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| Arbitration: Smarter, Faster, Cheaper? |
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by Billy Davis Private arbitration has long been utilized by the construction industry as a means to resolve disputes. The process, however, is often scrutinized by industry participants and their counsel – is arbitration actually a more-efficient and less-expensive alternative to handling a construction dispute via litigation? Indeed, arbitration sometimes falls short of delivering the time and cost benefits the parties expect. But, in my view, the primary reason arbitration may fail to keep its promise of being a smarter, faster, and cheaper alternative to the courthouse is the parties’ failure to both plan ahead and take control of the process.
Arbitration is a creature of contract. In that regard, parties can by agreement “design” the process in a manner which addresses their respective needs. Focus on this design process should be heavy at the contract negotiation stage. Indeed, as most construction industry participants know, even before a project begins, there is risk of a dispute. And, of course, it is less difficult to reach agreement on how any such dispute will be resolved before a problem or failure has occurred. Read more... |
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| Rethinking Arbitration Clauses in Condo Construction |
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by Andy Harris On August 31, 2018, the Texas Supreme Court denied a petition for review in G.T. Leach Builders, LLC v. Sapphire Condominiums Association, Inc. This denial leaves in place an appellate ruling which could have serious implications for the viability of arbitration clauses in condominium construction contracts. Namely, the Corpus Christi–Edinburg Court of Appeals ruled that a condominium association was not bound by the arbitration clause in the original contract between the owner and condominium developer.
In the G.T. Leach contract, the general contractor and the developer agreed to binding arbitration for any claims arising out of the construction contract and made the contract enforceable to their “assigns” and “successors.” As is often the case in new condominium construction, the developer eventually ceded control over to the condominium association’s board, but retained exclusive authority to oversee the completion of the project. Read more... |
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| Time is of the Essence with Opportunity Zone Investments |
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by Scott McKaig Under the 2017 Tax Cuts and Jobs Act, the tax code now encourages long-term, private capital investment in eligible economically-distressed communities, called Opportunity Zones, across the United States. The goal of this legislation is essentially to promote new or substantially-improved development in such areas by encouraging private investors to reinvest capital gains into “Qualified Opportunity Funds” by offering various tax deferral and even tax forgiveness incentives. The specific benefit of the deferral of otherwise taxable gains can be thought of as somewhat similar to the effect of a 1031 exchange, though this legislation is notably broader as it is not limited to real estate assets.
This new legislation, herein referred to as the OZ Legislation, comes on the heels of various other federal tax incentive programs that have either recently expired or are currently nearing the end of their set terms. Time is of the essence though, as investments in these Qualified Opportunity Funds should be made sooner, rather than later, in order to take full advantage of all the potential tax incentives. Read more... |
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| Breton A. "Bret" Rycroft Joins the Litigation Practice Group |
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| Bret Rycroft joins the firm's litigation practice group, where he represents a wide range of clients in commercial disputes in both federal and state courts across Texas. His goal is to find creative, practical and value-driven solutions to the complex issues his clients face. |
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| He has represented a diverse group of clients across numerous industries, including real estate, management, construction, energy and Texas businesses. Prior to joining Andrews Myers, Bret practiced commercial litigation with a boutique business litigation firm in Houston. Click here for more information on Bret Rycroft. |
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| An Effective Severance Agreement? |
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by Andy Clark In August, employers were given a reminder about how to go about securing enforceable severance agreements from departing employees. It’s fairly simple: Don’t pressure an employee to accept a severance agreement.
Most employers think that once a release agreement is signed, everything has been taken care of. But McClellan v. Midwest Machining, Inc., a case in the Sixth Circuit Court of Appeals, reminded employers that a release of claims agreement could be invalid—and employers may still face discrimination claims in court—if an employee was under fraud or duress when he or she signed the agreement. Read more... |
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| Employment Quick Takes |
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by Tony Stergio New FCRA Summary of Rights Form: Effective on September 21, 2018, a new “Summary of your Rights Under the Fair Credit Reporting Act” must now be used by employers conducting third-party credit background checks on employees and applicants. Employers should remember that the definition of a credit background check covered by the FCRA is extremely broad and encompasses most background checks conducted by third-party companies at the request of employers. It is imperative that employers conducting such background checks use the precise Statement of Rights (and other applicable) FCRA forms. Even minimal variances in FRCA forms used by employers have, in the past, resulted in significant liability.
Time to Check Affirmative Action Programs: The DOL says that it is establishing a program for verification of compliance by all contractors who have affirmative action obligations. Its Directive states that the program “would initially take the form of OFCCP review of a certification, followed by potential compliance checks, and could later take the form of annual submission of AAPs to OFCCP for review.” It’s a good idea for federal contractors and subcontractors to be proactive and get their affirmative action programs in order soon. |
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| Estimation of Claims in Bankruptcy - A Powerful Tool for Debtors |
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by Josh Judd Companies facing potentially large unliquidated claims have the benefit of section 502(c) of the bankruptcy code that allows the bankruptcy court to estimate the value of the claim to facilitate a faster confirmation of the debtor’s plan of reorganization without requiring the debtor to wait for a lengthy trial. One of the largest benefits of the estimation process is that it can significantly reduce time consuming and expensive litigation.
The bankruptcy code does not dictate the method to be used to estimate a contingent or unliquidated claim, and the Fifth Circuit has stated that the bankruptcy court “should use whatever method is best suited to the circumstances.” Methods used by bankruptcy courts to estimate a claim include summary trials, evidentiary hearings, and simple review of the pleadings and oral argument. Some bankruptcy courts use an “ultimate merits” approach to estimate claims in which the value of the claim is estimated according to its merits, while others have focused on a probabilistic methodology in which the estimated value of the claim is “the amount of the claim diminished by probability that it may be sustainable only in part or not at all.” Read more... |
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| Welcome New Associate Claire Dykeman |
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| Claire Dykeman joins the firm's litigation practice group as a first year attorney. Prior to joining the firm, Claire served as a judicial clerk to both Magistrate Judge Keith F. Giblin of the United States District Court for the Eastern District of Texas, and Judge W. Kent Walston in the 58th Judicial District Court of Jefferson County. |
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| In addition to her judicial internships, she was selected as a 2L summer law clerk for Andrews Myers. Claire also served as a special assistant to Baylor University’s Washington D.C. Initiatives program. Click here for more information on Claire Dykeman. |
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| Join Us at Any of the Upcoming Special Events in October |
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10/3 - AM supports the CREW Annual Signature Luncheon
10/4 - Carson Fisk guest lectures at the Cockrell School of Engineering at The University of Texas at Austin
10/8 - Brent Pharis guest lectures at the C. T. Bauer College of Business at University of Houston
10/9 - Clayton Utkov presents Legal Contracting Issues at the AGC of Texas 2018 Houston Prime Time Series
10/11 - AM sponsors the Texas Children's Hospital Bad Pants Open charity tournament
10/11 - AM sponsors the AGC Austin Fish Fry
10/17 - AM supports JE Dunn's Annual Golf Tournament
10/18 - Carson Fisk presents on Arbitral Decision-Making at the ABA CLS Luncheon
10/18 - Tony Stergio presents on Austin Sick Leave mandate to ASA Houston Chapter
10/18 - AM sponsors the Capitol Area Council Sporting Clay Classic
10/19 - AM sponsors the MCA Handgun & Rifle Competition
11/1 - Kenton Andrews presents on Construction Claims to CFMA Heart of Texas Chapter
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| Force Majeure in Hurricane Season |
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by Champe Fitzhugh As the United States faces another busy hurricane season, with storms directed at the coastline and ports along the Atlantic Seaboard and Gulf Coast, the energy industry faces another series of potential force majeure declarations. Storm surges and high winds adversely affect coastal plants, terminals, ships and a number of end points in the overall economic chain. Knowing the details of the force majeure clauses in your contracts can help you steer through the hurricane season with minimal financial loss.
Most supply, delivery, cargo and performance contracts contain force majeure clauses, but the clauses can be very different. At their most broad, force majeure clauses can cover every potential market related incident over which a performing party has no control – up to and including unforeseen price fluctuations and labor shortages. Frequently, however, the force majeure clauses are considerably narrower, and there is wide variation in what they require from both the party declaring Force Majeure and the party affected by another party’s declaration. Read more... |
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