Adjacent Land Owners Can Proceed with Trespass Claim Against Developer

Recently, on September 14, 2012 in the decision of Kurpiel v. Hicks, Record No. 112192, the Virginia Supreme Court reversed a Circuit Court's demurrer, and allowed two landowners' case of trespass to proceed against a neighboring developer. The development activities were alleged to have caused storm water overflow onto the claimant landowners' properly, and they sued in Stafford County. Judge Deneke had sustained the developer's demurrer, holding that the storm water intrusion, even if true, was not an actionable trespass. In reversing, the Virginia Supreme Court noted that Virginia follows the modified common law rule applicable to surface water, which provides that surface water is a common enemy that landowners may fight off as best they can, but they must do so reasonably and in good faith, and not wantonly, unnecessarily or carelessly. The court held that the plaintiffs had sufficiently pled that the developer had breached this modified common law rule, and so allowed the case to proceed. Whether the law of trespass will be expanded in a similar manner to other invasive results of development remains to be seen, but this case shows the importance, regardless, of developers' consideration of storm water impacts from their developments. Minimally, it would seem this same rationale could be used to hold land disturbing contractors responsible in tort to impacted neighboring property owners under applicable facts. The following is a link to the Virginia Supreme Court's webpage with a .pdf link for the Kurpiel opinion: http://www.courts.state.va.us/scndex.htm

7th Circuit Bars Payment Bond Claim Based on Paid if Paid Subcontract

Earlier this summer in BMD Contractors, Inc. v. Fidelity and Deposit Company of Maryland (679 F.3d 643) the 7th Circuit looked at the question of whether a subcontract's pay if paid clause bars its payment bond claim, concluding that it does. The case applies Indiana law, but that state's law does not appear significantly different from Virginia law on this issue. The case provides a good overview of the differences between pay when paid and pay if paid clauses, generally, and essentially follows the same rationale as the Virginia Supreme Court in the Galloway decision on that question. The case also provides a well reasoned rebuttal of the 4th Circuit's 2000 in Moore Bros. (207 F.3d 717) decision about pay if paid clauses as they relate to payment bonds, and provides good insight to anyone seeking to avoid, distinguish or try and overturn that decision.

Vandeventer Black Labor Law Review and Update Seminar set for October 17, 2012

Vandeventer Black's employment law team is putting on an employment law review and update seminar in Norfolk, VA on October 17, 2012 to review the latest issues regarding employment law for attendees.  This is always an informative seminar put on in an educational but fun way.  Registration information follow and more information can be obtained at the below weblink:

Labor & Employment Law Review and Update
Wednesday, October 17, 2012
8:30 a.m. – 4 p.m.
Sheraton Norfolk Waterside Hotel
777 Waterside Dr., Norfolk, Virginia
This is a program for CEOs, Managers, In-House Counsel, and Human Resource Professionals.
Please email: invite@vanblk.com to complete the registration process.

http://www.vanblk.com/event/labor-and-employment-law-review-and-update/

Sale of Condomimiums a Consumer Purchase Under the Virginia Consumer Protection Act

The Virginia Consumer Protection Act notes it purposing as the promotion of "fair and ethical standards of dealings between suppliers and the consuming public."  Among the constricts in that Act, it is unlawful for a supplier in a consumer transaction to misrepresent that goods or services are of a particular standard, quality, style or model. The Act defines a consumer transaction as "[t]he advertisement, lease, license or offering for sale, lease or license of goods or services to be used primarily for personal, family or household purposes."  The Act defines a supplier as "a seller, lessor or licensor who advertises, solicits or engages in consumer transactions."

In the case of ABi-Najm v. Concord Condominium, LLC, 280 Va. 350, 699 S.E.2d 483 (2010), the Virginia Supreme Court considered the question of whether the purchase of units in a condominium complex was a consumer transaction for purposes of the Virginia Consumer Protection Act, and concluded, yes, the purchase was a consumer transaction. The case therefore was allowed to proceed on the question of whether the seller made misrepresentations as part of the sales to the condominium purchasers.  The Virginia Supreme Court further held that the claims were not lost by the "doctrine of merger" because of the deeds for the purchases, and that nor were they barred by Virginia's "economic loss" rule because the claim under the act involved a legal duty separate from the duties arising from the contract of sale.

There is some thought that this case establishes a department from earlier law, but regardless it is a significant case of note to those selling or buying condominiums.

Subrogation Waivers: a quick primer

Below is an article about insurance subrogation for construction contracts prepared by one of VB's construction attorney partners, John Lockard:

WHAT IS A “WAIVER OF SUBROGATION”?

            The parties involved in a construction contract can purchase insurance as a way to allocate the risks involved in the project.  Typically, the specific responsibilities to provide insurance are spelled out in the insurance clause of the parties’ contracts.  If an insurance company does pay a claim associated with a construction project, then it “steps into the shoes” of its insured and has the right to pursue a claim against the individuals or company that actually caused the loss.  This is known as “subrogation.”  Often, however, the insurance clause in a construction contract contains a provision stating that the parties agree to waive any claims against each other to the extent those claims are covered by insurance.  This is a “waiver of subrogation.” 

            A waiver of subrogation makes sense in most cases.  For example, if the contractor and the owner agree that the contractor will provide builder’s risk insurance, then neither party wants its insurance carrier to attempt to collect from the other party for any loss paid for a claim made under the policy.  That would defeat the purpose of allocating the risk between the parties.  The parties must be careful, however, to review such insurance clauses with their insurance carrier.  In some cases, a waiver of subrogation can be contrary to the terms of the insurance policy and, possibly, invalidate the insurance.  This could leave one of the parties contractually responsible to pay a significant claim that would otherwise be covered by insurance.

            All contractors should be careful to review their insurance policies and contracts to make sure that they have covered the basic risks that can arise on a construction project.  As appropriate, they should also request that the other parties provide certificates of insurance to demonstrate that they actually have the required insurance in place.  The prudent contractor will periodically review its contracts with its insurance agent and an experienced construction attorney to make sure that they have these risks covered to the greatest extent possible by insurance.

Offsite "Subcontractor" Found a Claimant Under Virginia Little Miller Act Bond

In a recent decision, Judge Harris of Hanover County Circuit Court allowed a Little Miller Act claim to proceed by an offsite disposal yard as a payment bond claimant. The case is Yard Works, LLC v. GroundDown Constructors, LLC, and Safeco Insurance Company of America, Hanover Circuit Court Case No. CL11001781-00.

The plaintiff-claimant, Yard Works, LLC (Yard Works) received land-clearing debris from the project at an off-site facility. When Yard Works was not paid, it filed suit, including a Little Miller action claim against the prime contractor's surety, Safeco Insurance Company of America (Safeco).

Safeco filed a demurrer to Yard Works' complaint (roughly speaking, this is Virginia's version of a motion to dismiss a complaint for failing to state an actionable claim), arguing that the action should be dismissed because Yard Works had not supplied labor or materials. Judge Harris disagreed and dismissed the demurrer.

The main bases for his ruling dismissing the demurrer were: 1) that the Little Miller Act was remedial in nature, and so construed in favor of claimants and against sureties; and 2) that Yard Works' acceptance of debris, even though offsite, was part of the necessary obligations of the prime contractor in fulfilling the contract requirements.

He thus found Yard Works a claimant for purposes of overruling the demurrer. This ruling allows Yard Works to proceed against Safeco, and try and prove recoverability otherwise under the payment bond for the project. Whether Yard Works can ultimately prevail, or Safeco chooses to appeal this decision remains to be seen.

Doing Business in the United States: What Everyone Needs to Know

Doing business in the United States has the potential for great rewards, but also can be daunting with the many U.S. and state laws and regulations.  Vandeventer Black's International Group has prepared an easy to read informational booklet about commercial participation factors for companies interested in the U.S. market, a copy of which is linked below:

http://www.scribd.com/doc/105490673/Doing-Business-in-the-US-VB-Pamplet

This booklet is an excellent primer, and we hope you find it helpful.  For more information about related issues, please contact the Vandeventer Black International Group attorneys identified in the booklet, or me.