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Volume 7 - Number 22 | June 1, 2009

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  EDITOR'S NOTES | Issue 7-22
"Good fences make good neighbors." Despite Robert Frost's intent when he penned the adage, it is no guarantee. Consider this classic example given to law school students: A man decides to build a wall on his property and does what any good neighbor would do - he informs his next-door neighbor, who refrains from agreeing or disagreeing with the plan. Once the wall is up and both neighbors are benefitting from it, the man asks his neighbor to help pay for the wall. When the neighbor refuses, the man takes him to court and sues for compensation on the basis of quantum meruit. He argues that there was an implied agreement that the neighbor would help pay for the wall. The court will generally rule in favor of the man who built the wall. Why? Because the neighbor is receiving the benefit of something for which he has not paid. This week's first case is another lesson in quantum meruit, or fair value. The contractor fixed alignment flaws on a hydroelectric refurbishing project, but did not follow the contract's change order procedures when it engaged in the extra work. Even though the municipality received the benefit of the work, it was not required to pay the contractor because the court determined that the contract precluded the contractor's quantum meruit rights.

Also this week, we present cases on extended home office overhead costs and the justifications for a frivolous lien procedure.

If you haven't yet visited WPL Publishing's newest website, go to www.constructionadvisortoday.com. This week, editor Bruce Jervis writes about claims administration, a tedious, though necessary part of the construction process.
  CHANGE ORDER CLAUSE PRECLUDES “FAIR VALUE” RECOVERY
A contractor that fails to adhere to the changes clause in a municipal fixed-price contract cannot later use a quantum meruit argument to claim payment recovery for extra work performed.
  MARK-UPS ON EXTRA WORK COVERED EXTENDED OVERHEAD
Extended home office overhead costs are already covered in change order compensation on owner-caused delays, says a Pennsylvania court.
  FRIVOLOUS LIEN PROCEDURE WAS MISUSED
A Washington court spells out the requirements for implementing a frivolous lien procedure. The lien cannot be removed without a hearing if the matter involves a legitimate dispute.