In a recent Tennessee Court of Appeals decision, Nowaczyk v. Daniels Construction (Nov. 4, 2025), a contractor tried to disqualify the trial judge because the judge happened to live in the same neighborhood as a potential expert witness for the homeowners. The court’s response? Proximity isn’t prejudice.

The dispute started when homeowners sued Daniels Construction for allegedly botched remodeling work. When the judge disclosed during a hearing that he lived near the plaintiffs’ proposed expert, the defense moved to have him recused from the case. They argued that prior cases involving the same expert had led to recusals. The trial judge, however, made clear there was no personal or professional relationship with the expert and denied the motion.

On appeal, the Court of Appeals agreed. Citing Tennessee’s long-standing rule that judges must step aside only when their impartiality might reasonably be questioned, the court found no basis for recusal. Living in the same neighborhood as a witness doesn’t automatically suggest bias. This is especially true when there’s no friendship, prior dealings, or other connection beyond geography.

As the Court of Appeals reasoned: “If a judge were required to recuse based on circumstances such as this, or other minor acquaintance with a witness that doesn’t affect a judge’s impartiality, they would be forced to recuse an inordinate number of times.” In other words, casual community ties aren’t enough to suggest bias. Judges are part of the same cities or counties in which they serve, and unless there’s proof of something more, living in the same hood isn’t grounds for stepping aside.

While most states have enacted various forms of prompt payment laws for construction projects, California Senate Bill 440, known as the Private Works Change Order Fair Payment Act, marks a pivotal change in how payment obligations related to change orders are handled on private construction projects. Signed into law on October 10, 2025 by Governor Newsom, its implementation will affect owners, developers, contractors, and subcontractors alike. Importantly, it sets clear standards for processing change-order claims, imposing decisive deadlines and remedies.

The Big Picture

SB 440, effective for private contracts beginning on January 1, 2026, establishes a formal claim resolution process for work stemming from change orders on private projects. Key provisions include:

  • A contractor or subcontractor may submit a claim (for a time extension or additional compensation) and the owner must provide a written statement within 30 days identifying disputed and undisputed portions.
  • Payment of undisputed portions must occur within 60 days after the owner issues the written response.
  • If the owner fails to respond, or parts remain in dispute, the parties must meet and confer and then submit remaining issues to nonbinding mediation.
  • Undisputed amounts not paid on time accrue interest at 2% per month (or 24% annually).

A Contractor’s Perspective

From the viewpoint of contractors and subcontractors, and especially those handling change-order work, the law offers new protections. As one trade association put it prior to the Governor’s signature:

“This bill would bring much needed fairness and structure to private work change order processes by extending the successful AB 626 framework to the private sector. It ensures timely payment, allows contractors to initiate payment processes, and promotes nonbinding mediation over costly litigation.” — Northern California Chapter of the National Electrical Contractors Association (NECA)

For many contractors like those represented by NECA, the law is viewed as a mechanism to level the playing field when change orders alter scope, schedule, or cost.

Impact for Owners and Developers

For owners and developers, SB 440 introduces heightened administrative discipline and demands:

  • Review and approval processes must align with the statutory timelines.
  • Contract templates must be updated to reflect the new claim timeline and payment trigger obligations.
  • Financial planning must anticipate that undisputed change-order amounts will be due within 60 days.
  • Risk management must account for potential work suspensions or stop-work notices if undisputed payments are delayed.

Impact for Contractors and Subcontractors

For contractors and subcontractors, the law changes their operational landscape:

  • The ability to issue claims provides stronger leverage when change orders are delayed.
  • The prohibition of indefinite “pay-when-paid” or “pay-if-paid” practices delays downstream payment chains and reduces risk of cash-flow gaps.
  • Documentation, notice, and tracking systems become vital to preserve rights under the statute.

Practical Next Steps

To prepare for SB 440’s effective date of January 1, 2026, project stakeholders should begin by reviewing and revising their existing contract templates to incorporate the new timelines and procedures established under the law. Internal workflows for claim submission, owner review, and payment trackingshould be developed or refined to ensure compliance with statutory deadlines. Training programs for project managers, administrators, and accounting personnel will be essential so that teams understand the documentation and procedural requirements for change orders and payment claims. Finally, budgeting and cash-flow strategies must be adjusted to accommodate the 60-day payment requirement for undisputed amounts.

SB 440 appears to significantly reshape payment dynamics on California’s private construction projects, and its success in promoting timely payment and reducing disputes will depend on how effectively each party implements and adheres to these new processes.

Arbitration has long been viewed as a faster, more efficient alternative to litigation. But anyone involved in construction disputes today knows that is not always the case. The process can be just as costly, sometimes taking as long as a court case. Yet one thing remains consistent, and it is the most important point for everyone in the construction process to understand before signing an arbitration clause: once an arbitrator decides, that decision is almost always final.

That reality was reinforced in a recent Tennessee Court of Appeals decision, MidSouth Construction, LLC v. Burstiner (June 12, 2025) (pdf). The case involved a homeowner who tried to overturn an arbitration award following a dispute about defective deck construction. The homeowner argued that the arbitrator’s decision was “fundamentally irrational.” The court rejected that argument.

Under the Tennessee Uniform Arbitration Act (TUAA), a court may vacate an arbitration award only in very limited circumstances, such as corruption, fraud, partiality, or if the arbitrator exceeded his powers. The idea of a “fundamentally irrational” or “completely irrational” award does not exist under Tennessee law, although some federal courts have recognized this standard. See, e.g., Kyocdera  Corp. v. Prudential-Bache Trade Services, Inc., 341 F.3d 987, 997 (9th Cir. 2003) (finding that arbitrators “exceed their powers,” thus requiring a court to vacate an award, when the award is ‘completely irrational.”)

The Court of Appeals in Midsouthconfirmed that Tennessee courts cannot overturn arbitration awards simply because they might involve factual or legal mistakes. One key issue in this case was whether the contractor had been given a reasonable opportunity to cure defective work. The arbitrator found that MidSouth had offered to make repairs two or three times but that the homeowner refused access to the property. Even though the work was imperfect, the arbitrator ruled in favor of the contractor, finding that the owner had breached the duty to allow a reasonable opportunity to cure. The appellate court did not reweigh the evidence or second-guess that conclusion.

The lesson for everyone in the construction process (owners, developers, contractors, and subcontractors) is clear. Arbitration gives the arbitrator wide discretion, and once an award is issued, it is rarely disturbed. Whether you win or lose, the decision is almost always final.

As a construction litigation lawyer, dispute resolution is a recurring issue. It starts before the project begins at the time of contract negotiation, where the parties decide whether to require litigation or arbitration of their disputes. During project performance, disputes can often be addressed formally or informally. And after the project is completed, the real process begins: discussions, mediation, arbitration or litigation?

The Tennessee Court of Appeals recently decided a case that shows how arbitration and litigation can overlap. In Carbon Fiber Recycling, LLC v. Spahn (Oct. 2, 2025), a Tennessee company sued one of its members for misusing confidential information. The company asked the court for damages, an injunction, and to expel the member from the business. The trial court dismissed the case, reasoning that the operating agreement required arbitration in Delaware.

On appeal, the court agreed in part and disagreed in part. It held that the claims for damages and expulsion had to go to arbitration because of the contract language. But it also held that the trial court was wrong to dissolve the temporary restraining order. Even though arbitration was required, the company could still go to court for injunctive relief to stop ongoing harm while the arbitration process moved forward.

This decision matters for contractors. Many construction contracts require arbitration for disputes. But arbitration provisions do not take away statutory rights that can only be enforced in court. For example, a contractor’s mechanic’s lien must be filed and enforced through the court system. Just as the company in this case was allowed to seek injunctive relief despite the arbitration clause, a contractor may still need to go to court to protect lien rights while other disputes are resolved in arbitration.

When negotiating contracts, contractors should:

  • Recognize that arbitration clauses are enforceable, but they do not strip away lien rights.
  • Understand that seeking injunctive relief or enforcing liens will still require court involvement.
  • Ensure your contracts clarify the ability to seek judicial remedies when needed to preserve statutory rights.

The bottom line is that arbitration may control many disputes, but when it comes to statutory lien enforcement and urgent injunctive relief, Tennessee courts have made clear: you can still go to court.

Picture this: A contractor is nearly finished with a major dam stabilization project, but a series of Owner-directed changes pushes the last phase of the work into late fall and early winter. Instead of working through the relatively dry conditions expected in the original schedule, the contractor is suddenly battling weeks of rain and freezing temperatures. Crews are slowed, costs increase, and productivity suffers.

That’s exactly what occurred in the recent decision of Thalle Construction Co., ASBCA Nos. 63685, 63721, 63734 (Aug. 13, 2025). In that case, the Armed Services Board of Contract Appeals recognized that government delays had arguably pushed the contractor’s performance into a period of worse seasonal adverse weather than it would have faced under the original schedule. The Board distinguished between two types of weather:

  • Seasonal adverse weather: Normal, recurring patterns like rainy seasons or winter freezes, which are foreseeable and must be built into a contractor’s plan. If government delay extends performance into these months, the contractor may recover additional time and compensation.
  • Unusually severe weather: Extraordinary, unforeseeable events such as record-breaking storms or extreme floods. Under standard clauses, this type of weather typically entitles the contractor to time only (excusable delay), not money.

In Thalle, the Board concluded that a contractor may pursue recovery when a government-caused delay pushes performance into a worse seasonal weather window, because that kind of risk is foreseeable and measurable. By contrast, when performance is delayed into unusually severe weather, the contractor is entitled only to schedule relief, not compensation, since such extremes cannot reasonably be anticipated. This distinction was critical in allowing the contractor’s weather claim to proceed.

So how can contractors protect themselves? One way is to negotiate contract language that clearly addresses both categories of weather. Consider a provision such as:

“Contractor shall be entitled to an equitable adjustment in both time and price if Owner-caused delays extend performance into a period of increased seasonal adverse weather, as measured by the anticipated adverse weather days in Exhibit __. In the event of unusual adverse weather, Contractor shall be entitled to a time extension, and if such weather coincides with Owner delay, Contractor shall also recover compensable costs.”

This kind of clause allocates risk fairly, sets expectations for both parties, and reduces disputes over whether weather-related impacts are compensable.

In other words, the difference between staying on track and falling victim to the elements often comes down to clear drafting. Contractors who plan ahead and address seasonal and unusual weather in their contracts won’t find themselves caught in the storm unprotected.

Yesterday, the Sixth Circuit issued its opinion in Feagin v. Mansfield Police Department et al (Sept. 11, 2025), which involved an excessive force claim by a criminal defendant. Following his conviction for firearm and drug trafficking charges, the defendant sued the officers alleging claims of “excessive force” and the denial of “adequate medical care” in violation Fourth and Eighth Amendments.

How is this relevant to my construction dispute, Matt? Stick with me. The appellate court’s opinion started like no other opinion I have read:

“Advancing technology reaches every corner of society. The law is no exception. Consider, on this front, the advent of portable recording devices, from those attached to the body (body cams) to those placed on a vehicle’s dashboard (dash cams)…. The court system has especially benefitted from these advancements. Whereas encounters with law enforcement historically had to be understood through witness recollections alone, video now captures key aspects of the engagement, if not the entire event itself. According to one recent study, video evidence has resulted in cases being decided more quickly, with fewer disputed facts….

…. Namely, it is for the jury, not us, to settle any underlying material factual disputes. But when presented with video footage that accurately depicts most of the relevant events, we may utilize that footage to ensure [that] the district court properly constructed the
factual record…. ” (Citations and quotations omitted)..

Again, what does all of this have to do with construction projects? Quite a lot. The same principles that make video evidence persuasive in a courtroom apply equally on the jobsite.

Construction is fast-moving and ever-changing. Site conditions evolve by the hour, and disputes often arise long after the work is complete. Photos and videos provide a reliable, time-stamped record of what actually happened. They show progress as it unfolds, confirm the work in place when a pay application is submitted, and memorialize the details of change order work that might otherwise be forgotten or contested.

Additionally, when defects surface, visuals can capture conditions at the moment of installation, helping determine whether the cause lies in workmanship, design, or materials. And when conflicts escalate into claims or litigation, photo and video evidence often carry more weight than competing recollections or even written documentation.

This is not to diminish the value of daily reports, contracts, and witness testimony. Each has its place. But when credibility is tested, judges and arbitrators are far more likely to trust what they can see with their own eyes. In that sense, photos and videos on the construction project have become the gold standard of proof.

For contractors, the lesson is clear: treat your camera as seriously as your hard hat. Visual evidence may turn out to be the most valuable tool in your entire toolbox.

The title of this post says it all. No need for a catchy story about my kids or a play on words. In what had been an often debated issue in trial courts across Tennessee, the Court of Appeals recently weighed in on the issue of whether an underlicensed contractor (one who contracts beyond the monetary limitation of its license) can form the basis of a claim under the Tennessee Consumer Protection Act (“TCPA”), Tenn. Code Ann. §§ 47-18-101 et seq.

The Setup. In Zelenik v. Crowell Homebuilding LLC, (Aug. 14, 2025), the Court held that a contractor that exceeds its monetary licensing limit at the time of contracting violates the Contractor’s Licensing Act (“CLA”), Tenn. Code Ann. §§ 62-6-101 to -139 (2019 & Supp. 2024). The Court went on to hold that the trial court properly held that a violation of the CLA, in turn, constituted a violation of the TCPA.

The Licensing Dispute. In Zelenik, the parties agreed that the monetary limit associated with the contractor’s license was insufficient for the homeowner’s project. However, the contractor argued that the CLA only protects against unlicensed contractors, as opposed to underlicensed contractors.

But the CLA expressly provides: “It is unlawful … to engage … in contracting …, unless, at the time of such engagement …, the person, firm, or corporation has been duly licensed with a monetary limitation sufficient to allow the person, firm, or corporation to engage … in such contracting project.” Tenn. Code Ann. § 62-6-103(a)(1).

What the Court Decided. The Court succinctly outlined the prior version of the statute, as well as the prior case law, addressing this issue:

A contractor must be “duly licensed with a monetary limitation sufficient to allow the person, firm, or corporation to engage in or offer to engage in such contracting project.” In determining the Act’s applicability, this Court has previously found a significant “distinction between unlicensed contractors and contractors bidding above the monetary amount of their license.” Anchor Pipe Co. v. Sweeney-Bronze Dev., LLC . . . . But we were interpreting an earlier version of the Act, which applied to “[a]ny unlicensed contractor.” At the time these parties contracted, the Act expressly required sufficient monetary limits, which Crowell Homebuilding did not possess.

Notably, the Court held that the insufficient license was not a breach of contract—it was a statutory violation. Here, the construction contract in this case imposed no obligation regarding licensure. However, there were other facts justifying the trial court’s conclusion that the contractor first materially breached the contract.

Ultimately, the Court affirmed the trial court’s decision that the contractor’s actions constituted a violation of the TCPA, which also supported an award of attorney’s fees to the homeowner.

So What? The most important lesson from Zelenik is that underlicensing is just as dangerous as unlicensing. If you contract for work above your monetary limit, you risk losing payment rights and facing liability under the Tennessee Consumer Protection Act. Contractors must know and respect the dollar limits of their license before bidding or signing any agreement. In short, staying within your license limit is not just a technicality … it is the foundation for protecting your right to get paid and avoiding costly litigation.

The headlines in Nashville, Tennessee are hard to miss: “Construction work force taking a hit amid ICE operations in Middle Tennessee” and “Tennessee ranks near the top for ICE arrests” For contractors and subcontractors, these are more than political talking points. It is a business risk that can hit the bottom line overnight.

Labor Disruptions on Site. An ICE raid occurs when U.S. Immigration and Customs Enforcement (ICE) agents arrive at a construction site to investigate the immigration status of workers. These raids can result in employees being detained or leaving the jobsite, causing immediate labor shortages and project disruption. Even off-site arrests can ripple back to the project, as workers may not return out of fear or uncertainty, further straining the labor force. For example, a $20 million project in Mobile, Alabama was on track for on-time completion by November 1. However, as of July 28, 2025, the contractor is looking at a three-week delay after about half of his workers, scared by an ICE raid in Florida, have stayed away.

The Cost of Delays for Owners, Contractors, Subcontractors. Lost labor quickly translates into lost time for contractors. Delays compound as subcontractors reschedule work, crews sit idle, and materials wait in staging. Owners, however, rarely accept “labor disruption” as an excusable delay. Most construction contracts include a liquidated damages provision, which imposes penalties that can range from hundreds to thousands of dollars for each day the contractor misses a contractual milestone.

“Labor Shortage” as Excusable Delay. A crew that looks stable on Monday can be half its size by Wednesday. In a market already stretched by skilled-labor shortages, finding qualified replacements is rarely quick or easy. Contractors can be left scrambling to fill roles that require specific expertise, licenses, or certifications. The contractor is only entitled to relief if the delay is caused by an “excusable delay” event or a “force majeure” event. Similar to unusually severe weather, market volatility due to tarriffs, or material shortages, ICE actions are unpredictable. Ultimately, the decision will come down to whether the labor shortage was considered to be unforeseeable, so long as the contractor has nothing to do with the shortage.

What Next? Contractors and subcontractors can’t control when or where ICE activity occurs, but they can prepare for its impact. Here are a few practical considerations:

  • Review your contracts. Understand how liquidated damages, delay provisions, and force majeure clauses are drafted. If immigration enforcement is not addressed, you may be exposed to damages.
  • Evaluate your workforce. Subcontractors in particular should know their labor pools and have contingency plans for sudden shortages.
  • Plan for sequencing. A missing trade doesn’t just affect that scope of work. It can affect everything downstream on teh critical path. Build flexibility into schedules where possible.
  • Communicate early. If a disruption occurs, keep owners and upstream contractors informed. Transparency may help mitigate disputes later.
  • Document impacts. Keep clear records of manpower, schedules, and correspondence. In the event of a claim, documentation can be your best defense.

For Tennessee contractors, the risk of ICE enforcement is no longer abstract. Immigration enforcement is a sensitive and often polarizing subject, but on the jobsite, it boils down to one thing … risk. Contractors and subcontractors who recognize and plan for that risk will be in the best position to protect their projects, their businesses, and their bottom lines.

A few weeks ago, I took two of my girls to New York City for a quick overnight trip to see two Broadway shows. My rule for packing was simple: one backpack each. No rolling bags, no extras. We were walking the city, checking into a hotel, and going straight to the shows. The plain meaning of my instructions were clear: one bag per person.

That’s exactly how the Tennessee Court of Appeals handled a recent case, Killen v. Boardman (Aug. 2025). A landowner tried to build a second house after subdividing her lot. But the subdivision restrictions, recorded in 1971, said:

“Not more than one residence shall be erected on one tract.”

The court enforced the restriction as written. One tract meant one residence. Splitting the lot didn’t erase the covenant or the developer’s plan for the subdivision.

What made the analysis significant was the court’s reliance on the general plan doctrine, which holds that that when developer sells land with restrictions designed to implement a general plan of development, he “impliedly represents to the purchasers that the rest of the land included in the plan is,
or will be, similarly restricted.”

Here, because the subdivision had uniform, long, and narrow tracts designed for farming with one home each, the restrictions were part of a common scheme that applied to all owners. That made the covenant binding, even decades later.

Takeaway for owners and developers: This case is a reminder that restrictive covenants will be enforced according to their plain and ordinary meaning, especially when supported by a general development plan. Creative workarounds like re-subdividing a lot won’t succeed if they conflict with the original scheme. The safest path is to read covenants closely at the start of a project, apply their straightforward meaning, and seek legal advice early rather than risk litigation, injunctions, or even removal of completed work.

Because whether it’s family trips or property law, the rule holds: one backpack means one backpack … and one residence means one residence.

If you’ve handled construction disputes, chances are you’ve interacted with the American Arbitration Association (AAA). As one of the leading forums for alternative dispute resolution in the industry, the AAA is central to how many construction contracts manage conflict. According to a recently AAA announcment, it just got a lot easier to use.

Earlier this week, the AAA officially launched its redesigned website at www.adr.org, and the updates are worth noting, particularly for parties who custimarily deal with arbitration or mediation.

What’s New on the AAA Website?

The new site is faster, more intuitive, and designed to give users quick access to rules, forms, case data, and educational resources. Here are a few key improvements that stand out :

1. AI Tools and Technology Hub
AAA has consolidated its artificial intelligence offerings into a centralized hub. While this will continue to evolve, the emphasis on AI shows the organization’s commitment to streamlining arbitration and making dispute resolution more efficient—something construction pros will appreciate when timelines (and budgets) are tight.

2. Practice Area Resources at Your Fingertips
One of the most practical upgrades is the ability to access clauses, rules, and exclusive AAA data by practice area. For construction, that means faster access to the Construction Industry Arbitration Rules and Mediation Procedures, as well as sample contract clauses and administrative guides. This is a welcome change for anyone looking to draft or interpret ADR clauses quickly.

3. News & Insights Hub
This new section pulls together AAA’s thought leadership, including blog posts, podcasts, and legal updates. It’s a single resource to stay up to date with trends in arbitration and mediation, and may even serve as a helpful training tool for your in-house counsel or project management teams.

4. Featured Panelists
Construction law often hinges on selecting the right neutral. The new Featured Panelists section gives you a better way to learn about the arbitrators and mediators who serve on key AAA panels, including Construction, Judicial, Healthcare, and Mediation Panels.

5. Events Showcase
With arbitration becoming more prominent in construction disputes, education and training are more important than ever. The Events Showcase makes it easier to find and register for AAA-hosted webinars, seminars, and conferences focused on dispute resolution.

6. A Streamlined Experience
Last but not least, the AAA’s redesign is cleaner and easier to navigate. Whether you’re on your desktop or mobile device, the improved layout helps you get to what you need faster. No more digging through outdated pages to find a rule or filing requirement.

As a regular user of AAA website, I am excited to explore in more detail some of these changes. If you have any comments or concerns you want to share with AAA, please let me know. Also, if you have any questions about arbitration provisions or how to effectively resolve a construction dispute, you know where to find me.