Commercial Litigation in Pennsylvania's Construction Industry

Commercial litigation related to construction projects can be complex and high-stakes for all parties involved. Having an experienced Pennsylvania construction law attorney is key to successfully navigating any legal disputes. This article outlines seven essential steps companies in Pennsylvania's construction industry can take when facing commercial litigation.

However, there are steps both general contractors and subcontractors can take to resolve payment issues efficiently while preserving working relationships. The construction lawyers at Davis Bucco & Makara have extensive experience helping contractors navigate payment disputes. Call today at 610-238-0880 for more information.  

Carefully Assess Contract Agreements  

When a commercial dispute arises, the first step is to thoroughly review all contracts and agreements related to the project or relationship. A Pennsylvania construction law attorney can help analyze relevant documents to determine the rights, responsibilities, warranties, indemnities, jurisdictional issues, and other legal obligations of each party involved. This contractual foundation often forms the basis of claims, defenses, and counterclaims in commercial litigation. 

Pay particular attention to the following common provisions in Pennsylvania construction contracts that are frequently at issue in legal disputes:

• Choice of law and jurisdiction 

• Indemnity clauses 

• Warranties, guarantees, and bonds

• Insurance requirements 

• Limitations of liability

• Change order procedures

• Payment terms and conditions

• No damage for delay clauses  

• Dispute resolution processes

Proactively identifying any ambiguous, contradictory, or missing contract terms related to these provisions early on allows a Pennsylvania construction law attorney to best advise and position clients for success should litigation arise.

Gather and Preserve Relevant Documentation

Contemporaneous documentation is critical for substantiating claims or mounting a defense in construction litigation. As soon as a commercial dispute seems possible, clients should immediately consult a Pennsylvania construction law attorney and gather all project records, correspondence, emails, change orders, invoices, meeting minutes, photographs, inspection reports, and other documentation that could become evidence. 

A litigation hold may be necessary to prevent the routine destruction of paper or electronic records under internal company policies. Failing to preserve relevant documents opens the door for sanctions, adverse inferences, and other detrimental rulings for spoliation of evidence. An experienced Pennsylvania construction law attorney can provide specific evidence preservation advice tailored to individual cases.

Evaluate Insurance Coverage

Most construction companies and contractors carry commercial general liability (CGL) policies, builders risk insurance, surety bonds, and other coverages. When litigation strikes, it is essential to file claims under all potentially applicable insurance policies promptly. Carriers need timely notice to investigate claims and anticipate coverage defenses.

An insurance coverage attorney experienced with construction litigation can help guide clients through nuanced notification and cooperation requirements. Depending on policy language, certain costs incurred in resolving construction defect claims or lawsuits may qualify for valuable defense and indemnity benefits. An insurance archaeology exercise conducted by a qualified Pennsylvania construction law attorney can help identify additional excess, specialty, or historic policies that a company may not realize and also respond to.

Maximizing available insurance funds is almost always in a policyholder’s best financial interest for balancing litigation risk. Insurers can also bring substantial litigation resources to the table to help broker reasonable settlements.

Evaluate Third-Party Liability

Complex construction projects inevitably involve networks of owners, general contractors, subcontractors, design professionals, equipment manufacturers, and component suppliers. The web of intersecting commercial relationships and potential liabilities in these matters is vast.

Carefully mapping out all entities involved on the front and back end of a disputed project is critical for identifying other responsible third parties. A Pennsylvania construction law attorney can help clients consider all angles of contractual privity, common law duties, statutory obligations, insurance equities, indemnities, and warranties when strategizing over the optimal parties to pursue through litigation or bring to the negotiating table to resolve cases as advantageously as possible.   

Attempt Early Case Resolution

The litigation life cycle in commercial construction disputes can last years before courts or arbitration panels reach final verdicts. The business disruption and expense incurred defending high-stakes construction defect claims often compel all sides to explore early dispute resolution options. 

Mediation, arbitration, neutral case evaluation, and direct settlement negotiations conducted in the shadow of litigation are all common methods for resolving construction cases short of a protracted trial. An experienced Pennsylvania construction law attorney will advise clients on the pros and cons of each approach in light of the unique circumstances presented and relative bargaining leverage based on documentation obtained in discovery.

When sizable dollars are at stake, formal third-party neutral evaluations of case merits or facilitator-led mediation sessions may help crystallize reasonable settlement ranges well before deadlines for parties to commit to costly professional retention, destructive testing, and intensive pretrial preparation. Over 90% of all civil lawsuits filed ultimately settle out of court.

Commit to Seeing Cases Through

The impulse to disengage from seemingly endless construction litigation is understandable. However, walking away from a case risks allowing an adverse outcome by default. Before making any consequential decisions about continuing to pursue or defend against construction claims, clients should consult closely with their trusted Pennsylvania construction law attorney advisor.

Litigation outlooks shift over time. New evidence surfaces. Courts issue pivotal rulings. Opposing parties experience changes in corporate ownership or management. Unpredictable events alter trajectory. With so many moving parts, construction litigation simply does not unfold in perfectly straight lines. Patience, grit and determination are required.

An experienced Pennsylvania construction law attorney has a perspective informed by handling scores of construction cases across multiple industry cycles. Clients rely on this seasoned guidance when navigating the peaks and valleys inherent to major commercial litigation. Staying the course to capitalize on eventual turning points that could only crystallize months if not years later remains the wisest path forward in many situations.

Frequently Asked Questions About Commercial Litigation in Pennsylvania's Construction Industry

Many practical questions arise for Pennsylvania construction industry participants facing commercial disputes and potential litigation. An experienced Pennsylvania construction law attorney can provide further advice and answers regarding these key issues.

1. What Legal Obligations May General Contractors And Subcontractors Have To Defend And Indemnify Project Owners Facing Construction Defect Claims?

Pennsylvania courts will generally enforce clear and unambiguous indemnification requirements in commercial construction contracts and subcontracts. However, certain exceptions exist under applicable statutes related to sole negligence and public policy that limit contractual risk transfer. An experienced Pennsylvania construction law attorney can help interpret complex indemnity, insurance, and defense obligation provisions.

2. When Does The Clock Start Ticking On Pennsylvania’s Four And 12-Year Statutes Of Repose For Suing Over Construction Defects And Negligent Design Work?

Unlike a statute of limitations that runs from the date an alleged injury is discovered, statutes of repose impose strict deadlines tied to project substantial completion dates. Plaintiffs only have 12 years under state law to sue for dangerous defects and just four years to take legal action over any type of deficiency – irrespective of when property damage first manifests. The repose cut-off dates are difficult to overcome. So identifying the proper substantial completion trigger date with a Pennsylvania construction law attorney is essential for establishing these critical building defect claim timeliness defenses.  

3. Can Corporate Veil-Piercing Claims Succeed Against Shareholders, Executives, And Affiliates Of Pennsylvania Llc And Corporation-Structured Construction Contracting Entities? 

It depends on the extent of financial intermingling, failure to observe corporate formalities, degree of dominion exerted by owners, layers of ownership interests, and other factors probed when deciding whether to disregard a Pennsylvania construction entity’s protective business structure barriers. An experienced Pennsylvania construction law attorney evaluates veil-piercing claims based on the specific evidence available. However, undercapitalization, commingled funds, and whole-enterprise integration issues must generally be shown.

4. What Settlement Payment Dynamics Typically Occur When Multiple Parties Are Implicated In Pennsylvania Construction Defect Litigation?

With so many intersecting interests among assorted owners, contractors, subcontractors, architects, engineers, manufacturers, suppliers, and insurers dragged into these cases, creative resolution solutions are required. There may be defended parties aligned with plaintiffs against other defendants while also facing cross-claims. Strengths and weaknesses of relative liability and damage arguments also influence global settlement give-and-take. An experienced Pennsylvania construction law attorney can choreograph the dance of construction litigation shared contributions and releases.  

5. Can Defects Litigation Against My Pennsylvania Construction Company Result In Bodily Injury Claims Over Toxic Exposures To Workers Or Tenants Down The Road? 

Possibly. Construction defects like moisture intrusion causing mold growth or distribution of asbestos-containing materials during remediation efforts conceivably injure people after completion. Certain commercial general liability insurance policies may deny coverage for these delayed personal injury or sickness manifestations under asbestos, fungi, or expected/intended injury exclusions. An experienced Pennsylvania construction law attorney reviews all historical insurance policies for potential coverage defenses or limitations that could compromise available funds to resolve related toxic tort litigation down the road.

Clients confronting complex construction litigation risks in Pennsylvania often have more questions than this brief FAQ covers. Reach out to an experienced Pennsylvania construction law attorney at your earliest opportunity to discuss the particulars of your unique situation in more depth. Building trusting relationships with legal advisors upfront paves the way toward more informed decision-making as events unfold.

Selecting a Construction Lawyer to Handle Your Dispute

The construction lawyers at Davis Bucco & Makara have decades of combined experience specifically with contractor payment disputes.

There are always two sides to complex business disagreements, but prompt and thoughtful actions by both general contractors and subcontractors can keep most payment issues from escalating into serious conflicts. When unresolved disputes do arise, experienced construction attorneys can protect your rights and interests as a contractor in Pennsylvania. Reach out today to schedule your initial consultation at 610-238-0880.