Construction Law Signal - Insights & Information on Current & Emerging Developments affecting the Construction Industry

By: Lori Wisniewski Azzara and Jennifer M. Horn

As a follow up to its 2006 report, the Natural Resources Defense Council (NRDC) has issued a new report – Rooftops to Rivers II – that provides case studies for 14 geographically diverse cities that employ green infrastructure solutions to address stormwater challenges. These leading cities, which include Philadelphia and Pittsburgh, have recognized the beneficial uses to stormwater, thereby reducing pollution and overall costs.

The NRDC estimates that 10 trillion gallons of untreated stormwater runs off of roofs, roads, parking lots and other paved surfaces a year. By implementing a green infrastructure, cities can not only save money but also minimize stormwater pollution and sewage overflow problems. The report recognizes the multitude of benefits a green infrastructure provides over conventional infrastructures (i.e., underground storage systems and pipes), particularly its cost-effectiveness, flood resilience and augmented local water supply.

The report identified six key actions that cities should take to maximize their green infrastructure investment and become “Emerald Cities,” including:

• Developing a long-term green infrastructure plan;
• Enforcing a strong retention standard for stormwater;
• Requiring the use of green infrastructure to reduce and manage runoff;
• Incentivizing residential and commercial property owners to install green infrastructures;
• Providing assistance in accomplishing green infrastructure; and
• Ensuring that a long-term and dedicated funding source is available to support the green infrastructure investment.

Of the 14 cities, Philadelphia was the only city to achieve all six Emerald City criteria and is the nation’s first city to formally commit to using green infrastructure as the primary means to satisfy its sewer overflow obligations. Pittsburgh achieved one of six Emerald City criteria by passing an ordinance that establishes stormwater volume reductions standards, including a requirement that developments larger than 10,000 square feet retain the first inch of rainfall on-site.

Lori Wisniewski Azzara is an associate at Cohen Seglias Pallas Greenhall & Furman PC. Mrs. Azzara practices in the areas of construction and commercial litigation and has experience in contract negotiation, claims for delay and inefficiency, mechanics’ liens, and all types of contractual disputes.

Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

By: Marian A. Kornilowicz

The Pennsylvania Department of State Corporation Bureau (Corporate Bureau) identifies entities that may no longer be in existence in order to make their names available for use by new active entities. To make sure your business name is protected, most Pennsylvania businesses are required to file a report called the “Decennial Report of Association Continued Existence” (the Decennial Report) every 10 years. 54 Pa.C.S.A. §503.

Specifically, “associations,” which include in this context most foreign and domestic corporations, limited liability companies, limited partnerships, and business trusts, must file a Decennial Report with the Corporation Bureau between January 1, 2011 and December 31, 2011, unless the “association” came into existence after January 1, 2002 or had made another filing since that date (e.g., an address or name change).

If an “association” fails to file a Decennial Report prior to January 1, 2012, and is not exempt from doing so, it shall no longer be deemed to be registered and will lose the exclusive right to its name. After January 1, 2012, any other business entity may request and use the name. A late filing of a Decennial Report would reinstate the name of the “association” unless its name has been appropriated during the period of the delinquency. 54 Pa.C.S.A. §504.

More information is available at Corporation Bureau and Decennial Report form is also available. The state filing fee is $70.

If you require any assistance in the filing of a Decennial Report or have any questions relating to Decennial Reports or any other corporate matter, please contact Marian A. Kornilowicz, Esquire at 215 564-1700 or mak@cohenseglias.com.

Marian A. Kornilowicz is the chair of the Business Practice Group of Cohen Seglias Pallas Greenhall & Furman PC. His practice is concentrated in the representation of clients in varied business transactions and real estate matters.

By: Jennifer M. Horn

For over ninety years, Maryland's Court of Appeals has refused to honor the claims of unlicensed entities, including those of subcontractors and contractors who failed to adhere to the applicable regulatory licensing requirements. In late October, however, Maryland's high court upheld the reversal of this precedent and allowed an unlicensed subcontractor to enforce its contract against a general contractor on home improvement work.

In Stalker Brothers, Inc. v. Alcoa Concrete Masonry, Inc., subcontractor Alcoa Concrete did not obtain the proper license in accordance with Maryland law, yet performed residential home improvement work pursuant to its contract with general contractor Stalker Brothers. Stalker Brothers promised to pay Alcoa for the concrete work Alcoa performed; however, ultimately withheld payment. It was undisputed that Alcoa was not licensed with the State of Maryland Department of Labor, Licensing and Regulation prior to March 26, 2008, and the Maryland Home Improvement Commission confirmed Alcoa’s status as an unlicensed entity. On this basis, Stalker Brothers moved to dismiss Alcoa’s plea for payment, asserting that contracts made by an unlicensed entity are “illegal” and “will not be enforced.” The Circuit Court agreed.

In overturning the Circuit Court opinion, the Court of Special Appeals and, most recently, the Maryland Court of Appeals determined that the contract between Stalker Brothers and Alcoa was enforceable despite Alcoa’s status as an unlicensed subcontractor. In so doing, the high courts recognized that Maryland Home Improvement Law was intended to protect consumers from unlicensed contractors – not licensed general contractors from their unlicensed subcontractors.

Of course, every contractor should be licensed to perform their work in every appropriate jurisdiction in accordance with Maryland law. However, Maryland Home Improvement Law, according to the Alcoa case, is not intended to serve as a shield for contractors like Stalker Brothers who seek to elude payment for their just debts. For those reasons and others, the contract between Stalker Brothers and Alcoa was enforceable.

As contractors expand their geographic jurisdictions to gain more work in other areas, the Alcoa case serves as a reminder to all companies to update all appropriate professional licenses.

Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

By: Jennifer Horn

In a decision this month PennDot’s Design-Build Best-Value Bid (DBBV) procurement method has been deemed illegal by Pennsylvania’s Commonwealth Court. Strengthening earlier rulings, the Court noted that the illegality of the DBBV procurement method flows from the fact that the method permits a “subjective evaluation of construction contractors rather than utilizing criteria that are objectively measureable.”

In the case of Brayman Construction Corp., et. al, v. Commonwealther of Pennsylvania Dep’t of Transportation, a contractor Brayman, sought and obtained a permanent injunction that prohibits PennDot from using the two-step bid procurement selection method outlined in PennDot’s Publication 448, Innovative Bidding Toolkit (Publication 448). Publication 448 described the DBBV bid procurement method as one in which the number of bidders on a Project is short-listed to just three bidders who are then given stipends to prepare their final bids.

Previously, the Supreme Court of Pennsylvania enjoined Commonwealth agencies, including PennDot, from procuring construction contracts using DBBV unless there was a potential for harm to the travelling public.

This month’s ruling, however, left no room for exception. In rejecting PennDot’s attempt to justify the DBBV procurement method by proceeding under a different subsection of Section 512 of the Procurement Code, the Court found that PennDot was permanently enjoined from using this “illegal method of the selection of bidders” and would not be harmed if required to comply with the law requiring the use of objectively measurable bidding criteria.

Jennifer M. Horn is Senior Counsel at Cohen Seglias and a member of the Construction Group. She concentrates her practice in the areas of construction litigation and real estate.

By: Melissa C. Angeline

In its October 5, 2011 press release, the National Labor Relations Board states that it has postponed the November 2011 deadline for employers to post the “Employee Rights Under the National Labor Relations Act” notice. As previously reported, the Board recently established a rule requiring most private-sector employers to post a notice of employee rights as of November 14, 2011. The Board later published the 11 x 17 inch poster on its website.

The Board explained that it decided to postpone the deadline “in order to allow for enhanced education and outreach to employers,” and thereby “ensur[e] broad voluntary compliance” with the rule. According to the Board, this decision “follow[s] queries from businesses and trade organizations indicating uncertainty about which businesses fall under the Board’s jurisdiction.”

However, the Board cautioned that the postponement should not be viewed as a sign of impending change or reversal of the rule, stating that “[n]o other changes in the rule, or in the form or content of the notice, will be made.”

This postponement will not affect pending federal lawsuits seeking to invalidate the rule. However, this delay will provide valuable time for the courts to decide whether to enjoin the rule before the new effective date of January 31, 2012.

At this point, employers need not post the notice contained on the Board’s web site, and may postpone or put on hold any orders of pre-packaged employment law posters containing the Board notice. Employers should continue to check our blog as the deadline for new developments approaches.

Melissa C. Angeline is senior counsel in the Labor & Employment Group of Cohen Seglias Pallas Greenhall & Furman PC. She concentrates her practice on representing and counseling employers in all aspects of employment law.