To Catch a Thief
March 06, 2023 —
Christopher Durso - Construction ExecutiveTony Rader calls it “peeling back the onion”—the slow, methodical process of uncovering the full extent of an embezzlement scam that eventually totaled more than $1 million. What National Roofing Partners (NRP) first discovered was bad enough. The Coppell, Texas–headquartered company, which oversees a nationwide network of nearly 250 commercial roofing contractors, learned in 2018 that a South Texas firm called Statewide Texas Roofing was billing clients for work on behalf of NRP and pocketing all the money. It turned out to be a scheme masterminded by NRP’s then-president, who created Statewide, staffed the company with his kids and used phony work orders to steal hundreds of thousands of dollars in client fees from NRP. He’d been president for six years and with the company since it was created in 2007. It was a huge betrayal—and still just the tip of the iceberg.
“Initially, we thought it was only half a million [dollars] or so,” says Tony Rader, NRP’s chief operating officer. “But I’ll never forget, [Chief Executive Officer] Steve [Little] and I were talking over a bourbon one night, and that’s when I told him, ‘I’ve seen this once before, and this is like an onion. You’ve only peeled off the outer layers. We’re going to be finding stuff for a year, and it’s just going to get bigger and bigger and bigger.’ He said, ‘You think?’ And I said, ‘Oh, I’m pretty sure.’” Rader was all too correct. Working with a third-party forensic accountant, NRP found that not only were its then-chief financial officer and several other employees involved in the scheme, but the president had also abused his corporate credit card, racking up personal charges going back to 2013—on luxury vacations, expensive dinners, clothes, jewelry, even his daughter’s destination wedding in Jamaica. The final tally on his scams: $1.4 million.
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Christopher Durso, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Terminating A Subcontractor Or Sub-Tier Contractor—Not So Fast—Read Your Contract!
May 24, 2018 —
John P. Ahlers - Ahlers Cressman & Sleight PLLC BlogEvery few months I receive a call from a general contractor or subcontractor who has just terminated a subcontractor or sub-tier contractor for non-performance and is “checking in with me to see if there are any liability issues.” After the termination has taken place, if the termination is wrongful, there are serious legal consequences. Calling your lawyer after the fact will not cure missteps in the termination process. Termination for non-performance is a common term in most contract documents. As courts interpret contracts, however, the right to earn revenue from a contract is a substantial interest, and courts generally “abhor” forfeitures (termination) of that right. In other words, the courts will strictly determine whether the terminating party to a contract has complied with the termination process to the letter. A recent example from Connecticut is instructive in this regard. [1]
The general contractor on a large hospital project in Connecticut terminated its electrical subcontractor, hired others to finish the electrical subcontractor’s work, and then sued the electrical subcontractor for $26 million. The electrical subcontractor countersued the general contractor for $3.6 million of work that it had completed at the time of the termination which had not been paid for. The subcontractor claimed that due to the many changes that had occurred on the project, it stopped work because the changes altered the contract to the point that it was no longer the same contract. The subcontractor walked off the project and the general contractor then terminated the subcontractor and re-procured the work from other subcontractors.
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John P. Ahlers, Ahlers Cressman & Sleight PLLCMr. Ahlers may be contacted at
john.ahlers@acslawyers.com
Randy Okland Honored as 2019 Intermountain Legacy Award Winner
January 06, 2020 —
Jennifer Seward - Engineering News-RecordA passion for construction is in Randy Okland’s blood. His family’s business, Salt Lake City’s Okland Construction, was founded in 1918 by his grandfather, John Okland, a Norwegian immigrant and shipbuilder. Randy swept the floors and cleaned and fueled company vehicles while working as a laborer and later as a carpenter and concrete former. After graduating from the University of Utah, Randy worked full time at Okland, eventually taking over leadership of the company from his father in 1980.
Jennifer Seward, Engineering News-Record
ENR may be contacted at ENR.com@bnpmedia.com
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The Pandemic, Proposed Federal Privacy Regulation and the CCPA
November 02, 2020 —
Heather Whitehead - Newmeyer DillionThe U.S. Senate Committee on Commerce, Science and Transportation met recently to discuss considerations for implementing federal privacy laws. Not surprisingly, the main impetus to reevaluate a federal framework is the ongoing COVID-19 pandemic with the greatly increased reliance on online working and school arrangements, as well as the need to share personal information for contact tracing and other efforts to weaken the pandemic.
While federal regulation of personal information has been proposed in the past, there are a few key issues that still remain unresolved. One is enforcement of the regulations. The issue is whether enforcement should be handled by the Federal Trade Commission or if the establishment of a new federal authority is needed to enforce privacy requirement violations. Other key outstanding issues include pre-emption of state rights and whether any regulations should include a private right of action.
Given that the California Consumer Privacy Act of 2018 (CCPA) is the most stringent state regulation addressing data privacy in the United States, California Attorney General Xavier Becerra participated as a witness in the recent Senate Hearing. He shared his opinions as to both federal pre-emption and the need for a private right of action. He recommended that the committee preclude federal regulation from pre-empting state laws, including the CCPA. He noted that individual states are in a better position to adapt and keep up with technological innovation, and that some states have also already implemented thorough privacy protections, such as Mississippi and Washington. With respect to the private right of action, he admitted his office can only do so much to enforce these regulations amongst California’s huge population of businesses and residents. His belief is that individual consumers need the ability to pursue their own remedies in court.
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Heather Whitehead, Newmeyer DillionMs. Whitehead may be contacted at
heather.whitehead@ndlf.com
Reinsurer Must Reimburse Health Care Organization for Settlement Costs
June 17, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe Indiana Supreme Court reversed summary judgment issued to reinsurer Continental Casualty Company (CNA) and determined it must reimburse the insured for settlement costs under the E & O policy. Wellpoint, Inc., et al. v. National Union Fire Ins. Co. of Pittsburgh, PA, et al., 2015 Ind. LEXIS 316 (Ind. April 22, 2015).
Anthem, Inc. was a large managed health care organization. Anthem was its own primary and excess insurer for E&O liability. It had numerous excess reinsurers. Beginning in 1998, anthem was confronted by various lawsuits alleging it and other managed care organizations failed to pay claims in a full and timely manner, thereby breaching state and federal statutes. The various lawsuits alleged substantially the same wrongful conduct, namely that after promising to pay doctors in a timely manner for their services, Anthem sought to improperly deny, delay and diminish payments due.
The cases were consolidated into a federal multi-district litigation proceeding in the Southern District of Florida. Claims for breach of contract, unjust enrichment, and violations of state prompt pay statutes were dismissed or dropped. Anthem then settled the underlying litigation in July 2005 without admitting and instead denying any wrongdoing or liability. The settlement called for both cash payments and implementation of specific business practices consistent with requested injunctive relief.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Does Your 998 Offer to Compromise Include Attorneys’ Fees and Costs?
June 15, 2017 —
Anthony J. Carucci - Snell & Wilmer Real Estate Litigation BlogIn California, the “prevailing party” in litigation is generally entitled to recover its costs as a matter of law. See Cal. Code Civ. Proc. § 1032. But under California Code of Civil Procedure section 998, a party may make a so-called “offer to compromise,” which can reverse the parties’ entitlement to costs after the date of the offer, depending on the outcome of the litigation. Cal. Code Civ. Proc. § 998. The potential payoff of a 998 offer to compromise is explained in section 998(c)(1):
If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.
Cal. Code Civ. Proc. § 998(c)(1) (emphasis added).
The Basic Requirements for a Valid 998 Offer
Pursuant to section 998(b), a 998 offer must satisfy three principal conditions: (1) it must be contained in a writing; (2) it must state the terms and conditions of the proposed judgment or award; and (3) it must contain a provision allowing the offeree to accept the offer by signing a statement to that effect. Cal. Code Civ. Proc. § 998(b).
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Anthony J. Carucci, Snell & WilmerMr. Carucci may be contacted at
acarucci@swlaw.com
2017 Legislative Changes Affecting the Construction Industry
July 13, 2017 —
Melinda S. Gentile – Peckar & Abramson, P.C.The 2017 Florida Legislative Session recently concluded, and a number of important construction-related House Bills (HB) and Senate Bills (SB) were presented during the Session, most notably SB 204/HB 377. These Bills may impact General Contractors and Construction Managers in a number of ways, not the least of which is the period of time that a cause of action may be initiated for the design, planning or construction of an improvement.
The following construction-related Bills passed in both the House and Senate and will become law if approved by the Governor.
Senate Bill (SB) 204/House Bill (HB) 377: Relating to the Statute of Repose for causes of action based on design, planning or construction of an improvement to real property. This bill passed both the House and the Senate and was approved by the Governor on June 14, 2017. This bill becomes effective on July 1, 2017.
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Melinda S. Gentile, Peckar & Abramson, P.C.Ms. Gentile may be contacted at
mgentile@pecklaw.com
Builders Seek to Modify Scaffold Law
June 28, 2013 —
CDJ STAFFNew York’s scaffold law dates back to 1885 and requires contractors and building owners to take measures to protect worker from falls through “proper protection.” And although the law is more than 125 years old, Lou Colettie of the Building Trades Employers Association clams that the law “is going to destroy the construction industry.” On the other side, a former director of the NYC Central Labor Council says that builders want to get rid of the law because of “greed.”
The New York Daily News notes that when workers using scaffolds or ladders are injured, the contractor must prove the site was safe. According to the claims of the building industry, this would let workers get settlements if their injuries were their own fault, such as working while intoxicated or failing to observe their employer’s safety procedures. A bill is currently working its way through the New York legislature that would make the employee’s actions relevant in an injury lawsuit.
There have been past unsuccessful attempts to repeal the law, this year opponents are pushing to just amend it.
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