Inside this Issue
- A1 - Only A Bona Fide Patron Of A Business Can Bring An ADA Suit, Maryland Court Holds
- A2 - It Still Hurts - DOL's Revised, Final Rule on Overtime Doubles Minimum Salary Level Starting December 1, 2016
- A3 - Condo Complaint Alleging Fraudulent Concealment of Construction Defects Tolled Statute of Limitations for Misrepresentation Claim
- A4 - Contractor not Excused from Violating Building Code Even if Homeowner Directs Him to Violate the Code
Article 1
Only A Bona Fide Patron Of A Business Can Bring An ADA Suit, Maryland Court Holds
See similar articles: ADA Suit | ADA Title III Claim | Maryland Court
Minh N. Vu
Seyfarth Shaw LLP
Seyfarth Synopsis: In a refreshing breath of fresh air, a federal judge holds that an intent to return as a "tester" does not give a plaintiff standing to sue under Title III of the ADA.
As we've reported before, the number of ADA Title III lawsuits has surged in the past few years, mostly in part due to a handful of plaintiffs who file hundreds of lawsuits each year. Because a court can only consider an ADA Title III claim when there is a threat of an imminent future injury, these serial plaintiffs typically allege in their complaints that they have an intent to return to the business as a patron and that they are "testers" whose sole purpose is to see if the business is complying with the law. Some courts have held that a plaintiff's status as a tester does not necessarily bar the suit, emboldening plaintiffs to file even more suits in these jurisdictions.
U.S. District Judge Nickerson, in the District of Maryland, held in an Order issued on May 4 that an intent to return to the business as a tester does not give a plaintiff standing to sue. "This court is not aware of any authority showing that Title III of the ADA was intended to create such broad rights against individual local businesses by private parties that are not bona fide patrons, and are not likely to be bona fide patrons in the future." The court was not convinced that the plaintiff would be visiting the defendant's shopping center as a patron in the future because he had filed twelve other lawsuits against other businesses in the same vicinity along the I-95 corridor. Those lawsuits undermined his claim that he would be visiting this particular shopping center –as opposed to all those other businesses — as he traveled on the interstate.
Kudos to Judge Nickerson for a sensible ruling.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Author:
Minh N. Vu
Seyfarth Shaw, LLP
Partner
Washington, D.C.
Direct: (202) 828-5337
Fax: (202) 641-9279
This article is republished in ConstructionRisk.com Report, Vol. 18, No. 5 (June 2016) with permission.
Copyright 2016, ConstructionRisk, LLC
Article 2
It Still Hurts - DOL's Revised, Final Rule on Overtime Doubles Minimum Salary Level Starting December 1, 2016
See similar articles: Department of Labor | DOL | DOL Rule on Overtime | Final Rule on Overtime | Minimum Salary Level | Overtime | Paul Wilhelm
Paul A. Wilhelm, Esq.
Clark Hill, PLC
On May 18, 2016, the Department of Labor ("DOL") issued its long-awaited Final Rule for overtime exemptions, focusing on the "white collar" exemptions (executive, administrative, professional and certain computer employees). The Final Rule comes after the DOL processed 270,000 public comments on its proposed rule about which we wrote you, from late last summer. The Final Rule will take effect December 1, 2016 and will:
- Raise the minimum annual salary level required for "white collar" exemptions to$47,476 ($913 per week), up from the current $23,660 ($455 per week) - an increase of just over 100%. (Recall, the salary level test does not apply to doctors, lawyers, or teachers, and certain computer employees can be exempt if paid at least $27.63 per hour and meet applicable duties tests.) This final level is down slightly from the $50,440 annual figure proposed last June.
- For the first time, allow employers to use non-discretionary bonuses and incentive payments(including commissions) to satisfy up to 10% of the standard salary level (e., up to $91/week or $4,732 total annually), provided these payments are made on a quarterly or more frequent basis. The remaining 90% of the required, new salary level is $822/week, or $42,744 annually, totaling $47,476.
- Raise the minimum salary for those covered under the "highly compensated employee" exemption, from $100,000 in total compensation annually, to$134,004 - an increase of 34%. This final level is higher than the proposed rule, which had called for a new level of only $122,148 - an increase of 22%.
- Impose an escalator provision into the FLSA, automatically "updating" the above salary levels every three years, beginning on January 1, 2020, by tying the levels ad infinitum to certain economic measures. The proposed rule had called for annual "updates."
- Impose no changes to the duties tests. The DOL had sought comments on possible changes to the standard duties tests for these exemptions, but decided not to make any such changes.
Misclassification of salaried-exempt employees is among the fastest-growing civil actions in both federal and state courts. With the Final Rule, the incentive for employees (and/or the DOL) to claim misclassification has increased. We advise companies to begin assessing whether they wish to pay the higher salaries and/or take other measures, and also to review the duties of their employees that are, or may be, classified as salaried-exempt to ensure they meet the various duties tests for the white collar exemptions.
About the Author:
Paul A. Wilhelm (313) 309-4269 | pwilhelm@clarkhill.com; Clark Hill, PLC Labor and Employment Practice Group.
This article is republished in ConstructionRisk.com Report, Vol. 18, No. 5 (June 2016) with permission.
Copyright 2016, ConstructionRisk, LLC
Article 3
Condo Complaint Alleging Fraudulent Concealment of Construction Defects Tolled Statute of Limitations for Misrepresentation Claim
See similar articles: Concealed Defects | Concealment | Fraud | Misrepresentation | Statute of Limitations | Summary Judgment
Kent Holland, Jr.
ConstructionRisk, LLC
A condominium association sued the developer and contractor that constructed and sold the condominium complex. Some of the condo units experienced water seepage and resulting damage. An expert determined that water was entering through exterior wall components. A contractor that was hired to solve the problem found that the coping leaked, the masonry lacked mortar, there was no flashing or drainage systems, the lintels and sill were not sealed, and the roofing systems were defective. The plaintiff alleged that the defects were concealed and could not have been discovered without performing extensive testing of the units or opening up the walls. They argued that the developer and contractor knowingly failed to comply with the plans and specifications, knowingly misrepresented the condition of the property and then concealed the defects. Defendants were successful in the trial court in getting summary judgment dismissing the case based on it being barred by the statute of limitations. This was reversed on appeal, with the court holding that under the fraudulent concealment doctrine, the plaintiff might be able to prove to the jury that the defendants schemed to defraud plaintiffs beginning with misrepresentations in the sales packet concerning the quality of construction and that this was designed and intended to operate after the construction defect cause of action arose to prevent its discovery. Instead of deciding that via summary judgment, a jury would need to evaluate the evidence and decide whether plaintiffs had been prevented by defendants’ actions from discovering both the problems as well as root of the problems earlier than they did. Henderson Square Condominium Association v. Lab Townhouses, LLC, 2015 Illinois 118139 (2015).
The plaintiffs argued that the defendants knowingly misrepresented the condition of the property and then concealed the defects. The trial court found that the fraud exception to the statute of limitations did not apply because a fraudulent misrepresentation requires misrepresentation of a preexisting fact and does not encompass a promise to perform future conduct.
Under the applicable state law, the appellate court explained that if a defendant has fraudulently concealed the cause of action from the plaintiff, the action may be brought within five years from the date the plaintiff discovers he has a cause of action. The court noted that “generally the concealment necessary to toll the statute of limitations must consist of affirmative acts or representations calculated to lull or induce a plaintiff into delaying the filing of his claim or preventing him from discovering the claim.” The court stated that the defendants were mistaken in their contention that the affirmative acts that constitute the fraudulent concealment must always be subsequent to and can never be the same statements or omissions that form the basis of the cause of action.
Here, the plaintiffs alleged that the defendants “covered up” the deficiencies in brick and mortar so that they could not be found, and that they did this “for the purpose of realizing greater profits from the city contract.” Here, the court found that the allegations read in their most favorable light to the plaintiffs indicated a scheme to defraud the plaintiffs that began with the alleged misrepresentations in the packet and which was designed and intended to operate after the cause of action arose to prevent its discovery. Based on all of this, the court held that a question of fact exists that precludes dismissal. If it can be shown that the plaintiffs did not know, and should not have known, that their injury was wrongfully caused more than five years before they filed their complaint in this action, the suit would be timely filed. That question of fact must be decided by a jury and not by a judge on a motion for summary judgment.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 18, No. 5 (June 2016).
Copyright 2016, ConstructionRisk, LLC
Article 4
Contractor not Excused from Violating Building Code Even if Homeowner Directs Him to Violate the Code
See similar articles: Code violation
Kent Holland, Jr.
ConstructionRisk, LLC
Where a homeowner directed its roofing contractor to perform work in a manner that violated the building code, the contractor was nevertheless liable for a per se violation of the code. The homeowner’s waiver of the code requirements does not preclude the contractor’s liability for violation. In this case, the code permitted no more than two layers of roofing on the building. The trial court issued a jury instruction advising the jury that if they found the code violation was the result of the homeowner’s instruction, they need not assess damages against the contractor. The appellate court reversed and held it was an error to give that instruction and moreover, because the jury found that the contractor violated the code, judgment must be granted to the homeowner. Downey v. Chutehall Construction Co., 88 Mass. App. Ct. 795 (2016).
It was sharply disputed at trial whether the homeowner represented to the contractor that there was only one layer of roofing at the time of the work and whether the homeowner refused to allow the contractor to strip existing layers from the roof before installing the new membrane that resulted in a total of three layers of roof material. This was only mentioned by the court and not discussed because it was apparently not deemed relevant to the outcome of the decision.
What happened at the trial level was that the motions judge denied cross motions for summary judgment and ruled that a jury could conclude that the contractor’s violation of the code was not knowing or intentional if they found he relied on statements from the homeowner that there was only one layer of roofing on the roof. At the trial itself, the trial judge denied a motion by the homeowners to exclude evidence of their alleged representations concerning the roof as well as instructions to the contractor not to strip the roof. The basis for their motion was an argument that a consumer’s oral waiver of a building code’s requirements cannot be a defense to liability. The judge then instructed the jury, over objection by homeowner, that they could proceed to determine damages only if they found that the building code was violated and that the violation was not done at the insistence of the homeowners.
In analyzing what impact, if any, a client’s instruction to violate the code would have on the contractor’s obligation to comply with the code and liability for non-compliance, the appellate court stated that a statutory right may not be disclaimed if the waiver would “do violence to the public policy underlying the legislative enactment.” The purpose of the building code, according to the language of the statute, “is to insure public safety, health and welfare insofar as hey are affected by building construction, through structural strength, … and, in general, to secure safety to life and property from all hazards incident to the design, construction, reconstruction, alteration, repair, demolition, removal, use or occupancy of buildings, structures or premises.”
Based on this public policy, the court concluded that, “To permit a waiver by a homeowner of his or her right to compel a contractor to comply with the contractor's obligations under the building code would permit, even encourage, contractors, and perhaps consumers. To waive provisions of the building code on an ad hoc basis, in the hope of saving money in the short-run a, but endangering future homeowners, first responders, and the public in general.”
In reviewing all the issues in this case, the court found that the “consumer’s oral waiver of a building code requirement cannot defeat the contractor’s liability for the violation….”
Risk Management Comment
The question of whether a contractor or design professional can be excused from code compliance by direction of its client is one that comes up more often than might be expected. It seems that clients may have a number of reasons (such as cost cutting) for not complying with all the details of the building code. As this decision makes clear, the professional contractor or designer that designs or constructs in violation of code requirements may find itself strictly liable for damages arising out of the work that violated the code even though it did what the client told it to do. So beware of code compliance.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 18, No. 5 (June 2016).
Copyright 2016, ConstructionRisk, LLC
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