Posts Tagged ‘Virginia’

Can I File A Mechanics Lien For This?

Lien laws vary from state-to-state, but across the country it’s a consistent principle that contractors and suppliers can only file mechanic’s liens for work they perform on a construction improvement project.

This begs the very important questions – what is a construction improvement project? And beyond that, what is a construction improvement?

With respect to Virginia’s law on the issue, the Virginia Real Estate, Land Use and Construction Law Blog just posted on this topic: The Line Between Furniture and Fixtures: What Constitutes An Improvement, Part II. The post quotes a recent federal civil case, Summit Community Bank v. Blue Ridge Shadows Hotel & Conference Center, LLC, whereby the judge distinguished between installed cabinets (which can be liened) and furniture delivered to the project (which cannot be liened) saying:

It is not sufficient for materials to simply add value to a building by their mere presence without any further connection to the building.

The law in Washington and Oregon is very similar to Virginia. In both of these states, claimants may lien for work they perform in the “improvement of real property” or work used “in the construction of any improvement.”

Louisiana’s lien law is a bit more unique in this regard, and perhaps the most unique in the nation. In Louisiana, claimants may file a lien whenever they perform services in connection with a “Work.” A “Work” is defined as follows by the statute (LA RS 9:4808):

A work is a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.

I once represented a claimant in a Louisiana action against it to remove a mechanics lien, whereby I submitted a memorandum to the court distinguishing “work” (little w” from “Work” required by the statute (big w). I quoted the 1985 Louisiana Fourth Circuit case Lake Forest, Inc. v. Crilot Co., et al (466 So.2d 61) wherein a subcontractor’s lien against a property for excavation work related to the operation of a sand pit was challenged.

Interesting about this case is that there was no building or “improvement,” but the lien was found valid because the work was considered a “Work,” with the court explaining as follows:

Although “improvement” language is used in this general statement, La. R.S. 9:4808 contains a broader wording. The definition of “work” as “a single continuous project for the improvement…or other physical change of an immovable…” appears to apply to this unique sand pit operation.

We conclude that this sand pit…was designed to improve Lake Forest’s property. At the very least the operation was for the “modification…or other physical change of an immovable.”

Summary

Here is a short summary of this post. It’s important to know what is and what is not an “improvement” to determine whether you can in fact file a construction lien for the work or materials you provided. It’s also important to answer that question within the context of the laws applicable to your project. Most of the stuff is black & white…but in some cases, there can be a little gray.

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

Posted in:     Filing Requirements  /  Tags: , , , , , , ,   /   Leave a comment

Christopher Hill Launches Great Resource for Virginia Mechanic Liens

Our friend at Construction Law Musings, Virginia construction attorney Christopher Hill, just add a really great resource to his top-notch construction law blog for those interested in construction liens.   A Mechanic’s Lien Page.

Before the lien page, Musings was already a great source of  information on Virginia lien laws.   The new page really organizes that data.

Here are a few of the articles you can find within the new section:

A Lien By Any Other Name Can Sound Just As Sweet (written by yours truly)

Q:  What can you lien?  A: What did you bring to the project?

Contracts, Liens and Notices

Enjoy.

(P.S. If you’re looking for information on Virginia’s lien scheme you can just check out the Virginia tag at the Construction Lien Blog.    It even includes a post by Chris Hill).

This article was originally posted on Express Lien’s topic-specific Construction Lien Blog.

Posted in:     From The Experts, Mechanics Lien  /  Tags: , , ,   /   1 Comment

Developer Ordered to Remove Chinese Drywall in Virginia

The Chinese Drywall saga and how it relates to builders shook up a bit in Virginia this week when the Chesapeake Board of Building Code Appeals ordered a developer to remove Chinese Drywall from a hotel that was days from opening.

While not an order from a Virginia court, the board’s action demonstrates that builders and developers may actually be committing code violations and breaching their duties to the construction project by installing Chinese Drywall – whether they’re aware of it, or not.

Aside from what this order says about builder exposure, what is perhaps more interesting here is that Chinese Drywall is still being used on construction projects in the U.S., as this  project was just nearing completion.

Developer Dilip Patel said the order will delay the hotel’s opening by at least six months.

Here are some of the legal questions this situation will present for the parties:

  • Whether or not there is a liquidated damages clause, is this excusable delay?  Or will Patel be liable for delay damages?
  • Is this going to be a change order, or will the developer be forced to swallow the added expense?
  • If the drywall was given the time to cause damage, it’s possible that Patel would have a claim against his insurer.    But what now?   No damage, no claim?

The Virginia board’s order is going to delay this project for six months and certainly cost more than one hundred thousand dollars.

It’s an outstanding order made upon the developer to remove materials that [individually] showed zero problems.  Indeed, the science is not yet clear about whether the drywall itself is always cause for concern, or whether only a segment of the imported drywall is problematic.  The science is further lacking in attributing the initiating cause for contamination to the drywall itself, or some sort of interaction with the drywall and its surrounding climate.

As far as the science was concerned, the board’s chairman, Stephens Johnson, stated that he didn’t “think [the developer] gave us enough data or information to override the codes or our concern for public health.”

We don’t have the board’s proceedings here at the Chinese Drywall Blog, and don’t know exactly what science and evidence was considered.   Nevertheless, the order is a stirring demonstration of how builders and developers are exposed to liability in the Chinese Drywall crisis.

Perhaps another call to individual land owners to seek remedy from their home builders, and not class actions?

For builders, let’s hope not.   For homeowners…we’ll see.

Posted in:     Chinese Drywall  /  Tags: , , , ,   /   Leave a comment

How Filing A Lien Can Be Helpful on a Bankrupt Project

Let’s face facts:  2009 has not been a great year for construction.

Contractors and Suppliers large and small are facing non-payment scenarios, and sometimes, while waiting for a prolonged payment some are getting feared news:  that the owner or general contractor is filing bankruptcy.

Christopher Hill, a construction attorney in Virginia, just this week published a short and easy-to-read article on JDSupra explaining how Virginia Mechanic’s Liens Survive Bankruptcy.   Mr. Hill summarizes his point with the following:

[I]n today’s climate, contractors should not feel that they are completely helpless in the bankruptcy fight.   Filing a mechanics lien…can put a contractor or subcontractor in as good a position as possible should the owner of a project file bankruptcy.

While the article regards the mechanics lien statutes in Virginia, many other states’ lien statutes operate the same way.

Generally speaking, mechanics lien statutes are written to protect those who contributed to construction projects.   Regardless of what errors in payment occur on a construction project, mechanics liens are the best tool for your company to protect its right to get paid.

But the right doesn’t last forever, and if you file incorrectly, the rules are uncompromising.

This post originally appeared on the Construction Lien Blog, published by Express Lien.

Posted in:     Mechanics Lien  /  Tags: , , , ,   /   1 Comment

Builders Starting To Tango with Chinese Drywall Claims

As the Chinese Drywall crisis unfolded over the last few months, news reports were abound of class action litigation against large drywall manufacturers, but it appeared that builders were getting a “free pass” on liability.

Unfortunately, but inevitably, it appears the tide is changing.

Recently, the shoe dropped for Lennar Co., who was arguably the most predominate home building company facing Chinese Drywall claims.  While Lennar Co. made every attempt to thwart litigation, suit was formally filed against them just last week, and they are now preparing a defense and examining applicable exclusions in their insurance policies.

However, large building outfits like Lennar Co. or South Kendall Construction Corp. are no longer alone as builder-defendants in Chinese Drywall claims.

Here are some examples from across the affected areas.

Flannigan v. Stafford Custom Homes, Inc.

Last week, a news station in North Carolina reported that a couple with Chinese Drywall had filed suit against their local builder:  Stafford Custom Homes, Inc.

The plaintiff’s counsel in that case, Joel R. Rhine of Lea Rhine Rosbrugh & Chleborowicz was kind enough to share a copy of that complaint with the Chinese Drywall Blog, and its available to read here.

The complaint asserts the following claims against the homebuilder…and importantly, the homebuilder alone:

  • Breach of Contract;
  • Breach of Implied Warranties;
  • Breach of Express Warranties;
  • Negligence;
  • Negligent Misrepresentation;
  • Unfair and Deceptive Trade Practices

As mentioned, the suit against Stafford Custom Homes, Inc. is between the homeowner and the homebuilder only, and the plaintiffs did not bring suit against the subcontractor installer, the drywall supplier or the drywall manufacturer.

It will be interesting to watch this action progress, and especially to see how Stafford Custom Homes, Inc. defends itself in the case.   Likely, a claim will be made against Stafford’s General Liability insurance policy, and an argument will ensue about the applicability of the pollution exclusion clause.

Further, the builder will be well-served to take a page out of the Lennar Co. defense book, and file suit against its supplier, installer and the drywall manufacturer.

The case is in Wake Count, North Carolina, and is captioned Flannigan v. Stafford Custom Homes, Inc., General Court of Justice Superior Court Division, No. 09CV006759.

We’ll monitor this case as it moves forward.

Pronto v. Venture Supply, LLC, et al.

In Virginia, another couple has brought a claim against their contractor individually, as opposed to a class action, suit.  While the news report breaking the story doesn’t mention the contractors name, the couple also brought suit against Venture Supply, L.L.C., who is the purported supplier of the drywall.

Like Stafford Custom Homes, Venture Supply, L.L.C. is a self-proclaimed “locally owned” company.

The couple in this suit – Benjamin and Holly Pronto – are seeking more than $600,000 in damages associated with the Chinese Drywall contamination.

The estimate of damages by the Prontos is a haunting wake-up call to builders who have unknown exposure to Chinese Drywall claims.

Builders Mutual Insurance Company v. The Dragas Co.

This is another case out of Virgina, but unique in that here an insurance company has sued its insured.

The insured, The Dragas Co., is a Virginia builder who has installed Chinese Drywall in Virginia homes.

According to the report in The Virginian-Pilot, Dragas’ insurance company has denied coverage for Chinese Drywall damages, and has filed suit in federal court asking a federal judge to declare who is responsible for the drywall damages.  Download the Complaint here.

Posted in:     Insurance  /  Tags: , , , , , , , , , , , , ,   /   1 Comment