Welcome, Construction Law Section Members!

Caroline, a white woman with blond hair, wears a bright pink blouse, a black jacket and a pearl necklace. By Caroline Trautman

For those of you who don’t know me, I’m Caroline Trautman, Chair of the NCBA Construction Law Section for the 2024-2025 bar year. As a fan of new years, fresh starts and all the fun things that come with them (school supplies, anyone?) I’m excited for what’s in store for our section this year.

Thanks to the hard work of our Deskbook and CLE committees, we expect to release the 9th Edition of the Construction Law Deskbook, and on September 20-21, we’ll meet in beautiful downtown Asheville for a Fall Construction CLE titled “The Art and Science of Dispute Resolution: Winning Your Construction Case.” This program will be administered jointly with the South Carolina Bar and include CLE credit for both North Carolina and South Carolina. Plans for a winter program in Cary are underway. Additionally, our Pro Bono committee is working to connect our section with non-profit associations doing capital improvement projects, giving our attorney members a unique opportunity to give back to the community by assisting the non-profits with legal needs. Our many other committees are also working to keep our section connected to organizations like the AIA, ABA Forum on Construction Law, CAGC, UMCNC, YLD, Paralegal Division, and many more. Last but not least, we’re hoping that our recent trend of more in-person socials and other gatherings will continue, ideally in multiple regions of the state.

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The Building Envelope: A Perspective

By Mark Stewart, RRC CEI, and Jeffrey Martin, RRC, RRO, CEI, REWO, CDT

Mark Stewart, a white man with a grey beard, wears a white shirt with blue plaid.

Mark Stewart

Jeffrey Martin, a white man brown hair and a grey beard, wears a blue and grey plaid shirt.

Jeffrey Martin

The construction industry has currently been running at a breakneck pace. This pace, combined with the advent of a pandemic, which brought us material shortages and delays, and a workforce shortage, put contractors in a tough spot to bring quality-built projects in on time and under budget. When the delays began, it forced contractors and designers to look for alternative material options that were more readily available. These new alternative materials, without intense scrutiny of their application, could affect the performance of the building envelope.

For example, in the case of wood-framed multi-family construction, the availability of polyisocyanurate (iso) rigid roof insulation was delayed due to shortages of raw materials. Iso was then replaced with a coverboard, and alternate insulation, such as fiberglass batt insulation, was used below the roof deck. This moved the dew point above the insulation, and thus, the interior moisture condensates on the underside of the membrane. The moisture then was at the deck level and began to saturate the wood deck. Over a short period of time, the deck fails prematurely and the increased levels of moisture in the attic space create the perfect environment for biological growth . . . mold. This is just one example of many instances of where the building envelope was compromised.

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A Message from the Section Chair

Carl, a white man with light brown hair, wears a white shirt, orange tie, and black jacket.By Carl Burchette

Dear Section Members:

I have had the benefit of being a member in the section since law school, having been pushed to join by my law school professor. From the moment I joined the section, I found myself surrounded by smart, driven attorneys. As I became involved in committees and council meetings, I was continuously pushed to be a better researcher, writer, and attorney. Members of the section would become my mentors and friends, people who I can (and still do) call with questions about a case or simply for personal and professional guidance.

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How Expansively Is The Economic Loss Rule Being Applied Post-Crescent?

Matt Bouchard is a man with brown hair with blue eyes. He is wearing a light blue shirt and a red tie. He is pictured smiling and standing in front of a glass building.By Matt Bouchard

When Crescent University City Venture, LLC v. Trussway Manufacturing, Inc., 376 N.C. 54, 852 S.E.2d 98 (2020) was released in December 2020, the decision left some ambiguity about the scope of its intended reach. On the one hand, the North Carolina Supreme Court in Crescent reiterated that the purpose of the economic loss rule was to “prevent contract law from drowning in a sea of tort;” that the rule bars recovery in tort for the simple failure of a defendant to perform its contract; and that where a plaintiff has a bargained-for remedy, it must look solely to contract law when seeking recovery for purely economic losses. On the other hand, the Court more broadly concluded that “North Carolina’s state courts have consistently applied the economic loss rule to hold that purely economic losses are not recoverable under tort law, particularly in the context of commercial transactions.” That language arguably suggests a potentially more expansive application of the economic loss rule, one not dependent upon the existence or non-existence of a bargained-for exchange between the adversaries.

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Court of Appeals Upholds Summary Judgment for Design Professional Based on Established Law Regarding Duty and Bad Faith

By Nancy Litwak

On April 19, 2022, the Court of Appeals rendered its opinion in Southeast Caissons, LLC v. Choate Construction Company, Choate Construction Group, LLC, and Falcon Engineering, Inc., No. COA21-223, 2022 WL 1146261 (N.C. Ct. App. April 19, 2022).

Plaintiff Southeast Caissons, LLC (“Plaintiff”) appealed from an Order granting Falcon Engineering, Inc.’s (“Falcon”) Motion for Summary Judgment, as well as the Judgment dismissing Plaintiff’s claims against Choate Construction Company and Choate Construction Group, LLC (collectively, “Choate”) following a jury trial and verdict in favor of Choate.

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Session Law 2022-1 Results in Significant Changes to Multiple Aspects of Construction Law

By Anthony Bradley (“Brad”) Eben, III

This year, North Carolina owners, developers, and contractors will need to read up on new legislation that could fundamentally affect their businesses. On January 26, 2022, Governor Roy Cooper signed Session Law 2022-1. This legislation, most of which is effective as of March 1, significantly changes North Carolina General Statutes applicable to in-state construction projects (except for Department of Transportation design-build projects). Overall, Session Law 2022-1: (1) clarifies and updates statutory provisions related to the design-build contracting process; (2) renders void any unenforceable provisions in construction and design-professional agreements requiring lien waivers or claims as a condition for progress payments, with limited exceptions; and (3) modifies attorneys’ fees provisions applicable in statutory lien actions.

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The Evolving Practice – Construction Law in North Carolina

By Patrick Wilson

Forty years ago, construction law in North Carolina was not much to speak of.  “Construction law” as a practice area enjoyed only a slight existence, and you would have been hard-pressed to find a “construction attorney.” Now, when searching for construction attorneys online, you will find hordes of firms and individuals offering a helping hand. “Construction law” as we refer to it today encompasses a wide range of legal issues and services affecting the several participants engaged in developing, financing, designing, and building private and public construction projects.[1] So, how did we get here? I interviewed a number of experienced lawyers to tell us the story. Thank you to Richard Conner, Bob Burchette, and Fenton Erwin for dedicating time to tell the story.

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Gilmore’s Farm, Inc. v. Herc Rentals, Inc. – A New Basis for Unfair Trade Practice Claims?

By Luke J. Farley

It’s commonplace for plaintiffs in construction cases, especially owners, to assert unfair trade practice claims. But those claims rarely succeed. Most construction disputes involve a breach of contract between two sophisticated parties. In those circumstances, North Carolina law requires a substantial aggravating factor to turn the breach of contract into an unfair trade practice under G.S. 75-1.1 But a new decision in Gilmore’s Farm, Inc. v. Herc Rentals, Inc. from the U.S. District Court for the Eastern District of North Carolina has recognized that wrongfully asserting a lien can be the basis for a claim under G.S. 75-1.1.

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Representing Your Clients Before Licensing Boards

By Andrew P. Atkins

If you regularly practice construction law, as I do, you are likely used to client requests for contract reviews, delay claims, defect claims, and the like. However, you may also find yourself receiving requests outside what we typically view as construction law – requests by your construction clients for assistance with licensing boards. With over 300 boards and commissions established in North Carolina, it is hardly surprising that the construction industry is subject to state licensure and regulation. This regulatory framework leads to a complex collision of construction law and administrative law.

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Recent Court of Appeals Opinion: A Reminder of the Importance of Executing on a Judgment

By Sheldon L. Schenck

In Milone & MacBroom, Inc. v. Corkum, 2021-NCCOA-526, the North Carolina Court of Appeals issued a stark reminder about the importance of executing on a judgment prior to initiating supplemental proceedings as part of collection efforts. In Milone, the plaintiff obtained a judgment against the defendant for monies owed. Defendant had partially paid on that debt under a prior agreement, which authorized entry of a Consent Judgment in the event of default. After default and entry of the Consent Judgment, the plaintiff served interrogatories and requests for production of documents in a supplemental proceeding. Defendant did not respond, and plaintiff filed a motion to compel.

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