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That was Quick: SK Builders, Inc. v. Smith is Legislatively Overruled by Amendments to Arizona’s Prompt Pay Act.

Back in April of this year, I authored this post concerning the Arizona Court of Appeals’ recent decision in SK Builders, Inc. v. Smith. In SK Builders, the court held that Arizona’s Prompt Pay Act (the “PPA”) did not apply to billings containing work furnished outside the preceding 30 days because the PPA stated that “billing[s] or estimate[s]” must be based on “work performed and…materials supplied during the preceding thirty day billing cycle.” In other words, the court found that payment applications submitted at the end of a billing cycle were limited to work performed or materials furnished within the preceding 30 days. But, as I briefly noted in a July update to my earlier post, the sun set on SK Builders rather quickly. The decision was legislatively overruled by an amendment to the PPA and is no longer good law. read more

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OsHa No! – 9th Circuit Holds that Installation of Solar Panels Is Not Roofing Work for Purposes of Fall Protection

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It is hopefully no secret that the Occupational Safety and Health Administration (“OSHA”) regulations require employers to provide fall protection systems in certain circumstances. The type of protection required depends primarily on: (1) the nature of the work being performed; and (2) the environment in which it is performed. In Bergelectric Corp. v. Secretary of Labor, 925 F.3d 1167 (9th Cir. 2019), the 9th Circuit Court of Appeals was recently charged with deciding whether the installation of solar panels constituted “roofing work” for purposes of determining the applicable safety standards. The Court ultimately held that installing solar panels was not roofing work, and, as a result, affirmed a final order of the Occupational Safety and Health Review Commission (the “Commission”) that a contractor violated OSHA fall protection requirements by not complying “with the stricter safety standards governing work on unprotected sides and edges.” Given the growth of the solar industry, the decision in Bergelectric Corp. is significant. read more

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Time May Not be on Your Side: Understanding “Time is of the Essence” Clauses

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It is typical for construction contracts to provide that “time is of the essence.”  And while these clauses clearly signify that time is important, their practical impact on parties to an agreement may be less clear.   Luckily, the Arizona Supreme Court addressed the effect of “time of the essence” provisions in this state in Foundation Development Corp., v. Loehmann’s, Inc., 163 Ariz. 438 (1990).

Time as a material element of a contract.

Before addressing the holding in Loehmann’s, it should be noted that the general aim of “time of the essence” clauses is to make time a material requirement of the parties’ performance under an agreement.  Of course, even in the absence of a “time of the essence” provision, time can be rendered a material requirement of a contract if it is implied by the type of obligations assumed. read more

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Arizona Legislature Further Limits Scope of Indemnification Provisions Relating to Certain Residential Construction Projects

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Many construction contracts contain indemnification provisions.  Generally speaking, these provisions attempt to shift the risk of certain potential losses between the parties.  Among other things, indemnification provisions can address the manner in which parties allocate the risks of losses, costs, and expenses resulting from:  (a) bodily injury; (b) property damage; (c) lien claims; (d) hazardous materials; and (e) copyright or patent infringements.

Like many other states, Arizona has long had a statute on the books that limits the parties’ ability to shift particular risks through indemnification provisions in a construction setting.  Specifically (as explained in this post from 2016), A.R.S. § 32-1159(A) provides that indemnification provisions “that purport to indemnify, to hold harmless or to defend the promisee from or against liability for loss or damage resulting from the sole negligence of the promisee or the promisee’s agents, employees or indemnity [are] against the public policy of this state and [are] void” in all private construction contracts and architect-engineer professional services contracts. (Emphasis added). read more

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“An umbrella of liability”: Arizona Court of Appeals Sets Aside Industrial Commission Decision for not Evaluating the Liability of Each Contractor in a Workers’ Compensation Claim

Who is responsible for payment of a workers’ compensation claim arising from framing work that has been subcontracted at least 4 times on a residential construction project?  That is the question that Division One of the Arizona Court of Appeals recently tackled in Meno’s Construction, LLC v. Industrial Commission of Arizona, No. 1 CA-IC 18-0041 and 1 CA-IC 18-0042 (Consolidated).  The Court ultimately set aside the Industrial Commission of Arizona’s underlying decision that only two of the relevant subcontractors were responsible.  In doing so, the Court held that the administrative law judge (the “ALJ”) below “did not evaluate the liability of each contractor and subcontractor made party to [the] workers’ compensation claim,” in violation of the “umbrella of liability” concept for statutory employers contemplated by Arizona’s Workers’ Compensation Act. read more

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