There is no “one size fits all” in the contract world because each circumstance has its own set of facts that must be considered when drafting an agreement, writes C. Lucas Beal for Hutchison PLLC of North Carolina and Georgia.

He warns that indemnification, limitations of liability and disclaimer of warranty clauses can have disastrous effects, if not properly drafted.

“Litigations have hinged on the inclusion of one word in the contract,” Beal writes.

Read the article.

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A federal judge in Pennsylvania has ruled that the employer of a company was bound by an arbitration agreement with her employer even though she did not sign or return the agreement, according to a post on the website of Ballard Spahr.

The court found that the former employee was bound by language in the policy, which had put the plaintiff on notice:

If you do not opt out of this Policy within this 14-day period, both you and Compassus will be required to arbitrate all claims and disputes covered by this Policy in accordance with its terms.

Her acceptance of its terms could be inferred from her failure to opt-out within 14 days outlined in the policy and by her continued employment, the court ruled.

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A recent ruling provides an unfortunate example of what can happen when a contractor does not consider commercial general liability when making strategic decisions throughout the process of investigating and repairing construction defects, writes William Bennett in a web post for Saxe Doernberger & Vita.

The post continues:

The Southern District of California recently held that a series of demands for a general contractor to investigate and repair several construction defects at a U.S. Army facility did not constitute a “suit” within the meaning of the general contractor’s commercial general liability (“CGL”) policy.

In Harper Construction Co., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., the U.S. Government hired Harper Construction Company (“Harper”) to construct a U.S. Army training facility for the Patriot Missile System in Fort Sill, Oklahoma. No. 18-cv-00471-BAS-NLS (S.D. Cal. Mar. 28, 2019). During the project, Harper hired Harper Mechanical Contractors (“Harper Mechanical”), an independent company, as a subcontractor “to perform demolition, grading, and other work at the Project.”

After Harper completed the project, the government informed Harper of property damage at the project, “including, but not limited to, gypsum wallboard cracks and binding doors.” Harper attempted to repair the issues, but the problems continued. The issues were apparently the result of Harper Mechanical’s grading work. Subsequently, the government sent two letters requesting an investigation and asking Harper to “propose a plan to correct the issues.” As Harper undertook an investigation spanning multiple years, the government became increasingly frustrated with the delays. The government threatened to initiate “formal administrative recourse” and to demolish the project, forcing Harper to re-build from the ground up. It also sent Harper another letter requesting Harper submit a formal proposal to correct the issues.

Harper’s general liability carrier was National Union Fire Insurance Company of Pittsburgh, PA (“National Union”). Harper Mechanical was listed as an additional insured on Harper’s policy. Four years after the government’s first notification to Harper of the issues with the project, Harper’s broker submitted a claim to National Union. The broker noted that Harper was seeking additional insured coverage for Harper Mechanical under Harper’s own policy for investigation and repair costs resulting from Harper Mechanical’s work.

National Union issued a reservation of rights letter and sought more information from Harper. The parties corresponded for the next year and half, until National Union issued a denial letter indicating that there was not a “suit” against Harper seeking damages because of “property damage,” based on the policy’s definition of “suit.”

The policy contained the standard ISO CGL definition of “suit,” which is defined, in pertinent part, as “a civil proceeding in which damages because of … ‘property damage’ to which this insurance applies are alleged. ‘Suit’ includes: … b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.”

Harper sued National Union. National Union moved for summary judgment. In opposition, Harper argued that the government’s demand constituted a “suit” because the demand falls within the Contract Disputes Act (“CDA”), which includes administrative and court proceedings and qualifies as “any other alternative dispute resolution proceeding” under the policy definition. The CDA applies to “contracts made by an executive agency for, among other things, the procurement of construction … of real property.”

The court acknowledged that the CDA applied to the contract, given the Army’s status as an executive agency. However, the CDA does not automatically consider all disputes to constitute a “claim.” A dispute does not become a “claim” unless one of the contracting parties issues a “[w]ritten demand or written assertion … seeking … the payment of money in a sum certain,” at which point “each claim by the Federal Government against a contractor relating to a contract shall be the subject of a written decision by the contracting officer.” Without the claim being “submitted for a written decision by the contracting officer, which is the first step in the dispute resolution process under the CDA,” the court determined that there was “no evidence that Harper was faced with a “civil proceeding in which damages … are alleged” or “any other alternative dispute resolution proceeding,” as required by the policy’s definition of “suit.” The court also noted that there was no evidence that National Union had consented to any of the processes involved in the dispute, which is a further requirement of the definition of “suit.”

The court granted summary judgment for National Union based on the conclusion that the CDA demands did not constitute a “suit.” This case is an unfortunate example of what can happen when a contractor does not consider coverage when making strategic decisions throughout the process of investigating and repairing construction defects. The result could potentially have been favorable for Harper had it notified National Union early (and often) of the issues, involved coverage counsel to work with its defense and/or general counsel to strategize about how to cast the proceedings as a “suit” under the CDA, and followed the proper channels under the CDA to solidify its position that the parties were involved in ADR proceedings under existing California law.

A recent Texas ruling illustrates the problems that can arise when parties to a joint operating agreement elect to have a non-owner serve as the operator, points out Austin Brister in the McGinnis Lochridge Oil and Gas Law Digest.

The court was called on to determine whether an elected unit operator is permitted to delegate operatorship duties to a contract operator, and whether that contract operator can be liable to nonoperators for breach of any duties imposed on the operator under that unit operating agreement.

PBJV was designated as unit operator, but then PBJV entered into a contract with Apache to perform a number of duties.

The court concluded that Apache was merely delegated duties, based on its observations that PBJV never actually named or designated Apache as the “Unit Operator,” but instead entered into a “Contract Services Agreement” and power of attorney with Apache under which PBJV contractually delegated certain operator duties to Apache.

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Eric D. Mulligan of Hudson Cook, LLP writes about a case that illustrates the importance of drafting a contract that will avoid questions of interpretation by making the terms clear and apparent from the face of the text.

The case involves the default on a mobile home retail installment contract. The purchaser returned the home to the vendor with $40,000 left on the contract. Then the company sold the home for $53,000 and did not return the surplus to the buyer.

The Montana Supreme Court found that the terms of the release did not end the parties’ debtor-creditor relationship, and the purchaser was allowed to retain a surplus.

Read the article.

When considering employment by a hospital or health system, physicians should be mindful of various provisions that are often contained in physician employment agreements and how these provisions may impact the physician’s professional practice and personal life, advises McBrayer PLLC.

Christopher J. Shaughnessy discusses some important issues to consider when evaluating whether to enter into an employment agreement with a hospital or health system.

The article covers issues such as compensation, call coverage requirements, professional liability insurance coverage and “tail coverage,” and non-compete clauses.

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Greenberg Traurig offers a wide-ranging discussion of commercial contracts in a post on the Lexology website.

Using a question-and-answer format, the post covers such commercial contract topics as: contract formation, statutory controls and implied terms, limiting liability, payment terms, termination, subcontracting and assignment and third-party rights, disputes, and remedies.

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Amanda Garza of Porter Hedges, writing in the firm’s Texas Construction Law blog, explains the use of a “call-back warranty.”

“A call-back warranty establishes a period of time after the substantial completion of a project within which an owner can call upon a contractor to correct nonconforming work. The length of the ‘call-back period’ is typically one year but is ultimately determined by the language in the call-back warranty.”

She explains that the rights and obligations expire at the end of the call-back period, which can lead to some confusion about the effect on other warranties in the contract.

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When  you prepare, review and/or sign settlement agreements you sometimes pay less attention than you should to the details of those “standard” releases, writes Charles Sartain in Gray Reed’s Energy & the Law blog.

He explains that Acme Energy Services, d/b/a Big Dog Drilling v. Staley et al. provide the lesson: Beware the boilerplate; before signing, consider what you actually are trying to accomplish.

“Lake Hills contracted to provide materials and services on oil and gas leases owned by Heritage. Big Dog and other subcontractors provided work and materials and invoiced Lake Hills,” Sartain explains. “Heritage stopped paying Lake Hills and Lake Hills stopped paying the subs, who then recorded statutory mineral property liens against Heritage, its leases, and the well. Each subcontractor sued Heritage to foreclose and for personal liability.”

He lists the five rules the court considered in the case and discusses the ruling.

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In a podcast on the website of the University of Chicago Law School, consumer contract experts Omri Ben-Shahar and Florencia Marotta-Wurgler discuss several types of consumer contracts, enforceability of terms, and the potential consequences of agreeing to these terms without reading the fine print.

“Consumer contracts are everywhere,” they write in the introduction. “The number of contracts you enter into today may surprise you. Most of the contracts you enter into no longer involve a pen and paper. Purchasing a morning coffee, visiting a website, or scheduling a delivery are just a few daily transactions that more often than not include contract terms.”

Listen to the podcast.

U.S. contractors should proceed with caution when seeking to expand their footprint to an international stage, especially in developing countries where the local infrastructure may not promote a sustainable, stable environment, or a sustainable business model for the contractor, warns Rachael E. Stack in a website post for Faegre Baker Daniels.

But by considering three factors, contractors can mitigate exposure to the various risks involved in an international project.

Stack discusses the elements of contract form and language, governing law, and impact on the local community.

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A Delaware court refused to reform a contract with clear language, finding the argument of a scrivener’s error unconvincing, write Scott E. Waxman and Douglas A. Logan for K&L Gates.

“While the Court noted that it found all of the parties’ testimony believable, the Court did not find clear and convincing evidence that a mistake was made in drafting the contract in question,” the authors explain.

They list the three elements that a party seeking reformation must clearly and convincingly prove.

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Entering into a clearly drafted lease agreement at the outset of the relationship helps to set expectations, which minimizes the possibility of disputes over how the lease should be interpreted, writes Eric J. Remington for Ward and Smith.

The article lists some of the issues that can often result in disputes in commercial leases.

It also examines a recent opinion that addresses insurance and liability clauses and provides guidance on how courts should interpret insurance and liability provisions in commercial leases.

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Lex Machina will present a present a webinar on the company’s latest research on contracts litigation.

The 30-minute event will begin at 10 a.m. PDT (1 p.m. EDT) on Tuesday, May 7, 2019.

Lex Machine legal data expert Karen Chadwick, the author of the report, and Abena Mainoo, partner at Cleary Gottlieb, will discuss the latest findings and trends on top law firm and party data, timing metrics, case resolutions, damages awards, and more.

The webcast will cover:

• Case Filings
• Case Timing to Key Milestones
• Top Districts and Judges
• Most Active Parties
• Top Law Firms
• Case Resolutions and Findings
• Damages Awards

Register for the webinar.

A recent Delaware Court of Chancery ruling is a stark reminder that courts will enforce the terms of a merger agreement as written, and that the failure to comply with seemingly ministerial formalities can have severe consequences, according to a post on the Harvard Law School Forum on Corporate Governance and Financial Regulation.

The authors, partners at Cleary Gottlieb Steen & Hamilton, discuss Vintage Rodeo Parent, LLC v. Rent-A-Center, Inc., which involves a proposed merger. The agreement included a prescribed “end date,” means for extensions, and a reverse termination fee of $126.5 million.

The article expands on key takeways from the ruling, including the need for struct compliance with notice provisions, the lack of implied duty to warn a counterparty of its mistake, the discoverability of text messages, and enforceability of reverse termination fees.

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Mark A. Cobb of Cobb Law Group writes that whenever he’s negotiating construction contracts on behalf of a client or discussing a construction collection matter with a potential client, the conversation inevitably includes a discussion of the construction contract’s dispute resolution clause.

In an article in the Georgia Construction, Bond & Lien Law Blog, he discusses several of the questions that can arise; e.g., What is a dispute resolution clause and why is it important? What types of construction contracts should include the clause? What are construction arbitration and mediation?

He also offers an example of a mandatory mediation provision.

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The use of so-called “morals” clauses in services agreements, licenses, and other contracts is one of the primary means by which corporations that do business with high-profile performers seek to protect their investments against the talent’s appetites, foibles, weaknesses and, in certain cases, criminal impulses, points out Bloomberg Law.

In drafting the agreements, advises Steven S. Sidman, of counsel in Carlton Fields’ Atlanta office, “the parties should prepare agreements that not only clearly state what constitutes a violation (accusation of a crime versus actual conviction; what constitutes actionable public contempt or image tarnishing, and can it be measured objectively?), but also the remedies available to an aggrieved party.”

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The Supreme Court of Texas in its recent IBM v. Lufkin Indus. decision provided further clarity to what contracting parties must say in their contracts to disclaim fraudulent inducement claims, according to a post on the website of King & Spalding.

Craig Stanfield and Chad Stewart write that the court endorsed provisions that disclaim reliance on any representations other than those explicitly made in the agreement, further clarifying its previous holdings on this issue.

They explain that the court “held that the contractual language at issue must ‘clearly and unequivocally express[] the party’s intent to disclaim reliance on the specific misrepresentations at issue.’ The Court further noted that it must look to the contract language and the totality of circumstances surrounding the contract.”

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The importance of the terms in a state of work is sometimes overlooked by both business and legal teams because an SOW is commonly considered a business document rather than a legal document, writes Stephen F. Pinson in a Scott & Scott blog post.

He writes that it’s important for an SOW to address who will be providing the services, the scope of work being provided, the start date and timeline for the work, where the services will take place, the scope of work and the exact deliverables, and how the service ultimately be performed/delivered and paid.

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The 5th U.S Circuit Court of Appeals has affirmed a 2016 jury verdict and 2017 trial court judgment that ultimately awarded $9.5 million to a Dallas-based health care company, according to a post on the website of Androvett Legal Media & Marketing.

In a majority opinion, the appellate court found that BlueCross BlueShield of Louisiana failed to properly reimburse Encompass Office Solutions for in-office medical procedures, and distributed a defamatory letter to physicians with false information regarding the company and its services. That letter threatened to terminate the network contracts of doctors who continued to work with Encompass.

Subsequent to the opinion in the case, the court has denied a motion for rehearing.

A trial team from Thompson & Knight LLP represented Encompass throughout the district court hearings and before the 5th Circuit.

“This case has a lengthy history spanning several years, and we’re pleased that finally Encompass will be properly compensated for the services it provided and the damages the company has incurred,” said Jennifer Rudenick Ecklund, a trial partner at Thompson & Knight who argued the case before the trial court and 5th Circuit. The judgment remains subject to the awarding of interest and legal fees to Encompass.

Other members of the Thompson & Knight trial team included William L. Banowsky, Andrew C. Cookingham, Greg W. Curry, Richard B. Phillips, Jr. and Reed Randel.

Encompass provides mobile ambulatory surgery services that allow doctors to safely perform surgeries in their offices. Encompass’s business is primarily focused on women’s health, allowing patients to have sensitive gynecological procedures done in the comfort and safety of the doctor’s offices while providing the necessary anesthesia care. This method reduces the infection risks associated with hospitals and ambulatory surgery centers, and provides both doctors and patients with a more efficient and cost-effective means of delivering medically necessary surgical care.