Month: March 2015

Pre-contract Bond, Contract or Mechanic’s Lien Claim Waivers Nearing Statutory Extinction in Virginia

Virginia Governor McAuliffe proposed amendments on March 27, 2015 to Senate Bill 891S2 relating to lower tier claim rights, and their waiver.

First, he’s proposed adding a new provision in Title 11, dealing with contracts generally, to add a new code section, Code Section 11-4.1:1, to void pre-waivers of payment bond claims and contract claims executed prior to providing any labor, services, or materials.

Second, he’s proposed a similar pre-provision waiver of mechanic’s lien rights to Code Section 43-3 that further, similarly, voids any such pre-waivers executed prior to providing any labor, services or materials.

Click Here to view the current proposed amendments of the Governor.

Whether there is an intended distinction between the “in advance” and “prior to” language various used, as well as other interpretive aspects to the pre-waiver limitations, such as implications upon other contract payment terms, will remain to be seen if, as expected, the amendments are adopted to law.

Pre-contract Bond, Contract or Mechanic’s Lien Claim Waivers Nearing Statutory Extinction in Virginia

Virginia Governor McAuliffe proposed amendments on March 27, 2015 to Senate Bill 891S2 relating to lower tier claim rights, and their waiver.

First, he’s proposed adding a new provision in Title 11, dealing with contracts generally, to add a new code section, Code Section 11-4.1:1, to void pre-waivers of payment bond claims and contract claims executed prior to providing any labor, services, or materials.

Second, he’s proposed a similar pre-provision waiver of mechanic’s lien rights to Code Section 43-3 that further, similarly, voids any such pre-waivers executed prior to providing any labor, services or materials.

Click Here to view the current proposed amendments of the Governor.

Whether there is an intended distinction between the “in advance” and “prior to” language various used, as well as other interpretive aspects to the pre-waiver limitations, such as implications upon other contract payment terms, will remain to be seen if, as expected, the amendments are adopted to law.

New Executive Actions Relating to U.S. Immigration Law

On November 20, 2014, President Obama announced a series of executive actions to prioritize the deportation of felons rather than families and to modernize and improve immigrant and nonimmigrant visa programs.  The U.S. Citizenship and Immigration Services (USCIS) has indicated that they expect to implement some of these initiatives during the first part of 2015, with others taking longer.  Following is a summary of some of these initiatives:

  1. Expanding the population eligible for the Deferred Action for Childhood Arrivals (DACA) program to people of any current age who entered the United States before the age of 16; have lived in the United States continuously since January 1, 2012; and satisfy all other DACA requirements, including a criminal background check.  It is important to note that DACA does not offer a legal status; it is merely a deferral of deportation, though it possible to obtain temporary work authorization via this type of deferral.
  2. Offering deferred action for parents of U.S. citizens and lawful permanent residents who have lived in the United States continuously since January 1, 2010; had, on November 20, 2014, a son or daughter who is a U.S. citizen or legal permanent resident; and are not an enforcement priority for removal due to national security and public safety threats.
  3. Developing modernized programs to grow the U.S. economy and create jobs.  The primary goals include developing a method of allocating immigrant visas to maximize efficiency and use of all visas available; removing restrictions on natural career progression and general job mobility to provide relief for employment-based immigrants facing lengthy delays; authorizing parole into the United States for eligible inventors, researchers, and entrepreneurs who have been awarded substantial U.S. investor financing or hold the promise of innovation and job creation; and finalizing a rule to provide work authorization to the spouses of H-1B work visa holders who are on the path to lawful permanent resident status.The President has outlined several additional initiatives, though all of the details have not yet been finalized or released.  If you have questions about these programs or their requirements, you should contact the USCIS or an attorney who specializes in immigration law to discuss your individual circumstances.

Fourth Circuit Clarifies Federal False Claims Standards in January 2015 Majority Decision

Authored by attorney Neil Lowenstein

Last month the United States Court of Appeals for the Fourth Circuit (which has Federal Court appellate jurisdiction for Virginia, North Carolina, South Carolina, West Virginia, Maryland and the District of Columbia) clarified a number of aspects of Federal False Claim actions. The case is United States, et al. v. Triple Canopy, Inc., Nos. 13-2190 and 13-2191, decided January 8, 2015, and involves a whistleblower (“qui tam”)claim by an ex-employee of a security contractor, Triple Canopy, respecting Triple Canopy security service contracts with the Federal Government.

The whistleblower, a medic named Omar Badr, claimed that Triple Canopy had knowingly provided non-qualified guards, asked him to falsify related records, and then when he refused falsified them and invoiced for the non-conforming services. The Attorney General elected to intervene and proceed with the action after it was filed by Badr, and then filed an amended complaint alleging additional violations, and bringing several common law claims against Triple Canopy. The district court dismissed the False Claims Act claims and common law claims, as well as the whistleblower’s claims, and the appeal resulted.

Reviewing the district court’s decisions “de novo” (anew; the applicable review standard), the Fourth Circuit reversed several aspects of the district court’s decision, and in the process clarified the pleading (and proof) standards applicable to False Claims Act (“FCA”) actions. Particularly of note as being clarified by the court are the following:

  • Implied Certifications: The Fourth Circuit clarified that false claims include falsehoods by silence, and that such “implied” certifications (as opposed to affirmative representations) arise when the contractor’s silence infers the contractor has met contractual prerequisites for the Government action being induced (in that case, the prerequisites for payment). The court clarified that the silence must go to a “material” (as opposed to minor) contractual requirement though; in that case the non-qualification of the guards being held as material by the court.
  • Whistleblower as Plaintiff: The Fourth Circuit clarified that the whistleblower remains a proper party plaintiff claimant even after the Attorney General elects to intervene and proceed with the action. The district court had held that the whistleblower’s claims were superseded by the Government’s claims; but the Fourth Circuit reversed holding the whistleblower had the right to continue as a party in the action subject to the limitations in FCA Code Sec. 3730(c)(2); which the court noted the district court was free to consider on remand.
  • False Records Claim Basis: The Fourth Circuit clarified that the Government was not required to have actually reviewed or relied upon the false record to support a false records claim. The district court had focused on the actual effect of the false statement rather than its potential effect, but the Fourth Circuit held that – in appropriate circumstances – a record is false if it has the potential to influence Government payment; even if the Government ultimately did not review the record. Additionally, the court expressly declined to adopt the view that such implied representations can only give rise to FCA claims when the condition is expressly designated as a condition for payment; but that not every part of the contract can be assumed as a condition of payment – leaving the question of materiality for case by case analysis.

As part of its analysis, the court noted the importance of construing the FCA as a “strong remedy” when one was needed to confront fraud upon the government. While noting that its decisions in Triple Canopy might be “prone to abuse” by efforts to turn minor contractual violations into FCA claims, the court noted the FCA purposes overrode that concern and further noted the available remedies for any such “abusive litigation.”

How the Fourth Circuit’s decision in Triple Canopy expands FCA claims, and whistleblower actions in particular, remains to be seen; but it clearly seems to widen the door of FCA action-ability, and should serve as a caution to any Federal contractor respecting both what is said, and not said, to the Government throughout contractual performance.

Law Tips: Incorporation by Reference

Authored by attorney Dustin Paul

One of the most dangerous things a business can do is agree to contract terms that it has never read. Hidden in contracts may be a variety of provisions that could become expensive to a project or deal. Contracts may contain a forum selection clause requiring that suit be brought in another state. Contracts may contain a choice of law provision selecting the law of an unfavorable jurisdiction. A contract may waive your right to a jury trial. Or a contract may completely waive your business’s right to file a lawsuit, and instead force you to arbitration.

While there may be economic reasons to adopt any of these contractual terms, it is important a business intends to adopt these terms after consideration of their impact. But many businesses throughout the country are agreeing to these terms without ever reading them through a process called “incorporation by reference.”

Incorporation by reference is when one legal document adopts the terms of another legal document. And some businesses are using incorporation by reference to adopt their standard terms and conditions into contracts. Many businesses never provide a paper copy of their terms and conditions to their contractual partners. Instead, they include language in their invoices, contracts, or purchase orders that states that any transaction is subject to a business’s standard terms and conditions and identifies a website address where the terms can be read. Judges are increasingly enforcing these standard terms and conditions, especially where both parties are businesses. They are being enforced even where one of the parties has never read the incorporated terms.

A diligent business should review all the documentation related to a contract to ensure that its contractual partner has not attempted to incorporate unfavorable terms and conditions. If incorporation is attempted, a business should be prepared to negotiate changes or exceptions to the general terms and conditions. Otherwise a business may never know what it has agreed to until it is too late. A one-year warranty on workmanship is typical and acceptable but the Contractor should still attempt to establish definite commencement/end dates for all warranties and make sure that timely notice is required.

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