Posted tagged ‘Construction Law’

Dan Brennan’s Contribution to The 2017 A201 Deskbook

October 16, 2017

Dan Brennan, one of Laurie & Brennan, LLP’s founding partners, is proud to be a contributing author for the American Bar Association’s Forum on Construction Law’s newly released book, The 2017 A201 Deskbook.

 

Earlier this year, The American Institute of Architects (AIA) released its revised A201 General Conditions of the Contract for Construction, which is updated every ten years. The A201 is among the most frequently used documents of all AIA construction forms.

The 2017 A201 Deskbook provides a comprehensive and detailed guide to the new AIA A201, identifying and analyzing the significant changes made to the A201 document.  The Deskbook also provides a section-by-section critical analysis of the A201, including case law interpretations and practice tips to assist construction law practitioners.  The 2017 A201 Deskbook is available through ABA Book Publishing here.  Additional information about the ABA Forum on Construction Law, can be found here.

To contact Dan Brennan or another attorney at Laurie & Brennan, LLP, please call our office at (312) 445-8780 or visit our website at www.lauriebrennan.com.

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Philadelphia Jury Hands Down $5.5 Million Judgment Against Architectural Firm

June 18, 2015

In May, 2015 a jury awarded the City College of Philadelphia (CCP) $5.5 million against design firm Burt Hill (now part of Stantec) for breach of contract and professional negligence. The suit arose following large budget overruns and construction delays on a massive expansion and renovation project aimed at transforming CCP’s campus into a functionally modern—and aesthetically inviting—facility to serve its nearly 40,000 students.

According to CCP’s court filings, Burt Hill made multiple misrepresentations that induced CCP to hire the firm. These representations included Burt Hill’s ability to handle all architectural and engineering work in-house and that the project would be staffed by senior-level professionals experienced in comparable projects. CCP contended that Burt Hill, in an attempt to save money and mask its lack of qualifications in multiple project areas,  subcontracted engineering and other design services, assigned an inexperienced and unlicensed professional as lead project architect, and staffed the project with interns from Drexel University. CCP claimed the outsourcing resulted in a series of errors and omissions, and ultimately to significant delays and substantial additional project costs.

According to CCP, Burt Hill submitted plans and specifications for bid—six months behind its own schedule—that the firm knew were incomplete and riddled with errors. In doing so, Burt Hill “relinquish[ed] its quality-control obligation over its own documents to the bidding contractors.” CCP alleged this constituted a breach of Burt Hill’s professional obligations, and allowed contractors to charge premium prices for change order work required to complete the project. In addition, delays in the delivery of construction documents required eliminating the planned, staggered construction schedule that Burt Hill initially proposed for cost-efficiency purposes. Instead, the new construction and renovation portions of the project were undertaken concurrently, further adding to project costs. All told, the project’s cost ultimately ran $14 million over the initial $28 million budget.

Burt Hill’s defense claimed the project was plagued by well-documented owner-directed changes.  It claimed that once purported change order errors and omissions arising from these changes and related issues were culled out, those remaining—and attributable to the entire design team—were “well within the margins” permitted by professional standards.

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.

Developers Beware: Waiver of the Implied Warranty of Habitability Does Not Apply to Subsequent Purchasers

June 9, 2015

In a recent decision the Illinois Appellate court has ruled that an initial home purchaser’s waiver of the implied warranty of habitability does not bind subsequent purchasers who purchased the home without knowledge of the waiver, even if that home was sold “as is.” As such, a subsequent purchaser can sue the original developer for a breach of the implied warranty of habitability

In Fattah v. Bim, 2015 Ill. App. LEXIS 331, (Ill. App. Ct. 1st Dist. 2015), a developer built and sold a home under a sales contract that contained a valid waiver of the implied warranty of habitability. Three years later, the initial purchaser sold the property “as is” to Fattah. Four months after the sale, the patio collapsed. Fattah then filed a lawsuit against the developer, alleging that the developer had breached the implied warranty of habitability by constructing a home with latent defects.

The Illinois appellate court held that a subsequent purchaser is not bound by an initial purchaser’s waiver of the implied warranty of habitability when the subsequent purchaser did not have knowledge of the waiver or knowingly agree to accept the waiver. The court relied on the well-settled law that although an implied warranty of habitability can be waived, the purchaser must have knowingly waived that right. The court found that there was no evidence that the subsequent purchaser knowingly agreed to accept the initial purchaser’s waiver of the implied warranty of habitability.

Additionally, the court found that the “as is” rider provision used in the sales contract between the initial and subsequent purchaser did not prohibit the subsequent purchaser’s claim against the developer. It reasoned that an “as is” rider could only negate the warranty if it had a provision which fully disclosed the consequences of waiving the warranty. Without such a provision, and merely buying a home “as is,” a subsequent purchaser does not waive its right to assert an implied warranty of habitability claim against the developer.

With this ruling developers are on notice that an initial purchaser’s signing of a waiver of the implied warranty of habitability does not obviate the developer’s liability to subsequent purchasers from latent defects.

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.

Illinois Appellate Court Unwinds Fraudulent Transfers: A.G. Cullen Construction, Inc. v. Burnham Partners, LLC et al.

April 8, 2015

The Illinois appellate court has dealt a decisive blow to debtors who attempt to escape liability from creditors by dissipating assets by enforcing the Uniform Fraudulent Transfer Act (“UFTA”) and avoidance of transfers that violated it.

Defendant Westgate Ventures (“Westgate”) hired A.G. Cullen Construction, Inc. (“Plaintiff’) to build a warehouse and distribution facility.  Westgate was primarily owned by Burnham Partners, LLC, (“Burnham”) which, in turn, was owned by Robert Halpin (“Halpin”).  Following a dispute and arbitration at the end of the project, Plaintiff was awarded $457,416.37 against Westgate.  However, before the arbitration award was entered, Burnham, through Robert Halpin, began to liquidate all of Westgate’s assets.  Westgate paid a $2.5 million secured construction loan, the majority of Westgate’s remaining cash was disbursed to Burnham in the form of a $400,000 development fee and to the Halpins, to repay a loan they made to Westgate.  This left Westgate with no funds to pay the arbitration award.  Plaintiff filed a lawsuit against defendants in the circuit court to recover the amount awarded, alleging, among other things, fraudulent conveyance and breach of fiduciary duty.

The circuit court entered judgment in Defendants’ favor on all counts and dismissed the complaint.  Plaintiff appealed and contended: (i) the trial court abused its discretion by refusing its request for an adverse inference when defendants failed to produce numerous corporate records they claimed had been lost; (ii) defendants violated §5 of UFTA (740 ILCS 160/5 (West 2012)) by liquidating all of Westgate’s assets before the arbitration hearing; (iii) defendants violated §18-804 of the Delaware Limited Liability Company Act by fraudulently preferring one unsecured creditor over the other; (iv) the trial court erred in refusing to piece the corporate veil to hold Halpin personally liable for the money Westgate owes to Plaintiff; and (v) Defendants owed Plaintiff a fiduciary duty once Westgate became insolvent.

In reversing the trial court decision, the appellate court cited §8 of the UFTA as a basis for “avoidance of [fraudulent] transfer or obligation to the extent necessary to satisfy” a creditor’s claim.  740 ILCS 160/8.  In this case, the appellate court found that Defendant’s actions to be a violations of §5(a)(1) of the UFTA, often referred to as “fraud in fact” and found an actual intent to hinder, delay, or defraud the creditors.  The decision included an analysis of the eleven (11) factors under the UFTRA in determining an actual intent to defraud: (1) the transfer or obligation was to an insider; (2) the debtor retained possession or control of the property transferred after the transfer; (3) the transfer or obligation was disclosed or concealed; (4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5) the transfer was of substantially all the debtor’s assets; (6) the debtor absconded; (7) the debtor removed or concealed assets; (8) the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10) the transfer occurred shortly before or shortly after a substantial debt was incurred; and (11) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.  Notably, the AG Cullen court found that the presence of the “badges of fraud” may, in sufficient number, give rise to an inference or presumption of fraud under the UFTA.  In contrast, “fraud in law” does not require proof of actual intent to defraud.  The ultimate test for determining the validity of a transfer under the UFTA is “whether or not it directly tended to or did impair the rights of creditors.  If the transfer hinders, delays, or defrauds his creditors, it may be set aside as fraudulent.”

Accordingly, the AG Cullen court found that Defendants engaged in fraud in fact and violated §5 of the UFTA by making the two transfers to themselves and other unsecured creditors when knew of their potential liability to Plaintiff.  Specifically, the court found that Defendant Burnham was not entitled to the $400,000 development fee and that the other transfers were not made in good faith in the absence of documentary evidence to support that finding.  The court found that Defendants had violated nine (9) of the eleven (11) “badges of fraud,” allowing for a presumption of fraud in fact.  Further, the court found that the transfers “directly tended to or did impair the rights of creditors” thereby violating §5 of the UFTA.  The court further found that the Westgate Defendant was used as a shield to avoid personal liability.  As such, the court allowed the corporate veil to be pierced and Defendants were personally liable for the full judgment amount, plus interest.  The appellate court further remanded the matter to the trial court with directions to enter judgments in favor of Plaintiffs.

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.

Nevada Attempts to Curtail Frivolous Construction Defect Lawsuits

March 2, 2015

Earlier this week Republican governor Brian Sandoval of Nevada signed legislation that revised the statutory protections that Nevada affords to homeowners for construction defects.  The new legislation modifies a 1995 law that many critics argued created more ills than it cured.  That 1995 law required, among other things, that the losing side pay the prevailing side’s legal costs.  That law was enacted based on widespread complaints about shoddy construction in a rapidly expanding residential construction market in Nevada.  Unfortunately, experience under that law evidently sparked more and lengthier lawsuits and increased litigation costs rather than streamlining and paring down the claims.  According to an article in the Wall Street Journal, Nevada’s new law, effective immediately, eliminates the provision for shifting attorneys’ fees, requires homeowners to provide detailed descriptions of the defects and also mandates that claims go through a warranty process so builders have a chance to fix the defects out of court.  Not surprisingly, advocates for homeowners believe this is a win for the building industry that harms innocent homeowners by creating barriers to full compensation for damages.  Other states including Arizona, Florida, Colorado and Washington are also considering legislation to reign in construction defect litigation. A full text of the article in the February 26 Wall Street Journal can be found at http://www.wsj.com/articles/nevada-other-states-target-construction-defect-lawsuits-1424912880.

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.

L&B Lawyers on the Speaking Circuit

February 6, 2015

On January 22, Laurie & Brennan partner Krista Hallberg Kapp presented at the ABA’s Tort, Trial, Insurance and Practice Section and Fidelity, Surety Law Committee’s joint mid-winter meeting in New York on the development of a project from the Owner’s perspective. Choosing an appropriate project delivery system is one of the most important decisions an Owner must make at the early stages of the construction project. Determining how to process and organize the design, procurement, construction and completion of a project is crucial to a project’s success. Ms. Kapp’s presentation included an evaluation of certain project delivery systems from an owner’s perspective and discussed the benefits and risks to the owner of utilizing certain project delivery systems.

Laurie & Brennan partner Dan Brennan participated in a mock arbitration presentation on January 25 at ASHRAE’s Winter Conference in Chicago. In the mock arbitration, Dan represented the fictional owner of a pharmaceutical company that was prosecuting and defending claims arising out of the renovation of a manufacturing facility that involved proprietary technology. Other participants in the mock arbitration included mechanical engineers, a mechanical contractor, a sustainable building consultant and other attorneys. The interactive presentation prompted a lively exchange with the audience and illuminated important lessons about the vagaries of dispute resolution.

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.

Laurie & Brennan Obtains Ruling Entitling General Contractor Client, Harold O. Schulz Company, Inc. To Collect Its Attorneys’ Fees Under The Illinois Mechanics Lien Act From Non-Paying Owner

June 4, 2014

After securing a favorable jury verdict (see prior post here), Laurie & Brennan, LLP obtained additional relief on behalf of its general contractor client, Harold O. Schulz Company, Inc. (“Schulz”).  Specifically,  on February 27, 2014, Judge John Griffin of the Law Division of the Cook County Circuit Court entered an order finding that Astor Street, LLC, the property owner, withheld payment due and owing to Schulz “without just cause or right” in violation of Section 17 of the Illinois Mechanics Lien Act.  The Court specifically found that Schulz was entitled to collect its reasonable attorneys’ fees from Astor Street, LLC  (“Astor Street”) because Astor Street’s “refusal to pay Schulz for amounts requested in Schulz’s payment applications was without just cause or right and was not well grounded in fact or warranted by existing law or a good faith argument for the extension, modification or reversal of existing law.”

Laurie & Brennan’s trial team was comprised of Ty Laurie, Dan Brenner, Erin Krejci, Kendall Woods, and Kevan Carpenter.

For additional information regarding Laurie & Brennan’s victory see Judge Griffin’s February 27, 2014 Order attached here.

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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