Archive:2012

1
Qui Tam Relators for False Claim Actions Must Plead Sufficient Details to Withstand Motions to Dismiss
2
Buyer Beware: New Jersey’s Appellate Division Confirms that Exclusion for Bodily Injury to “An Employee of Any Insured” Bars Coverage for Third-Party Over Claim Against Additional Insured
3
Violation of NY Lien Law Provision Does Not Discharge Surety’s Obligation Under Performance Bond
4
New Jersey Court Clarifies Trigger Dates for Statute of Repose in Construction Defect Actions
5
K&L Gates’ Arbitration World, March 2012
6
Green Building: Design and Construction Contract Issues
7
LLC Must Register as Contractor; Member Registration Not Sufficient
8
Idaho Supreme Court Upholds Damages Award For Architectural Services Rendered Without A Written Contract
9
Court Imposes Strict Liability Under NYC Excavation Ordinance
10
Violation of Building Permit Requirement Not a Basis for Criminal Liability Under NY Executive Law

Qui Tam Relators for False Claim Actions Must Plead Sufficient Details to Withstand Motions to Dismiss

U.S. v. Hooker Creek Asphalt, No. 6:08-cv-6307-HO, 2012 WL 913229 (D. Or. Mar. 16, 2012)

A qui tam action brought against contractors for alleged violation of the U.S. False Claims Act arising from a road construction contract was dismissed with prejudice.  The qui tam relator’s complaints (following a series of amendments and, with the court’s direction, the inclusion of additional necessary pleading elements) were found lacking as to personal knowledge and failed to provide the “who, what, when, where and how”.  The relator relied on “representative example type pleading” which lacked required particularity.  The court found that permission to allow further amended complaints would be futile.

Buyer Beware: New Jersey’s Appellate Division Confirms that Exclusion for Bodily Injury to “An Employee of Any Insured” Bars Coverage for Third-Party Over Claim Against Additional Insured

By: Frederic J. Giordano, K&L Gates, Newark

Parties who require additional insured coverage from their contractors usually expect the coverage to extend to third-party over claims, particularly with respect to bodily injury claims by employees of contractors.  Those with such contracts covered by New Jersey law, however, may want to take special notice of a recent ruling of the New Jersey Appellate Division, which suggests that their expectations may be frustrated unless they take particular care in reviewing the policies at issue.

To view the complete article, click here.

Violation of NY Lien Law Provision Does Not Discharge Surety’s Obligation Under Performance Bond

Mount Vernon City School Dist. v. Nova Cas. Co., 19 N.Y.3d 28 (N.Y. Ct. App. 2012)

On April 3, 2012, the New York Court of Appeals held that a compensated surety cannot rely on a violation of Article 3-A of the Lien law to discharge its obligations under a performance bond.  The Mount Vernon City School District (“Plaintiff”) hired a contractor who obtained a performance bond in Plaintiff’s name from Nova Casualty Company (“Nova”), a compensated surety, securing his obligation under the contract.  After he defaulted and Nova refused to pay additional funds to complete the project, Plaintiff sued Nova for breach of contract.  Nova moved for summary judgment claiming that Plaintiff violated Article 3-A of New York Lien Law when, per the contractor’s request, Plaintiff remitted $214,000 of his fee to the Department of Labor (“DOL”) thereby discharging Nova’s duty to perform.

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New Jersey Court Clarifies Trigger Dates for Statute of Repose in Construction Defect Actions

New Jersey v. Perini Corp., 425 N.J. Super. 62 (N.J. Super. Ct. App. Div. 2012),

In this case, a New Jersey appellate panel clarified the trigger date for the ten-year statute of repose for construction litigation, N.J.S.A. 2A:14-1.1.  The Court held that the statute of repose is triggered upon substantial completion of the project, however, the Court recognized that there can be separate trigger dates for subcontractors that have substantially completed all of their work on the project prior to the completion of the project as a whole.  For these subcontractors, the Court held that the statute of repose “runs from the completion of that contractor’s entire work on the ‘improvement,’ not from discrete tasks” performed by the subcontractor.  New Jersey, 2012 WL 1057939 at *6.

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K&L Gates’ Arbitration World, March 2012

Emerging Markets Special Edition

Welcome to the 18th edition of Arbitration World, a publication from K&L Gates’ Arbitration Group.  This special edition focuses on issues and recent developments in emerging markets.  We also include our usual round-up of news items in international commercial arbitration and investment treaty arbitration.

We hope you find this edition of Arbitration World of interest, and we welcome any
feedback (email ian.meredith@klgates.com or peter.morton@klgates.com).

In this issue:

  • News from around the World
  • World Investment Treaty Arbitration Update
  • Developments in Indian Arbitration
  • Harmonizing Arbitration in China with International Best Practice
  • Arbitration in Ukraine – Moving Forward
  • Recent Developments on Arbitrability in Russia
  • The Arbitration Landscape in Latin America

View the entire March 2012 edition here.

Green Building: Design and Construction Contract Issues

By Gregory R. Andre, K&L Gates, Chicago

“Green Buildings” feature energy efficient and environmentally friendly elements.  Governmental regulation, cost savings and public relations are driving the trend.  While architects, engineers, contractors and facilities managers focus on Green Building design, construction, equipment and operation issues, lawyers may wish to consider Green Building issues in the contracts entered into between the owner and the design and construction professionals.  This article addresses the special contract issues that may arise in connection with the design and construction of Green Buildings.

To read the full article, click here.

Reprinted with Permission. ©2012 CCH Incorporated. All rights reserved.

LLC Must Register as Contractor; Member Registration Not Sufficient

Stonebrook Constr. LLC v. Chase Home Fin., No. 37868, 2012 WL 1433471 (Idaho Apr. 26, 2012)

The Idaho Supreme Court made clear that a contractor entity cannot foreclose a lien unless it is a registered contractor; registration of an LLC member is not sufficient.  Here, Stonebrook performed construction services for homeowners who had given a deed of trust to Chase.  Homeowners did not pay Stonebrook, so Stonebrook placed a lien on the property and commenced a foreclosure action.  Chase moved to dismiss because, while one of Stonebrook’s members was a registered contractor, Stonebrook itself was not.  The Court affirmed the trial court’s dismissal of the lien claim, rejecting claims of substantial compliance and unreasonably harsh results.
 

Idaho Supreme Court Upholds Damages Award For Architectural Services Rendered Without A Written Contract

Farrell v. Whiteman, 152 Idaho 190, 268 P.3d 458 (2012)

Damien Farrell, an architect originally licensed only in Michigan, brought suit against developer, Kent Whiteman, for uncompensated architectural services rendered for Whiteman’s condominium project.  Whiteman counterclaimed, arguing that Farrell was not entitled to compensation because some of the services rendered were rendered before Farrell obtained his architectural license in the State of Idaho and because some of the services rendered were provided without a written contract.

The District Court found that an implied in fact contract existed between the parties and awarded Farrell damages on the theory of quantum meruit for services rendered after obtaining his Idaho license, and unjust enrichment damages for services rendered before obtaining his license. Whiteman appealed.

Upon review, the Supreme Court of Idaho upheld the district court’s decision, including consideration of the speed and quality of Farrell’s work, in determining the amount of damages to award under the quantum meruit theory.  The Court also awarded Farrell his attorney fees.

Court Imposes Strict Liability Under NYC Excavation Ordinance

Yenem Corp. v. 281 Broadway Holdings, 18 N.Y.3d 481 (N.Y. 2012)

On February 14, 2012 the New York Court of Appeals held that former Administrative Code of the City of New York § 27-1031(b)(1), a municipal ordinance (“the Ordinance”), triggers strict liability for defendants who cause damage to adjoining property through excavation work.

In Yenem Corp., Defendants purchased a lot adjacent to a building located at 287 Broadway and began a construction project requiring an excavation eighteen feet below street level.  As a result, 287 Broadway shifted out of plumb; eventually, the Department of Buildings deemed the building unsafe for occupancy.  The plaintiffs, the owner and a tenant of 287 Broadway, sued for damages resulting from the excavation and moved for summary judgment under the Ordinance, which states that “when an excavation is carried to a depth of more than ten feet below the legally established curb level the person who causes such excavation shall at all times and at his or her own expense, preserve and protect from injury adjoining structures”.

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Violation of Building Permit Requirement Not a Basis for Criminal Liability Under NY Executive Law

People of the State of New York v. Grimditch, 936 N.Y.S.2d 527 (Sup. Ct. Essex Co. 2012).

In a case of first impression, the Court in People v. Grimditch held that a contractor cannot be held liable under New York Executive Law § 382(2) solely for building without a permit.  The Defendant contractor had been constructing a boathouse on Lake Placid when the town building code enforcement officer issued a stop work order for failure to obtain a building permit under the state building code.  When Defendant contractor disobeyed the order by continuing construction, he was indicted by the Essex County District Attorney’s Office for violating Executive Law § 382(2), which provides that failure to follow an “order to remedy any condition found to exist in, on, or about any building” or knowingly violating an order by a local government regarding the “standards for construction, maintenance, or fire protection” will result in fines or imprisonment.  The Court held that the indictment was defective because building without a permit did not amount to a condition existing “in, on, or about” the building and therefore was not a violation of the express language of the statute.  The Court also held that the requirement of a building permit was not a “standard of construction or maintenance.”

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