Mechanic’s Liens – Page 3 – Construction Law Musings- Richmond, VA

Motions to Dismiss, Limitations of Liability, and More

Remember BAE Sys. Ordnance Sys. V. Fluor Fed. Sols? I examined that case on two occasions previously here at Construction Law Musings. Previously the discussions were about the mix (or lack thereof) between fraud and contract and about how careful contract drafting is key.

In the most recent opinion in this ongoing litigation from March of 2022, the Court examined various motions to dismiss the Complaint and Counterclaim in the matter. As a reminder, the basic facts are as follows.

The US Army Joint Munitions Command (“Army”) contracted with BAE Systems OrdnanceSystems, Inc. (“BAE”) to operate and maintain the Radford Army Ammunition Plant (“RFAAP”)under a basic ordering agreement (“BOA”). Under BOA Task Order 002, BAE contracted to replace the legacy NC facility at the RFAAP with a newer one (the “NC Project”). Initially, BAE subcontracted the NC Project to Lauren Engineers & Constructors (“Lauren”), but later terminated Lauren. Despite terminating Lauren, BAE’s timeline to complete the NC Project remained unchanged and BAE was required to use Lauren’s design for the NC Project. BAE gave interested bidders access to the Lauren design and other related documents and required the selected subcontractor to perform in accordance with the 85% complete Lauren design, that the Lauren design could be relied on for accuracy, and the selected subcontractor only had to complete the unfinished parts. Fluor Federal Solutions, LLC (“Fluor”) submitted a request for information (“RFI”) asking BAE about the standards referenced in the SOW. Fluor was unable to determine the completeness of the Lauren design but relied on BAE’s assertion that the design was 85% complete. BAE rejected Fluor’s initial bid as being too high given what BAE had already paid Lauren for its design and told Fluor to lower its bid because the design was close to complete. Fluor lowered its price and submitted another bid proposal that outlined a firm-fixed-price design/build that forecasted 32 months to complete the NC Project. BAE awarded Fluor an Undefinitized Contract Action (“UCA”) in the amount of $9 million dollars, later increased to $32 million. Under the UCA, Fluor began procuring materials and physical construction before a formal subcontract was agreed upon. On December 17, 2015, BAE and Fluor agreed to a fixed-price design and build subcontract (the “Subcontract”) in which Fluor agreed to design, construct, and partially commission the NC Project for $245,690,422.00, which included money spent already in the UCA. When this litigation began, Fluor was scheduled to complete its work by December 2020, 2.5 years beyond the originally agreed-upon completion date.

On September 30, 2020, BAE sued Fluor for breach of contract. On May 24, 2021, Fluor counterclaimed for breach of contract, quantum meruit, and unjust enrichment. Fluor’s counterclaim alleged that Fluor was not at fault for failing to meet the agreed-upon schedule and Fluor had $183 million in outstanding change proposals when the litigation was filed.

Continue reading Motions to Dismiss, Limitations of Liability, and More

A Twist on Mechanic’s Liens and Bankruptcy

Originally posted 2010-11-08 11:28:52.

We have discussed mechanic’s liens and their advantages relating to bankruptcy on several occasions here at Musings. As I warmed up from a cold weekend of camping with my son’s Boy Scout troop, I remembered a recent case out of the Fairfax County, Virginia Circuit Court that provides an explanation of yet another wrinkle in the mechanic’s lien/bankruptcy interaction.

In Heritage Contracting LLC v. Vasquez, the Court considered the effects of a filing of bankruptcy by one of two joint tenants upon the lien enforcement rights of a material supplier to the property owned by those joint tenants. In Vasquez, Chopp & Company recorded its lien against the property 5 months prior to one of two joint tenants with the right of survivorship filing bankruptcy. Once the stay was lifted 9 months after the lien was recorded (and well outside of the 6-month statute of limitations for filing suit to enforce the lien), Chopp attempted to enforce its lien. While this, in and of itself, is relatively straightforward, Chopp did not file within the 30 days post-bankruptcy required by the bankruptcy code.

Despite this failure to meet the bankruptcy code deadline, Chopp argued that, because one of the two joint tenants did not file for bankruptcy, it was still allowed to enforce its lien. The Court disagreed. After an analysis of the various cases relating to severance of joint tenancies and the Fourth Circuit‘s “unusual circumstances” test (found in A. H. Robins v. Piccinin, 788 F.2d 994 (4th Cir. 1986)), the Court concluded that Chopp had blown its opportunity to enforce its lien when it failed to file the enforcement action within the 30 days.

In short, the cautionary tale of this case is that, despite mechanic’s liens surviving bankruptcy, several statutes (state and federal) are at play in every bankruptcy. Contractors and subcontractors that file these liens need to be aware of these interactions themselves or consult with an experienced construction attorney who is. Failing to do so could send your Virginia mechanic’s lien to the “dismissed” pile in a hurry.

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Mechanic’s Liens and Legislative Sausage

Originally posted 2016-12-19 10:00:35.

English: Virginia state capitol in Richmond. F... — Image via Wikipedia

Over the past week or two I’ve been covering HB 1265, a bill that was working its way through the Virginia General Assembly legislative sausage making process. I gave you my thoughts on the original bill as written and then on the somewhat better (though far from perfect) amended bill.

Well, this past Monday I had the opportunity to take part in the hearing on the bill before the Virginia Senate committee that was considering whether to recommend the amended bill to the entire Senate for a vote.

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Anatomy of a Construction Dispute- A Wrap Up

Originally posted 2015-02-06 09:37:58.

Under construction (Photo credit: Wikipedia)

Over the past four weeks, I’ve “mused” on the “stages” of a construction dispute. What started as a kernel of thought in my mind turned into what has seemed to be a popular set of four posts that I hope were both informative and interesting. Because of the great feedback I’ve gotten, I thought that I’d consolidate the posts into one so that my readers (thank you, by the way) will have them all in one place. Here they are:
Continue reading Anatomy of a Construction Dispute- A Wrap Up

Virginia Mechanic’s Liens- Defense Options

Originally posted 2015-08-24 09:00:15.

Here at Construction Law Musings, I have discussed the filing of mechanic’s liens in Virginia and various cases discussing the pitfalls to be found in the filing of these powerful collection tools. However, I have rarely discussed the affirmative steps that an owner can take in defending against the filing of a mechanic’s lien by a contractor, subcontractor or supplier who provided materials and labor to its project.

Aside from the obvious defenses involving the 90 day filing term, the 150 day “look back” period, and the 6 month statute of limitations for filing suit to enforce a lien, the Virginia mechanic’s lien statute contains numerous provisions that could help an owner faced with a lien. Among them are the following:

1. If the project is for residential construction, check to make sure that the contractor or subcontractor has properly notified any mechanic’s lien agent found on the building permit. (Section 43-4.01)

2. As a defense to the priority of a mechanic’s lien filed by a contractor that refuses or is unable to complete construction, Section 43-16 places any payment by the owner made to complete the structure takes priority over the lien.

3. In order to bring such defenses to light in the event that such action becomes necessary, Section 43-17.1 provides a procedure for affirmatively challenging the validity of a mechanic’s lien for any of the previously mentioned reasons.

These are only a few of the tools that an owner or upstream contractor can use when faced with a mechanic’s lien in Virginia. As an owner of a construction project in Virginia, please make sure you discuss your options with an experienced Virginia construction lawyer to assure that you use the proper tool for the job.

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