Missouri Release of Performance Bonds Required

An interest case for consideration on the differences between performance bond versus a warranty bond:

"At issue here is a performance or completion bond, not a warranty bond. A performance bond protects obligee by obligating the surety to cover any extra costs obligee may incur to complete project if principal defaults." As to compliance issues, record supported award in Contractor's favor against Sub-Contractors, including costs of testing. Contract did not release Sub-Contractors from liability. Homeowners Association was not entitled to damages for repair, nor to attorney fees because it did not prevail.
Essex Contracting, Inc. and Federal Insurance Company, Appellants v. Jefferson County, Missouri, et al., Respondents, Patrick J. Acheson, et al., Intervenors/Respondents, J. H. Berra Paving Co., Inc., Respondent/Cross-Appellant, Boling Concrete Const., Inc., Respondent/Cross-Appellant. Missouri Court of Appeals Eastern District

New Statistics From the EEOC Demonstrate that Workplace Discrimination Claims Continue to Soar . . .

New Statistics From the EEOC Demonstrate that Workplace Discrimination Claims Continue to Soar . . .

The latest annual statistics on discrimination charges filed with the Equal Employment Opportunity Commission (“EEOC”), the federal agency that enforces Title

VII

, suggest that discrimination claims are alive and well in the workplace. All forms of Title

VII

discrimination rose between 2006 and 2007.

TRENDS IN EEOC CHARGES	Number of Cases: 2006	Number of Cases: 2007	% Change
Race	27,238	30,510	+12%
Retaliation	22,555	26,663	+18%
Sex	23,247	24,826	+7%
Age	16,548	19,103	+15%
Disability	15,575	17,734	+14%
National Origin	8,327	9,396	+12%

In 2007, charges of racial bias rose 12% from 2006 (30,000+ cases in 2007), to their highest level in 13 years.  Because race claims are the most common, they are the types of claims company executives need to be most vigilant about. Moreover, as the American workforce absorbs more immigrants, preventing racial discrimination lawsuits is going to require even greater vigilance.

If you have questions, concerns, or have received notification that a current or former employee has filed a Charge of Discrimination, then

Jane

 

Bruer

, an Employment Lawyer with Spencer Fane Britt & Browne, can help.  You can find

Jane

’s contact information at: http://www.spencerfane.com/Attorney/SJane-Bruer.htm

Missouri developer jailed for violating Clean Water Act

Wentzille developer sentenced to 15 months for violating Clean Water Act St. Louis Business Journal Eric Johnson was sentenced to 15 months in prison and ordered to pay $100,000 in restitution for violating the Clean Water Act in association with his Wentzville subdivision development, U.S. Attorney Catherine Hanaway said Tuesday. Johnson, 43, of Springfield, Ill.,pleaded guilty in December to one count of violating the Clean Water Act and one felony count of bank fraud. He admitted with his plea that he failed to maintain runoff controls at his building site, resulting in storm water run-off into Dry Branch Creek, and used his building escrow money to pay other obligations, resulting in the foreclosure and losses to his partner and the lender. Johnson was the owner and operator of a construction site known as Providence on Peine and Providence Meadows developments in Wentzville. He obtained construction storm water permits from the Missouri Department of Natural Resources. In August 2004, inspectors with the Environmental Protection Agency observed numerous permit violations at both Providence sites, including lack of inspections and failure to evaluate, maintain, and implement runoff controls, resulting in off-site migration of a significant amount of sediment and accumulation of sediment in Dry Branch Creek, according to a release from Hanaway's office. Johnson was in the business of developing and building residential subdivisions in both St. Charles and Lincoln counties from 2003 to 2006. He had a loan with First Service Bank for $2.6 million to develop a residential subdivision known as Woodsmill Estates. An escrow account was set up at Commonwealth Land Title Insurance Co. to pay subcontractors of the development. However, during the time of this loan, Johnson used the escrow money to pay subcontractors and other bills for other projects, according to the release. The bank ultimately discovered this practice and foreclosed on the loan, which resulted in a loss to the bank in excess of $100,000. Additionally, Johnson's business partner, who co-signed on the loan, saw a loss between $400,000 and $500,000.

An interesting insurance policy interpretation question

Water Damage Exclusion Trumps Wind Cause Argument

Concurrent Causation Policy Language Supports Exclusion

Bao v. Liberty Mutual Fire Ins. Co.,--- F.Supp.2d ---, 2008 WL 542384, (D.Md., Feb. 27, 2008)

This breach of contract claim arose out of a denial of insurance coverage by Liberty Mutual Fire Insurance Company. Theresa Bao had an all-risk home insurance policy with Liberty Mutual when her Baltimore home was damaged during a strong wind and rain storm. Bao’s home inspector concluded that the home was damaged when a wind-blown object broke the sliding glass door and, consequently, rain entered the basement and collected at the basement floor.

Conversely, Liberty Mutual’s inspector claimed that the damage occurred after water accumulated in the outside basement stairwell leading to the glass door, causing the door to break and water to enter the basement. Bao’s insurance plan excluded water damage, and included “surface water” in the definition of water damage. Liberty Mutual denied coverage for damage to Bao’s basement. Bao brought suit with U.S. District Court. Liberty Mutual moved for summary judgment.

The District Court first found that water from rain constituted “surface water” under Maryland case law. Bao then argued that the damage here was the direct result of wind, not water, and thus, should be covered. The Court rejected this argument, because the policy stated that damage from wind was only covered if it was not first excluded by the water damage exclusion. Because the damage fell under a specific exclusion, in these particular facts, the Court found that the policy did not permit Bao to circumvent the water damage clause.

Additionally, Bao argued a matter of first impression before the Court, whether the District should accept the “efficient proximate cause” argument. Under this reasoning, even if the exclusion was applicable and water damage was excluded, the wind damage occurred prior to the water damage, and thus should be considered as the proximate cause of the damage.

The Court rejected the proximate cause reasoning and supported the “concurrent causation” scheme found in the policy language. Under this reasoning, an insurance plan can exclude certain types of damage, and the issue of proximate cause will not affect the exclusions.

The District Court granted summary judgment to Liberty Mutual.

The importance of accurately complying with the Kansas mechanic's lien statute!

Court of Appeals of Kansas.

Douglas BUCHANAN, Appellee,

v.

Jerry W. OVERLEY and Carol J. Overley, Appellants,

and

Community Bank of Wichita, Inc., Appellee.

No. 97,329.

March 7, 2008.

Background: Contractor for construction of single-family home petitioned for foreclosure of mechanic's lien. The District Court, Sedgwick County, Karl W. Friedel, J., ordered foreclosure. Homeowners appealed.

Holding: The Court of Appeals, McAnany, J., held that contractor did not strictly comply with requirement, in mechanic's lien statute, of verifying that the contractor's address, as used by suppliers on a number of the bills in exhibit to lien statement, was sufficient for service of process upon the contractor.

Reversed.

Bankruptcy advise for Contractors

Well, I hate to say it but it is time to start the process of learning about bankruptcy and what to do when this terror shows up at your doorstep......look at these stats from the affluent county outside of Kansas City:

Johnson

County

Appraisers

Update

 

Foreclosures are impacting values in

Johnson

County

            2007 5-10% of sales were foreclosures

            Jan-Feb of 2008 25% of sales were foreclosures

Changes in Property Valuation – instead of using 19 months of sales, the appraisers’ office is now using 10-11 months of sales in 2007 for valuation and only 3 comps instead of 5 – notices were just recently mailed out

Total residential value in

Johnson

County

rose 2.39%, Agricultural Value rose 113.45%

New Construction – Building permits down 25% from 2006-2007 From 3200 permits to 1700 permits current, Douglas County (Lawrence) has issued 2 permits Jan-Feb 2008 – we have 6.9 years worth of vacant lots in Johnson County

Sales prices by area for 2007

• Area 310 up 7.9%
• Area 315 down .9%
• Area 320 up 8.5%
• Area 325 down .5%
• Area 330 up 6.9%
• Area 335 down .5%
• Area 340 up 1.3%
• Area 345 up 3.9%

Old Leawood had the most appreciation – up 4.12% and Lenexa West of I-35 (Falcon Neighborhoods) most deprecation – down 3.08%

Average Sales Price  - Resales $244,041 and New Sales $380,083

Update on Immigration issues for the Heartland: No Match Letters Procedures

Please read, review and most of all......get ready for the government's efforts to deal with I-9 issues!

Procedures for Employers Who Receive a No-Match Letter (03/26/2008)

Supplemental Proposed Rule: http://www.dhs.gov/xlibrary/assets/press_nomatch-snprm.pdf

Department of Homeland Security (DHS) filed in the Federal Register a "supplemental proposed rule" entitled "Safe Harbor Procedures for Employers Who Receive a No-Match Letter," and invited public comments to be filed on or before April 25, 2008. The proposed rule does not contain an effective date. DHS previously filed a "final rule" on August 15, 2007 but implementation of that rule was preliminarily enjoined by the United States District Court for the Northern District of California on October 10, 2007. The district court based its preliminary injunction on three findings. According to DHS, "This supplemental proposed rule clarifies certain aspects of the August 2007 Final Rule and responds to the three findings underlying the district court's injunction."

*** Capsules ***

Construction Forecast for St. Louis, Missouri

This forecast looks similar to KC's forecast....

Commercial real estate experts forecast tough times locally By Riddhi Trivedi St. Clair ST. LOUIS POST-DISPATCH Tuesday, Mar. 25 2008 Commercial real estate professionals are preparing for changes in the market as the impact of the national housing slowdown and tighter lending standards trickle down to the St. Louis area. Three of those professionals shared their opinions on the office, industrial and investment property markets with the Post-Dispatch. They are expected to present their forecasts today at an annual event in Clayton held by the Society of Industrial and Office Realtors. INVESTMENT PROPERTY Area sales of investment property — office and industrial buildings bought by individuals and institutions for investment purposes — have slowed, said Tripp Hardin, senior vice president in the Clayton office of CB Richard Ellis. In the first three months of 2007, there were nine sales of office buildings with a price tag of at least $5 million for a total of $137 million. So far this year, there have been only two major sales totaling $67 million, he said. "This year as a whole compared to 2007 will not be business as usual," Hardin said. For industrial property, only one investment purchase for $19 million has taken place this year, compared to four sales for $22 million in the first three months of 2007. "The first half of this year is going to be a wait-and-see period for everyone," Hardin said. "There are fewer buyers in the market and there is less property in the pipeline." Sellers are not putting their properties on the market because they don't want their assets to be undervalued in a slow market. Many lenders have stopped financing large investments, Hardin said, and those that remain in the market are nervous. "They want more cash (down payment), better returns and underwriting standards are higher," he said. Historically, the St. Louis region has been able to weather negative cycles well, Hardin said, adding, "Hopefully we will see a more normal second half." INDUSTRIAL PROPERTY In industrial development, the housing meltdown and tougher credit environment are having an impact, said Terry Stieve, senior vice president and principal for the Clayton office of Colliers Turley Martin Tucker. Industrial property includes warehouse, distribution and manufacturing space. St. Louis is a regional distribution hub, not a national one, he said, and when the economy slows the regional hubs suffer. During slow economic times, companies tend to cut back on expanding into regional markets and handle more business from national hubs. In recent years, much of the demand for industrial space in the region has come from national companies looking for warehouse and distribution space, Stieve said, rather than local companies expanding. With the nation going through a major housing slowdown, house product suppliers and other large national retailers have reined in expansion plans. As a result, Stieve expects to see a significant decrease in speculative building — where developers build space without having tenants lined up. Speculative development lets the market accommodate unexpected growth from companies that need space immediately. Speculative development signals a healthy market for industrial space and high developer confidence. Of approximately 3 million square feet of industrial space added to the market last year, two-thirds was speculative development. This year, Stieve expects to see 3.4 million square feet of new space, but only 1 million square feet of that is speculative construction. "If we go into this year — with the tougher lending environment — and no speculative space (already in the market) to attract potential tenants, I would be really depressed," he said. OFFICE DEVELOPMENT Speculative construction of office buildings also will take a hit, said Mike Wolken, principal in Coldwell Banker Commercial. Last year developers started constructing four office projects with large amounts of speculative space: Meridian at Brentwood, Lakeside Crossing One in Maryland Heights, Central Park Square One in Chesterfield and 825 Maryville Office in Maryville. "That was different from the couple of years before last year, but we won't see it again for a while," Wolken said. "In this financing environment (developers) can't get financing without not only significant pre-lease but strong, credit-worthy leases." Given the lack of new office space, there will be greater demand for existing top tier — class A — office space allowing landlords to cut back on incentives offered to tenants. rtstclair@post-dispatch.com | 314 340 8206

Going Green in Kansas and Missouri

The continued movement to sustainability or "going green" appears to be taking root here in the Midwest, according to this note from the Kansas City Star:

'Green' bills get states' attention

By JASON NOBLE and DAVID KLEPPER
The Kansas City Star

JEFFERSON CITY | Kansas and Missouri lawmakers are trying to go green this year but, so far anyway, it looks to be a pretty pale shade.

In Missouri, lawmakers have introduced nearly 20 bills promoting energy-efficient technologies and encouraging environment-friendly development — mostly through tax incentives aimed at consumers.

Similar proposals are under consideration in Kansas, although critics say they’re little more than concessions to calm opponents of a controversial power plant expansion.

“We’re pretty sensitive to the issue,” said Missouri Senate Majority Leader Charlie Shields, a St. Joseph Republican.

“There’s a lot of attention being paid to environmental, or green, initiatives and energy-saving initiatives.”

Both states, though, are avoiding far-reaching legislation and generally shying away from mandates that would require action by businesses or consumers.

Show Me green

In Missouri, the bills showing movement this year rely on tax policy as a prod to change consumer habits and business operations.

The House last week gave first-round approval to a bill granting a $2,000 income tax deduction for the purchase of hybrid vehicles manufactured in the United States.

“Government should be in the forefront of change, but we have to have an incentive,” said Rep. David Sater, a Cassville Republican and the bill’s sponsor.

The tax break would be available for American-made cars such as the Ford Escape and Chevrolet Malibu hybrids — both of which are produced at auto plants in the Kansas City area — but would leave out the Japanese-made Toyota Prius, far and away the country’s best-selling hybrid.

In the Senate, language recently added to a large agriculture bill also addresses alternative-fuel vehicles. The bill includes not only a tax deduction for hybrid purchases, but also incentives for consumers who purchase 85-percent ethanol gasoline and gas-station owners who install alternative fuel facilities.

A green omnibus bill encompassing several Democratic and Republican proposals is also in the works, said Sen. Kevin Engler, a Farmington Republican. That bill will include legislation, introduced by Sen. Jeff Smith, a St. Louis Democrat, aimed at encouraging environmentally-friendly development in the state.

Smith’s legislation would create a “Show Me Green” sales tax holiday each April in which consumers could purchase Energy Star-certified energy-efficient appliances free of state and local sales tax.

Smith’s bill would also create tax credits for constructing energy-efficient buildings, completing home-energy audits and buying Energy Star-certified appliances.

Such incentives could have far-ranging economic effects, he said.

“Encouraging green building can spawn more residential development at a time when the housing market is lagging,” Smith said. “It can spawn the development of new industries that will be created to meet the demand for more of the products that go into green houses.”

A few lawmakers have proposed bills demanding more forceful action against global warming, although it’s unlikely they’ll weather the legislative process.

A bill presented in a House committee last week by Rep. Talibdin El-Amin, a St. Louis Democrat, would go the furthest by requiring greenhouse-gas emissions in the state be reduced to 1990 levels by 2022.

Industry, manufacturing and energy lobbyists castigated the bill.

“We are not an island or a nation by ourselves. We have to compete with other states, with other nations and even our neighbors,” said David Overfelt, a lobbyist for Associated Industries of Missouri. “We’re afraid these types of regulations would make it virtually impossible to expand or even consider expanding in this state.”

One exception to lawmakers’ no-mandates mantra, however, is a Senate bill requiring all diesel fuel sold in the state to contain 5 percent biodiesel, an alternate fuel derived from vegetable oil or animal fat.

In Kansas

Kansas lawmakers have put forward several green bills, but all are overshadowed by the key issue of the year: a coal-burning power plant expansion in western Kansas.

Both the Senate and the House have passed legislation designed to clear the way for Sunflower Electric Power Corp. to build two new coal plants at its existing Holcomb, Kan., plant.

The state’s top regulator rejected the plans last year, citing the estimated 11 million tons of carbon dioxide the expanded plant would produce.

CO2 is currently unregulated by the state.

Lawmakers balked at the rejection, and created legislation to eliminate the regulator’s power to reject the plant so long as it meets current state environmental rules.

Gov. Kathleen Sebelius has vowed to veto the bill, saying it doesn’t do enough to encourage renewable energy or protect the environment.

To balance the coal plant bill, lawmakers inserted several provisions they hoped would curry favor with environmentalists.

They include:

•Standards to require most utilities to generate 10 percent of their electricity from renewable sources by 2012 and 20 percent by 2020.

•A proposal to allow those with solar panels on their homes to sell excess electricity back to their utilities.

•Incentives for landlords to invest in energy-efficient construction and air/heating systems.

•The creation of a new energy commission that will include both scientists and laypeople to study the state’s future energy needs and the role global climate change may play.

“I thought it was one of the greenest bills in the country,” said Rep. Rob Olson, an Olathe Republican who serves as vice chairman of the House Energy and Utilities Committee. He said the Holcomb expansion will include the latest in pollution safeguards and that it’s unrealistic to think Kansas can have a secure power supply without coal.

“What’s enough?” he asked, noting the opposition from environmental groups. “Do the people of Kansas want blackouts?”

Environmental groups say the modest green initiatives don’t come close to offsetting the backward step they think the coal plant bill to be.

The phrase “green lipstick on a pig” has been used more than once.

The environmentally friendly components “are an attempt to attract those legislators with environmental concerns,” said Stephanie Cole, spokeswoman for the Kansas Sierra Club chapter. “There’s no reason that Kansas shouldn’t have those in place already.”

CONSTRUCTION ECONOMIC FORECAST

Economist predicts tumultuous year for construction

Washington Business Journal

Nonresidential construction faces a wide variance in demand, materials cost and labor availability, according to the Construction Inflation Alert released Monday by the Associated General Contractors of America.

AGC Chief Economist Ken Simonson said some growth is expected in segments such as power and energy, but other segments, such as lodging, "will slow or decline."

"Diesel, copper and steel are among materials costs likely to accelerate, while others remain benign," Simonson said.

In addition, the increase in diesel fuel prices -- as well as diesel fuel's importance to highway construction -- makes it more likely that highway costs will rise even more.

Looking beyond 2008, Simonson says there are two factors that make it likely that a 6 percent to 8 percent growth rate for construction input prices will be sustained. First, construction inputs, such as diesel fuel, steel and copper, are in demand worldwide. Second, construction will always be dependent on physical delivery of heavy, bulky, relatively low-value materials for which transportation and fuel costs are a major part of the delivered price.

Associated General Contractors of America is the largest and oldest national construction trade association in the United States, representing 33,000 firms.

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