Virginia Real Estate, Land Use & Construction Law : Virginia Construction Lawyers & Attorneys : Bean Kinney & Korman Law Firm : VA Real Estate, Land Use & Zoning

Here is a new sampling of cases in which the Virginia Supreme Court has recently granted appeals.

In April, the Court granted the petition for appeal in Studio Center Corporation v. WKW Construction, LLC, Record No. 092257, challenging the ruling of Judge Shockley from the Circuit Court of the City of Virginia Beach. Studio Center is contesting Judge Shockley’s holding that Virginia Code Section 54.1-1115(C) applied when the unlicensed contractor admitted it knew Virginia law required a license, but did not realize that it could not use someone else’s license. This case should give us some much needed guidance on Section 54.1-1115(C)’s requirement of “good faith” and “actual knowledge.”

What “Case Watch” would be complete without an appeal involving one of my favorite topics – BPOL tax! In March, the Court accepted the petition for appeal in Ford Motor Credit Company v. Chesterfield County, Record No. 092158. This case will delve into, among other issues, when a tax payer can take a deduction for out-of-state gross receipts under Virginia Code Section 58.1-3732(B)(2), and when it is appropriate to use the default apportionment method in Virginia Code Section 58.1-3703.1(A)(3)(b) to measure the tax payer's gross receipts.

In January, the Court also granted the petition for appeal in AMEC Civil, LLC v. Commonwealth of Virginia, et al., Record No. 091662. AMEC Civil designated no less than twenty-two assignments of error, with the Commonwealth designating seven assignments of cross-error. Much of the debate revolves around whether AMEC was required to give VDOT written notice of its claims at the “beginning of the work,” or whether AMEC could have given notice at the “time of the occurrence” under Virginia Code Section 33.1-386, whether that notice requirement could be satisfied by VDOT’s actual notice, and whether VDOT must show prejudice by any delay in providing notice. Some of the other issues involve whether sustained elevated lake levels constituted a differing site condition, and whether VDOT had a reciprocal duty to provide AMEC notice of that condition under the contract.

As always, stay posted!
 

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There are a number of important construction law and economic developments that I want to pass along to our readers.  Given timing and the plethora of topics to address, I wanted to share these developments in a more rapid fire format so these updates remained timely.

You should be on the lookout for more information on these topics in the future.  We may expand on some of these threads in the future here as well:

• The Supreme Court of Virginia will hear the appeal in AMEC Civil LLC v. VDOT.  This case is a very important case involving what is required for notice of claims on construction projects; any person or entity involved in Virginia construction needs to keep an eye on this case as it could have a major impact on future Virginia construction litigation
• As reported by our friend Chris Cheatham, the District of Columbia has attempted to fix their green building ordinance by no longer requiring a "performance bond" guaranteeing verification of green construction ... they will instead just require a "bond" guaranteeing verification of green construction.  Count me as a skeptic that this editorial change is meaningful or will fix the problem of lack of available bonds in the markets to cover this risk.
• The economy is sending some mixed messages.  Overall unemployment dropped from 10.0% to 9.7% in January according to the latest Bureau of Labor Statistics report
• Unfortunately, that improvement did not translate to the construction industry.  ENR reports a significant continued rise in construction unemployment, jumping from 22.7% in December to 24.7% in January.  The Bureau of Labor Statistics indicates that the construction sector lost 75,000 jobs in January bringing the total to 1.9 million since December 2007
• Associated Builders and Contractors released their latest Construction Economic Update.  The skinny: private non-residential construction spending rose 0.2% in December, but was down almost 18% year over year.

The continuing sluggish economy continues to place significant bidding pressure on the construction industry.  I still stand by my post last October that this bidding pressure will translate to serious claims issues over the next couple years.  Put on your seat belts, it will be a rocky ride here for a while.

Image by Ian Britton courtesy of Freefoto.com

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The current state of the economy makes clear that cash-flow is king in the construction industry. As our last post discussing the failed Granby Tower project in Norfolk demonstrates, even very high profile projects can suffer disastrous failures if the players have not addressed financing issues appropriately. For both general contractors and subcontractors, the first key to protecting yourself is to know the applicable rules of the game regarding mechanic’s liens and payment bonds.

• Know the timing requirements – failing to comply can and often will be fatal to your claim
• Know the precise contents of required bond and lien notices – again, failure is not an option
• Do not assume that all states are the same – with regards to both liens and bonds, you must know the applicable rules for each state in which you are doing work, and states differ substantially on form, content, and timing of required notices
• For bonds, obtain copies of the bonds before you start work as a subcontractor – on private jobs, the bond terms will control and your notices need to comply with the bond or again your claim may fail
• Do the research before the last second - you do not want to find out no day 91 that your lien notice was required on day 90; it is best to know the requirements before the job starts
• Associated corollary - if possible, spare your lawyer the heart attack and get them involved early, before the last second!

Perhaps from a perspective of self-preservation, but also in the interests of potential claimants, I will choose to end by amplifying on the last point a bit.  Lien claims, for example, are highly complex, extremely technical, and quite challenging.  A modest flaw may prove fatal to the claim.  Knowing this, it is in your best interest as a lien claimant to give yourself the best chance for success by not waiting until the last minute to evaluate, document and pursue lien claims.  Placing a last minute rush on an issue increases the difficulty of obtaining required information, reviewing applicable materials, and accurately preparing, filing and transmitting required notices and documents.

Given the current prevalence of cash-flow, collections, bonds and lien issues, we will be spending some more time in future posts discussing some of the regional variances amongst Virginia, Maryland and the District on lien and bond claims. We will also highlight a number of specific potential issues with liens and discuss some recent cases surrounding the same.

Image by Purpleslog

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