Construction Law Today : Construction Lawyer & Attorney : Joshua Glazov : Design Build Contracts, Construction Bankruptcy

An architect, an engineer, and a consultant sued the US Green Building Council in federal court in Manhattan. They claim that LEED building certification and professional accreditation is deceptive and violates racketeering, trademark, and consumer protection laws. 

A few days ago, the judge hearing the case, Hon. Leonard B. Sand, dismissed the lawsuit in this order (PDF). 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

My colleagues Scott Smith, David Eisenberg, and I just published a short article about the Illinois Supreme Court's controversial LaSalle Bank, N.A. v. Cypress Creek 1, LP decision.  It focuses on three things:

• A summary of who was involved, what their respective stakes were, the positions they took, and how the Justices reacted to them to decide the case
   
• How this decision affects construction industry stakeholders, particularly construction lenders and anyone who may claim a mechanics lien (e.g., prime contractors, subcontractors, material and equipment suppliers, architects, engineers, and other design professionals)
   
• Initiatives in the Illinois General Assembly to amend the Mechanics Lien Act to change the results in future cases

And it's a  wrap-up on Construction Law Today coverage that started back here: Mechanics Lien Priority: Contractor vs. Lender - Part 1. Click this link to navigate on to our article. 

Also in the same Litigation & Counseling Alert, some of our other colleagues also wrote these companion articles that may interest you too:

• Insurance and Due Diligence in the Business Transaction
   
• Can a Forbearance Agreement Actually Help a Lender Collect from Its Debtor?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

A federal court in Orlando, Florida recently decided that the D'Oench, Duhme doctrine stops claims for breach of a joint venture agreement. So does D'Oench's statutory supplement, Section 13(e) of the Federal Deposit Insurance Act (also referred to as 12 USC §1823(e)). The decision: ORL, LLC v. Hancock Bank (PDF).

Backstory: ORL, LLC v. Hancock Bank

A pair of real estate development companies borrowed money from a pair of banks (Peoples First Community Bank and Colonial Bank).  They used the money to buy land and construct a condominium project called the Blue Heron Beach Resort. Some of the borrowers' principals guaranteed the loans too.

As the borrowers encountered trouble, the banks agreed to modify some terms of the loan documents. One of the banks also agreed to provide purchase money "end-loans" to the buyers purchasing completed condominium units from the borrowers.

Unfortunately, the banks ran into trouble too. Colonial failed. Then Peoples First failed too. The FDIC was appointed as receiver for each bank. The FDIC sold the Peoples First loan to Hancock Bank under a Purchase and Assumption Agreement.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Estimating that over 125 cement trucks will be delivering loads for a big pour today, the Chicago Tribune warned commuters to avoid Wacker Drive, especially around Randolph and Lake Streets.  Here's crews and trucks at work as I walked past on the way to work this morning.....

 

 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

A federal court in Puerto Rico recently decided that the D'Oench, Duhme doctrine applies to deny claims for breach of informal employment contracts by former employees of failed banks.  And D'Oench's statutory supplement, Section 13(e) of the Federal Deposit Act (the "FDI Act", also referred to as 12 USC §1823(e)), applies too.  The decision: Ortiz-Hernandez v. WesternBank of Puerto Rico (PDF).

Backstory: Ortiz-Hernandez v. WesternBank of Puerto Rico

Rafael Ortiz-Hernandez worked as an employee for Westernbank of Puerto Rico.  He resigned in the spring of 2008 and, as part of his departure, entered into a severance contract with the bank. The severance contract didn't mention a Christmas bonus (the employee had traditionally received a $13,000 bonus each Christmas from the bank).  Despite the omission, the employee claimed that bank executives assured him he would still receive $13,000 as a bonus the following Christmas.  The assurances weren't written.  When Christmas arrived, the bank paid him less than $13,000 as a bonus.  So, the employee sued the bank for the remainder of his bonus.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Like failed banks, the D'Oench, Duhme doctrine applies to claims against the National Credit Union Administration Board ("NCUAB") acting as liquidator for a failed credit union.  And D'Oench, Duhme has a statutory companion for failed credit unions in the Federal Credit Union Act too: 12 U.S.C. §1787(p)(2).  A federal court in Utah recently used the D'Oench, Duhme doctrine and §1787(p)(2).  The decision: Campbell v. Castle Stone Homes, Inc. (PDF).

Backstory: Campbell v. Castle Stone Homes, Inc.

A Utah home builder known as Castle Stone Homes used the Internet, radio, and TV to solicit people with good credit scores to invest in a real estate investment scheme.  The investors allege that the builder used their good credit scores to obtain loans, then used the loan proceeds to construct, market, and sell homes.  Then the builder would split the home sale profits with the investors.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

LaSalle Bank, N.A. v. Cypress Creek 1, LP Decision from Illinois Supreme Court

In past posts we've been following this case as it wound its way through the Illinois judiciary up the the Illinois Supreme Court.  This morning, the Supreme Court issued this decision (PDF).  The Justices decided that a lender gets priority to the extent their loan proceeds paid for property improvement, regardless of whether the contractors paid with those proceeds timely, or properly, perfected mechanics liens. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

For the first time since the S&L crisis, the FDIC is suing a failed bank's former lawyers for professional malpractice.

The claims come against lawyers who formerly represented the now failed Neighborhood Community Bank in Newman, Georgia.  The FDIC's complaint (PDF) alleges that the lawyers deviated from the bank's instructions and colluded with a borrower to falsely represent disbursement of loan proceeds.  Important for those in the construction industry, each was an acquisition and development loan.

The complaint also alleges that the lawyers represented both the bank and the borrowers in various capacities at the same time, subverting the lawyers' loyalty to the bank and violating their fiduciary duties.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The D'Oench, Duhme doctrine and Section 13(e) of the Federal Deposit Insurance Act (a/k/a 12 U.S.C. §1823(e)) were active in Sacramento late last month to deny a borrower's claim for reformation of her loan documents.  The decision: Magdaleno v. IndyMac Bancorp, Inc. (PDF).

Backstory: Magdaleno v. IndyMac Bancorp, Inc.

Catalina Magdelano borrowed money from IndyMac. Her mortgage broker assured her that the interest rate on her loan would be a 30-year fixed rate with interest at 1% per year. But the documents for the loan set an adjustable rate starting at 1% per year, with a 9.950% maximum. Then IndyMac failed and the FDIC was appointed as IndyMac's conservator. Ultimately, the FDIC transferred the borrower's loan to a new lender: OneWest Bank.

• Email This
• Print
• Comments
• Trackbacks
• Share Link