Missouri Construction Contract decision: When a contract does not exist...

From our roving reporter Kate Whitby of Spencer Fane:

"The Missouri Court of Appeals handed down a new subcontractor vs. general contractor decision on June 24.  Subcontractor was hired to perform work on a project in Pennsylvania.  The subcontract incorporated by reference a "General Contract" which the subcontractor never received, or even reviewed.  A payment dispute developed, the subcontractor eventually filed suit in Missouri, and the general contractor convinced the trial court to dismiss based on a provision in the missing "General Contract" which chose Pennsylvania as the exclusive forum for lawsuits.  The subcontractor appealed, claiming that the "General Contract" presented by the general contractor was not the contract referenced by the subcontract. 

The appellate court agreed, finding that the document referred to in the subcontract did not, in fact, exist, and that the General Contractor could not prove what contract was intended to be incorporated into the subcontract.

The case is Livers Bronze, Inc. v. Turner Construction Company, Case No. WD68692.

Moral of the Story?  If a document is incorporated by reference into your contract, READ IT and GET A COPY.  "

New mechanic's lien case in Missouri.....failure to name a General Contractor does not merit dismissing the case!

General Contractor Is Not A Necessary Party
General Contractor's statutory duty to defend does not make it a necessary party to Subcontractor's mechanic's lien action. Such action requires Subcontractor's petition to name parties to the contract, which did not include General Contractor. Even if a necessary party were missing, the remedy is a motion to add the party, not dismiss the action. "Thus, in effect, the Court put the burden on the property owner, who always knows who the original contractor is, to join the general contractor as a party to an action for enforcement of a mechanic's lien." Denial of a motion to dismiss or for summary judgment is not subject to appeal unless its issues are "completely intertwined with the grant of summary judgment" for the opposing party.
Iowa Steel & Wire, et al., Appellant/Respondents v. Sheffield Steel Corporation, et al., Defendants, Ameristar Casino Kansas City, Respondent/Appellant. Missouri Court of Appeals Western District

Architects beware

A very unfortunate decision was handed down by a California court seeming creating a fiduciary duty between the owner and the architect (Lake Merritt Plaza v. Hellmuth Obata & Kassabaum).

Apparently the Court felt that the standard AIA contract enabled them to reach this conclusion and allowed the owner to be relieved from its responsibilities to investigate the job.

The owner was awarded $8,000,000.00.

Architects...hustle thee to thy attorney!

Withholding information from Insurer - "The Big Dig"

KUDOs to Deborah Griffin of Holland & Knight on the very interesting article she wrote on withholding privileged mediation materials from a builder's risk insurer.

According to the Massachusetts Superior Court in Modern Continental Construction Company, Inc. Zurich American Insurance, the Court ruled against the contractor's attempt to withhold production of materials from it's insurance carrier who undertaking its own investigation of claims arising from the construction project.

This case merits a discussion with your attorney on how to handle such an issue in your litigation case!

Engineers who want to tesify as an expert

A recent set of cases puts into confusion whether or not an engineer can testify in a state as  an expert where the engineer is NOT licensed in the state. The South Carolina Supreme Court refused to deny the testimony of the engineer, as did the Illinois Supreme Court while Alabama Supreme Court ruled the opposite way.

If you are an engineer and you want to testify, you should be licensed in the state where you are going to be called as an expert.....

Response to the FMLA case involving a diabetic

Stephen Wilson advanced this comment to one of my recent posting and agreed to allow me to forward his thoughts to you! They are as follows:

Dave . . .

"

I just finished reading today’s blog entry, and though I’m not an attorney, I must comment. I am a diabetic and with my wife a small business owner. On occasion I have suffered from low Blood Glucose levels (bottoming out). You see I KNOW I’m a diabetic and I take complete responsibility for my care. I carry a small tube of (tasty raspberry flavored) 100 mg glucose tablets in my car, have them in my desk draw, and carry one or two loose in my pocket when I’m out and about. They counter act a low in about a minute.

Most diabetic, all that I know for sure, understand and take responsibility for their disease as well by testing regularly, taking their meds, exercising, watching their diet, and seldom suffer any ill effects.

In the case of Collins v. U.S. Playing Card Co. the judge had his head up his fifth point of contact. The company hired Collins in good faith, no doubt carried him on their group insurance and had every right to expect Collins to take responsibility for his/her disease, test regularly, take his/her meds, exercise, and watch his/her diet.

Using FMLA was a legal dodge. Where Collins my employee, and I’m obviously sympathetic to the needs of diabetics, I’d can Collins as well!

This case smacks of the McDonald’s hot coffee in the lap judgment of some years back. This is just plain ludicrous!

Thanks for letting me sound off . . . I enjoy your blog and I refer the information I gather from it to our construction clients when appropriate. I just wish you’d post more often . . . talk about contracts, the value of change orders, why a good employee manual is critical in today’s construction environment, and why a commitment to professionalism is so important, etc.

   

Stephen Wilson

   Biz-comm, Inc."

   

   

Limitation of Liabilityl Provisions

A soil engineering firm was able to enforce a limitation of liability clause against an owner in conjunction with a commercial contract. In Fort Know Self Storage, Inc. vs. Western Technologies, Inc. (N.M. App., 2006), the Court ruled the anti-indemnity statute was not violated by this provision. In this case the provision had a $50,000 limitation. Why? Apparently the Court decided sum to be reasonable where the engineers were undertaking a discrete task for a low amount of compensation in light of the potential liability to the engineer.But remember this is a commercial case. I question whether or not this result would be achieved if a consumer was involved.

1st Amendment and Construction?

Here is an approach if you are the lowest bidder and you are not awarded a government job?

Well in Texas a Court allowed a contractor to sue under the 1st Amendment. Citing to retaliation lawsuits by fired employees, the Court ruled that a 1st Amendment lawsuit may lie even though the contractor had no commercial relationship with the city in question....allowing a claim by an independent contractor suit to go forward.

While the true lawsuit should lie elsewhere under state law, perhaps this is creating a new federal suit for contractors. Interesting.............the cases is called Oscar Renda Contracting, Inc. v. City of Lubbock (5th Cir., 2006).

Man, there has got to be something more to this than meets the eye????

Roofing company

A recent case in Texas indicates that the Magnuson-Moss Warranty Act applies to the roof shingling manufacturing business. You might say "So What?" Well a homeowner can expand his cause of action via another consumer protection device.....and in essence sue the contractor under a products liability cause of action for implied warranty.....better not install roof shingles in Texas?

Winding Up Your Business

A case that may be of importance in the next few years with the turning of the economy....an Illinois Court ruled that corporate officers who completed a job AFTER the corporation was dissolved did not incur liability for defective work. Apparently this case will hold up IF all the officers were doing related to wind up corporate affairs. As the Court ruled, "If we hold the officers liable for breach of warranty here, we will discourage corporate officers from taking any steps to fulfill corporate contractual duties while winding up corporate business".