In order to secure a real property owner’s payment obligation, contractors, mechanics, materialmen, and other workmen are often granted a lien referred to by a variety of names including, materialmen’s liens, workmen’s liens, and mechanic’s liens. While the parlance varies by jurisdiction, they are generally referred to as mechanic’s liens in Texas—even in the context of real property.
WTE-S&S AG Enters., LLC v. GHD, Inc., 2017 Bankr. LEXIS 2343 (Bankr. N. D. Ill. August 18, 2017)
CONSTRUCTION LEGAL EDGE This newsletter is informational only and should not be construed as legal advice. 2017, Pietragallo Gordon Alfano Bosick & Raspanti, LLP. All rights reserved. SUMMER 2017
ARTICLES CONTAINED IN THIS ISSUE OF THE CLE: 1 3D Printing is Changing Construction 2 Attack of the Drones: Are You Insured? 3 Third Circuit Cautions Contractors about the Scope of the
Bankruptcy Automatic Stay 4 Avoiding Liability for Injuries to Downstream Employees through
In re: Linear Electric Co., Inc., No. 16-1477, 2017 U.S. App. Lexis 5527 (3d Cir., March 30, 2017)
In an opinion by Judge Roth issued on March 30, 2017, the Court of Appeals for the Third Circuit held that two suppliers who had sold electrical materials to a bankrupt contractor had violated the automatic stay by asserting a construction lien against the owner of the development where the contractor had installed the materials supplied.
On April 28, 2017, the California Legislature passed Senate Bill No. 496, which limits the defense and indemnity obligations of design professionals who enter into contracts to perform design professional services on or after January 1, 2018. Existing law limits design professional defense and indemnity obligations for contracts entered into with public agencies to claims that arise out of, pertain to, or relate to the negligence, recklessness or willful misconduct of the design professional.
On March 30, the Third Circuit Court of Appeals filed an opinion regarding whether the filing of a mechanic’s lien after the commencement of a bankruptcy case violates the automatic stay. Given the frequent involvement of many companies in Delaware bankruptcy cases, you should be aware of the Third Circuit’s ruling.
Your business real estate may not be safe from a separate, but related, company’s bankruptcy.
A corporate manager with control over construction funds, facing personal liability under the NY trust fund law to an unpaid sub and the homeowner for improper diversion of funds, cannot discharge that liability in a personal bankruptcy. Even when the original contracts were with a corporate entity. That is the lesson from the federal bankruptcy court in Manhattan.
A client who is building a large mixed use development called me yesterday with a dilemma. He had received a letter from a local equipment supplier, who was on the verge of bankruptcy because the sub-contractor who had engaged him had gone into administration after the hire period had come to an end. He was pleading with my client to help him recover some £20,000 of hire fees still owed to him.