False Claims Act Development
In the recent case of The United States ex rel. Longih v. Lithium Powered Technologies, Inc., No.08-20194 (5th Cir. July 9, 2009), the Court considered a Federal False Claims Act claim against a company which had applied for a federal research grant. The grant application included false statements as to the year of incorporation, key personnel, existing facilities and equipment, the existence of a cooperative arrangement with a local university and a prior grant. Although the company had no special relationship with the University, it did use its facilities. The company properly billed for its grant and delivered the promised product.
The Court found that there was a material false claim by virtue of the false statements in the grant application. It deemed the false statements to be material, in that they "could have" or "had the potential" to influence the award of the grant.
In recent years, the California and Federal courts have been narrowing the grounds for what is a "material falsehood" for the purposes of a False Claims Act action. This decision appears to broaden that standard.
California Adopts Nation's First Statewide "Green" Building Code
The California Building Standards Commission adopted the nation's first statewide "green" building code.
The new California Green Building Standards Code contains standards for single-family homes, health facilities, and commercial buildings. It is intended to lead to improved energy efficiency and reduced water consumption in all new construction throughout the state, while also reducing the carbon footprint of every new structure in California.
According to the U.S. Green Building Council (USGBC), buildings nationwide account for 70% of electricity consumption, 39% of energy usage, 12% of potable water consumption, 40% of raw materials usage, 30% of waste output, and produce 39% of associated greenhouse gases.
The new green code proposes to accomplish the goal through a combination of more efficient appliances, more efficient building design, and more efficient operations. The new code declares the minimum standards that California will accept in environmentally friendly design and pushes builders to reduce energy use by 15% more than today's standards. It also encourages use of recycled materials in carpets and building materials, and identifies various site improvements, including parking for hybrid vehicles and better storm water plans. This will result in significant improvements in water usage for both commercial and residential plumbing fixtures and target a 50% landscape water conservation reduction.
The code is composed of optional standards that will become mandatory in the 2010 edition of the code, to allow time for industry and local enforcement agencies to prepare for, and comply with, the new standards. Thereafter, the California Green Building Standards Code will be updated annually.
In a July 23, 2007 ruling, the California Court of Appeals held, in Advantec v. Edwin's Plumbing, that merely filing a general denial is enough to shift the burden to the licensed contractor to introduce into evidence a verified certificate from the California Contractor's State License Board. In that case, there was no affirmative defense that Edwin's was not licensed. Nonetheless, when Edwin's failed to present a certificate when the license issue came up during trial, the court found they were not licensed. Lack of licensure not only precludes you from seeking compensation, it can give rise to a claim for disgorgement of profits.
Tales of the Law Revision Commission
The Law Revision Commission is motoring along in its years long effort to complete a rewrite of California's lien laws. In its most recent report, the Commission indicates it is studying the old rule that a supplier to a supplier cannot lien a project. This author is concerned that any change to the rule will open Pandora's box. Where will it stop? In an air conditioning unit, does the company that made the motor for the condenser get a lien? How about the manufacturer or the wire used in the motor? Nonetheless, these types of efforts suggest the important changes which may come out of the process.
Subcontractors often find that they have little or no leverage in negotiating contracts with prime contractors. As a result, subs often find themselves in a difficult position where there are problems between the owner and general contractor. However, use of a rider in a subcontractor's bid can be a method of introducing concepts of fairness and balance into a subcontract. Regardless, subcontractors are well advised to be certain that their bid is incorporated by reference into a subcontract, particularly as a means of ensuring that exclusions from the scope of work are part of the subcontract scope definition.