The good folks at Bricker & Eckler, an Ohio law firm, recently blogged about a New York appellate decision concering subcontract default insurance (“SDI”), often referred to as “SubGuard” based on a Zurich SDI product of the same name. The case involves a private owner who alleged it was misled by its construction manager (presumably at-risk) into believing that the SDI policy the CM had procured from the project’s largest subcontractor provided coverage to the owner in the event of that sub’s default. Turns out the policy only named the CM, but not the owner, as an insured, and when the owner discovered it had no coverage after the sub’s default, it sued the CM for fraud, among other claims.
Tag Archives: NC construction lawyer
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
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
Forecasting Governor-Elect McCrory’s Infrastructure Funding Priorities
I recently came across this blog post from The Council of State Governments’ “Knowledge Center” blog. The post forecasts the 2013 transportation funding challenges and priorities in 20 different states, North Carolina included. Here’s what the post had to say about what might be expected once former Charlotte Mayor Pat McCrory (R) becomes our governor in January:
The Associated Press recently looked at where incoming Gov. Pat McCrory (the longtime Charlotte Mayor) stands on transportation issues: “Don’t punish cities that must spend lots of money improving interstates, he says. Develop decades-long construction plans. Keep politics out of funding road projects and work with the private sector. And don’t be afraid to try something risky, like the Republican did in 1998 by lobbying for a referendum by voters that raised the local sales tax to help build Charlotte’s first light rail line.” Transportation advocates in the state are reportedly encouraged that the governor-elect, who championed transportation’s ability to improve the economy as Mayor of Charlotte, could endorse more sustainable transportation revenue sources and win support from legislators. But, as a Business Journal article pointed out earlier this fall, North Carolina’s gas tax is already among the highest in the nation and while the state has turned to tolling to help finance some projects, they have faced challenges with a couple of toll road projects.
Filed under State law, policy & news
N.C. Liens/Bonds, They Are A-Changin’ Part I: “Perfecting” Liens Under the New Regime
As 2012 draws to a close — faster than many of us can believe — the dawn of a new era under North Carolina’s mechanic’s lien and bond statutes quickly approaches. And that means it’s high time for me to end my brief blogging hiatus with a series dedicated to helping construction industry participants throughout the state understand the changes that are rapidly coming down the pike.
By way of brief recap, legislation protecting general contractors from double payment liability on public projects and legislation protecting title insurers from “hidden liens” on private projects made splashy headlines this past summer. I’ll be delving into the nuts and bolts of those significant changes as this series continues. This post, however, is dedicated to addressing a less-publicized, but no less substantial, alteration to the lien law that every potential lien claimant will need to bear in mind in 2013, and beyond: the process by which lien rights are “perfected.”
Filed under Feature story, Lien Law, State law, policy & news
Barnstorming Tour on Revisions to North Carolina’s Lien and Bond Laws Kicks Off Tomorrow In Durham
I’m excited to be one of five North Carolina lawyers participating in a series of seminars sponsored by CarolinasAGC aimed at helping the construction industry understand the significant lien and bond revisions passed by the General Assembly and signed into law by Governor Perdue earlier this summer.
Over the coming weeks, CAGC is sponsoring five such seminars in Durham, Wilmington, Greensboro, Charlotte and Asheville. CAGC’s website describes each seminar as follows:
This two hour seminar will cover the major, recently enacted revisions to North Carolina’s lien and public bond law statutes. House Bill 1052 and Senate Bill 42 were signed into law this July, and will take effect respectively in January and April 2013. The new laws substantially modify the steps that all parties will have to take to protect their interests — regardless of whether they are an owner, buyer, contractor or sub/supplier. In particular, the new laws impose significant new notice requirements for both public and private work. This seminar will be taught by attorneys that were intimately involved in passing the legislation and will cover in detail what the changes are and what you’ll need to do to protect your interests starting in 2013. Attendees will receive a written summary of the lien laws as amended and a copy of the Power Point
presentation presented and have ample opportunity to ask questions from the presenting attorneys.
Filed under Events, Lien Law, Payment Bonds, State law, policy & news, Surety Law
Bucking the Trend: The “Completed and Accepted Work Doctrine” Lives On In North Carolina
Image by eschipul via Creative Commons license.
In recent years, a majority of states have ruled that a contractor can be found liable for personal injuries suffered by third parties from accidents occurring after the contractor’s work is completed and accepted.
Not North Carolina.
In a decision handed down on August 7, 2012, the N.C. Court of Appeals (“COA”) once again embraced the “completed and accepted work doctrine,” which provides that an independent contractor is not liable for injuries to third parties occurring after the contractor’s work is completed and accepted. The doctrine has been the “law of the land” in the Old North State since 1946, and our appellate courts show no signs of reversing course.
This post explores the COA’s decision in Lamb v. D.S. Duggins Welding, Inc., considers the merits and drawbacks of the completed and accepted work doctrine and concludes with some observations about the rule’s exceptions and limitations.
The Ties That Bind, and Those That Don’t: Subcontracts v. Sub-bids
I frequently receive phone calls from general contractors curious to know what their legal rights and obligations are with respect to subcontractors before a subcontract agreement is actually reached. Invariably, these calls entail answering one of two questions:(1) Can I sue a subcontractor who wants to back out of its sub-bid or estimate? Or,
(2) Am I obligated to use a subcontractor upon whose sub-bid or estimate I based my prime contract price?
Generally speaking, the answer to both questions is “No.” That’s partially good news for subs, and partially good news for GC’s. Here’s why.
Filed under NC case law, Subcontractors
UPDATED: Lien Law Revisions Bill Cruises Through State Senate, Followed by “Hidden Lien” Legislation
Most recent update: Thursday, June 28, 2012 9:22 p.m.Both the lien law revisions bill and the “hidden lien” legislation sought by the title insurance industry flew through the N.C. Senate yesterday with flying colors.
The lien law revisions bill (House Bill 1052), which among other things would (1) provide “double payment” protection for general contractors under North Carolina’s public payment bond statute and (2) permit 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 protection, passed unanimously 49-0, with one Senator not voting.
The bill was amended prior to the vote to remove treble damages liability for misrepresentations made in lien waivers. I was listening to the Senate’s deliberations on the amendment, and Senators Brunstetter, Clodfelter, Tillman and Nesbitt all spoke about the dangers of introducing potential unfair and deceptive trade practices liability into a construction project’s payment cycle. The amendment was unanimously approved by the House on Thursday, June 28. The revised bill, as amended, can be found here.
The hidden lien legislation (Senate Bill 42), which among other things would require potential lien claimants to preserve their lien rights by providing a “Hi, I’m here” pre-notice to the project owner’s designated lien agent on residential and commercial projects, also passed unanimously 49-0, but not without some heartburn. In particular, Senator Tommy Tucker of Waxhaw spoke about how the legislation was only before the General Assembly “under a veiled threat” by the title insurance industry, thereby representing a “you’d better!” bill that would leave subcontractors “holding the bag again.” He expressed his support for the bill since the homebuilding industry supported it, but expressed his desire that the General Assembly re-visit the legislation early in the 2013 session to improve it before its April 1, 2013 effective date.
The version of SB 42 passed by the Senate contained several revisions to the version passed in the House on June 21. In the intervening week, a group of construction industry stakeholders — yours truly included, in the interest of full disclosure — worked to propose several modifications that would remove some of the rough edges from the House-passed bill. Those proposed modifications included the following:
- The requirement of pre-notice will not apply where the improvements in question are to be made to an existing single-family residential dwelling unit that is used by the owner as a residence.
- The failure to provide lien agent information to a supplier not expected to perform on-site labor will not result in triple damages exposure under North Carolina’s unfair and deceptive trade practices statute.
- Higher tiered contractors will no longer be able to cut off the lien rights of lower tiered contractors through lien waivers once the lower tiered contractor (1) files pre-notice to the lien agent and (2) serves a notice of claim of lien upon funds up the entire contractual chain and upon the lien agent (under existing law, a higher tiered contractor’s ability to waive the rights of lower tier contractors is only shut off when the lower tiered contractor files a lien enforcement action in court).
- Where a lien agent is not designated prior to the provision of design services by an architect or engineer, the design professional will be deemed to have met the requirement of pre-notice upon the owner’s designation of the lien agent.
These modifications and others are contained in a conference report that was adopted by both the House and Senate yesterday that you can find here. Legislative action on the hidden lien bill is complete, subject to the bill potentially being “tweaked” early in the next legislative session.
Both bills are on their way to Governor Perdue for her approval, which is expected before the end of the month.
Many thanks to Representative Sarah Stevens of Mount Airy for reaching out to me yesterday with news of these developments, and for all of her efforts in shepherding these important bills to the finish line.
Filed under Lien Law, Payment Bonds, State law, policy & news, Surety Law
N.C. Construction Law, Policy & News 