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

In the last bank insolvency post we talked about how the Federal Deposit Insurance Corporation (the "FDIC") can revive limitations periods even after they expire. Today we'll talk about another of the FDIC's extraordinary powers - the D'Oench, Duhme doctrine and it's companions.

D'Oench, Duhme gets its name from the 1942 U.S. Supreme Court decision in D'Oench, Duhme & Co., Inc. v. FDIC.  After the FDIC takes over as receiver of a failed bank, that decision, along with many that follow it, spells doom for many a borrower.  

In a nutshell, after the FDIC gets appointed as receiver for a failed bank, the D'Oench, Duhme doctrine and its companions allow the FDIC to ignore select pre-Appointment Date agreements and deals between bank representatives on one side and their borrowers and guarantors on the other.  Agreements that commonly fall victim are debt work-outs and restructurings that often include features like:

• Extending a promissory note's maturity date
   
• Reducing an interest rate
   
• Suspending, deferring, or reducing principal payments, and even interest payments
   
• Waiving fees and other payments (e.g., prepayment premiums)
   
• Waiving non-money defaults
   
• Waiving or reducing so-called "default interest" at higher than original rate
   
• Releasing guaranties

The FDIC refusing to honor these kinds of agreements can doom borrowers, guarantors, and the projects they're working on.  It doesn't matter if they're an owner under a construction loan or a contractor subcontractor, material supplier, or design professional under a working capital loan or line of credit.

As you learn about what D'Oench, Duhme can do, you'll recognize that it's a boon for whomever buys the affected loans from the FDIC.  It's meant to work that way.  More on that in future posts.

Continue Reading...

• Email This
• Print
• Comments
• Share Link

In the last jury service post I explained the background of the case I sat as a juror on, the verdict my fellow 11 jurors and I reached, and I offered some suggestions from the jury box for lawyers who try cases. 

This post is about suggestions for jurors, and prospective jurors, that might make your jury experience a little better.  So when you open your mailbox to find a jury summons someday, come back here to prepare yourself  the day before you must appear at the courthouse.  It's also about final thoughts about jury service.

Suggestions for Jurors:

• Bring a bottle of water.  You will get thirsty. Drinking fountains may be few and inundated by long queues
  
• Bring snacks.  You'll get hungry and there may be little or no food available
  
• Bring a book.  You'll endure long periods waiting for something to happen and yearn for entertainment.  Officials may prohibit use of PDAs, smart phones, iPods and other electronic devices at some point.  So bring an old fashioned book.  You can bring a newspaper too.  But they're cumbersome and you may be in close quarters where it's impractical to open-up and turn the pages of a newspaper
  
• Sit where you have a good view of the witnesses.  Watch them closely.  It's the best way you can decide whether you think they're telling the truth
  
• The in-court Sheriff's deputy is your friend.  Be good to them and they'll be good to you

Continue Reading...

• Email This
• Print
• Comments (4)
• Share Link

A couple of weeks ago I reported that I was picked for jury service in the Illinois Circuit Court for Cook County.  Well, the testimony and lawyers' arguments are finished.  We finished deliberating and rendered a verdict.  The judge thanked and discharged us. Now I can tell you about it.

The Case We Heard and Decided

The case started with a commissioned saleswoman suing her former employer for unpaid commissions.  The former employer counter-sued the saleswoman for repayment of excess advances she received against future commissions she didn't earn before leaving her job.

The saleswoman also sued her former employer for invading her privacy.  She claimed that her former employer illegally intruded on her seclusion.  She claimed that her former employer gave personal information from her personnel file to a private investigator.  And then the private investigator used that information to impersonate the saleswoman and get records of her home and mobile phone calls - who she called, when she called, and how long each call lasted.

We found for the former employer on most of the unpaid commission claims and all of the advance repayment counter-claim.  Our verdict came to about $15,000.  We found for the saleswoman on her invasion of privacy claims - $65,000 in compensatory damages and $1,750,000 in punitive damages.

Continue Reading...

• Email This
• Print
• Comments (5)
• Share Link

Well, Chris Thorman at Software Advice suggests using a smart phone application - an "App" on an iPhone or Blackberry - to do it.  And he shares his ideas in Bringing Your Punch List Into the 21st Century.

Pretty much everyone in the construction business knows that the "punch list" identifies the final items of work that must be done after substantial completion before a project is finally complete and the contractor gets fully paid.



Punch List App Benefits

Chris suggests that a punch list App will benefit prime and subcontractors.  I think it could benefit lenders, owners, and design professionals too.  The benefit for all can be faster, more coordinated, and more efficient:

• Identification and valuation of punch list work
• Communication to those who must perform the punch list work
  
• Evaluation of punch list work to confirm proper completion
• Payment for properly completed punch list work

Construction management software applications have been around for years.  Some even work on mobile devices.  But they don't maximize the features now available on smart phones.

Continue Reading...

• Email This
• Print
• Comments (3)
• Share Link

The conventional wisdom is that lawyers don't get picked to serve on juries.  Well, don't always bet on the conventional wisdom. 

I got my summons about a week ago and went this morning to the courthouse with hundreds of other registered Cook County voters.  Most of the day was spent waiting.  For a few minutes I filled out a juror questionnaire and answered questions from the judge and lawyers for the litigants.  I was surprised when the judge announced my name as one of the jurors selected.

I'm sworn not to talk about the case with anyone.  So you I can't tell you anything about it, except that the composition of our jury is contemporary and looks nothing like the picture above.

So if I miss a few days of posting, it's because I'm hearing evidence and listening to lawyers' arguments by day and working as a lawyer myself, instead of blogging, by night.  I'll post here later to fill you in after the trial ends and the judge discharges me.
    

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

Yesterday in a piece titled Stimulus Saves Construction Jobs: House Panel, Reuters' Lisa Lambert reported on where the federal government's stimulus money is going in the construction industry and who's using most of it.  The highlights of the highlights:

• Jobs created or preserved in July '09 by infrastructure projects increased by more than 50% over June '09

• According to a U.S. House of Representative report, water, highway, and public transportation projects "created or sustained" 77,470 jobs in July '09 compared to just under 50,000 in June '09

• Illinois accounts for almost 20% of jobs created or sustained - 15,388.  We need it here in Illinois.  Our unemployment rate was 10.4% in July '09, a whole percentage point above the national rate of 9.4%

• California got $787B and reported 10,146 jobs created or sustained
  

• Texas reports using stimulus money to create or sustain 5,953 jobs

• Wyoming led the nation in the number of projects (a) out to bid, (b) under contract, and (c) underway

• Hawaii is slowest in processing projects

• Associated General Contractors of America (the "AGC") CEO Stephen Sandherr said on Monday that while the states may be starting work, cities are lagging.



"It is difficult to understand why more communities aren't moving to put their stimulus funds to work while they are experiencing these kinds of job losses"


According to AGC analysis, city construction employment declined in 319 of the largest U.S. metropolitan areas in July '09, while increasing in only 11.

• The U.S. Labor Department reported that the construction industry shed 76,000 jobs in July '09.

• According to a federal report on construction spending released on Tuesday, money put into public capital works dropped 0.7% in July '09

• After rising 3.1% in June '09, state and local construction spending fell by 0.8% in July '09. Highway and street spending fell 1% and overall transportation fell 0.4%
  

• July '09 educational spending was down 1.3 compared to June '09
  

Lisa's writes regularly for Reuters on government stimulus spending and economic recovery efforts.  Hopefully she'll soon join Twitter so we can all follow her and see her new work sooner.

• Email This
• Print
• Comments
• Share Link

In this past post and this past post too I mentioned a bill (HB344) in the Illinois General Assembly to amend the Illinois Contractor Prompt Payment Act putting caps on retainage under private construction contract and subcontracts.   

This bill stalled in the spring.  But it's active again.  It's been assigned to the Senate's Assignments Committee and will then go for further action from there.

• Email This
• Print
• Comments
• Share Link