2012 May :: The Construction Management Pro

Lumber Prices Moving Higher – SLA Could Become a Factor

May 3, 2012

May 2, 2012

A mill fire in British Columbia sent lumber prices higher, adding to a number of supply side developments that moved the Random Lengths Framing Lumber Composite Price (FLCP) to $316 on Friday. This price, if maintained, would trigger provisions in the US-Canadian Softwood Lumber Agreement (SLA) reducing tariffs on imports of Canadian lumber. An average price above the $315 limit for the period from April 20 to May 11 would result in reduced tariffs for the month of June.

The mill fire, the second this year, coupled with already lean inventories helped push up the FLCP which has climbed steadily from a low of $252 in early November 2011. But the fire, the result of wood dust from the harvesting of beetle killed timber, also renewed focus on the longer term supply implications of the bug kill. One study estimates the British Columbia Interior timber supply could be reduced by one third over the next 20 years.

On the demand side, a slow but improving US housing recovery, combined with slower but still strong growth in China will keep upward pressure on lumber prices.

But some downward pressure on lumber prices, in addition to the possible tariff reductions, could come from Russia’s entry into the World Trade Organization. Membership is expected to increase competitiveness through reduced tariffs on Russian lumber exports, increasing exports to China and European markets. Theoretically, this would ease price pressures in the US market, but procedural issues of implementation could delay this effect.


Monday Morning Briefing


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Public Comments Invited for 2nd Draft, National Green Building Standard

May 3, 2012

A 45-day public comment period for the second draft of the 2012 National Green Building Standard (ICC 700) opened Friday, April 27, 2012. As part of the process approved by the American National Standards Institute (ANSI), only those changes to the first draft that were approved by the standard’s consensus committee during its February meeting are open for public comment. The deadline is June 11. Also released was the Pre-Public Comments Report (PCR), which documents the changes the committee members made  — and why they made them – based on comments received on the first draft.

Initiated in 2007 by the International Code Council and NAHB, the 2008 National Green Building Standard (ICC 700) was developed by a 42-member consensus committee and approved by ANSI in January 2009, making it the first point-based rating system for green residential construction, remodeling and land development to be approved by ANSI. As an ANSI-approved standard, the document is subject to periodic updates as a way to ensure that advances in building codes, technology, and other developments can be considered for incorporation – and this new version of the standard is expected to reflect those changes.

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Personal Liability for Contractor’s Officer

May 3, 2012

Never shy about expanding exposure to lawsuits, the New Jersey Supreme Court has decided that a company’s officers and employees can be personally liable for a corporations’s technical violations of a law. While the decision interprets the New Jersey Consume Fraud Act (CFA), one part of that analysis could pave the way for further undercutting the limited liability advantages of corporations and LLC’s.

Corporate officers and employees have always been personally liable for their negligence or other “torts” caused during employment. But, some laws also impose liability without fault. Under the CFA regulations involved in this case, home remodeling contracts and product substitutions must be in writing. Here, a contractor had orally contracted to build a pool’s retaining wall and may have substituted a different type of fill for the specified variety without written approval. Later, the wall bulged and cracked. A jury found the contractor at fault for CFA violations and the wall deficiencies, while the court imposed triple damages and counsel fees under the CFA.

The Supreme Court decided that the contractor was automatically liable under the CFA because there was no written contract. The Court then decided that the individuals who engaged in the making of the oral contract could be personally liable regardless whether they caused the actual harm. As the Court stated, a company officer could be liable for the damage if the failure to use a written contract was part of the business’s course of conduct. Allen v. and A Bros., Inc., A-30-10.

Lots of laws will impose liability without fault. For example, a contractor can be liable for another party’s attorneys fees expended to discharge a construction lien if the lien filing was not based on a written contract. Courts could use this decision’s reasoning to assign those costs to the person who signs the lien even if the signer did not know of this written contract requirement. Or perhaps this decision will be limited to the CFA and “public interest” laws? The Court left the details for the future, so more lawsuits will follow.


Richard m. Baron

The Law Firm of Richard M. Baron

300-3 Route 17 South, Ste. 6

Lodi, NJ 07644



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