Category Archives: Local law, policy & news

The Subcontract’s Unsigned, the Work is Complete and a Dispute Has Arisen — Now What?

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In order for an agreement to constitute a valid contract that courts or arbitrators will enforce, both parties to the agreement must mutually assent to all of the terms of the deal.  The fancy Latin term for this mutuality requirement is “aggregatio mentium;” we Americans call it a “meeting of the minds.”  And as between general contractors and subcontractors in the construction industry, the signatures of the parties typically signify their mutual intent to be bound.

But what if the subcontract isn’t signed, and the parties proceed with performance of the underlying scope anyway?

That’s the conundrum the North Carolina Court of Appeals (“COA”) confronted in its April 19, 2016 decision in Southeast Caissons, LLC v. Choate Construction Company.

The general contractor and caisson subcontractor in that case went back and forth repeatedly on various drafts of a written subcontract.  The sub’s scope was commenced — and completed about three months later — without a final deal being reached on all terms.

When the subcontractor wasn’t paid, it sued for breach of contract (among other claims) in the Forsyth County Superior Court.  The unsigned subcontract called for dispute resolution in Wake County, prompting the general contractor to move for dismissal of the sub’s suit or, in the alternative, a change in venue.  The trial court determined that the subcontractor was not bound by the unsigned subcontract, and that venue was proper in Forsyth County.  The GC appealed.

In affirming the trial court’s Order, the COA relied on the rule that the absence of a signed, written instrument is evidence of the parties’ intentions not to be bound by the proposed contract.  On  the rights set of facts, that evidence could be outweighed by other evidence demonstrating that both parties accepted and acted upon the unsigned terms.  That wasn’t the case in Southeast Caissons, however — to the contrary, the COA concluded that virtually all of the evidence suggested that the parties never achieved a “meeting of the minds” on all of the subcontract’s terms.

Does that mean no deal existed between the GC and the sub?  Not necessarily.  The COA remanded the case back to the trial court for a determination of whether a contract “implied-in-fact” existed between the parties by virtue of their actions.  Even in the absence of a contract implied-in-fact, the subcontractor might still prevail on its payment claim under an equitable quantum meruit (i.e., unjust enrichment) claim for relief.

The takeaway?  Southeast Caissons makes it clear that general contractors seeking to utilize their standard subcontract forms should insist upon a signed agreement before permitting work to begin.  Allowing your subcontractor to proceed with its scope without first obtaining its “John Hancock” risks losing the benefits of those favorable subcontract terms your construction attorney spent so long drafting for you.

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Filed under Construction Risk Management, Forum Selection Clauses, Local law, policy & news, NC case law, State law, State law, policy & news, Subcontractors

North Carolina Will Now Revise Its Building Code Every Six Years, Instead of Every Three

Monday MemoPrepare to hold onto your 2012 North Carolina Building Code until 2019.

On March 11, 2014, the N.C. Building Code Council voted to update the commercial building code once every six years, instead of once every three years under current regulations.  The six-year commercial code cycle now mirrors the update schedule for the residential code, which was changed to a six-year cycle by House Bill 120, signed into law by Governor McCrory on June 19, 2013.

As an exception to the new six-year rule for commercial buildings, the electrical code will continue to be updated on a three-year cycle.

The Council’s vote to place the commercial code update on a parallel track with the residential code’s six-year cycle was close: 9-6.  Why such a sharp split?

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Top 10 Things to Know About North Carolina’s New Design-Build/Public-Private Partnership Law

This past summer, the N.C. General Assembly passed and Governor McCrory signed into law groundbreaking legislation authorizing the use of design-build, design-build bridging and public-private partnerships in the delivery and financing of public construction projects in the state.  The legislation is sure to alter North Carolina’s public procurement landscape drastically and influence the complexion of the state’s construction industry, particularly at the design and prime contractor levels.

DBP3Last Wednesday, October 23, I attended an excellent panel discussion covering key aspects of House Bill 857 (“HB 857”) sponsored by Carolinas AGC Foundation, AIA North Carolina (@AIA_NC), the Professional Engineers of NC (@ProfEngNC), United Minority Contractors of North Carolina and the American Council of Engineering Companies of North Carolina.  Based on that discussion and my own review and analysis of the legislation, here are my top ten observations:

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Filed under Feature story, Local law, policy & news, Payment Bonds, Project Delivery Systems, Public Bidding, State law, policy & news

Latest on Lien and Bond Bills Pending in the General Assembly

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Monday is upon is, the beginning of what is likely to be the penultimate week of the General Assembly’s 2012 short session.

As my regular readers know, I’ve been tracking two key pieces of construction-related legislation: the lien law revision bill recommended by a legislative study commission, and the bill advanced by the title insurance industry to address the “hidden lien problem.”

This post provides an update on where those two bills stand, and also reports on a third construction-related bill that hit my radar last week.

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Filed under Lien Law, Local law, policy & news, Payment Bonds, Payment Bonds, State law, policy & news, Surety Law

4th Circuit, Flawed NEPA Review Process Cast Doubt On the Future of the Monroe Connector Bypass

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Remember the headline to my March 12, 2012 blog post about the Monroe Connector Bypass (or just the Monroe Bypass, for short)?

It suggested that the legal saga surrounding the proposed $725 million highway construction project was nearing “the end of the road.”

On second thought, not so much.

The road has taken an unexpectedly sharp turn, and there’s no telling how long the project may now be delayed.  Why? Because according to the Fourth Circuit Court of Appeals (“4th Circuit”) in its May 3, 2012 decision in N.C. Wildlife Federation v. N.C. Department of Transportation, the North Carolina Department of Transportation (“NCDOT”) and the Federal Highway Administration (“FHA”) (collectively, the “Agencies”) failed to conduct a clear, transparent environmental review process that permitted meaningful public comment under applicable principles of federal environmental law.

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BREAKING: 4th Circuit Blocks Monroe Bypass Project

I just heard this news, which I have yet to digest and absorb.  I’ll have a fuller update and analysis by early next week.  For now, please see the Charlotte Observer’s coverage here.

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Proposal To Toll I-95 Proving To Be VERY Controversial: Rep. Ellmers Introduces Federal Legislation To Stop It

Rep. Ellmers (R-NC)

In my February 6, 2012 blog post announcing the $4.4 billion widening of Interstate 95 from the South Carolina to the Virginia borders, I boldly predicted that NCDOT’s proposal to finance the project through tolling could prove controversial.

They don’t call me Master of the Obvious for nuthin’.

As of this blog post, the nototollsi95.com website has 3530 signatures.  The North Carolina Trucking Association, the Roanoke Valley Chamber of Commerce and a host of other local organizations and municipalities have all registered their strong opposition.

And now U.S. House Representative Renee Ellmers, a Republican from Dunn, has taken the fight to Congress, introducing legislation aimed at preventing North Carolina from participating in the federal pilot project that makes tolling on I-95 possible in the first place.

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Monroe Bypass Legal Saga Approaching End of Road, Could Impact Bonner Bridge Litigation

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Oral arguments are set to take place before the Fourth Circuit Court of Appeals in Richmond, Virginia on March 20, 2012 in connection with an appeal asserted by several environmental groups seeking to stall construction of the Monroe Connector Bypass (commonly known as the “Monroe Bypass”) in Union County.  If the Fourth Circuit rejects the appeal and allows the project to move forward, a groundbreaking is expected in August of this year, as reported late last week by the Charlotte Observer.

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Important NCRC Update — Electronic Version To Be Online Tomorrow

N.C. Insurance Commissioner & State Fire Marshal Wayne Goodwin (courtesy ncdoi.com)

Good news, residential builders and local permitting authorities.  According to this press release that the Office of Insurance Commissioner / State Fire Marshal Wayne Goodwin kindly e-mailed to me just moments ago, the entire 2012 N.C. Residential Code will be available online no later than 2:00 p.m. tomorrow, February 28, at this website, and at no cost.

As Mr. Goodwin writes in his release:  “There is no need and no justification for jurisdictions to delay the issuance of building permits, as the 2012 N.C. Residential Code will be readily available prior to its March 1 effective date.”  Kudos to Mr. Goodwin for arranging for this accommodation with the International Code Council.

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2012 N.C. Residential Code Printing Snafu Has Some Local Governments Scrambling

A delay in printing the 2012 North Carolina Residential Building Code (“NCRC”), which by law is due to go into effect on Thursday, March 1, is giving local leaders in various parts of the State an unwelcome headache.

Although the 2012 edition is based on the 2009 Code and various summaries of the changes are available online (see here and here), some local government officials are taking no chances.  For example, and as reported by the Watauga Democrat late last week, the Boone Town Council has voted unanimously to direct the Planning & Inspections Department to refrain from issuing residential building permits after  March 1 until the 2012 NCRC is received, citing liability concerns.  Based on this blog post by the Real Estate & Building Industry Coalition (“REBIC”), Mecklenburg County may follow suit.  And according to this Sun Journal article, inspection officials in New Bern and Craven County will keep their offices open until midnight on February 29 to make sure builders ready for permits can acquire same under the 2009 Code.

Based on what I’ve read, publication of the revised Code may occur as early as March or as late as May.  It’s an open question how other local governments might deal with the snafu in the interim.  Which leads to this unsolicited advice: homebuilders with shovel-ready projects should make every effort to obtain needed permits by the close-of-business this Wednesday.

I’ll be keeping my eyes open for developments and will provide updates accordingly.

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