Category archive

Columns

Eastern District Affirms Abuse of Process Damages in St. Louis County Subdivision Lot Split Lawsuit

in Law

By JAMES R KELLER

Missouri’s Eastern District Court of Appeals recently upheld sizable attorney fee awards for a seller and against subdivision trustees. The court also found in favor of those same trustees and against a buyer of a residential lot in the City of Frontenac.

The dispute involved an attempted lot split for construction of another home. The case is Trustees of Clayton Terrace Subdivision v. 6 Clayton Terrace, LLC and Huey, Trustee, June 19, 2018.

The seller’s mother, Jane Huey, lived in a home on a 2.3-acre parcel known as Lot 6 Clayton Terrace. Lot 6 was part of a 22-lot subdivision in Frontenac established by plat in 1923.

Huey died in 2011. The seller was the trustee of her mother Huey’s estate, including Lot 6. The seller had not lived in the home on Lot 6 for decades. She listed Lot 6 with Janet McAfee Real Estate, Inc. in 2012. A few months later, Lot 6 was sold.

The subdivision had various recorded restrictions amended over time. One of them required a 15-day notice to all subdivision lot owners of a pending sale. This allowed the subdivision owners, who had a right of first refusal, the first opportunity to purchase the lot at the sale price of the original sale – subject to all its other sale terms and conditions.

If more than one lot owner decided to a timely purchase, all such purchasing owners would own the lot on a pro rata basis.

The realtor timely hand-delivered notice of the sale to all lot owners. The sale closed for $415,000. No lot owner made a claim to purchase. This was a key piece of evidence for part of the appellate court’s decision.

The seller had no notice of any objection to the sale. There were no signs for someone to claim an irregularity in the sale going forward. The seller disbursed the proceeds to the estate beneficiaries.

The buyer wanted Lot 6 for investment purposes. Meanwhile, he leased it to Kevin McGowan and his six children.

The family made considerable improvements to their new home. Among them were removal of walls, combining the kitchen and dining areas, adding bedrooms and an exterior door, removing trees, refinishing the swimming pool, adding a new heater and replacing/refinishing the concrete pool deck.

The subdivision indentures provided that each lot—no matter its size—can only have one house.

More than a year after the sale, the buyer filed an application with the City of Frontenac to subdivide Lot 6. The City’s Planning and Zoning Commission approved the lot split.  This would allow another house on the new lot.

Two months later, the subdivision trustees sued the seller and the buyer. Count I sought a declaratory judgment against the seller for alleged failure to follow the required 15-day notice of a pending sale. It alleged that the seller failed to accept the offer of lot owner Elizabeth Schwartz to purchase the property under the 15-day notice provision.

Count II sought to enjoin (prohibit) the buyer from building an additional home on Lot 6. The subdivision indenture prohibiting any lot split had been “a matter of public record for almost 85 years and was still in effect,” according to the appellate court. This was another key piece of evidence.

The seller made a counterclaim against the trustees for abusive process in bringing Count I.

The trial took place on stipulated facts with no jury. This means the parties agreed on the evidence. It was up to the judge to apply these facts to the law and decide who would prevail. A stipulated record is not typical in a case tried before a judge, but it does occur occasionally. It never happens in a case tried before a jury.

The trial court’s decision sparked this appeal. On Count I, the judge ruled the sale was proper and the trustees abused process by suing the seller. A claim for abuse of process requires proof that the defendant made an illegal, improper, perverted use of process, a use neither warranted nor authorized by the process. The claim alleges that a defendant had an improper purpose in exercising its action, and this resulted in damage.

The trial court found the seller’s attorney fees and costs due to the litigation in the amount of $119,243 to be fair and reasonable. And yet, the court only awarded her $60,000 with $40,000 of that amount to be paid by the buyer and the other $20,000 to be paid by the trustees. The buyer had no claim against the seller.  The seller had no abuse of process claim against the buyer, only the trustees.

In Count II, the trial court found for the trustees. This allowed the division of Lot 6 into two parcels with a house on each.

The case turned in large part on the testimony of the head subdivision trustee. He stated that the only reason for suing the seller was to have the buyer move out of the neighborhood and take “their schemes with them.” He also acknowledged that the trustees had no “beef with the seller.”

There also was no evidence that subdivision lot owner Schwarz had made an offer to purchase the lot. This lack of evidence probably sealed the trustees’ fate on this point.  Based upon this record, the appellant court increased the attorney fee award to the seller and against all trustees to its full amount of $119,243.

The appellant court decided that the trustees should prevail against the buyer and prevent the splitting of the lot based upon the subdivision indentures which prohibited any lot split.

The Eastern District decided that the trial court’s award of $203,915 in attorney fees and costs to the trustees was too high. It sent the case back to the trial court to determine a “more reasonable amount” to be paid by buyer, “if any.”

James R. Keller is counsel with Sandberg Phoenix & von Gontard, P.C. where he concentrates his practice on construction law, complex business disputes, real estate and alternative dispute resolution. He is also an arbitrator and a mediator. Keller can be reached at (314) 446-4285, jkeller@sandbergphoenix.com.

A look back at 2018: Did My Technology-Based Predictions Materialize?

in Technology

By JOE BALSAROTTI

About a year ago, I wrote “What 2018 May Bring” in these pages. Let’s see how I did.

Then: Faster Internet – The pros or cons of the repeal of net neutrality will have to play out, but one thing is sure. Fiber to the home and gigabit infrastructure really took a hit the last couple years, possibly because the payoff was unclear or due to rising build and maintenance costs, but the technology exists for multi-gigabit Internet. Will 2018 see the likes of Google Fiber, Comcast’s Xfinity or Charter Spectrum ramp up their roll-outs?

Now: The world didn’t end when the short-lived net neutrality regs were rolled back. Locally, Spectrum doubled its base speeds and is pushing its fiber offerings more and more.

Then: Faster Wireless – Remember 3G, then 4G? 5G is almost upon us. This one might take until 2019 or 2020, but once 5G gets implemented, your smartphone data speeds will rival that of your wired connection. That dynamic should make for very interesting times as the “cord cutting” of cable TV could become cord cutting completely if wireless is priced comparatively with wired. The undeniable upside of this is that people will truly have choices in their communications options, beyond merely their phone company or cable provider as an on-ramp to the Internet for their business and personal use.

Now: We’re still waiting for 5G. And as too many of my recent travels have shown, 3G isn’t even prevalent outside major metro areas.

Then: Artificial Intelligence – You’ve already heard about this one. From experts warning that The Terminator is a real possibility (and imploring the military across the globe not to put machines in charge of weapons) to the far more benign, such as Amazon’s “you may be interested in…” After all, I remember reading an article maybe a decade ago that computers had already replaced human engineers in designing the very processors which become the next generation of computers. So maybe we’re already past the point of Skynet?

Now: 2018 saw the likes of Elon Musk and Stephen Hawking sounding the alarm on AI creators doing things because they can without thought to the unintended consequences.

Then: 4K Video – This one is already here and readily available. Simply put, the picture resolution is four times better than HD. Netflix, Amazon and Apple are already on the bandwagon, producing most of their new offerings in 4K.

Now: Very quickly, 4K has taken hold. Most TVs (except the very low-end ones) now have built-in 4K capability, as do video cameras and newer smartphones.

Then: The Internet of Things – I think IoT is one of the stupidest acronyms the tech industry has ever come up with. If consumer electronic companies and ad agencies have their way, every light bulb, thermostat, door lock and dog collar will be Internet enabled. The upside is we can control almost everything from our phones and know where Fido is at all times. The downside is there will always be a smarter programmer to hack into it. Instead of just losing data on a hard drive or network, now a hacker can cause physical damage by burning out an air conditioning compressor, spy on you from your own surveillance system or heat a building until equipment fails. There are predictions that by 2020 there will be 75 billion Wi-Fi-connected devices.

Now: 2018 definitely saw smart speakers become commonplace. You speak “order dinner” into them and it appears. But the unintended consequence of every word uttered in your home going to someone’s cloud server to be parsed might take the shine off for those who actually value privacy and security over convenience.

Then: The Gig Economy – This is the name given to the rise of temporary independent contractors, freelancers and others with alternative work arrangements. This drastic change in basic business continues to send shockwaves through industries. Lyft and Uber did it to the taxi business, Airbnb did it to timeshares and hotels. The playing field has not only been leveled; technology has taken an earthmover to it and changed the landscape completely.

Now: Uber, Lyft and the like are commonplace. Heck, even Lambert International now has Ride Sharing areas. If that doesn’t prove the concept has stuck, nothing will.

Looking ahead through 2019:

  • Continued push toward 5G cellular communications. The on-off-on merger of Sprint and T-Mobile cleared a hurtle in December. If it happens, the combined company says its claim to fame will be the most robust 5G system in the country. Much still has to happen for this to come to fruition, but a strong competitor to AT&T and Verizon might make it a reality.
  • We’ll see a pause in the breakneck speed of technology change in 2019. Amazon keeps adding massive warehouses. The accompanying overhead may just force business and common sense to win out over the things better left for Sci-Fi, like the now-shelved drone delivery.
  • Data security will continue to dog all industries and all types of tech. It seems to me the pendulum between cloud and on-premise might just swing back a tad this year as vendors see increasing pushback to their data being in someone else’s hands. Look for new and expanded private versions of cloud applications ranging from video surveillance to voice command, accounting and CRM systems.
  • Quantum computing (developing computer technology based upon the principles of quantum theory) is one of those things straight out of the Sci-Fi realm. Yet seeing a model of an IBM quantum machine at CES (the world’s largest consumer tech show) makes it seem that one of these days, things will drop into place for this technology. What it could mean for humanity is as unclear as it is boundless. The whole idea of computing gets upended in the quantum world. Answers are not exact and not identical, and final results are averages of millions of runs of the same equation – and those millions of runs can be done in less time than a single run can in the digital world. Modeling extremely complex things like the universe, the weather, medicine, motions of subatomic particles and the data generated by IoT devices might need this weird but compelling technology. It won’t happen in 2019, but this could be the most life-changing of any technology being talked about.

 

Joe Balsarotti is President of Software To Go and is a 39-year veteran of the computer industry, reaching back to the days of the Apple II. Keep up with tech by following him at Facebook.com/SoftwareToGo or on Twitter @softtogo.

Enacting a Construction Sales Process: Make Time for Sales to Have Sales

in Marketing/Sales

By TOM WOODCOCK

Contractors often must wear many hats – everything from estimating to project managing, vendor relations and, oh yeah, selling.

The selling part can often be an afterthought. The problem is that it needs forethought. Not allotting time and strategizing to sell can cripple a construction firm. Instead of trying to reshape an entire construction firm’s approach to sales, I often find it more effective to increase the level of efficiency and time usage. This is a process, but once enacted it produces opportunity.

My biggest challenge is to convey cause and effect, as many contractors tend to be a point A to point B types of thinkers. Sales rarely flows in that fashion. But if you practice the basics efficiently and consistently, results follow. The first step is to allot a percentage of time consistently to selling. This will require looking honestly at the amount of time you currently commit and what you can realistically designate for sales. Whether it’s a percentage of time or actual hours, start where you are, increase that number a bit and stick to it. A weekly total is most desirable.

The next level is to determine what to do with that time. What will get you the most bang for the buck? What actions will get you in front of more clients and potential customers? What is the quality of that contact time? This may sound daunting, but if you put a little effort into it, you’ll save time in the future.

Analyze which associations are most effective in generating opportunity. Which of the events you normally attend produce leads and relationships? Of the current relationships you have, which afford quality business opportunities? Invest time in these areas and reduce time in those that are nonproductive. Remember, you’re busy and you have other responsibilities. Sacrifice the more hit-or-miss opportunities that are out there. On a side note, make sure those other responsibilities are worth sacrificing any type of sales time to at all.

After you have time allotment laid out and know where you’re going to get in front of people, you need some preliminary marketing. The quickest, least expensive option is electronic marketing. But even in this realm, you still need to use your time efficiently. Hitting every aspect of social media can be alluring and trendy; however, realistically investing quality time into one avenue is best. Becoming consistently active on LinkedIn by joining the proper customer groups, connecting with industry professionals and searching for high-caliber networking functions should suffice – at least as far as social networking goes. Tie that activity to a monthly electronic newsletter properly designed and produced, and you have an effective platform.

Now you’re set to implement. Ah, there’s the rub. It’s far easier to get a company to strategize its approach and another to get it to diligently implement the plan. Even though we’re being respectful of all the other responsibilities that professionals have, still, many tend to put sales on the back burner. Effort cannot be structured into a strategy. It either exists or doesn’t.

Practicing efficient sales time usage will help with your corporate sales results, but true dedication to your firm’s sales dynamic always produces. Efficiency is effective, and yet a high level of time committed to a sales effort trumps efficiency – even if it’s not as effectively managed as a smaller, tighter effort.

There’s a principle in sales that holds true: If you’re out amongst people more, you’ll discover more opportunity. Projects come from unique leads, and introductions can be made to stronger network contacts. Creativity can be invoked in the sales approach, resulting in greater attention or differentiation. This larger type of time commitment is very rare in the construction industry. It’s usually inherent within larger contractors whose firms can afford specific business development and marketing personnel.

The final stage in this process is to continually evaluate what is producing the best results. Adjust your time commitment to those areas and expand their impact. Take actions producing good results and develop them into producing even greater success. Discontinue actions that are not producing sales opportunity, and you now have a formula for growing greater results. Of course, your efforts will eventually hit an artificial ceiling in terms of how much time you’re able to allot. The decision at that point will be to 1) stay put and maintain your new status quo, or 2) adjust the level of time your company commits to sales work. This is a good problem to have. It’s one that takes companies to the next level in revenue and profitability.

Construction is a hands-on industry. It’s filled with individuals who take complex plans and turn them into projects. Sales can be a foreign concept that is too often practiced on an as-needed basis. If the same amount of planning goes into a sales approach, quality results should be the expectation. The efficient usage of time relevant to sales can solidify a revenue base, not to mention increase overall profits. The old adage “time is money” must’ve been coined by a sales individual…if you consider Benjamin Franklin a sales rep.

Tom Woodcock, president of seal the deal, is a speaker and trainer for the construction industry nationwide. He can be reached via his website,  www.tomwoodcocksealthedeal.com, or at (314) 775-9217.

Eighth Circuit Court of Appeals Vacates $6 Million Jury Verdict Against Title Company on Mechanics’ Liens at Lake Condo Project

in Law
James R. Keller

By JAMES R. KELLER

The Eighth Circuit Court of Appeals recently vacated a jury verdict of $6 million in favor of a lender and against the title insurance company on a construction loan. The parties face a new trial with a different jury in federal court in St. Louis on this 13-year-old project.

The case is Captiva Lake Investments, LLC v. Fidelity National Title Insurance Co., 883 F.3d 1038 (8th Cir. 2018). This is a significant opinion about Missouri law from the nation’s second-highest court on construction lending, insurance coverage and mechanics’ liens.

The construction project was a condominium development at the Lake of the Ozarks in Sunrise Beach, MO that started in 2005.

National City Bank of the Midwest had loaned Majestic Pointe Development Co., LLC $21,280,000. National purchased title insurance for the project from Fidelity National Title Insurance Co.

Partway through construction, Majestic defaulted on the construction loan and went bankrupt. Captiva Lake Investments, LLC bought National City’s ownership interest in the project. Various contractors and subcontractors filed mechanics’ liens against the property.

Captiva (the lender) sued Fidelity (the title company) in 2009 asking Fidelity to protect Captiva on the mechanics’ liens. Fidelity agreed to defend Captiva under a reservation of rights. In turn, Fidelity sued Captiva alleging there was no coverage for the mechanics’ liens.

A reservation of rights is not unusual in the insurance industry. In this case, it meant that Fidelity would provide and pay for the defense of the lawsuit; it reserved the right to later disclaim there was insurance coverage.

Fidelity based its reservation on a specific exclusion contained in the title policy it had issued. The exclusion excluded from coverage claims based on liens that were “created, suffered, assumed or agreed to by the insured claimant.” In this case, that was Captiva.

After some procedural maneuvering in court, Captiva became the plaintiff in its claim against Fidelity for insurance coverage. The facts and claims are complicated.

The trial court judge did not allow Fidelity to present its exclusion defense to the jury.  The judge determined that there had to be evidence of intentional misconduct or inequitable dealings by National City (the original lender) to advance that defense, and there was no such evidence.

The Eighth Circuit noted “construction lending can be risky.” In case of bankruptcy, the lender’s loan is only protected by the unfinished project, “which is often worth far less than the money put into it.”

Title insurance protects the owner and insurer against defects in title that already existed before the date of the policy. It generally does not protect from events that occur after the date of the policy.

In this case, the title insurance policy was a standard 1992 American Land Title Association (ALTA) lender’s title policy. ALTA writes industry-standard policy forms that are used nationwide.

Fidelity issued the policy after the work had begun. Fidelity agreed to the lender’s deletion of standard policy language that excluded from coverage mechanics’ liens.

This created a risk to the title company that mechanics’ liens might be covered by its policy and that the liens might be given priority over Captiva’s deed of trust for the construction loan.

Missouri law gives priority to mechanics’ liens to protect unpaid contractors, subcontractors and material suppliers. These project partners may be the first in line to be paid before others, including the lender – even a lender whose loan predated any recorded mechanics’ lien. This depends in part on when the work first started in relation to the date of the construction loan.

This priority encourages those trades farther down the food chain to work. Otherwise, some would argue that nothing would get done on a construction project without up-front payment.

Since at least 1855, Missouri has followed the first-spade rule. This rule provides that the first day of work by any contractor, subcontractor or supplier is the operative first date of work for all of them as far as mechanics’ liens are concerned. The liens of all of them – no matter when filed (as long as timely filed) – revert for priority purposes to that first date.

If that date is before the date of the filing of the construction loan, all mechanics’ liens have priority over that lender. In this case, mechanics’ liens were filed after the date of the loan – but at least some of the work apparently preceded that date.

The Eighth Circuit stated that evidence was not presented to show that any work done before the policy date became part of a later lien.

Captiva did not provide any legal authority that applying the first-spade rule was determinative of whether unresolved mechanics’ liens rendered a title unmarketable.  Coverage for a title that is unmarketable allows the insured to be indemnified when there is a title defect that existed prior to the date of the policy.

There was another consideration in this case, however, besides mechanics’ lien priority and the first-spade rule.

The Eighth Circuit concluded that the jury should have been allowed to consider the lien exclusion contained in the policy without needing to find intentional misconduct or inequitable dealings by National City.

National City may have “allowed” or “suffered” the liens when it stopped funding the project. The general contractor – Kidwell Construction, Inc. – paid itself about $681,000 of a $1 million fee. This money was supposed to be deferred until the construction loan was repaid.

The schedule of values revealed there were insufficient funds to pay for finishes and site improvements. These events caused National City to stop funding the loan, leaving $1.2 million unpaid from the original loan.

Such evidence could persuade a jury that the “allowed” and “suffered” exclusion should apply, thereby releasing the title company from coverage even though the general exclusion for mechanics’ liens was not in the policy.

James R. Keller is counsel with Sandberg Phoenix & von Gontard P.C. where he concentrates his practice on construction law, complex business disputes, real estate and ADR. He also is an arbitrator and a mediator. Keller can be reached at (314) 446-4285 or jkeller@sandbergphoenix.com.

Relationship is to Sales what Messaging is to Marketing

in Marketing
Stephanie Woodcock

Good salespeople know the importance of relationships to sales and long-term success. Good marketers know the importance of messaging and the brand that supports that message.

There is a reason it’s called marketing and sales. They are two different things.  Marketing needs to create a message Sales believes in. Sales needs to help convey the message that is reflected in Marketing. In addition, Sales should also share input as to what the marketing message is, so that he can reinforce the message. Each department needs buy-in and the sharing of internal marketing needs to occur to get companywide buy-in. When the system is working correctly, Marketing generates leads and Sales follows up and closes.

With a cohesive email marketing campaign and marketing automation tools, B2B (business-to-business) companies can close the gap between marketing and sales by consistently nurturing prospects with helpful content and creative, concise branding. Buyer behaviors are changing. B2B marketers must communicate with buyers in new ways and create content marketing that answers questions, provides market insight and is personalized to the customer’s role, needs and level of interest.

One major change is that buyers do more research on their own. They investigate solutions on their own and discuss with peers before engaging vendor sales reps. Sales cycles start with the email campaign of the marketing department, and the message is key. The marketing team is tasked with developing a message and content that educates while it sells.

Too many times, marketers use existing content to power lead-nurturing campaigns but find that the content consists mainly of product brochures, technical white papers and press releases. Pushing this kind of technical content that does not have an underlying message pushes prospective clients away. Buyers have a low tolerance for commercial messages that sell first. The key is to engage buyers with a creative, cohesive message before selling your wares.

Marketers need to create a relationship, just like sales, between their brand and the leads they want to nurture. They need to create email campaigns that entice clients to open and click through for more information. New, educational content for these marketing campaigns can be culled through resources within the company. Sales, engineers, estimators and customer service personnel can add valuable, raw content for marketing to craft into a cohesive message.

Once the brand and message has been established, sales can use this as a starting point, engage these nurtured leads and continue the relationship and sales cycle.  One needs the other. Neither Sales nor Marketing should be operating alone. When married, the “whole is greater than the sum of its parts.” When Marketing and Sales are working toward the same goal, that synergy drives motivation, company culture and sales. It also increases more than the bottom line. It creates a culture of customer service, client relationship and client loyalty.

The marriage of both departments proves that while every company needs sales to drive revenue, they need marketing, too.

Stephanie Woodcock is president of Seal the Deal Too, a St. Louis-based marketing, creative & communications firm. She can be reached at stephanie@sealthedealtoo.com.

Let’s Get Married! How Sales & Marketing Should Operate Together

in Marketing
Stephanie Woodcock

When meeting with clients, one important topic is how we, as a marketing team, plan to drive sales, engage the sales team and better measure our efforts. How do we marry sales and marketing? How do we create a long-lasting, meaningful relationship between the two departments that not only increases sales but also engages the company’s internal resources?

In many companies, the sales and marketing departments are still only dating and haven’t fully committed to each other.

Here’s a sample scenario: Sales pops into Marketing’s office unannounced and asks (pleads):

  • Do you have a flyer for this product?
  • Can you create some brochures for this trade show?
  • Can you work up a PowerPoint presentation for a new client meeting that I have tomorrow?
  • I need 25 of those polo shirts you ordered, like now.

Many times, these unexpected but welcome requests are time-sensitive, top priorities. Marketing rises from her desk and scrambles around trying to make Sales happy. They put aside their long-term projects and quickly (but lovingly and willingly) try to put a sales package together that doesn’t look like it was assembled five minutes ago. There is no real cohesion, strategy or underlying message between Sales and Marketing. They haven’t said their vows yet.

Another scenario that occurs is when Sales and Marketing haven’t even met yet and they are still going about their business as singles, with no inkling that they need each other. This is actually worse than the former scenario because there is no marketing message to support the sales effort. Sales is on its own, using material that he generated on his own, and he is basically relying on his skill, talent and likeability to generate business.

We love you, Sales. We love your passion, your tenacity and your ideas. We want you knocking down our door to get our marketing materials. We want to meet your needs and help you “bring home the bacon.” But in order to truly meet those needs, we need a plan. We need you to “put a ring on it” and together we need to commit to a long-term marketing message and strategy. Then we need you to help make it happen. We cannot do it without you.

Environmental Remediation Issues Require Immediate Attention, Best Practices

in Technology

By TOM WOODCOCK

The environmental aspect of a construction project can often be inconsistent in approach. Whether asbestos, mold or lead, it’s surprising how common it isn’t properly handled or even ignored.

The risk of an environmental issue not being corrected is by far greater than the expense of litigation, industry experts contend. Part of the problem is many owners are not aware of the need; many times, owners are not informed of an existing problem. The discovery of dangerous materials should spur a removal process, environmental remediation experts say, but this isn’t always the case. Why does this occur, and what can be done to correct it? Too many times, renovation and demolition projects may remain unchecked and construction will go forward without the problem being resolved, experts agree.

There are reasons this is occurring regularly on construction projects, according to Mike Renfroe, founder of St. Louis-based GenCorp Services, LLC, a remediation and demolition contractor.

“There are several factors to this work not being done,” Renfroe said. “These may include tradesman who are not educated on environmental requirements and miscalculating the expense of removal.”

These two factors, Renfroe said, seem to be the most common reasons environmental problems go unresolved. At times, not a single individual on the project takes any regard to the presence of mold asbestos or lead, he added.

According to Renfroe, willful negligence can result in steep fines and even jail time in some cases. Fines can exceed $10,000 per day for more egregious violations, according to Renfroe. With more than 1,000 contractors in the vicinity and a minimal number of inspectors, some contractors may opt to roll the dice and skip the environmental phase of a project. In such cases owners are completely unaware of problem at hand, yet they absorb much of the blame. This scenario is far more common than many realize, according to Renfroe.

Simple testing of a site prior to renovation or demolition can solve this problem, said Ryan Spell, vice president of Precision Analysis, Inc., an environmental testing service.

“We are often brought in after the fact and have to test a site that has an apparent issue,” said Spell. “Testing midstream is more difficult, and workers may have already been exposed to harmful matter. It’s always wiser to test before a project begins,” he added.

Though testing seems reasonable, it’s not done consistently, according to Renfroe. Both St. Louis County and the City of St. Louis employ a small number of inspectors. These inspectors are often forced to focus on larger, higher-profile projects, Renfroe said. Smaller commercial projects – such as small office facilities – and residential projects are commonly missed. “People are living and working with dangerous environmental problems in the same spaces,” Renfroe said. “Laws have been established to prevent usage of some products and determine the levels of each material that are acceptable. The big question is whose responsibility it is to make sure the environmental issue is handled properly,” he added.

That question has an interesting answer.

Owners often count on the general contractor to handle all aspects of a project. The thought process here, according to BEX Construction Services President Randy Bueckendorf, is that a contractor knows what to look for and will address it. Most general contractors see the environmental issue as the responsibility of the owner or demolition contractor, Bueckendorf said.

“The environmental and demolition contractors are the experts,” said Bueckendorf. “After checking building records, we immediately refer any potential environmental issue to an environmental contractor. If a problem is discovered, we will stop work on the spot. The GC is not in a liability position, in most cases, to deal with it internally.”

It is difficult in some instances to determine unforeseen environmental issues, according to Bueckendorf, which is all the more reason to test and consult an environmental expert. Leaving the project to chance is not a solution, he said. Communication is paramount in eliminating the concern of environmental problems. Whether existing mastic (adhesive) or the airborne asbestos is involved during demolition, determining the need for removal is central to ensuring a safe project.

The cost of removal is exponentially less costly than mid-project remediation work, Renfroe said. If the hazard isn’t detected until construction work is already in progress, completed work may need to be torn out, cleaned and then rebuilt. All that can be extremely costly.

In addition to testing, Renfroe recommends using a demolition contractor that is fluent in environmental regulations and safety codes. “Owners cannot assume that the environmental aspect of their project is being addressed on the front end,” he said. “Asking the general contractor whose responsibility the environmental will be can help determine where the liability rests. The risk is significant, but it isn’t realized till a citation is given. Then the battle over responsibility begins. Combine this with an active living or working space, and things can get dicey quickly,” said Renfroe.

Best practices suggest testing and monitoring any renovation or demolition project, experts concur. “Taking the extra step and assuring environmental issues are being dealt with is the best course of action,” Bueckendorf said. “Averting extra project cost is enticing, but the risk seems to be significant. The seemingly small percentage of projects that are tested and even cleaned is disconcerting. The majority of quality general contractors, environmental and demolition contractors are sensitive to problems that may exist. They are looking for potential problems and are keeping the best interest of the owners in mind. The problem arises when the desire to save cost overrides the safety concerns. Covering up environmental issues is a risky proposition. Banking on inspectors not having the time in their schedule to review a project can be problematic,” he added.

The environmental aspects of demolition and renovation projects require attention. In a health-conscious construction community, not addressing these issues is counter to current construction positions. “Environmental professionals across the board agree that there needs to be greater adherence,” Spell said. “Many in the general contracting community concur, too. Increasing the level of analysis can help alleviate much of the concern as well as the potential for very costly results.”

The Bleeding Edge of Technology

in Technology

By JOE BALSAROTTI

I was racking my brain trying to come up with a good topic for this edition when inspiration struck. Unfortunately, it struck at one of my client’s workplaces and with a lot of wasted time, energy and frustration.

The publisher of an LOB (line-of-business) application (some people call them vertical or industry-specific applications) contacted our client to say that a new version was available, and the publisher needed us to provide remote access for them install it. The client has a maintenance contract with this publisher; it includes any and all updates as well as installation. This is a commonplace event for specialized software – and this is a software company that has a long-established program and track record of solid tech support.

In this scenario, we are the “boots on the ground,” acting as the intermediary/translator/consultant. We let the manufacturer of the software do its thing. We all decided upon a date and time, the appointment was made and one of my techs was on-site to answer questions about the network and provide the support requested by the software publisher.

Backups were made, and the installation appeared normal. The techs from the software publisher’s company said they were satisfied and went off on their merry way.

Of course, if the story ended there, this would be an awfully short guest column.

The story didn’t end there. What actually happened was that the next morning our client called to say they were getting kicked out of the application every couple of minutes. After some basic troubleshooting, it was time to get the publisher back on the line. The publisher’s software technicians fiddled around for most of the morning; meanwhile, the client wasn’t getting work done. That afternoon, the publisher said the issue had been fixed. The client squeezed in a couple of productive hours late in the day.

Unfortunately, the next morning, the client was back on the phone, reporting that they’d features they hadn’t used the previous day and some of those either did not work as they were supposed to or just plain crashed. Again, the publisher went to work, spending the rest of the day fiddling and fooling, but to no avail. Same thing on day three. The publisher was logged in and getting nowhere while our client’s staff sat around being unproductive.

Time for a conference call. Guess what? The techs suddenly admitted that this version had only been out there for one week and that all the installs were experiencing random problems. So, our problems weren’t unique and this update “might have been put out there without adequate testing.” Ya think?

Luckily, the software publishing company has been around for a couple of decades and did have a provision for rolling back the update. The publisher brought our mutual client to a stable environment so they could all get back to working productively. That’s not how it usually happens; the ability to roll back changes is not normal practice, unfortunately.

Like many others, this publisher has pushed annual updates of its software for years – something I think is ridiculous because at this point very, very few useful features are being added to anyone’s programs. Nearly every time, they’re merely cosmetic changes so that a publisher can continue justifying that a maintenance contract is worth the expense, rather than just buying an upgrade ad hoc. In this case, it looks like the publisher was running out of days on its calendar to get the 2019 release out there and rushed a buggy, obviously untested program to its clients just so it could say there was a new version available. This publisher even went as far as to proactively contact our mutual client to schedule installs.

As of now, our client is back to using the previous version of the software, which has worked well and has been bug-free for the past year. The software publisher is still working on making the update usable. There has been no estimate from the publisher’s techs as to when a fully-tested update will be available.

Joe Balsarotti is President of Software To Go and is a 38-year veteran of the computer industry, reaching back to the days of the Apple II. He served three terms as chairman of the National Federation of Independent Business’ Missouri Leadership Council, as chairman of the Clayton, Missouri Merchant Association for a dozen years, chaired Region VII of the Federal Small Business Regulatory Fairness Board and currently serves on the Dealer Advisory Panel of the ASCII Group, an organization of nearly 1,200 independent computer and technology solution providers in North America. He can be reached at businesstech@software-to-go.com.

Landowner Awarded Punitive Damages, Attorney Fees Against Contractor, Utility Company

in Columns/Law
James R. Keller

By JAMES R. KELLER

Missouri’s Southern District Court of Appeals recently upheld a jury verdict and court judgment in favor of the landlord and against Carroll Electric Cooperative Corp. for $12,224 in actual damages, $75,000 in punitive damages and $59,456 in attorney’s fees. The appellate court also upheld a separate judgment for the same amount in actual damages – but not punitive damages – against Seven Valleys Construction Co.

The case is Bare v. Carroll Electric Cooperative Corporation and Seven Valleys Construction Company, 2018 WL 1281114, decided March 13.

The judgment against Carroll Electric and Seven Valleys was for common-law trespass. The appellate court decided there was sufficient evidence to support the jury’s verdicts and the trial court’s judgments.

Carroll Electric had hired Seven Valleys to clear a right-of-way and pile resulting severed trees and brush on the edge of the right-of-way. Steven and Suzanne Bare were the co-trustees/owners of the land.

They granted an easement to Carroll Electric to clear and keep clear the right-of-way. The easement permitted the removal of trees and other obstacles outside of the right-of-way that were tall enough to interfere with transmission lines.

The landowner was concerned that the language in the easement contract seemed vague. The field service supervisor for Carroll Electric told the landowner that the language was in the easement contract so that Carroll Electric could “take danger trees.”

The landlord wanted this language removed. Carroll Electric’s representative would not do this but also said, “You have nothing to worry about.”

Carroll Electric’s design engineer had assured the landowner that the tree-clearing project could be done within 100 feet, the width of the right-of-way. Carroll Electric’s field service supervisor also told the landowner that if any damage occurred to landowner’s property beyond the right-of-way, then the landowner should “make a written claim to Carroll Electric and they would take care of restoring and repairing the damage.”

Without these promises, the landowner testified that she would not have signed the easement contract. The easement contract was one piece of paper. It guaranteed payment of $9,060 to the landowner for the easement.

The easement contract noted that logs would be left on the edge of the right-of-way for the landowner.

At trial, the Court received into evidence the one-page easement contract. It contained an additional hand-written note that stated: “Brush also to be left pushed off edge of right-of-way.”

Suzanne Bare testified at trial that she did not recognize the handwriting. She said the hand-written note was not on the easement contract when she signed it.

Carroll Electric’s field service supervisor testified that he added the hand-written note and it was on the easement before Suzanne Bare signed it.

The Southern District noted that the jury was entitled to believe or disbelief part or all of the testimony of any witness.

Steven Bare testified that he told Seven Valleys’ supervisor “not to clear anything wider than 100 feet.”

After the clearing crew had moved past the landowner’s property, the Bares went on an out-of-town trip. When they returned three days later, they discovered that a large area of their property had been bulldozed on what was previously a “fully wooded” section of their land.  In total, Seven Valleys’ work crew had removed 46 trees.

Contrary to the 100-foot limitation, Seven Valleys piled trees and lumber on the landowner’s property. Some of the trees had been placed on top of landowner’s fence, damaging the fence.  The landowner also discovered that other trees outside the boundary of the easement had been cut.

One of the issues on appeal was whether Carroll Electric controlled or had the right to control the activities of Seven Valleys. The appellate court noted that Seven Valleys’ contract permitted Carroll Electric to remove any employee of Seven Valleys. Carroll Electric could also force Seven Valleys to add employees to the project.

Further, Carroll Electric’s supervisor not only inspected Seven Valleys’ work, but he had the ability to correct work. The Southern District decided that there was substantial evidence supporting a finding that Carroll Electric’s control over Seven Valleys’ conduct “produced a trespass.”

The appellate court also considered whether the trial court errored by instructing the jury on punitive damages.

The Southern District concluded that the jury could reasonably find that Carroll Electric’s field service supervisor had added the hand-written note on the easement after it was signed by the landowner “to make it appear that the landowner had agreed to something that it had actually rejected.”

The Southern District further noted that he told Carroll Electric’s supervisor that he did not want any trees cleared beyond what they had agreed to in the easement. The supervisor replied that he would take any tree on landowner’s property that he wished.

With this evidence, the appellate court concluded that a reasonable juror could find that Carroll Electric’s conduct was outrageous by demonstrating a complete indifference to or a conscious disregard for landowner’s rights.

This is the legal standard to support an award of punitive damages under Missouri law. The Southern District, based on the standard and the evidence it considered, affirmed the award of punitive damages.

The Southern District also upheld the award of attorney fees pursuant to a Missouri statute. The statute provides that if a property owner prevails in an action for trespass against a rural electric cooperative, such property owner may be awarded reasonable attorneys’ fees, costs and expenses.

This statute also entitled the landowner to recover legal fees for the appeal including research in preparation of appellate briefs.

The appellate court sent the case back to the trial court to consider the reasonableness of the request for attorney fees and costs incurred by the appeal.

James R. Keller is counsel with Sandberg Phoenix & von Gontard P.C. where he concentrates his practice on construction law, complex business disputes, real estate and alternative dispute resolution. He also is an arbitrator and a mediator. Keller can be reached at (314) 446-4285 or jkeller@sandbergphoenix.com.

Five Essential Lessons to be Learned When It Goes Very, Very Wrong

in Columns/Technology
Joe Balsarotti

By JOE BALSAROTTI

As I write this column, my staff is in the fourth week of a nightmare scenario for a technology provider. One of our long-time vendors, who provided email and web hosting services, gave 30-day notice that the company was closing down. This followed a series of incidents in short succession of one client’s email being hacked, his tech making a grave error in an attempt to recover data and as a result, the destruction of a number of other clients’ data.

Luckily all but one client did get their data back, but significant downtime resulted for these businesses. Many of those affected by the shuttering of the vendor are our clients, but a number of them were not. Nevertheless, we offered to assist anyone who wanted help during the transition.

Through our industry associations, I’ve always kept a list of trusted colleagues who provide products and services that are complementary to ours. I’ve also kept a list of trusted colleagues who could act as a backup if we needed help. That planning paid off. We were able to work with a company who provided similar services and had the resources to be able to onboard those who were stranded in the digital sea before the looming deadline.

The process of switching all these companies over has been daunting. Each client’s setup is a little different. Some just use email, others depend upon their websites and many utilize both. This was about as close to a nightmare scenario as one can get, except that there was at least a month’s notice.

Working through all of this brought to light many important points.

First off, as we’ve covered before, do you own your data? A handful of the clients had their website created by that vendor and were never given access to it, nor were they given a copy of their data. Unfortunately, that means they will have to pay to have a new website designed for them. It’s not something they were expecting or budgeting for. And until the new site is completed, they don’t have a presence on the web.

Secondly, moving email providers is about the most labor-intensive project one can have. Someone has to touch not only every computer, but also every email and user account on each computer. Local data needs to be backed up, changes made, connections tested and data restored. With the volume of email some users keep, this can be a two- to three-hour process just for one account. Now multiply that by about 800 and you comprehend the scope of the task belonging not only to my team, but to the new datacenter and its staff as well.

We did our best to prioritize those who needed 24/7 access to their email, those who could do with checking through webmail during a transition and a select few who welcomed a day or two of digital peace and quiet.

“Always in motion, this project is,” paraphrasing Yoda. Like any major project your business takes on, making sure you’ve accounted for how much time is spent on each client is essential. With so many separate clients and each user needing attention, it’s easy to lose track as techs get sucked into a rabbit hole resolving one problem or another. Organization is key. Even if it starts to fail under the stress, at least there is a framework to keep the project moving forward.

The third point that reared its ugly head was documentation, or the complete lack of it at many clients. The vendor dealt with these clients directly. And although we often acted as a consultant or even a translator between them, we were not privy to the transactions between them. Many clients were sent scrambling to find account numbers, passwords and to track down who controlled (or even owned) domain names. Getting in contact with the website designers was nearly impossible, as many sites were old and their designers had long since moved on.

The fourth point brought to light was the lack of attention to websites. With only a handful of exceptions, all these clients’ sites were running drastically out-of-date software, security was nonexistent and the web designers who (as we’ve discussed in this column before) should have been doing ongoing maintenance on the sites, never even bothered to discuss it with the clients, let alone sell them on it. One of the affected sites was infected with a virus. As such, we could not download the client’s data because our security systems prevented it, as they should have. If we would have had another month to go through the process, we would have been able to save it, but the cost of cleaning and updating data just to be able to transfer it probably exceeds what designing from scratch would cost.

Lastly, misplaced trust in the cloud was amazing to me. As many times as we preach to clients that they must make backups, the number of businesses who made the faulty assumption that the vendor would have everything available forever – and they didn’t have to take any precautions themselves – was astonishing. The initial problem this vendor had was exasperated by a technician’s error, which then revealed that their assurances of data security were not as they had been portrayed.

The moral of this story – which continues to play out – is that with organization and a little planning, your business can survive a major disruption such as losing a key vendor. There will be a price to pay, however. Lost productivity, unforeseen costs and the potential of lost business are givens. How impactful this can be to your business comes down to how much time and effort you’ve put into being prepared.

Joe Balsarotti is president of Software To Go and is a 38-year veteran of the computer industry, reaching back to the days of the Apple II. He served three terms as chairman of the National Federation of Independent Business’ Missouri Leadership Council, as chairman of the Clayton, Missouri Merchant Association for a dozen years, chaired Region VII of the Federal Small Business Regulatory Fairness Board and currently serves on the Dealer Advisory Panel of the ASCII Group, an organization of nearly 1,200 independent computer and technology solution providers in North America. He can be reached at joe.balsarotti@software-to-go.com.

1 2 3 5
0 $0.00
Go to Top