2012 saw several major cases decided by Ohio courts that impact Ohio construction law and the way companies do business. Given the industry connection, oil and gas project owners, contractors, and suppliers could be affected by some of these rulings. Here are what we believe to be the Top 5 construction cases of 2012:
#1 Westfield Ins. Co. v. Custom Agri Sys., Inc., 133 Ohio St.3d 476
(Oct. 16, 2012).
Key Holding — Ohio construction companies may not be able to rely on their commercial general liability policies to cover claims for alleged defective work.
This case brought to the Ohio Supreme Court the much debated question of whether a standard commercial general liability insurance policy covers claims against a contractor for alleged defective and improper work. The court held that the policy does not cover such claims. The court based its ruling on its determination that the claims did not arise from an “occurrence,” which is defined in the policy to mean an “accident.” Because the work itself was not an “accident,” there was no coverage under the policy.
Takeaway: Meet with your insurance professionals to review your coverage and address this crucial issue. Do you have coverage for defective workmanship claims?…
Anyone familiar with the construction industry is aware that contractors and suppliers can protect their right to obtain payment on the project by filing a mechanics’ lien on the property. Those same protections are also available for companies working on the construction of oil and gas wells and pipelines. However, oil and gas projects are treated differently than other construction projects under Ohio’s mechanics’ lien statute, and there are several traps for the unwary. This post sets out the basic guidelines for preserving lien rights on oil and gas well and pipeline projects – with a particular emphasis on how the procedures differ from those on other construction projects. This post also explains how an owner of an oil and gas project can protect itself from “hidden liens” and the risk of double payment.
What is Covered?
In Ohio, private pipeline companies regulated as common carriers or public utilities have the power of eminent domain to “condemn” or “appropriate” private property in certain situations.
It is well known that the power of eminent domain is available to government authorities. But, the reality of modern America is that carefully regulated private companies, not government entities, furnish much of the energy resources and utilities we enjoy everyday. Pipeline companies that transport oil and gas to market are classic examples of private companies that do a job that serves the public welfare. Accordingly, under certain circumstances pipeline companies have the power of eminent domain under both Ohio and federal law.
Federal Law Allows Condemnation for Gas Pipelines in the “Public Interest.”
Currently, control of interstate natural gas pipeline construction is preempted by the federal Natural Gas Act, which assigns regulatory responsibility for almost all aspects of natural gas pipelines to the Federal Energy Regulatory Commission (“FERC”).
Under the Natural Gas Act, natural gas companies have the right to condemn property for natural gas pipelines as long as FERC determines that the project is in the public interest and issues a certificate of public convenience and necessity to the company. 15 USC §717f. Once that determination is made, a natural gas company may condemn property in federal district court where the property is located. But despite federal jurisdiction, the Natural Gas Act requires the federal condemnation action to “conform” as closely as possible “with the practice and procedure in a similar …