Construction Law Blog

New bussiness opportunities for construction companies

Dave Seitter — 2008-07-03T01:24:00-05:00

Please go to the EPA website to examine the 36 separate EPA climate change partnership opportunities. New business is on the horizon for small and mid-sized businesses!

OSHA Training and the New Missouri Immigration Law...CONTRACTORS MUST TRAIN EMPLOYEES ASAP!

Dave Seitter — 2008-07-02T00:56:00-05:00

Remember, effective August 28, 2009 most of the new act goes into effect January of next year but the 10 hours of OSHA training for those contractors working on public body must be completed within 60 days from starting any work!

Missouri Construction Contract decision: When a contract does not exist...

Dave Seitter — 2008-07-01T09:40:00-05:00

From our roving reporter Kate Whitby of Spencer Fane:

"The Missouri Court of Appeals handed down a new subcontractor vs. general contractor decision on June 24. Subcontractor was hired to perform work on a project in Pennsylvania. The subcontract incorporated by reference a "General Contract" which the subcontractor never received, or even reviewed. A payment dispute developed, the subcontractor eventually filed suit in Missouri, and the general contractor convinced the trial court to dismiss based on a provision in the missing "General Contract" which chose Pennsylvania as the exclusive forum for lawsuits. The subcontractor appealed, claiming that the "General Contract" presented by the general contractor was not the contract referenced by the subcontract.

The appellate court agreed, finding that the document referred to in the subcontract did not, in fact, exist, and that the General Contractor could not prove what contract was intended to be incorporated into the subcontract.

The case is Livers Bronze, Inc. v. Turner Construction Company, Case No. WD68692.

Moral of the Story? If a document is incorporated by reference into your contract, READ IT and GET A COPY. "

Green Building.....requiring bonding?

Dave Seitter — 2008-06-30T05:51:00-05:00

My law buddy Chris Cheatum, originally of KC who practices in DC tells me DC "green" construction requires now the posting of bonds to ensure performance with sustainability standards. Obviously this impacts owners, contractors, designers, insurers, and lenders...... Get ready folks.....our global warming friends will require new standards for contractors!

Newest update on Mold....

Dave Seitter — 2008-06-27T05:42:00-05:00

In a new article, Christopher Boggs pointed out that 2,000 mold cases filings since 2003 has caused many of the insurance companies to go find ways to avoid coverage for injuries for mold claims. See his article in insurancejournal.com. Mr. Boyer: no question, you are absolutely right.

So contractors, have you talked to your insurance agent on how to deal with these issues?

A new Missouri case on how to NOT get paid for work.

Dave Seitter — 2008-06-26T05:23:00-05:00

In the matter of Mark Miller And Bob Mahlandt d/b/a M & M Buildings, Appellant v. Mary Ruth Horn, Respondent, the Missouri Court of Appeals ruled that a construction company could not recover against a widower where only her deceased husband executed the construction contract. The interesting point of the case is that the issues of quantum meruit and unjust enrichment were examined and the differences that exist between the two (I know, I am a lawyer geek). The widow Horn sold the property and did not pay the contractor.

While the court looked at equitable principles, I think the real and only reason why the contractor loss was because the widow did not sign the agreement.

Rule: when doing business with a successfully businessman in Missouri, always get his wife on the dotted line..then you will not have to worry about: construction\equity\quantum meruit\unjust enrichment...GETTING PAID!

In fairness to the court, if you seek equity, show the value of the real estate is beyond the work you performed on the project!

Waiver of Subrogation - 4 years later a bar to further litigation

Dave Seitter — 2008-06-25T05:40:00-05:00

The Texas case of TX.C.C., Inc. v. Wilson\Barnes General Contractors, 233 S.W. 3d 562 (Texas App., 2007) stands for the proposition that a waiver of subrogation is a bar to further litigation and the Court apparently determined that the parties only resort must be to insurance coverages on post construction events.

I wonder, would this rule be followed in Kansas and Missouri? What if final payment had been made on the project...would this ruling still be the law? Please review your state's law to determine if such provisions are broadly written or narrowly written, as this will be the indicator as to the laws application in your case!

Nebraska waiver of subrogation - please review with your insurance agent!

Dave Seitter — 2008-06-24T04:46:00-05:00

Josh Dickinson explained in a recent teleseminar at www.MidwestConstructionlaw.com the following:

"The Nebraska Supreme Court has upheld subrogation waiver clauses in construction contracts even when the subrogated insurance company complained that gross negligence caused the accident. Lexington Ins. Co. v. Entrex Comm. Servs., 275 Neb. 702 (May 16, 2008). The Court examined a lawsuit arising out of a tower collapse on a construction project. The owner made a claim against its insurance carrier for the damages and the insurance company, in turn, made a claim for subrogation against the general contractor. The general contractor defended the lawsuit by asserting a subrogation waiver provision in its construction contract that waived all subrogation claims arising out of damages covered by insurance. The insurance company argued that such provisions were against Nebraska public policy at least with respect to claims of gross negligence. The Nebraska Supreme Court disagreed and held that "[w]aivers of subrogation serve in avoiding disruption of construction projects and reducing litigation among parties to complicated construction contracts. Concluding that waivers of subrogation cannot be enforced against gross negligence claims would undermine this underlying policy by encouraging costly litigation to contest whether a party's conduct was grossly negligent." The Court characterized its position as the "majority approach," but recognized a split in authority from state to state. A copy of the full opinion is attached hereto."

How to Fight Back When a Contractor Believes Dishonesty is Involved, Come out Swinging!

Dave Seitter — 2008-06-23T17:34:00-05:00

I praise the article written by Steve J. Koprince, Esq., an attorney in Virginia citing to the decision of DSC Logistics, Inc. v. Innovative Movements, Inc. 2004 WL 421977 (N.D.Ill. 2004), where he cited the judge's decision to allow a defamation, commercial disparagement and interference with contractual and business relations stand after Innovative Movements made some negative statements about DSC to Solo Cup.

What I think is really pertinent to all contractors is IMI's use of e-mail to disparage DSC. As Kelly Campbell of Spencer Fane has illustrated to our clients over and over again is that e-mail messages are discoverable. The types of statements uttered by IMI most likely would not have been known even a few years ago as they would have been verbal and virtually unprovable in a court of law. But with world's decision to communicate almost exclusively via e-mail, an unlimited depository of evidence is now available to all litigators!

Time to train your sales folks!

The return of equipment 6 years after sale? You bet!

Dave Seitter — 2008-06-20T03:58:00-05:00

Yep, in the case of Farm Credit Leasing Services Corp. v. Ferguson Packaging Machinery, Inc. out of the Eastern District of Pennsylvania a Federal District Court Judge ruled that a purchaser of lease equipment was liable under conversion (think civil theft) on the purchase of equipment from the original owner. While it turns out the owner was only a lessee, the Court still found the claim of the purchaser to be junior and inferior to that of the creditor even though the purchaser paid the value of the asset.

It is not enough to pay value for equipment. These days contractors are looking for value and will buy assets from folks going out of business. But without knowing for sure who the owner is, you may find yourself turning over the assets you thought you bought free and clear to someone else....six years after the sale took place!