How to Mitigate Lien Release Bond Premiums with Disappearing Lien Claimants
May 20, 2019 —
Scott MacDonald - Ahlers Cressman & Sleight PLLCIt is one of those dreaded business situations that plagues the construction industry, especially in times of economic downturn—what to do when a lower-tier entity files a lien against a property then disappears. It has happened to countless owners, general contractors, subcontractors, and even some particularly unlucky sub-tier subcontractors and suppliers. Here is how it arises: a project is moving along, then performance or payment issues arise, and a company that is over extended or unwilling to continue work stops performance, walks off the job, and files a lien against the property for whatever amounts were allegedly unpaid. Often, the allegedly unpaid sums were legitimately withheld due to a good faith dispute over payment/performance, and it is not unusual for the defaulting entity to not be entitled to any of the sums claimed in the lien. Regardless, the lien stays on the property, and pressure is applied from the “upstream” entities to the party who contracted with the defaulting entity to “deal” with the lien.
Oftentimes, a contract will require the parties to “deal” with a lien by obtaining a lien release bond (“release bond”). For those lucky enough to not have encountered this issue, a release bond is a nifty statutory device whereby a surety agrees to record a release bond for the full claimed amount of the lien, with the release bond substituting in for the liened property, effectively discharging the property from liability under the lien. In other words, the lien is released from the property and attaches to the release bond. If the lien claimant recovers on its lien, it is technically satisfied by the surety providing the release bond (or the party who agrees to indemnify and defend the release bond). In exchange for delivering the release bond, the surety demands yearly premiums be paid on the release bond amount
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Scott MacDonald, Ahlers Cressman & Sleight PLLCMr. MacDonald may be contacted at
scott.macdonald@acslawyers.com
Aarow Equipment v. Travelers- An Update
January 16, 2024 —
Christopher G. Hill - Construction Law MusingsPreviously here at Musings, I discussed the application of pay if paid clauses and the Miller Act. The case that prompted the discussion was the Aarow Equipment & Services, Inc. v. Travelers Casualty and Surety Co. case in which the Eastern District of Virginia Federal Court determined that a “pay if paid” clause coupled with a proper termination could defeat a Miller Act bond claim. However, as I found out a couple of weeks ago at the VSB’s Construction Law and Public Contracts section meeting, the 4th Circuit Court of Appeals reversed and remanded this case in an unpublished opinion (Aarow Equipment & Services, Inc. v. Travelers Casualty and Surety Co.)
In it’s opinion, the 4th Circuit looked at some of the more “interesting” aspects of this case. One of these circumstances was that Syska (the general contractor) directed Aarow to construct sedimentary ponds and other water management measures around the project (the “pond work”), which both agreed was outside of the scope of the work defined in their subcontract. Syska asked that the government agree to a modification of the prime contract and asked Aarow to wait to submit its invoice for the pond work until after the government issued a modification to the prime contract and Syska issued a change order to the subcontract.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Court Upholds Plan to Eliminate Vehicles from Balboa Park Complex
June 10, 2015 —
Kristen Lee Price and Lawrence S. Zucker II – Haight Brown & Bonesteel LLPIn Save Our Heritage Organisation v. City of San Diego, et al. (No. D063992, filed 5/28/15), the California Court of Appeal for the Fourth Appellate District upheld a controversial plan to eliminate vehicles from various plazas in historic Balboa Park. In reaching its decision, the Court of Appeal considered a question of first impression involving the interpretation of San Diego Municipal Code section 126.0504.
Balboa Park, designated a National Historic Landmark in 1940, is a large urban park in the center of San Diego. The City of San Diego (“City”) recently approved a proposed plan (“Project”) to eliminate vehicles from the plazas within the Balboa Park complex and to return the plazas to purely pedestrian zones. Subsequently, a community group named Save Our Heritage Organisation (“SOHO”) filed a petition for a writ of mandate alleging, among other things, the City erroneously approved the Project. SOHO contended Municipal Code section 126.0504 mandated two key findings be made before the Project could be approved: (1) that the intended purpose of the property would not be adversely affected; and (2) without the proposed project, the property would not be put to a “reasonable beneficial use.” SOHO argued that although the City made the requisite findings, those findings lacked substantial evidentiary support. The trial court agreed with SOHO and directed the City to rescind the site development permit.
The City argued on appeal that Municipal Code section 126.0504 vested it with “discretion to make a qualitative determination of whether an existing use of the property, even if deemed beneficial, is also a reasonable use of that property under all of the facts and circumstances applicable to the particular property in question.” The Court of Appeal agreed and reversed.
Reprinted courtesy of
Kristen Lee Price, Haight Brown & Bonesteel LLP and
Lawrence S. Zucker II, Haight Brown & Bonesteel LLP
Ms. Price may be contacted at kprice@hbblaw.com; Mr. Zucker may be contacted at lzucker@hbblaw.com
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New Addition to the ASCE/SEI 7-22 Standard Protects Buildings from a 500-year Flood Event
June 05, 2023 —
The American Society of Civil EngineersReston, VA — The
American Society of Civil Engineers (ASCE) released a new update to their most widely used standard today,
ASCE/SEI 7-22 Minimum Design Loads and Associated Criteria for Building and Other Structures. As the increasing frequency of severe storms puts strain on communities across the globe, the design standard's
new flood load provisions will protect against 500-year flood events, which is a significant improvement to the 100-year flood hazard referenced in the previous version. The update — which is available in a supplement as a free download — is a significant revision of the design provisions in Chapter 5 to strengthen building resilience against the flood hazard. The ASCE 7 national loading standard is an integral part of building codes in the United States and around the globe.
"For more than 30 years, the ASCE 7 standard has been the authoritative source for the specification of minimum design loads and related criteria in the civil engineering community," said Tom Smith, ASCE Executive Director. "To ensure structures continue to be safe for the public, it is imperative that the standards we rely on are updated to account for emerging risks to the built environment. This Supplement is the most significant change to the standard's flood load provisions since the inception of ASCE 7 and will improve the safety and reliability of structures across the globe."
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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In a Win for Property Owners California Court Expands and Clarifies Privette Doctrine
March 28, 2018 —
Garret Murai – California Construction Law BlogWe’ve written before about the
Privette doctrine, which
generally holds that a higher-tiered party is not liable for injuries sustained by employees of a lower-tiered party under the peculiar risk doctrine,
here,
here,
here and
here. We’ve also talked about some of the
exceptions to the
Privette doctrine, including the non-delegable duty doctrine and the negligent exercise of retained control doctrine, which provide that a hirer cannot rely on the
Privette doctrine if it owed a non-delegable duty to an employee of an independent contractor or if it retained control over the work of an employee of an independent contractor and negligently exercised that control in a manner that affirmatively contributes to injuries to that employee.
In the next case,
Delgadillo v. Television Center, Inc., Second District Court of Appeals, Case No. B270985 (February 2, 2018), the Court examined whether a property owner could be held liable under the non-delegable duty doctrine and negligent exercise of retained control doctrine for failing to provide structural anchor bolts on its buildings which led to the death of an employee of window washing company.
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Garret Murai, Wendel, Rose, Black, & Dean, LLPMr. Murai may be contacted at
gmurai@wendel.com
Is Drone Aerial Photography Really Best for Your Construction Projects?
June 09, 2016 —
Sherry and Brett Eklund – Construction Informer BlogIt’s no secret that aerial photographs play an essential role in any construction project. They help with the planning process, assist builders in documenting the progress of a project, provide an opportunity to spot potential issues that would otherwise be missed, capture great marketing images, and more.
It used to be the only way to get sky-view pictures for construction purposes was to hire an aerial photography team with a piloted aircraft. However, a new player has entered the scene – the drone. And whether you choose to hire a professional aerial photography team using a fixed-wing airplane, helicopter, or drone, or choose to go the DIY route, all have a place in the world of construction. But, using drones is complicated and ever evolving, so we’d like to touch on a few key points to help you understand drone aerial photography.
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Sherry and Brett Eklund, Desert View Aerial PhotographyMs. and Mr. Eklund may be contacted at their website http://dvaerialphoto.com/contact/
Tick Tock: Don’t Let the Statute of Repose or Limitations Time Periods Run on Your Construction Claims
February 28, 2022 —
Gus Sara - The Subrogation StrategistIn Wascher v. ABC Ins. Co., No. 2020AP1961, 2022 Wisc. App. LEXIS 110 (Feb. 9, 2022), the Court of Appeals of Wisconsin considered whether the plaintiffs were barred — by Wisconsin’s 10-year statute of repose for improvements to real property claims and the six-year statute of limitations for breach of contract claims — from bringing a lawsuit against the original builders of their home. The plaintiffs alleged negligence and breach of contract against the masonry subcontractors, asserting that they improperly installed the exterior stone cladding. The court found that the plaintiffs’ claims against the original builders were time-barred.
In 2005, the plaintiffs, Thomas and Pamela Wascher (the Waschers) retained Mathwig Builders (Mathwig) as the general contractor for the construction of their home in Greenville, Wisconsin. Mathwig subcontracted defendants Natural Surfaces, LLC (Natural Surfaces) and Carved Stone Creations (CSC) to install the stone cladding on the exterior walls and patio for the home. On November 3, 2008, the Township of Greenville inspected the home and granted the Waschers permission to occupy the residence. The Waschers moved into the home within the next few weeks. In early 2009, the Waschers discovered efflorescence on the stone cladding for the patio. In 2010, the Waschers hired CSC to repair the stone cladding. CSC removed some stone, which revealed that flashing had not been installed behind the stone, which caused water to infiltrate the stone and patio.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Connecticut Reverses Course for Construction Managers on School Projects
August 05, 2024 —
Anand Gupta - Construction Law Zone BlogOn June 6, 2024, Connecticut Governor Ned Lamont signed into law Public Act 24-151 (H.B. 5524) (Bill 5524). Bill 5524 authorized and adjusted bonds of the state and provisions related to state and municipal tax administration, as well as addressed school building projects. Notably, Bill 5524 removed the ban on construction managers self-performing work on public school construction projects, effective July 1, 2024. Allowing construction managers to self-perform certain portions of the work, such as general trades, subject to the standard bidding requirements, is a common industry practice that, theoretically, reduces total project costs by reducing the amount of subcontracted work. However, proponents of banning self-performance argue that construction managers have too much information to bid fairly and competitively.
Reprinted courtesy of
Anand Gupta, Robinson+Cole
Mr. Gupta may be contacted at agupta@rc.com
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