New Case Cautions Owners and Contractors to Carefully Review Indemnity and Insurance Provisions in Construction Contracts
By: Matthew R. Lasek, Timothy C. Quinn
Are you aware of the possible consequences of the indemnity and insurance language in your construction contract? Will you be covered for your own or a third party's negligence? Will you be required to indemnify another party for your acts or the acts of a third party? Finally, how will your insurance and the insurance of others protect you?
A recent case from the Pennsylvania Superior Court serves as a stark reminder to owners and contractors alike that you should seek legal advice when drafting and reviewing the indemnity and insurance provisions in a contract. In Burlington Coat Factory of Pa., LLC v. Constr. Mgmt. Co., LLC, 126 A.3d 1010 (Pa. Super. 2015), an employee of a subcontractor sustained injuries during renovations of a retail store. The employee claimed that his injuries were caused by the owner's negligent maintenance of a freight elevator. The owner settled with the employee, then sought reimbursement from the contractor under the indemnity and insurance provisions in the construction contract. The owner claimed that the contractor was required to reimburse the owner for the entire settlement amount, including amounts that could be attributed to the negligence of the subcontractor and even to the owner itself. When the contractor refused, the owner filed a lawsuit claiming that the contractor breached the construction contract by refusing to indemnify the owner and failing to obtain insurance coverage required by the contract which could have protected the owner.
Pivotal to the Burlington Coat Factory case was the fact that the construction contract in question had two indemnification provisions. One required the contractor to indemnify the owner "to the extent caused in whole or in part by negligent acts or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable[.]" The second indemnity clause was stated more broadly and was not limited to "the extent caused in whole or in part by negligent acts or omissions of the contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable[.]" Under the second, broader provision, the owner argued that, regardless of who was at fault, the contractor was required to reimburse the owner for all costs associated with the claim by the injured individual.
The court disagreed. It held that, because the owner drafted the contract, the conflicting indemnity provisions would be interpreted against the owner and the first, more-narrow indemnity provision would prevail. Therefore, while the contractor would be liable for its own negligence and that of its subcontractors in failing to properly train employees on the use of the freight elevator, the contractor was not responsible for costs caused by the owner's own negligence in maintaining the elevator.
The court in the Burlington Coat Factory case also addressed three topics important to construction contracts. First, the court decided that, based on the language of the construction contract, the contractor had an obligation to obtain insurance that covered the contractor's indemnity obligations. Second, the court decided that, contrary to the contractor's suggestion, the owner would not waive its indemnification rights by settling the case with the injured employee unless that settlement was unreasonable. Finally, the court provides a reminder of how important it is to use the correct party names in a construction contract in order to ensure that the parties can enforce the agreement.
The Burlington Coat Factory case provides owners and contractors an important warning of how the specific wording of a construction contract can dramatically alter the rights and liabilities of the parties. The case also reminds us that more is not necessarily better, especially when it comes to the addition of potentially conflicting indemnity provisions. In addition to the issues raised by the court in the Burlington Coat Factory case, there are many other considerations that owners and contractors should keep in mind when reviewing and revising indemnity and insurance provisions in a construction agreement. If you are wondering how these and other rules affect your construction contract, please feel free to contact us to arrange a meeting and discuss the matter.
Thursday, March 24, 2016
Monday, March 21, 2016
|Ashley L. Wilkinson|
Each year, Robert Morris University’s School of Communications and Information Systems honors high achieving alumni from all majors. Robert Morris University will recognize Wilkinson on April 10, 2016 for her accomplishments in the legal field and for the distinction she brings to her profession and the university. Wilkinson is a 2012 graduate of Robert Morris University, and received a bachelor’s degree in English with a minor in Legal Studies.
Wilkinson is an associate at Meyer, Unkovic & Scott LLP. She works with clients on litigation and dispute resolution. Prior to joining the firm, Wilkinson served as a 2014 summer associate, where she worked on a variety of issues. While in school at Duquesne University School of Law, she served as a member of the Pro Bono Urban Development Clinic.
Wilkinson has received numerous scholarships and awards, including the Hardiman Scholarship, the Honorable Carol Los Mansmann Scholarship, the Honorable Carol Los Mansmann Endowed Student Resource Fund, the Law School Scholarship for Excellence and the Outstanding Oral Argument Award. The CALI Excellence for the Future Award also recognized Wilkinson for having the highest score in her law school class in the areas of Criminal Law and Procedure, Sales, Estates and Trusts and Core Competencies II.
While in law school, Wilkinson served as treasurer of the Women’s Law Association, junior staff member and production editor of the Duquesne Law Review and student ambassador to the Dean. She also worked as a research assistant and studied abroad in the summer of 2013.
Wilkinson resides on the South Side of Pittsburgh.
Wednesday, March 16, 2016
|Matthew R. Lasek|
Indexing is a process that occurs at the time of recording, when all of the parties to a recorded document are listed so that the document can be found in a title search. Incorrectly indexed documents can be impossible to find as part of a normal title search. If the recorder's office makes an indexing mistake, the recorder is not liable and the document remains in force. In that situation, future third parties (such as a buyer, lender, and so on), who might have had no realistic chance of discovering the document, may still have their rights affected by it. If the indexing problem is the fault of the parties to the document, however, then subsequent, unsuspecting third parties may not be bound by it.
Consider the following scenario. A Company mortgages its land to a Lender. The Mortgage is recorded but improperly indexed. The Company then sells the Real Estate to a Family, who conducts a title search but, because of the indexing error, does not find the Mortgage.
If the county recorder made the indexing mistake, the Lender's rights are preserved, the land remains subject to the Mortgage (meaning that, if the Mortgage is not paid, the Lender can foreclose on it and eliminate the Family's interest in the property), and the recorder is not liable for any of it. If the Lender made the mistake, however, then there is a good chance that the Family will own the land without having to worry about the Mortgage. The sheer uncertainty and inconvenience of a situation like this one should motivate most parties to do what they can to get recorded documents properly indexed so that they are discoverable during a title search.
While all Allegheny County indexing rules (available at https://pa_allegheny.uslandrecords.com/palr/indexing_guidelines.jsp) should be noted, parties should be especially cognizant of several counterintuitive and potentially troublesome rules. First, Allegheny County's rules state that initials in corporate or company names are indexed with spaces between the initials. In an example given by Allegheny County, a document to which "ING Bank" is a party is indexed under "I N G Bank"; therefore, a search for "ING" or "ING Bank," without the spaces between the first three letters, will not return the document in question.
Second, Allegheny County's related indexing rule - that capital letters in a partially-capitalized name are assumed to represent initials - creates additional problems. This can be particularly problematic for entities which have capitalized letters that do not represent initials. For example, a document involving a company named "PANAM Airlines, Inc." ("PANAM" being a contraction of "Pan American") would be indexed as "P A N A M Airlines, Inc.," which is an unlikely search term; it would not be found by searching for "PANAM Airlines, Inc.," the actual name of the company.
No case in Pennsylvania has decided what happens when parties run afoul of the indexing rules discussed above. However, in order to avoid being the test case on this issue, parties can employ a simple, widely-used drafting technique: capitalizing the entire name of the parties the first time they appear in a recorded document. Under this approach, documents involving "PANAM AIRLINES, INC.," typed in all capitalized letters, could be located using the much more intuitive and true-to-life search of "PANAM Airlines, Inc."
Being aware of the indexing rules and the simple drafting technique discussed here could save individuals and companies who record and search for recorded documents in Allegheny County a considerable amount of time, expense, and grief.
For more information about recorded documents or other real estate matters, please feel free to contact Matthew Lasek or any of the attorneys in Meyer, Unkovic & Scott's award-winning Real Estate & Lending Group.
Friday, March 11, 2016
|Beth A. Slagle|
The answer is that we don't really know. The federal government has never consistently collected the data needed to accurately calculate wage differences among different demographic groups that perform the same work. That's why the Equal Employment Opportunity Commission (EEOC) has proposed regulations to collect wage data in order to identify possible wage discrimination in America.
As most employers know, Title VII of the Civil Rights Act of 1964 makes it illegal to discriminate against employees based on sex, race, color, national origin, and religion. Many companies that discriminate may be inadvertently paying male and female workers unequally for a variety of reasons; although, some employers may have an unwritten policy or corporate culture that promotes discrimination in pay.
In the past, however, the only available statistics to calculate possible discriminatory wage practices were from U.S. Census data reports of median wages broken down by gender, race, and ethnicity. The problem with these statistics is that they don't take life choices into account, such as differences in chosen career fields, total hours worked, and other variable factors.
In response to President Obama's National Equal Pay Task Force, the EEOC has proposed new employer reporting requirements that will help the government identify illegal wage discrimination in the workplace.
Since 1966, the EEOC has required all employers with more than 100 employees (50 employees for federal contractors) to submit data about the number of individuals they employ broken down by job function, race, ethnicity, and sex. The proposed new reporting standard will also require all employers with more than 100 employees to report related pay data based on wages reported on W-2 tax forms. The requirement will not apply to federal contractors with 50-99 employees.
According to Secretary of Labor Thomas Perez: "We can't know what we don't know. We can't deliver on the promise of equal pay unless we have the best, most comprehensive information about what people earn. We expect that reporting this data will help employers to evaluate their own pay practices to prevent pay discrimination in their workplaces. The data collection also gives the Labor Department a more powerful tool to do its enforcement work, to ensure that federal contractors comply with fair pay laws and to root out discrimination where it does exist."
The Office of Management and Budget (OMB) will need to approve the EEOC's plans before it can begin collecting the data. If the OMB approves the plan, companies will need to begin reporting data in 2017.
Any employer that does not already maintain wage records categorized by job function, gender, race, and ethnicity should begin collecting records now. Even if the government does not approve the new data collection standards, companies will be able to use the data internally to correct any inadvertent wage discrimination among people who perform equal work.
For more information about EEOC reporting requirements and other employment law matters, contact Beth Slagle or any other Meyer, Unkovic & Scott attorney with whom you have worked.
Friday, March 4, 2016
|Tony J. Thompson|
The Homer S. Brown Division (HSBD) provides a forum for members of the ACBA to discuss and address issues affecting African Americans within the bar association and the local community. It also informs the ACBA about the needs of its African-American members.
The HSBD presents the Young Leader Award to an attorney who exhibits strong leadership qualities and a commitment to the promotion of equality and the advancement of justice among the African-American community. Any HSBD member under the age of 40 who actively participates in HSBD and at least one other committee, division or section of the ACBA is eligible to receive the award. Through the award, the HSBD honors the accomplishments of young attorneys who have positively affected the African-American legal community.
Thompson participates in Meyer, Unkovic & Scott LLP’s Litigation & Dispute Resolution, Employment Law & Employee Benefits and Intellectual Property Groups. He counsels clients on a variety of matters, including contract negotiations, trade secrets, labor-management relations, complex commercial litigations and commercial landlord and tenant disputes. He has represented plaintiffs and defendants in both state and federal courts and in arbitration proceedings. He also serves on the firm’s Diversity Committee.
Thompson serves on the boards of the Pitt Law Alumni Association, Rainbow Kitchen Community Services, and Small Seeds Development, Inc. Several publications have included Thompson among their lists of awardees, including Pennsylvania Super Lawyers’ “Rising Stars,” The Legal Intelligencer’s “Lawyers on the Fast Track” and The New Pittsburgh Courier’s “Fab 40.” He is an active member on several committees of the Pennsylvania Bar Association and the Allegheny County Bar Association.
Thompson received his Bachelor of Arts degree in economics from Washington & Jefferson College and his Juris Doctor degree from the University of Pittsburgh School of Law. He currently resides in Monroeville with his wife.