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Shoddy construction and late completion claims are “trending”

Author By Christopher P. FinneyPosted on

As lawyers experienced in Ohio real estate  law, we get  calls from existing and new clients nearly daily with the problem du  jour.  We have seen mortgage fraud, we have seen fraudulent deeds, we have seen predatory lenders, and we have seen home builders go bust.

The calls we are getting lately (other than complaints  about basements leaking from all the rain), seem to be centered on shoddy home renovation projects.

Why?

We are never certain why one set of calls prevails over another, and sometimes with a small firm such as ours, it is just the “luck of the draw.”

But we surmise that with the red-hot real estate market, plenty of rehabbers  have newly entered the marketplace, and plenty of them don’t have  an experienced corral of professional subcontractors —  carpenters, electricians, plumbers, HVAC contractors, roofers, etc. –to do the work.  Or contractors and subcontractors are simply over-committing.  As a result, deadlines are not being met, and quality is dropping as contractors farm out work to entirely inexperienced subs.

The problem

This leads to the problems that deadlines are being missed, the quality of work is shoddy, and followup on warranty and punch list items is slow or non-existent.

The dispute

As with everyone else performing services,  the contractor wants to be paid.  But if the work is late and sub-standard, how is a homeowner to respond?  If it’s non-payment, the contractor many times quickly resorts to filing a mechanics lien as the “check mate” of a construction dispute.

But a lien is not the  end of the story.  A lien is merely a claim or an assertion by the contractor of what he is owed, and the property  owner can successfully fight it if it not  well-grounded.  Now a lien can cause title problems, and thus foul up the construction loan disbursements for the remainder of the work.  But if the client has some financial flexibility, a lien problem can be worked around.

From our experience, the key to a contractor dispute is as much an accounting problem as it is a legal problem: What was the original price of the work, what were the agreed change orders, and what other adjustments are appropriate?

A poor foundation

As is discussed here and here, a construction contract can be either a fixed-price contract, a cost-plus contract, or a hybrid thereof.  If a contract is straight cost-plus with no controls built in, a home buyer or renovator could be in for a rude awakening at the time of financial reconciliation.  A fixed price contract, however, may many times only adjust  with a written change order.

But  even worse than cost escalators is a contract that has no clear “beginning point,” in other words it states that in exchange for “X” amount of money, the home owner will pay “Y” cost.  But if “X” is not clearly defined  — the product to the built for that fixed consideration — enforcement of the contract becomes a mish-mash of he-said, she-said allegation.  Simply imagine if you were the Judge  or a  Juror deciding how much money is owing when (a) the parties have failed to state at the outset what the builder was giving in exchange for the payment from t he buyer? (b) change orders were not properly agreed upon  and documented, but in some instances  asked for and performed? These tasks are incredibly difficult for a fact-finder and thus require tremendous factual development to properly present.

Conclusion

The summation of this problem is: First, don’t assume someone has industry knowledge and experience just because they hold themselves our as experienced and knowledgeable on  the internet  or otherwise.   Check references and inspect their prior projects.  Talk to their former customers about cleanliness of the worksite, quality of work, and timely perrformance.

Second, carefully document the contractual agreement  with the Contractor from the first day of  the project to  the last.  Third, continuously monitor the  contractor’s performance and don’t accept half-solutions and shoddy work.

If you want our help writing the contact, that is fine, but  certainly if you run into  contract  disputes, consult our experiences attorneys.  I suggest  Eli Kraft-Jacobs (513.797.2853) to help with your construction disputes.

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Ohio Employment Law: Does being salaried mean an employee is not entitled to overtime?

Author By Christopher P. FinneyPosted on

A common misconception about wage and hour law is that salaried employees are not eligible to receive overtime pay when they work more than 40 hours in a week. This is sometimes true, but not always.

Generally speaking, the law  divides employees into “exempt” and “non-exempt” employees. An “exempt” employee is an employee who is exempt from the overtime laws – meaning that employers normally are not required to pay them time and 1/2 when they work more than 40 hours in a week. In order to be considered “exempt,” an employee DOES have to receive a regular salary that – for the most part – does not vary based on the number of hours they work. But (and this is an important “but”) receiving a regular set salary is not the ONLY requirement in order for an employee to be considered “exempt” from the wage and hour laws.

In order to be considered “exempt,” an employee must be performing a certain kind of work that falls into one of the exemptions recognized by federal and/or state law. There are literally dozens of exemptions, but if an employee doesn’t fall into at least one of them, then he or she is entitled to be paid overtime regardless of whether or not he or she is “salaried.” The most common exemptions are for executives, professionals, administrative employees who exercise a great deal of discretion and independent judgment in their jobs, and outside salespeople.

The wage and hour laws are among the most complicated laws that govern the employment relationship. As a consequence, it is very common for employers to “miss-classify” an employee as being exempt when they are not. When an employer makes a classification mistake, it can be very expensive, as employees can recover not only their lost wages, but also additional damages and attorney’s fees from the employer who makes the classification mistake. This is also a field in which employers can be subject to hugely expensive “class action” lawsuits, filed on behalf of dozens, hundreds, or even thousands of employees.

When it comes to classifying employees as either “exempt” or “non-exempt,” it is literally true that “you can’t be too careful!” If you have any questions or concerns about these issues – as an employer or employee – be sure to consult with competent employment counsel.

Finney Law Firm Files Class Action Suit on Behalf of Retired Ohio Teachers

Author By Christopher P. FinneyPosted on

On May 23rd the Finney Law Firm filed a proposed class action lawsuit in Federal Court in Cincinnati on behalf of nearly 150,000 retired Ohio teachers.

The basis for the lawsuit is the 2017 decision of the Ohio State Teachers Retirement Board to eliminate the 2% cost-of-living increases that the retirees had been receiving under Ohio law. The lawsuit alleges that the Board eliminated these much needed cost-of-living adjustments – adjustments that the retirees had been promised, and were counting on – without proper legal authority, and without justification.

The caption of the suit, which has been assigned to Judge Susan Dlott, is “Dean Dennis and Robert Buerkle v. Ohio State Teachers Retirement Board.” We are asking the Court to certify the case as a class action on behalf of all Ohio teacher retirees.

Our clients worked for decades, for very modest compensation, doing one of the most important jobs in the world – educating Ohio’s children. Over the course of those decade of work, our clients had been repeatedly promised that, in their retirement years, they would receive annual cost of living adjustments that would at least allow them to keep pace with inflation.

We believe the State Teachers Retirement Board broke faith with Ohio’s retired teachers in 2017, when it abruptly and indefinitely eliminated their cost-of-living increases without due consideration, and without a valid legal basis for its action.

The perceived financial issues that the Board cited as the justification for eliminating these important benefits could have been more than adequately addressed in a variety of ways that would not have dealt such a devastating blow to our retired teachers. Instead, the Board chose to put 100% of the burden on the people who were most vulnerable, and who could least afford it. We do not believe this was necessary, just, or legal.

We hope this lawsuit will shine a light on the Board’s actions, and that it will lead to the restoration of the benefits Ohio’s retried teachers worked so hard to earn.

Our firm’s employment law department, Steve Imm and Matt Okiishi, are counsel on the case along with the firms of Goldenberg Schneider LPA, (with whom we successfully have prosecuted other class action cases) and Minnillo & Jenkins, Co., LPA.

For more information, contact Stephen E. Imm at 513-943-5678.

You may read the Complaint online here or below.

We will regularly update progress on this important case on this blog.

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Another Win for Leased Fee Property Buyers

Author By Finney Law FirmPosted on

The Ohio Supreme Court recently issued decisions in three cases further clarifying the valuation of “leased fee sales” (property that is subject to an existing lease at the time of the sale).

The purchase price of a leased fee interest, particularly when the lease has a many years left, more accurately reflect the value of the cash flow that the lease will generate rather than the value of the underlying real estate. This is why real estate investors had for years sought changes to Ohio’s property valuation law (the legislature  acted in 2013). Since then, the battle has been in the courts to determine how the changes would be implemented.

In recent years, the courts have given life to those changes in decisions ordering the board of tax appeals to disregard the sales in “sale leaseback transactions” and in these most recent cases, in ordering the Board of Tax Appeals to consider appraisal evidence of leased fee sales.

The Court issued decisions on that issue in three cases on May 6, 2019:

Store Master Funding VI, LLC v. Franklin County Board of Revision, 155 Ohio St.3d 253, 2018-Ohio-4301

Spirit Master Funding IX, LLC v. Cuyahoga County Board of Revision, 155 Ohio St.3d 254, 2018-Ohio-4302

Northland-4, LLC v. Franklin County Board of Revision, 155 Ohio St.3d 257, 2018-Ohio-4303

The Court also issued a decision regarding the exclusion of easement rights in determining the value “as if unencumbered.” The Court found that the express language of the statute, ordering that the value of real estate be determined “as if unencumbered” means that the value of an easement benefiting a parcel should be excluded when determining the value of that parcel. Worthington City Schools Bd. of Edn. V. Franklin County Board of Revision, 155 Ohio St.3d 187, 2018-Ohio-2909

The end result for all four of these cases points to a better opportunity for real estate investors to challenge the auditor’s adoption of the recent sale price of properties subject to leases or other encumbrances,

Learn more about Finney Law Firm’s Property Valuation practice here.

Finney Law Firm Files Public Records Suit against Perry Township

Author By Finney Law FirmPosted on

Perry Township in Montgomery County, Ohio, has been in the news recently regarding a mass resignation of police officers and the controversial hiring of a new police chief.

One concerned citizen contacted our office after she felt township officials were attempting to intimidate her when she sought information and spoke out against the hiring.

Bonnie Bertelson

In March, we submitted requests to the trustees and the fiscal officer for copies of their communications regarding the mass resignation of police officers and the hiring of chief Tim Littleton. In the weeks since we submitted the request, the township has failed to even acknowledge the requests. Our suit seeks an order compelling production of the records.

We expect that the records will show that a substantial amount of the deliberations about the hiring of the police chief occurred via email and text message and otherwise outside of meetings open to the public.

The mass resignation and hiring has been the subject of news reports in the Dayton Daily News and by Fox45.  A sampling of that coverage is available here,  here, and here.

The case, styled State ex rel. Bonnie Bertelson v. Perry Township, has been filed in the Montgomery County Common Pleas Court. Read the Complaint below or here.

We are particularly concerned about the efforts of certain trustees to intimidate our client and silence criticism of their actions. As Hamilton County Common Pleas Judge Robert Ruehlman recently noted, too often elected officials think they are “self-employed” and forget that, in fact, they work for the people. We intend to make sure the Perry Township Trustees take this lesson to heart.

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Ohio Public Interest Law: Finney Law Firm files Open Meetings suit in Columbus

Author By Finney Law FirmPosted on

A Finney Law Firm attorney  filed suit on Thursday against the Columbus Ohio Historic Resources Commission, seeking to enjoin violations of Ohio’s Open Meetings Act.

The Commission routinely fails to create minutes of its meetings and has failed to locate audio recordings of its meetings.

Our client is a Columbus resident whose efforts to navigate through the Commission’s Byzantine permitting regime have been hamstrung by the inability to review minutes of past Commission meetings.

Read the complaint below:

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Gang of Five Emails Produced

Author By Finney Law FirmPosted on

Pursuant to the Agreed Entry and Order by Judge Ruehlman, Cincinnati Councilmembers Tamaya Dennard, Greg Landsman, Chris Seelbach, PG Sittenfeld, and Wendell Young – the self-proclaimed “Gang of Five” turned over emails between them.

What stands out is the substantial amount of public business being discussed and conducted in secret emails using private accounts rather than their city provided email accounts. We can only be so certain that we have in fact received all of the emails. As we know that Wendell Young deleted his text messages, we may never truly know whether the Gang of Five has turned over everything or not.

Read below or Use this dropbox link

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Finney Law Firm Heads to Ohio Supreme Court

Author By Finney Law FirmPosted on

On Tuesday, March 26, 2019, Curt Hartman, of counsel attorney with Finney Law Firm, will represent Pat Meade before the Ohio Supreme Court. This suit seeks enforcement of Ohio’s Open Meetings Law (R.C. 121.22) to prohibit local governments from voting by secret ballot.

Meade brought suit in 2016 against the members of the Village of Bratenahl’s Village Council for violating Ohio’s Open Meetings Act by voting via secret ballot during an otherwise public meeting.

The Ohio Coalition for Open Government; the Reporters Committee for Freedom of the Press; and the Ohio Association of Broadcasters filed a friend of the court (amicus) brief in support of Ms. Meade as well.

In 2011, a Hamilton County Common Pleas Court found that secret ballot voting violates the Open Meetings Act. That same year, the Ohio Attorney General issued an opinion letter coming to the same conclusion. In this case, the Cuyahoga County Court of Common Pleas and Court of Appeals ruled that secret ballot voting is permissible. The question has never previously been before the Ohio Supreme Court. The Ohio Supreme Court will provide the final answer on this issue.

The Ohio Supreme Court live streaming feed is available here. The Court’s docket begins at 9 a.m. We expect oral argument in our case to begin at approximately 9:30 a.m.

Learn more about Finney Law Firm’s Open Meetings Law practice here.

Read our previous posts about the case here.

Learn more about the Ohio Coalition for Open Government here.

Learn more about the Reporters Committee on Freedom of the Press here.

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