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Creativity Motivation – What is motivation – Corey K Katir
Advertising From http://www.creativitymotivation.com Describes motivation process for creativity with emphasis on intrinsic motivation by Corey K Katir Avoiding “Embarrassment” In Contract Disputes Act Litigation: Routine vs. Non-Routine Requests For Payment
From feeds.lexblog
By Christopher E. Hale
Contractors pursuing claims against the government under the Contract Disputes Act (“CDA”) can often fall victim to the jurisdictional pitfalls of the Act from the very start of the claims process, i.e., with the claim itself. After a contracting officer denies a claim under the CDA, a contractor can appeal the decision to either a Board of Contracts Appeals or the U.S. Court of Federal Claims. However, there is no shortage of cases in which such appeals are dismissed for lack of jurisdiction because the original requests for payment did not constitute “claims” under the CDA.
One recent illustration of this problem involved the distinction between routine and non-routine requests for payment, as addressed by a recent split-panel decision of the United States Court of Appeals for the Federal Circuit, Parsons Global Services, Inc. v. Secretary of the Army, No. 2011-1201 (Fed. Cir. Apr. 20, 2012).
The case centered on the termination for convenience of several task orders under an indefinite-delivery-indefinite quantity contract awarded by the Army to Parsons for design-build work in Iraq. Parsons had entered into a subcontract with Odell International, Inc. (“Odell”) to construct health care facilities and deliver medical equipment in Iraq pursuant to the prime contract.
Shortly before the task orders were terminated for convenience by the Government, the Defense Contract Audit Agency (“DCAA”) determined that Odell had been mistakenly billing Parsons using a lower overhead rate than was specified in the subcontract. Odell then invoiced Parsons for the difference, but Parsons refused to pay the invoice and submitted a termination settlement proposal to the Termination Contracting Officer (“TCO”) without including the disputed Odell costs. Two years later, as part of settlement of the prime contract, DCAA audited Parsons’ billed costs, including Odell’s costs, and determined that Odell’s costs at the higher overhead rate were supported and appropriate. Odell submitted a new invoice for the difference, and Parsons submitted three payment requests for the additional Odell costs to be paid directly by government. The TCO declined to act on the requests to settle directly with Odell. Parsons then submitted a sponsored “Certified Claim for Payment” under the CDA on behalf of Odell to the Procurement Contracting Officer (“PCO”), and appealed the PCO’s denial of the claim to the Armed Services Board of Contract Appeals (“ASBCA”).
The Government moved to dismiss for lack of jurisdiction, arguing that Parsons’ routine request for payment to the PCO did not amount to a claim under the CDA. Parsons countered that, because its requests for payment occurred two years after the termination of the task orders and thus could not be subject to routine invoicing and termination procedures, the request was non-routine and sufficient by itself to constitute a claim. The ASBCA sided with the Government and dismissed the claim.
On appeal, the Federal Circuit affirmed the ASBCA’s decision, holding that Parsons’ request for payment was not a claim as defined in FAR 2.101. Under the FAR, demands for payment can be classified as either “routine” or “non-routine.” If the request is “non-routine,” then it constitutes a claim under the CDA so long as “it be (1) a written demand, (2) seeking, as a matter of right, (3) the payment of money in a sum certain.” However, if the request is “routine,” a pre-existing dispute is necessary for it to constitute a claim under the CDA.
As the Federal Circuit detailed, non-routine requests for payment typically spring from additional or unforeseen costs not covered by the contract:
Such requests include requests for equitable adjustments for costs incurred from “government modification of the contract, differing site conditions, defective or late-delivered government property or issuance of a stop work order” and other government-ordered changes; for damages resulting from the government’s termination for convenience and termination settlement proposals that have reached an impasse; for compensation for additional work not contemplated by the contract but demanded by the government; for the return of contractor property in the government’s possession; and for damages stemming from the government’s breach of contract or cardinal change to the contract.
In contrast, according to the Federal Circuit, the request for payment of Odell’s costs made to the PCO was routine because the costs were explicitly covered by the contract and, but for the billing error, would have been subject to routine invoicing during contract performance. Furthermore, the routine request was not subject to a pre-existing dispute because the PCO, the appropriate official to evaluate the request, never received a proper request for payment prior to the improper “Certified Claim for Payment.”
In a somewhat scathing dissent, Judge Newman posited that major billing errors, such as Odell’s, are neither foreseen nor intended and cannot be characterized as routine. However, stepping away from the esoteric classification of routine and non-routine requests for payment, Judge Newman threw the facts of the case – in which “a simple correction of a billing error has morphed into a nearly four-year litigation, with no end in sight” – into sharp relief:
The agency’s refusal to pay Parson’s claim, having acknowledged the obligation and having audited it through its own Audit Agency, is contrary to the guiding principle that “The Federal Acquisition System will [c]onduct business with integrity, fairness, and openness.” . . . . This lengthy litigation of a conceded governmental obligation is an embarrassment.
To avoid being caught in such an “embarrassment,” contractors should take care when submitting claims pursuant to the CDA to ensure that a request for payment that could be classified as routine is subject to a pre-existing dispute. Otherwise, the contractor might find years later that its claims process was flawed from the start and must begin anew – assuming the statute of limitations has not already run its course.
In the Tradition of Gilda Radner, the Court of Appeals for the Federal Circuit Proclaims “Never Mind” in Zoltek II
From feeds.lexblog
By Louis D. Victorino
The United States Court of Appeals for the Federal Circuit (CAFC) recently issued a so-called en banc (all judges of the court) decision with great importance to Federal Government contractors. In Zoltek Corp. v. United States, Fed. Cir., No. 2009-5135, March 14, 2012 (“Zoltek II“), the Court redefined the scope of the statute underlying the Federal Acquisition Regulation (FAR) “Authorization and Consent” clause, 28 U.S.C. §1498. In so doing, the Court confirmed Federal Government contractor immunity from patent infringement suits in instances where the patent infringement may have occurred in whole or in part outside of the United States. The more fundamental holding of the case was to reverse its own prior decision in the same case (“Zoltek I”), in which the CAFC had held that §1498 does not waive Federal Government patent immunity from certain patent infringements occurring in part outside the United States.
Zoltek Corporation (Zoltek), is a U.S. corporation headquartered in St. Louis, MO, and is the assignee of rights in a U.S. patent related to manufacturing processes and methods used for the production of carbon fiber sheets. Two types of fiber carbon products allegedly were manufactured through the use of methods covered by the Zoltek patent. The allegedly infringing resulting products were used by Lockheed Martin Corporation (Lockheed) in the manufacture of F-22 jet aircraft, designed and built, of course, under a U.S. Government contract. The carbon fiber products were manufactured from fiber carbon components in one instance manufactured in Japan and finished in the U.S. and in a second instance manufactured entirely in Japan and imported into the U.S.
In its original complaint, Zoltek sued the United States under 28 U.S.C. §1498(a) in the United States Court of Federal Claims (COFC) alleging, in relevant part, that its patent was infringed because the F-22 related carbon fiber products were used or manufactured by or for the U.S. without a license or other legal right. No claims were asserted against Lockheed. In relevant part, 28 U.S.C. §1498(a) provides:
(a) Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.
* * *
For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.
The U.S. (Government) moved for summary judgment on this portion of the Zoltek lawsuit based on the language of sub-section (c) of 28 U.S.C. §1498. That sub-section provides, in total, “[t]he provisions of this section shall not apply to any claim arising in a foreign country.” The Government argued that this section precluded recovery by Zoltek under its “methods” patent claims because some or all of the infringement occurred in Japan and, thus, arose “in a foreign country.” The COFC held, in part, that §1498 did not waive Government’s sovereign immunity to all infringements (direct infringements but not indirect infringements) but ultimately denied the Government’s motion. Both parties appealed the court’s decision on various grounds.
On appeal, the CAFC held, in its first decision in the Zoltek matter, that a “direct infringement” of a patent under 35 U.S.C. §271 was a predicate for Government liability under §1498(a). The CAFC further held that a “process” asserted to be covered by a method patent cannot give rise to an infringement “within” the United States unless each and every step of the process is performed in the U.S. Since some or all of the processes at issue in the litigation occurred in Japan, the §1498(a) remedy was not available. Zoltek Corp. v. United States, 442 F.3d 1345, 1350 (Fed. Cir. 2006) (“Zoltek I“). The CAFC did not address contractor patent infringement immunity under §1498(a). The case was remanded to the COFC for further proceedings. Id. at 1353.
On remand, Zoltek sought leave to amend its complaint to add an infringement claim against Lockheed based on 35 U.S.C. §271 and sought, further, to have the matter transferred to a federal district court in Georgia. The Government argued that §1498(a), while not waiving sovereign immunity for Zoltek’s patent claims, nevertheless provided Lockheed immunity from Zoltek’s suit and, therefore, there was no jurisdiction in the federal district court in Georgia. The COFC rejected the Government’s arguments and found that it was in the interest of justice to transfer the case to Georgia. Subsequently, the COFC certified for appeal to the CAFC the issue of Lockheed immunity under §1498(a).
In considering the merits of the appeal, the CAFC came to a disturbing conclusion regarding the implications of its prior decision in Zoltek I. It stated the issue as follows:
In confronting the question of whether a contractor acting under Government authority could be held liable for patent infringement, in a situation in which we had previously held the Government not liable for the allegedly infringing actions of its contractor, we realized that one of two consequences would result. Either we had to conclude that a patentee’s well-pleaded complaint of infringement in the United States of a United States patent in these circumstances fails to state a cause of action against both the Government and the Government’s contractor, or we would have to override the long-standing understanding of the statutory framework that a contractor working for the Government is immune from individual liability for patent infringement occurring in the course of conducting the Government’s contract.
Zoltek II, at page 8.
The CAFC concluded, with one dissent, that neither of these options was acceptable and, instead, ruled to overturn its earlier decision in several respects. First, the Court ruled that the COFC and the CAFC’s earlier decision had wrongly relied on case law to conclude that §1498(a) covered only direct infringements and not indirect infringements. The CAFC reviewed the prior case law relied upon in Zoltek I and found that statements used by the COFC to reach its decision regarding the scope of §1498(a) were dicta. Second, the CAFC found that unauthorized “sales” and “use” of products incorporating patented technology were indirect patent infringements falling within the coverage of §1498(a). Finally, the CAFC reversed its prior holding that all steps in a “process” or “method” patent must be infringed in the United States for §1498(a) to apply.
The practical result of Zoltek is that very few sales to the U.S. Government by contractors and subcontractors of products or services that infringe patents will not be covered by §1498(a). The Court’s holding that indirect patent infringements are covered by §1498(a) largely achieves this result since §1498(a) states:
For the purposes of this section, the use or manufacture of an invention described in and covered by a patent of the United States by a contractor, a subcontractor, or any person, firm, or corporation for the Government and with the authorization or consent of the Government, shall be construed as use or manufacture for the United States.
28 U.S.C. §1498(a) (emphasis added). This language, together with the Court’s holding that not all processes in a process or method patent need be performed in the U.S., encompasses the overwhelming majority of patent infringement cases covered by §1498(a). If a product or service of a contractor is produced through the unauthorized use of a U.S. patent with the authorization and consent of the Government, any resulting patent infringement action must be brought against the Government in the United States Court of Federal Claims. This is, of course, the result that most government contractors believed to be the case prior to the Zoltek I decision.
Deciphering the Alphabet Soup – FAPIIS, CPARS, and PPIRS; Don’t Look For All This In The FAR
From feeds.lexblog
By Bruce Shirk and David Gallacher
In March 2010, the U.S. Government rolled out a new tool promised to provide a centralized source for all publicly available contractor past performance and integrity information – the Federal Performance and Integrity Information System (“FAPIIS”). We have written multiple times about it (in June 2010, March 2011, and January 2012), including the importance of monitoring the information entered to ensure that past performance evaluations are accurate, complete, and fair, and also to prevent release of proprietary information to the public. But the system continues to evolve and, as contractors try to manage the information in FAPIIS, many companies find the process baffling due to (among other things) the multiplicity of modules within the system and the acronyms used to identify them. In fairness, government personnel tasked with implementing FAPIIS have developed on-line training to assist contractors in navigating this complex system. That said, not everyone involved in government contracting can or will take the training, but everyone does need a basic understanding of FAPIIS. So keep reading, because you won’t find this information in the FAR.
“What’s in a name?” – Understanding the Past Performance Databases
Let us begin with a review of the terminology, to assure that we understand the various acronyms and government IT systems. Generally speaking, the government has three primary systems or modules that contain past performance data:
The FAR, if read literally, would suggest that PPIRS contains only written past performance evaluations submitted pursuant to the requirement of FAR 42.1502 that “agencies shall prepare an evaluation of contractor performance” for certain types of contracts over the simplified acquisition threshold of $150,000 (with the Department of Defense having different and higher thresholds). Such information is indeed contained in PPIRS – but in a separate sub-module called PPIRS-RC (Report Card). Past performance information for contracts beneath the applicable dollar thresholds are contained in another PPIRS module – PPIRS-SR (Statistical Reporting), which collects quantifiable contractor past performance information regarding delivery, quality, etc., and uses sophisticated algorithms to compare the performance of comparable contractors and classify them accordingly. This past performance information is updated monthly and, like the information contained in PPIRS-RC, is accessible to contractors, who can review and challenge their classifications. Training on PPIRS is available at www.ppirs.gov. At the risk of over-simplifying this confusing process, the graphic below illustrates generally how past performance information flows through the government systems and into FAPIIS.
“Clear As Mud” The government appears to be aware of the confusion it has generated with its past performance “alphabet soup.” To eliminate this confusion, the government has taken a number of steps:
Make Sure You Focus on More Than Just FAPIIS While companies are encouraged to stay abreast of information posted in FAPIIS because such information is required to be made publicly available (as we previously discussed in our blog), focusing only on FAPIIS ignores the other part of the picture – the part that your government customers see and use to make their past performance evaluations. Conclusion – And More to Come Hopefully, we have managed to clarify (at least a little bit) your understanding of FAPIIS as a system and how it relates to the other past performance data repositories. In the coming months, we will follow up with additional postings discussing questions that we commonly receive from contractors in these regards, including: “Exactly what information must I report in FAPIIS?” “What must I certify with regard to FAPIIS?” and “What past performance information should I be monitoring, how and when, and what can I do about it?” Stay tuned.
Preventing Personal Conflicts Of Interest Among Contractor Employees Performing Acquisition Support Services
From feeds.lexblog
By Keith Szeliga and Franklin Turner
On December 2, 2011, Federal Acquisition Regulation Subpart 3.11 – Preventing Personal Conflicts of Interest for Contractor Employees Performing Acquisition Functions — took effect. The new Rule imposes a host of compliance obligations on contractors, including the requirement to screen for and prevent personal conflicts of interest when supporting acquisition functions. The Rule also requires contractors to prohibit covered employees from utilizing non-public information for personal gain and to obtain from covered employees executed non-disclosure agreements prohibiting the dissemination of such information.
Two of our Government Contracts lawyers – Partner Keith Szeliga and Associate Franklin Turner – recently published a Briefing Paper that assists contractors in understanding the Rule and complying with its requirements.
Click here to view a PDF copy of the article.
The DoD IG Has Moved
From feeds.lexblog
The Office of the Inspector General of the Department of Defense recently changed its mailing address. Unfortunately, some contractors have failed to notice the change, and have used the old address in attempting to submit their disclosure letters. Unfortunately, these disclosures were returned to sender. The new address(es) are below, and detailed information can be found here. For further information regarding the mandatory disclosure rule, please see our previous posting on the ABA’s Guide to the Mandatory Disclosure Rule or an article authored by two of our government contracts partners, Louis D. Victorino and John W. Chierichella, republished with permission from The Government Contractor.
Mailing address:
Office of Inspector General of the Department of Defense
For FedEx and UPS packages use the following address:
Department of Defense Office of Inspector General
Fisher v. Halliburton: Fifth Circuit Invokes Common Sense To Defend Defense Base Act
From feeds.lexblog
By Alex Major
In March 2010, a federal district court in Texas ruled that the deaths and injuries sustained by a group of civilian convoy drivers in Iraq during insurgent attacks were not “accidents” caused by conditions of their employment and were, therefore, outside the scope of the protections afforded to contractors by the Defense Base Act (“DBA”). 42 U.S.C. § 1651, et seq. Fisher v. Halliburton, 703 F. Supp. 2d. 639 (S.D. Tex. 2010). We previously described and criticized the district court decision in this blog, noting that it was now unclear how, exactly, the DBA would fare in future litigation. But on January 12, 2012, the Fifth Circuit restored clarity— and common sense—to the application of the DBA by recognizing that the facts in Fisher presented “the quintessential case of a compensable injury arising from a third party’s assault”. Holding the DBA to be the exclusive remedy for damages, the Fifth Circuit vacated the district court’s decision and remanded the case for further proceedings. Fisher v. Halliburton, 2012 WL 90136 (5th Cir. 2012).
The Fifth Circuit efficiently disposed of the district court’s decision, beginning with a determination that the third party, i.e., insurgent, acts were directed against Plaintiffs “because of [their] employment.” Forcefully disagreeing with the district court’s conclusion that the employees were targeted for simply being Americans and not because they were providing logistical support to the U.S. Military, the court cautioned that such reasoning threatened the applicability of the DBA “on foreign soil” or to “those that support a war.” Moreover, the court stated, if the reasoning of the district court were sustained, then “[t]he argument could always be asserted that an employee was killed or injured not because of her employment, but because she was an American.” Accordingly, the circuit court found it to be “self evident” and “a matter of common sense that when insurgent forces in Iraq attack an Army-led fuel supply convoy, the insurgents are attacking the convoy because of its role in supporting the Army’s operations in that country.”
The Fifth Circuit then disposed of another argument raised by Plaintiffs in Fisher, i.e., that the Plaintiffs’ injuries were caused by the defendant-contractor, who, they alleged, committed an intentional tort by failing to act to protect Plaintiffs from “substantially certain” injury at the hands of the insurgents. This argument, premised on intelligence reports and open-source news reports, reasoned that the defendant knew that the assaults would occur and did nothing to stop the convoys from moving forward. While recognizing that the “intentional tort exception” has not been applied in the Fifth Circuit to the either the DBA or the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), upon which the DBA is based, the court noted that, when applying this exception, other courts “consistently require that the employer have had a specific intent or desire that the injury occur” and that neither circumstance existed here. Moreover, the circuit court reiterated the purpose of the DBA and concluded that its “provisions admit of no exception for cases in which an employee claims his employer was ‘substantially certain’ that the employee would be assaulted by a third party because of his employment.” The circuit court essentially recognized the difficulty in applying a “substantially certain” exception premised on purportedly informed conjecture derived from military intelligence and open-source news. To allow a “substantially certain” exception would undercut the very purpose of the DBA of “providing prompt relief for employees, and limited and predictable liability for employers.” Therefore, the court concluded, coverage under the DBA precludes an employee from recovery from its employer “under a ‘substantially certain’ theory of intentional-tort liability.”
Finally, the Fifth Circuit did agree with the district court that the DBA prevents an employee from bringing a fraud claim to recover damages for a DBA-covered injury. Echoing the sentiment of the lower court, the circuit court held that any deceit proven against the employer that led to the compensable injury “merges into that injury for purposes of compensation coverage.”
In his book recounting his leadership of the American Expeditionary Forces in World War I, My Experiences in the World War, General John Pershing reflected that “military science is based on principles that have been deduced from the application of common sense in the conduct of military affairs.” The Fifth Circuit’s defense of the DBA in vacating and remanding the lower court’s ruling in Fisher v. Halliburton, recognizes that the same application of common sense should be brought to bear in the application of U.S. law in the battlespace.
By Mike Emmick
In the fervor of the U.S.’s current anti-foreign-corruption efforts, a particularly misguided proposal has occasionally reared its ugly head: Requiring “mandatory debarment” for any company that violates the Foreign Corrupt Practices Act (“FCPA”).
On the merits, such a proposal is completely wrong-headed. Debarment is a severe, forward-looking administrative remedy – the corporate “death penalty” – not a vehicle to “boost” the penalties for past criminal FCPA violations.
Nonetheless, in 2010, such a “mandatory debarment” bill was passed by the House, only to die in Congress due to Senate inaction. Optimistic multinational contractors might therefore have concluded, “Whew, we dodged that bullet.”
However, a recent law-review article has sought to resurrect the debarment idea, contending that no other remedy will deter large global companies from violating the FCPA.
Below is a snapshot of the relevant law, recent developments, and pertinent arguments. As will be explained, despite the recent article, the notion of “mandatory debarment” is unlikely to gain traction – even the Department of Justice (“DOJ”) opposes it – but the article and the current anti-corruption frenzy may cause authorities to reconsider the idea. Any multinational company that does substantial government contract work should therefore monitor and resist such efforts.
As nearly everyone who operates in this market knows by this time, the FCPA prohibits U.S. companies from paying bribes to foreign officials in order to obtain or retain business. The FCPA also requires accurate books and records and meaningful internal accounting controls. Violations of the FCPA can result in huge criminal and civil fines, disgorgement of profits, and payment of interest, not to mention a wide range of collateral consequences. The FCPA is enforced by DOJ and the SEC.
Over the past five years DOJ has been extremely aggressive in its prosecution of FCPA violations. Eight of the ten largest FCPA fines in history occurred in 2010, and multi-million-dollar fines have now become routine. There are currently dozens of pending FCPA investigations – many more than in previous years. Indeed, DOJ has dubbed this “the new era of FCPA enforcement.”
Congress attempted to climb aboard this FCPA-enforcement bandwagon when, on September 15, 2010, the House unanimously passed a “mandatory debarment” bill – H.R. 5366, known as the 2010 Overseas Contractor Reform Act. The bill would have created a government-wide policy that no contracts be awarded to companies or individuals that violated the FCPA. H.R. 5366, § 3. Procedurally, the law would have required the contracting agency to propose for debarment all contractors found to be in violation of the FCPA.
The bill was flawed in many ways. It did not define a “finding” of an FCPA violation, so it was unclear whether the debarment would be triggered by a non-prosecution or deferred prosecution agreement. The bill failed to differentiate between major and minor FCPA violations, or between different kinds of violations (i.e., bribe payments versus “books and records” or accounting violations). The bill did not require or permit consideration of how the violation occurred, whether the company self-reported the violation, or whether the company dramatically improved its anti-corruption compliance program thereafter.
Shortly after the bill was passed, DOJ answered questions about the FCPA generally, as the Chamber of Commerce was proposing FCPA amendments. DOJ expressed its opposition to “mandatory debarment,” stating that mandatory debarment “would likely be counterproductive, as it would reduce the number of voluntary disclosures and concomitantly limit corporate remediation and the implementation of enhanced compliance programs.” According to DOJ, such a debarment program could also hurt the government’s ability to investigate and prosecute transnational corruption. Linking debarment to criminal conviction would “fundamentally alter the incentives of a contractor-company,” because an FCPA resolution would then cause the company to suffer a dramatic reduction in revenue. That, in turn, would negatively impact prosecutorial discretion and the flexibility to reach an appropriate resolution given the facts and circumstances of the particular case.
DOJ’s opposition would ordinarily be enough to ensure that “mandatory debarment” would not be taken seriously. And in fact the Senate took no further action on the House bill, perhaps because of DOJ’s opposition after the House bill was passed.
However, a recent law-review article has sought to resurrect this misguided debarment notion. In November 2011, Fordham Law Review published a 70-page article entitled “FCPA Sanctions: Too Big to Debar,” available here, which was written by Professor Drury Stevenson of the South Texas College of Law, along with one his law students. The article took the position that debarment should be considered as an additional punishment for FCPA violations. According to the article, corporations can only be punished via fines, and government contract revenues are so large that fines often become a mere “cost of doing business,” which prevents those fines from having deterrent value. In addition, the public may interpret a failure to debar a company as suggesting that companies can buy their way out of FCPA violations.
The article acknowledged that mandatory debarment might discourage self-disclosure – one of DOJ’s concerns – but proposed that self disclosure might be meaningfully rewarded through a reduced criminal fine. The article also acknowledged that debarment might be the contractor’s “death knell”; it might even raise an “Arthur Andersen” problem by driving an important and responsible company out of business entirely, which might harm the contracting market, foreign relations, national security, and the company’s shareholders. As an alternative to mandatory debarment, the article proposed an increase in discretionary debarments based on FCPA violations.
For a number of reasons, “mandatory debarment” for FCPA violations is a bad idea. In fact, In January 2012, two months after “Too Big to Debar” was published, Fordham Law Review published a responsive article authored by Jessica Tillipman, a professor at George Washington Law School. Jessica Tillipman, “A House of Cards Falls: Why “Too Big to Debar” is All Slogan and Little Substance”, available here. Tillipman disagreed with nearly all of Professor Stevenson’s conclusions and analysis, and her remarks warrant summarizing here.
First, the debarment provision in the Federal Acquisition Regulations (FAR) is itself inconsistent with “mandatory debarment.” FAR 9-402(b) states that “the serious nature of debarment and suspension requires that these sanctions be imposed only in the public interest for the Government’s protection and not for purposes of punishment.” (Emphasis added.) The point of debarment is to ensure that the government works with “responsible partners.” Indeed, that is why the prosecutors handle the fines, and the debarring officials handle the debarment.
Second, the FAR expressly requires the debarment officials to consider whether the contractor undertook remedial measures or whether the violation involved mitigating factors that demonstrate that the contractor is still “presently responsible.” FAR 9-406-1. Mandatory debarment would make those provisions meaningless, and would shift the focus of debarment from future conduct to past conduct.
Third, imposing the remedy of “mandatory debarment” would unfairly focus on government contractors, not on other companies or individuals that may violate the FCPA. Why should contractors be discriminated against – especially automatically discriminated against?
Fourth, debarment is an inappropriate “all or nothing” remedy. Its use might destroy responsible companies – even essential companies – that have thousands of employees and contribute immensely to the economies of the U.S. and the world. That is why debarment should be used only rarely, and only after an extensive review of what prompted the transgression, how the company responded, and other important factors.
Fifth, if mandatory debarment were to become the law, it might even discourage large companies from engaging in business with the U.S., because their devotion of time to and their monetary investments in government contract work could be lost at the whim of federal prosecutors, perhaps as the result of actions by rogue employees who clandestinely refused to adhere to the companies’ anti-corruption compliance program.
Finally, as DOJ itself pointed out in 2010, “mandatory debarment” might actually hurt the US’s FCPA-enforcement efforts by discouraging corporate self-disclosure and cooperation as part of the remediation process. Those procedures are currently a critical source of information for DOJ to use in its prosecution of FCPA violations.
In light of DOJ’s opposition, “mandatory debarment” for FCPA violations is unlikely ever to become law. Nonetheless, because the consequences would be potentially devastating, any such possibility should be monitored closely by and vigorously opposed by global contractors.
By Marko W. Kipa, Anne B. Perry, and Lucantonio N. Salvi
An acquisition transaction involving a government contractor brings with it a unique set of rules and regulations. There is no shortage of frequently changing and complex requirements regulating a government contractor’s operations, and a firm grasp of these requirements is crucial both to arriving at a proper valuation of a target company and to understanding the risks associated with the transaction.
Three of our Government Contracts lawyers – Marko W. Kipa, Anne B. Perry, and Lucantonio N. Salvi – recently published an article that assists buyers and sellers in identifying the most common risk areas in an acquisition transaction involving a government contractor. With permission of The Government Contractor, the article is reproduced in full in this issue of our blog.
Click here to view a PDF copy of the article.
Plaintiff has Slip and Fall Accident at Work
From newyorkinjurylawyer247blog.com
A general contractor was hired by a tenant of a building in Manhattan. The project was to install duct work into the intake air duct down in a shaft below street level in front of the building. A New York Injury Lawyer said the general contractor hired an air conditioning contractor to install the duct work at the job site. The air conditioning contractor subcontracted out its work to the metal sheet contractor.
The complainant was employed by the metal sheet contractor as a journeyman sheet metal worker, whose responsibilities were to hang and install duct work through the supervision of the complainantas foreman. On November 9, 2004, the complainant and his foreman went to the building in order to install a large piece of prefabricated duct work, known as gooseneck duct, below street level. According to the complainant, the gooseneck duct was the size of a car and was approximately six feet long, six feet wide, and five feet tall, and weighed between 110 and 125 pounds. The site where the gooseneck duct was to be placed was located below a series of about 40 metal grates that were in place on the ground. Each grate measure approximately two feet by four feet, and this grating covered an area of the ground measuring approximately 12 feet by 8 feet. The vault below the grating was approximately 15 feet deep.
In order to install the gooseneck duct below ground, the grating on the street level needed to be opened. The gooseneck duct was to be lowered through an opening in the grates in order to be installed below them.
Upon the complainantas arrival together with his foreman at the job site, they met with a representative from the general contractor, The general contractor representative who showed them where the gooseneck duct was going to be installed in the area below the grates and told them to wait for the representatives of the buildings to see how they would go about installing it. A mechanic and an engineer, who were employees of the building met with the complainant and the foreman. The two building employees then told the complainant and his foreman that the gooseneck duct was going to be lowered though the grating, and asked the foreman which grate was to be opened. The foreman told the building employees which grate to open and the complainant and his foreman went back to their truck to unload the gooseneck duct. As the complainant and his foreman were unloading the gooseneck duct off the truck, the mechanic removed the grate by unbolting four clips that held the grate down, lifting the grate up, and leaning it back against the building. However, the mechanic did not open the grate that the foreman had requested him to open. Instead, the mechanic opened the grate in the far corner, creating an unprotected two feet by four feet holes.
In order to maneuver the gooseneck duct to the grating area, the complainant and his foreman had to take the gooseneck duct around a rectangular billboard sign, which was attached to posts that were bolted to the ground over the grates. They transported the gooseneck duct to the area of the billboard on a dolly, and, when they arrived at the billboard area, they removed the gooseneck duct from the dolly, and attempted to drag the gooseneck duct behind the billboard on the left side in the space between the billboard and the building. While the gooseneck duct was on the sidewalk over the grates and the complainant was attempting to pull it into position, he let go of the gooseneck duct and fell backwards down approximately 15 feet into the hole created by the open grate.
Consequently, the complainant filed the action against the property manager and the general contractor, seeking to recover damages for the personal injuries sustained by him due to his slip and fall. The complaint alleges claims of common-law negligence, and violations of Labor Laws. The general contractor and the property manager both interposed their answers and the property manager asserted cross claims against the general contractor. The general contractor filed a third-party action against the metal sheet contractor. The metal sheet contractor answered the third-party complaint and the general contractor filed a second third party complaint against the air conditioning contractor. The air conditioning contractor interposed its answer and served cross claims against the metal sheet contractor. The general contractor sought to voluntarily discontinue its second third-party action against the air conditioning contractor, but none of the parties, other than the general contractor and the air conditioning contractor agreed to sign and execute the stipulation of discontinuance. The complainant filed his note of issue upon the completion of discovery.
The complainant argues that he is entitled to summary judgment in his favor on his Labor Law claim. The Labor Law imposes liability upon owners and contractors and their agents who fail to provide or erect safety devices necessary to give reasonable and adequate protection and safety for workers engaged in construction work who are exposed to elevation-related hazards. The legislative purpose behind the enactment is to protect workers by placing ultimate responsibility for safety practices at building construction jobs where such responsibility actually belongs, on the owner and general contractor, instead of on workers, who are scarcely in a position to protect them from an accident. A Long Island Personal Injury Lawyer said it is well settled that Labor Law is to be construed as liberally as may be for the accomplishment of the purpose for which it was framed.
In opposition to the complainantas motion for summary judgment and in support of its motion insofar as it seeks summary judgment dismissing the complainantas Labor Law claim, the property manager contends that the Labor Law is inapplicable to it because it was not the owner of the premises, a general contractor, or the agent of the owner or general contractor. However, a Brooklyn Personal Injury Lawyer said while the property manager was not the owner of the premises or a general contractor, a party can be deemed a statutory agent under the Labor Law and may be held vicariously liable as an agent of the property owner for injuries sustained pursuant to Labor Law where it had the ability to control the activity which brought about the injury. The property manager argues that although it served as the property manager for the premises, it had no contractual relationship to the construction work which the complainant was performing. The property manager relies upon the fact that the general contractoras contract for the project was with the tenant. However, it is unnecessary for the property manager to have it actually contracted for the work in order for it to be held liable under Labor Law.
The property manager also relies upon their mechanicas deposition testimony that his supervisor, had told him to go up to the street level and open a piece of the grating for the tenant. Such deposition testimony, however, only supports the argument that the property manager was acting as an agent for the owner when its employee, the mechanic opened the grate for the complainant to install the gooseneck duct.
While the property manager argues that it did not supervise or control the complainantas work, their employees, the mechanic and the engineer, were present at the work site. The property manager contends that the removal of the grate by their mechanic did not constitute supervision or control over the complainantas work since it was the foreman who directed their mechanic to remove a particular grating. The foremanas direction as to which grate to open, however, did not negate any independent duties which the property manager may have had under the Labor Law, or prevent them from assuming those duties and thereby becoming vicariously liable as an agent of the property owner.
With respect to the supervision and control of the property manager over the complainantas work, the foreman testified, at his deposition, that a representative from the general contractor told them that they had to wait for somebody from the building to come and see how they were going to get the gooseneck duct into the building. The foreman further testified, at his deposition, that the people from the building then told them that they should bring the gooseneck duct down through the grating. Although according to the foreman, he told the people from the building which grate he wanted removed, the mechanic decided to open a different grate because he thought it would be the safest one, and neither the complainant nor the foreman was informed of it.
By opening the grating and thereby creating an open unprotected hole, the property manager, through its employees, exercised sufficient supervision and control over the complainantas work so as to render it liable under Labor Law as an agent of the owner. While vigorously disputing the liability of the property manager, which is acknowledged to be an incorrect accused and not the owner of the premises, the company has acknowledged that it served as the property manager for the subject premises. Thus, as the agent for the owner, they would be liable to the complainant under the Labor Law. Thus, the property manageras cross motion, insofar as it seeks dismissal of the complainantas Labor Law claim, must be denied.
In opposition to the complainantas motion for summary judgment in his favor, the property manager argues that the complainant is not entitled to summary judgment because there is a question of fact as to whether the complainant acts were the sole proximate cause of his injuries. Specifically, the property manager contends that the complainant was aware of the necessity for a grate to be removed so that the job could be carried out, but did not pay attention to the work of the employees. The property manager asserts that the complainantas failure to pay attention is a sufficient ground to deny his motion for summary judgment.
The property manager’s argument is rejected. Where a violation of Labor Law is a proximate cause of an accident, the worker’s conduct cannot be deemed solely to blame for it. The law states that contributory negligence will not exonerate an accused who has violated the statute and proximately caused a complainantas injury.
The general contractor and the metal sheet contractor, in opposition to the complainantas motion, argue that Labor Law is inapplicable to the case because the complainant was not involved in any work related to an elevation differential, but was, instead, merely moving the gooseneck duct from one location on the ground to another and not attempting to lower it. The argument is rejected. Although the complainant was at ground level, the hole into which he fell was 15 feet deep, and, thus, there was an elevation differential. The purpose of the complainantas actions, moreover, was to move the duct from ground level to the lower level through an opening in the grate pursuant to instruction. Traversing the ground where there was a 15 foot deep hole constituted an elevation-related risk covered by Labor Law.
The general contractor further argues that an opening created by the removal of a grate is akin to an opening created by the removal of a manhole cover. The Appellate Division in so holding, specifically noted that while Labor Law is applicable to work performed at heights or where the work itself involves risks related to differentials in elevation, the work in which the injured the complainant was involved in that case was wholly unrelated to an elevation-related hazard, the manhole in which he fell. Thus, the complainantas injury was not a direct consequence of the performance of his work.
Doing our job sometimes exposes us to danger. If you are harmed or injured while at work, you can seek the services of Brooklyn Slip and Fall Attorneys together with Brooklyn Accident Lawyers. If you are unable to work and earn a living due to injuries at work, you may consult a Brooklyn Workers Compensation Lawyer from Stephen Bilkis and Associates.
Employee Injured at Work-Site
From newyorkinjurylawyer247blog.com
A married woman owned a property with a two-car garage. She decided to renovate the two-car garage by making it over into a guesthouse with a fireplace. She hired a general contractor to secure the necessary permits and licenses needed for the project; to hire and to supervise sub-contractors for each and every phase of the work; and to purchase insurance to shield the owner from suits in damages for any accidents that may occur during the renovation at the worksite.
The general contractor hired a company that constructs and installs drywall. It also hired a rock supplier to provide and install sheet rock as flooring. A man was hired by the rock supplier to deliver 16-foot sheet rock. A New York Injury Lawyer said he drove the truck on which the sheet rock was delivered. He also operated the boom that lifted the sheet rock from the truck bed to the forklift. A foreman from the general contractor told him to just bring the sheet rock into the garage and rest them on the long wall. The man and his helper took one sheet rock and carried it between the two of them. They entered the garage. When they got to the room where they were supposed to pile the sheet rock, the manas right foot slipped into a hole on the cement floor of the worksite that measured about sixteen inches in diameter. There was a pipe that protruded from the hole and the man tripped on this and fell. The man could not see where he was going as he and his helper carried the sheet rock in between them. His slip and fall made him land on the sheet rock which fell and broke.
The man sustained serious personal injury and sued the owner of the premises (premises liability), her husband, the general contractor, the drywall installer, and the rock supplier for common law negligence and for negligence under the labor code to compensate him for the damages he sustained as a result of his personal injury.
All the defendants moved for summary judgment asking for the dismissal of the complaint of the sheet rock delivery man. The only question before the Court is whether or not the defendants are entitled to a summary judgment of dismissal.
The owner of the premises submitted proof that she personally and solely owned the premises. She hired a general contractor to oversee in her behalf the construction and renovation. A Bronx Personal Injury Lawyer said that she often visited the premises but did not exercise any supervision of the construction work. She did not give instructions as to the performance of the construction work. She merely visited to see how the work was progressing.
The husband of the owner of the premises submitted proof that the premises are not conjugally or jointly owned by him and his wife; he submitted proof that only his wife owned the premises. He also submitted proof that he has not visited the premises and has not in any way supervised the work at the construction site.
The dry wall company submitted proof that on the day of the accident, it was not yet working at the worksite. The phase of the work that involved the installation of drywall had not yet begun and so it did not have any employees or equipment at the worksite. It had not yet worked at the worksite.
The rock supplier also disclaimed any responsibility for the slip and fall accident of the delivery man. Although the sheet rock was delivered at the worksite, the rock supplier had yet to begin work at the construction site. It had not yet done any work that could have created or caused the slipping and tripping hazard claimed by the deliveryman.
The general contractor denies any liability by stating that its job was limited to hiring sub-contractor to do the different phases of the construction work. A Brooklyn Personal Injury Lawyer said it hired architects, engineers and interior designers; it secured all the necessary licenses and permits for the construction work. Also it denies that it can be held liable for negligence under the Labor Code as it is not the employer of the deliveryman. The Court ruled in favor of dismissal of the causes of action against the owner or the premises who never at any time exercised supervision or control of the construction project. The cause of action against the husband of the owner of the premises is also entitled to a dismissal of the cause of action against him as he is not the owner and has no relationship of supervision or control over the construction project.
The Court opined that liability for causes of action based on common law negligence and for violations of the Labor Code is limited to those who exercised control or supervision over the deliveryman; and to those who had actual or constructive notice of the existence of an unsafe condition that has caused the accident.
Clearly, none of the people and companies sued for damages under common law or the labor code exercised supervision or control over the deliveryman at the time that he delivered the sheet rock. There is no preliminary proof adduced in any of the causes of action that any of the parties here had actual or constructive notice that a dangerous condition existed that caused the deliveryman to slip and fall.
The complaint was dismissed.
Are you an employee who got injured at a worksite? Did you suffer damages as a result of a construction accident? Are you wondering if you can sue? Are you wondering whom to sue? Call the New York City Workers Compensation lawyers at Stephen Bilkis and Associates. They can give you advice on the most viable cause of action to bring. Their New York Workers Compensation attorneys will spare you the nightmare and expense of engaging in costly litigation that will end up in dismissal. You will also need to have some idea of the amount of damages you are likely to obtain. The NYC Slip and Fall Lawyers at Stephen Bilkis and Associates can sit down with you and work out the actual and moral damages you can claim. Call Stephen Bilkis and Associates at any of their offices in the New York area. The NY Slip and fall attorneys there are willing to assist and to represent you.
Changes to Chapter 53, Mechanic’s & Materialman’s Lens
From feeds.lexblog
The 2011 Legislative Session resulted in a number of changes to Chapter 53 of the Texas Property Code (addressing Mechanic’s, Contractor’s, or Materialman’s Liens). Included below are the revisions to Chapter 53, along with brief commentary regarding these revisions.
Clarification regarding landscapers’ lien rights.
§ 53.021. Persons Entitled to Lien
(d) A person who provides labor, plant material, or other supplies for the installation of landscaping for a house, building, or improvement, including the construction of a retention pond, retaining wall, berm, irrigation system, fountain, or other similar installation, under or by virtue of a written contract with the owner or the owner’s agent, contractor, subcontractor, trustee, or receiver has a lien on the property.
Clarification regarding the accrual of a claim for retainage.
§ 53.053. Accrual of Indebtedness
(e) A claim for retainage accrues on the earliest of the last day of the month in which all work called for by the contract between the owner and the original contractor has been completed, finally settled, terminated, or abandoned.
Prior to the the changes to Section 53.047, the deadline for a subcontractor to give a notice of contractual retainage was the 15th day of the second month following its delivery of materials (or performance of work) under a contractual retainage agreement. However, given the way the statue was written, a subcontractor who gave proper notice could still lose its lien rights because it waited to file its lien affidavit within the extended time period permitted under Section 53.052 (i.e., the 15th day of the fourth month after the claimant’s indebtedness accrues). What’s more, if the subcontractor did not include “fund-trapping” language its notice of contractual retainage, the subcontractor’s claim would be limited of the owner’s statutory retainage—which could be released 30 days after final completion. Under the former statutory scheme, a subcontractor could end up with a “timely” but worthless claim. The changes, below, attempt to address this scenario.
§ 53.057. Derivative Claimant: Notice for Contractual Retainage Claim
(a) A claimant may give notice under this section instead of or in addition to notice under Section 53.056 or 53.252 if the claimant is to labor, furnish labor or materials, or specially fabricate materials, or has labored, furnished labor or materials, or specially fabricated materials, under an agreement with an original contractor or a subcontractor providing for retainage.
(b) The claimant must give the owner or reputed owner notice of contractual retainage not later than the earlier of:
(1) the 30th day after the date the claimant’s agreement providing for retainage is completed, terminated, or abandoned; or
(2) the 30th day after the date the original contract is terminated or abandoned.
(b-1) If an agreement for contractual retainage is with a subcontractor, the claimant must also give the notice of contractual retainage to the original contractor within the period prescribed by Subsection (b).
(c) The notice must generally state the existence of a requirement for retainage and contain:
(1) the name and address of the claimant; and
(2) if the agreement is with a subcontractor, the name and address of the subcontractor.
(d) The notice must be sent to the last known business or residence address of the owner or reputed owner or the original contractor, as applicable.
(e) If a claimant gives notice under this section and Section 53.055 or, if the claim relates to a residential construction project, under this section and Section 53.252, the claimant is not required to give any other notice as to the retainage.
(f) A claimant has a lien on, and the owner is personally liable to the claimant for, the retained funds under Subchapter E if the claimant:
(1) gives notice in accordance with this section and:
(A) complies with Subchapter E; or
(B) files an affidavit claiming a lien not later than the earliest of:
(i) the date required for filing an affidavit under Section 53.052;
(ii) the 40th day after the date stated in an affidavit of completion as the date of completion of the work under the original contract, if the owner sent the claimant notice of an affidavit of completion in the time and manner required;
(iii) the 40th day after the date of termination or abandonment of the original contract, if the owner sent the claimant a notice of such termination or abandonment in the time and manner required; or
(iv) the 30th day after the date the owner sent to the claimant to the claimant’s address provided in the notice for contractual retainage, as required under Subsection (c), a written notice of demand for the claimant to file the affidavit claiming a lien; and
(2) gives the notice of the filed affidavit as required by Section 53.055.
(g) The written demand under Subsection (f)(1)(B)(iv):
(1) must contain the owner’s name and address and a description, legally sufficient for identification, of the real property on which the improvement is located;
(2) must state that the claimant must file the lien affidavit not later than the 30th day after the date the demand is sent; and
(3) is effective only for the amount of contractual retainage earned by the claimant as of the day the demand was sent.
Subchapter L to Chapter 53 is new; and Section 53.085 incorporates Subchapter L. Specifically, Section 53.085 allows a person making payment to require, as a condition of payment, an affidavit of bills paid and waiver of mechanic’s lien (or payment bond) claims by the person who furnished labor and/or materials to the subject project. Subchapter L provides the form of such waivers.
§ 53.085. Affidavit Required
(c) The affidavit may include:
(1) a waiver or release of lien rights or payment bond claims by the affiant that is conditioned on the receipt of actual payment or collection of funds when payment is made by check or draft, as provided by Subchapter L;
Section 53.103 incorporates the new Section 53.057(f).
§ 53.103. Lien on Retained Funds
(2) except as allowed by Section 53.057(f), files an affidavit claiming a lien not later than the 30th day after the earliest of the date:
(A) the work is completed;
(B) the original contract is terminated; or
(C) the original contractor abandons performance under the original contract.
Section 53.015 provides clarification regarding the owner’s liability for failure to retain.
§ 53.105. Owner’s Liability for Failure to Retain
(a) If the owner fails or refuses to comply with this subchapter, the claimants complying with Subchapter C or this subchapter have a lien, at least to the extent of the amount that should have been retained from the original contract under which they are claiming, against the house, building, structure, fixture, or improvement and all of its properties and against the lot or lots of land necessarily connected.
Section 53.106 incorporates the changes to Section 53.057.
§ 53.106. Affidavit of Completion
(a) An owner may file with the county clerk of the county in which the property is located an affidavit of completion. The affidavit must contain:
* * *
(6) a conspicuous statement that a claimant may not have a lien on retained funds unless the claimant files an affidavit claiming a lien not later than the 40th day after the date the work under the original contract is completed.
* * *
(d) Except as provided by this subsection, an affidavit filed under this section on or before the 10th day after the date of completion of the improvements is prima facie evidence of the date the work under the original contract is completed for purposes of this subchapter and Section 53.057. If the affidavit is filed after the 10th day after the date of completion, the date of completion for purposes of this subchapter and Section 53.057 is the date the affidavit is filed. This subsection does not apply to a person to whom the affidavit was not sent as required by this section.
Section 53.106 incorporates the changes to Section 53.057.
§ 53.107. Notice Relating to Termination of Work or Abandonment of Performance by Original Contractor or Owner
(b) The notice must contain:
* * *
(7) a conspicuous statement that a claimant may not have a lien on the retained funds unless the claimant files an affidavit claiming a lien not later than the 40th day after the date of the termination or abandonment.
* * *
(d) If an owner is required to send a notice to a subcontractor under this section and fails to send the notice, the subcontractor is not required to comply with Section 53.057 to claim retainage and may claim a lien by filing a lien affidavit as prescribed by Section 53.052.
Section 53.156 gives a trial court discretion to award fees and costs with respect to a mechanic’s lien or payment bond claim arising out of a “residential construction project.” Note: The term “residential construction project” refers to the construction or repair of a “residence”; and the term “residence” refers to a [house] that is used or intended to be used as a dwelling by an owner. Thus, a spec-house that is being constructed by a developer (i.e., someone who has no intention of occupying the dwelling as their residence) is not a “residential construction project” under the statute.
§ 53.156. Costs and Attorney’s Fees
In any proceeding to foreclose a lien or to enforce a claim against a bond issued under Subchapter H, I, or J or in any proceeding to declare that any lien or claim is invalid or unenforceable in whole or in part, the court shall award costs and reasonable attorney’s fees as are equitable and just. With respect to a lien or claim arising out of a residential construction contract, the court is not required to order the property owner to pay costs and attorney’s fees under this section.
Section 53.159 expands the scope of information that an owner or contractor must provide. These changes also maintain consistency with the new Section 53.057, i.e., dealing with notice for contractual retainage.
§ 53.159. Obligation to Furnish Information
(a) An owner, on written request, shall furnish the following information within a reasonable time, but not later than the 10th day after the date the request is received, to any person furnishing labor or materials for the project:
(1) a description of the real property being improved legally sufficient to identify it;
(2) whether there is a surety bond and if so, the name and last known address of the surety and a copy of the bond;
(3) whether there are any prior recorded liens or security interests on the real property being improved and if so, the name and address of the person having the lien or security interest; and
(4) the date on which the original contract for the project was executed.
(b) An original contractor, on written request by a person who furnished work under the original contract, shall furnish to the person the following information within a reasonable time, but not later than the 10th day after the date the request is received:
(1) the name and last known address of the person to whom the original contractor furnished labor or materials for the construction project;
(2) whether the original contractor has furnished or has been furnished a payment bond for any of the work on the construction project and if so, the name and last known address of the surety and a copy of the bond; and
(3) the date on which the original contract for the project was executed.
* * *
(g) A subcontractor who does not receive information requested under Subsection (a)(4) within the period prescribed by Subsection (a) is not required to comply with Section 53.057 and may perfect a lien for retainage by filing a lien affidavit under Section 53.052. This subsection expires September 1, 2013.
Section 53.160 includes the permissible grounds for a motion to summarily remove an invalid or unenforceable lien. The section permits the filing of a motion on grounds that the deadline for perfecting a lien claim for retainage have passed.
§ 53.160. Summary Motion to Remove Invalid or Unenforceable Lien
(b) The grounds for objecting to the validity or enforceability of the claim or lien for purposes of the motion are limited to the following:
* * *
(4) the deadlines for perfecting a lien claim for retainage under this chapter have expired and the owner complied with the requirements of Section 53.101 and paid the retainage and all other funds owed to the original contractor before:
(A) the claimant perfected the lien claim; and
(B) the owner received a notice of the claim as required by this chapter;
(5) all funds subject to the notice of a claim to the owner and a notice regarding the retainage have been deposited in the registry of the court and the owner has no additional liability to the claimant;
Section 53.281 is the beginning of Subchapter L, which subchapter is new to Chapter 53. Subchapter L provides the sole manner in which mechanic’s lien and bond claims under Chapter 53 may be waived.
§ 53.281. Waiver and Release of Lien or Payment Bond Claim
(a) Any waiver and release of a lien or payment bond claim under this chapter is unenforceable unless a waiver and release is executed and delivered in accordance with this subchapter.
(b) A waiver and release is effective to release the owner, the owner’s property, the contractor, and the surety on a payment bond from claims and liens only if:
(1) the waiver and release substantially complies with one of the forms prescribed by Section 53.284;
(2) the waiver and release is signed by the claimant or the claimant’s authorized agent and notarized; and
(3) in the case of a conditional release, evidence of payment to the claimant exists.
§ 53.282. Conditions for Waiver, Release, or Impairment of Lien or Payment Bond Claim
(a) A statement purporting to waive, release, or otherwise adversely affect a lien or payment bond claim is not enforceable and does not create an estoppel or impairment of a lien or payment bond claim unless:
(1) the statement is in writing and substantially complies with a form prescribed by Section 53.284;
(2) the claimant has actually received payment in good and sufficient funds in full for the lien or payment bond claim; or
(3) the statement is:
(A) in a written original contract or subcontract for the construction, remodel, or repair of a single-family house, townhouse, or duplex or for land development related to a single-family house, townhouse, or duplex; and
(B) made before labor or materials are provided under the original contract or subcontract.
(b) The filing of a lien rendered unenforceable by a lien waiver under Subsection (a)(3) does not violate Section 12.002, Civil Practice and Remedies Code, unless:
(1) an owner or original contractor sends a written explanation of the basis for nonpayment, evidence of the contractual waiver of lien rights, and a notice of request for release of the lien to the claimant at the claimant’s address stated in the lien affidavit; and
(2) the lien claimant does not release the filed lien affidavit on or before the 14th day after the date the owner or the original contractor sends the items required by Subdivision (1).
(c) Subsection (a)(3) does not apply to a person who supplies only material, and not labor, for the construction, remodel, or repair of a single-family house, townhouse, or duplex or for land development related to a single-family house, townhouse, or duplex.
§ 53.283. Unconditional Waiver and Release: Payment Required
A person may not require a claimant or potential claimant to execute an unconditional waiver and release for a progress payment or final payment amount unless the claimant or potential claimant received payment in that amount in good and sufficient funds.
§ 53.284. Forms for Waiver and Release of Lien or Payment Bond Claim
(a) A waiver and release given by a claimant or potential claimant is unenforceable unless it substantially complies with the applicable form described by Subsections (b)-(e).
(b) If a claimant or potential claimant is required to execute a waiver and release in exchange for or to induce the payment of a progress payment and is not paid in exchange for the waiver and release or if a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release must read:
“CONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
“Project ___________________
“Job No. ___________________
“On receipt by the signer of this document of a check from ________________ (maker of check) in the sum of $__________ payable to _____________________ (payee or payees of check) and when the check has been properly endorsed and has been paid by the bank on which it is drawn, this document becomes effective to release any mechanic’s lien right, any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights for persons in the signer’s position that the signer has on the property of ________________ (owner) located at ______________________ (location) to the following extent: ______________________ (job description).
“This release covers a progress payment for all labor, services, equipment, or materials furnished to the property or to __________________ (person with whom signer contracted) as indicated in the attached statement(s) or progress payment request(s), except for unpaid retention, pending modifications and changes, or other items furnished.
“Before any recipient of this document relies on this document, the recipient should verify evidence of payment to the signer.
“The signer warrants that the signer has already paid or will use the funds received from this progress payment to promptly pay in full all of the signer’s laborers, subcontractors, materialmen, and suppliers for all work, materials, equipment, or services provided for or to the above referenced project in regard to the attached statement(s) or progress payment request(s).
“Date ____________________________
“_________________________________ (Company name)
“By ______________________________ (Signature)
“_________________________________ (Title)”
(c) If a claimant or potential claimant is required to execute an unconditional waiver and release to prove the receipt of good and sufficient funds for a progress payment and the claimant or potential claimant asserts in the waiver and release that the claimant or potential claimant has been paid the progress payment, the waiver and release must:
(1) contain a notice at the top of the document, printed in bold type at least as large as the largest type used in the document, but not smaller than 10-point type, that reads:
“NOTICE:
“This document waives rights unconditionally and states that you have been paid for giving up those rights. It is prohibited for a person to require you to sign this document if you have not been paid the payment amount set forth below. If you have not been paid, use a conditional release form.”; and
(2) below the notice, read:
“UNCONDITIONAL WAIVER AND RELEASE ON PROGRESS PAYMENT
“Project ___________________
“Job No. ___________________
“The signer of this document has been paid and has received a progress payment in the sum of $___________ for all labor, services, equipment, or materials furnished to the property or to _____________________ (person with whom signer contracted) on the property of _______________________ (owner) located at ______________________ (location) to the following extent: ______________________ (job description). The signer therefore waives and releases any mechanic’s lien right, any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights for persons in the signer’s position that the signer has on the above referenced project to the following extent:
“This release covers a progress payment for all labor, services, equipment, or materials furnished to the property or to __________________ (person with whom signer contracted) as indicated in the attached statement(s) or progress payment request(s), except for unpaid retention, pending modifications and changes, or other items furnished.
“The signer warrants that the signer has already paid or will use the funds received from this progress payment to promptly pay in full all of the signer’s laborers, subcontractors, materialmen, and suppliers for all work, materials, equipment, or services provided for or to the above referenced project in regard to the attached statement(s) or progress payment request(s).
“Date ____________________________
“_________________________________ (Company name)
“By ______________________________ (Signature)
“_________________________________ (Title)”
(d) If a claimant or potential claimant is required to execute a waiver and release in exchange for or to induce the payment of a final payment and is not paid in good and sufficient funds in exchange for the waiver and release or if a single payee check or joint payee check is given in exchange for the waiver and release, the waiver and release must read:
“CONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
“Project ___________________
“Job No. ___________________
“On receipt by the signer of this document of a check from ________________ (maker of check) in the sum of $____________ payable to _____________________ (payee or payees of check) and when the check has been properly endorsed and has been paid by the bank on which it is drawn, this document becomes effective to release any mechanic’s lien right, any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights for persons in the signer’s position that the signer has on the property of _____________________ (owner) located at ______________________ (location) to the following extent: ______________________ (job description).
“This release covers the final payment to the signer for all labor, services, equipment, or materials furnished to the property or to __________________ (person with whom signer contracted).
“Before any recipient of this document relies on this document, the recipient should verify evidence of payment to the signer.
“The signer warrants that the signer has already paid or will use the funds received from this final payment to promptly pay in full all of the signer’s laborers, subcontractors, materialmen, and suppliers for all work, materials, equipment, or services provided for or to the above referenced project up to the date of this waiver and release.
“Date ____________________________
“_________________________________ (Company name)
“By ______________________________ (Signature)
“_________________________________ (Title)”
(e) If a claimant or potential claimant is required to execute an unconditional waiver and release to prove the receipt of good and sufficient funds for a final payment and the claimant or potential claimant asserts in the waiver and release that the claimant or potential claimant has been paid the final payment, the waiver and release must:
(1) contain a notice at the top of the document, printed in bold type at least as large as the largest type used in the document, but not smaller than 10-point type, that reads:
“NOTICE:
“This document waives rights unconditionally and states that you have been paid for giving up those rights. It is prohibited for a person to require you to sign this document if you have not been paid the payment amount set forth below. If you have not been paid, use a conditional release form.”; and
(2) below the notice, read:
“UNCONDITIONAL WAIVER AND RELEASE ON FINAL PAYMENT
“Project___________________
“Job No.___________________
“The signer of this document has been paid in full for all labor, services, equipment, or materials furnished to the property or to ___________________ (person with whom signer contracted) on the property of ______________________ (owner) located at ______________________ (location) to the following extent: ______________________ (job description). The signer therefore waives and releases any mechanic’s lien right, any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights for persons in the signer’s position.
“The signer warrants that the signer has already paid or will use the funds received from this final payment to promptly pay in full all of the signer’s laborers, subcontractors, materialmen, and suppliers for all work, materials, equipment, or services provided for or to the above referenced project up to the date of this waiver and release.
“Date ____________________________
“_________________________________ (Company name)
“By ______________________________ (Signature)
“_________________________________ (Title)”
§ 53.285. Attempted Compliance
(a) A waiver or release shall be construed to comply with this subchapter and is enforceable in the same manner as a waiver and release under this subchapter if the waiver or release:
(1) is furnished in attempted compliance with this subchapter; or
(2) evidences by its terms intent to comply with this subchapter.
(b) Any provision in any waiver or release furnished in attempted compliance with this subchapter that expands or restricts the rights or liabilities provided under this subchapter shall be disregarded and the provisions of this subchapter shall be read into that waiver or release.
(c) This section expires August 31, 2012.
§ 53.286. Public Policy
Notwithstanding any other law and except as provided by Section 53.282, any contract, agreement, or understanding purporting to waive the right to file or enforce any lien or claim created under this chapter is void as against public policy.
§ 53.287. Certain Agreements Exempt
This subchapter does not apply to a written agreement to subordinate, release, waive, or satisfy all or part of a lien or bond claim in:
(1) an accord and satisfaction of an identified dispute;
(2) an agreement concerning an action pending in any court or arbitration proceeding; or
(3) an agreement that is executed after an affidavit claiming the lien has been filed or the bond claim has been made.
Classifying Workers: Independent Contractors Or Employees?
From rss.justia
The Government Proposes To Increase Certainty With Respect To Worker Classification
Current Law
For both tax and nontax purposes, workers must be classified into one of two mutually exclusive categories: employees or self-employed (sometimes referred to as independent contractors).
Worker classification generally is based on a common-law test for determining whether an employment relationship exists. The main determinant is whether the service recipient (employer) has the right to control not only the result of the workeras services but also the means by which the worker accomplishes that result. For classification purposes, it does not matter whether the service recipient exercises that control, only that he or she has the right to exercise it.
Even though it is generally recognized that more highly skilled workers may not require much guidance or direction from the service recipient, the underlying concept of the right to control is the same for them. In addition, only individuals can be employees. In determining worker status, the IRS looks to three categories of evidence that may be relevant in determining whether the requisite control exists under the common-law test:
(i) behavioral control, (ii) financial control, and (iii) the relationship of the parties.
For employees, employers are required to withhold income and Federal Insurance Contribution Act (FICA) taxes and to pay the employeras share of FICA taxes. Employers are also required to pay Federal Unemployment Tax Act (FUTA) taxes and generally state unemployment compensation taxes. Liability for Federal employment taxes and the obligation to report the wages generally lie with the employer. For workers who are classified as independent contractors, service recipients engaged in a trade or business and that make payments totaling $600 or more in a calendar year to an independent contractor that is not a corporation are required to send an information return to the IRS and to the independent contractor stating the total payments made during the year. The service recipient generally does not need to withhold taxes from the payments reported unless the independent contractor has not provided its taxpayer identification number to the service recipient. Independent contractors pay Self-Employment Contributions Act (SECA) tax on their net earnings from self-employment (which generally is equivalent to both the employer and employee shares of FICA tax). Independent contractors generally are required to pay their income tax, including SECA liabilities, by making quarterly estimated tax payments.
For workers, whether employee or independent contractor status is more beneficial depends on many factors including the extent to which an independent contractor is able to negotiate for gross payments that include the value of nonwage costs that the service provider would have to incur in the case of an employee. In some circumstances, independent contractor status is more beneficial; in other circumstances, employee status is more advantageous.
Under a special provision (section 530 of the Revenue Act of 1978 which was not made part of the Internal Revenue Code), a service recipient may treat a worker as an independent contractor for Federal employment tax purposes even though the worker actually may be an employee under the common law rules if the service recipient has a reasonable basis for treating the worker as an independent contractor and certain other requirements are met. The special provision applies only if (1) the service recipient has not treated the worker (or any worker in a substantially similar position) as an employee for any period beginning after 1977 and (2) the service recipient has filed all Federal tax returns, including all required information returns, on a basis consistent with treating the worker as an independent contractor.
If an employer meets the requirements for the special provision with respect to a class of workers, the IRS is prohibited from reclassifying the workers as employees, even prospectively and even as to newly hired workers in the same class. Since 1996, the IRS has considered the availability of the special provision as the first part of any examination concerning worker classification. If the IRS determines that the special provision applies to a class of workers, it does not determine whether the workers are in fact employees or independent contractors. Thus, the worker classification continues indefinitely even if it is incorrect.
The special provision also prohibits the IRS from issuing generally applicable guidance addressing the proper classification of workers. Current law and procedures also provide for reduced penalties for misclassification where the special provision is not available but where, among other things, the employer agrees to prospective reclassification of the workers as employees.
Reasons for Change
Since 1978, the IRS has not been permitted to issue general guidance addressing worker classification, and in many instances has been precluded from reclassifying workers a even prospectively a who may have been misclassified. Since 1978 there have been many changes in working relationships between service providers and service recipients. As a result, there has been continued and growing uncertainty about the correct classification of some workers.
Many benefits and worker protections are available only for workers who are classified as employees. Incorrect classification as an independent contractor for tax purposes may spill over to other areas and, for example, lead to a worker not receiving benefits for unemployment (unemployment insurance) or on-the-job injuries (workersa compensation), or not being protected by various on-the-job health and safety requirements.
The incorrect classification of workers also creates opportunities for competitive advantages over service recipients who properly classify their workers. Such misclassification may lower the service recipientas total cost of labor by avoiding workersa compensation and unemployment compensation premiums, and could also provide increased opportunities for noncompliance by service providers.
Workers, service recipients, and tax administrators would benefit from reducing uncertainty about worker classification, eliminating potential competitive advantages and incentives to misclassify workers associated with worker misclassification by competitors, and reducing opportunities for noncompliance by workers classified as self-employed, while maintaining the benefits and worker protections associated with an administrative and social policy system that is based on employee status.
Proposal
The proposal would permit the IRS to require prospective reclassification of workers who are currently misclassified and whose reclassification has been prohibited under current law. The reduced penalties for misclassification provided under current law would be retained, except that lower penalties would apply only if the service recipient voluntarily reclassifies its workers before being contacted by the IRS or another enforcement agency and if the service recipient had filed all required information returns (Forms 1099) reporting the payments to the independent contractors. For service recipients with only a small number of employees and a small number of misclassified workers, even reduced penalties would be waived if the service recipient (1) had consistently filed Forms 1099 reporting all payments to all misclassified workers and (2) agreed to prospective reclassification of misclassified workers. It is anticipated that, after enactment, new enforcement activity would focus mainly on obtaining the proper worker classification prospectively, since in many cases the proper classification of workers may not have been clear. (Statutory employee or nonemployee treatment as specified under current law would be retained.)
The Department of the Treasury and the IRS also would be permitted to issue generally applicable guidance on the proper classification of workers under common law standards. This would enable service recipients to properly classify workers with much less concern about future IRS examinations. Treasury and the IRS would be directed to issue guidance interpreting common law in a neutral manner recognizing that many workers are, in fact, not employees.
Further, Treasury and the IRS would develop guidance that would provide safe harbors and/or rebuttable presumptions, both narrowly defined. To make that guidance clearer and more useful for service recipients, it would generally be industry- or job-specific. Priority for the development of guidance would be given to industries and jobs in which application of the common law test has been particularly problematic, where there has been a history of worker misclassification, or where there have been failures to report compensation paid.
Service recipients would be required to give notice to independent contractors, when they first begin performing services for the service recipient, that explains how they will be classified and the consequences thereof, e.g., tax implications, workersa compensation implications, wage and hour implications.
The IRS would be permitted to disclose to the Department of Labor information about service recipients whose workers are reclassified.
To ease compliance burdens for independent contractors, independent contractors receiving payments totaling $600 or more in a calendar year from a service recipient would be permitted to require the service recipient to withhold for Federal tax purposes a flat rate percentage of their gross payments, with the flat rate percentage being selected by the contractor. The proposal would be effective upon enactment, but prospective reclassification of those covered by the current special provision would not be effective until the first calendar year beginning at least one year after date of enactment. The transition period could be up to two years for independent contractors with existing written contracts establishing their status.
Home Insurance Question
From feedproxy.google Rating: 0 Posted By: vjsinha What is the appropriate home insurance amount? I have this home insurance quote. But it gives like 5 options, Guarenteed replacement Value, etc. Someone knowledgeable may want to explain. I do not want to be underinsured nor overinsured. Thanks. My house value as per county records is around $132000 and land is about 40000 of it, so the value is about 92000. But to construct a similar house, it would cost about 120000 based on current contractor’s estimate. Question Deals
W2 vs 1099
From feedproxy.google Rating: 0 Posted By: wizardking I am looking at a contractor position that will offer me $20/h on a 1099 or $16.67 on a w2 in WA (no income tax in WA). Just straight salary, no benefits. Tax would be based on being single. Does anyone know an easy way to calculate the tax I will be paying out of pocket on a 1099 so I can compare the two? Tax Deals
Question about 1099 vs W2 for elder care at home
From feedproxy.google Rating: 0 Posted By: abugarcias I am taking care of my grandmother’s finances as she is 96 and cannot see to pay her bills or write checks. She has a lady that comes in to help frequently with bathing, errands, household chores, etc… Before I got involved with things, the lady was paying all of her bills and actually signing as her name on all checks, and would occasionally write checks to herself to cash and get paid. Nothing was reported, everything was “under the table”. It was getting to be too much for this lady to help pay the bills and manage finances hence why I stepped in. I’ve looked at the requirements for independent contractor vs household employee. Most sites say elder care is W2 as a household employee however there are unique situations such as: 1) the lady that comes in to help comes and goes as she pleases. My grandmother nor I tell her when to come. She will stop in about every other day to help with things, if things need to be done. According to the IRS regulations it would seem that she is indeed a contractor and can be issued a 1099. Thoughts and interpretations of IRS 926 on this matter? From what I see since she comes and goes as she pleases and offers services to another lady, she is a contractor. I am planning on consulting a CPA but wanted to see the general consensus here in the mean time. Thanks. Question Deals
Mold found in rental home, How to proceed to properly cover myself
From feedproxy.google Rating: 0 Posted By: 07pilot4me i searched and found a few mold related topics in the archives, so decided to make a new post. short story: moved into rental home in California, bathroom DOES NOT have a vent fan (which i thought was weird) 1990′s construction Oct 2011, move-in inspection notes cracks in shower and bath tub tile Dec 2011 – noted to property management that cracks seem to be expanding and new cracks are showing up (most of the cracks starting from partition/glass between bath tub and shower) Feb/March 2011 – property management sends out a contractor to inspect cracks in tile. contractor says that they are most likely from the foundation shifting and that the prop manager will probably opt to NOT fix the problem. May 2011 – contractor calls and sets up appt to fix the tiles (surprised by this), he tears appart tiles and reveals: needless to say, more problems than what I/property management/contractor expected what are some of the things/steps that i need to make sure i do to: basically asking what savvy FWF members (renters/landlords/lawyers etc…) would do in my situation Personal Finance Deals
Los Angeles Accident Attorney
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