NORTH CAROLINA CONSTRUCTION LAW DESKBOOK Seventh [PDF]

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NORTH CAROLINA CONSTRUCTION LAW DESKBOOK Seventh Edition (2016) CHAPTER I ALTERNATIVE DISPUTE RESOLUTION I. II.

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INTRODUCTION..............................................................................................................5 ARBITRATION..................................................................................................................5 A. AAA Construction Industry Arbitration Rules........................................................6 B. The North Carolina Revised Uniform Arbitration Act...........................................7 1. Arbitration Agreements are Valid & Enforceable......................................7 2. Compelling or Staying Arbitration..............................................................9 3. Waiver of Arbitration.................................................................................11 a. How Courts Determine Whether There has Been a Waiver............12 b. Demonstration Requirements for Resisting Arbitration................13 (1) Actions that Do Not Amount to a Waiver...........................14 (2) Actions that Do Amount to a Waiver.................................16 4. Procedural Provisions................................................................................18 5. Appeal of Arbitration Orders.....................................................................20 6. Confirming, Vacating or Modifying Arbitration Awards............................21 a. North Carolina...............................................................................21 b. Federal Arbitration Act & Arbitration in Other States...................29 (1) Corruption, Fraud or Undue Means....................................30 (2) Evident Partiality...............................................................31 (3) Arbitrator Misconduct.......................................................34 (a) Failure to Postpone Hearing..................................35 (b) Refusal to Hear Evidence.......................................35 (c) Misconduct Catch-All Provision...........................36 (4) Arbitrator Exceeded Power................................................36 (a) Greathouse – A Prime Example in which Arbitrators Exceeded their Powers........................38 (b) Perini – A Prime Example in which Arbitrators Did Not Exceed their Powers................................39 7. Alternative Decisionmakers......................................................................41 C. Other Relevant North Carolina Statutes................................................................42 1. Contracts to Improve Real Property..........................................................42 2. Contract Provisions Waiving Jury Trials Unenforceable...........................42 3. Contracts with Forum Selection Provisions.............................................43 D. The Federal Arbitration Act..................................................................................44 E. Court-Ordered Arbitration....................................................................................47 HOW TO ARBITRATE A CONSTRUCTION DISPUTE................................................48 A. Contractual Arbitration Provisions........................................................................48 B. Subsequent Agreement..........................................................................................48 C. Service Providers...................................................................................................48

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1. American Arbitration Association.............................................................49 2. The International Chamber of Commerce.................................................49 3. Other Service Providers.............................................................................49 IV. MEDIATION................................................................................................................49 A. AAA Construction Industry Mediation Rules......................................................50 B. Mediation in North Carolina..................................................................................50 1. General Courts of Justice...........................................................................50 2. North Carolina Federal District Courts.....................................................53 V. CONCLUSION.................................................................................................................53 VI. FORMS & APPENDIX.....................................................................................................53 FORM 1: Motion to Dismiss, Motion to Stay Proceeding and to Compel Arbitration, and Motion to Cancel Lien.....................................................................................55 FORM 2: Order on Motions to Dismiss, Stay Proceeding and Compel Arbitration, and Cancel Lien.....................................................................................................59 FORM 3: Motion to Stay Pending Arbitration Answer and Counterclaim............................61 FORM 4: Order on Motion to Stay Pending Arbitration.......................................................63 FORM 5: Motion to Dismiss..................................................................................................65 FORM 6: Petition to Confirm Arbitration Award..................................................................69 FORM 7: Order to Confirm Arbitration Award.....................................................................73 FORM 8: Motion to Confirm Arbitration Award..................................................................75 FORM 9: Sample Arbitration Provisions...............................................................................77 FORM 10: Agreement to Arbitrate, Version 1..........................................................................79 FORM 11: Agreement to Arbitrate, Version 2..........................................................................83 FORM 12: Post-Dispute Agreement to Arbitrate.....................................................................87 APPENDIX: Arbitration Procedures...........................................................................................89 CHAPTER II CASE LAW SUMMARY I. II.

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ACCORD & SATISFACTION........................................................................................111 ARBITRATION...........................................................................................................112 A. Arbitrability.......................................................................................................112 B. Compelling Arbitration........................................................................................114 C. Waiver.................................................................................................................116 D. Award of Attorney’s Fees.....................................................................................117 E. Confirming Award................................................................................................118 F. Vacating Award....................................................................................................119 ARCHITECTS & ENGINEERS......................................................................................120 A. Licensing...........................................................................................................120 B. Scope of Duties/Obligations................................................................................121 C. Liability to Client.................................................................................................122 D. Liability to Third Parties......................................................................................123 ATTORNEY’S FEES......................................................................................................125

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V. VI.

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IX. X. XI. XII. XIII.

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CHANGES & CHANGED CONDITIONS....................................................................126 A. Entitlement to Compensation..............................................................................126 B. Waiver of Written Notice.....................................................................................128 CIVIL PROCEDURE.....................................................................................................129 A. Jurisdiction & Venue............................................................................................129 B. Standing..............................................................................................................132 C. Res Judicata........................................................................................................133 D. Pleadings.............................................................................................................133 E. Statutes of Limitation & Repose..........................................................................136 F. Discovery............................................................................................................145 G. Evidence........................................................................................................146 H. Sanctions.......................................................................................................147 I. Notice of Appeal..................................................................................................149 CONTRACTS...............................................................................................................150 A. Consideration....................................................................................................150 B. Award & Bidding.................................................................................................150 C. Formation.................................................................................................151 D. Enforcement......................................................................................................152 E. Implied......................................................................................................152 F. Interpretation................................................................................................154 G. Breach...............................................................................................................156 H. Substantial Performance......................................................................................161 I. Anticipatory Repudiation....................................................................................161 J. Termination.........................................................................................................162 DAMAGES....................................................................................................................162 A. General................................................................................................................162 B. Interest................................................................................................................166 C. Delay...................................................................................................................167 D. Liquidated Damages...........................................................................................168 ENVIRONMENTAL......................................................................................................168 FEES..............................................................................................................................170 FINANCING & LENDING.............................................................................................170 INDEMNIFICATION & CONTRIBUTION...................................................................171 INSURANCE..............................................................................................................173 A. What Policy Applies............................................................................................173 B. Scope of Coverage..............................................................................................175 C. Exclusions to Coverage.......................................................................................175 D. Other Conditions to Coverage.............................................................................177 E. Miscellaneous.....................................................................................................178 LICENSING.................................................................................................................178 A. Requirement of Licensure...................................................................................178 B. Expiration of License..........................................................................................182 C. Disciplinary Power & Revocation........................................................................182

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D. Effect of Lack of Licensure..................................................................................183 MECHANIC’S LIENS....................................................................................................184 A. Claimants............................................................................................................184 B. Entitlement..........................................................................................................187 C. Amount...............................................................................................................189 D. Procedure...........................................................................................................190 E. Timeliness..........................................................................................................192 F. Priority................................................................................................................193 G. Waivers/Releases................................................................................................195 OSHA & PROJECT SAFETY..........................................................................................196 PUBLIC CONTRACTS..................................................................................................200 A. Bidding...............................................................................................................200 B. Qualifications......................................................................................................202 C. Sovereign Immunity............................................................................................202 D. Claims.........................................................................................................203 REMEDIES FOR DEFECTIVE WORK.........................................................................207 SURETYSHIP................................................................................................................214 A. Claimants..........................................................................................................214 B. Notice..................................................................................................................215 C. Venue.................................................................................................................216 D. Limitation of Actions..........................................................................................216 E. Extent of Liability................................................................................................217 F. Discharge of Surety.............................................................................................219 G. Rights of Surety...................................................................................................220 TORTS............................................................................................................................220 A. Personal Injury to Workers...................................................................................220 B. Personal Injury to Third Parties............................................................................225 C. Negligence..........................................................................................................226 D. Misrepresentation...............................................................................................231 E. Fraud............................................................................................................232 F. Conversion..........................................................................................................234 G. Interference with Contract...................................................................................234 H. Nuisance..............................................................................................................235 UNFAIR TRADE PRACTICES......................................................................................235 WARRANTY..................................................................................................................240 A. Express................................................................................................................240 B. Implied Warranty of Plans & Specifications........................................................242 C. Implied Warranty of Workmanlike Construction................................................243 D. Implied Warranty of Habitability.........................................................................244 E. Implied Warranty of Merchantability..................................................................246 WORKERS’ COMPENSATION.....................................................................................246 A. Choice of Law......................................................................................................247 B. Statutory Employer..............................................................................................247 C. Exceptions to Employer’s Immunity...................................................................250 North Carolina Bar Association Foundation Continuing Legal Education

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CHAPTER III CONSTRUCTION CLAIMS I.

INTRODUCTION..........................................................................................................259 A. Changes, Change Orders & Extra Work...............................................................259 1. The “Changes” Clause.............................................................................259 a. Was the Original Scope of the Work Changed?..........................260 b. Was the Person Who Changed the Scope of the Work Authorized to Order Changes?.......................................................................261 (1) Authority........................................................................261 (a) Express (Actual) Authority..................................261 (b) Implied (Actual) Authority..................................261 (c) Apparent Authority..............................................262 (2) Ratification by the Owner................................................262 (3) Practice Point..................................................................263 c. Was a Written Change Order Required?......................................264 (1) Practice Point...................................................................264 d. Was a Written Notice of a Claim for Additional Compensation Required?...................................................................................265 2. Drafting Claims for Additional Compensation........................................267 B. Constructive Change...........................................................................................268 1. Owner’s Erroneous Interpretation of Contract Documents......................268 2. Changed Conditions................................................................................268 a. Type I...........................................................................................269 b. Type II.........................................................................................270 c. Practice Points.............................................................................271 3. Owner’s Dictation of Method of Performance........................................272 4. Impossibility or Impracticability of Performance...................................272 5. Delays & Interference..............................................................................273 6. Acceleration...........................................................................................274 7. Cardinal Changes....................................................................................275 8. Improper Inspection................................................................................275 C. Warranties........................................................................................................276 1. Express Warranties..................................................................................276 2. Implied Warranties..................................................................................277 a. Warranty of Plans & Specifications...........................................277 (1) Practice Points.................................................................277 b. Warranty to Not Delay or Hinder................................................278 c. Warranty of Workmanship...........................................................278 d. Warranty of Habitability..............................................................278 D. Contract Performance or Breach.........................................................................279 1. Substantial vs. Complete Performance....................................................279 2. Material vs. Immaterial Breach................................................................280

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Material Breaches........................................................................281 (1) Failure to Pay....................................................................281 (2) Timeliness of Performance..............................................281 (3) Improper Performance of Work (Defective Work)..........281 (4) Delay, Disruption & Interference.....................................282 (5) Defective Plans or Specifications....................................282 Delay, Disruption & Acceleration........................................................................282 1. Introduction...........................................................................................283 2. Determining Fault....................................................................................283 a. Excusable/Noncompensable Delays............................................283 (1) Weather..........................................................................284 (2) Labor Problems................................................................284 (3) Notice.............................................................................284 b. Unexcusable/Compensable Delays..............................................284 c. Concurrent Delay.........................................................................285 (1) No Recovery by Either Party............................................285 (2) Apportionment of Delay Damages...................................285 d. Early Completion.........................................................................285 3. “No Damages for Delay” Clauses............................................................286 4. Acceleration............................................................................................288 Inspection & Acceptance......................................................................................288 1. Inspection...............................................................................................288 2. Acceptance.............................................................................................289 Contracts Implied at Law.....................................................................................289 Unfair & Deceptive Trade Practices.....................................................................290 Damages............................................................................................................291 1. The Contractor’s Damages......................................................................291 a. Actual Damages..........................................................................292 (1) Direct..............................................................................292 (2) Indirect.........................................................................293 2. The Owner’s Damages............................................................................293 3. Exemplary Damages................................................................................294 a. Punitive Damages........................................................................294 b. Treble Damages...........................................................................295 4. Attorneys’ Fees........................................................................................295 a. N.C. Gen. Stat. § 6-21.2...............................................................295 b. N.C. Gen. Stat. § 75-16.1.............................................................296 c. N.C. Gen. Stat. § 44A-35.............................................................296 d. N.C. Gen. Stat. § 1D-45...............................................................296 5. Duty to Mitigate/Minimize......................................................................297 6. Liquidated Damages Clauses...................................................................297 Prompt Pay Acts...................................................................................................298 1. Public Projects.........................................................................................298 North Carolina Bar Association Foundation Continuing Legal Education

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K. L. M. N. O. P. Q. R. S. T. U.

a. Federal Law.................................................................................298 b. North Carolina Law.....................................................................299 2. Private Projects........................................................................................300 Pay-When-Paid Clauses......................................................................................301 Negligence.........................................................................................................301 Willful & Wanton Negligence..............................................................................304 Duty to Subcontractors........................................................................................305 Negligent Misrepresentation...............................................................................305 Fraud...................................................................................................................306 Strict Liability......................................................................................................306 Intentional Interference with Contract/Prospective Economic Advantage...........307 Conversion..........................................................................................................308 Trespass...............................................................................................................309 North Carolina False Claims Act (NC FCA)........................................................309 1. Introduction............................................................................................309 2. Purpose...................................................................................................309 3. Actions Constituting a False Claim.........................................................309 4. Liability under NC FCA..........................................................................310 5. Key Terms...............................................................................................310 6. Application of Terms...............................................................................311 7. Sample False Claims................................................................................311 8. Statute of Limitation................................................................................311 9. Black Letter Law – Federal False Claims Act/Relevant Case Law.........312 a. Basic Elements............................................................................312 b. Legitimate Claims vs. Inflated Claims........................................312 c. Burden of Proof...........................................................................312 d. General Contractor Passing-Through Claims.............................312 CHAPTER IV CONSTRUCTION INDUSTRY STANDARD FORM CONTRACTS

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INTRODUCTION....................................................................................................319 WHY INDUSTRY STANDARD FORM CONTRACTS?..............................................320 TYPES OF CONSTRUCTION INDUSTRY STANDARD FORM CONTRACTS......322 A. AIA Standard Form Contract Documents.............................................................322 1. Integrated Project Delivery (IPD)............................................................323 a. AIA Document A295–2008: General Conditions of the Contract for Integrated Project Delivery......................................323 b. AIA Document C195–2008: Standard Form of Single Purpose Entity Agreement for Integrated Project Delivery.........324 c. Four AIA Digital Practice Documents..........................................326 (1) AIA Document C106–2013: Digital Data Licensing Agreement.......................................................................326

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AIA Document E201–2007: Digital Data Protocol Exhibit.............................................................................326 (3) AIA Document E202–2008: Building Information Modeling (BIM) Protocol Exhibit...................................327 (4) AIA Document E203–2013: Building Information Modeling (BIM) & Digital Data Exhibit..........................327 2. New Master Services & Project Management Agreements......................328 a. Master Services Agreements.......................................................328 (1) Contractor........................................................................328 (2) Architect..........................................................................328 (3) Consultant........................................................................328 b. Program Management Agreements.............................................329 (1) Program Manager for Single Project................................329 (2) Program Manager for Multiple Projects...........................329 3. Availability of AIA Standard Form Contract Documents........................330 B. ConsensusDocs Standard Form Contract Documents.........................................338 1. ConsensusDocs 300: Standard Form of Tri-Party Agreement for Collaborative Project Delivery.................................................................340 2. ConsensusDocs 301: Building Information Modeling (BIM) Addendum...............................................................................................342 3. Availability of ConsensusDocs Standard Form Documents...................343 C. Design-Build Institute of America (DBIA) Standard Form Contract Documents.........................................................................................................347 1. Availability of DBIA Standard Form Documents....................................347 D. EJCDC Standard Form Contract Documents......................................................350 1. EJCDC C–700: Standard General Conditions of the Construction Contract...................................................................................................350 2. Availability of EJCDC Standard Form Documents.................................350 E. Fédération Internationale Des Ingénieurs-Conseils (FIDIC) Standard Form Contract Documents............................................................................................353 1. Availability of FIDIC Standard Form Documents...................................354 IV. CONCLUSION...............................................................................................................354 APPENDIX...........................................................................................................................355 APPENDIX A-1: Residential Construction Contract...............................................357 APPENDIX A-2: Cost-Plus Addendum to Residential Construction Contract........363 APPENDIX A-3: Residential Construction and Land Sales Contract.....................367 APPENDIX A-4: Cost-Plus Addendum to Residential Construction and Land Sales Contract..............................................................................375 CHAPTER V CONSTRUCTION LIENS INTRODUCTION......................................................................................................................383 PART 1: ADVISING THE PERSON WHO SEEKS TO COLLECT MONEY OR SECURE PAYMENT UNDER THE LIEN STATUTE..........................................................385 xxiv

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THE CONTRACTOR’S LIEN AGAINST THE OWNER’S REAL PROPERTY..........385 A. Can a Lien Be Asserted on the Client’s Behalf? – Legal Requirements...............385 B. The Elements of the Contractor’s Lien Against the Owner’s Real Property.......386 1. The Furnishing of Labor, Materials & Services.......................................387 2. Contracts to Improve Real Property Can Be Express or Implied...........387 3. Identifying the “Owner” of the Property.................................................388 4. The Contract Must Be for the Making of an Improvement to Real Property...........................................................................................389 5. New Lien Agent & Pre-Notice Requirements..........................................389 a. Owner Obligation to Designate a Lien Agent & Lien Agent Obligations..................................................................................390 b. Contractor & Subcontractor Obligations to Provide Notice of the Lien Agent “Downstream”................................................390 c. Notice to Lien Agent...................................................................391 6. All Debts Owing......................................................................................393 C. Practical Considerations Regarding Whether the Contractor Should File a Lien Against the Owner’s Real Property...........................................................394 D. Pre-Notice Requirements, Perfection & Enforcement of the Contractor’s Lien on Real Property..........................................................................................395 1. Preparing the Claim of Lien on Real Property..........................................395 a. The Caption.................................................................................397 b. Prefatory Language.....................................................................397 c. Name & Address of the Person Claiming the Lien.......................397 d. Name & Address of the Record Owner, Name of Contractor......397 e. Description of the Real Property.................................................398 f. Name & Address of the Person with Whom Claimant Contracted...398 g. Date Upon Which Labor or Materials Were First Furnished by the Lien Claimant...................................................................398 h. Date Upon Which Labor or Materials Were Last Furnished by the Lien Claimant....................................................................399 i. General Description of the Labor Performed or Materials Furnished & the Amount Claimed...............................................400 j. Signing the Claim of Lien on Real Property...............................400 2. Amending the Claim of Lien on Real Property.......................................401 3. The Lawsuit to Enforce the Lien..............................................................401 a. Necessary Parties.........................................................................401 b. Venue...........................................................................................403 c. Essential Elements.......................................................................403 d. Preparing the Judgment................................................................403 e. Voluntary Dismissal.....................................................................404 f. Amendments to Assert Lien Claims............................................404 g. Special Considerations in Cases in Which Owner Files Bankruptcy..........................................................................404 E. Discharging the Lien............................................................................................404 1. Discharging the Lien After Settlement.....................................................405

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2. Replacing the Lien With a Cash or Surety Bond.....................................405 ELEMENTS OF THE SUBCONTRACTOR’S LIEN UPON FUNDS............................407 A. Furnishing Labor or Materials at the Site of the Improvement...........................408 B. The Money to Which the Lien Attaches.............................................................409 1. Identifying the Obligor.............................................................................409 2. Principles of Subrogation.........................................................................409 3. Priority of the Subcontractor’s Lien on Funds – The Bankruptcy “Fix”........................................................................................................410 C. Using & Enforcing the Subcontractor’s Lien Upon Funds.................................411 1. Establishing the Lien on Funds................................................................411 a. Use the Statutory Form................................................................411 b. Improve the Form Through Use of Prefatory Language.............412 c. Fill out the Form Correctly...........................................................412 d. Properly Serve the Notice of Claim of Lien Upon Funds...........413 2. The Obligor’s Duties Upon Receipt of a Notice of Claim of Lien Upon Funds.....................................................................................414 a. The Obligor Must Withhold Funds to Satisfy the Lien from the Next Payment at the Peril of Becoming Directly Liable to the Lien Claimant.....................................................................414 b. If the Obligor Makes a Payment, the Lien Continues on the Funds in the Hands of the Person Paid..................................416 c. Obligors Making Wrongful Payments are Entitled to Reimbursement & Indemnification..............................................416 D. Enforcing the Lien on Funds...............................................................................417 1. The Obligor’s Remedy: Declaratory Judgment & Interpleader................417 a. Proper Parties...............................................................................418 b. Venue...........................................................................................418 c. Relief Requested..........................................................................418 d. Distribution of the Funds.............................................................419 2. The Lien Claimant’s Remedy – Foreclosure...........................................419 a. Proper Parties...............................................................................419 b. Venue...........................................................................................419 c. Elements in Foreclosing a Lien on Funds....................................419 E. Discharging the Lien on Funds – Use of Lien Waivers......................................420 LIENS ON REAL PROPERTY AVAILABLE TO SUBCONTRACTORS....................421 A. The Subcontractor’s Lien on Real Property Arising from the Owner’s Wrongful Payment...............................................................................................421 1. The Rights of Lower-Tier Subcontractors to Assert the DirectLiability Lien via Subrogation..................................................................422 2. Procedure for Perfecting the Direct-Liability Lien on Real Property Under Section 44A-20(d).........................................................422 a. Time Limits for Establishing the Direct-Liability Lien................423 b. Priority of the Direct-Liability Lien............................................423 c. Proving Service by Affidavit.......................................................423 d. Stating the Grounds for Believing the Owner is Directly Liable.............................................................................425 North Carolina Bar Association Foundation Continuing Legal Education

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The Nature of the Subcontractor’s Lien on Real Property Through Subrogation.........................................................................................................426 1. Filing the Subrogation Lien....................................................................426 2. Time Limits.............................................................................................426 3. Defenses to the Lien Asserted Through Subrogation..............................427 4. The “Electric Supply” or “Swain” Problem............................................427 a. The 1992 Electric Supply “Fix”..................................................428 IV. ATTORNEY’S FEES ARE AVAILABLE TO THE PREVAILING PARTY....................429 V. FILING OF A HYBRID CLAIM OF LIEN/NOTICE OF CLAIM OF LIEN UPON FUNDS................................................................................................................430 PART 2: ADVISING THE PERSON WHO SEEKS TO DEFEND AGAINST OR DEFEAT A LIEN CLAIM.................................................................................................431 I. DEFENDING AGAINST CLAIMS OF LIEN ON REAL PROPERTY.........................431 A. Look for Errors in the Claim of Lien on Real Property........................................431 1. Identifying the Owner.............................................................................431 2. Confirm that Time Limits Have Been Met...............................................432 3. Review the Description of the Real Property Involved...........................432 4. Review the Description of the Work Performed by the Contractor................................................................................................433 5. Review the Amount of Money Claimed by the Contractor in the Claim of Lien.................................................................................433 6. Check the County in Which the Claim of Lien is Filed..........................433 B. If the Claim of Lien on Real Property Appears Procedurally Proper, Check the Accuracy of Its Factual Contentions......................................433 1. Review the Contracts Involved...............................................................433 2. Confirm the Facts Relating to the Date of First Furnishing and Last Furnishing of Labor & Materials.....................................................434 3. Analyze Carefully the Amounts Claimed by a Contractor.......................435 C. Challenging the Validity of Lien Waivers.............................................................435 II. DEFENDING CLAIMS OF LIENS UPON FUNDS.....................................................436 A. Defending the Claim of Lien Upon Funds from the Obligor’s Perspective..........................................................................................................436 B. Defending the Claim of Lien Upon Funds from the Contractor’s or Subcontractor’s Perspective............................................................................437 III. DEFENDING SUBCONTRACTOR LIENS AGAINST THE OWNER’S REAL PROPERTY..........................................................................................................437 A. Defending the Subrogation Lien.........................................................................437 B. Defending the Direct-Liability Lien....................................................................438 PART 3: ADVISING THE CONTRACTING PARTIES IN ADVANCE OF CONSTRUCTION....................................................................................................................440 I. ADVISE THE PARTIES TO COMPLY WITH NEW LIEN AGENT & PRE-NOTICE REQUIREMENTS AND TO KEEP CAREFUL RECORDS.................440 II. ADVANCE LIEN WAIVERS ARE VOID AS AGAINST PUBLIC POLICY.............440 III. USING THE LIEN ON FUNDS PROSPECTIVELY.....................................................441

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CHAPTER VI EFFECTS OF BANKRUPTCY I. II.

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THE BASICS...................................................................................................................450 A. Chapter 7, 11 or 13?.............................................................................................450 PROCEEDINGS UNDER CHAPTER 11.......................................................................451 A. Creditors..............................................................................................................452 1. First-Day Orders......................................................................................452 2. Meeting of Creditors................................................................................452 3. Proofs of Claim........................................................................................453 4. Creditors’ Committees.............................................................................454 5. Appointment of Chapter 11 Trustee or Examiner....................................455 B. What Constitutes Property of the Estate..............................................................456 1. Property of the Estate Generally..............................................................456 2. Surety Bonds............................................................................................456 3. Progress Payments...................................................................................457 4. Joint Checks.............................................................................................458 5. Letters of Credit.......................................................................................458 6. Right of Setoff..........................................................................................459 7. Perfection of Liens...................................................................................460 C. Debtor’s Obligations............................................................................................462 1. Monthly Reports......................................................................................463 D. Motions Filed Prior to Confirmation of Plan of Reorganization..........................463 1. Motions for Relief from Stay...................................................................463 a. Enforcement of Mechanic’s & Materialmen’s Liens While the Automatic Stay is In Place...........................................................465 2. Motions to Allow Financing.....................................................................468 3. Assumption & Rejection of Executory Contracts....................................469 4. Motion for Valuation of Collateral...........................................................472 E. Adversary Proceedings........................................................................................472 F. Chapter 11 Disclosure Statement & Plan of Reorganization................................473 1. Disclosure Statement...............................................................................473 2. Plan of Reorganization.............................................................................474 PROCEEDINGS UNDER CHAPTER 13.......................................................................475 A. The Chapter 13 Trustee........................................................................................476 B. Creditors..............................................................................................................476 1. Meeting of Creditors................................................................................476 2. Automatic Stay.........................................................................................477 a. Termination for Individual Debtors..............................................477 b. No Automatic Stay.......................................................................478 c. Termination for Individual Cases................................................478 d. Secured Creditors – Grounds for Relief from Automatic Stay.......479 3. Violations of the Automatic Stay.............................................................479 North Carolina Bar Association Foundation Continuing Legal Education

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4. Proofs of Claim.......................................................................................480 5. Secured Claims.......................................................................................481 6. Unsecured Claims...................................................................................483 C. The Debtor...........................................................................................................484 1. Chapter 13 Plan........................................................................................484 a. Good Faith Requirement.............................................................484 b. Contents of Plan..........................................................................485 c. Modification of Plan....................................................................486 d. Completion of Plan......................................................................486 e. Additional Requirements for Discharge Entry.............................487 2. Retention of Property of the Debtor & Motivations for Filing a Chapter 13 Plan........................................................................................488 a. Retention of Property...................................................................488 b. Protection of Co-Debtor (or Co-Obligor)....................................488 c. Chapter 13 Superdischarge..........................................................489 D. Post-Confirmation of the Chapter 13 Plan...........................................................489 E. Chapter 13 Motions & Objections........................................................................490 1. Motions for Relief from Stay..................................................................490 2. Motion for Valuation of Collateral..........................................................490 3. Exemptions............................................................................................492 a. North Carolina Exemptions & Applicability...............................493 b. Exemptions Available Under North Carolina Law......................493 c. Other Exemptions Available........................................................495 d. Notice Required of Additional Exemptions................................496 PROCEEDINGS UNDER CHAPTER 7.........................................................................496 A. Creditors.............................................................................................................496 1. Meeting of Creditors...............................................................................496 2. The Automatic Stay.................................................................................497 3. Proofs of Claim.......................................................................................498 4. Final Distribution....................................................................................499 B. The Debtor...........................................................................................................499 1. Debtor’s Responsibilities After Filing.....................................................499 2. Duties of the Individual Debtor...............................................................499 a. Statement of Intention.................................................................499 b. Exemptions & Objections to Exemptions....................................500 c. Lien Avoidance............................................................................500 d. Reaffirmation..............................................................................503 C. The Trustee..........................................................................................................504 1. Identification & Gathering of Assets.......................................................504 2. Executory Contracts or Unexpired Leases...............................................504 3. Preferences..............................................................................................506 a. Exception: Contemporaneous Exchange for New Value.............507 b. Exception: Ordinary Course of Business....................................511 c. Exception: New Value.................................................................511

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d. Exception: Fixing of Statutory Lien.............................................511 e. Exception: Value Limits...............................................................511 4. Avoiding Powers......................................................................................512 5. Fraudulent Conveyances & Transfers......................................................513 6. Sale of Assets...........................................................................................514 7. Abandonment of Property........................................................................515 8. Final Account of Trustee..........................................................................515 9. Order Closing the Case.............................................................................515 Discharge..........................................................................................................516 1. Objections to Discharge of Specific or Certain Debts.............................516 2. Complaint Objecting to Entire Discharge................................................517 3. Discharge of Debtor.................................................................................518 CHAPTER VII ENVIRONMENTAL ISSUES IN CONSTRUCTION LAW

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OVERVIEW....................................................................................................................525 A. Key Federal & State Environmental Laws and Regulations...............................525 1. The Federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. §§ 9601–9675)..........................526 2. North Carolina Inactive Hazardous Sites Act (N.C. Gen. Stat. §§ 130A-310 to -310.77 (2015))....................................................................526 3. Federal Resource Conservation and Recovery Act (RCRA) (42 U.S.C. §§ 6901–6991(i))......................................................................................527 4. North Carolina Solid Waste Management Act (N.C. Gen. Stat. §§ 130A-290 to -310.77 (2015))...............................................................527 5. North Carolina Oil Pollution and Hazardous Substances Control Act (OPHSCA) (N.C. Gen. Stat. §§ 143-215.75 to -215-104AA (2015))........527 6. Federal & North Carolina Underground Storage Tank (UST) Regulations (40 C.F.R. Part 280; 15A N.C. Admin. Code, Subchapter 2N)..........................................................................................................528 7. North Carolina & Federal Petroleum Underground Storage Tank Trust Funds (N.C. Gen. Stat. §§ 143-215.94A to .94Q (2015); 42 U.S.C., Subtitle 1)....................................................................................528 8. Federal Clean Air Act (CAA) (42 U.S.C. §§ 7401–7671).........................528 9. Federal Clean Water Act (CWA) (33 U.S.C. §§ 1251–1387)....................529 10. North Carolina Water and Air Resources Act (N.C. Gen. Stat. §§ 143-211 to -215.10 (2015))....................................................................................530 11. Federal Toxic Substances Control Act (TSCA) (15 U.S.C. §§ 2601– 2629).......................................................................................................530 12. Federal Emergency Planning and Community Right-to-Know Act (EPCRA) (42 U.S.C. §§ 11001–11050).....................................................530 13. North Carolina Hazardous Chemicals Right-to-Know Act (N.C. Gen. Stat. §§ 95-173 to -221 (2015)).................................................................531 North Carolina Bar Association Foundation Continuing Legal Education

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National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. §§ 4321–4370h)...........................................................................................531 15. North Carolina Environmental Policy Act of 1971 (SEPA) (N.C. Gen. Stat. §§ 113A-1 to -20 (2015))..................................................................531 16. North Carolina Sedimentation Pollution Control Act (SPCA) (N.C. Gen. Stat. §§ 113A-50 to -69 (2015))........................................................532 17. North Carolina Coastal Area Management Act (CAMA) (N.C. Gen. Stat. §§ 113A-100 to -134.9 (2015)).........................................................532 18. North Carolina Mining Act of 1971 (N.C. Gen. Stat. §§ 74-46 to -74 (2015).....................................................................................................532 B. The North Carolina Agencies Responsible for Implementing Environmental Laws....................................................................................................................534 1. Division of Coastal Management (DCM)...............................................534 2. Division of Water Resources (DWR)......................................................534 3. Division of Air Quality (DAQ)...............................................................534 4. Division of Energy, Mineral and Land Resources (DEMLR)...............535 5. Division of Waste Management (DWM).................................................535 ENVIRONMENTAL STANDARDS IMPACTING CONSTRUCTION ACTIVITIES.................................................................................................................535 A. Water Quality Protections....................................................................................535 1. Sedimentation Pollution Control Act (SPCA).........................................535 a. Mandatory Standards...................................................................536 (1) General Buffer Requirement Around Watercourses........536 (2) Graded Slope Requirement..............................................536 (3) Uncovered Land Requirement.........................................537 (4) Erosion & Sedimentation Control Plans.........................537 b. Local Ordinances & State Jurisdiction........................................538 c. Penalties & Enforcement.............................................................538 d. Case Law.....................................................................................540 2. Spill Notification Requirements..............................................................541 a. Hazardous Substance Under CERCLA.......................................541 b. Oil & Other Substances under OPHSCA....................................543 c. Extremely Hazardous Substances................................................543 d. Polychlorinated Biphenyls (PCB)...............................................545 e. Hazardous Waste.........................................................................546 f. Discharges to Surface Water.........................................................547 g. Underground Storage Tanks (USTs)............................................547 h. Transportation-Related Spills......................................................547 3. Wetlands................................................................................................548 a. Dredge & Fill (Section 404) Permits...........................................548 (1) Does the Project Occur in “Wetlands”?..........................548 (2) Does the Project Involve a Regulated Activity?...............551 (3) Does an Exemption Apply for the Project?.....................552

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If a Section 404 Permit is Required, is a Nationwide or an Individual Permit Needed?.........................................553 b. 401 Certification & State Wetlands Rules....................................553 4. Riparian Buffer Rules..............................................................................554 5. Stormwater Requirements.......................................................................555 a. National Pollution Discharge Elimination System (NPDES) Stormwater Permits.....................................................................555 b. State Stormwater Management Program Permits.......................556 c. Nutrient Management Requirements...........................................557 d. Coastal Area Management Act (CAMA) Permits.......................558 (1) Major Permits..................................................................558 (2) General Permits...............................................................559 (3) Minor Permits..................................................................559 B. Air Quality Protections........................................................................................559 1. Hazardous Materials Protections.............................................................559 a. Asbestos.....................................................................................559 b. Lead Paint....................................................................................560 2. Permits for Transportation Sources..........................................................561 3. Open Burning Rules................................................................................562 SITE CONTAMINATION & REMEDIATION..............................................................563 A. General Remediation Statutes..............................................................................563 1. CERCLA.................................................................................................563 a. The Cleanup Program..................................................................563 b. Potentially-Responsible Parties...................................................564 (1) Liability in General..........................................................564 (2) Liability for Construction Activities................................564 (3) Lender Liability...............................................................567 c. Defenses......................................................................................567 2. The Federal Resource Conservation and Recovery Act (RCRA)...........569 3. Inactive Sites............................................................................................569 4. Land Use Restrictions..............................................................................571 B. Petroleum Underground Storage Tanks (USTs)...................................................572 C. Dry Cleaners........................................................................................................573 D. Brownfields.....................................................................................................574 ACRONYM GLOSSARY...............................................................................................576 CHAPTER VIII FEDERAL PUBLIC CONSTRUCTION

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INTRODUCTION...........................................................................................................583 SOURCES OF FEDERAL PUBLIC CONSTRUCTION LAW.......................................583 A. The FAR..............................................................................................................583 B. The Prime Contract..............................................................................................584 North Carolina Bar Association Foundation Continuing Legal Education

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C. Statutes................................................................................................................584 D. Case Law.............................................................................................................585 III. PROCUREMENT...........................................................................................................585 A. Federal Business Opportunities in North Carolina..............................................585 B. The Bidding Process............................................................................................585 1. Sealed Bidding (Formal Advertising).....................................................585 2. Competitive Negotiation (Best Value Bidding).......................................586 3. Bid Protests.............................................................................................587 C. Socioeconomic Programs....................................................................................587 D. Ethics, FAPIIS & Debarment..............................................................................588 IV. CLAIMS & DISPUTES...................................................................................................588 A. The Contracting Officer......................................................................................588 B. The Written Claim...............................................................................................589 C. The Contract Disputes Act...................................................................................589 V. THE MILLER ACT.........................................................................................................590 A. Types of Bonds....................................................................................................591 1. Bid Bond.................................................................................................591 2. Performance Bond...................................................................................592 3. Payment Bond.........................................................................................592 B. Nonexclusivity of Remedy..................................................................................593 C. Contracts Covered...............................................................................................594 D. Absence of Bond.................................................................................................594 E. Parties Covered...................................................................................................595 1. First-Tier Subcontractor/Supplier............................................................596 2. Second-Tier Subcontractor/Supplier.......................................................596 3. Third-Tier Subcontractors/Suppliers.......................................................598 F. Notice Requirements...........................................................................................599 G. Suits to Enforce Rights Under the Act..................................................................600 1. State Law vs. Federal Law/Federal Preemption.......................................601 2. Administrative Issues..............................................................................601 3. Contractor/Subcontractor Litigation.......................................................601 VI. WEBSITES.....................................................................................................................602 VII. ADDITIONAL RESOURCES........................................................................................603 FORM 1: Sample Notice Letter...........................................................................................605 APPENDIX: Procedure in Procurement Protest Cases Pursuant to 28 U.S.C. § 1491(b).........607 CHAPTER IX GREEN/SUSTAINABLE CONSTRUCTION I. II.

INTRODUCTION..........................................................................................................617 A. What is Sustainable or Green Construction?.......................................................617 B. Why is Building Green Important?.....................................................................618 THE MAJOR RATING SYSTEMS – AN OVERVIEW................................................619

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A. U.S. Green Building Council (LEED Certification)............................................619 B. Green Globes.......................................................................................................620 LEED BD+C NEW CONSTRUCTION & MAJOR RENOVATION CERTIFICATION...........................................................................................................621 A. Certification Process............................................................................................621 B. BD+C Certification Requirements.......................................................................621 1. Integrated Process....................................................................................623 2. Location & Transportation (LT)...............................................................623 3. Sustainable Sites (SS)..............................................................................623 4. Water Efficiency (WE)............................................................................624 5. Energy & Atmosphere (EA).....................................................................624 6. Materials & Resources (MR)...................................................................624 7. Indoor Environmental Quality (EQ).......................................................625 8. Innovation (IN)........................................................................................625 9. Regional Priority......................................................................................625 INTERNATIONAL GREEN CONSTRUCTION CODE...............................................625 A. Site Development & Land Use............................................................................626 B. Material Resource Conservation & Efficiency....................................................626 C. Energy Conservation, Efficiency & CO2 Emission Reduction...........................627 D. Water Resource Conservation, Quality & Efficiency..........................................627 E. Indoor Environmental Quality & Control............................................................627 F. Commissioning, Operation & Maintenance.........................................................628 G. Existing Buildings & Existing Building Site Development................................628 STATUTORY REQUIREMENTS...................................................................................628 A. State Facilities......................................................................................................628 B. State or Local Mandates for Green Construction................................................629 GREEN RISK ALLOCATION/CLAIM PREVENTION...............................................630 A. Risk of Non-Certification....................................................................................632 B. Risk of Failure to Meet Performance Requirements............................................634 C. Higher Designer Standard of Care & Possible Unintended Warranties.............635 D. Use of New, Unproven & Potentially-Unavailable Products..............................635 E. The Need to Redefine Substantial Completion...................................................636 GREEN RESOURCES ON THE WEB...........................................................................637 CHAPTER X INSURANCE ISSUES IN CONSTRUCTION LAW

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INTRODUCTION..........................................................................................................643 COMMON POLICIES & COVERAGES........................................................................645 A. Builder’s Risk Insurance......................................................................................645 1. Introduction.............................................................................................645 2. Property Covered.....................................................................................645 3. Scope of Coverage & Policy Exclusions..................................................646 North Carolina Bar Association Foundation Continuing Legal Education

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4. Builder’s Risk Endorsements..................................................................648 5. When the Policy Terminates....................................................................648 6. Deductibles.............................................................................................649 7. Waiver of Subrogation.............................................................................649 B. Contractor’s Commercial General Liability (CGL) Policy.................................650 1. Introduction........................................................................................650 2. Declarations Page....................................................................................650 3. Who is Insured?.......................................................................................650 4. Duty to Defend........................................................................................653 5. What is the Extent of Coverage (i.e., Limits of Liability)?.......................653 6. Occurrence/Claims-Made....................................................................653 7. Types of Coverage Available...................................................................655 8. Claims for Faulty Workmanship..............................................................656 a. Not “Property Damage” Caused by an “Occurrence”..................656 b. “Business Risk” Exclusions........................................................658 9. Other Policy Exclusions..........................................................................660 a. “Expected or Intended Injury”....................................................660 b. Employer’s Liability....................................................................660 c. Contractual Liability Exclusion..................................................660 d. Pollution Exclusion.....................................................................661 10. Notice of Claims......................................................................................661 OTHER TYPES OF INSURANCE.................................................................................662 A. Owner’s & Contractor’s Protective Liability Policies.........................................662 B. Project Management Professional Liability Insurance........................................663 C. Owner-Controlled Insurance Programs (“Wrap-Up” Policies)...........................663 D. Pollution Liability Policies..................................................................................664 1. Contractor’s Pollution Liability (CPL)....................................................664 2. Pollution Legal Liability (PLL)...............................................................665 3. Non-Owned Disposal Site Coverage (NODSC).....................................665 4. Storage Tank Liability..............................................................................665 5. Environmental Property Transfer.............................................................665 E. Umbrella or Excess Liability Insurance..............................................................666 F. Workers’ Compensation Insurance.....................................................................666 G. Force Majeure Insurance.....................................................................................667 H. Owners’ & Contractors’ System Performance Coverages or Efficacy Coverage...........................................................................................................667 I. Inherent Defects Insurance (IDI).........................................................................667 J. Cyber Liability Insurance....................................................................................667 LIABILITY INSURANCE AVAILABLE TO DESIGN PROFESSIONALS................668 A. Professional Liability (Malpractice) Insurance...................................................668 B. Project Insurance Covering Design Professionals..............................................669 C. Design-Build Insurance......................................................................................669 OTHER RESOURCES...................................................................................................670 CONCLUSION...............................................................................................................671

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CHAPTER XI EMPLOYMENT, IMMIGRATION & LABOR ISSUES FACING THE CONSTRUCTION INDUSTRY I.

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INDEPENDENT CONTRACTORS & EMPLOYEES...................................................679 A. Distinguishing an Independent Contractor from an Employee...........................679 B. The Tests..............................................................................................................681 1. The Department of Labor “Economic Realities” Test............................681 2. Internal Revenue Service Test..................................................................682 a. Factors to Determine Status of the Relationship.........................683 (1) Instructions.....................................................................683 (2) Training..........................................................................683 (3) Integration...............................................................683 (4) Services Rendered Personally.........................................683 (5) Hiring, Supervising & Paying Assistants......................683 (6) Continuing Relationship..................................................683 (7) Set Hours of Work............................................................684 (8) Full Time Required...........................................................684 (9) Doing Work on Employer’s Premises...............................684 (10) Order or Sequence Set......................................................684 (11) Oral or Written Reports.....................................................684 (12) Payment by Hour, Week, Month......................................685 (13) Payment of Business and/or Traveling Expenses..............685 (14) Furnishing of Tools & Materials.......................................685 (15) Significant Investment.....................................................685 (16) Realization of Profit or Loss.............................................685 (17) Working For More Than One Firm at a Time..................686 (18) Making Service Available to General Public....................686 (19) Right to Discharge............................................................686 (20) Right to Terminate............................................................686 b. Categories to Assess Degree of Control & Independence........686 (1) Behavioral Control..........................................................686 (2) Financial Control.............................................................687 (3) Type of Relationship........................................................687 3. The Common Law Test............................................................................688 a. Federal Courts..............................................................................688 4. North Carolina Courts..............................................................................690 IMMIGRATION............................................................................................................691 A. Federal Immigration Reform...............................................................................691 1. Executive Order – Expansion of the Deferred Action for Childhood Arrivals...................................................................................692 B. State Immigration Reform...................................................................................693 C. The Immigration Reform and Control Act of 1986 (IRCA)...............................694 1. Compliance with IRCA: I-9 Form............................................................694 North Carolina Bar Association Foundation Continuing Legal Education

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Document Presentation & Review..............................................694 Completing the I-9 Form.............................................................695 (1) Section 1..........................................................................695 (2) Section 2..........................................................................696 (3) Section 3..........................................................................696 c. Rehires.....................................................................................696 d. Expiration of Eligibility...............................................................696 e. Unique Circumstances.................................................................697 (1) Referrals from State Employment Service Agencies......697 (2) Third-Party Verification...................................................697 (3) Replacement Receipts.....................................................697 f. Retention of I-9 Forms................................................................698 2. Penalties for Noncompliance...................................................................698 a. Knowing Violations.....................................................................698 (1) Actual Knowledge...........................................................698 (2) Constructive Knowledge.................................................699 b. Technical Violations....................................................................700 3. Audits......................................................................................................701 a. Self-Audits..................................................................................701 b. ICE Audits...................................................................................702 D. The E-Verify Program..........................................................................................703 1. Using E-Verify.........................................................................................703 2. E-Verify Requirements for Federal Contracts..........................................705 3. E-Verify in North Carolina.......................................................................706 a. Public Employers........................................................................706 b. Private Employers.......................................................................707 c. E-Verify Requirements for State Contracts.................................707 d. Violations....................................................................................708 E. Discrimination.....................................................................................................708 1. Types of Prohibited Discrimination.........................................................708 2. Protected Parties......................................................................................709 3. Filing Discrimination Charges................................................................709 4. Remedies & Penalties..............................................................................710 COVENANTS NOT TO COMPETE..............................................................................710 A. Non-Compete Agreements in North Carolina.....................................................710 B. Judicial Review of Covenants Not to Compete...................................................711 1. The Writing Requirement........................................................................712 2. Consideration..........................................................................................713 3. Reasonableness with Regard to Time & Territory....................................714 4. Not Against Public Policy.......................................................................715 C. Avoiding Litigation.............................................................................................716 1. New Employees.......................................................................................716 a. Avoiding Unfair Competition Claims.........................................716 b. Protecting an Employer’s Own Interest......................................717

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(1) Confidentiality Agreements.............................................718 (2) Non-Solicitation Agreements..........................................718 (3) Assignment of Invention Agreements.............................718 2. Departing Employees..............................................................................719 D. Investigation, Evidence Preparation & the Injunction..........................................720 1. Strategy....................................................................................................720 2. Procedure...............................................................................................721 a. Temporary Restraining Orders.....................................................721 b. Preliminary Injunctions...............................................................722 c. Appeal.........................................................................................722 ORGANIZED LABOR & THE UNION-FREE EMPLOYER........................................722 A. North Carolina’s Right-to-Work Status.................................................................723 B. The National Labor Relations Act........................................................................723 1. Unfair Labor Practices.............................................................................724 2. Union Elections.......................................................................................725 a. Voluntary Recognition.................................................................725 b. Board-Certified Election..............................................................726 C. Protected Concerted Activity...............................................................................727 D. Employer Free Speech & Issue-Free Message.....................................................728 1. Employer Free Speech.............................................................................729 2. An Employer’s Statement on Remaining Union-Free..............................730 3. Captive Audience Meetings.....................................................................733 4. Employment Policies...............................................................................733 a. Rules Regarding Union Insignia..................................................734 b. Rules Regarding Solicitation/Distribution..................................734 c. Rules Regarding Off-Duty Access...............................................735 d. Rules Regarding On-Duty Conduct............................................736 e. Rules Regarding Posting of Union Literature.............................736 E. Board Remedies for Unlawful Policies................................................................736 F. The Foundation of an Issue-Free Employer.........................................................737 1. The Preventive Audit...............................................................................737 2. Management Credibility & Training.....................................................738 3. Effective Communications with Employees & Problem-Solving Mechanisms.............................................................................................739 4. Appreciation of Employees.....................................................................739 QUICK REFERENCE GUIDE FOR ADDITIONAL EMPLOYMENT LAW TOPICS..........................................................................................................................740 A. Employment at Will.............................................................................................740 B. Labor Statutes......................................................................................................740 C. Wage & Hour Laws..............................................................................................741 D. Family & Medical Leave Act (FMLA) Equivalent..............................................741 E. Special Leave Statutes.........................................................................................742 F. Military Service & Employee Leave....................................................................742 G. Trade Secrets........................................................................................................742 North Carolina Bar Association Foundation Continuing Legal Education

H. Unfair & Deceptive Trade Practices Act.............................................................743 I. Personnel or Employee Confidentiality...............................................................743 J. Protection of Social Security Numbers...............................................................743 K. Discrimination.....................................................................................................744 1. North Carolina’s Equal Employment Practices Act (NCEEPA)..............744 2. North Carolina Persons with Disabilities Protection Act (NCPDPA)......744 L. Whistle-Blower Statutes & Retaliatory Discharge..............................................744 M. Worker Adjustment & Retraining Notification (WARN) Act.............................745 N. Workplace Violence.............................................................................................745 VI. FORMS...........................................................................................................................745 FORM 1: Exit Acknowledgment.........................................................................................747 FORM 2: Unemployment Eligibility Verification (Form I-9).............................................749 FORM 3: Social Security Administration Notice to Employee of Tentative Nonconfirmation.............................................................................................759 FORM 4: U.S. Department of Homeland Security Notice to Employee of Tentative Nonconfirmation............................................................................................763 FORM 5: Verification of Work Authorization Complaint Form & Instructions...................767 CHAPTER XII LICENSING OF CONSTRUCTION PROFESSIONALS I. THE NORTH CAROLINA LICENSING BOARD FOR GENERAL CONTRACTORS..........................................................................................................779 A. Introduction.................................................................................................779 B. Examinations......................................................................................................779 C. License Classifications........................................................................................779 D. Limitation of License..........................................................................................780 E. Entities Licensed.................................................................................................781 F. Reciprocity..........................................................................................................782 G. Homeowners Recovery Fund..............................................................................782 H. Statutes & Cases Defining General Contracting..................................................783 1. Statutory Definition.................................................................................783 2. Unauthorized Practice.............................................................................784 3. Civil Consequences of Unlawful General Contracting............................784 4. The Strict Compliance Policy.................................................................785 5. Who is a “General Contractor?”..............................................................786 a. The Control Test..........................................................................786 b. Subcontractors............................................................................787 c. Parallel Prime Contracting..........................................................788 6. Cost of the Undertaking...........................................................................789 7. Construction Management......................................................................789 a. Statutory Definition.....................................................................789 b. Licensing Requirements..............................................................790 c. Cases..........................................................................................791 North Carolina Construction Law Deskbook, Seventh Edition (2016)

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8. Clearing & Grading.................................................................................792 THE NORTH CAROLINA BOARD OF ARCHITECTURE.........................................792 A. Introduction.........................................................................................................792 B. Application & Renewal of License......................................................................793 1. Application..............................................................................................793 2. Renewal.................................................................................................793 a. Individual License Renewal........................................................793 b. Corporate Registration Renewal..................................................793 c. Reinstatement..............................................................................794 C. License Classifications, Limitations of License & Entities Licensed................794 1. Individual License...................................................................................794 2. Corporate License....................................................................................794 3. Partnerships............................................................................................794 D. Reciprocity.........................................................................................................795 1. Individuals..............................................................................................795 2. Foreign Corporations...............................................................................795 E. Statutes and Rules & Regulations........................................................................795 1. Practice of Architecture............................................................................795 2. Unauthorized Practice..............................................................................796 3. Exemptions.............................................................................................796 4. Qualified Immunity..................................................................................797 5. Disciplinary Actions & Procedures.........................................................797 6. Adoption of New Rules & Declaratory Rulings......................................797 THE NORTH CAROLINA BOARD OF EXAMINERS FOR ENGINEERS & SURVEYORS.................................................................................................................797 A. Introduction........................................................................................................797 B. Application & Renewal of License......................................................................798 1. Application............................................................................................798 a. Engineering License....................................................................798 b. Land Surveyor License................................................................799 2. Renewal.................................................................................................799 3. Temporary Permits...................................................................................800 C. License Classifications & Limitations.................................................................800 1. Engineer.................................................................................................800 2. Land Surveyor..........................................................................................800 D. Entities Licensed..................................................................................................800 E. Reciprocity..........................................................................................................800 F. Statutes and Rules & Regulations........................................................................801 1. Practice of Engineering............................................................................801 2. Practice of Land Surveying......................................................................801 3. Unauthorized Practice.............................................................................802 4. Exemptions..............................................................................................802 THE NORTH CAROLINA BOARD OF EXAMINERS OF ELECTRICAL CONTRACTORS............................................................................................................803 North Carolina Bar Association Foundation Continuing Legal Education

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Introduction.......................................................................................................803 Application & Renewal of License......................................................................803 1. Application for Registration, Certification & License.............................803 2. Renewal.................................................................................................804 3. Restatement.............................................................................................804 C. License Classifications, Limitations of License & Entities Licensed.................804 1. Limited, Intermediate & Unlimited License Classification....................805 2. Residential Dwelling License..................................................................805 3. Special Restricted License Classifications..............................................805 D. Reciprocity..........................................................................................................805 E. Statutes and Rules & Regulations........................................................................805 1. Practice of Electrical Contracting............................................................805 2. Unauthorized Practice.............................................................................806 3. Exemptions.............................................................................................806 4. Disciplinary Actions & Procedures..........................................................806 5. Adoption of New Rules & Declaratory Rulings......................................807 BOARD OF PLUMBING, HEATING & FIRE SPRINKLER CONTRACTORS..........807 A. Introduction......................................................................................................807 B. Application & Renewal of Registration...............................................................807 1. Application..............................................................................................807 2. Renewal...................................................................................................808 3. Reinstatement..........................................................................................808 C. License Classifications........................................................................................808 D. License Limitations, Duties & Responsibilities..................................................809 1. Permits...................................................................................................809 2. On-Site Presence.....................................................................................809 E. Entities Licensed.................................................................................................810 1. Corporation.............................................................................................810 2. Partnership..............................................................................................810 3. Business with a Trade Name....................................................................810 F. Reciprocity......................................................................................................810 G. Statutes and Rules & Regulations........................................................................810 1. Practice of Plumbing, Heating & Fire Sprinkler Contracting.................810 2. Unauthorized Practice.............................................................................811 3. Exemptions............................................................................................811 4. Disciplinary Actions & Procedures..........................................................811 5. Adoption of New Rules & Declaratory Rulings......................................812 THE NORTH CAROLINA APPRAISAL BOARD........................................................812 A. Introduction........................................................................................................812 B. Real Estate Appraisers.........................................................................................812 1. Application & Renewal of License..........................................................812 a. Application for Registration, Certification & License.................812 b. Renewal.......................................................................................813 2. License Classifications............................................................................813

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a. Trainee.......................................................................................813 b. Licensed Residential Real Estate Appraiser................................814 c. Certified Residential Real Estate Appraiser.................................814 d. Certified General Real Estate Appraiser......................................814 3. Entities Licensed......................................................................................815 4. Reciprocity...............................................................................................815 5. Statutes and Rules & Regulations............................................................815 a. Practice of Real Estate Appraisal.................................................815 b. Standards for Appraisals..............................................................815 c. Unauthorized Practice.................................................................815 d. Disciplinary Actions & Procedures..............................................816 B. Real Estate Appraisal Management Companies..................................................816 1. Application & Renewal of License..........................................................816 a. Application for Registration.........................................................816 b. Renewal.....................................................................................817 c. Inactive or Lapse of Registration.................................................817 2. Registration Classifications, Limitations & Entities Registered...............817 3. Statutes and Rules & Regulations.............................................................818 a. Practice of Real Estate Appraisal Management...........................818 b. Unauthorized Practice..................................................................819 c. Exemptions...............................................................................819 d. Records.......................................................................................819 e. Disciplinary Actions & Procedures..............................................819 THE NORTH CAROLINA HOME INSPECTORS LICENSING BOARD..................820 A. Introduction........................................................................................................820 B. Application & Renewal of License......................................................................820 1. Application.............................................................................................821 2. Renewal...................................................................................................821 3. Inactive or Lapse of License....................................................................821 C. License Classifications, Limitations & Entities Licensed....................................822 D. Reciprocity..........................................................................................................822 E. Statutes and Rules & Regulations.........................................................................823 1. Practice of Home Inspecting....................................................................823 2. Unauthorized Practice.............................................................................823 3. Exemptions............................................................................................823 4. Disciplinary Actions & Procedures..........................................................823 THE NORTH CAROLINA BOARD OF LANDSCAPE ARCHITECTS......................824 A. Introduction.........................................................................................................824 B. Application & Renewal of License.......................................................................824 1. Application.............................................................................................824 2. Renewal...............................................................................................824 3. Reinstatement..........................................................................................825 C. License Classifications, Limitations & Entities Licensed....................................825 D. Reciprocity..........................................................................................................825 North Carolina Bar Association Foundation Continuing Legal Education

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Statutes and Rules & Regulations........................................................................825 1. Practice of Landscape Architecture.........................................................825 2. Unauthorized Practice.............................................................................826 3. Exemptions.............................................................................................826 4. Disciplinary Actions & Procedures..........................................................826 THE NORTH CAROLINA LANDSCAPE CONTRACTORS REGISTRATION BOARD..........................................................................................................................826 A. Introduction........................................................................................................826 B. Application & Renewal of Registration...............................................................827 1. Application..............................................................................................827 2. Renewal..................................................................................................827 3. Reinstatement..........................................................................................827 C. Classifications, Limitations & Entities Certified.................................................828 D. Reciprocity..........................................................................................................828 E. Statutes and Rules & Regulations........................................................................828 1. Practice of Landscape Contracting..........................................................828 2. Unauthorized Practice.............................................................................828 3. Disciplinary Actions & Procedures..........................................................829 BOARD OF LICENSING OF SOIL SCIENTISTS.........................................................829 A. Introduction.........................................................................................................829 B. Application & Renewal of Registration...............................................................829 1. Application..............................................................................................829 2. Renewal............................................................................................830 3. Reinstatement.........................................................................................830 C. License Classifications, Limitations & Entities Licensed....................................830 D. Reciprocity..........................................................................................................831 E. Statutes and Rules & Regulations........................................................................831 1. Practice of Soil Science...........................................................................831 2. Unauthorized Practice.............................................................................831 3. Exemptions.............................................................................................831 4. Disciplinary Actions & Procedures..........................................................832

CHAPTER XIII SURETY LAW & THE CONSTRUCTION INDUSTRY: A NORTH CAROLINA PRIMER I. II. III.

INTRODUCTION..........................................................................................................839 SURETYSHIP DEFINED & DISTINGUISHED...........................................................839 A. Insurance Distinguished from Suretyship............................................................840 B. Indemnity Distinguished from Suretyship...........................................................840 PERFORMANCE & PAYMENT BONDS......................................................................841 A. Performance Bonds.............................................................................................842 1. Surety’s Options upon Principal’s Default..............................................842 a. Provide Financial Assistance to Defaulting Principal.................842 b. Allow Obligee to Remove & Replace Defaulting Contractor.......842

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Obtain Bids for Completing Contractor........................................843 Tell Obligee to Complete Projects with Remaining Contract Funds...........................................................................................843 e. Perform Good Faith Investigation................................................843 2. “Takeover” Agreements...........................................................................843 B. Payment Bonds....................................................................................................844 1. The Federal Miller Act.............................................................................844 a. Covered Claimants.......................................................................844 b. When Pre-Suit Notice Is Required...............................................845 c. The One-Year Statute of Repose..................................................845 d. Venue for Action...........................................................................846 e. Delivery of Materials to Site Not a Condition Precedent to Recovery...................................................................................846 2. North Carolina’s “Little Miller Act”........................................................846 a. Payment Bond Claims by First-Tier Subcontractors...................846 b. Payment Bond Claims by Remote Subcontractors – Notice Required.......................................................................................847 c. The One-Year Statute of Repose..................................................847 d. Venue for Action..........................................................................847 e. Delivery of Materials to Site Not a Condition Precedent to Recovery...................................................................................848 f. 2012 Legislation – “Double Payment” Protection for Contractors...................................................................................848 C. Obtaining Copies of Payment Bonds for Public Projects.....................................849 NATURE & EXTENT OF SURETY’S LIABILITY........................................................849 A. General Principles................................................................................................849 B. What the Obligee Can Recover from the Surety in the Event of the Principal’s Default.................................................................................................................850 C. Who Can Recover from the Surety in the Event of the Principal’s Default...........851 D. Penal Amount of the Bond....................................................................................852 E. Disputes Concerning Default...............................................................................853 F. Surety’s Liability for Principal’s Negligence.......................................................853 G. Surety’s Liability for Interest...............................................................................854 H. Surety’s Liability for Defects After Substantial Completion................................855 I. Surety’s Defenses.................................................................................................855 1. Failure to Declare Unequivocal Default...................................................856 2. Cardinal Changes.....................................................................................856 3. Prepayments & Overpayments.................................................................856 4. Invalidity of the Bond...............................................................................857 SURETY’S REMEDIES.................................................................................................857 A. Remedies Against the Bonded Principal & Its Indemnitors.................................857 1. Reimbursement.......................................................................................857 2. Exoneration.............................................................................................857 3. Quia Timet................................................................................................858 North Carolina Bar Association Foundation Continuing Legal Education

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4. Subrogation.............................................................................................858 5. Specific Performance...............................................................................858 B. Remedies Against the Owner/Obligee.................................................................859 C. Remedies Against Co-Sureties.............................................................................860 D. Remedies Against Engineers & Architects........................................................860 E. Remedies Against Principal’s Accountant...........................................................860 ANALYSIS OF AIA PERFORMANCE & PAYMENT BONDS AND THE DAWN OF THE CONSENSUSDOCS BOND FORMS................................................861 A. Analysis of the AIA Document A312-2010 Performance Bond..........................861 1. Section 1 – Obligations of the Surety.....................................................861 2. Section 3 – Owner’s Obligation to Give Notice to Surety......................862 3. Section 4 – Failure to Comply with Notice Requirement.......................863 4. Section 5 – Options of the Surety...........................................................863 5. Section 6 – Default by Surety..................................................................864 6. Section 7 – Amount of Surety’s Liability.................................................864 7. Section 10 – Waiver of Notice of Change...............................................865 8. Section 11 – Limitations Period..............................................................865 B. Analysis of the AIA Document A312-2010 Payment Bond...............................866 1. Section 1 – Obligations of Surety...........................................................866 2. Section 5 – Contractual Privity...............................................................866 3. Section 7 – Actions Required by Surety..................................................867 4. Section 8 – Amount of Surety’s Liability................................................868 5. Section 11 – Waiver of Notice................................................................868 6. Section 12 – Limitations Period..............................................................868 7. Section 16.2 – Claimants.........................................................................869 C. ConsensusDocs Bond Forms...............................................................................869 1. Key Differences Between the AIA A312 Performance Bond & ConsensusDocs 260.................................................................................869 a. No Meeting Required as Precondition to Action........................869 b. No Owner Consent Required.......................................................870 c. No Recitation of Damage Liabilities...........................................870 2. Key Differences Between the AIA A312 Payment Bond & ConsensusDocs 261.................................................................................870 a. Surety Not Required to Pay Claimant........................................870 b. No 60-Day Deadline for Surety Response...................................870 OTHER CONSTRUCTION INDUSTRY BONDS.........................................................870 A. Lien Discharge Bonds.........................................................................................871 B. Bid Bonds............................................................................................................871 ARBITRATION.............................................................................................................872 A. Surety’s Obligation to Arbitrate Disputes Arising Solely Out of the Performance Bond’s Terms and/or from Principles of Suretyship Remains Unsettled..............872 B. Surety Bound by Arbitration Between Obligee & Principal...............................874 C. Surety May Not Be Entitled to Notice................................................................874

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Surety Seeking to Arbitrate Must Appeal Denial of Stay Motion or Risk Waiving Arbitral Rights...............................................................................875 IX. STATUTE OF LIMITATIONS FOR SURETIES...........................................................875 A. Actions Against the Surety...................................................................................875 1. General Principles....................................................................................875 2. Contractual Limitations Provision of the A312 Performance Bond.........876 3. Miller Act & Little Miller Act..................................................................877 4. Private Payment Bonds............................................................................877 5. Performance Bond Actions by the State or Political Subdivision...........877 B. Actions by the Surety Against the Principal.........................................................878 X. RECOVERY OF ATTORNEYS’ FEES...........................................................................878 A. Right of the Surety to Recover from Principal.....................................................878 B. Recovery of Attorney’s Fees from Surety.............................................................879 1. Recovery by Performance Bond Obligees...............................................879 2. Recovery by Miller Act Claimants...........................................................880 3. Recovery by Little Miller Act Claimants................................................880 XI. BAD FAITH CLAIMS AGAINST SURETIES..............................................................880 XII. INDEMNITY AGREEMENTS......................................................................................881 XIII. LEGAL ISSUES ARISING FROM THE UNDERWRITING PROCESS......................884 A. The Underwriting Process Generally..................................................................884 B. Surety’s Legal Obligations During the Underwriting Process.............................884 C. Legal Issues Arising from the Involvement of Bond Brokers.............................885 1. The Extent to which Brokers can Bind Sureties......................................885 2. Bond Broker Liability..............................................................................886 XIV. BANKRUPTCY CONSIDERATIONS...........................................................................887 A. The Fight for Contract Proceeds..........................................................................887 B. Preference Battles................................................................................................888 C. Automatic Stay Does Not Shield Surety from Claims.......................................888 D. Limiting the Principal’s Discharge......................................................................888 XV. FORMS..........................................................................................................................889 FORM 1: Takeover Agreement............................................................................................891 FORM 2: Performance Bond & Payment Bond with Instruction Sheet (AIA Document A312).........................................................................................895 FORM 3: Performance Bond (ConsensusDocs 260)..........................................................905 FORM 4: Payment Bond (ConsensusDocs 261).................................................................909 FORM 5: Model General Agreement of Indemnity.............................................................913 CHAPTER XIV OCCUPATIONAL SAFETY & HEALTH ACT OF NORTH CAROLINA I. II.

OVERVIEW.....................................................................................................................927 PROCEDURAL PROVISIONS OF OSHANC................................................................928 A. Organizational Structure for Administering OSHANC.......................................928 B. OSHANC Inspections..........................................................................................928

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1. Validity of OSHANC Inspections/Warrants............................................928 2. What a Contractor Should Do During an OSHANC Inspection..............929 3. Citation & Response Procedures..............................................................930 C. Appeals Process...................................................................................................930 SUBSTANTIVE PROVISIONS OF OSHANC..............................................................932 A. Statutory Duties of Employers.............................................................................932 B. Types & Classifications of Violations..................................................................933 1. De Minimus Violations............................................................................934 2. Non-Serious Violations...........................................................................934 3. Serious Violations...................................................................................934 4. Repeated Violations................................................................................934 5. Willful Violations....................................................................................935 DEFENSES & NON-DEFENSES TO OSHANC VIOLATIONS...................................935 A. Defenses..............................................................................................................935 1. Impossibility of Compliance...................................................................936 2. Standards................................................................................................936 3. Isolated Employee Misconduct...............................................................936 4. A Greater Hazard.....................................................................................936 5. Multi-Employer Work Site......................................................................936 6. Economic Infeasibility............................................................................937 7. No Hazard...............................................................................................937 8. No Exposure............................................................................................937 9. Repeated Violation Defenses..................................................................937 10. Willful Violation Defenses......................................................................938 11. Timeliness............................................................................................938 B. Non-Defenses..............................................................................................938 MULTI-EMPLOYER WORKSITE CITATIONS...........................................................938 WOODSON v. ROWLAND: CONTRACTOR LIABILITY IN TORT...............................942 A. Liability of Employer...........................................................................................943 B. Liability of the Owner/General Contractor..........................................................947 CHAPTER XV PROJECT DELIVERY SYSTEMS

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INTRODUCTION...................................................................................................953 ALTERNATIVE DELIVERY SYSTEMS......................................................................954 A. The Traditional Design-Bid-Build Method.........................................................954 1. Single-Prime Approach...........................................................................954 2. Multi-Prime Approach............................................................................956 B. Design-Build..................................................................................................957 1. Overview................................................................................................957 2. Special Licensing Considerations in North Carolina for Design-Build....961 C. Construction Management Options....................................................................963 1. “Agency” Construction Managers...........................................................964

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2. “At-Risk” Construction Managers...........................................................965 Project & Program Managers...............................................................................966 Integrated Project Delivery..................................................................................967 1. Project Cost Risk......................................................................................968 2. Project Schedule (& Damages from Late Completion Risk)....................968 3. Design & Construction Defects................................................................969 4. Third-Party Claims & Insurance...............................................................969 5. Dispute Resolution...................................................................................969 F. Public-Private Partnerships..................................................................................970 PRICING OPTIONS........................................................................................................970 A. Fixed-Price or Lump-Sum Contracts....................................................................970 B. Cost-Plus Contracts..............................................................................................971 C. Guarantee Maximum Price (GMP) Contracts.......................................................971 CONCLUSION...............................................................................................................972 D. E.

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INTRODUCTION..........................................................................................................985 SOVEREIGN IMMUNITY..............................................................................................986 DEPARTMENT OF ADMINISTRATION.......................................................................987 A. State Buildings.....................................................................................................987 1. Designer Selection...................................................................................987 2. Advertising/Bidding................................................................................988 3. Construction Methods or Delivery Systems.............................................989 a. Separate- or Multi-Prime Contracting..........................................989 b. Single-Prime Contracting.............................................................990 c. Dual Bidding................................................................................990 d. Construction Management...........................................................990 e. Design-Build...............................................................................991 f. Design-Build Bridging.................................................................992 g. Public-Private Partnership...........................................................992 h. Alternative Contracting Methods.................................................992 i. University Exception....................................................................993 4. Award....................................................................................................993 5. Withdrawal of Bid....................................................................................994 6. Execution of Contract Documents...........................................................995 7. Minority Participation & Goals................................................................995 8. Project Expediter......................................................................................996 9. Construction Administration....................................................................996 10. Contractor Review Process......................................................................999 11. Claims....................................................................................................999 12. Claim Procedures...................................................................................1000 North Carolina Bar Association Foundation Continuing Legal Education

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N.C. Gen. Stat. § 143-128(f)(1) Disputes Resolution..................1000 Administrative Remedies..........................................................1001 (1) During Construction......................................................1001 (2) Post-Construction..........................................................1001 c. De Novo Review........................................................................1002 (1) Judicial Review..............................................................1002 (2) OAH Review.................................................................1003 B. State Purchase Contracts....................................................................................1003 IV. DEPARTMENT OF TRANSPORTATION....................................................................1004 A. NCDOT Contracts.............................................................................................1004 1. Competitive Bidding.............................................................................1004 2. Submission of Bid/Bid Security............................................................1005 3. Withdrawal of Bid.................................................................................1005 4. MBE/DBE Requirements......................................................................1005 5. Construction Administration.................................................................1006 6. Claims Procedure..................................................................................1006 a. Administrative Remedies..........................................................1006 (1) During Construction......................................................1006 (2) Post-Construction..........................................................1007 b. De Novo Review........................................................................1008 (1) Judicial Review.............................................................1008 (2) OAH Review.................................................................1008 VI. CONCLUSION............................................................................................................1009 VII. FORMS & APPENDIX.................................................................................................1009 FORM 1: State Standard Form of Agreement Between Owner/Designer (SAMPLE).....1011 FORM 2: State Standard Form Construction Contract......................................................1025 FORM 3: State Standard Form Change Order...................................................................1033 FORM 4: State Standard Form CM@R Pre-Construction Services Contract....................1037 FORM 5: State Standard Form CM@R Preliminary GMP Contract.................................1039 FORM 6: State Standard Form CM@R Fixed GMP Contract..........................................1043 FORM 7: State Performance Bond Form..........................................................................1047 FORM 8: State Payment Bond Form.................................................................................1049 APPENDIX: State Standard Form General Conditions..........................................................1051 CHAPTER XVII THE NORTH CAROLINA STATE BUILDING CODE I. II. III.

OVERVIEW..................................................................................................................1101 HISTORY......................................................................................................................1101 NEW LAWS / PROPOSED LEGISLATION: SESSION LAW 2015-145, HOUSE BILL 255.......................................................................................................................1103 A. Purpose of the Bill..............................................................................................1103 B. Resulting Changes to Existing Statutes..............................................................1103

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1. Imposition of Additional Limits on Inspections......................................1103 2. Simplification of Application Process.....................................................1103 3. Clarification of “Misconduct”................................................................1104 4. Threshold Requirement Raised..............................................................1104 5. Creation of Residential Code Committee...............................................1104 AUTHORITY & STRUCTURE OF THE STATE BUILDING CODE.........................1105 A. Statutory Authorization......................................................................................1105 B. The Building Code Council................................................................................1106 C. The State Building Code as an Administrative Rule..........................................1107 D. Interpretation.....................................................................................................1108 SECTIONS OF THE CURRENT STATE BUILDING CODE.......................................1108 A. North Carolina Administrative Code & Policies.................................................1110 B. 2012 NC Building Code.....................................................................................1110 C. 2012 NC Accessibility Code – Chapter 11 of the 2012 NC Building Code........1111 D. 2012 NC Electrical Code....................................................................................1112 E. 2012 NC Energy Conservation Code..................................................................1112 F. 2012 NC Fire Code.............................................................................................1113 G. 2012 NC Fuel-Gas Code.....................................................................................1114 H. 2012 NC Mechanical Code.................................................................................1115 I. 2012 NC Plumbing Code...................................................................................1116 J. 2012 NC Residential Code.................................................................................1116 K. 2015 NC Existing Building Code & 2006 North Carolina Rehabilitation Code..1117 L. 2004 Edition of NC Regulations for Manufactured Homes................................1119 ENFORCEMENT..........................................................................................................1119 A. Jurisdiction of Building Inspectors.....................................................................1120 1. County...................................................................................................1120 2. City.........................................................................................................1122 3. State.......................................................................................................1123 B. Certificates of Compliance & Occupancy..........................................................1125 C. Department of Insurance Review of Plans..........................................................1126 D. Application of Current or Pre-Existing Requirements for Building Repairs.....1126 E. Appeals..............................................................................................................1126 1. Local Ordinances...................................................................................1126 2. Direct Appeal to NCDOI........................................................................1127 3. Appeal from NCDOI to BCC.................................................................1127 4. Appeal from Building Code Council to the Superior Court...................1128 LIABILITY....................................................................................................................1128 A. Negligence Per Se..............................................................................................1128 1. Member of Protected Class....................................................................1128 2. Proximate Cause....................................................................................1129 B. Defense of Sovereign Immunity.........................................................................1130 1. Government Function............................................................................1130 2. Insurance Coverage...............................................................................1131 C. Negligent Inspection..........................................................................................1132 North Carolina Bar Association Foundation Continuing Legal Education





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Official Capacity....................................................................................1132 Individual Capacity...............................................................................1133

INDEX......................................................................................................................................1135

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