Volume 6 - Number 48 | December 8, 2008 - Construction Claims Advisor

Recent Issues

EDITOR'S NOTES | Volume 6 - Number 48: In Shakespeare’s Romeo and Juliet, Juliet asked, “What’s in a name?” Though a rose by any other name might smell as sweet to Ms. Capulet, if you’re doing business, it pays to stick with one name (or at least know the correct name of that business). During a restaurant project, the contractor incorporated his business, changed the business name, and then filed for bankruptcy before launching a new business under a different name. The project owner got lost in the shuffle and could not collect on its $500,000 arbitration award for disputes related to the project.

A name change isn’t the only way to try to circumvent legal obligations. Borrowing a contractor’s license is another shady tactic. However, without a proper license, you may not be able to file a mechanic’s lien or pursue a claim against a contractor or owner for nonpayment, as one out-of-state subcontractor learned.

And finally, if you withhold payments from a contractor or subcontractor, it pays to have a good reason. Otherwise, you may end up on the losing end of a bad faith lawsuit. Do you have plans to attend Ecobuild America’s fall convention in Washington, D.C., this week? If so, be sure to register using Construction Claims Advisor’s discount code, WPLF8EKC. You’ll receive free admission to the exhibit hall and keynote addresses. Visit www.aecEcobuildFall.com for more information.

PROJECT OWNER UNABLE TO ENFORCE ARBITRATION AWARD DUE TO CORPORATE CONFUSION: Name and other legal changes to a business create difficulties for a project owner trying to collect payment of an arbitration award.

SUBCONTRACTOR WAS UNLICENSED BECAUSE ELECTRICIAN NEVER PERSONALLY SUPERVISED WORK: A subcontractor relies on a “rented” electrician’s license to perform work across state borders. However, because the electrician did not oversee the work, the unlicensed subcontractor cannot pursue a mechanic’s lien against the prime contractor for non-payment.

CONTRACTOR SANCTIONED FOR BAD FAITH ASSERTION OF SUBCONTRACT SET-OFFS: When a contractor cannot justify why it withheld payment from its subcontractor, the court may sanction the contractor for its actions.