The much-anticipated Miss Dig Underground Facility Damage Prevention & Safety Act (2013 PA 174, MCL 460.721, et seq.) was finally passed into law earlier this month.  It takes effect on April 1, 2014 and as of that date, it will replace the Protection of Underground Facilities Act (“PUFA”) (MCL 460.701, et seq.), which is being repealed.

The new act is much more comprehensive than its predecessor (PUFA) and while some aspects of the old law are being continued, a number of new provisions have been added.  A few of those new provisions are worth highlighting.

Positive Response System
Facility owners and operators will be required to provide notification to the notification system using positive response.  This will arguably enable excavators to determine whether all facility owners or facility operators contacted under a ticket have responded in accordance with the act.  See generally MCL 460.727(3) and MCL 460.723(x).

Caution Zone & Safe Zone Designations
The Miss Dig Act will break a construction site into two zones relative to underground facilities that have been marked by the facility owner or operator.  The “caution zone” is defined as, “the area within 48 inches of either side of the facility marks provided by a facility owner or facility operator.”  MCL 460.723(f) (emphasis added). An excavator will be required to expose all marked facilities in the caution zone by “soft excavation” (i.e., hand digging) before power tools and equipment can be used in this zone.  MCL 460.725(5).  If conditions make complete exposure of the facility impractical, an excavator will be required to consult with the facility owner or operator to reach agreement on how to protect the facility.  For excavations in a caution zone parallel to a facility, the excavator will be required to use soft excavation at intervals as often as reasonably necessary to establish the precise location of the facility.

The other zone is designated the “safe zone” and is defined as, “an area 48 inches or more from either side of the facility marks provided by a facility owner or facility operator.”  MCL 460.723(aa) (emphasis added).  Subject to the new act’s provisions, an excavator will be allowed to conduct excavation in a safe zone using power equipment without establishing the precise location of any facilities. MCL 460.725(15).

Liability & Damages
The new act exempts the notification system (i.e., MISS DIG System, Inc.), as well as its officers, agents and employees from liability for any damages, including damages for injuries or death to persons or damage to property, caused by its acts or omissions in carrying out the provisions of the act.  Further, the notification system will not be responsible for assuring performance by a facility owner or facility operator of its obligation to participate in the notification system under section 4(4) of the act.  MCL 460.729(1).

Governmental agencies, conversely, lost their immunity relative to potential civil liability for excavating around underground facilities.  Passage of the Miss Dig Act required that the Governmental Tort Liability Act be amended to provide that, “the immunity provided by this act does not apply to liability of a governmental agency under the MISS DIG underground facility damage prevention and safety act.”  MCL 691.1407(7).  In short, that means that as of April 1, 2014, governmental agencies will be in essentially the same position as private companies and individuals with regard to potential civil liability for excavating around underground facilities.

Finally, the act adds a new layer of administrative sanctions that can be assessed against “persons” – which includes individuals, companies and governmental agencies – who violate the act.  The Michigan Public Service Commission (“MPSC”) will be responsible for enforcing the act’s provisions.

Under the new administrative scheme, persons other than governmental agencies (i.e., individuals and companies) can be ordered to pay civil fines of not more than $5,000 for each violation and, either additionally or alternatively, be ordered to obtain reasonable training to assure future compliance of the act.  The MPSC will be required to consider all of the following factors in determining the amount of any fine it imposes:

(a) The ability of the person charged to pay or continue in business;
(b) The nature, circumstances, and gravity of the violation;
(c) Good-faith efforts by the person charged to comply with this act;
(d) The degree of culpability of the person charged and of the complainant; and
(e) The history of prior violations of the person charged.  [MCL 460.731(2)]

A progressive approach will be taken with regard to governmental agencies insofar as administrative sanctions are concerned.  If the MPSC has not issued an order against the governmental agency within the preceding 12 months, the potential civil fines are the same as set forth above for non-governmental agencies.  MCL 460.732(3)(a).  In determining the amount of the fine, the MPSC will be required to consider factors (a) through (e) above.

Where the MPSC has issued an order against the governmental agency within the preceding 12 months, the civil fine can potentially double (to not more than $10,000.00), and the governmental agency can be required to provide underground facility safety training at its expense to all its personnel involved in underground utility work or excavating.  Once again, the MPSC will be required to consider factors (a) through (e) above in determining the amount of the fine. MCL 460.732(3)(b).

If the MPSC has issued two orders against the governmental agency within the preceding 12 months, the civil fine can increase to up to $15,000 (with the MPSC again considering factors (a) through (e) above in determining the amount of the fine).  Additionally, the MPSC will be able to order the government agency to pay to the facility owner or operator the cost to repair the facilities if the government agency’s violation caused the damage.  MCL 460.732(3)(c).

All civil fines ordered under the act are to be paid to the MPSC and used for underground facilities safety education and training.  MCL 460.732(7).  Each day upon which a violation occurs will be considered a separate offense. MCL 460.732(8).

- Disclaimers -

The US Sixth Circuit Court of Appeals held today that Michigan’s Fair & Open Competition in Governmental Construction Act – which restricts the use of project labor agreements on publicly funded construction projects – is not preempted by the National Labor Relations Act (“NLRA”).  The opinion was rendered in Michigan Building & Construction Trades Council v Snyder, ___ F3d ___ (6th Cir 2013).  It reverses the district court’s judgment and vacates the injunction that permanently enjoined the act's enforcement.

Project labor agreements (“PLAs”) are contracts that set common terms and conditions of employment for large construction projects involving multiple subcontractors and unions.  Parties to PLAs on public projects include the governmental unit funding the project (or its general contractor) and the labor union.  PLAs frequently "incorporate terms from individual local union collective bargaining agreements," and all of the contractors and subcontractors on the project – including non-union contractors – must agree to abide by the PLA’s terms in order to work on the project.  It has been observed by one federal court that “a PLA effectively unionizes an entire construction project because all union and non-union contractors must comply with certain union protocol and procedure.”  There has been significant debate over the extent to which PLAs are beneficial and detrimental.

The Michigan legislature originally passed the Fair & Open Competition in Governmental Construction Act in 2011, and amended it in 2012.  As amended, it bars governmental units from entering into PLAs; forbids governmental units from discriminating against bidders on public projects based on whether the bidder had entered into a PLA; and allows a governmental unit to award a contract, grant, tax abatement, or tax credit to a private owner, bidder, contractor, or subcontractor who enters into or who is party to a PLA "so long as entering into that PLA 'is not a condition for award of the contract, grant, tax abatement, or tax credit . . . .'" 

Following the passage of the Fair & Open Competition in Governmental Construction Act, various associations of labor organizations filed suit seeking to stop its enforcement.  They were ultimately successful and in February of 2012, the US District Court for the Eastern District of Michigan – Southern Division ruled that the act, “impermissibly interferes with the comprehensive regulatory scheme established by the NLRA.  It is preempted.”  The district court also permanently enjoined enforcement of the act.  Governor Snyder appealed.

The Sixth Circuit Court of Appeals observed that the state was merely, “seeking to preserve taxpayer resources by encouraging open competition among potential contractors and subcontractors.  It is not banning PLAs, and contractors who enter into PLAs can compete on equal footing with non-PLA contractors for public contracts. Private entities, including contractors working on government projects, remain free to enter into PLAs.  The law’s effect is limited to forbidding governmental units from entering into PLAs and then forcing the terms and conditions found within on bidders, contractors, and subcontractors.”  Holding that “the act furthers Michigan’s proprietary goal of improving efficiency in public construction projects, and the act is no broader than is necessary to meet those goals,” the court concluded that “the law is not preempted by the NLRA.”

- Disclaimers - 

In a case of first impression, the Michigan Court of Appeals has ruled that where an owner files a Master Deed that redefines the project as a condominium project after the Notice of Commencement was filed, the general contractor is not required by Section 132 of the Condominium Act to file separate liens against each individual condominium unit within the project.  The ruling was issued on April 11, 2013 in the case of CD Barnes  Associates Inc v Star Heaven LLC, ___ Mich App ___, ___ NW2d ___ (2013).
 
Star Heaven purchased a partially completed apartment project in February of 2005.  At some point after the purchase, Star Heaven began to market the project as a “high-end condominium project.” 
 
Star Heaven thereafter hired C.D. Barnes Associates, Inc. (“Barnes”) to finish construction of the 19 buildings, and to perform upgrades to some of the existing units and structures.  However, the parties did not enter into a written contract delineating the scope of the improvement to which Barnes was contributing its labor and material. 

Barnes performed its first physical improvement to the property on or about August 10, 2005.  Star Heaven filed a Notice of Commencement on October 4, 2005 which utilized a metes and bounds description for the entire property. 
 
On May 2, 2006, Barnes executed a Sworn Statement at Star Heaven’s request that represented that, as of that date, the subject property was “free from claims of construction liens.”  Star Heaven recorded the Master Deed for the new condominium project on May 16, 2006.  Flagstar’s loans to Star heaven closed shortly thereafter, and Flagstar recorded its mortgage on May 23, 2006.
 
Star Heaven paid the first 20 invoices that Barnes submitted, but Barnes’ last seven invoices totaling $360,909.11 remained unpaid.  The opinion notes that Star Heaven’s explanation for the late or slow payments was always an inability to pay. 
 
Barnes thereafter recorded nine separate claims of lien on May 8, 2008.  Six of the lien claims referenced particular individual unit numbers within the project, and the three remaining claims were filed against the overall project.  “Each of the three liens filed against the project referred to the last day on which Barnes provided any work to the ‘overall project’ and each used a metes and bounds description encompassing the entire property set forth in the 2005 Notice of Commencement; they did not reference the dates upon which labor or materials were provided to any individual condominium unit within the project.”
 
Star Heaven assigned all of its interests in the property to David Findling on December 31, 2008, for the purpose of liquidating the assets and distributing the proceeds to creditors. 
 
Barnes filed suit seeking to foreclose on its liens under the Construction Lien Act (“CLA”) in May of 2009.  Flagstar contested the priority of Barnes’ construction liens over its mortgage.
 
Findling subsequently filed a separate action in Ottawa Circuit Court to liquidate the property for the benefit of Star Heaven’s creditors.  The sale of the subject property was to proceed as part of Findling’s case. 
 
The parties and the trial court in Barnes’ action agreed that the purpose of that case was solely to determine the priority and amount of valid liens to be asserted against the proceeds of the property sale.  The trial court ultimately concluded that the full amount of Barnes’ lien was valid, that the lien had priority over Flagstar’s mortgage, and that the lien attached to Star Heaven’s interest in the property (as then held by Findling as assignee). 
 
Barnes thereafter moved for attorney fees under § 118(2) of the CLA and for sanctions under MCR 2.114 and MCR 2.625.  The trial court granted Barnes $32,460 in attorney fees but denied its request for sanctions.  It entered judgment in Barnes’ favor on August 27, 2010, declaring that Barnes’ construction lien had priority over Star Heaven’s mortgage to Flagstar and that it was “valid for the full amount claimed of $360,909.11 and  attorney fees in the amount of $32,460.”  Flagstar appealed, contesting both the validity and the extent of the lien claims.
 
Flagstar asserted that Barnes’ lien claims were invalid for two reasons.  First, it claimed that they were invalid to the extent they described the subject property in metes and bounds rather than as individual condominium units.  The Court of Appeals rejected this argument noting that the CLA requires Barnes’ claims of lien to reference the legal description set forth in Star Heaven’s Notice of Commencement which, as indicated above, utilized a metes and bounds description for the entire property.  Barnes’ lien claims were therefore found to substantially comply with the CLA. 
 
The Court of Appeals then considered the effect of the filing of the Master Deed – which redefined the project as a condominium project – after the Notice of Commencement was filed.  It examined whether it effectively required Barnes to file separate  liens against each individual condominium unit within the project pursuant to Section 132 of the Condominium Act.  Noting that Barnes was not initially providing labor and materials to a condominium unit as contemplated by either Section 126 of the CLA or Section 132 of the Condominium Act because Star Heaven had not yet recorded a Master Deed designating the project as a condominium project or identifying condominium unit numbers, the Court of Appeals held that, “at the time Barnes’ lien arose under the CLA, the work performed was not ‘performed upon a condominium unit,’ so as to invoke the requirement that Barnes file separate liens on each condominium unit under § 132 of the Condominium Act.”  Consequently, Barnes’ claims of lien were valid and the lien was entitled to priority over Flagstar’s mortgage interest. 
 
Flagstar’s second argument in this regard was that Barnes’ Sworn Statement of May 2, 2006 – wherein Barnes represented that the property was “free from claims of construction liens,” but did not state that it was “free from the possibility of construction liens” – failed to substantially comply with the requirements of the CLA.  Flagstar essentially asserted that the defects in the Sworn Statement rendered it invalid, and thereby invalidated Barnes’ claims of lien.  The Court of Appeals noted that Flagstar was not claiming that the sworn statement was  inaccurate or that it failed to advise Star Heaven of the information that the CLA requires to be included in a sworn statement, but that Flagstar was asserting only that the omission of the “possibility” language from the Sworn Statement was material.  The Court of Appeals quickly rejected this argument based on existing statutory and case law. 
 
Flagstar also took issue with the extent of Barnes’ lien claims in its appeal.  First, it argued that the trial court should have limited Barnes’ claims of lien to work and material actually provided to each unit within 90 days of the filing of the claims of lien.  Noting the lack of a written contract between the parties, the Court of Appeals observed that, “[a]ll of the evidence presented below indicated that Barnes was retained, on a time and materials basis, to serve as the general contractor for the entire project being undertaken at the property by Star Heaven.  Thus, ‘the improvement’ to which Barnes was supplying its labor and/or material was in furtherance of the entire project.” [Emphasis supplied.]  It therefore affirmed the trial court’s conclusion that Barnes’ claims of lien were timely filed and encompassed the entire project – not just each unit that received labor and material within 90 days of the filing of the claims of lien.
 
Flagstar’s second argument as to the extent of Barnes’ lien claims was that the trial court should have reduced the amount of the lien for work and materials provided to units that were subsequently sold.  The Court of Appeals rejected that argument as well, noting that a construction lien “attaches to the entire interest of the owner . . . who contracted for the improvement, including any subsequently acquired legal or equitable interest” pursuant to Section 107 of the CLA. [Emphasis supplied.]  Since Barnes’ lien attached to Star Heaven’s entire  interest in the property as described in the Notice of Commencement – which included the entire project – the Court of Appeals held that trial court had been correct in refusing Flagstar’s request to reduce the amount of the lien. 
 
Finally, Flagstar took issue with the trial court’s award of attorney’s fees.  The Court of Appeals affirmed the attorney’s fee award, but held that the trial court erred when it combined the awarded attorney fees with the amount of the construction lien because Section 107 of the CLA prohibits a construction lien from exceeding the amount the property owner owes on the contract with the claimant.  It therefore held that, “the award of attorney fees is not properly added to the amount of a construction lien, but must instead be awarded by way of a judgment separate from the lien itself.”

(Disclaimers)

The Michigan Court of Appeals published an opinion earlier this week further defining the scope of the definition of “residential structure” in the Construction Lien Act (“CLA”), MCL 570.1101, et seq.  The case, Karaus v Bank of New York Mellon, ___  Mich App ___, ___ NW2d ___ (2013), originally issued as an unpublished opinion on December 20, 2012, was approved for publication on March 19, 2013. 
  
A couple (the Carefs) purchased a home in Glenn, Michigan in March of 2004.  Two months later, they entered into an oral agreement with the plaintiff to perform construction work on the property which, according to the opinion, continued through 2006.  Plaintiff thereafter reportedly performed various repair work on the property between 2006 and 2009.
 
The Carefs refinanced their home in July of 2006, securing the loan with a mortgage that was recorded in June of 2007.  The mortgage was thereafter assigned to the defendant, Bank of New York Mellon (“Mellon Bank”).
 
Plaintiff recorded a construction lien against the property in October of 2009 in the amount of $325,000 plus interest.  He thereafter filed a complaint in September of 2010 seeking foreclosure of the construction lien, and asserting claims of breach of contract against the Carefs, and unjust enrichment against the Carefs, PNC Bank (which was ultimately resolved), and Mellon Bank.  The trial court ultimately ruled in favor of Mellon Bank on both the plaintiff’s effort to foreclose on the construction lien, and his claim of unjust enrichment. 
 
The trial court’s resolution of the construction lien foreclosure action involved an analysis of whether the subject property was residential.  That analysis was necessary because the CLA requires that improvements to residential structures be pursuant to a written contract “between the owner or lessee and the contractor” in order for the contractor to have a right to a construction lien.  The CLA defines “residential structure” as “an individual residential condominium unit or a residential building containing not more than 2 residential units, the land on which it is or will be located, and all appurtenances, in which the owner or lessee contracting for the improvement is residing or will reside upon completion of the improvement.” MCL 570.1106(3). 
 
The court found that the subject property was indeed residential.  While conflicting evidence was presented on the issue of whether the Carefs resided at the property during the relevant time frame, the trial court ultimately stated that it accepted the plaintiff’s statement that the Carefs did not occupy and use the property as a residence.  However, it proceeded to find that the property was occupied and used by tenants, and that pursuant
to the case of Kitchen Suppliers v Erb Co, 176 Mich App 602; 440 NW2d 50 (1989), “the fact that lessees occupied and used the property as a residence renders the property residential for purposes of the CLA.”  Since the court found that the plaintiff only had an oral contract with the Carefs, it ruled in favor of Mellon Bank on the construction lien foreclosure action. 

The Michigan Court of Appeals reversed the trial court’s ruling on the construction lien foreclosure action, and remanded the case for further proceedings consistent with its opinion.  It initially found that the trial court engaged in impermissible fact-finding when it concluded that the Carefs did not occupy and use the property as a residence, holding that there was a genuine issue of material fact on that issue. 
 
More importantly, however, the Court of Appeals held that the trial court misapplied the law when it ruled that
even though the Carefs never resided on the property, it was nevertheless “occupied and used” by tenants, and that summary disposition in the bank’s favor was therefore required.  The Court of Appeals explained that the Kitchen Suppliers case did not support the court’s rationale in that regard.  Notably, it held that, “on the basis of the plain language of the statute and the Court’s interpretation and application of the CLA’s definition of 'residential structure,’ the determining factor in regard to whether a property constitutes a 'residential structure' or a commercial property is whether the owner or lessee contracting for the improvement intends to actually reside on the property upon completion of construction. [Cites omitted.] Thus, intent to reside in a structure is a
prerequisite to that structure being a ‘residential structure’.”

 -Disclaimer-

The State of Michigan has amended the law governing indemnity contracts relative to construction projects.  The existing law, MCL 691.991, currently provides as follows:

The new P.A. 2012, No. 468 was approved by Governor Snyder late last month.  It goes into effect on March 1, 2013 and amends MCL 691.991 in several important respects.

First, it broadens the range of construction activities to which the statute will apply.  As of March 1, 2013, the statute will also apply to indemnity agreements relative to the:

The new act also limits the extent to which public entities can require other contracting parties to defend and/or indemnify them and/or the other contracting parties.  Currently, MCL 18.1237c prohibits Michigan's Dept. of Management & Budget from requiring an "architect, professional engineer, or contractor" to "assume any liability" or to indemnify the state "for any amount greater than the degree of fault" of the respective architect, engineer, etc. when contracting for a "capital outlay project, capital improvement or facility, . . . ."

The new P.A. 2012. No. 468 incorporates the general principles of MCL 18.1237c, and expands their application.  It also provides protection to Michigan-licensed architects, professional engineers, landscape architects, and professional surveyors that it doesn't provide to those licensed outside the state.  It states:

The term "public entity" is defined by P.A. 2012, No. 468 as: 

It should be noted, however, that the new act specifically exempts from these provisions, "institutions of higher education as described or provided for in section 4 or 6 of article VIII of the state constitution of 1963, or their
employees or agents."

Disclaimer

The U.S. Court of Appeals has upheld a judgment of liability under the False Claims Act against a contractor at the Ft. Campbell military base.  While affirming liability, the ruling in U.S. v Circle C Construction LLC, ___ F3d ___ (6th Cir 2012) reversed the treble damages award of $1.6 Million and remanded the case back to the district court for a recalculation of damages.

Circle C contracted to construct buildings at Ft. Campbell. Wage rates on the project were dictated by the Davis-Bacon Act, which also imposed various reporting and other requirements.  These included but were not limited to submitting payroll certifications as a condition of payment, ensuring that subcontractors complied with the Davis-Bacon Act, and ensuring that payroll certifications were complete and accurate.

The project appears to have begun in 2004.  According to the opinion, "Phase Tech was Circle C's subcontractor on at least 98 percent of the electrical work on the Ft. Campbell project," although it had no written contract with Circle C.  While eight Phase Tech employees worked on the project, the original payroll certifications submitted by Circle C reportedly did not list them.  Phase Tech did not submit any payroll certification for the years 2004 or 2005, and subsequently asserted that Circle C did not inform it of the need to submit certified payrolls on the Ft. Campbell project until approximately two years after the project began.

The subject lawsuit was filed in January of 2007.  The United States intervened in the action approximately ten months later and filed a three-count amended complaint alleging a violation of the Fair Claims Act, unjust enrichment, and payment by mistake.  "Specifically, plaintiffs averred that all of the payroll certifications during the period when Wall and McPherson worked at the construction site were false because defendants (1) failed to disclose that any Phase Tech employees worked on the Circle C contract, and (2) the payroll certifications falsely asserted that Circle C paid the prevailing Davis-Bacon Act wages to employees, including Circle C's subcontracted employees, when this was not the case."

Approximately two years after the suit was initially filed, Phase Tech provided Circle C with new payroll certifications for the years when its employees were not included on any certified payrolls.  Circle C passed that information on to Ft. Campbell officials without verifying that it was either accurate and/or complete.  As it turned out, nine of the certifications that Phase Tech had signed were inaccurate and failed to match Phase Tech's contemporaneous documents for workers on the project.

Phase Tech ultimately settled with plaintiffs and the action proceeded solely against Circle C.  In March of 2010, the district court granted plaintiffs' motion for summary judgment and, as to the False Claims Act allegations, held that: "(1) Circle C violated the FCA by submitting false payroll certifications to the government regarding wages for Phase Tech employees, contrary to its agreement to abide by Davis-Bacon requirements; and (2) because Circle C did not have a written subcontract with Phase Tech and did not ensure that Phase Tech complied with the Davis-Bacon Act, its wage certifications wrongly certified that prevailing wages were paid to Phase Tech electricians working on the Fort Campbell Project in violation of the FCA."  The district court determined that actual damages were approximately $554,000, which it then trebled pursuant to the False Claims Act, resulting in the entry of a judgment against Circle C in the amount of roughly $1.6 Million.  Following the denial of its motion to alter or amend the judgment, Circle C appealed.

The Sixth Circuit Court of Appeals affirmed the district court's ruling on liability, noting that "liability is established by the express false certifications that were made."  Specifically, the court held in relevant part that, "Circle C conceded that it should submit payroll certifications for all employees on the project, but did not include Phase Tech employees on the original certifications, although it did submit separate payroll certifications for the other subcontractors.  Circle C acknowledged that it never paid or supervised the payment of any Phase Tech employees and had no first-hand knowledge regarding Phase Tech's payments to its employees.  It was only in 2006 that Circle C finally informed Phase Tech of the need to submit payroll certifications to Fort Campbell.  Once the records were provided by Phase Tech, Circle C never verified their accuracy. *  *  *  [T]here were 62 inaccurate submissions, 53 of which pertained to 2004 and 2005 and failed to list any Phase Tech workers. The 62 certifications also were false because they wrongly certified that the prevailing wages were paid."

The appellate court nevertheless reversed the damages award and remanded the case back to the district court for recalculation.  It cited deficiencies in the manner in which the damages were originally calculated as the basis for its ruling in this regard.

Disclaimers

The Michigan Supreme Court has ruled in favor of an architect in a tortious interference case filed by a disappointed bidder.  The opinion in Cedroni Assoc Inc v Tomblinson Harburn Assoc Architects & Planners Inc, ___ Mich ___, ___ NW2d ___ (2012) was issued on July 27, 2012 and it reversed a published Michigan Court of Appeals decision issued in 2010.

In Cedroni, a public shool district had entered into a contract with Tomblinson for architectural services with regard to a construction project.  Tomblinson reportedly agreed to assist the school district with the bid selection process by, among other things, "evaluating the bids submitted by contractors and making a recommendation to the school district regarding which contractor should be awarded the project."  Allegedly due to Tomlinson's recommendation, the school district eventually awarded the project to the second-lowest bidder rather than to Cedroni, who had submitted the lowest bid.  Cedroni thereafter sued Tomblinson for tortious interference with a business expectancy.

The trial court ruled in Tomblinson's favor, holding that Cedroni did not have a valid business expectancy.  However, the Court of Appeals reversed that ruling in a split decision, holding that a genuine issue of material fact existed on that issue.  Cedroni Assoc Inc v Tomblinson Harburn Assoc Architects & Planners Inc, 290 Mich App 577, 802 NW2d 682 (2010).

The Michigan Supreme Court disagreed with the Court of Appeals and held that Cedroni, "had no valid business expectancy for the purposes of sustaining a claim of tortious interference with a business expectancy."  It noted the highly discretionary nature of the school district's decision, and the longstanding rule in Michigan that "a disappointed low bidder on a public contract has no standing to sue in order to challenge the award of a contract to another bidder." 

The Court did not find any evidence that Thomblinson had improperly influenced the school district's decision. However, in order to dispel concerns that its ruling might be interpreted to mean that architects and other private entities are now immune from liability for making false statements about low bidders or otherwise dishonestly influencing governmental entities, the Court clarified its holding by specifically stating that "we do not hold that an architect is 'immune from liability' for making false statements about a low bidder."  It further explained that it was not, "immunizing from liability a private entity that 'acts with dishonesty and bad faith to interfere with the governmental entity's efforts, . . . .'"  Indeed, the Court twice noted that, "we are simply holding that when the ultimate decision to enter into a business relationship is a highly discretionary decision reposed by law within a governmental entity, a disappointed low bidder does not have a valid business expectancy for the purpose of sustaining a claim of tortious interference with a business expectancy."

(Disclaimer)

On June 13, 2012, the ORR approved the proposed amendments to the Construction Safety Standards - Part 10 - Lifting & Digging Equipment. A copy of the proposed amendments can be found here. MIOSHA has published a fact sheet highlighting the proposed changes to Part 10.

Federal OSHA's new crane standard became effective in November of 2010 and the law requires state plans to be at least as effective as the federal standards. Until the amendments to Part 10 of the Construction Safety Standards are completed, MIOSHA requires compliance with the current Part 10 Standard. According to MIOSHA's Fact Sheet, "[w]hen serious hazards not covered by the current Michigan rules are identified, MIOSHA would be required to use the General Duty Clause to address those hazards.

Disclaimer