Design/builder IPS-Integrated Project Services (IPS) entered
into a subcontract with Fraser Engineering (Fraser) for work on a new
pharmaceutical manufacturing facility in Portsmouth, NH. Fraser signed the contract in February of
2016 for the mechanical and plumbing scopes of work in the amount of $5,312,100.00. During the course of contract negotiations
starting in the fall of 2015, IPS and the owner made Fraser aware that it may
be required to accelerate its work on the project for certain schedule
considerations. In December of 2015 IPS
directed Fraser to institute an overtime program for the project which ended up
lasting for months. During this time,
IPS and Fraser were in communication about the costs and labor inefficiencies
associated with such a prolonged overtime schedule. Ultimately Fraser worked
an additional 59,845 manhours on the project.
Fraser’s subcontract contained two provisions related to additional
work it might experience during the execution of the project. The first required Fraser to report any
unforeseen conditions resulting in a change and any failure to provide IPS notice
would result in the waiver of claims for time or money. The second provision required Fraser to
submit conditional lien waivers with each monthly requisition of which Fraser
submitted eight throughout the project. The first of the seven waivers Fraser submitted
contained no reservation of rights related to the additional manhours for the
IPS-directed acceleration, the eighth and final did.
At some point Fraser submitted a claim for over $4 million
of which $3,324,083.30 was related to labor inefficiencies due to the owner and
IPS directed acceleration. Fraser further contended it was owed $1,554,867.29
in retainage and unpaid contract balances.
On January 26, 2017, Fraser filed a motion for and was granted an ex
parte attachment to perfect a mechanic’s lien in Rockingham County Superior
Court. After objecting to the attachment
in state court, the defendant removed the matter to federal court.
IPS argued that Fraser waived its lien rights by executing waivers throughout the project before finally reserving its rights for the acceleration
claim on its final requisition. The Court rejected IPS’s lien waiver argument by
pointing out in the record IPS had actual
knowledge when the seven lien waivers were submitted that Fraser would seek additional costs related to the directed
acceleration. The Court identified Fraser’s numerous communications
with IPS between December 2015 and August 2016 that it was experiencing labor
inefficiencies due to the directed acceleration.
The Court also discussed due to the “remedial nature” of the
mechanic’s lien statute, it could not state with certainty the N.H.
Supreme Court would “ignore the defendant’s awareness of the labor inefficiencies
and strictly enforce the lien waivers.”
Finally, the Court found that IPS made no attempt to separate
costs for the additional work Fraser experienced between the seventh lien
waiver in May 2016 and the eighth and final lien waiver in August 2016. Since
IPS does not dispute the work was actually completed, it is impossible for the
Court to reduce the lien amounts for work prior to May 2016.
Ultimately the Court found the lien enforceable in the amount
of $4,917,122.20.
--------------------------------------------------
The author, Brendan Carter, Esq., is the Director of
Industry Advancement & Labor Relations with the AGC of Massachusetts based
in Wellesley, MA. He is a monthly contributor to The Dispute Resolver and a
former Student Division Liaison to the Forum on Construction Law. He may be contacted at 781.786.8916 or carter@agcmass.org.
No comments:
Post a Comment