The use of unlicensed trade subcontractors can be potent ammunition when a project owner asserts claims against a contractor for deficient work. How should this evidence be treated when the claimant attempts to use it to influence the fact finder?

A condominium association sued the builder of the project for defective construction. Statements indicating the unlicensed status of two key subcontractors were admitted into evidence during the jury trial. However, the trial judge refused to instruct the jury that the use of unlicensed subs was permissible.

The other case in this issue involves a written subcontract agreement that was never signed by either party. The contractor and subcontractor signed eight change orders, each of which referenced the unsigned subcontract. Was the arbitration clause in the subcontract binding on the parties?

While a state statute authorized the use of unlicensed subcontractors working under the supervision of a licensed contractor, a builder accused of deficient work was not entitled to a jury instruction to the effect that its use of unlicensed trade subs had been permissible.

Executed bilateral change orders incorporated the terms of an unsigned subcontract. Consequently, an arbitration clause in the subcontract agreement was binding on the parties.

The AIA General Conditions address the risk of casualty loss to property during construction. One of the parties agrees to maintain “all-risk” casualty insurance until completion and acceptance of the project. And, the parties agree to a reciprocal waiver of claims for damage “covered by property insurance,” which applies to subcontractors, employees, agents, etc., of each party. This leads to a question: When a casualty loss is less than the deductible amount of the policy, is the loss covered by property insurance?

The owner of a project in Indiana elected to carry property insurance with a very large deductible. A $1 million casualty loss, allegedly caused by subcontractors, was well within the deductible, so the insurance company made no payment. The subcontractors argued the loss had been “covered” because it resulted from a risk stipulated in the policy. The project owner and its prime contractor argued the waiver did not apply because the insurer made no payment for the loss.

The second case in this issue involved an alleged misrepresentation of custom fabricated windows. The project owner argued promotional material had represented crafting of individual items and testing for compliance with certain standard specifications. The supplier responded the language was merely “advertising puffery.”

The third case addressed delay damage claims disguised as change order requests. A New York court ruled the contractor could not use this device to avoid the consequences of an enforceable no-damages-for-delay clause.

Although the casualty loss to a project was below the deductible stipulated in the owner’s “all-risk” insurance policy, the project owner was the insurer of the deductible and the reciprocal waiver of claims in the AIA General Conditions applied.

A manufacturer did not violate a consumer fraud statute when it said its products were individually crafted. Nor did an industry certification suggest each custom product was independently tested.

A subcontractor could not avoid an enforceable no-damages-for-delay clause by disguising delay claims as change order requests. The construction manager’s alleged inept management could not constitute intentional or bad faith conduct.

State mechanic’s lien statutes usually invalidate lien filings that have exaggerated or overstated amounts. The language of these statutes varies, but it is implicit that there must be some wrong-doing on the part of the lien claimant. Some statutes expressly require fraudulent intent. That is the case with the Illinois statute.

An Illinois appellate court was faced with the question of whether a contractor’s duplicate billings were evidence of a fraudulent lien filing. In this case, they were. These were not mere misstatements of charges for work. They included billing for materials furnished to a separate project and for labor at two separate projects for the same employees during the exact same hours.

The second case in this issue involves an employee’s right to sue an employer for underpayment of wages mandated by a state prevailing wage statute. If testing and inspection services qualified as maintenance—and they did—was there standing for former employees as third-party beneficiaries of the contracts between their employer and the public works owners?

Double billings and charges for costs incurred on separate property were sufficient to support a finding of fraudulent intent in filing a mechanic’s lien.

Testing and inspection services were part of “maintenance” of public works facilities and therefore subject to a state prevailing wage law. The standing of former employees to sue as third-party beneficiaries of the public works contracts was an unsettled question of law that was referred to the state’s highest court.