Construction Cybercrime Is On the Rise
May 26, 2019 —
Tom Sawyer & Jeff Rubenstone - Engineering News-RecordAt the end of April, just as St. Ambrose Roman Catholic Church in Brunswick, Ohio, neared the close of a five-month-long, $5.5-million renovation, Father Bob Stec, the parish pastor, was surprised to hear that the contractor, Marous Brothers Construction, Willoughby, Ohio, had not received a $1.7- million payment.
Reprinted courtesy of
Tom Sawyer, Engineering News-Record and
Jeff Rubenstone, Engineering News-Record
Mr. Sawyer may be contacted at sawyert@enr.com
Mr. Rubenstone may be contacted at rubenstonej@enr.com
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Unpredictable Opinion Regarding Construction Lien (Reinstatement??)
January 17, 2023 —
David Adelstein - Florida Construction Legal UpdatesHere comes the discussion of an appeal I was intimately involved in dealing with a construction lien. See Suntech Plumbing and Mechanical Corp. v. Bella Isla, LLC, 2022 WL 14672765 (Fla. 3d DCA 2022). Unfortunately, it was a losing result on my end but not a losing result to the issue at-hand. You should ask what in the world does this mean. I will tell you.
Here is the fact pattern. A subcontractor files a construction lien foreclosure lawsuit against an owner for unpaid contract balance. In the same lawsuit, the subcontractor sues the general contractor for breach of contract and unjust enrichment associated with an approximate three-year delay on a construction project. The project was scheduled to be completed in 2019. It was not. The project was pushed into COVID and into 2022. (The subcontractor did not sue the general contractor for amounts subject to the lien foreclosure claim.) The general contractor, assuming the defense of the owner, moved to stay the lawsuit pending the outcome of arbitration based on an arbitration provision in the subcontract. The subcontractor did not dispute the arbitration provision, but argued that arbitration provision should not extend to the owner that was (a) not bound by the subcontract, (b) would not be a party to the arbitration, and (c) the amounts pled against the general contractor did not include the amounts subject of the lien foreclosure lawsuit. At a minimum, the lawsuit should be stayed, not dismissed. Nevertheless, the trial court dismissed the entire lawsuit in an order that states that it is a final order with language that the lien may be “reinstated” after the outcome of the arbitration (that the owner is not a party to).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Travelers v. Larimer County and the Concept of Covered Cause of Loss
May 10, 2013 —
Brady IandiorioTravelers Indemnity Company (“Travelers”) recently won a decision against Larimer County regarding a claim for damage caused to the roofs of several buildings at the County Fairgrounds. Travelers Indemnity Company v. Board of County Commissioners for Larimer County, Slip Copy, 2013 WL 238865, p. 1 (10th Cir. 2013). Larimer County alleged, in district court, that snowstorms and the weight of the snow build-up caused damage to the roof structures. Id. After the district court found for Travelers on a motion for summary judgment, Larimer County appealed the ruling, claiming that Traveler’s was obligated under the insurance policy to pay for repair costs to portions of the roofing structure. Id.
The underlying claim for repairs originates with several snowstorms that caused damage to several buildings on the County Fairgrounds. The damage claimed was widespread to the roof structures, evidenced by rolling and buckling purlins (horizontal beams running along the length of the roof, resting upon the principal rafters at right angles and supporting the ordinary rafters). Travelers denied the claim based on its own investigation which concluded the damage was caused by design and construction defects, and therefore excluded from coverage under the insurance policy.
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Brady IandiorioMr. Iandiorio can be contacted at
iandiorio@hhmrlaw.com
Federal Contractors – Double Check the Terms of Your Contract Before Performing Ordered Changes
July 08, 2019 —
Jonathan Schirmer - Ahlers Cressman & Sleight PLLCAs federal contractors may be aware, the general rule when performing a contract for the federal government is that only the contracting officer (“CO”) can bind the government. Often, the CO delegates responsibility to a contracting officer’s representative (“COR”). While in some cases a COR may be able to bind the federal government, the contract may limit that ability exclusively to the CO.
Important for our clients, it is the responsibility of the contractor to determine whether the COR can legally bind the federal government when ordering changes to the scope of work. [1] This is true even when a COR possesses apparent authority to order changes to the work, and when the project is almost exclusively overseen by COR’s. [2]
A recent case highlights the dangers of a contractor relying on the orders of a COR when performing work outside the scope of a contract. In Baistar Mechanical Inc., a contractor was awarded a maintenance and snow removal contract with the federal government. The contract expressly stated that only the CO had contracting authority regarding additional or changed work. [3] However, Baistar, the contractor, argued it was directed by the contracting officer’s representatives to perform work outside of the contract.
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Jonathan Schirmer, Ahlers Cressman & Sleight PLLCMr. Schirmer may be contacted at
jonathan.schirmer@acslawyers.com
U.S. Supreme Court Oral Arguments: Maritime Charters and the Specter of a New Permitting Regime
February 24, 2020 —
Anthony B. Cavender - Gravel2GavelEarlier this month, the Supreme Court heard oral arguments in two important environmental cases—one that could change the approach to routine maritime charters and another that could introduce a potentially punishing permitting regime via a CWA citizen suit.
Cleaning the Delaware: CITGO Asphalt Refining Company v. Frescati Shipping Company
The CITGO case involves a large oil spill into the Delaware River, and who bears financial responsibility for the cleanup. CITGO chartered an oil tanker to bring Venezuelan crude oil to CITGO’s New Jersey refinery located on the Delaware River. The tanker struck a submerged and abandoned anchor within yards of the refinery, and a large and expensive oil spill resulted. In accordance with the Oil Pollution Act, both the shipper, Frescati Shipping Company, and the United States, paid for the immediate oil spill response, and CITGO was later sued for a large share of these costs based on the fact that it entered into a charter with Frescati, which obliged CITGO to provide a “safe berth.” The U.S. Court of Appeals for the Third Circuit held that CITGO was liable under the principles of maritime law, meaning that CITGO was strictly liable for the spill even if no one knew that the anchor was present on the floor of the river or lurking in the waters of the Delaware River. CITGO has argued that this result is unfair and poses a threat to the maritime shipping industry if it is held to be strictly liable for this spill. It appears that this is may well be the majority rule that is applied when interpreting these routinely entered maritime charters. The Court’s decision will be immensely important to the shipping industry.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Naples, Florida, Is Getting So Expensive That City Workers Can’t Afford It
April 10, 2023 —
Amanda Albright - BloombergThe city of Naples on Florida’s Gulf Coast is paradise on Earth, if you believe those slick websites that rank the best US cities to live in or retire in. But if you talk with the people who work in its hospitals, restaurants and city government, you’ll get another story. They’d like to live in Naples, too, but most of them can’t afford to.
The city of 19,000 is home to the second-richest ZIP code in the US, after Miami Beach. Median household income stood at about $125,000 in 2021, compared with about $62,000 in Florida overall, according to the Census Bureau. Naples landed on a 2022 list of least affordable places for renters compiled by the National Apartment Association.
Amid a dearth of reasonably priced housing, at least 90% of city employees live outside Naples. Job vacancies are going unfilled, leading to chronic staffing shortages. The shortfall among firefighters, police officers and other essential workers in Collier County, which includes Naples, verges on unsafe, according to one local advocate. Private-sector employers have converted a hotel into apartments for workers as a temporary fix.
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Amanda Albright, Bloomberg
The Enforceability of “Pay-If-Paid” Provisions Affirmed in New Jersey
January 04, 2023 —
Levi W. Barrett, Michael S. Zicherman & Brian Glicos - Peckar & Abramson, P.C.On December 7, 2022, the Appellate Division affirmed the New Jersey Superior Court decision in Jersey Precast v. Tricon Enterprises, Inc. et al., finding that the “pay-if-paid” clause in a material supplier’s purchase order with a general contractor was binding and enforceable. While clauses conditioning a general contractor’s obligation to pay its subcontractors on the general contractor’s receipt of payment from the project owner are not unique – this is the first time that a court in New Jersey has affirmed this practice in a published opinion. [1]
Background
The general contractor, Tricon, sent Jersey Precast its standard form purchase order for the supply of prestressed box beams to fulfill a public improvement contract with Union County. The reverse side of the form purchase order contained standard terms and conditions, and included a pay-if-paid clause drafted by Michael Zicherman, a partner of Peckar & Abramson, P.C. While Jersey Precast provided some draft revisions to the terms and conditions, Tricon never signed the purchase order and the proposed revisions were never accepted. Significantly, Jersey Precast did not attempt to modify the pay-if-paid provision. It later developed that the construction of the project became impossible, and the beams fabricated by Jersey Precast were not used. Tricon invoiced Union County for the cost of the beams, but the County failed to make payment and refused to accept delivery of the beams.
Reprinted courtesy of
Levi W. Barrett, Peckar & Abramson, P.C.,
Michael S. Zicherman, Peckar & Abramson, P.C. and
Brian Glicos, Peckar & Abramson, P.C.
Mr. Barrett may be contacted at lbarrett@pecklaw.com
Mr. Zicherman may be contacted at mzicherman@pecklaw.com
Mr. Glicos may be contacted at bglicos@pecklaw.com
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4 Lessons Contractors Can Learn From The COVID-19 Crisis
May 25, 2020 —
Patrick Hogan - Handle.comAt the start of 2020, the industry outlook in construction was positive. Many contractors were optimistic about what the year had in store for construction businesses in terms of profit, expansion of operations, and even payment issues. That was until the COVID-19 pandemic put a wrench in everyone’s business plans.
There’s no question about how huge the impact of the novel coronavirus crisis is on business operations. With the federal and state governments implementing strict measures to slow down the spread of COVID-19, construction businesses are experiencing significant delays and disruptions in their operations. Because of the lockdowns and stay-at-home orders, many construction projects are forced to postpone operations or, worse, cancel them altogether.
Nevertheless, there are lessons in the COVID-19 pandemic that contractors can learn. Here are some of them.
1. Contractors need to be proactive in meeting preliminary notice requirements
Cash is tight in times of crisis. As the economy comes to a standstill, construction businesses will need to deal with decreasing profits. They may even have to dip into their own cash reserves to cover fixed expenses and their employees’ salaries.
In times like this, it is crucial that contractors perform due diligence in protecting their right to get paid. The first step in doing so is to prepare
preliminary notices. These notices are an important step in the mechanics lien process and without them, chances contractors will not be able to recover the unpaid compensation for the materials they furnished and services they rendered.
2. Force majeure provisions are crucial parts of a contract
The novel coronavirus pandemic has highlighted the importance of force majeure provisions in construction contracts. Before the COVID-19 crisis hit business operations, force majeure provisions were typically considered as simple boilerplate clauses. This means they were just there as a standard part of contracts.
However, the same force majeure clauses, as well as impossibility of performance provisions, have become crucial in the current crisis. As many construction businesses experience difficulties with their operations, they may not be able to fulfill their contractual responsibilities. The said clauses can give contractors a much-needed reprieve.
As the current crisis continues, contractors should review contracts as these provisions can give them more time to finish the job. And in the hopefully near future when the crisis ends, business owners should review the contract creation process and ensure that these clauses included in contracts will be able to address the impact of situations similar to COVID-19.
3. Having solid internal communication is crucial
There’s a lot of uncertainty with the COVID-19 situation. With work operations temporarily stopping, the circumstances can be quite stressful for employees. There will be doubts and fears within your workforce on whether work will be back to normal as soon as possible or not.
Keeping your workforce well-informed and trusting of your organization is crucial, especially in this time of uncertainty. That is why it is paramount that you have a solid internal communication infrastructure to disseminate information about the current work situation and the next steps that the business will take. In addition, only through proper employee communication can the implementation of social distancing and hygiene measures be effective.
4. Contractors can benefit from flexible work arrangements
As the coronavirus crisis has made it necessary for everyone to stay at home, construction businesses should look for ways to continue operations. Expanded work arrangements such as work-from-home setups may just be the solution.
Of course, most of the physical work that is needed to be done on-site will be impossible to do at home, but office-based functions such as sales, client relations, design, and administrative roles can still continue. This can even have additional benefits to productivity and health. And when the crisis is over, business owners should consider incorporating these work arrangements into their operations permanently.
The COVID-19 crisis is not showing any sign of stopping soon, and even when it ends, it will take quite a long time before we can be back to business as usual. As the crisis continues, however, business owners should take the situation as a learning experience.
Once the COVID-19 crisis is over, it will take a long time for things to go back to normal. In fact, things may not end up going back to the way they were before and businesses will need to adapt to the new normal. However the situation evolves, business owners should take this opportunity to learn new things and maintain resilience in trying times.
About the Author:
Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.
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