Delaware recently passed House Bill No. 109, which amends Delaware's laws regarding Building Construction Payments. Two notable revisions which may be of interest to our readers:
- The amendments clarify when fees and costs may be awarded and the standard for awarding fees (see previous post on recovery of attorney's fees here). Specifically, the revised statute provides,
§ 3508. Attorneys' fees and litigation costs.
- If arbitration or litigation is commenced to recover payment and it is determined that the owner, contractor or subcontractor has failed in good faith to comply with the payment terms of the contract or this title, the arbitrator or the Court, whichever applicable, may award the amount determined to have been wrongfully withheld, plus an amount equal to the amount wrongfully withheld, as additional damages. An amount shall not be deemed to have been wrongfully withheld to the extent that it bears a reasonable relationship to the value of any disputed amount or claim held in good faith by the owner, contractor or subcontractor against whom the contractor or subcontractor is seeking to recover payment.
- The party commencing arbitration or litigation shall have the burden of proof that payment has been wrongfully withheld.
- Absent any agreement to the contrary between or among the parties, the arbitrator or the Court in any proceeding arising under this chapter may award to the substantially prevailing party its reasonable attorneys' fees, arbitration or court costs and expenses, and expenses for expert witnesses if applicable. Any award of attorneys’ fees shall not be limited by 10 Del. C. § 3912.
- The amendments add a clause which prohibits construction contracts from requiring that the parties litigate in a foreign jurisdiction or apply the law of a foreign jurisdiction. Specifically, the revised statute provides,
It shall be against public policy and shall be void and unenforceable for any provision of a construction contract to ... [r]equire the contract, subcontract, agreement or understanding between a contractor and subcontractor to be subjected to the laws of a State other than Delaware or require litigation, arbitration, mediation or other dispute resolution procedures to occur in or be governed by the laws of a State other than Delaware.