Michigan's legislature and Supreme Court each recently acted to deliver important construction law changes in Michigan.
At the legislative level, PA 98 of 2011, the Fair and Open Competition in Government Contracting Act ("Act"), became effective July 19, 2011, with the goal of injecting a higher level of competition into the government construction project process by significantly diminishing the use of so-called project labor agreements ("PLAs"). Specifically, the Act prohibits a governmental unit from including, in either a construction contract or as a condition of awarding a grant, tax abatement or tax credit related to a construction contract, either (i) a term that requires, prohibits, encourages or discourages bidders, contractors or subcontractors from entering into or adhering to agreements with a collective bargaining organization relating to the construction project or related projects, or (ii) a term that discriminates against bidders, contractors or subcontractors based on their status as a party or nonparty to, or willingness or refusal to enter into, an agreement with a collective bargaining organization relating to the construction project or related projects. Additionally, these terms are prohibited from being included in bid specifications, project agreements or other controlling documents relating to the construction, repair, remodeling or demolition of a government-owned or leased facility.
The Act's effect is to prohibit a governmental unit from discriminating either against or in favor of nonunion or union contractors when awarding a project construction contract. Further, while Michigan's prevailing wage law is intact, nonunion contractors are expected to benefit from the legislation. The Act will act to prohibit various expensive requirements typically contained in PLAs that historically discouraged nonunion contractors from bidding on those projects, such as contributing to union benefit plans and using the union hiring hall.
In Miller-Davis Company v Ahrens Construction, Inc. (July 11, 2011, Case No. 139666), a unanimous Michigan Supreme Court overruled two Michigan Court of Appeals decisions in ruling that the statute of limitations period for bringing a breach of contract claim against a contractor, architect or engineer related to a real property improvement is governed by the breach of contract statute, MCL 600.5807(8) (and not the statute of repose, MCL 600 5839(1), which is now limited to tort actions.) The significance of this decision is that, unlike the limitations period under MCL 600.5839(1) which runs from "the time of occupancy of the completed improvement, use, or acceptance of the improvement," the limitations period under MCL 600.5807(8) runs from the date the "claim first accrued . . . ." Because the date the claim first accrues will frequently be later than the date of occupancy, use or acceptance of the completed improvement, a greater opportunity for pursuing construction breach of contract claims is anticipated as a result of the Miller-Davis ruling.