March 2010

Our newsletter, Law and Mortar, is intended to be a source of information relating to the management of construction contracts, risks and business practices for our clients, friends and others doing business in the construction industry. Please note the disclaimer below regarding the general content of this newsletter. We encourage you to forward this newsletter to your colleagues.

Pennsylvania Supreme Court: Utility Company Not Liable to Contractor for Inaccurate Marking of Utility Lines in Response to One Call System Request


Venzie, Phillips & Warshawer paper icon

In the recent case of Excavation Technologies, Inc. v. Columbia Gas Company of Pennsylvania, Excavation Technologies, Inc. (“ETI”), an excavation contractor, sued Columbia Gas Company of Pennsylvania (“Columbia Gas”) for allegedly mismarking several gas lines, and even failing to mark certain gas lines, pursuant to a One Call System request.  ETI sought to recover damages for 47 hours of downtime for its manpower and equipment, which resulted from hitting the mismarked gas lines on eleven different occasions.  

In support of its position, ETI relied on the Pennsylvania Supreme Court’s decision in Bilt-Rite Contractors v. Architectural Studio.  In Bilt-Rite, the Court held that a contractor could assert a negligent misrepresentation claim directly against an architect to recover cost overruns the contractor incurred as a result of the architect’s incorrect and inaccurate specifications.  The Court’s decision in Bilt-Rite was based on the principle that one who is in the business of supplying information for a financial gain, such as an architect, has a duty to exercise reasonable care in supplying such information and is liable for damages that result from a breach of such duty.  

The Pennsylvania Supreme Court rejected ETI’s argument for several reasons.  First, the Court distinguished Bilt-Rite on the basis that, unlike an architect, who is a professional information provider that receives payment for his or her services, a utility company is not compensated for responding to One Call System requests.  A utility company has a legal duty under the One Call Act to respond to a One Call System request and supply information on the location of its underground facilities.  Therefore, the Court held that ETI could not assert a claim against Columbia Gas based on Bilt-Rite

Second, the Court explained that the purpose of the One Call Act is not to protect against economic losses, but to protect against physical harm to construction workers and to avoid property damage to utility equipment and nearby structures.    

Third, the Court held that excavators, not the utility companies, are ultimately responsible for identifying the precise location of underground facilities.  According to the Court, under the One Call Act, when a utility provides “insufficient information” to locate facilities, the excavator is required to employ “prudent techniques, which may include hand-dug test holes,” to determine the precise location of the underground equipment.  The Court stated that excavators are in the best position to employ prudent techniques to determine the exact location of the underground facilities 

Finally, the Court held that public policy considerations weigh against imposing liability upon the utility companies.  Specifically, the Court was reluctant to expose utility companies to liability for damages incurred by the excavators since such costs would likely be passed on to consumers.  The Court determined this is a decision to be made by the legislature as opposed to the courts.

Default and Performance Bonds Claims: If you have been declared in default or terminated for default or are thinking about declaring a contractor or subcontractor in default or terminating a contractor or subcontractor for default on a private project, pay special attention to the requirements in the contract documents and in the performance bond for providing notice of such default. Many jurisdictions have held that compliance with the default notice requirements is a condition precedent to the right to assert a claim against the surety on a performance bond. In addition, a defaulted contractor may have a claim of wrongful termination if the notice requirements were not met. On a public project, pay special attention to the requirements of the jurisdiction's public bond statutes in addition to those requirements identified in the lanaguage of the bond.


VP&W Bulletin Board

1. Howard D. Venzie, Jr. has been named one of Philadelphia's Best Lawyers in the categories of Alternative Dispute Resolution and Construction Law in the 2010 edition of Philadelphia's Best Lawyers. Click here to view a copy of that publication.

 

   

Venzie, Phillips and Warshawer is a proud member of the following industry associations:

back to top

An E-Newsletter From
Venzie, Phillips & Warshawer
For the Construction Industry

Editors

 Jeffrey C. Venzie, Esq.
 Stephen A. Venzie, Esq.
 Howard D. Venzie, Jr., Esq.

Do You Want to Learn More?

As a further service to our clients and friends, we offer seminars, in-house training programs and counseling workshops specifically developed to fit your most immediate business practice needs. Please don’t hesitate to inquire further by contacting our office manager, Florence Anderson.

For additional publications by our attorneys and other construction industry resources visit our website at www.venzie.com

Venzie, Phillips & Warshawer is a law firm located in Philadelphia, Pennsylvania serving all facets of the construction and surety bond industries since 1975. The firm engages in both the prosecution and defense of construction contract and other commercial litigation before the state and federal courts in the Commonwealth of Pennsylvania and the State of New Jersey, as well as those of other jurisdictions, and has substantial experience in the arbitration and mediation of construction industry claims and disputes before the American Arbitration Association and in the settlement of such claims and disputes through various forms of Alternative Dispute Resolution.

Recent Headlines

1. The Pennsylvania Superior Court recently held in Wyatt Incorporated v. Citizens Bank of Pennsylvania, 976 A.2d 557 (Pa.Super. 2009), that the attorneys' fees, penalties and interest damages that are potentially recoverable under a claim based on the Pennsylvania Contractor and Subcontractor Payment Act are not recoverable under a mechanics' lien claim.

2. The United States District Court for the District of New Jersey recently clarified New Jersey law on the long debated topic of whether a surety can assert a "paid-if-paid" or "paid-when-paid" clause in the bonded contract as a defense to a payment bond claim. In Fixture Specialists, Inc. v. Global Constr., LLC, No. 07-5614, 2009 WL 904031 (D.N.J. Mar. 30, 2009), the U.S. District Court held that the surety is entitled to raise such clauses as a defense to is own liability under the payment bond. This is also the law in Pennsylvania and numerous other states.

 

 

 

 

Venzie, Phillips & Warshawer, P.C., 2032 Chancellor Street, Philadelphia, PA 19103
Tel: (215) 567-3322 / Fax: (215) 864-9292 / www.venzie.com

We do not sell, share or distribute email addresses to or with any party outside of our office.
Copyright © 2010 Venzie, Phillips and Warshawer, P.C. All rights reserved. The newsletter is protected by U.S. and international copyright and intellectual property laws. The commercial use of Law and Mortar material without the express written consent of Venzie, Phillips and Warshawer, P.C. is prohibited by law.

This Newsletter is a periodical publication of Venzie, Phillips and Warshawer, P.C. and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Publication of this Newsletter does not create and should not be construed as creating an attorney-client relationship, and the contents and editorials contained herein are intended for general information purposes only. This publication may contain what some states may consider attorney advertising. For further information about the contents of this Newsletter or to discuss specific legal questions you may have, please contact the firm.