Construction projects are all about deadlines–30 days, 60 days, 90 days…..You’re always calculating when you will start or complete your work during a project.
And, have you ever finished a project and when payment is slow, you want to know the deadline before your ability to file a payment bond or materialmen’s lien expires? Affidavits of Nonpayment, for example, must be filed within 60 days from the date of your Georgia lien waiver, but your construction lien must be filed within 90 days of the last day you were on the job.
Well, there’s no need to keep counting out on your fingers or searching for the calendar you keep misplacing–Cobb Law Group has created a calendar wheel for this very thing, and as a small thank you, we will drop one in the mail to you for FREE!! It’s so easy, just
1. “Like” Cobb Law Group on Facebook;
2. Leave a comment on the blog with a topic you would like for us to write about in a future blog article or tell us how you found us; and
3. E-mail us your mailing address firstname.lastname@example.org
No more scrambling around or being lazy about those deadlines–we use ours all the time!
Giveaway ends April 1, 2014
by Mark A. Cobb
Virginia Construction Lawyer, Christopher G. Hill, maintains the highly-regarded blog “Construction Law Musings”. He recently honored the Cobb Law Group by requesting that Mark Cobb write a guest post. Mark chose to write about some pending Georgia legislation which is based on a Virginia statue. Sen. Lindsey Tippins (R-Marietta) recently introduced S.B. 269 which, if passed, would give Georgia mechanics and materialmen’s liens priority over a deed to secure debt by requiring distributions from a foreclosure sale to first be used to satisfy the liens. The impact of this legislation has a tremendous benefit to Georgia lien claimants, and we urge our readers to contact their legislators to vote in favor of this bill. To learn more about this bill, please read Mark’s guest blog > >
by Mark A. Cobb
Welcome to the new year! It’s January and that means there are new-years resolutions being made in great abundance. Self-improvement is always a good idea, but January can also be used to break bad business habits and replace them with better practices. Thus, we hereby offers our New Year’s Resolutions for the construction industry:
- RESOLVE to have your construction contracts reviewed and revised to improve their enforceability, to properly shift risks, and better define a project’s scope
- Georgia General Contractors should RESOLVE to file proper Notices of Commencement on every construction project
- Third-tier subcontractors and suppliers should RESOLVE to timely send Notices to Contractors and Notices to Owners (NTOs)
- RESOLVE to use only Georgia’s statutory Interim Lien Waiver form and Final Lien Waiver form (they waive payment bond claims too!)
- RESOLVE to remember that if you wait more than 60 days from the date of a Georgia lien waiver, the lien waiver becomes unconditional which means that you cannot recover the money you are owed
- RESOLVE to work harder as today’s construction market place requires the best of each and every individual
- RESOLVE to give your construction attorney time to prepare and file your Georgia mechanics and materialmen’s liens
- Suppliers and materialmen should RESOLVE to update their credit applications and obtain more information which is useful to judgment collection
- Non-resident contractors working in Georgia should RESOLVE to register with the Georgia Department of Revenue and obtain their sales tax bond
- RESOLVE to purchase (and maintain!) all pertinent types of insurance including workers’ comp, general liability, an umbrella policy, automobile insurance, etc.
- RESOLVE to address issues on construction projects as soon as you become aware of them rather than letting a small issue snowball into a larger problem
- RESOLVE to pay your bills on time
- RESOLVE to submit accurate, signed pay apps
- RESOLVE to treat your employees and subordinates (well, everyone) the way that you want to be treated
- RESOLVE to implement (and maintain!) better bookkeeping & record keeping methods
- For plumbers (others?), RESOLVE to cover-up that plumber’s butt
- RESOLVE to implement technology to lower your cost and improve your efficiency
- RESOLVE to keep signed, daily construction logs
- RESOLVE to know your rights as a prime contractor, a specialty subcontractor, or as a material supplier
- Contractors and specialty sub-contractors should RESOLVE to promptly pay their subcontractors and suppliers after they receive payment
- RESOLVE to adopt a policy of integrity for every aspect of your business
- RESOLVE to become more active in any number of great contractor groups such as AGC (Associated General Contractors), ASA (American Subcontractors Association), or CSA (Construction Suppliers Association)
- RESOLVE to honor your business contracts
- RESOLVE to stop procrastinating
- RESOLVE to constantly strive to be your best
- RESOLVE to take a vacation and relax
- RESOLVE to improve the professionalism of the construction industry
by Mark A. Cobb
In its December 3, 2013 ruling, the U.S. Supreme Court took a very important stand in favor of subcontractors! For those of us watching Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, et al. closely, we were delighted to see that the Supreme Court upheld the laws of twenty-four states (which impacts every state) to limit the uses of forum-selection clauses in construction contracts.
What is a Forum Selection Clause? Forum selection clauses are very common in all types of contracts as they establish the jurisdiction where a dispute related to the contract will occur. In other words, for example, a California general contractor and a subcontractor from Alabama working on a project in Georgia might agree in their subcontract agreement that any and all disputes related to their contract will be resolved in Georgia as that is the project’s location. This makes sense as both parties were working in Georgia, the building in dispute is in Georgia, many of the witnesses were or are in Georgia, and it involves Georgia real estate.
Do Forum Selection Clauses in Construction Contracts Differ from Forum Selection Contracts in Other Business Agreements? Yes, and that’s the impact of this case. In the most general terms, forum selection clauses in commercial contracts tend to be enforceable. Construction contracts, however, have very significant public policy consideration as well as issues related to state and federal laws. Specifically, many states have enacted statutes which either void or make voidable forum selection clauses in construction contract. States have singled out construction contracts due to public policy related to the situs of the project among other reasons.
Why do Some States Limit the Terms of Forum Selection Clauses? Imagine in the example above regarding the California general contractor, that the contract selected California as the proper jurisdiction for all disputes. It might not be as fair for many reasons including California’s natural tendency to favor its citizens (in the case the general contractor); frequently, the general contractor has deeper pockets than the specialty subcontractor so to require the Alabama subcontractor to enforce its rights in California could be very expensive, the costs to fly witnesses located in the project’s location (Georgia) is time-consuming and expensive, and, frequently, subcontractors have limited opportunity to negotiate the terms of their contracts. Furthermore, and perhaps most importantly, the dispute would involve a construction site or building located in Georgia. Thus, many state legislatures have put limits onto the use of forum selection clauses in construction contracts.
What Happened in the Recent Case Decided by the Supreme Court? In Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas, a Virginia-based general contractor, Atlantic Marine, hired a subcontractor named J-Crew Management, Inc, a Texas corporation, to build a child care facility in Fort Hood, Texas. And, the subcontract between Atlantic Marine and J-Crew contained a forum-selection clause requiring that all disputes “shall be litigated in the Circuit Court for the City of Norfolk, Virginia, or the United States District Court for the Eastern District of Virginia, Norfolk Division.”
J-Crew, in turn, subcontracted some of its work to sub-subcontractors who were located in or near Fort Hood, Texas (very close to the project). All of J-Crew’s work was performed in Texas, and all of the sub-subcontractors work was performed in Texas. At the close of the project, however, J-Crew was owed almost $160,000 even though it had timely completed its work. In order to recover the amount due, J-Crew brought suit against the general contractor in Texas (in the federal district where the project was located). The general contractor, Atlantic Marine, citing the forum-selection clause contained in the construction subcontract, moved to dismiss or transfer J-Crew’s case to federal court in Virginia.
The Trial Court’s Decision: Because the project occurred solely in Texas, the claim arose in Texas, all of the participants had been in Texas, and most of the evidence concerning the claim was located in Texas, the trial court agreed with J-Crew and refused to transfer venue to Virginia. Furthermore, the Texas legislature had enacted a statute which states that construction contracts for improvements to real property located in Texas are “voidable by the party obligated by the contract to perform the construction” if the contract requires litigation in another state.
Federal Appeals Court Upholds State Law: In response to the trial court’s ruling, Atlantic Marine appealed to the Federal Court of Appeals to seek enforcement of the forum-selection clause, but the appeals court agreed with the trial court. Finally, Atlantic Marine appealed to the U.S. Supreme Court, which granted review. The Supreme Court heard oral arguments in the case in October and handed down their ruling this week.
Why The U.S. Supreme Court Upheld the Trial Court’s Decision: The Supreme Court recognized states rights in not overruling the Court of Appeals Decision. And, in fact, the Supreme Court’s holding states that when a federal court considers the forum for a case, “the court should not consider the parties’ private interests aside from those embodied in the forum-selection clause; it may consider only public interests.” By authorizing public policy as a part of a court’s decision to transfer or dismiss a case, the Supreme Court recognized state sovereignty as well as the need for public interest to enforce states laws.
Important Lessons for Subcontractors and Suppliers: Although Atlantic Marine did not render all forum selection clauses in construction contracts unenforceable, it does permit a balance between parties’ rights to contract and public policy. In addition, Atlantic Marine is a great reminder of the importance that even a seemingly insignificant subcontract term can hold in a construction contract. Frequently, forum-selection provisions are buried deep within the “boiler plate” terms of the construction contract; parties entering into contract must pay attention to each of these terms including the forum selection clauses.
Georgia construction attorney Mark Cobb has been asked to be a presenter at the construction law seminar, “CONTRACTOR SURVIVAL 101″, sponsored by the Associated General Contractors (AGC) of Georgia held on Wednesday, December 18, 2013 in Tifton, Georgia.
According to the AGC Georgia’s information brochure, “Construction firms are faced with difficult legal, accounting and insurance issues exacerbated by the shrinking markets and lower profit margins. AGC Georgia has assembled a team of experts in these fields to share professional experiences and answer your questions.”
The seminar is intended to assist construction professionals with some of the important legal and accounting needs faced by the industry. In addition to a question-and-answer session, the following five topics will be the central focus of this seminar:
- Common Sense Surety and Financial Risk Management
- Internal Controls and Best Practices for Contractors
- Tax Law Updates
- Georgia Lien Law
- Sound Practices for Prime Contractors to Implement When Working with Specialty Contractors
Mark Cobb is honored to be a part of this important, educational program and to be leading the discussion on Georgia Lien Law and Sound Practices for Prime Contractors to Implement. In doing so, Mark will be highlighting several important topics such as:
- Understanding Legal Rights
- Georgia’s Statutory Notice Scheme including Notices of Commencement, Notices to Contractors, and Notices to Owners
- Effectiveness and Forms for Interim and Final Lien Waivers and Releases
- Affidavits of Nonpayment
- Private Project Payment Bonds
- Bonding of Specialty Contractors
- Detailed Schedule of Values
- Language in Subcontracts
- Reports from Subcontractors and Suppliers
- Obtaining Proper Paper Work from Specialty Subcontractors
- Confirming Worker’s Compensation Insurance
Contractor Survival 101 is open to everyone, and there is a discount for AGC Georgia members. This educational construction law seminar begins at 10:00 a.m. and will finish at 3:00 p.m. (lunch is included in the registration price). To learn more about the speakers or topics or to download registration information, please view Upcoming Events on the AGC Georgia website by clicking here – - >
In addition, you may contact the Cobb Law Group directly for additional information. We look forward to seeing you there.
by Mark A. Cobb
A Georgia Court of Appeals recently published its opinion in Board of Regents of the University system of Georgia v. Brooks, and the holding impacts businesses providing janitorial and general maintenance on Georgia’s public buildings.
The Background Facts: The Plaintiffs’ employer entered into a maintenance and service contract with Georgia Southern University (“GSU”) which included the cleaning of rooms and the refinishing of floors. In order to secure the contract, the employer submitted a payment bond to GSU, and the employees began working on the campus. The employer, however, did not pay its employees; thus, the employees made a claim against the payment bond for payment of their past due wages. Upon further investigation, it was determined that the employer had forged the payment bond. Consequently, the employees became the plaintiffs in a lawsuit against the Board of Regents alleging that GSU owed a duty to the Plaintiffs to “obtain, confirm and [e]nsure the existence of a valid payment bond under O.C.G.A. §§ 13-10-62 and 13-20-63″ (which is often called “The Little Miller Act”).
GSU’s Argument: The Board of Regents denied all liability. Among its arguments, the Defendant argued that the suit was barred by the doctrine of sovereign immunity. More specifically, the Defendant argued that the claim was a tort claim based upon negligence, and, as such, the case was governed by the Georgia Tort Claims Act (and not by the payment bond requirements of the construction of public works projects of Title 13). Consequently, the Defendant argued that GSU was entitled to sovereign immunity from all tort suits, including this one, and that the doctrine of sovereign immunity extends to employees of the State of Georgia while acting within the scope of their official duties or employment.
The Court’s Ruling: Although the Plaintiffs insisted that O.C.G.A. §§ 13-10-62 and 13-10-63 required a payment bond for the Plaintiffs’ protection, the Georgia Court of Appeals found that the Plaintiff’s failed to demonstrate that these code sections were applicable in this specific instance. Since the requirement for a payment bond was not proven, then, the court reasoned, the doctrine of sovereign immunity applied.
When Are Payment Bonds Required on Georgia Public Works Projects? According to O.C.G.A. § 13-10-60, Payment bonds are required for “public works construction contracts with an estimated contract amount greater than $100,000.00.” Although the phrase “public works construction contracts” is not defined in Chapter 10 of Title 13, the Court of Appeals noted that the same phrase is defined in the statutory scheme governing local government public works construction (which is substantially similar to the statutory scheme governing public works owned by the State of Georgia). According to O.C.G.A. § 36-91-2(12), the term “public works construction” means “the building, altering, repairing, improving, demolishing of any public structure or building . … Such term does not include the routine operation, repair, or maintenance of existing structures, buildings, or real property.”
What is the Lesson for Subcontractors Working on Public Projects? In this case, Plaintiffs did not submit the entire GSU contract into the record, and the complaint and portions of the GSU contract which were included in the record show only that the contract was for maintenance and other services, such as cleaning services. Consequently, the Plaintiffs failed to establish that their contract was for public works construction and, accordingly, a payment bond was not required by law. Therefore, prior to bringing a suit against a payment bond, it is vital to determine whether or not a payment bond was required for a specific contract.
Are there Other Important Lessons from this Case? Yes! Since the original payment bond submitted by the Plaintiffs’ employer was forged, the Plaintiffs also argued that GSU had a duty to confirm the validity of the payment bond. The court also held that Plaintiffs failed to demonstrate the state’s duty to verify the accuracy of the payment bond and reminded us that when the Board of Regents takes a proper-form bond, it is “not required to make any further inquiry or investigation into the propriety of the information presented on the face of the payment bond.” It is incumbant upon the subcontractor or supplier to confirm the validity of the payment bond on which they work or supply materials.
Two days before Thanksgiving, the Cobb Law Group‘s founding partner, Mark Cobb and his editor submitted their final revisions for the new book on Subcontractor Law to be published by the American Bar Association (ABA) next spring.
As long-time readers of this blog recall, in early 2012, the ABA Forum on Construction law began working on the first national book to be published on the unique specialty area of subcontractor law, and Georgia subcontractor attorney Mark Cobb was chosen as a contributor. Mark was honored to be selected to participate in this project particularly since he is the only construction lawyer from Georgia working on this project.
Mark’s contributions to the book focused on payment issues faced by subcontractors on their projects. Topics range from preliminary contract terms, paid-if-paid and paid-then-paid terms, owner and general contractor breach as well as the remedies available to subcontractors including materialmen’s liens, subcontractor liens and payment bond claims. For more information on this exciting project, please click here – - >
Since the final document has been sent to the publisher, the subcontractor law book remains on schedule with an anticipated publication date of April 2014. It’s launch will likely coincide with the Annual Meeting of the ABA’s Forum on th Construction Industry. We will post continued updates regarding this useful new book as they become available.
The Construction Suppliers Association (CSA) is a trade association working for–and advocating on behalf of–independent material suppliers throughout Georgia and Alabama. According to its website, “The association serves as the voice of its members to state and federal government. CSA also provides a wide range of educational and cost-saving programs to businesses in the building materials industry.”
“Since the majority of our clients are construction suppliers, we thought that participating in a group such as the CSA would be a natural fit,” says Cobb Law Group’s founder Mark Cobb. “Almost daily, we prepare and file liens and payment bond claims throughout the state of Georgia; in addition we offer a full-range of legal services to our subcontractor and supplier clients including business law, contract review, construction collections, and construction litigation. We are hopeful that we will continue to build our practice and improve our skills by becoming a part of this great trade association.”
Since 1936, the Construction Suppliers Association has worked tirelessly to educate suppliers, to work for sound industry legislation and to improve the building supply economy. The construction lawyers at the Cobb Law Group look forward to working with the Association in each of these areas. According to Cobb, education is a great benefit to every material supplier. “For example,” he offers, “Georgia materialmen have advantageous lien rights in Georgia, but they must understand the complexities and be diligent in preserving and enforcing their rights.”
In fact, as readers of our blog already know, Mark Cobb is a contributor (the only Georgia construction lawyer!) to a new book to be published by the American Bar Association on Subcontractor Law. It will be the first book to be printed which focuses exclusively on this unique area of law. As one of the few subcontractor law and material supplier law attorneys in Georgia, Cobb understands the needs of the industry, and he welcomes opportunities such as those offered by the CSA to meet other industry professionals.
To learn more about the Construction Suppliers Association and its membership opportunities, please click here – - >
“This is a great opportunity to contribute to the next generation of leaders, business professionals, and attorneys,” said Cobb. In addition to having tremendous experience as a commercial and business lawyer, Cobb is also a successful businessman. Over the past ten years, Professor Cobb has built his law firm into one of the top construction law and business law firms in the State of Georgia. He has also served (and continues to serve) on multiple boards and frequently advises start-up businesses as well as established businesses struggling with growth opportunities in a downsized market.
For the Fall 2013 semester, Professor Cobb will be teaching in the Thomas University’s distinguished MBA program; in particular, Cobb will be teaching a class on “Leadership” to a group of Chinese students who participate in Thomas University’s MBA program associated with Jimei University, one of the key universities in Fujian Province, China. The students arrived in the program after completing their studies in engineering, law and business.
Cobb is excited to participate in this cross-cultural exchange. “Leadership is a fascinating subject, and we will explore this topic from many perspectives including recent scholarship, innovated leadership theories, and practical applications for improving the students’ own leadership abilities,” says Cobb. “Our course work will explore the complex phenomenon which exists between the leader and the followers in particular situations.”
Cobb credits his recent contribution to a new book (to be published by the American Bar Association in 2014 on Subcontractor Law) with his interest in teaching on the college and graduate school level. While researching and writing about national construction law issues, Cobb was reminded that the best lawyers balance practical client concerns with innovative, academic innovation. He is thrilled for the opportunity to combine his vast experience as a business and construction lawyer with a 21st century academic perspective.
Of course, Cobb’s first priority will be his students, however, he expects to grow and learn from the experience as well. “Our own growth must be continual–it benefits ourselves, our family’s and enriches our lives. More importantly, it helps us to grow and evolve with the ever-changing landscape of the modern business world, and this is very important for our clients,” says business professor Cobb.
Located in historic Thomasville, Georgia, Thomas University is a private, fully-accredited university offering a diverse curriculum. Currently, it offers 43 programs of study encompassing everything from healthcare professions, education, and business to arts, sciences, and human services. And, it is accredited by the Commission on Colleges of the Southern Association of Colleges and Schools (SACS) to award associate, bachelor and master degrees. For more information on Thomas University, please click here – - >
Huffington Post journalist, Radley Balko has written a very interesting article for the most recent issue of the American Bar Association’s ABA Journal regarding the evolution of America’s police from friendly public servants to pseudo-military; to read this article, please click here > >
If you would like to read more, the article’s author, Radley Balko, has written a book entitled Rise of the Warrior Cop: The Militarization of America’s Police Forces; if you are interested in reading this click on the following link.
Don’t forget to leave your comments regarding this interesting and important topic.