The New Yorker always has fascinating articles on a variety of topics. One of my favorites is construction related.
Back in 1995, Joe Morgenstern wrote this article about the structural design of Citicorp Center in New York City. Potential design miscalculations were brought to the attention of the structural engineer by a student working on his dissertation. The structural engineer, William J. LeMessurier, performed calculations based on the student's alert, and became concerned that the bracing system in the tower was suceptible to quartering winds. Based on his concerns, the engineer raised the issue with the Owner and insurers and a fix was developed. LeMessurier explained to his students, "You have a social obligation. In return for getting a license and being regarded with respect, you're supposed to be self sacrificing and look beyond the interests of yourself and your client to society as a whole. And the most wonderful part of my story is that when I did it nothing bad happened."
Saturday, May 21, 2011
Friday, May 20, 2011
Loosening up on liens
Historically, lien requirements have been dealt with very strictly by the courts. This may be relaxing a bit. The Court of Appeals recently sided with a lien claimant on the adequacy of a claim of lien’s property description. In 3400 Partners v. Chavez, a painting subcontractor sued to foreclose a lien on a condominium project. The trial court granted summary judgment in favor of the subcontractor, and the owner appealed, arguing that the lien was defective because the legal description referred to in the lien listed one of many condominium units, rather than the property as a whole. The Court of Appeals affirmed and found the lien to be valid.
The subcontractor’s lien properly identified the street address for the property, 3400 Malone Drive, Chamblee, Georgia 30341, and stated that the lien “is claimed, separately and severally, as to all buildings and improvements thereon, and the said land.” The owner’s argument focused on Exhibit A to the lien, which included a legal description of the property, “all that tract and parcel of land lying in and being land lot 299, 18th District, Chamblee section, Dekalb County” but went on to say “and being unit 311, 3400 Malone Condominiums.” Thus, Exhibit A to the lien contained language arguably limiting the lien to Unit 311. Clearly, the lien and Exhibit A contained conflicting language as to the scope of the lien.
In rejecting the owner’s argument, the Court of Appeals acknowledged that the creation of liens under the mechanic’s lien statute is in derogation of the common law, and that “strict compliance with the requirements of the statute is required.” The Court balanced this rule with recent case law that passed on the adequacy of a property description. In a 2008 case, the Court ruled that “it is only when a description [of property] is manifestly too meager, imperfect, or uncertain to serve as adequate means of identification that the court can adjudge the description insufficient as a matter of law.” Deljoo v. Suntrust Mtg., 284 Ga. 438,440, 668 S.E. 2d 245 (2008). The Court noted that the Court of Appeals had enforced liens with descriptions containing surplusage, omissions, or even errors.
In this case, the Court found that the limitation to Unit 311 contradicted all of the other evidence in the case. The Court noted that the lien contained the correct street address for the property, and the description incorporated plat book drawings of the entire condominium project. Interestingly, the Court also relied on extrinsic evidence. First, the owner, 3400 Partners, had sent a letter to Chavez concerning its work at 3400 Malone Drive without any limitation to a particular unit. Second, Chavez claimed a lien for $186,000, and the market value of the individual units was less than $200,000.
In short, the Court overlooked the discrepancy in the lien, and noted that “there was no evidence that the parties were confused” about the extent of the property interest subject to the lien. The Court focused on the correct address and statement that the lien covered all buildings, and found that any confusion or discrepancy was resolved by extrinsic evidence. Chavez will certainly be cited in years to come by attorneys defending liens that may have some defect, with the argument that the court should look at extrinsic evidence to uphold the lien.
The subcontractor’s lien properly identified the street address for the property, 3400 Malone Drive, Chamblee, Georgia 30341, and stated that the lien “is claimed, separately and severally, as to all buildings and improvements thereon, and the said land.” The owner’s argument focused on Exhibit A to the lien, which included a legal description of the property, “all that tract and parcel of land lying in and being land lot 299, 18th District, Chamblee section, Dekalb County” but went on to say “and being unit 311, 3400 Malone Condominiums.” Thus, Exhibit A to the lien contained language arguably limiting the lien to Unit 311. Clearly, the lien and Exhibit A contained conflicting language as to the scope of the lien.
In rejecting the owner’s argument, the Court of Appeals acknowledged that the creation of liens under the mechanic’s lien statute is in derogation of the common law, and that “strict compliance with the requirements of the statute is required.” The Court balanced this rule with recent case law that passed on the adequacy of a property description. In a 2008 case, the Court ruled that “it is only when a description [of property] is manifestly too meager, imperfect, or uncertain to serve as adequate means of identification that the court can adjudge the description insufficient as a matter of law.” Deljoo v. Suntrust Mtg., 284 Ga. 438,440, 668 S.E. 2d 245 (2008). The Court noted that the Court of Appeals had enforced liens with descriptions containing surplusage, omissions, or even errors.
In this case, the Court found that the limitation to Unit 311 contradicted all of the other evidence in the case. The Court noted that the lien contained the correct street address for the property, and the description incorporated plat book drawings of the entire condominium project. Interestingly, the Court also relied on extrinsic evidence. First, the owner, 3400 Partners, had sent a letter to Chavez concerning its work at 3400 Malone Drive without any limitation to a particular unit. Second, Chavez claimed a lien for $186,000, and the market value of the individual units was less than $200,000.
In short, the Court overlooked the discrepancy in the lien, and noted that “there was no evidence that the parties were confused” about the extent of the property interest subject to the lien. The Court focused on the correct address and statement that the lien covered all buildings, and found that any confusion or discrepancy was resolved by extrinsic evidence. Chavez will certainly be cited in years to come by attorneys defending liens that may have some defect, with the argument that the court should look at extrinsic evidence to uphold the lien.
Thursday, August 5, 2010
Copyrights: The Importance of Registration
Design professionals should carefully consider the benefits of registering their copyrights at an early date. Working on one of my cases recently brought home the importance of timely registration. It is possible for an architect desiring to bring an infringement claim to wait until the infringement to register the copyright. However, in so doing, the copyright owner loses the benefit of two hugely important remedies in the copyright law--statutory damages and attorneys fees.
First, statutory damages are available to copyright owners who register before the infringement occurs. As many folks who have defended cases filed by the recording industry know, this is a powerful weapon. Statutory damages can range from $750 to $30,000 per infringement, with higher damages for wilful infringement. Without statutory damages, a plaintiff must prove his actual damages. A plaintiff may recover the infringer's profits, but in the architectural plan context, the defendant will try to reduce the gross profit by overhead and other expenses incurred. The defendant may also attempt to allocate profits to factors other than the Plaintiff's work.
The second reason why early registration is so important centers on the recovery of attorney's fees. A plaintiff can recover attorney's fees only if he registered the copyright prior to the infringement. A copyright case can easily cost a copyright owner tens of thousands of dollars, if not six figures. These costs can erase the benefit of any recovery. Also, the threat of an attorney's fees claim makes a critical impact on settlement negotiations and the defendant's assessment of the case.
First, statutory damages are available to copyright owners who register before the infringement occurs. As many folks who have defended cases filed by the recording industry know, this is a powerful weapon. Statutory damages can range from $750 to $30,000 per infringement, with higher damages for wilful infringement. Without statutory damages, a plaintiff must prove his actual damages. A plaintiff may recover the infringer's profits, but in the architectural plan context, the defendant will try to reduce the gross profit by overhead and other expenses incurred. The defendant may also attempt to allocate profits to factors other than the Plaintiff's work.
The second reason why early registration is so important centers on the recovery of attorney's fees. A plaintiff can recover attorney's fees only if he registered the copyright prior to the infringement. A copyright case can easily cost a copyright owner tens of thousands of dollars, if not six figures. These costs can erase the benefit of any recovery. Also, the threat of an attorney's fees claim makes a critical impact on settlement negotiations and the defendant's assessment of the case.
Sunday, December 20, 2009
Georgia Court of Appeals Rejects Challenge to Arbitration Award
The Georgia Court of Appeals recently adhered to its deferential attitude towards arbitration decisions in America’s Home Place, Inc. v. Cassidy, A09A1148 (November 10, 2009). In a dispute between a contractor and homeowners, the Court ruled on both a substantive challenge to the award and the homeowners’ challenge of procedure.
Procedurally, the homeowners complained that the arbitrator failed to require the contractor to submit a pre-hearing witness list, and failed to issue a requested witness subpoena. Interestingly the Court found that the arbitration code providing that the arbitrator “may issue subpoenas for the attendance of witnesses” simply provided the arbitrator discretion to do so, but did not mandate that a subpoena be issued. Moreover, the Court found that the homeowners waived any potential challenge by proceeding with the arbitration hearing, and by pursuing their counterclaim (including filing a post hearing brief seeking recovery on their counterclaim). The Court noted that the code allows for vacating an award where the rights of a party were prejudiced by a “failure to follow the procedure of this part, unless the party applying to vacate the award continued with the arbitration with notice of this failure and without objection.” O.C.G.A. § 9-9-13(b) (4). The Court found that the homeowners waived any objection by anxiously proceeding with the arbitration.
The homeowners also challenged the arbitrator’s decision, arguing that the arbitrator failed to follow the party’s contract when he ruled that the contractor had substantially completed the work. The Court handled this argument as a manifest disregard of the law issue, noting that manifest disregard requires that the arbitrator be conscious of the law and deliberately ignored it. A simple mistake in interpretation of the law, or the contract, does not suffice. Here, the homeowners argued that the contract required that a Certificate of Occupancy be issued in order to find substantial completion. The arbitrator--and the Court--disagreed with this interpretation of the contract. Interestingly, the opinion does not quote the language from the contract on the substantial completion/CO issue.
It will be interesting to see if future challenges are pursued, based on the Court’s admonition that an arbitrator may not decline to follow the parties’ contract. Arguable, that might provide ammunition for a manifest disregard argument. In this case, however, the Court not only deferred to the arbitrator’s interpretation, but also seemingly agreed with it.It will be interesting to see if litigants pursue future challenges premised on the Court’s admonition that an arbitrator may not decline to follow the parties’ contract. Arguably, that might provide ammunition for a manifest disregard argument. In this case, however, the Court not only deferred to the arbitrator’s interpretation, but also seemingly agreed with it.
Saturday, July 11, 2009
The importance of licensing
A 2008 Georgia case illustrates the importance of proper licensing for certain subcontractors, including those performing electrical work. Some subcontractors perform great work, but for whatever reason their principal failed to obtain an appropriate license. For electrical subcontractors, this would be from the Division of Electrical Contractors. Regulation of certain trades, and licensing requirements, applies the contracting work affects "the public interest."
The 2008 case, JR Construction/Electric v. Ordner Construction, 669 S.E. 2d 224 (Ga. App. 2008), involved an out of state electrical subcontractor who sought to satisfy the licensing requirement by joint venturing with a local, licensed subcontractor. The Court found that this was inadequate because of the limited services performed by the licensed individual--he showed up, according to the evidence, only to provide the license. As a result, the Court invalidated the lien, and held that the subcontract was unenforceable. The subcontract was void because it violated public policy.
Based on this case, subcontractors lacking a proper license may be able to protect themselves by joint venturing, but only if the licensed individual observes and supervises the work.
Friday, December 19, 2008
Critical filing date for a claim of lien
In D.C. Ecker Constr. Inc. v. Ponce Inv. LLC (Case No. A08A107 November 25, 2008), the Georgia Court of Appeals issued an interesting opinion concerning the timeliness of a lien claim. Ecker filed a claim of lien which recited that the claim became due on June 16, 2006, three months and five days before the lien was filed. The trial court, based on the owner's motion to dismiss, ruled that the lien was untimely filed (it was not filed within three months as required by the mechanic's lien statute) and dismissed the action. The Court of Appeals reversed, explaining that the lien claimant had inserted both the June 16, 2006 date, as well as a statement that the lien was filed within three months since the furnishing of the lien claimant's services, labor and materials.
The Court of Appeals explained that the crucial date is the last date that materials or labor was furnished to the project, not the date the claim became due. The Court stressed that the claim could become due after the materials, labor or services were last provided. Previously, many courts treated those two dates as one and the same. The Court distinguished previous cases in which liens were deemed untimely, because they contained only the date, and not a boilerplate statement that the lien was filed within three months after the last date that materials or labor were furnished. Certainly this is an interesting case showing the importance of a boilerplate statement, and giving some benefit of the doubt to the claimant (in an area of the law that sometimes shows no mercy for the unwary).
The Court of Appeals explained that the crucial date is the last date that materials or labor was furnished to the project, not the date the claim became due. The Court stressed that the claim could become due after the materials, labor or services were last provided. Previously, many courts treated those two dates as one and the same. The Court distinguished previous cases in which liens were deemed untimely, because they contained only the date, and not a boilerplate statement that the lien was filed within three months after the last date that materials or labor were furnished. Certainly this is an interesting case showing the importance of a boilerplate statement, and giving some benefit of the doubt to the claimant (in an area of the law that sometimes shows no mercy for the unwary).
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