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Is Your Business’s Faith in Technology Its Undoing?

in Columns/Technology

BY JOE BALSAROTTI

Joe Balsarotti

There’s evidence of it all around us. Teens can’t make change at the drive-thru window. Drivers blindly follow GPS right into a lake (if they take the wheel at all). Cursive writing has become a lost art. Surveys show that people losing their smartphone rank that experience just one point below a terrorist attack in regard to the level of stress it would cause.

As technology does more and more for us, the adage “use it or lose it” has begun to prove itself a law of the universe. Just as the prevalence of auto-pilot use caused the FAA to increase simulator time for pilots due to falling reaction times, we see what used to be common knowledge has become foreign to the younger generations – or lost to those who don’t make use of the skills they once had.

Maybe map reading, making change or flying planes aren’t required for your business, but the same causes and effects are probably starting to creep into your business processes. After all, we purchase and use technology in our companies to increase productivity and lower costs. However, blind trust in the technology – with staff now unable to verify or recreate the results without the ‘black box’ – should be of concern to any business owner or manager.

All technology eventually fails. We back up, surge-protect, virus-protect, firewall and scan. We sync data and for mission-critical systems, we include redundant elements and have spares at the ready.

Is your company ready for when the systems “which can’t go down” do go down? Does your business have a documented plan in place to start from scratch in case of a major disaster? Where are the license keys, contracts and warranty information for your equipment, software and services? Is your answer, “On the computer?” If so, you now see the problem.

The old POTS (plain old telephone service) was unbelievably resilient. New VoIP (voice over internet protocol) phones are anything but. You can’t just grab a $10 extension phone at Radio Shack like you used to, plug it into the wiring closet and at least get a line out. Now the internet line needs to be up, the switches, routers, firewalls and VoIP servers need to be in place, powered and configured to achieve that same basic dial tone. That’s the price for the cost savings and flexibility of VoIP, and there’s no choice as phone companies slowly turn off those POTS services.

Fire, flood, earthquake, alien invasion or zombie apocalypse – all could render all your technology infrastructure useless. You say, “It’s all safely in the cloud” and that’s fine, assuming you can get to that cloud. What many forget is that if you can’t get to your account information, license keys, contracts and the like, you can’t gain access. With encryption being the norm for backups nowadays (for good reason, as I’ve discussed in previous columns) that also means if you lose the key, the data is rendered useless and unrecoverable.

What’s a business owner or manager to do? Follow the words of President Ronald Reagan, “Trust, but verify.”

~Take the steps to back up locally and offsite in the cloud.

~ Put redundant elements in place where critical.

~ Regularly maintain and update not only the hardware, but the software also.

~ Make sure there are hard copies of your contracts, licenses, keys and other critical information locked up in a fire safe both on-site and off-site.

~ Have a contact list for emergencies and a calling order to wrangle the staff together.

~ Drill your staff to make sure they can keep basic business functions running without the cool technology.

~ Check your insurance coverage to verify you have cyber coverage as well as contents coverage.

~ Speak to your IT provider about what services it can offer in event of an emergency.

The United States Small Business Administration found that more than 90 percent of companies fail within two years of being struck by a disaster. Unfortunately, it’s these basic non-technology pieces of the technology puzzle which elude so many business owners and become the death knell after a disaster strikes.

Use these tips and apply common sense business practices to make sure your business doesn’t become a statistic.

Joe Balsarotti is President of Software To Go and is a 40-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.

Court Rules for and against Contractor and Subcontractor

in Columns/Law

BY JAMES R. KELLER

James R. Keller

Missouri’s Eastern District Court of Appeals decided for and against a contractor and its subcontractor. The opinion offers significant legal rulings on everyday construction issues including change orders for extra work, lien waivers and attorney fees.

The case is Parkway Construction Services, Inc. v. Blackline LLC, 2019 WL 1344401 (March 26, 2019).

The court placed the victory with the subcontractor, however, finding it to be the prevailing party. This finding allowed the subcontractor to recover attorney fees under its subcontract.

The fees exceeded by 11 times the amount awarded on the subcontractor’s claim. The Eastern District directed the trial court to reconsider these fees considering the overall dollar value of the recovery.

The project was the renovation of two apartment buildings at 2804-2820 South Compton Avenue in St. Louis, MO. Magnolia Halliday, LLC owned the property.

Magnolia hired Blackline as the general contractor. Blackline entered into a subcontract with Parkway to do the plumbing work for $96,000.

Blackline agreed to provide shower valves, faucets, tubs and sinks. Parkway’s scope of work included reworking existing drains lines, waste drains and vents (DWV). This improvement would allow for new fixtures.

The contract described Parkway’s objective was to provide a complete working plumbing system. But Parkway was unwilling to accept the risk of replacing all the DWV piping.

Thus, the parties stipulated that Parkway would be responsible for repairing or replacing up to a maximum of 50 percent of the DWV piping. This 50 percent threshold was not clearly defined.

The contract did expressly define extra work, however, as requiring prior written authorization from Blackline. Extra work is work not in the original contract scope.

The contract also contained an attorneys’ fee provision stating that the prevailing party was entitled to its reasonable attorneys’ fees, costs and expenses. The contract did not define “prevailing party.”

The project quickly fell behind schedule due to factors beyond Parkway’s control. Blackline continuously pressured Parkway to stay on schedule.

During the project Parkway emailed Blackline that it had reached the point of having repaired 50 percent of the stacks without any additional costs. It asked Blackline for direction going forward. Parkway stated it was a “tough job with a ton of additional costs we could not have foreseen.”

Blackline responded three days later. It disagreed that the 50 percent threshold had been reached.  Blackline contended that the entire job should be completed without exceeding the 50 percent allowance.

Parkway created two change order forms. One form related to the extra DWV work. The other form related to extra shower valve work.

Parkway submitted the shower valve change order form to Blackline before starting the work. Blackline approved in writing the extra work for $1,051.

Parkway submitted the DWV change order form only after completing the work. Parkway did not detail the precise hours spent on each task. It also did not receive in advance oral authorization to do the work.

When Blackline refused to grant the DWV change order request for extra work, Parkway stopped work.

Blackline then had to hire another plumbing contractor to complete the work.

As a partial attempt to resolve the DWV piping issue, Parkway executed a lien waiver in return for Blackline’s payment of $25,200. The waiver waived any claim for work through the date of the lien waiver.

Blackline also tendered to Parkway a check for $8,712.97. Blackline calculated this was the remaining amount due to Parkway after subtracting Blackline’s costs for hiring a second subcontractor to complete the job.

Parkway did not accept the check as payment, fearing this would preclude its claim for extra work.

At trial, Blackline admitted it owed Parkway $1,051 for the extra shower valve work and $8,712.97 under the contract as the remaining balance due. Parkway sought $79,449 relating to its extra work claim on the theory that Blackline benefitted from the work and if it did not pay it would be “unjustly enriched.”

Missouri case law supports recovery for work performed that was requested, but no formal contract was in place to cover the work. The claim is for quantum meruit or unjust enrichment.

The trial court found Blackline’s tender of $8,712.97 as final payment of the balance due to be a conditional settlement offer that Parkway did not accept. The court also noted Blackline’s behavior as “employing sharp practices to pressure Parkway to complete the project” and at the same time being “purposefully unresponsive to Parkway’s attempts at communication.”

Blackline prevailed on the DWV extra work claims. Blackline did not request the work as extra work.

The trial court also found that Parkway released its DWV claims by signing the lien waiver.

Parkway did recover on its contract balance and shower valve extra work claims. The work apparently was not subject to the lien waiver.

Finding Parkway to be the prevailing party, the trial court awarded attorney fees of $103,234.31.

Both parties appealed parts of the trial court’s rulings.

The appellant court decided that the lien waiver was enforceable and precluded Parkway from seeking any money for work it performed before the date on the lien waiver. The appellant court also decided that Parkway should have ceased work until it obtained written authorization pursuant to a change order to exceed the 50 percent threshold.

Despite these rulings, the appellant court found Parkway to be the prevailing party. The court noted there are many varied definitions and interpretations under Missouri case law as to who is the prevailing party.

In this case the court noted that Parkway’s evidence generally related to all its claims.  Thus, success on one was enough to be the prevailing party.

The Eastern District sent the matter back to the trial court to reexamine appropriate attorney fees and to make certain they were not excessively awarded given the success by the parties on various claims.

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

My, How Time Flies: Windows 7 Will Be Gone in a Flash

in Technology
Joe Balsarotti

By JOE BALSAROTTI

It seems that the upcoming discontinuation of Windows 7, Microsoft Server 2008 and Adobe’s Flash were somehow a surprise to a number of businesses. Microsoft drops its monthly security updates and patches as of January 2020, as in the beginning of next year. We’ve consulted with our clients for a while to develop budgets and replacement plans for their networks, but far too many IT firms don’t like to give “bad news” – and as such, they leave such discussions until the last minute.

If your business is all Windows 10 or Server 2016, congratulations. Pat yourself on the back; you’re more prepared than most, it seems. If all this is all news to you, you need to get ready quick. The computer industry has been plagued with shortages of Intel processors for months now and there is no relief in sight. That means multiple months-long wait times for server and higher-end PC orders. Also, there are a number of application programs that need to be upgraded to run under Windows 10, so this tech refresh will probably take longer, from a calendar perspective, than previous ones. Networks with older NAS (network attached storage) units and old servers have problems connecting to new Windows 10 equipment, as W10 slammed the door on many of the security holes that the operating systems of these devices have.

Microsoft did its biggest push ever to position Windows 10 as its premier operating system. For more than a year, Microsoft gave free updates for users of both Windows 7 and Windows 8. Personally, I suspect sweeping the anything-but-popular Windows 8 under the rug was a large part of the strategy. However, narrowing the development focus to just one version certainly can’t hurt Microsoft, who has had its hands full trying to patch and secure multiple operating systems at the same time.

In January 2020, when Microsoft stops updating Windows 7, all those old machines become a security risk for your business and the data of both your company and its customers. As we’ve discussed before, running a business with known flaws in its PCs and networks opens it up for liability and loss of customers. Assuming one wants to stay in business, updating older technology is a business imperative in today’s environment. A new wrinkle is that Microsoft has said that updates will be available for those Windows 7 and Server 2008 customers who sign support contracts, but pricing will be such that updating the machines will be a far, far less expensive strategy.

Microsoft’s position is that Windows 10 is the “last version of Windows” and will morph over the years and undergo substantial updates on the fly, adopting the philosophy of Apple with its operating systems. Whether that idea will survive amidst changes in technology and widely varying needs of users is a gigantic question. Just ask the Apple owners who wake up to notice things that used to work no longer do because their systems can’t handle the new updates. Also, look forward to “as a service” offerings from Microsoft where monthly or annual payments will replace Windows bundled with systems. Microsoft has already been successful transitioning millions of Microsoft Office buyers onto monthly or annual payments for Office 365.

On top of these Microsoft changes, Flash – the language that powered websites for two decades – is finally going away. Flash, which was developed by Macromedia (and acquired by Adobe in 2005), brought easy animation to the web. However, Flash has been plagued with bugs and security flaws. Apple dropped support in its browsers and Apple co-founder Steve Jobs publicly skewered the software in an open letter back in 2010. Those using Firefox for browsing saw Flash support end, and Microsoft is dropping it from IE and Edge as well. At one point, more than 80 percent of users accessed some Flash-enabled website each and every day, but at last count that had dropped into the teens as HTML5 became the web language of choice. As with the Windows 7 transition, look for disruptions as old websites and applications that have not been rewritten become inaccessible.

Be sure to not only plan for the physical replacement of machines, servers and upgraded software, but also for training as Windows 10 and Windows servers have some substantial differences from their predecessors – and rewritten websites might have different functionality from their Flash version days.

Hopefully this isn’t new news. Hopefully your company and its tech staff (or outside provider) are already discussing this on an ongoing basis. However, if your current IT provider isn’t consulting with you at least annually to talk through refreshes to your technology, you may want to get serious about upgrading soon.

Technology is always in motion. To ignore it is to put your company at a disadvantage.

Joe Balsarotti is President of Software To Go and is a 40-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.                             

Eastern District Orders Insurance Company Back to Trial Court on its Refusal to Cover Homeowners’ Construction Policy Claim

in Law/Uncategorized
James R. Keller

BY JAMES R. KELLER

Missouri’s Eastern District Court of Appeals recently granted judgment for homeowners and against their insurance carrier on claims for construction damages to piers, a pole and the foundation of their home. The appellate court sent part of the dispute back to the trial court to consider further whether the insurance company’s refusal to cover a policy claim for these damages was vexatious.

The case is Cockerham v. American Family Mutual Insurance Company, 561 S.W.3d 862 (Eastern District, MO 2018).

The appellate court noted this was the first case in Missouri to directly address the issue of insurance coverage under a policy of this sort. The Missouri Supreme Court denied on Dec. 18 an application to consider the Eastern District’s opinion.

The Eastern District’s decision is now new law affecting all similarly worded insurance policies, at least in Missouri courts in the Eastern District.

Homeowners Robert and Stacia Cockerham sued their insurance provider, American Family Mutual Insurance Company, for damages relating to the construction of an addition to their residence. The addition was a celestial observatory.

The alleged damages involved a newly installed telescope support system attached to the foundation of their home and the homeowners’ loss of use of the observatory.

The homeowners purchased their home on Lakeshore Drive in Creve Coeur, MO in 2001. In 2005 they hired Nicholas Schalk and Schalk Construction, LLC to construct the observatory addition to their home.

The project included a telescope and its support system. Schalk had never before built such a system.

Schalk hired one subcontractor to install the piers and a separate subcontractor to pour concrete over the piers. The homeowners claimed the concrete subcontractor poured the concrete incorrectly, damaging the piers, the support system and the foundation.

The homeowners made a claim on their insurance policy to cover the losses. American Family denied coverage. It contended the claims were excluded from coverage or were not covered at all under the homeowner policy.

After cross motions for summary judgment, the trial court granted American Family’s motion in part by dismissing the homeowners’ claim for vexatious refusal to pay for the piers, pole and foundation damage. The homeowners appealed.

The appeal involved interpretation of the insurance policy and its various sections.  Typically, this is a question of law for judges, not juries, to decide.

The policy excluded defective construction in part C but it did cover “resulting loss” to property described in Part C that was “not excluded.”

The Eastern District found its job to be difficult. The policy required the appellate court to “decipher a rather prolix word puzzle.” Insurance policies tend to be complicated, layered with qualifiers, exceptions and exclusions.

American Family argued that it did not cover the loss because the homeowners’ losses were already excluded due to faulty construction. The “not excluded” clause did not apply, the carrier contended, since the coverage already was excluded.

Focusing on the “resulting loss” clause, the Eastern District rejected this argument. The policy did not define “resulting loss.” As Missouri courts typically do when the contract does not define a word whose meaning the parties dispute, the court turned to Webster’s Dictionary for guidance.

Webster’s Third New International Dictionary (1993), unabridged, defines the verb form of the word “result” as “to proceed, spring or arise as a consequence, effect or conclusion: to come out or have an issue.”

The court noted that the policy did not specifically state what a “resulting loss” may result from except to the extent such losses will not be covered that are “excluded or excepted” from the policy.

The Eastern District concluded that an ordinary purchaser of insurance would conclude that where one loss results from another loss caused by faulty construction, “such resulting loss is covered.”

Thus, the policy covered the damages to the piers, pole and foundation due to the incorrectly poured concrete. This includes the cost to remove and replace the bad concrete.

The Eastern District also found there were factual questions as to whether American Family’s refusal to pay on this claim was vexatious. This included a dispute as to whether the insurance company’s position denying coverage was willful and unreasonable.

The court’s finding means the dispute has returned to the trial court for further consideration regarding the piers, pole and foundation claims for vexatious refusal to pay.

The homeowners also had a claim for loss of use of their observatory. The policy, however, covered such a loss only when the property as a whole was uninhabitable, causing additional homeowner expenses.

The appellate court agreed with the trial court’s denial of this claim.

It was undisputed that the house was not uninhabitable – especially since the homeowners continued to live there.  They had no claim for additional living expenses because there were none.

The appellate court concluded that American Family clearly was not subject to a vexatious refusal to pay claim for loss of use. Since there was no coverage, the carrier’s position was proper.

The homeowners had additional assertions that the Eastern District found persuasive enough to raise more genuine fact questions meriting further trial court consideration.  They included that American Family’s representatives told the homeowners they did not need a builder’s risk policy to cover losses like the ones that occurred in this case, given the policy they had. The representatives included an adjuster who allegedly told them that “their losses would be covered.”

The appellate court also noted that the carrier did not cite the “resulting loss” clause in its defense when it filed its answer to the initial lawsuit. It did not rely on this clause in its briefs on the motions for summary judgment.

The insurance company relied solely on the faulty construction exclusion.

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.

Former Equipment Sales Eye Trends, Patent Technology to Serve New Markets

in Marketing
Stephanie Woodcock

By STEPHANIE WOODCOCK

Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.”

Chuck Justus, owner of Green2Go Rental Power & Light, a supplier of eco-friendly rental power and field lighting products, quotes Ford while explaining an industry that refuses to change. “On one hand, you have smaller rental houses that are mom and pops and don’t take chances, and on the other hand, you have large companies that are slow to change,” said Justus. “Because of the lack of innovation and this unwillingness to change, both sides are killing product evolution in the rental industry.”

Justus’ work experience helped him develop his patented technology. Years ago, he worked for a large company that manufactured equipment and saw engineers wringing their hands trying to find a solution when in 2015, a large portion of diesel engines in mobile applications were required to meet heightened emission standards. Contractors had to look in different directions for alternatives, according to Justus, which led to increased acquisition costs for generators and a longer learning curve for both technicians and end users. Power and lighting equipment were becoming more complex.

In 2016, Justus started Green2Go, an emerging supplier in the rental power industry in St. Louis. According to the founder, his products challenge the status quo and add innovation to an industry that had seen little innovation over the last fifteen years.

“I saw an opportunity I call ‘radically different’ and I took a chance,” said Justus, who cites St. Louis Art Fair as a client that uses his generators. “They were spending north of $50,000 in electric rental and installation for their festival. With my product, the were able to save 50 percent on electrical infrastructure.”

Keith Jackson, president and owner of 24/7 Onsite Cameras, also uses the words “radically different” when describing his mobile camera trailers. Jackson says there has always been security and there have always been cameras, but there hasn’t always been the ability to rent security mobile camera trailers.

“The concept of onsite security cameras is fairly new,” he said. “I took these two concepts – security and cameras – and customized them for jobsites. I made security trailers that were customized to be mobile and rentable because I saw the emerging market and need for this technology.”

There is a radically different mindset for renting versus owning security equipment, according to Jackson.

“You have to think about what can go wrong with a piece of equipment and how to meet the harsh demands of the environment. There is no rulebook,” he said. “You find a need and develop the product to fit the need, but if you’re going to rent it like we do, you have to industrialize it and be willing to invest the dollars in production and in owning that product for a long period.”

In addition to embracing and understanding the nuances of an emerging market, Jackson said he also pours much time and expertise into thinking through the manufacturing process. “For instance, when my mobile camera trailers travel, they have to have the capability of being lowered to a certain level so they can be transported by truck. From the industrial housings that store the electronics to the solar panels that make the product stand-alone, each production detail is customized to be ‘road rental ready,’” he said.

Jackson’s experience in the rental industry spans more than 25 years. When he launched 24/7 Onsite Cameras in 2010, Jackson says no one was renting mobile security trailers. “Few companies saw the need to have security on their jobsites,” he said. “Instead, they bought extra product to counteract the anticipated loss of supplies on a jobsite and hired security guards when necessary. Rental units never sleep, never take breaks or bribes, and have a photographic memory.”

Contractors today see beyond the benefit of security alone, according to Jackson. They can consolidate manpower, remotely oversee deliveries and contractors and reduce theft on their jobsites. Safety on jobsites is improving with onsite cameras, he says, because surveillance increases worker awareness. Mobile security trailers continue to change the jobsite culture.

The education process remains a big component of his long-term success, according to Jackson. Once contractors realize the return on their investment is beyond jobsite security, they become loyal customers. “But the industry is slow to change,” he said. “Hurdles in this emerging market are setting precedents with price and changing customer perceptions and expectations. Customers want to continue to do things the way they have always been done. Unfortunately, sometimes it’s too late. We are the least expensive first option and the most expensive last resort.”

Another business owner changing the culture of the jobsite and willing to invest in innovative equipment is Chase Darrah, owner of ChaseCo Equipment Rental & Sales. With four locations in the Midwest, Darrah started his rental company in 2004 after working in equipment sales for one of the largest Ditch Witch dealers in the world based out of Sullivan, MO.

In the 2000s, Darrah noticed the trend of contractors renting equipment rather than purchasing it.

“It made total sense to me,” Darrah said. “Why pay for the insurance, maintenance and taxes and have that fixed cost on a piece of equipment that you don’t use every day?”

At that time, Darrah also detected the need for a specialty equipment rental facility. “A great rental store does really well at managing the equipment from all aspects including purchasing, replacing, maintaining, servicing, delivering, inspecting and stocking,” he said. “The rental store isn’t in the building business or the manufacturing business. It is in the equipment business. On the flip side, many companies in these industries aren’t in the equipment business. It makes sense to sub the equipment needs out to the rental company,” he added.

Like his colleagues Jackson and Justus, Darrah saw an emerging market in renting advanced equipment that could change the landscape of jobsites. Every year the percentage of equipment that is rented versus purchased increases, according to Darrah. “I saw an unfulfilled need before other rental houses did, and I was willing to invest the dollars into my vision.” Like Justus, he faced a slow-to-change industry that favor adapting to new technology.

Darrah currently stocks Ditch Witch vacuum excavators (hydrovacs) in his rental fleet, trailer-mounted vacuums on steroids with high-powered water pressure systems commonly used in the directional boring field. This product, however, is in its infancy stage with so many unknown uses, Darrah says.  ChaseCo Rental was one of the first equipment rental companies to purchase these in the country, according to Darrah. “I knew we could present these to our existing customer base involved in directional boring, but I also knew we would have to educate our other customers in other markets for our rental revenue to increase. It has been a long road, but every year the demand is rising,” he said.

Darrah says uses for this product are plenty, but it takes a while to get customers on board. “We went through the same process with mini-excavators when we first opened,” he said. “Many of our customers were using full-size backhoes at that time and thought mini-excavators were a joke. But eventually, when they needed to rent an excavator, they began to see the many benefits that excavators provided over backhoes.”

Another commonality between the three innovators is their ability to gain traction from new, less traditional markets. Green2Go rents to event organizers.  24/7 Onsite Cameras rents to the oil and gas market, utilities, industrial and large contractors. Chase Rental Co. rents to large manufacturing plants.

Are You Losing Contact with Sales Humanity?

in Marketing
Tom Woodcock

By TOM WOODCOCK

The pressure to give in is immense.

Do everything electronically and save time. You’ll also cut costs. Sounds great, doesn’t it? Communicating by social media, email or text. Getting plans off FTP sites. Researching suppliers through their websites. Electronic deposits for payment (though for some reason, few “modernize” to this technique).

All of these make the need to meet face to face, or even voice to voice, obsolete. Nobody comes by the plan room anymore. iPads manage project information onsite and appointments are held via Skype. Attendance begins to drop at construction events and association meetings. Pretty soon, everything in construction will have an app.

I’m not an old fuddy-duddy, but I just don’t quite buy into the totality of complete, non-human communication. I’m the farthest thing from a computer geek and I still enjoy face-to-face contact with customers. I regularly speak to general contractors, subcontractors and their suppliers about getting personal again. They communicate a longing for the old days when you looked into someone’s eyes in a live situation, not through a computer screen. I find it interesting that purchasing products online during the holiday season has flatlined a bit. Isn’t it remarkable that so many people waited in line for a ridiculous amount of time to be first for Black Friday? Hmmm, seems people still like to physically go out and shop.

This really doesn’t surprise me in the least. It may sound simplistic, but people still prefer to do business with other people. Yes. Face to face, in meetings, working together. When you reduce your customer interaction to solely electronic sources, you lessen your own personal role in securing a project.

It’s easy to simply work through electronic communication and sit comfortably in our posture- supporting desk chair. This techno-generation finds avoiding personal contact preferable, not to mention do all our social interaction on Facebook or LinkedIn. Sheesh. Soon, we’ll just order our food online and have it delivered to our desk. Oh, you already do that? At least you won’t have to worry about sun poisoning.

The last time I looked, construction took place outside and around people. It amazes me how many contractors skip walk-throughs, client meetings or doing follow-up meetings on project completion. The more you eliminate customer contact, the more you make yourself exactly like your competitors. Why would anyone choose you or your firm over another if all the data came from each company electronically? You may think, “That’s what my customers want.” Well, my son wants cake for dinner every night, but I know it’s not the best thing for his health. How can you educate your customers on innovations, competitive differences or negative market practices if you’re not getting in front of them?

Accepting every electronic innovation that comes along is a bit irresponsible. Evaluate how effective the innovation is: Does it move you closer to the customer or further away? The closer you are to the customer, the more you’ll learn his/her needs, tendencies or preferences. Tweeting, posting or friending does not count as developing customer relationships. Tried and true sales tools such as the handshake, the smile and the thank-you are still alive and well. You cannot do any of these without being with the client.

I know you’re busy; having all this technology at your fingertips buys you more time. But that time is worthless if it comes at the cost of a lesser connection to your customer base. If no one visits plan rooms anymore, then I want to be the only one who does. If nobody delivers bids personally anymore, call me FTD. If you live by the price, you’ll die by the price. If Electrician A looks just like Electrician B, my choice will be made according to price. If GC A looks like GC B, who can build my building cheaper? It’s not very complex. For those of you who feel all of this is a waste of time and are convinced that 100 percent electronic communication is the wave of the future, please compete against my clients.

Once again, I’m not anti-technology. You should be getting email and project information on your phone, being active on business social networks and leveraging electronic marketing vehicles. These are simply no-brainers. However, they are merely support mechanisms, not primary communication tools. You are your primary communication tool. It’s much tougher for anyone to tell you “no” when looking into your eyes.

The one thing that this all takes is courage. So many people hide behind their keyboards and attack from cyberspace. I challenge you to buck the trends and keep the tradition of personal contact in your repertoire. It will truly make a significant difference if you stick with it. There are no quick fixes to a slow, fast or highly competitive economy. Yet by combining effective electronic tools with traditional human contact, you’ll have a greater level of success. As a matter of fact, I don’t just think it. I know it.

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.

The Perspective of History

in Columns/Perspective
Mike Chollet

In this issue, as we celebrate the 50th year of the publication of St. Louis Construction News & review, we also recognize the foresight and good works of those who came before us. When Thomas J. Finan, III set out to create a narrative on the state of the St. Louis area construction industry, he understood the necessity of providing clear, factual and unbiased information. We are proud to have done our part in telling your story of the St. Louis building community over the years and to advance the dialog fairly and with the perspective of all voices. It has been our goal to focus on the positive when reporting on the work of those who build structures and community on both sides of the river.

In addition to looking outward to the enduring symbols of St. Louis progress, we honor the early CNR staff and family who have worked so hard to bring your story to life. I have been at the helm of CNR for just over 10 years and our excellent editor, Kerry Smith has been on board for about 2 years. Her research and the telling of the CNR story has been an interesting process for both of us and we hope it will be for you.

One of the people Kerry interviewed for this story is Eldon Arteaga. Known by many for his high-altitude, breathtaking photography of the construction of the St. Louis Gateway Arch – and also recognized as Teamsters President, Jimmy Hoffa’s official photographer – was one of the St. Louis CNR founder’s dearest friends and closest colleagues. The two met in the 1960s when the young Arteaga was 29 years old. Eldon is now an entertaining chap of a certain age with a truckload of colorful stories. After our editor interviewed him for this feature she remarked on how very helpful he had been and that “he even told me a joke”. Almost too perfect.

When you see Eldon’s photographs of the building of the St. Louis’ Gateway Arch, you get a strong sense of the pride and determination of the men and women who knew that they were building something of great importance that would stand in perpetuity as a testament to imagination and ingenuity, two uniquely human attributes which are the bedrock of our industry.

Fittingly, in this issue, we also feature the rebirth and repurposing of three historic St. Louis buildings from the 1920’s.

The Woodward & Tiernan Printing Company building has been rehabilitated and converted into 164 upscale lofts in St. Louis’ Forest Park Southeast neighborhood. The personality of the original Woodward & Tiernan Printing Company building, we learn, remains in Woodward Lofts in the design which carries with it a feel of offset printing that occurred during the decades of operations there.

Steelcote Lofts represents the first phase of a multi-phase strategy to rehabilitate, renovate and reenergize longstanding industrial buildings in Midtown St. Louis. A five-story, 43,541-square-foot building listed on the National Register of Historic Places and was long known as the Steelcote Manufacturing Company Paint Factory, the building is undergoing a creative and elaborate transformation that began in early 2017. It is a $9 million project.

The Last Hotel is a $54 million historic rehabilitation construction project wrapping up in the former International Shoe Company Building at 1501 Washington Avenue. The 10-story edifice, erected in 1909 by St. Louis Union Station architect Theodore Link, gets its name, rightly so, from a shoemaking tool. The “last” was a hardwood or cast iron, foot-shaped mechanical form used decades ago by cobblers to repair and manufacture shoes.

One cannot help but wonder whether the people involved in the designing and building of these structures had any notion that, nearly 100 years hence, their work would be honored and conserved by future generations.

When you go to work in the morning, think about the future. There’s a very good chance that the population of the twenty-second century will still appreciate your work. Everyone who builds St. Louis can be very proud of this incredible legacy.

Sometimes the Toughest Questions Open Doors to Success

in Columns/Perspective

When my daughter Anna was 13, she came to her mother and I with a heavy ask. She wanted to go to Ecuador with some classmates in a school-related trip where they would work and study in a rain-forest preserve. She was barely a teen and it was the late ‘90s when the “semester abroad” concept was a little less of a thing, so our initial reaction was not what she had hoped.

Eventually, we acquiesced. She had a great time, but she returned with a grand scheme tucked neatly up her sleeve. We would learn much later that our very observant daughter had noticed some of the students working at the preserve were staying longer than her group, and a helpful staff member explained that when she was sixteen she would be eligible for that privilege. Anna tucked that bit of information away, and just prior to her 16th birthday she came to us with her plan fully intact. Airline schedules and fare costs, ground travel plans, information about the established rainforest study facility, and on and on. Armed with facts and determined to go, she convinced her mother and I that this could work. What we didn’t know is that her abundance of planning time had allowed her to build in some less-structured but more anxiety invoking side trips that were (perhaps) intentionally obscured in the itinerary she provided before she left. Ultimately, her trip was a success, as was our subsequent family discussion about her youthful take on permission versus forgiveness.

From that trip, many others have followed: A mission trip to a Haitian clinic. Two months in Costa Rico to brush up on her medical Spanish, a solo medical research trip to a remote fishing village in Malaysia. A trip to Uganda where she upped the ante by taking her younger brother, Peter, with her. Like any younger brother worth his salt, he has taken full advantage of the parental skids greased by his sister. To date, his adventures include spending most of a summer backpacking in Europe, a trip to Vietnam and regular trips to feed his growing passion for rock climbing.

Observing Anna’s love of travel, her mother regularly expressed her fear that one or both of her children would end up living in some remote backwater, out of reach and visiting St. Louis far less than a potential future grandmother might like, but at least for now that is not the case.

Peter is a Lead Consultant in his ninth year with Cerner Corporation in Kansas City and, as you may have guessed by now, my daughter became a physician. Anna is married to a wonderful gentleman she met in med school in New Orleans, and they both practice Family Medicine at a teaching hospital in Memphis. The perfect American success story, with roots that extend well beyond the US.

My son-in-law was born and raised in Houston, Texas. He is a die-hard Cowboys and Texans fan. (Maybe next year, dude). His parents, lovely people both, were born in Bangladesh and came to the US for college. They remained and became citizens. His father worked for NASA and his mother became a college professor and real estate investor.

My daughter and her family are the living example of the new face of America. And while I can admit to being biased by the arrival of my first granddaughter, Sarabi Louise, I would say things are looking pretty rosy.

In this issue, one of our features explores the issue of diversity in the construction industry. As it turns out, St. Louis is in the odd position of lagging in the building rebound from the ’08 economic downturn relative to other major US cities, and at the same time we are struggling to field enough skilled workers to fill current and future construction needs.

Clearly our outreach needs to be expanded. A lot.

The St. Louis – Kansas City Carpenters Regional Council is one organization with a laser focus on creating opportunities for minorities and women in the construction industry. Director of Training and Workforce Development, John Gaal, EdD, says the Carpenters are launching a new initiative in 2019 that should fulfill the diversity objective and provide a second chance at work and life for many, including prisoners who have served their sentences. In 2019, the union will begin a carpentry program within the Missouri prison system. He and his organization are not alone in the quest to reach out to people of all gender, ethnic and other diverse backgrounds to consider the benefits of a career in the construction industry. Others include:

  • The U.S. Army Corps of Engineers
  • The IBEW (International Brotherhood of Electrical Workers) Local 1
  • The St. Louis Chapter of NECA (National Electrical Contractors Association)
  • The Construction Career Development Initiative (CCDI) founded by Clayco in 2015
  • MOKAN CCAC (Missouri-Kansas/St. Louis Construction Contractors Assistance Center)
  • The Associated General Contractors of Missouri

These fine associations and many, many others are looking into the future and seeing that change is essential to maintaining America’s status as the greatest country on earth.

Sadly, at this writing, the US government is shut down in an impasse concerning the future of immigration in America. One argument is that immigration has literally built our country. An equally robust point of view says that changing world conditions require a new look at the rules and regulations. Fair enough.

Our country will somehow bump its way through this quagmire and come out better for it. Just remember, sometimes future successes start with a heavy ask.

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.

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