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The Construction Advantage

Asha Echeverria, Conor Shankman, Michael R. Bosse

Two Day Trial In York County Results In $2,250 Award

By: Asha Echeverria

In Lavin v. R.L. Chase Building Movers, Inc. et al., CCV-13-0275, (York Superior Ct.), a Maine homeowner filed an action against their barn contractor and its sole shareholder claiming breach of contract, breach of warranty, fraud, and violation of the Home Construction Contract Act, 10 M.R.S. §§ 1486 et seq. Defendants brought counterclaims against the homeowner for breach of contract, quantum meruit, unjust enrichment, and violation of the Prompt Payment Act, 10 M.R.S. §§ 1111 et seq. After a two-day bench trial on April 12 & 13, 2017, all that money and effort by both parties resulted in the contractor receiving just $2,520 in payment. Attorneys’ fees and costs probably amounted to ten times that recovery.

At the trial, both homeowner and contractor testified that they met on May 5, 2012 and discussed the prospective work, but their testimony of the details of their conversation differed in a number of material ways and their failure to enter a written agreement led to disputes over the work to be done, the cost, and the schedule. Because of the lack of a written agreement and the wildly differing testimony, the court ultimately found that the parties never entered into a contract; there was no meeting of the minds with respect to the material terms, including the contract price, the time for commencing and completing the work and the scope of the work. This meant that neither the homeowner nor the defendant contractor could collect on their breach of contract claims.

Relying on the defendants’ expert, the court found for the contractor on the breach of warranty claim. While the contractor’s work may not have satisfied the homeowner’s aesthetic expectations, the contractor’s work was not defective and was done in a workmanlike manner.

The court dismissed the fraud count and the Home Construction Contract Act claim, because the plaintiffs had not met their burden of proving it more likely than not that they have suffered a loss of money or property resulting from a method or practice that violates the Unfair Trade Practices Act.

Ultimately the contractor’s basis for recovery was quantum meruit, which permits recovery for labor, services or materials provided pursuant to an implied contract inferred from the conduct of the parties. The evidence established that the defendants provided labor to rebuild portions of the homeowner’s barn; that this work was done for the homeowner with their knowledge and consent; and that it was provided under circumstances that make it reasonable for contractor to expect payment. The measure of recovery in quantum meruit is the reasonable value of the labor, materials, goods or services provided. In this circumstance, the court held that the $40 per hour rate for labor on this job was a reasonable rate, and was one that the homeowner had agreed to pay. Therefore, after applying amounts already paid by the homeowner, the balance due the contractor was $2,520.

As to the prompt payment statute, the court found that the homeowner had disputed and withheld payment of the balance owed in good faith, and therefore were not subject to penalties and fees otherwise assessable under this statute.

It’s hard to imagine that this trial was worth the effort expended.  With all that goes into preparing for a trial on the merits, and all of the uncertainty, this appears to be a case with no winners and everyone ending up unsatisfied.  Just a reminder why most cases settle, and should settle, before a trial ever occurs.

 

Road Trip For A Connecticut Contractor

By: Conor Shankman

Nothing can be more frustrating than learning that you need to appear as a defendant in an out-of-state lawsuit. When a construction dispute is destined for the courtroom, parties will often race to file suit first in an attempt to anchor the dispute close to home. Doing so can reduce costs, travel time, and increase the availability of witnesses. But, there are constitutional limits to when and where a plaintiff can file suit.

Recently the United States District Court for the District of Rhode Island, detailed when and why a construction company might find itself a defendant someplace far from home, and the analysis the court must perform to determine if it has jurisdiction over a defendant.

In, Sugar Fox 218, LLC v. Greython Construction, LLC, a Rhode Island restauranteur hired a Connecticut contractor for the demolition and construction of a restaurant space at the Foxwoods Casino in Connecticut. The deal went south and the restauranteur filed suit against the contractor in Rhode Island. The contractor quickly moved for dismissal contending that the court lacked personal jurisdiction, and that the proper venue was in Connecticut.

To determine if it could exercise personal jurisdiction the court applied a three-prong test:

1) The defendant must have sufficient contacts with the forum state

2)Those contracts must be purposeful

3) The exercise of jurisdiction must be reasonable under the circumstances

Ultimately, the Rhode Island court looked to the following factors and determined it could exercise personal jurisdiction over the Connecticut based contractor:

  • Contractor’s website identified two different offices which it operated from Rhode Island,
  • Contractor maintained a steady business practice in Rhode Island,
  • Contractor frequently sent employees to Rhode Island to work,
  • Contractor’s website contained photographs of job sites in RI,
  • CEO regularly traveled to RI for work,
  • Advertising was visible at contractor’s Rhode Island work sites and offices (i.e. the contractor advertised in the state),
  • Contractor has completed or was in process of completing at least seven projects prior to suit, and
  • Contractor was registered as a corporate business with the state of Rhode Island.

Therefore, if some or all of the above factors look familiar, you should consider including a choice of venue provision in all of your construction contracts, otherwise there is the potential that you could find yourself compelled to appear at a courthouse located far from home.

 

2017 Osha Update: The Latest Developments In The Trump Administration

By: Mike Bosse, Esq.

In a previous article, I suggested that enforcement and regulations under the Occupational Health and Safety Administration (“OSHA”), a division of the United States Department of Labor, might change drastically under the new presidential administration. The prediction was that there would be a movement towards a loosening of regulations and less of a focus on enforcement, and increased attention  on education. This article will provide an update on OSHA’s new direction in the recent months. Generally, the predictions seem to be holding up and are accurate under this still new administration.

In March of 2017, OSHA delayed the effective date of a rule related to occupational exposure to beryllium from March 21, 2017, to May 20, 2017. Beryllium is a strong, lightweight metal used in the aerospace, electronics, energy, telecommunication, medical and defense industries. However, it is highly toxic when beryllium-containing materials are processed in a way that releases airborne beryllium dust, fume, or mist into the workplace air that can be then inhaled by workers, potentially damaging their lungs. The final rule will reduce the eight-hour permissible exposure limit from the previous level of 2.0 micrograms per cubic meter to 0.2 micrograms per cubic meter. Above that level, employers must take steps to reduce the airborne concentration of beryllium. The rule also requires additional protections, including personal protective equipment, medical exams, other medical surveillance and training. Additionally, it  establishes a short-term exposure limit of 2.0 micrograms per cubic meter over a 15-minute sampling period. Workers in foundry and smelting operations, fabricating, machining, grinding beryllium metal and alloys, beryllium oxide ceramics manufacturing and dental lab work represent the majority of those affected by the rule. The extension of the rule was in keeping with a January 20, 2017, memorandum from the new administration titled “Regulatory Freeze Pending Review,” which applied to many pending regulations whose effective date had not been reached.  Finally, on June 23, 2017, OSHA announced that it would modify the rules going forward in the construction and shipyard industries.

In April, OSHA then announced a delay in the enforcement of the crystalline silica standard that applies to the construction industry to conduct additional outreach and provide educational materials and guidance for employers. Originally scheduled to begin June 23, 2017, enforcement will now begin Sept. 23, 2017. Previous articles have addressed the new silica standards, with the realization that many think that silica may be the asbestos hazard of our generation. More can be found about the new regulations here. OSHA still expects employers in the construction industry to continue steps towards compliance with the new permissible exposure limit, or to implement specific dust controls for certain operations as provided in a table appended to the standard. Construction employers should also continue to prepare to implement the standard’s other requirements, including exposure assessment, medical surveillance and employee training.

The last example of extended or delayed rulemaking occurred in late June, just a few  weeks ago. OSHA has proposed a delay in the electronic reporting compliance date of the rule, “Improve Tracking of Workplace Injuries and Illnesses,” from July 1, 2017, to Dec. 1, 2017. That rule was finalized in May of 2016, more than a  year ago. Under the regulation, certain employers have to complete a form, called “Form 300A,” electronically. The rule is designed to provide information to OSHA so that they can better identify, target, and remove safety and health hazards and would improve the quality of information submitted and lead employers themselves to increase workplace safety.  OSHA predicts that the costs savings achieved by the delay for business are between $59,310 and $134,689, and OSHA concluded that the delay was both technologically and economically feasible.

As just one example of additional training, OSHA and Allied Construction Industries, a trade association representing more than 500 members, renewed a partnership in February to protect workers through increased training, daily work shift safety meetings, safety orientations and stand downs related to workers’ knowledge of hazards, and protective measures and equipment. The partnership was first signed in 2000.

Enforcement is not going to disappear, and OSHA will continue to maintain a focus on citing workplace hazards and injuries that occur when appropriate safety measures have not been taken. However, the new administration does appear to be loosening the regulatory framework, with an increased willingness to hear business concerns during rulemaking and compliance periods for new final rules.