How To Manage the Confluence Of Construction Law and Intellectual Property

By Jeff Reichard

Construction lawyers may face myriad issues related to intellectual property, including patents, copyrights, trademarks and trade secrets.  Intellectual property disputes can create substantial economic risks and even completely shut down an otherwise successful construction project.  While these issues often are misunderstood, the intellectual property issues that arise most often in construction can be easily recognized and managed via contract negotiation or otherwise after educating yourself on the various types of intellectual property and how they may apply to construction projects as identified below.

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Getting Liquidated Damages in Your Default Judgment

By Luke Farley

Owners, if you want liquidated damages to be included in your default judgment against a contractor, then be sure to plead the LDs in your complaint.

In Aoun & Cole, Inc. v. Fitzpatrick, a new, unpublished opinion from the N.C. Court of Appeals, the court affirmed an order under Rule 60(b)(6) setting aside liquidated damages that were awarded to an owner against a contractor as part of a default judgment.

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House Bill 707: What’s New With Lien Agents?

By Nan Hannah

In late June 2017, the North Carolina General Assembly passed legislation revising the Lien Agent statutes. Because these changes involve upgrades and changes to the website, the effective date for the new law is October 1, 2018.  So, what’s new?

44A-11.1(f) now provides for a designated lien agent to accept renewals and cancellations of Notices to Lien Agents.  What should catch your attention is the fact the original statute did not provide for either renewal or cancellation of such notices.

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Fourth Circuit Court of Appeals Deals Significant Blow To Traditional Contractor-Subcontractor Relationship

  By Arty Bolick and John Ormand

On January 25, 2017, the Fourth Circuit Court of Appeals[1], dealt a significant blow to the traditional contractor-subcontractor relationship.  In finding a contractor and subcontractor could be considered “joint employers” of the subcontractor’s workers for purposes of the Fair Labor Standards Act (“FLSA”), the court’s decision has opened a pandora’s box of potential wage and hour issues, including claims for overtime pay against contractors and higher tier subcontractors from the employees of lower tier subcontractors. Read more

A Brief Primer On Subdivision Development Bonds

By Luke J. Farley

Payment and performance bonds get all our attention. But there is another type of construction bond you might encounter, especially if the housing market in North Carolina stays hot[1]—the so-called “subdivision development bond.”[2] Both cities and counties can provide for “more orderly development of subdivisions by requiring the construction of community service facilities” like roads, sidewalks, utilities, etc.[3] To ensure that the infrastructure improvements are completed, local governments can require “performance guarantees” from developers.[4] All performance guarantees must meet the same basic requirements.[5] The purpose of a performance guarantee is to prevent a situation where a developer begins work on a subdivision, builds some houses, and then runs out of money without completing the infrastructure, leaving residents in a half-built community without roads, sidewalks, sewer, etc. Unfortunately, incomplete subdivisions were a common problem during the last economic downturn.[6]

Performance guarantees usually take the form of surety bonds, though the developer also has the option of getting a letter of credit[7] or some other equivalent security.[8] According to the International Risk Management Institute, a bond is the preferred option because it does not require any security[9] (though the developer or its principals should still expect to sign an indemnity agreement). Other performance guarantees, like a letter of credit or certificate of deposit, would either tie up the developer’s capital or put it directly at risk as collateral.[10]

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Recommended Reading: On the State Tax Code, Clarity Combined With New Gray Area

This year, North Carolina made many changes to the Tax Code which have raised many questions coming from the construction industry. Certain construction projects, if not considered capital improvements under the Tax Code’s definitions, require that the contractors collect taxes on projects. Even if no taxes are to be collected on the projects, contractors need to understand the affidavits that they should request, or that will be requested of them. Brett Becker and John Mabe offer an explainer on the new tax in a post on the NexsenPruet Insights site.


The Chair’s Column: Construction Law Section, This Blog’s For You

By M. Riana Smith

Happy 2017! While it is the new year for everyone else, this time of year marks the half-way point of our bar year, which provides a great opportunity to see what we have accomplished so far, what is new and what is upcoming. Let’s start with what’s new. I am excited to introduce you to the section’s new blog format.

Rather than receiving our newsletter approximately every four months, you will receive more frequent posts on items of interest and affecting our section members – typically on a monthly basis. The motivation behind this change is to provide the members more timely access to important information instead of waiting until we have enough articles for the Change Order or until the next deadline. Expect to still receive the same great articles from section authors that you always have, but also look forward to blogs on other areas of law that may affect your practice, as well as legislative and case law updates. Changing the format has been in the works for some time. I want to thank the Newsletter Committee: Jonathan Massell, Lindsey Powell, Gib Laite and Todd Jones for their hard work that led to the successful launch of our new blog format. If you have ideas for a blog, an article (perhaps broken into a series of blog posts), or see another blog that should be re-blogged, please email our co-chairs (listed above) so they can make plans to include in future posts. Also, we welcome your feedback on this new format – good, bad (aka kindly constructive), or in-between, so we can continue to improve and better serve the section.

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