Effective Aug. 28, 2017, public entities in Missouri will no longer be permitted to require a project labor agreement (PLA) on a public works project. A PLA typically is signed by the contractor, subcontractor and trade labor unions and sets forth the terms and conditions affecting the employment of labor on a construction project covered by that agreement, including the requirement to utilize labor furnished by the signatory trade unions.
In a recent ruling, the U.S. Supreme Court sustained the well-established principle that the Federal Arbitration Act pre-empts state laws that specifically disfavor arbitration agreements.
In Kindred Nursing Centers, L.P. v. Clark, et al, 16-32 (May 15, 2017), the U.S. Supreme Court overruled a Kentucky Supreme Court decision not to enforce arbitration agreements between a nursing home and residents that had been signed by family members on behalf of the residents pursuant to powers of attorney. In the underlying case, two family members each held a power of attorney that designated the family member as an “attorney-in-fact” providing broad authority to manage the affairs of the residents. Notably, one power of attorney provided for the family member to institute legal proceedings and to enter into contracts, and the other power of attorney provided “full power” to the family member to transact, handle and dispose of all matters including entering into contracts. The family members used their powers of attorney on behalf of the residents to sign contracts with the nursing home that contained broad arbitration agreements.
An unpaid contractor’s best friend is often the mechanic’s lien statutes, which provide an avenue for the unpaid contractor to apply pressure to the owner or higher-tier contractor for payment. A mechanic’s lien will likely attract attention from the owner’s lenders and potentially motivate the owner to pay the contractor’s unpaid balance. Additionally, in Illinois, a mechanic’s lien can even allow the contractor to foreclose on the property if the lien is left unsatisfied.
How long should a party to a construction project retain its project documents after completion? The good news: not forever. The bad news: longer than expected.
After completion of a construction project, the likelihood of becoming a party to a lawsuit should lessen over time. Claims regarding such issues as non-payment, delay and scope of work disputes are typically raised and pursued soon after completion of the project. These types of claims are usually recognized by the claimant sometime during or after completion of construction and soon acted upon for economic reasons.
Many legal battles in the construction industry revolve around contract interpretation disputes. Care in contract drafting is a valuable way to avoid disputes.
A fundamental principle of contract interpretation is to ascertain and give effect to the parties’ objectively expressed intent. What a party was trying to say, without accurately expressing it, does not count. Contract terms are usually given their ordinary (i.e., dictionary) meaning unless the contract specially defines them or the industry has adopted a special meaning known to both parties.
Missouri law (R.S.Mo. 429.005.1, et seq.) grants general contractors, subcontractors, suppliers, and laborers the ability to assert a mechanic’s lien for labor and materials provided to a property, provided the lien is properly filed within six months of the last date of work (excluding warranty and corrective work).
A claimant’s ability to file a mechanic’s lien against an owner’s interest in leased property is often a complicated analysis. Missouri law provides that “any person who shall do or perform any work or labor upon land … for any building, erection, or improvements upon land … upon or by virtue of any contract with the owner or proprietor thereof, or his or her agent, trustee, contractor or subcontractor” shall have a lien upon the building, erection or improvements. R.S. Mo. § 429.010 (emphasis added).
Arbitration continues to be the chosen dispute resolution process for many in the construction industry. Generally, arbitration is considered an efficient and cost-effective way to resolve most typical construction disputes.
Selecting arbitration as the dispute resolution process requires a written agreement. Most often, the arbitration agreement is included among many terms and conditions in the contract for a project. It is typically much easier to negotiate terms of arbitration agreement before a dispute arises as opposed to afterward, when parties often disagree about everything. Therefore, for those who want to make the most of the arbitration process, some advance planning is necessary to draft and negotiate a tailored arbitration agreement to take maximum advantage of the benefits.
Missouri’s Public Prompt Payment Act was enacted in 1990, with its most recent modifications taking effect in 2014. The statute, R.S.Mo. § 34.057, has extensive requirements for owners, contractors, subcontractors and suppliers on public works projects in Missouri. For those in the construction industry, it is worth reviewing periodically to ensure that standard practices on public jobs are in compliance.
A statute went into effect Aug. 28, 2016, that adds Missouri to the list of states embracing design-build as an acceptable delivery method for public improvements.
Under the new statute, R.S. Mo. § 67.5060, design-build is an optional delivery method for: