Atlanta Injury Attorneys Blog

In April 2008, the EPA issued final regulations under the Toxic Substances Control Act (TSCA) to address lead-based paint hazards in child-occupied and target housing, including residential structures and public and commercial buildings constructed prior to 1978 where children spend a significant amount of time (known as the Lead Renovation, Repair, and Painting (RRP) Rule). The RRP Rule requires, among other things, that contractors and subcontractors be properly trained and certified and use safe work practices to minimize lead dust. The EPA has begun aggressively enforcing the RRP Rule. Several environmental and children's advocacy groups filed suit against EPA seeking to expand the regulatory reach to repairs and renovations at commercial and public buildings (other than child-occupied facilities) to the extent such renovations create lead-based paint hazards.

In 2010, EPA issued an advance notice of proposed rulemaking (ANPRM) concerning renovation, repair,and painting activities in public and commercial buildings. EPA is in the
process of determining whether these activities create lead-based paint hazards, and, for those that do, developing certification, training, and work practice requirements as directed by TSCA. On December 31, 2012, EPA announced its intention to hold a public meeting and to seek comment and data pertaining to the renovation, repair, and painting activities on public and commercial buildings.

According to a Federal Register notice published on May 13, 2013, EPA has announced the public meeting date for June 26, 2013 and has extended the comment period until July 12, 2013. EPA has specifically requested information on:

• The manufacture, sale, and uses of lead-based paint after 1978;
• The uses of lead-based paint on public and commercial buildings;
• The frequency and extent of renovations of public and commercial buildings;
• Work practices used to renovate public and commercial buildings; and
• Dust generation and transportation from exterior and interior renovations of public and commercial buildings.

Sweetnam and Schwartz, LLC has significant experience representing construction and demolition contractors and related companies in RRP matters. Any such companies seeking additional information on EPA's proposed action or seeking to submit comments on the proposed RRP rule are welcome to contact Sweetnam and Schwartz, LLC for assistance.

The US Environmental Protection Agency, Region 4 (EPA) proposed initial penalty of over $300,000 for alleged violation of lead based paint (LBP) regulations threatened the economic survival of our client, the owner of a medium-sized apartment complex in Tennessee. Specifically, EPA alleged that the complex failed to disclose to resident lessees and leasing agents the presence of LBP; failed to provide lessees with an EPA-approved LBP hazard information pamphlet; failed to include in leases a statement disclosing the presence of LBP; failed to provide a list of records and reports regarding LBP in leases; failed to provide a lease statement confirming receipt of that information; failed to provide a lease statement that the leasing agent informed the lessee of the lessors obligations with regard to LBP; and failed to certify in the lease the accuracy of the statements.

Sweetnam and Schwartz devised a plan to assuage the situation. We immediately prepared and implemented a strategy to obtain substantial reduction of the penalties. This consisted of a comprehensive evaluation of the factual basis of the EPA claims and application of the regulations and penalty policy. Based on this review, we made substantive challenges to the alleged violations, recalculation of the proposed penalty, implementation of compliance measures where appropriate, and negotiation of a revised penalty based on relevant equitable and legal factors. Ultimately, the strategy was successful, resulting in a reduction of the penalty to only $6,000.00. This result allowed the client to continue in business with only minor impact to its financial condition.

On April 16, 2013, the US Environmental Protection Agency, Office of Solid Waste and Emergency Response (OSWER), released for public comment draft final vapor intrusion guidance documents. The first guidance document is general guidance for all compounds, while the second guidance document focuses on petroleum released from underground storage tanks.

The draft final guidance represents significant changes from the previous versions proposed in 2002. All persons interested in vapor intrusion issues are encouraged to review the guidance documents and provide input to OSWER. Public input must be submitted by May 24, 2013, through an established website for docket number: EPA-HQ-RCRA-2002-0033-007.

The focus on pharmaceutical waste is increasing at the Federal and state levels. The United States Environmental Protection Agency ("EPA") has announced that it will develop a new rule to address the management and disposal of hazardous waste pharmaceuticals generated by healthcare facilities. The new rule would only apply to pharmaceutical waste within the definition of "hazardous waste" under the Resource Conservation and Recovery Act ("RCRA") and is anticipated to be published for public comment in August 2013.

EPA currently regulates the disposal of pharmaceuticals from healthcare facilities under RCRA's hazardous waste generator regulations. Therefore, healthcare facilities, including pharmacies, hospitals and retail stores with pharmacies, that dispose of hazardous waste pharmaceuticals may be regulated hazardous waste generators. EPA has posted guidance regarding the management of hazardous waste pharmaceuticals. Many healthcare facilities have had difficulty maintaining compliance with these requirements because of the large variety, but relatively small amount of pharmaceutical waste generated at various locations. Nonetheless, until the new rule is promulgated, healthcare facilities are still required to comply with RCRA generator regulations when disposing of hazardous pharmaceutical waste and may be subject to federal or state enforcement if they fail to comply. Meantime, in the absence of a final federal rule, some states have enacted their own regulations to alleviate some of this burden on health care facilities. It is uncertain how the EPA's proposed new rule may impact these state regulations.

We can be of assistance if you need to know more about the new proposal for healthcare facility-specific management standards for hazardous waste pharmaceuticals, or to determine your compliance status under currently applicable regulations.

Ed Schwartz successfully resolved an administrative enforcement matter in which the US Environmental Protection Agency, Region 4 alleged multiple violations of the Toxic Substances Control Act (TSCA) by a client involved in chemical manufacturing. Specifically, EPA alleged that the client manufactured two chemical products that were included on the TSCA Inventory, without having filed pre-manufacture notices (PMN) or having obtained polymer exemptions in violation of TSCA section 5; and that the client failed to submit an Inventory Update Release (IUR) report in 2006 for the 2005 reporting year for another chemical in violation of TSCA section 8. EPA proposed the assessment of a substantial penalty for the alleged violations. After presenting compelling and unique legal and equitable defenses to EPA, Ed was able to achieve a significant (over 80%) reduction of the originally proposed penalty. In-house counsel for the client was extremely satisfied with the resolution, stating "We could not be more pleased with Ed's representation. He took the time to understand our business and the situation. He formulated a highly effective strategy, utilizing his intimate, hands-on knowledge of TSCA and the penalty policy, as well as his personal relationships with EPA personnel, to negotiate and achieve a favorable result for our company that, at the outset, seemed impossible. Thanks, Ed."

The US Environmental Protection Agency ("EPA") issued a proposed rule on Feb. 22, 2013, that would require 36 states, including Georgia, to revise the startup, shutdown, and malfunction ("SSM") rules in their Clean Air Act State Implementation Plans ("SIPs"). As a general matter, the Georgia SIP provides a defense for air emissions exceeding an applicable emission limit during SSM events. The proposed rule would require states to remove SIP provisions allowing exemptions from emission limitations during SSM events. Instead, the proposed rule allows an affirmative defense against penalties (but not injunctive relief) for violations of emission limits during unplanned and unanticipated malfunctions. Under the proposed rule, EPA would issue a SIP-call to states requiring the removal of SSM exemptions.

All facilities should review their air operating permits for SSM exemptions. If such exemptions exist, the permit may be required to be modified under the proposed rule.

On January 10, 2013, Ed Schwartz made a presentation to the Real Estate Section of the Atlanta Bar Association regarding environmental issues in real estate transactions. Ed explained the various environmental laws that may impact the interests of a seller or purchaser of real property such as Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and Georgia Hazardous Site Response Act (HSRA), which hold property owners responsible for environmental conditions on property regardless of their participation in causing those conditions); Resource Conservation and Recovery Act (RCRA), regarding the management of waste and underground storage tanks), Clean Water Act (CWA), regarding property development implications for streams and wetlands, including soil and erosion control measures/best management practices; and the Endangered Species Act (ESA), regarding property development implications for the presence of a protected species.

Ed then addressed the tools that can be utilized by a competent environmental attorney to address these concerns including adequate pre-purchase due diligence; contractual risk allocation techniques such as indemnification agreements, release agreements, remediation agreements and environmental insurance; and statutory options such as the use of the Georgia Brownfields Program and the Voluntary Remediation Program; or any combination of these tools best suited to the needs of the client. Using examples from his own practice, Ed provided practical advice to assist sellers and purchasers in overcoming environmental obstacles in real estate transactions. The presentation was so well received that Ed was asked to provide a summary of the presentation to the Real Estate Section for publication in its quarterly newsletter.

Property Insurers need to be aware of a recent decision of the Supreme Court Of Georgia regarding the scope of exposure for damage to real property. The United States Court Of Appeals for the Eleventh Circuit certified a question of law to the Supreme Court Of Georgia in the matter of Royal Capital Development LLC v. Maryland Casualty Company 659 F.3d 1050 (11th Cir. 2011). Essentially the Supreme Court was called upon to decide whether an Insurer was responsible not only for the cost of repair but whether it was further required to compensate the property owner for any diminution in value associated with stigma attached to the property due to it having been damaged? The Supreme Court Of Georgia answered in the affirmative thus potentially expanding significantly the extent of the risks insured against under a contract insuring either residential or commercial property.

Although the measure of damages with regard to injury to real property has long been either the loss in value to the property or alternatively the cost of repair, the Supreme Court reiterated that repair serves "only to abate, not eliminate, the insurer's liability for the difference between pre-loss value and post-loss value." The application of this principle to damage to real property represents a significant expansion of an insurer's potential liability for this kind of injury. By way of example, in the Royal Capital case, Maryland Casualty paid approximately 1.1 million dollars for the costs of repair to Royal Capital's building. The property Owner then filed a lawsuit seeking damages for the diminution in value aspect of its claimed damages in the amount of 5.6 million dollars!
Royal Capital owned an 8 story commercial building in Atlanta which suffered structural damage due to severe vibration caused by construction work on an adjacent site.

The last sentence of the Supreme Court Of Georgia's opinion in this case should be considered carefully by the insurance industry. "Accordingly, whether damages for diminution of value are recoverable under Royal Capital's contract depends on the specific language of the contract itself and can be resolved through the application of the general rules of contract construction".

Whether pursuing or defending a claim property owners and their insurers are well advised to retain counsel familiar with the intricacies of both how to trigger coverage in the first instance and how to limit exposure in the latter. The attorneys at Sweetnam & Schwartz LLC have extensive experience in both arenas.

Last year we published a blog entry regarding the importance of notices of commencement and non assignment clauses to general contractors. Both properly filed notices of commencement and non assignment clauses in general contracts and subcontracts can limit the number of entities able to assert viable lien claims. In the first instance, a properly filed notice of commencement renders it incumbent upon second tier sub contractors and material suppliers to properly serve a notice to contractor or risk losing their lien rights. In the second instance any sub subcontractor or material supplier which performs labor for or supplies materials to a prime subcontractor with a non assignment clause in its primary contract must be made known to the general contractor or owner or they too may not be able to assert any lien. (See O.C.G.A. 44-14-365.1(b) and Benning Construction Company v. Dykes Paving, 263 Ga. 16, 426 S.E. 2d 564). As such the proactive project owner or general contractor can set up roadblocks designed to limit exposure to having to pay twice for the same services.

What happens if despite your best efforts and best practices a lien or liens are nonetheless properly filed? A procedure afforded by the revisions made to the Georgia lien statutes can often be effective in defeating even liens which are properly filed. Georgia now allows an Owner or Contractor to file a "Notice Of Contest Of Lien" to shorten the time period a lien claimant has to sue to perfect its claim of lien. The Notice includes the following directive aimed at the lien claimant after some preliminary language identifying the lien being challenged: The above referenced lien will expire and be void if you do not: (1) commence a lien action for recovery of the amount of the lien claim pursuant to O.C.G.A. Section 44-14-361.1 within sixty days from receipt of this notice: and (2) file a notice of commencement of lien action within 30 days of filing the above referenced lien action. A copy must be sent by certified or registered mail or statutory overnight delivery to the lien claimant at the address listed on the lien within seven days of filing and proof of delivery must also be recorded with the superior court clerk. If no Notice Of Commencement Of Lien Action has been filed within 90 days of the filing of the Notice Of Contest the lien becomes extinguished by of law.
Since the amendments to the Georgia lien laws we have filed several Notices Of Contests Of Lien on behalf of Owners. In every case the lien claimants have failed to then follow the statutory steps necessary to perfect their liens and those liens have become void saving our client owners and general contractors significant sums of money.

What constitutes an occurrence and covered resulting property damage in the arena of construction defect claims has been the source of pervasive litigation nationwide in recent years. A 2011 ruling by The Supreme Court Of Georgia clarified this issue to some degree and should be carefully studied both by Claimants and Insurers.

In American Empire Surplus Lines Insurance Company v. Hathaway Development Company, Inc. 288 Ga. 749, 707 S.E. 2d 369 decided March 7, 2011, The Supreme Court Of Georgia upheld The Georgia Court Of Appeals reversal of a trial court's decision (Hathaway Development Company, Inc. v. American Empire Surplus Lines Insurance Company, 301 Ga. App. 65, 2009). In that case, improperly performed plumbing work contributed to extensive damage to three different projects. The general contractor sued the plumbing subcontractor and was successful in recovering from the plumber's Commercial General Liability (CGL) policy. The latter opinion is a must read for participants in construction claims and contains a broad discussion of many of the issues which arise when a damaged party seeks to recover from a CGL policy. At the trial court level the Insurer had persuaded the court that its CGL policy did not cover the damages caused by its insured (the plumbing subcontractor) for a wide variety of reasons including the business risk exclusion. The business risk exclusion essentially stands for the proposition that an insurer does not insure risk of loss to its insured's own work. If an insured contractor performs its work negligently or deficiently the replacement or repair cost of that work is not an insured risk. But what about damages sustained as a result of improperly performed work? That is where the opportunity for recovery exists for the alert and careful claimant and where the risk of loss is to the insurer. We have been successful both in defeating claims on behalf of insurers by presenting a claimant's damages in such a way that they were subject to one or more exclusions and in recovering for claimants by understanding the intricacies of where, when and how to present construction defect claims in order to trigger coverage. While it may seem obvious, for CGL coverage to apply the claims brought must be grounded in negligence and not breach of contract. I have seen this error made many times by counsel not well educated or experienced in this area of the law.

Essentially, in the Hathaway case, the general contractor claimant succeeded in doing two things. First it succeeded in presenting its claims as resulting damages, in other words not damages to the plumber's own work, thus avoiding the business risk exclusion. Second it succeeded in characterizing the plumbers' negligent work as a covered "occurrence" under the CGL policy. The insurers argument had been that the negligence of its insured in performing its own work was not covered because the acts were intentional, and not accidents. The Supreme Court saw it differently saying "A deliberate act, performed negligently, is an accident if the effect is not the intended or expected result; that is, the result would have been different had the deliberate act been performed correctly."

Understanding the manner in which construction defect claims are addressed by the courts and how CGL policies on construction projects are interpreted is absolutely essential in the effective representation of claimants and insurers alike.

In early March 2012, the Georgia legislature passed House Bill 994, which includes an amendment to the Hazardous Site Reuse and Redevelopment Act, O.C.G.A Section 12-8-202(b)(6), commonly referred to as the Georgia brownfields law. The amendment provides that a purchaser of property is no longer required to apply for participation in the brownfields program prior to the purchase of property, at which there has been a regulated release; rather, the purchaser has up to thirty days after acquiring title to the property to apply for brownfields protection. Further, the amendment of section 208(c) makes the limitation of liability received by a purchaser automatically applicable to future title holders, rather than simply transferable to such parties. Finally, changes to the law were made so that, in certain circumstances, existing brownfield purchasers would have an additional up to fifteen years to recover the tax benefits, which is an increase of five years from the current provisions

Each of these amendments were intended to address concerns of purchasers and sellers and facilitate more transactions associated with environmentally impacted properties. It is anticipated that Governor Deal will sign the legislation into law. In the ever shifting climate of environmental regulation it is crucial for developers and owners to be aware of the rules applicable to real property and to have access to experienced counsel in that regard.

It has become common practice in the construction industry today for General Contractors to seek to include in any agreement with a Project Owner a clause requiring a mutual waiver of claims for consequential damages. In fact, such a clause has been a standard component of the AIA form construction contracts for well over a decade. But why can a clause purporting to be a mutual waiver of claims against each other in fact be anything but mutual and in reality, vastly to the advantage of the General Contractor? The reason is that consequential damages to which a Project Owner could be exposed are almost always going to be far, far greater than any to which the General Contractor could be exposed. Counsel experienced in these and other issues important to participants in the construction industry is crucial to both General Contractors and Owners alike.

Consequential damages are damages which do not result immediately and directly from a wrongful act but rather arise indirectly and as a consequence of that act. By way of example, if a General Contractor delays completing an industrial project by a month the immediate damage to the Project Owner may simply be a 30 day delay in being able to recommence operations. The indirect or consequential damage suffered by the Owner could be the loss of a multi million dollar supply contract because the Project Owner was unable to recommence production in time to fulfill the terms of an order for its products. Were there a mutual waiver of consequential damages clause in the construction contract for this particular hypothetical example the Project Owner could well have to absorb this multi million dollar loss itself even though the damages were caused entirely by the General Contractor's negligence or breach of contract.

From a General Contractor's perspective however such a result does not seem so unreasonable. If the value of the construction contract is one million dollars and the General Contractor expects to realize a profit of ten percent or one hundred thousand dollars why should it be willing to undertake the risk of a potential fifty or hundred million dollar liability? Clearly any General Contractor who would assume such a risk is making a significant gamble. The General Contractor will almost always be well advised to insist on a mutual waiver of consequential damages.

If the Owner and the General Contractor cannot agree on the inclusion or exclusion of such a clause the best practice is for the parties to define and quantify the extent of the risk and then insure against it. The attorneys at Sweetnam & Schwartz LLC have extensive experience in the crafting of construction industry agreements from the perspectives of both Project Owners and General Contractors. Both Parties owe it to themselves to ensure that any project undertaken is done so pursuant to well written contracts with clearly defined responsibilities and identified risks.

In the current economic environment it is more important than ever that Project Owners and General Contractors be proactive in ensuring that their projects remain lien free and that payments they issue are properly applied to outstanding debts for labor and materials. This issue has previously been discussed in our Blog concerning notices of commencement and non-assignment clauses.

Proactively filing the requisite notices and mandating the inclusion of non-assignment clauses in contracts can help to reduce the risk associated with improper allocation of funds paid on a project. What do you do however, when a subcontractor executes a lien waiver and then absconds with the money leaving sub subcontractors and material suppliers unpaid? An Owner or a General Contractor can at least preserve the possibility of some additional protection in this situation by requiring that in addition to the statutory lien waiver forms, an affidavit of payment also be signed. The lien waiver forms required by the changes to the Georgia lien statutes which became effective in 2009 do not include any affirmative representation that subcontractors or material suppliers of the payee have been paid. Since the statute requires that lien waiver forms must substantially conform to the requirements set forth in the statute, it is inadvisable to alter the form of the waiver to include this representation. Rather, the better practice would be to have the payee execute both a lien waiver AND an affidavit that all subcontractors and material suppliers either have been paid or will be paid from the funds paid pursuant to the waiver. This is a practice that Sweetnam & Schwartz recommends to all our construction industry clients.

While the affidavit itself may not prevent an unscrupulous subcontractor from falsely swearing and diverting funds to itself instead of paying its suppliers, it may allow for personal liability on the part of the affiant thus giving the Owner or GC some additional recourse. In essence, executing an affidavit which the signer knows to be false can amount to fraud, an action that may not be protected by the corporate shield. If a subcontractor's president or owner knowingly provides a false affidavit in order to obtain money then that individual may be become personally liable for the losses suffered by the Owner/GC, in addition to the subcontracting entity itself. In the case of Peters v. Imperial Cabinet Company 189 Ga. App. 337 (1988) the Georgia Court Of Appeals specifically recognized a cause of action for false swearing as set forth in O.C.G.A. 51-1-6. In that case the owner of a residential general contracting company executed an affidavit in conjunction with the sale of a home which falsely set forth that all outstanding debts for labor or materials had been paid. The Court held under these circumstances that "Appellee's allegationthat Appellant knowingly swore falsely, thereby injuring Appellee, set forth a cause of action for brach of the legal duty to swear truthfully."

The Importance Of Notices Of Commencement And Non Assignment Clauses To The General Contractor

One of the most pressing concerns for a General Contractor on any project is to avoid the exposure associated with subcontractors and material suppliers filing liens against the Owner's property. One way to do this is to properly file a Notice Of Commencement. The requirements of the notice are detailed in O.C.G.A. 44-14- 365.1(b). Properly and timely filed, the Notice requires all second tier subcontractors and suppliers to in turn serve a Notice To Contractor on the General Contractor in order to preserve their lien rights. Even if those second tier subcontractors and suppliers properly serve the Notice To Contractor at least the General Contractor now knows the identity of these entities and can take steps to protect itself.

It is equally important for the pro active General Contractor to also include a non assignment clause in all of its subcontracts specifically prohibiting any entity it contracts with from assigning any portion of the work without the General Contractor's specific written permission. This has two advantages in Georgia. First, it forces first tier subcontractors to identify second tier subcontractors and suppliers to the General Contractor. Again, so long as the General Contractor knows these entities exist it can take steps to protect itself. Second, any failure by the first tier subcontractor to comply with this requirement can cause an unidentified sub subcontractor or material supplier to lose its lien rights thus again, protecting the General Contractor. In a 1993 decision of The Supreme Court Of Georgia ( Benning Construction Company v. Dykes Paving, 263 Ga. 16, 426 S.E. 2d 564) the Court was faced with the question of whether a lien filed by a supplier to an unknown second tier subcontractor was valid. The Court observed that the second tier subcontractor and supplier were unknown to the General Contractor. Further, the sub subcontract between Benning's subcontractor and its in turn sub subcontractor was in violation of the anti assignment clause in Benning's subcontract. Consequently the Court determined that the material supplier which filed the lien was not "in a direct chain of contracts" with the General Contractor as required by O.C.G.A. 44-14-361(b) and NOT ENTITLED TO LIEN RIGHTS.

The pro active General Contractor will take all available steps to protect itself from exposure to unanticipated claims and to the risk of having to pay for work twice. The construction attorneys at Sweetnam & Schwartz, LLC have extensive experience in assisting General Contractors in avoiding claims through the use of pro active front end contracting and project management techniques.

Adequate Insurance Coverage

Most Americans are badly underinsured. Imagine you are sitting at a red light and a drunk driver slams into you from behind causing you serious and debilitating injuries. The negligent driver who hit you has only minimal insurance coverage (or possibly none at all). You have $50,000.00 in medical bills and your claim in the hands of skilled personal injury counsel is worth several hundred thousand dollars. What do you do? The negligent driver's coverage, say $25,000.00, won't even cover half of your medical bills much less compensation for your injuries.

Because situations like the one described above happen everyday, it is essential that you procure uninsured (or underinsured) motorist coverage. This is coverage you purchase under your own automobile coverage. It protects you if you are injured by someone with little or no insurance. Uninsured motorist coverage works like this. Say you have $250,000.00 in uninsured motorist coverage. The driver who injured you has only $25,000.00 in liability coverage. In that situation your uninsured coverage will pay up to a total of $225,000.00 to you in compensation for your injuries. The amount of available liability coverage is always offset against the amount of uninsured coverage you have.

Check with your insurance agent to make sure you have adequate liability coverage and just as importantly uninsured or underinsured coverage. Maintaining at least $250,000.00 in liability and uninsured coverage is recommended. If you or a member of your household is badly injured by a driver with no or minimal insurance there is a real possibility that you will not be able to recover adequate compensation for your medical bills, injuries and lost wages. It is very important to maintain appropriate uninsured motorist coverage in order to avoid being left with no way to recover your losses if you are injured by an uninsured or underinsured driver.