My wife and I were looking for condominiums in the Seattle area a few years ago, and every place we inspected marketed themselves as “green built.” Being a LEEP AP, I asked a few questions about what the label meant. Most of the time, it meant nothing.

That’s precisely what a new bill in the Washington legislature is trying to prevent.

The practice of deceptive green marketing has a name. Wikipedia defines Greenwashing as follows:

Greenwashing (green whitewash) is the practice of companies disingenuously spinning their products and policies as environmentally friendly, such as by presenting cost cuts as reductions in use of resources. It is a deceptive use of green PR or green marketing.

Greenwashing is so serious it has its own Greenwashing Index.

The new bill was introduced just this January 2010 by Senators Becker and Fraser, and requires the state building code council to adopt rules to define “green” home and “energy efficient” home for residential units and residential buildings. It seeks to prohibit builders and developers from marketing or selling a home as “green” or “energy efficient” unless it meets the specifications.

As currently written, the code must be written by December 2012. Thus far, the bill has strong support.

Builders and Developers should keep a close eye on this legislation, especially as they begin new projects in the coming years hoping to market the project to green-seeking buyers.

If the bill passes, it will be interesting to see how the definitions are drafted, and whether they will incorporate already existing certification programs, such as the U.S. Green Building Council’s LEED program (as a recent amendment to the bill suggests). Follow the bill at Washington Votes here, or stay tuned to the Northwest Green Building Law Blog.

The U.S. Department of Energy has a “Solar America Cities” program, whereby it works in partnership with U.S. cities to accelerate the adoption of solar energy technologies for a cleaner, more secure energy future. There are 25 major U.S. cities on the list, and New Orleans is one of them.

If you’re in or around the city, it’s hard not to notice that we’ve got a vibrant market for solar energy technologies. Here are just a few companies offering solar products and installations (and doing well at it):

• South Coast Solar
• Gulf South Solar
• Louisiana Solar Works
• Joule Energies

Why so much hype about solar energy products? Well, for two reasons really.

First, solar energy is cheaper than the energy you get from Entergy because you’re getting it from the sun. Second, government tax rebates and credits make it super affordable and practical to invest in solar technology for your home or business.

The State Tax Credit

What’s great about the state tax credit is that Louisiana will actually write you a check if the credit results in an overpayment of your state income taxes.

Right now, the credit applies to residential and apartment projects, and provides a credit of 50% the cost of the system & its installation. The available credit is maxed out at $12,500.00, but you can install multiple systems on the same building and claim an additional credit.

How To Apply for State Tax Credit

Applying is a synch. You’ll need to fill out Louisiana Department of Revenue form R-1082, and file it.

You also need to provide the Department of Revenue with the following “proof of purchase:”

1. type of system applying for the tax credit;
2. output capacity of the system:
   1. Solar Electric System: total nameplate listed kW of all installed panels;
   2. Solar Thermal Systems: listed SRCC annual BTU or equivalent kWh output;
   3. Wind Electric Systems: total rated kW of all alternators and generators;
   4. Wind Mechanical Systems: shaft horsepower as rated by manufacturer, licensed contractor or licensed professional engineer.
3. physical address where the system is installed in the state
4. total cost of the system as applied towards the tax credit separated by:
   1. equipment costs;
   2. installation costs;
   3. taxes;
5. make, model and serial number of generators, alternators, turbines, photovoltaic panels, inverters, and solar thermal collectors applied for in the tax credit.
6. name and Louisiana contractor’s license number of installer.
7. copy of the modeled array output report using the PV Watts Solar System Performance Calculator developed by the National Renewable Energy Laboratory and available at the website www.nrel.gov/rredc/pvwatts. The analysis must be performed using the default PV Watts de-rate factor.
8. copy of a solar site shading analysis conducted on the installation system using a recognized industry site assessment tool such as a Solar Pathfinder or Solmetric demonstrating the suitability f the site for installation of a solar energy system.

It Matters Who Installs Your System

Not just anybody can install your renewable energy system. The Notice of Intent Letter from the Louisiana Department of Revenue regarding these credits provides the following requirement about contractor qualifications:

All installations must be performed by a contractor duly licensed by and in good standing with the Louisiana Contractors Licensing Board with a classification of Solar Energy Equipment and a certificate of training in the design and installation of solar energy systems from an industry recognized training entity, or a Louisiana technical college, or the owner of the residence

You Can Get Federal Credits Too

In addition to the 50% Louisiana Tax Credit, you can also apply for the 30% federal tax credit for the same system. The details for this is for another time and place, but for now, take a look at the Legal Guide I published on Avvo.com in March 2010 here: How to Claim A Federal Tax Credit for Solar or Renewable Energy.

Let me see if I can convince you Northwesterns to head down to cajun country for a few days to attend the Green Legal Matters conference in New Orleans, LA.

Here are three reasons: (i) the conference and list of speakers is impressive; (ii) it’s the weekend of Jazz Fest in the city; and (iii) the weather will be perfect (not raining).

Green Legal Matters is a national symposium aimed to bring together the best and brightest legal minds to discuss opportunities presented by the green movement, and the legal challenges it presented for folks in the industry. The conference producers promise a very full 2 days of keynotes, panels and presentations from subject matter experts.

In what is great news for the Louisiana green industry, the industry is hosting its first annual conference in New Orleans between April 26 – 28, 2010.

I’m happy to be among a number of great experts to speak at the conference, and among some attorneys who are good friends of ours from twitter and blogs such as Christopher Hill (who I’ll present with on green litigation), Shari Shapiro and Tim Hughes.

The conference hopes to pull in great attendance based upon its location (New Orleans = greatest city in the world), the time of year (sandwiched between the two weekends of New Orleans Jazz Festival) and a line-up of very significant speaks including:

• New Orleans Mayor Elect, Mitch Landrieu
• James Carville, political consultant
• Susan Dorn, General Counsel of US Green Building Council
• Roberta Lang, General Counsel, Whole Foods
• Steve Harmon, Sr. Director Legal Services, Cisco

If you’d like to learn more about the conference, or to register to attend, please visit www.greenlegalmatters.com.

A bill that would slightly amend RCW 18.160.050, RCW 82.02.100 and RCW 70.119A.180 is floating around in the Washington legislature this session. While not an earth-shattering measure, the bill (sponsored by Representative Simpson), seeks to encourage builders, homeowners and water purveyors to voluntarily install sprinkler systems in private residences.

Read the Washington Votes summary of the bill here (and track it).

Of course, sprinkler systems are all around us in commercial buildings, where they are frequently even mandatory elements of the facility’s construction. While private residences have smoke detectors, they rarely have sprinkler systems…and the question being asked more frequently these days is “why?”

The U.S. Fire Administration through FEMA states as follows on the topic:

It is the official position of the U.S. Fire Administration that all American should be protected against death, injury and property loss resulting from fire in their residences. All homes should be equipped with smoke alarms and automatic fire sprinklers…

(Check out FEMA website for very interesting statistics about residential fires and sprinkler systems).

The bill currently pending in the Washington legislature looks to help push sprinklers in private residences by eradicating barriers that prevent the installation of systems in private residences, by promoting education on the effectiveness of residential systems and by providing financial and regulatory incentives to homeowners, builders and water purveyors for voluntarily installing sprinkler systems.

Check out the digest:

Eradicates barriers that prevent the voluntary installation of sprinkler systems in private residences by promoting education regarding the effectiveness of residential fire sprinklers.

Provides financial and regulatory incentives to homeowners, builders, and water purveyors for voluntarily installing the systems.

Allows expenditures from the fire protection contractor license fund for use in developing and publishing educational materials related to the effectiveness of residential fire sprinklers.

Prohibits a person installing a residential fire sprinkler system in a single-family home from being required to pay the fire operations portion of the impact fee.

Exempts a public water system from liability for damages resulting from shutting off water to a residential home with an installed fire sprinkler system if the shut off is due to routine maintenance, nonpayment by the customer, or water system emergencies.

Green Legal Matters is a national symposium aimed to bring together the best and brightest legal minds to discuss opportunities presented by the green movement, and the legal challenges it presented for folks in the industry. The conference producers promise a very full 2 days of keynotes, panels and presentations from subject matter experts.

In what is great news for the Louisiana green industry, the industry is hosting its first annual conference in New Orleans between April 26 – 28, 2010.

I’m happy to be among a number of great experts to speak at the conference, and among some attorneys who are good friends of ours from twitter and blogs such as Christopher Hill (who I’ll present with on green litigation), Shari Shapiro and Tim Hughes.

The conference hopes to pull in great attendance based upon its location (New Orleans = greatest city in the world), the time of year (sandwiched between the two weekends of New Orleans Jazz Festival) and a line-up of very significant speaks including:

• New Orleans Mayor Elect, Mitch Landrieu
• James Carville, political consultant
• Susan Dorn, General Counsel of US Green Building Council
• Roberta Lang, General Counsel, Whole Foods
• Steve Harmon, Sr. Director Legal Services, Cisco

If you’d like to learn more about the conference, or to register to attend, please visit www.greenlegalmatters.com.

What is a Miller Act Claim?

How do you file a Miller Act Claim?

Am I entitled to file a Miller Act Claim?

These are some of the questions answered by Scott Wolfe’s latest Legal Guide published on Avvo.com, titled “How To File A Miller Act Claim.” In the guide, Scott breaks the federal filing down into four steps, introducing the topic as follows:

If you furnished labor and/or materials to a federal construction project, and were not paid, contractors or suppliers may file a “Miller Act Claim” against the general contractor’s payment bond. You can file a claim on your own, through a filing service, or with an experienced attorney.

Click here to read all of Scott’s Legal Guides at Avvo.com.

A draft of the International Green Construction Code (IGCC) is scheduled for release in March 2010. Developed in partnership with the American Institute of Architects and ASTM International, and supported by the United States Green Building Council, the code is expected to perform as a “model code” for jurisdictions across the country looking to draft and enforce green construction codes in their areas.

There’s a key difference between the proposed “code” and rating systems such as the LEED Rating system. Unlike rating systems like LEED, the IGCC is a regulatory framework.

A great article explaining the IGCC and its potential uses and challenges was written by Harvey Berman, a LEED AP lawyer in Ann Arbor, Michigan. Read it here: “ICC makes rapid progress on International Green Construction Code.”

It will be interesting to see which jurisdictions adopt the IGCC, and which go further to make it mandatory.

As many in the green building sector know, California has already adopted a “California Green Building Standards.” While code compliance is currently voluntary, it becomes mandatory this year. Other cities and states have introduced and passed legislation that will require commercial projects to meet certain sustainable performance benchmarks, although not always in the form of a code.

In Washington state, and the City of Seattle, new laws require commercial property owners to report its energy performance, and disclose it to future tenants and purchasers. Seattle, Washington, Portland and the entire Pacific Northwest is likely to be among the early adaptors of the IGCC.

Louisiana certainly hasn’t remained dormant in the green building sector, and perhaps the state and its parishes will look closely at the IGCC when its released.

Scott Wolfe Jr., a graduate of Loyola’s College of Law, returned to the campus to teach a second Skills course (the first was written about here).

This time, Scott taught “Solo from Scratch: Starting Up, Marketing & Finding Success.”

The presentation was given to 100 students at the school, and focused on the administrative tasks required to open a law practice, marketing concepts like “Positioning,” the use of Web 2.0 tools in business, and a practice’s short and long term goals.

The Keynote slides for the presentation are shared through Slideshare, and embedded directly within this post below.

Scott is a LEED AP, and is the founding author of two construction law blogs that focus exclusively on green building issues: (1) the Louisiana Green Building Law Blog, focusing on green building legal issues in Louisiana; and (2) the Pacific Northwest Green Building Law Blog, focusing on green building legal issues in the Pacific Northwest.

The presentation for Sterling Education focused on the growth of green building in Louisiana and across the country, an overview of green building principals and the concept of green leases. The Keynote slides for the presentation are shared through Slideshare, and embedded directly within this post below.

The U.S. Department of Transportation awarded TIGER Grants last week to cities across the country, funding projects that “foster job creation, show strong economic benefits, and promote communities that are safer, cleaner and more livable.” New Orleans shared in the pie of funding, getting a $45 million grant to pay the full cost of a new streetcar line to run along Loyola Avenue, reaching from Canal Street to the Union Passenger Terminal.

Nola.com reports that RTA hopes to have the streetcar line up and running within 2 years.

In addition to the $45 million in federal funding, RTA is hoping to make a “French Quarter Loop” through local investment.

While much of the focus here has been on the development of retail establishments along the streetcar line, here are some benefits we see:

• $45 – $115 Million investment into building the new lines;
• Increasing alternative transportation options for residents and tourists (including transportation to the train station)
• Additional step for New Orleans towards more sustainable practices

Congratulations to RTA and the team working on the TIGER Grant.

Earlier this year, I attended a seminar promoted by the Louisiana Chapter of the USGBC with guest speaker John Moore from the New Orleans Office of Environmental Affairs. Under the Nagin administration, this office has taken a bit of a beating, getting separeted and consolidated from other departments so often…they haven’t even had time to finish their website!

The election of Mitch Landrieu as Mayor of New Orleans shows promise for this department, and is good news for any New Orleanian interested in the green building industry.

Glassboth.org, a neat web organization that publishes candidates views on certain issues, had a survey filled out for Mitch during the election. Here are his answers on Environmental and Sustainability issues.

Mitch supports:

• City-funded recycling program
• Expanding the role of the City’s Office of Environmental Affairs to include issues of sustainability
• Supporting municipal carbon footprint regulations to control local CO2 emissions
• Requiring all public buildings to meet LEED Standards
• Implementation of the City’s plan for sustainable redevelopment called GreenNola

All good news for Mr. Moore and the team working on GoGreenNola.com. And for Louisiana companies who build green.

How Do You Access It?

If you’re a client, you should have received an invitation email from billing@wolfelaw.com. Click on the link through that email and set up your username and password, and from there, you’ll see your open and paid invoices. It’s really that easy.

The login page for our new online billing center can be accessed here: https://wolfelawgroup.freshbooks.com/

What is Freshbooks?

Freshbooks is an industry leading Web 2.0 App for online invoicing. Instead of sending our clients paper invoices, with pages and pages of timesheets, we’re now able to send those invoices and timesheets via email.

Not only is the invoice instantly accessible to the client, but the online billing center keeps a historical record of the invoices. Clients can view open and paid invoices, and can run different reports to see how much they’ve spent on any given legal matter.

For those clients who rather receive paper invoices, the Freshbooks system sends the invoice via ordinary mail.

Why We Did It & What It Means to Our Clients

If there is one thing businesses loathe about attorneys (and rightfully so), it’s the money spent with the law firm. In large part, business dislike a few things:

- Law firms sell a service, and its difficult to see what is being purchased;

- Law firms have inconsistent billing practices, where invoices are delivered only periodically, and sometimes request huge payments

- Businesses have difficulty predicting and budgeting the costs of a legal matter.

Our new online billing center advances our efforts to combat these issues. Each invoice explains the work performed during the invoicing period in detail, and with 24/7 access to client billing histories, the cost of the legal matter are made transparent.

To help businesses budget and predict the costs of litigation (in addition to Alternative Billing Methods), we send invoices out once every three weeks. It’s like clock-work, and it ensures that you know exactly what is happening on your case and how much it is costing.

Want To Use Freshbooks For Your Own Business – Go Through Us

Freshbooks is an affordable and useful web 2.0 tool for businesses. Not only does it help us bill more efficiently, but it could help many of our clients and readers who send invoices as part of their business.

So, if you do go to the Freshbooks homepage, and like what you see – please mention Wolfe Law Group when you sign up.

Building upon the “Efficiency First” SB 5854 signed into law last year by Washington Governor Chris Gregoire, the City of Seattle announced a new city ordinance that will require owners of large commercial and multi-family properties to measure its annual use of energy.

Why? Seattle City Council Chair Richard Conlin explains in the city’s press release that “[y]ou can’t manage what you don’t measure.”

New Requirements in Washington & Seattle

In large part, the Washington bill and Seattle ordinance will require certain classes of private property owners to rate their buildings using Energy Star software, and disclose the information to prospective buyers, lessees and lenders prior to any closing transaction.

Here are some highlights of the new state-wide regulations, including information on how it may apply to you:

• Non-residential buildings greater than 50,000 square feet must rate and disclose beginning January 1, 2011. Buildings greater than 10,000 square feet required to rate and disclose beginning January 1, 2012.
• Beginning January 1, 2010, public agencies may not lease or renew space in private buildings with Energy Star rating less than 75.

The Seattle ordinance adds a few wrinkles, highlighted as follows:

• Multifamily buildings (5 units or more) are subject to disclosure requirements.
• Rating date must be disclosed to current tenants, if they request it
• Energy performance data must be reported annually to City of Seattle. Multifamily properties must report beginning April 1, 2012. Other non-residential property must report beginning April 1, 2011 if over 50,000 SF, and April 1, 2012 if over 10,000 SF.

Consequences for Failing to Report

Since the state law and city ordinance is so new and not even in full effect, it’s difficult to predict how aggressive the city and state will be in enforcing the regulations. As time goes on and the challenges of the requirements are examined, these regulations may even be altered to aid in enforcement.

Seattle’s City Ordinance provides the city with the following remedies if a building owner fails to comply:

1. Failure to Report: $150 citation, and if not filed within 15 days of the citation, a $150 per day penalty for first ten days of noncompliance, then $500 per day for each day in violation pat the 10th day until compliance is achieved.
2. Failure to Disclose: $150 citation for first violation, $500 for subsequent violations.

The failure to disclose penalty is a lot less severe than then failure to report, which can become astronomical to a property owner if they try to ignore the ordinance. As usual, the ordinance does provide administrative procedures to challenge and mitigate citations.

Related Links

Seattle Green Building Capital Initiative

Raw Text: Seattle Ordinance 123226

Raw Text: Washington Senate Bill 5854

NSF Checks are a fact of life for those in the construction business. They are especially so when working in turbulent economic clients.

Getting paid with a NSF Check is actually not a terrible situation. In fact, in certain scenarios it can help your position against the non-paying party. While each side may have arguments about the quality of work or completeness of items before payment is made, once a check is written and it goes NSF, the old arguments disappear and you can focus on a very simple legal issue: (i) a check was written to you; (ii) it wasn’t honored; (iii) the money is now due.

In addition to simplifying the issues, most states (including Washington) have very powerful laws that impose penalties against dishonored checks. It is key to follow the relevant statutes and properly demand that the NSF Check be paid. Take special notice of RCW §62A.3-520 and RCW §62A.3-522.

Step 1: Give Notice of Dishonor

Upon receipt of a NSF check, you should deliver a “Notice of Dishonor of Check” to the drafter. The preferred language is provided for by statute, as follows:

NOTICE OF DISHONOR OF CHECK

A check drawn by you and made payable by you to ….. in the amount of ….. has not been accepted for payment by ……, which is the drawee bank designated on your check. This check is dated ……, and it is numbered, No…….

You are CAUTIONED that unless you pay the amount of this check within fifteen days after the date this letter is postmarked, you may very well have to pay the following additional amounts: (1) Costs of collecting the amount of the check, including an attorney’s fee which will be set by the court; (2) Interest on the amount of the check which shall accrue at the rate of twelve percent per annum from the date of dishonor; and (3) Three hundred dollars or three times the face amount of the check, whichever is less, by award of the court.

You are also CAUTIONED that law enforcement agencies may be provided with a copy of this notice of dishonor and the check drawn by you for the possibility of proceeding with criminal charges if you do not pay the amount of this check within fifteen days after the date this letter is postmarked.

You are advised to make your payment to ….. at the following address: ………

Step 2: Execute Affidavit of Sending Notice

This is a lot easier than it sounds. Simply add the following language to the end of your “Notice of Dishonor of Check,” fill in the blanks and sign it. Make sure you keep a copy of the Notice being sent, along with a signed Affidavit of delivery.

While not required by the terms of the statute, it’s good practice to send this notice via Certified Mail so you can track its delivery. Here is the affidavit of delivery language:

AFFIDAVIT OF SERVICE BY MAIL

I, ………., hereby certify that on the ….. day of ………., 20.., a copy of the foregoing Notice was served on ……… by mailing via the United States Postal Service, postage prepaid, at ………., Washington.

Dated: ………………….
(Signature)

What NOT To Do

The first two steps are things you should do…this is a list of statutory things you should not do. The Washington statutes specifically enumerate these actions, and state that if a party does any of these things, that party will not be entitled to penalties, interest & attorneys fees in collecting on the NSF check:

• Do Not demand interest or collection costs in excess of the amounts provided for by statute;
• Do Not demand interest or collection costs prior to the expiration of fifteen days after the mailing of notice of dishonor;
• Do Not demand attorneys fees without having the fees set by the court, or prior to the expiration of fifteen days after the mailing of notice of dishonor.

Your Reward and The Next Step

If you follow Steps 1 and 2, and do not do the forbidden items within the “What NOT To Do” step, the statutes provide that you are entitled to the following if the check is not honored within 15 days of the notice:

1. A reasonable handling fee for each instrument;
2. Interest at the rate of 12% per annum from the date of dishonor
3. Cost of collection not to exceed $40 or the face amount of the check, whichever is less
4. Reasonable Attorneys Fees
5. Penalty in the amount of $300, or three times the face amount of the check, whichever is less

If payment is not made as requested in the Notice of Dishonor, you can proceed with a civil action to enforce payment of the check, along with the penalties, interest and attorneys fees provided for by statute.

Folks, we’ve never raised our billing rates on a client.

Think we’re going out of our way to brag about this? Think again. It’s almost a tradition in the legal profession for firms to annually raise rates on their clients.

Even the turbulent economic client isn’t enough to stop firms from raising rates. Reports and surveys are abound certifying that firms are raising rates on clients in 2010. Take a look:

• New Survey Shows Law Firms Will Raise Rates in 2010
• Despite Down Economy, Law Firms Say They’re Raising Rates
• Law Firms Likely to Hike Billing Rates in 2010

We’ve said it a thousand times: Wolfe Law Group is different. Is your company ready for an attorney/client relationship that appreciates you? That’s focused on results? That understands the bottom line?

Happy New Year to our clients. And don’t worry – at Wolfe Law Group, we’re sticking to our original agreement with you.

Guardian News ran an article last week about “Greenroads,” opening with these daunting statistics:

With 4m miles of highway, the USA has around 10% of the entire planet’s paved roads – and spends $85bn (£52bn) annually on rolling out tens of thousands more miles. Building and maintaining a single mile of freeway takes as much energy as 200 US homes use in a year, consumes as much raw material as 1,000 households get through in 365 days and generates more waste than 1,200 homes produce annually.

Wow.

The good folks at the University of Washington have been focused on the greening of roads, and have announced the development of a rating system for road construction.

The “Greenroads Sustainability Performance Metric” works a lot like the U.S. Green Building Council’s LEED program, awarding credits for approved sustainable practices. The metric already has a bit of support from states according to the Guardian article and the Greenroads website, which states that Greenroads “already has the support of five US state departments of transport.” Greenroads is following a few projects as “case studies,” one of which was the I-90 West of George paving project in Washington.

Interesting metric system creating that is worth following, as it may one day change the way states and the federal government pave all their roads.

Related articles by Zemanta

• Greenroads lays foundation for more sustainable US road construction | Mark Harris (guardian.co.uk)

Thanks to the Beer With A Construction Lawyer blog for pointing out a new bill in the Washington State Legislature that has green building implications. The bill is sponsored by Senators Kastama, Rockefeller, and Ranker.

The bill, if passed, would offer very aggressive tax incentives to projects that meet LEED certification standards. Here is the breakdown:

Platinum Certification: 100% Sales and Use Tax Deferred

Gold Certification: 75% Sales and Use Tax Deferred

Silver Certification: 50% Sales and Use Tax Deferred

Less than Silver: 25% Sales and Use Tax Deferred

Projects would have to apply for the deferral before initiation of the construction.

The bill is interesting to green building nerds because it completely relies on the LEED green building standards published by the United States Green Building Council. While the LEED program is certainly the most widespread of programs in the country, it’s not without its critics. See Chris Cheatham’s recent article on his Green Building Law Update blog analyzing the complaint against the USGBC for using anti-competitive practices.

You can follow this bill at the legislature’s website, or by subscribing to the bill’s RSS feed. Download the original bill text.

Representatives Hinkle and Kretz introduced House Bill 3055 yesterday, whose digest explains will “modif[y] provisions regarding contractors’ bonds for public contracts.”

If passed, the bill would amend RCW 39.04.155 and 39.08.010, and make the following substantive changes:

• Contracts $35,000 or less would not require a bond
• On contracts between $35,000 and $100,000, in lieu of a bond, the county or public entity may retain 25% of the contract amount for a period of 30 days after final acceptance of the work

Currently, bonds are required on every project, with the state having the option to retain 50% of contract funds in lieu of a bond when the contract is less than $35,000.00.

The suggested amendment here seems to make practical sense.

Requiring a bond for tiny public contracts is a bit overkill, and the 50% retainage figure is near unworkable. The amended figures and bond requirements feels more aligned with the practical needs of smaller public projects.

Stay tuned here for updates on this bill, or you can follow it online or subscribe to its RSS feed. Download the original bill here.

The New Orleans Times Picayune reported that a group of scientist have written to Gov. Bobby Jindal urging him to take greenhouse gases more seriously. The group linked the state’s eroding coastline with greenhouse gases produced by the state’s industries, aruging that if something isn’t done soon, much of New Orleans will erode away.

This story underscores an often overlooked issue.

While we spend a great deal of time on this blog talking about what green initiatives are being taken by Louisiana (mostly in the green building sector), we forget how uncommon and unpopular green building and green initiatives actually are.

Louisiana has a smaller number of LEED APs and LEED projects than most any other state, and while our local governments are trying to structure green incentives, we’re behind many other cities and states. In large part, green building isn’t widespread in these neck of the woods.

This call to Gov. Jindal, however, is another effort to get the green sector in Louisiana moving, and in theory, the moss will continue to accrue.

This post was originally published on our sister blog NWConstructionLawyers.com. You can view the original post here at the blog.

There is a growing debate on whether or not legislatures should seek to codify and incorporate provisions of the LEED rating system into state and local law. The debate is now hitting the blogosphere.

One of our favorites, Chris Cheatham, over at the Green Building Law Update has theorized that there are three simple reasons why codification of the LEED rating system will not work: (the following section is take in direct quote from his site)

“1. There are troubling antitrust issues associated with the LEED rating system. These antitrust issues are significantly exacerbated by the incorporation of LEED into regulations or building codes.

2. The LEED rating system was never intended to be codified. In fact, the LEED rating system is meant to apply to only 25 percent of new construction starts.

3. I believe the USGBC has recognized the problems associated with codification of the LEED rating system. In response, the USGBC, along with other groups, is quickly pushing along publication of ASHRAE 189.1P, which codifies many of the elements of the LEED rating system. This is just a hunch, but I anticipate that the USGBC will start urging jurisdictions to adopt ASHRAE 189.1P instead of the LEED rating system.”

I think Chris has some good points, as he seeks to illustrate why LEED codification is simply not practical. But please check out Chris’ comment board – he has plenty of detractors.

I, for one, agree that the 25% rule does limit the ability of governing agencies to effecively regulate new construction. As is posed in this dizzying display of what the LEED 25% rule is composed of, you will understand that it means that only 25% of new construction starts or ground-breakings are actually intended to meet LEED certification.

But, there are certainly problems with the allegations that there might be an antitrust problem. All building standards (and other standards) come from a single source at some point and time. So, its likely that this is not as big an issue as posed in the article.

In any event, Jim Broughton posted a nice counter-comment discussing support for codification of LEED ratings. Check it out here.

It remains to be seen whether or not codification is a possibility – but it certainly raises a good topic for discussion.

As we enter it a new year, we thought it was prudent to review what the Washington legislature passed last year that is now law and affecting the construction industry.

Earlier this week, we wrote about the small amendments to the Contractor Registration Act.

More changes to Washington’s regulatory scheme passed into law in 2009 aside from these small amendments. In this post, we’ll discuss SB 5613 which authorizes L&I to issue stop work orders on employers not in compliance with workers compensation requirements, and SB 5904 which defines an “independent contractor” on public works projects.

Stop Work Orders Allowed on Contractors Who Do Not Pay Workers Compensation

SB 5613 was passed by the Washington legislature, and became effective in July 2009. This new law provides Labor & Industries with an additional mechanism to enforce the worker’s compensation requirements for contractors: stopping work.

Previously, L&I could fine employers and contractors in violation of the workers compensation provisions, but couldn’t actually force the contractor to stop work. Now, a new section has been added to RCW §51.48 giving L&I this stop work authority.

If an employer is in violation of the workers comp requirements, L&I can force the employer to stop work on that project (and other projects where there are violations) until the employer gains compliance. Becoming compliant will require the payment of any assessed penalties and interest.

What happens if the employer doesn’t stop work after being so ordered? Paragraph (4) of the new section subjects the employer to a $1000 per day penalty until the employer is in compliance.

The new section is clearly aimed at punishing employers dearly if they are not compliant with the workers compensation statutes. Where penalties alone didn’t always work in the past, now L&I can hurt contractors on jobs. If an employer must stop work, obvious problems arise: will they get paid for work done? will they be responsible for delay damages on the project? will the job be given to another contractor?

Getting clever and opening a new entity with less baggage will be of little use under the new section. Paragraph (7) contemplates this circumstance, and provides that stop work orders are effective against “any successor…business entity that has one or more of the same principals or officers…”

Read the passed SB 5613 here.

Independent Contractor Defined for the Purposes of Prevailing Wages

In the past, much argument has ensued on public works between Washington’s Department of Labor & Industries and contractors over whether a party or entity is an employee or an independent contractor.

The consequence to the distinction is clear. If an employee, prevailing wage rates must be paid. If an independent contractor, the prevailing wage rate may not be required.

Well, SB 5904 adds a section to RCW 39.12 to clear up the ambiguity.

Regardless of how an employer attempts to label a party/entity, they will be considered a laborer, worker or mechanic unless all of these factors are met:

1. They have been and is free from control or direction over the performance of the service, but unde under the contract and in fact;
2. The service provided is either outside the usual course of business for the hiring contractor or the service is performed outside the places of business for the hiring contractor;
3. The party/entity is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the instant contract;
4. The party/entity is responsible for filing at the next applicable filing period a schedule of expenses with the IRS;
5. The party/entity has an active and valid certificate of registration with the department of revenue, and all other required registrations;
6. The party/entity maintains a separate set of books or records reflecting all items of income or expense of the business; and
7. The party/entity is a registered contractor, if required.

Read the passed bill’s full text here.

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• Did You Notice the Amendments to Washington’s Contractor Registration Act? (nwconstructionlawyers.com)
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President Obama unveiled an aggressive clean energy program that should be music to the ears of those in the green building / solar energy industries.

Armed with the goal of doubling the amount of renewable energy in the U.S. in 2010, Obama stated that the government will provide $2.3 billion in tax credits for the clean energy manufacturing sector. The cash will come from the American Reinvestment and Recovery Act, and will provide a 30% tax credit for qualifying projects.

There is promise that this program will have fast effect, as 1/3 of the projects are expected to be completed this year.

Now, for those green builders out there, it’s important to note that this program is from clean energy manufacturers. Thus, it won’t reach many installers or property owners (who already have these incentives).

However, more manufacturing likely equals more installations.

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• Obama Allocates $2.3 Billion for New Clean-Tech Manufacturing Jobs (inquisitr.com)
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Anyone who has used Skype will go on and on about how great of an application it is. You can make regular phone calls through the app, video conference, or just chat. It is a great way to get in touch with our attorneys because they’re online all day long, and if they step away from their desk or are on the other line, you’re message will be sitting there when they get back.

If you go to any of the attorney’s bio pages on our website there is now a button that shows when the attorney is on or offline. Just click on that button to send them a message through Skype. It’s that simple.

We’d love to hear from you, and to put you on our list of contacts. It’s just another way we can reach out to clients and underline the difference between us and those folks in the skyscrapers.

Don’t have Skype? It’s a free download for Macs (yay) and PCs (yuck).

Now that 2009 has drawn to a close, we have decided to review some movement in the Washington Legislature last year as it affects the construction industry. Later this week, we’ll write about two new laws, one about workers compensation insurance enforcement, and the other about the definition of an “independent contractor” on prevailing wage jobs.

Today, however, we’ll focus on some small changes to the Washington Contractor Registration Act.

We previously wrote about the Contractor Registration Act in Washington, highlighting that the failure to comply with statutory requirements can result in severe penalties. Many may not have taken notice of HB 1555 in the Washington legislature in 2009, but it passed the House and Senate, was signed by the governor and is now already law in the state.

The Reasoning Behind Amendments

All of these amendments were suggested (and passed) at the recommendation of the legislative task force on the underground economy in the construction industry. This is a group put together in 2007 that has spent the past two years investigating those instances where contractors have worked without a license…and came up with ways to stop it.

The recommendations were made to the Washington legislature at the beginning of the 2009 legislative session, and have evolved into law.

What Has Changed?

This bill made some significant amendments to Washington statutes regulating contractor licensing. Here are a few examples of important amendments:

• Contractors must maintain and have available for L&I to inspect a list of all direct subcontractors and a copy of their certificate of registration. Clearly, this is intended to make enforcement easier for L&I and shift the burden on contractor licensing up the chain.
• Licensing Agencies are now granted authority to check on a company’s licensing status with another department. So, for instance, when a contractor seeks a business license from King County, the county can contact L&I and ensure that that the contractor is registered according to law.

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• Two New Washington Laws Contractors Must Know From the 2009 Legislature (nwconstructionlawyers.com)

Most in the Pacific Northwest should remember the 2006 crane collapse in Bellevue, WA that killed a Microsoft employee. What many might not know is that in response to the collapse, the 2007 Washington State Legislature increased the state’s regulation of cranes and crane operators. Compared to other states, the Washington regulations are quite extensive, Washington being only the 2nd state (California) to have licensing requirements for cranes and crane operators.

The question is whether the state is ready for the January 1, 2010 effective date for the new regulatory scheme. With the effective date only days away, Labor & Industries is worried that the answer is no.

The Puget Sound Business Journal reports that as of December 22, 2009, less than 10% of cranes have been certified. Fortunately, the lag seems isolated to the certification of the cranes themselves, as the crane operators have mostly become compliant. ENR.com reports that as many as 2000 crane operators have received their licenses.

What You Need To Know

Labor & Industries has issued WAC, Part L, §§ 296-155-525 through 296-155-533 setting forth the certification requirements for cranes and crane operators.

Here are three critical things to keep in mind:

Cranes Must Be Inspected

Every crane used in Washington construction projects must be inspected by a certified inspector (see below). The general guidelines for a crane inspection are set forth in WAC 296-155-53200, which among other things requires review of the crane’s maintenance records, safety devices, wire rope in light of manufacturer’s specifications, and the performance of load tests.

Inspectors Must Be Certified

Not just anyone can inspect Washington cranes and certify them…the inspectors themselves must be first certified by Labor & Industries. Becoming a certified inspector of cranes not only requires properly applying for the license, but a mixture of know-how and experience with cranes, and passing examinations.

Crane Operators Must Be Licensed

In addition to the cranes themselves being subject to a strict inspection process, those in charge of operating the cranes are also regulated by the new provisions, and must have a license starting January 1, 2010. The crane operator requirements are found within WAC 296-155-53300. The regulation requires operators to:

(1) Pass a substance abuse test;

(2) Have a specific number of hours of experience in operating cranes; and

(3) Hold a valid crane operator certificate for the type of crane being operated, issued by a crane operator testing organization accredited by a nationally recognized accrediting acgency, which includes a successful passing of a written and practical examination.

#1 and #2 are non-ambiguous requirements. #3, however, can be subject to interpretation and circumstance. The Division of Occupational Safety and Health issued DOSH Directive 8.60 on December 23, 2009, to address this requirement. The Directive states in its § IV that:

[I]f compliance staff encounter crane equipment in use for which there is no nationally accredited operator written or practical test established and the equipment is operated by a non-certified operator, the CSHO shall not cite the employer for a violation of WAC 296-155-53300(1)(a). Instead, the CSHO shall include a message on the citation or notice issued advising the employer that once an appropriate certification is avaialble as described in the rule that the employer has one year to ensure that such non-certified crane operators become certified. The employer will be allowed to continue operating the crane provided the employer makes documentation readily available to the department indicating that the operator has been competently trained, evaluated and tested by the employer on the operating procedures for the piece of equipment in use as recommended by the crane equipment manufacturer.

Certainly, we’ll soon run into questions about what is “competent” training, evaluation and testing… For now, however, the most important issue is getting your crane certified and your operator in compliance with the new WAC requirements. Starting January 1st, Labor & Industries will be checking projects for compliance, and in these times when margins and schedules are tight, a L&I violation on these new crane requirements is something worth avoiding.

Check out International Union of Operating Engineers, Local 302, announcement of the Rule Change, which has some usable information, and a “Crane Operator Experience Declaration Form.” This form is to be signed by crane operators, who will declare their pre-2010 experience with a specific crane to employers.

Just before Christmas, the Wall Street Journal published an article about how “Green Builders [are] Awaiting The Green.”

The article simply reminded us (and builders across the country) that the General Services Administration had until the end of 2009 to allocate $2 billion for green building construction projects. And another $3.5 billion is waiting for distribution in 2010, as per the America Recovery and Reinvestment Act.

That’s the good news for green buildings.

The bad news? The GSA is having trouble spending the money.

The excuse is legitimate. First, public projects generally move slower than private ones, and the slow movement on projects has resulted in most GSA funded projects being stuck in planning phases, leading to low-spending. Second, bids are coming in lower than expected.

While this spells bad news for public contractors in 2009…it is a relief that 2009 is over (and good riddance). The GSA has some extra cash burning a whole in its pocket, and more money to spend. Hopefully, these public projects will get underway and more green building will ensue…and that it will happen in Louisiana.

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• Some Buildings Not Living Up to Green Label (nytimes.com)

LEED projects are hotter than ever, especially with the amount of public works projects being funded by the Stimulus package. As more and more LEED projects get underway, more and more mistakes occur. Unfortunately, mistakes all too often lead to disputes and litigation.

I Don’t Get It? LEED What?

Here is the readers digest explanation of LEED projects.

A property owner or public entity wants to construct its project to be environmentally friendly. In doing so, it can seek a certification from one of many organizations – one of which is the U.S. Green Building Council, who certifies a project as a LEED project (Gold, Silver, Platinum, etc. – depending on how green it is).

Seeking certification carries certain benefits (i.e. PR, tax credits), and in some circumstances certifications are required.

Certification is achieved by meeting two types of goals.

On the one hand, the project meets the goal of saving energy in the construction process. This is done by purchasing materials manufactured locally (to prevent the environmental price of long-range delivery), recycling materials, creating a job site that meets debris and water run-off requirements, etc.

On the other hand, the project meets the goal of saving energy while in use post-construction. This is done by using energy efficient appliances and lighting, planting trees and reducing the “heat island effect,” enhancing the quality of life of those who will spend time in the building, etc.

The LEED certification is achieved by collecting points. For each sustainable goal met by the project, a point is awarded. A project must accumulate a number of points for certification, with the level of certification increasing with the collection of additional points.

Those administering LEED projects spend a great deal of time planning the construction project to ensure that the proper number of points are accumulated…and sometimes, it’s a close-call.

How One Contractor Can Hurt A Project’s Chance At Getting LEED Credits

After the planning phase, work on the project begins, and the property owner or architect will depend upon each supplier and subcontractor to performing its work or delivering its materials to qualify for LEED credit. Work performed or supplies delivered incorrectly can easily result in the loss of a LEED point.

Let’s take the example of concrete.

The LEED system requires concrete used in a parking lot or a rooftop to be a certain color to achieve LEED credit (LEED credit 7.1 requires concrete to meet certain color requirements to reduce the “heat island effect” for example).

Let’s say that the concrete subcontractor is a bit asleep at the wheel, and pours the wrong concrete. The concrete solidifies, and the owner/architect doesn’t notice for a few days (if not later!) that the concrete is incorrect.

That LEED point is lost.

The LEED Point is Lost….but Now What?

This is a very concerning question for the construction industry, and many legal experts are at a loss in predicting just how this will play out in the courts. The problem is more complex than it seems at first glance.

Let’s assume that a subcontractor or supplier actually was required to perform in a way that would qualify for LEED credit, and that it failed to do so for reasons that are 100% its fault.

The next question is tough: What are the damages? In answering this question, let’s look at two scenarios:

Scenario 1: The LEED Point is lost, but the LEED certification is still achieved.

This is entirely possible. While the construction planning often cuts LEED certification points close, there is usually at least some cushion between the points a project should get, and the points it is required to get. So, in theory, a subcontractor or supplier can completely mess up, the LEED point can be lost and the project may still get its certification.

If this happens, did the owner/architect sustain any damages? The answer is….possibly.

In some instances, the idea behind a LEED point is not just to get a certification…the owner may also be interested in energy savings. Let’s take our concrete example again – if the correct concrete was poured, this could theoretically cool off the project’s premises. This may result in lower energy bills during hotter months.

While the failure to gain the point may not have cost the owner certification, it may cost the owner thousands of dollars in energy savings over the coming years.

Other types of examples, however, may yield more complex results. There may not be any calculable damages for accidentally failing to buy locally manufactured materials, for example. If its the same materials – just manufactured somewhere else – there may not be any damages beyond the loss of a LEED point.

Scenario 2: The LEED point makes a difference

What if the LEED point costs the project’s LEED certification? What damage is sustained?

Calculating these damages may be more realistic in some circumstances versus others. If the property owner sought certification because it was required, or because of a desired tax break….the damages can at least be quantified. If, however, the owner was simply doing it to feel good, or for good PR, there will be much debate about just what – if any – monetary damages were sustained by the LEED failure.

Concluding

In the end, one issue that owners must remember is that they will have the burden at trial in proving their damages, and likely being required to prove it by a preponderance of evidence. Calculating the cost of losing a LEED point or the loss of theoretical energy savings can be quite tough. With that in mind, owners may want to consider liquidated damages provisions for these types of a defaults….and those signing contracts with owners or GCs may want to be weary of the same.

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The old blog simply kept folks abreast on news and updates from our firm, and we thought it better for those updates to get posted right within our website, as opposed to a separate domain.

We made some other changes to our blogs over the holidays, and we’ll be posting an update about this soon.

Happy New Year!

Our holiday hours are:

December 24, 25, 26, 27 – Closed

December 28 – 30, Open, but limited time for appointments, phone calls. Email works best.

December 31, Jan 1, 2, 3 – Closed

January 4th, we resume normal operations.

You can always contact us by email at the following addresses, and we’ll get back to you promptly:

Scott Wolfe – scott@wolfelaw.com

Doug Reiser – doug@wolfelaw.com

Seth Smiley – ssmiley@wolfelaw.com

Jessica Reiser – jess@wolfelaw.com

See you next year!

You’ve heard all the praise about hybrid vehicles over the past 12-24 months…but did you hear the news from CAT this Christmas?

Yesterday, CAT delivered its first “Hybrid” bulldozer. The dozer is a hybrid diesel-electric vehicle, that reportedly increases fuel efficiency by 25%. More than that, CAT reports that the D7E should be more product, require less maintenance, and be all-around better for a company’s bottom line.

The savings in fuel and maintenance and increased productivity is offset by the machine’s price, which is approximately 20% more than the non-hybrid line. CAT, however, promises that the machine will pay for itself in 2 – 2.5 years.

Check out the D7E website, where you can read more about the product, view its specs, watch videos and more.

Investing so much into construction machinery like a bulldozer is definity not something we run across everyday. These machines take such a beating, and they are so inefficient as a matter of rule…that it seems counter-intuitivie to have an “efficient” bulldozer. CAT, though, sees potential benefit in this offering, and perhaps it is something for your company to review.

If you are an equipment lessor, imagine the savings you can have if your maintenance costs were decreased? How much more could you charge to clients with the promise of fuel savings?

If you’re a contractor with your own dozers, it’s a no-brainier if the efficiencies and productivity match CAT’s testing. While a bit pricy at first, you’ll reap the rewards quicky.

And you’re saving the world, too.

You’re a Washington contractor or property owner, and someone has filed a lien on your construction project. You disagree with the amount of the lien, or you think the lien is flat-out invalid.

Now what?

Putting aside the expensive option to bond the lien (deposit money with the court in exchange for a lien release, and then litigating over who is entitled to the money), Washington law allows any interested party to file an action in civil court to challenge the validity of a construction or mechanics lien.

The action, however, carries great risk and reward.

The Reward

If you win the action and the lien is removed, you may be possibly rewarded with the cost of your attorney’s fees and legal expenses. To get such award from the court, you’ll not only need to prove that the lien is invalid, but you’ll also need to prove that the lien was frivolous.

Be careful here…while you may get the lien removed and declared invalid…it still may not be considered frivolous. Washington courts have stated that while all frivolous liens are invalid, not all invalid liens are frivolous. A frivolous lien requires that it have no reasonable basis (which can be a rare event).

In this instance you won’t lose anything. In fact, the lien will be deemed invalid and you’ll win because the lien will be removed from public records. However, you won’t recover your attorneys fees and legal expense without convincing the court that the lien was more than invalid, and was frivolous.

The Risk

If you lose the action and the lien is upheld, the Washington statutes mandate that the lien claimant be awarded its attorney’s fees and legal expense incurred in the lien dispute proceeding. If this occurs, not only will the lien continue to exist and the debt still be arguably owed to the claimant, but you would be responsible to pay the legal expenses and attorney’s fees incurred by the claimant (which could be in the thousands).

This is quite a risk, and unlike the circumstances surrounding your potential reward, no further proof is required from the claimant to get its attorney’s fees. If the lien is upheld, the attorney’s fees are awarded.

Know Your Chances

When faced with a lien, get to know your chances of victory. Contacting a construction lawyer to discuss the liens validity is a good first step, and then responsibly make a decision about how to proceed.

One problem for GCs and owners in lien dispute proceedings is that courts will mostly look to the procedure and quality of the lien only in such a proceeding, and not to the merits of the amount claimed. In other words, if you think the lien is invalid b/c it doesn’t follow the statute, was not filed on time, or has some other type of obvious error – the lien will likely be deemed invalid. However, if you think the lien is invalid because the claimant is demanded $45,000 when they are only entitled to $35,000 because you claim they owe back-charges, be prepared for the court to uphold the validity of the lien and leave the discrepancy to be addressed at trial.

Learn more about disputing a lien in Washington.

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Welcome to Wolfe Law Group’s latest legal blog: The Northwest Construction Law Blog.

We’ll be posting articles and updates on legal matters that affect those in the construction industry – from contract drafting and interpretation through filing and enforcing claims and liens.

Specifically, we’ll focus on the laws in Washington and Oregon, the beautiful Pacific Northwest.

Stay tuned by subscribed to our RSS Feeds. And if you hear about something we’ll be interested in or want to suggest a post topic, saying hello is simple.

And while you’re browsing this new blog, be sure to take a look at all of the other Wolfe Law Group blogs on the web. They’re all dedicated to construction law issues that your company faces day-in and day-out. We’re dedicated to leading the legal industry in providing free construction law discourse and resources to you. See more about our blogs here.

The domain nwconstructionlawyers.com too long, or not doing it for you? Access the page with any of these other domains: nwbuilderlaw.com, wabuilderlaw.com, orbuilderlaw.com, waconstructionlawyers.com, or orconstructionlawyers.com

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Now, many are reporting that a guest lecturer at the National Association of Public Insurance Adjusters just recently predicted that courts will find at least some coverage for Chinese Drywall damages (As per Merlin Law Group). Earlier in the year, the folks at Merlin Law Group also posted that the FC&S Bulletin’s June 2009 edition also indicated that there would be coverage for Chinese Drywall losses under homeowner insurance policies.

So, while it’s far from certain that Chinese Drywall damages will be covered by standard homeowner insurance policies…it’s also far from certain that courts will disallow such coverage. One thing is certain: insurance companies have largely taken the position that the policies do not cover the damages, and are denying these claims across the board.

This begs the question: what is the next step?

In Louisiana, most policy holders have just 1 year to file suit for insurance benefits. The time period begins from when the policy holder knew or should have known of the occurrence or loss.

News of Chinese Drywall problems broke across Louisiana between January and March 2009. Arguably, those with Chinese Drywall “should have known” of the problem starting at this time. To be safe, homeowners with Chinese Drywall are facing a very important deadline as the new year approaches.

With so many questions about who is liable for this Chinese Drywall mess, it would be quite devestating for homeowners who may have a viable claim against their homeowners insurance, to lose that claim because they failed to take the necessary action before the alloted time expired.

News around the country is that the insurance industry may be liable for these Chinese Drywall losses. If you have Chinese Drywall losses, you should consider filing suit to enforce your claim for coverage….or risk losing the opportunity.

Is it or is it not bad for your health? Must the drywall be replaced completely, or can a filtration system solve the problem? Will the corrosive elements cross-contaminate into other components of the home, or is it isolated in the drywall only?

These questions certainly have practical implications. After all, the answers to some of these questions will dictate how the drywall is actually repaired.

However, the questions also have implications in the legal arena.

Most notably in Louisiana, the severity of the damages related to corrosive drywall will be a large factor in deciding the question of whether the builder is or is not liable to homeowners for the installed drywall.

In previous posts here at the Chinese Drywall Blog, we discussed the Louisiana New Home Warranty Act and whether it will or will not create liability for builders who installed Chinese Drywall. Because of the Act’s wording, it may simply come down to how severe the Chinese Drywall damages are.

Under the NHWA, builders are liable to homeowners for any “major strucutral defect” for a period of 5 years. The question becomes, therefore, are the Chinese Drywall damages major structural defects?

If the damages can be remediated with a simple filtration system, you can count on the builders using this as evidence that the defect was not a major structural defect. If they are successful, the 1 or 2 year warranty period, as opposed to the 5 year warranty period, would apply, and many of the currently filed claims would be considered as tardy.

If the damages cannot be easily remediated, however, and require the replacement of all sheetrock, and even the replacement of some elements of the framing…the homeowners will argue that this more closely resembles a major structural defect. Accordingly, the 5 year warranty period would apply.

More specific information about whether the Chinese Drywall damages will be covered under the New Home Warranty Act is found on our blog here.

While knowing the severity of the damages is important to estimate the damage itself, and to understand how to fix the damages….the severity and scope of damages plays an even more important role in the litigation against builders who installed contaminated drywall. It may be a very important question to answer when deciding whether the 5 year NHWA period applies.

Legally? Not Really – At Least Not Yet

For the time being, the legal answer is “not really.”

Unfortunately, when you signed your mortgage agreement, you agreed to pay the amount of the note regardless of the property’s condition. Therefore, the fact that the property condition is worsening because of Chinese Drywall does not act to modify any obligations under the mortgage note itself.

Now, this is usually not a problem because mortgage companies require the property to be insured. In the case of Chinese Drywall, as we’ve previously discussed, the applicability of insurance to the loss is a bit complex.

There is some chatter on Capital Hill on this very issue, and a bill has recently passed the U.S. House of Representatives by a margin of 419-1 that would “encourage” banks and mortgage companies to provide homeowners with Chinese Drywall temporary forbearance on their mortgage payments.

What does this mean?

It means that the federal government would likely give the banking companies some incentive ($$$) to allow its mortgage holders with Chinese Drywall (you) to temporary not make mortgage payments. If the bill passes, homeowners with Chinese Drywall may have some legal recourse to request mortgage forebearance, and avoid foreclosure on their home while actions to recover for the Chinese Drywall losses progress.

Practically Speaking…There May Be Room For Negotiation

While homeowners may not have the legal right to receive “a break” from their mortgage company, the financial realities of Chinese Drywall may open the window for some practical remedies. Namely, to request a forbearance.

What is a forbearance? Wikipedia defines it as follows:

In the context of a mortgage process, forbearance is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.”

Loan borrowers sometimes have problems making payments. This may cause the lender to start the foreclosure process. To avoid foreclosure, the lender and the borrower can make an agreement called “forbearance”. According to this agreement, the lender delays his right to exercise foreclosure if the borrower can catch up to his payment schedule in a certain time. This period and the payment plan depend on the details of the agreement that are accepted by both parties.

Forbearance is usually for temporary financial problems. If the borrower has more serious problems, for example if it is a variable-rate mortgage and the interest rate becomes unaffordable for the borrower, then forbearance is usually not a solution.

While you are not entitled to a forbearance without the U.S. legislation getting further along (and perhaps even being made stronger)…the realities you face as a homeowner are not lost upon mortgage companies. After all, if the property is worth less than the mortgage, they really don’t have much motivation to foreclose on the property.

Contact your mortgage company and request a forbearance. They will likely send you a forbearance application, and depending on the severity of your drywall problems, they may grant the forbearance. Remember, however, that forbearance agreements are temporary, and interest usually continues to accrue during forbearance periods.

We certainly don’t like to have so much time pass in-between posts, but sometimes, work and life gets in the way and it happens. Sorry to all of our readers. Over the past two months we’ve gotten very busy with Chinese Drywall claims, other work and even personal matters (my wife & I took a bit of trip for our anniversary at the end of Sept.).

The good news is that we’re back in the saddle and you can expect to the regular updates and discussion on Chinese Drywall law to continue. A lot has happened…and continues to happen.

The traditional “first Thanksgiving” is the celebration that occurred at the site of Plymouth Plantation, in 1621. The Plymouth celebration occurred early in the history of what would become one of the original thirteen colonies that became the United States. The celebration became an important part of the American myth by the 1800s.

Staying true to tradition, the Thanksgiving feast or dinner generally includes food items of the native land. Corn, potatoes, meats (such as the Turkey) and pumpkin based foods. Thanksgiving fact: The pumpkin is native to North America and was an early export to France. From there it was introduced to Tudor England, and the flesh of the “pompion” was quickly accepted as pie filler. The Pilgrims brought the pumpkin pie back to New England, but it subsequently died out in England itself.

Now that your history lesson is complete, Wolfe Law Group would like to wish everyone a HAPPY THANKSGIVING!

The LES has three main chapters in the state of Louisiana and is dedicated to the advancement of the engineering profession by pursing an active leadership role through various resources.

For LES’ full mission and vision statements, click here. Incorporating speakers during the monthly meetings is just one of the many ways the LES provides its members with resources and information relevant to the field of engineering.

As a construction lawyer, Scott Wolfe consults with engineers as experts on various cases. Since the discovery of Chinese Drywall in completed construction projects across the state, he has become familiar with the basic problems of Chinese Drywall, how it effects individuals and contractors and how to proceed in the case that Chinese Drywall is detected.

The issue of Chinese Drywall is not only relevant to contractors and home/property owners, it extends to architects, engineers and attorneys. Engineers in particular are being contracted to perform inspections of homes and businesses suspected of harboring Chinese Drywall.

Scott focused his presentation on the pertinent issue of Chinese Drywall in the state of Louisiana. Below is the slide presentation that was used during the meeting yesterday.

Washington is harsh, hardline, whatever you want to call it – but if you do not know the rules regarding contractor registration in Washington state, you could be without a claim and staring at some serious penalties.

Knowing the rules and what is required of you can ensure that your business is protected from severe loss.

Washington’s ruling is contrary to the Louisiana rule which provides for recovery under quantum meruit. Washington courts have been consistent: If you fail to register where required, you have NO claim for your work. Further, if you, as a contractor, hire unregistered contractors you can face some heavy fines and repurcussions.

RCW 18.27.080 requires registration as a prerequisite to bringing a lawsuit or claim against a debtor.

This is consistent with other states like Illinois, where the Illinois Construction Law Blog recently reported on Timmerman v. The Grain Exchange, holding that the failure to register negated all claims relative to the work.

There is no exception if you fail to register when required by law. You will lose your right to lien, your right to bring an action, and your right to recovery. On top of that, Washington holds failure to register as a criminal act, punishable under RCW 18.27.020, and provides a consumer a cause of action under the Consumer Protection Act. (RCW 1827.350)

So, what to do? The Washington Contractor Registration statute is provided in RCW 18.27.  The statute provides two main necessities: (a) who is a contractor? (b) when does a contractor have to register?

Who is a Contractor?

RCW 18.27.010 provides the definition of a contractor under the Act. The statute provides:

     (1) "Contractor" includes any person, firm, corporation, or other entity who or which, in the pursuit of an independent business undertakes to, or offers to undertake, or submits a bid to, construct, alter, repair, add to, subtract from, improve, develop, move, wreck, or demolish any building, highway, road, railroad, excavation or other structure, project, development, or improvement attached to real estate or to do any part thereof including the installation of carpeting or other floor covering, the erection of scaffolding or other structures or works in connection therewith, the installation or repair of roofing or siding, performing tree removal services, or cabinet or similar installation; or, who, to do similar work upon his or her own property, employs members of more than one trade upon a single job or project or under a single building permit except as otherwise provided in this chapter."

"’Contractor’ also includes a consultant acting as a general contractor."

"’Contractor’ also includes any person, firm, corporation, or other entity covered by this subsection, whether or not registered as required under this chapter or who are otherwise required to be registered or licensed by law, who offer to sell their property without occupying or using the structures, projects, developments, or improvements for more than one year from the date the structure, project, development, or improvement was substantially completed or abandoned."

As you can see the statute is severely broad – so much so that the legislature has continually made changes (most recently in 2007) to ensure that particular contractors are postively covered by the statute. The statute now includes property owners who "flip" homes without living in them.

Cabinet installation, tree removal, and carpet installation have beaten 18.27 in court cases such as Harbor Millwork v. Achttien, 6 Wn. App. 808; Labor & Indus. v. Davison, 126 Wn. App. 730, 740 ; Craftmaster Rest. Supply Co. v. Cavallini, 11 Wn. App. 500, 504 (Wash. Ct. App. 1974). However, immediately after being vindicated in the courts, those specialties were subsequently added to 18.27 by the legislature in order to shut down "loopholes."

So, what should you know? Register. Register. Register. The cost of registration is minimal in comparison to the loss that you may incur in a failed legal action. You can find out more about registration at the L&I website, which provides for online registration.

Fees are mandated by the L&I and are currently $175.00. You are required to additionally post a statutory payment bond of $6,000.00 or $12,000.00 (for general contractors) and provide insurance with coverage of $250,000.00. The specifics are found here.

In all your costs will be vastly less than the loss you risk in working without a license. Under RCW 18.27.340, an unregistered contractor will be fined not less than $1,000.00, lose its right to work, and lose its right to bid on public works for one year (RCW 39.12.055)

Hence – Register.

When to Register?

The law is clear on this issue – you must register prior to contracting for any work. This means that your failure to register as a contractor is not curable or simply fixed by registering at a later time.

RCW 18.27.080 provides:

"…he [the contractor] was a duly registered contractor and held a current and valid certificate of registration at the time he contracted for the performance of such work or entered into such contract."

Register before taking on any work. Failure to do so will likely prevent you from bringing any lawsuit to recover for amounts due to you.

Out of State Contractors & Registration

If you are an out of state contractor, you have additional requirements. You must first register to do business with the State of Washington through the Secretary of State.

The Washington Business Corporation Act regulates "foreign corporations" and businesses by forcing these entities to first obtain a certificate of authority under RCW 23B.15.010.

Without a certificate of authority, a foreign business may not maintain a legal action within the State of Washington (RCW 23B.15.020).

Luckily, it has been held that RCW 23B.15.020(2) provides that this a curable offense and therefore a contractor may go ahead and register after the fact in order to prevent losing its litigious rights.

Obtaining a certificate of authority is simple. Navigate over to the Washington Secretary of State webpage and online register to obtain your certificate – now you can work in the state without fear of losing your rights.

Contractor Responsibility for Unregistered Subcontractors

The new contractor registration requirements enacted in 2007 holds a contractor responsible for hiring unregistered contractors. So, even if you have done your homework and registered – you still might have problems.

Under RCW 18.27.020(2)(e) it is unlawful for a contractor to subcontract with an unregistered contractor. Further, a contractor cannot (a) permit a subcontractor to "work under" its registration or (b) transfer its registration to another contractor. (RCW 18.27.020(2)).

Failure to comply will result in the imposition of a gross misdemeanor against the contractor and may result in additional penalties against the hiring contractor’s registration.

Contractors can determine whether a subcontractor is licensed by reviewing the Labor & Industries listings found here.

If you look closely at your contractor’s or subcontractor’s certificate of insurance, you’re likely to find a disclaimer that reads something like this:

This certificate is issued as a matter of information only and confers no rights upon the certificate holder.   This certificate does not amend, extend or alter the coverage afforded by the policies below.

Normally, the certificate of insurance is produced specifically for the purpose of demonstrating that a particular party is a "certificate holder" or "additional insured."  But the very document itself has a boldfaced disclaimer that the certificate cannot be relied upon.

This begs our question:  Is the certificate of insurance worthless?

Legally Speaking…Yes

It will be the burden of the insured (or the party claiming coverage) to prove the existence of a policy and coverage.  Tunstall v. Stierwald, 809 So.2d 916 (La. 2002).   

There is clear case law that reliance on certificates of insurance may be easily misplaced.   In T.H.E. Insurance Co. v. City of Alton, for example, the US 7th Circuit held that a party "could not simply rely on the certificate [of insurance] for the terms and conditions of coverage."  227 F.3d 802, 806 (2000).

A certificate of Insurance is not an insurance policy, and the certificate itself is not ordinarily issued by the insurance company.   Simply speaking, a party claiming coverage will likely not meet its burden of proving insurance coverage by pointing to a certificate of insurance only.  

So, How Do You Confirm Insurance?

Our friends in Mississippi who run the Construction Law Toolbox blog posted last week asking "Can I Rely On My Subcontractor’s Certificate of Insurance?"   They provide a good analysis of the problem with certificates of insurance in their article, and they offer a "best practices’" for those in the construction industry:

The best business "policy" is to always obtain and read the actual insurance policy itself. In reviewing the policy, take into consideration the circumstances related to each particular project.

While this is more difficult than the ordinary receipt and filing of your contractor’s or subcontractor’s certificate of insurance, it’s the only way to confirm that the insurance policy required by your contract has been properly provided.

Options If You Have a Certificate, But No Insurance

What to do if you have a Certificate of Insurance…but no actual insurance? 

While you may not have a perfect claim against the insurer, you have a number of alternative claims.   Some example claims:  A suit against the insurance agency for negligent or intentional misrepresentation, or for errors and omissions, or a suit for breach of contract against the person or entity who was required to provide insurance.

These claims may expire quickly, so if you a certificate of insurance (but, no actual insurance), it’s important to promptly seek the advice of counsel.

Take, for example, a news story from the Baton Rouge’s Advocate about a tenant who was forced to move out of their rented home because of Chinese Drywall. Or, a news story about a Florida landlord to an apartment complex housing low-income elderly people, who were evicted en mass because the complex had imported drywall.

These scenarios present interesting legal questions:

• Can a tenant break a lease because of Chinese Drywall?
• Can a landlord evict a tenant because of Chinese Drywall?
• Is Chinese Drywall a “breach” of the lease?
• Should landlords evict / move tenants when properties have Chinese Drywall to avoid responsibility for future health effects?

While the answer to this question will greatly depend upon the terms and provisions with the lease agreement, here is what that Louisiana Civil Code may have to say about the matter.

The Landlord’s Warranties

The landlord makes a number of warranties to its tenants through the Louisiana Civil Code, and it can be argued that the existence of Chinese Drywall at the leased premises is a breach of these warranties.

La. C.C. art 2696, for example, provides that the “lessor warrants…that the thing is suitable for the purpose for which it was leased and…is free of vices or defects.” This warranty extends to vices “that arise after the delivery of the thing.” The following code article (2697) indicates that the warranty encompasses vices or defects not known to the lessor.

The landlord may be liable to the tenant for any damages that result from the landlord’s breach in warranty. These damages may include the cost for alternative accommodations, moving expenses, and sustained personal injury or health damages.

For landlords who are leasing properties with Chinese Drywall, it is important to consider the statutory warranties made to tenants. The existence of Chinese Drywall may be a breach of their warranties, and if so, landlords are likely liable to tenants for any ensuing damages.

Statutory Termination of the Lease

In addition to the landlord’s warranties, another area of Landlord/Tenant law implicated by Chinese Drywall regards the statutory termination of leases.

La. C.C. art 2714 provides that if a thing is lost or totally destroyed, without the fault of either party, the lease terminates and neither party owes damages to the other. In the case of partial destruction or “substantial impair[ment], that is not the fault of the lessor, the tenant may dissolve the lease or reduce their rent. If the lessor is at fault, the tenant may also seek damages.

What’s The Rub?

Chinese Drywall presents some interesting issues for Louisiana Landlord / Tenant law. Is the existence of Chinese Drywall a vice or defect that breaches the landlord’s warranty, or a partial destruction or “substantial impairment” to the property? Are landlords entitled to damages, or just dissolution of the lease? Should the landlord relocate tenants to mitigate its damages?

As is the case with most Chinese Drywall scenarios, as to landlord/tenant laws, there are more questions than answered here. Landlords and Tenants with Chinese Drywall should seek the counsel and advice of an attorney.

Will There Be Coverage?

Over the past few months, we’ve discussed whether insurance companies will cover losses related to Chinese Drywall (See Insurance Coverage category).

Our predication was that claims would be denied based on Pollution Exclusions, and from what we’ve seen so far, insurance companies across the country are beginning to churn out these types of denial letters.

While the talk amongst insurers and adjusters is that these damages are not covered, an insurance company declaring something to be true does not make it so. The applicability of the “pollution exclusion” will ultimately depend on a number of factors, some known and others currently unknown: (1) the language of the exclusion; (2) The scientific explanation behind the damages; and (3) Your home’s jurisdiction.

What The Blogosphere Says

A quick read of our blog, and you’ll know what we’re saying about homeowners insurance claims:  that insurers may very well be liable for these losses. But what are some others in the country saying?

An August 2009 article from Inside Counsel has a long discussion (and quotes us!) about suits against homeowner insurers, and notes that the “pollution exclusion” may not be as clear as the insurance companies would like to believe. The debate is lively in Florida according to the Herald Tribune. Merlin Law Group’s Property Insurance Coverage Law Blog has a great post about both sides of the argument.

We suggested in the past that Louisiana homeowners may have a better case than homeowners in other states, because of Louisiana’s narrow interpretation of the pollution exclusions applicability.

What To Do…What To Do

This much is clear: If you don’t file your insurance claim now (or soon), the time available to you to file the claim will pass. How depressing it would be for homeowners who sat on their hands for this debate to reach a judge 12 or 14 months from now, and the decision to favor homeowners!

This can happen.

Many of the claims available to homeowners, builders, suppliers, subcontractors and other parties to this Chinese Drywall mess are based on a lot of legal mysteries. How will the New Home Warranty Act be interpreted? Will insurance policies exclude or cover losses? Are actions against the suppliers already prescribed?

Who knows – in 12 months, we may know that builders are absolutely not liable in Louisiana, but insurers are, or vice versa. Homeowners should file insurance claims against their casualty policies, and should file suit against the insurer after the claim is denied, because there very well may be coverage. And with insurers denying all Chiense Drywall claims, pursuit of the claim through litigation is the only way to get paid.

Will My Premiums Increase?

This is something homeowners should discuss with their insurance agent. However, it is very possible that premiums may be increased if you assert a claim for insurance coverage. If the claim is paid, the payment will likely be used in calculating any rate increases.

If the Chinese Drywall loss was just a small $5k or $10k claim, there might be good reason to not file the claim. However, some Chinese Drywall claims have $50k-100k or more in damages. Depending on your financial stability, the risk of losing this amount may be greater than the risk of a future premium increase.

We Sue Insurers

Wolfe Law Group has filed suits against homeowners insurance companies related to Chinese Drywall damages, and we’d be happy to discuss filing suit against your insurer, too. Learn more about our firm by reviewing this promotional brochure.

While backed by the new President and slated to take effect on September 8, 2009, there seemed to be just one more hurdle:   The litigation challenging it.

Today, AGC’s Smart Brief reports that a federal district court has ruled on the legality of the controversial E-Verify requirement, holding that the requirement is legal.  

On September 8th, therefore, systems are a-go for the E-Verify requirement.

Calling the per house damages “astronomical,” the article warns that many builder and homeowner polices may exclude damages based on the pollution exclusion or the “your work” exclusion.

In the past, we’ve discussed insurance coverage issues and the pollution exclusion here at the Chinese Drywall Blog.

From our experience in dealing with homeowner and builder claims, it seems the insurance industry is positioning itself to deny coverage for contaminated drywall exposure. But more troubling than this is that many homeowners and builders are taking this position as a matter-of-fact.

While there are certainly legal challenges to recover against insurance companies for these losses, the insurance companies face legal challenges in excluding coverage. Homeowners and builders have two things on their side: (a) The insurance company has the burden of proving the applicability of its exclusion; and (b) Any ambiguities will be interpreted against the insurance company.

Homeowners and Builders should not consider the exclusion of coverage as a foregone conclusion, and should place their insurer on notice of the claim. While litigation may result in coverage applying to this loss, without a timely claim and a lawsuit to enforce the same, builders and homeowners will lose their rights.

In Louisiana, with a one-year prescriptive period ticking very quickly against drywall claims, the insurance company’s best argument against coverage is soon-to-come.

Check out Wolfe Law Group’s newly published Chinese Drywall brochure and learn how to get started on your drywall lawsuit.

Trying a Chinese Drywall class action case in 6 months is frankly impossible, and homeowners should not let this news get their hopes up.

A class action specialist in Florida, Ervin Gonzalez, was quoted in an article about Judge Fallon’s intentions saying the following:

Fast-tracking is an understatement. It’s a rocket docket. And he means business. He wants the first case tried by the end of the year, and he wants an inspection of every home. He wants to be able to get to the bottom of the problem.

Here’s the obvious problem: He can’t get to the bottom of the problem in the next 5 or 6 months.

The problem is complicated, and the science is in its infancy. Leading scientist are unsure of whether the problem can be remediated, or whether full replacement of sheetrock is required. Leading scientist are also unsure about what is actually causing the problem, and whether even replacement of the contaminated sheetrock will be enough to solve the problems.

This is not to mention some serious legal hurdles: (1) Discovery; (2) Getting all the Defendants on the same page; (3) Identifying all the Defendants; (4) Dragging foreign manufacturers into Judge Fallon’s court.

Judge Fallon’s recent statement is sensational news, but it is false hope for the homeowners, builders and suppliers who are struggling to resolve their Chinese Drywall problems. The only thing that has happened in his court is the allocation of attorneys fees and attorney leadership – which has nothing to do with the substantive matters.

Deadlines to file suit against builders, subcontractors and insurers are ticking away. Homeowners, Builders and Subcontractors are all affected by these deadlines, and it’s important that they all make their claims as immediately as possible to avoid the expiration of these claims.

There are problems with class action litigation as it relates to Chinese Drywall damages. Judge Fallon’s impossible 6-month deadline only underlines those problems.

Wolfe & Reiser will co-present during the program’s middle segment, “Exploring the Current Status of Chinese Drywall Claims and Litigation.”

Be sure to attend the program on July 31st in New Orleans. To get ready, or in case you can’t make it, below is the slide presentation we’ll use during the presentation.

Originally a George W Bush executive order, E-Verify was slated to become mandatory for federal contractors beginning January 15, 2009.   The change in executive administrations and a handful of lawsuits, however, pushed the requirement back indefinitely.

This week, the Obama administration chimed in on the subject, and announced that it would support the E-Verify requirement, and that it would take effect across the country starting September 8, 2009.   Appropriately, the day after Labor Day.

Any federal projects or businesses receiving money under the federal stimulus program will be subject to the rule, and required to register and use the E-Verify system.

Differences Between Obama E-Verify and Bush E-Verify

When comparing the Obama E-Verify requirement and the Bush E-Verify requirement, one difference stands out:   Obama has ditched the "No-Match" system.

As a result, for better or worse, the requirement going into effect this September will have substantially less teeth.

Ditching the "No-Match" component of the E-Verify requirement will benefit employers because they will not be required to terminate (on such a tight time-line) employees whose social security numbers do not match with the system.

It will benefit workers, too, because Obama will not allow the federal government to use mismatched SSN data to find illegal immigrants in the workplace.

Is It Really Going To Happen This Time?

The short answer:  Yes.

While it has been delayed repeatedly in the past year, and there’s always a possibility for more delay, it looks like the latest effective date will stick.  

The Obama administration has reviewed the requirement, and is now standing behind it, and by ditching the most controversial aspects of the rule, there will be fewer legal and political challenges.

Beginning September 8, 2009, therefore, the government will award contracts only to companies in compliance.

Who Needs to Be Prepared?

A lot of people need to be prepared for this E-Verify requirement.  

While the controversial components of the requirement have been removed by Obama, the scope of the rules applicability has actually gotten broader.   The requirement will not only apply to contractors and subcontractors on federal projects, but it will also apply to any business receiving money under the federal stimulus project.

With the influx in federal and state spending on construction projects, and the decrease in private work available, more and more contractors are being forced into bidding and working on public works.  And with the now wider reach of the E-Verify program, contractors and subcontractors need to prepare themselves.

In February 2009, we wrote a post here at the Construction Law Monitor titled "The Stimulus Package and Your Construction Business."  

The post discussed the differences between private and public works, and addressed some of the issues private contractors face when working on its first public project.   

Add the new E-Verify requirement to the list, and the article is still a good read.

Is this Still Controversial?

Even with Obama’s backing of the system and some tweaks to its enforcement power, the E-Verify program definitely still has its detractors.

The San Bernardino Sun News just ran an article about how the E-Verify system puts Obama at odds with some democrats.   

Despite the controversy, the E-Verify requirement will take effect on September 8th, and construction companies around the country must be prepared.

Over the next several months, the Army Corps of Engineers plans to advertise three dozen construction contracts that could cost upwards of $3 billion — more than it has spent since Hurricane Katrina…

So vast and compressed is the construction schedule that corps representatives have advised contractors to consider importing out-of-state labor, lining up temporary housing for employees and working around the clock.

This is certainly welcome news for Louisiana contractors, who are constantly reading grim economic forecasts for the rest of the nation.   Thus far, the post-Katrina market has seemingly insulated the region from economic peril, as New Orleans and Baton Rouge have maintained robust construction markets throughout the downturn.

If your company is going to bid for a piece of the Corps spending, be sure to enter into contracts carefully and protect your company’s right to payment throughout the job.

Here are two important things to keep in mind:

Contracting:  Contacting an attorney – like Wolfe Law Group – to review your contracts can pay dividends on the project.   A simple contract review can cost as little as $1000.00, but give your company a better understanding of its rights and obligations under the agreement, and sometimes even point out provisions that can be altered to your company’s benefit.

Just because a contract is put before your company, doesn’t mean it needs to be signed in that form.  Frequently, contractors and project owners are willing to negotiate common terms, and simple changes to critical provisions can later save your company thousands.

Read more about construction contracts on our blog here.

Liens:   Since they will be funded by the Corps, these projects are all likely to be public.   However, just because a project is public doesn’t mean your company is without "lien" rights.   Louisiana’s Public Works Act allows unpaid companies to file "Statements of Claims" that protect a company’s right to get paid…and since federal and state projects are nearly always bonded, the Statements of Claims can be a very powerful and effective collections tool.

However, filing successfully under the Public Works Act begins before you step foot on the job-site.  

Learn more about public liens and the Public Works Act here.

And for more information about the Corps projects and legal representation from Wolfe Law Group on these types of projects, contact us today.

But what happens when a lien is filed improperly?

Depending on your perspective, it’s either fortunate or unfortunate that parish recording offices are required to file mechanic’s lien upon presentation. 

So…if a subcontractor liens a project for $10 million when he’s only owed $35.00, the lien is recorded.   If a laborer liens a project five years after its substantially complete, the lien is recorded.  Or if the lien fails to include information required by law, it is still recorded.

While the construction or mechanic’s lien may be legally improper, it gets on the books, and that means it can have the effect of preventing a sale, transfer or refinancing of the property.

The Private Works Act provides a procedure by which any interested party can dispute the validity of a construction lien.  If they are successful at removing the lien, the Act provides the disputing party the ability to recover attorneys fees and costs.

Scott Wolfe recently published a Legal Guide on the national lawyer ranking website, Avvo.com.  The guide is titled "How to Dispute a Construction Lien in Louisiana," and guides an interested party through these three steps:

1)  Answer the Obvious Question:  Is the Lien Improper?  [read common mistakes]

2)  Make Written Demand for Cancellation of the Lien [see template letter]

3)  File Suit to Demand Removal of the Lien [see similar lawsuit]

Read the legal guide in full at Avvo.com by clicking here.

Wolfe Law Group frequently works with clients who dispute the validity of construction and mechanics liens in Louisiana and Washington.   Contact us today for more information about how to demand the cancellation of a construction or mechanic’s lien filed against your property, or on your project.

Today, we are going to comment on the most injured party to the imported drywall crisis:  the Homeowner.

Homeowners with Chinese Drywall in their homes are faced with a terrible situation.  Is it safe to live in the home?  How pronounced is the problem?  Who is going to pay to fix it?  When?

While attorneys and construction industry professionals have debated how these disputes should be handled and litigated…the homeowner’s life and property is left in the balance.  Here are a few important and difficult choices facing homeowners with Chinese Drywall installed.

Finding A Remedy:  Class Action v. Insurance v. Builder

In one corner, weighing in as a monster, is the class action lawsuit.   There are already television commercials, internet keyword ads and news reports suggesting that if your home has Chinese Drywall installed…you should contact an attorney and join the filed class action suits.

In the other corner is a lawsuit directly against your builder, a contractor who is quite possibly a victim in itself…and who may not have the pockets or wherewithal to handle the scope of imported drywall claims.

And finally, we have insurance.  Insurance of the builder, of the supplier and even homeowners insurance.   They have all been implicated in imported drywall claims already…and the consensus is that the pollution exclusion will provide room for insurance companies to deny claims.

What is the homeowner to do?

Unfortunately, the answer here is not easy. 

As debated across the blogosphere, there are pros and cons to each remedy.  Class action suits can take years, and may not result in a real remedy for claims unrelated to personal injury.   Suits against the builder may have practical collection problems.  Insurance companies are denying coverage based on pollution exclusions…

The best answer for homeowners is to get educated about Chinese Drywall, and to consider all of the available remedies.   It isn’t prudent to contact a class action attorney, provide them with your name and number, and flip off your mental switch about taking legal action related to tainted drywall.

Homeowners should explore all available remedies, and seek counsel about how to best proceed against responsible parties for damages caused by Chinese Drywall.

The Long Road of Litigation:  Fixing Yourself

Let’s just talk about a homeowner’s practical problem:  getting the drywall out of their property.

Assuming they have contacted a class action attorney and are hoping to be a member of the class…what does a homeowner do to get the drywall out of their quarters while they wait years for the litigation to resolve itself?

Well, unfortunately, homeowners may be forced to do the work themselves, and not just because they want the drywall removed…but also because they have a duty to mitigate their damages.

Clearly, this is one of the most prominent critiques of Chinese Drywall class action suits.

Conclusion

Perhaps more so than builders, suppliers, construction attorneys and other involved parties…homeowners are faced with difficult and consequential decisions about how to proceed with Chinese Drywall claims.  

There is already much debate as to how they should proceed…and only time will tell which remedies will be successful in this complicated search for liability.

Builders, however, are not the only folks at a legal crossroads with respect to the imported drywall crisis.   Construction attorneys – and plaintiff attorneys – too must make important decisions that will alter the course of litigation for their clients.

For those attorneys representing homeowners, the litigation choices they make will not only affect the merits of their client’s case, but also their lifestyle.  

If an attorney chooses to file simply a class action, for example, the client’s home may go unattended to for years, requiring the client to find living quarters elsewhere at great expense and inconvenience.

For attorneys representing builders, they too have decisions with consequences beyond the litigation itself.  

Correcting imported drywall problems could cost a builder thousands, if not over a hundred thousand dollars.   Builders without deep pockets, and with more than one Chinese Drywall claim, could be facing huge liability.   How should an attorney advise a builder to mitigate its losses? To balance the cost of litigation with the cost of repairing drywall problems?

The questions are aplenty. Here are a few frequently discussed issues facing construction attorneys.

The Role of Class Actions

Plaintiff attorneys across the country are signing up Chinese Drywall victims in droves.    The problem: class action suits are largely against foreign manufactures or huge drywall importers.   It looks like class action attorneys are doing little, if anything, to explore other remedies for homeowners.

There are real problems with this, and the problem is only exasperated by the “class action culture” that may result in homeowners signing papers with a class action attorney, and forgetting about the problem.

Here are a few:

1. Homeowners want the drywall out of their homes.   The class action remedy, however, will likely take years to organize and resolve itself, and then it’s not certain how homeowners will be compensated. See Donald Brenner’s argument on Construction Litigation Law Blog: Class Action Suits May Not Help Homeowners for Years If Ever.
    
2. There are problems with collecting judgments against foreign companies, like those named in the class actions.   See Dan Harris’ commentary on his China Law Blog titled “Show Me The Money;”
    
3. Time Ticks against homeowners on all of their other claims (warranty, contract, tort, insurance, etc.).   By signing up with a class action attorney, these other claims may be ignored, and their statute of limitations will approach quickly.

Warranties and The Role of Builders

It doesn’t seem fair that builders would be liable for drywall installed in perfectly good condition, without any way of knowing of the defects.

However, those representing homeowners ought to seriously consider an action against builders, since builders have contractual and warranty obligations to the homeowner, and a clear duty of care.  

Those representing homeowners, consider the action taken by North Carolina attorneys in bringing the Flannigan v. Stafford Custom Homes, Inc. matter. While other parties will likely get involved with this action (suppliers, insurers, etc.), the plaintiffs in that case leave those issues to the builder….which brings me to those representing builders…

Those representing builders ought to consider the role of insurance, and potentially bringing an action against its suppliers, installers and the drywall importers and manufactures.   Be cautious of the Pollution Exclusion clause in CGL policies, but review the actions taken by Lennar Co. in the face of Chinese Drywall claims as an example of how to proceed aggressively for a builder client.

Mitigating Damages

As construction attorneys know, everyone has a duty to mitigate.   Since Chinese Drywall damages appear to be of the type that will get progressively worse with time (i.e. continued decay), the role of the mitigation duty is pronounced.

The duty is a difficult one under these circumstances because of the potential cost of remedying Chinese Drywall damages and defects.  

Whether the homeowner is suing its homeowners insurance or the builder….or the builder is suing its CGL for coverage…talk of the mitigation duty is likely to surface.

Should builders be notifying homeowners of potential contamination?

Should homeowners and builders be tearing out drywall and other contaminants to avoid further decay?

What is the consequence of not doing these things, or simply not being able to afford to do them? Less insurance coverage? More exposure for the builder/homeowner?

Advising your client with respect to its duty to mitigate in the face of a Chinese Drywall claim may be significant advice…but it will certainly be costly.

• Rio is trying to bring the Summer Olympics to South America for the first time;
• Brazil fully guarantees $14.4 billion for the Games, which is nearly as high as the budgets of the other three candidate cities combined (Chicago, Tokyo and Madrid);
• Since the 2014 World Cup is ensured to Brazil, an Olympic bid could make the fourth double hosting in history.

The long and short of these three bullet-points as it relates to the Brazilian and South American economy, and specifically the Brazilian construction industry is this: A successful bid = global credibility and huge infrastructure investments.

Aside from the construction of the actual venues to be used, take a look at some other infrastructure investments mentioned by the Wikipedia page for Rio’s 2016 bid:

Rio de Janeiro plans to implement 150 km (93 mi) of Olympic lanes connecting the four Olympic zones and the Antônio Carlos Jobim International Airport. An existing corridor of high capacity rail and metro systems as well as motorways and major roads links three of the four Olympic zones, and with the development of the western corridor, all four zones will be connected. Bus Rapid Transit (BRT) system is going to be the main solution to the city’s topography.

Take a look at Rio’s official 2016 bid page, as well as their bid video on YouTube, embedded here:

The geography of 2009 is different from the geography of 1948 when the U.N. was created. And because of this we want more continents to participate in the U.N. Security Council. Brazil should have a seat.

This interview is coupled with some other comments from President Lula on the general topic.

BrazilMag reports on President Lula’s recent comments that “the destiny of Brazil is closely linked to the destiny of the region where we sill have a complicated problem…”

The same online news agency reported that Lula supports the creation of a police force in South America similar to Europol, the security organization of the European Union – perhaps foreshadowing a future economic and political union between South American nations.

While President Lula is advocating for Brazil’s political prowess, the Brazil economy certainly doesn’t need the same advocacy. Time Magazine reports that the Brazilian economy may be immune from the recession, and the country just invested US $182 billion in the housing sector and construction industry alone.

All of the news is good news for companies doing business in Brazil.

Here’s an interview of President Lula from CNN:

In January 2009, the Brazilian government announced plans to spend US$ 152 billion constructing houses for poor families over the next 15 years.

As reported by KHL’s International Construction, the government will be building 300,000 houses just this year alone! That’s a massive amount of money, and a massive investment into the construction industry of an already booming market. According to quotes from the KHL article, the aim of the program was “to help poor Brazilians…and stimulate the economy by creating construction jobs.”

More information about the program can be found at the Brazilian Chamber of the Construction Industry (Camara Brasileira da Industria da Construcao).

Last week the Time Magazine suggested that Brazil – once a turbulent economy – might be the one country unscathed by the world’s recent economic woes.

The notion certainly seems possible, especially considering the Brazilian government’s recently announced plan to invest US $152 billion in the housing sector alone.

The Brazil Construction Law blog will comment more on the huge Brazilian investment into the housing sector in another post, and its potential impact on the international construction market.

For now, the strong Brazilian economy is surging ahead without much effect from the global economic crisis…and perhaps that signals an opportunity for businesses in other countries to participate in the large-scale construction growth ahead in South America.

The purpose of this blog is to provide insight and commentary on construction law issues and news within the country of Brazil.

Wolfe Law Group is a construction law practice with offices in Seattle, Washington and New Orleans, Louisiana. The firm represents construction businesses in foreign contracting, international arbitration and disputes, international joint ventures, and international construction risk management, with a focus on cross-border transactions involving South America, including Brazil, Argentina and Chile.

Learn more about our practice at http://www.wolfelaw.com