Can the statute of limitations for a claim expire even before a project owner knows that it has a claim? This is a very real possibility if one is not careful in drafting contracts. Courts generally recognize that sophisticated business entities should be permitted to forfeit rights in contracts, so long as the terms do not violate public policy. Parties to a contract can limit the time period for bringing a claim or define when the limitations period begins.
Generally, lien waivers that contain fraudulent information are not enforceable. However, not all intentionally misleading statements are fraudulent. The crux of the issue is whether a lien waiver simply states that the subcontractor has been paid a specific amount or whether the subcontractor claims that the work completed is worth the amount stated in the waiver.
The Illinois Appellate Court addressed this issue briefly in Casablanca Lofts, LLC v. Blauvise (2014 Ill. App. Unpub. Lexis 1377 (1st Dist. June 26, 2014)). In arbitration, prior to litigation, the developer/owner of a condominium project, Casablanca Loft, discovered that the electrical subcontractor had submitted three lien waivers totaling $135,000 and had been paid $135,000. Id. at ¶6. Continue reading “Liens with Intentionally Incorrect Information May Still Be Enforceable”
Drafting a ‘prevailing party’ clause requires more care than one might assume. This point is highlighted by the recent 8th Circuit opinion in DocMagic, Inc. v. The Mortgage Partnership of America, L.L.C., 729 F.3d 808, 2013 U.S. App. LEXIS 18329 (8th Cir., Sept. 4, 2013). DocMagic entered into an agreement with Lenders One, whereby Lenders One would supply DocMagic with a list of its members so that DocMagic could solicit new clients for its mortgage loan preparation software. Id. at *2. The agreement contained a choice of law provision, which selected Missouri law. Missouri law  The agreement also contained a ‘prevailing party’ clause, which merely stated that “the prevailing party shall be entitled to reasonable legal fees and other costs and expenses incurred in resolving such dispute….” Id. *3.