Construction Reporter News

by Dena Wurman 

Dena Wurman - Attorney

This column usually focuses on legal topics in the construction industry.  A recent Urban Land Institute presentation in Albuquerque offered insight into the future. Specifically, where new construction employment is predicted to occur, in the coming years. Who could resist? Let’s take a little detour and glimpse briefly in to this area and return to legal topics in our next column.

Generally, expert predictions for construction employment in New Mexico are not particularly optimistic.  At the Urban Land Institute* February 29th event entitled, “What’s Next? New Mexico Jobs,” Dr. Reynis of the University of New Mexico’s Bureau of Business and Economic Research suggested construction losses are holding New Mexico back from economic recovery while “the rest of the country enjoys a…boom.”  The Albuquerque presentation emphasized how losses in the construction industry have exceeded all other industry losses in New Mexico.

According to Dr. Reynis construction ranks near the bottom in terms of job losses and growth.  A reversal is projected for 2012, but to levels of decades past.

According to her projections, growing construction-related employment will be in renewable energy and energy transmission, based on a recent finding of the Western Governor’s Association.  The association identified 27 gigawatts of renewable generating capacity (solar, wind, geothermal and biomass) in New Mexico, the largest capacity among the included states and western Canada.

*ULI, the Urban Land Institute, is a nonprofit research and education organization supported by its members. Founded in 1936, ULI engages in dialogue, debate, and analysis of market trends and future challenges facing urban markets locally and globally. The Institute now has members in 95 countries worldwide, representing the entire spectrum of land use and real estate development disciplines working in private enterprise and public service.

Public construction projects in New Mexico were among the country’s first to utilize progressive energy conservation guidelines, such as the LEED rating system. As part of a broad pro-business agenda, Gov. Susana Martinez (R) replaced these codes with a less-stringent code established in 2003 that many other states and municipalities have adopted.

This code reversal is the subject of recent litigation in New Mexico.  In January 2012, a group of environmental advocates, including the Sierra Club, filed a brief with the New Mexico State Court of Appeals challenging the method which the “replacement codes” where recently adopted by the New Mexico Construction Industries Commission.  Here is their argument. 

The environmental groups allege members of the Commission came to conclusions on how to vote on the replacement codes prior to their meeting, not at the meeting, in violation of the New Mexico Open Meetings Act. The Open Meeting Act is known as a “sunshine law.”  Such laws are motivated by the belief that the democratic ideal is best served by a well-informed public.

 In their brief, those challenging the Commission findings state “The Act provides that decisions of state agencies that are not made in open meetings are invalid.”  According to the Open Meetings Act 2008 Compliance Guide, this subsection of the statute seems to arrive at a different conclusion. 

 The guidance instructs us that the Act establishes “a presumption that actions taken by public bodies have been taken at meetings that conform to the requirements of the Act. Where this is shown not to be the case, the actions of a public body may be held invalid.”  

 The language in the Attorney General guidance implies a presumption of conformance when an action is taken by the Commission.  The Attorney General adds, it is “always possible that a court faced with the same issues would disagree…”   

 What is your opinion on the Commission’s actions and the “replacement codes”?  What about the environmental challenge? 

Dena Wurman - Attorney

The highest state court in New Mexico recently rendered an interesting opinion in a dispute over an unwritten agreement for the construction of a home. (Mileta v. Jeffryes) At trial, the court listened to both the contractor testimony and Mr. and Ms. Mileta to determine the terms of their agreement.

The Miletas testified that their contractor (Jeffryes) told them in 2004 he would build their house in Raton, New Mexico for $282,000. Jeffryes testified that he entered into a cost plus ten percent contract. He also testified that he did not always submit the costs or invoices to the Miletas, did not add the ten percent on the invoices he did submit and never explained how the costs would be determined with respect to labor.

Even with no written agreement, the testimony of each party has equal weight in court. It was undisputed that the total amount paid to Jeffryes was $294,278. In this case, Jeffryes was paid $294,278 which exceeded the oral contract for $282,000.

Based on the evidence presented, the court concluded that the testimony of the Miletas raised “a sufficient question of fact” as to their understanding of the agreement with Jeffryes. A judge or jury will decide what happens next.

The contractor said he usually used written contracts for such construction projects. He did not use one here, in part because he had had negative experiences with contracts in the past. The lesson is that with no written agreement, a court may decide, particularly when a professional contractor with 32 years of experience goes up against an inexperienced client.