The Court of Appeals (“COA”) held last week that a general contractor can not be held liable under North Carolina’s Sedimentation Pollution Control Act (the “SPCA” or the “Act”) for land-disturbing activities that resulted in an offsite deposit of silt, mud, debris and water on an adjacent landowner’s golf course. The 2-1 split decision limits the reach of the SPCA, codified at N.C. Gen. Stat. § 113A-50 et seq., to offsite sediment disposal into water; according to the COA, disposal onto land is not covered by the Act.
Case Law Spotlight: COA Limits Reach of Sedimentation Pollution Control Act in 2-1 Decision
Filed under Environmental Issues, Feature story, NC case law
Finally Extinct: Mammoth & Harrelson Decisions Disavowed by the Same Court That Issued Them
Back in the Summer of 2009, the entire North Carolina construction industry, particularly us construction lawyers, were shocked by a series of decisions handed down by the U.S. Bankruptcy Court for the Eastern District of North Carolina that essentially prevented subcontractors and suppliers from serving claims of liens upon funds up the contractual chain once an entity higher on that chain had filed for bankruptcy protection. Nearly three years later, and in a surprise move that should come as welcome news to a wide swath of the contracting community (and particularly to subs and suppliers), the same court reversed course last Wednesday, and is once again permitting notices of claims of liens upon funds to be served despite the automatic stay provisions of federal bankruptcy law.
I’ll have more analysis in the days ahead. In the interim, rest assured that the In re Mammoth Grading and the In re Harrelson Utilities decisions are for all intents and purposes no more. To read the Order of Judge Randy Doub reversing course, click here.
Filed under Federal case law, Lien Law
Recommended Reading: The Basics of E-Verify in North Carolina
I’m a pure sticks-and-bricks construction and surety lawyer, focusing on construction contracts, change order claims, payment claims, defect claims, delay claims, etc. etc. While I don’t dabble in either employment or immigration law, I fully recognize that construction participants — and particularly general contractors and subcontractors — confront a host of employment- and immigration-related legal issues on a regular basis. I therefore endeavor to pass along important information authored by my colleagues in the legal community who, unlike me, are experts in the employment and/or immigration law fields.
In that vein, Jennifer Parser of PoynerSpruill has posted an excellent primer on E-Verify that I recommend to all North Carolina construction participants. E-Verify is an internet based tool that allows employers to instantly verify the eligibility of their employees to work in the United States. E-Verify became the “law of the land” here in North Carolina last June, and Ms. Parser’s article discusses how the legislation will be phased in, how employers can comply and the penalties for non-compliance. Must reading. And for more, head to the federal government’s E-Verify site.
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.
Monroe Bypass Legal Saga Approaching End of Road, Could Impact Bonner Bridge Litigation
Image from ncdot.gov
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.
Postcard from Hilton Head: Greetings from CAGC’s 91st Annual Convention
Yesterday marked the first full day of Carolinas AGC’s 91st Annual Convention, taking place this year at the Hilton Head Marriott Resort & Spa. With over 350 attendees, this year’s event is CAGC’s best-attended annual convention in five years.
Day 1 highlights included remarks by 2012 AGC president Joe Jarboe, an update on the reauthorization of the federal highway/transit investment law from Rich Juliano of the American Road & Transportation Builders Association (“ARTBA”) and a presentation about the possibilities social media presents to the construction industry.
Filed under Events, Feature story
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.
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.
Arbitration News: 4th Circuit Weighs In On “Manifest Disregard” Confusion
Consider the following hypothetical:
You are claims counsel for a large surety company who has spent the better part of last December preparing for and participating in eight days of arbitration hearings arising from the termination of your bonded principal in late 2010. Back then, you had made the decision to contest liability under the performance bond on several grounds, not the least of which was the owner’s retention of a replacement general contractor without surety consent and otherwise in violation of the conditions precedent set forth in the AIA-A312 form of performance bond utilized on the project. Your bonded principal is now in bankruptcy, and you were required to take a leading role in the arbitration proceeding as a result.
Your outside counsel is now on the phone, announcing that the Award of the Arbitrator has been issued. Unfortunately, it’s not pretty. The arbitrator has awarded the owner virtually the entire completion premium it had been seeking in the arbitration proceeding, minus a few adjustments here and there. Adding insult to injury, the award is completely devoid of any reference to your A312 conditions precedent defense, which from day one you believed to be a winner, based on your interpretation of the prevailing legal authorities.
“That can’t be right,” you complain to your outside counsel. “That’s clear error by the arbitrator. Doesn’t the Federal Arbitration Act give me a right to challenge his obvious failure to apply the law?”
“Well,” outside counsel begins, “likely not. Generally speaking, the FAA only permits a judge to vacate an arbitration award upon proof of gross misconduct by the arbitrator. I’m talking about partiality or corruption, or misconduct in refusing to hear evidence pertinent to the dispute, that kind of stuff. And frankly, proving any of those statutory grounds would be a steep uphill battle for us.”
“Okay, let’s put the FAA to the side for a moment,” you respond. “If I’m right, and the arbitrator completely blew it on our A312 defenses, aren’t there cases out there that allow us to challenge this award if we can prove that it demonstrates a manifest disregard of the law by the arbitrator?”
Ah, manifest disregard of the law. For over fifty years, this common law doctrine has represented the last best hope for parties seeking to challenge the enforceability of an arbitration award. But ever since the U.S. Supreme Court’s decision in Hall Street Associates v. Mattel, Inc. in 2008, there’s been a decided split in the federal courts — and therefore a tremendous amount of confusion — as to whether manifest disregard still exists.
Last week, the U.S. Court of Appeals for the Fourth Circuit, which handles appeals from the North Carolina’s federal trial courts (as well as from the federal trial courts in MD, VA, WV and SC), finally took its stance in the ongoing mess. And at least in this jurisdiction, manifest disregard lives on.
Filed under Arbitration, Federal case law, Surety Law
More on Highway Financing through Public-Private Partnerships
A couple of my blog posts have mentioned the use of public-private partnerships (“PPPs”) as an alternative source of highway construction financing, including my February 6, 2012 story about NCDOT’s plans to widen I-95 (by the way, last Friday, the Federal Highway Administration gave tentative approval to tolling on I-95).
It remains unclear whether any private money might be utilized to finance the I-95 widening project. What is clear is that PPPs present a host of legal issues that all project participants (and their attorneys) would need to wrestle with should the NCDOT seek private money for I-95, or any other state highway project.
The purpose of this blawg post is to supply three resources for enhancing our collective understanding of the practical implications of PPP financing. A good place to start is this blog post from the blawg “Best Practices Construction Law,” authored by attorney Matthew J. DeVries, who practices in Virginia and Tennessee. Mr. DeVries links to the second resource you should consider, and that’s the AGC’s White Paper on Public-Private Partnerships. Contractors may want to jump to page 13 of the White Paper, which includes a chart summarizing how a PPP could shift typical risk allocations:
For additional depth, consult the National Cooperative Highway Research Program’s Major Legal Issues for Highway Public-Private Partnerships. It presents several representative case studies and concludes that several successful projects have given PPP participants the flexibility to select the optimal project delivery system for their particular project. Such flexibility, of course, could mean procurement outside the sealed bid process.
I’ll be keeping an eye on subsequent I-95 developments. Should the NCDOT begin exploring PPPs, it is hoped that these three resources will provide the contracting community with a foundation for understanding the legal ramifications of this alternative highway financing framework.
N.C. Construction Law, Policy & News 