What Happens When a Secured Creditor Files a Late Claim in an Equity Receivership?
September 28, 2017 —
Ben Reeves - Snell & Wilmer Real Estate Litigation BlogPitting a receivership court’s inherent equitable powers against pre-existing property rights can lead to some pretty interesting questions. In SEC v. Wells Fargo Bank, N.A., 848 F.3d 1339, 1343-44 (11th Cir. 2017), the Eleventh Circuit recently examined whether a district court’s inherent authority to establish a claims submission process allowed the court to extinguish a security interest in real property based solely upon an untimely proof of claim. Much to the relief of secured creditors, the Eleventh Circuit held that the district court erred, as a matter of law, by extinguishing the creditor’s pre-existing property rights under those circumstances.
Introduction
Equity vests a district court with “‘broad powers and wide discretion to determine relief in an equity receivership.’” Wells Fargo, 848 F.3d at 1343-44 (quoting SEC v. Elliot, 953 F.2d 1560, 1566 (11th Cir. 1992)). These powers include: (i) establishing procedures for the submission of claims to a receiver, and (ii) setting a claims bar date. Id. at 1344 (citing SEC v. Tipco, Inc., 554 F.2d 710, 711 (5th Cir. 1977)).
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Ben Reeves, Snell & WilmerMr. Reeves may be contacted at
breeves@swlaw.com
Panel Declares Colorado Construction Defect Laws Reason for Lack of Multifamily Developments
January 22, 2014 —
Beverley BevenFlorez-CDJ STAFFDennis Huspeni writing for the Denver Business Journal provided reactions from panelists at a ULI Colorado event on January 9th at the Embassy Suites Denver – Downtown/Convention Center hotel regarding a report on “Emerging Trends in Real Estate.” According to Huspeni’s article, panelists discussed “the lack of for-sale multifamily development and attributed it to Colorado’s construction defect laws.”
John Beeble, chairman and CEO of Saunders Construction, one of the panelists, said that Saunders does not build condos because of Denver’s construction defect laws: “We’ve been in business for 42 years and never been sued for construction defects,” Beeble said, according to the Denver Business Journal. “But the odds are close to 100 percent that we’d be in court defending ourselves if we did condos.”
Jeff Hawks, principal at ARA Colorado, claimed, “Colorado has some of the worst construction defect laws in the country. It’s stupid to try and build a condo development until that changes,” as reported by the Denver Business Journal.
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Builders Beware: A New Class Of Defendants In Asbestos Lawsuits
January 06, 2016 —
David J. Byassee, Bremer Whyte Brown & O’Meara, LLP & Timothy A. Gravitt, Ulich, Ganion, Balmuth, Fisher & Feld, LLPResidential, commercial and industrial builders face new and potentially significant liability for construction activities that took place in the 1960s, 1970s and 1980s: personal injury lawsuits filed by construction workers from exposure to building products containing asbestos. After emptying the pockets of manufacturers and suppliers of raw asbestos and asbestos-containing products over the last 20 years, plaintiff lawyers are beginning to set their sights on a new class of defendants in asbestos litigation: residential, commercial and industrial builders who unknowingly allowed asbestos-containing products to be incorporated into their projects.
The men and women who have been involved in the building industry for 40 years or more may remember the subject of asbestos surfacing in the 1970s with the enactment of the Occupational Safety and Health Act (OSHA). At that point builders were just beginning to learn that asbestos was a component of some building materials, and the potential risk of cancer presented by asbestos was being debated in scientific and medical journals. Although the use of building materials containing asbestos was mostly phased out by the 1980s, the health risks associated with exposure to asbestos continue – and in fact increase – for the duration of an exposed person’s life.
Today it is generally accepted that exposure to asbestos increases the risk of developing asbestosis and certain kinds of cancer, including mesothelioma. Cancers associated with exposure to asbestos are typically diagnosed at least 15 years (and sometimes up to 50 years) after a person’s exposure to asbestos, meaning that exposures in the 1960s, 1970s and 1980s might not manifest in disease until now. The class of persons who may be at risk for asbestos-related disease is long and varied: insulators, HVAC installers, pipe fitters, plumbers, drywall installers, painters, plasterers and roofers, to name a few. Long-term exposure history, coupled with the theory that “each and every” exposure during a lifetime is a substantial factor increasing the risk of developing cancer, presents potential liability to builders acting as general contractors and/or property owners, as well as the usual defendants in asbestos lawsuits, which include manufacturers, suppliers, and users of asbestos-containing materials.
In recent years, plaintiff lawyers have set their sights on builders as the financial wherewithal of traditional asbestos defendants has dried up. Plaintiff lawyers have created a new theory of liability which they use to rope builders in as defendants in asbestos lawsuits: that the builder knew – or should have known – that a deadly ingredient (asbestos) was contained in the building materials used in construction, and the builder failed to warn its subcontractors or anyone else on the project that exposure to asbestos could harm them.
Builders have unique legal defenses to claims brought by employees of subcontractors who have developed asbestos-related disease. For example, the California Supreme Court in Privette v. Superior Court (1993) 5 Cal.4th 689, held that an injured employee of a subcontractor cannot maintain a claim against the hirer (builder) for the employee’s injury absent affirmative contribution on the part of the builder to the injury. Thus the first line of defense in an asbestos exposure case is to argue that the developer had no direct role in the plaintiff’s exposure to asbestos and therefore the Privette doctrine precludes the plaintiff from suing the builder. But resourceful plaintiff lawyers are coming up with arguments to get around this so-called Privette defense in asbestos lawsuits by claiming that builders’ activities such as cleanup of asbestos-containing materials, or assertion of control over the work of the subcontractor, directly contributed to the plaintiff’s injuries and therefore provide exceptions to Privette and allow the claim to proceed.
A practical question is raised in asbestos cases: How is a plaintiff able to prove, decades after working on a project, what building materials contained asbestos, or that a builder knew or should have known in the 1960s, 1970s or 1980s that asbestos-containing materials were used on their project, or that asbestos presented a health risk? To answer the first part of the question (what building materials contained asbestos), plaintiff’s experts will say that during the relevant timeframe asbestos was a common ingredient in many building products, e.g., drywall joint compounds, stucco/plaster/gun cement, acoustic ceiling products, cement pipe, insulation, roofing mastic, caulk and plumber’s putty; this can be further proven by reference to product manufacturers’ disclosures made pursuant to the Asbestos Information Act. Also, through the decades of asbestos litigation against product manufacturers and suppliers, resourceful plaintiff lawyers have developed vast banks of data and documentation identifying the manufacturers of asbestos-containing building products, the end-users of those products, and the projects where those products were supplied. With this bank of knowledge, all that is necessary for them to make the claim against a builder is to have the plaintiff identify a construction project where he or she remembers working during the relevant timeframe. Once that identification is made, it is a simple matter for the lawyers to dig and find out who developed the building/project, who then becomes a defendant in an asbestos lawsuit.
The answer to the second part of the question (whether the developer knew or should have known that the products brought to their projects contained asbestos) requires a detailed investigation into the dates at which the products were supplied to the project, the manufacturer of the product, and what information was available in the market place about the material content of the particular product.
The answer to the third part of the question (knowledge that asbestos presented a health risk) is trickier. One of the first standards set by OSHA in 1972 related to permissible levels of exposure to asbestos. It is a common tactic for plaintiff lawyers to argue that the existence of OSHA standards created a presumption of knowledge in the building industry about the dangers of asbestos. But what about pre-OSHA knowledge? Here plaintiff lawyers will argue that well before OSHA, going back as far as 1936, exposure to asbestos was regulated in California under General Industry Safety Orders relating to Dusts, Fumes, Mists, Vapors and Gases. They argue that the General Industry Safety Orders put builders “on notice” of the dangers of asbestos by virtue of being regulated by the State of California, and, by extension, builders had “knowledge” of the health risks associated with asbestos.
There are defenses that skilled defense counsel can utilize to defeat asbestos claims, assuming the Privette defense is not available. The first is to thoroughly investigate and evaluate all of the plaintiff’s potential exposures to asbestos throughout his entire lifetime, and identify those sources that likely were the major contributors to his disease. Next, counsel has to properly investigate the project at which the plaintiff is alleged to have been exposed to asbestos, identify all of the possible sources of exposure, i.e., the products that were used or might have been used at the project, and finally how the plaintiff was allegedly exposed at the project. As most builders do not maintain records of what products were used in their projects dating back 15 years or more, let alone the identities of the trades that worked on the projects, knowledgeable defense counsel can be a valuable partner in unearthing the brands of products typically in use in the locale where the construction took place, and identifying the manufacturers of those products. Defense counsel must analyze the frequency, duration, proximity and intensity of the exposure, as well as the type of asbestos the plaintiff was allegedly exposed to (not all asbestos is created equal – some types are more toxic than others). This will involve careful evaluation of the levels of exposure created by the alleged activity of the builder, to determine, through experts and a thorough understanding of the scientific and medical studies on the subject, whether the levels of asbestos exposure created by the activity could be considered a “substantial factor” in contributing to the risk of the plaintiff’s development of his asbestos-related disease.
Asbestos lawsuits present a significant risk to the unsuspecting and unprepared builder. Money damages available to a plaintiff are substantial. Medical expenses for treatment of asbestos-related disease typically run into the hundreds of thousands of dollars, lost income (including retirement benefits) can also be significant, and jury awards for pain, suffering and emotional distress can be staggering - often millions of dollars. In some cases punitive damages are even awarded.
The bottom line is that a builder runs a big risk if it treats an asbestos claim like any other claim. The level of analysis and investigation to properly defend against the claim requires prompt action by knowledgeable counsel, and frequently there is no insurance coverage.
David J. Byassee is an attorney with the firm
Bremer Whyte Brown & O’Meara, LLP, and is a litigator who has devoted nearly a decade to representation of real estate developers and builders. He can be reached at: dbyassee@bremerwhyte.com.
Timothy A. Gravitt is an attorney with the firm
Ulich, Ganion, Balmuth, Fisher & Feld, LLP who is devoted to defending real estate developers and builders in a variety of litigation. He can be reached at: tgravitt@ulichlaw.com.
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OSHA Updates: New Submission Requirements for Injury and Illness Records
October 02, 2023 —
Ashley Meredith Strittmatter & Chelsea N. Hayes - Construction ExecutiveIn a revival of an OSHA recordkeeping rule originally implemented under the Obama administration in 2016 and "rolled back" by the Trump administration in 2019, OSHA issued a final rule on July 21, 2023, requiring certain establishments in high-hazard industries to submit additional injury and illness data electronically to OSHA. The
Final Rule is found at 29 CFR 1904 and goes into effect on Jan. 1, 2024.
What does this mean? On and after Jan. 1, 2024, OSHA will require employers with 100 or more workers in certain high-hazard industries to provide annual information from their
Forms 300 and 301, in addition to the already-required electronic submission of Form 300A. Form 300 is the Log of Work-Related Injuries and Illnesses, including the specific injuries or illnesses and the employee names, while Form 301 is the corresponding Injury and Illness Incident Report, which includes additional details on each item listed on the 300 Log. Form300A is the corresponding Annual Summary showing the injury and illness totals for the year, including the number of cases, number of lost workdays, the injury and illness types, the average number of employees and the total hours employees worked. This Form 300A Annual Summary must be routinely submitted by employers with more than 250 employees on or before March 2 of each year for the prior year.
Reprinted courtesy of
Ashley Meredith Strittmatter and Chelsea N. Hayes, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Ms. Strittmatter may be contacted at astrittmatter@bakerdonelson.com
Ms. Hayes may be contacted at cnhayes@bakerdonelson.com
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Approaching Design-Build Projects to Avoid (or Win) Disputes
August 07, 2023 —
Stuart Eisler - Construction ExecutiveStakeholders engage in design-build projects believing the collaborative nature better aligns parties' interests and reduces overall risk exposure. Each of the lead parties bases this belief on different factors—the owner sees an opportunity to reduce change-order exposure and improve delivery times, the design-builder (or contractor) aims to control design volatility by ensuring project components match budgeted projections, and the designer intends to benefit by greater constructability review from the design-builder team and often additional time to detail designs. Rarely do design-build parties contemplate claims arising while initiating a project.
This being said, design-build projects carry unique, inherent risks due to the award of often fixed-price contracts utilizing incomplete, preliminary designs. As scopes creep and costs balloon, previously harmonious parties experience discord and lurking claims. While the majority of design-build projects are completed without major dispute, there are strategies available to further avoid disputes and prevail in those that are unavoidable.
Reprinted courtesy of
Stuart Eisler, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Four Common Construction Contracts
August 26, 2015 —
Garret Murai – California Construction Law BlogLike Baskin Robins, construction contracts come in a variety of different flavors although, thankfully, significantly fewer than 31. Here are four of the more common types of construction contracts between project owners and contractors:
Fixed Price
Fixed price construction contracts, also commonly referred to as “lump sum” or “stipulated sum” contracts, are the most common types of construction contracts. As its name suggests, under a fixed price contract a contractor agrees to construct a project for a “fixed” or agreed upon price.
1.
Benefits: Fixed price construction contracts provide price predictability for project owners because absent changes in the scope of work, unforeseen conditions, or other circumstances which might cause the “fixed” price of the contract to go up or down, the contractor is required to complete the work for the agreed upon price.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Supreme Court Holds That Prevailing Wage Statute is Constitutional
November 28, 2022 —
Cassidy Ingram - Ahlers Cressman & SleightThe Supreme Court recently held
[1] that Senate Bill 5493 (“SSB 5493”), which alters the method for how the Washington State Department of Labor and Industries’ industrial statistician sets the prevailing wages for employees on public works projects, is constitutional. Prior to the enactment of SSB 5493, the industrial statistician set prevailing wages for each trade on a county-by-county basis based on either the majority or average wage rate in that specific county. Following SSB 5493’s enactment, the industrial statistician would be required to adopt the prevailing wage rate for a county solely based on collective bargaining agreements (CBAs) for that trade. If a trade has more than one CBA in a county, the highest wage rate will prevail.
SSB 5493 has negative impacts on employers because it creates the potential for wage rates to be set based on CBAs that represent the minority of hours worked in a county. The International Union of Operating Engineers, Local 302, provides an example of this. AGC began negotiations with an operators’ union for a master labor agreement, which would cover almost all operating engineers in 16 Washington State counties. When they could not reach an agreement, Local 302 called a strike against the employers. After one week of the strike, Local 302 approached small employers and negotiated a side agreement. Some of these employers were also card-carrying members of Local 302. A few weeks later, AGC ratified a new agreement with Local 302 that included lower wages than the side agreements. Because the rates in the side agreement were higher, those wage rates became the prevailing wage in 16 counties even though they represented a minority of the hours worked.
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Cassidy Ingram, Ahlers Cressman & SleightMs. Ingram may be contacted at
cassidy.ingram@acslawyers.com
The Preservation Maze
June 12, 2023 —
Sofya Uvaydov - Kahana & Feld LLPTo appropriately preserve an issue for appeal is frankly confusing to many attorneys due to differing rules depending on the issue or procedural posture (presumably why appellate attorneys are more commonly used during trial). On May 25th, the US Supreme Court handed down Dupree v. Younger, 598 U.S. __ (2023) clarifying preservation requirements from denied summary judgment orders. When a federal court denies summary judgment on sufficiency of evidence grounds, a party must raise the argument again post-trial to preserve it for appeal as per the Court’s prior ruling in Ortiz v. Jordan, 562 U.S. 180 (2011). When a court denies summary judgment on a purely legal issue, the Court unanimously held that the issue is preserved in an appeal from a final judgment without having to raise it again post-trial. The Supreme Court distinguished this from their prior rule in Ortiz by explaining that sufficiency or factual issues which were previously denied at summary judgment must be evaluated based on the totality of the evidence adduced at trial. A purely legal issue decided on summary judgment is not changed by factual evidence at trial.
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Sofya Uvaydov, Kahana & Feld LLPMs. Uvaydov may be contacted at
suvaydov@kahanafeld.com
