The South Carolina Supreme Court Enforces a Contractual Waiver of Punitive Damages

We have all heard the saying that an ounce of prevention is worth a pound of cure.  This holds true for litigation arising from construction projects where it is much easier and cheaper to avoid a large judgment through careful contract drafting on the front end.  One important tool for doing so is a limitation of liability provision which is commonly found in construction contracts.

The South Carolina Supreme Court recently held in Maybank v. BB&T Corporation,[1] that such provisions can extend to prohibiting an award of punitive damages.  The potential for a punitive damages award in an amount many times a plaintiff’s actual damages is a serious concern for construction professionals, and the ability to contractually eliminate that risk is of great value.  However, as Maybank makes clear, a limitation of liability provision must be carefully drafted to provide the greatest likelihood that a court will enforce the provision.

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How to Avoid Financing State Projects, Also Known As Collecting Interest on Delayed Payments From the State of South Carolina

Unless a contractor wants to finance public construction projects, a contractor on a State project wants to collect interest on any late payments the State of South Carolina owes. South Carolina’s Prompt Payment Act permits contractors to recover interest on such late payments, but a recent decision shows contractors must carefully comply with the statute’s notice requirement to preserve this right.

In Consensus Construction & Consulting, Inc. v. Horry-Georgetown Technical College, Case No. 2015-003, (CPOC, March 15, 2016), the Chief Procurement Officer for Construction (“CPOC”) found the State wrongfully withheld payment from a contractor and then turned to the issue of whether the contractor was entitled to recover interest on the payment owed.  The State’s Standard Contract Modifications and Standard Supplementary Conditions replace the interest provisions in standard form contracts with a provision limiting the recovery of interest to only those situations where the State must pay interest under the Prompt Payment Act.  The CPOC held that the Prompt Payment Act applies to the State, but the contractor was not entitled to interest because of the Act’s notice requirement which provides:  “no interest is due unless the person being charged interest has been notified of the provisions of this section at the time the request for payment is made.”  S.C. Code Ann. § 29-6-50. Continue Reading

The Ongoing Tension Over Class Actions and Statistical Evidence and the Significance for Residential Developers and Builders

For developers and builders of single-family communities and multi-family housing, an increasingly common tactic is for plaintiffs’ counsel to assert a class action, a procedural device that allows one person to sue on behalf of related persons who are not parties to the lawsuit. Plaintiffs’ counsel then relies on statistical extrapolation from limited inspections of a few homes or units to prove liability and damages.  For example, a plaintiff’s expert may inspect three residences in a subdivision of one hundred single family homes, find water intrusion around windows in those three residences, and reach a conclusion that the windows and associated flashing must be removed and replaced in all one hundred homes.

The statistical extrapolation also occurs at each building inspected.  For example, a plaintiff’s expert may perform test cuts at three locations on a building, find water intrusion, and conclude the entire exterior veneer must be replaced.  In addition to making a statistically questionable generalized conclusion from a small sample, plaintiff’s experts also exhibit a selection bias by choosing for their sample those residences, units, or test locations they believe are most likely to exhibit damages.  Among the many problems this tactic creates for developers and builders are the weaknesses of using statistical methods in this manner and the inevitable pressure defendants feel to settle when faced with a large class action claim even if the plaintiff’s claims are very weak. Continue Reading

South Carolina Office of the State Engineer Publishes Notice of Intent to Adopt 2015 ICC Codes for State Buildings

The Office of the State Engineer proposed adopting the following building codes for state buildings which would take effect on July 1, 2016:

  • International Building Code (IBC), 2015 Edition
  • International Existing Building Code (IEBC), 2015 Edition
  • International Fire Code (IFC), 2015 Edition
  • International Fuel Gas Code (IFGC), 2015 Edition
  • International Mechanical Code (IMC), 2015 Edition
  • International Plumbing Code (IPC), 2015Edition
  • International Private Sewage Disposal Code (IPSDC), 2015 Edition
  • International Property Maintenance Code (IPMC), 2015 Edition,
  • International Residential Code for One and Two Family Dwellings (IRC), 2015 Edition
  • International Wildland – Urban Interface Code (IUWIC), 2015 Edition
  • International Code Council Performance Code (ICCPC), 2015 Edition
  • International Swimming Pool and Spa Code (ISPSC), 2015 Edition
  • National Electrical Code (NEC) [NFPA-70], 2014 Edition

South Carolina State Register, Vol. 40, No. 3, at 7 (March 25, 2016).

The new code editions will replace the 2012 edition of most of these codes as the applicable code for state buildings as set out in section 5.1.3(E) of the 2015 Manual for Planning and Execution of State Permanent Improvements. For a quick overview of the significant new provisions and modifications to existing provisions, see http://www.iccsafe.org/about-icc/periodicals-and-newsroom/key-changes-in-the-2015-international-codes-i-codes.

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