constructionattorneyblog

Texas Supreme Court orders Arbitration under the FAA

The Texas Supreme Court in a recent opinion in In re Nexion Health held that the FAA trumped the Texas Arbitration Act. In this case, the fact that Medicare payments were made invoked Interstate Commerce, thus triggering the FAA. After the trial court denied a motion to compel under the TAA, the FAA was raised, but the trial court denied the motion to reconsider. The Texas Supreme Court reversed, ordering arbitration, finding no waiver.

Colorado Governor vetoes bill prohibiting Indemnification and Additional Insureds

On May 31, 2005, the Governor of Colorado vetoed a bill that would have prohibited indemnification and additional insured provisions in construction contracts.

In a construction setting, the ability to bargain for risk transference, indemnification and insurance to cover liability is essential. General Contractors, investors and property owners must be able to retain the right to bargain for protection from subcontractors - those who perform the work - and are therefore in the best position to identify, manage and control the significant and inherent risks of large construction projects.

Florida Adopts new Rules re: representing clients in ADR Proceedings

The Florida Supreme Court has issued new rules that address, among other things, out-of-state attorneys participating in Florida arbitrations and mediations. Download these rules here. These rules require such attorneys to provide notice to the Florida Bar and pay a fee. There are other limitations that attorneys must be aware of before undertaking the representation of any client in a Florida ADR matter.

Mechanics Lien held invalid because Architect not Licensed

Design professionals need to be careful that they have complied with applicable licensing statutes. An illustration of this is the case of G.M. Fedorchak v Chicago Title Land Trust Co, (Ill.App.3 Dist. Jan 7, 2005). The owner hired an out of state architectural firm for a project. When the owner failed to pay the bills, the architectural firm foreclosed on its mechanics lien. The owner moved to dismiss on the grounds that the architectural firm was not properly licensed.

Illinois requires an architectural firm to be registered with the state (with few exceptions) and for the person in charge of the architecture to hold an Illinois license. In this case, the firm was not registered and neither of the father and son owners of the firm held active Illinois licenses at the time the contract was formed. The court held that this resulted in the contract being void which, in turn, rendered the mechanics lien invalid.

Copyrights: Proving Copyright Damages in Architecture Case

The recent case of Van Brouck & Assoc v. Darmik, Inc., 329 F.Supp.2d 924 (E.D.Mich, 2004), provides a good overview of the methodology of damages calculation. The case involved a defendant who infringed on an architect's copyrighted plans for a single family home. The architect had charged the original owner $15,000 for plans. The infringer wound up paying the architect a total of $181,500.46.

Illinois Mechanics Lien: Lien unenforceable for lack of verification

In Tefco Construction v. Continental, the Illinois Appellate Court held a lien invalid because the contractor failed to verify the lien before recording it.

In order to enforce the lien against a creditor, section 7 of the Act provides several prerequisites, including the requirement that the claim be verified by the affidavit of the contractor, or his or her agent or employee.  770 ILCS 60/7 (West 2002).  The record shows that Flanagan, in his capacity as president of Tefco Construction, completed a claim for lien that included a brief statement of the contract, the balance due after allowing all credits, and a sufficiently correct description of the property.  However, the claim for lien signed by Flanagan does not include any language which may be construed as an affidavit but, rather, simply states that "[t]he claimant, Tefco Construction of Forest Park, County of Cook, State of Illinois, hereby files a claim for lien against Randhurst Currency Exchange." Accordingly, Flanagan failed to verify the document or attach an affidavit to the claim as required by section 7 of the Act. The parties dispute the result of this omission.

Finally, Tefco Construction urges this court to construe section 7 in accordance with the Act's general purpose to protect contractors' rights to receive payment when they furnish valuable labor and material in good faith because section 39 requires that the Act be "liberally construed as a remedial act."

Section 39 does provide that the Act as a whole should be liberally construed to reflect its remedial purpose, but only after the contractor has "scrupulously observed" all the statutory prerequisites that give effect to the lien. Gateway Concrete Forming Systems, Inc. v. Dynaprop XVIII: State Street LLC, No. 1-04-2184, slip op. at 9 (March 31, 2005). The provisions of the Act that fall outside of the statutory requirements are applicable only after the claimant complies with the statutory requirements. Delaney Electric Co., 235 Ill. App. 3d at 265; Connelly, 97 Ill. 2d at 246. Because Tefco Construction failed to meet the prerequisites to enforce its claim for lien under section 7, we cannot liberally construe the Act to afford Tefco Construction a remedy because its claim for lien was unenforceable.

We also note that the verification requirement serves an important function under the Act. Obtaining a mechanic's lien entails the relatively simple process of a claimant filing a claim with the recorder's office in accordance with section 7 of the Act. However, the recording of such a claim for mechanic's lien has significant legal consequences involving the encumbrance on property. By requiring verification of the claim for mechanic's lien, section 7 provides that the claimant must make statements in the recorded document under penalty of perjury which provides a much needed consequence should the claimant file a frivolous claim under the Act. The fact that the appellant's claim in the instant case was not frivolous, as the appellant unquestionably supplied the materials and performed the work as alleged in the claim, does not change our analysis. Despite the unfavorable outcome to the appellant in this case, we will not depart from the plain language of the statute by reading into it exceptions that conflict with the intent of the legislature. Carver v. Sherrif of La salle County, 203 Ill. 2d 497, 507 (2003).