New Hampshire Construction Lawyer

#72:  Determining the Amount of a Mechanic’s Lien

A contractor is thrown off a job midstream for alleged shoddy work and/or slow performance. He sues the owner for his unpaid contract balance. His contract provides for interest and attorneys’ fees if payment is not timely made, so he adds both to his complaint. The owner then counterclaims for the cost of correcting items of poor workmanship and for the cost of completing the unfinished work (which the owner claims will exceed the unpaid contract balance), and perhaps for delay damages as well. Suppose the contractor applied for and got a mechanic’s lien attachment on an ex parte basis in the full amount of his claims (unpaid balance, interest and anticipated attorneys’ fees). If the owner then files an objection to the lien and asks for a hearing, what will be grounds for the judge to reduce or eliminate the lien? The starting point is the basic mechanic’s lien rule in RSA 447:2 that anyone who furnishes labor or materials to improve another’s property “shall have a lien on any mater..

#71:  Product Warranties of Future Performance

Consider this scenario: Owner needs a new roof, and sees Manufacturer’s advertisement for “30-year shingles.” He picks up a catalog, which trumpets “30 year protection.” The limited warranty at the end states that if the shingles fail in the first 30 years due to manufacturing defects, Manufacturer will pay to replace them according to a prorated formula (the longer into the 30 years, the lesser the Manufacturer’s liability) but excluding the costs of tear down, disposal and new installation. Owner buys them, believing that they will last for 30 years. In 15 years, the shingles fail and Owner sues Manufacturer for the cost of a new roof -- including the tear down, disposal and new installation costs. Owner says that he has no recollection of reading the limited warranty, but relied on the Manufacturer’s marketing catalog, which gave the impression of an express warranty that the shingles would last 30 years. He points to Kelleher v. Marvin Lumber & Cedar Co., 152 N.H. 813 (2005), whic..

#70:  Owner and GC Tort Duties to Subcontractor Employees

It is commonplace for subcontractors to promise to provide for the safety of their employees, and for general contractors to promise the owner that they will maintain site safety as well. Who is liable for injuries to the sub’s employees in such cases? The recent case of Grady v. Jones Lang Lasalle Construction Company, Inc. provides some guidance. Steven Grady was an employee of A&M, a roofing subcontractor to Jones Lang on a project in Dover owned by Liberty Mutual. A&M’s subcontract required it to assume full responsibility for implementing safety programs on the project, to maintain all work areas in a safe manner, and to furnish all safety equipment. But on one cold and windy February day, A&M did not furnish rubber gloves and fire-proof leather gloves to Grady when he was using a cleaning solvent and a torch to melt ice on the roof -- and Grady ended up burning his hand. He couldn’t sue A&M due to the Workers’ Compensation Law’s exclusivity provision, but he could and did sue th..

#69:  Measures of Adequacy in Contract Performance

In their first year of law school, budding lawyers learn in Contracts class about the “perfect tender” rule and the “substantial performance” rule. These alternative measures of adequate performance raise precisely the issue that their words suggest: must a contracting “promisor” give the “promisee” (please forgive the legalese) exactly what was promised, or is a “close enough” standard applicable? In construction cases, “close enough” is not enough to prevent a breach of contract from occurring, but it takes a “material” breach to excuse the other party’s obligation to pay for the work. And when a failure to deliver a perfect tender causes the other party no damages, “close enough” yields the same financial result as no breach at all. The leading case is Justice Cardozo’s opinion in Jacob & Youngs, Inc. v. Kent, 230 N.Y. 239 (1921). The contract in that case specified Reading pipe, but different pipe identical to Reading pipe in every material way was inadvertently installed, a mistak..

#68:  Energy Code Compliance

On June 12, 2018, Governor Sununu signed into law House Bill 1472, repealing the state code for energy conservation in new construction (RSA 155-D) effective August 7, 2018. RSA 155-D, first enacted in 1979 before the international building codes came into prominence, has largely been redundant since New Hampshire’s adoption of the International Energy Conservation Code as part of its state building code in 2002. HB 1472 was intended to clean up that redundancy. But repeal of the old law may have an unintended consequence. As with RSA 155-D, the 2009 IECC -- the version currently in effect in New Hampshire -- has different rules for residential and commercial buildings. (Residential buildings more than three stories above grade are considered commercial for code compliance purposes; commercial buildings three stories or less above grade may show compliance with residential requirements instead.) Under RSA 155-D:4, plans for both types of construction bearing the certification of a lic..

#67:  Paying Your Subcontractor’s Employees

Like many states, New Hampshire law requires that if a subcontractor doesn’t pay wages to its employees, the general contractor must pay them. RSA 275:46. Similarly, New Hampshire law provides that if a subcontractor doesn’t pay amounts owed to its employees under workers’ compensation laws, the general contractor must cover those as well. RSA 281-A:18. If the general contractor must write a check under either of these statutes, the subcontractor will owe reimbursement to the general contractor -- but it’s a safe bet that any subcontractor who can’t meet payroll or pay workers’ comp premiums won’t be able to meet any reimbursement obligation either. How does a GC protect itself? Before subcontracting any significant portion of a long term job to someone who isn’t known to be financially solvent, the wise general will ask for proof that the sub can carry the strain of weekly payroll through a monthly requisition procedure, with retainage. If a sub won’t share its current financials, ch..

#66:  Labor Inefficiency Costs: Who Pays? How Much?

Among the possible reasons a project might cost more to build than anticipated is diminished labor productivity occasioned by unforeseen space or time constraints. If the available space for construction gets compressed, workers who are confined by a tighter site or other physical obstacles they didn’t count on, or whose anticipated lay-down or staging areas are shifted to a more distant off-site location, will become less productive. If the available time for construction gets compressed, work could be pushed into winter conditions when labor is notoriously less efficient, or acceleration could be required with its attendant overtime expenses and consequent fatigue factors making a man-hour less productive. Sometimes this unanticipated time/space compression is the owner’s fault, in which case the general contractor/construction manager and its subcontractors will likely be entitled to increased compensation by change order or otherwise -- and to a mechanic’s lien if that increase is ..

#65:  Unjust Enrichment Recovery for Verbal Change Orders

Given the importance of nailing down any changes to an original scope of work along with their price and schedule effects, many construction contracts require change orders to be in writing, and even define change orders as written instruments. Section 7.2.1 of the A201 (2007) is typical: “A Change Order is a written instrument prepared by the Architect and signed by the Owner, Contractor and Architect.” Some contracts are even more limiting, expressly stating that if extra work is done without a signed change order, no additional compensation can be claimed. What if an owner orders a change but never prepares the written change order? What if the contractor prepares a change order himself but the owner ignores it? Should he suspend work, and risk being in breach? There may be another option. If he proceeds with the work on the reasonable expectation of getting a change order signed later and doesn’t get it, he still has a shot at “unjust enrichment” recovery -- a remedy allowed by cou..

#64:  Recovering Attorneys’ Fees as Damages

Win, lose or draw, the usual rule in litigation is that “absent statutorily or judicially created exceptions, parties pay their own attorney’s fees.” Shelton v. Tamposi, 164 N.H. 490, 501 (2013). Judicial exceptions include “bad faith” litigation, for which “an award of attorney’s fees is appropriate where one party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, where the litigant’s conduct can be characterized as unreasonably obdurate or obstinate, and where it should have been unnecessary for the successful party to have brought the action.” Bedard v. Town of Alexandria, 159 N.H. 740, 744, (2010) (quotations omitted). In such two-party scenarios, attorneys’ fees are not awarded as damages caused by the defendant’s conduct, but “to do justice and vindicate rights, as well as to discourage frivolous lawsuits.” Jesurum v. WBTSCC Ltd. Partnership, 169 N.H. 469, 483 (2016) (quotation omitted). But matters are different in three-party scenarios, where A is forced..

#63:  Subcontractor or Supplier: A Potentially Crucial Distinction

On most building contracts the contractor is called upon to provide labor, materials and equipment. He will often hire subcontractors to furnish various portions of the labor and materials, and either he or they will purchase equipment (such as a boiler or a well pump) for installation at the job site. On high end commercial projects the required equipment can be quite large and specialized (say, a gas turbine for a utility power plant). Is the seller of that equipment considered a subcontractor, or a mere manufacturer/supplier? The distinction can be important on many levels. For one thing, the Uniform Commercial Code rather than general contract law governs the sale of goods, and employs different legal rules, including special warranty provisions and a longer statute of limitations. For another, payment bond rights and mechanic’s lien rights were held unavailable for suppliers to suppliers (as opposed to suppliers to subcontractors) in Lyle Signs, Inc. v. Evroks Corp., 132 N.H. 156 ..

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