Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
3Activity
0 of .
Results for:
No results containing your search query
P. 1
Damon Key's Legal Alert, Spring/Summer 2013

Damon Key's Legal Alert, Spring/Summer 2013

Ratings: (0)|Views: 997 |Likes:
Published by robert_thomas_5
Damon Key's Legal Alert, Spring/Summer 2013
Damon Key's Legal Alert, Spring/Summer 2013

More info:

Categories:Types, Business/Law
Published by: robert_thomas_5 on Jul 12, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

05/21/2014

pdf

text

original

 
Inside thisIssue:
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
Providing clientsworldwide accessto sophisticatedlegal advice andexceptional service.
Spring / Summer 2013
T
he Supreme Court of Hawai‘i has issued a new construction licensingcase that is likely to create confusion and add cost to constructionrenovation projects. The case addresses the scope of a specialtycontractor’s renovation license, and what work the renovation contractor can lawfully perform.The potential fallout of this decision is of huge import to the industry and is of particular interestto this firm due to our understanding of the history leading up to the decision.In the fall of 1993, Ken Kupchak and I worked on a bid protest involving one of the refurbishingphases for the Honolulu Stadium. At issue in that case was whether a general contractor hadto have a specialty license to do painting and waterproofing work on a construction project, orwhether the general’s license allowed it to do specialty license work. The case generated aninquiry with the Contractors License Board, asking the Board to clearly state what exactly thescope of a general contractor’s license may be. The Board answered that for the constructionof a building, as long as the work involved more than two specialty trades or crafts, the generalcould do the whole job with its general contracting license, except for work that required aseparate permit. The Board’s interpretation was memorialized in meeting minutes which wereused by us and others in a number of different bid protests through the years.This was the law until the Okada Trucking decision came along in 2002. In that case, theSupreme Court of Hawai‘i reviewed the licensing laws and the Board's administrative rules, notingthat through its rules, the Board automatically awarded a number of specialty licenses to generalengineering and building contractors upon licensure. Unfortunately, the Board’s 1993 meetingminutes were not in front of the Supreme Court when it considered the case. The Okada TruckingCourt decided, in direct opposition to the Board’s own statements on the scope of the licensesit policed, that these automatically awarded specialty licenses must be the only work the Boardbelieved the general engineering and building contractor was capable of performing itself, andso ruled.The Okada Trucking decision changed drastically the scope of work that could be legallyself-performed by general contractors licensed in the State of Hawaii. Whereas formerly, generalcontractors could self-perform nearly all of the work covered by C-specialty licenses, suddenlythey were deemed “unqualified” to self-perform painting, masonry, or drywall work they had beenperforming for decades.
Damon Key Leong Kupchak Hastert
1003 Bishop Street
Suite 1600
Honolulu, Hawaii 96813Telephone (808) 531-8031
Facsimile (808) 533-2242
Website www.hawaiilawyer.com
New Court Decision Addsto the Costs of Construction
Estate PlanningUpdate:Tenancy by theEntirety Protectionin TrustsOwner ControlledInsurancePrograms – A Helpor HindranceThe Ho‘opiliProjectSun Yat-sen andFrancis WilliamsDamon
Continued on page 2
By Anna H. Oshiro
 
2
Damon Key Leong Kupchak Hastert
1003 Bishop Street
Suite 1600
Honolulu, Hawaii 96813Telephone (808) 531-8031
Facsimile (808) 533-2242
Website www.hawaiilawyer.com
Continued from cover 
For more information on this article, please call Annaat 531-8031 ext 601, email her at aho@hawaiilawyer.com,or scan the code with your smartphone.
Despite multiple efforts to address the decision through legislative amendments or through rule changes atthe Contractors License Board, reversal of the decision was never achieved, and the industry continues to workthrough the repercussions of the case.Fast forward to 2013, and you have most the recent decision, addressing the C-5 renovation license. Thescope of work covered by this license is written very broadly in the licensing administrative rules. The questionis whether the Okada Trucking decision dictates that in renovation, a contractor must hire specialty contractorsfor all work that is covered by a specialty license, or whether the contractor can perform any work necessary tocomplete the renovation (aside from work requiring a special permit, of course).The case originally arose out of the Department of Accounting and General Services (DAGS) a project involvingthe installation of 10,390 vinyl slats and 476 aluminum jalousie windows. The State put the job out to public bid,and awarded the contract to Allied Pacific Builders, Inc. The Appellant filed a petition for declaratory ruling withthe administrative hearings offices, arguing that a C-22 specialty glazing and tinting license was needed for thework. Allied possessed a C-5 specialty license for renovations.The hearings officer ruled against Appellant, finding that the jalousie window replacement was related to andnecessary for the completion of the renovation work and as such was incidental and supplemental to completionof the project. The administrative hearings officer found no license violation, and on appeal the Circuit Courtagreed. Appellant sought further review at the Intermediate Court of Appeals (ICA). The ICA also affirmed,finding that the hearing officer's findings were entitled to deference unless plainly erroneous, which in this casethey were not. The decision was affirmed.Appellant was not done. It sought review by the Supreme Court of Hawai‘i, which accepted Appellant’spetition for certiorari. The Court has now issued a construction licensing opinion concluding renovation contractorsare not entitled to undertake specialty work (such as painting), that is directly related to and necessary for thecompletion of the renovation project, unless the cost and scope of the specialty work is “incidental andsupplemental” in comparison to the overall cost.The Supreme Court of Hawai‘i said renovation contractors may only perform specialty work that is “incidentaland supplemental” to a renovation job, taking into account the cost and scope of the work. The Court held theincidental and supplemental exception was supposed to have been narrow and minor in scope. Yet, other thannoting that specialty work cannot lawfully constitute the majority of a renovation project, the decision providesvirtually no guidance on what is “narrow and minor,” i.e. what percentageor amount of specialty work will be deemed legally unacceptable, orwhat “work” is to be counted in making that determination.Because the question of what is “incidental and supplemental” undera C-5 license is now gray at best, it will likely be subject to continued bidprotests and litigation in the future. This will be bad news for the longoverdue renovation work needed at Hawaii's schools and other publicbuildings, which will now be subject to a new round of bid protests.Hawaii already leads the nation for cost of construction in nearly everycategory, and this decision will only add to that unfortunate statistic.This will also mean for every renovation project (homes, schools, airports,courthouses, etc.) contractors may now have to hire subcontractors toperform work they used to perform themselves, which will mean moreexpense, and will also mean less work for the industry.
 
3
Damon Key Leong Kupchak Hastert
1003 Bishop Street
Suite 1600
Honolulu, Hawaii 96813Telephone (808) 531-8031
Facsimile (808) 533-2242
Website www.hawaiilawyer.com
By Caron N. Ikeda
recently enacted (July 2012) law offers a way for married couples, civil union partnersand reciprocal beneficiaries (collectively referred to herein as “spouses”) to have thebenefit of tenancy by the entirety (“TE”) creditor protections even if they hold their realproperty in trust. This was not possible prior to the enactment of this law. TE is a formof ownership between spouses under which both spouses have an equal, undivided interestin the whole property. TE ownership is unique from other forms of joint ownership in that creditors of only onespouse may not attach and sell the interest of that spouse in TE property. For example, if husband and wifehold property as TE and husband has separate debts against him, a creditor would not be able to go after theproperty to satisfy husband’s separate debts since the property is held as TE with his wife. The only way thata creditor would be able to go after property held as TE is if the debt was against both husband and wife.
Estate Planning Update: Tenancy by theEntirety Protection in Trusts
Previously, you couldn’t have the best of bothworlds. Spouses had to choose between holdingtitle to real property as TE or transferring title tosuch real property to their trust(s). Given the choice,holding property in trust was often thought to bethe more advantageous of the two options becauseit avoids the need for a probate proceeding on thesecond spouse’s death and also avoids the need fora conservatorship proceeding upon the incapacity ofeither or both spouses. Holding property in trust alsooffers certain estate tax benefits to those spouseswith taxable estates (combined estates of over $10.5million in 2013).Thanks to this new law, spouses no longer haveto make this choice. Instead, they can now transfertheir property to their trusts while also maintainingTE protections against creditors. In order for this tohappen, the following requirements must be met:(1) Your real property must be held as TE prior tothe conveyance to your trust with the TE protections.If your property is already in a joint or separaterevocable trust without TE protections, you will needto convey it out of your trust(s) to yourselves, as TE,and then back to your trust(s) with the TE protections.(2) Your real property must be conveyed in equalshares, as tenants in common, to your respectiverevocable trusts, or wholly to your trust in the caseof a joint trust.3) Certain language must be included inthe deed transferring the property to your trust.This language must include a statement that thereal property held in trust is immune from theclaims of each spouse’s separate creditors.Property transferred to your trust with TEprotections passes according to the dispositiveprovisions in your trust, and not to the survivingowner as is usually the case with TE property.These TE protections automatically terminate upondivorce and can also be expressly waived by thetrust or by the written consent of both spouse.This new law benefits all spouses owning realproperty together in this state. Any real propertyconveyed to trust prior to July 1, 2012, will not haveTE protections. Therefore, this is an opportunityfor many of you to maximize the benefit of yourestate plans by adding TE protections to any realproperty held by your trusts.
For more information on this article, please call Caronat 531-8031 ext 608, email her at cni@hawaiilawyer.com,or scan the code with your smartphone.
 A 

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->