Thoughts on construction law from Christopher G. Hill, Virginia construction lawyer, LEED AP, mediator, and member of the Virginia Legal Elite in Construction Law
For this week’s Guest Post Friday here at Musings, we welcome back a good friend, Scott Wolfe. Scott is the founder of Levelset, a cloud-based platform that gives construction industry participants control over their financial risk and payment processes. The Levelset platform manages the mechanics lien compliance process for all parties in the contracting chain, automating and optimizing the exchange of preliminary notices, monitoring lien rights and exposure, and exchanging lien waivers. Levelset empowers over 10,000 companies to optimize their credit and financial risk management, and works to promote a fair and transparent construction payment process, improve B2B relationships, facilitate faster payments, and reduce legal and financial risk.
Sending preliminary notice is the most important step in mechanics lien compliance. A majority of states require preliminary notice (sometimes called a pre-lien notice or notice to owner) from contractors, material suppliers, and other construction parties. Even if preliminary notice is not required, however, it is best practice to send this document on all projects for a variety of reasons. Continue reading Navigating Complex Preliminary Notice Requirements
Here we are on Guest Post Friday and I thought that I’d take a moment to thank those that have allowed me the privilege of providing guest posts at their sites over the last few months. I always appreciate the chance to share some thoughts with readers of great blogs like the Zlien blog and ALPS411 among others. I count the folks at these and other blogs as friends and I hope that you will check out my posts there as well as the other great information found at these blogs.
For this week’s Guest Post Friday here at Construction Law Musings, we welcome Matthew Homann. Matt is a writer, speaker, facilitator and entrepreneur. He’s the founder of LexThink, and the author of the [non]billable hour blog. He was named a “Legal Rebel” by the ABA Journal, lives in St. Louis and has a daughter named Grace.
I believe most lawyers write their bios for themselves and their peers instead of for their clients. I don’t think many clients really care about where their lawyer went to law school 25 years ago, but go check out a dozen random law firm websites and, “Lawyer X graduated from Y Law School” is almost always the first thing you’ll see.
Is your bio any different? What’s in the first line? Is it something your prospective clients care about? If not, I challenge you to do the following to make your bio more interesting and relevant to your prospective clients: write it for them.
Some things to think about:
When you meet with a prospect for the first time, what do you talk about first as you get to know one another?
What in your office catches their eye? Is it your diploma, or the hardhat you keep on your bookcase because you regularly visit with clients out on the job site?
Are your potential clients more likely to ask why you didn’t go to Harvard, or how the little league team you coached finished up the season?
Do they want to know if you wrote an article for the law review in school, or if you’ve written contracts like the ones they need?
In short, make certain your bio shows them the kind of lawyer (and person) you are now and why they’ll like working with you. If you’re not sure what those things are, ask your best clients this simple question:
“What three things about me were most important to you as you were deciding to hire me as your lawyer?”
And if you’ve got a handful of loyal, wonderful clients, think about asking them if they’d take a crack at writing your bio in a way that would impress their peers. You might just be surprised at how many will say yes.
As always Matt and I welcome your comments below.Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.
We have discussed mechanic’s liens on many occasions here at Musings. Given the interest in this powerful collection tool, a contractor may think that this remedy, when used properly, will cover any provision of labor or materials to a project. We’ve discussed one exception to this seemingly universal rule previously.
Another exception is highlighted by a recent case in the Western District of Virginia Federal district court. In Summit Community Bank v. Blue Ridge Shadows Hotel the Court considered the question of what supplies to a construction project are subject to a mechanic’s lien in Virginia. In this case, the Western District bankruptcy court determined that furniture delivered to a hotel during construction was properly subject to a mechanic’s lien. Unfortunately for the lienholder, the U. S. District Court disagreed.
The Court stated that furniture, including tables, lamps, chairs, etc. are not “improvements” within the meaning of the mechanic’s lien statute. In short, the Court determined that the Virginia statute requires more of a connection between the materials and the structure than is present with personal property with the sole connection of “presence” in the building. The Court did not go so far as to require a physical connection, leaving open the question of where on the spectrum of personal property with only a “presence” connection and an irremovable fixture would allow materials delivered to a job site to be subject to a lien.
The takeaway? First of all, not all work or materials are subject to lien. This means that a contractor, subcontractor or supplier must be careful in what it includes in a lien, particularly in light of the picky nature of these liens and the ease with which the Virginia courts will invalidate them. Second of all, just because a claim is not subject to lien does not mean that a contractor is completely without remedy. A breach of contract action is always a possibility (of course this case is a bankruptcy case and a lien is always a better option in such circumstances).
As always, I encourage you to consult a Virginia construction attorney to discuss your options prior to moving forward with a mechanic’s lien or any other claim related action.
Image via Stock Exchange.
As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.
The Federal Miller Act is a great tool that subcontractors and suppliers on Federal projects can use for collection of wrongfully withheld amounts due. However, as a recent federal case from the Eastern District of Virginia points out, the construction contract’s terms affect when a subcontractor or supplier can use this great collection tool and how much it can recover.
In Aarow v Travelers the Court looked at the interaction between a typical termination clause, a “pay when paid” clause, and the Miller Act. The key facts are these. The general contractor on the project at issue, Syska, did not get paid some disputed amounts by the owner and subsequently did not pay Aarow, the plaintiff and a subcontractor on the project. Aarow then refused to continue work and was terminated by Syska who then took over the completion of the work. Aarow sued, seeking damages for the value of its work prior to the termination. Travellers, the surety defended stating that, if Aarow was properly terminated for cause by Syska, then Aarow was not entitled to payment under the contract until such time as the work was completed and accepted by the owner. The termination clauses are set out in the linked opinion.
The Court agreed with Travelers, stating that the pay when paid clause created a situation whereby Aarow could not stop work merely because of a non-payment by Syska attributed to non-payment by the owner. The Court was clear in stating that the Miller Act trumps “pay when paid” in instances where the only cause for non-payment is non-payment by an owner. The Court then reasoned that it is the interaction between the termination and “pay when paid” provisions, and not the “pay when paid” clause itself, that exonerated Travelers because it created the default by Aarow due to its refusal to continue work. In short, Aarow was properly terminated for cause because it left the job without justification and therefore Travelers was not liable.
What can we learn from this? 1. A “pay when paid” clause, on its own, does not create a defense to a Miller Act claim; 2. Read every line of a construction contract before you, as a subcontractor, leave a job site and refuse to come back; and 3. The Miller Act does not completely absolve parties to a contract from the terms of that contract.
In sum, the careful reading of your construction documents and the advice of a construction lawyerbefore making a big decision like leaving a job site can go a long way toward a successful collection action under the Miller Act.
Update: The 4th Circuit reversed this ruling and gave some more insight into the interaction between the “pay if paid” and the “prevention doctrine.” I “muse” about it in my November 28, 2011 post.
As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.
