In This Issue
MEP Contractors Must Be State Licensed
Donald W. Gregory, Construction Law Chair
Electrical, plumbing, refrigeration, hydronics, and heating, ventilating and air conditioning contractors serving the commercial construction industry will have to get licensed by the State of Ohio, as a result of House Bill 434.
The goal of the new law is to create a uniform statewide licensure law in an effort to improve quality in these trades and avoid differing licensing standards in various municipalities. The law prohibits local governments from imposing additional examinations or requirements upon those holding the state license.
MEP contractors applying by October 21, 2001 will not have to take a state examination, but will have to make a $50 application to the Ohio Construction Industry Examining Board and show proof of active employment in one of the MEP trades for at least three years. Ten hours of continuing education will be required to keep the license, which must be renewed every three years.
This bill will allow a MEP contractor possessing a single state license to do business throughout Ohio. While municipalities or counties may still require the contractor to meet certain additional regulations, no additional testing or demonstration of skills may be required by local governments of a contractor holding a statewide license.
Back to top Subcontractor's Unjust Enrichment Claim Against Owner Not Stayed by Arbitration
A recent case decided by the Eleventh District Court of Appeals has decided that an unpaid subcontractor can assert an unjust enrichment claim in Court against the owner of the project even though there was an arbitration agreement in the prime contract between the owner and the general contractor. Owens Flooring Company v. Hummel Construction Company (2001), 140 Ohio App.3d 825.
The Court held that the issues between the owner and subcontractor were not referable to arbitration because there was no agreement in writing between those parties. Generally speaking, an arbitration provision only binds the specific parties to that agreement. The Court did however state that if the owner had filed suit against the subcontractor and contractor in an effort to escape its own arbitration agreement, then a stay of the legal proceedings against both (while arbitration proceeded) would be appropriate.
This case means that subcontractors will be free to assert lien claims, unjust enrichment claims or other claims against an owner that they do not have a contract with even if the owner and general contractor are entangled in a messy and lengthy arbitration. However, a different result might occur if the subcontractor had signed a subcontract, which stated that its claims against all parties must be stayed until such time as the arbitration between the owner and general contractor is resolved.
Back to top Duty of Good Faith and Fair Dealing Imposed
Riding out of the Rocky Mountains like a cool breeze comes a case from Wyoming's Supreme Court finding that general contractors owe a duty of good faith and fair dealing to subcontractors under commercial construction contracts. Scherer Construction v. Hedquist Construction, 2001 WY 23, 18 P.3d 645 (2001).
In that case, a public owner decided to order a "value-engineering" change from asphalt paving to concrete, which was then passed through by the contractor to the subcontractor - deleting approximately 80% of the subcontractor's original scope of work. The subcontractor successfully argued that every construction contract in Wyoming - including the subcontract here - should contain an implied covenant of good faith and fair dealing. The Wyoming Supreme Court agreed that §205 of the Restatement (Second) of Contracts should be adopted and therefore a duty of good faith and fair dealing should apply to all commercial contracts.
This case should give parties to construction contracts an additional tool to utilize when unfair contract language might otherwise bar an equitable recovery — particularly in states which recognize the implied covenant of good faith and fair dealing.
Back to top When Is a Roof Not a Fixture?
One would typically think that an installed roof material was a fixture - that being a component permanently attached to the building. If so, the statute of limitations for asserting a defective product claim for a bad roof would be four years.
However, a recent Tenth District Court of Appeals case determined that a roof membrane (which could arguably be rolled up and removed) fastened only at roof edges and penetrations was a "product" or personal property rather than a "fixture" or real property. Federal Insurance Company, Inc. v. HPG International, Inc., Case No. 00AP-1125, May 31, 2001. This meant that the statute of limitations was two years rather than four years and that the case against the roofing manufacturers should not have been dismissed as untimely.
Therefore, it would appear that the statute of limitations for defective roofs (absent an express contract between the parties) will vary depending on the exact nature of the roofing system and its installation -- which make it appear either more like a fixture or a product.
Back to top Firm News
Kegler, Brown, Hill & Ritter has been named General Counsel to the National Ground Water Association - an international trade association with over 16,000 members serving the ground water industry and preserving ground water resources.
Back to top
Credits
Kegler, Brown, Hill & Ritter's Construction Law Alert is prepared by the Construction Law practice group.
To subscribe to any Kegler Brown publication, please use our Subscribe Form. This publication, as well as an archive of previous publications, is also available from our Publications Archive.
The Construction Law Alert is designed to provide general information about the subjects discussed. It is not meant to be all-inclusive or comprehensive. Kegler Brown is not rendering any legal or professional advice by way of this publication.
© 1993-2010, Kegler, Brown, Hill & Ritter Co., L.P.A.
1989-2010, Kegler, Brown, Hill & Ritter Co., L.P.A.