9th Circuit Plumbs Through the Federal and State False Claims Acts
January 16, 2024 —
Garret Murai - California Construction Law BlogYou may have heard of the False Claims Act and know that it penalizes companies and individuals in contract with the government who present false claims. The federal False Claims Act was signed into law by President Abraham Lincoln in 1863 to penalize profiteers during the Civil War who were selling the Union Army moth eaten blankets, boxes of sawdust instead of guns, and sometimes re-selling the Army calvary horses several times over. Since then, many states, including California, as well as municipalities, have enacted their own false claim statutes.
As currently written, the federal False Claims Act provides for statutory penalties against any person who:
- “[K]nowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval”;
- “[K]nowingly makes, uses or causes to be made or used, a false record or statement material to a false or fraudulent claim”;
- “[H]as possession, custody, or control of property or money used, or to be used, by the Government an knowingly delivers, or causes to be delivered, less than all of that money or property”;
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Texas Public Procurements: What Changed on September 1, 2017? a/k/a: When is the Use of E-Verify Required?
October 11, 2017 —
Timothy D. Matheny – Peckar & Abramson, P.C.Every contractor that does business with the federal government is familiar with the requirement to use of E-Verify in order to document the employability of a contractor’s employees. But, when is a contractor required to use E-Verify in Texas? And, does this requirement to use E-Verify extend to the contractor’s subcontractors? All contractors and each of their subcontractors will be required to use E-Verify for a variety of goods and services contracts with state agencies. Failure to understand these requirements could lead to your company losing out on the award of the next Texas public procurement contract.
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Timothy D. Matheny, Peckar & Abramson, P.C.Mr. Matheny may be contacted at
tmatheny@pecklaw.com
Construction Contract Clauses Which Go Bump in the Night – Part 1
November 10, 2016 —
Garret Murai – California Construction Law BlogScope, time and cost provisions may be the most important clauses in your construction contract but they’re not the only ones which can impact your bottom line. The first in a multi-part series, here are some other important construction contract clauses you may (or may not realize you should) be losing sleep over.
Provision: Incorporation and Flow-Down Provisions
- Typical Provision: “The term ‘Contract Documents’ shall include, without limitation, the Prime Contract, drawings, specifications and other agreements between Contractor and Owner, insofar as they relate in any way, directly or indirectly, to Subcontractor’s Work under this Agreement, and are hereby incorporated by reference. Subcontractor agrees to be bound to Contractor in the same manner and to the same extent as Contractor is bound to Owner under the Contract Documents. Where, in the Contract Documents, reference is made to Contractor, and the work and specifications therein pertain to Subcontractor’s trade, craft, or type of work, such work or specifications shall be interpreted to apply to Subcontractor rather than Contractor.”
- What it Means: An incorporation provision literally “incorporates” another document or documents into a contract by merely referring to them by title or description and it is not uncommon for a lower-tiered contractor to never see those documents.
A flow-down provision requires a lower-tiered contractor to comply with all obligations which a higher-tiered contractor, typically a direct contractor, owes to a higher-tiered party, typically, the owner. The intent of the provision to ensure that a lower-tiered subcontractor has no greater rights against a direct contractor has against the owner.
- What You Can Do: Lower-tiered contractors should obtain a copy of all documents to be incorporated into their contract and review them to ensure that they understand the obligations and any limitations to their rights.
Lower-tiered contractors should also seek to include language requiring that a higher-tiered contractor assume toward the lower-tiered contractor all obligations and limitations on their rights that the owner assumes toward or is subject to with respect of the general contractor.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Acord Certificates of Liability Insurance: What They Don’t Tell You Can Hurt You
June 28, 2013 —
David McLainAs anyone involved in construction knows, one of the most heavily used forms for tracking insurance information during the subcontracting phase of a project is the Acord Certificate of Liability Insurance. General contractors often require subcontractors to provide these ubiquitous forms as evidence that the subcontractor maintains adequate insurance or insurance which complies with the requirements of the subcontract. Unfortunately, experience has shown that the Acord forms being used today are insufficient sources of the information needed by the developer and general contractor.
Historically, developers and GCs would require Acord forms to ensure that a subcontractor had a CGL insurance policy, with sufficient limits, and which named them as additional insureds. More recently, developers and GCs took the additional step of requiring a confirmation on the Acord forms that they were named as additional insureds for both ongoing and completed operations. This is important because coverage for ongoing operations only provides coverage during the construction process. Once the homes are put to their intended use, developers and GCs must be named as additional insureds for completed operations also in order to avail themselves of the benefits of the policy. Unfortunately, this is where the evolution of the use of the Acord forms ended, resulting in a failure to provide sufficient information to protect developers and GCs from the unknown.
My firm has had a rash of recent experience where our clients have not obtained the benefit of additional insured coverage for which they bargained because they relied on Acord forms which failed to provide sufficient information to allow them to protect themselves from insufficient insurance coverage on the part of the subcontractors with which they did business. For example, in one recent case a homeowners association alleged insufficient grading and drainage away from the homes within a development built by one of our clients. In reviewing the insurance information from the construction files, we found the Acord forms from the excavating company that performed all of the grading work around the homes. To our delight, the Acord form listed our client as an additional insured for both ongoing and completed operations.
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David M. McLainDavid M. McLain can be contacted at
mclain@hhmrlaw.com
Tort Claims Against an Alter Ego May Be Considered an Action “On a Contract” for the Purposes of an Attorneys’ Fees Award under California Civil Code section 1717
April 12, 2021 —
Tony Carucci - Snell & Wilmer Real Estate Litigation BlogCalifornia Civil Code section 1717 entitles the prevailing party to attorneys’ fees “[i]n any action on a contract,” where the contract provides for an award of attorneys’ fees to the prevailing party, regardless of whether the prevailing party is the party specified in the contract or not. But what about an action that alleges tort causes of action against an alter ego of a contracting party but that does not include a breach of contract claim against the alter ego? This was the question facing the California Court of Appeal in 347 Group, Inc. v. Philip Hawkins Architect, Inc. (2020) 58 Cal.App.5th 209.
In that case, the plaintiff 347 Group sued and obtained a default judgment for breach of contract against defendant Philip Hawkins Architect, Inc. Id. at 211–12. 347 Group had also sued Philip Hawkins individually as well as Design-Build, Inc., the company Hawkins founded after putting Philip Hawkins Architect, Inc. into bankruptcy. Id. at 212. 347 Group originally alleged claims for breach of contract, fraudulent conveyance, and conspiracy against Hawkins and Design-Build, seeking to establish that Hawkins and Design-Build were the alter egos of the contracting party, Philip Hawkins Architect, Inc., but later dismissed the breach of contract claim. Id. Hawkins and Design-Build eventually prevailed on the tort causes of action, and moved for attorneys’ fees. Id.
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Tony Carucci, Snell & WilmerMr. Carucci may be contacted at
acarucci@swlaw.com
From Both Sides Now: Looking at Contracts Through a Post-Pandemic Lens
August 03, 2020 —
Lori S. Smith - White and WilliamsA little over a year ago, I wrote a blog post about the danger of relying on precedent. Now, more than ever, clients and their advisors need to revisit contract forms on which they may have been relying for years. While many of us have lived through times that required certain adjustments in how we viewed contractual obligations — recessions, wars, oil embargoes, natural disasters, 9/11 — none of these events had the widespread and long-lasting impact that the current COVID-19 pandemic is having. None of these events shut down the U.S. economy and impacted global supply chains across every industry in the manner we are now experiencing.
With this in mind, there is a need to figure out what the “new normal” will look like for contract negotiations in a post-pandemic world. Business professionals need to now anticipate more widespread disruption than we could have ever before imagined. It isn’t just force majeure clauses or material adverse effect provisions, as these will likely add pandemics and government shutdowns to their ever-growing list of contemplated risks, if they were not already expressly covered. And it is not clear, at least in the near-term, whether a resurgence or mutation of COVID-19 or the emergence of another virus can truly be seen as unforeseeable in a post-COVID world. The issues are much more fundamental to the approach that parties may take in negotiating contracts. Commercial contracts between purchasers, vendors, distributors, licensors and licensees will need to evaluate allocation of risk from both sides and come to a new happy medium that all can live with in an ever-evolving world. While parties should review their standard contracts in their entirety, some key provisions to think about include:
- Length of the contract and exclusivity. Depending on which side you are on, you may want to reconsider a long-term arrangement that ties your company to a particular vendor or distributor. Supply chain disruption can have a seriously detrimental impact on your business. Are requirements contracts where a particular supplier is required to make available all of your needs for a certain good or service really the best arrangement for your business? What about take or pay arrangements where you are obligated to which are common in certain industries pay a minimum amount or a penalty to a supplier whether or not you actually purchase the contemplated volume of goods ? Do you really want to be tied up in an exclusive arrangement, or do you need flexibility to maintain secondary or tertiary sources of supply? Do you want to provide a licensee with an exclusive right to your technology (even within a limited field of use or industry sector)?
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Lori S. Smith, White and WilliamsMs. Smith may be contacted at
smithl@whiteandwilliams.com
Foundation Differences Across the U.S.
October 15, 2014 —
Beverley BevenFlorez-CDJ STAFFThe National Association of Home Builders’ Eye on Housing analyzed data from the Survey of Construction (SOC) to demonstrate the differences in foundations built across the nation. For instance, “about 30 percent of new single-family homes started in 2013 have a full or partial basement, 54 percent are built on slabs, and 15 percent have a crawl space. The remaining share, including homes built on stilts or pilings, accounted for about 1 percent of homes started in 2013.”
Climate is the deciding factor in what type of foundations are used, Eye on Housing reported. “In colder regions where codes require foundations to be deep the marginal cost of providing a full or partial basement is not that great. So basements are the most common type of foundation in the colder climate divisions.” The warm climate area of the West South Central division are primarily built on slabs. However, “the other two divisions that make up the South region – the East South Central and South Atlantic –are still largely built on slabs but crawl spaces are also common.”
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Travelers’ 3rd Circ. Win Curbs Insurers’ Asbestos Exposure
November 21, 2017 —
Gregory D. Podolak - Saxe Doernberger & Vita, P.C.Originally published by CDJ on May 3, 2017
In breaking news this week, LAW360.com posted that the Third Circuit ruled Friday that “a common exclusion found in a Travelers policy bars coverage for claims arising out of asbestos in any form, limiting insurers’ potential exposure to asbestos injury claims by precluding policyholders from arguing that the exclusionary language is ambiguous and doesn’t extend to products containing the carcinogen.”
In its detailed analysis of the decision, LAW360 turned to Greg Podolak for his analysis.
Gregory D. Podolak, managing partner of Saxe Doernberger & Vita PC’s Southeast office, said the ruling is a cautionary tale that should galvanize policyholders and their insurance brokers to take a closer look at policies to delete or curtail broad “arising out of” language in exclusions. Otherwise, insureds could find themselves without any coverage for claims even remotely related to a certain product, he said.
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Gregory D. Podolak, Saxe Doernberger & Vita, P.C.Mr. Podolak may be contacted at
gdp@sdvlaw.com
