Virginia Construction Law and Practice

Chapter 1: Construction Contracts
1.01 Introduction
1.02 Types of Contracts
1.02[1] Written Contracts
1.02[2] Oral Contracts
1.02[3] Implied Contracts
1.02[4] Implied at Law
1.02[4][a] In General
1.02[4][b] Quantum Meruit
1.02[4][c] Unjust Enrichment
1.02[5] Implied in Fact
1.02[6] Collateral Contract
1.03 The Parties
1.03[1] Owner
1.03[2] General Contractor
1.03[3] Architect/Engineer
1.03[4] Design/Build
1.04 Implied Covenant to Perform Construction in a Workmanlike Manner
1.05 Important Contract Provisions
1.05[1] Price and Scope
1.05[2] Completion Date
1.05[3] Standards of Performance
1.05[4] Changes
1.05[5] Insurance
1.05[6] No Damages for Delay
1.05[7] Payment Provisions
1.05[8] Site Investigations
1.05[9] Indemnification
1.05[10] Termination
1.05[10][a] In General
1.05[10][b] Termination for Default
1.05[10][c] Termination for Convenience
1.05[10][d] Conversion of Termination for Default to Termination for Convenience
1.05[11] Venue
1.05[12] Disputes
1.05[13] Attorney’s Fees
1.05[14] Shifting of Risk to Contractor and Subcontractor
1.06 DPOR Provisions Required for Contracts With Homeowners
1.07 Forms
1.07[1] Model Subcontract for Federal and State Work
1.07[2] Model Subcontract for Virginia Private Work

Chapter 2: Mechanic’s Liens
2.01 Introduction
2.02 The Real Property in the Memorandum of Mechanic’s Lien and What Structures Are Subject to a Mechanic’s Lien
2.02[1] In General
2.02[2] Real Property That Can be Subject to a Mechanic’s Lien
2.02[3] Identifying the Owner in the Memorandum of Mechanic’s Lien
2.02[4] Identifying the Real Property in the Memorandum of Mechanic’s Lien and Over-inclusive Descriptions
2.03 Who May Perfect a Mechanic’s Lien
2.03[1] In General
2.03[2] Subcontractors and Limitations on Subcontractor Liens
2.04 Mechanic’s Liens for Site Development and Apportionment
2.05 Waiver of Mechanic’s Lien Rights and Ability to Waive Before Performance of Work
2.06 Licensure Requirement to File a Mechanic’s Lien
2.07 Perfection Requirements for a Memorandum of Mechanic’s Lien
2.07[1] In General
2.07[2] The 90-Day Rule
2.07[2][a] Overview
2.07[2][b] Determining the Last Day of Work
2.07[2][c] Otherwise Terminated
2.08 The 150-Day Rule
2.09 Certificate of Mailing
2.10 Liens in Less Than the Fee
2.11 Notifying the Mechanic’s Lien Agent
2.12 Notice of Mechanic’s Liens
2.13 General Contractor’s Lien to Inure to the Benefit of Subcontractor
2.14 Defenses
2.14[1] Owner not Indebted to the General Contractor
2.14[2] Owner’s Priority in Completion
2.14[2][a] Overview
2.14[2][b] Failure to Properly Perfect
2.14[2][c] Responses to Defenses
2.15 Suits to Enforce the Mechanic’s Lien
2.15[1] In General
2.15[2] Timing
2.15[3] Parties
2.15[4] Other Requirements for a Lien Enforcement Action
2.16 Summary Action to Invalidate Lien
2.17 Bonding Off Mechanic’s Liens
2.18 Priority of Mechanic’s Liens and Other Liens
2.19 Forms
2.19[1] Sec. 43-5 Mechanic’s Lien Form for General Contractor
2.19[2] Sec. 43-8 Mechanic’s Lien Form for Subcontractor
2.19[3] Sec. 43-10 Mechanic’s Lien Form for Second Tier Subcontractor
2.19[4] Sec. 43-20 Mechanic’s Lien Form for Second Tier Subcontractor

Chapter 3: Pleadings
3.01 Pleadings
3.01[1] Overview
3.01[2] Before a Plaintiff Can File its Lawsuit - Conditions Precedent to Filing Suit
3.01[3] Venue
3.01[4] Parties
3.01[5] The Complaint
3.01[6] Other Offensive Pleadings
3.02 Causes of Action
3.02[1] Overview
3.02[2] Breach of Contract
3.02[3] Contracts Implied at Law – Unjust Enrichment and Quantum Meruit
3.02[4] Breach of Payment and Performance Bonds
3.02[5] Enforcement of Mechanic’s Lien
3.03 Tort Claims in Construction Law
3.03[1] Overview
3.03[2] Source of Duty Rule
3.03[3] Fraud – Actual and Constructive
3.03[4] Fraud in the Inducement
3.03[5] Conversion
3.03[6] Violation of Virginia Consumer Protection Act
3.03[7] Pleading Consideration When Planning A Claim Under the Virginia Department of Professional and Occupation regulations Contractor’s Recovery Fund
3.04 Service of Process of the Complaint
3.04[1] Virginia
3.04[2] Service in Federal Courts
3.05 Responsive pleadings
3.05[1] Answer
3.05[2] Demurrer / Motion to Dismiss under Rule12(b)(6)
3.05[3] Plea in Bar
3.05[4] Motion to Stay Pending Arbitration
3.06 Affirmative Defenses
3.06[1] Overview
3.06[2] Necessity to Plead Affirmative Defenses
3.06[3] Common Affirmative Defenses
3.06[3][a] First Material Breach
3.06[3][b] Set-Off and/or Recoupment
3.06[3][c] Waiver
3.06[3][d] Unclean Hands
3.06[3][e] Prevention of Performance
3.06[3][f] Accord and Satisfaction
3.06[3][g] Statute of Limitations
3.06[3][h] Lack of Licensure
3.06[3][i] Substantial Compliance

Chapter 4: Discovery, Trial and Post-Trial
4.01 Interrogatories
4.01[1] Overview
4.01[2] Common Interrogatories
4.02 Requests for Production
4.02[1] Overview
4.02[2] Specific Requests for Production
4.03 Requests for Admission
4.04 Third Party Documents
4.05 FOIA
4.06 Subpoena Duces Tecum
4.07 Touhy Request
4.08 Experts
4.08[1] Overview
4.08[2] Disclosure of Experts
4.08[3] Timing of Expert Witness Disclosure
4.08[4] Practice Tip – Expert Witness Disclosure
4.09 Depositions
4.09[1] In General
4.09[2] Corporate Representatives
4.09[3] Third Parties
4.10 Witness and Exhibit Lists
4.11 Jury Instructions
4.12 Post-Trial
4.12[1] Motions
4.12[2] Suspending Orders
4.12[3] Appeal
4.12[4] Collections
4.12[5] Recovery Fund
4.12[6] DPOR Rule on Judgments
4.13 Model Scheduling Order

Chapter 5: Construction Claims
5.01 Introduction
5.02 Claims
5.02[1] Failure to Make Progress Payment when Due
5.02[2] Defective Work
5.02[3] Extra Work Claims
5.02[4] Contractual Entitlement to Changes
5.02[5] Cardinal Changes
5.03 Requirement for Signed Change Order
5.04 Notice Requirements
5.04[1] Private Contracts
5.04[2] Notice Requirements on Federal Contracts
5.04[3] Notice Requirements Under the Virginia Public Procurement Act
5.05 Delay Claims
5.05[1] Overview
5.05[2] Typical Causes of Delay Claims
5.05[3] Critical Path Method Analysis
5.05[4] The Schedule
5.05[5] The Contract
5.05[6] Documents Needed for a Schedule Analysis
5.05[7] Acceleration
5.05[8] Loss of Productivity
5.05[9] Defenses to Delay
5.05[9][a] Concurrent Delay
5.05[9][b] Prevention Doctrine
5.05[9][c] Force Majeure
5.06 Differing Site Conditions
5.06[1] History and Background
5.06[2] Differing Site Condition Contract Clauses
5.06[3] Type I Differing Site Conditions
5.06[4] Type II Differing Site Conditions
5.06[5] Notice by the Contractor of a Differing Site Condition

Chapter 6: Bonds and Bond Claims
6.01 Introduction of Bonds and Parties
6.02 Liability of the Surety
6.03 Types of Bonds
6.03[1] Payment Bond
6.03[2] Performance Bond
6.03[3] Bid Bond
6.03[4] Mechanic’s Lien Release Bond
6.03[5] Other Bonds
6.04 Bond Claims Prior to Litigation
6.04[1] Payment Bonds
6.04[2] Performance Bonds
6.05 The Federal Miller Act
6.05[1] Introduction
6.05[2] Requirements for Bonding on Federal Projects
6.05[3] Who can be a Claimant
6.05[4] Notice Requirements
6.05[5] Filing Requirements
6.05[6] Parties to a Miller Act Lawsuit
6.05[7] Arbitration
6.06 The Virginia Little Miller Act
6.06[1] Introduction
6.06[2] Requirements for Bonding under the Virginia Little Miller Act
6.06[3] Who Can be a Claimant
6.06[4] Notice Requirements
6.06[5] Filing Requirements for a Lawsuit on a Little Miller Act Payment Bond
6.06[6] Timing Requirements for Filing Suit on a Virginia Little Miller Act Performance Bond
6.06[7] Necessary Parties
6.06[8] Difference with Federal Miller Act
6.07 Allowable Costs
6.07[1] Attorney’s Fees
6.07[2] Labor
6.07[3] Materials
6.07[4] Time Related Damages
6.07[5] Interest
6.08 Surety Defenses
6.08[1] In General
6.08[2] Time Limitations
6.08[3] Failure to Comply With Bond
6.08[4] Contract Defenses
6.08[5] Material Alteration
6.08[6] Requirement to Sue Principal First
6.08[7] Limitation on Surety Defenses
6.09 The General Agreement of Indemnity
6.10 Forms
6.10[1] Miller Act Model Complaint — First Tier
6.10[2] Sample Notice of Miller Act Claim (federal)
6.10[3] Sample Notice of Little Miller Act Claim (Virginia)
6.10[4] Sample Bond Claimant Demand Letter Pursuant to Virginia Code § 49-25

Chapter 7: Design Professional – Architects and Engineers
7.01 Introduction
7.02 The Relationship Between the Design Professional and Other Parties on a Construction Project
7.03 Requirement for a Design Professional to Be Licensed
7.03[1] Architects
7.03[2] Engineers
7.04 Requirements to Obtain a License as an Architect or Engineer
7.04[1] Architect’s License Requirements
7.04[2] Architect’s Licensure Based on Comity
7.04[3] Engineer’s License Requirements
7.04[4] Engineer’s Licensure Based on Comity
7.05 Allowable Entities and Corporate Registration
7.05[1] Architect Entities
7.05[2] Engineer Entities
7.06 Penalties for Failure to Comply With Licensing Requirements
7.07 Disciplinary Proceedings Before DPOR
7.07[1] Prohibited Acts
7.07[2] Proceedings
7.08 Ethics
7.09 Design Professional’s Seal
7.10 Common Claims
7.10[1] Overview
7.10[2] Professional Liability
7.10[3] Legal Standard for Negligence by a Design Professional
7.11 Avoiding Contractual Liability
7.12 Ownership of Design
7.13 Limitations of Damages in Claims Against Design Professionals
7.13[1] Overview
7.13[2] Contractual
7.13[3] Common Law Limitation on Damages, The Economic Loss Doctrine
7.14 Other Design Professional Defenses
7.14[1] Statute of Limitations and Statute of Repose
7.14[2] Betterment
7.14[3] Contributory Negligence
7.15 Third Party Beneficiary

Chapter 8: Damages
8.01 Damages Generally
8.02 General Contract Damages
8.03 The Cost Rule
8.04 The Value Rule and the Economic Waste Doctrine
8.05 Damages for Implied Contracts
8.06 Direct or Consequential Damages
8.06[1] Overview
8.06[2] Consequential Damages
8.06[3] Virginia Interpretations of Consequential Damages Claims
8.06[4] Limitations and Waivers of Consequential Damages
8.07 Damages for Wrongful Termination
8.08 Damages for Termination for Convenience
8.09 Contract Damages
8.10 Delay Damages
8.10[1] In General
8.10[2] Extended Overhead
8.10[3] Home Office Overhead – Eichlay Formula
8.10[4] Loss of Productivity
8.10[5] Acceleration
8.10[6] Other Contractor Damages for Delay
8.11 Liquidated Damages
8.11[1] Liquidated Damages Generally
8.11[2] Contractual Language
8.11[3] Need to Apportion
8.12 Attorney’s Fees
8.13 Punitive Damages
8.14 Differing Site Condition
8.15 Defective Plans
8.16 Limitations on Damages
8.16[1] The Economic Loss Rule
8.16[2] Credit for Unperformed Contract Balance
8.17 Proof of Damages at Trial
8.17[1] Overview
8.17[2] Expert Witness
8.17[3] Documents

Chapter 9: Alternative Dispute Resolution
9.01 Alternative Dispute Resolution Generally
9.02 Arbitration
9.02[1] Arbitration Generally
9.02[2] The Virginia Uniform Arbitration Act
9.02[3] Enforcement of Arbitration Agreements
9.02[4] Issues and Claims that Are Arbitrable
9.02[5] Who Can Be Compelled to Arbitrate
9.02[6] Motions to Stay a Proceeding on an Arbitration
9.03 Arbitration Procedures Pursuant to the Virginia Uniform Arbitration Act Versus the AAA’s Construction Industry Rules for Arbitration
9.03[1] Parties May Select the Applicable Rules
9.03[2] The Selection of the Arbitrator
9.03[3] Procedures for the Hearing Under the Virginia Uniform Arbitration Act
9.03[4] Discovery Allowed by the Virginia Uniform Arbitration Act
9.03[5] The Award
9.04 The Federal Arbitration Act
9.04[1] The Federal Arbitration Act Generally
9.04[2] Compelling Arbitration and Arbitrability of Claims
9.04[3] Selection of the Arbitrator
9.04[4] Subpoenas Under the Federal Arbitration Act
9.05 District Court’s Modification of Award
9.06 Waiving the Right to Arbitrate
9.07 Limitation on the Venue for Arbitration
9.08 Considerations When Electing Arbitration in a Contract
9.08[1] Parties May Set Terms for Arbitration
9.08[2] Sample Arbitration Agreement
9.08[3] Who Will Be the Decision Maker
9.08[4] Timing
9.08[5] Appeal
9.08[6] Discovery
9.08[7] Cost
9.09 American Arbitration Association (AAA) Arbitration
9.09[1] AAA Rules Generally
9.09[2] Jurisdiction
9.09[3] AAA Arbitrator Selection
9.09[4] Fast Track Procedures
9.09[5] Procedures for Resolution of Disputes Through Document Submission
9.09[6] Regular Track Procedures
9.09[7] Cost
9.10 Grounds for Overturning an Arbitration Award
9.11 Enforcing an Arbitration Award
9.12 Variations on Arbitration
9.13 Mediation
9.13[1] Mediation Generally
9.13[2] Requirements to Mediate
9.13[3] Confidentiality
9.13[4] Costs
9.14 Judicial Settlement Conference
9.14[1] Overview
9.14[2] Sample Order of Designation and Referral to Settlement Conference
9.15 Other Forms of Alternative Dispute Resolution
9.15[1] Summary Trial
9.15[2] Binding ADR

Chapter 10: The Virginia Public Procurement Act
10.01 Sovereign Immunity and The Act in Derogation of Sovereign Immunity
10.02 Purpose of the Virginia Public Procurement Act
10.03 Methods of Procurement
10.04 Competitive and Sealed Bidding
10.05 Competitive Negotiation
10.06 Architectural and Engineering Contracts
10.07 Job Order Contracting
10.08 Joint and Cooperative Procurement
10.09 Required Use of Federal Employment Eligibility Program
10.10 Modifications to Contracts
10.11 Set Asides for Small, Women-Owned, Minority-Owned, Military Families and Service Disabled Veterans
10.12 Provisions Required in Public Contracts
10.13 Use of Brand Names and Substitutions
10.14 Prequalification
10.15 Negotiation with the Lowest Bidder if Funds Are Insufficient
10.16 Cancellation of Bids
10.17 Debarment
10.18 Payment of Prevailing Wage
10.19 Withdrawal of Bid Due to Error and Appeal of Denial of Withdrawal of Bid
10.20 Retainage on Construction Contracts
10.21 Delay Claims Against the State; No Damages for Delay Clauses
10.22 Bonds
10.22[1] Bonds Generally
10.22[2] Bid Bonds
10.22[3] Performance Bonds
10.22[4] Payment Bonds
10.23 Alternate Forms of Security
10.24 Statutes of Limitations
10.24[1] Statute of Limitations for Performance Bonds
10.24[2] Statute of Limitations for Construction Contracts
10.24[3] Statute of Limitations for Architecture and Engineering Contracts
10.25 Waiver of Rights to Bond Claim
10.26 Prompt Payment
10.26[1] Prompt Payment Generally
10.26[2] Prompt Payment by the State
10.26[3] Prompt Payment by Localities
10.27 Required Contract Clauses
10.28 Interest Penalty for State Agencies
10.29 Ineligibility to Bid
10.30 Determination of Nonresponsibility
10.31 Protest of Award
10.32 Contractual Disputes
10.33 Notice Requirements