Tag Archives: construction

Lien Law Changes Ahead? Add your voice!

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How a Bill Becomes a LawAre you familiar with North Carolina lien law provisions?  Ever think they should be changed and updated?  You are not alone.   The NC Bar Association (through the Lien Law Revision Committee of the Construction Section) is in the process of preparing substantive changes to a proposed new Lien Law statute.  The committee is aiming to have a prepared piece of legislation drafted for consideration in the upcoming legislative session of the General Assembly.

According to the Lien Law Committee, revisions to the statute are needed for several reasons, including:

  • handling the uncertainty created by recent Bankruptcy court decisions relating to liens
  • reexaming the “relation back” and “double payment” issues in current lien law
  • reexaming the long form lien waivers and current problems with those waivers

Last week, at the Design Professionals Lliason Committee (another Construction Section committee), I was given a copy of the lien law draft proposal for a revision to the lien law.  The Lien Law Committee wants their proposals to be discussed by the construction industry, so that all sides can be fully vested in the new lien process.

Review the proposal and let me know what you think.  The proposal contains some rather large changes to the lien statute.  Are these good, bad, or irrelevant to your business?  Email me or comment below with any thoughts, questions, suggestions, or concerns.  I will pass all comments along to the Lien Law committee.

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Photo “How a Bill Becomes a Law” by Peter Merholtz via Flickr/Creative Commons license.

Common Sense Tip: Don’t lose your cool when sued

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Common Sense credit cardDespite the vast number of legal shows on television, as you might suspect:  getting sued is not cool.

Immediately, when threatened with litigation, it seems like everyone and everything is out to get you.  Allegations in complaints can cut deep.  You may want to just bury your head in the sand.  Don’t.  Problems denied can turn figurative mole hills into mountains.   Here are three common sense tips for dealing with the initial shock of being named in a lawsuit:

1.

Run, don’t walk, to your attorney.  If you have insurance coverage, talk to your agent immediately to report the loss so that a claims attorney can be assigned to your case.  Court deadlines are not something to be missed, and so you’ll want to get professional help on your team asap.

2.

Immediately begin to gather all documentation relating to the Project.  If you have regular paperwork or computer deletion/destruction policies, stop them at once.  Notify everyone in your company that litigation is pending (or threatened) and place holds from any automatic or scheduled deletion of documents. 

3.

Make lists.  Your attorney will need all sorts of information about the Project, even stuff you may not deem relevant.  Making lists can get your attorney up to speed quickly and efficiently.   Lists may include:

  • a general timeline of your involvement with the Project and any key dates (Notice to Proceed, Substantial Completion, First notice of defects, etc)
  • a list of the Project’s players; that is, all companies that you know worked on the Project, their role, and their key employees
  • a list of your employees that dealt with the Project in any capacity, their contact information, and, if they are no longer with your company, whether or not they left on good terms

Ever been in litigation?  Tips you wish you had known right away?  Comment below.

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Photo adapted from “common sense” by Benjamin Gray via Flickr/Creative Commons/Share Alike.

Active vs. Passive Negligence (Law note)

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whole hog sign“As long as I was in, and in for good, I might as well go the whole hog.”

–Huck Finn, The Adventures of Huckleberry Finn by Mark Twain

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If you work on a North Carolina construction project, you, too, are in “the whole hog” if you are negligent.  That is, if you are negligent at all, you are on the hook for the full lot.  As we’ve discussed, joint tort-feasors (that is, two negligent parties who are jointly & severally liable) are generally not entitled to indemnity from one another.

However, there are exceptions, and today we’re talking about one such exception– the passively negligent party.  

What is passive negligence?

Active negligence is an action which causes damage.  In contrast, passive negligence is negligence due to inaction, omission, or the failure to do something that you are legally obligated to do.   The actively negligent party is primary responsible for paying any damages, and the passively negligent party is only secondarily liable.

For example, if a subcontractor is actively negligent in constructing the framing for a building, and the general contractor failed to notice the defect, the subcontractor is actively negligent and the general contractor is passively negligent. 

Indemnity of the passively negligent party

Where the active negligence of one tort-feasor and the passive negligence of another combine to proximately cause injury to a third party, the passively negligent tort-feasor who is compelled to pay damages to the injured party is entitled to indemnity from the actively negligent tort-feasor.  This is called common-law indemnity, as opposed to contractual indemnity, which we discussed in an earlier blog post. 

In our example above, the subcontractor, as the actively negligent party, is the party ultimately responsible for the poor framing and the resulting damages.  If the general contractor is sued by the owner, he can in turn sue the subcontractor for the damages which were caused by the sub.

Questions about active versus passive negligence?  Drop me a line in the comments below.

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Photo “Whole Hog Heaven BBQ” by Bill.Roehl via Flickr/Creative Commons license.

Free marketing webinar for homebuilders

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Good Friday morning to you all!

bar graph increasing resultsJust got in word last night of a *free* upcoming webinar (this coming Thursday).  The webinar is to help homebuilders market themselves.  The details:

What:  “How to Profit from Your Most important Brand-Yourself” 
 
When:  Thursday, October 28th at 8pm (Eastern Time) 
Who:    Mike Jeffries of Rivers of Revenue/ Construction Programs & Results (CPR)
Why:   Learn free tips to market yourself in this tough economy
How:  Register (for free), then attend via web and/or telephone
 

If you sign up, drop me a note afterwords to let me know if you felt the program was worthwhile.  I strive to inform my readers of upcoming events they may enjoy, but want to make sure I mention only quality programs.  So, feedback (good, bad, or indifferent) is appreciated!

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Photo “Bar Graph” by  KevinZHengli via Flickr/Creative Commons license.

 

Contributory Negligence on the construction project (law note)

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scale of justiceI’m sometimes asked if the percentage of “fault” is something that a client can rely on to reduce the amount of money they may owe on construction project gone bad.  The short answer:  no.   As I mentioned in my post on joint & several liability, if you are even 1% liable for the damages on a project, you can be hit with 100% of the damages. 

 This is not true in many other jurisdictions, where proportional fault (called comparative negligence) is often allowed.  In those states, if you are found 20% liable, you only have to pay 20% of the damages. Not so in North Carolina.  Here, unless you are entirely passively negligent (a concept we’ll discuss next week), you may be on the hook for the full amount.

That’s not fair!

Perhaps.  But, that’s life on a North Carolina construction project.  One concept that helps to reduce the unfairness factor is the concept of contributory negligence.  In North Carolina (but few other states), if a party is negligent at all (even 1%), they cannot recover from another negligent party.  

For example:  the owner of a project sues its general contractor on a project for a late project delivery which costs the owner money.  While almost all of the delay was the contractor’s fault, the owner also caused delay by failing to deliver owner-furnished equipment in time to meet the critical path of the project.  The owner’s own failure means that the owner itself is contributorily negligent and, under North Carolina law, the owner cannot recover the rest of its damages from the contractor.

But wait! There’s more.

Before you get too excited about contributory negligence, you need to understand the concept of  jury nullification.  When contributory negligence is explained to a jury, the jury may sometimes decide not to find fault where they might otherwise apportion fault, to avoid what they perceive as an unjust result. 

In the above example, the jury might decide the owner’s failure was not really contributing to the delay after all, and therefore award the owner damages.  This is called jury nullification, and it can take the sting out of contributory negligence.

Change to NC’s Contributory Negligence law?

The concept of contributory negligence (and its complete bar to any recovery) is one which many would like to change.  There has been legislation in the NC General Assembly in recent years to abolish contributory negligence in favor of a comparative-fault  negligence, as is common in most states.  So far, this has not happened.  As they say, however, the jury is still out on whether such a change will occur.  

Do you have an opinion on contributory negligence vs. comparative negligence? Think NC’s law should change to one based on percentage of fault?  Share in the comments below.

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Photo “Scale—Image”  by Matthias Kulka/Corbis via Picasa/Creative Commons License.