July 2000
Vol. 3, Issue 1
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By Grant
M. Yoakum, Esq.
 BDB
is pleased to present Build on This, formerly known
as Construction Law Quarterly. More than just the title
is new - the content of Build on This reflects
the decision to combine BDB's Real Estate and Construction
Law Practice Groups. These areas of law are closely related,
and we believe that this combination will improve efficiency
and increase value for our clients. Build on This
will continue to feature helpful and interesting articles
to keep you informed of all the latest real estate and
construction law news. We hope that you enjoy our new
publication!
Many of you also receive another BDB newsletter,
The Advisor, so you are familiar with BDB's new
e-mail and fax publication formats. Many clients have
requested these changes, and we are happy to accommodate
their requests. This method of distribution enables us
to provide more current information by eliminating the
lengthy distribution process associated with regular mail.
Please let us know your thoughts on our new publication
formats.
Grant
M. Yoakum is a member of the Real
Estate and Construction Practice Group
and can be reached at 330.258.6431 or by e-mail
at
gyoakum@bdblaw.com
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Owner's
Disclaimer Of Liability Ineffective
By Donald B.
Leach, Jr., Esq.
 In
a case decided at the end of January, the Franklin County Court
of Appeals found the government liable for the breach of its
warranty of the accuracy of its own documents, in spite of disclaimers
to the contrary. The case, Smoot Construction v. Ohio Department
of Administrative Services, arose from the construction
of a state correctional facility. Our Firm, through Don Leach
and Ken Fisher of the Columbus office, served as counsel to
Smoot Construction. The Court held that where the government
provided information about site conditions, which was obviously
intended to be used by contractors in formulating their bids,
the government could not avoid liability for differing site
conditions by disclaiming any responsibility for the accuracy
of the information provided.
Soil Borings "For Information Purposes Only"
As is frequently done, the owner in this case provided soil
borings before the bid "for information purposes only" and not
as part of the contract documents. Use of the information by
the contractor was stated to be "totally at the risk of the
contractor," and bidders were instructed to inspect the site
of the work.
The conditions encountered at the site were, in
fact, different from those reflected in the soil borings. The
difference resulted in substantial additional costs to the contractor.
The Court of Appeals held that the contractor was entitled to
recover those costs.
Implied Warranty
Citing the long-standing Spearin doctrine, which provides
that in cases involving government contracts, the government
implicitly warrants the accuracy of its affirmative indications
regarding job site conditions, the Court ruled that the implied
warranty of job site conditions "will prevail over express contract
clauses which disclaim any responsibility for the accuracy of
information provided to contractors, and which require contractors
to examine the site and check the plans."
The only exceptions to recovery recognized by
the Court arise where (1) a reasonable inspection of the job
site by the contractor would have revealed the actual site conditions
or (2) the information provided by the government was accurate,
but the conclusions drawn by the contractor differed from the
actual site conditions. Neither of these exceptions applied
to the Smoot case.
Reasonable Expectations
In its reasoning the Court recognized that it is unreasonable
to expect every bidder on a government contract to perform expensive
job-site investigations when the government is in a position
to perform the testing once for the benefit of all bidders.
To require every bidder to conduct its own testing would reduce
the number of bidders on government contracts and increase the
price of the few bids received.
In other aspects of its decision the Court held
that the contractor was entitled to recover costs incurred for
additional mason helpers, who were necessary to overcome work
disruptions caused by another prime contractor. In addition
the Court recognized that the contractor could recover damages
incurred on one contract as a result of the same owner's breach
of another, unrelated contract.
Don Leach
is a partner in the Firm and serves as the Shareholder-in-Charge
of the Columbus office. His practice focus is on
construction law and he regularly represents owners,
lenders, contractors, subcontractors and suppliers
in construction contracting and dispute-related
matters. Don is a member of the Builders Exchange
(BX), is a past president of the BX board of directors
and is actively involved in the Law Group of the
BX. He can be contacted at 614.227.4262 or by e-mail
at dleach@bdblaw.com
Environmental
Update
by Sheila Noonan Mitchell, Esq.
 Three
recent environmental law developments discussed below will impact
the real estate and construction industries:
I. Wetlands: A significant change in the
Nationwide Permit that regulates the filling of wetlands for
residential, commercial and industrial development became effective
June 7, 2000. The U.S. Army Corps of Engineers (Corps) issued
five new Nationwide Permits (NWPs) and modified six existing
NWPs to replace NWP 26, the general permit that allowed the
filling of up to three acres of wetlands without having to obtain
an individual permit from the Corps. Of the new NWPs, NWP 39
is the one that most impacts industrial, commercial, and residential
development.
NWP 39 is much more restrictive than NWP 26. NWP
39 only allows the filling of one-half acre of wetlands or 300
linear feet of stream (as opposed to three acres and
500 linear feet of stream under NWP 26). NWP 39 requires
pre-construction notification to the Corps 45 days prior to
the filling of more than one-tenth of an acre of wetlands (as
opposed to 30 days notice for filling more than one-third
of an acre of wetlands under NWP 26). NWP 39 requires mitigation
for the filling of more than one-tenth of an acre of wetlands
(NWP 26 required mitigation for the filling of more than
one-third of an acre of wetlands).
The end result of the new NWPs is that any filling
of more than one-half acre of wetlands or 300 linear feet of
stream for residential, commercial, or industrial development
requires an individual permit from the Corps. An individual
permit involves considerably more cost and time to obtain (as
long as six months to a year) because it requires more extensive
ecological study of the wetlands and an additional water permit
from the State EPA.
II. Stormwater Permits: Developers and
other parties involved with construction presently are required
to obtain a general stormwater discharge permit for construction
activities if construction at a site will disturb five or more
acres of land. On December 8, 1999, the U.S. EPA adopted final
regulations that will require a stormwater discharge permit
for construction activity that disturbs between one to five
acres of land. Under these new regulations, each state has
until December 8, 2002 to draft a state-specific general permit
for these activities. Owners and operators of developments disturbing
one to five acres of land will be required to have a permit
under the program by March 10, 2003.
III. Revision of ASTM Standards for Phase
I Site Assessments: Revisions to the ASTM standards that
apply to Phase I site assessments were approved in April, 2000.
The most significant changes to the standard include a new focus
on identifying "business environmental risks" (the environmental
issues impacting the property and its intended use) and an increase
in the number of environmental matters that are not required
to be investigated in an ASTM Phase I. The anticipated publication
and effective date of the new standard is September, 2000.
Sheila Noonan Mitchell is a member
of the Environmental and Business Law Practice Groups.
If you would like more information on these or other
environmental issues, e-mail her at smitchell@bdblaw.com
or call 330.643.0331.
Industrial
Commission Decision May Impact Construction Companies
The Industrial Commission found that an employee driving from
home to a work site would be covered by workers' compensation
for an accident on the way to work. The Hearing Officer found
that the construction worker who routinely traveled from his
home to work sites was not a "fixed situs employee." The Hearing
Officer found that the worker's "injuries were sustained in
the course of and arising out of his employment." The case is
being appealed.
To help you learn more about our attorneys in the
Real Estate and Construction Law Practice Group,
each issue of Build on This will provide
you a profile of one of our group members. This
month, we are featuring Bob
Hager of our Cleveland, Ohio office.
 As
an 18-year-old, Bob Hager joined the Local International Laborers'
Union in Cleveland and began his work in the construction industry.
Through college and law school, he worked on many underground
utility construction projects in Ohio, Pennsylvania and Hawaii,
gaining practical field experience and a lifelong connection
with the industry. After passing the bar examination in 1988,
Bob joined several trade associations (American Subcontractors
Association, American Institute of Constructors, and Associated
Builders and Contractors) which improved his understanding of
the construction industry from both a business and legal standpoint.
Bob is currently the Chairman of the Ohio State Bar Association
Construction Law Subcommittee.
"Practicing as a construction lawyer allows me
to participate in the creative and exciting process of building
new schools, libraries and businesses. Initially, we strive
to avoid problems by assisting during the early planning stages
of the project. This proactive approach requires excellent communication
between all parties involved to anticipate and prevent problems
which may occur on a particular project. The preparation of
clear and concise 'front-end documents' is extremely important.
If disputes arise, the factual and legal issues must be quickly
identified to allow for the ability to suggest practical solutions.
More extensive disputes may require formal mediation or arbitration
proceedings, and in some cases, litigation is necessary. A practical
and progressive approach toward resolving construction disputes
usually requires the creative use of dispute avoidance and alternate
dispute resolution techniques. The lawyer's goal should be to
create an environment where disputes are avoided or quickly
resolved so as not to negatively impact the ultimate goal of
constructing a first-class facility intended to benefit many
people."
Bob has been practicing at Buckingham, Doolittle
& Burroughs, LLP since 1988 and serves as the Shareholder-in-Charge
of the Firm's Cleveland office. He can be reached by email at
bhager@bdblaw.com
or by phone at 216.615.7318.
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Bob
Hager, of the Cleveland office, is
presenting Construction Lien Law for Attorneys
in Ohio on August 2, 2000 at the Holiday
Inn Cleveland. This seminar is designed for
attorneys who represent clients with claims
related to construction or mechanics' liens.
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 Brett
Miller, from the Columbus office, presented
the In's and Out's of Workers' Compensation
to the Builders Exchange of Central Ohio on
May 18, 2000.
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 George
Weinstein, of the Boca Raton office, will
teach a class in Estate Planning at the University
of North Carolina College for Seniors in Ashville,
N.C. from July 24-27 which features instructors
deemed outstanding in their respective fields. He
has just completed his term as President of the
Greater Boca Raton Estate Planning Council and is
now serving a term as Director Emeritus.
If you are interested in having a speaker from BDB make a presentation
to your organization, please contact: Cheryl Warren, Director
of Client Relations and Marketing 800.686.2825 ext. 546 or by
e-mail at cwarren@bdblaw.com.
For more information on speaking engagements, visit
http://www.bdblaw.com/new/events.html.
At BDB we are always improving our processes so that we operate
efficiently and effectively. Please let us know how you like
our new broadcast format. E-mail: bdb@bdblaw.com
Phone: 330.258.6473 Fax: 330.252.5473.
Thank you.
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