Archive for August 2010

The Federal Arbitration Act Trumps the Building and Construction Contracts Act

August 23, 2010

The Federal Arbitration Act (“FAA”) preempts state laws prohibiting arbitration of contractual disputes out of that state. The latest ruling that confirms this is the case R.A Bright Construction, Inc. v. Weis Builders, Inc. The original suit, filed in Will County Circuit court by Bright Construction, maintained that Bright was owed over seven and a half thousand dollars by Weis for concrete and utilities work on a new Wal-Mart in Lockport, Illinois. In their contract, Weis and Bright included an arbitration clause that stipulated if any dispute arose between the two, it would be settled by arbitration in Minnesota. Weis filed a motion with the court to stay the action and compel arbitration in Minnesota, claiming that the FAA mandated arbitration in this matter. The motion was denied and Weis filed an interlocutory appeal to the Illinois Appellate Court to argue that the trial court erred when denying the motion to compel arbitration, contending that the FAA preempts any state law that prohibits arbitration of matters out of the state.

Weis argued that the FAA should be used by the court to determine that arbitration should be held in Minnesota to resolve their dispute with Bright. Weis had to establish that its contract involved interstate commerce. Weis established this through documents that showed Bright had purchased nearly $80,000 of supplies from Wisconsin. The court concluded that this evidence, and that Weis has offices in multiple states, proved that the contract evinces a transaction involving commerce intended by section two of the FAA. Weis had proved that this case involves interstate commerce and the FAA should be used to determine whether to compel arbitration.

Once the contract was established as demonstrating a transaction involving commerce, Weis asserted any arbitration clause in such a contract – including their own – is “valid, irrevocable and enforceable,” under the FAA. Bright argued that the Illinois Building and Construction Contracts Act prohibits enforcement of such a clause because it requires that an Illinois forum needs to be selected for arbitration. Weis argued that the FAA preempts the Illinois Building and Construction Contracts Act. The Appellate Court ruled in favor of Weis and reversed the decision of the trial court and remanded the case with directions to refer the matter to arbitration in accordance with the contract. This case confirmed the rulings of previous cases where there was a conflict between the FAA and state statutes that required arbitration to take place within that state.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only.  The purpose of the Blog is not to provide specific legal advice on any particular matter.  By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm.  This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.  Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

Equal Rights Center v. Archstone: Fourth Circuit says “No” to ADA and FHAA Indemnity Claims against Architects

August 20, 2010

On April 19th, 2010 the Fourth Circuit United States Court of Appeals held that an owner or developer cannot seek indemnity from an architect for damages or liability for accessibility violations under the Fair Housing Act or the Americans with Disabilities Act.

In 2004, the Equal Rights Center and other disability advocates filed suit against Archstone, the developer and owner of a project, for failure to design and construct various apartment complexes in compliance with the Fair Housing Act and Americans with Disabilities Act, federal laws that prohibit housing discrimination against persons with disabilities. Eventually Archstone settled with the Equal Rights Center and agreed to retrofit the properties to make them accessible and pay $1.4 million in damages, attorney fees, and expenses to the plaintiffs.

After resolving the dispute with the Equal Rights plaintiffs, Archstone filed a cross claim against Niles Bolton, the architect for one or more of the apartment complexes, seeking indemnity under several theories —  express indemnity, implied indemnity, breach of contract, and professional negligence. Archstone sought to recover all damages and fees paid to the Equal Rights Center for the settlement, to recover the costs of retrofitting the properties, and to be indemnified for future costs that will be incurred in order to modify the remainder of the properties so that they are compliant.

The district court granted summary judgment to Niles Bolton based on ‘obstacle preemption’ which applies “where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress”. Archstone claimed that it was only seeking partial indemnification, for the properties directly related to Niles Bolton, and that indemnification would not prevent compliance with the federal laws. The Fourth Circuit rejected Archstone’s arguments and held that obstacle preemption did exist, because the intent and purposes of the federal laws were to ensure compliance with accessibility laws, and that allowing indemnification would undermine the incentive for owners and developers to verify that their properties are accessible and in accordance with federal statutes.

Before the district court, Archstone sought leave to amend their complaint to include a contribution claim, and therefore was not seeking full indemnification, and not shifting the blame to insulate itself from liability. The Fourth Circuit upheld the lower court’s decision to deny the amendment because it would ‘prejudice’ Niles Bolton, in that it would fundamentally change the nature of the litigation.

While indemnity claims have been explicitly rejected by the Fourth Circuit, the viability of contribution claims in ADA and FHA cases remains open.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only.  The purpose of the Blog is not to provide specific legal advice on any particular matter.  By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm.  This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.  Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

Dan Brennan to present at ABA Forum on the Construction Industry’s Fall Meeting in Miami

August 18, 2010

Dan Brennan will speak on a panel at the opening plenary session at the ABA Forum on the Construction Industry’s Fall Meeting in Miami, September 2-3.  The plenary session, entitled “Winning Strategies for Reviving the Troubled Project in a Downward Economy,” will examine strategies and options available to the project participants for saving or reviving a troubled project, including ones affected by bankruptcy.   The topics of the plenary will include: the renegotiation of major contracts with construction contractors, equipment suppliers, end-users, future tenants, and others; strategies for dealing with lenders, insurers, governmental authorities and the loan work-out process; surety issues and appraisal issues for distressed projects; potential damages and the effective use of on-site neutrals to salvage troubled projects.  To learn more about the program and register, please visit www.abanet.org/forums/construction.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only.  The purpose of the Blog is not to provide specific legal advice on any particular matter.  By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm.  This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.  Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.

Amendment to Home Repair and Remodeling Act

August 4, 2010

On July 12, 2010 the Illinois General Assembly amended the Home Repair and Remodeling Act (815 ILCS 513/1 et seq.) (the “Act”) to add clarification to a section of the Act which many Illinois courts had previously found ambiguous.  This amendment essentially adopts the holdings of several Illinois appellate court cases which have held that a contractor’s failure to strictly abide by each of the Act’s requirements does not  prevent that contractor from later suing the homeowner for breach of contract or to foreclose its mechanics lien.

Under the recent amendment to section 30 of the Act, homeowners must prove actual damages pursuant to section 10a of the Illinois Consumer Fraud and Deceptive Business Practices Act to recover damages for a contractor’s violation of the Act.  It is now clear: a contractor’s failure to execute a written contract with the homeowner, provide a homeowner a consumer rights brochure, or provide the homeowner with proper notice of contractual provisions requiring arbitration or waiving the homeowner’s right to a jury trial will not invalidate the contractor’s contract with the homeowner or invalidate the contractor’s mechanics lien on the homeowner’s property.

This Blog is made available by Laurie & Brennan, LLP for general educational purposes only.  The purpose of the Blog is not to provide specific legal advice on any particular matter.  By using this Blog site you understand that there is no attorney client relationship between you and this firm and the authors or members of the firm.  This Blog should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.  Under rules applicable to the professional conduct of attorneys in various jurisdictions, the material on this Blog may be considered advertising material.


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