Author Archives: Melissa Dewey Brumback

Personal Assets at Risk Despite Corporate Formalities (Law Note)

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checking the plumb of a trussMany people establish business entities to protect themselves from personal liability.  In a ruling last week, however, the NC Court of Appeals  held that despite such corporate formalities, contractors can be personally liable for their own negligence.

The case, White v. Collins Building, Inc., __ N.C. App. __ (January 4, 2011), involves a new home constructed by developer AEA and purchased by the Whites.  AEA contracted with Collins building, Inc. to build the residence.  Collins Building is a one-member company owned by Edwin Collins, president, sole-shareholder, and qualifier for the company.  When the Whites began to experience alleged construction defects, they sued all involved, including both Collins Building Inc. and Edwin Collins, individually.

Edwin Collins moved to dismiss the lawsuit against him individually, and his motion was granted.  On appeal, the Court held that the dismissal was in error, and that Edwin Collins could be found individually liable to the Whites because the alleged negligence was his own action.   While noting that it was a case of first impression for the construction context, the Court pointed out that “It is well settled that an individual member of a limited liability company or an officer of a corporation may be individually liable for his or her own torts, including negligence.”

The Court stated that a properly formed and maintained business entity may provide a shield or “veil” of protection from personal liability, but that the protection was not absolute.   The Court also contrasted this situation to one in which the parties had contracted with each other; there the claim is usually a contractual one only, so if the Whites had contracted directly with Collins Building, Inc. to build their residence, they likely would not have a cause of action against Edwin Collins individually.

This case shows that, whilecorporate formalities are  important to protecting yourself from individual liability,  they are not a guaranty.

Share your thoughts, questions, or comments below.

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Photo copyright Defense.gov.

 

Tues Tip: Prepare for new ADA Standards

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ADA sign   The Americans with Disabilities Act (“ADA”) has been a standard in construction since its was signed into law by President George   H.W. Bush in 1990.  However, there are significant new changes coming, thanks to a new Department of Justice Rule and Standards.  The new Rule becomes effective in a little over two months– on March 15, 2011.  The new Standards are not mandatory until next year (March 15, 2012).  Buildings can currently be constructed to meet either the current or the 2010 Standards; however, the 2010 Standards will become mandatory next year.

According to the Department of Justice, some of the changes that design for new construction will need to accommodate include:

1. Reach Range Requirements (Section 308)

The reach range requirements have been changed to provide that the side reach range must now be no higher than 48 inches (instead of 54 inches) and no lower than 15 inches (instead of 9 inches). The side reach requirements apply to operable parts on accessible elements, to elements located on accessible routes, and to elements in accessible rooms and spaces.

2. Water Closet Clearances in Single User Toilet Rooms (Sections 603, 604)

In single-user toilet rooms, the water closet now must provide clearance for both a forward and a parallel approach and, in most situations, the lavatory cannot overlap the water closet clearance. The in-swinging doors of single use toilet or bathing rooms may swing into the clearance around any fixture if clear floor space is provided within the toilet room beyond the door’s arc.

3. Common Use Circulation Paths in Employee Work Areas (Sections 203.9, 206.2.8)

Under the 1991 Standards, its was necessary to design work areas to permit an employee using a wheelchair to approach, enter, and exit the area. Under the 2010 Standards, it will be necessary for new or altered work areas to include accessible common use circulation paths within employee work areas, subject to certain specified exceptions.

4. Location of Accessible Routes (Section 206)

All accessible routes connecting site arrival points and accessible building entrances now must coincide with or be located in the same general area as general circulation paths. Also, where a circulation path is interior, the required accessible route must also be located in the interior of the facility.  [Editor’s note: this requirement will help meet the Universal Design principle of equitable use by all persons.]

These are just some of the many changes.  The DOJ ADA website offers several fact sheets and the actual regulations, so take some time to review it if you have not already.

Questions about the Americans with Disabilities Act?  Comments about how these changes will affect your projects and how you are adapting plans to accommodate these coming changes?  Drop me a line in the comment section below.  Also, be sure to enter your email to get delivery of posts direct to your email inbox to be sure you never miss a post.

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Photo:  “Minneapolis Road to Freedom 71“by Transguyjay via Flickr/Creative Commons License.

What Will It Take for You? (Guest Post)

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 Guest Post:  Today we have a very inspirational guest post by Julie Fleming, J.D., A.C.C., on finding success no matter the odds.  A nice piece to help you change your mindset as you start off the new year.

Julie A. Fleming

Julie A. Fleming

 

 Julie is known as the business development expert for client-based businesses.  Julie consults with client service professionals on all aspects of creating a successful, satisfying and sustainable practice, with a special emphasis on business development and executive coaching.  Julie is the author of The Reluctant Rainmaker:  A Guide for Lawyers Who Hate Selling.  Additional information and resources are available at www.juliefleming.com.   Contact Julie by email to [email protected] or by telephone to 800.758.6214.

What Will It Take For You?

I saw The King’s Speech on New Year’s Day.  You’ll probably see the movie (about the efforts by King George VI, informally known as Bertie, to overcome a stutter around the time he ascended to the throne following the abdication of his brother, King Edward VIII, who left to marry the American divorcée Wallis Simpson) described as one about stuttering, about royalty, about friendship, about conflicting and social status.  It’s all of that and, to this Anglophile, more besides – a must-see that’s apparently the frontrunner for multiple Oscars.

But beneath all of that, deeper lessons become apparent.  Here are the top three that struck me.

  1. Masks tend to reveal as much as they cover.  In other words, if you pretend to be that which you aren’t, cracks will show.  Perhaps the real you won’t leak through the cracks, but fault lines will reveal that all is not as it appears to be.  Bertie’s speech therapist Lionel Logue opined that no child is born with a stutter and that a left-handed child forced to write with his right hand will never find that motion to be natural.From the business angle… So what?  I’ve had the opportunity to coach professionals who feel they must wear a mask to work with colleagues or to attract clients.  The “lucky” ones are unsuccessful, which prompts them to re-evaluate; lucky and unlucky alike are miserable. Who are you in your business, or in your practice?  As Bob Burg has written, “All things being equal, people will do business with, and refer business to, those people they know, like and trust.”  People are sensitive to hints of inauthenticity and tend not to trust those who wear masks.  So, really, it’s often your choice: would you prefer to lose some business because people sense you are not the person you’re pretending to be, or would you prefer to lose some business because of you are who you are, knowing full well that others will be drawn to you because you are that person? 
  2. Breaking the rules may be precisely the thing that propels you forward.  In The King’s Speech, one of Bertie’s breakthroughs comes with the freedom granted when Logue urges him to curse.  Bertie, a straight-laced royal, soon lets the expletives rip.  I won’t spoil the movie for those who haven’t seen it, but letting loose plays a role later in the movie in an amusing way. Some rules must not be broken – but those who are successful often find certain rules that don’t work for them, and shattering those restrictions also shatters the glass ceiling.  What rules are holding you back?  Are they truly non-negotiable?  If you could break them, how would you do it?  And, most importantly, for the sake of what?  Don’t go breaking rules just to break them. 
  3. Opportunities may arise in the form of problems or defeat.  Take them anyway.  Bertie was never supposed to be king.  His wife (the woman most of us knew as the Queen Mother) never wanted to be queen.  And yet, when King Edward VIII abdicated, Bertie and Queen Elizabeth stepped up at a crucial time in British history.  Bertie found his voice because he had to work for it.  England would likely have come through World War II and the Blitz regardless, but to hear English citizens of those years talk, the leadership shown by the “shouldn’t-have-been-royals” shaped the courage and determination of a generation.  Bertie did what was necessary to stand as a leader; his country modeled what he did.What opportunities are in front of you?  Which have come in the guise of defeat?  Perhaps you made a proposal to a potential client and lost.  What will you do?  One of my clients asked why, received valuable feedback, and proceeded to convert the prospect into a client within a matter of days for a parallel project created solely because the prospect wanted to work with her.  Perhaps you launched a program or a product and no one bought.  What opportunity can you spy when you take your eye off the failure?

Comments on how you can use these ideas in your own business?  Julie and I welcome your thoughts in the comments section, below. 

Pay when Paid & Pay if Paid

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pay here signRecently I was contacted by several readers asking questions about “Pay when Paid” clauses.  For those of you who may have missed it, I’ve previously addressed Pay When Paid issues in my April 29, 2010 post, Pay When Paid Clauses in the NC Construction Contract.

For a good discussion of the application of N.C. Gen. Stat. 22C-2, the Court of Appeals opinion American Nat. Elec. Corp. v. Poythress Commercial Contractors, Inc., 167 N.C.App. 97, 101, 604 S.E.2d 315, 317 (2004) is worth a read.

In that case, the electrical subcontractor sued the general contractor for delay claims. The contract provided that the contractor would only be liable to the subcontractor for delays if the contractor was compensated for such delays by the owner.  While such a term is clearly a “pay if paid” provision, the Court called the provision a “pay when paid,” and declared it unenforceable in North Carolina.  It seems likely, therefore, that the Court would find that both provisions have the same legal effect in North Carolina– that is, both are unenforceable.

One time when a “pay if/when paid” provision could be enforceable?  Residential construction of fewer than 12 units.

As always, consult your local attorney because such clauses very widely in their enforceability from state to state.

Questions or comments on “pay when paid” or “pay if paid”?  Drop me a line in the comments section, below.

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Photo: “Pay Here” via Freefoto.com / Creative Commons License. 

 

HealthyBuilt Homes Program- is it for you? (Tue Tip)

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NC HealthyBuilt Homes Program

Are you a North Carolina builder or designer interested in energy-efficient homes?  Want a “marketing edge” with your clients, to demonstrate why you are the professional they should use for the construction of their new home? 

If so, then check out the NC HealthyBuilt Homes Program website, which features checklists, requirements, and links to other  information on tax incentives for building healthier, greener homes.  In the builder section of the website, they even include a downloadable brochure for your customers, to help you stand out from the crowd.

Questions? Comments?  Part of the HealthyBuilt program?  Share your thoughts in the comments section.