ARTICLES

Good Faith and Fair Dealing: The Implied Duty to Meaningfully Educate the College Athlete, Co-Author Kerry Krueger

Mechanics’ Liens: The Basics, Joshua Stevens

Good Faith and Fair Dealing: The Implied Duty to Meaningfully Educate the College Athlete

Margaret E. Ciccolella, University of the Pacific; Linda A. Sharp, University of Northern Colorado; Kerry Krueger, Law Firm of Kroloff, Belcher, Smart, Perry & Christopherson, Stockton, California (Originally published Entertainment and Sports Law Journal Volume 6 Number 1.

Statements found in the NCAA Manual and made by the NCAA President emphasize the primacy of academic success for college athletes. However the reality of a 'meaningful education' is often elusive due to the multitude of competing interests. College athletes must balance academic success with the extensive time demands of athletic competition, practice, travel, conditioning, watching game film, etc. Often, this balancing act proves unsuccessful insofar as it pertains to the achievement of educational goals. To date, there has been little legal recourse available for aggrieved college athletes who wish to argue that they have been unfairly deprived of the opportunity for a meaningful education. Educational malpractice lawsuits have been unsuccessful and contractual recourse for students has been limited to cases in which specific promises have been breached by a university. The authors argue, however, that college athletes should be able to rely upon a university's good faith efforts to provide a meaningful education. If a university fails to act in good faith a cause of action based on a breach of the duty of good faith and fair dealing should be available to the college athlete.

College Sport-Contract-Good Faith and Fair Dealing

'Every contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement' (Restatement of Contracts [Second] (1981) §205). It is widely accepted that the basic legal relationship between student and university is contractual in nature (Zumbrun v. University of Southern California (1972) 25 Cal. App. 3d 1; Wickstrom v. Northern Idaho College (1986) 725 P. 2d 155 (Idaho)). The exchange of tuition for an education creates a contract between student and university as does the promise to participate in the intercollegiate athletics program in exchange for a meaningful education (Gally v. Columbia University (1998) 22 F.Supp. 2d 199 (S.D.N.Y.); Ross v. Creighton University (1992) 957 F.2d 410 (7th Cir.)

The term 'meaningful education' begs precise definition. However, one commentator described a 'meaningful education' as the 'intellectual development of students engaged in good faith in the educational process' (Widener, 1982, p. 470). While a precise definition of a 'meaningful education' may be elusive, there is no dispute as to the importance placed upon the educational process by colleges and universities. Further, the NCAA and its member institutions prioritize the importance of the educational process and academic success, and explicitly acknowledge that the academic interests of student and college athlete are indistinguishable. For example, Myles Brand, President of the NCAA, spoke to this issue recently: 'since the participants in college sports are students - individuals whose first business is acquiring an education - their academic success is of central importance.' (NCAA State of the Association Address, 2006).

The 2005-2006 NCAA Manual (§§ 2.2 and 2.4) also emphasizes educational primacy:

Intercollegiate athletics programs shall be conducted in a manner designed to protect and enhance the . . .educational welfare of student-athletes . . .Intercollegiate athletics programs shall be maintained as a vital component of the educational program and student-athletes shall be an integral part of the student body . . .The admission, academic standing and academic progress of student-athletes shall be consistent with the policies and standards adopted by the institution for the student body in general.

A representative statement by a university in its college athlete handbook concerning this issue is as follows: 'the primary purpose of a student's attendance at a collegiate institution is to acquire an education. The college athlete's goals must be the same as those of other students, with education as the primary pursuit' (Student-Athlete Handbook and Calendar, 2005-2006, p. 7).

If the primary purpose for all students is to acquire an education, then the university must carefully consider its obligation to provide a meaningful education. This is especially true for the college athlete who commonly faces the competing interests of the intercollegiate athletic and academic programs, e.g., time demands, conflicting schedules between practices/games and classes. For example, a study released at the 2007 NCAA Convention reported that almost one-third of Division I football and men's basketball players stated that athletics participation has prevented them from choosing the major they wanted. This survey raises further questions about whether college athletes are given enough opportunity to be students first (Knobler, 2007).

When a college athlete alleges that the university has failed to provide a meaningful education, legal action may result. Such a claim, as in Ross, typically complains of failures related to academic offerings or performance, e.g., the type and nature of a course, the quality of an instructor, the provision of tutors, and the quality of equipment. These suits typically allege educational malpractice and/or breach of contract (Ross; Andre v. Pace University (1996) 655 N.Y.S.2d 777 (App. Div.)). Claims in educational malpractice are essentially negligence claims alleging that an educational institution has failed to provide a quality education. The problem with such lawsuits is two-fold: (i) a claim in educational malpractice is generally not recognized as a viable cause of action by the courts; and (ii) promises made by the university to the student are often vague and therefore difficult to enforce. As a result, universities generally are not liable (Davis, 1991).

However, a recent case, in which no specific promises were alleged, has allowed a breach of contract claim (University of Southern Mississippi v. Williams (2004) 891 So.2d 160 (Miss.)). In this case the court employed the principle of good faith and fair dealing that requires the highest ethical conduct on the part of the university and may provide a broader and more effective legal strategy for aggrieved college athletes in future lawsuits against universities.

This paper will focus on the contractual duty of a university to meaningfully educate the college athlete emphasizing the duty of good faith and fair dealing. It will briefly explain why educational malpractice is not a viable cause of action for the student seeking legal recourse for alleged academic failures of the university. Thereafter, fundamentals of the contractual relationship between a student and a university will be discussed, followed by an analysis of how courts resolve these disputes both when specific promises are involved and when they are not. The Ross case will be discussed at length and an argument will be made to employ a neoclassical model of contract interpretation in college athlete/university disputes. The next section addresses the theory of good faith and fair dealing through an analysis of the Williams case and argues for the application of good faith and fair dealing in the college athlete context and is followed by concluding remarks.

Educational malpractice

Negligence cases in which a student alleges academic failures of the university are typically framed as educational malpractice. Claims in educational malpractice are essentially negligence claims alleging that an educational institution has failed to provide a quality education. However, courts are quite clear, as in Ross, that they are reluctant to interfere in the educational process when the general quality of an education is attacked. Professionals in other disciplines have been subject to malpractice actions but the courts, generally for policy reasons, have refused such claims against educators (Davis, 1991). There is no satisfactory way to establish duty or a standard of care by which to evaluate an educator because education is a collaborative and subjective process whose success is largely reliant upon the student. There is inherent uncertainty about causation - does ultimate responsibility for results lie with the educator or the student? - and damages are often uncertain. There is also a concern that recognizing claims in educational malpractice will result in a deluge of claims against schools, thus opening the 'floodgates' of litigation. Finally, courts have recognized that they are not properly equipped to oversee the day-to-day operations of a school and/or resolve disputes involving academic freedom and autonomy (Ross; Andre; Beh, 2000; Melear, 2003).

In a very few situations, claims in negligence have been viable but only on the rare occasions when there has been a constitutional and/or statutory basis for such an action. For example, in 1982 the Supreme Court of Montana held that school authorities owed a duty of reasonable care to a special education student in testing her and placing her in an appropriate special education program (B.M. v. State (1982) 649 P. 2d 425 (Mont.)). This court stated that it had no difficulty in finding a duty of care owed to special education students citing both the state constitution and relevant sections of state statutory law. The court allowed the negligence claim but remanded the case for consideration of damages. In a subsequent proceeding, plaintiff failed to meet her burden of proof regarding damages and no recovery was therefore awarded (B.M. v. State (1985) 698 P. 2d 399 (Mont.)). This case highlights the difficulty for the plaintiff in proving damages even when a claim in negligence is allowed.

It should be noted that malpractice actions sounding in contract are also typically rejected. Such claims ostensibly attack the quality of educational experiences provided to students but actually reiterate the questions concerning the reasonableness of conduct by universities in providing educational services. For example, in the Gally case, a dental student sued a dental school for breach of contract, including breach of good faith, alleging that the school failed to perform on promises in its code of conduct. Specifically, the student claimed the school failed to address her allegations of rampant cheating by other students and discriminatory treatment to her personally. The court acknowledged the contractual relationship between student and university but held that not every dispute between a student and university is amenable to a breach of contract claim. 'Where the essence of the complaint is that the school breached its agreement to provide an effective education, the complaint must be dismissed as an impermissible attempt to avoid the rule that there is no claim in New York for 'educational malpractice' (Gally v. Columbia University (1998) 22 F. Supp. 2d 199 (S.D.N.Y.), at p. 207).

The essence of a claim for educational malpractice raises questions that must be answered by reference to principles of duty, standards of care, and reasonable conduct. These issues are integral to tort law, not contract law, and are typically rejected by the courts for the policy reasons described above (CenCor, Inc. v. Tolman (1994) 868 P. 2d 396 (Colo.)).

Contract theory

Fundamentals of the Contractual Relationship

The basic legal relationship between a student and a university is contractual in nature (Zumbrun; Wickstrom). The relationship's terms are generally implied and found in documents such as enrollment agreements, student manuals, registration materials, catalogs, bulletins, circulars, and university regulations made available to the student. Implicit in the contract is the understanding that if the student complies with the terms prescribed by the university, she will obtain the degree sought (Gally; Ross; Beh, 2000).

Express contracts, denoting the obligations of both student and university, do exist but are less common (CenCor). The following enrollment agreement signed by the student provides an example:

I agree to attend all classes as scheduled, to perform all duties required by the College and abide by the rules and regulations of the College in accordance with the policies as set forth in the current College catalogue . . . I further understand that upon satisfactory completion of the above titled program (including the externship) and the fulfillment of my financial obligations to the College, I will receive the College diploma (CenCor, Inc. v. Tolman (1993) Petitioner's Opening Brief WL 13037812, at pp. 10-11).

For the college athlete, an express contract exists when documents are signed requiring the signature of university official(s) and/or the student, i.e., the letter of intent and a financial aid agreement (Cozzillio, 1989; Davis, 1991). For example, the following university mandated financial aid agreement requires the signatures of the college athlete and three university officials:

This athletics financial aid agreement is made in accordance with the provisions of the Constitution of the National Collegiate Athletic Association that pertain to the principles of amateurism, sound academic standards, and financial aid to student-athletes. Your acceptance of this award means that you agree with these principles and are bound by them (Financial Aid Agreement, 2005-2006).

There is a long line of precedent establishing that the relationship between the university and the college athlete is contractual, based on the financial aid agreements and the national letter of intent (NLI). Beginning with the seminal case, Taylor v. Wake Forest University (1972) 191 S.E.2d 379 (N.C. Ct. App. ), there is substantial authority for this proposition. In Taylor, the court had no difficulty interpreting the scholarship agreement as a contract. Thereafter courts have consistently followed this line of analysis (Begley v. Corporation of Mercer University (1973) 367 F. Supp. 908 (E.D. Tenn.); Cardamone v. University of Pittsburgh (1978) 384 A. 2d 1228 (Pa. Super. Ct.); Barile v. University of Virginia (1981) 441 N.E.2d 608 (Ohio Ct. App. ); Waters v. University of South Carolina (1984) 313 S.E.2d 346 (S.C. Ct. App. ); Hysaw v. Washburn University (1987) 690 F. Supp. 940 (D. Kan.)).

In an oft-cited article on the issue of the contractual nature of the athletic scholarship and the college national letter of intent, Cozzillio (1989) acknowledged precedent that has found the university-student relationship to be contractual, particularly when financial aid is involved. Cozzillio, however, also attempted to explicate the parameters of each party's rights and duties under the contract. At its foundation, the NLI sets forth a university's promise to provide financial aid in exchange for the college athlete's promise to attend the university and play a sport. Additionally, the college athlete must meet the express conditions in the contract. The NLI is null and void if by the opening day of classes an athlete has not met: '(a) the institution's requirements for admissions, (b) its academic requirements for financial aid to athletes, or (c) the NCAA requirements for freshman financial aid (NCAA Bylaw 14.3) or the junior college transfer requirements' (Collegiate Commissioners Association (2005) § 7b).

The university's duty under the scholarship and letter of intent is to provide a financial aid package, an opportunity to participate in athletics and 'to provide an opportunity to secure an education' (Cozzillio, 1989, p. 1367). Consistent with the university's stated duty, Cozzillio (1989, p. 1370) reiterated the concept of educational primacy as a part of the university's duties: 'First, the student-athlete's purpose in attending college is to obtain an education'. This concept that interpretation of bilateral promises found in the scholarship agreement and national letter of intent must be broad enough to include the opportunity to secure an education is a pivotal concern. It should be considered unconscionable to require college athletes to maintain good academic standing and yet fail to require the university to provide a meaningful educational opportunity for college athletes.

When Specific Promises are Involved

Breach of contract is a viable theory on which an aggrieved student may seek a remedy against a university. Specifically, the likelihood of plaintiff's success rises substantially when the suit alleges the breach of identifiable promises relevant to the terms of these agreements. Universities are more likely to incur liability when there is a breach of a specific rather than vague promise, arguably because it is easier to state a claim. Case law is replete, as exemplified by the cases discussed below, with favorable outcomes for a student-plaintiff when a university knowingly or recklessly makes specific false or misleading statements in the course of an agreement. Course catalog statements typically describe the nature and extent of academic programs and can create a reasonable expectation of what is available to the student who relies upon the catalog and decides to matriculate. When the statements are specific and either false or misleading, university liability may ensue. The following are examples of statements for which schools were liable:

1. Misrepresenting the type and quality of equipment, facilities, and/or faculty. Students have a cause of action when they allege that statements by school officials and the catalog misrepresented that students would train on 'up-to-date equipment and instruments' and work under 'qualified faculty' (CenCor, Inc. v. Tolman (1994) 868 P. 2d 396 (Colo.), at p. 399). A student received damages when a community college falsely represented in its catalog and by statements of school officials the type of equipment and training that would be available to him in welding class (Dizick v. Umpqua Community College (1979) 599 P. 2d 444 (Ore.)).

2. Misrepresenting accreditation status. The university was liable when it misrepresented in the catalog and in statements from school personnel that the respiratory therapy school was accredited. The statements were made with a reckless disregard for whether the college could perform (Lesure v. State (1990) Tenn. App. LEXIS 355.

3. Breach of a catalog promise. The court found a breach where a 'catalogue promised such things as qualified teachers, modern equipment, a low teacher to student ratio, and excellent training aids' but that the 'college actually provided one unqualified teacher in a room with seating for 42 students, all taking different level courses, with only two 10-key machines' and the 'only training aid was an unused overhead projector'. The jury found that the school knowingly made false and misleading statements (American Commercial Colleges, Inc. v. Davis (1991) 821 S.W.2d 450 (Tx. Ct. App. ), at p. 452).

When Specific Promises are not Involved

The question remains whether there can be liability when there are breached promises that lack the specificity of the above-cited examples. In Gally, the court held that merely alleging a breach without the identification of a 'specific breached promise' did not state a claim upon which relief can be granted. Likewise, in Jackson v. Drake University (1991) 778 F. Supp. 1490 (S.D. Iowa), a court rejected the claim of a college athlete who asserted that rights to an educational opportunity and to athletic participation were implied within the express contract between him and the institution. The court declined to adopt this view as it stated that 'where the language of a contract is clear and unambiguous, the language controls' (p. 1493). In the Hysaw case a few years earlier, a federal district court also rejected a breach of contract claim by a college athlete who asserted that there was an implied right to play football in the scholarship agreement that he signed. According to the court, the right to play football is not a promise made in the scholarship agreement.

Probably the most widely publicized case dealing with a college athlete's contract claims is the Ross case. In 1978, Creighton University, a private liberal arts school, provided Kevin Ross with a basketball scholarship to attend Creighton. Creighton sought this contract with Ross knowing he was not academically prepared for the rigors of its academic program. At the time of the offer, Ross' academic ability was far below the average Creighton student, i.e., Ross was from an academically disadvantaged background and Ross' ACT score, a test used to predict academic success at college, was in the bottom fifth percentile while the average student admitted to Creighton was in the upper 27th percentile. Based on Ross' academic disadvantages, Creighton offered tutoring and academic support and assured him he would be able to participate in a meaningful education. Ross accepted and played basketball for four years for Creighton. During this time, Ross maintained a D average, while completing only 96 units. Many of these units did not apply to the necessary 128 units needed to graduate. Ross alleged he took these courses upon advice from the athletic department personnel. At the end of these four years, Ross was no longer eligible to play college basketball and still had over a year's worth of academic work to complete in order to get a degree. It is important to note that while at Creighton, Ross' written coursework was read and typed by the athletic secretary. Although a Creighton student for four years, at the end of his college basketball career, Ross had the overall language skills of a fourth grader and the reading skills of a seventh grader.

In 1982, Creighton paid for Ross to attend one year of a private elementary school to acquire basic educational skills in reading and writing. Unlike his fellow elementary students, Kevin had already attended public schools for 12 years and Creighton University for four years. When Ross then tried to complete his college education at a local university, he was forced to withdraw due to lack of funds. Ross alleged he then fell into a deep depression.

In 1989 Kevin Ross filed a lawsuit alleging, among other claims, that Creighton University had breached its duty of good faith and fair dealing in his contract with the University. According to Ross, this duty imposed an obligation on Creighton to provide him with a reasonable opportunity for meaningful participation in its academic programs. Ross alleged that Creighton breached this contract when it denied him any real opportunity to participate in and benefit from the University's academic program. The basis for this claim alleged numerous University failures, e.g., the University failed to provide adequate tutoring services; the University failed to require Ross to attend tutoring services; the University failed to allow Ross to red-shirt to spend more time on his academics; and the University failed to provide funds so that Ross could complete his education.

Although Ross' claims were dismissed by the federal district court, the Seventh Circuit Court of Appeals reversed and remanded on the contract claim, specifically addressing whether the plaintiff was able to point to identifiable contractual promises that the defendant failed to honor. The court held that Ross' contract claims alleged more than simply an inadequate education; rather, the student asserted that the university knew of his deficiencies, promised him specific services to assist him academically, and breached its promise by failing to provide those services. The court used precedent to point out examples of specific promises which a court could objectively use to assess whether a breach of contract had occurred, e.g., the failure to provide a set number of instructional hours (Paladino v. Adelphi University (1982) 454 N.Y.S.2d 868 (App. Div.); the failure for a professor to give lectures and final exams and all students received a grade of 'B' (Zumbrun); the failure to provide instruction fundamental to skills necessary for a specific qualification such as journeyman (Wickstrom). The Seventh Circuit's decision would have allowed a trial court to determine 'whether the institution made a good faith effort to perform on its promise', whether Ross had 'any real access to its academic curriculum' and an adjudication on 'Mr. Ross' specific and narrow claim that he was barred from any participation in and benefit from the University's academic program without second-guessing the professional judgment of the University faculty on academic matters' (Ross v. Creighton University (1992) 957 F.2d 410 (7th Cir.), at p. 417). Creighton settled with Ross for $30,000 (Olivas, 1997). Although the first instance court mentioned the notion of good faith, it based its holding on the failure of Kevin Ross to plead specific broken contractual promises. The court did not address the context of the situation nor look for fairness in the circumstances of Ross' situation at Creighton University (Beh, 2000).

A critique of the Ross decision has been offered by Beh (2000). With regard to good faith, Beh stated that the court should have examined: whether the school provided any tutoring at all, and if so, was that program comparable to other schools; whether Ross' practice schedule left him adequate time for class, tutoring and studying; and whether the school engaged in ethical conduct toward Ross as required by the NCAA. With regard to bad faith, Beh stated that the Ross court should have examined: whether Creighton assessed Ross' academic ability during the recruiting process (or did it just focus on his athletic talents); whether Creighton knew that its program was educationally inadequate to meet Ross' needs; whether Creighton misrepresented the nature of the academic support program to Ross in written and/or oral communications; and whether Creighton followed the ethical tenets of the professional organizations to which it belonged. Beh argued that such questions 'focus on the objective reasonableness of the program in comparison to similar programs, external standards of good practice, and any evidence of bad faith and improper motives. This result is more satisfying than complete abdication of judicial oversight in that it can protect students from exploitive conduct while still according deference to academic decisions' (Beh, 2000, p. 219). Beh, therefore, proposed an analysis that looks not just at specific promises found in a document but at the larger context of the relationship between the parties.

The context of the college athlete/university relationship

Contract law has been viewed as providing a framework for the enforcement of promises (Feinman, 1990). Classical contract theory provided a vehicle to allow parties the 'freedom of contract', which meant that parties were essentially allowed to fashion their own contracts with whomever they chose and with terms that they jointly negotiated. So long as the parties did not violate public policy or the law, they were free to make contracts that reflected their own self-interests. This view of contracts emphasized notions of individual autonomy in which the courts limited their intrusion into the parties' ability to make contracts (Feinman).

However, this theory presupposes that parties are able to act in their own best interests and to operate on an even playing field. The neoclassical model of contract interpretation (modern contract) has been fashioned to recognize that courts sometimes need to intervene in contracts and not just apply the abstract and formal contract principles embodied in the classical model (Eisenberg, 1984). Thus, the neoclassical model allows courts to look at the context of a contract, not just the express language. It permits courts to look at the relational aspects of a contract to try and reconcile the inherent tension that is at the heart of many contracts; between individual autonomy in making contracts and issues of social or individual welfare. The neoclassical model focuses on flexibility and pragmatism and allows arguments based on policy analysis, empirical inquiry and practical reason. The formalistic inquiry associated with the classical model gives way to considerations of fairness and interdependence (Eisenberg).

In Melear's article (2003) dealing with the evolution of the contractual relationship between student and institution, the author states that students, who are now characterized as consumers in some contexts, 'have specific and often precise expectations of institutional performance and actively seek judicial relief through contract theory for perceived abrogations of these expectations….In its contemporary manifestation, contract theory provides students an outlet that was previously unavailable to seek redress against their colleges and universities' (Melear, 2003, p. 175). Further, although the relationship between student and university is contractual in nature, it is not always appropriate to adhere to the rigid interpretation which is a part of the classical model.

Davis (1997) made a compelling argument that courts improperly ignore the relevant context of the college athlete and university relationship in adhering to a classical model of contractual interpretation, as in the Ross case, which focused primarily on the bargain principle, i.e., what the parties have bargained for in the contract. Davis argued that courts should interpret contracts between college athletes and universities using the neoclassical model that focuses on the relational aspects between the parties. Courts, according to Davis, need to look at the relative status of the parties and the nature of the context in this situation. Courts that continue to adhere to the formalistic rules of the classical model do not fully appreciate the relative powerlessness of the college athletes. Further, the classical model does not account for the fact that college athlete contracts with their universities are not in any way negotiated. They are a take-it-or-leave-it proposition and not the business- to-business contract typified by the classical model.

Hanlon (2006) has also echoed the call for a neoclassical interpretation in the context of the college athlete contract with the university due to the disparity of bargaining power that exists between the parties. For example, in the NLI situation, the language of this agreement disproportionately favors the NCAA and its member universities. 'In fact, there is no bargaining power afforded to the prospective student-athlete' (Hanlon, 2006, p. 44). Hanlon (p. 46) therefore characterized the relationship between the university and the college athlete as an 'unconscionable contract of adhesion'. Using the neoclassical model would allow courts to address fairness of a contract by looking at outside social factors, public policy, and community values. 'Several doctrines have developed as a result of the neoclassical contract law evolution including promissory estoppel, unconscionability, condition precedent and good faith' (Hanlon, 2006, p. 60).

Riella (2002), in an article discussing the National Letter of Intent (NLI), also characterized it as an unconscionable contract based on the inherent disparity in position and bargaining power between the parties and noted the failing of a strict contractual interpretation that does not recognize implied obligations of contracts between universities and athletes. 'Such holdings fail to recognize that the documents that form the contract, and especially the NLI, are not bargained-for exchanges, but standard form agreements' (Riella, 2002, p. 2199).

Thus, the fact that some promises are not explicitly stated in the contract document should not be an impediment to arguing that some aspects of the relationship, e.g., educational primacy, should be an important component of the deal. If courts appropriately adopt the neoclassical model of interpretation in the case of the college athlete and university relationship, justice is served by adhering to the longstanding principle of 'good faith and fair dealing'.

Good Faith and Fair Dealing

Fundamentals of Good Faith and Fair Dealing

This section addresses the principle of good faith and fair dealing, analyzes a recent good faith and fair dealing case in the student-university context and argues for its application in the college athlete relationship with the university. The aggrieved student suing the university for alleged breached promises that are not explicitly stated in the contract should have recourse using a neoclassical model of contract interpretation which employs the good faith and fair dealing concept as a tool to address the context of the college athlete and university relationship and the expectations of the parties.

It is a fundamental principle of law that in every contract there is an implied covenant of good faith and fair dealing in the interpretation and enforcement of contracts, and an implied duty of cooperation on both sides (Lord, 2005; Logan v. Bennington College (1995) 72 F.3d 1017 ( 2d Cir.); Restatement (Second) Contracts, 1981). The duty of good faith requires cooperation, fairness, and decency consistent with the 'parties' agreed-upon common purposes and justified expectations' (Beh, 2000, p. 216).

The obligation of good faith and fair dealing when one has induced expectation is historically rooted in a principle that imposes high ethical conduct in the performance of a contract. In 1877, the United States Supreme Court stated that the principle of good faith is 'one of sound morals as well as sound law' (Insurance Co. v. Wolff (1877) 95 U.S. 326). Previously, in 1868, the Supreme Court had considered the 'good faith' rule to be a well-settled principle of law, i.e., the rule that one may not defeat the just expectations of those with whom they contract:

Corporations as much as individuals are bound to good faith and fair dealings, and the rule is well settled that they cannot, by their acts, representations, or silence, involve others in onerous engagements and then turn round and disavow their acts and defeat the just expectations which their own conduct has superinduced (Railroad Co. v. Howard (1868)74 U.S. 392, at p. 413).

In another judicial definition, the California Supreme Court has stated that the principle of good faith 'exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made' (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317 (Cal.), at p. 349).

The duty of good faith explicitly considers the behavior of one party to another. The Supreme Court stated that 'Courts from time immemorial have held that those who undertake to act for others are held to good faith and fair dealing and may not favor themselves at the cost of those they have assumed to represent' (Trailmobile Co. v. Whirls (1947) 331 U.S. 40). This sentiment has also been expressed at the state level: 'the covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith' (Carma Developers (Cal.) Inc. v. Marathon Development Cal. Inc. (1992) 2 Cal.4th 342 (Cal.), at p. 372).

By extension, this has direct application to the student-university relationship. One court aptly described this notion as follows: 'The judicial inquiry should be directed toward the bona fides of the decisionmaking and the fairness of its implementation: whether the institution acted in good faith and dealt fairly with its student body should be the polestar of the judicial inquiry' (Beukas v. Board of Trustees of Fairleigh Dickinson (1992) 605 A.2d 776 (N.J. Super. Ct. App. Div.), at p. 784).

Beh (2000, p. 184) contends that good faith and fair dealing, 'the work horses of contract law', hold the potential to 'police' the student-university relationship, even in cases where the promises made are vague. 'Good faith and fair dealing can provide a framework to adjudicate student claims that is not unduly intrusive in that gray area where student claims are less specific but reasonable expectations seem clear' (Beh, 2000, p. 215). Courts may look at external sources such as 'custom, community standards in the academic community, literature of higher education, and codes of ethics of professional organizations' (p. 216) to provide courts with external, objective standards in order to force accountability upon the academic institution.

Application of Good Faith and Fair dealing in the Student-University Setting

The recent case of Williams is a seminal case for the application of the good faith principle in the student relationship with the university. In Williams, the Supreme Court of Mississippi held the university breached its duty of good faith and fair dealing with a graduate student when it consciously frustrated her attempts to prepare and defend her dissertation. The court's analysis focused on the student's expectation of pursuing her academic endeavors in an unfettered environment as well as the university's obligation to conduct itself in concert with its relevant publications.

Williams began her doctoral work in the summer of 1985. Upon completion of her coursework, having received grades of A's and one B, and passing her comprehensive examination and two foreign language examinations, she was admitted to candidacy for her Ph.D. in the summer of 1990. At that time, she was also hired by the department to teach undergraduate courses. She alleged her chairperson engaged in sexual harassment and assault and after reporting this to the Dean of the College and the Chair of the department, she requested a new chairperson. Over the course of the next four years, Williams made repeated requests for advice and direction on her dissertation but received no reply. Finally, in 1994 she met with the new chairperson and made plans to finish within the year. In June of 1995 however, she received a letter from the chairperson, acknowledging his 'unconscionable lack of response' and stating that her dissertation topic was not viable (University of Southern Mississippi v. Williams (2004) 891 So.2d 160 (Miss.), at pp. 171-172). This situation effectively precluded Williams from defending a dissertation that had been approved and was followed by six years' work on the project. No option for redress was offered internally by USM.

In Williams the plaintiff filed suit arguing USM breached the contract created by its graduate catalog since USM failed to provide the educational opportunity for which she paid, by not giving her a fair hearing regarding her complaints about actions and inactions of the professors, and by not acting with good faith and fair dealing. USM countered that it did not violate any term of an alleged contract and that Williams was merely suing over a bad grade. Williams prevailed on her contract claim and was awarded $800,000 in damages.

The Supreme Court of Mississippi had previously held that 'the student-university relationship is contractual in nature and the terms of the contract may be derived from a student handbook, catalog, or other statement of university policy' (University of Mississippi Medical Center v. Hughes (2000) 765 So.2d 528 (Miss.), at p. 534). The court in Hughes also held that 'rigid importation of the contractual doctrine has been rejected' (p. 534 noting the potential danger of judicial intervention in the academic context). The court stated in Williams, however, that judicial reluctance to intervene in the academic context does not mean that academic decisions are inherently unreviewable. '[D]eference should not be construed as a license for administrators to act arbitrarily and capriciously when making decisions that affect a student's academic standing, nor to act in bad faith or deal unfairly with a student' (University of Southern Mississippi v. Williams (2004) 891 So.2d 528 (Miss.), at p. 169).

In recognizing that every contract contains an implied covenant of good faith and fair dealing in performance and enforcement, the Williams court cited a previous iteration of good faith and bad faith:

Good faith is the faithfulness of an agreed purpose between two parties, a purpose which is consistent with justified expectations of the other party. The breach of good faith is bad faith characterized by some conduct which violates standards of decency, fairness, or reasonableness (Cenac v. Murry (1992) 609 So.2d 1257 (Miss.), at p. 1272).

In affirming the jury's verdict for the plaintiff, the court found sufficient evidence to conclude that USM breached the duty of good faith and fair dealing in its relationship with Williams. The court acknowledged evidence that USM and its employees knowingly conducted themselves in ways that violated standards of decency, fairness, and reasonableness. The court noted the uncontested academic performance of Williams and found that she 'was a mature, accomplished student on the verge of full acceptance into academia', and the inactions of USM employees 'precluded, or at least severely delayed, Williams' ability to complete the final requirement of a doctorate, the presentation and defense of an acceptable dissertation' (University of Southern Mississippi v. Williams (2004) 891 So.2d 160 (Miss.), at pp. 171, 173). In so doing, USM failed to fulfill its contractual obligations to Williams. The Supreme Court of Mississippi remanded on the issue of damages. Thereafter, the University of Southern Mississippi and Williams settled the claim for an undisclosed amount (Leifer, 2006).

Good Faith and Fair Dealing with College Athletes

Ross opened the door for college athletes to find redress for university breach of contract claims based on the failure to perform specific promises. And, while Ross dealt with the college athlete, Williams opened the door wider for any student, including an aggrieved athlete under a general notion of good faith and fair dealing. Melear (2003) concludes that the relationship between student and university emphasizes reciprocity of good faith and reasonableness, and that courts caution against the rigid application of purely contractual principles. According to Melear (p. 179), the 'polestar' of judicial inquiry should be directed toward the fairness of decisions and whether institutions act in good faith and deal fairly with students.

Therefore, the neoclassical model of contract interpretation should be used by courts and the good faith and fair dealing concept must be employed in college athlete cases alleging a lack of meaningful opportunity for an education. With regard to the college athlete, Davis (1991, pp. 787-788) stated that schools often control the daily lives of athletes and, in so doing, 'a relationship of trust and dependence often develops that is not present in the relationship between lay students and universities'.

Many commentators have noted that the increasing commercialization of college sports has made it even more difficult for universities to reconcile the gap between college sports and the fundamental mission of higher education. Allen Sack (2001, p. B7), a well-known commentator on collegiate sport stated: 'longer seasons, significantly lower admission standards for athletes, and the growing power of coaches over all aspects of an athlete's life are just a few of the changes spawned by the unprecedented commercialism that has invaded athletics departments'. Numerous books have documented the basic incompatibility of big-time college athletics and educational primacy (Sack & Staurowsky, 1998; Sperber, 2000; Shulman & Bowen, 2001; Duderstadt, 2000; Zimbalist, 1999). Eitzen (2000, p. 30) has captured the essence of the matter:

Not only do typical athletes in big-time sports enter at an academic disadvantage, they often encounter a diluted educational experience while attending their schools. Coaches, under the intense pressure to win, tend to diminish the student side of their athletes by counseling them to take easy courses, choose easy majors, and enroll in courses given by faculty members friendly to the athletic department.

Despite the call for educational primacy by Myles Brand and the statements embodied in the NCAA Manual, the reality is far from the stated ideal. In fact, the current commercial structure of big-time college sports is essentially incompatible with education (Eitzen, 2000; Sack, 2001).

Therefore, the good faith and fair dealing principles found in Williams should be applicable in a college athlete context. This case evidenced the university's powerful bargaining position in dealing with the academic needs of Williams. Likewise, college athletes generally have little experience and/or expertise in understanding whether their academic course of study matches a university's academic offerings and expectations or even whether the academic experience that they are receiving is a meaningful one. Conversely, the university is in a position to reasonably predict how a student's academic ability will match the university academic programs. It should be noted that at the time the athlete is recruited, the university controls the educational experiences offered. Given this environment and based on the disparity of power in the college athlete/university context, Davis (1997) asserted courts should adopt a neoclassical model of contract interpretation, allowing the expectation interest of college athletes to be considered. Courts should not 'reject the notion of interdependence and communal interests between college athletes and their institutions' (p. 1145).

College athlete handbooks and NCAA guiding principles which expressly state that athletes are 'students first' or that the 'academic endeavors are of primary importance' provide specific support for the proposition that the athlete has been promised a meaningful academic environment. Athletic performance expectations that significantly interfere with this promise, such as practice times that do not allow an athlete to attend required courses or obtain academic tutoring should result in a finding of breach based on the good faith and fair dealing principle. The survey results reported at the 2007 NCAA Convention which showed that almost a third of Division I football players and men's basketball players stated that athletic participation prevented them from choosing the major they desired raises more questions about the issue of educational primacy in this highly commercialized environment (Knobler, 2007).

Additionally, arbitrary and capricious decisions by the university and those made in bad faith, as exemplified in both Ross and Williams, place the college athlete at great academic risk and the university at risk for breach of contract under principles of good faith and fair dealing. Specifically, academic advising to meet the needs of athletics rather than academia, failure to provide assistance with academic-related concerns, failure to allow college athletes the same educational opportunities as other students, are all indicative of a failure to put the student first or to make academics a priority as promised in college athletics.

Good faith and fair dealing with students, as expected under Williams, requires an athletic department first look to the students' academic abilities and performance and only then to examine athletic abilities. The good faith doctrine provides a mechanism by which courts can recognize the educational component of an institution's obligation to its college athletes (Davis, 1991).

Conclusion

Judicial deference to educational institutions and the courts' reluctance to consider educational malpractice has allowed past claims by students to be ignored and universities to proceed without accountability and oversight (Gally; CenCor, Inc). The Ross holding suggests that the courts are willing to consider an action in contract that alleges identifiable breaches that a court can objectively consider and avoid interfering with matters of academic substance.

Moreover, colleges should provide a critically important function in offering opportunities for college athletes to further develop their intellectual abilities. Institutional practices that result in a prioritization of athletic over academic interests and limit a student's participation in academics may represent a breach of good faith and fair dealing for which the institution may be liable as evidenced by the fact pattern in Williams.

If good faith performance of a contract deals with 'faithfulness to an agreed common purpose and consistency with the justified expectations of the other party' (University of Southern Mississippi. v. Williams (2004) 891 So.2d 160 (Miss.), at p. 170), then it is a reasonable assertion that the agreed common purpose between student and university is education. Courts should use a neoclassical model of contract interpretation and address the contextual aspects surrounding the college athlete/university relationship. Simply put, the university should be held accountable to be faithful to its primary educational purpose and the specific expectations it creates with all students, i.e., to act in a way that exemplifies good faith and fair dealing with the college athlete. This has special importance given the increasingly commercial approach by universities investing in competitive marketing to attract and induce the matriculation of prospective students and student-athletes (Beh, 2000).

Mechanics’ Liens: The Basics

All too often, an attorney is retained to help an honest and well-intentioned contractor who has not been paid for his work, only to quickly find out that the proper procedures were not followed and the contractor has forfeited his right to pursue Mechanics’ Lien remedies. While this is not the end of the world, it is a potential road to recovery that is often closed before the attorney ever gets involved. Mechanics’ Liens can be powerful tools that aid in securing payment; however, they are also creatures of strict statutory construction and thus certain deadlines and procedures must be followed or those Mechanics’ Lien rights are forever forfeited. With Mechanics’ Liens, what you don’t know can hurt you.

What follows is by no means a comprehensive guide to Mechanics’ Lien law, but instead is intended to be a basic primer to help you protect your rights, with an eye towards some proactive precautions that can be taken to protect your rights on future projects.

Article XIV, Section 3 of the California Constitution provides that -

"Mechanics, persons furnishing materials, artisans, and laborers of every class, shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor done and material furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens."

The bulk of the statutes governing Mechanics’ Liens are contained in California Civil Code sections 3109 through 3155.

So, what exactly are Mechanics’ Liens? Mechanics’ Liens are constitutional remedies, implemented by statutes, that attach to private works of improvement (i.e. the project or property upon which work was performed) that give a claimant (contractor, subcontractor, etc.) who furnished labor, services, equipment, or materials, an enforcement tool towards obtaining payment for its supplied labor, services, equipment, or materials. The claimant is given this protection because its contribution increased the value of the property, and thus the claimant should be allowed to collect payment for its services. (See Gary C. Tanko Well Drilling, Inc. v. Dodds (1981) 117 Cal.App.3d 588, at 593.)

What is a "private work of improvement?" A private work is essentially any work of improvement contracted for by any private entity. If the work of improvement is contracted for by a local, state, county, or federal governmental agency, it is a "public" work of improvement, and Mechanics’ Liens are unavailable. (See California Civil Code §§ 3100 and 3109.) In a "public" project, a contractor may have Payment Bond or Stop Notice rights; however, a description of these remedies is outside the scope of this article.

Who is allowed to record a Mechanics' Lien? According to Civil Code section 3110, the definition of who may record a Mechanics’ Lien is quite broad, and includes:

"Mechanics, materialmen, contractors, subcontractors, lessors of equipment, artisans, architects, registered engineers, licensed land surveyors, machinists, builders, teamsters and draymen, and all persons and laborers of every class performing labor upon or bestowing skill or other necessary services on, or furnishing materials or leasing equipment to be used or consumed in or furnishing appliances, teams, or power contributing to a work of improvement . . . whether done or furnished at the instance of the owner or of any person acting by his authority or under him as contractor or otherwise."

Essentially, any person (or business entity) who at the request of the owner of the property (or the owner’s agent), furnished labor, material, leased equipment, or furnished special skills and/or services to a project for constructing a work of improvement on real property is entitled to record a Mechanics’ Lien, subject to specifically enumerated statutory and/or case law exceptions.

Further, although not specifically enumerated under Civil Code section 3110, the following classes of persons have also been allowed to record Mechanics’ Liens: carpenters (See Ogram v. Welchoff (1919) 40 Cal.App. 298), house movers (See Palmer v. Lavigne (1894) 104 Cal. 30), those who provide laborers (such as businesses who provide a pool of laborers to perform work or services upon a project) (See Contractors Labor Pool Inc. v. Westway Contractors, Inc. (1997) 53 Cal.App.4th 152), and transporters of materials (under certain limited circumstances). (See Consolidated Lbr. Co. v. Bosworth, Inc. (1919) 40 Cal.App.80; Contractors Dump Truck Serv. v. Gregg Constr. Co. (1965) 237 Cal.App.2d 1; Ivy Trucking Inc. v. Creston Brandon Corp. (2000) 84 Cal.App. 4^th 85.)

Thus, if someone physically worked on a property or provided something to be used on a property, he or she may be able to record a Mechanics’ Lien. However, in the case of material suppliers, the materials, parts, etc. must have actually been used on the project, even if specially constructed for the project, or else the supplier has no right to a Mechanics’ Lien. This holds true even if those materials, parts, etc. are not usable for any other project. (See California Portland Cement Co. v. Wentworth Hotel Co. (1911) 16 Cal.App.692; George F. Kennedy, Inc. v. Miles & Sons Constr. Div. (1970) 5 Cal.App.3d 516.)

Where are Mechanics’ Liens Recorded? A Mechanics’ Lien must be recorded with the County Recorder’s Office in the county where the property upon which the work of improvement was performed, is located.

II. Preserving the Mechanics’ Lien Before it is Recorded

What is a Preliminary Notice? In most cases, before a contractor may record a Mechanics’ Lien, they must serve a preliminary twenty (20) day notice (also known as a "prelien notice"). (See California Civil Code § 3114.) A preliminary notice must be in writing, and must contain at a minimum:

(1) Heading: the statement "Notice to Property Owner" as required by Civil Code section 3097(c)(5), set forth in boldface type. (Most pre-printed preliminary notices contain such a statement at the top of the form.)

(2) Description of Who the Work is For: the name and address of the party to whom the labor, services, equipment, or materials will be furnished.

(3) Description of Who Will Do the Work: the name and address of the person or entity furnishing the labor, services, equipment, or materials.

(4) Description of the Work: a substantially accurate general description of the labor, services, equipment, or materials to be furnished along with a total price estimate, or total contract price.

(5) Location: a description of the jobsite sufficient to identify where the work of improvement is to be performed, street address, block numbers and street names or even tract information is sufficient, if the property is identifiable.

(See California Civil Code § 3097.)

The task of identifying the jobsite can present a problem in instances where new construction is being performed on developments that do not yet have a street address. Nevertheless, the claimant serving the preliminary notice has a duty to identify the jobsite to the best of its ability, sufficient that the person or entity receiving the preliminary notice can identify the property listed and distinguish it from other jobsites. (See California Civil Code § 3097(c)(4).

When must a preliminary notice be served? When a contractor provides services directly to a private landowner, the contractor has no obligation to serve the owner with a preliminary notice, but the contractor must still serve any lender. (See Civil Code § 3097(a).) However, if a contractor provides services to a general contractor, who is in turn providing services to a private landowner, the contractor must serve a preliminary notice within twenty (20) days of the time he or she first provides services on the project. (Not within twenty days of when the contract was signed, but within twenty days of when the subcontractor started its actual work.) (See California Civil Code § 3097(b) and (d).) A preliminary notice does not cover work performed before the beginning of the 20-day period. (See Romak Iron Works v. Prudential Ins. Co. (1980) 104 Cal.App.3d 767.)

The purpose of the preliminary notice is to put the owner on notice that there is a contractor or material supplier who does not have a direct contract with the owner, and if this subcontractor is not paid, he may file a lien. It does not mean that the subcontractor is due any money, only that if, at some later date the subcontractor is not paid, he may record a lien. Thus, to be safe, if there is any degree of separation between the contractor and the landowner, a preliminary notice should be served within twenty (20) days of beginning work.

The issue of whether a preliminary notice is required can be complicated where the same entity or a closely related entity is both the general contractor and the owner of a particular property. In such cases, the owner/general contractor may set up one entity to own the land and one to act as the general contractor. This type of structure may make it difficult for the subcontractor to determine whether it is in direct contract with the owner or not. Whether a preliminary notice is required in such instances is uncertain and fact dependant; thus, it is best to serve a preliminary notice if there is any uncertainty.

If a preliminary notice is not served timely a subcontractor may still be able to establish that the owner had actual notice of the subcontractor’s work in its capacity as the general contractor and thus record its lien.

Who must be served with a preliminary notice? A preliminary notice must be served on the owner of the property (or the reputed owner), the "original" contractor, and any lender. (See California Civil Code § 3097(a).) If service of a preliminary notice is not properly sent when required, and a subcontractor records a Mechanics’ Lien, the subcontractor may be subject to disciplinary action by the Contractor’s State Licensing Board. (See Business and Professions Code §§7000-7191.)

How must a preliminary notice be served? A preliminary notice must be served either personally, or by registered or certified mail. (See California Civil Code § 3097(f).) It is wise to request return receipt if the notice is served by mail to later establish proper service.

Once the preliminary notice has been served, then what? If a contractor is not timely paid, the contractor must record a Mechanics’ Lien within ninety (90) days of either completing or ceasing work on the project. (See California Civil Code § 3116.) However, if the owner of the property records either a notice of completion or a notice of cessation, the contractor has only thirty (30) days from the time the notice is recorded to record its Mechanics’ Lien. (See California Civil Code § 3116.)

What information must a Mechanics’ Lien contain? According to California Civil Code § 3084, a Mechanics’ Lien must include:

(1) Amount Owed: the claimant’s demand after deducting all credits and offsets.

(2) Owner: the name of the owner or reputed owner of the property.

(3) Description of the Work Performed: a general description of the labor, services, equipment, or material furnished by the claimant.

(4) Description of Who the Work was Performed For: the name of the person or entity who employed the claimant or to whom the claimant furnished labor, services, equipment, or material.

(5) Location: a description of the project site sufficient to appropriately identify it.

(6) Signature: the claimant’s signature and verification that the claims made in the Mechanics’ Lien are true and accurate.

III. Enforcing the Mechanics’ Lien

If a contractor remains unpaid, after a Mechanics’ Lien is recorded, the contractor must bring a suit to foreclose on its Mechanics’ Lien within ninety (90) days from the date the Mechanics’ Lien was recorded, or the Mechanics’ Lien is forfeited. (See California Civil Code § 3144.)

Is there any way to extend this period? The ninety (90) day period for filing an action to foreclose on a Mechanics’ Lien may be extended through mutual agreement between the contractor who recorded its Mechanics’ Lien and the owner. The agreement must be in writing and recorded in the County Recorder’s Office before the ninety (90) day time limit runs. Such an extension may not last longer than one year from the time the contractor’s work on the project was completed. (See California Civil Code § 3144.)

Further, if the real property against which a Mechanics’ Lien has been recorded falls under the jurisdiction of a bankruptcy action, the ninety (90) day period in which an action must be brought to foreclose on a Mechanics’ Lien is tolled until the bankruptcy action’s automatic stay is terminated. (See 11 USC § 362; Sawyer Nurseries v. Galardi (1986) 181 Cal.App.3d 663.)

After payment, what should a contractor do? If the contractor has been paid, the contractor should promptly record a Release of Mechanics’ Lien with the County Recorder’s Office. It is important to note that while the original Mechanics’ Lien does not require a Notary Acknowledgment a recorded Release of Mechanics lien must be notarized.

IV. Possible Future Changes in the Law

Currently, California Mechanics’ Lien law does not require the recording of a Notice of Action or Lis Pendens against a property to foreclose on a Mechanics’ Lien. (See California Civil Code §3146.) California Senate Bill 1691, introduced by Senator Lowenthal during the 2008 session, sought to change the law to require a claimant who moves to enforce a Mechanics’ Lien claim to record a Lis Pendens disclosing the nature of the enforcement action within 110 days of recording the Mechanics’ Lien, or else the lien would be forfeited. A Lis Pendens would impart constructive notice upon all other parties of the contractor’s action to enforce his Mechanics’ Lien. Senate Bill 1691 also sought to move the statutory sections of the California Civil Code governing Mechanics’ Liens to a newly created code section, section 8000 through 8848.

Senate Bill 1691 was vetoed by Governor Schwarzenegger on September 28, 2008, with the stated reason being the California Legislature’s failure to pass the state budget in a timely manner. Nevertheless, Senate Bill 1691 could be renewed at a future date, and would add an additional procedural hurdle to the enforcement of Mechanics’ Liens.

Obviously, there are many potential pitfalls involved in protecting a client’s Mechanics’ Lien rights, and many of the same problems regularly plague contractors. The following "Commandments" are intended to give the attorney an idea of certain proactive measures to discuss with a client to better protect the client’s rights on future projects and give the client or potential client some insight into the process from the attorney's prospective.

1) Thou Shalt Always Serve A Preliminary Notice. Tell the client to get these out early and often. A lot of contractors do not send out a preliminary notice until a problem arises, and by then it is usually far too late for a preliminary notice to be effective. Preliminary notices do not hurt anyone’s feelings, they are not offensive, and they should become a regular part of any contractor’s business that go out like clockwork once work has begun on a project. Does the client have any questions about whether a preliminary notice needs to be served? Have them serve one anyway because it cannot hurt. If the client needs help with serving documents and staying on top of deadlines, consider putting the client in touch with any number of reputable construction services that assist with preliminary notices and Mechanics’ Liens.

2) Thou Shalt Not Wait Until The Last Day To File, Serve, Or Record Anything. Attorneys usually do not like to work on a rush basis. Inform your client that if you are forced to file something at the last minute, it will often cost the client considerably more money. Additionally, the client runs the risk that due to delay, something may not get filed on time and they will simply be out of luck. Waiting until the last day to serve an important notice is almost a surefire way to guarantee that problems will arise, and service will not be timely. Failing to record something in a timely manner means that all of the other contractors who did not wait to record their liens stand at the front of the line when it comes to collecting money, while your client waits at the back of the line and hopes there is still some money left when it is their turn. Sometimes filing, serving, or recording something at the last minute is truly unavoidable, but these times are few and far between. If at all possible, do not wait.

3) If Thou Hath Waited Until The Last Day, File, Serve, or Record in Person. If, for whatever reason, the client is filing, serving, or recording something anywhere near the last day to do so - THEY SHOULD DO IT IN PERSON. The client should not mail their lien to the Recorder’s Office on the second to last day and hope everything gets taken care of appropriately. The Recorder’s Office periodically changes their rates for recording documents. If your client mails a lien to be recorded, they run the risk that they have included the incorrect amount of money, or that the Recording Clerk will not get to the lien for several days. In both instances, the lien will be late. Instead, the client should show up to the Recorder’s Office in person, early, and allow themselves plenty of time to pay all necessary fees and make sure that their lien has the correct date on it. Things get lost or held up in the mail all the time, so they should not believe that just because they dropped it in the mail everything will be ok.

4) Thou Shalt Provide Your Attorney With All Available Information. Instruct your client that before they see you, they should gather up everything they have on the project and should try to assemble their materials in some degree of order. Attorneys need everything; even if the client does not think it is important, it might be. Dates of completion, cessation, filing dates, recording dates, service dates, the first and last days the client performed work on the project, invoices for all amounts owed on the project(s) in question, etc. Tell them to bring everything. Finally, tell them to be available when you call with questions. All of this will save the client considerable money in the long run.

5) Thou Shalt Develop A Separate, Organized Binder For Each Project. Really, for each an every one. It does not matter how big or small the project is. It does not matter if the client is just doing a little work for their cousin’s brother’s best friend from high school who they have known for 30 years. Organize everything in a separate binder. What should go in the binder? Everything about that particular project (See Commandment #4, above). This becomes especially important if the client has several different projects with the same company, person, or entity. The client should ideally organize the binder by project, development, or unit, clearly label them, and make sure each binder has all of the necessary information. Let the client know that the better organized they are, the more money they will save if the matter is referred to an attorney, because the attorney will spend less time trying to piece together all of the relevant information.

6) Thou Shalt Treat Every Project As If It Will One Day End Up In Litigation. Obviously, a client should not threaten everyone they work with that "my attorney can beat up your attorney." But, if a client has this litigation mindset from the beginning, they are far more likely to send out preliminary notice notices on time, record and file documents in a timely manner, and better organize their documents from the start.

7) Thou Shalt Explain Everything About The Project To Your Attorney As If Your Attorney Has Never Seen A Building Before In His Life. When explaining the matter to you (or any attorney), a client should not assume anything. The client was at the project site, the attorney was not. The client saw each phase of construction as it was being performed, talked with other contractors, etc. The attorney did not. In many construction cases, the attorney might never actually see the project site in person or in pictures because the matter is resolved before such a viewing becomes necessary. So have the client lay it all out for you. Have them draw a map of the project. Have the client detail exactly which units they worked on, and which ones they did not. This ensures that when their claim is filed, or a demand letter is sent on their behalf, that everything they are entitled to is included.

8) Thou Shalt Not Be Filled With Righteous Anger. Don’t get mad, get legal. Counsel the client that it does not benefit them to get angry and storm off the job, or try to "get even" with someone. The client should never give another party ammunition to use against them. The absolute best thing a client can do is to finish their work (if possible) and do the best job they can so that an opposing party cannot later complain about their work. Then the client can move to collect. Let the client know you understand they are frustrated, but they need to realize that attorneys do not have magic wands they can waive to immediately collect payment for their clients. Enforcing legal rights takes time. The client should finish their work, be proud of it, provide their attorney with everything he or she needs, and treat this project as a business matter, not a blood debt. Getting angry and taking a razed-earth approach to litigation only costs the client more money, and is rarely if ever satisfying to anyone.

9) Thou Shalt Stay Informed and Regularly Contact the Recorder’s Office. Just as the client should not get mad, they should not bury their head in the sand and hope it all blows over either. The client will need to be available to collect notices of completion or cessation. The client should stay in contact with other contractors on job. The client will often be able to find out if the other contractors got paid, and if not, why not? The client should stay in contact with the general contractor, or owner, or even the lender, and should keep their finger on the pulse of what is going on with the project. With their connections, the client is often the best source of information for the attorney. Also, the client should make a habit of calling the Recorder’s Office regularly to inquire about projects they have not been paid on, to see if anything important has been recorded recently. The client should make sure their contact information is current, and that the Recorder’s Office, lender, general contractor, and owner all have their correct address on their service list for the project.

10) Thou Shalt Not Feel Too Badly If A Deadline Hast Been Blown. Guess what? There is more than one way to skin a cat. If the client did not serve a preliminary notice, did not record a Mechanics’ Lien, or blew some other important deadline, all is not necessarily lost. Depending upon the nature of their claims, you may still likely be able to file a lawsuit on the client’s behalf to collect the amount owed, under a breach of contract type claim or something similar. As ever, let the client know that it is almost always best for them to come and see you sooner, rather than later.

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