Largest Construction Projects in Michigan, 2009 List

Crain's Detroit Business is out with the annual list of the Largest Construction Projects in Michigan for 2009 (here). Most of the projects in the Top 20 began several years ago, and are scheduled to complete in 2009 or early 2010. As in past years, school and hospital projects dominate the Top 20. The few commercial developments listed appear to be on hold.

New Ethics, Disclosure Rules for Federal Contractors

On December 12, 2008, new federal rules on mandatory disclosure and ethics and compliance went into effect. Among other things, the rule requires government contractors to disclose evidence of violations of certain criminal laws by their employees or subcontractors and to implement certain internal controls within their companies.

The new rule requires, for contracts and solicitations after the December 12, 2008 effective date, the insertion of the clause at FAR 52.203-13, Contractor Code of Business Ethics and Conduct, in all contracts in which the value of the contract is expected to exceed $5 million and the performance period is 120 days or more (a "covered contract").

For more information, click here.

The Federal Construction Contracting Blog has a number of posts here on these new regulations, tracking back to when they were first proposed.

Arbitration Award, Michigan Court of Appeals Clarifies Time to Confirm

The Michigan Court of Appeals recently clarified the deadline for confirming an arbitration award.  

In Greater Bethesda Healing Springs Ministry v Evangel Builders & Construction Managers, LLC, 282 Mich App 410 (2009), the Michigan Court of Appeals, explained that MCR 3.602(I) requires only that an arbitration award be filed with the court clerk within one year after the award was rendered, and has no bearing on the time period in which the award may be confirmed and entered as a judgment by the court. 

Prior to this case, courts had interpreted this court rule as requiring a party to confirm an arbitration award within one year from award. 

Click here for a copy of the slip opinion in this case. 

New Bill Would Allow Construction Liens on Public Property

On January 29, 2009, Sen. Dennis Olshove (D. Warren) introduced S.B. 140, which would allow construction liens to be recorded against government (public) property.

Specifically, S.B. 140 would amend Section 107 of the Construction Lien Act (MCL 570.1107) by adding a new Subsection (7):

(7) Real property owned or leased by a government entity or as to which a government entity contracts for an improvement is subject to a construction lien under this Act to the same extent as other real property.

That a constructions lien may not attach to public property is a well established principal under Michigan law. S.B 140 would be a significant departure from long-established precedent. See e.g., Kammer Asphalt v East China Twp, 443 Mich 176, 181, n. 10 (1993). ("materialmen and contractors may not obtain a mechanics' lien on a public building") (citing Knapp v Swaney, 56 Mich 345, 347; 23 NW 162 (1885) ("Public property cannot be the subject of a [Builders'] lien unless the statute shall expressly so provide; it is by implication excepted from lien statutes, as much as from general tax laws, and for the same reasons.") and Ford v State Bd of Ed, 166 Mich 658, 660; 132 NW 467 (1911) ("These creditors have no lien upon this public building.").

To track the progress of S.B. 140, click here.

Implementation of E-Verify Rule Delayed

Federal Computer Week reported on January 12, 2009 that -

"Enforcement of a new rule that requires federal contractors to use the Homeland Security Department’s E-Verify system to check employees' work eligibility has been postponed until Feb. 20, the U.S. Chamber of Commerce announced.

"DHS is delaying implementation from the original Jan. 15 starting date to Feb. 20 as a result of negotiations associated with a lawsuit filed by the chamber and other business groups, the chamber said in a Jan. 9 news release.

"Under President George W. Bush’s executive order, use of E-Verify was to be made mandatory for approximately 168,000 federal contractors beginning Jan. 15. The E-Verify regulation pertains to federal contracts of more than $100,000 and subcontracts of more than $3,000. A coalition of business groups led by the chamber is suing to keep E-Verify from being imposed on contractors."

Click here for the rest of the story. The lawsuit filed by the U.S. Chamber of Commerce was reported in an earlier post.

Contractor Groups File Suit, Seek to Block New Immigration Checks

The Federal Times reported on December 30, 2008:

"Five trade groups are suing the Homeland Security Department to block a new requirement that federal contractors check the immigration status of their employees using the department’s E-Verify system.

"In documents filed in the U.S. District Court for Maryland on Dec. 23, the groups ask the court to halt the Jan. 15 implementation of the rule and to declare the rule invalid.

"The groups say the requirement, in a June executive order, is contrary to the statute authorizing E-Verify. That law states that Homeland Security “may not require any person or other entity to participate” in the program, according to court documents.

"The case was filed by the U.S. Chamber of Commerce, Associated Builders and Contractors, the Society for Human Resource Management, the American Council on International Personnel and the HR Policy Association."

Click here for the rest of this article.

NOTE: The lawsuit cited in this article is styled as Chamber of Commerce of the United States of America et al v. Chertoff et al, Case No. 08-cv-03444-AW (U.S. District Court, District of Maryland). A copy of the Complaint is below:

Publish at Scribd

This case is also discussed here in a recent post at the Federal Construction Contracting Blog, which includes additional background information.

AGC Legal Brief Highlights Recent Builder's Trust Fund Decision, Other Michigan Decisions

The December, 2008 issue of the AGC Legal Brief highlights a number of recent court decisions and legislative changes affecting design professionals, contractors, subcontractors and residential builders in Michigan.

The current issue of the AGC Legal Brief was written by attorneys from Dickinson Wright and its construction practice group, and includes the following articles:

• Joseph W. DeLave, Bankruptcy Court Recognizes Preclusive Effect of State Court Default Judgment Entered Under the Michigan Builder's Trust Fund Act to Bar Subcontractor from Disputing Nondischargeability of Resulting Debt [reporting on In Re Brunett, 394 B.R. 425 (Bkrtcy. E.D. Michigan, October 8, 2008)] (slip opinion here)
  

• Michelle L. Alamo, Contractor Claims Against the Project Engineer Hang in the Balance after the Michigan Court of Appeals' Recent Decision in Keller Construction, Inc. v. U.P. Engineers & Architects, Inc.

• Jeffrey M. Wesselhoff, Licensed Builders Shed Consumer Protection Claims [reporting on the Michigan Supreme Court's decision in Liss v Lewiston-Richards]

• Leslee M. Lewis, Michigan Bolsters Residential Builder Licensing Laws including Licensing Requirements and Consumer Remedies [reporting on Public Acts 155-158 of 2007]
  

AGC Legal Brief is published quarterly by the AGC of Michigan and its Legal Advisory Committee. The full text of the December issue can be found here at the AGC's website.

Legally Blawged: Connecting Michigan's (Online) Legal Community

Earlier this year, I met two other Michigan attorneys who write legal blogs (blawgs). We began to meet for dinner and to share our experiences with blawgs as a way to develop and expand our practices. We call ourselves "Legally Blawged" and recently incorporated as a Michigan non-profit corporation (Legally- Blawged.com, Inc.) With the assistance of Justia.com, one of the best legal blog development companies out there, we recently launched our website -- LegallyBlawged.com.

The three attorneys who "blawg" and form the core of this group are:

• Gary Nitzkin -- Michigan Collection Law
• Mike Hamblin -- Michigan Business Lawyer
• Peter Cavanaugh -- Michigan Construction Law Update

We are expanding the membership of Legally Blawged and are looking for other lawyers, paralegals and anyone else with an interest in law firm marketing to join our group. We plan to meet once a month for dinner to discuss marketing ideas that have worked and those that have not. We also plan to invite guest speakers to discuss marketing and technology ideas to help each of us improve our marketing efforts. We also intend to use these monthly meetings as a way to network. Please join us.

Statute of Limitations Bill Passed by House Judiciary Committee

On November 12, 2008, Senate Bill 865, which would revise the statute of limitations for bringing an action against an architect, professional engineer, land surveyor or construction contractor, was unanimously approved by the House Judiciary Committee. Gary Quesada testified before the Committee on behalf of AIA of Michigan, and was joined by ACEC/Michigan Executive Director Ron Brenke, and Ken Lawless, Vice President of Clark Construction and AGC of Michigan Board member, who also testified before the committee in support of the measure.

S.B. 865 was passed out of the Senate in February. This bill was discussed in an earlier post.

For more information about this issue, contact Gary Quesada at Cavanaugh & Quesada, PLC, 306 South Washington, Suite 216, Royal Oak, MI 48067, Tel: (248) 543-8320.

Cavanaugh & Quesada, PLC -- Announcing New Firm

Peter Cavanaugh and Gary Quesada are pleased to announce the formation of Cavanaugh & Quesada, PLC. The new firm is located in Downtown Royal Oak (MI), and will focus on serving the unique legal needs of the design and construction communities.

• Mr. Cavanaugh's practice is concentrated on business and construction law matters, including litigation, arbitration, and mediation of contract, construction lien and payment bond claims, and disputes involving owners, contractors, subcontractors, and suppliers. Mr. Cavanaugh also represents clients who specialize in water and wastewater construction projects, especially those projects involving the Detroit Water and Sewerage Department (DWSD).

• Mr. Quesada's practice is concentrated on representing architects, engineers, owners and contractors in business and construction law matters, including litigation and arbitration of commercial, municipal and residential construction claims, copyright and risk management consultation. Mr. Quesada also represents clients in the fields of photographic, sculptural, literary and film arts.

For more information, you may contact Peter Cavanaugh or Gary Quesada at Cavanaugh & Quesada, PLC, 1027 S. Washington Ave., Suite A, Royal Oak, MI 48067, Tel: (248) 543-8320, Fax: (248) 543-8330 or visit our website -- www.MichiganConstructionLaw.com

New Bill Would Create "Commercial Real Estate Broker's Lien Act"

On May 14, 2008, Sen. Randy Richardville (R. Monroe) introduced S.B. 1313, which would create the "Commercial Real Estate Broker's Lien Act". The bill was reported out of committee on October 2, 2008.

The bill would do all of the following:

• Specify circumstances under which a commercial real estate broker's lien would attach to commercial real estate.
  

• Require a claim of lien to be recorded before conveyance unless the broker's commission was due in installments and at least one was due after conveyance.

• Provide for the recording and attachment of a lien in the case of a lease agreement, a broker's acting as a buyer's agent, or a commission owed on a purchase option.

• Specify information that would have to be included in a claim of lien.

• Provide that a prior-recorded lien or mortgage would have priority over a commercial real estate broker's lien.

• Require the establishment of an escrow account if a lien recorded under the proposed Act would prevent a closing transaction.

• Authorize a person claiming a commercial real estate broker's lien to bring an action to enforce it in circuit court.

• Allow an owner of commercial real estate to serve on a lien holder a demand to enforce the lien or answer a claim; and provide that the lien would be extinguished if the lien holder did not respond within 30 days.

• Specify that a lien under the Act would be available only to a licensed real estate broker.

A commercial real estate broker's lien would attach to commercial real estate in favor of a real estate broker if all of the following circumstances existed:

• The real estate broker had a written commission agreement.

• The broker was entitled to a commission under that agreement.

• The broker recorded a claim of lien before the actual conveyance of the commercial real estate.

To track the progress of S.B. 1313, click here. 

Update: S.B. 1313 died, but a similar bill was introduced on May 27, 2009, S.B. 610, that would also create a lien statute for commercial real estate brokers.  

On October 5, 2010, S.B. 610 was signed into law by Governor Granholm as PA 201 of 2010. The new law is effective immediately.

Detroit City Council Approves Upper Rouge CSO Tunnel, DWSD Contract PC-764

The Detroit Free Press reports -- "The Detroit City Council approved today on a 6-0 vote a $314 million portion of a $1 billion tunnel system to store sewage and storm runoff during heavy rain with the city up against a Sept. 28 deadline to act or face the loss of low-interest loans [as outlined in a September 24 letter from the MDEQ] that could have cost ratepayers an extra $100 million in interest on construction bonds and put the city in violation of its water pollution permit."

Click here for the rest of the story. Read Here for more information about the Upper Rouge CSO Tunnel project. Click here for a copy of the City's NPDES pollution permit.

SBA Suspends Applications for Small Disadvantage Business (SDB) Program

The Small Business Administration (SBA) announced yesterday that it is suspending the receipt of applications for the Government-wide small disadvantaged business (SDB) program effective September 22, 2008. The announcement was made through the Federal Register. The SBA will continue to process all applications received before that date to completion, unless an applicant withdraws its application.

AGC Legal Brief Highlights False Claims Act

The September 2008 issue of the AGC Legal Brief highlights the use of the False Claims Act (FCA) against contractors and subcontractors. The article, written by Attorney Patrick Facca, presents an overview of the FCA and outlines some of the risks associated with the statute. Mr. Facca notes that use of the FCA has been increasing on federal projects and federally funded project. Mr. Facca also includes information about proposed legislation (HB-4773), which would create a Michigan False Claims Act.

AGC Legal Brief is published by the AGC of Michigan's Legal Advisory Committee. Click here for the full text of Mr. Facca's article.

Panel to Consider Arbitration Post-Hall Street Associates

On October 6, 2008, the ABA's Section on Public Contracts is sponsoring a Panel Discussion concerning the Supreme Court's ruling in Hall Street Associates v Mattel, ___ U.S. ___ (2008) and its impact on arbitration in federal procurement cases. We first reported on the Hall Street decision here.

The panel includes:

• Donald P. Armadas, a former Judge at the ASBCA who now serves as an arbitrator and mediator;
• Judge Paul Williams, Chairman, Armed Services Board of Contract Appeals: and,
• Frederick J. Lees, Professor Emeritus, George Washington University School of Law.
  

The panel will discuss the limitations on judicial review of arbitration awards, and the ways in which arbitration can be made more time and cost efficient.

To participate in this event, or to obtain materials from the Public Contract Section website afterwards, click here.

New Article Outlines Laws and Programs Designed to Assist Service-Disabled Veteran-Owned Small Business in the Federal Marketplace

Korsak, "The Service-Disabled Veteran-Owned Small Business in the Federal Marketplace," The Army Lawyer, July 2008, pp. 45-58.

Written by Lieutenant Commander Theron R. Korsak, this article is meant to introduce agency heads, contracting officers, Judge Advocates, and veterans to the laws and programs designed to assist service-disabled veteran-owned small businesses (SDVOSB) in federal contracting.

The first section of the article summarizes the laws intended to assist service-disabled veteran-owned small businesses. Section two focuses on socio-economic programs and eligibility requirements. Section three is a review of common procedural issues affecting service-disabled veteran-owned businesses. Section four explores policy conflicts that may impact contract awards to a service-disabled veteran-owned small business. Section five summarizes the role that federal agencies, quasi-government organizations, and industries play to meet the 3% goal. The article concludes with recommendations to increase contract awards to service-disabled veteran-owned small businesses.

Click here for a full text copy of this article.
--
Note: Thanks to Jerry Walz at PubKLaw.com for the heads-up on this article. Jerry's PubKLaw-Digest is an excellent resource for those involved with federal procurement. This article is among many that Jerry includes in his "Papers of Interest" collection. Highly recommended!

Michigan Seller Disclosure Act (SDA): Innocent Misrepresentation Not a Claim under SDA Rules Michigan Court of Appeals

Holding that innocent misrepresentation is not a viable theory of liability under the Seller Disclosure Act (SDA) (MCL 565.951, et seq), the Michigan Court of Appeals recently reversed a judgment awarding Plaintiffs $86,813 in damages and costs and remanded the case for entry of a judgment in favor of the Defendant-Sellers. Roberts v Saffell, ___ Mich App ___ (2008) (Lawyers Weekly No. 07-67463 - 12 pages) (published opinion) (Markey, J., joined by Wilder, J.) (White, J., dissenting). On appeal from the Leelanau County Circuit Court; Rodgers, J.. Click here for the slip opinion.

In this case, Plaintiffs asserted that Defendants failed to disclose a termite infestation in the home they purchased from Defendants. Prior to trial, Plaintiffs successfully moved for dismissal of all claims, except one for innocent misrepresentation. This claim was based on Defendants' "No" answer on their Seller Disclosure Statement in response to the item "History of infestation, if any: (termites, carpenter ants, etc.)"

The Court of Appeals found nothing in the plain terms of the act requiring a transferor of property covered by the SDA "to exercise ordinary care to discover defects in the property being transferred." The act requires a transferor "to answer all items required by MCL 565.957 honestly, based on information actually known to the transferor at the time the SDS is completed." Apart from the SDS, the Legislature had not modified the rule of caveat emptor and its common law exceptions imposing liability for fraud.

A transferor cannot "be held liable for any errors, inaccuracies, or omissions in the SDS unless they were within his personal knowledge." Since liability for innocent misrepresentation can be imposed "without regard to whether the party making the representation knew it was false or was acting in good faith and because MCL 565.955(1) precludes imposition of liability on transferors who lack personal knowledge with respect to errors, inaccuracies, or omissions in an SDS, there is no liability for a disclosure made on an SDS under a theory of innocent misrepresentation."

VA Proposes New Rules to Increase Opportunities for Service-Disabled Veteran-Owned Small Business (SDVOSB)

Veterans Administration (VA), Federal Acquisition Regulations: Supporting Veteran-Owned and Service- Disabled Veteran-Owned Small Businesses, Proposed Rules, 73 Fed. Reg. 49141, August 20, 2008.

This proposed rule would implement portions of the Veterans Benefits, Health Care, and Information Technology Act of 2006 and Executive Order 13360, Providing Opportunities for Service-Disabled Veteran Businesses to Increase Their Federal Contracting and Subcontracting. The Public Law and Executive Order authorize the Department of Veterans Affairs (VA) to establish special methods for contracting with service-disabled veteran-owned small businesses (SDVOSBs) and veteran-owned small businesses (VOSBs).

Under this proposed rule, a VA contracting officer could restrict competition in contracting for SDVOSBs or VOSBs under certain conditions. Likewise, sole source contracts with SDVOSBs or VOSBs would be permitted under certain conditions. The proposed rule would implement these special acquisition methods as a change to the VA Acquisition Regulation (VAAR).

Dates: Comments on the proposed rule should be submitted on or before October 20, 2008 to be considered in the formulation of the final rule.

Note: Thanks to Jerry Walz at PubKLaw.com for the heads-up on this announcement. For those of you who are involved in public contracting, especially federal procurement, Jerry's PubKLaw-Digest is an excellent resource. For a modest annual cost, you receive a daily newsletter updating all aspects of procurement law, and recent decisions from the various boards of contract appeals, and federal district and circuit courts. Highly recommended!

Avoiding Home Foreclosure in Michigan

Gary Nitzkin, who blogs at Michigan Collection Law Blog, recently posted an important article outlining a number of ways that homeowners can avoid losing their homes to foreclosure.

Gary's suggestions include (a) asking your lender about a Home Retention Program, (b) talking directly with the lender's Loss Mitigation Department, (c) considering a Forbearance Agreement, a Loan Modification, deed in lieu of foreclosure or (d) negotiating a pre-foreclosure short sale. Gary notes that there may be significant tax consequences to any agreement with the lender that involves forgiveness of debt.

To read Gary Nitzkin's post in its entirety, follow this link.

AGC of Michigan Sponsors ConsensusDOCS Seminar

On Thursday, September 25, 2008, at 8:30 a.m., the AGC of Michigan will present ConsensusDOCS: A New United Voice for Construction Contracts at its office in Lansing. The session will run 8:30 a.m. - 11:30 a.m. and includes a continental breakfast and seminar materials. Thomas M. Keranen, Kerenan & Associates, P.C. will be the featured speaker.

A registration form for this seminar can be found here.