The information that you must include in a Nebraska construction lien is pretty straightforward. A construction lien must include the following: The real estate subject to the lien; The name of the person against whose interest in the real estate a lien is claimed; The name and address of the claimant; The name and address of the person with whom the claimant contracted; A general description of the services performed [...]
I’ve reviewed three construction contracts this week and all three of them contained a pay-if-paid clause. Are you signing contracts with pay-if-paid clauses? Here are some suggestions to minimize your risk with pay-if-paid clauses. What is a pay-if-paid clause? Pay-if paid clauses eliminate the general contractor’s obligation to pay subcontractors if the general contractor does not get paid. Courts reviewing these clauses have found that a subcontractor that signs a [...]
This is the first in a series of blogs on preserving your rights to get paid on a construction project. The most effective tool you have to get paid is by filing a construction lien. But, there’s a lot to consider before you file that lien. This blog will cover when you must file your lien and where the lien should be filed. The Nebraska Construction Lien Act is contained [...]
After a three year experiment as Vice President and General Counsel at a long time client, I’m back to practicing law at Lamson Dugan & Murray. It was an amazing three years and I learned first hand how hard it is to deal with the day to day operations of a company, let alone the legal details. For the past three years, I was a jack of all trades, and, [...]
Ouch. That’s what a court called a contract to remediate petroleum contamination at a number of gas stations in New York. Sometimes, it’s hard to believe the contracts that get signed. Environmental Risk hired Science Applications to remediate petroleum contamination at 47 gas stations. Environmental Risk had previously entered into a Professional Services Master Agreement with Science Applications, but also required Science Applications to sign three separate, but basically identical, subcontracts called [...]
Sean Minahan, one of my partners, and I were discussing a construction dispute the other day and we commented again and again about the significant organization required to get a construction project to completion. From the contracts, to the schedule, to the funding—everything has to be in lock step or there will be problems that could bring the project to a halt, or worse yet litigation. The same is true [...]
A contractor learned a $12M lesson when it tried to change course on a Corps of Engineer river dredging project. The case also illustrates the importance of documenting problems on a project and providing notice of those problems to the owner. In Weston/Bean Joint Venture v U.S., Weston/Bean was awarded a Corps of Engineers project to provide maintenance dredging on the Miami River to a depth of 15 feet. [...]
I recently had a discussion with an insurer about whether defense costs were included within the policy limits of a client’s coverage or in addition to policy limits. This was an important discussion because if costs of defense were included in the policy limits, my client was going to exceed those policy limits in a hurry. How would this situation play out with your insurance? Fortunately, the majority of insurance [...]
I hope you and your family are enjoying some well earned time off this Thanksgiving. Today’s post provides me an opportunity to thank everyone who gave me ideas for the blog and I thank you for reading it. I’d also like to thank all of my construction clients from whom this blog is written. I appreciate the opportunity to assist you in your construction projects. Finally, we will be smoking, [...]
Wouldn’t it be nice to know ahead of time what an OSHA inspector will be looking for when he comes to your work site? Well, I know the secret. And, it’s not really a secret. Just look at OSHA’s top ten citation standards and it becomes quite clear. In 2015, OSHA’s top ten most frequently cited violations are: Fall protection (C) Hazard communication Scaffolding (C) Respiratory protection Lockout/tagout Powered industrial trucks Ladders [...]
I had the pleasure of speaking at the National Association of the Remodeling Industry (NARI) Education Day earlier this month. During my presentation, “The Myth of the One Year Warranty”, we discussed the impact of arbitration clauses in construction contracts and who should act as arbitrator. While the American Arbitration Association is certainly a popular forum, there are others. For example, the New York Times recently wrote about a hardwood [...]
A recent case out of New Mexico highlights the importance for subcontractors to review their contract with the general and the contract between the general and the owner. In Centex/Worthgroup, LLC v. Worthgroup Architects, L.P, the architect claimed that the limitation of liability clause in the prime contract trumped the provisions of the subcontract. The court disagreed and ruled that the specific provision in the subcontract controlled. In the case, [...]
We all know the importance of filing a construction lien within 120 days of your last work. Nebraska Construction Lien Act, § 52-137. But, equally, if not more important is filing the construction lien on the correct property. Often times on a construction project, the exact address of the project may not be known. And, if there are a few buildings going up on the same general site, [...]
Fitness for Duty examinations can be an important part of an employer’s hiring and retention protocol. The Nebraska Supreme Court recently clarified when an employer may require applicants and employees to undergo fitness for duty examinations. In Arens v. Nebco, Inc., the court ruled that an employer must have a legitimate, nondiscriminatory reason for its demand that a current employee submit to a fitness for duty examination. In this case, [...]
I often advise clients on the use of E-Verify and the importance of getting policies and procedures in place to ensure compliance. This is particularly true for clients that do federal and state work. Now it’s my turn to follow my own advice. I was recently appointed to represent the Nebraska Board of Engineers and Architects. As such, I am a contractor for the State of Nebraska. That means I [...]
A recent case out of Missouri emphasizes the importance of providing notice to a surety when a bonded subcontractor is in default. When the question of whether a surety will be obligated under the bond is in the balance, notice is crucial. In CMS v. Safeco Insurance Company, Safeco provided a performance bond to a subcontractor for the benefit of CMS. The bond specifically provided: PRINCIPAL DEFAULT. Whenever the Principal [Subcontractor] shall be, [...]
You may know this situation all too well. You’ve submitted your certified claim to the contracting officer and there it sits. You ask for a decision and they say soon, but it’s not soon. And pretty soon, several months have gone by. Since the Court of Federal Claims’ decision in Rudolph and Sletten, Inc. v. U.S., the government may have to decide in 60 days or your claim will be [...]
I just attended an Associated Builders and Contractors meeting during which Lueder Construction discussed a fatality on one of its worksite. OSHA fully investigated the incident and did not issue a single citation. This is a testament to the safety plan and training Lueder had in place well before this incident. One defense to an OSHA citation is unpreventable employee misconduct. However, proving this defense requires substantial planning, well before an [...]
The California Court of Appeals has allowed the second lowest bidders on public construction projects to sue the lowest bidder where it appears that the lowest bidder was only the lowest because it paid its employees less than the established prevailing wage. This is a novel theory for recovery, but may provide for an opportunity to challenge improperly low bids. Background Between 2009 and 2012, American Asphalt outbid two asphalt companies [...]
Perhaps in anticipation of Labor Day, the National Labor Relations Board issued its ruling in Browning-Ferris Indus. of Cal. d/b/a BFI Newby Island Recyclery, establishing an easier standard for unions to prove that a joint employer relationship exists. This will make it easier for unions to make the upstream company, like a parent company, liable for unfair labor practices, even if the upstream company had no direct involvement. Some Background [...]
What is a subcontractor to do when the owner has demanded additional work, but has refused to pay for it? Typically, a subcontractor cannot sue the owner because the subcontractor doesn’t have a contract with the owner. Perhaps the subcontractor and general contractor should enter into a liquidating agreement through which the general contractor can pursue the claim on behalf of the subcontractor. Liquidating agreements bridge the privity gap between [...]
Flow-Down or pass-through clauses obligate downstream contractors to certain provisions contained in the up up-stream contractor contracts, such as the contract between the general contractor and the owner. These clauses are contained in every major form subcontract and they can expand the scope of your potential liability. This blog will look at typical language of a flow-down clause, what it means and how you can deal with them. [...]
This summer the Department of Labor's Wage and Hour Division issued proposed changes to the white-collar overtime regulations under the Fair Labor Standards Act (FLSA). The white collar exemptions include the executive, administrative, professional, outside sales and computer employee exemptions. The focus of the proposed regulations is to increase the salary level required to qualify for the exemption from $23,660 per year to $50,440 per year. The DOL predicts this [...]
On July 28, 2015, OSHA issued proposed rules seeking to clarify an employer’s ongoing obligation to make and maintain accurate records of work-related injuries and illness. The new rules were drafted in response to the U.S. Court of Appeals decision in AKM LLC, d/b/a Volks Constructors v. Secretary of Labor, in which a contractor successfully argued that OSHA’s citation was issued well beyond the six month limitation period. OSHA’s Injury [...]
Several months ago, I wrote about an escalator subcontractor that sued a general contractor, demanding payment for work completed based on approved shop drawings. The trial court agreed with the subcontractor, but the general contractor appealed. Ten months later, the Court of Appeals reversed, finding that the subcontractor had a duty to bring to the general contractor’s attention major discrepancies or errors they detect in the bid documents. The subcontractor [...]
The debate continues on whether a subcontractor’s faulty work constitutes property damage and an occurrence such that the insurer must cover the claim. The most recent court to weigh in on this issue is the New Jersey appellate court (one step down from the New Jersey Supreme Court) in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC. In this case, the condominium association sued the general contractor, who also [...]
In a recent Trade Release OSHA announced 60-day delay in enforcing the new Confined Spaces in Construction standard. Here is my earlier blog on the new standard. Full enforcement will not begin until October 2, 2015. During this 60-day temporary enforcement period, OSHA will not issue citations to employers who make good faith efforts to comply with the new standard. Employers must be in compliance with either the training requirements of [...]
On July 15, 2015, the Department of Labor issued an Administrator’s Interpretation asserting that most independent contractors are actually employees under the Fair Labor Standards Act. The DOL claims that the FLSA’s broad definition of employment and “suffer to work” standard under the FLSA requires that most workers be treated as employees. The certainly appears to be the DOL’s warning shot over the bow and companies using independent contractors should [...]
The Deck--not quite done I had the pleasure of spending the 4th of July weekend working on a friend’s deck. Fortunately for her, and for my son and me, it was not a big project. It just involved replacing the decking, steps and railings. An old adage was reinforced for me this weekend--it’s better to have someone that knows what he’s doing handle some projects, than someone who dabbles [...]
Yep, our founding fathers, Thomas Jefferson and James Madison specifically, were responsible for proposing the first mechanic’s lien laws in the United States. Mechanic’s liens were not a new concept when the first law was passed in the United States; France, Spain and other countries already had them. But, in England, where landownership was limited to the upper classes, the concept of giving a tradesman an interest in the land for [...]
How often do you review both the additional insured language in the contract and the insurance policy provided by a subcontractor? My guess is, unless the project has gone off the rails, NEVER. Well, perhaps you should to make absolutely sure the extent of the subcontractor’s insurance obligations and whether those obligations are being fulfilled. This point was recently addressed in a recent DRI article analyzing the Deepwater Horizon/BP lawsuit. [...]
Another court has found that poor record keeping will prevent recovery on a claim. The court in Weatherproofing Tech., Inc. v. Alacran Contracting, LLC found that a contractor’s documents were a mess and that no reasonable jury could base a verdict on the contractor’s records. The underlying project involved the construction of an army training facility. The total project cost approximated $13 million. Alacran, the general contractor, subcontracted about $3 [...]
A recent Wall Street Journal article, Worker Shortage Hammers Builders, noted that construction industry employers are facing a tight labor market. U.S. builders shed more than 2 million jobs during and after the housing bust. Now they say they can’t find enough carpenters, electricians, plumbers and other craftsmen for a growing pipeline of work. That is certainly consistent with everything that I’ve heard and read about construction companies in the [...]
Contractors often ask if they should include a one year warranty in their subcontracts. I tell them that they can, but it may be more effective to include a one-year correction period. If a contractor does include a warranty in the contract, it may actually extend the time in which a contractor may be sued. I recommend instead a Correction Period. Typical Construction Warranties Form construction contracts, like the AIA forms, [...]
A Texas Court of Appeals, in USA Walnut Creek, DST v. Terracon Consultants, Inc., recently ruled that an engineer owed a duty to the buyer of an apartment complex, even though the engineer had no contractual relationship with the buyer. This is an expansion of the duty professionals owe on construction projects and could signal a change in the law. In the case, Walnut Creek purchased a three year old apartment [...]
On May 1, OSHA announced its final rules for construction workers in confined spaces. The Final Rules, which will take effect August 3, 2015, will require more comprehensive training , with the goal of providing construction workers the same or similar protections as employees in manufacturing and general industry. The final rule will cover confined spaces such as: Crawl spaces Manholes Tanks Sewers The final rule will require the following: Confined [...]
Getting paid for your work is often times one of the hardest parts of a project. If you find yourself working without getting paid, it’s easy to think, “I’ll just stop working until I get paid.” While the law may support you in that decision, the contract may not and you may be found in breach of the contract if you walk off the job. Nebraska Law Nebraska courts have [...]
It seems that every construction contract now-a-days, contains an indemnity clause. Contractors should be reviewing these indemnity clauses very carefully to understand the potential scope of an indemnity obligation and your opportunity to negotiate changes. What is an indemnity Clause? An indemnity clause transfers risk from one party to another. When a contractor signs an indemnity agreement, it is agreeing to pay for damages for which another party could be [...]
When you are involved in construction litigation, you have battles on several fronts, including those against subcontractors, owners, insurers and the court. Shoring up your defenses on each of these fronts is imperative, or you may lose the battle or, worse yet, the war. A recent opinion out of the Eleventh Circuit Court of Appeals (overseeing federal courts in Alabama, Florida and Georgia) Carithers v. Mid-Continent Casualty Company, illustrates the [...]
On April 14, 2015, the National Labor Relations Board's new election rule went into effect. The new rule, which shortens the time frame for union elections, will make it easier for unions to organize. Employers must get prepared now, not when they hear about an election. As the NLRB Members who dissented from the final rule noted: The Final Rule has become the Mount Everest of regulations: Massive in scale and unforgiving in its [...]
For those of you in and around Omaha, you recall the tragic collapse of International Nutrition’s plant in early 2014, killing two workers and injuring several others. OSHA swept onto the scene and issued citations. Surprisingly, the penalties totaled only $120,000. While a large sum, one would think two deaths and a score of injuries would generate a larger fine. International Nutrition appealed the penalties and they have now been [...]
This spring has been busy with questions about employee handbooks. Perhaps it is because the NLRB just issued a directive on the legality of various clauses usually contained in handbooks. Or perhaps it’s because employers, including construction companies, are realizing the importance that handbooks play in defending against claims of harassment. Employee Handbooks Are Important Employee handbooks are an employer’s first line of defense in claims of harassment. A [...]
One of the attendees of the Goldleaf Surety presentation asked a great question about reducing retention under the Nebraska Construction Prompt Pay Act, Nebraska Revised Statutes, 45-1201-45-1211. He wanted to know whether there was any way to reduce and recover retainage during the project. The short answer is retainage should be reduced half way through the project, but there is no right to recover retainge for work performed during the [...]
The Department of Labor announced late last year that it had recovered nearly $2 million in back wages and fringe benefits from a subcontractor that provided constructions services at the federally funded Crescent Dunes Solar Energy Project in the Nevada desert. This was not a failure to pay Davis Bacon wages, but a failure to properly classify laborers on the project. The DOL determined that the laborers should have been [...]
The Federal Circuit Court of Appeals opinion in K-Con Building Systems, Inc. v. United States illustrates the difficulties a contractor may face when pursuing a claim before a Contracting Officer. After nearly 10 years of litigation, the court found that the contractor’s claim to the Contracting Officer did not contain enough detail to allow the claim to proceed. That’s a lot of time and resources wasted on a claim that [...]
I am preparing for a presentation this week on Troublesome Contract Clauses to the Construction Specifications Institute (“CSI”), Nebraska Chapter. One of the clauses we will be discussing is the dreaded Pay-if-Paid clause, a particularly nasty provision that places the risk of owner's solvency squarely on the subcontractor's shoulders. While pay-if-paid clauses can create tremendous problems for subcontractors, they are enforceable. Pay-if-Paid clauses eliminate the obligation to pay the subcontractor [...]
OSHA has long held the opinion that general contractors may be held liable for subcontractor’s OSHA violations and the Eighth Circuit Court of Appeals, overseeing the Midwest, has agreed since 2009. To combat this risk, general contractors would be well served to incorporate targeted indemnity provisions into their subcontracts that require subcontractors to pay for all claims and costs associated with subcontractor caused OSHA violations. OSHA’s Multi-Employer Policy OSHA’s Multi-Employer [...]
The Nebraska Court of Appeals threw a wrench into the calculation of your warranty earlier this year in Adams v. Manchester Park, LLC and Southfork Homes, Inc. In that case, the court found that the statute of limitations for a warranty claim started running after the homebuilder’s warranty expired. So, the four year breach of warranty statute of limitations did not begin until after the one year homebuilder warranty expired. [...]
A recent article in the Construction Executive discussed the importance of preserving your claim, both in terms of timeliness of submitting your claim and making sure that you aren't waiving portions of your claim when executing releases. These are all excellent points and bear some follow-up. Timing Your Claim I often review construction contracts that contain deadlines by which claims must be submitted. It may seem counter intuitive to think [...]
While change orders are always part of construction projects, it’s important to know whether a public agency is limited on how much it can increase the scope of the work through change orders. A contractor in Virginia found out the hard way that the state agency did not have the authority to increase the scope of the project and thus the contractor could not collect for the extra work. In [...]
