Lab to Pursue Fix in Botched Security System (John Serverence, Los Alamos Monitor)

Los Alamos National Security, LLC, is bringing in outside counsel to help it deal with the botched construction of a security upgrade at the lab. Originally, the system was supposed to cost $213 million, but cost overruns have jacked the project up to $254 million, according to a memo written by Lab Director Charlie McMillan, to employees. The National Nuclear Security Administration is holding LANS, LLC accountable for the projected $41 million in cost overruns.

Read the full story at:
http://www.lamonitor.com/content/lab-pursue-fix-botched-security-system

2 courts back TDOT suspension of 2 contractors (Associated Press)

2 courts back TDOT suspension of 2 contractors (Associated Press)

NASHVILLE, Tenn. (AP) — Two courts in Nashville have backed a decision by state transportation officials to bar two guardrail companies that were implicated in corruption investigations from bidding on projects.

Lu Inc. and Tennessee Guardrail contend in separate lawsuits that their suspensions weren't proper.

Lu Inc. owner and president Novice Cole has acknowledged giving a Tennessee Department of Transportation supervisor $30,000 as the TDOT worker oversaw a 2005 Interstate 65 widening project in Nashville. Cole has not been criminally charged and claimed in his lawsuit that the suspension of his Kingston Springs-based company violated terms of a 2006 agreement he reached with TDOT, according to The Tennessean (http://tnne.ws/tIShL9.)

The state argued before Davidson County Chancellor Russell T. Perkins that Lu's suspension was required to preserve "public confidence in the integrity of the department's bidding and contracting processes" and was based on evidence of irregularities" committed by Cole.

In his lawsuit, Cole noted the payments to the TDOT supervisor occurred in 2005, and he held that a one-year bidding suspension should be overturned. He contended the 2006 settlement with TDOT keeps the state from punishing him for anything the state knew about at the time of the agreement.

Full article located at: http://www.knoxnews.com/news/2011/nov/08/2-courts-back-tdot-suspension-of-contractors/

Knoxville contractor joins ICE enforcement program

Knoxville contractor joins ICE enforcement program (Josh Flory, Knoxville News-Sentinel)

To many business owners, voluntarily opening their books for a federal inspection may sound like a terrible idea.

One local contractor is doing just that, though, and says its customers are the reason.

On Monday, general contractor J.A. Fielden became the first company in the state to join the U.S. Immigration and Customs Enforcement "IMAGE" program.

Launched in 2006, IMAGE — which stands for ICE Mutual Agreement between Government and Employers — requires participants to submit to an inspection of their I-9 employment records. In return, the agency agrees to waive or mitigate any fines associated with violations and to refrain from additional I-9 inspections for two years.


Full article located at: http://www.knoxnews.com/news/2011/nov/07/knox-contractor-first-state-join-ice-program/

Court: Contractors liable for what their subs do (Jackson Sun)

A ruling from the Tennessee Supreme Court last week made it easier for homeowners to hold contractors responsible for shoddy work by subcontractors. The court has found that contractors have a duty to perform services in a "careful, skillful, diligent and workmanlike manner" that can't be fully delegated to another contractor they hire.

Read more about the issues that led up to the decision in the Tennessee Bar Journal.

The Jackson Sun carried this AP story

State Supreme Court ruling finds liability for contractors using subs

A ruling from the Tennessee Supreme Court has made it easier for homeowners to hold contractors responsible for shoddy work by subcontractors.

The court has found that contractors have a duty to perform services in a “careful, skillful, diligent and workmanlike manner” that can’t be fully delegated to another contractor they hire.

The 5-0 ruling in a case from Chattanooga over a botched roof repair job that caused a fire could have broad implications for homeowners and contractors because most home construction and repair work involves bringing in subcontractors to handle parts of the job.

The opinion written by Justice Gary Wade and released last week said this was the first time the state Supreme Court had taken up the issue of whether a contractor was absolved from liability under the contract by hiring a subcontractor.

The case began when Robert and Joanie Emerson signed a contract with Winters Roofing Co. to replace a roof. Company owner Martin Winters subcontracted out the work. When the Emersons complained that the new roof leaked, Winters brought in a different subcontractor for repairs.

The subcontractor used a propane torch on the roof, and a few hours later the house caught fire. A fire investigator for the insurance company concluded the open flame roofing work started the fire, which caused more than $870,000 in damages to the home on Sept. 26, 2007.

Neither Winters nor the subcontractor had liability insurance, although Winters tried to obtain it the day after the fire and then filed a claim that said the fire happened seven days later, the ruling said.

The Emersons’ insurance company sued Winters, who argued that he wasn’t at the site while the subcontractor was working and wasn’t responsible for his mistakes.

The trial court dismissed the lawsuit, saying the couple’s insurance company couldn’t recover damages because the fire wasn’t a foreseeable part of the contract. It also said that the only way Winters could be held responsible was if it was shown that he was negligent in his hiring or supervision of the subcontractor.

Last year the Tennessee Court of Appeals overturned that decision.

“The defendant had an implied duty to perform the services required by his contract with the Emersons in a careful, skillful, diligent, and workmanlike manner,” the Supreme Court ruling says.

It concluded that while Winters had lawfully delegated his responsibility to install a proper roof to the subcontractors, he still was liable for the shoddy work.

http://www.jacksonsun.com/article/20111030/NEWS01/111030004/State-Supreme-Court-ruling-finds-liability-contractors-using-subs-

New Government Crackdown On Independent Contractors Coincides with IRS Offer to Come Clean

The IRS has launched a new program that will enable many employers to resolve past worker classification issues at a relatively low tax cost by voluntarily reclassifying their workers.

This new program offers employers an opportunity to come into compliance by making a payment covering past payroll tax obligations.

This IRS "Fresh Start" initiative coincides with another new government Department of Labor program to crack down on employers who misclassify employees as independent contractors (see right-hand box for more information).

The new IRS Voluntary Classification Settlement Program "is designed to increase tax compliance and reduce burden for employers by providing greater certainty for employers, workers and the government," according to the IRS.

See full article at: http://www.maloneynovotny.com/news-resources/latest-news/2011/100311.html

TN Supreme Court considers home repair case

September 4, 2011

The Tennessee Supreme Court heard oral arguments last week on a case that could change a homeowner's ability to recover damages when a subcontractor botches a home repair or remodeling job. The case involves a Hamilton County couple whose house was destroyed by a fire while someone was fixing their roof. If the court finds in favor of the owner of the roofing company homeowners are going to have to be more vigilant, Nashville attorney John Day said. Day also wrote about the case in a recent Tennessee Bar Journal column.

Read the full story on the Tennessean's website.

Tennessee High Court hears Botched Home Repair Case

September 3, 2011

The Tennessee Supreme Court is considering a case that could change a homeowner's ability to recover damages when a subcontractor botches a home repair or remodeling job.

The case involves a Hamilton County couple whose house was destroyed by a fire while someone was fixing their roof.

The Tennessee Supreme Court heard oral arguments in the case Thursday.

Robert and Joanie Emerson hired a company to repair their roof but, unbeknownst to them, the firm subcontracted the job out to someone else. The Emersons accuse the subcontractor of setting the house on fire while using a propane torch during the repairs.

The damage amounted to more than $800,000.

Because repair and construction work is often subcontracted out to cheap laborers who lack insurance, some legal experts say a decision in favor of the general contractor could leave many homeowners saddled with the costs for botched repair jobs.

The full article is located at: http://www.expertwitnessinconstruction.com/httpdocs/news-Botched_Home_Repair.php

Property Damage Exclusion Precludes Duty to Defend (Wiley Rein, LLP)

The United States District Court for the District of Colorado has held that an insurer did not owe a duty to defend under a Non-Profit Executive Protection and Employment Practices Liability Insurance (D&O) policy issued to a condominium association (the Association) because the claims in the underlying breach of contract suit fell under the policy’s property damage exclusion. Beauvallon Condominium Assoc., Inc. v. Granite State Ins. Co., 2011 WL 2565474 (D. Colo. June 29, 2011).

After the retailers began to complain about problems with common elements, including drainage from the roof and interior leakage from overhead plumbing defects, the owner of the retail spaces filed suit against the Association, demanding repair of the common elements.

Read more at http://www.expertwitnessinconstruction.com/httpdocs/news-Property_Damage_Exclusion.php

An ICE Storm of Immigration Audits is Coming

An ICE Storm of Immigration Audits is Coming
Dana Olsen
Corporate Counsel
June 22, 2011

For the second time this year, auditors at the U.S. Immigration and Customs Enforcement branch of the Department of Homeland Security are cracking down on employers to ensure compliance with workplace eligibility laws. Ian MacDonald, an immigration attorney at Littler Mendelson, says the audits are not going to stop anytime soon.

The government announced last week its intention to audit the hiring records of 1,000 employers of all sizes across the country. ICE says the selection of targeted employers is random, but MacDonald says certain industries are particularly prone to the audits. In February, the agency made a similar announcement and investigated 1,000 employers. Adding in whistleblower tips, the latest action brings the number of I-9 audits for fiscal year 2011 up to 2,300.

See complete article:
http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202498023756

Workers Compensation update: Lawmakers strike deal on independent contractors

According to the Tennessean, lawmakers have struck a deal on how to cover independent contractors for accidents on the job. Yesterday, a House committee passed a new bill that would let the owners of small construction firms opt out of Tennessee's workers' compensation insurance program if they can prove they have no employees other than themselves.

The full story may be found at: http://www.tennessean.com/article/20100429/NEWS0201/4290322/1009/NEWS02

"The bill essentially would undo a 2008 law that would have required all contractors to have workers' comp insurance, even if they had no employees and were covered for accidents by their own health insurance policies." Id.

"The new bill — which is supported by groups representing large and small contractors — would limit exemptions to contractors that can show they own at least 30 percent of the company they work for and that they have either a supervisory role or are performing the work themselves." Id.

"Contractors would have to reapply for exemptions every two years. They could have to pay a $50 filing fee, money that would be used for enforcement." Id.

Tennessee Legislature suspends Workers' Compensation regulations. Sources indicate either until March 28, 2010 or 2011.

From the Knoxville Bar Association's legislative update: "Worker's Compensation -- The General Assembly approved legislation calling for immediate suspension of a new law to require sole proprietors and partners engaged in the construction industry to carry workers' compensation coverage on themselves due to unintended effects of the act. The law will be suspended until March 28, 2010. In the meantime, the legislature will discuss alternative ways to address gaps in coverage for workers in companies of all sizes in the various construction fields in order to address the problem without harming small business owners."

However, other independent sources say the regulations are suspended until March 28, 2011.

Humphrey on the Hill
Examiner.com

Lawmakers to suspend new Workers Compensation requirements for further study in the legislature

Workers comp law change eyed
Lawmakers meet with contractors upset over measure
Knoxville News Sentinel

When they return to the Capitol next month, state lawmakers will be under pressure to change a workers compensation law that takes effect on Dec. 31.

At a breakfast meeting on Tuesday, a trio of local legislators heard from contractors who are upset about a provision that places new insurance mandates on certain businesses. The meeting was co-hosted by the National Federation of Independent Business, and featured Knoxville Reps. Harry Tindell, a Democrat, and Bill Dunn, a Republican, along with Sen. Doug Overbey, a Maryville Republican.

Jim Brown, NFIB's state director, said he's been told by members of the legislative leadership that a suspension of the law should happen quickly after lawmakers resume their business on Jan. 12. Brown also said the Department of Labor has indicated contractors who are found to be in violation before the law is suspended will be given 60 days to come into compliance.
But Overbey pointed out that it's dangerous to predict legislative action, saying "how long it will take and what it will do I wouldn't start to predict." The senator also said he's getting an equal number of letters from people who say the law should be left alone, as from those who are calling for a suspension.

Sam Sole, a local siding contractor, attended the meeting and said the law will put him out of business. His two biggest customers, Sole said in an interview, typically build 150 to 180 homes a year between them, but through the first six-and-a-half months of this year had only built six. His gross profit on six homes, Sole said, adds up to around $6,000, making it impossible to afford the new insurance mandate.

And the possibility that the law will be suspended? "How can I trust the same people that put it in as law (in the first place)?" he said.

Article located at: http://www.knoxnews.com/news/2009/dec/16/workers-comp-law-change-eyed/

U.S. Supreme Court limits judicial review of arbitration decisions, even when agreed to by contracting parties

High Court Rules in Arbitration Case
(by PETE YOST, March 25, 2008)

WASHINGTON (AP) — The Supreme Court has limited the role of the courts in reviewing arbitration awards under federal law.

In a 6-3 decision Tuesday, the justices said, however, that there may be other legal avenues besides the Federal Arbitration Act to enable a larger role for the courts in examining the work of arbitrators. The case before the Supreme Court involved a cleanup dispute between toymaker Mattel Inc. and the owner of a factory site in Oregon contaminated with an industrial solvent.

An arbitrator initially ruled in favor of Mattel, and the Supreme Court ruling is helpful to the toy manufacturer. The Federal Arbitration Act "confines its expedited judicial review" to narrow circumstances, Justice David Souter wrote in the majority opinion. Souter added, however, that the court is "is no position" to address possible alternatives to reliance on the FAA.

The issue before the Supreme Court was whether Mattel and Hall Street Associates L.L.C. could agree in advance to broad court review of an arbitration award to correct any errors of law.

An arbitrator ruled that Mattel did not have to pay for environmental cleanup on Hall Street's property. A federal judge subsequently rejected the arbitrator's legal reasoning. The 9th U.S. Circuit Court of Appeals in San Francisco sided with Mattel, saying the Federal Arbitration Act bars judicial review of arbitration awards in such circumstances. The appeals court finding in favor of Mattel underscores the concern of some businesses that are hesitant to settle disputes through arbitration. These businesses say that in most cases they cannot appeal to a judge if an arbitrator rules against them.

Expanding judicial review could have a positive impact, encouraging parties in a dispute to enter arbitration, knowing that serious errors could be corrected by the courts. Others in the business community say that the downside to expanded court review is that it could lead to an increase in the cost and time that result from losing parties attempting to overturn arbitration awards. The American Arbitration Association oversaw more than 137,000 cases in 2006, the large majority of them arbitrations. The association opposes expanded judicial review.