Supreme Court Opens Door for Challenges to Older Federal Regulations
August 05, 2024 —
Jane C. Luxton - Lewis BrisboisWashington, D.C. (July 1, 2024) – On July 1, 2024, the U.S. Supreme Court issued another end-of-term major decision limiting the scope of federal agency actions in Corner Post, Inc. v. Board of Governors of the Federal Reserve System. Adding to the tectonic shift in the regulatory landscape created by the Court’s June 27 and 28 rulings constraining the role of administrative law judges and overturning longstanding “Chevron deference” by courts to federal agency expertise, the decision in Corner Post establishes a newly expanded time frame for affected entities to challenge final agency action. Instead of confirming that final agency action is subject to a default six-year statute of limitations, the Court held that under the Administrative Procedure Act (APA), the time limit for appeal begins to run when a plaintiff is injured by the agency's action, not when the action becomes final. This decision has important implications for businesses and others affected by federal regulations.
The case arose when Corner Post, a truck stop and convenience store in North Dakota that opened in 2018, challenged a 2011 Federal Reserve Board regulation (Regulation II) that set maximum interchange fees for debit card transactions. Corner Post filed suit in 2021, arguing that Regulation II allowed higher fees than permitted by statute. The lower courts dismissed the suit as time-barred under 28 U.S.C. § 2401(a), which effectively requires APA claims to be filed "within six years after the right of action first accrues."
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Jane C. Luxton, Lewis BrisboisMs. Luxton may be contacted at
Jane.Luxton@lewisbrisbois.com
Bankruptcy on a Construction Project: Coronavirus Edition
May 25, 2020 —
Garret Murai - California Construction Law BlogExperts are warning of a wave of bankruptcies in the wake of the coronavirus pandemic. In some industries, such as the hard hit retail sector, that rising tide has already begun as J. Crew and Neiman Marcus filed for bankruptcy protection this past week.
While the federal government’s stimulus package, including the $660 billion Paycheck Protection Program which is part of the larger 2.2 trillion CARES Act, may help to stem the tide of bankruptcies, Chapter 11 bankruptcy filings increased 26% in April over the same period last year.
How the pandemic will impact the construction industry is uncertain. Anecdotally, we’ve been hearing from clients that some project owners are stalling projects that are still in the planning stages as they evaluate the situation, which suggests long term impacts that can be ridden out rather than short term impacts that can devastate on-going construction projects.
Nevertheless, with 24-7 coverage of the pandemic, project owners, contractors, material suppliers, and equipment lessors are understandably concerned with the impact a bankruptcy might have on a construction project. So, here’s a primer on bankruptcies on a construction project.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Executing Documents with Powers of Attorney and Confessions of Judgment in PA Just Got Easier
October 27, 2016 —
Thomas C. Rogers, Nancy Sabol Frantz and Susan Fetterman – White and Williams LLPCertain tedious requirements in Pennsylvania for the execution of a document used in a commercial transaction which contains a power of attorney have been eliminated. Act 103 of 2016, which was signed by Governor Wolf on October 4, 2016, exempts certain powers of attorney from the requirement that it be acknowledged by a notary public as well as other formalities.
Reprinted courtesy of White and Williams LLP attorneys
Thomas C. Rogers,
Nancy Sabol Frantz and
Susan Fetterman
Mr. Rogers may be contacted at rogerst@whiteandwilliams.com
Ms. Frantz may be contacted at frantzn@whiteandwilliams.com
Ms. Fetterman may be contacted at fettermans@whiteandwilliams.com
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AB 1701 – General Contractor Liability for Subcontractors’ Unpaid Wages
December 01, 2017 —
Alex Baghdassarian, Eric M. Gruzen, & Kerri Sakaue – Peckar & Abramson, P.C.Contractors will soon find themselves on the frontline of wage disputes on projects if laborers working on behalf of their subcontractors or vendors are unpaid. On October 14, 2017, Governor Jerry Brown signed into law AB 1701, which will allow laborers to seek direct compensation from the general contractors on private projects, if their wages remain unpaid.
The legislative mandate requires direct contractors—defined as contractors who have a direct contractual relationship with an owner—to assume liability for any debt incurred by a subcontractor, at any tier, for a wage claimant’s performance of labor included in the subject of the original contract between the general contractor and the owner. The California bill will apply to all private construction contracts entered into on or after January 1, 2018. Previously, all laborers could maintain a mechanic’s lien claim against private property, without needing to serve a 20-day preliminary notice, but there was no statutory obligation on the “direct contractors” to reimburse the laborers their unpaid wages.
Reprinted courtesy of Peckar & Abramson, P.C. attorneys
Alex Baghdassarian,
Eric M. Gruzen and
Kerri Sakaue
Mr. Baghdassarian may be contacted at abaghdassarian@pecklaw.com
Mr. Gruzen may be contacted at egruzen@pecklaw.com
Ms. Sakaue may be contacted at ksakaue@pecklaw.com
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When to Withhold Retention Payments on Private or Public Projects
August 29, 2018 —
Nicholas Karkazis - Gordon & Rees Construction Law BlogTo ensure that construction contractors and subcontractors receive timely progress and retention payments, the California Legislature enacted statutes that impose deadlines and penalties on owners and direct (general) contractors who delay payments. (Cal. Civ. Code, §§ 8800, 8802, 8812, 8814; Pub. Contract Code, §§ 7107, 10262.5; Bus. & Prof. Code, § 7108.5.) However, there is an exception to these deadlines and penalties on both private and public projects. The exception allows an owner or direct contractor to withhold payment1 when there is a good faith dispute between an owner and a direct contractor or between a direct contractor and a subcontractor. (Civ. Code, §§ 8800, subd. (b), 8802, subd. (b), 8812, subd. (c), 8814, subd. (c); Pub. Contract Code, §§ 7107, subds. (c), (e), 10262.5, subd. (a); Bus. & Prof. Code, § 7108.5, subd. (a).)
But the term “good faith dispute” has been a source of confusion where direct contractors owe subcontractors retention payments, but want to withhold the payment because of a dispute.2 California appellate courts were split, with one court finding that any type of bona fide dispute justified withholding, and another finding that only disputes related to the payment itself justified withholding. (Compare Martin Brothers Construction, Inc. v. Thompson Pacific Construction, Inc. (2009) 179 Cal.App.4th 1401 [any bona fide dispute could justify withholding] with East West Bank v. Rio School Dist. (2015) 235 Cal.App.4th 742 [disputes related to the payment itself may justify withholding].) In May 2018, the California Supreme Court clarified that for a direct contractor to withhold a retention payment on a private project, the good faith dispute must somehow relate to the payment itself. (United Riggers & Erectors, Inc. v. Coast Iron & Steel Co. (2018) 4 Cal.5th 1082, 1097-1098.)
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Nicholas Karkazis, Gordon & Rees Scully MansukhaniMr. Karkazis may be contacted at
nkarkazis@grsm.com
Could You Be More Specific . . . About My Excess AI Coverage?
February 23, 2017 —
Yas Omidi - California Construction Law BlogAre you a general contractor who is pretty sure that you have additional insured coverage for some stuff under your sub-subcontractor’s excess policy? Advent, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, Case No. H041934 (December 6, 2016) warns you to be a little more specific.
Johnson Western Gunite was the shotcrete sub-subcontractor on a job. One of its employees—specifically, Jerry Kielty—tumbled down a stairwell, sustaining severe bodily injury thereby. Kielty filed suit against the general contractor in charge of the job—Advent, Inc.—amongst others. Kielty did not name his employer Johnson in the suit. In terms of insurance:
Advent was insured under a primary insurance policy issued by Landmark American Insurance Company and an excess policy issued by Topa Insurance Company.
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Yas Omidi, Wendel Rosen Black & Dean LLPMs. Omidi may be contacted at
yomidi@wendel.com
Life After McMillin: Do Negligence and Strict Liability Causes of Action for Construction Defects Still Exist?
January 24, 2018 —
Thomas Balestreri and Amanda Crawley - Balestreri, Potocki, & HolmesThe ruling is in but the battle will likely continue over the practical application of SB 800. On January 18, 2018 the California Supreme Court issued its decision in
McMillin Albany, LLC v. Superior Court (Van Tassel) (January 18, 2018, S229762) __ Cal.4th __, holding that the statutory prelitigation scheme in The Right to Repair Act (“the Act”) that provides for notice and an opportunity for the Builder to repair defects applies to all claims for construction defects in residential construction sold on or after January 1, 2003, regardless whether the claim is founded on a violation of the Act’s performance standards or a common law claim for negligence or strict liability. (
McMillin Albany, LLC v. Superior Court (Van Tassel) (January 18, 2018, S229762) __ Cal.4th __.) With this holding, has the Court ruled that common law causes of action for construction defect still survive? If so, what will they look like and what standards will be applied?
The short answer is that it appears that common law causes of action still survive, at least for now, but it is not clear from this decision what they will look like and what standards will apply.
Portions of the decision seem to suggest that the Act is the sole and exclusive remedy for construction defect claims: “…even in some areas where the common law had supplied a remedy for construction defects resulting in property damage but not personal injury, the text and legislative history [of the statute] reflect a
clear and unequivocal intent to supplant common law negligence and strict product liability actions under the Act.” (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 6].) (Italics added for emphasis) However, at the end of the decision, the Court seems to be saying that there may still be a place for common law claims for negligence and strict liability alongside the Act but that these causes of action may be subject to the performance standards in the Act.
The
McMillin case went up to the Supreme Court on a procedural issue: whether a common law action alleging construction defects resulting in both economic loss and property damage is subject to the Act’s prelitigation notice and cure procedures. The Van Tassels had dismissed their claims under the Act opting to proceed solely on their common law claims including negligence and strict liability. McMillin sought a stay to force the Van Tassels to comply with the Act’s prelitigation procedures. The Supreme Court held that the Van Tassels must comply with the statutory procedures and affirmed the stay issued by the trial court. But the question remained: now that the Van Tassels were left only with common law claims, how would they proceed under the Act?
To understand how the Court dealt with this question, one must first understand how the Court dealt with the narrow procedural question presented by the case. The Court provides a very detailed, clear explanation of the reasons why it felt the Legislature intended for all construction defect claims involving residential construction must comply with the prelitigation requirements of the Act. In summing up its conclusions the Court makes three definitive holdings.
First, for claims involving economic loss only—the kind of claims involved in
Aas—the Court holds that the Legislature intended to supersede
Aas and provide a statutory basis for recovery. (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 10].) In other words, the Court clearly agrees that the Act was meant to allow recovery of damages based solely on economic damages. No surprise there. Second, the Court held for personal injuries, the Legislature made no changes to existing law that provides common law remedies for the injured party. (Id.) Nobody has ever contested that. Finally, the Court held that for construction defect claims involving property damage and not just economic loss “the Legislature replaced the common law
methods of recovery with the new statutory scheme.” (
Id.,) (Italics added for emphasis.)
In other words, the Court is not saying that negligence and strict liability are not permitted causes of action. The Court is merely stating that these causes of action must comply with the Act’s statutory scheme just as the same as a claim for economic loss. Here the Court is focusing on the procedure that must be followed. “The Act, in effect, provides that construction defect claims not involving personal injury will be treated the same procedurally going forward whether or not the underlying claims gave rise to any property damage.” (
Id.)
Having laid out its fundamental premise, the Court then deals with Plaintiff’s arguments regarding the intent of the Legislature and makes light work of them all. In the process, the Court disapproves
Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal. App. 4th 98, and
Burch v. Superior Court (2014) 223 Cal. App. 4th 1411, to the extent they are inconsistent with the views expressed in the
McMillin opinion.
This is where the decision gets interesting. The Court reminds us that the Van Tassels had dismissed their statutory causes of action for violation of the performance standards under Section 896. One would think at that point that Plaintiffs had to be wondering if they had any claims left given that the Court had ruled that the Act was the sole means of recovery for construction defects. Not so fast. The Court points out that the complaint still rests on allegations of defective construction and that the suit remains an “ ‘action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction’ of the plaintiffs’ homes (§896)
and McMillin’s liability under the Van Tassels’ negligence and strict liability claims depends on the extent to which it [McMillin] violated the standards of sections 896 and 897.” (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 19].) (Emphasis added.) WHAT DID THE COURT JUST SAY? Did the Court just say that a plaintiff could bring a common law cause of action for negligence or strict liability based on a violation of the performance standards under Section 896? What exactly would that claim look like? What would be the elements of such a cause of action?
To answer these questions, the Court states in the very next paragraph, which also happens to be the last paragraph in the decision: “In holding that claims seeking recovery for construction defect damages are subject to the Act’s prelitigation procedures regardless of how they are pleaded,
we have no occasion to address the extent to which a party might rely upon common law principles in pursuing liability under the Act.” (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 19].) (Italics added for emphasis) Is the Court answering “No” to the questions posed above? Probably not. It is simply following the age old rule that an appellate court will
not rule on an issue that is not specifically presented by an appeal, leaving that question for another day.
All we know for sure from
McMillin is that every claim for construction defects falling within the scope of the Act must follow the prelitigation procedure. There are no hall passes for negligence and strict liability. The larger question posed by the last two paragraphs in the decision, is whether the law recognizes a cause of action for negligence and strict liability for construction defects based on the standards in Section 896. The answer will have to be worked out by judges and trial attorneys in courtrooms across the State! The parameters of this hybrid cause of action that the Court seems to have posited will need more careful consideration than can be offered on first reading of
McMillin v. Superior Court.
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White and Williams Selected in the 2024 Best Law Firms ranked by Best Lawyers®
December 04, 2023 —
White and Williams LLPWhite and Williams LLP is proud to be selected in the 2024 Best Law Firms ranked by Best Lawyers®.
The firm was recognized in the National Rankings in four practice areas including both Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law and Insurance Law (Tier 1). In addition, the firm’s office locations in Philadelphia, New York City, Boston, Baltimore, Delaware and New Jersey were recognized for 30 practice areas in the Metropolitan rankings.
Achieving a tiered ranking in Best Law Firms signals a unique combination of quality law practice and breadth of legal expertise. The Best Law Firms research methodology includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field and review of additional information provided by law firms as part of the formal submission process.
The 2024 Best Law Firms rankings can be accessed at www.bestlawfirms.com.
2024 Best Law Firms
National Tier 1
- Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
- Insurance Law
National Tier 3
- Construction Law
- Litigation – Construction
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White and Williams LLP
