A single-justice of the Massachusetts Supreme Judicial Court has held that a temporary suspension by the Massachusetts Board of Registration in Medicine must be based on the “preponderance of the evidence,” and not merely “substantial evidence.” See Randall v. Massachusetts Board of Registration in Medicine, SJ-2014-0475.
The Board of Registration in Medicine can summarily (temporarily) suspend a physician’s license if it “determines that a licensee is an immediate and serious threat to the public health, safety, or welfare.” However, the Board must “provide a hearing on the necessity for the summary action within seven days after the suspension.” If the temporary suspension is upheld at that hearing, the temporary suspension remains in effect pending a hearing on the merits of the allegations against the licensee and a final decision.
The single-justice of the SJC agreed that “substantial evidence” was the appropriate standard to be applied when administrative decisions are appealed to the courts, but that it is the inappropriate standard to be applied in the first instance. The single-justice noted that “[w]hile due process requirements may be lessened in the context of a temporary suspension, resulting in shorter time frames and the consideration of the available evidence in less than pristine or complete form, such a suspension must still be based on the preponderance of the evidence actually considered.”
This ruling helps to clarify the standard that must be followed by administrative law judges in determining whether a temporary or summary suspension is warranted. As this type of suspension can cause significant harm to a physician’s practice, even if he or she is later exonerated, this new standard will hopefully ensure that temporary/summary suspensions are only issued when the facts of the case call for such a finding.
Legal updates, news and commentary from Preti Flaherty's Professional Services Attorneys
Architect to Serve Jail Time Over Design and Construction Defects That Killed Los Angeles Firefighter
Wednesday, January 8, 2014
An architect recently pleaded no contest to an involuntary manslaughter charge stemming from the ceiling collapse at a luxury home that the architect designed and built. The architect was sentenced to three years of probation and one year in county jail. For more information regarding this story, see the recent ENR story, "Architect Will Serve Jail Term Over Blaze that Killed L.A. Firefighter."
While most construction professionals strive to meet their obligations based upon pride and professionalism, there are risks on any project that can go beyond those that can be insured. Preti Flaherty attorney Kenneth E. Rubinstein has written on the topic in the Constructor Magazine and has spoken on the topic at the American Council of Engineering Companies 2012 Annual Conference. For further information, Ken can be reached at (617) 226-3868 or (603) 410-1568 or by email at krubinstein@preti.com.
For more information on professional liability matters, contact Ken or any member of our Professional Liability Group.
While most construction professionals strive to meet their obligations based upon pride and professionalism, there are risks on any project that can go beyond those that can be insured. Preti Flaherty attorney Kenneth E. Rubinstein has written on the topic in the Constructor Magazine and has spoken on the topic at the American Council of Engineering Companies 2012 Annual Conference. For further information, Ken can be reached at (617) 226-3868 or (603) 410-1568 or by email at krubinstein@preti.com.
For more information on professional liability matters, contact Ken or any member of our Professional Liability Group.
Mello Construction, Inc. v. Division of Capital Asset Management, 84 Mass. App. Ct. 625 (December 18, 2013)
Tuesday, January 7, 2014
The question presented on appeal was whether a general contractor may sue the Division of Capital Asset Management (DCAM) for money damages after a discretionary decision to deny an annual application for certification to bid on public construction projects. DCAM is the Massachusetts state agency within the Executive Office of Administration and Finance established to oversee public building projects and to administer the public bidding statutes. The Appeals Court affirmed the Superior Court’s dismissal of the contractor’s complaint.
From 1985 until 2004, Mello Construction, Inc. (Mello), a general contractor specializing in large-scale public construction projects, received annual certificates of eligibility from DCAM. In October 2004, Mello submitted its annual application for certification. On August 19, 2005, DCAM issued a preliminary determination denying the application based in part on two negative contractor evaluations. As permitted by the statute (M.G.L. c. 149, §44D), Mello timely requested reconsideration and submitted additional information and documentation to DCAM, including lengthy rebuttals of the allegedly biased evaluations. On October 27, 2005, DCAM, refusing to disregard the negative evaluations, denied Mello's application for four reasons: (1) failure to achieve a minimum average project rating required for certification; (2) receipt of two failing scores on projects; (3) failure to disclose on its application the termination from another project; and (4) failure to disclose the invoking of a performance bond.
After a hearing in January 2006, the Attorney General issued a decision on April 6, 2007, affirming the denial of the application. In July 2007, Mello commenced this Superior Court action against DCAM, seeking monetary damages. On December 1, 2009, DCAM filed a motion to have the case proceed pursuant to a writ of certiorari under M.G.L. c. 249, § 4, which was allowed. The parties then filed cross motions for judgment on the pleadings. DCAM's motion for judgment on the pleadings was granted, Mello's motion was denied, and the complaint was dismissed. Mello filed a timely notice of appeal.
Under the Massachusetts competitive bidding statute, every contract for the construction of public buildings estimated to cost more than $100,000 “shall be awarded to the lowest responsible and eligible general bidder.” DCAM was charged by the Legislature with the duty of certifying bidder eligibility, and eligibility is a prerequisite to bidding on any public construction contracts. Each year, a contractor must submit a detailed application to DCAM and DCAM is required to evaluate the applicant "on the basis of the application and on relevant past performance according to procedures and criteria" mandated by statute and the regulations and guidelines prescribed by DCAM. The contractor has the burden of establishing to DCAM's satisfaction that it is competent and responsible. DCAM has wide discretion in deciding whether to issue a certificate of eligibility.
DCAM's requirements and conditions for certification are lengthy. Some events occurring within the five-year statutory look back period require the mandatory denial of an application for certification, while others constitute justifiable cause for denial. Discretionary grounds for denial include, as herein relevant, the following events: termination for cause from a building project, a record of two project ratings that fall below the passing score established in DCAM's Contractor Certification Guidelines and Procedures (guidelines) on more than one building project, and a record of an invoked performance bond. DCAM may also deny an application based on the provision of either false or misleading information or the failure to provide all required information.
This appeal turned on the meaning of "remedies at law" that an aggrieved party may seek following the exhaustion of its administrative appeal. Mello contended "the remedies at law" referred to in the second paragraph of M.G. L. c. 149, § 44D(4), was the right to bring a civil action for money damages against DCAM with a full jury trial on the merits. However, the court disagreed, noting that the Commonwealth of Massachusetts did not waive its sovereign immunity with respect to any claims arising from the denial of, or refusal to, issue a license or certificate. The court further noted that even if immunity was waived, the legislative intent necessary to infer an implied right of private action from the statute was absent in this case. The court also noted the statute provided an applicant with the remedy of an administrative appeal to the Attorney General and expressly empowered the Attorney General to institute enforcement proceedings, if warranted, against DCAM.
The court was also not persuaded by Mello's argument that a cause of action for money damages against DCAM existed at common law. The court noted that licenses are required to engage in many occupations and businesses; and the loss of a license may cause devastating financial and emotional consequences to an applicant. Nonetheless, there is no right to money damages flowing from an improper licensing action.
To learn more about this case, contact attorney Daniel Sonneborn at 617-226-3800 or by email dsonneborn@preti.com. To learn more about construction law or professional liability matters, contact any member of Preti Flaherty's Professional Liability Practice Group.
From 1985 until 2004, Mello Construction, Inc. (Mello), a general contractor specializing in large-scale public construction projects, received annual certificates of eligibility from DCAM. In October 2004, Mello submitted its annual application for certification. On August 19, 2005, DCAM issued a preliminary determination denying the application based in part on two negative contractor evaluations. As permitted by the statute (M.G.L. c. 149, §44D), Mello timely requested reconsideration and submitted additional information and documentation to DCAM, including lengthy rebuttals of the allegedly biased evaluations. On October 27, 2005, DCAM, refusing to disregard the negative evaluations, denied Mello's application for four reasons: (1) failure to achieve a minimum average project rating required for certification; (2) receipt of two failing scores on projects; (3) failure to disclose on its application the termination from another project; and (4) failure to disclose the invoking of a performance bond.
After a hearing in January 2006, the Attorney General issued a decision on April 6, 2007, affirming the denial of the application. In July 2007, Mello commenced this Superior Court action against DCAM, seeking monetary damages. On December 1, 2009, DCAM filed a motion to have the case proceed pursuant to a writ of certiorari under M.G.L. c. 249, § 4, which was allowed. The parties then filed cross motions for judgment on the pleadings. DCAM's motion for judgment on the pleadings was granted, Mello's motion was denied, and the complaint was dismissed. Mello filed a timely notice of appeal.
Under the Massachusetts competitive bidding statute, every contract for the construction of public buildings estimated to cost more than $100,000 “shall be awarded to the lowest responsible and eligible general bidder.” DCAM was charged by the Legislature with the duty of certifying bidder eligibility, and eligibility is a prerequisite to bidding on any public construction contracts. Each year, a contractor must submit a detailed application to DCAM and DCAM is required to evaluate the applicant "on the basis of the application and on relevant past performance according to procedures and criteria" mandated by statute and the regulations and guidelines prescribed by DCAM. The contractor has the burden of establishing to DCAM's satisfaction that it is competent and responsible. DCAM has wide discretion in deciding whether to issue a certificate of eligibility.
DCAM's requirements and conditions for certification are lengthy. Some events occurring within the five-year statutory look back period require the mandatory denial of an application for certification, while others constitute justifiable cause for denial. Discretionary grounds for denial include, as herein relevant, the following events: termination for cause from a building project, a record of two project ratings that fall below the passing score established in DCAM's Contractor Certification Guidelines and Procedures (guidelines) on more than one building project, and a record of an invoked performance bond. DCAM may also deny an application based on the provision of either false or misleading information or the failure to provide all required information.
This appeal turned on the meaning of "remedies at law" that an aggrieved party may seek following the exhaustion of its administrative appeal. Mello contended "the remedies at law" referred to in the second paragraph of M.G. L. c. 149, § 44D(4), was the right to bring a civil action for money damages against DCAM with a full jury trial on the merits. However, the court disagreed, noting that the Commonwealth of Massachusetts did not waive its sovereign immunity with respect to any claims arising from the denial of, or refusal to, issue a license or certificate. The court further noted that even if immunity was waived, the legislative intent necessary to infer an implied right of private action from the statute was absent in this case. The court also noted the statute provided an applicant with the remedy of an administrative appeal to the Attorney General and expressly empowered the Attorney General to institute enforcement proceedings, if warranted, against DCAM.
The court was also not persuaded by Mello's argument that a cause of action for money damages against DCAM existed at common law. The court noted that licenses are required to engage in many occupations and businesses; and the loss of a license may cause devastating financial and emotional consequences to an applicant. Nonetheless, there is no right to money damages flowing from an improper licensing action.
To learn more about this case, contact attorney Daniel Sonneborn at 617-226-3800 or by email dsonneborn@preti.com. To learn more about construction law or professional liability matters, contact any member of Preti Flaherty's Professional Liability Practice Group.
A Professional's Failure to Perform As Promised Is Cause for Breach of Contract Action
Friday, January 3, 2014
S.D. Cummings & Co., PC provided accounting and business services to a construction industry client. The client asked for a recommendation to an attorney to place a mechanic’s lien on property where he had done some framing, for which he was owed $44,000. Cummings suggested she could provide the services, and gave the client a Representation Letter promising to communicate with all pertinent parties and to prepare all documents necessary to secure the claim, including applications for a mechanic’s lien. She instructed the client to direct all future communications from anyone on the topic to her. Accordingly, the client forwarded to her offers by the general contractor and the property owner to pay the sums owed if the client would finish the work. Unfortunately, Cummings failed to provide any of the services she promised, and the time for securing the mechanic’s lien expired. The client sued her for the balance owed, and won.
The NH Supreme Court rejected each of three arguments Cummings raised on appeal. (1) Claimants must take reasonable measures to mitigate their damages, and Cummings protested the client could have responded to the offers, or unilaterally sued the contractor or homeowner. No duty to mitigate arises until the defendant’s breach of the contract is clear, however, and here, the client’s failure to respond to the offers or to timely sue the general contractor or property owner came about in reliance on the professional’s promise to undertake communications and document preparation. By the time the client learned Cummings had done nothing to secure the lien, there was little the client could do. (2) Cummings argued there was no causation established between her inaction and the loss. But it was clear her inaction caused the lapse of the client’s mechanic’s lien rights. (3) Most interestingly for professional liability practitioners, the court also rejected an argument that an expert witness was required. The court explicitly noted that this was neither a negligence nor a legal malpractice case, but rather simply a breach of contract action. The issue was whether the defendant failed without legal excuse to perform as promised in the Representation Letter. Such a finding was within the realm of common knowledge and everyday experience, and the award was sustained.
At oral argument, some distinction was made between this defendant and a hypothetical case against an attorney on similar facts, but we expect to see Audette v. Cummings, No. 2012-496 (December 24, 2013) cited in the future, as plaintiffs’ counsel try to garner breach of contract damages (i.e., expectancies) in legal and other professional negligence cases, effecting an end-around to the economic loss rule.
For more information on professional liability matters, contact attorney Bill Saturley at 603-410-1500 or by email at wsaturley@preti.com or a member of Preti Flaherty's Professional Liability Practice Group.
The NH Supreme Court rejected each of three arguments Cummings raised on appeal. (1) Claimants must take reasonable measures to mitigate their damages, and Cummings protested the client could have responded to the offers, or unilaterally sued the contractor or homeowner. No duty to mitigate arises until the defendant’s breach of the contract is clear, however, and here, the client’s failure to respond to the offers or to timely sue the general contractor or property owner came about in reliance on the professional’s promise to undertake communications and document preparation. By the time the client learned Cummings had done nothing to secure the lien, there was little the client could do. (2) Cummings argued there was no causation established between her inaction and the loss. But it was clear her inaction caused the lapse of the client’s mechanic’s lien rights. (3) Most interestingly for professional liability practitioners, the court also rejected an argument that an expert witness was required. The court explicitly noted that this was neither a negligence nor a legal malpractice case, but rather simply a breach of contract action. The issue was whether the defendant failed without legal excuse to perform as promised in the Representation Letter. Such a finding was within the realm of common knowledge and everyday experience, and the award was sustained.
At oral argument, some distinction was made between this defendant and a hypothetical case against an attorney on similar facts, but we expect to see Audette v. Cummings, No. 2012-496 (December 24, 2013) cited in the future, as plaintiffs’ counsel try to garner breach of contract damages (i.e., expectancies) in legal and other professional negligence cases, effecting an end-around to the economic loss rule.
For more information on professional liability matters, contact attorney Bill Saturley at 603-410-1500 or by email at wsaturley@preti.com or a member of Preti Flaherty's Professional Liability Practice Group.
First Circuit Enforces Arbitration Clause in Attorney Engagement Letters
Tuesday, December 24, 2013
In Bezio v. Draeger, No. 13-1910 (December 16, 2013), the Court of Appeals for the First Circuit affirmed a ruling by the United States District Court for the District of Maine, enforcing an arbitration clause in an attorney-client engagement letter. The former client brought malpractice and unfair practice claims, but the action was dismissed and sent to arbitration under Maine law.
The court found that (1) Maine professional responsibility law for attorneys permits arbitration of legal malpractice claims so long as there is no prospective limitation of the firm's liability; and 2) Maine law, like the Federal Arbitration Act, evidences no hostility to the use of the arbitral forum.
There were several material factors in the instant case that could limit its application to its particular facts. The client negotiated the terms of the engagement letter, for example, changing some, and then signed the letter and initialed each page, thus specifically noting his agreement to each term. This client also had specific and particular prior experience with arbitration, thus limiting the amount of explanation of the procedure that was required of the firm in reaching informed consent of the particulars of this type of dispute resolution.
But the broader significance is clear: arbitration of client disputes is permitted and indeed encouraged. If attorneys mimic the procedure followed in this particular engagement letter, by actually getting client signature on letters, there is every reason to believe their choice of arbitration for dispute resolution will be followed. Of particular note, while making sure prospective clients are informed about the process is material to the outcome, the court found no requirement that the law firm encourage the client to seek independent counsel over the meaning of the term in the agreement.
For more information on professional liability and arbitration issues, contact attorney William Saturley or a member of Preti Flaherty's Professional Liability group.
The court found that (1) Maine professional responsibility law for attorneys permits arbitration of legal malpractice claims so long as there is no prospective limitation of the firm's liability; and 2) Maine law, like the Federal Arbitration Act, evidences no hostility to the use of the arbitral forum.
There were several material factors in the instant case that could limit its application to its particular facts. The client negotiated the terms of the engagement letter, for example, changing some, and then signed the letter and initialed each page, thus specifically noting his agreement to each term. This client also had specific and particular prior experience with arbitration, thus limiting the amount of explanation of the procedure that was required of the firm in reaching informed consent of the particulars of this type of dispute resolution.
But the broader significance is clear: arbitration of client disputes is permitted and indeed encouraged. If attorneys mimic the procedure followed in this particular engagement letter, by actually getting client signature on letters, there is every reason to believe their choice of arbitration for dispute resolution will be followed. Of particular note, while making sure prospective clients are informed about the process is material to the outcome, the court found no requirement that the law firm encourage the client to seek independent counsel over the meaning of the term in the agreement.
For more information on professional liability and arbitration issues, contact attorney William Saturley or a member of Preti Flaherty's Professional Liability group.
Contractors Have No False Claims Act Liability for Overweight Trucks
Wednesday, December 18, 2013
In a refreshing rebuke to the certification theory of False Claims Act (“FCA”) liability, the Fifth Circuit in United States ex rel. Stephenson v. Archer Western Contractors, Case No. 13-30327 (5th Cir. Dec. 2, 2013) affirmed the dismissal of a complaint alleging FCA liability brought by the owner and manager of a trucking company against various contractors working on the reconstruction of the New Orleans levee system for the United States Army Corps of Engineers. The complaint alleged that the contractors had defrauded the government by falsely certifying as part of their requests for payment that they were in compliance with all “Federal, state and municipal laws, codes and regulations applicable to the performance of the work” when in fact they were consistently violating state and local weight limits for trucks on highways. The evidence presented to the Court indicated that the topic of overweight trucks had been raised in emails between the government and the contractors and that it was readily visible on-site. Nevertheless, the government had never issued any stop work orders, never stopped the delivery of clay by the overweight trucks to the project site, and never withheld payment to the contractors. Accordingly, the Fifth Circuit concluded that the alleged “fraud” was immaterial and could not be a basis for FCA liability.
There are innumerable laws and regulations that may apply to a particular construction project. This decision makes it clear that only those violations of law which actually affect the decision of the government to pay for the work being performed on the project are a basis for FCA liability. In particular, the decision suggests that payment by the government with full knowledge of the violation may be a basis to conclude that such violations are immaterial. This should hopefully alleviate any concerns for contractors signing off on such certifications that technical violations of laws or regulations unrelated to the government’s payment decision should not result in FCA liability.
For more information on professional liability and construction issues, contact attorney Nathan Fennessy or a member of Preti Flaherty's Professional Liability group.
There are innumerable laws and regulations that may apply to a particular construction project. This decision makes it clear that only those violations of law which actually affect the decision of the government to pay for the work being performed on the project are a basis for FCA liability. In particular, the decision suggests that payment by the government with full knowledge of the violation may be a basis to conclude that such violations are immaterial. This should hopefully alleviate any concerns for contractors signing off on such certifications that technical violations of laws or regulations unrelated to the government’s payment decision should not result in FCA liability.
For more information on professional liability and construction issues, contact attorney Nathan Fennessy or a member of Preti Flaherty's Professional Liability group.
Why the Project Delivery Method Matters in Construction Litigation
Friday, December 13, 2013
The most common theme in construction litigation is a dispute between owners, contractors, and designers as to who was responsible for a construction defect that caused delays or additional costs. In these cases, the matter is often determined by which construction delivery method was being used by the parties involved.
Most construction is done on a design-bid-build model, meaning that the owner hires a designer (architect/engineer) to put together plans and specs, and then the owner hires a contractor to build to those plans and specs. When the owner hires the contractor, they are given an implied warranty (the Spearin doctrine) that if the contractor builds in accordance with the plans and specs that the design is sufficient so that the contractor will achieve the intended purpose. In other words, if an owner gives the contractor plans and specs that will result in a building envelop, the owner can't then blame the contractor when the contractor builds in accordance with the faulty design.
By contrast, some construction is done on a design-build basis in which the owner hires one firm that is responsible for both the design and construction of the building. In that instance, if something goes wrong, the owner doesn't have to figure out who is at fault - they have one firm that carries all of the responsibility. Notably, even in cases where the construction was generally done on a design-bid-build basis is not necessarily dispositive, because sometimes contracts will leave specific aspects of the construction (such as HVAC) to be done on a design build basis. In those instances, the designer will provide most of the design for the building, but will intentionally exclude certain systems, with the understanding that the contractor (or more likely his sub) will likely design the particulars of their solution anyway.
When litigating this issue, take a look at the plans and specs to find out whether the roof was being done on a design-build basis as that will be critical to your analysis. Part of that analysis is looking to see whether the contract provides a "design spec" or a "performance spec" for that aspect of the work. A design spec allows the contractor to determine the means and methods of construction (how to perform the work), but tells the contractor the specific materials or sizes that are required. Where a design spec is used, the owner (and by extension, the architect) retains responsibility for the design being used. A performance spec, by contrast, simply dictates the desired outcome, but leaves it to the contractor to determine how to achieve that outcome. In these instances (even where the contractor still has to provide shop drawings for their solution to be approved), the contractor ultimately bears all responsibility for all aspects of meeting the defined objective.
For more information on construction or professional liability matters contact attorney Ken Rubinstein at 603-410-1500 or any member of Preti Flaherty's Professional Liability Practice Group.
Most construction is done on a design-bid-build model, meaning that the owner hires a designer (architect/engineer) to put together plans and specs, and then the owner hires a contractor to build to those plans and specs. When the owner hires the contractor, they are given an implied warranty (the Spearin doctrine) that if the contractor builds in accordance with the plans and specs that the design is sufficient so that the contractor will achieve the intended purpose. In other words, if an owner gives the contractor plans and specs that will result in a building envelop, the owner can't then blame the contractor when the contractor builds in accordance with the faulty design.
By contrast, some construction is done on a design-build basis in which the owner hires one firm that is responsible for both the design and construction of the building. In that instance, if something goes wrong, the owner doesn't have to figure out who is at fault - they have one firm that carries all of the responsibility. Notably, even in cases where the construction was generally done on a design-bid-build basis is not necessarily dispositive, because sometimes contracts will leave specific aspects of the construction (such as HVAC) to be done on a design build basis. In those instances, the designer will provide most of the design for the building, but will intentionally exclude certain systems, with the understanding that the contractor (or more likely his sub) will likely design the particulars of their solution anyway.
When litigating this issue, take a look at the plans and specs to find out whether the roof was being done on a design-build basis as that will be critical to your analysis. Part of that analysis is looking to see whether the contract provides a "design spec" or a "performance spec" for that aspect of the work. A design spec allows the contractor to determine the means and methods of construction (how to perform the work), but tells the contractor the specific materials or sizes that are required. Where a design spec is used, the owner (and by extension, the architect) retains responsibility for the design being used. A performance spec, by contrast, simply dictates the desired outcome, but leaves it to the contractor to determine how to achieve that outcome. In these instances (even where the contractor still has to provide shop drawings for their solution to be approved), the contractor ultimately bears all responsibility for all aspects of meeting the defined objective.
For more information on construction or professional liability matters contact attorney Ken Rubinstein at 603-410-1500 or any member of Preti Flaherty's Professional Liability Practice Group.
The Tripartite-Relationship and Insurers' Legal Standing
In a case of first impression, the Washington Supreme Court was asked to determine “whether an attorney hired by a title insurer to represent its insured owed a duty to the non-client insurer and, hence, whether that insurer can sue the lawyer for negligently representing the insured during the defense.” The court concluded that neither the common interest between the insurer and the insured, nor any contractual duty that might be owed by the law firm to the insurer to keep it informed about the progress of the underlying litigation, were sufficient to create a duty of care that would support a malpractice claim by the insurer. Such a duty would also violate the relevant Rules of Professional Conduct, which prohibit an attorney from surrendering his professional judgment when rendering legal services, observed the court.
The case concerned a mechanics’ lien on property in which Sterling Savings Bank had a construction loan. In the litigation over priority of interests, the attorneys hired by Stewart Title to defend the Bank’s interest stipulated that the mechanics’ lien took priority over Sterling’s security interest. Stewart Title then fired the law firm, contending they gave in on the argument too soon. Stewart Title subsequently sued the law firm for legal malpractice. The suit was met with a motion for summary judgment.
On direct review, the Washington Supreme Court held the law firm’s duty ran only to the insured, Sterling, and it owed no duty to Stewart Title, a non-client.
The State of Washington thus joins those jurisdictions which hold the tripartite-relationship gives an insurer no standing to bring a legal malpractice suit against defense counsel for negligence when it defends the insured. Several other jurisdictions have held otherwise, and the Restatement (Third) of the Law Governing Lawyers §51 comment g (2000) argues for a different result.
For more information on professional liability matters, contact attorney William Saturley at 603-410-1500 or any member of Preti Flaherty's professional liability practice group.
The case concerned a mechanics’ lien on property in which Sterling Savings Bank had a construction loan. In the litigation over priority of interests, the attorneys hired by Stewart Title to defend the Bank’s interest stipulated that the mechanics’ lien took priority over Sterling’s security interest. Stewart Title then fired the law firm, contending they gave in on the argument too soon. Stewart Title subsequently sued the law firm for legal malpractice. The suit was met with a motion for summary judgment.
On direct review, the Washington Supreme Court held the law firm’s duty ran only to the insured, Sterling, and it owed no duty to Stewart Title, a non-client.
The State of Washington thus joins those jurisdictions which hold the tripartite-relationship gives an insurer no standing to bring a legal malpractice suit against defense counsel for negligence when it defends the insured. Several other jurisdictions have held otherwise, and the Restatement (Third) of the Law Governing Lawyers §51 comment g (2000) argues for a different result.
For more information on professional liability matters, contact attorney William Saturley at 603-410-1500 or any member of Preti Flaherty's professional liability practice group.
US Supreme Court Upholds the Enforceability of Forum Selection Clauses in Construction Contracts
Thursday, December 5, 2013
The United States Supreme Court in Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, No. 12-929 (Dec. 3, 2013) reiterated the priority and enforceability of forum selection clauses in construction contracts. The Supreme Court reversed the decision of the Fifth Circuit upholding the trial court’s decision not to enforce the forum selection clause contained in a construction agreement between Atlantic Marine, a Virginia corporation, and J-Crew Management, Inc., a Texas corporation. The parties’ subcontract included a forum-selection clause, which stated that all disputes between the parties would be litigated in Virginia. When a dispute arose, J-Crew filed an action in the United States District Court for the Western District of Texas. Atlantic Marine responded by filing a motion to dismiss the case or in the alternative to transfer the case to Eastern District of Virginia. The trial court denied both motions and the Fifth Circuit upheld the denials on the basis that Atlantic Marine bore the burden of proving that transfer was appropriate and had failed to meet its burden.
In reversing the Fifth Circuit’s decision, the Supreme Court concluded that “[w]hen the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause” unless there are “extraordinary circumstances unrelated to the convenience of the parties,” which the Court found lacking in the instant case. The Court noted that the “enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system.” Thus, when considering the appropriate forum for a dispute, “a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.” The Supreme Court found that the Fifth Circuit erroneously placed the burden on the party seeking to enforce the forum selection clause rather than the “party acting in violation of the forum-selection clause,” who should have borne the burden of showing that public-interest factors overwhelmingly disfavor a transfer.
This is a very important decision from the Supreme Court that once again reiterates the priority of forum selection clauses in determining where disputes should be litigated. This is a good reminder when entering into a contract to pay attention to the forum selection clause included and where a potential dispute down the road may be litigated because courts are going to hold you to the forum identified in those clauses.
For more information on professional liability matters, contact attorney Nathan Fennessy at 603-410-1500 or any member of Preti Flaherty's professional liability practice group.
In reversing the Fifth Circuit’s decision, the Supreme Court concluded that “[w]hen the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause” unless there are “extraordinary circumstances unrelated to the convenience of the parties,” which the Court found lacking in the instant case. The Court noted that the “enforcement of valid forum-selection clauses, bargained for by the parties, protects their legitimate expectations and furthers vital interests of the justice system.” Thus, when considering the appropriate forum for a dispute, “a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.” The Supreme Court found that the Fifth Circuit erroneously placed the burden on the party seeking to enforce the forum selection clause rather than the “party acting in violation of the forum-selection clause,” who should have borne the burden of showing that public-interest factors overwhelmingly disfavor a transfer.
This is a very important decision from the Supreme Court that once again reiterates the priority of forum selection clauses in determining where disputes should be litigated. This is a good reminder when entering into a contract to pay attention to the forum selection clause included and where a potential dispute down the road may be litigated because courts are going to hold you to the forum identified in those clauses.
For more information on professional liability matters, contact attorney Nathan Fennessy at 603-410-1500 or any member of Preti Flaherty's professional liability practice group.
Beware of Copyright Infringement in Construction Projects
Thursday, November 21, 2013
On November 8, 2013, the Fifth Circuit Court of Appeals affirmed a $3.2 million jury award in favor of Kipp Flores Architects, L.L.C. ("KFA") against Hallmark Design Homes, L.P. (“Hallmark”), in a copyright infringement action. The jury in the U.S. District Court in Houston found that Hallmark infringed KFA's copyrights by constructing hundreds of houses from KFA’s architectural plans without purchasing the plans for each house as required. KFA alleged that Hallmark obtained copies of certain of its copyrighted architectural designs pursuant to a license from KFA allowing Hallmark to build one home based upon each design. According to KFA, the agreement expressly provided that additional licenses for additional units could be purchased, but Hallmark failed to pay the additional license fees in connection with its reuse of the licensed plans. The jury returned a verdict compensating KFA for the amount of profits that Hallmark earned from the sales of the homes in question that were built based upon KFA’s architectural plans. The appellate court rejected Hallmark's arguments that the evidence was insufficient to support a jury finding of “substantial similarity” and concluded that the matter had been well tried at the district court.
This is a reminder for all architects and design professionals to take care in ensuring that they do not copy or otherwise infringe another professional's copyrighted designs. It also creates an incentive for design professionals to take steps to register their designs with the U.S. Copyright Office to ensure that their hard work is not being copied and used without appropriate compensation.
For more information on professional liability matters contact attorney Nathan Fennessy at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
This is a reminder for all architects and design professionals to take care in ensuring that they do not copy or otherwise infringe another professional's copyrighted designs. It also creates an incentive for design professionals to take steps to register their designs with the U.S. Copyright Office to ensure that their hard work is not being copied and used without appropriate compensation.
For more information on professional liability matters contact attorney Nathan Fennessy at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
Gas on the Fire: First Circuit's Homeowner's Insurance Carrier Decision After a "Conflagration"
Tuesday, November 19, 2013
"It seems self-evident that a story which involves throwing gasoline on a smoldering fire is unlikely to have a happy ending. That is true here, but the parties to this appeal have sifted through the embers and identified what some might regard as an oxymoron: an interesting insurance coverage question." - Vermont Mutual Insurance Company v. Andrew Zamsky
In a decision issued on October 9, 2013, the First Circuit Court of Appeals ruled that a homeowner’s insurance carrier owed a duty to defend and indemnify its insured against personal injury claims arising from an accident occurring on uninsured property owned by the carrier’s policyholder. In Vermont Mutual Insurance Company v. Andrew Zamsky, the defendant, Andrew Zamsky, was an insured under three homeowner’s policies issued to his parents by Vermont Mutual. The three policies, on three different properties owned by Zamsky’s parents, required Vermont Mutual to defend and indemnify all insured persons for claims for “bodily injury” caused by a covered “occurrence.” Zamsky’s parents also owned a fourth property that was not insured. Unfortunately, the injury occurred on the uninsured property.
One evening in the fall of 2008, Zamsky, his girlfriend, and several of their friends drove to the uninsured property and decided to make an outdoor fire. One of the friends retrieved a portable fire pit from a shed on the property, and they placed it on a deck attached to the house. They tried to start a fire, but the wood was damp and would not stay lit. Another friend then grabbed a container of gasoline and poured it on the fire. As the First Circuit explained, the “consequent conflagration set at least three of the assembled persons aflame.” One of them, Zamsky’s girlfriend, was badly burned. She eventually sued, asserting “a golconda of negligent acts and omissions.” Vermont Mutual provided Zamsky with a defense to the litigation under a reservation of rights but, while that case was still pending, filed a declaratory judgment (“DJ”) action in Massachusetts Federal Court, seeking a determination that it was not required to defend or indemnify Zamsky under the policies.
In the DJ action, Vermont Mutual relied on an “uninsured location” exclusion of the policies, which excluded coverage for any injury “arising out of a premises” owned by an insured, but that was not itself an “insured location.” Vermont Mutual argued that, because the injury had occurred on the uninsured property, it was not required to either defend or indemnify Zamsky.
The First Circuit rejected Vermont Mutual’s argument. The Court found that the “arising out of a premises” language was ambiguous, and it interpreted that provision to mean “arising out of a condition of a premises.” Although the injury occurred on the uninsured property, it had not resulted from a “condition” of the uninsured property. Because the injury resulted from events that occurred on the property, and not from any condition of the uninsured property itself, the Court held that the exclusion did not apply and that Vermont Mutual owed a duty to defend and indemnify Zamsky.
For more information on professional liability matters contact attorney Greg Moffett at 601-410-1500 or a member of Preti Flaherty's professional liability group.
In a decision issued on October 9, 2013, the First Circuit Court of Appeals ruled that a homeowner’s insurance carrier owed a duty to defend and indemnify its insured against personal injury claims arising from an accident occurring on uninsured property owned by the carrier’s policyholder. In Vermont Mutual Insurance Company v. Andrew Zamsky, the defendant, Andrew Zamsky, was an insured under three homeowner’s policies issued to his parents by Vermont Mutual. The three policies, on three different properties owned by Zamsky’s parents, required Vermont Mutual to defend and indemnify all insured persons for claims for “bodily injury” caused by a covered “occurrence.” Zamsky’s parents also owned a fourth property that was not insured. Unfortunately, the injury occurred on the uninsured property.
One evening in the fall of 2008, Zamsky, his girlfriend, and several of their friends drove to the uninsured property and decided to make an outdoor fire. One of the friends retrieved a portable fire pit from a shed on the property, and they placed it on a deck attached to the house. They tried to start a fire, but the wood was damp and would not stay lit. Another friend then grabbed a container of gasoline and poured it on the fire. As the First Circuit explained, the “consequent conflagration set at least three of the assembled persons aflame.” One of them, Zamsky’s girlfriend, was badly burned. She eventually sued, asserting “a golconda of negligent acts and omissions.” Vermont Mutual provided Zamsky with a defense to the litigation under a reservation of rights but, while that case was still pending, filed a declaratory judgment (“DJ”) action in Massachusetts Federal Court, seeking a determination that it was not required to defend or indemnify Zamsky under the policies.
In the DJ action, Vermont Mutual relied on an “uninsured location” exclusion of the policies, which excluded coverage for any injury “arising out of a premises” owned by an insured, but that was not itself an “insured location.” Vermont Mutual argued that, because the injury had occurred on the uninsured property, it was not required to either defend or indemnify Zamsky.
The First Circuit rejected Vermont Mutual’s argument. The Court found that the “arising out of a premises” language was ambiguous, and it interpreted that provision to mean “arising out of a condition of a premises.” Although the injury occurred on the uninsured property, it had not resulted from a “condition” of the uninsured property. Because the injury resulted from events that occurred on the property, and not from any condition of the uninsured property itself, the Court held that the exclusion did not apply and that Vermont Mutual owed a duty to defend and indemnify Zamsky.
For more information on professional liability matters contact attorney Greg Moffett at 601-410-1500 or a member of Preti Flaherty's professional liability group.
Knowingly Operating Under a Conflict is Not Dishonest Conduct – NH Supreme Court
Monday, November 4, 2013
In Appeal of David Stacy, 164 N.H. 706 (March 29, 2013), the New Hampshire Supreme Court appears to have split a very fine hair concerning a lawyer’s actions while subject to a known conflict of interest. While the distinction drawn by the Court prevented a claimant from draining funds from the Public Protection Fund, it may spawn coverage litigation and raise questions about professional discipline that the Court failed to anticipate.
An earlier case before the Court set the stage for this ruling. In Wyatt’s Case, 159 N.H. 285 (2009), the Court suspended an attorney for knowingly operating under a conflict of interest when he simultaneously represented the conservatorship estate of the petitioner, and the petitioner. The petitioner made a claim against the attorney for the fees paid him during the period of the conflict, and then subsequently sought reimbursement from the Fund for the balance of the unrecovered fees and costs.
The Court noted that the Rule creating the Fund is consistent with the ABA’s Model Rule, pursuant to which public protection funds generally reimburse losses caused by the dishonest conduct of lawyers. The Court found “dishonest conduct” meant wrongful acts in the nature of theft or embezzlement of money, or the wrongful taking or conversion of money, property, or other things of value. The Court found, however, that “knowledge of a conflict of interest is not the equivalent of knowingly dishonest conduct,” and ruled that Wyatt’s actions were not conversion. In so ruling, the Court protected the Fund and made it more difficult to recover against lawyers, but did it open up other questions?
For example, in making the precise distinction it did, the opinion could make for more confusion in coverage questions. When is knowing conduct that involves a conflict going to be covered? Equally important, how will the Attorney Discipline Office apply this standard in future claims of unethical behavior? Only time will tell if the Appeal of Stacy is the last word on Attorney Wyatt’s actions, or the first of many decisions examining the consequences of knowingly operating under a conflict.
For more information on professional liability matters, contact attorney Bill Saturley at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
An earlier case before the Court set the stage for this ruling. In Wyatt’s Case, 159 N.H. 285 (2009), the Court suspended an attorney for knowingly operating under a conflict of interest when he simultaneously represented the conservatorship estate of the petitioner, and the petitioner. The petitioner made a claim against the attorney for the fees paid him during the period of the conflict, and then subsequently sought reimbursement from the Fund for the balance of the unrecovered fees and costs.
The Court noted that the Rule creating the Fund is consistent with the ABA’s Model Rule, pursuant to which public protection funds generally reimburse losses caused by the dishonest conduct of lawyers. The Court found “dishonest conduct” meant wrongful acts in the nature of theft or embezzlement of money, or the wrongful taking or conversion of money, property, or other things of value. The Court found, however, that “knowledge of a conflict of interest is not the equivalent of knowingly dishonest conduct,” and ruled that Wyatt’s actions were not conversion. In so ruling, the Court protected the Fund and made it more difficult to recover against lawyers, but did it open up other questions?
For example, in making the precise distinction it did, the opinion could make for more confusion in coverage questions. When is knowing conduct that involves a conflict going to be covered? Equally important, how will the Attorney Discipline Office apply this standard in future claims of unethical behavior? Only time will tell if the Appeal of Stacy is the last word on Attorney Wyatt’s actions, or the first of many decisions examining the consequences of knowingly operating under a conflict.
For more information on professional liability matters, contact attorney Bill Saturley at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
Iowa Attorney Charged with Felonies for Allegedly Over-Billing
Wednesday, October 23, 2013
According to the ABA Journal, an Iowa attorney is charged with felony counts of theft and fraudulent practice for allegedly obtaining nearly $178,000 in overpayments for his work as a contract attorney for the Iowa Public Defender.
An audit concluded that the lawyer claimed to have worked more than 24 hours on 80 different dates between 2007 and 2011. Four other contract lawyers also were identified in the audit as having over-billed and, as a result, were terminated from the program.
According to the ABA Journal, the Iowa State Bar Association President has called the audit findings “an isolated aberration, involving five lawyers,” adding that “a few bad apples do not spoil the barrel.” The Bar President stated that “any abuses of the program… need to be promptly corrected.”
For more information on Professional Liability Matters, contact Attorney Simon Brown at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
An audit concluded that the lawyer claimed to have worked more than 24 hours on 80 different dates between 2007 and 2011. Four other contract lawyers also were identified in the audit as having over-billed and, as a result, were terminated from the program.
According to the ABA Journal, the Iowa State Bar Association President has called the audit findings “an isolated aberration, involving five lawyers,” adding that “a few bad apples do not spoil the barrel.” The Bar President stated that “any abuses of the program… need to be promptly corrected.”
For more information on Professional Liability Matters, contact Attorney Simon Brown at 603.410.1500 or a member of Preti Flaherty's Professional Liability Group.
Accounting Firms Shielded from Repeat Lawsuits from Taxpayers
Thursday, October 10, 2013
The Appellate Court of Illinois affirmed the decision to dismiss a taxpayer lawsuit against a school district’s accounting firm based upon a res judicata theory – that is a claim that was once brought or could have been brought between the same parties is barred.
In Lutkauskas v. Ricker, et al., 2013 Il. App. (1st) 121112, a taxpayer sued his school district’s accounting firm alleging that the accounting firm was complicit in violating the school code by allowing the district’s working cash fund to be depleted without a school board resolution. Despite the fact the taxpayers in this matter never brought suit before, the Court nonetheless determined the action was barred against the accounting firm based upon the doctrine of res judicata. In general, res judicata can only apply to bar an action when the same parties or their privies are involved. Here, the taxpayers argued they were not part of the previous action. In rejecting that argument, the Court ruled that a taxpayer action is derivative in that it was being brought on behalf of the school district. The key to the Court’s reasoning was that the claimed injury – the depletion of the working cash fund – was not personal to the taxpayers, but rather impacted the governmental entity.
While it remains to be seen whether courts in other jurisdictions would adopt the reasoning of the Illinois Court, it is a legal theory to be considered in defending a taxpayer action on behalf of a governmental entity or a derivative action brought on behalf of a corporation.
For more information on professional liability matters, contact Attorney Adam Shub at 207-791-3000 or a member of Preti Flaherty's Professional Liability Group.
In Lutkauskas v. Ricker, et al., 2013 Il. App. (1st) 121112, a taxpayer sued his school district’s accounting firm alleging that the accounting firm was complicit in violating the school code by allowing the district’s working cash fund to be depleted without a school board resolution. Despite the fact the taxpayers in this matter never brought suit before, the Court nonetheless determined the action was barred against the accounting firm based upon the doctrine of res judicata. In general, res judicata can only apply to bar an action when the same parties or their privies are involved. Here, the taxpayers argued they were not part of the previous action. In rejecting that argument, the Court ruled that a taxpayer action is derivative in that it was being brought on behalf of the school district. The key to the Court’s reasoning was that the claimed injury – the depletion of the working cash fund – was not personal to the taxpayers, but rather impacted the governmental entity.
While it remains to be seen whether courts in other jurisdictions would adopt the reasoning of the Illinois Court, it is a legal theory to be considered in defending a taxpayer action on behalf of a governmental entity or a derivative action brought on behalf of a corporation.
For more information on professional liability matters, contact Attorney Adam Shub at 207-791-3000 or a member of Preti Flaherty's Professional Liability Group.
Indiana Attorney's Comment on the Immigration Status of his Client's Spouse Leads to Suspension
Monday, October 7, 2013
According to the ABA Journal, an Indiana lawyer has been suspended for thirty days for making a comment about the immigration status of his divorced client’s spouse in correspondence sent to opposing counsel and the Judge in the case. Objecting to his client’s lack of access to his child, the attorney wrote:
“Your client doesn’t understand what laws and court orders mean I guess. Probably because she’s an illegal alien to begin with. I want you to repeat to her in whatever language she understands that we’ll be demanding she be put in JAIL for contempt of court. I’m filing a copy of this letter with the court to document the seriousness of this problem.”
According to the ABA Journal, the Indiana Supreme Court held that the attorney’s letter violated rules of professional conduct concerning demonstration of bias or prejudice, and conduct with no substantial purpose other than to embarrass, burden or delay a third person. The Court concluded that “accusing [the] mother of being in the country illegally is not legitimate advocacy concerning the legal matter at issue and served no substantial purpose other than to embarrass or burden [the] mother.”
In comments printed in the ABA Journal, the attorney said he disagreed with the Supreme Court’s ruling, noting that he had written the letter threatening contempt of court only after the mother had previously been found in contempt for violation of the lower court’s parenting order. In defense of his immigration statement, he said that “people who come into this country illegally are not respecting American laws.”
For more information on professional liability matters, contact Attorney Simon Brown at 603-410-1500 or a member of Preti Flaherty's Professional Liability Group.
For more information on professional liability matters, contact Attorney Simon Brown at 603-410-1500 or a member of Preti Flaherty's Professional Liability Group.
Mass Appellate Court Provides Another Reason to Ensure Indemnification Provisions Include Survival Clauses
Friday, October 4, 2013
Last week, the Massachusetts Court of Appeals ruled that a contractual indemnification clause does not necessarily survive termination, absent a survival clause keeping the obligation in force. While the Court applied Georgia law in reaching its decision, the principles that the Court applied would likely yield the same result using Massachusetts law.
In Fraco Products, Ltd. v. Bostonian Masonry Corporation, C.A. No. 12-P-933 (Mass. App. Ct., Sept. 26, 2013), an equipment manufacturer sold a piece of equipment to a masonry subcontractor on an installment payments basis. The contract included a “Transfer of Risk and Insurance” clause requiring the masonry subcontractor to indemnify the manufacturer from any losses caused by the equipment. The Transfer of Risk and Insurance clause did not state that it would survive the termination of the contract (while another section dealing with risk noted that that clause would survive termination).
After the final payment was made, there was an accident involving the equipment killing a passerby and two construction workers. The estate of one of the workers sued the manufacturer, and the manufacturer sued the subcontractor for indemnification.
The Court of Appeals dismissed the claim for contractual indemnity, stating that “Courts are to construe the language of an indemnification contract strictly against the party seeking indemnification.” The court went on to note that the “Transfer of Risks and Insurance” provision was “not followed by a survival clause.” Accordingly, since the “contract terminated by its own terms when [the subcontractor] made the final installment payment (sometime before the accident), the ‘Transfer of Risks and Insurance’ provision is not relevant here.”
This is another good reminder to contractors to make sure that their standard subcontracts include express language in their indemnification provisions that make clear that the subcontractor’s indemnification obligation survive termination.
For more information on construction law and professional liability matters, contact Attorneys Kenneth Rubinstein and Nathan Fennessy at 603-410-1500 or a member of Preti Flaherty's Professional Liability Group.
In Fraco Products, Ltd. v. Bostonian Masonry Corporation, C.A. No. 12-P-933 (Mass. App. Ct., Sept. 26, 2013), an equipment manufacturer sold a piece of equipment to a masonry subcontractor on an installment payments basis. The contract included a “Transfer of Risk and Insurance” clause requiring the masonry subcontractor to indemnify the manufacturer from any losses caused by the equipment. The Transfer of Risk and Insurance clause did not state that it would survive the termination of the contract (while another section dealing with risk noted that that clause would survive termination).
After the final payment was made, there was an accident involving the equipment killing a passerby and two construction workers. The estate of one of the workers sued the manufacturer, and the manufacturer sued the subcontractor for indemnification.
The Court of Appeals dismissed the claim for contractual indemnity, stating that “Courts are to construe the language of an indemnification contract strictly against the party seeking indemnification.” The court went on to note that the “Transfer of Risks and Insurance” provision was “not followed by a survival clause.” Accordingly, since the “contract terminated by its own terms when [the subcontractor] made the final installment payment (sometime before the accident), the ‘Transfer of Risks and Insurance’ provision is not relevant here.”
This is another good reminder to contractors to make sure that their standard subcontracts include express language in their indemnification provisions that make clear that the subcontractor’s indemnification obligation survive termination.
For more information on construction law and professional liability matters, contact Attorneys Kenneth Rubinstein and Nathan Fennessy at 603-410-1500 or a member of Preti Flaherty's Professional Liability Group.
First Major Integrated Project Delivery Dispute: The VA and Kiewit-Turner
Tuesday, September 24, 2013
According to Engineering News-Record (“ENR”) the first major dispute in the area of integrated project delivery (“IPD”) has developed between the Department of Veterans Affairs (“VA”) and a Kiewit-Turner joint venture in connection with the construction of a VA hospital in Aurora, Colorado. IPD is a contractual relationship in which the owner, designer and builder all share one contract in which they agree to share the risk and the efficiencies of a particular project. There are generally strict provisions in the contract that require the parties to engage in discussions to resolve issues that arise through consensus and dispute resolution.
The dispute between Kiewit-Turner and VA arises from a nearly $200 million cost overrun on the project that Kiewit-Turner contends is the result of the VA signing off on a design that became impossible to build for the cost the VA demanded. Kiewit-Turner relies upon a handwritten note (or memorandum of understanding – as Kiewit-Turner refers to it) signed by representatives of the VA and Kiewit-Turner that the parties would use their best efforts to stick to a $604 million price tag for the project. The note contains language suggesting that the parties agreed that such efforts would include making design changes, but according to Kiewit-Turner the VA never took any steps to revise the design to reduce costs despite Kiewit-Turner’s warnings. The VA contends that Kiewit-Turner was heavily involved in the design review phase of the project and failed to provide the necessary input identifying problems resulting in the cost overruns.
This dispute highlights one of the major difficulties with an IPD project. A successful IPD contract requires extensive cooperation between the design architect/engineer, the contractor, and the owner, at the outset – particularly in the design review phase. The hallmark of IPD is that the team should be working together as the scope and budget are established. Otherwise, there are likely to be disputes down the road as to who should accept responsibility for problems that arise with the scope or budget for the project.
For more information on professional liability matters, contact Attorney Nathan Fennessy at 603.410.1500 or nfennessy@preti.com or a member of PretiFlaherty's Professional Liability Group.
The dispute between Kiewit-Turner and VA arises from a nearly $200 million cost overrun on the project that Kiewit-Turner contends is the result of the VA signing off on a design that became impossible to build for the cost the VA demanded. Kiewit-Turner relies upon a handwritten note (or memorandum of understanding – as Kiewit-Turner refers to it) signed by representatives of the VA and Kiewit-Turner that the parties would use their best efforts to stick to a $604 million price tag for the project. The note contains language suggesting that the parties agreed that such efforts would include making design changes, but according to Kiewit-Turner the VA never took any steps to revise the design to reduce costs despite Kiewit-Turner’s warnings. The VA contends that Kiewit-Turner was heavily involved in the design review phase of the project and failed to provide the necessary input identifying problems resulting in the cost overruns.
This dispute highlights one of the major difficulties with an IPD project. A successful IPD contract requires extensive cooperation between the design architect/engineer, the contractor, and the owner, at the outset – particularly in the design review phase. The hallmark of IPD is that the team should be working together as the scope and budget are established. Otherwise, there are likely to be disputes down the road as to who should accept responsibility for problems that arise with the scope or budget for the project.
For more information on professional liability matters, contact Attorney Nathan Fennessy at 603.410.1500 or nfennessy@preti.com or a member of PretiFlaherty's Professional Liability Group.
Lawyer Faces Discipline for Responding to Client's Negative AVVO Review
According to the ABA Journal, an Illinois employment lawyer is facing disciplinary action for allegedly revealing confidential information about a former client when the lawyer responded online to a negative review on AVVO, a legal marketing site.
The client posted a negative review of the lawyer on AVVO. After the client refused to remove the review unless the lawyer refunded his fee, the lawyer posted the following online response to the negative comment:
“I dislike it very much when my clients lose, but I cannot invent positive facts for clients when they are not there. I feel badly for him, but his own actions in beating up a female co-worker are what caused the consequences he is now so upset about.”
According to the disciplinary complaint, this posting was intended to intimidate and embarrass the former client, and to keep him from posting additional information about the lawyer.
Counsel representing the lawyer in the disciplinary matter asserts that when the former client posted the negative statements about her, he waived the attorney-client privilege, and the lawyer had the right to vigorously defend herself.
This disciplinary matter, which remains pending, illustrates the pitfalls for attorneys who interactively advertise. It also presents an interesting test case concerning the duties owed to former clients who choose to publicly criticize their lawyer.
For more information on professional liability matters, contact Attorney Simon Brown at 603.410.1500 or sbrown@preti.com or a member of PretiFlaherty's Professional Liability Group.
The client posted a negative review of the lawyer on AVVO. After the client refused to remove the review unless the lawyer refunded his fee, the lawyer posted the following online response to the negative comment:
“I dislike it very much when my clients lose, but I cannot invent positive facts for clients when they are not there. I feel badly for him, but his own actions in beating up a female co-worker are what caused the consequences he is now so upset about.”
According to the disciplinary complaint, this posting was intended to intimidate and embarrass the former client, and to keep him from posting additional information about the lawyer.
Counsel representing the lawyer in the disciplinary matter asserts that when the former client posted the negative statements about her, he waived the attorney-client privilege, and the lawyer had the right to vigorously defend herself.
This disciplinary matter, which remains pending, illustrates the pitfalls for attorneys who interactively advertise. It also presents an interesting test case concerning the duties owed to former clients who choose to publicly criticize their lawyer.
For more information on professional liability matters, contact Attorney Simon Brown at 603.410.1500 or sbrown@preti.com or a member of PretiFlaherty's Professional Liability Group.
Providing Personal Employee Information to Above the Law Website Means Ropes & Gray LLP Must Try Retaliation Claims
Friday, September 20, 2013
An employment discrimination and retaliation case brought by a former associate at Ropes & Gray LLP will go to trial in November 2013, following a ruling on competing summary judgment motions, rules Judge Richard G. Stearns of the U.S. District Court (Massachusetts) in an Order released on August 16, 2013.
Plaintiff John H. Ray III alleges that Ropes & Gray LLP denied him promotion to partnership because of his African-American heritage. Most of these claims were dismissed following the firm’s summary judgment motion. Ray also argued the firm retaliated against him when he complained of discrimination. Those claims survived summary judgment.
The alleged retaliation included, among other things, the firm’s withholding of recommendation letters, which a jury could conclude was in retaliation for an EEOC filing by Ray. A further retaliation charge concerns the firm’s providing the EEOC’s initial “no cause” determination letter to the profession-oriented website, Above the Law. The letter included details about Ray’s performance reviews and an internal investigation into alleged criminal conduct by Ray. The firm argued the determination letter was not confidential, and providing it to the website was to correct Ray’s one-sided presentation of the facts.
The Court ruled, however, Title VII prohibits an employer from responding to protected activity (like an EEOC filing) by taking an action that would dissuade a reasonable worker from pursuing a charge of discrimination, and that the threat of dissemination of derogatory private information, even if true, would likely deter any reasonable employee from pursuing a discrimination complaint against an employer. The Court also noted that, by knowingly releasing damaging information about Ray, the firm arguably violated its own policy against dissemination information contained in employee personnel records.
For more information on professional liability matters, contact Attorney Bill Saturley at 603.410.1500 or a member of PretiFlaherty's Professional Liability Group.
Plaintiff John H. Ray III alleges that Ropes & Gray LLP denied him promotion to partnership because of his African-American heritage. Most of these claims were dismissed following the firm’s summary judgment motion. Ray also argued the firm retaliated against him when he complained of discrimination. Those claims survived summary judgment.
The alleged retaliation included, among other things, the firm’s withholding of recommendation letters, which a jury could conclude was in retaliation for an EEOC filing by Ray. A further retaliation charge concerns the firm’s providing the EEOC’s initial “no cause” determination letter to the profession-oriented website, Above the Law. The letter included details about Ray’s performance reviews and an internal investigation into alleged criminal conduct by Ray. The firm argued the determination letter was not confidential, and providing it to the website was to correct Ray’s one-sided presentation of the facts.
The Court ruled, however, Title VII prohibits an employer from responding to protected activity (like an EEOC filing) by taking an action that would dissuade a reasonable worker from pursuing a charge of discrimination, and that the threat of dissemination of derogatory private information, even if true, would likely deter any reasonable employee from pursuing a discrimination complaint against an employer. The Court also noted that, by knowingly releasing damaging information about Ray, the firm arguably violated its own policy against dissemination information contained in employee personnel records.
For more information on professional liability matters, contact Attorney Bill Saturley at 603.410.1500 or a member of PretiFlaherty's Professional Liability Group.
Violation of FDCPA Not Necessarily a Violation of Massachusetts' Consumer Protection Act
Thursday, September 12, 2013
A Massachusetts law firm which violated the federal Fair Debt Collection Practices Act while trying to collect unpaid condominium fees did not necessarily violate the Massachusetts consumer protection act, according to a U.S. magistrate judge. McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 09-10159-MBB, August 26, 2013.
The law firm violated the FDCPA by communicating directly with the plaintiff condo owner – not his attorney – and with the owner’s mortgagees without his consent, said U.S. Magistrate Judge Marianne B. Bowler. The judge then went on to find a per se violation of the state’s consumer protection act, Mass.G.L. 93A. But a recent decision of the Supreme Judicial Court, the state’s highest court, found that a violation of Massachusetts regulations designed to protect consumers in other contexts does not necessarily mandate liability under the Act. Klairmont v Gainsboro Restaurant, Inc., 987 N.E.2d 1247 (Mass.2013) established that a violation of such regulations is only a violation of Chapter 93A when the conduct leading to the violation is both unfair or deceptive and occurs in trade or commerce.
Since the law firm’s services to its client were aimed at resolving a private dispute – failure to pay condominium fees – and were not services distributed in a business context, they did not occur in trade or commerce, according to the judge.
Reaction to the decision has been swift, and along predictable lines. According to various news reports, consumer advocates fear the ruling will leave consumers with no remedy if a particular activity is not covered by other laws, pointing out that Chapter 93A has been used acted as leverage against numerous activities seen as violative of consumer interests in the past. Other commentators suggest this ruling is evidence of a continuing effort by the judiciary to prevent every potential claim from evolving into a 93A case.
For more information on professional liability matters, contact Attorney Bill Saturley at 603-410-1500 or a member of PretiFlaherty's Professional Liability Group.
The law firm violated the FDCPA by communicating directly with the plaintiff condo owner – not his attorney – and with the owner’s mortgagees without his consent, said U.S. Magistrate Judge Marianne B. Bowler. The judge then went on to find a per se violation of the state’s consumer protection act, Mass.G.L. 93A. But a recent decision of the Supreme Judicial Court, the state’s highest court, found that a violation of Massachusetts regulations designed to protect consumers in other contexts does not necessarily mandate liability under the Act. Klairmont v Gainsboro Restaurant, Inc., 987 N.E.2d 1247 (Mass.2013) established that a violation of such regulations is only a violation of Chapter 93A when the conduct leading to the violation is both unfair or deceptive and occurs in trade or commerce.
Since the law firm’s services to its client were aimed at resolving a private dispute – failure to pay condominium fees – and were not services distributed in a business context, they did not occur in trade or commerce, according to the judge.
Reaction to the decision has been swift, and along predictable lines. According to various news reports, consumer advocates fear the ruling will leave consumers with no remedy if a particular activity is not covered by other laws, pointing out that Chapter 93A has been used acted as leverage against numerous activities seen as violative of consumer interests in the past. Other commentators suggest this ruling is evidence of a continuing effort by the judiciary to prevent every potential claim from evolving into a 93A case.
For more information on professional liability matters, contact Attorney Bill Saturley at 603-410-1500 or a member of PretiFlaherty's Professional Liability Group.
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