Construction Law Signal

Construction Law Signal

Insights & Information on Current & Emerging Developments affecting the Construction Industry

7th Annual Labor & Employment Law Seminar

Posted in Firm News, Labor and Employment, Pennsylvania

Join Cohen Seglias’ Labor & Employment Group for a seminar on cutting edge labor and employment law issues impacting your business. Employment Policy Featuring speakers Marc Furman, Jonathan Landesman, Steven Williams, Christopher Carusone and Mark Leavy, the team will present on April 28th at the Union League in Philadelphia, May 5th at the Hershey Country Club and May 12th at The Omni William Penn Hotel.  This year our group will cover retaliation cases, workplace relationships, workplace investigations and a new feature—our first ever interactive panel discussion and Q&A featuring questions from you!  Participate in the debate as our panelists cover the most significant developments in labor and employment law in 2014 and address your concerns about what lies ahead for 2015.

Continental breakfast starts at 8:00AM, the seminar begins at 8:30AM and ends at noon.  The program is approved for 3 CLE & CPE credits.  There is no charge and space is limited. Register here or for questions, please contact Rachel McNally at 215.564.1700 or rmcnally@cohenseglias.com.

New Prevailing Wage Law in West Virginia

Posted in West Virginia

This month, West Virginia Governor Earl Ray Tomlin signed Senate Bill 361, which significantly adjusts the state’s calculation of prevailing wages to establish an amount more reflective of actual earnings in regions across the state.  As Governor Tomlin states, the new law will “address the concerns of hardworking West Virginians while establishing a common sense approach to continued investments in [the] infrastructure.”

Law gavel on a stack of American money.

Currently, all contractors on public projects pay wages calculated by the West Virginia Department of Labor.  When the new law goes into effect on April 13, 2015, economists at West Virginia University and Marshall University, as well as Workforce West Virginia, will be tasked with calculating those wages.

The most impactful aspect of the new law is that any West Virginia public project under $500,000 will be exempt from paying prevailing wages.  For projects over $500,000, before the public entity can advertise for bids, it must obtain from Workforce West Virginia the fair minimum rate of wages to be paid by the successful bidder to the laborers. This schedule of wages is to be made part of the construction specifications.

There is a July 1, 2015 deadline for the calculation of the new 2015 prevailing wages.  If, for any reason, Workforce West Virginia, together with West Virginia University and Marshall University, fail to determine the prevailing hourly wage rate by this date, no prevailing wages will be in effect until the determination is made.  There are provisions in the Bill that allow for an extension of time during which current prevailing wage rates would remain in effect, but if a determination is not made at the expiration of the extension period, no prevailing wages will be in effect until a determination is made.

West Virginia is one of a growing number of states enacting laws to narrow the types of construction projects affected by prevailing wages, and in some cases, to remove the law entirely.  We will continue to monitor the prevailing wage reform across the country, and, as always, we welcome your comments and questions.

Lisa M. Wampler is a Partner in the Construction Group of Cohen Seglias Pallas Greenhall & Furman PC.

Lori Wisniewski Azzara is an Associate at Cohen Seglias Pallas Greenhall & Furman PC. Lori 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.

2014 A Busy Year for Pennsylvania Mechanics' Lien Law: More New Changes Take Effect

Posted in Liens, Pennsylvania

When it comes to the Pennsylvania Mechanics’ Lien Law (Lien Statute), the Pennsylvania legislature was quite active in 2014.  In July, Governor Corbett signed into law certain changes to the Lien Statute affecting residential lien rights and lien priority.  We previously covered these changes.

Change Ahead Sign

On October 14, 2014, Governor Corbett signed into law additional changes to the Lien Statute in the form of House Bill 473 (HB473).  HB473 had been written, voted against, rewritten, and voted against some more going all the way back to June 2013 when we first covered the proposed changes.

The new amendments to the Lien Statute provide for the creation of a State Construction Notices Directory (the Directory) that will serve as a statewide system for registering and tracking construction projects within the Commonwealth costing in excess of 1.5 million dollars.  The legislation is designed to provide a centralized system for owners, contractors, subcontractors, and suppliers to notify each other that projects registered on the Directory have commenced and that furnishings of labor, materials, and equipment are being made by subcontractors.

Now, if an owner elects to register a project on the Directory (by filing a Notice of Commencement), subcontractors will be required to file a Notice of Furnishing with the Directory within 45 days after commencing work or first providing materials to the jobsite.  Under the changes, subcontractors that fail to substantially comply with these requirements forfeit their lien rights.  This front-end notice requirement is in addition to the existing back-end notice requirement in the Lien Statute requiring subcontractors to serve the owner with a notice of intent to lien at least 30 days before filing.

As we previously reported, one touted benefit of the law is that owners and contractors will be able to reconcile their payments with the list of subcontractors and suppliers registered on the Directory.  This centralized system will help owners and contractors ensure that lower-tiered contractors and suppliers have been paid.

As a product of the new amendments, subcontractors must carefully review their contracts for notice that the project in question will be registered with the Directory.  If the subcontract does not contain such a notice, subcontractors should nonetheless check the Directory out of an abundance of caution.  Suppliers will also need to monitor the Directory vigilantly for Notices of Commencement so that they file timely Notices of Furnishing and protect their lien rights.

With the Directory to be operational by December 31, 2016, members of the Pennsylvania construction industry have some time to study the new changes to the Lien Statute and modify their business practices accordingly. We welcome your comments and questions on these new changes to the Lien Statute.

Jason A. Copley is the Managing Partner at Cohen Seglias and a Partner in the Construction Group. His practice is focused on representing contractors, subcontractors and owners in the areas of construction and commercial litigation.

Daniel E. Fierstein is an Associate in the Construction Group of Cohen Seglias and focuses his practice on construction law. Dan counsels clients at all tiers of the construction industry, including general contractors, subcontractors, owners, developers, and design professionals.

What We Can Learn from PennDOT's Award of the First Rapid Bridge Replacement P3 Project

Posted in Infrastructure, Pennsylvania

Background

In the first significant public private partnership (“P3″) infrastructure project in Pennsylvania, PennDOT recently selected Plenary Walsh Keystone Partners (“Plenary Walsh”) for award of the Rapid Bridge Replacement program. Under the P3 agreement, Plenary Walsh is required to demolish 558 bridges in various states of disrepair throughout Pennsylvania and to construct new bridges in their place within three years of work commencement in the summer of 2015. According to PennDOT, this P3 procurement will result in both cost and time savings. PennDOT states that it would have taken it eight to twelve years to complete the replacement bridge work under conventional procedures. PennDOT estimated that the cost of the work using traditional means would have been over $2 million per bridge, whereas the cost through this P3 agreement is approximately $1.6 million per bridge.

bridge maintenance workPennDOT’s Rationale for Selecting Plenary Walsh

Plenary Walsh narrowly edged-out competitor Keystone Bridge Partners (“Keystone”), scoring 95.14 on PennDOT’s grading scale, as compared to Keystone’s grade of 94.77. The Plenary Walsh consortium includes Plenary Group, The Walsh Group, Granite Construction Co., and HDR Engineering. Keystone includes Kiewit, Parsons, and DBi. PennDOT stated that it selected Plenary Walsh over Keystone because of Plenary Walsh’s commitment to complete the 558 bridges eight months earlier than required, its $899 million price, and other key elements of its proposal, such as the traffic management plan and quality control plan. PennDOT Secretary Barry Schoch said that the goal for the project was not only finding cost savings, but also minimizing impact to the traveling public, which was reflected in the traffic management plan and the plan to complete eight months early in Plenary Walsh’s proposal. According to PennDOT’s press release, PennDOT also considered the financial capability to carry out the project, the background and experience in managing comparable projects, and the understanding of the project in selecting Plenary Walsh.

What Does This Mean for Those Seeking Award of Future Rapid Bridge Replacement P3s?

The takeaways for consortiums on future bridge replacement projects are that price, cost savings, experience, and financial capability remain fundamental considerations. Should these considerations be nearly equal between competing consortiums, the winning proposal is likely to be the one that demonstrates early completion of the project and a careful traffic management plan calculated to minimize the impact to the traveling public.

Tony Byler is a Partner at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Construction Group. As a trial lawyer, he focuses his practice on representing public and private owners, contractors, subcontractors and material men.

Jason C. Tomasulo is Senior Counsel at Cohen Seglias Pallas Greenhall & Furman PC. He focuses his practice on construction law and represents owners, general contractors, subcontractors, suppliers and sureties.

 

Crisis Management: Are You Ready for the BIG Surprise?

Posted in Business, Consumer Protection, Pennsylvania

Having designated legal counsel is critical to any comprehensive crisis management strategy. Whether you are in pre-crisis, crisis or post-crisis—having an attorney involved in your decision-making process can be the difference between surviving or even thriving in a crisis and having a crisis disrupt your business or derail your career permanently. How can your attorney help you be ready for a crisis? For starters, counsel can assess your document retention and storage policies and recommend best practices. Your counsel should also review your readiness procedures with a dedicated crisis management team of public relations and marketing professionals as well as a company spokesperson. Being prepared for a crisis requires strategic planning. Crisis flow chart

Be ready for the BIG surprise or bombshell that may be lurking in your future. Please join me and my team of crisis management experts for a half-day program of invaluable crisis management training, February 17th in Bethlehem, PA hosted by the American Subcontractors Association of Central PA. Our all-star panel will feature David Blain, Principal, of McKonly & Asbury, Doug Dvorchak, Sales/Account Executive & Risk Control Consultant, with Murray Securus and Lydia Mantle, Bond Account Executive, also with Murray Securus. Using real-world examples, we will provide tips on risk management, protecting your credit and assets, among other topics. We will answer your questions in a live Q&A. The best crisis management response takes planning, a holistic effort and a range of expertise. Take this opportunity to learn from the best and start planning now for your own synchronized response. Make the best of what will surely be a stressful situation.

Tuesday, February 17th
Event Center at Blue
4431 Easton Avenue, Bethlehem, PA

Registration & Breakfast – 7:30 a.m. – 8:00 a.m.
Program: 8:00 a.m. – 11:30 a.m.

Register here.

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

Best Practices in Construction Webinar

Posted in Compliance, Contract, Federal, New Construction, Small Business

On December 3, Jennifer Horn and Maria Panichelli presented the second webinar in their core construction curriculum series for Women Impacting Public Policy and Give Me 5%. The presentation, entitled “Best Practices in Construction,” covered suggested best practices for before, during, and after conclusion of a construction project, in the context of both state and federal jobs. The presentation provides tips on contracting, documentation, compliance, and claims prevention strategies. Start implementing business practices that make the difference between a profitable construction project and one that exposes your company to financial risk now! Check out: “Give Me 5: Best Practices in Construction,” here.

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

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Webinar on Federal Acquisition Regulations and Federal Procurement for WIPP and Give Me 5%

Posted in Small Business

On November 12, Jennifer Horn and Maria Panichelli presented the first webinar in their core construction curriculum series on the Federal Acquisition Regulations and Federal Procurement for Women Impacting Public Policy and Give Me 5%. The presentation covered the bidding process for both sealed bidding and negotiated procurement. Improve your understanding of FAR and its application in the construction context by checking out “Give Me 5: Construction Unit FAR 101 – Part 1, The Fundamentals of the Federal Acquisition Regulations and Federal Procurement: The Bidding Process,” here.

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

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

Jennifer M. Horn and Maria L. Panichelli To Begin Core Construction Curriculum Series for WIPP and Give Me 5%

Posted in Federal, Small Business

Please join Jennifer M. Horn and Maria L. Panichelli as they begin their “Core Construction Curriculum” series for Women Impacting Public Policy’s Give Me 5% program.

WIPP is a national nonpartisan public policy organization advocating on behalf of its coalition of 4.7 million businesswomen including 75 business organizations. WIPP identifies important trends and opportunities and provides a collaborative model for the public and private sectors to increase the economic power of women-owned businesses.  Give Me 5%, named after the 5% federal contracting goal for women-owned businesses, was created to educate women business owners on how to apply for and secure federal procurement opportunities. GiveMe5 is working to improve the WOSB Procurement Program to increase access to contracts for women entrepreneurs.

Give me 5

Jennifer and Maria will begin the Core Construction Curriculum series with two webinars.  On November 12th at 2:00pm they will be presenting Give Me 5: Construction Unit FAR 101 – Part 1, The Fundamentals of the Federal Acquisition Regulations and Federal Procurement: The Bidding Process.  The Federal Acquisition Regulations or “FAR” can be confusing whether you are new to federal contracting or have been contracting with the government for years. This webinar will focus on improving participants’ understanding of FAR and its application in the construction context. The presentation will cover the bidding process for both sealed bidding and negotiated procurement. You can find a description of the presentation and registration information, here.

On December 3rd at 2:00pm Jennifer and Maria will be presenting Best Practices in Federal Construction. Whether you a contractor working on federal, state or private projects, certain construction practices should be followed to ensure that you and your company are protected on the project. Observing best business practices can mean the difference between a profitable construction project and one that exposes your company to financial risk. This Webinar will focus on best construction practices before, during and at the conclusion of a construction project.  Read more and register, here.

We will keep you posted on additional webinar topics and times. If you have suggested topics, feel free to contact Jennifer or Maria.

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

Maria L. Panichelli is an Associate in the firm’s Federal Practice Group.

New Changes to Pennsylvania Mechanics' Lien Law Take Effect

Posted in Consumer Protection, Liens, Pennsylvania

Rolled Blueprints and gavel of justice

On July 9, 2014, Pennsylvania Governor Tom Corbett signed a bill (S.B. 145) into law that amends the Pennsylvania Mechanics’ Lien Law of 1963 (the “Lien Law”). The new law took effect on September 8, 2014 and affects subcontractor lien rights on residential construction projects as well as the order of lien priority between mechanics’ liens and open-end mortgages.

Liens on Residential Property

Under the new law, an unpaid subcontractor no longer has lien rights if all three of the following conditions are satisfied:

  1. The property owner or tenant has paid the full contract price to its general contractor;
  2. The property is or is intended to be used as the owner’s or tenant’s residence; and
  3. The property in question is a one or two unit residential property or townhouse.

In other words, this amendment protects homeowners from having to pay twice for the same work (e.g., where the owner pays the general contractor but the general contractor fails to pay its subcontractor). The new law includes a procedure through which an owner can discharge or reduce the amount of the mechanics’ lien by petitioning the court and proving that he or she has paid the full contract price to the general contractor.

Changes to Lien Priority

Through S.B. 145, the Pennsylvania Legislature has also changed how the Lien Law addresses the question of lender priority. As we have blogged previously, “priority” refers to who gets paid first if a property encumbered with multiple mortgages, mechanics’ liens, or the like is sold. Before the new law was passed, a mechanics’ lien could enjoy priority over a mortgage if the work in question began before the bank recorded the mortgage and the loan proceeds secured by the mortgage were used, in part, for non-construction costs.

With the new changes to the Lien Law, these open-end mortgages will enjoy priority over a mechanics’ lien claim as long as at least 60% of the loan proceeds are used to pay the “costs of construction” (which is defined in S.B. 145 very broadly to encompass just about every conceivable construction cost including taxes, bonding, and permits). These changes appear to be the legislature’s response to situations like the one in which the Pennsylvania Superior Court encountered in the case of Commerce Bank/Harrisburg, N.A. v. Kessler. In Kessler, a contractor’s mechanics’ lien was given priority over a bank’s open-end mortgage on the property in connection with a construction loan because not all of the proceeds from the loan were used to cover the costs of construction.

What Do These Amendments Mean to Players in the Construction Industry?

For subcontractors, the risk of nonpayment on residential projects increases because the homeowner may be able to demonstrate that it paid the general contractor in full. In those instances, the subcontractor’s recourse will most likely be limited to a breach of contract lawsuit against the general contractor. It is important for all members of the construction industry to note that this new protection to owners is limited to residential properties where the owner intends to use it as his or her residence.

Lenders and title companies will likely celebrate the changes to the Lien Law because it effectively overrules the Kessler decision and defines “costs of construction” more broadly such that open-end mortgages in connection with construction loans are likely to enjoy priority over a mechanics’ lien claim under most circumstances.

As is evident from these amendments, the Lien Law is a powerful and complicated statutory remedy that affects the rights of most participants in a construction project including lenders, owners, contractors, subcontractors, and suppliers. These latest changes remind us how challenging it can be to balance and navigate the competing rights and interests of each player. Anyone with questions regarding these new changes or the Lien Law generally should feel free to contact Cohen Seglias.

Jason A. Copley is the Managing Partner at Cohen Seglias and a Partner in the Construction Group. His practice is focused on representing contractors, subcontractors and owners in the areas of construction and commercial litigation.

Daniel E. Fierstein is an Associate in the Construction Group of Cohen Seglias and focuses his practice on construction law. Dan counsels clients at all tiers of the construction industry, including general contractors, subcontractors, owners, developers, and design professionals.

Shafer Electric & Construction v. Mantia: PA Supreme Court holds that noncompliance with the Home Improvement Consumer Protection Act does not entitle homeowners to free work

Posted in Consumer Protection, Contract, Home Improvement, Pennsylvania

Pennsylvania’s Home Improvement Consumer Protection Act (“HICPA”), which went into effect in 2009, generally requires that home improvement contracts be in writing and contain thirteen specific items (including the contractor’s home improvement contractor registration number, the date of the transaction and the name, address and telephone number of the contractor).  Absent inclusion of all items, the contract is not valid or enforceable against the owner.  This means that the contractor cannot assert a claim for breach of contract if the owner fails to pay for work performed.

Home Renovation

However, in the recent case of Shafer Electric & Construction v. Mantia, the Pennsylvania Supreme Court ruled that even if a contract fails to comply with HICPA, the contractor may still be able to recover the reasonable value for its services under the equitable theory of quantum meruit, or unjust enrichment.  What this means is that a homeowner is not excused from its obligation to pay the contractor simply because the home improvement contract does not comply with HICPA.

In Shafer, the homeowners engaged the contractor to build a garage addition onto their home.  The contract, however, did not comply with most of the requirements of HICPA.  After the contractor had performed work, a dispute arose and the parties agreed that the contractor would 1) invoice the homeowners for the work completed and 2) thereafter, discontinue its efforts.  Nevertheless, the homeowners refused to pay and the contractor filed suit for breach of contract and quantum meruit.  The homeowners moved to dismiss the action pursuant to HICPA.  The trial court granted the motion.  On appeal, the Pennsylvania Superior Court reversed as to the quantum meruit claim.  The homeowners then took a further appeal to the Pennsylvania Supreme Court.

The Supreme Court determined that HICPA does not preclude a non-compliant contractor from pursuing an action in quantum meruit.  Instead, HICPA only speaks to the enforceability and validity of home improvement contracts.  Further, under common law principles, a party is not precluded from bringing a quantum meruit action when one for breach of contract is unavailable.  Significantly, the court noted that the language of HICPA does not make any reference to a claim for quantum meruit being precluded and that it would be improper to insert words into HICPA that would extinguish a claim for quantum meruit.

Shafer is helpful for contractors in the event of noncompliance with HICPA.  However, it remains our strong recommendation to contractors that your home improvement contracts comply with HICPA.  Under quantum meruit, you can only recover the reasonable value of the services rendered and not necessarily the profit under the contract.  Additionally, a violation of any aspect of HICPA is also considered a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, which could subject you to enhanced damages and attorney’s fees in the event that a homeowner asserts a claim against you.

If you are unsure about whether your home improvement contract complies with HICPA, please do not hesitate to contact us.

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

Matthew L. Erlanger is an Associate in the Construction Group.