TBJ January 2022

2021: The Year in Review

Construction Law

Written by William B. “Ben” Westcott and Christopher P. “Chris” Scheurich

2021 was a busy year for new and interesting decisions in the field of construction law. The State Bar of Texas Construction Law Section publishes a monthly newsletter called The Change Order; special thanks to each of the contributing firms and the section for the content of these summaries.

In a recent case, JLB Builders, L.L.C v. Hernandez, the Texas Supreme Court addressed the scope of a general contractor’s duty of care to its subcontractor’s employees on the project site. The court’s opinion reaffirms that typical provisions in subcontracts and the normal aspects of the contractor/subcontractor relationship do not give rise to a duty of care toward subcontractor employees.

On that same note, in Los Compadres Pescadores, L.L.C. v. Valdez, the Texas Supreme Court found that Chapter 95 of the Texas Civil Practice and Remedies Code is only implicated when an employee is injured by a dangerous condition of the same improvement on which the employee was working, rather than a dangerous condition of the general workplace. The court’s interpretation eliminates claims based on generalized workplace or premises injuries, effectively narrowing the scope of cases that fall within Chapter 95.

Additionally, Texas courts issued several decisions that impact arbitration. In Conn Appliances, Inc. v. Puente, the 9th Court of Appeals in Beaumont held that manifest disregard of the law, even if stated in an arbitration provision, is not an independent basis for setting aside or vacating an arbitration award under the Federal Arbitration Act. In Bierscheid v. JP Morgan Chase Bank, the court denied a defendant’s motion to compel arbitration because the defendant had substantially invoked the judicial process. Importantly, the court noted that the defendant did not move to compel arbitration until after receiving an adverse ruling on his liability from the trial court.

In D2 Excavating, Inc. v. Thompson Thrift Construction Inc., the general contractor represented that the project site would not require importing or exporting dirt. During construction, the subcontractor determined that the site was not “balanced” and would require importing/exporting dirt. The project owner orally agreed to pay for these increased costs, but a written change order was never executed. The U.S. Court of Appeals for the 5th Circuit found that the subcontractor had assumed the risk, and a party doing work bears the risk that it will end up being more difficult than anticipated unless the contract shifts that risk. Further, the court found that an oral change order between the parties did not render the general contractor liable, as the oral change order was void.

In October, the Texas Supreme Court heard oral arguments in the James Construction Group LLC et al. v. Westlake Chemical Corp. case. The court is considering whether it should apply substantial compliance or strict compliance in reviewing the contracts. This is a case to monitor as the outcome will likely significantly impact language used in construction contracts and determine whether substantial compliance or strict compliance applies to notice provisions in Texas.

On the legislative front, the 87th Legislature concluded its work on May 31, 2021. Of importance, the Legislature passed Senate Bill 219, which clarified in statute that contractors are not responsible for damages due to defective design documents provided to them by someone other than their subcontractors. SB 219 also created a duty for contractors to notify the general contractor or owner, in writing, of a design defect discovered before or during construction. Importantly, a contractor who fails to identify a defect it should have caught may be held responsible for the consequences of that defect.

WILLIAM B. “BEN” WESTCOTT is certified in construction law by the Texas Board of Legal Specialization and is co-managing shareholder in Andrews Myers, where his practice focuses on both transactional and dispute resolution aspects of construction law. Additionally, he maintains an active alternative dispute resolution practice, mediating and arbitrating construction disputes, and is a member of the Panel of Arbitrators of the American Arbitration Association.

CHRISTOPHER P. “CHRIS” SCHEURICH’S practice focuses on both construction litigation and alternative dispute resolution, in which he represents general contractors, subcontractors, suppliers, and owners in a variety of construction-related disputes, as well as labor and employment litigation. He served as a judicial clerk to Senior U.S. District Judge Ewing Werlein Jr. while studying at South Texas College of Law. Scheurich has been with Andrews Myers since 2019.

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