Quick Note: Subcontractor Payment Bond = Common Law Payment Bond
February 16, 2017 —
David Adelstein – Florida Construction Legal UpdatesWhat is a common law payment bond? A common law payment bond is a bond not required or governed by a statute. For example, if a prime contractor provides the owner a payment bond, that bond will be a statutory payment bond. On the other hand, if a subcontractor provides the general contractor with a payment bond, that bond will be a common law payment bond. Why? Because there is not a statute that specifically governs the requirements of a subcontractor’s payment bond given to a general contractor. The subcontractor’s payment bond is aimed at protecting the general contractor (and the general contractor’s payment bond) in the event the subcontractor fails to pay its own subcontractors and suppliers. The subcontractor’s payment bond will generally identify that claimants, as defined by the bond, are those subcontractors and suppliers the subcontractor has failed to pay. This common law payment bond is not recorded in the public records so sometimes it can be challenging for a claimant (anyone unpaid working under the subcontractor that furnished the bond) to obtain a copy of the bond. With that said, an unpaid claimant should consider pursuing a copy of this bond in certain situations, particularly if it may not have preserved a claim against the general contractor’s statutory payment bond.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.com
Replacement of Defective Gym Construction Exceeds Original Cost
January 22, 2013 —
CDJ STAFFAustin, Texas has torn down a school gym, the Turner-Roberts Recreation Center at the Overton Elementary School, due to structural problems which became evident after the gym was completed four years ago. The cost of the new gym is $6.4 million, more than the cost of building the gym in the first place. The city is paying $3 million in repair costs with the rest of the money coming from the companies that designed and built the now demolished gym. According to the Austin Statesman, the total cost to the city will be about $8.6 million.
The Turner-Roberts Recreation Center cost $5.6 million to build, but soon after it opened, structural problems were discovered. Cracks formed in walls and glass doors buckled. The settlement with the designer, contractor, and engineering firm did not require the firms to admit fault as they paid $3.4 million to fix the situation. The Statesman was unable to get a breakdown of how much each firm paid. Tom Cornelius, president of the GSC, the architectural firm on the project told the Statesman that "the foundation issues were not caused by design defects."
Initially, the city sought to repair the gym, but early excavation determined that the defects were too extensive. In addition to the structural flaws, it was also determined that the HVAC system was faulty. Excavation also damaged plumbing work. Tearing down the gym turned out to be the most cost-effective response.
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Traub Lieberman Senior Trial Counsel Timothy McNamara Wins Affirmation of Summary Judgment Denial
August 28, 2023 —
Timothy G. McNamara - Traub LiebermanIn this appeal brought before the State of New York Appellate Division, Second Judicial Department, the court ruled in favor of Traub Lieberman’s client, a housing complex owner, affirming the denial of co-defendant landscaping company’s summary judgment motion seeking dismissal of the cross-claims asserted by the complex owner against the co-defendant.
In the underlying case, the plaintiff was allegedly injured when she slipped and fell on ice on the exterior stairs of the housing complex where she lived. The complex owner had contracted with the co-defendant to provide snow removal services for the complex. The plaintiff commenced action against both the complex owner and the landscaping company to recover damages for personal injuries. The complex owner asserted cross-claims against the landscaping company for contribution, common-law indemnification, and contractual indemnification. The landscaping company sought summary judgment dismissing the complaint and all cross-claims asserted against it, but the branch of the motion seeking dismissal of the cross-claims was denied. In the appeal brought before the Appellate Division, the court ruled in favor of Traub Lieberman’s client, the complex owner, affirming the denial of summary judgment for the cross-claims.
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Timothy G. McNamara, Traub LiebermanMr. McNamara may be contacted at
tmcnamara@tlsslaw.com
Reconciling Prompt Payments and Withholding of Retention Payments
March 30, 2016 —
Eric J. Rollins, Esq. – Newmeyer & Dillion, LLPIt is common in California for the owners of a project to make monthly payments to a contractor for work as it is completed, but withhold a certain percentage as a guarantee of future satisfactory performance. Contractors almost always pass these withholdings on to their subcontractors. Unsurprisingly, disputes can arise regarding when the withheld retentions must be paid.
Civil Code section 8814, subdivision (a), states that a direct contractor must pay each subcontractor its share of a retention payment within ten days after receiving all or part of a retention payment. However, an exception exists -- a direct contractor may withhold from the retention paid to a subcontractor an amount not in excess of 150 percent of the estimated value of the disputed amount, whenever a “good faith dispute exists between the direct contractor and a subcontractor.” (See Cal. Civ. Code, § 8814, subd. (c).) The problem with the statute is that it offers no help in defining a “good faith dispute,” and the California courts have historically not provided much guidance either. Can a “good faith dispute” be any dispute between the contracting parties, e.g., a dispute regarding change orders, mismanagement, etc.? Or must the dispute relate specifically to the retention? Unfortunately for California litigants, the answer may depend on the appellate district in which the parties find themselves.
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Eric J. Rollins, Esq., Newmeyer & Dillion, LLPMr. Rollins may be contacted at
eric.rollins@ndlf.com
A Court-Side Seat: Flint Failures, Missed Deadlines, Toad Work and a Game of Chicken
October 05, 2020 —
Anthony B. Cavender - Gravel2GavelThe last few weeks have yielded a number of interesting developments in the Federal courts.
FEDERAL COURTS OF APPEAL
In re Flint Water Cases
Several local and State of Michigan officials, including the former governor, requested dismissal from the civil litigation seeking damages for the massive failure of Flint, Michigan’s public drinking water system. On August 5, 2020, the U.S. Court of Appeals for the Sixth Circuit agreed that the plaintiffs, residents of Flint, have successfully pled a case that the conduct of the defendants so “shocked the conscience” that a claim for a violation of their substantive due process rights was appropriately alleged. The defendants, including the former governor, argued that they were entitled to a qualified immunity defense. The court rejected this argument on the basis of the earlier decisions made by the court in this matter. Judge Sutton concurred because he was bound by this precedent, but remarked that the evidence for the governor’s culpability was very thin; he was not intimately connected to the extraordinary error in judgment. The majority was very upset with this concurrence as indicted by their own opinion.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
A Court-Side Seat – Case Law Update (February 2022)
March 06, 2022 —
Anthony B. Cavender - Gravel2GavelIt is already early in 2022, but several important environmental cases have already been decided by the federal district and federal appellate courts.
THE COURTS OF APPEAL
The U.S. Court of Appeals for the Fourth Circuit
West Virginia State University Board of Governors v. The Dow Chemical Company, et al.
On January 10, 2022, the court decided this case, in which Dow and the other defendants attempted to remove a state groundwater contamination lawsuit to federal court, citing the federal officer removal statute and the presence of a significant federal question. Both the federal district court and the appellate court rejected these arguments and remanded the lawsuit to the state court. For many years, Dow and other parties had been engaged in a RCRA hazardous waste cleanup at an industrial site located in Institute, West Virginia. RCRA permits and corrective action authorizations were issued or supervised by EPA. The plaintiffs complained that the groundwater cleanup, insofar as it affected their property, was deficient, which compelled them to supplement the ongoing federal cleanup with a lawsuit based on West Virginia causes of action and unique to their property. After a careful review of the record, the Fourth Circuit held that the defendants were not acting under the “subjection, guidance or control” of the EPA, and therefore the federal officer removal statute did not apply. Moreover, there was no federal question to resolve as the separate state lawsuit did not challenge a CERCLA cleanup nor did it arise from the RCRA remedial measures that had been taken.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Housing Woes Worse in L.A. Than New York, San Francisco
September 03, 2014 —
Nadja Brandt and John Gittelsohn – BloombergJeanette Cross took out a payday loan to cover her May rent of $1,600 in South Los Angeles. She skipped car and insurance payments to keep a roof over her head.
“I’m further and further behind,” Cross, a 34-year-old single mother of four, said in a telephone interview. “I make a payment on one thing and don’t pay others.”
She isn’t alone. Angelenos use a bigger slice of their paychecks on shelter than people in New York, San Francisco or Miami, studies show. Surging property prices in the second-largest U.S. city are driving up costs in once-impoverished areas while pushing lower-income households into converted garages or to distant suburbs, where the tradeoff is hours stuck in traffic each day.
Reprinted courtesy of
Nadja Brandt, Bloomberg and
John Gittelsohn, Bloomberg
Ms. Brandt may be contacted at nbrandt@bloomberg.net; Mr. Gittelsohn may be contacted at johngitt@bloomberg.net
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NLRB Finalizes Rule for Construction Industry Unions to Obtain Majority Support Representational Status
September 23, 2024 —
Aaron C. Schlesinger - Peckar & Abramson, P.C.On July 26, 2024, the National Labor Relations Board (“NLRB”) issued its Fair Choice – Employee Voice Final Rule (“Final Rule”), which takes effect September 30, 2024. The Final Rule eases the process for unions in the construction industry to convert their status as collective bargaining representative of bargaining unit employees from Section 8(f) to 9(a) of the National Labor Relations Act (“Act”) simply by placing certain recognitional acceptance language in their collective bargaining agreements. As a result, construction industry employers should review their collective bargaining agreements prior to signing to determine if such language exists.
Section 9(a) Non-Construction Industry Employers
In most industries, not including construction, union recognitional status as collective bargaining representative of the employer’s employees is governed by Section 9(a) of the Act. In order for a Union to obtain recognitional status under Section 9(a), the union must either: (1) file a petition with the NLRB showing support of 30% of the proposed bargaining unit via employee executed authorization cards and win an election of 51% of the employees in the proposed bargaining unit who actually vote; or (2) by reaching an agreement with the employer that the union possesses employee executed authorization cards from 51% of the proposed bargaining unit, which has been confirmed by a neutral arbitrator pursuant to a card count. Once such status is achieved, the union and employer are required to meet and bargain towards reaching a collective bargaining agreement covering the terms and conditions of employment of the union represented employees. A Section 9(a) union cannot have its recognitional status revoked absent the loss of majority support of the employees it represents.
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Aaron C. Schlesinger, Peckar & Abramson, P.C.Mr. Schlesinger may be contacted at
aschlesinger@pecklaw.com