what had been known as the “economic loss rule,” which courts traditionally interpreted as barring tort claims for any harm not involving physical injury to other property or to a person. Under LTK Consulting, the lead opinion of the court said that the economic loss rule (renamed the independent duty rule) would not bar a tort claim based on an engineering firm’s duty of care to avoid damages to a third party.

Washington Supreme Court Holds Statutes of Limitations Do Not Apply to Arbitration Proceedings

A narrowly-divided Washington State Supreme Court has held that an arbitration panel cannot apply the state statutes of limitations to bar a claim, unless the parties have contractually agreed to allow the arbitrators to do so. According to the Court, a general reference in an arbitration clause to forum rules will not suffice and can be grounds for vacating an arbitration panel’s dismissal of claims on the state statute of limitations.

Court Rules That Construction Lien Claim Fails for Lack of Proper Acknowledgment

The Washington Court of Appeals has re-emphasized the perils of failing to strictly follow the statutory requirements of perfecting construction liens. On April 7, Division Two of the Court of Appeals ruled in Williams v. Athletic Field, Inc., that recording a mechanic’s lien without the proper authentication clause results in a void lien.

Are You Covered? Comprehensive Green Building Liability Insurance Not Quite Ready for Prime Time

The U.S. Green Building Council’s (USGBC) minimum program requirements for buildings certified under its Leadership in Energy and Environmental Design (LEED) program is now in effect for certifications issued under the LEED 2009 process. The requirements include mandatory reporting of energy and water usage for a five-year period after occupancy and provide for potential revocation of LEED certification for noncompliance. While it is unclear what level of noncompliance would result in LEED decertification, the mere threat increases the litigation risk for builders, engineers and design professionals, and should send them scrambling to check their insurance coverages and perhaps shopping for specific green building coverage. What they will find, however, may not be very comforting.

Washington State Revises Greenhouse Gas Reporting Requirements to Conform with Federal Rules

Washington Governor Christine Gregoire has signed a bill into law that revamps how businesses should report their greenhouse gas (“GHG”) emissions. The bill amends an earlier law that set out an initial framework for GHG reporting. The new law will bring Washington’s GHG reporting requirements more in line with federal rules, but with some important exceptions.

Time to Hit the Books: How to Prepare for a Technical Case

As a young lawyer who is unfamiliar with construction law, you may find yourself representing a civil engineer in a case involving faulty construction on a bridge. You are sure to encounter complex, technical questions in this case, such as whether the standard of care was met in providing a seismic analysis for the widening of a bridge. How will you prepare yourself for this challenge?

City of Seattle Adopts Energy Efficiency Reporting Requirements That Exceed State Law

On February 1, 2010, Seattle Mayor Mike McGinn signed the Building Energy Rating and Disclosure Ordinance, which the City Council had unanimously passed in January. Effective March 3, 2010, owners of nonresidential commercial buildings and multi-family buildings of four or more units in Seattle will have to benchmark, rate and disclose the energy efficiency of their buildings using the Energy Star system.

Green Performance Standards Are Still Evolving

Green construction offers the opportunity to cut operational costs, reduce greenhouse gas emissions and improve the overall health of building occupants.

Owners Entitled to Interest on Relocation Benefits in Condemnation Proceedings

The Washington Court of Appeals has decided property owners are entitled to interest on state relocation benefits following a taking of property by eminent domain. The decision, however, was not unanimous, and the dissent argued that the issue should be decided by the legislature rather than the courts.

Land Grab: Take Action When the Government Comes Calling

Consider the following: You own property in the area with a growing population, and you plan to build a new residential community. You have prepared initial design documents and have begun the process of obtaining necessary government approvals. You may have even begun the work of providing necessary infrastructure for the project.

Protecting Your Lien Rights Requires Attention to Detail

The Washington Court of Appeals has issued a decision that serves as a powerful reminder of the need to adhere strictly to all requirements necessary for perfecting lien rights. In A.W.R. Construction, Inc. d/b/a Comet Roofing v. Washington Department of Labor & Industries, the court ruled that a failure to file a mandatory disclosure report barred a contractor from enforcing its lien.

Washington State’s Proposed Mandatory Greenhouse Gas Reporting Rules Differ from Federal Government’s Rules – Which Will Prevail?

Businesses operating in the state of Washington might be understandably confused as a result of the Washington Department of Ecology’s (“Ecology”) release on October 2 of its draft greenhouse gas emission (“GHG”) reporting rules, which differ in some material ways from the federal Environmental Protection Agency’s (“EPA”) reporting rules released on September 22.

View full article (PDF).

U.S. Treasury Department Issues Guidance for Cash Grants in Lieu of Energy Tax Credits

On July 9, 2009, the U.S. Treasury Department issued guidance for the award of cash grants by the federal government (“Grants”) in lieu of energy tax credits under Section 1603 of the American Recovery and Reinvestment Act of 2009 (“ARRA”). When ARRA was enacted in February 2009, Congress recognized that current economic conditions have reduced investors’ taxable income, and the attractiveness of the production tax credit (“PTC”) and the investment tax credit (“ITC”) as incentives for development of renewable energy projects has diminished. The goal in providing cash grants for a limited period is to spur renewable energy development, even in the absence of taxable income, and to further the goals of job creation and expansion of renewable energy sources.

View full article (PDF).

Spending the Stimulus: Federal Guidelines and Accountability

President Obama signed the American Recovery and Reinvestment Act (the “Stimulus Act”) on February 17, 2009, providing $787 billion to create and maintain jobs and to spur economic growth. Of the total, tax relief accounts for $212 billion. The other $575 billion will be disbursed by Federal agencies through construction and other contracts and grants to state and local governments and nonprofit organizations. The Stimulus Act allocates specified amounts to named Federal agencies for designated programs and activities. View full article (PDF).

LEEDing the Way in a New Year — The Highly Successful ‘LEED’ Green-Building Rating System is Being Refined to Take into Account New Criteria to Better Measure a Building’s Carbon Footprint

Early this year, a significant milestone in the green-building movement will occur as the U.S. Green Building Council goes live with “LEED 2009,” a significant update of its renowned building rating system. View full article (PDF).

This article first appeared in Seattle Business magazine.

Reduce carrying costs – Monitoring property tax assessments can save money in the long run

Carrying costs are a significant consideration for any development project. For residential developers in particular, the issue escalates when you consider a nationwide decline in the housing market, the increased time on market for new homes and rising construction costs. Understanding and planning for variable costs, such as property taxes, is critical to determining a development project’s profitability and maintaining sufficient cash flow to ensure the project’s survival. View full article (PDF).

This article first appeared in BUILDERnews magazine.

Climate Change Regulation is Coming – Prepare to Reduce Development Impact on Global Warming

As fast as you can say “climate change and greenhouse gas emissions,” local governments are initiating regulations aimed at reducing the impact of development on global warming. Whether or not you agree that climate change is an issue, or one that can be addressed in a meaningful way, the regulatory trend is inevitable and represents a significant change in the traditional way environmental laws and regulations have been adopted. Vire full article (PDF).

This article first appeared in BUILDERnews Magazine.

2008 Legislature Fails to Pass Bill Imposing Reasonable Care Standard on Residential Construction Professionals

In January 2008, we reported that the legislature was considering Senate Bill 6385, which would have significantly changed the landscape regarding construction defect claims available to owners of residential properties in Washington. Specifically, the bill created a reasonable care standard for construction professionals, including contractors and design professionals, involved in the construction or improvement of residential property. View full article (PDF).

Proposed Bill Could Dramatically Alter the Construction Industry

Sen. Brian Weinstein (D-41, Mercer Island) has introduced Senate Bill 6385, which would add a new section to the Construction Defects statute, RCW 64.50 et seq. Rep. Brendan Williams (D-22, Olympia) introduced a companion bill, HB 2837, in the House of Representatives. Sen. Weinstein recently offered a substitute version of the bill. This bill, as revised on January 24, creates a reasonable care standard for all construction professionals involved in the construction of any improvement on real property. View full article (PDF).

The Bottom Line on Green Building Practices in Common Interest Areas

Common Interest Developments (CIDs) are residential or commercial developments that have common elements or areas maintained through an association of the owners of individual units or properties. Condominiums, townhouses, co-ops and planned unit developments of lots for single-family homes all fall within this definition.

Developers of CIDs have a vested interest in holding the line on common area costs. … With an increase in public awareness of environmental issues, the availability of tax credits and incentives, and improvements in materials, many builders are finding that building Green can help keep costs down and provide an additional marketing tool. View full article (PDF).

This article first appeared in BUILDERnews.

Contractor Registration Acts Apply to Subcontractors as Well as General Contractors

Subcontractors often ask whether they are required to register with the state and, if so, why they should register. The short answer to the former question is yes—subcontractors are generally required to register with the state pursuant to statutory enactments such as Washington’s Contractor Registration Act (CRA), Title 18.27 RCW. Subcontractors fall within the CRA’s definition of contractors, who are required to register with the state. The answer to the latter question is more involved and informative. View full article (PDF).

Negotiating a Contract? Try This Checklist

The contract negotiation process is an opportunity for parties to clearly communicate expectations and allocate risk. Contracting parties must have a full appreciation of the issues involved in the negotiation process, their interrelationships and their relative importance to the end result — a successful project. View full article (PDF).

This article first appeared in the Seattle Daily Journal of Commerce.

Washington Supreme Court Overturns the Completion and Acceptance Rule

Is a contractor always potentially liable for negligent work on a construction project? Under the completion and acceptance doctrine — long recognized by Washington courts — the answer was no. Once the contractor completed work and that work was accepted by the property owner, the contractor could no longer be liable for injury to third parties.
Last week, the Washington Supreme Court rejected the completion and acceptance rule in Davis v. Baugh Industrial Contractors, Inc. View full article (PDF).

Reducing Condominium Developer Liability

With condominium lawsuits surging, knowledgeable preparation can prevent builders from becoming litigation targets. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Effect of Dissolution of Condo Developer – Washington Supreme Court Speaks Out

In Ballard Square Condominium Owners Ass’n v. Dynasty Const. Co., 126 Wn. App. 285, 108 P.3d 818 (2005), the Washington State Court of Appeals did a relatively extensive analysis of Washington’s corporations statute in determining that the dissolution of the corporation prior to the time that the claim for damage arose did, in fact, cut off the claims of the homeowners’ association under Washington law. The reasoning of the decision caused some to believe that the early dissolution of a developer and builder of a condominium is a legitimate “strategy” in setting up transactions. View full article (PDF).

A Contracting Checklist — Here’s What You Should Be Thinking About

The contract negotiation process is an opportunity for parties to clearly communicate expectations and allocate risk. Contracting parties must have a full appreciation of the issues involved in the negotiation process, their interrelationships and their relative importance to the end result— a successful project. The following checklist presents some of the issues that should always be considered and clearly presented in any contract. The checklist is not exhaustive: every project has unique aspects requiring project-specific considerations and modifications. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Be Clear and Concise or Pay the Price

Indemnification provisions are some of the most important paragraphs of any construction contract. Indemnification provisions allocate risks of unintended adverse consequences between the parties. View full article (PDF).

Immigration Enforcement in the Construction Industry

In May 2006, U.S. Department of Homeland Security enforcement officers raided construction sites of one of the country’s top residential home construction companies and found 76 undocumented workers working as subcontractors. As a result, four supervisors are facing federal charges of harboring illegal immigrants with penalties of up to 10 years in prison and $250,000. Further, in recent crackdowns, Homeland Security officers arrested seven managers of a Houston pallet supply company. These actions represent aggressive moves to show Homeland Security is serious about employer compliance of workforce hiring laws. Companies should recognize that immigration issues continue to pose hot-button topics for the construction industry, and should focus on three measures: 1. Know your workforce. 2. Know your obligations for complying with the law. 3. Know your rights. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Making the Most of Mixed-Use Opportunities

As cities around the country continue to redevelop their urban centers, opportunities abound for developers eager to build mixed-use projects that fit in with today’s market-driven realities. Many people are tired of long commutes to their downtown jobs and mind-numbing drives to shopping centers, and yearn for safe and enjoyable urban living experiences with all the convenient amenities. Combine an aging American population with a lack of desire to pay for an outgrown suburban home, and what do you find? A strong marketplace for residential development tactfully integrated with multifaceted retail, office and entertainment uses—the classic mixed-use development project. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

A “Bad Day at the Construction Project” – The Deposition of a Human Resource Manager

The engineering and construction industry experiences more than its share of employee harassment and discrimination complaints. In this day and age, you need protection. The way to protect yourself from these suits is to perform good investigations of employee complaints, act upon the investigations in a corrective way, and be ready to answer the hard questions you may face later.  View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Is the Union Knocking? – Steps Employers Can Take to Address Unionization

The recent split in the AFL-CIO is certain to result in increased levels of union organizing. (See BUILDERNews, September 2005, “AFL-CIO Split – The Largest Union Pullout in Over 70 Years.”) These developments present new challenges for employers in the building industry who may not have previously been targeted for unionization. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Critical Planning Points – In Real Estate Partnerships and Joint Ventures

In a perfect partnership or joint venture (JV), the parties combine their disparate skills and resources and create a whole that is greater than the sum of the parts. Each party trusts the others to act in the best interest of the JV, and no party abuses that trust. Each party is allocated responsibility and authority consistent with that party’s skills, and no party interferes with any other party’s performance of its functions. The economic returns from the venture are divided in a manner that is commensurate with the respective contributions of the parties; all parties believe they are fairly compensated; and tax burdens are minimized. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Urban Redevelopment – Mixed-use, Mixed Environment

Portland, Ore., has been lauded by many as a model for urban renewal and mixed-use development. There are several challenges to developing mixed-use projects and many preliminary questions and competing priorities that need to be addressed. The Pearl District, Belmont Dairy, Rose Garden Arena, Museum Place, University District, North Macadam District and Beaverton Round are a few of the many past and future redevelopment projects that come to mind in the Portland area. Some projects have succeeded, while others have struggled. For those undertaking urban redevelopment projects, only one thing is certain: there is no clear-cut recipe for success. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

The Devil is in the Details – New Tax Deduction for Construction Businesses

Tax codes are a lot like building codes: the devils, and the dollars, are in the details. Consider the IRS’s new Domestic Production Activities (DPA) deduction. This tax break, which applies to income from construction activities, allows builders to take a deduction equal to three percent of qualifying incomes in 2005 and 2006; six percent in 2007, 2008 and 2009; and nine percent from 2010 on. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Condo Act – Condominium Act Amendments Mean Big Changes

New condominium starts have been hampered by extraordinary price increases and, in some cases, the unavailability of liability insurance for builders. A study commissioned by the Washington Legislature found that, where available, liability insurance premiums ran about five to eight percent of construction costs, losses were $2.50 for every dollar of premium, and loss expenses were about twice those of other states. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

Prompt Action Saves Property Taxes on New Construction in Washington

In general, there are a number of ways in which commercial and industrial buildings can be improperly valued for property tax purposes. This publication alerts owners to the likelihood that assessors in the state of Washington are not accurately valuing construction in progress. View full article (PDF).

Mold: A Four-Letter Word – Hidden Dangers Can Add Up In Court

“Black mold, that stuff can kill you,” said one of our firm’s paralegals about five years ago as I was showing her the photographs in a mold lawsuit we were defending. These were not the words of some sue-happy person looking for a free ride, but from a paralegal in a major Pacific Northwest law firm who had been involved for more than 20 years in assisting in the defense of litigation matters for businesses. The paralegal proceeded to explain to me the parade of horribles that she “knew” could be caused by “toxic” mold. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

The New Washington Condominium Act – Law Balances Owner and Builder Rights

Many insurers have stopped offering coverage for condominium construction in Washington. Those that offer it charge premiums that price many construction professionals out of the market, in part causing multifamily housing construction to decline more than 30 percent over the past few years. The state legislature’s goal for the new condominium law is to encourage more multifamily construction in Washington. View full article (PDF).

This article first appeared in BUILDERnews Magazine.

New Statute: A Trap for Unwary Contractors and Developers?

Consider this scenario: Your company is retained to serve as the general contractor to build a development in California of a hundred single family homes. You subcontract out the drywall, masonry, and cleanup work to other contractors, each of whom submitted very attractive bids. Two years later, long after the project has been completed, your company is served with a lawsuit filed on behalf of the employees of each of the subcontractors. Over 20 employees are named as plaintiffs, and they are all seeking unpaid overtime, unpaid vacation benefits, as well as penalties and attorneys’ fees. View full article (PDF).

This article first appeared in BUILDERnews Magazine.