2010 – Page 3 – Construction Law

Failure to Provide all Necessary Minority and Woman-Owned Business Enterprise Subcontracts Within Reasonable Time After Subcontract Award is Material Breach of Contact

Aug 15 2010

Jay Dee/Mole Joint Venture v. Mayor and City Council of Baltimore, 725 F. Supp. 2d 513 (D. Md. 2010)

In an interesting decision issued by the United States District Court for the District of Maryland, the Court held that a prime contractor was in material breach of its contact with the City of Baltimore for not entering into promised subcontracts with Minority and Women-Owned Disadvantaged Businesses.

Under Maryland law, state and local public contracts typically require participation by minority, social, economic and woman-owned disadvantaged businesses (collectively “DBs”). Such participation is usually accomplished by subcontracts, which are typically entered into post prime contract award. To qualify as a bidder/offeror, however, the prime contractor must make certain certifications and representations as to how the DB participation requirements are to be met.

The Availability in the UAE of Liens to Secure Payment under Construction Contracts

Aug 11 2010

By Neal R. Brendel, Amy L. Barrette, & Wadih El-Riachi, K&L Gates, Dubai

This article was originally published in Arab Law Quarterly.

Abstract
While much attention has been devoted to curbing the rise of lawsuits surrounding Dubai’s struggling construction industry, surprisingly little attention has been focused on another option available to contractors who seek payment for failed or troubled projects. Contractors, architects, and engineers may find relief under a seldom-reported UAE federal law that establishes qualified rights for contractors to secure payment for work under non-governmental contracts by filing a priority lien against the project itself. This article discusses the remedy, know in many common-law jurisdictions as ‘mechanic’s liens’ or ‘builder’s liens’, and why it is important for contractors to be familiar with the applicable Civil Code and Civil Procedure Code provisions. Those who first exercise their lien rights and seek to register liens with the Land Department will be treading new ground and will want to be well-prepared and educated on their rights provided under existing law.

To read the full article, click here.

Fifth Circuit Disallows Equitable Defenses to Limitations Under Texas Performance Bond Statute

Jul 23 2010

Hartford Fire Ins. Co. v. City of Mont Belvieu, Texas, No. 09-40586 (5th Cir. July 13, 2010)

By: David Coale & Billie Ann Maxwell, K&L Gates, Dallas

This case shows why it is important for governmental entities, their contractors, and performance bond providers to be aware of statements among the parties for limitations purposes, and the application of equitable defenses, in the context of the one-year limitations period under Texas Government Code § 2253.078(a). The lessons of this case apply fully to similar statutes in other jurisdictions.

California Court of Appeal Clarifies Definition of Retention Payments Under Civil Code § 3260

Jul 07 2010

Yassin v. Solis, 184 Cal. App. 4th 524 (Cal. Ct. App. 2010)

By: Carlo L. Rodes and Brett D. Bissett, K&L Gates, Los Angeles

In this case, the court of appeal set forth a definition for retention that applies whenever a contractor seeks an award of penalties for improperly withheld retention under a California prompt payment statute.

The plaintiff-contractor, Diaa Yassin was hired by the defendants-owners, (collectively “Solises”), to improve the Solises’ home. Under the contract, Yassin was to receive a series of payments throughout various stages of construction and the last payment was to be made upon completion of the work and before occupancy. Yassin ultimately sued the Solises for money allegedly owed under the contract. Although the court addressed other matters, a principal issue was the status of the final two payments of $15,000 and whether those amounts qualified as retention payments under California Civil Code § 3260. Under section 3260, if an owner fails to make retention payments within the time prescribed by that section, a contractor may recover a penalty in the amount of 2 percent per month on the improperly withheld amount plus attorney fees.

Lien Held Invalid for Failure to Comply with Statutory Attestation Requirement

Jun 07 2010

Williams v. Athletic Field, Inc., No. 33607-3-II (Wash. Ct. App. Apr. 7, 2010)

By: Jesse O. Franklin IV and Bradley D. Bowen, K&L Gates, Seattle

This case demonstrates the importance for claimants to substantially comply with Washington’s lien statutes. The issue in Williams was whether a lien is invalid if a lien filing service employee signs the lien’s attestation clause, rather than a claimant or the claimant’s attorney. The Court in Williams held that an agent of a claimant can sign a lien’s attestation clause under RCW 60.04.091, addressing the recording of liens, including an employee of a lien filing service. However, the Court went on to hold that when the claimant’s agent is also a corporation, like a lien filing service, the agent must comply with the corporate acknowledgement requirements under Washington law. Moreover, the Williams case stands for the more general proposition that a lien claimant in Washington must clearly demonstrate that all statutory lien claim requirements have been met because courts strictly construe the lien statutes.

Texas Supreme Court Finds Jurisdiction over Foreign Manufacturer

Apr 05 2010

Spir Star AG v. Kumich, No. 07-0340 (Tex. Mar. 12, 2010)

By: David Coale & Matthew Sikes, K&L Gates, Dallas

The recent Texas Supreme Court case of Spir Star AG v. Kumich affirmed jurisdiction over a foreign company that had deliberately structured its Texas business to be conducted through a separate intermediary. No. 07-0340 (Tex. March 12, 2010). This case illustrates an aspect of personal jurisdiction over foreign entities that can be critical to disputes about projects involving overseas consultants or specialty contractors.

Fifth Circuit Upholds Use of Contractual Interim Orders and Progress Payments to Preclude Contractors from Obtaining Further Payment for Extra Work

Mar 11 2010

Addicks Servs., Inc. v. GGP-Bridgeland, LP, 2010 WL 4250054 (5th Cir. Feb. 8, 2010)

This case shows the effectiveness that explicit waivers and progress payments can have on precluding contractors from obtaining further pay for alleged extra work. A contractor sought damages for extra work and delay costs incurred in performing excavation and grading work for a developer. The Fifth Circuit, applying Texas law, granted summary judgment in favor of a developer because the interim waivers and accompanying progress payments unambiguously released any outstanding claims for payment of extra work performed before the date of each interim waiver.

State Statutes, Regulations, and Local Codes

Feb 02 2010

A. Statutes

Maryland Employment Laws

Maryland Code
Business Regulation, Title 2, Department of Labor, Licensing and Regulation
Labor and Employment, Title 3, Employment Standards and Conditions
Labor and Employment, Title 5, Occupational Safety and Health
Real Property, Title 9, Statutory Liens on Real Property

B. Regulations

Code of Maryland Regulations (COMAR)

Title 5, Department of Housing and Community Development

Title 9, Department of Labor, Licensing and Regulation

Title 21, State Procurement Regulations

C. Local Codes

Maryland Municipal Codes

Maryland County Codes

D. Building Codes

Maryland Building Codes