SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Bond Principal Necessary on a Mechanic’s Lien Claim

September 07, 2020 — Christopher G. Hill - Construction Law Musings
As anyone that reads this construction law blog knows, mechanic’s liens are a big part of the Virginia landscape for a construction attorney like me. One option for dealing with a mechanic’s lien here in Virginia that we have not discussed but so often is the ability to “bond off” a lien. In short, the Virginia statute allows a party to essentially substitute a bond valued at a court set multiple of the principal amount of the mechanic’s lien for the memorandum. In exchange, the lien is released of record. Any enforcement action can still proceed with security for the claimant and the property owner feeling better about things because there will be no lien on the title to the land. In many ways this process provides an easier path to resolution for both owner and claimant. First of all, the claimant does not have to deal with a bank or other interest holders in the property (though a recent case discussed below reminds us that certain other parties are necessary). Second of all, the owner does not have the cloud on the title of a mechanic’s lien that may have been filed by a subcontractor over which he has no control. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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What is a Subordination Agreement?

May 06, 2019 — Bremer Whyte Brown & O'Meara LLP
Put simply, a subordination agreement is a legal agreement which establishes one debt as ranking behind another debt in the priority for collecting repayment from a debtor. It is an arrangement that alters the lien position. Without a subordination clause, loans take chronological priority which means that a deed of trust recorded first will be considered senior to all deeds of trusts recorded after. As such, the oldest loan becomes the primary loan, with first call on any proceeds from a sale of a property. However, a subordination agreement acknowledges that one party’s claim or interest is inferior to that of another party in the event that the borrowing entity liquidates its assets. Further, shareholders are subordinate to all creditors. The junior debt is referred to as a “subordinated debt”, and the debt which has a higher claim to any assets is the senior debt. Often, the borrower does not have enough funds to pay all debts, and lower priority debts may receive little or no repayment. For example, if a business has $400,000 in senior debt, $100,000 in subordinated debt, and a total asset value of $420,000, upon liquidation of the company, only the senior debtholder will be paid in full. The remaining $20,000 will be distributed among the subordinated debtholders. Subordinated debts are, therefore, riskier and lenders will require a higher interest rate as compensation. Read the court decision
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Reprinted courtesy of Bremer Whyte Brown & O'Meara LLP

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Ahead of the Storm: Preparing for Irma

September 07, 2017 — Stephen H. Reisman – Peckar & Abramson, P.C.
While Hurricane Irma boils in the Atlantic and seems to be aiming towards Florida, storm preparations are well underway. As contractors are busy organizing efforts to secure their job sites, we at Peckar & Abramson offer some quick reminders that may prove helpful when the dust finally settles:

• Review your contracts, particularly the force majeure provisions, and be sure to comply with applicable notice requirements.
• Even if not expressly required at this point in time, consider providing written notice to project owners that their projects are being prepared for a potential hurricane or tropical storm and that productivity and the progress of the work will be affected, with the actual time and cost impact to be determined after the event.
• Consult your hurricane plan (which is often a contract exhibit) and confirm compliance with all specified safety, security and protection measures.

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Reprinted courtesy of Stephen H. Reisman, Peckar & Abramson, P.C.
Mr. Reisman may be contacted at sreisman@pecklaw.com

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Attorneys Fees Under California’s Prompt Payment Statutes. Contractor’s “Win” Fails the Sniff Test

October 02, 2015 — Roger Hughes – California Construction Law Blog
This past month, the California Court of Appeals for the Third District, in James L. Harris Painting & Decorating, Inc. v. West Bay Builders, Inc., Case No. C072169 (August 27, 2015), handed down a decision in a construction contract battle that has raged since 2007. And, once again, the winner is . . . in the words of Justice Andrea Lynn Hoch who authored the opinion . . . . “no prevailing party in [the] case” and hence “no prevailing party attorney’s fees [ ] awarded.” Background In Harris, subcontractor James L. Harris Painting & Decorating, Inc. (“Harris”) sued general contractor West Bay Builders, Inc. (“West Bay”) for extra work performed on a school construction project in Stockton, California. Among its claims, Harris asserted that West Bay was liable under California’s prompt payment statutes for failure to timely pay Harris. Read the court decision
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Reprinted courtesy of Roger Hughes, Wendel Rosen Black & Dean LLP
Mr. Hughes may be contacted at rhughes@wendel.com

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Eleventh Circuit Finds No “Property Damage” Where Defective Component Failed to Cause Damage to Other Non-Defective Components

October 11, 2021 — Anthony L. Miscioscia & Margo Meta - White and Williams
In Florida, damage caused by faulty workmanship constitutes “property damage;” however, the cost of repairing or removing defective work does not. Amerisure Mutual Insurance Company v. Auchter Company, 673 F.3d 1294 (11th Cir. 2012) (Auchter). But what happens when the cost of repairing or removing defective work results in loss of use of the tangible property which is not physically injured? The United States Court of Appeals for the Eleventh Circuit was recently faced with this question in Tricon Development of Brevard, Inc. v. Nautilus Insurance Company, No. 21-11199, 2021 U.S. App. LEXIS 27317 (11th Cir. Sep. 10, 2021). Tricon arose out of the construction of a condominium. Tricon was hired to serve as general contractor for the project and hired a subcontractor to fabricate and install metal railings. The railings installed by the subcontractor were defective and damaged, improperly installed, and failed to meet the project’s specifications. Tricon filed an insurance claim with Nautilus Insurance Company, the subcontractor’s commercial general liability insurer, for the cost to remove and replace the railings.[1] Reprinted courtesy of Anthony L. Miscioscia, White and Williams and Margo Meta, White and Williams Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com Ms. Meta may be contacted at metam@whiteandwilliams.com Read the court decision
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Approaches in the Absence of a Differing Site Conditions Clause

April 10, 2019 — Parker A. Lewton - Smith Currie
A contractor who has encountered unforeseen conditions will typically rely on the contract’s differing site conditions clause as a means to recovery. Most construction contracts address those issues directly. In ConsensusDocs Standard Agreement and General Conditions between Owner and Constructor, the starting point is § 3.16.2. But what if the contract does not contain a differing site conditions clause? Or, what if the contract does contain such a clause, but the contractor failed to provide adequate notice or satisfy other conditions or requirements of the contract? When reliance on a differing site conditions clause is impractical, a contractor still may seek recovery in certain instances under one or more of the following legal theories: misrepresentation; fraud; duty to disclose; breach of implied warranty; and mutual mistake. Misrepresentation Misrepresentation occurs when an owner “misleads a contractor by a negligently untrue representation of fact[.]” John Massman Contracting Co. v. United States, 23 Cl. Ct. 24, 31 (1991) (citing Morrison–Knudsen Co. v. United States, 170 Ct. Cl. 712, 718–19, 345 F.2d 535, 539 (1965)). A contractor may be able to recover extra costs incurred, under a theory of misrepresentation, if it can show that (1) the owner made an erroneous representation, (2) the erroneous representation went to a material fact, (3) the contractor honestly and reasonably relied on that representation, and (4) the contractor’s reliance on the erroneous representation was to the contractor’s detriment. See T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 728–29 (Fed. Cir. 1997). These four requirements can be satisfied, for example, through the use of deposition testimony detailing the owner’s representations and the contractor’s reliance thereon. See, e.g., C & H Commercial Contractors, Inc. v. United States, 35 Fed. Cl. 246, 256–57 (1996). Read the court decision
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Reprinted courtesy of Parker A. Lewton, Smith Currie
Mr. Parker may be contacted at palewton@smithcurrie.com

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Seven Trends That Impact Commercial Construction Litigation in 2021

March 29, 2021 — Jeffrey Kozek & E. Mitchell Swann - Construction Executive
2021 stands to bring sizeable change to the commercial construction industry as trends that had been on the horizon meet the impact of the pandemic. That means it will be even more important for architects, engineers, contractors and owners to prioritize revisiting their project plans as the industry adapts so that they can better reduce their likelihood of facing litigation down the line. While many in the industry will struggle to react to the ongoing environment, building stronger contractual understanding and preparedness to adapt could be the difference in being able to complete the work and move onto the next project in a timely manner. Meanwhile, contractors are using a wider usage of technologies for improved project communication and efficiency. In the coming year, there are seven trends will have the greatest impact on commercial construction. Reprinted courtesy of Jeffrey Kozek and E. Mitchell Swann, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Ireland Said to Plan Home Loans Limits to Prevent Bubble

October 01, 2014 — Joe Brennan – Bloomberg
Ireland’s central bank plans to impose limits for the first time on how much banks can lend home buyers as real estate values soar again in the home of western Europe’s worst property collapse, two people with knowledge of the matter said. The regulator is preparing to publish a consultation paper on its proposals within weeks, said one of the people, who asked not to be named, as the matter is private. Banks and lobby groups will have a chance to comment on the plans, which center on introducing loan-to-value and loan-to-income restrictions. A spokesman for the central bank in Dublin declined to comment. Irish homes prices are surging even as banks grapple with the aftermath of mortgage crisis that forced the government to bail out most of the nation’s lenders. A quarter of the country’s owner-occupier home loans are in arrears or had their terms eased. Loans granted during the boom for more than 85 percent of the property value were most likely to default in the wake of the crash, central bank economists said today. Read the court decision
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Reprinted courtesy of Joe Brennan, Bloomberg
Mr. Brennan may be contacted at jbrennan29@bloomberg.net

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