tag:blogger.com,1999:blog-288772192024-03-12T20:49:37.755-04:00Michigan Construction Law UpdateCurrent developments in Michigan construction law.
Published by Cavanaugh & Quesada, PLCPeter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.comBlogger118125tag:blogger.com,1999:blog-28877219.post-3272667843301788712023-03-25T15:09:00.015-04:002023-04-02T15:18:04.049-04:00Michigan Legislature Repeals Right to Work and Reinstates Prevailing Wage<p><span style="font-size: small;"><span style="font-family: georgia;">On March 24, 2023, Governor Whitmer signed into law bills repealing Michigan's "right-to-work" law and reinstating the prevailing wage statute, the latter of which had been repealed in 2018. </span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;">The prevailing wage statute will mandate higher wages and benefits on state-funded buildings, schools, public works projects, roads and bridges. <br /></span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;">These new laws will taken effect in March 2024. <br /></span></span></p><p><span style="font-family: georgia;"><span style="font-size: small;"><a href="https://www.crainsdetroit.com/politics-policy/whitmer-signs-repeal-right-work-prevailing-wage">Whitmer signs repeal of right-to-work, prevailing wage | Crain's Detroit Business (crainsdetroit.com)</a> </span></span></p><p><span style="font-family: georgia;"><span style="font-size: small;"> <br /></span></span></p>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-91808341679621024122021-10-08T09:10:00.004-04:002021-10-08T09:10:52.149-04:00Michigan Governor Reinstates Prevailing Wage Requirement for DTMB Projects<p><span style="font-family: georgia;"><span style="font-size: small;">On October 7, 2021, <a href="https://www.mlive.com/public-interest/2021/10/gov-whitmer-reinstates-prevailing-wage-for-michigan-construction-projects.html ">Governor Gretchen Whitmer announced</a> that she's signed an <a href="https://www.michigan.gov/whitmer/0,9309,7-387-90499-569931--,00.html">executive directive</a> instructing the Michigan Department of Technology Management and Budget (DTMB) to require contractors and subcontractors to pay prevailing wages for construction projects in Michigan. </span><span style="font-size: small;">The prevailing wage policy will only apply to projects bid out by the DTMB. </span></span></p><p><span style="font-family: georgia;"><span style="font-size: small;">Michigan's Prevailing Wage Act was <a href="https://www.freep.com/story/news/2018/06/06/prevailing-wage-repealed-gop-michigan-legislature/678292002/">repealed by the Michigan Legislature on June 6, 2018</a>. <br /></span></span></p><p><span style="font-family: georgia;"><span style="font-size: small;">Watch this space for updates because the Governor's executive action will most certainly be challenged in the courts by non-union contractors and their associations. </span><br /></span></p><p><span style="font-family: georgia;"><br /></span></p><p><br /></p>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-45629281452468238762021-04-21T10:06:00.042-04:002021-04-21T16:08:45.933-04:00New Bill Would Require Builders to Present License When Recording Construction Lien<p><span style="font-size: small;"><span style="font-family: georgia;">On April 20, 2021, Rep. Tommy Brann (R. Wyoming) introduced a new bill, which would require lien claimants to present their contractor's license and drivers license, or attach a copy of them, when recording a construction lien under the Michigan Construction Lien Act. Contractors who violate this requirement would be guilty of a misdemeanor (up to 90 days in jail) and incur a $500 fine. <br /></span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;"><a href="http://legislature.mi.gov/doc.aspx?2021-HB-4668">H.B. 4668</a> would amend Section 114 of the Construction Lien Act (MCL 570.1114), by adding four new subsections. </span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;">Section 114(2) would require contractors to display (present) their builder's license and some form of personal identification, such as a drivers license, when recording a claim of lien in person. <br /></span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;">Section 114(3) would require prohibit a register of deeds from accepting a claim of lien for recording without seeing or attaching a copy of the contractor's license and personal identification to the claim of lien. </span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;">Section 114(4) outlines the penalties for violation. A contractor who violates Section 114 would be guilty of a misdemeanor and face a fine of up to $500, or both. <br /></span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="font-family: georgia;">Section 114(5) outlines five different forms of "personal identification" that would be acceptable.</span></span></span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="font-family: georgia;"><i>Comment: The Michigan Construction Lien Act already includes safeguards against unlicensed builders trying to enforce their construction liens. <a href="http://legislature.mi.gov/doc.aspx?mcl-570-1114a">Section 114a(3)</a> for instance requires that a person who brings an action to enforce a construction lien, who is required to have a license, allege and prove that he (or she) is properly licensed. <a href="http://legislature.mi.gov/doc.aspx?mcl-570-1114a">Section 114a(1)</a> allows an owner of residential property (Homeowner) to bring an action to discharge a construction lien recorded by an unlicensed builder, and recover actual attorney fees and costs. </i> </span></span></span></span></p><p><span style="font-size: small;"><span style="font-family: georgia;">For more information about the Michigan Construction Lien Act, contact Peter Cavanaugh or Gary Quesada at (248) 543-8320. Or visit our website - <a href="http://www.MichiganConstructionLaw.com">www.MichiganConstructionLaw.com</a> <br /></span></span></p>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-7978514194181751352021-03-11T11:47:00.102-05:002021-04-21T18:21:08.079-04:00How to Discharge an Old Construction Lien in Michigan<p>
</p><div class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><p><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;">In Michigan, a construction lien must be recorded within 90 days after the
lien claimant last furnished labor or materials to a project. And a court action to enforce a
construction lien must be started within one year of recording. </span></span></span></p></div><div style="text-align: left;"><p><span style="font-family: georgia;"><span style="font-size: small;">
</span><span style="font-size: small;">
</span></span></p></div><div class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><p><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;">But what happens after a year if the lien claimant takes no
action to enforce their lien? How do you remove an old lien? </span></span></span></p></div><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0in;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;"></span></span></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-size: small;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKBh-xgzpefNAGdm3VuC9QsTqK-PBELngzCOBlHtj1FUA7tC9TmpkPV7USWoKQ5u8L-VDPojFmIY7gMSazGY533Ux7VeJ6cErAUSYxbj1KWa93YnM6orgpKYD5vLH7ZFRogyg9LQ/s480/Calendar+-+March+2012.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="360" data-original-width="480" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKBh-xgzpefNAGdm3VuC9QsTqK-PBELngzCOBlHtj1FUA7tC9TmpkPV7USWoKQ5u8L-VDPojFmIY7gMSazGY533Ux7VeJ6cErAUSYxbj1KWa93YnM6orgpKYD5vLH7ZFRogyg9LQ/w320-h240/Calendar+-+March+2012.jpg" width="320" /></a></span></div><p><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;">As a practical matter, a lien “expires” after more than one year
if the claimant doesn’t file a lawsuit to enforce the lien. But old
construction liens aren’t discharged automatically and remain part of the county property records. An old lien can disrupt the sale or refinancing of a property. <span> </span><span> </span></span></span></span></p><p></p><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;"> </span>
</span></span><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;">Section 128 of the Michigan Construction Lien Act (MCL 570.1128), however,
provides a remedy and a process to discharge an old construction lien. <span> </span></span></span></span></p><p style="text-align: left;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;"> </span>
</span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;">Discharging an old construction lien in Michigan is a 3-step process:</span></span></span></p><p style="text-align: left;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;"> </span>
</span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;">1. <u>Prepare an Affidavit</u>. The affidavit must state your
relationship to the property (ie., that you are the fee owner or the agent for the owner), describe the property (parcel number, legal description, and address), and provide information
about the lien, including the date it was recorded. </span></span></span></p><p style="text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;">
</span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;">The property includes the legal description (metes
and bounds), the parcel number, and the common street address. This
information is included with your property tax bill, but will also be included
with the (old) construction lien you’re trying to discharge. </span></span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;">Attach
the construction lien to the affidavit.Have the affidavit notarized. Make a copy. <br /></span></span></span></p><p style="text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;">
</span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;">2. <u>Submit the Affidavit to the County Clerk</u>. Send the affidavit and a letter to the County Clerk requesting they examine their records; and if no proceedings to enforce the construction lien have been
commenced, execute and deliver a certificate of that fact,
bearing the seal of the circuit court. Some clerks charge a small fee for
preparing the certificate. </span></span></span></p><p style="text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;">
</span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-family: georgia;"><span style="font-size: small;"><span style="color: #222222;">3. <u>Record the Certificate</u>. The certificate issued by the
County Clerk, confirming no action was filed to enforce the construction
lien within a year of recording, must then be recorded with the Register of Deeds to complete the lien
discharge process. An unrecorded certificate is of little value. The recorded certificate discharges the old lien. The Register of Deeds is usually down the hall from the County Clerk. <span>The recording fee is about $30. <br /></span></span></span></span></p><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0.0001pt; text-align: left;"><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;"><span><span style="font-size: small;"><span style="font-family: georgia;">For more information or help with discharging an old construction lien, contact
Peter Cavanaugh or Gary Quesada at (248) 543-8320. Or visit our website
- <a href="http://www.MichiganConstructionLaw.com">www.MichiganConstructionLaw.com</a></span></span> <br /></span></span></span></span></p><span style="font-size: small;"><span style="font-family: georgia;">
</span></span><p class="MsoNormal" style="background: white none repeat scroll 0% 0%; line-height: normal; margin-bottom: 0in;"><span style="font-size: small;"><span style="font-family: georgia;"><span style="color: #222222;"> </span></span></span></p>
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mso-style-noshow:yes;
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mso-para-margin-left:0in;
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mso-pagination:widow-orphan;
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mso-ascii-theme-font:minor-latin;
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mso-hansi-theme-font:minor-latin;}
</style>
<![endif]--></p>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-58813138789472405022019-08-20T16:44:00.000-04:002019-08-21T10:11:30.096-04:00How to Bond Off a Construction Lien in Michigan<div class="" style="white-space: pre-wrap;">
<span style="font-family: "georgia" , "times new roman" , serif;">The process for bonding off a construction lien in Michigan generally involves posting a surety bond for twice the lien amount with the county clerk where the property is located. Cash bonds are permitted, but not common. Once a bond is submitted, and no objections are received, the county clerk will issue a certificate vacating he lien which is then recorded with the register of deeds. The whole process takes about 4-5 weeks.</span></div>
<div class="" style="white-space: pre-wrap;">
<span style="font-family: "georgia" , "times new roman" , serif;">For lawyers, the process for bonding off a construction lien is governed by Section 116 of the Michigan Construction Lien Act (<a href="http://legislature.mi.gov/doc.aspx?mcl-570-1116" target="_blank"><span style="text-decoration: underline;">MCL 570.1116</span></a>). A bond discharging a lien also acts to discharge any notice of lis pendens which may have been recorded.</span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;">For a detailed, step-by-step primer on bonding off a construction lien, we recently published a "How To" on our website: <a href="http://www.michiganconstructionlaw.com/blog/2019/8/14/how-to-bond-off-a-construction-lien-in-michigan">http://www.michiganconstructionlaw.com/blog/2019/8/14/how-to-bond-off-a-construction-lien-in-michigan</a></span></span></div>
Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-92213898368636247352017-01-23T10:55:00.001-05:002017-01-23T10:55:51.381-05:00Michigan Legislature Renews Effort to Abolish Prevailing Wage<span style="font-family: Georgia,"Times New Roman",serif;">On January 18, 2017, Senators Peter MacGregor, Dave Hildenbrand, and Arlan Meekhof, introduced <a href="http://legislature.mi.gov/doc.aspx?2017-SB-0003" target="_blank">S.B. 0003</a>, which would repeal Michigan's Prevailing Wage statute (<a href="http://legislature.mi.gov/doc.aspx?mcl-Act-166-of-1965" target="_blank">PA 166 of 1965</a>; MCL 408.551, et seq) in its entirety. </span><br />
<br />
<span style="font-family: Georgia,"Times New Roman",serif;">The proposed legislation also includes a nominal appropriation to make it more difficult to challenge the repeal if enacted.</span><br />
<br />
<span style="font-family: Georgia,"Times New Roman",serif;">We'll continue to monitor this proposed legislation, which is certain to attract attention in the upcoming months. </span>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-6547076782532017692017-01-05T12:15:00.002-05:002017-01-19T08:37:11.507-05:00New Skilled Trades Regulation Act Impacts Section 114 of Michigan Construction Lien Act<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">During the recent lame duck
session in December, the Michigan Legislature passed a series of bills
aimed at consolidating the licensing and regulation of skilled trades,
including residential builders, electricians, plumbing and mechanical
contractors. All of these trades are now regulated under the “Skilled Trades
Regulation Act.” </span></span><br />
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">S.B. 963 repealed the Electrical
Administrative Act, the Forbes Mechanical Contractors Act, the State Plumbing
Act, the Boiler Act, and the Building Officials and Inspectors Registration Act
and created in its place the "Skilled Trades Regulation Act" to
regulate all of those trades. Signed by Governor Snyder on January 3, 2017, the
new statute, designated <a href="http://legislature.mi.gov/doc.aspx?2016-PA-0407" target="_blank">Public Act 407 of 2016</a> will take effect in 90
days<span style="font-family: "georgia" , "times new roman" , serif;"> on April 4, 2017</span><span style="mso-spacerun: yes;"> </span></span></span><br />
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">Passage of Skilled Trades
Regulation Act also affects the Michigan Construction Lien Act for residential
construction. <span style="mso-spacerun: yes;"> </span></span></span><br />
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">Section 114 of the Construction
Lien Act requires that contracts for residential construction include certain
statutory language regarding licensure. <span style="mso-spacerun: yes;"> </span>In
a companion bill, S.B. 971 (<a href="http://legislature.mi.gov/doc.aspx?2016-PA-0415" target="_blank">PA 415 of 2016</a>), the Michigan Legislature changed
Section 114 to refer to the new “Skilled Trades Regulation Act.” <span style="mso-spacerun: yes;"> </span></span></span><br />
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">TAKE ACTION IN JANUARY, 2017 – </span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">1. Residential builders and other
contractors that perform residential construction, you should update your contracts
to incorporate the new language. It’s an easy fix. Do it today. <span style="mso-spacerun: yes;"> </span></span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">2. Residential Builders and
contractors who do <u>not</u> use a written contract or whose contract does <u>not</u>
include any of the language required by Section 114, you should use this
opportunity fix things. Amend your contract form to include the (new) statutory
language. Don’t wait. </span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">NEW LANGUAGE / ADD TO YOUR
CONTRACT</span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">“Pursuant to Section 114 of the
Michigan Construction Lien Act, Homeowner is advised as follows:</span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">“(a) That a residential builder
or a residential maintenance and alteration contractor is required to be
licensed under article 24 of the occupational code, 1980 PA 299, MCL 339.2401
to 339.2412. That an electrician is required to be licensed under article 7 of
the skilled trades regulation act, MCL 339.5701 to 339.5739. That a plumbing
contractor is required to be licensed under article 11 of the skilled trades
regulation act, MCL 339.6101 to 339.6133. That a mechanical contractor is
required to be licensed under article 8 of the skilled trades regulation act,
MCL 339.5801 to 339.5819. </span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">“(b) If the contractor is
required to be licensed to provide the contracted improvement, that the
contractor is licensed and the contractor’s license number.</span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">For residential builders, use the
following: </span></span></div>
<div class="MsoNormal" style="line-height: normal;">
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">(b) {Name of Contractor} is a
licensed residential builder in the State of Michigan (License No. ___________;
{qualifying officer’s name}, Qualifying Officer.</span></span><br />
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">For electrical contractors, use
the following:</span></span><br />
<br /></div>
<div class="MsoNormal" style="line-height: normal;">
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">(b) {Name of Contractor” is a
licensed electrician in the State of Michigan (License No. _______; {qualifying
officer’s name}, Qualifying Officer. <span style="mso-spacerun: yes;"> </span></span></span></div>
<br />
<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 115%;">NOTE: Under Michigan law, for residential
construction, the entity contracting for the work must be properly licensed. It
is not sufficient for an individual to be licensed if the business entity,
corporation or LLC, which is contracting with the homeowner, is not licensed.
This is a common pitfall that builders, licensed individually, can fall into
when they start a new business and fail to secure a builder’s license for the
business.</span></span></span><br />
<br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;">For more about <i>Michigan Construction Law Update</i>, or to talk with one of our construction attorneys, <a href="http://michiganconstructionlaw.blogspot.com/p/about-michigan-construction-law-update.html">click here</a>.</span></span>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-3807642227208406822013-12-02T10:09:00.001-05:002013-12-02T10:09:29.597-05:00FAR Amendments Designed to Speed Up Payment to Subcontractors<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">On November 25, 2013, the DOD, GSA, and NASA issued a <a href="https://www.federalregister.gov/articles/2013/11/25/2013-28053/federal-acquisition-regulation-accelerated-payments-to-small-business-subcontractors">final rule</a> amending the Federal Acquisition Regulations (FAR) to incorporate a new clause to provide accelerated payments to small business subcontractors.</span></span><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcRd-DyNeVYqflniblWNnP56_oyYHr6mX5l483XtaD_T0oTOdTjZSkg95BT00UAEm78sWNOcV-E3FTlZ5P9daF9Ir9DJjM7uM9RboyPtRzrfr6gIdgkK99jHQVDTxYGdCJF6VCxg/s1600/FAR+Regulations.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="178" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcRd-DyNeVYqflniblWNnP56_oyYHr6mX5l483XtaD_T0oTOdTjZSkg95BT00UAEm78sWNOcV-E3FTlZ5P9daF9Ir9DJjM7uM9RboyPtRzrfr6gIdgkK99jHQVDTxYGdCJF6VCxg/s320/FAR+Regulations.jpg" width="320" /></a></div>
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">The new clause [FAR 52.232-40] requires prime contractors, upon receipt of
accelerated payment from the Government, to make accelerated payment to
small business subcontractors, to the maximum extent practicable, after
receipt of a proper invoice and all proper documentation from small
business subcontractors. [ <i>Note: </i><i>If the Government does not accelerate payment to a prime contractor,
that prime contractor is under no obligation to accelerate payments to
its small business subcontractors. <a href="http://www.federalregister.gov/a/2013-28053/p-35">78 FR 70478</a> </i>] </span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">This clause will be inserted into all new
solicitations issued after the effective date of this rule [December 26, 2013] and resultant
contracts, including solicitations and contracts for the acquisition of
commercial items. </span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">This rule does not provide any new rights under the
Prompt Payment Act and does not affect the application of the Prompt
Payment Act late payment interest provisions.</span></span><br />
<span style="font-size: small;"><span style="font-family: Georgia, "Times New Roman", serif;"></span></span><br />
<h4 class="" id="h-33">
52.232-40 Providing Accelerated Payments to Small Business Subcontractors (Dec 2013)</h4>
<div data-page="70479" id="p-58">
(a) Upon receipt of
accelerated payments from the Government, the Contractor shall make
accelerated payments to its small business subcontractors under this
contract, to the maximum extent practicable and prior to when such
payment is otherwise required under the applicable contract or
subcontract, after receipt of a proper invoice and all other required
documentation from the small business subcontractor.</div>
<div data-page="70479" id="p-59">
(b) The acceleration of payments under this clause does not provide any new rights under the Prompt Payment Act.</div>
<div data-page="70479" id="p-60">
(c) Include the substance
of this clause, including this paragraph (c), in all subcontracts with
small business concerns, including subcontracts with small business
concerns for the acquisition of commercial items. <span style="font-family: inherit;"><span style="font-size: small;"><a href="http://www.federalregister.gov/a/2013-28053/p-57">78 FR 70479</a>
</span></span></div>
<br />
<span style="font-size: small;"><span style="font-family: Georgia, "Times New Roman", serif;"><span><span>For more about the Federal Acquisition Regulations (FAR), <a href="http://en.wikipedia.org/wiki/Federal_Acquisition_Regulation">click here</a>. For a complete copy of all the FAR regulations, or to download a complete set, <a href="http://www.acquisition.gov/far/">click here</a>. </span></span></span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: Georgia, "Times New Roman", serif;"><span><span>For more about <i>Michigan Construction Law Update</i>, <a href="http://michiganconstructionlaw.blogspot.com/p/about-michigan-construction-law-update.html">click here</a>.</span></span> </span></span>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com1tag:blogger.com,1999:blog-28877219.post-84633242295026264152013-09-15T14:57:00.002-04:002017-06-21T10:38:37.801-04:00Sixth Circuit Upholds Michigan Law Limiting Project Labor Agreements<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">On September 6, 2013, the Sixth Circuit Court of Appeals voted
2-1 to uphold the "Michigan Fair and Open Competition in Government Construction Act" (PA 98 of 2011). </span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;">The act prohibits a city, village, township or other governmental unit from
awarding a public construction project, grant, tax abatement or tax
credit based on whether or not a bidder, contractor or developer employs
union or non-union labor.</span> </span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">The Court noted in a <a href="http://www.ca6.uscourts.gov/opinions.pdf/13a0266p-06.pdf">13-page published opinion</a> </span></span><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">that "The act furthers Michigan’s proprietary goal of improving efficiency in
public construction projects, and the act is no broader than is
necessary to meet those goals." </span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">The Sixth Circuit's decision overturns a 2012 decision we <a href="http://michiganconstructionlaw.blogspot.com/2012/03/federal-court-strikes-down-michigan-law.html">reported here</a> by U.S. District Judge Victoria Roberts, who had ruled that PA 98 violated the National Labor Relations Act.</span></span></span><br />
<br />
<span style="font-family: Georgia,"Times New Roman",serif;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="font-family: Georgia,"Times New Roman",serif; font-size: small;"><span style="font-size: x-small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">Cite: <i>Michigan Bldg & Const Trades Council v Snyder</i>, 729 F.3d 572 (6th Cir. 2013).</span> </span></span></span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">For more about <i>Michigan Construction Law Update</i>, <a href="http://michiganconstructionlaw.blogspot.com/p/about-michigan-construction-law-update.html">click here</a>.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">Additional reading:</span></span></span><br />
<ul><span style="font-family: "georgia" , "times new roman" , serif;">
</span>
<li><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">"Sixth Circuit upholds Michigan's open competition law," <u>Legal Newsline Legal Journal</u>, Sept 9, 2013 (<a href="http://legalnewsline.com/issues/labor-issues/244079-sixth-circuit-upholds-michigans-open-competition-law">click here</a>) </span></span></span></li>
<span style="font-family: "georgia" , "times new roman" , serif;">
</span>
<li><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">"New Michigan Law Prohibits (Most) Project Labor Agreements," <u>Michigan Construction Law Update</u>, July 22, 2011 (<a href="http://michiganconstructionlaw.blogspot.com/2011/07/new-michigan-law-prohibits-most-project.html">click here</a>) </span></span></span></li>
<span style="font-family: "georgia" , "times new roman" , serif;">
</span>
<li><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">"U.S. Circuit Court Upholds Michigan Ban on Project Labor Agreements", <u>National Legal and Policy Center</u>, Sept 16, 2013 (<a href="http://nlpc.org/stories/2013/09/16/us-circuit-court-upholds-michigan-ban-project-labor-agreements">click here</a>) </span></span></span></li>
</ul>
Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-21811405817100159382013-01-14T10:37:00.000-05:002013-01-14T10:37:52.202-05:00New Law Expands Protection of Michigan's Anti-Indemnification Law<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="line-height: 115%;">The final days of 2012 saw a flurry of activity by the Michigan Legislature. Among the new legislation passed during <span style="font-size: small;">an</span> historic lame duck session was a significant legislative victory for contractors and design professionals. Public Act 468 of 2012, which was sponsored by Rep. Kurt Heise of Plymough (<a href="http://legislature.mi.gov/doc.aspx?2012-HB-5466">HB 5466</a>), clarifies and expands the protections of
Michigan's “anti-indemnification statute” for Michigan’s
construction industry. MCL 691.991. The new law takes
effect March 1, 2013.</span></span></span><br />
<div class="MsoNormal" style="text-align: left;">
<br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="line-height: 115%;">Under
generally applicable Michigan law, every person is responsible for
their own negligence, and if found liable are required to pay damages only in
an amount equal to their degree of fault. This principle is known as
“comparative” fault. In the construction
industry, parties with greater bargaining power have historically sought, by
contract, to shift risk to other parties with lesser bargaining power. In response, the Legislature has provided
certain limited protections from unfair indemnification clauses in construction
contracts.</span></span></span></div>
<div class="MsoNormal" style="text-align: left;">
<br />
<span style="font-size: small;"><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="line-height: 115%;">Under <span style="font-size: small;">existing Michigan law, </span><a href="http://legislature.mi.gov/doc.aspx?mcl-691-991">MCL 691.991</a> prohibits agreements in connection with construction projects from
requiring one party (the “indemnitor”) to indemnify another party (the
“indemnitee”) for damages<span style="background: none repeat scroll 0% 0% white; color: black;"> arising
out of bodily injury to persons or damage to property, </span>where those damages
are <span style="background: none repeat scroll 0% 0% white; color: black;">caused by or resulting from the
sole negligence of the i</span>ndemnitee.<span style="background: none repeat scroll 0% 0% white; color: black;"> These types of clauses are
declared void as against public policy.</span></span></span></span></span><br />
<br /></div>
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="color: black; line-height: 115%;">Another
important protection for industry participants is existing MCL 18.1237c, which
applies only to contracts with the State of Michigan, Department of Technology,
Management & Budget (“DTMB”). <a href="http://legislature.mi.gov/doc.aspx?mcl-18-1237c">Sec 18.237c</a> requires that indemnification
provisions in DTMB contracts be “comparative” in nature.</span></span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="color: black; line-height: 115%;">Despite these
protections, the existing law still allows many unfair and overreaching
indemnification provisions to be included in design and construction contracts.</span></span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="color: black; line-height: 115%;">The new law
clarifies that Sec. 691.991 applies to design contracts, and that the
protection includes contracts in connection with all manner of private and
public construction. Importantly, the
new law will require that design and construction contracts with “Public
Entities,” (including cities, villages, townships, counties, school districts,
intermediate school districts, authorities, and community and junior colleges),
must not violate comparative fault principles.
In addition, such contracts can no longer require that contractors, and
Michigan-licensed architects, engineers, landscape architects, surveyors defend
the public entity from negligence claims.
However, state universities are exempted from the requirements of the
new law.</span></span></span><span style="font-size: small;"></span><br />
<div class="MsoNormal" style="text-align: left;">
<span style="font-size: small;"><br /></span></div>
<span style="font-size: small;"><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"></span></span><div class="MsoNormal" style="text-align: left;">
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><span style="color: black; line-height: 115%;">For more information about PA 468, contact <a href="mailto:gquesada@cqlawfirm.com">Gary Quesada</a><span style="font-size: small;">. </span> </span></span></span><br />
<br />
<span style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">For more about <i>Michigan Construction Law Update</i>, <a href="http://michiganconstructionlaw.blogspot.com/p/about-michigan-construction-law-update.html">click here</a>.</span></span></div>
</span><br />
Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com1tag:blogger.com,1999:blog-28877219.post-24524425678305671892012-03-05T21:32:00.092-05:002017-06-21T10:33:39.506-04:00Federal Court Strikes Down Michigan Law Barring Project Labor Agreements, Finds that National Labor Relations Act Preempts State Law (UPDATED)<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;">On February 29, 2012, U.S. District Judge Victoria Roberts issued an Order striking down the "Michigan Fair and Open Competition in Government Construction Act" (PA 98 of 2011) finding that its limits on project labor agreements (PLA) violated the National Labor Relations Act. Judge Roberts also entered a judgment that permanently enjoins enforcement of the Act.</span></span></span><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2Mo3aF2vdWkG3NZl1gvmmJ2xRrRpquTsx160hAeID-VLrH6eM-1Q9StqHzAviVaoXz-gLpelLq2k6zMRxzvxmcGfW1zpFCOY73PfxnASIpKnfFilqEclnJIe_2zU_0KNMaE1O7w/s1600/lady+justice.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="228" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh2Mo3aF2vdWkG3NZl1gvmmJ2xRrRpquTsx160hAeID-VLrH6eM-1Q9StqHzAviVaoXz-gLpelLq2k6zMRxzvxmcGfW1zpFCOY73PfxnASIpKnfFilqEclnJIe_2zU_0KNMaE1O7w/s320/lady+justice.jpg" width="320" /></a></div>
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<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">As we reported last August (<a href="http://michiganconstructionlaw.blogspot.com/2011/08/federal-lawsuit-challenges-legality-of.html">here</a>), </span></span><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">shortly after <a href="http://michiganconstructionlaw.blogspot.com/2011/07/new-michigan-law-prohibits-most-project.html">PA 98 was signed into law</a> by Governor Rick Snyder,</span><span style="font-family: "georgia" , "times new roman" , serif;"></span></span><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;"> </span><span style="font-family: "georgia" , "times new roman" , serif;">the Michigan Building and Construction Trades Council (AFL-CIO) and Genesee, Lapeer, Shiawassee Building and Construction Trades Council (AFL-CIO) filed suit in U.S. District Court challenging the legality of the Act</span></span><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">. The plaintiffs alleged that PA 98 was preempted by the National Labor Relations Act (NLRA) (<a href="http://www.law.cornell.edu/uscode/text/29/chapter-7/subchapter-II">29 USC 151, et seq</a>). The Court ultimately agreed. </span></span><span style="font-family: "georgia" , "times new roman" , serif; font-size: small;"> </span><br />
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<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">In its ruling, the Court found that Section 7 of the NLRA, which allows employees to engage in concerted activity, protected employees' rights to negotiate project labor agreements. The Court also found that Sections 8(e) and (f) of the NLRA allows for project labor agreements in the construction industry. The court held that PA 98 effectively prohibited governmental units, construction managers, private contractors and subcontractors from entering into project labor agreements on state construction projects.</span></span><br />
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<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">The court found that PA 98 was an impermissible obstacle to the employees' right under Section 7 of the NLRA to negotiate a project labor agreement. The court also found that PA 98, by prohibiting activity allowed by sections 8(e) and 8(f) of the NLRA, regulated an area of labor law that Congress intended to be left "unregulated and to be controlled by the free play of economic forces" which violated the preemption principle announced by the U.S. Supreme Court in 1976 case. See, <i>Lodge 76 International Association of Machinists and Aerospace Workers v Wisconsin Employment Relations Commission</i>, <a href="http://supreme.justia.com/cases/federal/us/427/132/">427 US 132</a> (1976). </span></span><br />
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<span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">The Court rejected the Governor's argument that Section 13 of the Act, which states that the Act should not be construed so as to interfere with agreements or other activity protected by the NLRA. The Court held that Governor's reading of the Act would render the entire Act a nullity.</span></span><br />
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<span style="font-size: small;">The Court's decision in <a href="http://scholar.google.com/scholar?scidkt=1171882552508966222&as_sdt=2&hl=en"><i>Michigan Building and Construction Trade Council, AFL-CIO v Synder</i></a> permits local units of government and school districts to resume the practice of using project labor agreements on public projects.</span></div>
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<span style="font-size: small;">For more about <i>Michigan Construction Law Update</i>, <a href="http://michiganconstructionlaw.blogspot.com/p/about-michigan-construction-law-update.html">click here</a>.</span></div>
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<i><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">Update (3/7): Crain's Detroit Business <a href="http://www.crainsdetroit.com/article/20120306/FREE/120309933/state-to-fight-ruling-that-overturned-law-banning-union-favored-labor">reported today</a> that Michigan Attorney General Bill Schuette plans to appeal Judge Roberts' decision to the 6th Circuit Court of Appeals. </span></span></i><br />
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<i><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">Update (3/9): Michigan Attorney General Bill Schuette filed a Notice of Appeal earlier today confirming earlier reports that Judge Roberts' decision would be challenged. See, Case No. </span></span><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">11-cv-13520, Doc #39. </span></span></i><br />
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<i><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">Update (9/15/13): On September 6, 2013, the 6th Circuit Court of Appeals voted 2-1 to uphold PA 98 of 2011. The Court noted in a <a href="http://www.ca6.uscourts.gov/opinions.pdf/13a0266p-06.pdf">13-page published opinion</a> </span></span></i><i><span style="font-size: small;"><span style="font-family: "georgia" , "times new roman" , serif;">that "The act furthers Michigan’s proprietary goal of improving efficiency in
public construction projects, and the act is no broader than is
necessary to meet those goals." <span style="font-family: Georgia,"Times New Roman",serif;"> </span></span><span style="font-family: Georgia,"Times New Roman",serif;"> </span></span></i><br />
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<i><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">Citation:</span></span></i><span style="font-family: Georgia,"Times New Roman",serif;"><i><span style="font-size: small;"> Michigan Bldg. & Const. Trades
Council v. Snyder, 729 F.3d 572 (6th Cir. 2013). </span></i></span></div>
Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-88739872096519133432012-02-29T21:20:00.005-05:002012-03-01T09:52:45.803-05:00Test Wells Count as "Actual Physical Improvement" for Lien Priority, Michigan Court of Appeals Rules<div style="font-family: Georgia,"Times New Roman",serif;">Test wells installed by a potential buyer prior to closing constituted a physical improvement, allowing a construction lien to attach prior to buyer’s closing and giving the lien priority over a mortgage granted at closing. The Michigan Court of Appeals reached this conclusion in a recent <i>unpublished</i> case. <i>See</i>, <i>E.T. MacKenzie Company v Sutton Place-Raisin Twp, LLC</i> (Mich. App. No. 297864, Nov 22, 2011) (<a href="http://www.michbar.org/opinions/appeals/2011/112211/50223.pdf">slip opinion</a>). </div><div style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVJ6YMKqU834gv5Bitf7lQi6DaGQatrK_dzHk7JJoAMCkXZU9vJsqox8Bfd8Iw337CK-wPpnGf9mXhDvbpOOx-aBsGXG6KG4wZsZQHK7jkwi-ba18EiqDkgXBUeQTaDbZVTu2Q5w/s1600/Test+Well+Drill+Rig.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVJ6YMKqU834gv5Bitf7lQi6DaGQatrK_dzHk7JJoAMCkXZU9vJsqox8Bfd8Iw337CK-wPpnGf9mXhDvbpOOx-aBsGXG6KG4wZsZQHK7jkwi-ba18EiqDkgXBUeQTaDbZVTu2Q5w/s1600/Test+Well+Drill+Rig.jpg" /></a></div><div style="font-family: Georgia,"Times New Roman",serif;">Under Section 119(4) of the Michigan Construction Lien Act (MCL 570.1119(4)), a construction lien has priority over a mortgage recorded <i>after</i> the “first actual physical improvement.” MCL 570.1103(1) states that an “actual physical improvement” does <i>not</i> include <em>preparation</em> for a change or alteration, such as surveying, soil boring and testing. </div><div style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div style="font-family: Georgia,"Times New Roman",serif;">In <i>E.T. MacKenzie</i>, the buyer’s contractor drilled eight test wells prior to closing and left PVC pipes extending five feet above ground. In 2006, the buyer closed and granted United Bank a mortgage. Eight months later, the buyer contracted with E.T. MacKenzie Company for demolition and grading. The Court of Appeals opinion does not discuss the relationship of the well contractor and MacKenzie. In January 2008, MacKenzie recorded a claim of lien for unpaid services and asserted priority over the mortgage.</div><div style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div style="font-family: Georgia,"Times New Roman",serif;">The trial court found that the wells were not the first “actual physical improvement,” and that the first improvement occurred after the mortgage was recorded. The Court of Appeals disagreed and reversed. </div><div style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div style="font-family: Georgia,"Times New Roman",serif;">Relying on <i>Michigan Pipe & Valve-Lansing, Inc v Hebeler Enterprises, Inc</i>, 292 Mich App 479, <i>lv app denied</i>, 490 Mich 874; 803 NW2d 688 (2011), the Court of Appeals held that the wells were the “first actual physical improvements” and the construction lien attached prior to recording the mortgage:</div><blockquote class="tr_bq"><div style="font-family: Georgia,"Times New Roman",serif;">As defined in MCL 570.1103(1), an “actual physical improvement” does not “include that labor which is provided in preparation for that change or alteration, such as surveying, soil boring and testing, architectural or engineering planning, or the preparation of other plans or drawings of any kind or nature.”We do not dispute that these acts may suggest that the definition in effect recognizes a “due diligence process” that involves the specific procedures stated in the definition of “actual physical improvement.” Nor does the plain language of the statute, which states “such as,” suggest that the list is exhaustive. However, none of the procedures stated in the definition equates to the digging of a well, or any other act, which makes a “readily visible” “physical change” to the property. To the contrary, the acts identified in the statute are all of a nature that none of them will leave a permanent presence on the property. Consequently, we find [the defendant’s] assertion that the exception encompasses all acts done in the “due diligence process” is not supported by the plain and unambiguous language of MCL 570.1103(1). [<i>Michigan Pipe </i>at 486.]</div></blockquote><div style="font-family: Georgia,"Times New Roman",serif;"><br />
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</div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-37092283262223527822011-10-07T10:44:00.007-04:002011-10-07T14:58:21.531-04:00SB 77 Signed into Law by Governor SnyderOn October 4, 2011, Governor Rick Snyder signed <a href="http://legislature.mi.gov/doc.aspx?2011-SB-0077">SB 77</a> into law (now PA 162 of 2011). <span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">As we <a href="http://michiganconstructionlaw.blogspot.com/2011/09/statute-of-limitations-ostroth.html">noted here</a>, the new law solves the problems created by the Michigan Supreme Court's 2006 <i>Ostroth </i>ruling. The new law restores the applicable limitation periods to their previous durations, and restores the long-established rules that govern them.</span></span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjotYUwLCqwcbMBZcf94F7JNEr-eVTR6EYw3TmbbZ_q3Kcl5FtuXHZh2f3il75RKBz3XhfSau6oLzaZ-xCHxeh8W1fp9nwQooAObSawliyoKvVVoC3d3Z2r1u9mTQRKTG3bB3EWzw/s1600/SB+77+Billing+Signing+Ceremony.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="291" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjotYUwLCqwcbMBZcf94F7JNEr-eVTR6EYw3TmbbZ_q3Kcl5FtuXHZh2f3il75RKBz3XhfSau6oLzaZ-xCHxeh8W1fp9nwQooAObSawliyoKvVVoC3d3Z2r1u9mTQRKTG3bB3EWzw/s400/SB+77+Billing+Signing+Ceremony.JPG" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">(<span style="font-size: xx-small;">R/L: Benedetto Tiseo, Frederick Butters, Gov. Rick Snyder, Sen. Tonya Schuitmaker, and Gary Quesada</span>)</td></tr>
</tbody></table>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-28372035044956116342011-09-23T12:33:00.001-04:002011-09-23T14:20:15.790-04:00Statute of Limitations: Ostroth Overturned by SB 77, New Law Takes Effect January 1, 2012<div style="font-family: Georgia,"Times New Roman",serif;">By: Gary D. Quesada, Esq</div><div style="font-family: Georgia,"Times New Roman",serif;">Cavanaugh & Quesada, PLC</div><br />
<div class="MsoNormal" style="font-family: Georgia,"Times New Roman",serif;"></div><div class="MsoNormal" style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">One of the most effective defenses to a lawsuit is the statute of limitations. Limitations periods created by statute are grounded in public policy considerations which include encouraging the prompt recovery of damages, penalizing plaintiffs who have not been industrious in pursuing their claims, affording defendants security against stale demands and prolonged fear of litigation, and prevention of fraudulent claims. After a claim accrues (or is alleged to have accrued), if a plaintiff delays too long before bringing suit, the statute of limitations will serve to bar the claim, despite any other considerations.</span></div><div class="MsoNormal" style="tab-stops: 189.0pt;"><br />
</div><div align="left" class="heading3" style="font-family: Georgia,"Times New Roman",serif; text-align: left;"><span lang="EN-CA" style="color: black; text-decoration: none;">Before February 2006, Michigan’s design and construction industry was subject to the same statute of limitations system as other businesses. However, in February 2006, the Michigan Supreme Court issued its ruling in <i style="mso-bidi-font-style: normal;">Ostroth v Warren Regency</i>, </span><i style="mso-bidi-font-style: normal;"><span style="color: black; text-decoration: none;">474 Mich 36</span></i><span style="color: black; text-decoration: none;">; <i style="mso-bidi-font-style: normal;">709 NW2d 589</i> (<i style="mso-bidi-font-style: normal;">2006)</i>. <i style="mso-bidi-font-style: normal;">Ostroth</i> overruled existing case law and long-established practice, segregated the industry from general limitations law and lengthened all limitations periods specific to the design and construction industry in Michigan. </span></div><div align="left" class="heading3" style="font-family: Georgia,"Times New Roman",serif; text-align: left;"><br />
</div><div align="left" class="heading3" style="text-align: left;"><span style="color: black; text-decoration: none;">The impact of <i style="mso-bidi-font-style: normal;">Ostroth</i> was significant. For instance, according to a survey published by the American Council of Engineering Companies in 2008, Michigan’s statute of limitations for design professionals became the longest in the country. </span><i style="mso-bidi-font-style: normal;"><span style="color: black; text-decoration: none;">Ostroth</span></i><span style="color: black; text-decoration: none;"> also eliminated the rule that the limitation period begins to run when a claim accrues. In practical application, that effect served to double, triple or even quadruple the limitations period for many typical claims. <i style="mso-bidi-font-style: normal;">Ostroth</i> also eliminated any identifiable limitations period for incomplete projects.</span><span style="text-decoration: none;"> <span style="color: black;">Clearly, the <i style="mso-bidi-font-style: normal;">Ostroth</i> decision negatively affected individual design and construction businesses, and the industry as a whole. </span></span></div><div align="left" class="heading3" style="mso-pagination: widow-orphan lines-together; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in; text-align: left;"><br />
</div><div align="left" class="heading3" style="font-family: Georgia,"Times New Roman",serif; text-align: left;"><span style="color: black; text-decoration: none;">As early as the Winter of 2006, Michigan’s design and construction industry organizations began working together to reverse <i style="mso-bidi-font-style: normal;">Ostroth</i> by legislation. </span></div><div align="left" class="heading3" style="font-family: Georgia,"Times New Roman",serif; text-align: left;"><br />
</div><div align="left" class="heading3" style="font-family: Georgia,"Times New Roman",serif; text-align: left;"><span style="color: black; text-decoration: none;">After 5 ½ years of political activity in connection with this effort, SB 77 was finally passed by the Michigan House of Representatives on Tuesday, September 20, 2011. The vote was 87-21, with broad bi-partisan support. The Senate concurred the next day, and SB 77 is now expected to be signed into law by Governor Rick Snyder. The new law will take effect January 1, 2012.</span></div><div align="left" class="heading3" style="mso-pagination: widow-orphan lines-together; tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in; text-align: left;"><br />
</div><div class="MsoNormal" style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">SB 77 solves the problems created by <i>Ostroth, </i>restores the applicable limitation periods to their previous durations, and restores the long-established rules that govern them. The period of time that facility owners have to discover latent defects is not affected by SB 77. </span></div><div class="MsoNormal" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="MsoNormal" style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">As with any political campaign, teamwork and perseverance were required for success. SB 77 bill sponsor Senator Tonya Schuitmaker (R-Lawton) provided her leadership throughout the process, from introduction through final passage. <span style="color: black;">Industry organizations that supported this successful legislative effort represent all sections of the design and construction industry, including the following:</span></span><br />
<ul><li><span style="font-size: small;"><span style="color: black;"> American Institute of Architects of Michigan</span></span></li>
<li><span style="font-size: small;"><span style="color: black;">American Council of Engineering Companies </span></span></li>
<li><span style="font-size: small;"><span style="color: black;">Michigan Society of Professional Engineers </span></span></li>
<li><span style="font-size: small;"><span style="color: black;">American Society of Civil Engineers - Michigan Section</span></span></li>
<li><span style="font-size: small;"><span style="color: black;">Michigan Society of Professional Surveyors, </span></span></li>
<li><span style="font-size: small;"><span style="color: black;">AGC of Michigan </span></span></li>
<li><span style="font-size: small;"><span style="color: black;">Michigan Infrastructure and Transportation Association (MITA)</span></span></li>
<li><span style="font-size: small;"><span style="color: black;"> Construction Association of Michigan (CAM), and </span></span></li>
<li><span style="font-size: small;"><span style="color: black;">Michigan Association of Homebuilders </span></span></li>
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</div><div class="MsoNormal" style="tab-stops: 0in .5in 1.0in 1.5in 2.0in 2.5in 3.0in 3.5in 4.0in 4.5in 5.0in 5.5in;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIFtGYX08KYzuZVsK_iKPdAa2R0TlTx6iJPM6WuoJG-ONq7AAiGKjSn4AOLtM6duMOMWes471dCzEZfCtd5Hp3su6rp1prPJy3oZRNtikZiiwtujYgYS3LMiBoRwXWI_Dj_rstmA/s200/GDQ+head+photo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIFtGYX08KYzuZVsK_iKPdAa2R0TlTx6iJPM6WuoJG-ONq7AAiGKjSn4AOLtM6duMOMWes471dCzEZfCtd5Hp3su6rp1prPJy3oZRNtikZiiwtujYgYS3LMiBoRwXWI_Dj_rstmA/s200/GDQ+head+photo.jpg" width="150" /></a></div><span style="color: black; font-family: "Arial","sans-serif";"><i><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">Gary D. Quesada is a partner with the construction law firm of Cavanaugh & Quesada, PLC. Mr. Quesada served as the point person for legal issues throughout the campaign to overturn Ostroth, and testified in favor of the bill on numerous occasions before Judiciary Committees in both the Michigan House and Senate. </span></span></i></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="color: black; font-family: "Arial","sans-serif";"><i><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">For more information see <a href="http://www.michiganconstructionlaw.com/">www.MichiganConstructionLaw.com</a>, or e-mail <a href="mailto:gquesada@cqlawfirm.com">gquesada@cqlawfirm.com</a>.</span></span></i> </span><span style="font-family: "Arial","sans-serif";"></span></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-35400231194672060252011-08-22T11:03:00.004-04:002011-08-22T14:39:45.014-04:00Federal Lawsuit Challenges Legality of Michigan's New PLA Legislation (PA 98)<div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">Not unexpectedly, a federal lawsuit was filed on August 11, 2011 challenging the legality of the </span><span style="font-size: small;">“Fair and Open Competition in Governmental Construction Act” (<a href="http://legislature.mi.gov/doc.aspx?2011-SB-0165">PA 98 of 2011</a>). As we reported last month (<a href="http://michiganconstructionlaw.blogspot.com/2011/07/new-michigan-law-prohibits-most-project.html">here</a>), PA 98 prohibits most project labor agreements. </span></div><div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;"><br />
</span></div><div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibZogkAQj2BlWgftJmci-9XcohcKmcLczNrpyt7XD8C71p5mhrMvYLJ1iAMb7Od6IF-EU3O2EUXSiQvurgwZHEPwM_pF22qwPwnFY0uFd9AT8Ne3Nr6ZGc8ctgS-BMTGmi1kZUgQ/s1600/court+doc.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibZogkAQj2BlWgftJmci-9XcohcKmcLczNrpyt7XD8C71p5mhrMvYLJ1iAMb7Od6IF-EU3O2EUXSiQvurgwZHEPwM_pF22qwPwnFY0uFd9AT8Ne3Nr6ZGc8ctgS-BMTGmi1kZUgQ/s1600/court+doc.png" /></a></div><span style="font-size: small;">The Michigan Building and Construction Trades Council (AFL-CIO) and Genesee, Lapeer, Shiawassee Building and Construction Trades Council (AFL-CIO) filed suit in U.S. District Court against Michigan Governor Rick Snyder. </span><br />
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<span style="font-size: small;">Plaintiffs seek a declaratory judgment that PA 98 (a) is preempted under the Supremacy Clause; (b) violates the National Labor Relations Act; and (c) violates the Contracts Clause of the U.S. Constitution. </span><br />
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<span style="font-size: small;">The case is pending in U.S. District Court, Eastern District of Michigan, Case No. 11-cv-13520 before the <a href="http://judgepedia.org/index.php/Victoria_Roberts">Honorable Victoria A. Roberts</a>. </span><br />
<span style="font-size: small;"><br />
</span></div><div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">(Hat-tip: <a href="http://www.courthousenews.com/2011/08/16/39035.htm">Courthouse News Service</a>). </span></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-23134758451376082142011-08-01T17:22:00.019-04:002011-08-03T12:39:02.241-04:00Michigan Supreme Court Decision Expands Liability Exposure for Contractors<div style="font-family: Georgia,"Times New Roman",serif;">By: <a href="mailto:gquesada@cqlawfirm.com">Gary D. Quesada</a>, Hon. Aff. AIA, J.D.</div><div style="font-family: Georgia,"Times New Roman",serif;">Cavanaugh & Quesada, PLC </div><br />
<div style="text-align: justify;">On July 11, 2011, the Michigan Supreme Court decided the case of <i>Miller-Davis v. Ahrens</i>, __ Mich __ (2011), which held that Michigan’s special statute of repose, MCL 600.5839, does not apply to contract-based construction claims. This decision means that contractors are at greater risk for lawsuits. </div><br />
<div style="text-align: justify;">In 1967, Michigan enacted MCL 600.5839, the special statute of repose for claims arising from improvements to real property. Section 5839 barred all claims for “injuries to persons or property” against architects, engineers and contractors that arose more than six years after “use, occupancy or acceptance” of the improve- ment. </div><br />
<div style="text-align: justify;">Originally, the statute was understood to apply only to third-party claims, and Michigan courts so held. In 1988, Michigan enacted an amendment that was held by several courts to have expanded the statute of repose to include contractual claims as well as third-party claims. However, the Supreme Court never addressed this issue.</div><br />
<div style="text-align: justify;"><i>Miller-Davis</i> involved a claim by a general contractor against a subcontractor for breach of contract. The issue was the construction of a natatorium roof, which the general contractor alleged was improperly constructed by the subcontractor. The subcontractor argued the claim was brought later than six years after first use, occupancy or acceptance of the improvement, and was therefore “reposed.” The Michigan Court of Appeals agreed and held the claim was barred. Plaintiff then sought review by the Michigan Supreme Court.</div><br />
<div style="text-align: justify;">In the Supreme Court, the plaintiff argued the statute of repose did not apply to its claim, which was based on breach of contract and not an “injury to person or property.” The Supreme Court reversed the lower court and held that the statute of repose “does not apply to a breach of contract claim for a defect in a building improvement.” In making its ruling, the court cited with approval the federal case of <i>Garden City Osteopathic Hosp v HBE Corp</i>, 55 F3d 1126 (CA 6, 1995).</div><br />
<div style="text-align: justify;">The <i>Miller-Davis</i> decision significantly extends the duration contractors can be sued for building defects. The impact of the case is likely to be that warranty claims by building owners for defective work will be brought long after the building has been occupied. Owners have contracts with their prime contractor, and often have direct contracts with specialty contractors. There is no longer any repose period for claims based on these contracts. By statute, warranty claims may be brought up to 6 years after a breach is discovered. Therefore, owners may bring suit up to 6 years after discovery of a latent defect, no matter when that discovery occurs.</div><br />
<div style="text-align: justify;">The <i>Garden City</i> case cited by the Supreme Court is as example of the potential application of <i>Miller-Davis</i>. <i>Garden City</i> involved an owner’s claim brought against a contractor approximately <u>21 years after construction</u>. Contractors should now be more careful to review their contracts and when possible, seek to limit their contractual obligations, including indemnification and warranty provisions, to reasonable durations.</div><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIFtGYX08KYzuZVsK_iKPdAa2R0TlTx6iJPM6WuoJG-ONq7AAiGKjSn4AOLtM6duMOMWes471dCzEZfCtd5Hp3su6rp1prPJy3oZRNtikZiiwtujYgYS3LMiBoRwXWI_Dj_rstmA/s1600/GDQ+head+photo.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIFtGYX08KYzuZVsK_iKPdAa2R0TlTx6iJPM6WuoJG-ONq7AAiGKjSn4AOLtM6duMOMWes471dCzEZfCtd5Hp3su6rp1prPJy3oZRNtikZiiwtujYgYS3LMiBoRwXWI_Dj_rstmA/s200/GDQ+head+photo.jpg" width="149" /></a></div><div style="text-align: left;"><i>For more information about the </i>Miller-Davis<i> decision and the Michigan statute of repose, you may contact <a href="mailto:gquesada@cqlawfirm.com">Gary Quesada</a> at Cavanaugh & Quesada, PLC, 1027 S. Washington Ave, Ste A, Royal Oak, MI 48067, Tel: (248) 543-8320. </i></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-59220469570640874042011-07-22T18:16:00.003-04:002011-08-22T10:58:00.934-04:00New Michigan Law Prohibits (Most) Project Labor Agreements<div style="text-align: justify;"><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">On July 19, 2011, Michigan Governor Rick Snyder signed <a href="http://legislature.mi.gov/doc.aspx?2011-SB-0165">SB 165</a> into law as the “Fair and Open Competition in Governmental Construction Act” (<a href="http://legislature.mi.gov/doc.aspx?2011-SB-0165">PA 98 of 2011</a>).<br />
<br />
</span><span style="font-family: Georgia,"Times New Roman",serif;">The Act prohibits a city, village, township or other governmental unit from awarding a public construction project, grant, tax abatement or tax credit based on whether or not a bidder, contractor or developer employs union or non-union labor.</span></span> </div><div style="text-align: justify;"></div><div style="text-align: justify;"><br />
<div style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">The Act generally prohibits a governmental unit from:</span></div></div><ul style="text-align: justify;"><li><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">Entering into or spending funds under a construction contract if the contract terms: (1) require or prohibit a bidder or contractor from entering into an agreement with a collective bargaining organization relating to the underlying construction project or related projects; or (2) discriminate against a bidder or contractor based on their willingness or refusal to enter into an agreement with a collective bargaining organization relating to the construction project or a related project.</span></span><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"> </span></span></li>
<li><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">Conditioning a grant, tax abatement or tax credit on a requirement that the recipient include one of the terms listed above in a contract document.</span></span></li>
<li><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"> A governmental manager or construction manager from placing the above terms in bid specifications, project agreements, or other construction documents.</span></span></li>
</ul><div style="text-align: justify;"><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">The statute has one significant exception: The Act does not prohibit employers or other parties from entering into agreements or engaging in any other activity protected by the federal National Labor Relations Act. </span></span> </div><br />
<span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;">The law is effective immediately.</span></span><br />
<br />
<span style="font-size: small;">Click <a href="http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/htm/2011-HLA-0165-3.htm">here</a> for additional analysis of this new law. </span><br />
<div style="text-align: justify;"><span style="font-size: small;"><br />
</span></div><div style="text-align: justify;"><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif;"><i>Update: Not unexpectedly, a federal lawsuit was filed on August 11, 2011 challenging the legality of PA 98. The Michigan Building and Construction Trades Council (AFL-CIO) and Genesee, Lapeer, Shiawassee Building and Construction Trades Council (AFL-CIO)filed suit in U.S. District Court seeking a declaratory judgment that PA 98 (a) is preempted under the Supremacy Clause; (b) violates the National Labor Relations Act; and (c) violates the Contracts Clause of the U.S. Constitution. (Hat-tip: <a href="http://www.courthousenews.com/2011/08/16/39035.htm">Courthouse News Service</a>). </i></span></span></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-66779379301261162122011-07-01T11:48:00.000-04:002011-07-01T11:48:09.058-04:00Davis Bacon Wage Determinations (Past and Present)<div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;">The U.S. Government Printing Office (GPO), in conjunction with the Department of Labor (DOL) and the NTIS, have collaborated to provide permanent public access to Davis Bacon Wage Determinations. </div><div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><br />
</div><div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;">The new site is called "Wage Determinations OnLine.gov" (<a href="http://www.wdol.gov/">www.wdol.gov</a>), and contains both current and archived wage determinations. Users can search or browse for a wage determination by state and county. Archived determinations are available from 2000 forward. </div><br />
(hat-tip: Sabrina Pacifici of <a href="http://www.bespacific.com/">beSpacific.com</a>)Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-76995937176527217242011-05-27T10:33:00.000-04:002011-05-27T10:33:54.750-04:00New Legislation Bans Resale, Capital Recovery Fees for Residential, Commercial Real Estate in Michigan<div style="font-family: Georgia,"Times New Roman",serif;"><div class="separator" style="clear: both; text-align: center;"></div><div style="text-align: justify;">Following the collapse of the real estate market a few years ago, a growing number of developers and home builders have been adding "resale fee" provisions to their sales agreements that allow the developer to collect 1 percent of the sales price from the seller every time the property changes hands — for the next 99 years. This practice was <a href="http://www.nytimes.com/2010/09/12/business/12fees.html">outlined by the New York Time in a September 10, 2010 article</a>. </div><br />
<div style="text-align: justify;">Michigan recently enacted legislation that prohibits the imposition of such fees, also called capital recovery fees, on either residential or commercial real properties. <a href="http://legislature.mi.gov/doc.aspx?2011-HB-4227">PA 34</a> and <a href="http://legislature.mi.gov/doc.aspx?2011-HB-4228">PA 35 of 2011</a> were signed into law on May 24, 2011 by Governor Snyder. The new legislation takes effect immediately. </div><br />
<div style="text-align: justify;">Under the new legislation, a transfer fee covenant that was executed on or after the bill's effective date, whether or not it was recorded, could not run with the title to the real property and would not be binding on or enforceable against any subsequent owner, purchaser, or mortgagee of any interest in the real property as an equitable servitude or otherwise. Any lien purporting to secure the payment of a transfer fee under a transfer fee covenant that was executed on or after the bill's effective date would be void. </div><br />
<div style="text-align: justify;">"Transfer fee" is defined in the legislation as a fee or charge payable upon the subsequent sale, gift, conveyance, assignment, inheritance, or other transfer of an ownership interest in real property located in Michigan, or payable for the right to make or accept a transfer, regardless of whether the fee or charge is a fixed amount or is determined as a percentage of the value of the property, the purchase price, or other consideration given for the transfer. The legislation includes a number if exclusions. </div></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-80690344702752778072011-03-02T16:57:00.000-05:002011-03-02T16:57:50.219-05:00AGC Legal Brief Highlights Cedroni Decision, Other Recent Michigan Cases<div style="font-family: Georgia,"Times New Roman",serif; text-align: left;">The February, 2011 issue of the <a href="http://newsmanager.commpartners.com/agcdet/downloads/legal%20brief%20Feb%202011.pdf">AGC Legal Brief</a> highlights a number of recent court decisions affecting design professionals, contractors, subcontractors and lien claimants in Michigan.</div><div style="text-align: left;"><br />
</div>This issue of the Legal Brief was written by <a href="http://www.hilgerhammond.com/cgi-bin/go.pl?session=ujmt3zrb6utprxvyg765ibp8rjmeuwc7&s=site&&p=1723">Aileen M. Leipprandt</a>, a construction attorney with the <a href="http://www.hilgerhammond.com/">Hilger Hammond</a> firm in Grand Rapids, and includes the following articles:<br />
<ul><li>Contractor Gets a Shot at Proving Architect Improperly Interfered with Bid Award [reporting on the November 2010 Michigan Court of Appeals deicsion in <a href="http://scholar.google.com/scholar_case?q=Cedroni+Associates,+Inc&hl=en&as_sdt=2,23&case=11767146088436864649&scilh=0">Cedroni Associates, Inc v Tomblinson, Harburn Associates</a>, Mich Ct App No. 287024 (Nov 16, 2010] </li>
</ul><ul><li>Contractor Holds Airport Authority's Feet to the Fire Despite Absence of Signed Contract [which discusses <a href="http://michiganconstructionlaw.blogspot.com/2011/01/court-of-appeals-finds-contract-airport.html">The Garrison Company v Bishop Int'l Airport decision</a>]</li>
</ul><ul><li> Construction Lien Has Priority over Mortgage Regardless of Change in General Contractor and Project Ownership [which details decision in <a href="http://scholar.google.com/scholar_case?q=First+Community+Bank+v+Mountainaire,+LLC&hl=en&as_sdt=2,23&case=2925536435337604889&scilh=0">First Community Bank v Mountainaire, LLC, et al.</a>, Mich Ct App No. 293005 (Oct 21, 2010)] </li>
</ul><ul><li>You Snooze, You Lose - Subcontractor's Lien Invalid Where Warranty Work Did Not Extend Time to Record Lien [reporting on <a href="http://scholar.google.com/scholar_case?q=Stock+Building+Supply,+LLC+v+Parsley+Homes+of+Mazuchet+Harbor,+LLC&hl=en&as_sdt=2,23&case=5244200537795143786&scilh=0">Stock Building Supply, LLC v Parsley Homes of Mazuchet Harbor, LLC, et al.</a>, Mich Ct App No. 294098 (Jan 25, 2011)]</li>
</ul><ul><li>What's New in the New AIA A-312 Payment and Performance Bonds? </li>
</ul>The AGC Legal Brief is published quarterly by the <a href="http://www.agcmichigan.org/">AGC of Michigan</a> and its Legal Advisory Committee. The full text of the February, 2011 issue can be found <a href="http://newsmanager.commpartners.com/agcdet/downloads/legal%20brief%20Feb%202011.pdf">here</a> at the AGC's website.Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-76302878456727945552011-01-14T17:16:00.000-05:002011-01-14T17:16:28.977-05:00Court of Appeals finds Contract, Airport Authority Bound by Accepted Bid<div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">By: <a href="mailto:matt@mattnorrislaw.com">Matthew C. Norris</a>, Esq</span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;">Matthew C. Norris, PLC</span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">Occasionally, a contractor will successfully submit a low bid to a government entity and have the low bid accepted, only to have the public body refuse to formally enter into the contract. </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">The Michigan Court of Appeals recently decided a case in favor of a general contractor. The Court ruled that accepting the contractor’s bid constituted formation of a contract. The later refusal by the public body, to sign the contract, did not change the fact a contract had been entered into. The case is <a href="http://coa.courts.mi.gov/documents/opinions/final/coa/20101118_c293415_48_293415.opn.pdf"><i>The Garrison Company v Bishop International Airport Authority</i></a>, Mich Ct App No. 293415 (Nov 18, 2010).</span></div><div class="Default"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">In the case, the contractor submitted the low bid, its bid was accepted by the Airport Board, and the public body communicated this to the contractor. The contractor began to exchange emails with the architect for the airport. </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">A month later, the Airport Director refused to sign the contract, and the Airport Board rescinded its acceptance of the bid. The contractor sued for lost profits. </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">The Court of Appeals ruled that there was a binding contract, even before the construction contracts themselves were signed. The reasoning for the Court’s decision is that the Airport accepted the contractor’s offer to perform the contract at a fixed price, and the contract was enforceable. The act of formally signing the construction contracts “was not a step that had to be completed before a valid contractual relationship arose.” </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><span style="font-size: small;"> </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">The Court of Appeals reasoned that, if the contractor attempted to walk away from its bid, the contractor could not “walk away from the project without liability.” Since the bid and acceptance were binding on the contractor, the public body was also bound. </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">The Court was also not convinced by the Airport’s argument that the Airport needed to conduct “due diligence” after accepting a bid. The Court reasoned that, if a public body were allowed to conduct due diligence <i>after</i> accepting a bid, the public body could accept a bid with impunity, and later interpose an indefinite due diligence time period before rescinding. Due diligence should be done <i>before</i> acceptance of a bid. </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div class="Default" style="font-family: Georgia,"Times New Roman",serif; text-align: justify;"><span style="font-size: small;">The Court of Appeals cited a 100-year history of Michigan case law that a bid, once accepted, becomes a contract. </span></div><div class="Default" style="font-family: Georgia,"Times New Roman",serif;"><br />
</div><div style="text-align: justify;"><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif; line-height: 115%;">A low bid contractor is often disappointed if its contract is ultimately rescinded by a public body. While cases against public bodies remain difficult, this Court of Appeals decision should make it more likely a contractor in this situation might prevail.</span></span></div><br />
<div class="MsoNormal" style="text-align: justify;"><i><span style="font-size: small;"><span style="font-family: Georgia,"Times New Roman",serif; line-height: 115%;">Matthew Norris graduated </span></span>from Michigan State University (B.A., 1981); and Wayne State University Law School (1984) and has concentrated his practice on construction law. He was admitted to the Michigan and U.S. District Court, Eastern District of Michigan, in 1984; to the U.S. District Court, Western District of Michigan and U.S. Court of Appeals, Sixth Circuit. </i></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><i>Mr. Norris is a also member of the Oakland County Bar Association and State Bar of Michigan (Sections of: Business Law; Probate and Estate Planning; Real Estate Law; Construction Law Committee). He was Chair of the State Bar Construction Law Committee from 1997 through 2000. Chair, State Bar of Michigan Real Property Section Summer Conference, July, 2001; State Bar of Michigan Real Property Law Section, 2002 presenter: "Commercial Projections: What you Need to Know about Construction Contracts and Liens"; and Co-authored an article summarizing Construction Lien Act decisions and another dealing with pay-when-paid contract clauses, both published in the Michigan Real Property Review.</i></div><div class="MsoNormal" style="text-align: justify;"><br />
</div><div class="MsoNormal" style="text-align: justify;"><i>For more information about the </i>Garrison<i> </i><i>case, you may contact Matt Norris by <a href="mailto:matt@mattnorrislaw.com">e-mail</a> or telephone at (248) 994-7320. </i><span class="text"><b></b></span></div><span style="font-family: "Calibri","sans-serif"; font-size: 11pt; line-height: 115%;"> </span>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-13506075798103446802010-09-13T12:59:00.001-04:002010-11-22T06:04:46.385-05:00Municipal Codes Online<div style="text-align: justify;">Municipal codes are not the sexiest part of the law, but occasionally there are issues that require you track down a local ordinance. I recently had to track down the procurement ordinance for Wayne County (Michigan). I got nowhere calling the Purchasing Department, but found what I was looking in short order through <a href="http://www.municode.com/Library/Library.aspx">Municode.com</a>. </div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Incidentally, the Wayne County Procurement Code is Chapter 120, ("Unified Procurement System") and can be found <a href="http://library1.municode.com/default-test/home.htm?infobase=13032&doc_action=whatsnew">here</a>. </div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-22434409023549398832010-09-08T15:37:00.002-04:002010-09-08T15:38:12.824-04:00Public-Private Partnership Legislation May Be Limited to DRIC Bridge Project<div style="text-align: justify;"><span style="font-family: Georgia,"Times New Roman",serif;">Legislation to authorize public-private partnerships (P3) in Michigan (f<a href="http://michiganconstructionlaw.blogspot.com/2010/06/legislation-creating-public-private.html">irst reported here</a>) may be limited to the Detroit River International Crossing (DRIC) project, according to a <a href="http://www.crainsdetroit.com/article/20100908/FREE/100909884#">report in Crain’s Detroit Business</a>. </span></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-8735012091284664512010-07-31T17:40:00.055-04:002010-08-02T16:01:18.083-04:00Negligent Building Design, Expert Testimony Required to Establish<div style="text-align: justify;">The Michigan Court of Appeals recently affirmed the rule that expert testimony is required to establish negligent building design. This rule was outlined in <i>Lawrenchuk v Riverside Arena, Inc</i>, 214 Mich App 431; 542 NW2d 612 (1995): </div><div style="text-align: justify;"></div><div style="text-align: justify;"><blockquote>“In the absence of expert testimony providing standards for evaluating the relevant risks and advantages of [a particular] design, a jury would be denied an objective framework by which to evaluate [the] plaintiff’s claim, thus precluding any genuine determination whether the design was unreasonable.” Id. at 434. Therefore, a plaintiff’s negligent building design claim must be dismissed if not supported by expert testimony. Id. at 436.</blockquote></div>See, <i>Tappen v. Carlton 54th L.L.C</i>., <span id="xref">(Mich. Ct. App. July 30, 2010)</span>. A copy of the <a href="http://www.michbar.org/opinions/appeals/2010/072210/46409.pdf">slip opinion can be found here</a>.<br />
<br />
<div style="text-align: justify;">In <i>Tappen</i>, the Court of Appeals found that the trial court had erred when it failed to grant summary disposition to the Defendant where the Plaintiff failed to present expert testimony in support of its claim of negligent design.</div><div style="text-align: justify;"><blockquote>"It is well settled that a jury must not be permitted to speculate or guess whether a defendant has been negligent; nor may a jury be permitted to speculate concerning the causation of a plaintiff’s injuries. (citations omitted) Because plaintiff failed to present expert testimony to support his claim that defendant’s hotel was negligently designed, the circuit court erred by declining to grant summary disposition in favor of defendant with respect to this claim."</blockquote></div>Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com0tag:blogger.com,1999:blog-28877219.post-11797938149073815972010-06-19T10:33:00.002-04:002019-09-01T15:23:16.378-04:00Bill to Abolish Michigan Homeowner Construction Lien Recovery Fund Passes House<div style="font-family: Georgia,"Times New Roman",serif; text-align: justify;">
On June 16, 2010, <a href="http://legislature.mi.gov/doc.aspx?2010-HB-5830">H.B. 5830</a>, and a series of companion bills that would abolish the Homeowner Construction Lien Recovery Fund, was passed by the Michigan House of Representatives by a 94-9 vote. The bill has been referred to the Senate Appropriations Committee.</div>
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As we noted in earlier posts (<a href="http://michiganconstructionlaw.blogspot.com/2009/12/homeowner-construction-lien-fund-runs.html">here</a> and <a href="http://michiganconstructionlaw.blogspot.com/2010/02/new-bill-would-abolish-michigan.html">here</a>), the Lien Fund is out of money, overwhelmed by claims, and without a legal mechanism to replenish itself. PA 497 of 2006 repealed Section 201(2) of the Construction Lien Act and eliminated the ability of the Fund to make a $50 special assessment when the Fund fell below $1 million. Instead, the Fund can only assess members a $10 annual renewal fee.<br />
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<i>Update: H.B. 5830 was voted out of committee by the Senate Appropriations Committee on July 21, 2010. A vote by the full Senate is expected shortly.</i><br />
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<i>Update: H.B. 5830 was approved and voted into law on August 23, 2010 as PA 147 of 2010 and given immediate effect. </i></div>
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Peter J. Cavanaughhttp://www.blogger.com/profile/08416352896263136016noreply@blogger.com2