Justia Construction Law Opinion Summaries

In 2006, Developer-Appellee 500 James Hance Court, LP entered into a construction management agreement with Contractor Gorman Construction Company, Inc., pertaining to the erection of a building at 500 James Hance Court, situated within the Oaklands Corporate Center in Exton, Chester County. According to the agreement, the contemplated, 68,000-square-foot structure was to be used as an elementary charter school, and the project was denominated "Collegium Charter School." Soon after the lease and related contracts were executed, the Bureau of Labor Law Compliance notified the School that it was investigating the project to determine whether prevailing wages were required. In this regard, the Bureau explained that charter school construction was treated the same as a traditional school project (re: public works project) for prevailing wage purposes. If the project's phases could be bifurcated, both the school and Appellee would be responsible. The issue between the parties centered on who was ultimately responsible for compliance with the prevailing wage law: the contractor or the school. The Commonwealth Court had found no evidence that the charter school had any role in determining space and performance goals for the project, and therefore the school was responsible for compliance. But upon review, the Supreme Court concluded that the Board’s determination that the lease was a disguised construction contract for the building as a whole, was based on legal error and essential findings which lacked substantial evidentiary support. Facially, the project was rationally divisible according to major phases of shell and fit-out construction. As to the shell, Appellees established the private character of the funding. Furthermore, in terms of economic reality, Appellees presented a prima facie case that Developer's only relationship with the School was per a bona fide pre-development lease. The Bureau failed to go forward with sufficient evidence to the contrary to overcome this prima facie case, and as such, affirmed the Commonwealth Court. View "500 James Hance Ct. v. Pa. Prevailing Wage Appeals Bd." on Justia Law