Gary Quesada to Speak at MSPE / ACECM 2007 Annual Conference

Gary D. Quesada, Hon. Aff. AIA, J.D., will be speaking as a Member of the PCIA Risk Management Panel Discussion at the MSPE/ACECM 2007 Annual Conference on June 9, 2007 at Boyne Mountain Grand Lodge. The focus of this Conference is "Re-Engineering Michigan's Economy."


Mr. Quesada is a Shareholder with Thomas M. Keranen & Associates, P.C. His practice is concentrated on business and construction law matters, including litigation and arbitration of contract, construction defect and property disputes, construction lien and surety bond claims, construction-related copyright, and disputes involving architects, engineers and environmental professionals.

Implied Obligations in Michigan Construction Contracts

The May, 2007 Michigan Bar Journal includes an article by William F. Frey entitled "Obligations Implied in Michigan Construction Contracts." Mr. Frey provides a brief overview of Michigan law in the following areas:

• Owner's Implied Warranty of Plans and Specifications (Spearin Doctrine)
• Owner's Duty to Share all Material Information
• Owner's Duty to Provide Access / Duty to Coordinate / Duty Not to Interfere
• Contractor's Implied Warranty of Fitness for a Particular Purpose of "Habitability"
• Contractor's Implied Warranty of Workmanship

Wm. Frey, Obligations Implied in Michigan Construction Contracts, 86 Mich BJ 36 (2007). A PDF version of this article can be found here. 

New Bill Would Create Michigan False Claims Act (H.B. 4773)

On May 16, 2007, a new bill was introduced in the Michigan House (H.B. 4773), which would create the Michigan False Claims Act. On first read, it appears that the drafters of H.B. 4773 borrowed heavily from the Federal False Claims Act (31 USC 3729, et seq).

H.B. 4773 was likely introduced in response to passage of the Deficit Reduction Act of 2005, which President Bush signed into law on February 8, 2006. The DRA includes an incentive for states to enact mini-False Claims Act statutes. Under the incentive, states with a false claims statute may receive an additional 10% of any funds recovered under the statute.

H.B. 4773 can be read here.

For more information about the Deficit Reduction Act, and the incentive for states to enact False Claims Acts, read here.

Update: H.B. 4733 was referred to second reading on February 12, 2008. Legislative Analysis of the Bill can found found here.

New Bill Would Modify Recently Amended Construction Lien Act (S.B. 487)

On May 9, 2007, Senators Garcia and Basham introduced a new bill in the Michigan Senate (S.B. 487), which would limit to residential construction the changes made to Sections 110 (lien waivers) and 115 (sworn statements) of the Construction Lien Act by the passage of PA 572 of 2006.

S.B. 487 can be read here.

Background -- Rationale for Change

PA 572 of 2006, and a companion statute passed at the same time, PA 497 of 2006, were aimed at shoring up the Michigan Homeowner Lien Recovery Fund, and preventing fraud in the residential construction market. PA 572 adds several requirements that on their face appear to add a significant administrative burden on contractors who operate outside of the residential construction market.

First, PA 572 amends Section 110 of the Act to require that sworn statements include the address and telephone number for any listed subcontractor, supplier or laborer listed. Not a significant change. However, PA 572 further requires that the owner, lessee or designee notify persons listed on a sworn statement (advising them that they are so listed) and provide them with copies of the sworn statement, within 10 business days, if so requested.

“(6) On receipt of a sworn statement, the owner, lessee, or designee shall give notice of its receipt, either in writing, by telephone, or personally, to each subcontractor, supplier, and laborer who has provided a notice of furnishing under section 109 or, if a notice of furnishing is excused under section 108 or 108a, to each subcontractor, supplier, and laborer named in the sworn statement. If a subcontractor, supplier, or laborer who has provided a notice of furnishing or who is named in the sworn statement makes a request, the owner, lessee or designee shall provide the requester a copy of the sworn statement within 10 business days after receiving the request.” [MCL 570.1110(6)]

In addition, PA 572 adds a requirement to Section 115 that lien waivers be authenticated:

“(7) Subject to subsection (8), an owner, lessee, or designee shall not rely on a full or partial unconditional or conditional waiver of lien provided by a person other than the lien claimant named in the waiver if the lien claimant has either filed a notice of furnishing under section 109 or is excused from filing a notice of furnishing under section 108 or 108a unless the owner, lessee, or designee has first verified the authenticity of lien waiver with the lien claimant either in writing, by telephone, or personally.” [MCL 570.1115(7)]

S.B 487 would clarify the changes made by PA 572, and limit its application to residential construction, as it was originally intended.