Construction Loan Audit Services

Improvements in the economy and pent-up construction demand have provided lenders with profitable opportunities to offer loans on commercial and residential construction projects.  It is important to recognize, however, that these loans significantly differ from loans in other industries.  The terms and administration of these construction loans should be customized to address the unique risks in the industry.  Clark Hill assists lenders to mitigate these risks while allowing for the efficient completion of the construction project.  Services provided include:

  • Providing in-depth audits of construction lenders’ policies and procedures;
  • Preparing recommended policies and procedures for lenders to implement during pre-closing, construction draw, and close-out phases;
  • Drafting construction loan and administration documents for lenders to utilize with tis customers and builders; and
  • Providing advice on troubled construction projects.

Experience

Mark McInerney and Ellen Hoeppner recently obtained dismissal of a contentious lawsuit filed against Clark Hill’s client United States Steel. In October 2014, the plaintiff filed a lawsuit against U. S. Steel, alleging disability discrimination, interference under the Family and Medical Leave Act, and workers’ compensation retaliation. The plaintiff’s claims all stemmed from a workplace injury plaintiff suffered in July 2013, in which the tip of his finger was caught in a machine and nearly severed. Over the next two days, the plaintiff twice failed to appear at U. S. Steel Plant Medical for evaluation as directed, and misrepresented his medical condition by telling Plant Medical personnel that his finger had to be surgically “cut off” due to infection. When the true facts came to light, U. S. Steel determined the plaintiff’s misconduct warranted termination.  

These relatively straightforward facts, however, were made very complicated by a zealous plaintiff’s attorney, who propounded a theory of wide-spread discrimination against disabled employees because such employees posed a liability risk to the company for the purposes of workers compensation and OSHA reporting. Mark and Ellen filed a Motion for Summary Judgment, carefully separating the unsupported theories from the undisputed facts. The Court dispensed with oral argument, and on the strength of the briefs, United States District Judge Linda Parker recognized the theory for what it was, and dismissed the plaintiff’s case. 

Christopher Hossack and Heather Seiferth, with the assistance of paralegal, Therese Mayo, defeated a wrongful death claim filed against one of Clark Hill’s national architect/engineer clients in which the Plaintiffs demanded $3,000,000 to settle our client’s alleged liability. The final settlement demand against all defendants in this litigation was $20,000,000, as the deceased was a young man who left minor children behind at his passing.  

Clark Hill’s client was responsible for drafting, auditing and enforcing safety programs during construction administration work for a mine owner preparing to re-open a copper mine in rural Arizona.  As the construction work was winding down, our client’s services were reduced and the mine owner assumed more responsibility for the completion of construction. On a day when our client’s safety technicians were directed by the mine owner to stand down, the deceased, a rookie miner who had only worked six days in this mine allegedly stepped into an un-barricaded chute and fell to his death.  Plaintiffs sought to hold our client, along with the mine owner and its other contractors, jointly and severally liable for failing to enforce safety rules and MHSA mine safety standards on the day of the accident. The mine owner also demanded indemnification from our client under its contract.  

Shortly before trial was due to start, Chris and Heather persuaded the trial court to reconsider a summary judgment motion that had previously been denied. The motion argued that our client could not have proximately caused this accident because the chute was properly barricaded and marked on the client’s last site visit, and no employee of our client was present on the day of the accident.  After the second argument, the trial judge ruled from the bench to dismiss all claims against our client.  Not only was this architect/engineer firm spared the expense and risk of a three week jury trial, but also the mine owner’s indemnity claim was extinguished by this ruling.

The firm was contacted by an attorney in Canada. His client owns an architectural company in Canada. One of the architects was looking for license reciprocity in Nova Scotia to do work for a large project they were awarded recently. To comply with that province’s reciprocity rule, the client needed proof of his architect licensure from the states wherein he is licensed – MI and AZ. And he needed it yesterday! We got the call late Wednesday October 7th. Doug Folk got AZ to send the licensure information to Nova Scotia on Thursday the 8th, and Val Lawver had to work a little harder with MI, but got them to issue it late Friday – and it was Fed Ex’d Monday the 12th. The Nova Scotia License board met Tuesday the 13th in the morning – and everything was in – reciprocity approved!

Our client, Daniels Building Company, was the successful awardee of a U.S. Department of Veterans Affairs construction contract to renovate existing kitchen and food storage areas at the Battle Creek VA Medical Center in Battle Creek, MI.  The procurement was set aside for award only to service-disabled veteran-owned small businesses (“SDVOSB”) approved through the VA’s Center for Verification and Evaluation (“CVE”).  After announcement of the award, a disappointed unsuccessful offeror filed a SDVOSB status protest challenging whether Daniels Building was actually a SDOVSB and thus ineligible for the contract award.  Daniels Building engaged Clark Hill to defend this protest, which if sustained could have potentially destroyed our client’s business due to its dependency on federal SDVOSB set-aside contracts.

The protestor alleged that, through two separate joint ventures with two different companies with no connection to the VA’s procurement award, that Daniels was (1) controlled by a large company and thus no longer small; and/or (2) was controlled by non-veterans in conflict with the VA’s regulations.  The protestor also alleged that Daniels Building fraudulently obtained its SDVOSB certification by intentionally filing false information with, and withholding key information from, the VA.  The Clark Hill team of Bret Wacker, Stuart Schwartz and Nicole Tersigni prepared, in the mandated 5 day response period, a detailed brief demonstrating Daniels Building is in fact owned and controlled by a service disabled veteran; and that the protestor’s attempts to defame and discredit Daniels Building Company were without basis in fact or law.  The VA agreed with Daniels Building that its joint venture relationships had no bearing on the ownership or control of our client, and that the protestor’s evidence was not compelling enough to overturn Daniels Building Company’s SDVOSB certification.  Our client is now able to move forward with contract performance at the Battle Creek VA Medical Center.

With assistance from  Kristi Gauthier,  Ed Hammond, Peter Domas and Bishop Bartoni, Kevin Hendrick and Nicole Tersigni successfully defended an insurance priority dispute, resulting in an extremely favorable judgment for firm client, United States Steel Corporation’s ERISA-governed Retiree Benefits Plan.  U. S. Steel Retirement Plan was joined as a third-party defendant in a pending dispute by a No-Fault Automobile Insurance carrier,  which had been sued by a healthcare service provider for unpaid patient attendant care fees.  The No-Fault Carrier claimed that the obligation to pay for these services under Michigan No-Fault law  fell to U. S. Steel Retirement Plan, which covered the patient (who was a former U. S. Steel employee).  Ed, Bishop, Kristi and Peter lent their expertise to Kevin and Nicole in interpreting alleged conflicting insurance priority provisions and explanations of benefits.  Kevin and Nicole crafted a legal argument that ultimately led to summary disposition in favor of U.S. Steel Plan, and against the No-Fault carrier, saving U.S. Steel Plan from payment of the healthcare fees, and also reimbursing U.S. Steel Plan for benefits it had earlier paid by mistake, out of priority.  As the No-Fault carrier had rejected the Case Evaluation award prior to the filing of cross motions for summary disposition, it also appears that attorney  fees are recoverable for our client.  Kristi and Ed on Employee Benefit law, Bishop on Michigan No-Fault law, and Pete on Health Care issues, proved to be unbeatable resources.

In a pro bono case, Nicole Tersigni (under the supervision of Jordan Bolton and Stuart Schwartz) successfully prosecuted our clients’ primary breach of contract claim, and successfully defended our clients’ fraud claims through summary disposition proceedings. In short, our clients hired the defendant contractors to remodel our clients’ modest 900 square foot home, so the main level would be accessible to their severely disabled son. The defendant contractors took our clients’ money, completed a portion of the work, then walked off the job, claiming fraud in the inducement. After taking a significant supporting role in discovery, and a lead role in getting the defendant contractors’ counterclaims dismissed as a sanction for their discovery abuses, Nicole took a lead role in the briefing related to competing motions for summary. The Court dispensed with oral argument, granted our clients’ motion on their breach of contract action, and denied the defendant contractors’ request to dismiss our clients’ fraud claims.

Congratulations to Nicole Tersigni of the Construction Practice Group for her successful bid protest before the U.S. General Accountability Office on behalf of firm client Daniels Building Company (“DBC”).  DBC, a service-disabled veteran-owned small business, was blocked from bidding on a multi-million dollar U.S. Department of Veterans Affairs (“VA”) contract opportunity for construction services in Ann Arbor, Battle Creek, Detroit, and Saginaw, Michigan, due to ineffective publishing of the contract solicitation by the VA.  

This protest offered significant challenges to achieve the client’s objectives.  Under prior GAO precedence, all potential offerors for federal contracts are deemed to have constructive notice of any solicitation posted on the Government’s FedBizOpps website.  In addition, the U.S. Court of Federal Claims has held that such constructive notice cannot be rebutted.  With guidance and assistance from Bret Wacker of the Government & Public Affairs Practice Group, Nicole crafted an argument that the VA’s publishing of the solicitation on Fed BizOpps was so flawed that it was legally invalid from the start.  Nicole submitted evidence that the VA knew of the flaws, which it attempted to mitigate by selectively mailing copies of the solicitation to certain favored contractors in direct contravention of the Competition in Contracting Act and the Federal Acquisition Regulations.  Upon receipt of the protest, rather than risk an adverse decision with potentially widespread impact, the VA chose to take corrective action by re-opening the procurement, allowing DBC to compete for this valuable opportunity.  

Sullivan v. Pulte Home Corporation 232 Ariz. 344, 306 P.3d 1 (2013) – Held that a subsequent purchaser’s construction defect claim is not barred by the economic loss doctrine or statute of repose, but purchaser may not have a cause of action for negligent construction.

Flagstaff Affordable Housing Limited Partnership v. Design Alliance, Inc., 223 Ariz. 320, 223 P.3d 664 (2010) – As between a design professional and its client, contractual remedies for recovery of economic loss will bar tort claims seeking the same damages, which enables proper risk allocation through contract negotiations.

Albano v. Shea Homes Ltd. P’ship, 227 Ariz. 121, 254 P.3d 360 (2011) – Held that Arizona’s statute of repose is not tolled by the filing of a class action complaint in construction defect litigation.

1800 Ocotillo, LLC v WLB Group, Inc., 219 Ariz. 200, 196 P.3d 222 (2008) – Confirmed that contractual limitations of liability are not against public policy and may be enforced as agreed by a design professional and its client.

Represented a general contractor in all property damage cases arising out of the Pittsburgh subway construction.
Obtained defense verdict in extra work claim in AAA arbitration proceeding.
Member of the AAA Mediation Panel and Federal District Court for the Western District of Pennsylvania Mediation Panel. Mediation training was obtained by attending the Federal Bar Association’s mediation training (40 hours) and “A Systematic Approach to Mediation Strategies (STARS)” and “Mediating Construction Disputes”, both at Pepperdine University School of Law, Straus Institute for Dispute Resolution. I have served as a mediator in dozens of construction cases. Construction projects included: power plants, water plants, sewage plants, airport, courthouse, schools, commercial buildings, office buildings, apartment buildings, restaurant and residences.
Member of the AAA Construction Arbitration Panel, the Allegheny County Bar Association’s Construction Dispute Resolution Group and the Federal Court for the Western District of Pennsylvania Arbitrator and Early Neutral Evaluation Panel. Conducted Ace Training for AAA arbitrators. Served as chair, panelist, party-appointed, neutral and sole arbitrator in arbitrations, including large complex cases. Extensive experience in handling construction cases involving claims for delay, acceleration, loss of productivity, default termination, extra work, defective specifications, design errors and omissions and differing site conditions, as well as the drafting of construction contracts.
Obtained a favorable ruling from Justice Souter of the United States Supreme Court permitting the demolition of the old Pittsburgh International Airport.
Obtained a TRO in state court and settlement in international arbitration in excess of $2 million for an engineering/automation contractor of two continuous pickling and annealing lines.
Recovered $1 million for the Allegheny County Airport Authority from demolition contractors and an engineering firm related to the release of asbestos during the demolition of the old Pittsburgh International Airport.
Represented a Korean EPC contractor in an action to recover amounts on a letter of credit for a $320 million power plant project in Israel.
Tried various multimillion-dollar construction cases to verdict in West Virginia State and Federal Courts involving a cogeneration plant.
Defended Allegheny County in a $75 million construction litigation involving the County jail, resulting in mediated settlement.
Represented precast subcontractors in a $60 million litigation involving the construction of the Pittsburgh International Airport, resulting in a mediated settlement. Client paid nothing on the claim against it and received $100,000 on the counterclaim.
Obtained a directed verdict in Pennsylvania State Court in a $13 million property damage case involving construction of the Pittsburgh Subway.
Newsletter Alerts
President Trump Revokes President Obama's "Blacklisting" Executive OrderDangers When a Contractor Agrees to Indemnify or Name an Architect/Engineer as an Additional Insured on an Insurance PolicyNew Year, New President - How Will Employers Be Affected?Employers Must Begin Using New I-9 Form by January 22, 2017New Federal Acquisition Regulation Rule - Reporting Reduced or Untimely Payments to Small Business SubcontractorsPennsylvania State Construction Notices Directory Is Now Available Dispute Resolution Provision, in AIA 201-1997 General Conditions, Narrowly Construed by Trial CourtFederal Judge Blocks New Salary Level Overtime Regulations From Taking Effect December 1, 2016DOL Issues New Paid Sick Leave Rule for Federal Contractors and SubcontractorsDown Payments Issued Without a Sworn Statement May Result in Owners and Lenders Paying More than Their Contract PriceDOL Issues Guidance on the Fair Pay and Safe Workplaces Executive OrderIt Still Hurts - DOL's Revised, Final Rule on Overtime Doubles Minimum Salary Level Starting December 1, 2016Owners and Developers Beware: Federal law preempts your remedies against design professionals for ADA violations Federal False Claims Act (FCA) Actual Damages for Non-Compliant Goods or Services That Cannot Be Remedied Contractors Beware: Avoid Loss Payable TrapsContracts 101 for Design ProfessionalsYour Place or Mine? Drafting Forum Selection Clauses in the Wake of Rieth-RileyPrevention Through Design OverviewMichigan Supreme Court Addresses Claims Involving Unlicensed Residential BuildersFederal Contractors Must Amend Employee Handbooks to Add Fair Pay ProvisionArizona Court of Appeals Deals Win To Contractors, Subs and Design Professionals in Subsequent Homeowner Negligence ClaimsFederal Contractor Alert: White House Planning Another Executive Order -- This Time Mandating Paid Sick LeaveAmerican Arbitration Association Issues Revised Construction Industry Arbitration Rules and Mediation Procedures Effective July 1, 2015Arbitration Agreements: For Better or For WorseChange to Garnishment Law, Effective April 2015Michigan Prevailing Wage LawMichigan Court of Appeals Reinforces Limitations on "No Damages for Delay" and "Pay-If-Paid" ProvisionsRecovery of Attorney Fees under Construction Lien ActMichigan Court of Appeals Rejects Insurer's Effort to Expand Contractual Liability Exclusion to Claims Arising Out of Insured's Performance of its Own ContractFair Pay and Safe Workplace Executive OrderPresident Obama Signs Executive Order Prohibiting Discrimination Based on Sexual Orientation and Gender IdentityUnited States Supreme Court Once Again Affirms the Strong Federal Public Policy Favoring ArbitrationFolk & Associates Join Clark Hill PLCSupreme Court of Michigan Rules in Favor of General Contractor and Clarifies the Accrual of Indemnification Claims in the Construction Industry New MISS DIG Law, Effective April 2014 Personal and Successor Liability Against a Principal and His Newly Formed Entity for Debt Incurred by the Principal's Previous, Bankrupted CompanyChanges to the Michigan Court of ClaimsSixth Circuit Upholds Michigan's Ban on Project Labor Agreements on Public ConstructionIllinois Governor Signs Tough New Amendments to Construction Industry Independent Contractor Misclassification Law - Personal Liability IncludedAnti-Indemnification Statute Applicable to Construction Contracts Expanded By Michigan LegislatureSubcontractors BewareMichigan Pay to Play Law Targeting Service Providers to Public Employee Pension Plans Takes EffectHealth Care Reform Special Transitional Relief for 2014 Measurement Periods -- Are You Prepared?Key Small Business Provisions of the National Defense Authorization Act of 2013Bid Requirements for Public Projects Under the Iran Economic Sanctions Act of 2012Michigan Passes the Uniform Arbitration ActNew Law Limits Indemnification Provisions in Construction ContractsMichigan Court of Appeals Provides Guidance as to What Constitutes an Improvement to Real Property Triggering the Application of the Statute of ReposeUpdate on Right-to-Work Legislation and Union Requests to Extend Agency Shop Via Letter of AgreementMichigan Supreme Court Upholds Strict Enforcement of Governmental Notice RequirementsAn Update on the "Disappointed Bidder" DoctrineProject Labor Agreement Law Resurrected
News
Clark Hill Attorney P. Douglas Folk Quoted in Engineering Inc. Clark Hill Announces Attorneys Elected to Membership, Promotions to Senior AttorneyClark Hill Attorney Matthew T. Smith to Present at the ICBA Bankruptcy Section Meeting in Lansing, MI on January 26, 2017Clark Hill Attorney Matthew T. Smith to Present at Fundamentals of Landlord-Tenant Law Seminar in Lansing, MI on January 24, 2017Seventeen Clark Hill Attorneys Named to the 2017 Illinois Super Lawyers & Rising Stars List Twenty-Eight Clark Hill Attorneys Named to DBusiness Magazine's 2017 Top Lawyers ListClark Hill PLC Receives National Rankings in the 2017 Edition of U.S. News-Best Lawyers, “Best Law Firms”Clark Hill Attorney Douglas Folk to report on “Threats to Professional Licensure and How to Defeat Them,” at American Council of Engineering Companies Fall National Conference Clark Hill Attorneys Jeffrey M. Gallant and Scott D. Garbo to Present at MICPA Construction Industry Conference on September 23, 2016 Clark Hill Attorney Matthew T. Smith to Present at the 2016 HVAC/R Expo of Michigan on September 29, 2016 Sixty Clark Hill Attorneys Named 2016 Michigan Super Lawyers & Rising StarsClark Hill Continues to Grow with the Addition of Arizona Construction Attorney William BreierSixty-Four Clark Hill Attorneys Selected for Inclusion in the 2017 Edition of Best Lawyers in AmericaClark Hill Attorneys Named 2016 “Leaders in their Field” by Chambers USATwenty-Six Clark Hill Attorneys Named to Pennsylvania Super Lawyers & Rising Stars 2016 ListClark Hill Paralegal Valerie J. Lawver to Present at Institute for Paralegal Education Probate Seminar in Grand Rapids, Michigan on May 9, 2016Clark Hill Attorneys Named to Southwest Super Lawyers & Rising Stars 2016 ListClark Hill Attorney Matthew T. Smith to Present at AGC Surety Bonding & Construction Risk Management conference in Naples, FL on February 3, 2016 Sixty-Six Clark Hill Attorneys Selected for the 2015 Super Lawyers Business EditionTwenty-Eight Clark Hill Attorneys Named to DBusiness Magazine's 2016 Top Lawyers ListClark Hill PLC Receives National Tier 1 Ranking for Litigation – Construction in the 2016 Edition of U.S. News-Best Lawyers, “Best Law Firms”Clark Hill Attorneys Kevin Hendrick, Jay Berger and Jason Canvasser to Present at BOMA Premises Liability Brown Bag Series Seminar October 6, 2015Sixty-Five Clark Hill Attorneys Named to Michigan Super Lawyers 2015 ListClark Hill PLC Receives National and Metropolitan Tier 1 Rankings in the 2016 Edition of Best Lawyers in America's “Best Law Firms”Sixty-Two Clark Hill Attorneys Selected for Inclusion in the 2016 Edition of Best Lawyers in AmericaClark Hill Paralegal Valerie J. Lawver to Present at Institute for Paralegal Education Event on November 19, 2014Clark Hill Attorney P. Douglas Folk to Present at the American Council of Engineering Company’s 2014 Annual Convention and Legislative Summit – April 28Clark Hill Attorney P. Douglas Folk to Present at the APLS Annual Conference – April 10Clark Hill Attorney P. Douglas Folk to Present at the Leadership in Engineering Administration Program hosted by the American Council of Engineering Companies of Arizona – April 4Clark Hill Attorney P. Douglas Folk to Present a Webinar for the Arizona Builders’ Alliance – January 16Clark Hill Attorney P. Douglas Folk Presented with a Presidential Commendation by AIA Arizona at the 2013 Arizona Design AwardsClark Hill Attorney P. Douglas Folk to Present at the ACEC Fall National Conference – October 29Clark Hill Attorney P. Douglas Folk and James B. Wright to Present In-House Education Program to Architectural Resource Team, Inc. – October 24Clark Hill Attorney Jeffrey Gallant Awarded 2013 Engineering Society of Detroit Outstanding Committee/Council/Leadership AwardClark Hill Attorney David M. Cessante to Present Legal Requirements for Temporary, Leased and Independent Contractors SeminarAmerican Bar Association Forum on the Construction Industry Presents “Sticks & Bricks” in Ann Arbor on November 11, 2010Clark Hill Attorney Matthew T. Smith to Present “Fair Collection Law, Finance & Banking” Seminar at Johnstone UniversityClark Hill Attorneys David M. Hayes and Matthew R. Rechtien Featured in American Bar Association Section of Litigation’s Construct! NewsletterAttorney Kevin Hendrick to Speak at Michigan Construction Industry’s Professional Development DayAttorney Matthew T. Smith to Speak at the West Michigan Chapter of Air Conditioning Contractors of America