Representative Bell has introduced House Bill No. 1306 [Click here to view House Bill No. 1306] that would require construction claims for projects located in Mississippi be litigated or arbitrated in Mississippi. This requirement would apply regardless of whether or not the contract had a provision that required the claims to be resolved in another jurisdiction. This is an important bill for Mississippi contractors since many foreign contractors frequently include a venue provision forcing Mississippi contractors to litigate or arbitrate their claims in the foreign contractor’s home state. Without this legislation, the cost to pursue a claim against a foreign contractor could be cost prohibitive and potentially force Mississippi contractors to settle their claim for pennies on the dollar. Mississippi Contractors should keep their eye on this litigation and encourage its passage.
The Mississippi construction industry is about to undergo a radical change to its lien law in response to the Fifth Circuit’s decision in Noatex Corp. v. King Construction of Houston, LLC, 732 F.3d 479 (5th Cir. 2013). Noatex affirmed a district court’s ruling that Mississippi’s "stop payment" statute was unconstitutional because it included no due process. Construction Law Toolbox reported on this decision on October 15, 2013 [Click here to view Noatex post]. Rather than revise the "stop payment" law to cure the due process issue, legislators have decided to re-write Mississippi’s lien laws. Senate Bill No. 2622 was introduced and would extend lien rights to second tier subcontractors and suppliers who currently have no lien or "stop payment" rights in Mississippi. [Click here to view SB No. 2622] This legislation can be followed by logging into www.legislature.ms.gov/.
Biggs, Ingram & Solop, PLLC’s construction attorneys Christopher Solop and Lynn Thompson are closely monitoring the legislation. When a new lien law is passed lenders, owners, contractors, subcontractors and suppliers will need to understand the intricacies of all lien rights, including effectively filing a lien, penalties for false representation of actual and conditional payments; defending or eliminating a claim of lien, deadlines for initiating litigation or arbitration of a claim of lien, and penalties for false liens.
There are only two pieces of construction related legislation that passed during the 2012 session worthy of mention. The first piece of legislation is HB 1301. Click here to see HB 1301. This bill amends Miss. Code Ann. § 85-7-185 to add the requirement that an owner or contractor furnish a copy of a payment bond when requested by a subcontractor or supplier. The second bill is SB 2902. Click here to see SB 2902. This bill makes it a misdemeanor for a contractor to negotiate a joint check "tendered in payment for material or equipment furnished or labor performed" without the authorization of the other party. The offending contractor could also be fined up to $500.00, ordered to make full restitution and be required to pay the attorney’s fees.