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Volume: 19, Issue: 13 - 07/15/2021

 

Most state mechanic’s lien statutes allow successful lien claimants to recover reasonable attorney fees incurred in the foreclosure of a lien. The foreclosure process is necessarily judicial; in today’s environment, however, the underlying determination of entitlement to payment may be made through some form of alternative dispute resolution. Are attorney fees incurred in those proceedings recoverable under a lien statute?

 

An Iowa appeals court recently answered this question in the affirmative. A subcontractor’s attorney fees incurred during binding arbitration of its payment dispute with the prime contractor were permissible. The reasoning was that without the subcontract’s arbitration clause, the question of entitlement to payment would have been before the court in the lien foreclosure action.

 

The other two cases in this issue involve default termination on a federal contract and enforcement of a payment bond clause in a subcontract in Florida. Read more.


 

An arbitration award in a subcontract dispute was integrally related to the subcontractor’s lien foreclosure suit. The trial court had discretion to award the sub attorney fees incurred during the arbitration proceeding pursuant to the state mechanic’s lien statute.


 

A terminated contractor failed to challenge a default within one year and could not later assert monetary claims that were premised on the assumption of wrongful termination. The contractor could, however, maintain claims for unpaid invoices for work completed prior to termination.

 

A subcontract stipulated a venue for suits, but a payment bond furnished by the prime contractor did not state a venue. The subcontractor sued the surety under the bond but did not name the prime contractor as a party or allege breach of the subcontract. The “venue selection” clause in the subcontract did not apply to the action against the bond.

Volume: 19, Issue: 12 - 06/30/2021

 

The first case this issue involves an unusual situation where a claim on a government contract was denied because the amount claimed was not separated into separate subtotals corresponding to the two separate entitlement issues expressed in the claim, and thusly did not meet the "sum certain" as defined in the Contract Disputes Act.  The second case this issue finds that a general contractor improperly withheld retainage on a subcontractor when the sub refused to perform additional work with a change order or by the sub's failure to provide an engineer's stamp, which was not required by the contract. Read more.


 

A contractor’s claim amalgamated delay during the design and construction phases of the project. While the claim stated a precise amount, it failed to apportion damages, or a “sum” certain, between two distinct events as required by the Contract Disputes Act. It was therefore dismissed for lack of jurisdiction.


 

A prime contractor did not have a good faith defense for its refusal to release subcontractor retainage. Extra work was not required without a written change order, and extra-contractual requirements could not be imposed on the subcontractor.


Volume: 19, Issue: 11 - 06/15/2021

 

Public works contracts usually require the contractor and its subcontractors to pay their workers the “prevailing” local wages, as determined by administrative labor officials. The federal Davis-Bacon Act was the prototype and most states followed suit. Elaborate statutory and regulatory enforcement structures stand behind these contract clauses. Two cases in this issue involve the ramifications of wage underpayment.

 

The third case in this issue involved a contractor’s loss of bonding capacity, which resulted in the default termination of a construction contract. Read more.


 

A contractor on federally funded construction contracts represented in its bids it would not use subcontractors and would pay its employees Davis-Bacon Act wages. The contractor awarded fixed-price subcontracts and treated subs as employees on certified payroll documents. The conviction of the two principals of the company for federal wire fraud was affirmed.


 

The Illinois Supreme Court has interpreted the state Prevailing Wage Act to provide underpaid laborers with a remedy against the contractor/employer only if the public works contract stipulated the applicable prevailing wages. The contract failed to do so. The laborers had only a lesser remedy against the public project owner.


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