A recent bankruptcy plan filed by Munilla Construction Management (MCM)–the general contractor for the failed pedestrian bridge at Florida International University (FIU)–paves the way for judicially recognized interpleader-type scenarios allowing insurers to resolve multiple-claimant incidents where there may be insufficient policy limits. On November 15, 2018, the Southern District of Florida Bankruptcy Court agreed to expedite a process that would allow victims of the pedestrian bridge collapse to start receiving compensation payouts following the creation of a victim’s fund.

When creditors are left holding the bag after providing valuable goods or services to a company that files for bankruptcy relief, they often feel misused and that an injustice has occurred. After all, they are legitimately owed money for their work or their product, and the debtor has in effect been unjustly enriched because it received something for nothing. Unsecured creditors do not have recourse to collateral, and typically have to wait in line to receive cents on the dollar.

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.