The Massachusetts Court of Appeals ruled last week that attorney’s fees for legal work performed by in-house counsel are properly recoverable under M.G.L. c. 93A. A copy of the decision can be found here.
In allowing the fee award, the Appeals court held that, “every hour spent on the []litigation was an hour when [in-house counse]’s efforts were directed away from other legal matters... Therefore, having in-house counsel engaged in the present suit had a concrete financial impact on [the plaintiff], which we conclude ‘incurred’ a cost.” The Court also applied policy considerations in awarding in-house counsel’s fees, stating, “To deny attorney’s fees to Omniglow in this case simply because it chose to utilize its own in-house counsel would undercut the deterrent purposes of c. 93A and would implicitly reward the defendants for their questionable behavior.”
News and commentary from the Construction Law attorneys at Preti Flaherty.
Insurer Sues Municipalities Over Claims Stemming From Climate Change
Tuesday, May 20, 2014
Farmers Insurance has filed a series of class action lawsuits against several Chicago area municipalities for allegedly failing to address climate change in their storm water runoff plan. Farmers claims that this led to massive damage to Chicago area homes during a two day deluge last April – leading to claims against Farmers' insurance policies. Farmers points to certain assertions that local officials made in the Chicago Climate Action Plan to show that the municipalities knew about the risks posed by climate change, but failed to take appropriate action. According to the suit, "The defendant knew or should have known that climate change in Cook County has resulted in greater rain fall [sic] volume, greater rainfall intensity and greater rainfall duration than pre-1970 rainfall history evidenced, resulting in greater stormwater runoff."
These suits carry far reaching implications, particularly to public and institutional owners and engineering firms, who now face potential claims for failing to give full consideration to the impacts of climate change.
These suits carry far reaching implications, particularly to public and institutional owners and engineering firms, who now face potential claims for failing to give full consideration to the impacts of climate change.
Going Green With New Building Materials Can Lead to Expensive New Issues
Synthetic stone veneer, fast-growing wood, and green roofs are just a few examples of green building materials and techniques that are rising in popularity as individuals, companies, and local, state and federal governments embrace sustainable building practices. However, for as aesthetically pleasing, environmentally beneficial, and socially conscious as these efforts may be, costly problems can arise if green building materials are used inappropriately or designed and installed ineffectively.
Many green building products are so new that they have limited in-service data indicating whether they are code compliant, compatible with other materials, or will work as intended. For example, synthetic stone veneer (or adhered manufactured stone masonry veneer - “AMSMV”) has been to known to lead to moisture intrusion and buckling. Although the lightweight nature of the veneer can drive down building costs, if installed improperly – such as without appropriate weatherproofing – the later cost of repairing water damage could outweigh its benefits. It is therefore important for construction projects to utilize contractors who are familiar with the appropriate installation techniques (a specific ASTM standard for AMSMV installation was published in 2013) and have worked with AMSMV products before.
Wood from fast-growing trees can earn LEED credits, and may be desirable in green building projects. However, lumber from these trees must be treated using particular sealants to prevent deterioration due to exposure to the elements. One lawsuit exemplifies the pitfalls of using green products inappropriately. The Chesapeake Bay Foundation, Inc. et al v. Weyerhaeuser Company lawsuit involved the effort to build the nation’s first LEED platinum building using a lumber product made from wood waste from fast growing trees: Parallal Strand Lumber (also known as Parallam). The supplier allegedly provided Parallam that it claimed had been treated with a suitable sealant, when in reality the sealant had not been approved for use on that product. Deterioration, including wide-spread rot, was later found on the exposed beams. The Chesapeake Bay Foundation sued the supplier for $6,000,000 in damages alleging breach of contract and negligent misrepresentation, among other claims. Although the case was ultimately resolved due to statute of limitations grounds, it demonstrates how costly litigation can result where green building products do not perform as originally anticipated or promised.
Vegetation has also become an important part of sustainable building projects. Roof gardens and vertical gardens (“living facades”) are becoming more popular, especially in dense urban spaces. Their benefits include evaporative cooling (leading to energy savings), reduced urban heat island effect, oxygen production, LEED credits, and pleasing aesthetics. However, leaks, dampness, rotting vegetation, molds and bacteria can also result due to poor design or maintenance, and leaks can be difficult to assess and remedy. One often overlooked aspect is the sometimes close proximity between the vegetation and HVAC systems. These systems can transmit spores from rotting vegetation inside, or any pesticides used on the green space. Other important design considerations include the load bearing capacity of the roof, utilization of appropriate weatherproof membranes, and suitable draining. Design limitations must be respected when considering green roofs or walls in order to maintain structural safety and moisture control.
Ultimately, as green building continues to grow in popularity (most especially in government-funded or high-end private projects) new issues will arise due to the use of new products in new applications. Time, effort, and care must therefore be taken when designing new projects, ascertaining what green building products are appropriate to use, and most especially, determining the appropriate means to install and apply these new materials.
Many green building products are so new that they have limited in-service data indicating whether they are code compliant, compatible with other materials, or will work as intended. For example, synthetic stone veneer (or adhered manufactured stone masonry veneer - “AMSMV”) has been to known to lead to moisture intrusion and buckling. Although the lightweight nature of the veneer can drive down building costs, if installed improperly – such as without appropriate weatherproofing – the later cost of repairing water damage could outweigh its benefits. It is therefore important for construction projects to utilize contractors who are familiar with the appropriate installation techniques (a specific ASTM standard for AMSMV installation was published in 2013) and have worked with AMSMV products before.
Wood from fast-growing trees can earn LEED credits, and may be desirable in green building projects. However, lumber from these trees must be treated using particular sealants to prevent deterioration due to exposure to the elements. One lawsuit exemplifies the pitfalls of using green products inappropriately. The Chesapeake Bay Foundation, Inc. et al v. Weyerhaeuser Company lawsuit involved the effort to build the nation’s first LEED platinum building using a lumber product made from wood waste from fast growing trees: Parallal Strand Lumber (also known as Parallam). The supplier allegedly provided Parallam that it claimed had been treated with a suitable sealant, when in reality the sealant had not been approved for use on that product. Deterioration, including wide-spread rot, was later found on the exposed beams. The Chesapeake Bay Foundation sued the supplier for $6,000,000 in damages alleging breach of contract and negligent misrepresentation, among other claims. Although the case was ultimately resolved due to statute of limitations grounds, it demonstrates how costly litigation can result where green building products do not perform as originally anticipated or promised.
Vegetation has also become an important part of sustainable building projects. Roof gardens and vertical gardens (“living facades”) are becoming more popular, especially in dense urban spaces. Their benefits include evaporative cooling (leading to energy savings), reduced urban heat island effect, oxygen production, LEED credits, and pleasing aesthetics. However, leaks, dampness, rotting vegetation, molds and bacteria can also result due to poor design or maintenance, and leaks can be difficult to assess and remedy. One often overlooked aspect is the sometimes close proximity between the vegetation and HVAC systems. These systems can transmit spores from rotting vegetation inside, or any pesticides used on the green space. Other important design considerations include the load bearing capacity of the roof, utilization of appropriate weatherproof membranes, and suitable draining. Design limitations must be respected when considering green roofs or walls in order to maintain structural safety and moisture control.
Ultimately, as green building continues to grow in popularity (most especially in government-funded or high-end private projects) new issues will arise due to the use of new products in new applications. Time, effort, and care must therefore be taken when designing new projects, ascertaining what green building products are appropriate to use, and most especially, determining the appropriate means to install and apply these new materials.
Lawsuit Seeking Payment Under the Miller Act does not Require a Contractor or Subcontractor to be Licensed in the State in Which it is Seeking Payment
Monday, May 5, 2014
In Technica LLC, et al. v. Carolina Cas. Ins. Co., et al., 2014 U.S. App. LEXIS 8023, (9th Circuit 2014), the court held that the fact that Technica was not a licensed California contractor, as required by California law, did not bar its Miller Act (40 U.S.C. §§ 3131-3134) claim for payments due under a subcontract. The Miller Act is the modern-day remedy to the historical dilemma faced by contractors and materialmen denied compensation in federal construction projects. The common law doctrine of sovereign immunity prevented liens against property of the federal government, and federal statutes only allowed those in privity of contract to sue to enforce contractual rights. The Miller Act requires a general contractor on a federal construction project to furnish a payment bond “for the protection of all persons supplying labor and material in carrying out the work provided for in the contract.” If anyone supplying labor or material has not been paid after 90 days, they may bring a civil action on the payment bond for the amount due. The Miller Act explicitly extends to subcontractors.
California Law precludes any contractor from maintaining an action for collection of compensation for services if the contractor was not a licensed contractor during the performance of the contract. See California Business and Professions Code § 7031(a). Technica performed $893,677.77 of work, but was only paid $287,861.81. When suit was brought to recover the remaining amount due, the defendants argued that because Technica was not a licensed California contractor, it could not bring an action for collection of the money it was owed. Following similar decisions in the Eighth and Tenth Circuit Courts of Appeal, the Ninth Circuit held that the state law limitation on the right of a non-licensed contractor to maintain an action for collection of unpaid services did not apply to an action under the Miller Act.
The court noted that “the federal rights affording relief under a federally declared standard could be defeated if states were permitted to have the final say as to what defenses could and could not be properly interposed to suits under the [Miller] Act. Applying the state’s licensing statute as a defense to a Miller Act claim would, at best, condition the rights of a subcontractor on the procedural requirements of the law, and, at worst, result in the nullification of those rights completely. Neither result is in accordance with the remedial purposes of the Miller Act.
The Court concluded by noting that enforcement of state licensing requirements against Miller Act claims would wreak havoc on the uniform application of the Miller Act. Federal contractors routinely bid on projects throughout the county and often perform contracts that span multiple states. Requiring them to comply with contractor licensing requirements in any given state in which the work is contrary to the intent of Congress in enacting the Miller Act, which was meant to reduce the substance and procedural hurdles placed on federal contractors, labor providers, and materialmen in seeking payment of wages denied to them.
The Court’s decision is a practical one and provides protections to contractors and subcontractors who are brought into a different state, where they are not licensed, to work on a federal project.
California Law precludes any contractor from maintaining an action for collection of compensation for services if the contractor was not a licensed contractor during the performance of the contract. See California Business and Professions Code § 7031(a). Technica performed $893,677.77 of work, but was only paid $287,861.81. When suit was brought to recover the remaining amount due, the defendants argued that because Technica was not a licensed California contractor, it could not bring an action for collection of the money it was owed. Following similar decisions in the Eighth and Tenth Circuit Courts of Appeal, the Ninth Circuit held that the state law limitation on the right of a non-licensed contractor to maintain an action for collection of unpaid services did not apply to an action under the Miller Act.
The court noted that “the federal rights affording relief under a federally declared standard could be defeated if states were permitted to have the final say as to what defenses could and could not be properly interposed to suits under the [Miller] Act. Applying the state’s licensing statute as a defense to a Miller Act claim would, at best, condition the rights of a subcontractor on the procedural requirements of the law, and, at worst, result in the nullification of those rights completely. Neither result is in accordance with the remedial purposes of the Miller Act.
The Court concluded by noting that enforcement of state licensing requirements against Miller Act claims would wreak havoc on the uniform application of the Miller Act. Federal contractors routinely bid on projects throughout the county and often perform contracts that span multiple states. Requiring them to comply with contractor licensing requirements in any given state in which the work is contrary to the intent of Congress in enacting the Miller Act, which was meant to reduce the substance and procedural hurdles placed on federal contractors, labor providers, and materialmen in seeking payment of wages denied to them.
The Court’s decision is a practical one and provides protections to contractors and subcontractors who are brought into a different state, where they are not licensed, to work on a federal project.
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