Luke Nicholas Eaton

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Iliescu v. Steppan, No. 68346, 2017 Nev. LEXIS 38, (Nevada Supreme Court, May 25, 2017)

Appellants Iliescu entered into a Land Purchase Agreement to sell four unimproved parcels in downtown Reno, Nevada to Consolidated Pacific Development (“CPD”) for development of a high-rise, mixed-use project to be known as Wingfield Towers, which agreement was subsequently assigned to BSC Investments, LLC (“BSC”).  BSC subsequently hired Mark Steppan (“Steppan”), to provide design services for the Wingfield Towers.  Financing was never obtained for the project and the escrow never closed on the sale of appellants’ property.  In addition, since BSC did not pay Steppan for his services, Steppan recorded a mechanic’s lien against appellants’ property.  However, Steppan did not provide appellants with a pre-lien notice.

In this case, the Nevada Supreme Court was asked to determine whether the actual notice exception for pre-lien notices should be extended to offsite work and services performed by an architect for a prospective buyer of the property.  NRS 108.245(1) requires a mechanic’s lien claimant, other than one who performs only labor, to deliver a written notice to the owner of the property of the right to lien after they first perform work on or provide material to a project.  However, substantial compliance with this requirements is met if the property owner: (1) has actual notice of the construction on the property and (2) knows the lien claimant’s identity.

In re: Linear Electric Co., Inc., No. 16-1477, 2017 U.S. App. Lexis 5527 (3d Cir., March 30, 2017)

This case concerns whether suppliers, Cooper Electrical Supply Co. and Samson Electrical Supply Co. (“Suppliers”), could file construction liens under New Jersey law, despite the fact that Linear Electric Inc. (“Contractor”), filed a petition for bankruptcy, which automatically stays any act to create or perfect any lien against the contractor’s property. Two weeks after Contractor filed for bankruptcy, the Suppliers filed construction liens against projects in New Jersey where the materials were incorporated.  Following a motion by the Contractor, the Bankruptcy Court held that the liens were in violation of the automatic stay provision of the Bankruptcy Code. The District Court affirmed the Bankruptcy Court’s holding that, under New Jersey law, the liens were claims against the Contractor’s accounts receivables, which receivables are part of the bankruptcy estate and protected by the automatic stay.  On appeal, the Third Circuit affirmed the ruling of the District Court.

United States v. Int’l Fid. Ins. Co., No. 16-0472-WS-C, 2017 U.S. Dist. LEXIS 16791 (S.D. Ala. Feb. 7, 2017)

This action arose out of a payment dispute between Bay South Limited, Inc. (“Bay South”) and Stephens Construction & Concrete, Inc. (“Stephens”). Bay South entered into two subcontracts with Stephens, whereby Bay South agreed to furnish labor and materials to Stephens on two federal construction projects.  In connection therewith, International Fidelity Insurance Company (“Fidelity”) issued payment bonds (the “Bonds”) to Stephens.  Bay South filed a complaint in federal court to assert claims against the Bonds under the Miller Act (40 U.S.C. §3133), as well as other claims.  Stephens sought to compel arbitration of Bay South’s claims, pursuant to the arbitration provision in the subcontracts, which provided:

“In the event of a dispute arising between [Stephens] and [Bay South] under the Subcontract Agreement, the dispute shall be settled by arbitration in accordance with the Construction Industry Rules of the American Arbitration Association then in effect …”

Bay South argued that the 1999 Amendment to the Miller Act prohibits such claims from being arbitrated, and, in the alternative, even if these claims may be arbitrated generally, Bay South’s specific claims are not subject to arbitration because they are not within the scope of the parties’ arbitration agreement.