Category Archives: Law Notes

The police are at the door! Service of the construction lawsuit on your company (Law & Order: Hard Hat files Part 2)

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sheriff carThe police?  Yes, that’s right.  If you are sued, at least in North Carolina, you may find Mr. Policeman (or Ms. Policewoman) at your door.  There are several ways that you may find out you or your company are being sued, but undoubtedly seeing the Sheriff at the door is the most nerve-racking.  Heck, we have Sheriffs in our law office occasionally to serve papers, and the sight never fails to startle me.  So be forewarned—the first you find out that there is a lawsuit may be when Johnny Law himself comes knocking.

While unnerving (as it is often meant to be by the party suing you), rest assured that all the Sheriff will be doing is identifying you and handing you papers showing you’ve been sued.  The Sheriff doesn’t actually have to hand you the papers personally- in fact, depending on if and how you are incorporated, he may be handing them to your spouse, another adult that resides in your house, your business partner, or an officer or manager of your professional association.  While the Sheriff is not supposed to leave papers with a mere employee, that can and does happen as well.

The Sheriff is not the only way you can be sued.  You can also get a certified mail package—you know, the type that requires you to go sign for it at the post office.  Or, you may get a Fed Ex package.  If you are being sued in federal court, or you know the lawsuit is coming, you may not get anything, as it may all come to your lawyer instead.

What should you do if you do get the lawsuit (called the Complaint)?  First, run, do not walk, to your insurance carrier and/or lawyer.  Do not pass go.  This should be the first thing you do.  If you don’t have a lawyer, but you have insurance, your agent should be able to help you report the claim, and a lawyer will be assigned to you by the insurance company.  If you have a lawyer, you can report to him/her, and ask the lawyer to make the claim on your behalf to your insurance company.

Remember, however, that you need to report it as soon as you can.  In state actions in North Carolina, you have 30 days from receipt to respond.  In federal actions, you have 20 days.  There are certain rules concerning weekends and governmental holidays that change these deadlines at times.  But the important thing to remember is that you must respond, timely, or you can end up with a judgment entered against you in default.  So, when you report the lawsuit, the first thing your agent or lawyer will want to know is the date you (or someone connected with you) first received the Complaint.

If you report the claim and do not hear back?  Follow up.  Never assume that an email went through or that the person you called isn’t on vacation or in the hospital.  Make sure that you speak with your agent and/or lawyer personally and that they know when you were served.

Questions? Comments?  Have you ever been sued?  Do you now know something you wish you knew then?  Drop me a line or comment below.

Next week in our series:  You have the right to an attorney! (but one will not be appointed for your construction lawsuit)

Photo (c) freefoto.com

 

4 Federal Labor Laws Every Construction Manager Needs to Know (guest post)

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construction hard hat on postToday, a guest post from Kristie Lewis, freelance writer for Construction Management Degree.  Kristie has written numerous articles on both construction training and education as well as industry news and trends. In her spare time, Kristie enjoys cooking in her newly remodeled kitchen and reading science fiction novels. You can reach out to her at Kristie.Lewis81@gmail.com.  Thanks for sharing, Kristie.

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In an effort to protect the rights of employers in all industries, the federal government has enacted several labor laws. Some of the laws apply to all business sectors, and some apply to specific industries, such as construction.

Although those who earn a degree from an accredited construction management program will be required to learn about a variety of laws that apply to the construction industry, it is never a bad idea to review the details of them. Here are four labor laws that every construction manager should know like the back of their hand.

The Fair Labor Standards Act (FLSA)

This act sets the standards for wages and overtime pay. In general, it requires employers to pay covered employees who are not otherwise exempt at least the federal minimum wage and pay 1.5 times the regular rate for overtime hours. The Fair Labor Standards Act is administered by the Wage and Hour Division. More information on this law can be found at the division’s official website.

Davis-Bacon and Related Acts

These policies apply to contractors and subcontractors that are working on public buildings or public works projects that are federally funded and will cost more than $2,000 to construct, alter or repair. According to the act, contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. There are additional details that can also be found on the Wage and Hour Division’s official website.

The Occupational Safety and Health Act (OSHA)

This act is administered by the Occupational Safety and Health Administration and includes an array of industry-specific regulations that are enforced through regular workplace inspections and investigations. Compliance assistance and other cooperative programs are available for employers who request help. Although there seems to be an endless amount of rules to comply with, most of them are common sense rules that smart construction managers already abide by. Still, it is wise to make sure your project is congruent with the federal law, because any infractions can be found through inspection or reported by a worker.

The Labor-Management Reporting and Disclosure Act (LMRDA) of 1959

This law deals with the relationship between a union and its members. Also known as the Landrum-Griffin Act, it protects union funds and promotes union democracy by requiring labor organizations to file annual financial reports. Employers are also required to file reports regarding certain labor practices. It is administered by the Office of Labor-Management Standards. You can read the details of the law here.

Knowing the details of the above laws will not only keep your construction business safe from legal trouble, it will also allow you to provide your employers with the best working environment possible.

Questions on these laws, or comments?  Drop Kristie and me a note in the comment section, below.

Photo: (c) Anna Strumillo.

Is there a dead body in your future? The first sign of trouble on the construction project (Law & Order: Hard Hat files Part 1)

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fake dead bodyNobody dies in a construction dispute.  At least most of the time!

However, just as the usual “thunk-thunk” chord in Law & Order warns the viewer that something is awry, there are warning signs that your construction project may be under similar dire straights.  You should recognize these signs for what they are—early-warning lawsuit detection devices.  Signs that a lawsuit may be in your future include:

  1. The  “everything has gone wrong” situation.  This one is fairly big and obvious, but it bears mentioning.  If the project is delayed, over budget, and there are signs that the owner is looking for someone to take the fall, watch out.
  2. Much more subtle, but equally troubling, is the “start acting squirrely” syndrome.  If you have always had a good working relationship with the general contractor, but suddenly he is aloof, watch out.  If the owner is usually friendly and free with the flow of information, and he suddenly begins to clam up, be concerned.
  3. The “let’s document everything” protocol.  Now, as a lawyer, I feel duty bound to tell you that I think documenting everything is best management practice.  However, I do know that most normal folk don’t usually behave this way 24/7.  So, if you are on a project where a contractor likes to write letters to the file almost as much as he does change order requests, be leery.  Could be he just listens well to his lawyer’s proactive advice to document everything.  Or, could be he is preparing a case from the get-go to claim design failures, construction administration delays, and the like.  How to tell the difference?  Often, you can only go with your gut.  But take note—is Mr. Letter Writer documenting everything, or just items that might be considered “blame-able” ?
  4. The “I’m confused” RFI king.   Similar to #3 above, but more specific, the confused RFI king always seems to need clarification or further information about your design.  The requests for information flow so fast, you may have trouble responding timely.  This may be part of the plan.  Or, it may simply be a numbers game— either the contractor is asking RFIs to buy time on the project (often on a case with strong liquidated damages provisions), or he wants to later be able to point out the “excess number of RFIs” to prove “bad design.”

 Now that you’ve caught the whiff of trouble brewing, how do you stop it before the dead body smell takes up residence in your car?  Observe, document, and respond in kind.

If you are dealing with an RFI king, respond timely, and note when the RFI is asking for information that is readily available on the plans.  You might even consider keeping your own running log of questionable RFIs, so you can readily show your lawyer, and a future jury, that although there may have appeared to be a large number of RFIs on the project, the fact was that most of them (X percentage) were questions about something that the contractor should have already known if he had reviewed the plans.

If you have a “document everything” guy on your hands,  respond in kind.  You should be doing this anyhow, of course, but if you have someone that is especially prone to documenting everything, you need to be extra vigilant that he is not stating anything that is untruthful, that the documentation is complete, and that any time you get a document that doesn’t completely tell “the truth, the whole truth”, that you supplement it with your own documentation accordingly.

If you have a squirrely acting client, you might consider just politely confronting him to ask if anything is going on.  It could be something that has nothing to do with the project –  internal politics, personnel crises, etc.  In which case, you will find that out.  If there is something more sinister afoot, you can probably determine that as well.  The key here is to ask whoever you are (or had been) close to, and to ask them off the record, in person.  You can learn a whole lot through non-verbal body language.  If you find out, directly or indirectly, that there may be a claim afoot, then you can proceed accordingly.

If the project has gone to hell in a handbasket, there is not a whole lot you can do, other than to keep ensuring that you and your team are meeting all contract requirements.  Part of this should include documentation for the eventual lawsuit, if it comes to that.  You might also contact your lawyer or insurance company for assistance behind the scenes—something called “loss prevention”.  Remember, reporting the dead body is the first step to clearing the air.  It’s the cover up that usually gets folks in trouble.

Now it’s your turn.  Drop me a note or comment below to share your own techniques for recognizing possible lawsuits.  Next week in the series: the mechanics of being sued.  Stay tuned!

Photo (which is not of a *real* dead body) (c) garlandcannon via cc. 

 

Why Everything You Learned from Law & Order won’t help you win your professional malpractice case!

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Secret confession time here:  I *love* my Law & Order.  And while I’ve been known to suffer through SVU or, God forbid, Criminal Intent, it’s the original Law & Order (with uber-cool Detective Lennie Briscoe and the always wild-eyebrow of Jack McCoy) that really makes my day.

Some clients wonder why I like to watch a legal show on television after a day of practicing law.  The answer is because the real world of law is nothing like that on shown on TV.  Things happen so fast and so amazingly on the show, it is fun way to wind down the day.

On Law & Order, a subpoena is issued for bank documents, and, faster than you can say, “cha-chunk”, the documents are rolling through the office.  Court cases are wrapped up in neat tidy 60 minute packages (including time for discovering the real killer).  The lawyers get to ask unfair questions—make self-serving testimony and arguments to the jury—and it doesn’t matter, because they are on the side of truth, justice, and the American way.  Law & Order is many things, but an accurate representation of a court case, it is not.

What does this have to do with YOUR court case?  Everything.  Sure, you expect your construction case will be different from a “sexy” homicide case, but are you really prepared for just how different it will be?  How long it will take?  The delays, stalling, and prevarication the other side will be allowed?   Probably not.  Until now.

Over the next several weeks, I plan to walk you through a “typical” construction defect lawsuit—from the first initial phone call from the project manager that something might be amiss, to the dreaded yellow paperwork delivered by the Sheriff (if you are really lucky), the famed “courthouse steps” settlement discussions, and even the angst-producing knock on the jury room door announcing a verdict.  Stay tuned for Part 1 of the new series:  Law & Order: Hard Hat files, starting next Tuesday.  [And Dick Wolfe, if you steal my title for your next television series, please give me credit and a cut!]

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Latent Defects: extending the statute of limitations (law note)

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defective-tools-cause-injuriesAs we’ve previously discussed, the statute of limitations for construction claims in North Carolina is generally three years.  That is, once 3 years have passed, you are generally protected from any lawsuit filed after that time.

Does that mean that no lawsuit can be filed against you subsequent to that time?  No.  First, the statute of limitations is an affirmative defense, meaning that you must timely assert the defense as part of your response to the lawsuit.

Secondly, it is sometimes not apparent when the three year period begins to run.  Substantial completion or final completion?  What if your work is finished, but the project is not– does the three year period not start until project completion?  The issue of whether the statute of limitations has run is complex, and a mixture of law and fact questions.  See, Lord et al v. Customized Consulting Specialty, Inc. et al, 182 N.C. App. 635, 643 S.E.2d 28 (2007).

Finally, be aware of the hidden danger of hidden dangers. 

The three years does not start to run until it becomes obvious that there is damage stemming from your professional negligence.  The applicable statute states that the three years “shall not accrue until bodily harm to the claimant or physical damage to his property becomes apparent or ought reasonably to have become apparent to the claimant, whichever event first occurs.” N.C. Gen.Stat. § 1-52 (2005).

In other words, if there is a defect that is not readily observable and visual, the three years may not start to run until it becomes observable (e.g., through destructive testing, repair work, or renovation work).  This is what is known as a “latent defect”, and it can impose liability far beyond the initial 3 years.

Does the latent defect rule extend liability indefinitely?  No, it does not.  The statute of repose (6 years in NC; other states vary) will impose an absolute final date on real property improvements, after which no further liability can successfully be claimed.

Questions?  Drop me a comment, below.  Also, be sure to sign up for regular email updates and our free Construction Professional newsletter by entering your contact information on the top right of the homepage.

Photo “Defective Tools Cause Injuries” – NARA – 514107