LENDERS’ MORTGAGES FOUND TO HAVE PRIORITY OVER SUBCONTRACTORS’ LIENS DUE TO FLOW DOWN CLAUSE IN SUBCONTRACTS
Ohio’s Tenth Appellate District very recently decided a matter which continued Ohio’s history of broadly construing and freely enforcing flow down clauses. A “flow down clause” is a provision in a subcontract which incorporates duties and responsibilities of other contract documents and is often used to create obligations between a subcontractor and prime contractor which mirror the obligations already in existence between the prime contractor and the project owner. A common example would be an arbitration provision in a prime contract which is enforced against a subcontractor due to terms which merely acknowledges the other construction documents and affirms consent to be bound by them. Read More ›
Where You Sue can Hurt You: Ohio Appellate Courts Split on Ability to Appeal in Foreclosure Actions
The Ohio Court of Appeals issued a decision in 2012 that serves as a reminder to participants in the construction process and their counsel that the old adage of "location, location, location" can become very important in a lien foreclosure action. In U.S. Bank N.A. v. Mobile Associates National Network Systems, Inc., 195 Ohio App. 3d 699 (10th Dist. 2011) the court addressed the issue of whether a party could pursue an appeal of a trial court’s decision ordering the foreclosure on a parcel of property when, at the time of the appeal, the foreclosure sale had already occurred. While the decision was favorable for the property owner in Mobile, it may have faced a different outcome had the property been located in a different appellate district. Read More ›
Indiana Court of Appeals Rules Against Contractor and Performance Bond Surety on Contractor's Differing Site Conditions Claim
Earlier this year, the Indiana Court of Appeals issued an important opinion that impacts contractors and sureties alike. The decision should give contractors in Indiana pause before ceasing work while a dispute with the owner is pending. Sureties also have been placed on notice that strict compliance with the terms of their bonds is amongst their best defenses to claims made by owners and bond claimants. Read More ›
Kentucky Corrects Law That Previously Considered Private Construction Companies “Public Agencies”
Is a private construction company a “public agency”? Most people would respond in the negative. However, until April 2012, under Kentucky law, virtually all highway contractors and many vertical builders would be considered “public agencies” under Kentucky’s Open Records law. Read More ›
Construction Trades Find Protection in Shortened Statute of Limitations
On September 28, 2012, the Ohio Revised Code 2305.06 was amended to reduce the statute of limitations from 15 years to 8 years. In the past, a contracting party had 15 years to file suit for breach of a written contract. Read More ›
General Contractor Remains Liable for Property Safety Until Owner Accepts the Project
The Kentucky Court of Appeals held, in September 2012, that a general contractor is liable for unsafe lighting on a temporary walkway until the owner of the project accepts the work. At the request of a hospital owner, the general contractor built a pedestrian walkway from the hospital to an employee parking lot. The walkway impeded an existing stairway to the parking lot causing the contractor to construct a temporary stairway for employee use during construction efforts. A transition step or curb existed at the top of the stairway to the parking lot. The hospital owned the parking lot. The parking lot had permanent lighting fixtures. The general contractor also placed a temporary light fixture midway on the stairway. The temporary light fixture was connected or on the same schedule as the permanent lighting. An employee accessed the stairway at approximately 6:15 p.m. in late November at a time when none of the parking lot lights or the midpoint stairway light was functioning. The employee fell, suffering a severe shoulder injury, when she missed the transition step, claiming she could not see the transition step. Read More ›
FEDERAL CONTRACTORS COULD BE LIABLE UNDER FALSE CLAIMS ACT FOR “FRAUDLENT” UNDERBIDS OR “FALSE” ESTIMATES
A recent federal appellate court held that there may be situations in which a contractor’s intentionally low bid for a federal contract could give rise to liability under the False Claims Act (FCA). Read More ›
NEW FEDERAL POLICIES SEEK TO ACCELERATE PAYMENT TO SMALL BUSINESS SUBCONTRACTORS
The Office of Management and Budget recently issued a memorandum outlining a new Executive Branch policy to federal agencies encouraging them to ensure prime contractors are promptly paying their small business subcontractors. Specifically, the OMB indicated agencies should, to the full extent provided by law, temporarily accelerate payments to prime contractors “as soon as practicable” with a goal of issuing payment within fifteen days of receiving proper documentation (instead of the thirty days required by the Prompt Payment Act). This, in turn, will allow prime contractors to pay their small business subcontractors more quickly. Read More ›
Is Your Arbitration Clause Enforceable?
A recent court-of-appeals decision nicely summarizes the enforceability of arbitration clauses. In Crouse v. LaGrange Junction, Ltd., 2012 Ohio 2972 (June 29, 2012 9th Dist.) a homeowner sued a builder when a number of problems prevented legal occupation of a house. The home builder / defendant moved to stay the litigation pursuant to Ohio Revised Code section 2711.02, citing an arbitration clause in a construction contract. The trial court denied the motion to stay, agreeing with the homeowner that the arbitration clause was unenforceable due to substantive and procedural unconscionability. Read More ›
When Does a Claim on Funds / “Public Lien” Expire in Ohio?
Six years after the cause of action accrued, not six years after perfecting the lien, according the recent holding in Akron Concrete Corp. v. Medina City School Dist. Bd. of Edn. , 2012 Ohio 2971 (June 29, 2012 9th Dist.). An appellate court recently confirmed our long-held interpretation of Ohio lien law that public liens do not expire after six years. Read More ›
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Attorney Spotlight
C. Michael Shull, III focuses his practice on construction law and litigation. Michael's client representations range from casinos and ENR Top 400 contractors to design firms and subcontractors.