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UPDATE: CSLB, Catching Illegal Contracting in the Act with “Eyes on Site” (Apr. 2, 2014)

California’s Contractors State License Board (CSLB) Statewide Investigative Fraud Team (SWIFT) team has reported that 121 individuals have been arrested in connection with simultaneous undercover sting operations conducted March 25-27, 2014, in 9California locations. SWIFT investigators partnered with a variety of local law enforcement agencies to conduct the stings, including law enforcement agencies in Bass Lake (Madera County), Clovis (Fresno County), Dana Point (Orange County), Hanford (Kings County), Palos Verdes Estates (Los Angeles County), Sacramento (Sacramento County), San Jose (Santa Clara County), Vista (San Diego County), and Woodland (Yolo County).

Of the 121 individuals arrested, 115 now may face misdemeanor charges for contracting without a license, which is prohibited by Bus. & Prof. Code § 7028. The penalty for a conviction is up to 6 months in jail and/or a fine of up to $5,000. Of those arrested, 94 may also be charged with illegal advertising in violation of Bus. & Prof. Code § 7027.1. Among other things, California law requires contractors to place their license number in all print, broadcast, and online advertisements. Those without a license are permitted to advertise to perform jobs valued at less than $500, but the ad must state that they are not a licensed contractor. The penalty for illegal advertising is a fine of $700 to $1,000. Other charges may include requesting an excessive down payment in violation of Bus. & Prof. Code § 7159.5. In California, unless exempt, a home improvement project down payment cannot exceed 10% of the contract total or $1,000, whichever is less. This misdemeanor charge carries a maximum penalty of 6 months in jail and/or up to a $5,000 fine. The CSLB further reported that the blitz totals may increase as some suspects are expected to provide their bids to undercover investigators via text, email or fax at a later date.

Additional Source: Fall California Licensing Blitz Stings 75; California Contractors State License Board

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Yesterday, Pillsbury attorney Joël Van Over  published his advisory titled Who Says Life’s Not Fair: Good Faith and Fair Dealing Prevails in Metcalf Case. The Advisory discusses the Federal Circuit’s highly anticipated decision in Metcalf Construction Company, Inc. v. United States, No. 2013-5041 (Fed. Cir. Feb. 11, 2014). The Federal Circuit ruled that a contractor suing the government for breaching the implied duty of “good faith and fair dealing” need not show that the government’s conduct was “specifically targeted” to reappropriate the contractor’s benefits under the subject contract except in limited circumstances present in the court’s 2010 decision in Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010). Rather, in Metcalf, the court reaffirmed the vitality of traditional standards used to prove a breach of the duty of good faith and fair dealing, such as where the government hindered or failed to cooperate with the contractor’s performance so as to “destroy the [contractor’s] reasonable expectations. . . regarding the fruits of the contract.”

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Instead of sexist catcalls, construction works yell: “I’d like to show you the respect you deserve!” “A woman’s place is where she chooses!” “You know what I’d like to see? A society in which the objectification of women makes way for gender-neutral interaction free from assumptions and expectations” in a real-world extension of Snickers’ “You’re not you when you’re hungry” campaign. Check out the YouTube video titled Aussie Builders surprise public with loud empowering statements.

Additional Resource: AdWeek, Construction Workers Yell Messages of Empowerment to Women in Snickers Stunt … So when you’re hungry, you’re not a creep?

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A Manhattan trial judge issued a series of decisions in the last few weeks in connection with a civil case stemming from the 91st Street crane collapse that occurred in May, 2008. The collapse received widespread media attention due to the deaths of two workers (including the crane operator), and subsequent criminal charges against a mechanic and the owner of New York Crane, James Lomma. The 91st Street collapse was just one in a series of tower crane accidents at the time, prompting the City to strengthen its crane safety laws.

The mechanic, Tibor Varganyi, pled guilty to negligent homicide in exchange for his testimony that Mr. Lomma had an important weld repair performed by an inexperienced company in China because he wanted to save money. However, Mr. Lomma was acquitted of serious charges including second-degree manslaughter after a lengthy bench trial.

In the civil case, the court granted summary judgment to an engineering firm (McLaren Engineering) that was hired by the New York City Buildings Department, because it was only contracted to inspect the tower mast upon which the crane rested. Although there were several theories as to the cause of the accident, including the failed weld and operator error, there was no claim that the tower mast had anything to do with the accident. Accordingly, the court dismissed the deceased workers’ claims against McLaren.

Earlier, on March 3, Justice Manual Mendez refused to dismiss welding contractor Brady Marine Repair Co., even though it did not work on the weld that caused the accident. Since Brady’s invoice stated that it would “test all welds” on the crane, Justice Mendez determined that a jury should decide the scope of work that it committed to perform.

The Construction Manager, DeMatteis Construction, also moved for summary judgment, claiming that its subcontractor, Sorbara Construction, was solely responsible for the selection, operation and maintenance of the crane, and that DeMatteis did not supervise or control Sorbara’s work. Justice Mendez similarly denied this motion, finding issues of fact as to whether DeMatteis was negligent. Various claims against Lomma and New York Crane, as well as Sorbara, will move forward.

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Yesterday, Pillsbury attorney Julia E. Judish and Maryelena Zaccardelli, Principal, MEZ Consulting, LLC, published their advisory titled Government Contractors Face Expanded Affirmative Action Requirements Regulations relate to veterans and individuals with disabilities discussing the Obama Administration’s Office of Federal Contract Compliance Programs’ expansive new regulations. The Advisory discusses, among other things, what the new regulations require, including that government contractors will be required to undertake greater efforts to employ veterans and individuals with disabilities.

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Today, Pillsbury attorneys Ken Taber and Teresa Lewi published their advisory titled Update: Amendments to New York City’s Paid Sick Leave Law Changes Effective April 1st Expand Obligations for Employers. The Advisory reports that New York City Mayor Bill de Blasio signed into law amendments to the Earned Sick Time Act that impose additional requirements on almost all private employers in the City, with enforcement set to begin on April 1st. It also discusses the new requirements.

Additional Sources: New York Employers Face Far-Reaching Employment Law Changes in 2014

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Today, Pillsbury attorneys Mark Jones and Matt Ryan posted their advisory titled Health Care Reform Update: Employers Must Begin Reporting Details of Health Coverage to IRS. The Advisory discusses the significant new reporting requirements applicable to employers providing self-insured group health coverage to their employees and to other, large and mid-size employers subject to the shared responsibility (or “Pay or Play”) rules under the Affordable Care Act. It further discusses recently finalized regulations that explain the requirements and provide certain employers with opportunities to reduce their reporting burden. The reporting regime will become effective on January 1, 2015, relying in part on data collected in 2014.

Additional Resources: IRS Releases Final Regulations on “Pay or Play” (Feb. 25, 2014); Health Care Reform Update: Large Employers Must Offer Health Coverage or Pay Assessment (Jan. 22, 2013)

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Last week, the U.S. Department of Energy announced that the U.S. Deputy Secretary of Energy Daniel Poneman, Colombia’s Minister of Energy and Mines Amylkar Acosta, Mayor of Santiago de Calí Rodrigo Guerrero, and Director of Planning of Colombia Tatyana Orozco have signed a Memorandum of Understanding (MOU) “to collaborate in the development of a Solar Decathlon Latin America and Caribbean competition.” Under the MOU, both countries will, among other things, “exchange information regarding rules, scoring, judging, safety, and site and team selection for a Solar Decathlon Latin America and Caribbean event.” It was further announced that the first Solar Decathlon Latin America and Caribbean is expected to take place in Santiago de Cali in late 2015. This marks the first step towards a Solar Decathlon competition in Latin America.

Since 2010, the U.S. Department of Energy has helped launch four international Solar Decathlon competitions, including two in Madrid, Spain in 2010 and 2012; one in Datong, China in 2013; and one planned for Versailles, France in July 2014.

Additional Sources: U.S. Solar Decathlon 2015: Teams Announced; 2014 Solar Decathlon Europe – Solar Home Stretch For Participants; Vienna University of Technology Shines at US Solar Decathlon 2013; Countdown to U.S. Department of Energy Solar Decathlon 2013 and XPO; Congratulations Solar Decathlon China 2013 Award Winners ; U.S. Department of Energy Solar Decathlon

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Today, Pillsbury attorneys Ray Sweigart and Jeff Kiburtz published their advisory titled An American Policyholder in London: English Choice of Law Clauses in United States Insurance Policies. The Advisory identifies a few of the issues on which English law is notably different from prevailing law in the United States and which ought to be taken into account when considering an English law and forum clause.

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UPDATE: Chief Executive Magazine, Best & Worst States for Business (May 2014) — In the 10th annual survey of CEOs, over 500 CEOs across the U.S. graded states with which they were familiar on a variety of measures, including the tax and regulatory regime, the quality of the workforce and the quality of the living environment. Texas continues its 10-year historical position as the best state overall.

Downtown Austin is buzzing with hotel construction and other development activities, as recently recognized by the New York Times in its article Austin, Tex., Stands Out in Hotel Recovery That Has Hugged Coasts (Oct. 1, 2013) and, more recently, the Austin Business Journal in its article Fairmont Austin Developer names general contractor; project appears on track (Mar. 18, 2014). austin.jpg

There are reportedly numerous hotel and other projects currently under construction and in the planning phase in downtown Austin.

The New York Times article highlighted hotel projects under construction and other projects in the pipeline:

“A $300 million JW Marriott hotel, the biggest JW Marriott in the country and the city’s biggest hotel at 1.2 million square feet, is under construction on a full block near the Capitol. Developers broke ground on a Westin over the summer and a $350 million Fairmont will be going up a few blocks away.

Eight hotels containing almost 4,000 rooms are scheduled to open across Austin within the next three years, making the Texas capital one of the most active markets in the country for new hotel construction.”

It noted that, although developers across the nation may be “skittish,” delaying new hotels “until the economy returns to health, and financing does, too,” in Austin, “developers aren’t that wary.”

In turn, the Austin Business Journal recently confirmed that developer Manchester Texas Financial Group LLC has announced that it has awarded Hunt Construction Group the $247 million construction contract for development of the Fairmont Austin downtown. It reported that “[t]he total value of the 47-story project to be built at Cesar Chavez and Red River streets is $370 million.” Characterizing Austin as a “robust hospitality market,” it confirmed that “[d]owntown Austin is buzzing with hotel construction activity.” It highlighted projects under construction and in the pipeline as well:

“In addition to the JW Marriott Austin, the Westin Downtown Austin also is under construction along with Hotel Van Zandt in the Rainey Street District. The status of construction of the proposed Hotel Zaza at 401 Guadalupe St. is unknown at this time. Several other boutique hotels have been announced, mostly around Rainey Street and in East Austin.”

Downtown Austin Alliance’s webpage identifies other planned and under construction projects:

  • Republic Square, Phase II – Planned
  • Travis County DA Office Building – Planned
  • Texas PTA – Planned
  • Holiday Inn Hotel – Mixed Use Project – Planned
  • New Travis County Civil & Family Courthouse – Planned
  • Texas Public Policy Foundation Office Building – Planned
  • Gables Republic Park/Hotel Zaza – Planned
  • Dell Medical School & Teaching Hospital At UT Austin – Planned
  • Mexic-Arte Museum – Planned
  • Waterloo Park Tower – Planned
  • Episcopal Church National Archives – Planned
  • Trinity Place – Planned
  • 416 Congress – Planned
  • 5th and Brazos – Planned
  • West Campus Apartments – Under Construction
  • Hyatt Ballroom and Parking Structure – Under Construction
  • Capitol Studios – Under Construction
  • Colorado Tower – Under Construction
  • Stubb’s Green Building – Under Construction
  • Waller Creek Flood Diversion Tunnel – Under Construction
  • IBC Bank Plaza – Under Construction
  • New Central Library – Under Construction

Additional Sources: Austin Business Journal, Hotel Van Zandt breaks ground on Rainey Street (Aug. 22, 2013)

Photo: Stuart Seeger, Austin Texas Lake Front – Creative Commons