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Welcome to our eighth issue of 2024 for our construction industry insights e-newsletter - The Site Report.
ANNOUNCEMENTS
We are very pleased to announce that we are reaffirming our commitment to Mansfield Certification for 2024-2025. Since joining Mansfield in 2023, Spilman has made strides in increasing the transparency and accessibility of its advancement processes, ensuring all talent at the firm has equitable opportunities for leadership roles and activities. Click here to learn more about the Mansfield Certification.
In addition, 66 of our attorneys were selected by their peers for inclusion on the 2025 Best Lawyers list, five were selected as Best Lawyers "Lawyers of the Year," and 19 others were selected as Best Lawyers "Ones to Watch." Several attorneys nominated are integral parts of the Construction Practice Group including Carl Cather III, Jonathan Deasy, Travis Eckley, Stephanie Eaton, Matthew Georgitis, Matthew Heiskell, Steven Hemric, Clifford Kinney III, Gerald (Gee) Lofstead, Julian Neiser, James Simon, John Teare, Gerald Titus, and Robert Ziogas. Best Lawyers' methodology is designed to capture the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. Click here to see the entire list of recognized attorneys.
SPILMAN EVENTS
You are cordially invited to our event "Your Business in the Digital Era: Legal and Commercial Challenges" on September 19 from 1-5pm in Pittsburgh, PA. This forum, intended for business owners and risk management professionals, is offered free of charge to VIP clients and friends of the firm. We will address cybersecurity threats, data privacy, legal and ethical concerns with AI in business operations, intellectual property protection, and how to avoid and protect yourself from litigation. Click here to learn more and register.
On October 4, we are hosting our 2024 North Carolina SuperVision Labor & Employment Symposium in Winston-Salem, NC. This complimentary symposium is tailored for business owners, HR professionals, and anyone who manages employees. Dive into a day of invaluable insights on topics such as remote work; workplace investigations; AI, emerging technologies, and privacy; union avoidance; workplace violence; and more. Click here to register.
SPONSORED EVENTS
We are sponsoring and looking forward to the WV Chamber of Commerce's Annual Meeting and Business Summit being held August 28-30 at The Greenbrier in White Sulphur Springs, WV. The Business Summit is a highlight of the year and brings together the best and brightest in this region. Click here to learn more and register.
On September 16-18, we are sponsoring the WV Economic Development Council's Annual Fall Conference in Martinsburg, WV. The WVEDC conference promises three days packed with insights, innovations, and inspiration. Click here to learn more.
Thank you for reading!
Stephanie U. Eaton - Co-Chair, Construction Group; Vice Chair of Southern Offices, Litigation Department; Editor, The Site Report
and
Julian E. Neiser - Co-Chair, Construction Group; Vice Chair of Northern Offices, Litigation Department
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Atlantech Decision Enforces Important Lessons About Avoiding Double-Payment Jeopardy in North Carolina Construction Contracts | |
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By James E. Simon
A recent decision from the North Carolina Court of Appeals has highlighted the necessity for general contractors to ensure that they fully comply with notice and lien waiver requirements in order to avoid “double payment jeopardy” in North Carolina.
Under North Carolina law, a second-tier contractor may enforce a subrogation lien against real property if the first-tier contractor fails to pay it for work performed or materials supplied. This applies even if the general contractor had already paid the first-tier contractor for the same work or materials. In that situation, the general contractor can be exposed to “double payment jeopardy”; i.e., paying the first-tier contractor and the second-tier contractor for the same work/materials because the first-tier contractor failed to pass the payments down to the second-tier contractor.
To remedy this potential liability, the North Carolina Legislature established two methods by which general contractors can avoid this situation. Under N.C. Gen. Stat. § 44A-23(b)(1)(a), the general contractor can post a Notice of Contract at the job site within a certain time period after the building permit is issued or the contract is awarded, which forestalls enforcement of these types of subcontractor liens. Alternatively, under N.C. Gen. Stat. § 44A-23(c), the general contractor can issue lien waivers to the subcontractor, which would likewise eliminate the subcontractor’s subrogation lien rights.
In Atlantech Distribution Inc. v. Land Coast Insulation, Inc., the general contractor failed to follow these provisions and subsequently was found liable to pay the second-tier contractor even though it had already paid the first-tier contractor for the second-tier subcontractor’s materials. As the North Carolina Court of Appeals found, the general contractor made two significant errors that subjected it to this “double jeopardy.” First, while the general contractor had appropriately filed a Notice of Contract with the local county clerk, it did not post that Notice of Contract at the jobsite, which meant that it could not take advantage of the protections of N.C. Gen. Stat. § 44A-23(b)(1)(a). Second, while the general contractor had issued partial lien waivers to the subcontractor, it had not issued a final lien waiver. While partial lien waivers can limit the amount of the subcontractor lien to the extent of the lien rights that the general contractor possesses on the property, a partial lien waiver cannot eliminate the subcontractor’s subrogation rights (contrary to a final lien waiver, which does eliminate those rights). Although the general contractor argued that the cumulative total of the partial lien waivers should make them operate in the same manner as a final lien waiver, the Court of Appeals found that argument unpersuasive.
Atlantech should serve as an important reminder to general contractors that (1) double payment jeopardy is an important issue to be aware of in North Carolina, and (2) in order to avoid the situation that arose in Atlantech, general contractors should conscientiously ensure that they are satisfying every element necessary to establish their protections under N.C. Gen. Stat. § 44-23.
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“The program will support the Biden administration’s Buy Clean Initiative to boost lower-carbon building products.”
Why this is important: In connection with the Biden administration’s Buy Clean Initiative to help achieve net zero carbon emissions in federal construction projects by 2050, on August 7, 2024, the EPA announced its plan to implement a program to identify construction materials that are more “climate-friendly” by adding a label to the products for use in federal highway, infrastructure, and building projects. The program is focused on labeling steel, glass, asphalt, and concrete products first, and will have a tiered rating system. The EPA also issued Product Category Rule Criteria that set forth guidelines for manufacturers to develop environmental product declarations that provide information about the environmental impacts of each product. Further, the EPA also released a document that establishes a methodology for assessing the “life-cycle” emissions associated with the production of the product. The EPA plans to include construction products that receive the label in a publicly accessible registry so contractors can more easily identify and purchase them.
The new labeling will be important for general contractors and material supplier subcontractors working on federal construction projects to ensure that project requirements for the use of these “greener” products are met. The new program, and in particular, the Product Category Rule Criteria and “life-cycle” emissions assessment, will also be critical for construction product manufacturers and suppliers to understand so that their products earn the requisite labels for use on federal construction projects. Further, product manufacturers and suppliers will need to monitor inclusion and access to their products in the registry to ensure accuracy of information, and they will need to promote use of their appropriately labeled products to general contractors engaged in federal construction work. Finally, as with any new regulation, there will be a potential for litigation over whether the construction products were appropriately or fairly rated and labeled, whether labels accurately reflect the product’s “life-cycle” emissions, and whether products without the labels can and should be used on federal construction projects. Spilman’s construction team will monitor developments on the new program and report back to our readers as appropriate. --- Stephanie U. Eaton
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“In May, Deep Lake Energy Center filed an application to construct a 150-megawatt plant on the 1,500-acre site of a former surface mine near Summersville.”
Why this is important: Earlier this month, West Virginia regulators approved the construction of a major solar energy plant in Nicholas County. The plant is set to be one of the largest solar facilities in the state and is expected to produce more than 300 jobs during construction. By increasing local energy production, this plant will enhance West Virginia’s energy independence and reduce its reliance on external energy sources. Further, large-scale renewable projects such as this one often lead to improvements in local infrastructure and can stimulate further investment and development in Nicholas County. In the end, this project aligns with the broader goals of sustainability and economic development, marking another significant move toward renewable energy in a state historically reliant on coal. --- Jonathan A. Deasy
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“These aerial devices are improving efficiency and accuracy, and transforming site surveys, project management, and safety protocols.”
Why this is important: The continually growing impact of drones on the construction industry is impossible to ignore, and this article does an excellent job of distilling a few highlights of how construction businesses are putting drones to work to improve their projects and processes. From increased safety to site surveys to remote inspections, drones continue to show themselves to be valuable tools for construction professionals. As with any new technology, however, using drones on projects comes with its own unique risks and potential liabilities. Before implementing a drone program, consultation with an experienced construction lawyer is an excellent way to mitigate risks and ensure potential liabilities are properly addressed in contracts and via supplemental insurance coverage. --- Steven C. Hemric
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“Electric vehicle drivers living in multifamily dwellings are finding a lack of available charging at home.”
Why this is important: As technological improvements make electric vehicles, or EVs, more available, affordable and acceptable among drivers, at least one “roadblock” remains to more expansive adoption of EVs: lack of reliable charging stations at multi-family dwellings, office buildings, and public charging spaces. While EV owners living in single-family homes can charge their EVs at home without much trouble – aside from being mindful of electric utility charging rates that may vary based on time and/or day of the week – those living in condos, townhouses, or apartments have to play “EV musical chairs” with other residents or find a way to charge their EV at work or public station. Often, public stations have broken cables, poor efficiency, or fees for charging regardless of usage. As building owners work toward expanding EV charging stations to accommodate demand, this article highlights some important challenges those building owners must consider: capital costs to install chargers, physical layout of the property to accommodate charging areas, daily charging needs of those using the chargers and selection of appropriate number and voltage of outlets, regular maintenance plans, reliable cellular or WiFi network connectivity, and coordination with electric utilities to understand applicable rates and regulations. If you are considering adding an EV charging station to an existing building, or are working on an EV-related project, then contact Spilman’s Construction Practice Group to assist with evaluating EV needs and solutions. --- Stephanie U. Eaton
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“Aaron Anderson, the director of innovation for Swinerton, dishes on the tech and the tools the firm uses to stay competitive.”
Why this is important: Swinerton, a construction and project management firm, is incorporating generative AI into its operations in partnership with FutureTech and Microsoft. The integration of this technology is aimed at enhancing project design and management processes, highlighting the growing role of AI in the construction industry. Construction professionals should take note of Swinerton’s recent partnership as AI-driven tools can streamline project management by predicting potential issues, optimizing schedules, and managing resources more effectively. This can reduce delays and cost overruns. Further, by automating routine tasks and providing advanced analytics, generative AI can significantly boost productivity on construction sites, leading to faster project completion and reduced labor costs. However, while the integration of generative AI offers numerous benefits, implementation requires a significant investment of time and resources. Construction professionals may face a steep learning curve and need extensive training to utilize these tools efficiently. Additionally, the effectiveness of AI systems heavily depends on the quality of the data they use, meaning poor or incomplete data can lead to inaccurate outputs and unreliable recommendations that affect decision-making. Overall, the use of generative AI represents a significant advancement in the construction industry by promoting greater efficiency, cost savings, and innovation in project execution. Construction professionals however must take a pragmatic approach towards the implementation of any AI systems to not only maximize its benefits, but mitigate its intrinsic risks. --- Jonathan A. Deasy
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Matthew P. Heiskell
Member, Morgantown Office
304.291.7932
mheiskell@spilmanlaw.com
Matt Heiskell is a Member in our Morgantown, West Virginia office where his practice encompasses state and federal trial work and litigation, with a focus on complex commercial litigation, construction, mineral and energy law, corporate and partnership business disputes, consumer finance law, and class actions. He also has experience handling matters before the West Virginia Business Court Division.
Matt's practice involves a variety of entities and matters including fraud and breach of fiduciary duties claims, eminent domain actions, quiet title actions, and partnership disputes.
He has been nominated by his peers for inclusion in The Best Lawyers in America in the areas of Commercial Litigation and Corporate Law. He received his B.A. from West Virginia University, his J.D. from Duquesne University School of Law, and his LL.M. in International Trade and Banking from American University Washington College of Law. Matt is admitted to the West Virginia, New York, and Pennsylvania State Bars; United States District Courts for the Southern and Northern Districts of West Virginia and for the Southern and Eastern Districts of New York; and the United States Court of Appeals for the Fourth Circuit.
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