As Much As He (She) Deserves-Quantum Meruit Recovery

I am representing a client seeking payment for extra work, with both breach of contract and quantum meruit claims.  The defendant filed a motion for judgment on the pleadings, arguing that the case should be dismissed because my client did not have documents needed to support its claim.  I couldn't figure out how a motion for judgment on the pleadings would be a proper vehicle to ask for relief in this situation.  But, I also addressed the substance of the motion.

My thought going in:  the law should not require particular documentation in order to state a claim.  A Georgia case supported my belief.  In Hamler v. Wood, an interior designer, Wood, sought to recover for work performed under theories of breach of contract and quantum meruit.

On the quantum meruit claim, the owner, Hamler, moved for a directed verdict, arguing that Wood failed to provide sufficient evidence of the reasonable value of her services. The trial court denied the motion, and the Court of Appeals affirmed.  The Court of Appeals found that Wood's oral testimony was sufficient proof:

With respect to value, Wood offered evidence of the master invoice, which detailed the cost of work approved by Hamler, as well as testimony regarding the hours she spent on the project and their agreed-upon hourly rate. She explained the balance due on Hamler's account. Moreover, she asserted that Hamler never questioned the time she billed to the project, did not raise most of his complaints about the workmanship until "[y]ears later," asked her to continue working for him, and promised to pay her. Because such evidence authorized the jury to value the benefit of Wood's services, the trial court properly denied Hamler's motion for directed verdict as to quantum meruit.

Wood sufficiently proved "what she deserved" -- by her testimony.

I am pleased to announce that at the request of my friend Neal Sweeney, I contributed a chapter on surety law for the2017 edition of  Construction Law Update, a Wolters Klewer publication. This will be published in May.  Pictured is the 2016 update to which I contributed.  Neal has edited this publication annually since 1992.  I have contributed for the last few years.  For several years I have authored a chapter discussing recent developments in surety law .  Back in 2014, I wrote a chapter on no damage for delay clauses.

Waiver danger

A recent Georgia Court of Appeals decision (Bibler Masonry Contractors, Inc. v. J.T.Turner Construction Co., 2017 Ga. App. LEXIS 86 (A16A2094 March 6, 2017), demonstrates the perils of signing a lien waiver then failing to take action under the mechanic's lien statute.  The statute deems payment to a party signing a lien waiver to be conclusive unless the signer takes specific action, including filing an Affidavit of Nonpayment in the property records within 60 days after the date of the waiver.

Aside:  I once had a case involving a subcontract that required payment in 60 days.  Subcontractors waited the 60 days, and payment was not made. The contractor argued that the lien waiver barred the subcontractors' lien and bond claims, because the subcontractor failed to file the affidavit of nonpayment.  Not good.

In the recent case, the subcontractor, Bibler, performed masonry work for J.T. Turner Construction for the Savannah Law School.  Bibler signed a Waiver and Release Upon Final Payment, and the document bore a date of December 22, 2014.  The Waiver was forwarded to Turner on February 17, 2015, and after Turner failed to make payment, Bibler filed an Affidavit of Nonpayment on February 27, 2015.

In Bibler's lien action, the trial court granted the owner's motion for summary judgment, ruling that the Affidavit of Nonpayment was untimely--it was recorded more than 60 days after the date of the waiver, back on December 22.

Bibler argued that it backdated the lien waiver at the request of Turner, and that the 60 days should run from February 17, when it signed the waiver and forwarded it to Turner.  Quoting those dreaded words that the lien statute is in derogation of common law (ouch) and that the law must be construed against the claimant, the Court of Appeals disagreed.  The court noted that the lien waiver form provides that the claimant is conclusively deemed to have been paid in full, even if it has not been paid, 60 days "after the date stated above".

Interestingly, the court explained that its decision was "undergirded" by O.C.G.A. §44-14-366(f)(1), which provides that the amount is conclusively deemed to have been paid "sixty days after the date of execution of the waiver and release..."  That section would seem to support Bibler's argument that the date of execution has relevance.  Nevertheless, the court rejected Bibler's argument that an ambiguity existed, and held that the 60 days runs from the date shown on the document, regardless of when it was signed and submitted.   The court found that unambiguously, date of execution=date of document.  

Construction in The New Yorker

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."

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.

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.

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.