I am not Being Paid – Can I Suspend my Works?

Suzannah Fairbairn and Alastair Young | Dentons

Why is this question so common?

For the construction industry, the uncertain economic climate can mean a lack of cash and liquidity across the supply chain. Employers are increasingly seeking to rely on their contractual rights and remedies to avoid having to pay, or to delay payment. As a result, one of the biggest issues we see contractors facing in the current market is the lack of cash-flow due to non-payment, late payment or underpayment.

In these circumstances, the contractor often feels it has limited options to ensure it gets paid, and sees suspending works as its only viable option. If there is a clear contractual entitlement to suspend works, then this can be a very powerful tool for the contractor. However, if there is not a clear entitlement and/or the contractor wrongfully suspends its works, then this can lead to serious repercussions.

I have an unamended FIDIC contract – can I suspend? 

  • You have a right to suspend in certain circumstances (Sub-Clause 16.1, 1999 Edition), including:
    • if the engineer fails to issue a payment certificate; and/or
    • if the employer fails to pay any amounts due.
  • You can rely on this only if:
    • there has been a failure to pay an amount that has been certified, or a failure to issue a payment certificate at all. It does not apply if the engineer certifies “nil”, no matter how good your grounds for disputing this “nil” certification;
    • you have given at least 21 days’ notice after the payment or certificate became due; or
    • you have otherwise performed the contract, and you are exercising this right, in a manner consistent with the requirements of good faith (Article 246(1) Civil Code).
  • If this applies, then:
    • you are entitled to an EOT, cost and profit arising from the suspension, as long as you have fulfilled the necessary notice requirements for contractor’s claims (Sub-Clause 20.1); and
    • this right is in addition to any entitlement to financing charges and to termination.
  • However, the right to suspend works is often deleted from contracts in the region (or at least heavily amended), so check your contract carefully before attempting to rely on an assumed contractual entitlement.

My contract does not contain a right to suspend – is there any other way?

  • Article 247 of the Civil Code provides a possible right to suspend works. This states: “In bilateral contracts, where the reciprocal obligations are due, each of the contracting parties shall have the right to abstain from executing his obligation in case the other party does not honour his obligation.”

However, this does not necessarily give you an entitlement to suspend the works if you have not been paid. An attempt to rely on this article is risky.

  • There is no right to suspend mentioned in the part of the Civil Code dealing with construction contracts (Muquwala).
  • The requirement for reciprocal obligations is problematic because the payment relates to work already completed, rather than work that you are hoping to suspend.
  • You would need to be able to demonstrate, at a minimum, that: (i) you were not in breach of the contract first; (ii) you were willing and able to perform your obligations; (iii) the suspension is proportionate; and (iv) you are acting in good faith.

Is it worth a try?

  • You should only suspend the works if you are confident that you are entitled to do so and have fully complied with the notice provisions and any other requirements.
  • If you suspend without entitlement, this would be a breach of contract and the employer might be able to terminate the contract and/or claim (often very substantial) damages.

Key messages 

  • A clear contractual right to suspend can be very effective (however, commercially this can be very difficult to obtain).
  • Even an unamended FIDIC does not assist where the issue is routine under-certification.
  • Make sure you have fully complied with all the contractual requirements – failure to do so could be fatal to your right to suspend and open you up to significant claims.
  • It is very risky to suspend without a clear contractual right to do so (although it may be worth considering in exceptional circumstances).
  • Do not simply slow or stop work without notice.
  • The result of suspending works without entitlement can be severe.
  • If you are suffering cash-flow problems, take legal advice early.

A Few More 2020 Bills “Crossing Over” in the General Assembly

Christopher G. Hill | Construction Law Musings

Last week I posted about a few bills that should be noted by the construction community here in Virginia.  Now that the “crossover” (passed Senate bills headed to House and vice versa), here are a couple of other bills that the AGC of Virginia has highlighted that were not included in the post and updates last week.  I will just highlight two here but for a more complete list, check out this crossover update from the AGC of Virginia.

SB208 Mechanics’ liens; right to withhold payment. Specifies that the use of funds paid to a general contractor or subcontractor and used by such contractor or subcontractor before paying all amounts due for labor performed or material furnished gives rise to a civil cause of action for a party who is owed such funds. The bill further specifies that such cause of action does not affect a contractor’s or subcontractor’s right to withhold payment for failure to properly perform labor or furnish materials and that any contractual provision that allows a party to withhold funds due on one contract for alleged claims or damages due on another contract is void as against public policy.

HB1300 Virginia Public Procurement Act; statute of limitations on performance bonds; statute of limitations on construction contracts and architectural and engineering contracts. Provides that an action against the surety on a performance bond shall be brought within five years after the completion of the contract. The bill further provides that the statute of limitations on construction contracts and architectural and engineering contracts is 15 years after completion of the contract.

Both of these bills have passed their respective chambers and are being considered in the other chamber of the General Assembly.  The first deals with offset by general contractors and the other should be good news for all who deal in public construction because it at least would give some certainty and mitigate so called “Hensel Phelps” problem.

As always, I recommend that you read the entire bill yourself and consult a Virginia construction attorney with any questions about how this will affect your construction business.

Contractor Entitled to Defense for Alleged Faulty Workmanship of Subcontractor

Tred R. Eyerly | Insurance Law Hawaii

    Applying Nevada law, the Federal District Court in Florida found that the general contractor was entitled to a defense of claims based upon alleged faulty workmanship of a subcontractor. KB Home Jacksonville LLC v. Liberty Mutual Fire Ins. Co, 2019 U.S. Dist. LEXIS 151235 (M.D. Fla. Sept 5, 2019).

    KB Home completed six residential developments utilizing various subcontractors. One subcontractor was Florida State Plastering, LLC (FSP) for installing stucco. Eighty-eight complaints against KB Home implicated FSP’s stucco work. Plaintiffs alleged that the stucco subcontractor’s work suffered from construction defects, causing damages not only to the exterior stucco, but also the underling wire lath, paper backing, house wrap, wood sheathing, interior walls, interior floors and other property. 

    Ironshore insured FSP under a CGL policy. KB Home was an additional insured for liability for property damage caused by “your work.” KB Home was also insured under its own CGL policy with Liberty Mutual. Both insurers refused to defend.

    KB Home filed suit for a declaratory judgment. Liberty Mutual then agreed to defend. Ironshore argued that KB Home was not entitled to partial summary judgment because there were material facts in dispute. The court concluded that the underlying complaints alleged “property damage,” caused by an “occurrence” of FSP’s allegedly faulty workmanship. Further, there were allegations of damage to property other than FSP’s own work. The underlying complaints alleged that FSP’s faulty stucco installation caused damage to paper backing, house wrap, wood sheathing, interior walls and interior floors. 

    Ironshore next argued it still had no duty to defend because Liberty Mutual was providing KB Home a defense. The court disagreed. The presence of multiple insurers did not excuse any single insurer from fully defending the insured. Therefore, KB Home’s motion for partial summary judgment was granted to the extent Ironshore had a duty to defend. 

Top 10 Cases of 2019

Jeffrey J. Vita, Grace V. Hebbel and Andrew G. Heckler | SDV Insights

In the 2019 edition of SDV’s Top Ten Insurance Cases, we probe wiretapping claims under an armed security services policy, delicately sniff out E&O coverage for a company using cow manure to create electricity, scour the earth for coverage for crumbling foundation claims, and inspect D&O policies for government investigation coverage. In addition, we preview some important and exciting decisions due in 2020. Without further ado, SDV raises the curtain on the most informative and influential insurance
coverage decisions of 2019.1  
 

1. ACE American Ins. Co. v. American Medical Plumbing, Inc.,
    206 A.3d 437 (N.J. Super. Ct. App. Div. 2019)
    April 4, 2019

Is waiver of subrogation language in a standard AIA201 contract sufficient to bar an insurer’s subrogation rights?

The New Jersey Supreme Court held that it was. Equinox Development obtained a comprehensive blanket all-risk policy with limits of $32 million per occurrence from ACE American Ins. Co. (“ACE”). The policy covered Equinox’s new project in Summit, New Jersey. Equinox hired Grace Construction as GC, who in turn subcontracted the plumbing scope of work to American Medical Plumbing, Inc. (“American”). After completion of the work under the subcontract, a water main failed and flooded the entire project. ACE paid the limits of the policy and subrogated against American to recover its losses. American argued that there was a waiver of subrogation in the AIA201 contract that barred the suit. ACE challenged the validity of the AIA provision, arguing that it applied only to claims before completion of construction and that it only applied to damage to the work itself and not to adjacent property. The court rejected both arguments, finding that the AIA provision effectively barred ACE’s subrogation claim. This decision provides guidance on a frequently used contract form for contractors across the country.

Click here to read more.  
 

2.  Scott Fetzer Company v. Zurich American Insurance Company,
     769 Fed.Appx. 322 (6th Cir. 2019)
     April 30, 2019

Do three separate allegations of sexual harassment, combined with a negligent supervision claim against an employer, constitute one occurrence or three separate occurrences under the employer’s CGL policy?

The 6th Circuit found the “accident” to be negligent supervision, and therefore, the three allegations constituted one occurrence. Scott Fetzer Company (“Fetzer”), a manufacturer of vacuum cleaners, was sued by three women alleging sexually inappropriate conduct of an independent vacuum dealer, John Fields. The women alleged various unsolicited sexual acts, including assault and battery by Fields and alleged negligent supervision as to Fetzer. Fetzer settled the claims and sought reimbursement from Zurich American Insurance Company (“Zurich”) under its two general liability policies. The policies provided coverage in the amount of $2 million per occurrence, the first $1 million of which was subject to a deductible. Zurich agreed to pay the amount exceeding the deductible for one of the claims but argued that it was not required to indemnify Fetzer for the other two settlements because the allegations constituted three separate “occurrences” and therefore required three separate deductibles. Fetzer argued, however, that there was only one occurrence and therefore only a single deductible applied. The Sixth Circuit agreed with Fetzer, holding that the policy was ambiguous and that the “accident” was Fetzer’s negligent supervision, not Fields’ independent actions towards the three women. Accordingly, the entire suit constituted one “occurrence” requiring Fetzer to pay only a single deductible.

Click here to read more.  
 

3. Xtreme Protection Services, LLC v. Steadfast Ins. Co.,
    2019 WL 1976482 (Ill. App. Ct. 2019)
    May 3, 2019Does the possibility of a punitive damages award constitute a conflict of interest sufficient to entitle the insured to independent counsel? The Illinois Appellate Court answered in the affirmative. Xtreme Protection Services, LLC (“Xtreme”), a security services company, was hit with a multi-count complaint for various causes of action including federal wiretapping, intrusion upon seclusion, trespass, and intentional infliction of emotional distress. Xtreme tendered the defense of the claim to its insurer, Steadfast Insurance Company (“Steadfast”), under its “armed security services” liability policy. Specifically, the policy provided coverage for compensatory damages but contained exclusions for intentional conduct and punitive damages. While waiting for a response from Steadfast, Xtreme hired its own counsel and argued that the conflict of interest allowed it to select its own attorney at Steadfast’s expense. Steadfast eventually provided its own defense counsel and stated that there was coverage for any compensatory damages, but there would be no coverage for any allegations of intentional conduct or for punitive damages. Xtreme filed a declaratory judgment action seeking a ruling that it was entitled to select its own counsel due to the conflict of interest, while Steadfast argued that Xtreme breached its duty to cooperate. The court held that Xtreme was entitled to select independent counsel due to the conflict of interest between the insurer and the insured with respect to coverage for punitive damages. Click here to read more. 
 4.  Conduent State Healthcare, LLC v. AIG Specialty Ins. Co.,
     2019 WL 2612829 (Del. Sup. Ct. 2019) &
Crowley Maritime Corporation v. National Union Fire Ins. Co.,
     931 F.3d 1112 (11th Cir. 2019)
     June 24, 2019  Do government investigations constitute covered “Claims” under a D&O policy? In both cases, it was determined that two different types of government investigations constituted “claims” under D&O policies. These cases illustrate the significant impact that variations in the definition of “Claim” can have on the availability of coverage for government investigations. In Crowley, the Eleventh Circuit noted that DOJ and FBI investigations constituted a claim, but eventually found no coverage due to an unrelated notice issue. In Conduent, the Delaware Supreme Court similarly held that a Civil Investigative Demand from the Texas Attorney General constituted a “Claim’ alleging a ‘Wrongful Act.’” These decisions discuss in detail the split in authority that exists across the country on this issue but suggest a possible trend in favor of coverage under D&O policies. Click here to read more. 5. Pitzer College v. Indian Harbor Ins. Co.,
    447 P.3d 669 (Cal. 2019)
    August 29, 2019
 Is the notice-prejudice rule such an important California public policy that it trumps a choice of law provision in an insurance policy? The California Supreme Court believes so. In August, the Court answered a pair of certified questions from the Ninth Circuit on the applicability of the notice-prejudice rule. Pitzer College’s (“Pitzer”) Pollution and Remediation Legal Liability Policy was issued by Indian Harbor Insurance Company (“Indian Harbor”) and contained a consent provision broadly prohibiting any expenses incurred without the insurer’s consent. After discovering problematic darkened soils at the construction site, Pitzer spent nearly $2 million to remedy the soils in an effort to keep the project on schedule. Indian Harbor denied coverage for Pitzer’s first party pollution claim on the basis of Pitzer’s failure to comply with the policy’s consent provision. Pitzer contested the basis of the denial, and a secondary issue arose as to which law should apply – California or New York. The Indian Harbor policy included a New York choice of law provision which Indian Harbor invoked to avoid application of the notice-prejudice rule. Despite the existence of the New York choice of law provision, the California Supreme Court applied the notice-prejudice rule, finding that it is a fundamental policy of the state of California which trumps any applicable choice of law. As a result, a first party insurer cannot contract around the notice-prejudice rule in California. Click here to read more. 6. Crum & Forster Specialty Insurance Co. v. DVO, Inc.,     939 F.3d 852 (7th Cir. 2019)     September 23, 2019 Is a breach of contract exclusion within an E&O policy excessively broad as to render coverage “illusory?” In the Seventh Circuit, yes. The defendant, DVO, Inc. (“DVO”), was in the unique business of building anaerobic digesters used to create biogas and energy. WTE-S&S AG Enterprise, LLC (“WTE”) contracted with DVO to build an anaerobic digester that would be used to create electricity from cow manure. When the design-build was unsuccessful, WTE sued DVO for breach of contract and other damages. DVO tendered the claim to Crum & Forster, with whom DVO had multiple policies including E&O coverage. After initially defending pursuant to a reservation of rights, C&F ultimately withdrew its defense of the claim , relying on a breach of contract exclusion within the policy. C&F then brought a declaratory judgment action against DVO seeking a determination that it did not have a duty to defend DVO. DVO argued that the exclusion was so broad as to render the E&O coverage illusory and the Seventh Circuit agreed. C&F was out of luck; it could not raise the breach of contract exclusion to defeat coverage. This case is important for all insureds with broad breach of contract exclusions in their E&O policies. Rarely does a court find insurance coverage illusory, especially for such a generally applicable exclusion. Click here to read more.
 7. RT Vanderbilt Company, Inc. v. Hartford Accident and Indemnity Company, et al.,
    333 Conn. 343 (2019)
    October 8, 2019
 Does Connecticut recognize an unavailability exception for pro rata allocation of insurance losses? In a policyholder friendly ruling, the Connecticut Supreme Court recognized an “unavailability exception” to the pro rata allocation scheme for long tail asbestos claims. We first brought this case to your attention in our Top Ten Insurance Cases of 2018. In 2017, the Connecticut Appellate Court ruled that the continuous trigger theory applied to long term exposure claims and also applied an unavailability rule for long tail allocation claims. In October of 2019, the Connecticut Supreme Court affirmed this decision.  The case originated in 2007 when Vanderbilt sued a number of its insurers for coverage related to asbestos injury claims filed over a good part of the 20th century. The parties argued over a number of important coverage issues: whether or not there was an unavailability exception to the pro rata allocation scheme, the method of contribution from multiple insurers, the policy trigger for long-term exposure claims, and the application of an occupational disease exclusion. Specifically, Vanderbilt argued in favor of an unavailability rule, meaning that the court would not allocate liability costs to an insured for years when insurance was unavailable in the market. The Connecticut Supreme Court affirmed the decision of the Appellate Court, holding that there is an unavailability exception to the pro rata allocation scheme for long term exposure claims. Thus, costs would not be prorated to Vanderbilt for periods in which insurance for asbestos was unavailable in the marketplace. The Supreme Court also held that the continuous trigger theory applies to long tail asbestos injury claims. Click here to read more. 8. T-Mobile USA Inc. v. Selective Ins. Co. of Am.,
    450 P.3d 150 (Wash. 2019)
    October 10, 2019
 Can representations made on a COI guarantee additional insured status, despite the presence of disclaiming language?
 Yes, so long as the person making the representations is an agent of the insurer. In a significant victory for policyholders, the Washington Supreme Court held that a certificate of insurance (“COI”) which included representations from an agent of the insurer afforded T-Mobile USA additional insured status. T-Mobile Northeast (“T-Mobile NE”) entered into a contract with a general contractor to construct a cell tower in New York City which required the general contractor to name it as an additional insured on its CGL policy. By virtue of the contract in conjunction with the policy language, T-Mobile NE qualified as an additional insured. T-Mobile USA, however, was not a party to the contract and therefore did not qualify as an additional insured pursuant to the policy language. Nonetheless, T-Mobile USA relied on the assurance of Selective’s agent within the COIs that it and its affiliates were included as additional insureds under the contractor’s policy. While Selective argued that the standard disclaimer language on the COI makes clear that it does not guarantee coverage, the court held that the disclaimer was ineffective because of the specific representations made by the agent. Though this case does not suggest that every COI is a guarantee of coverage, it illustrates how an insurer may be estopped from denying coverage because of its agent’s representations.
Click here to read more. 9.  Karas v. Liberty Ins. Corp.,
     No. 20149, 2019 WL 5455947 (Conn. Nov. 12, 2019);      Vera v. Liberty Mut. Fire Ins. Co.,
     No. 20178, 2019 WL 5955936 (Conn. Nov. 12, 2019); and      E Jemiola Tr. of Edith R. Jemiola Living Tr. v. Hartford Cas. Ins. Co.,
     No. 19978, 2019 WL 5955904 (Conn. Nov. 12, 2019)     November 12, 2019 Are crumbling foundations considered a “collapse” under a traditional homeowner’s policy? No, at least under the policies reviewed by the Connecticut Supreme Court in these three instances. Last year, we noted that the Connecticut Supreme Court was set to decide a series of cases related to the crumbling foundation dilemma in Connecticut. In November, the justices released opinions on all three cases. All of the appeals arose out of denials by homeowners’ insurers for cracking and crumbling foundation damage. At the end of the 20th century, a significant number of homes were built with a bad batch of concrete that caused issues for hundeds of Connecticut residents in recent years. The Court first held in Jemiola that the foundational damage did not constitute “an abrupt falling down or caving in” under a Hartford homeowner’s policy. In the other two cases, the Court construed Liberty Mutual homeowner’s policies and similarly held that there was no “collapse” under the specfic language of the policies. Read More Here. Karas v. Liberty Ins.CorpVera v. Liberty Mut. Fire Ins. Co,E Jemiola Tr of Edith R. Jemiola

10. Rawan v. Continental Casualty Co.,
      Case No. SJC-12691, 2019 WL 6838013
      (Mass. 2019)
      December 16, 2019 Are consent-to-settle clauses in professional liability policies enforceable? The Massachusetts Supreme Court held in the affirmative: “consent-to-settle” clauses are enforceable and not in violation of Massachusetts’ unfair insurance practices statute. An engineer faced an initial lawsuit for negligence , among other causes of action, arising out of his failed design for the plaintiffs’ new home. The engineer received coverage under his professional liability policy which contained a “consent-to-settle” clause that required that Continental Casualty Company (“CNA”) obtain his informed consent before settling any claim. Despite repeated offers for settlement, the engineer refused to consent to any settlement and insisted on taking the claim to trial. After receiving a $420,000 verdict against the engineer, the underlying plaintiffs pursued CNA directly for violations of Massachusetts Insurance regulations, specifically alleging that CNA failed to effectuate a prompt settlement and conduct a reasonable investigation to their detriment. The Supreme Judicial Court of Massachusetts heard arguments that the “consent-to-settle” clause violated Mass. Gen. Laws Ann. ch. 176D, § 3(9)(f) which requires insurers to “effectuate prompt, fair, and equitable settlements of claims….” The Court rejected this argument and held that “consent to settle” clauses are enforceable despite the statute, but also noted that an insurer still must make good faith efforts to settle under the statute. Click here to read more.            

Cases to Watch in 2020:


Arch Insurance Company v. Kubicki Draper, LLP
On Appeal From: District Court of Appeal of Florida, Fourth District


Kubicki Draper was panel counsel for Arch and was selected to represent its insured in an accounting malpractice action. The underlying case eventually settled within the policy limits. However, Arch brought a professional negligence suit against its panel counsel, Kubicki Draper, alleging that the firm’s failure to timely raise a statute of limitations defense resulted in an excessively large settlement. The firm argued that Arch had no legal standing to sue since the firm represented the policyholder and not the insurer. The Fourth District Court of Appeal agreed and now the Florida Supreme Court will decide whether or not an insurer may sue its panel counsel for professional negligence even in the absence of any direct contract for representation. Arch has argued that, due to the tripartite relationship, the panel counsel has a direct contractual relationship with both the insured and the insurer. The decision is important as the parties and the courts often grapple with conflict issues related to panel counsel’s representation of the insured.

Rossello v. Zurich American Insurance Company
On Appeal From: Maryland Court of Special Appeals

In 2020, Maryland will join other states that have decided the issue of the appropriate allocation method for long term exposure losses. The case arises out of a mesothelioma claim resulting from long term asbestos exposure. The underlying plaintiff, Patrick Rossello, secured a $2,700,000 judgment against his former employer and was granted the right to pursue its insurers directly. Rossello sought payment of the judgment from the policies in effect between 1974 and 1977. With all of these policies implicated, the Maryland Court of Appeals will decide whether such losses should be allocated on a pro rata or all sums basis for long term exposure losses. Though not a certified question, it is also likely that the Court will consider the proper trigger of coverage for such losses. The Maryland Court of Appeals heard arguments in November and a decision is forthcoming in 2020.

Montrose v. Superior Court
On Appeal From: California Court of Appeal

This year, the California Supreme Court will address the key issue of horizontal vs. vertical exhaustion in the context of high value environmental property damage claims spanning decades. Montrose Chemical Corporation is on the hook for more than $100 million in damages related to a CERCLA action for DDT pollution in Los Angeles Harbor from 1947-1982. Approximately two dozen of Montrose’s primary and excess insurers are involved in the coverage litigation and the specific issue to be decided is the order in which Montrose can tap its upper- level excess policies. Montrose has argued that the policies should be exhausted vertically, meaning that Montrose can turn to upper-level insurance for a selected period before exhausting all lower level insurance for all periods. The insurers, however, argue that Montrose must exhaust all underlying policies for all periods before pursuing any upper-level excess coverage. This decision by the California Supreme Court will have far reaching impacts on the priority of      coverage debate not only in the environmental contamination context but also in the broader general liability context as well.

Beware of the Risks! No Ownership, No Lien

Andrew Atkins, Peter Marino and Patrick Wilson | Smith Anderson

A recent North Carolina Court of Appeals decision reiterates the importance of knowing who you are dealing with when undertaking work or selling materials in connection with any construction or development project in our state. In Davis & Taft,1 the Court of Appeals found that the design firm that performed design services for a prospective property purchaser could not properly assert a lien on the property, given the design services were never actually used to improve the property. While this case involved a design firm, the lesson of this case extends to any party providing labor or materials on any type of construction or development project in the state.

N.C. Gen. Stat. § 44A-7(6) defines the owner of real property as a “person who has an interest in the real property improved and for whom an improvement is made and who ordered the improvement to be made.” N.C. Gen. Stat. § 44A-7(3) defines an improvement as, among other things, an “improvement upon, connected with, or on or beneath the surface of any real property, . . . .” In Davis & Taft, the Court noted that the terms “labor” and “improve” contemplate actual work upon the subject property performed by the person claiming the lien. 

The design firm in the Davis & Taft case contracted with a company interested in buying the subject property. The sale fell through, but before it did, the design firm performed $230,000 in design work, $80,000 of which remained unpaid. The design firm filed a lien on real property and sued to enforce the lien. The trial court dismissed the lien claim at summary judgment, and the Court of Appeals affirmed this decision.

The Court reasoned that since the design services were under contract to a prospective buyer and not an “owner” of the property at issue, and because the design was never actually used to “improve” the property as required by the statute, that no lien on the property was permissible.

A key takeaway for construction and design industry professionals is to ensure the entity that hires you or your company actually owns the subject property. If they don’t, then you may not be able to rely on lien rights as a basis for recovery. Concerned parties can also protect their interests by confirming whether the project is protected by payment and performance bonds.  

This case highlights the risks parties take with respect to contracting with potential future owners and with respect to performing design or construction related activities in connection with a project that never materializes.


1 Davis & Taft Architecture, P.A. v. DDR-Shadowline, LLC, 835 S.E.2d 473, 475 (N.C. Ct. App. 2019).