This blog post addresses: (1) steps to be taken, (2) issues to be aware of, and (3) recovery prospects when a general contractor files for bankruptcy protection under Chapter 11 of the Bankruptcy Code, from the owner’s perspective.

1. The Automatic Stay Prohibits Taking Immediate Adverse Action Against the ...

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The Sweeping Application of the Texas Construction Anti-Indemnity Act

Although generally known as the “Texas Construction Anti-Indemnity Act,” the sweep of Subchapter C of Chapter 151 of the Texas Insurance Code (the “TCAIA”) is much broader than its name would seem to suggest.[1]  Notwithstanding that the TCAIA only applies where there is a “construction contract,” ...

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The Texas legislature has passed House Bill 3485 that may limit owner-directed change orders for owner-directed work. The law takes effect September 1, 2023 for contracts entered into on or after September 1, 2023. The upshot of the bill is that private and governmental owners cannot issue owner-directives (or ...

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When an arbitration tribunal issues an award, the first thing parties should do is calculate and calendar their deadlines to seek relief in court. This post discusses one such deadline—the one to file a motion to vacate or modify the award. Both the Federal Arbitration Act (FAA) and Texas Arbitration Act (TAA ...

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Texas Supreme Court Rules on Governmental Immunity in Construction Contract Dispute

Last week, the Texas Supreme Court issued an important case involving governmental immunity in construction contract disputes. The case, Pepper Lawson Horizon International Group LLC v. Texas Southern University, arose out of a project to construct student housing on TSU’s campus.

    

Background

The project ...

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Bond to Indemnify Against Liens vs. Bond to Pay Liens or Claims

Bonds can play an essential role in protecting owners from the financial risk associated with liens and other contractor claims on Texas construction projects. Two types of commonly used surety bonds are (1) bonds to indemnify against liens, and (2) bonds to pay liens or claims. When and how to utilize these bonds are ...

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Recent Construction News under the Inflation Reduction Act

The Inflation Reduction Act of 2022 (“IRA”) offered several incentives for the construction industry, including an update of the deduction for energy efficient property installed at commercial buildings under Section 179D of the Internal Revenue Code of 1986, as amended (the “Code”).  The CHIPS Act of ...

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Tips on Drafting Enforceable and Effective Liquidated Damages Provisions Under Texas Law

Liquidated damages provisions are commonplace in construction contracts. One would think that given the strong Texas public policy favoring freedom of contract, bargained for liquidated damages would be easily enforceable in litigation. But Texas law on this issue is counterintuitive and can render a ...

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Price Escalation Considerations in Construction Contracts

With material cost volatility in the current market, the topic of price escalation clauses is more prevalent. Some material costs are up and other costs are now down. Traditional lump sum contract structures do not take into account price escalation or de-escalation; whereas cost plus structures entirely and ...

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Top Five Provisions to Review in Your Construction Contract

It’s 3:00 p.m. on a Friday and you’ve been tasked with reviewing a construction contract by close of business. It’s long, and you only have time to review the most important terms. Which ones do you choose?

Divide and Conquer

Contract terms can be divided into three general categories of terms. There are ...

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