GEORGIA CONSTRUCTION, BOND & LIEN LAW BLOG

by Mark Cobb

We are excited to report that earlier this week, Georgia’s Governor Nathan Deal signed HB 434 into law thereby amending our state’s lien statute to allow lien claimants to include the amount due and owing the lien claimant under the terms of an express or implied contract, subcontract, or purchase order as well as interest on the past due balance.   We’ve written more extensively about the 2013 amendment to Georgia’s lien laws, but we wanted to follow-up with our readers and let you know that the bill is now law.  Thank you Gov. Deal.

If you have any questions regarding the changes to our state’s lien laws or if you have any other questions regarding construction liens, payment bonds, Miller Act claims or construction contracting in Georgia, please contact the lawyers at the Cobb Law Group by email or call us at (866) 960-9539 today!

Did you hear?!

Last week, Georgia Governor Nathan Deal signed a proclamation naming May Georgia’s International Building Safety Month. This is a national campaign to help individuals and businesses understand what it takes to create and sustain safe and sustainable structures. The campaign reinforces the need for adoption of modern, model building codes, a strong and efficient system of code enforcement and a well-trained, professional workforce to build and maintain the system.   The materialmen lien law and construction bond lawyers at the Cobb Law Group salute Georgia’s International Building Safety Month!

by Mark Cobb

Every four years, the American Society of Civil Engineers (ASCE) produces a report evaluating the state of America’s infrastructure and grades them on a scale of A+ (great) to F- (lousy), and they recently released their 2013 report card.  Their report card covers 16 infrastructure categories and provides information on all 50 states in each of the 16 areas including bridges, drinking water, roads and schools.  Sadly, the cumulative national grade (or C.P.A.) was a D+.  Although this is abysmal, Georgia’s individual score was slightly higher coming in with a C-.

I don’t know about you, but my parents would not have been happy if I had come home with these grades!

Here’s a breakdown of the 16 categories showing the national performance and Georgia’s performance:

In addition to providing the overview of the infrastructure, the ASCE also pinpoints specific facts which led to the scores.  Here are some of the key facts relating to Georgia’s Infrastructure and our future construction possibilities:

• Dams:  Georgia’s dam safety program has 7.5 full-time employees that each oversee over 4,000 state regulated dams, 484 of which are considered his hazard dams;

• Drinking Water:  Georgia has reported that it has $8.9 billion in drinking water infrastructure improvements  needed in the next 20 years;

• Hazardous Waste:  Georgia has 15 sites on the National Priorities List;

• Wastewater: Georgia has reported that is needs $89 million in wastewater Infrastructure improvements;

• Bridges: Six percent (6 %) or 878 bridges in Georgia are considered structurally deficient; another 12.7 % or 1,871 bridges in Georgia are considered functionally obsolete;

• Roads: Nineteen percent (19 %) of Georgia’s roads are in poor or mediocre condition; in addition, driving on roads in need of repair costs Georgia motorists $374 million a year in extra vehicle repairs and operating costs which amounts up to $60 per motorist;

• Parks and Recreation:  Georgia has an unmet need of $123 million for its parks system; and

• Schools:  It is estimated that Georgia schools have $5.2 billion in infrastructure funding needs.

IS THERE ANY GOOD NEWS?!  If there is a silver lining to this report, it is the fact that our future depends upon financing and completely a lot of infrastructure improvements in Georgia which means, of course, there should be quite a bit of work for Georgia’s contractors and specialty contractors (and the suppliers to those jobs too!)  To see the full report and many more details, please click here; to read more details related to Georgia’s state report card, please click here.

Don’t forget to leave your comments about the state of our infrastructure below:

by Mark A. Cobb

(UPDATED MAY 9, 2013)  GOVERNOR SIGNED HB 434 INTO LAW; click here for more information!

We love sharing good news about pending changes to Georgia’s lien laws!  A couple of weeks ago, we published a blog post about Georgia 2013 HB 434 which allows Georgia lien claimants to include both general condition costs and accrued interest as a part of their lien claims.  At the time our blog entry was published, the Georgia House of Representatives had passed the amendment and the bill was being forwarded to the Senate.  Our long-time friend, Senator Jack Murphy sponsored the bill in the Georgia Senate, and, we are pleased to report, the bill passed the Senate unanimously.  Consequently, HB 434 has been forwarded to Governor Deal for consideration.  Thank you Georgia representatives and senators!

This vital legislation greatly impacts Georgia’s subcontractors and material suppliers.  In a recent court decision, a judge ruled that a lien claimant was not allowed to include the whole value of its contract in its lien; thus, for example, the lien claimant was potentially prohibited from included general condition costs, mobilization and demobilization costs, etc.  The proposed legislation of Georgia HB 434 attempts to rectify this potentially detrimental court holding by specifically amending Georgia’s lien statute to permit a claim of lien to include the amount due and owing the lien claimant under the terms of an express or implied contract, subcontract, or purchase order as well as interest on the past due balance.

To read the proposed change to Georgia’s Mechanics and Materialmen’s Lien Act found at O.C.G.A. Section 44-14-361, please click here.

The construction attorneys at the Cobb Law Group want to keep you up-to-date on all the laws and cases which affect your rights.  Please rely on us with any questions you may have regarding Georgia’s lien laws and payment bond claims.  Contact us here.

(UPDATED MAY 9, 2013)  GOVERNOR SIGNED HB 434 INTO LAW; click here for more information!

(UPDATED APRIL 10, 2013) TO SEE THE LATEST INFORMATION ON THE PENDING CHANGES TO GEORGIA’S LIEN LAWS, PLEASE SEE OUR FOLLOW-UP BLOG ENTRY BY CLICKING HERE.

As the current session of the Georgia legislature winds down, we want to send our kudos to Rep. Tom Weldon, Wendell Willard and Mike Jacobs for supporting HB 434 which attempts to amend Georgia’s Mechanic’s and Materialmen’s Lien Law.  The proposed amendment will allow Georgia’s contractors, specialty subcontractors and material suppliers to specifically include pre-judgment interest, General Condition Costs and other sums due under their contract as lienable items.  This proposed bill is in direct response to a recent court decision which negatively impacted construction professionals by excluding General Condition Costs as a lienable item in Georgia.

Specifically, HB 434 amends O.C.G.A. Section 44-14-361 to include the following specially crafted language for new subsection (c):

(c) Each special lien specified in subsection (a) of this Code section shall include:

(1) The amount due and owing the lien claimant under the terms of its contract, subcontract, or purchase order; or

(2) In the absence of a contract, subcontract, or purchase order, the unpaid value of the labor, materials, and services provided by the lien claimant for the improvement of the real estate. Such lien shall include interest on the principal amount due in accordance with applicable law.

To see a copy of HB 343, click here.  Currently, the bill is with the Senate Judiciary Committee.  We will keep you informed as this issue progresses.

by Mark A. Cobb

Our construction law colleagues at Kaplin Stewart maintain a very good Pennsylvania construction law blog, and a recent posting by them gives a very important warning to architects, engineers and builders who consider cutting corners to save money.  Apparently, an owner/designer of luxury house in Hollywood Hills, California has been charged with involuntary manslaughter after his house caught fire resulting in the death of a firefighter.  The builder’s negligent construction technique has been alleged as the proximate cause of the fireman’s tragic  death.

The home’s owner, who was also the designer and general contractor, was building the California house in order to shoot the television show “Germany’s Next Top Model”.  During the building process, however, he apparently (i) lied about his intentions to install fireplaces in his new home and, subsequently, (ii) used fireplaces designed exclusively for exterior use for his interior.  The misappropriated fireplaces, consequently, caused the fire, and, tragically, a fireman was killed trying to put out the inferno.

Los Angeles County prosecutors allege that “grossly negligent construction” led to the fire and the firefighter’s death.  Thus, they decided to prosecute the builder/owner.

The warnings conjured by these events are obvious, but they bear repeating.

First, defective construction can harm and even kill innocent people.  In this case, a brave firefighter’s life was lost unnecessarily, and this loss, no doubt, impacts the firefighter’s family and friends tremendously.  There are too many similar scenarios where defective building techniques have lead to collapses, cave-ins, fires, floods, and other calamities.

Second, efforts to cut-corners and save money at the beginning of a project frequently result in significant damages down the road.  In this case, the property has been destroyed, the shooting location of the tv series has been changed, and, the owner/builder faces serious criminal charges and the incumbent attorneys fees surrounding his defense.  In addition, the owner may face civil damages in the event that the fireman’s family pursues their own claim against him.

Third, products have individual and specific uses.  Do not misuse your construction materials.  Do not skimp on quality or quantity if you want to have a building with integrity.

Fourth, do not lie or mislead building inspectors.  Although many people quickly tire of government involvement and fees, the inspector’s job is ultimately to ensure safety and quality.  This is particularly important in historic states like Georgia.  We have many historic houses from the antebellum and Victorian eras, and, thankfully, there are many Georgia communities where these architectural treasures are cherished and restored.  There are times, however, when an inspector’s goal and a preservationist’s goal differ, and an inspector might be shown an allegedly completed project which, subsequently, gets changed after the inspector’s departure.  Be careful!  And, know that you might be liable for these subsequent alterations.

Please, build safely and responsibly.

by Mark Cobb

Last Friday, the U. S. Citizenship and Immigration Services (“USCIS”) published a new, updated Form I-9.  This new form can be used immediately, although some of the older forms will be accepted by the USCIS until May 7, 2013.  After May 7, all employers must use the new Form I-9.  If you need a copy of the new Form I-9, please click here.

For more information on this new form and employment eligibility verification in general, please click here.

The new form has greatly expanded the instructions for completing the form in order to address some of the frequently asked questions; in addition, the form has been expanded from 1 page to 2 pages to allow more spaces for the information and to make the form more user-friendly.

If you need assistance in completing the new Form I-9, please contact Mark Cobb, an experienced construction lawyer directly at 770-886-5890 ext.2 or by clicking here.

According to the website maintained by USCIS, “Form I-9 is used for verifying the identity and employment authorization of individuals hired for employment in the United States. All U.S. employers must ensure proper completion of Form I-9 for each individual they hire for employment in the United States. This includes citizens and noncitizens. Both employees and employers (or authorized representatives of the employer) must complete the form. On the form, an employee must attest to his or her employment authorization. The employee must also present his or her employer with acceptable documents evidencing identity and employment authorization. The employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and to relate to the employee and record the document information on the Form I-9. The list of acceptable documents can be found on the last page of the form. Employers must retain Form I-9 for a designated period and make it available for inspection by authorized government officers.

The Forum on Construction Law which is a part of the American Bar Association (ABA) is a very active group of construction lawyers, and Mark Cobb is proud is be an active participant in this great organization.  He is looking forward to next week, when the Construction Industry Forum will have its 2013 Midwinter Meeting with a focus on “Making Dollars and Sense of Construction Damages.”

It’s a wonderful opportunity to attend seminars and panel discussions related to construction law, to earn continuing legal education hours, to learn about the latest construction cases, to meet and visit with collogues from all over the county.  Some of the topics which Mark will hear include:

• Delay Damages
• Construction Contract Drafting to Reduce or Eliminate Damages
• Working with Damages Consultants
• Preparing the Damages Expert for Trial
• Graphics for Damages Presentations
• Direct and Cross Examination of the Damages Expert
• The Reality Behind the Theory of Lost Labor Productivity Claims
• Terminations for Convenience
• Green ConstructionProjects
• What to Do When Damages Aren’t Enough
• Ethics in Construction Law

In addition, there will be break-out sections for specific sub-groups of construction law professionals.  Mark actively participates in Division 9 which deals with issues related to specialty subcontractors, suppliers, mechanics and materialmen’s liens, and surety and payment bond claims.  At these break-out sessions, Mark looks forward to increasing his knowledge of emerging trends and the latest developments in lien and bond law.  In fact, it is through his work with Division 9 that he was asked to help write the forthcoming book on Subcontractor Law which will be published in 2014!

Mark is a Georgia lien and bond attorney, but the ABA Forum on Construction Industry is open to all lawyers, and Mark encourages your participation.  If you have ever attended a Forum meeting, then you know how educational they are.  Please leave a comment about your experience with the ABA Construction Law Forum meetings.

by Mark A. Cobb

A recent Georgia Court of Appeals holding may give some subcontractors and suppliers reason to rejoice.  In Pinnacle Props. V, LLC v. Mainline Supply of Atlanta, LLC, 735 S.E.2d 166 (Ga. Ct. App. 2012), the court held that a materialmen’s lien placed against a construction project on a development corporation’s real estate was valid and could be enforced.

Background: Mainline Supply of Atlanta, LLC, a construction material supplier, provided pipes, valves and similar materials for use on a construction project in Cobb County, Georgia.  This project was an office building being constructed by Pinnacle Properties on real estate owned by the Kennesaw Georgia Development Authority.  Originally, the real estate had been owned by Pinnacle Properties, but it was deeded to the Development Authority and leased back to Pinnacle Properties.  After the general contractor failed to pay Mainline Supply for its building materials, Mainline Supply filed a Georgia Mechanics and Materialmen’s Lien against the Pinnacle Properties project and the Kennesaw Development Authority.

The Development Authority’s Argument: Although the materialmen sued the development authority (along with Pinnacle Properties), the trial court found that the documents which the parties had signed transferring ownership of the real estate between them severed the ownership of the land and ownership in the building. Thus, the lower court determined that the local development corporation had no ownership interest in the building, but it held that the development authority held a fee simple interest in the land; conversely, the lower court held that Pinnacle Properties  held a usufruct (a license to use) in the land, but had “title” to the improvements.  Consequently, the Kennesaw Development Corporation was dismissed as a party.

The Material Supplier’s Argument:  It is well established that a materialman’s lien may attach to the interests of a “true owner,” that is, someone who has an estate or property interest in realty; but it will not attach to a usufruct, which does not convey an ownership interest and is not subject to levy and sale.  Thus, while Pinnacle Properties argued that its rights were a mere usufruct and not subject to a lien, the material supplier argued that Pinnacle Properties had title to the building.  Construction lawyers for the material supplier argued that the documents executed between Pinnacle Properties and the development authority severed ownership of the building from ownership of the land.

All of the parties conceded that, typically, any buildings placed upon the land of another–even if they are placed on the property by someone entitled to use the real estate–become part of the realty, and the title to the buildings becomes vested in the owner of the land.  However, the supplier argued, this rule may be altered by agreement, and, by looking at the land-exchange documents, the supplier argued that the parties clearly intended to create a special agreement wherein Pinnacle Properties would have a fee-simple interest in the improvements.

The Georgia Court of Appeals Holding: The Georgia Court of Appeals rejected both Pinnacle’s argument that its interest was a mere usufruct and Mainline Supply’s argument that Pinnacle retained a fee-simple interest in the improvements.  Nonetheless, the Court opined that an estate for years carries with it the right to use the property in as absolute a manner, and an estate for years may be subjected to the lien.  Thus, the Court held that, “Even if Pinnacle does not have title to the building on which the lien is claimed and title is in a third party not subject to the suit, this “will not bar an action for foreclosing the statutory lien of a materialman because if the defendant has any interest in the premises upon which the lien can take effect, that interest is bound. Every legal interest in real and personal property can be seized and sold.  Here, Pinnacle had an estate for years in the leased premises, and a materialman’s lien could attach to and be enforced against such interest, subject to the conditions of the lease.”

Summary:  Even if the building owner did not have title to the building on which the lien was claimed and title was in a third party not subject to the suit, this would not bar an action for foreclosing the statutory lien of a materialman because if the defendant had any interest in the premises upon which the lien can take effect, that interest was bound.

Georgia Claim of Lien Laws:  If you need to file a construction lien anywhere in the state of Georgia, it is vital that it be filed against the proper parties and that all of the deadlines and statutory requirements be met; thus, we encourage you to contact a qualified Georgia Materialmen’s Lien Attorney to help you with your claim of lien.  If you have any questions or have any lien claims or bond claims in Georgia, please feel free to contact us or leave your comments below!

The Cobb Law Group is pleased to announce that its founding member, Mark Cobb, has been selected to be a co-author of a book on Subcontractor Law to be published by the American Bar Association‘s (ABA)  Forum on the Construction Industry.  Mark is honored to be the only lawyer from Georgia who will be contributing to this scholarly book as his co-authors are a distinguished panel of construction lawyers from across the country.

The working title of the book is “Construction Subcontracting and Teaming”, and it is edited by three highly regarded construction attorneys: Aaron Silberman from California, Joe Kovars from Maryland, and Sheila Sayne from Oklahoma.  This book will be a significant resource for law students, attorneys, judges, business owners, credit managers as well as for construction professionals who need to understand their construction contract rights and obligations, defaults, remedies and other vital topics.  Currently, the book proposal includes 23 chapters including the following topics:

• Form Construction Contracts (such as AIA contracts and ConsensusDOCS);
• Subcontractor Contract Terms;
• Negotiation and Drafts Issues for Subcontractors and Suppliers;
• Scheduling and Performance;
• Mechanics and Materialmen’s Liens;
• Changes and Differing Site Conditions;
• Subcontractor Payment Issues;
• Contract Termination;
• Claims Against Prime Contractors;
• Claims Against Subcontractors;
• Warranties;
• Indemnification and Types of Liability;
• Labor and Safety Issues;
• Insurance, Builders Risk Insurance, and other types of Insurance;
• Surety Bonds including Payment Bonds and Performance Bonds;
• Specialty Contractor Licensure;
• Contract Disputes;
• Issues Unique to Residential Construction Projects;
• Public Projects (Federal, State and Local);
• Alternative Project Delivery and BIM Impacts on Subcontracting;
• Green Building Projects including Green Guarantees and Subcontractor Responsible Credits;
• Globalization and International Projects;
• Subconsulting Design Contracts;
• Supply Contract Issues; and
• Teaming Arrangements including Joint Venture Agreements and Letters of Intent.

This tremendous compilation of subcontractor law will be the first book published with specific focuses on subcontractor law.  Hopefully, its publication will increase knowledge and understanding in the construction law field.  It will concentrate on national construction law precedence, emerging trends, recent legislation, and specific issues important to every legal practitioner, subcontractor, credit manager, and supplier.

Mark Cobb and Florida construction lawyer Jim Dickson will be co-authoring a section of the book focusing on subcontractor payment and payment problems.  The duo intend to include a survey on payment issues faced by subcontractors including:

• Determination of Payments (Fixed Price, Unit Pricing Cost Plus Pricing);
• Conditions Precedent to Payment;
• Retention / Retainage;
• Impact of Liquidated Damages Clauses;
• Impact of Merger Clauses;
• Impact of Flow-Down Clauses;
• Joint Check Agreements;
• Cross-Default Construction Provisions;
• Alternative Dispute Resolution Clauses and their impact on Lien Laws;
• Mechanics and Materialmen Lien Statutes;
• Impact of Lender Mortgage Priority;
• Payment Bond Statutes;
• Prompt Payment Statutes;
• The Doctrine of Unjust Enrichment; and
• Equitable Liens.

“It’s terrific to be a part of such an esteemed group of nationally-recognized construction lawyers working together. ” says Mark.  “This is a long overdue, and much-needed resource on subcontractor law . We have been working on the book over six months; this process takes time and the anticipated publication date is spring 2014.  Thus, there will be a lot more work, research, writing, revising and editing to make the book the caliber it needs to be.”

The Cobb Law Group focuses its practice on representing specialty subcontractors and material suppliers throughout Georgia, and we’re confidence that our legal experience, knowledge and understanding of the issues affecting subcontractors and suppliers will benefit every lawyer and construction professional working in Georgia and throughout the country.  We look forward to keeping you up-to-date as the book’s progress continues.