HL Construction Law News

Arbitration Panels: Choose Wisely!

8/17/2010 8:00:00 PM

Bound to arbitrate? Before you begin, listen to Rob Remington, 22 year veteran of numerous arbitrations and mediations, review the risks and benefits of sole vs. panel arbitrations, the value of expanded arbitrator discovery, and the strict rules for arbitration appeals.

Click here to listen.

Public Works Projects: Unsuccessful Bidder May Recover Bid Preparation Costs

7/20/2010 8:00:00 PM

The Supreme Court of Ohio has ruled that when a rejected bidder can show that a public authority has violated state competitive bidding laws in awarding public improvement contracts, the unsuccessful bidder may recover reasonable bid-preparation costs if the bidder already promptly sought, and was denied, an injunction to suspend work on the project.

The Court held that because the work was already started when it was later determined that the public authority wrongfully awarded the contract, the injunctive relief was no longer applicable for the wronged bidder, and bid-preparation costs were the only relief available.

For the Ohio Supreme Court opinion, see Meccon, Inc. v. Univ. of Akron, Slip Opinion No. 2010-Ohio-3297 (Decided July 21, 2010).

New York Law Requires the Filing of Loan Contracts to Establish Priority for Mechanic's Lien Claims

7/11/2010 8:00:00 PM

Recently, Hahn Loeser obtained summary judgment in favor of The Hayner Hoyt Corporation, establishing the priority of its $3.3 million mechanic's lien claim arising out of renovations to portions of the historic Syracuse Hotel located in downtown Syracuse, New York. Hahn Loeser successfully argued that Hayner Hoyt's mechanic's lien was superior to the earlier recorded $10 million mortgage because the Tel Aviv based mortgage lender failed to comply with specific New York statutory law, which required the recordation of building loan contracts in addition to the mere recordation of the mortgage document.

Ohio Tests Alternatives to Multi-Prime Contracting

5/3/2010 8:00:00 PM

Recently, Substitute House Bill 318 went into effect, authorizing the Chancellor of the Ohio Board of Regents, in consultation with representatives of state institutions of higher education and with Controlling Board approval, to utilize certain alternative methods of construction delivery. Under Substitute House Bill 318, the Chancellor will designate one construction project at each of three different state institutions of higher education for the use of the alternative methods subject to other requirements. These alternative methods relate to:

Construction manager at risk;
Design build;
General Contracting (for contracts up to $600,000) which is exempted from O.R.C. Chapter 153's multiple prime requirements; and
Design Assist.

By way of background, for certain projects which cost $50,000 or more, Chapter 153 generally requires public authorities to obtain separate bids and award separate contracts for (1) plumbing and gas fitting, (2) steam and hot-water heating, ventilating apparatus, and steam-power plant, and (3) electrical equipment, but by authorizing these alternative methods, Substitute House Bill 318 now offers limited exceptions to these requirements.

To view Substitute House Bill 318 click here.

EPA Rule Requires Safe-Lead Certification: Deadline April 22, 2010

4/4/2010 8:00:00 PM

On April 22, 2008, the U.S. Environmental Protection Agency issued the Renovation, Repair, and Painting Rule under the Toxic Substances Control Act requiring the use of lead-safe practices and other actions aimed at preventing lead poisoning in children.

Effective April 22, 2010, all individuals, firms and companies performing renovation-type work and/or dust sampling in child-facilities (including schools and day-care centers), single family homes, and multi-family housing built prior to 1978 must apply to the U.S. EPA for Safe-Lead Certification. This certification requires an application submitted to the EPA and payment of a fee and, for individuals, the completion of full-day or half day training course given by an EPA accredited instructor.

For more information on certification, including accredited training courses, certificate applications and lead safety publications prepared by the EPA, visit the U.S. Environmental Protection Agency website at www.epa.gov/lead or contact an HL Construction Law Attorney.

Construction Law Status Reports

3/10/2010 7:00:00 PM

Over the past year, HL Construction Law has provided articles on a variety of construction law topics. The following are status reports for some of these topics:

HL Construction Law issued an article in April 2009 entitled, ''U.S. District Court Grants Preliminary Injunction with Respect to Albuquerque's Green Building Ordinances.'' In The Air Conditioning, Heating, & Refrigeration Institute v. City of Albuquerque, a New Mexico U.S. District Court granted a motion for preliminary injunction and prohibited the enforcement of certain Albuquerque green building ordinances until the case was resolved. Albuquerques ordinances impose minimum energy efficiency standards for commercial and residential buildings and provide specific ways to achieve these standards, including achieving LEED silver certification. At this time, the case remains ongoing.
HL Construction Law's June 2009 article, ''Ohio Bans eBay-Style Construction Bidding,'' addressed legislation contained in the 2010-2011 Ohio State Budget, Am. Sub. House Bill No. 1 designed to prohibit certain governmental entities from using internet reverse auctions to award construction work. This legislation has now become law(http://66.161.141.164/orc/gp9.314), having gone into effect on October 16, 2009.
HL Construction Law's July 2009 article, ''Ohio May Offer Assistance to Minority Businesses with New Bonding Laws,'' addressed new minority bonding legislation contained in the 2010-2011 Ohio state budget, Am. Sub. House Bill No. 1. This minority bonding legislation has now become law (http://codes.ohio.gov/orc/122.89), having gone into effect on October 16, 2009.

POET, LLC and POET Design and Construction, LLC

1/19/2010 7:00:00 PM

Hahn Loeser represents POET, LLC, a $5 billion, privately held company headquartered in Sioux Falls, South Dakota that is the world's largest producer and manufacturer of ethanol and related biofuel products. We act as construction counsel to POET Design and Construction, LLC (a division of POET responsible for the design and construction of ethanol plants throughout the country). Recent litigation matters include the successful defense of POET Design and Construction in a multi-million dollar dispute relating to a $60 million contract for the design and construction of a material handling system and solid fuel boiler used to power POET's largest ethanol plant in the United States.

The Time Period for Filing Affidavit for Mechanic’s Lien Is Not Extended by Unauthorized Work

1/13/2010 7:00:00 PM

The Ohio 12th District Court of Appeals recently held that to perfect a lien against a construction project for materials provided, the equipment supplier must file its affidavit for Mechanics Lien within 75 days of work being performed on the project; but that work must be expressly authorized by the Owner or Contractor and in furtherance of the construction contract.

In Argo Construction Company, Inc., v. Kroger Limited Partnership I et al., Argo leased equipment to the excavating subcontractor (Tower Construction) in connection with the construction of a Kroger Store in Ohio. When Tower Construction defaulted on its lease payments, Argo filed an affidavit for mechanic’s lien against the project indicating March 1, 2007, as the last date the Argo equipment was used at the project site.

The trial court concluded, as was ultimately upheld by the appellate court, that the Contractor did not authorize winter work and the last specifically authorized work by Tower Construction occurred on December 28, 2006. Although project records show that the Tower Construction Project Superintendent performed work with Argo’s equipment at the site in January and February of 2007, that work was admittedly without the permission of the Contractor or Owner and performed in an attempt to improve Tower Construction’s relationship with the Contractor and to seek additional compensation for “extra work” and was not to be taken into account when perfecting the mechanic’s lien. As a result, Argo failed to timely perfect its lien rights in connection with the leased equipment.

According to the holding in this case, the deadline for filing an Affidavit for Mechanic’s Lien (ORC 1311.06) is determined only by specifically authorized labor or work or materials furnished by the person claiming the lien in connection with the contract between the parties.

Ohio Law to Require LEED Certification for State-Funded Projects

10/8/2009 8:00:00 PM

Ohio H.B. No. 7, introduced in the General Assembly early this year, would require that all buildings or structures erected or constructed using any state capital monies, including monies from the education facilities trust fund, be certified as meeting at least the silver standard of the Leadership in Energy and Environmental Design (LEED) green building rating system developed by the United States Green Building Council (to be enacted as O.R.C. 153.013).

Click here for the status of H.B. 7.

Cleveland Metropolitan Bar Association Adds Hahn Loeser to List of Local Green Certified Organizations

9/24/2009 8:00:00 PM

The Cleveland Metropolitan Bar Association (CMBA) recently announced that the Cleveland-based law firm of Hahn Loeser & Parks LLP has been officially named Green Certified by the CMBAs Green Initiative Committee.

Brauer Honored Again by Ohio State Bar Foundation with Statewide Community Service Award

9/22/2009 8:00:00 PM

Jeffrey A. Brauer, a partner in the Cleveland office of Hahn Loeser & Parks LLP, was recently awarded the Statewide Community Service Award for Attorneys 40-and-Under by the Ohio State Bar Foundation.

Kopit Appointed Chair of American Bar Associations Fund for Justice and Education

9/20/2009 8:00:00 PM

Alan S. Kopit, partner in charge of the Cleveland office of Hahn Loeser & Parks LLP, was recently appointed chair of the American Bar Associations Fund for Justice and Education. Mr. Kopit has been a member of the funds Council since 2006, and a member of the ABA since 1977.

Ohio Supreme Court Issues Two Decisions Affecting Ohio’s Prevailing Wage Law - Part I

8/17/2009 8:00:00 PM

The Ohio Supreme Court recently interpreted Ohio’s prevailing wage law to apply only to on-site workers on public improvement projects, not off-site fabricators of materials for the projects.

In Sheet Metal Worker’s International Association, Local Union No. 33 v. Gene’s Refrigeration, Heating & Air Conditioning, Inc., a contractor was awarded a contract for the construction of the Granger Fire Station involving both on-site construction work and off-site fabrication of ductwork. The contractor paid its on-site workers prevailing wage rates pursuant to law, but paid the off-site fabricators the normal non-prevailing wage rates. The Union filed an administrative prevailing wage complaint against the contractor and subsequently filed suit in the Medina County Court of Common Pleas. The Union claimed that Ohio prevailing wage law applies to employees who work on materials that will be used in, on or in connection with, a public works project, even if the work is not performed on-site. The trial court concluded that the prevailing wage law did not apply, and after a series of appeals, the Supreme Court of Ohio agreed that in order for the prevailing wage statute to apply, the public improvements work must be done on the project site.

Ohio Supreme Court Issues Two Decisions Affecting Ohio’s Prevailing Wage Law - Part II

8/17/2009 8:00:00 PM

In another recent Ohio Supreme Court opinion, the Court unanimously held that Ohio’s prevailing wage law applies only to work performed in the construction of a “public improvement” by or for the benefit of a public authority, and does not apply to private work funded by state and county public economic grants. In Northwestern Ohio Bldg. & Constr. Trades Council v. Ottawa Cty. Improvement Corp., the Trades Council attempted to stop the work on a private renovation project that was partially funded by loans from the Ohio Department of Development and the Ottawa County Improvement Corporation. The Trades Council claimed that the project should be subject to the prevailing wage law because it involved the expenditure of public funds on a construction project.

The Ottawa County Court of Common Pleas denied an injunction requiring that bid specifications and other elements of the project be conducted under the requirements of the prevailing wage law, ruling that the prevailing wage law is applicable only to the construction of public improvements done by or for a public authority. Both the Appellate Court and the Ohio Supreme Court agreed with the trial court and concluded that the prevailing wage law did not apply to the private renovation project just because public money was used.

Thirty-One Hahn Loeser & Parks LLP Attorneys Named to The Best Lawyers in America

8/16/2009 8:00:00 PM

Thirty-one attorneys at Hahn Loeser & Parks LLP have been named to the 2010 edition of The Best Lawyers in America.

Ohio May Offer Assistance to Minority Businesses with New Bonding Laws

7/21/2009 8:00:00 PM

The Ohio legislature has included changes to the minority business bonding program in the latest version of the Ohio 2010-2011 state budget, Am. Sub. House Bill No. 1. These changes are aimed at assisting small minority businesses who would otherwise have difficulty obtaining bonds.

Hahn Loeser named a Leading Law Firm in Ohio; Seven Partners Ranked as Leading Lawyers

7/16/2009 8:00:00 PM

For the sixth year in a row, Chambers USA has ranked Hahn Loeser and seven of its attorneys in the latest edition of Chambers USA: Americas Leading Lawyers for Business.

The firm was named a leading law firm in Ohio for its Commercial Litigation practice and its Bankruptcy/Restructuring practice. Seven Hahn Loeser partners were recognized by Chambers USA, including:

Daniel A. DeMarco - Bankruptcy/Resctructuring
Robert J. Fogarty - Commercial Litigation
Steven A. Goldfarb - Commercial Litigation
Lawrence E. Oscar - Bankruptcy/Restructuting
Lee D. Powar - Bankruptcy/Restructuring
Rob Remington - Construction
Nancy A. Valentine - Bankruptcy/Restructuring

Ohio Bans eBay-Style Construction Bidding

6/9/2009 8:00:00 PM

Following the lobbying efforts of the Ohio Contractors Association, the Ohio legislature included in the latest version of the Ohio 2010-2011 state budget an express ban on certain forms of internet reverse auctions that have been used by government entities, most notably Portage County, to obtain bids and award construction work.

The provision defines these types of proposals as reverse auctions, which it defines as, a purchasing process in which offerors submit proposals in competing to sell services or supplies in an open environment via the internet. These auctions resemble an eBay auction, with the main difference here being that the lowest bidder is awarded the contract. A company called BidBridge appears to have assisted with auctions in Ohio.

The budget proposal disallows such reverse auctions if:

[T]he contract concerns the design, construction, alteration, repair, reconstruction, or demolition of a building, highway, road, street, alley, drainage system, water system, waterworks, ditch, sewer, sewage disposal plant, or any other structure or works of any kind.

This list encompasses much of the work that contractors in Ohio perform. The budget including this language is being finalized and, unless amended further, will be presented to the Governor shortly.

Am. Sub. H. B. No. 1, Secs. 9.314(A) and (B) (Lines 953-4, 970-4, 1008-13)

Click here for more information

''When is third party manufacture of licensed products allowed?'' R. Eric Gaum, Esq. and Meghan Sheehan, Law Clerk

6/3/2009 8:00:00 PM

The recent case of CoreBrace LLC v. Star Seismic examines whether third party contractor manufacture of licensed products is included in the right to make, use, and sell a patented product. In this case, the U.S. Court of Appeals for the Federal Circuit analyzed the issue and ruled that the right to have made is inherent in a licensees right to make, use, and sell. Unless the license agreement demonstrates a clear intent to exclude the right to have made, a licensee is free to contract a third party to manufacture the licensed product.

14 Penn Plaza: Let's Arbitrate, Not Litigate

5/26/2009 8:00:00 PM

In a recent 5-4 ruling, the United States Supreme Court expanded a unionized company's ability to require its employees to arbitrate - rather than litigate - their discrimination claims. In 14 Penn Plaza LLC v. Pyett, a former night watchman was demoted after his position was outsourced, causing his union to file suit in federal district court under the Age Discrimination in Employment Act (ADEA).

The employer moved to compel arbitration, based on the collective bargaining provision. The district court and the Second Circuit Court of Appeals denied the motion, but the Supreme Court reversed, requiring union members to arbitrate their ADEA claims and citing the freedom to contract policy of the National Labor Relations Act (NLRA).

U.S. District Court grants preliminary injunction with respect to Albuquerque’s green building ordinances

4/23/2009 8:00:00 PM

Many legislative bodies are enacting various pieces of legislation encouraging or requiring green construction; but green construction legislation may come with unintended consequences. In The Air Conditioning, Heating, & Refrigeration Institute v. City of Albuquerque, a New Mexico U.S. District Court granted a motion for preliminary injunction and prohibited the enforcement of certain Albuquerque green building ordinances until the case was resolved.

In its motion, the plaintiff claimed that portions of Albuquerque's green building ordinances are preempted by specific federal law that establishes nationwide standards for the energy efficiency and energy use of major residential and commercial appliances and equipment. Albuquerque's ordinances impose minimum energy efficiency standards for commercial and residential buildings and provide specific ways to achieve these standards, including achieving LEED silver certification. LEED certification was created by the United States Green Building Council and is a nationally accepted benchmark for the design, construction, and operation of green buildings.

In reaching its decision, the Court determined that under federal law, cities and states had limited flexibility in adopting building codes, and could not use building codes as a way to require the installation of products exceeding federal efficiency standards. With respect to LEED certification, the Court concluded, in part, that Albuquerque failed to establish that it was practical to build a home to LEED silver standards using only federally compliant HVAC and water heating products.

Mazzara Joins Hahn Loeser & Parks LLP

4/20/2009 8:00:00 PM

Justin B. Mazzara has joined Hahn Loeser & Parks LLP as an Associate in the Fort Myers office. Mazzara has practiced in the area of commercial litigation in Southwest Florida for the past two years and will continue his practice at Hahn Loeser in the firm's Litigation Area.

Ohio revises existing law related to municipal installment payment contracts for energy conservation measures

4/14/2009 8:00:00 PM

On December 30, 2008, Ohio House Bill 420 took effect, amending Section 717.02 of the Ohio Revised Code which addresses installment payment contracts entered into by municipalities for energy conservation measures, including upgrading or installing heating or air conditioning systems, building insulation, or windows and doors.

Employers must use new Form I-9 as of April 3, 2009

4/1/2009 8:00:00 PM

All U.S. employers are responsible for the completion and retention of Employment Eligibility Verification Form I-9 for each individual they hire for employment in the United States, including citizens and noncitizens alike. U.S. Citizenship and Immigration Services (USCIS) recently released a new Form I-9 which employers are required to use as of April 3, 2009.

The New COBRA Subsidy: What You Should Know

3/29/2009 8:00:00 PM

Changes in COBRA obligate companies to notify departing employees (including those who left as far back as September 1, 2008) of a federal right to subsidized health care continuation. Under the American Recovery and Reinvestment Act of 2009 (ARRA) and the newly-issued administrative guidance and model notices, an employer must advance 65% of COBRA premiums for those employees involuntarily terminated between September 1, 2008 and December 31, 2009, who elect continuation.

Employee Free Choice Act Introduced in Congress

3/29/2009 8:00:00 PM

On March 10, 2009, the Employee Free Choice Act (EFCA) was introduced in Congress. The EFCA would dramatically change federal labor law in three significant ways.

Exercise Caution When Contracts Are Negotiated Via Email

3/3/2009 7:00:00 PM

At a time when contract negotiations are commonly taking place via electronic forms of communication, it is becoming increasingly important for contractors to examine all contract documents closely and not commence work until they are certain they can agree to the terms and conditions governing that work. An Illinois case demonstrates the importance of these precautions.

Contractors and Owners Beware: Lawsuit Follows Green Construction

2/14/2009 7:00:00 PM

Contractors and owners everywhere are hearing about the green construction trend, and where construction goes, lawsuits follow. One of the forces behind green construction is the U.S. Green Building Council. The USGBC has developed a third-party certification program and nationally accepted benchmark for the design, construction, and operation of green buildings. This program is known as The Leadership in Energy and Environmental Design (''LEED'') Green Building Rating System. Some governmental entities have begun to require certain levels of LEED certification with the construction of buildings and have also offered tax incentives to private owners for achieving certification.

In Shaw Development, LLC v. Southern Builders, Inc., an owner filed a countersuit against its general contractor seeking, among other damages, $635,000 in lost tax credits under Maryland's tax credit green building program requiring specific LEED certification. The owner alleged that the contract required the general contractor to build a green building in conformance with Silver LEED Certification. The parties, however, used an AIA Standard Form Agreement for their contract, and only the project manual referenced LEED Certification. The project manual, however, simply stated that the project was designed to comply with Silver LEED Certification.

Although its appears that the parties settled or otherwise resolved this matter out of court, this case should serve notice to both owners and contractors to clearly state the contractor's contractual requirements regarding LEED certification or any other green construction expectations.

In addition, in April of 2009, HL Construction Law's Rob Remington will take part in a presentation regarding green construction at the ABA Forum on the Construction Industry's annual meeting in New Orleans, Louisiana.

West Virginia Passes Law Authorizing Counties and Municipalities to Enter into Energy-Savings Performance Contracts

1/12/2009 7:00:00 PM

On March 13, 2008, West Virginia's Governor signed into law a bill authorizing counties and municipalities to enter into energy-savings performance contracts for the purpose of reducing energy costs. Under the new law, West Virginia counties and municipalities may contract with qualified providers to install energy savings measures so long as the providers guarantee specific energy savings resulting from those measures. Permissible energy-savings measures include a variety of goods and services, including the modification or replacement of heating or air conditioning systems, building insulation, or roofing. The law took effect on June 3, 2008. The full text of the new law as it relates to counties can be found at W. VA. CODE § 7-1-3oo. The full text of the new law relating to municipalities can be found at W. VA. CODE § 8-12-5e. The West Virginia Code in its entirety can be found online at: http://www.legis.state.wv.us/WVCODE/code.cfm For more information regarding energy-savings performance contracts, please contact HL Construction Law at info@hlconstruction.com.

Ohio Supreme Court Rules That Cincinnati's Refusal to Award Contract to Noncompliant Low Bidder Was Not Unlawful

1/12/2009 7:00:00 PM

The Ohio Supreme Court has ruled that the City of Cincinnati's refusal to award a drywall contract to a low bidder was not unlawful because the City rightfully concluded that the lowest bidder failed to satisfy a small business enterprise requirement set forth in the bid documents. In Cleveland Construction, Inc., the City sought bids for the expansion of the Cincinnati Convention Center. After competitive bidding, the City awarded a drywall contract to a contractor whose bid included work by small business enterprises as required by the bidding requirements. The City did not award the drywall contract to Cleveland Construction — despite being the low bidder — because it failed to meet this small business bidding requirement. After not being awarded the bid, Cleveland Construction filed a lawsuit against the City arguing that the City violated its due process rights. The Ohio Supreme Court concluded that although Cleveland Construction had standing to challenge the bid award, it could not prevail because it could not demonstrate that the City abused its discretion. The Court found that under the Cincinnati Municipal Code and bidding documents, the City could consider many factors beyond price to grant or deny the contract. For example, the Cincinnati Municipal Code permitted Cincinnati to award contracts to the ''lowest and best bidder,'' and even the lowest and best bid could be rejected if the bid was ''not in the best interests of the city.'' The Court concluded that the City properly exercised its discretion in awarding the drywall contract based on the small business enterprises requirement and therefore, Cleveland Construction could not prevail.

Contractors Were Not Entitled to Prejudgment Interest Under Their Mechanic's Liens

12/15/2008 7:00:00 PM

In Ohio, contractors, material suppliers, and certain others can file a mechanic's lien to secure payment for improvements. In Guernsey Bank v. Milano Sports Ents., LLC, a bank filed a foreclosure action against the owners of property who were attempting to convert an indoor tennis facility into an ice rink. The owners hired contractors and suppliers to perform work and provide materials. The owners, however, failed to pay them, and they filed mechanic’s liens on the property. Thereafter, the bank and the contractors and suppliers argued over whether the mechanic’s liens or the mortgage had priority with respect to the proceeds of the foreclosure. Although both the trial court and the appeals court determined that the mechanic's liens had priority over the mortgage, the court of appeals overruled the trial court’s award of prejudgment interest. The appeals court concluded that the contractors and suppliers were not entitled to prejudgment interest on their mechanic's lien claims. Generally, prejudgment interest is interest calculated from the time that an amount is due to obtaining a court judgment, and without it, stalling a case in litigation can benefit the non-paying person. In reaching its decision, the appeals court considered a provision under the Ohio Revised Code that allows for interest when money becomes due and owing under an instrument of writing or verbal contract. Ultimately, the appeals court determined that an action on a mechanic’s lien arises out of the Ohio Revised Code and not under any contractual right to recover. Therefore, the appeals court concluded that the contractors and suppliers were not entitled to prejudgment interest. Further, the appeals court also explained that its ruling applied to all mechanic's liens regardless of whether a party had a contract with the owner or not. This decision provides guidance to owners, contractors, material suppliers, and others informing them that one might not be able recover prejudgment interest under a mechanic's lien claim.