Month: July 2015

New Laws Affecting Construction: Part II

Authored by James Harvey

Last time we reviewed recent new laws impacting the validity of mechanic’s lien and bond waivers for subcontractors and suppliers before work is performed. This week, we take a look at the new law intended to correct a court decision that would have prohibited any contractor on a public procurement from even submitting a claim that exceeded 25% of the original contract value. The Public Procurement Act requires that for any contract modification or series of modifications that exceed 25% of the amount of the contract, or $50,000, whichever is greater, that approval must be made by the public body or the governor’s designee. HB 1628 was passed to clarify that this statute does not limit the amount a party may claim or recover against the public body through the Virginia Public Procurement Act’s claims and disputes process. While this change is a positive development for contractors, all should be aware that the contracting officer, purchasing department or public works manager may not have the authority to enter into any change order that exceeds 25% of the contract value. If the contractor proceeds, it does so at its own risk that the modification can be declared invalid.

Should you find yourself in a contract with an excessive amount of change orders, contact Vandeventer Black LLP to protect your rights.

READ: PART IPART III

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17 Vandeventer Black LLP Attorneys Selected as 2014 Legal Elite

Vandeventer Black LLP attorneys have been selected as Virginia’s Legal Elite.  Begun in collaboration with the Virginia Bar Association in 2000, this year 1,315 Virginia lawyers nominated 3,461 of their peers in 16 legal categories.

Attorneys from the law offices of Vandeventer Black LLP include: Christopher Ambrosio (Business Law); Anne Bibeau (Labor/Employment); Nash Bilisoly (Appellate Law); Mark Brennan (Health Law); Richard Crouch (Real Estate/Land Use); William Franczek (Alternative Dispute Resolution); Geoffrey Hemphill (Taxes/Estates/Trusts/Elder Law); Neil Lowenstein (Construction); Richard Ottinger (Legislative/Regulatory/Administrative); Dustin Paul (Young Lawyer – under 40); Michael Sterling (Construction); Jane Tucker (Intellectual Property).

“Vandeventer Black is proud of our history, our heritage, and having so many of our seasoned attorneys recognized as Virginia’s Legal Elite demonstrate our success in looking forward, continuing to do great work, and not resting on our laurels,” said Michael Sterling, Managing Partner.  “Any attorney will tell you there is no substitute for preparation. Preparing in every capacity is what we’ve been doing since 1883 and this constant effort is reflected in this honor.”

Lawyers are allowed to vote for attorneys in their own firms, but they also must vote for an equal numbers of attorneys outside their firm.  “Outside” votes are scored higher than “inside” votes in arriving at a final score for any nominee. This year marks the 15th edition of the Legal Elite in Virginia Business.

New Laws Affecting Construction: Part I

Authored by attorney James Harvey

The General Assembly was unusually busy this year in passing legislation that impacts construction and government contracts in Virginia.  This is part 1 of 3 on these new laws every contractor should know:

Mechanic’s Liens and Bond Waivers
Senate Bill 891 changes Virginia law and now prohibits any attempt to have a subcontractor or supplier waive or diminish its payment bond claim rights or right to assert contractual claims for demonstrated additional costs prior to providing any labor, services, or materials.  This makes agreements at the outset of the work that waive a subcontractor’s right to file mechanic’s liens or bond claims unenforceable.  Importantly, this same protection is NOT afforded to general contractors.  General contractors need to take precautions in their contracts with owners not to waive such rights when they cannot pass that waiver onto their subcontractors and suppliers. This also raises questions as to the enforceability of other common contractual limitations on subcontractor lien and claim rights such as “no damage for delay” clauses.

While the intent of the legislation was undoubtedly to level the playing field for subcontractors and suppliers, this new law will raise many new questions.  Consult with Vandeventer Black LLP before signing your next contract!

READ: PART II, PART III

EDVA Win for Two Vandeventer Black Litigators

In a recent Federal maritime case in the United States District Court for the Eastern District of Virginia, Norfolk-based litigators Richard Ottinger and Dustin Paul won a summary judgment defense verdict for their client. This is one of only a handful of opinions that has ever applied the qualified immunity doctrine to a negligence action under maritime law.

The suit alleged that a training instructor leading a tactical boating course for Virginia law enforcement officials was negligent in his instruction. While another student was at the vessel’s helm, the complaint alleged the operator improperly executed a maneuver causing the vessel to “catch a chine,” the vessel stopped abruptly, and threw the plaintiff against the vessel causing her a variety of injuries. The suit sought to hold the instructor liable for the accident.

While the training was sponsored by a non-profit boating association, the instructor was an employee of the State of Louisiana. He was participating in the training under directions from his superior at the Louisiana Department of Wildlife and Fisheries. The state was paying the instructor to lead the training, and the association was covering his lodging and food expenses.

The Court entered summary judgment in favor of the instructor on a defense of qualified immunity. Qualified immunity shields government officials from liability for discretionary actions taken as part of their official duties. The Court granted the Motion finding the instructor to be immune from suit given that he not violated a clearly established constitutional or statutory right of the plaintiff.

Richard and Dustin are part of Vandeventer Black’s Maritime and Admiralty Law Department and represent domestic and international interests in virtually all areas of marine law. The Department offers one of the most diverse ranges of maritime-related legal services in the country and has the depth and experience to handle the full spectrum of maritime legal issues that arise. The team has extensive trial experience in federal courts on the U.S. East and Gulf Coasts, as well as Virginia state courts.

Vandeventer Black Litigator Receives Prestigious Peer Rating

Norfolk, VA. (July 16, 2015) – Vandeventer Black LLP’s Anne G. Bibeau has received an AV Preeminent® Peer-Review Rating(Litigation, Labor and Employment, and Insurance) from Martindale-Hubbell®, the legal profession’s most prestigious rating service.

Bibeau works from Vandeventer Black’s office in Downtown Norfolk, and is a partner in the firm’s Labor Department. Bibeau focuses her practice on Labor & Employment Law, General Litigation, and Tax Litigation. She represents clients before federal, bankruptcy, and state courts, arbitrators/mediators, and administrative agencies, including the EEOC and NLRB. She advises clients on sexual harassment, workplace investigations, the Family and Medical Leave Act, disability law, labor relations, and other labor and employment law matters.

The Martindale-Hubbell® AV Preeminent® rating is the highest possible rating for an attorney for both ethical standards and legal ability. The “AV” designation represents the pinnacle of professional excellence, and is achieved only after an attorney has been reviewed and recommended by his/her peers, including members of the bar and the judiciary.

Department of Justice Releases Cyber Security Best Practices

Authored by summer associate Paul Hawkins

Cyber security is a hot topic in today’s news cycle. Whether it was the much-publicized Sony hack, or the very recent compromise of enormous amounts of highly sensitive U.S. government information, these types of incidents have been shown to be extremely costly to organizations. Today, private companies, large and small, cannot afford to fail to take the proper precautions in securing their own networks. A cyber attack can expose trade secrets, business strategies, and employees’ personally identifiable information. These attacks can lead to public embarrassment, lost profits, and litigation.

Preparedness is well over half the battle. The U.S. Department of Justice has provided a quick and accessible guide to both protecting your organization from attack, and responding to a network breach.

Below are some highlights of the D.O.J.’s recommendations:

  • Be prepared beforehand. Identify your most important and sensitive information and take the appropriate steps to protect it by ensuring that the technology in use is up-to-date, and that the appropriate authorizations are in place for network monitoring.
  • Develop a response plan in case a cyber attack does occur. This plan should contain actions to mitigate damage, collect and preserve evidence, and notify officials as well as customers and employees.
  • Build relationships with law enforcement, legal counsel, and private security groups before a network attack ever occurs.
  • Ensure you employ legal counsel who is well-versed in the many laws that are related to this area and has a working knowledge of cyber issues.
  • Follow procedures closely when a cyber attack occurs to ensure damage to your network is contained—do not use affected systems or seek retaliation.
  • Take advantage of the Cyber Incident Response Preparedness checklist that is included in this guide.

These suggestions are only that—suggestions. However, as most businesses, regardless of size, move more and more to paperless record-keeping, cloud computing, and other digital means to carry out their operations, it behooves leaders to take the initiative and use all information at their disposal to get out in front of the hackers and corporate spies.

Multinationals in Kristiansand – Mobilizing for the Future

Norway is becoming an important trading partner for the United States. (Norway is the 5th fastest growing source of FDI into the US according to the US Bureau of Economic Analysis.)  Vandeventer Black’s Katharina B. Powers recently visited Norway to meet with Norwegian and US companies. On May 21st the City of Kristiansand, Norway, in cooperation with the American Chamber of Commerce / Norway (AmCham) held a full-day symposium, “Multinationals In Kristiansand – Mobilizing for the Future”, which focused on attracting international businesses to the city.  Interesting speakers from Citigroup, BI Business School, and Merce gave presentations.  The day also included visits to three US-owned companies in Kristiansand – National Oilwell Varco, Air Products and Chemicals, Inc., and Oceaneering International, Inc. These visits are important in an effort to assist both US and Norwegian companies in pursuing business opportunities and to guide these companies in how to navigate cultural and legal challenges.

The Risks of Using Criminal Statutes to Collect Construction Debts

The failure to make payment on a construction contract may not only result in a claim for money damages in a civil lawsuit, but it may also result in a violation of a criminal statute.  For example, Code of Virginia Section 43-13 makes it a felony to use funds received for a particular construction project for any purpose other than paying contractors or suppliers who provided labor or materials for that project.  That code section expressly provides that the criminal charges may be brought against any officer, director or employee of a construction company that misuses funds meant for a contractor or supplier.

When a contractor has not been paid for work performed on a project, it can be tempting to contact the authorities and request that they bring criminal charges against the upper tier contractor who received funds, but failed to use them to make payment to subcontractors or suppliers.  However, this is not always an effective strategy and carries some risks.  The contractor may have a defense to payment if the work performed was not considered satisfactory.  The person filing the complaint may also be exposing themselves to a claim of malicious prosecution if the courts determine that the claim was brought for an improper purpose and without probable cause.  As a practical matter, many law enforcement agencies are reluctant to vigorously pursue criminal investigations of matters that they perceive to be “civil” in nature, like the failure to pay a debt.

Contractors should carefully consider the risks before contacting the authorities regarding the failure to pay a debt on a construction project.  Any such claims should be supported by documentation of the payment history for the project and not just by the word of the complaining party.  We strongly encourage all contractors to consult with an experienced construction attorney regarding the risks and benefits of pursuing criminal charges to collect a construction debt before contacting any law enforcement authorities.

Another Vandeventer Black Victory

Anne G. Bibeau, Esq., a partner with Vandeventer Black LLP, recently won summary judgment in an insurance defense suit. The plaintiff, an incapacitated adult, had been severely injured while in the care of defendant Community Direct Services, Inc. (CDS). The plaintiff petitioned for declaratory judgment that two insurance policies issued to CDS—one by Vandeventer’s clients, certain underwriters with Lloyds of London (“Certain Underwriters”), and the other by another insurer—provided coverage for plaintiff’s injuries. Our clients Certain Underwriters had issued their policy to CDS after the plaintiff’s accident. Because CDS had failed to disclose the accident when applying for the insurance policy, Certain Underwriters rescinded the policy when it was revealed that CDS provided false information on its insurance application. We moved for summary judgment on the basis that the policy was rescinded, and that even if the policy had not been rescinded, it would not provide coverage because several policy exclusions applied. The court granted summary judgment, holding that the known claims exclusion applied because it was undisputed that prior to the policy’s inception, CDS had received written notice from plaintiff’s counsel that plaintiff was about to file suit.

False Claims Act: The Fourth Circuit’s Triple Canopy Decision

Authored by attorney Megan Caramore

The False Claims Act, 31 U.S.C. §§3729-3733, also known as the “Lincoln Law,” is a federal law that imposes liability on individuals and companies (often federal contractors) who defraud the government.  The Act prohibits contractors from presenting the government with a false or fraudulent claim for payment.

The Fourth Circuit recently examined the issue of what constitutes a false or fraudulent claim in the case ofU.S. v. Triple Canopy, Inc., 775 F.3d 626 (2015). Triple Canopy contracted with the government to provide security services at an airbase in Iraq. Triple Canopy was required to ensure that the guards provided satisfied certain U.S. Army marksmanship requirements; however, the contract did not specifically provide that payment was conditioned on compliance. To fulfill its contract, Triple Canopy hired hundreds of Ugandan guards to serve at the airbase. After the Ugandan guards arrived in Iraq, Triple Canopy supervisors became aware that the guards did not meet the marksmanship requirements. Despite this knowledge, Triple Canopy submitted invoices to the government for payment. After a failed training attempt, a Triple Canopy supervisor directed the creation of false scorecard sheets to be placed in the guards’ personnel files.

The government action against Triple Canopy alleged that it knowingly presented false claims because it knew that the guards did not satisfy the contract requirements but nonetheless billed the government the full price anyway and falsified documents in its own files to show that guards qualified as marksmen. Triple Canopy argued that the invoices it submitted to the government contained no false statements and that the government was improperly attempting to turn a breach of contract claim into a False Claim Act action.

The Fourth Circuit determined that claims can be false when a party impliedly certifies compliance with a material contract condition. The court found that the “straight shooting” requirement was a material term of the contract, given that the contract was for base security guards in a war zone. By submitting the bills, Triple Canopy impliedly certified that it was complying with the material terms of the contract. This amounted to a false statement due to Triple Canopy’s knowledge that it was not in compliance with contract requirements.

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