Posts Tagged ‘Contractors’

I’ve Received Contractor Lawsuit. What Happens Next?

Builder Ripping Up A Contract Lawsuit

The project is either over or it is winding down, money and tensions are getting tight. Contractors know this scenario very well. The problem arises when a lawsuit is delivered because of the dispute. Many contractors do not know what to do once they receive a lawsuit. This post will outline the possibilities of what happens after the lawsuit is received.

Why Did I Receive A Lawsuit?

On a typical construction project, whether public or private, commercial or residential, there are typical players. These players include: the owner, general or prime contractor, subcontractors, laborers, suppliers and equipment lessors. All of these parties have the ability to file a lawsuit and/or receive a lawsuit, depending on the facts of the situation.

In actuality, you have received this lawsuit because of your involvement in the project and someone in this group has alleged that you are liable for some type of damage. This undoubtedly will be money damages. Other types of damages exist but courts like to compensate with money.

What Happens Once I Am Served With The Lawsuit

The clock starts running! No matter the jurisdiction, whether it be state or federal court or in Louisiana or another state, the time to respond to the lawsuit begins to run once service is made. Depending on the jurisdictions for which I am familiar you have anywhere from ten to sixty days to respond. The usual here in Louisiana is fifteen days from service in a state court, see La. C.C.P. 1001.

Many times if you contact an attorney they can get an extension of time for which to file and answer or other responsive pleadings. This is customary in our business.

Options With The Lawsuit

There are a few options that I see people do when they receive a lawsuit, some are advisable and others are inadvisable.

Hire An Attorney: The first, most logical and most advisable option is to contact your attorney and retain his services to defend you in the lawsuit. An attorney will know the landscape of the Court procedures and assure that you will be protected within the confines of the law. Attorneys are not miracle workers, but they have a number of strategic and tactical maneuvers which can be deployed to protect you or your company’s interests.

The flaw here is that lawyers are not cheap. A good lawyer will tell you whether the amount and nature of your dispute are worth fighting over. Many times its a better business choice to work out a deal and move on with making money.

Self-representation: I see this more and more these days. A person can always represent themselves in a court of law. The Fourteenth and Sixteenth Amendments have been interpreted through the years to allow individuals to represent themselves pro se in court. The key here is individuals representing themselves. A corporation or limited liability company is not an individual. They are juridical entities, which cannot be represented in court unless by an attorney.

Due to the fact that most smart business owners are some type of business entity, courts will not allow for self-representation. Self-representation can be advisable in some situations, but most of the time it is not.

Do nothing: This option is popular, but it is disfavored and inadvisable. When a party who is sued does nothing, the suing party can get a judgment by default. Once a judgment is rendered against the party who is sued, then bank accounts, garnishments and property are all options for a quick collection.

Instead of doing nothing, if you file and answer or other responsive pleading, the judicial process will take much longer and you have many other legal moves at your disposal.

Other options: – Informal negotiations or ADR clause are other options. Once you have been sued and within the time frame to answer, you and/or your company could engage in informal negotiations with the adversary. I always encourage my clients to work out a deal and move on. This can be with informal meetings or telephone calls. Its always smart to bring in an attorney to help here, even if not for the full lawsuit.

Finally, many construction contracts have some type of alternative dispute resolution (ADR) clause. Even with these clauses present an adversary may still file suit contrary to the contract. This can be done for a number of legitimate reasons. All you or your attorney have to do is enforce the ADR clause. This can be done informally or via formal court Motion.

Conclusion

Once a lawsuit is received by a party to a construction project, there are a number of options, as discussed above, which can be implemented. The key here is to do something and avoid a default judgment. Contacting an attorney for advice is a smart play, even if it is to decide which of the above methods is best for you.

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Posted in:     About Our Services, Construction Contracts, Litigation, Louisiana  /  Tags: , , , ,   /   Leave a comment

Louisiana Home Improvement Contractors License Requirements

English: Larose, LA, September 7, 2008 -- Loca...

Larose, LA, September 7, 2008 — (Photo credit: Wikipedia)

The Louisiana State Licensing Board for Contractors (LSLBC) is a very useful place for Louisiana contractors. I was recently reading up on the requirements for home improvement contractors. The LSLBC is a one stop shop for all things related to contractor licensing. It is a good place for both contractors and consumers. Contractors can find out information on commercial, residential, home improvement and mold remediation.

Qualifications for Home Improvement License

All home improvement contracts over five thousand dollars and up to seventy-five thousand dollars need to be in writing. In order to be considered a Home Improvement Contractor you must register with the LSLBC. The application is located at this link. This application is less formal than the Residential Contractor license application. The process is also more relaxed. Further, there is no test.

The contractor who is applying for the Home Improvement license needs to provide general liability insurance and show that the contractor or the registering entity is registered with the Louisiana Department of Revenue.

Of course there are fees associated with this filing but that is very expected. The LSLBC will deliver the certificate of registration to the applicant who has been approved. These certificates are non-transferable.

Persons Who Do Not Need the Home Improvement License

Generally there are persons and entities who do not need the protection of a Home Improvement License. If a homeowner physically performs work on his personal residence then he does not need to get this license, no matter the cost. This does not mean that the homeowner does not need to abide by local permitting rules and regulations.

A contractor can perform work without the Home Improvement license if the home improvement work has a “value” of less than seven thousand five hundred dollars ($7,500). Many times contractors try to circumvent the licensing requirement by making contracts for $7,500 or less when the work is really more than that. The LSLBC rule states that the value to the home must be less than $7,500. This is an objective standard.

Of course other contractors who have a better license do not need this one, such as commercial and residential contractors.

Other Aspects to Consider

Contractors who are getting licensed for the first time should consider contacting an attorney so that they can get protective language put in invoices, and properly drafted contracts. It is always smart to properly form an entity such as and Limited Liability Company (LLC) to protect personal assets. Other helpful documents include demand letters, lien waivers and filing of liens when payment is not received. Companies such as zlien.com are very good with helping contractors manage notice and lien compliance.

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Posted in:     Construction News, Licensing  /  Tags: ,   /   1 Comment

Louisiana State Licensing Board for Contractors (LSLBC)- Not To Be Taken Lightly

Senate Judiciary Committee Hearing

(Photo credit: Talk Radio News Service)

In recent weeks, I have seen a spike in the number of issues coming across my desk that directly involve the Louisiana State Licensing Board for Contractors (“LSLBC”). While every situation has its own idiosyncrasies, when you find yourself being called to appear before the LSLBC, chances are very good you have a licensing problem. Here at the Wolfe Law Group, we have posted about Louisiana licensing law numerous times and have counseled numerous clients regarding their particular license issue. However, we have not really gone beyond the procedural legalese and really explained why the LSLBC is not to be taken lightly.

What is the LSLBC?

For many contractors, the first experience they have with the LSLBC is when they receive a letter from the LSLBC notifying them of a hearing they must attend because they have been accused of violating one of the statutes under the LSLBC’s jurisdiction. I know, that statement is just full of things “legal.” However, it is essential to understanding what the LSLBC is and why it should be taken seriously.

The LSLBC is an arm of the state government. It is not a court. This explains why many people are a little surprised when they are called before the LSLBC for a “hearing.” Even though it is not a court, since it is an agency of the state, it has been granted all of the powers to regulate aspects of the construction industry in Louisiana. Most importantly, this includes the power to punish those who violate certain statutes, particularly with regard to licensing requirements. This was a point of concern for one client recently: if the LSLBC isn’t court, how can it have jurisdiction over my company and fine us? The simple answer: it has jurisdiction over your company because you did work in this state and this state says that it has jurisdiction over your company. It has been this way since 1956, when the legislature created the LSLBC as it exists today, along with all of the rules that the LSLBC is charged with enforcing. All of which can be found in Louisiana Revised Statute 37:2150 et seq.

Any person that performs construction work in the State of Louisiana is subject to these provisions, and any person or company that performs work in this state that is not licensed is subject to punishment. This is why it is so important for contractors (especially out-of-state contractors) to get licensed or certified before beginning work in Louisiana. If you do not, it is the LSLBC that will come calling.

Who is the LSLBC?

The ladies and gentlemen that make up the LSLBC generally have two things in common. First, they are appointed by the Governor to sit on the Board for terms up to six years. Second, they have experience working in the construction industry. These qualifications are important in understanding where the LSLBC is coming from when it exercises its agency powers. While ruminations regarding the appointed nature of a Board position are best reserved for other arenas of public discourse, it is incredibly important for contractors to understand that the LSLBC consists of people with actual construction experience. These are people that “know what you’re going through,” so to speak. They have an understanding of that difficult homeowner, or that fight to get paid. With the exception of two “at-large” positions, this experience is a requirement to sit on the LSLBC, which makes the system inherently more fair.

Of course, this is a difficult concept to explain to a person or business that is being accused, by the Board, of violating one of its rules. I would suggest, though, that it is better (and financially safer) to be governed by a group of colleagues from within your profession, as opposed to a group of people who are removed from, or unrelated to, the construction industry. The LSLBC will always be an institution that exists to safeguard the construction profession. While this will sometimes manifest itself in coming down hard on members of that profession, it will likely be a fair, educated, and even-handed determination. Regardless, though, while a good approach is to know who and what you are up against, a better approach is to avoid that confrontation.

I Have a Hearing – What Now?

Of course, the hope is that you will not be called before the LSLBC for any violation. Whether you are an in-state contractor or out-of-state contractor, hopefully you have already contacted an attorney to make sure your licenses and registrations are current, relevant and secured. If you haven’t – do so! This should avoid being called before the LSLBC for any licensing violation. Sometimes, though, it cannot be avoided (for example, when a homeowner files a complaint about workmanship). Regardless of the underlying complaint, should you find yourself holding that letter demanding your appearance, you should not hesitate in contacting an attorney. For one, the procedure during an LSLBC hearing is almost entirely different from what one would normally expects at a hearing.

You will be required to enter a “plea” before the proceedings begin (sounds like criminal court). You will be entitled to review the evidence compiled against you, but this review happens on the day you show up for the hearing. You might be questioned by an attorney for the Board, or be able to ask questions of the Board’s investigator. Sometimes you might be able to have a more informal discussion of your matter with the Board itself, or they might just see all the evidence and make a determination. Sometimes, you might not even need to show up if you  offer to settle the matter, in writing, beforehand. It is, however, almost a guarantee that you will be fined with at least the administrative fee of $500.00. To se a general outcome of 2012 cases, see here.

The moral of the story: agency hearings are a different kind of animal, which is more likely to throw people for a loop. Your best bet is to prepare yourself by preparing your best case. Even though the situation is more informal than a court proceeding, the question is the same: has there been a violation of some law. Who better to help navigate that course than a lawyer with experience in that field of law?

 

 

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Posted in:     Construction News, Licensing, Louisiana, Regulations  /  Tags: , , ,   /   2 Comments

Contractors Prepare: 2013 Hurricane Season

From his vantage point high above the earth in...

(Photo credit: Wikipedia)

Last week, the Office of the Attorney General issued a general letter from Attorney General Buddy Caldwell to the public regarding the 2013 hurricane season. Sometimes, for unfortunate reasons, this time of the year and leading into the late fall and early winter can see a spike in the need for contractors and subcontractors. More unfortunate still is that when we see this spike in demand, we sometimes read or hear about the negative, and instances of “contractor fraud.” Since Buddy has taken the time to inform the public about how to handle these situations, I thought it fitting to inform contractors how they can better prepare for the 2013 hurricane season, and avoid problems in their own right.

Keepin’ It Current

Louisiana has pretty strict guidelines for determining who is allowed to bid, contract and work on a project. The foundation of all that governs contractors in this state is the license. Long story short and in general: you need one (there are always exceptions, depending on the work being done). But I’m an attorney, so I can’t keep it that short. Whether you are an out-of-state contractor or an in-state contractor, in order to operate within the law, there are certain qualifications that must be met. One such necessity is being licensed by this state before even bidding on a project. In my experience, this isn’t usually a problem when people come to us here at the Wolfe Law Group. However, knowing that this license expires is just as important as knowing that you are licensed in the first place. As we enter into a potentially busy season, take the time to review your license. Is it a one-, two- or three-year license? When was it issued? Make sure you keep it current. Your license expires on the anniversary of the date on which it was originally issued. You only have 15 days from that expiration to renew your license without paying a penalty, or worse, being treated as a new applicant.

To all you new applicants out there: now is the time to begin the process of acquiring the proper licensing or registration if you have not already done so. As I said before, any hurricane season has the potential for a spike in business. However, acquiring a license isn’t a quick turnaround. Depending on your status, it could take anywhere from 4 to 10 weeks to get your license. During a time when competition could become rather fierce, this is a delay that could potentially kill your ability to turn a profit.

More important, though, is the need to avoid penalties, losses and lawsuits in the future. The last thing you want to do is go through the entire process and expense of completing a project to then have difficulties with the homeowner and you NOT be licensed. For example, if they decide to not pay you but you don’t have your license, you almost definitely do not have any lien rights under the Private Works Act. If they decide to report you and you don’t have a license, you risk exposure to civil and potentially criminal penalties. If they decide to sue you, well, you get the point. As we enter the 2013 hurricane season, the first item on your contractor preparedness checklist should be to make sure everything is current.

Keepin’ It Active

Less “do or die,” but in my opinion important, is maintaining an active status with the Secretary of State. You would be amazed at how many times a simple search on the Secretary of State’s website reveals that a company actively doing business in this state is actually listed as inactive or that its charter has been revoked by the Secretary. Why? Because people get sloppy. It takes almost no time and very little expense to maintain an active, good standing status with the State of Louisiana, yet people so often let this fall by the wayside. While it doesn’t necessarily impact one’s ability to work or provide services in the state, it could have ramifications if you’re sued by a disgruntled homeowner.

Remember, you are running a business. In so doing, there are certain guidelines and requirements that you need to follow depending on the type of business you are operating. Stay on top of it, or better still, have your lawyer stay on top of it for you. Let’s get back to that disgruntled homeowner from above. Say, the project is complete and, for whatever reason, they sue your company. You’re safe, though, personally right? Maybe. Have you been keeping up with those state requirements for your business? Have you been filing all the correct paperwork every year? Have you been maintaining your accounts correctly? Has your business been operating as a true business, or is it just a front for either yourself or another business? If you can’t answer yes to these questions, you have a problem and you might not be protected. An easy way to avoid this is to keep it active. Make sure you are consistently keeping records with the state and you consistently keep good records for your business. Don’t let the “business-y” end of your construction business lag, especially moving into a time when you could potentially become much busier than usual. If this isn’t your thing – hire that attorney to do it for you.

Keepin’ It Honest

The final note is just one of general good business practice. Keep it honest. When you start bidding and contracting, a lot of times you can avoid future headaches by just playing the game fairly. Of course, there will always be those difficult people you will encounter along the way. It’s amazing, though, how far someone can get (and how much trouble they can avoid) by developing an honest and trusting relationship with the people they are working with. Now is as good a time as any to make that a work mantra.

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Posted in:     Construction Contracts, Hurricane, Licensing, Regulations  /  Tags: , , , ,   /   1 Comment

Construction Insurance Rates Predicted To Increase

According to a recent Press Release from Marsh, a leader in insurance broking and risk management, construction firms across the U.S. will be facing new challenges in the upcoming year. Insurance rates have been declining for close to a decade, but rates are forecasted to increase between 8 and 10 percent. Firms with poor loss histories will receive higher rates, and some may not even be able to renew their policies.

This rise in rates is apparently the result of “soft market conditions” in recent years. Michael Anderson, Leader of Marsh’s U.S. Construction Practice, stated, “This comes against the backdrop of medical cost inflation and changes to some state statutes that have extended coverage beyond the insurers’ originally intended scope.” Mr. Anderson also goes on to explain that even with the increase in rates, the industry’s capital is still strong resulting in market conditions remaining competitive.

To read more about this Press Release and other interesting Construction Market Updatesclick here.

Contractors need to be sure to stay current on all insurance so that the contractor will limit its exposure when occurrences happen. Being insured is a major expense in all construction companies. That expense will be justified when a claim is made. Insurers seek to exclude or deny coverage, therefore a good attorney will be needed to fight back. Here at Wolfe Law Group, LLC we handle situations where we work with insurers to aid our clients and other situations where we fight insurers to get them to pay our clients what they are owed under the policy.

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