A couple of weeks ago, I posted my thoughts about the N.C. Court of Appeals’ recent decision in Ramey Kemp & Associates, Inc. v. Richmond Hills Residential Partners, LLC et al., which held that an engineer’s preparation of a project status update letter constituted what I call a “lienable activity,” i.e., an event sufficient to trigger the 120-day deadline for filing a mechanics’ lien under N.C. Gen. Stat. § 44A-12(b). In light of the Ramey Kemp decision, general contractors might well ask themselves, “Gee, if an engineer’s project status letter is a lienable activity on a construction project, how about the close-out paperwork I’ve gotta provide under my contract, particularly as-builts?” Good question. Continue reading
Is As-Built Drawing Preparation a Lienable Activity?
Embed from Getty Images
Will QR Code Technology Provide Contractors Quick Relief in Filing Preliminary Lien Notices?
Ever since its passage last summer, North Carolina’s so-called “lien agent statute” has caused much consternation throughout the commercial construction industry, with many contractors, subs and suppliers worried that it will be inconvenient and expensive for them to comply with the statute’s various requirements (which I’ll be discussing in detail as my “Lien & Bond Law Revolution” series continues in the weeks ahead). The title insurance industry, however, has tried to assure leery potential lien claimants that an online application will make filing preliminary lien notices convenient and inexpensive.This week, we’ll get down to where the rubber meets the road on that assurance. Continue reading
Filed under Events, Lien Law, State law, policy & news, Subcontractors
$4M+ Reasons to Be Wary of False Claims Risk
Need a reminder about the risk of making false claims in connection with public contracting?
I’ll give you three.
First, consider the general contractor who submitted allegedly inflated change orders on various projects financed by the U.S. Department of Justice and Army Corps of Engineers. The government alleged that the change order requests included CGL and workers’ comp insurance rates that had additional “cushions” above and beyond what the GC had actually incurred. Although the contractor denied liability, it agreed last week to settle the government’s fraud allegations by paying the United States $367,500.
Next, consider the general contractor whose subcontractor failed to pay prevailing wages under the Davis Bacon Act on a U.S. Department of the Army contract. The GC’s certified payroll records inaccurately represented that prevailing wages were paid to all subcontractor employees. In October 2012, the U.S. Court of Appeals for the Sixth Circuit upheld a U.S. District Court’s $1.66 million judgment against the GC, but remanded the case for a recalculation of damages that could end up saving the GC at least a little bit of money.
Finally, consider the general contractor who overstated the costs it incurred participating in the U.S. Department of Defense’s Mentor-Protégé Program, designed to provide developmental assistance to disadvantaged small businesses. The government alleged that the contractor submitted more than 20 requests for payment in connection with the program that significantly overstated the amount of developmental assistance actually provided. In December 2012, the contractor agreed to pay a $2 million penalty to avoid prosecution by the government.
Three cases. Millions of dollars. One conclusion: submitting false claims in connection with federal contracting can be extremely expensive.
Filed under False Claims Act
N.C. Court of Appeals Fleshes Out the Scope of Design Professionals’ Mechanics’ Lien Rights
Embed from Getty Images
The North Carolina Court of Appeals (“COA”) this morning issued a 33-page opinion clarifying the types of professional engineering services entitled to a claim of lien under North Carolina’s mechanics’ lien statutes. One of the three COA judges, however, issued a dissenting opinion, which means further review by the North Carolina Supreme Court could be in the offing. This post explores the facts of Ramey Kemp & Associates, Inc. v. Richmond Hills Residential Partners, LLC et al., discusses the majority and dissenting opinions, and comments on the important points to take away from the decision.
Filed under Design Contracts, Feature story, Lien Law
Celebrate Great Blogs, Come On!
It was an honor and a surprise to receive an email from Bob Kruhm, publisher of NC Construction News, earlier this week informing me that he had nominated this blog for the “2013 Best Construction Blog Competition” sponsored by the Construction Marketing Ideas blog. Voting begins today and continues through April 1.
Filed under Uncategorized
Why I Support Limiting North Carolina’s Lien Agent Statute to Residential Construction Projects
Photo Credit: Marietta Daily Journal
This afternoon I attended the first lien law “Stakeholders’ Meeting” of the North Carolina General Assembly’s 2013 Regular Session. The purpose of today’s meeting was to give folks in support of and opposition to proposed legislation that would limit the state’s new lien agent notice requirements to one- and two-family dwelling units 30 minutes per side to argue their respective cases.
I spent just under ten minutes of the “pro” side’s time making an argument that I’ve memorialized in the letter attached, below. To read a larger version of the letter, click the expand button in the lower right-hand corner of the Scribd application.
This issue is still very much ripe for discussion, and so I invite and value your comments.
Filed under Lien Law, State law, policy & news
Seeing the Forest AND the Trees: Handling Contract Surety Claims with an Eye on the Big Picture
A Grim Tale
Image by Larisa Koshkina / PublicDomainPictures.net
Once upon a time, Best General Contracting, Inc. hired Able Electric Services Co. to perform the $900,000 electrical scope of work on a library project for a local college. Having not worked with Able before, and in light of the value of the electrical scope, Best required Able to obtain subcontractor performance & payment bonds for Best’s benefit, agreeing, of course, to reimburse Able for the $13,500 bond premium. As fate would have it, the library project proved one too many for the not-so-able Able, who ran into cash flow problems, sought bankruptcy protection and abandoned the project. Best immediately fired off a notice of default letter to Superior Surety and hoped that the claims handling process would match previous, positive experiences with subcontractor sureties and culminate in a quick, fairy-tale resolution to this project setback.
To Best’s surprise, it would not. Continue reading
Filed under Claims Handling, Performance Bonds, Surety Law
10 Big Changes to Bidding, Performing & Making Verified Claims On NCDOT Projects
I represent a number of highway/heavy contractors, all of whom know that doing business with the North Carolina Department of Transportation (“NCDOT” or the “Department”) requires careful attention to the agency’s “Standard Specifications for Roads and Structures.” NCDOT’s Standard Specs contain both front-end “General Requirements” (what would be called “General Conditions” on virtually any other public or private construction contract) and back-end standards for all aspects of highway work — from earthwork, pipe culverts, subgrade and asphalt pavements to signing, materials, pavement markings and electronic signalization.As my highway/heavy clients also know, the NCDOT’s Standard Specs are regularly revised every 4-6 years. Last year, NCDOT issued the 2012 version of its highway construction bible, updating the 2006 version. This post focuses on what I consider to be the ten most significant changes to NCDOT’s front-end “General Requirements.” As you will see below, these ten revisions affect how contractors obtain, perform and make claims on NCDOT work.
Foul Weather, Contract Time and Excusable Delay
Would snow tonight give rise to excusable delay tomorrow? Image courtesy of The Weather Channel.
Is it just me, or has it been exceedingly gray and wet in Raleigh-Durham, NC so far in 2013? Heck, forecasters are even calling for 3-6 inches of snow overnight in the Triangle (note to self: pick up milk, bread and other essentials during the lunch break, before the grocery stores shelves are predictably and thoroughly picked over).
The unusually dreary skies around here of late have me thinking about the intersection between the weather and construction delay claims. Specifically, I’ve been ruminating on this question: when is a contractor’s project delay excused by nasty weather?
Filed under Delay Claims
N.C. Liens/Bonds, They Are A-Changin’ Part II: The (Bankruptcy) Fix Is In
Back in 2010, when a group of construction, real property and bankruptcy lawyers first started meeting to consider potential revisions to North Carolina’s lien and bond statutes, one of the driving forces behind those discussions — particularly for those who typically represent subcontractors and suppliers — was protection for downstream project participants after an upstream player filed for bankruptcy. Such protection, known commonly as the “Bankruptcy Fix,” was included in the package of revisions signed into law last summer. This post explores the origins of the Bankruptcy Fix and discusses how the 2012 lien law legislation protects the right of subs and suppliers to serve a Notice of Claim of Lien Upon Funds even after a party above them in the contractual chain files for bankruptcy.
N.C. Construction Law, Policy & News 