The Site Report - Construction Industry Insights, Issue 3, March 2024

Stephanie Eaton, Anthony Hassey, Steven Hemric, Bryan Neft, Julian Neiser, Alexander Turner
Spilman Thomas & Battle, PLLC
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Issue 3, 2024

Welcome to our third issue of 2024 for our construction industry insights e-newsletter - The Site Report.

In honor of last week’s Women in Construction Week, last Friday’s International Women’s Day, and Women’s History Month, we asked Spilman Member Stephanie Eaton, as Co-Chair of Firm’s Construction Group, why DEI efforts are a pivotal component across a variety of industries, and in particular in the construction industry. See our “Ask the Attorney” section below for Ms. Eaton’s answers.

Thank you for reading!

Clarifying Mechanics’ Lien Law

By Anthony J.G. Hassey

A mechanics’ lien is a powerful remedy that provides a contractor with a priority lien on a property and a fast means of being made whole if payment is not rendered at the completion of a job. In order to successfully obtain a mechanics’ lien, a filing party must “Perfect the Lien,” meaning that it must be filed appropriately and contain the necessary information. Belfor Property Restoration v. Ravenwood Mannor, LLC, 305 A.3d 1085 (Pa.Super. 2023), and R.A. Greig Equipment Company v. Mark Erie Hospitality, LLC, 305 A.3d 56 (Pa.Super. 2023), demonstrate the importance of strict adherence to the rules and meaning of the language in the mechanics’ lien statute to ensure a cost-effective and successful outcome when filing a lien on behalf of a client. In Belfor and R.A. Greig the Superior Court of Pennsylvania was asked to review two separate but related trial court rulings dismissing mechanics’ liens.

Click here to read the entire article.

5 of the Largest US Office Conversions Underway

“Over 55,000 residential units are in the pipeline, concentrated in major metros.”

Why this is important: Supply chain disruptions are not the only lingering effect of the COVID-19 pandemic. Many in the workforce that were forced to work remotely during the pandemic chose to, or were allowed to, continue remote work once businesses resumed in-person operations. Remote work, in turn, led to extensive vacancies in office buildings throughout the United States. Rather than see these vacant office buildings as unusable space, potentially subject to demolition, some developers, design professionals and contractors began converting the vacant office space into residential units, with more than 55,000 units in the process of conversion at this time. This article highlights five of the largest office conversions in progress: (1) 25 Water Street in New York, NY; (2) Ames Center in Arlington, VA; (3) The Centennial in Cleveland, OH; (4) 135 South LaSalle St. in Chicago, IL; and (5) Kierland Sky in Scottsdale, AZ. These projects can repurpose older, existing buildings and/or parking areas into residential and mixed use space, which helps keep the metro area intact and vibrant. In some instances, developers plan to add new green space (e.g., Kierland), amenities (which include a museum at Centennial), and retail outlets for residents, and/or create affordable housing within the development (e.g., LaSalle).  

 --- Stephanie U. Eaton

Security in Building Design Falls Short and Adds Costs, Study Finds

““New report reveals that while security is a new priority in building design, a mismatch between ambition and reality leads to spiraling costs.”

Why this is important: Integrating security into building design has become one of the most important priorities for owners over the past several years. This shift has been driven by high-profile data security breaches and active shooter situations that have brought to the forefront both the importance of physical site security and the value added by integrating physical security into building design. However, integrating physical security into building design comes at a cost, both monetarily and, sometimes, aesthetically, and owners, designers, and contractors are working to find the appropriate balance. As with any shift in design focus, integrating security into design also brings new liability and legal considerations for all parties involved. These risks should be addressed in contracts before projects begin, and when navigating both the risks and benefits of incorporating security into design, assistance from an experienced construction attorney can be a valuable resource. --- Steven C. Hemric

Pennsylvania Supreme Court Revisits the Admissibility of Evidence of Product’s Compliance with Governmental Regulations or Industry Standards Post-Tincher v. Omega Flex 

By Bryan S. Neft

In 2014, the Pennsylvania Supreme Court issued its much-anticipated opinion in Tincher v. Omega Flex, Inc., 628 Pa. 296, 104 A.3d 328 (2014). That case was a product liability action based on a design defect. The defense bar had hoped the Supreme Court would use the Tincher case to adopt the Restatement (Third) of Torts Product Liability §§ 1-8 so that principles of due care and “state of the art,” evidence of which had been rigidly excluded from the section 402A analysis, would be admissible. The Supreme Court did not take the bait, however, and reaffirmed Pennsylvania’s adherence to the Restatement (Second) of Torts § 402A, which is the law of Pennsylvania regarding product liability today.

Click here to read the entire article.

Sustainability Gains Momentum in Construction

“A Trackunit predicts even more adoption.”

Why this is important: In prior articles in The Site Report ("North Carolina Building Code Council Evaluates Proposed Code Changes to Increase Energy Efficiency in Construction" and "North Carolina, Building Codes and Climate Change – Upcoming Public Hearing and Public Comment Deadlines") we have discussed the significant impact that the construction industry has on the environment, with its traditionally heavy carbon footprint. We also have observed global, federal, and even some state mandates for carbon reduction by certain target dates, which often coincide with sustainability goals of corporate developers, design firms, suppliers, and contractors. This article is important because it cites results from Trackunit’s survey called “Constructing a Better Future,” finding that “73% of industry professionals already use sustainability practices – and expect to add more by 2028.” Attitudes among those in the construction industry regarding sustainability were tracked in the survey, with over one-third in North America stating that sustainability “is now ‘very important’” for construction projects. The survey further identified that North American companies who adopted KPI-led goals “specifically put them in line to either match or even beat the UN’s 2030 targets on emission reporting.” Globally, among specific groups with significant focus on improving sustainability are equipment rental companies (51 percent) and contractors (43 percent). Finally, the article references emission reporting software that can be used to track emissions from on- and off-highway trucking fleets and heavy equipment. Consider ways your project can reduce emissions, and how such reductions can be tracked and recorded, especially where project owners – both public and private – push toward meeting sustainability goals. --- Stephanie U. Eaton

Highlights from North Carolina’s 43rd State Construction Conference

By Stephanie E. Eaton and Steven M. Hemric

On March 7, 2024, approximately 1,200 members of the construction industry participated in NC’s 43rd State Construction Conference in Raleigh, NC. In case you missed the Conference, Spilman attorneys Stephanie Eaton and Steven Hemric provide the highlights.

Click here to read the entire article.

New SEC Cyber Disclosure Rules will Force Companies to Develop Incident Response Plans

“Looking closely at the SEC crackdown, it could prove to be just the nudge companies need to finally prepare the kind of proper incident response plans that would help them with fast-turnaround reporting.”

Why this is important: On September 5, 2023, the SEC’s Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure rules went into effect. These rules require publicly traded companies to disclose “material” cybersecurity incidents within four business days. “Material” means an incident where “there is a substantial likelihood that a reasonable shareholder would consider it important” in relation to making an investment decision. The disclosure guidelines require:

  • Disclosure of cybersecurity incidents within four business days, including a description of the nature, scope, timing, and material or likely material impact;.
  • Implementation of detailed processes for assessing, identifying, and managing material risks from cybersecurity threats; and
  • A description of the board of directors’ oversight of risks from cybersecurity threats and management’s role and expertise in assessing and managing material risks.

Enforcement of these new rules began in December 2023.

There is confusion regarding when the four-day disclosure countdown begins. It is not when the cyberattack is discovered. It instead begins when the cyberattack is determined to be “material,” which can vary from case to case. Regardless, time is of the essence, and public companies should not rely on the application of a “grace period” when complying with the disclosure rule. Consequently, companies subject to the disclosure rule should implement a response plan now so that they are prepared to comply with the disclosure rule within the tight disclosure period. If your organization needs assistance developing a robust response plan in order to be able to timely comply with the SEC disclosure rule, please contact a member of Spilman’s Cybersecurity & Data Protection Practice Group for help. --- Alexander L. Turner

Ask the Attorney

Why are DEI efforts are a pivotal component across a variety of industries, and in particular in the construction industry?

“That’s a great question, especially for those of us practicing in the area of construction law. While the construction sector remains a male-dominated field, the construction industry gender statistics continue to change. According to statistics published by the National Association of Women in Construction, or NAWIC, 1,173,000 women now work in the construction industry in the U.S., which amounts to around ten percent of this country’s construction industry workforce.  

I have personally worked as a legal advocate within the construction industry for more than 25 years, and I continuously meet more amazing women working in the industry, such as the women serving on the Board of Advisors of our client, United Minority Contractors of North Carolina: Gloria Shealey, the President and CEO of The Daniele Company; Jenine Stevenson, with The National Institute of Minority Economic Development; LaQuiana Bailey, ECMCA, Minority Business Development Manager at Balfour Beatty; Pamela Gales, Director of Supplier Diversity and Inclusion for Wake County Schools; and Renee Jones, President of All For 1 Inclusion Innovators.

One way we can continue to grow the participation of both women and diverse members of the construction industry is through Diversity, Equity, and Inclusion, or DEI, initiatives that focus on policies and practices, culture, and training to improve upon and enhance DEI within organizations. DEI initiatives highlight important principles that cut across all businesses and social endeavors. Obviously, having a wider pool of potential employees benefits any industry. The more the industry opens up to women, the more likelihood construction companies will see an influx of job applicants. Even more importantly, having a more diverse workforce brings about more innovation, creativity, problem-solving skills, better representation of clients, more employee satisfaction/retention, and economic benefits. - Stephanie U. Eaton

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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