Thoughts on construction law from Christopher G. Hill, Virginia construction lawyer, LEED AP, mediator, and member of the Virginia Legal Elite in Construction Law
While it is impossible to list all of you who have contributed to Guest Post Fridays here at Musings (please use the link above to review all of these posts and see who else has contributed) and to thank you individually, please know that each and every one of your contributions have made Construction Law Musings a more vibrant and interesting place to visit. The opportunity to work with such varied, intelligent, and insightful people over the last year has been wonderful. With each post I learn something new.
Without these contributions to add a layer of color that I could not provide alone, Musings would just be another blog about construction law by a Virginia lawyer. With them, Musings is a fun place to hang out and learn. To those who have posted here in the past, the door is always open for a repeat posting, just give me a buzz with a topic and when you can do it.
In short, thank you to all of you who have contributed since this experiment began and I look forward to hearing what you all have to say in the future.
Map of the United States District Courts in Virginia (Photo credit: Wikipedia)
I have discussed the importance of every word in a construction contract on multiple occasions at Construction Law Musings. The United States District Court for the Western District of Virginia recently gave another reminder that one area that can act as a sword or shield in a contract is the language regarding provision of notice.
In an unusual flurry of occupational safety related activity, the Virginia courts decided two cases in the last week relating to either the review of occupational safety regulations themselves or their enforcement.
In Nat’l College of Business & Technology Inc. v. Davenport (.pdf), the Virginia Court of Appeals considered what constitutes a “serious” violation of the exposure to asbestos Virginia Occupational Safety & Health (VOSH) regulations. The facts found by the Salem, Virginia Circuit Court were that employees of the petitioner college were exposed to asbestos insulation when they were required to enter a boiler room to retrieve paper files. However, no evidence was presented regarding the length of time or level of exposure at the Circuit Court level. Despite the lack of evidence regarding the level or extent of exposure, the Circuit Court upheld the VOSH citation for exposure and the level of violation at a “serious” level with the attendant penalty.
The Virginia Court of Appeals disagreed with the second finding. The appellate court determined that the lack of evidence regarding the level of exposure (whether length or extent) made the serious level violation an error. The Court stated that merely presenting evidence that asbestos is a carcinogen is not enough given the number of carcinogenic materials in existence and then remanded the case back to Circuit Court to reconsider the penalty level.
In a second case, Steel Erectors Ass’n of America v OSHA(.pdf ), the petitioner, SEAA, challenged a 2010 directive from OSHA regarding the enforcement of 2001 safety standards regarding steel construction, claiming that the enforcement change was an illegal regulation. The 4th Circuit Court of Appeals, in an exercise of discretion, determined that SEAA or one of its members would need to challenge any attempt at enforcement when OSHA tried to invoke its new policy. What the 4th Circuit said SEAA could not do was to challenge the enforcement policy without any pending enforcement action.
What these two cases show, aside from the fact that, yes, the Courts will occasionally look at these types of cases, is that not all cases are cut and dried. With the assistance of an experienced Virginia construction lawyer, a construction professional may be able to challenge an administrative enforcement action. Also, the help of such an attorney can certainly help head off a failed challenge such as that by SEAA with its attendant expense and headaches.
As always, I welcome and encourage your comments below, please share your thoughts. Also, please subscribe to keep up with the latest Construction Law Musings.
I’ve discussed the economic loss rule here at Musings on several occasions. The economic loss rule basically states that where one party assumes a duty based in contract or agreement, the Virginia courts will not allow a claim for breach of that duty to go forward as anything but a contract claim. This doctrine makes fraud claims nearly, though not absolutely, impossible to maintain in a construction context. In a majority of instances, fraud and construction contracts are very much like oil and water, leaving parties to fight it out over the terms of a particular contract despite actions by one party or the other that non-lawyers would clearly see as fraud.
However, a recent case decided by the Virginia Supreme Court gives at least some hope to those who are seemingly fooled into entering a contract that they would not other wise have entered into. In Philip Abi-Najm, et. al, v Concord Condominium, LLC, several condominium purchasers sued Concord under for breach of contract, breach of the Virginia Consumer Protection Act (VCPA) and for fraud in the inducement based upon flooring that Concord installed that was far from the quality stated in the purchase contract. Based upon these facts, the Court looked at two questions: 1. Did a statement in the contract between Concord and the condo buyers create a situation in which the merger doctrine barred the breach of contract claim, and 2. Did the economic loss rule bar the VCPA and fraud claims?
After analyzing the merger claim and determining that the merger doctrine did not bar the breach of contract claim, the Court moved on to its analysis of the VCPA and fraud in the inducement claims. In both instances, the Court determined that the causes of action would stand. It reasoned that the VCPA created an independent statutory requirement making it unlawful to misrepresent that goods are of a particular quality. Because this duty arose independent of the contract, the claim was not barred by the economic loss rule.
Similarly, the fraud in the inducement claim was not barred because the plaintiffs alleged that Concord deliberately misrepresented the quality of the flooring knowing that it would likely cost Concord the sales if it disclosed the actual quality of the floors. In short, the fraud, as alleged, was independent of the contract because it was conceived to bring buyers in despite Concord’s having no intention to follow through on the quality of the floors.
The lesson here is that pleading matters and that not all is lost for a consumer or home buyer that thinks that he or she is subject to fraud. However, the devil is in the details and in the details put into the pleadings. Without pleading some independent duty outside of the contract, any fraud or other non-contract claim will fail. The advice of an experienced Virginia construction attorney will help you parse through the facts and properly package them for presentation to the Court.
As always, I welcome and encourage your comments below, please share your thoughts. Also, please subscribe to keep up with the latest Construction Law Musings.
Unfortunately, developer bankruptcies are very much in the news these days. This news, while unsurprising in today’s economy and given the housing issues that hit last year, can give heartburn to those contractors that perform the site work, pave the roads, and of course build the houses at these developments. Like Musings has discussed before, bankruptcy of an owner or developer is a real possibility for which contractors and subcontractors must prepare.
However, contractors in Virginia may have a silver lining for the bankruptcy cloud. Virginia mechanic’s liens, being creatures of statute, survive bankruptcy and remain in force even after the owner of the property files for bankruptcy. Even more importantly, the 6 month statute of limitations on filing a case to enforce your mechanic’s lien stops running as of the date that bankruptcy is filed.
Even more importantly, aside from certain specific situations, mechanic’s liens in Virginia gain priority over all other secured liens.
In short, in today’s climate, contractors should not feel that they are completely helpless in the bankruptcy fight. Filing a mechanic’s lien after consultation with an experienced attorney can put a contractor or subcontractor in as good a position as possible should he owner of a project file for bankruptcy.
Please comment below, or subscribe to Musings if you find this of interest.
