Texas Construction Law Blog

When entering into construction contracts, the question of which state’s laws will govern is a pivotal consideration. Choice of law has real-world implications for how construction disputes are resolved. Different states have varying laws on contract interpretation, remedies, and liability. For instance ...

While change orders are widely viewed as a mechanism to increase the contract price in a construction contract, sophisticated players understand that change orders can and should be used to manage claims. 

From the owner’s perspective, change orders are often used to finalize compensation and delay days for ...

In construction disputes, owners typically deal with defects within the scope of work of the subcontractor or vendor by pursuing claims directly against the general contractor. The owner, however, may consider pursuing claims directly against a subcontractor or vendor under certain circumstances.

Potential ...

Coordination between the Owner-Architect Agreement and the Owner-Contractor Agreement is crucial for any successful project. In particular, the parties may overlook the provisions related to an Initial Decision Maker (“IDM”). When the fight breaks out, there are usually conflicting claims whether the ...

The construction industry is a cornerstone of Texas’s robust economy, and timely payments are critical for maintaining the health of this sector. To ensure that contractors, subcontractors, and suppliers are paid promptly for their work, Texas has implemented the Texas Prompt Payment Act (“the Act”)

The Owner and Architect of a Project may sometimes strongly disagree on who should or does own the designs, plans, and specifications that the Owner pays the Architect and its consultants to produce. The meaning of “ownership” is a core part of this argument. This article provides a very basic overview of the ...

Perfecting a performance bond claim in Texas requires careful attention to legal requirements and procedural details set forth on the face of the bond and under Texas law. Perfection of a performance bond claim is often intertwined and complicated by owner concerns over project delays that arise any time a ...

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 ...

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,” ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

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 ...

August through October marks the peak of hurricane season along the Texas Gulf Coast. Nearly every year, at least some part of the Texas coast feels the impact of a named storm during these months, either by flood, wind, rain, or all three. The resulting damage can create an immediate and dramatic need for contractors ...

Excluding consequential damages has become a regular part of negotiating engineering and construction contracts. A typical clause excludes recovery of indirect, exemplary, and consequential damages for both parties. Beyond these broad categories, there is often little negotiation as to the specific types of ...

Most sports fans are familiar with the concept of home field advantage — the idea that the home team gains an advantage over the visiting team because it is playing in familiar facilities, does not have to travel long distances before the game, and has the full depth and breadth of its local community’s support ...

A chronic issue in Texas law is defining when representations made by a “seller” prior to contract execution bind the seller, notwithstanding contract language that purports to disclaim or otherwise limit the “buyer’s” right to hold the seller responsible for the pre-contract representations ...

Less than a year ago, Texas Senate Bill 219, addressing liability for construction defects due to defects in design documents, went into effect and was codified as Chapter 59 of the Texas Business and Commerce Code. Where the statute applies, it generally provides that contractors do not bear the risk of design ...

On March 31, 2022, the United States Supreme Court issued an important decision regarding federal courts’ subject matter jurisdiction to confirm, vacate, or modify arbitral awards under Sections 9 and 10 of the Federal Arbitration Act (“FAA”). The issue was whether, in such proceedings, courts can use a ...

Earlier this month, our firm was well-represented at the 35^th Annual Construction Law Conference in San Antonio, Texas. As always, the conference presented great opportunities to visit with colleagues and other construction law practitioners throughout Texas, meet new friends, and to learn of recent legal ...

On February 17, 2022, the Court of Appeals in El Paso, Texas reversed a summary judgment in favor of a mineral lien subcontractor claimant because, at the time the lien was filed, nothing further was owed under the prime agreement (Pearl Res. Operating Co. LLC v. Transcon Capital, LLC, No. 08-19-00288-CV, 2022 WL ...

In September 2021, the Texas legislature made major changes to the construction lien statutes in Chapter 53 of the Texas Property Code. All of the key players in the construction industry (owners, contractors, subcontractors, suppliers, architects, engineers, landscapers, and sureties) are affected.  

This ...

Texas Senate Bill 219, which governs liability for construction defects due to flaws in design documents, goes into effect on September 1, 2021. With a few exceptions, the statute will effectively wipe out the Texas Supreme Court’s long-standing Lonergan holding that absent contractual language to the ...

In a recent case, the Texas Supreme Court addressed the scope of the general contractor’s duty of care to its subcontractors’ employees on the project site.  In JLB Builders, L.L.C. v. Hernandez,^[1] the Court upheld the trial court’s summary judgment in the general contractor’s favor and dismissed the ...

Statutory Retainage

Texas law obligates construction owners to withhold 10% of the value of the work during the course of a project and for 30 days after final completion. This is generally known as statutory retainage. Owners should memorialize their statutory retainage obligation in their construction ...

As the end of the 87^th Texas legislative regular session approaches, we appear to be on the verge of having new, shortened statutes of repose for design and construction claims by certain Texas governmental entities. This is important because statutes of repose “provide a definitive date beyond which an action ...

The Houston First Court of Appeals of Texas recently affirmed a trial court’s decision wiping out a whopping $17 million claim brought by a contractor against an owner for acceleration costs, holding that the claim was barred by release language contained in a signed contract modification of the type routinely ...

Any lawsuit filed in Texas state courts on or after January 1, 2021 are now subject to the newly-amended Texas Rules of Civil Procedure.  Our litigation team has a helpful review of several of the most significant changes available here.  This post focuses on how the new rules, particularly the new disclosure ...

In 2020, the Fifth Circuit Court of Appeals issued its decision in Soaring Wind Energy LLC (SWE) v. CATIS USA Inc., et al.  In that case, the various members of a limited liability company (LLC) entered into an agreement to provide worldwide marketing of wind energy equipment and services.  The agreement contained an ...

Change orders can quickly become a source of contention on construction projects and are often the subject of major disputes.  As a result, it is important for stakeholders to carefully draft and negotiate the change order and related provisions pre-contract. 

The key portions in a change order clause beyond the ...

As COVID-19 continues to result in government shutdown orders, labor shortages, and increased lead times to acquire materials, project owners, contractors, and subcontractors may begin to make claims of “force majeure,” or may otherwise suspend or even terminate work.  Often these notifications or ...

The subcontractor did everything right:  it did the work, but did not get paid, and thereafter properly perfected a lien.  Now, the subcontractor has an opportunity to settle with the general contractor or even its subsequent bankruptcy trustee.  The subcontractor needs to proceed with caution to avoid losing its ...

Porter Hedges recently scored a significant victory for landowners Terrance and Kenneth Hlavinka and their families (“the Hlavinkas”) against HSC Pipeline Partners, a subsidiary of Enterprise Products Partners.

On June 18, 2020, the First Court of Appeals in Houston, Texas rendered its opinion, reversing ...

The Texas Supreme Court has issued a ruling that significantly impacts arbitrations involving governmental entities, which include cities, counties, school districts, conservation districts, hospital organizations, and other political subdivisions.  In San Antonio River Authority v. Austin Bridge & Road ...

While this coronavirus event grips the nation, contractors and subcontractors are asking whether this qualifies as a force majeure or changed condition event.  We think it qualifies as both. 

When you bid and signed your contracts, if the force majeure clause was given any thought, it likely was about the impact of a ...

The Small Business Administration (SBA) has designated COVID-19 as a qualifying event for the provision of Economic Injury Disaster Loans to small businesses and private non-profits. As a result, on March 17, 2020, Governor Greg Abbott requested an emergency designation from the SBA for the entire state of Texas ...

The spread of COVID-19 has severely impacted our nation and economy. We are facing lockdowns, travel bans, and massive disruptions to day-to-day activities as authorities work to stop the spread of COVID-19. As the virus-related impacts spread, parties are likely to find it increasingly difficult to meet their ...

Subcontractors have long celebrated—and general contractors long feared—the Texas Construction Trust Fund Act, codified in Chapter 162 of the Texas Property Code.  The Act, which is (ideally) construed broadly to primarily protect subcontractors, provides that payments “made to a contractor or ...

If you are involved in the construction industry, you have probably heard of or dealt with mechanic’s liens. The majority of work performed on private Texas construction projects will fall under Chapter 53 of the Texas Property Code, to which mechanic’s liens apply. However, certain projects involve work ...

Unlike with private commercial projects, liens cannot be filed against public projects in Texas. This means that unpaid subcontractors and suppliers do not have the same protections on public projects as those on private projects. On a private project, a subcontractor or supplier would ordinarily file a lien ...

Texas law has certain peculiarities which must be followed when a project is located in Texas.  To avoid surprises and unanticipated liability on construction projects, the parties should modify contracts consistent with Texas law—or at least be aware of the limitations that are in place due to certain Texas ...

What should a Subcontractor do when a General Contractor presents, to the Subcontractor, the 401A-2017 Standard Form of Agreement Between Contractor and Subcontractor (“A401”)?  While some provisions in the A401 are favorable to the Subcontractor, others are not.  This multi-part series explores some of the ...

Different types of damages may be recoverable from a breach of a design, construction, EPC or other construction-related contracts. The baseline damages are “direct” damages, which are necessarily caused by a breach and compensate for the losses, for example the costs to repair faulty work ...

Commercial construction contracts between owners and contractors, such as the form AIA Document A201 contract, often include various express warranties whereby the contractor warrants its work on the project to the owner. Among those express warranties are the more common warranties that: (i) the materials and ...

Owners of construction projects are often surprised to learn that they are required to withhold 10% retainage on private construction projects in Texas. Failure to withhold 10% can result in liability up to that amount.^[1]  Similarly, owners often continue to pay the general contractor after receiving a lien ...

The Texas Legislature is back in session, and lawmakers generally have until March 8, 2019 to file bills for consideration this session. In our original post on January 31, 2019, we identified several bills of interest to the construction industry that had been filed as of that date. Since that post, the ...

The Texas Legislature is officially back in session. While lawmakers generally have until March 8, 2019 to file bills, many bills of interest to the construction industry have already been filed. Below is a list of some key construction related bills we will be following this session along with a description of the ...

Texas Property Code Section 53.056(a)-(c) details the notice requirement deadlines that subcontractors must comply with to perfect a statutory lien on a private, commercial project in Texas. Simply put, the statute sets forth separate notice deadlines dependent on whether the claimant is a second-tier (and ...

Although arbitral institutions like the London Court of International Arbitration and International Chamber of Commerce have historically based arbitration costs on models other than a pure hourly-basis, the American Arbitration Association/International Centre of Dispute Resolution recently ...

As described by my colleague Sean McChristian in Part 1 of this two-part blog series, planning for hurricane season in Texas is a critical part of mitigating risk in the construction industry. In addition to reviewing force majeure provisions, owners and contractors need to have an understanding of the ...

The Gulf Coast hurricane season runs from June 1st to November 30th each year. Because this is a known risk, many businesses prepare emergency response plans to mitigate risks to persons and property, but many of those same businesses are not prepared to mitigate economic risks arising from ongoing construction ...

Subcontracts between a general contractor and subcontractor often contain a flow-down provision stating that the terms and conditions in the owner/contractor agreement (the “Prime Contract”) are also binding on the subcontractor—making the subcontractor obligated to provisions in the Prime ...

Filing a certificate of merit (“COM”) can quickly become a sticky situation for any plaintiff pursuing a claim against a design professional. Plaintiffs who comply with the COM requirements can still have their claims dismissed for various reasons. This post focuses on the necessary qualifications of the ...

November 2018 will mark the 25^th anniversary of a significant case regarding the limitations period for construction defect claims in Texas. In Bayou Bend Towers Council of Co-Owners v. Manhattan Construction Co., 866 S.W.2d 740 (Tex. App.—Houston [14th Dist.] 1993, writ denied) the Court held that even ...

A recent Texas case clarified that both disruption and delay claims are potentially recoverable against a county pursuant to Texas Local Government Code § 262.007. Under the statute, sovereign immunity is waived to a certain extent against a county in Texas when the county is a party to a construction contract. The ...