Construction law

8/30/2011 12:34:00 PM

Subcontractors do not have privity of K with owners. So they cannot sue the owner upon non-payment. Owner has a separate relationship with architect/engineer. So, GC is not in privity with architecture. GC has a job to do high quality, safety and meet expectations. Sub-K have the same goals. There is an employed covenant of good faith and fair dealing in every contract. Conforti: The issue was with professional negligence. Here, GC can go after design professionals even though there is no privity on a tort claim theory because had no other means for recouping losses. However, for claims on a theory of contract, privity is needed. Kravco: this will be important for exam and how it should grant summary J. GC terminates a subK because they believe subk is in breach. Now, subK had a sub-subK do work, whose work had nothing to do with the termination. Sub-subK sued everyone. But the court held they could only sue SubK because there was no privity w/ the rest. also tried to bring claims for quantum meruit. But the court said that this was a quasi-K and since there was no privity, there is no quantum meruit here either. A construction lean against the owner within the K would have given sub-subK something to fall back on. Where the owner gives some sort of assurance that they will get paid, it as is if there is another contract between the two, and in that case a subK could sue the owner. It is not advisable for the owner to issue a check directly to the subK because this almost generates a new K. Multi prime contracts means that there are a lot of GCs. Broadway maintenance:

 Here there was a multi prime contract. The owner chose one of the GCs and made them the penultimate GC. There was in every K that each GC should deal with the penultimate GC. The court ruled that this provision worked, and despite the lack of privity between the GCs and the penultimate GC, they still had to go through him, and the owner is off the hook. However, the owner could still sue the other GCs for delay and what not. Project delivery systems Oneo design o bid o build twoo a multi-prime system-where the owner directly deals with several contractors, is a different delivery system. Benefits to this: Less expensive Down side Owner has more risk especially since he is not a professional as a contractor would. o Two types of Construction Managers: CM as an agent Gives advice to owner, lends some expertise, helps with general stuff, and coordinating/supervising. But the ultimate risk still lies with the owner. CM at risk He will himself contract with the other contractors. Here he takes all responsibility and risk. This is different than a regular general manager item because the CM comes in later after some things have already begun by the owner. But there is no real legal difference. They also get paid under a different structure with a flat fee on design and then a percentage on construction.

The cost risk allocation traditional method-lump sum/fixed price contract-risk on ktor o lump sum price after the design is in place o The owner has no right to see the prices the ktor is paying the subs. Cost plus-here the risk is on the owner o Owner will pay a set fee for costs plus a percentage for profit. o guaranteed maximum price (GMP) - with cost plus arrangement where cost cant go beyond a certain price. Cost savings-this is some sort of bonus incentive for the Ktor not to go directly to the GMP. This can consist of splitting the leftover Unit pricing- where actual units are established to make set prices. Like $10 a foot. Change order- work outside the scope of the k. ex. Where you have lump some price, but there is some extra effort required. It becomes part of the original k even though it is not included in that price. The disputes in this is whether its within the scope or not. Bidding goes to lowest ultimate cost not just price. Private K v. public K In public you have bidding statutes and you have to chose the lowest ultimate cost. In private you can do whatever you want. A bid is an offer to provide work for a set price. An invitation for proposal (IFP), is something which invites someone to make a bid. Once bids are made, even the public can reject all the bids. Quantity take offs is the amount of what they need, their costs, labor costs The k must be given to the lowest responsible bidder. Meadowbrook v. consolidated Consent of surety is when they say a bond will be issued as long as you have a contractor with a low bid. Holding-material defects in a bid cannot be waived even if a municipality wants too. Further, the lack of a consent of surety makes a bid incomplete.

 The question will arise whether or not something missing should be considered a material defect. In a public dispute, these rules are made to protect the public. 40:11-23.2: these items are material in contract w/o which these bids should not be considered: o guarantee to accompany the bid o certificate from a surety company o statement of corporate ownership o listing of subcontractors when a bid is missing these elements it goes to the next lower bid. Oshea Ktors were competing for k from a school but they didn't post a list of their subcontractors. The court said that this was material and you cant leave it out. Further the court said you cannot substitute sub-ktors because this is trying to prevent bid shopping by protecting sub-contractors from giving one price and having the ktor then go and find a cheaper one to make more profit. This means that once you put the bid in listing the subKs than you cant later switch. Adding the required stuff doesnt help once it wasn't sent with the bid. After the K is signed, the ktor can fire the sub, if he is a bad ktor. (this probably has some requirement for proof to show that he is not just bid shopping afterwards??) Must be lowest responsive responsible bidder Responsive v. responsible? A surety company is not going to issue a surety bond if the company they are assuming liability for is not responsive, so the Gov. isnt that concerned w/ responsive once a company has a bond. A Responsible bidder must have the complete capacity to finish the k. This is a subjective approach. Not sure of the difference?

 In this determination, the standard of review is abuse of discretion Mistakes Unilateral mistakes are not excusable except in: o Cases that it is unconscionable Surety bond means that if ktor doesn't work, they will step in and complete the jobs Bid bond- (typically 10%) a security that ktor will complete the work or lose this security to compensate for damages if ktor fails to perform. If more $ is needed for damage than the security company is not responsible for this extra amount. I think this is the difference between the two. But I am not sure. Make sure. Construction contracts Purpose of K is to create fair and realistic expectations If it's a commercial, arms length transaction, there is no requirement that there be a k. Each construction k, should have a method for when problems come up. The purpose of the deal is what the courts look at. The terms are viewed and translated within the meaning of the industry Further, the court will only support reasonable terms, and if they are missing such terms the court will supply them Also, all ks take the public good into consideration. The five parts to a construction k you should look for: The owner-general contractor agreement is always accompanied by general conditions which are in the AIA. Sometimes there are special conditions which are also implemented into the k. plans and drawings is also part of the agreement. Specifications- very detailed text describing requirements for the work. Addenda-change orders which are pre-bid o Change orders themselves at whatever point become part of the k. Important issue, check identity of parties of k and their viability Basic terms of k: Some ks will have an order of preference for when there are disagreements in those k. (the AIA does not have a preference provision,

but actually puts such responsibility on the contractor to notice disagreements in the k). Scope of work-describes the entire scope of the K. the general contractor is responsible for the scope of the work The date of the k is important because they usually have time limits so its important to know what the time limits are. o Some times change orders are used for additional time. o This may help in proving a material breech of a contract. Term for concealed or unforeseen sight conditions which you can get increased time for or money for under a change order. o Some ks just put out a lump sum and its too bad. This makes k cost more Milestones- usually these are incorporated into the k. they specify the items which must be met by a certain time. o You cant sue until the breach occurs. Substantial completion-when they use the premises o If someone can actually use the property there is less reasons to allow the other party to sue. o The time limit stops when this is met Final completion-all the money is paid. No damage for delay-no compensation for extended duration of a project is allowed. GCs will put this in sometimes for damages which is not their fault. o Not enforceable if there was some tortuous conduct by the GC or some action like this Requisition process o Getting paid-usually occurs monthly o partial waiver of lean-agreement to waive lean rights for the portion of work being paid. Meaning no contractor can use the job as a lean. o Percentage of the amount owed being held. So if GC owes 100k he will hold 10%, and a reduction of retainage percentage occurs as the completion date comes closer. Is this only retained by the GC in paying the SubK or also the owner to the GC?? Retainage is limited by statute for public work

o the architect is the one able to tell whether 10% has been completed, so he has to check and confirm for the owner that he can pay out 10%. This is a k responsibility to the architect. This opens up the architecture to exposure. o termination provision- typically discuss terms by which terms termination takes place, as well as types of termination. Some of this is allowed for convenience w/o cause. If owner terminates w/o cause, the contractor is entitled to costs plus lost profits. Termination for cause- failing to pay subK, where ktor doesn't pass inspection repeatedly, is otherwise guilty of substantial breach of other docs. Before owner can allege breach of k, it needs to give ktor notice o damage for delay o Insurance provision o Bonding o Safety o Dispute resolution- you may be locked in w/ arbitration, so be careful. If you miss your completion date, the owner, as long as he can prove it was the contractor who caused the delay, can seek damages. This will require a loss. Liquidated damages-where you can identify a fixed amount which is a reasonable forecast of those damages that might be difficult to asses accurately. These can be placed in the k from the beginning. Penalties are unenforceable. Bonus can be set to have a project done sooner. If contractor is delayed by the owner, which prevents him from doing another job he can seek some damages as well. Consequential damages are typically waived in construction ks. what are consequential damages?

NJ statute prohibits more than a 2% retainer. What does this mean? Is this going back on that 10% retainer of money that GC owes subK? 18a:18-41- Liquidated damages may be considered punitive when there is negligence, active interference, tortous conduct. Look at this-I don't get it. Waiver of construction lean rights are unenforceable. Only when it is only a partial waiver is it allowed. What is an example of a partial waiver? dff Arbitration agreements are preferred for construction claims so you don't have to educate the judge. Why would a ktor want to go to court and not arbitration- because he can bring in all the subKs and bring claims against them too. Wherein arbitration, they can only do it w/ two parties. Owner may want to go to court because he can bring in architect or another party (not subK because no privity) Sub K: Provisions: o The GC wants all obligations it has to the owner flow down to the subs. o Incorporation by reference is used by GCs to do this if not included in the subks k itself. Incorporation requires a specific reference for each provision. o Scope of work- will say all the electric() of this original k will be your responsibility. o They usually sign onto a schedule as opposed to a time frame. o Damage for delay is also important. Progress payments works the same way as in a general contract. Subs ask GC for money who asks the owner. Pay when paid clause- GC pays subK can pay this way. Which will help put timing of payment on some sort of schedule. o Sealtight distinguishes pay-if-paid from pay when paid.

o o o o o o o o o

Court says GC must pay the sub no matter what even if not paid by the owner. There is a reasonable amount of late time accorded the GC. Policy-it was the GC who made the deal and trusted the owner, so its not his prob. Pay if paid can be enforceable if: subk agrees to this, and subk is relying on credit of the owner. And the J allows it. Duty of performance Safety Warranty Change order provision Dispute resolution- mediation can also be used. Mediation clause helps the client not look weak

Contracts between homeowners and contractors Residential ks are treated different than commercial to protect consumer and public. Contractors don't need to be licensed. But if they are dealing with residential ks they do need a license. New home warranty act- Homeowner warranty ,provided by builder at closing of title of new home, allows homeowner to claim anything within the first year, and some things for 2 years, and a structural warranty for 10 years. These warranties are transferrable. If a homeowner elects arbitration they cant go to court afterwards. Contractors registration act- requires home improvement ktor to be registered. If they don't register, they have committed consumer fraud If you can make an argument that ktor has not complied w/ this, there is a huge bargaining chip. not having a written k w/ signature is fraud. Must have right to cancel w/in 3 business days Copy of insurance is needed

 Registration must be on the k, maybe even on the truck. Consumer fraud act-to give relief from unlawful conduct, and deter fraud. Allows for treble damages, and attorney damages To prove fraud you need: o Unlawful practice o Ascertainable loss o Connection between loss and practice Zar v. heath Whether homeowner has claim against contractor for a new home. The GC didn't get out of not having a license despite the fact that it was a new home construction, and the court held it still falls under the contractor registration act. Artistic Lawn The worker was unlicensed. This invokes a problem under the consumer fraud act. Damages: it didn't award treble damages b/c there were no real damages. (no ascertainable loss). Some cases feel that there is equitable estoppel, preventing instances where there is only a verbal agreement, which will stop homeowners unfairly suing. Green Building NJ stat 52:32 All state buildings must be built to a high performance green building standard in a manner that at least: o A silver rating according to leed NJ Stat 52:27 There should be a green building manual to help builders. No such manual has yet been made. Gifford v. us green building council Alleging fraudulent activity with regards to what is green building exactly. Court dismissed this.

Gidumal v. site development: Sued for not being as green as advertised. Class 6: Construction contract disputes Contractual termination: ARA has two ways to terminate: o For cause o For convenience (AIA 14.4.3) Contractor shall receive money owed, costs in determination and demobilization, and lost profits. The reason for termination needs to be identified. minor deviations do not give rise to material breaches allowing for termination. Grounds for breach: 3 of them? Fails to make payment of subs. Failing building inspection- leading to issues of violations against property Contractor not paying sales tax, or getting permits. Otherwise guilty of substantial breach of contract documents. An owner can take back what it already paid, but a contractor cannot take back what it already performed, hence development of doctrine of substantial performance. If contractor is not paying subKs and work is not getting done, this is material breach. Though, Ingrassa Contractor was building school, and the k required that ktor get a certain license by the architect which they failed to get. Yet, there is a common law right to There is a common law right to terminate regardless of what is in the contract. Assertion of termination:

 Some ks require that an architect give a certification of breach, or a cool off period (7 day notice) to negotiate because a possible breach gets costly because both parties start suing each other for breach. Contract will state remedies. Owner may take possession of materials and equipment o To provide incentive to ktor to get stuff out of there. w/ termination, subKs are lost. remedies Specific performance o Make them do the job o Lean foreclosure Damages Limitations on recovery: causation o Whether there was sufficient causation is the main issue. Like whether it was the construction worker or the architect at fault. Certainty o Claimant must show that there is an ascertainable loss. o Have delay damages liquidated (in agreement from beginning) Foreseeability o Hadley v. baxendale- events must have been forseeable. (consequential damages). Sometimes consequential damages are waived. Mitigationo even if there is breach, the owner must mitigate damages such as by allowing ppl to destroy the structure and prevent vandalism and theft. Lost profits o What ktor is entitled to, even if terminated wrongfully. Requires a clear demonstration of exact amount of lost profits. Helpful factors: past experience, bid for job with mark up Punitive o Not generally allowed Attorneys fees

o Not recoverable-American rule You could agree to it contractually. Measures of damages: Substantial performance o Compliance in good faith with all important particulars of contract. Where all purposes of things contracted for are performed. Economic waste o Ripping stuff out with value. In such a case, there is likely a diminished value, but its not worthless, and its not fair to rip out. Betterment o Where the owner had used the item for a few years, he gets recovery of entire life span minus use. Changes: Modifies scope of work, labor and material costs, and impacts to efficiency. Change order provision must be in contract in order to impose a right to modify that contract. Otherwise it is a breach of contract to order changes in the work. There is a common law right to seek change order damages if formalities are not followed. Minor project changes are not compensable even if they are not within the contract. it is on the contractor to prove that additional time is warranted. Changes clause is a provision which allows a contractor to do extra work which is needed even though its not in the contract. It is a doctrine of equitable relief. Without this, a Contractor cannot do any work without permission. This should be placed into every contract. If there is a provision which allows an owner to make change orders whenever it wants, then contractor has to do it. Cardinal change doctrine-provides breach remedy for contractors who are directed to perform, but the work is so drastically altered from the original scope of work originally bargained for. A plaintiff may try to make this claim. If he is wrong what happens?

Deductive change order- this can deduct scope from the k. but they end up losing potential profits so, Differing cite condition: Material difference between what was anticipated and what was there. Like bad soil. You should have a provision that if this happens you would be granted a change order. The other option is to require the contractor to take on the risk; look at the cite and set a price, and in the exculpatory clause, it agrees that it will not seek greater payment. Spearing doctrine-there is an implied warranty of adequacy that what the contractor is given is actually buildable. Thus, it is not contractors responsibility whether the design will work or not. Some owners try to put more responsibility onto the contractor. Gullomer v. NJ highway: App div allowed contractor to recover damages despite the exculpatory clause, because the elevations info was wrong and costed the contractor more $$ Sasoo contracting v. nj App div refused recovery b/c the state representations of the highway (which was off by a few inches), were merely gratuitous and reliance upon them was not justified. Because contractor should have done its own research. Difference between 2 cases was the latter mistake was pretty clear. PTL v. NJ Allowed recovery where state made representations but did not disclose material facts which only it knew. Impact claims: Delay o There is a critical path, which means that if one thing is delayed it will impact everything else.

o Concurrent delay- when 2 delays happen at same time, but they delay on separate paths. o There may be a no delay damages provision. o Total cost recovery-contractors cost of performance cost of contract price. This is not favored. Destruction- not sure about this? o Measured mile-come up with a metric which can compare to the unproductive period so you see how productivity has decreased. Acceleration o Where the owner requires the contractor to complete a phase in a certain period of time, but causes it to do it faster which increases costs. Eicley formula-formula to calculate extended office use overhead. Where does this fit in? If work changes are forseeable you cant really seek a claim. Saving documents helps everyone. Lean claims are there for when a contract claims don't work. You don't need privity for a lean claim. Statutory remedies for sub-contractors are mechanic lien claim, or construction lean claim. Public contractors have bond claims. There are also trust fund acts, so allegations can be made in violation of a trust fund where a contractor may have been paid, but refuses to pay a contractor. If a contractor has completely paid the money to the contractor he is off the hook, and the sub has no more right to the lean. This is to protect the owner from paying twice. money going to ktor, it is going for the benefit of subs, and failure to act this way is a violation of the trust fund act.

You have only 120 days from the last day you do contract work to file a lean. Then, if nothing happens, and it is on the real property, the one holding the lean has 1 year to perfect the lean where he has to file an action. Otherwise it will go away. If the year is up for one subcontractor, the other subcontractor can piggyback onto the lawsuit-a second chance. Construction lean claim: Contractor gains an interest in the real property by its services to improve it. This is a right to real property. Residential construction lean claims Commercial/private/public Public construction lean claims have a municipal mechanic lean claim. This means that fund for leans is being withheld for the lean holder. If all the money is paid out, its too bad. If there are several leans then it shares an equal portion in right to the lean funds. Process for residential lean claim All single family residence up to 4, is a residence and gets a construction lean claim. But in a residential situation, you need to file a nub notice of unpaid balance and right to file a lean and serve it on the owner and contractor. There must also be a filing with the arbitration association. Further an arbitrator is appointed to review the nub and make a determination within 30 days if the construction lean claim. This all must be done within 120 days. There could be a defect in the nub which will be used as a defense. In dealing with condominiums lean law applies as though a residence. Thus, the lean is filed as against the interest of the condo association. Whereas commercial lean claim doesnt need to have this nub filed. Where the owner has a lease, then the lean goes against the lease rights not the real property interest. (you could sell the lease to satisfy the lean) He argued that it should still go against the owner of the commercial property because they are getting benefit. plus, if the lease has provisions for such thing, requiring consent, then the landlord knew about it, so it should entitle the subk to the lean. The

courts have split, but a recent case says that only if a landlord specifically consents to THIS project will the real owner be subject to lean. Municipal mechanics lean claim You can file a claim for 100% of the money even if you did only 50% of the work. The time frame: 60 days after work is accepted by public agency.

Important points If the lean is invalid, the court is required to discharge the lean claim, and you get legal fees. Lean rights must be in a written contract Labors materials and services are the only things allowed in a lean claim. Not lost profits/attorneys fees/interest. In fact such things can invalidate it. Further if there is an invalid lean, you can bring an action for Slander of Title where you could seek damages depending on extra costs incurred based on the clouded title. Subcontractor leverage: Requirement to fill out nubs and the rest set offs things which lower the price of any money unpaid for bad work and the like. Another statute against the contractor and owner is a prompt pay statute. These give rights to prompt payment. Practically-this doesn't working Trust fund act-gives subK leverage b/c it enables subK to include in litigation individual owners of the corp. which is withholding their money, allowing them to go after real assets.

There is a general liquefying agreement in contracts where the contractor can take on the subKs claims against the owner. This is good because it shares costs and expenses. Contractor usually has power to settle. Prevailing weigh act Specifically in public work Prevailing weigh must be paid for contractors work, even to non-union labor. So, if subcontractor fails to pay its workers appropriately, the contractor is responsible and subject to suit. In preventing this you set up a joint check agreement. o This means that a sub issues a lean release that says it will pay the prevailing weigh, though really, this doesn't give too much protection because you could still sue contractor. Other ways claims can be asserted beside contract actions is through bond claims. There is an indemnity agreement which accompanies the bond. Insurance v. bonding: Insurance is a two part agreement between insured and insurance company. Coverage supplied, is usually to third parties, and coverage is based on the odds of risks. There is an expected loss. Bonding is a 3 party agreement between a principal, surety company, obligee (beneficiary). There is no expectation of loss. Underwriter will o Principal purchases the bond. Surety insures it. Performance bond- here contractor is principal, and seeks surety which will pay to the owner-obligee. Purpose-in event of contractors failure to perform, owner can go to surety and seek performance of work. Surety does due diligence of contractor, and gets an indemnity agreement from an owner of the contractor, which pierces veil of corp. When a surety takes over, its called a takeover agreement where they have to take over the contract with same provisions as before. In general with bad faith you are then in a position to receive punitive damages.

Payment bond-secures contractors obligation to make payments to all those that provide labor, materials and services to a project. Contractor is principal, obligee are those providers. So a subK can sue ktor for breach, the city under municipal mechanics lean, and the surety co. Bid bond- purchased by contractor, owner is obligee. Here the obligation is that if the contractor tries to back out of a low ball bid, then the surety steps in and pays the difference between this bid, and the next business agreement. Maintenance bond- at end of job, there may be some maintenance which needs to be continued. So if they disappear, the owner can call surety. There may be an obligation to match a certain green building amount. There can also be a bond for this in the event the building is not green. Miller act deals with bond for federal projects. Little miller acts are for state. Miller act-a project over 1K must have an adequate performance bond. This as well as a payment bond which should not be less then performance bond. To make a claim, action must be brought after 90 days of last item of work, and within a year. If you are below the sub-sub-contractor, you must tell GC that your entitled to bond. This is in NJ, where federal, gives no claim. o Dial block- did not give required notice. Here, there was some contact between ppl below the 2nd tier, so they didn't need to give notice. But, the court ruled that there must still be notice. InsuranceCGL commercial general liability insurance. This covers personal injury or property damage which occurs as a result of defective workmanship. It only covers liability not costs to remake it like a surety bond. Once payment is paid, you cant sue the contractor. Plus, the insurance pays for defense in suits. Builders risk-covers direct damage to structures under construction

Design professionals carry errors and omisions coverage for negligence in making the design. There must be an affidavit of merit by a professional before you can say professional misconduct occurs. This must be filed w/in 90 days of the answer or summary judgment will be granted. Construction defects-whenever finished work fails to perform as required by contract or accepted standards of care. This includes: o Material deviations o Functional defect-like too much energy used o Building code violationsDispute resolution: Litigation ADR- alternative dispute resolution o Partnering- process whereby parties get together at the outset and endeer parties to one another, and help be more friendly when claims do arise. o Mini trial- each side presents small version of its case to a judge o Mediation- party to party w/ trained facilitator Can happen at any time. Cant be forced upon adversary. It is either writing in K or it is voluntary. Should put it in k. Benefits: Potential for early resolution Highlights strength and weakness Discovery device Detriments Expense Helps opposing party know your side which May cause a higher settlement bar Bad mediater Your not locked into ruling

o Negotiation-party to party o Arbitration- process by which dispute is resolved by third party. Creature of k. -must be agreed upon. Guided by NJ arbitration act of 2003. Courts are pro arbitration, and will bounce it to arbitration if possible. Arbitrators Either a panel of 3 or just one depending on amount in controversy. Parties can agree to go with only one. Cost split between parties Choosing process: No bias There is a limited right of appeal. Usually only able to do it if it appears that arbitrator is biased or conflict. Informal process Rules of evidence are loosely applied. No need for attorney. Loosely follow procedure of trial Law doesn't need to be applied. They are bound by fairness. expense high filing fee regular court-200 fee. Arbitration >1 mm is 8000 arbitrator fee could take a lot of time they don't limit testimony, so things will be repeated. Could get part time arbitrator/non consecutive hearings. Result: Not final until award is confirmed in court Very limited appellate review Could make rules for arbitration. Brock v. Plosia 390 nj super 543

 In the absence of any advance notice that the scope of the arbitration includes potential liability for treble damages and counsel fees, and arbitrator may not impose such extraordinary relief in the award. In this case, these excess damages were not presented from the beginning so the damages werent allowd. 2A:23B-23 the court can vacate arbitration when corruption, fraud, undue means partiality not being able to bring witness as you see fit. arbitrator exceess his power. No agreement to arbitrate. o There is no default judgment, but you still show argument to arbitrator and can get an award. o Tretina printing v. Fitzpatrick 135 nj 349 Unless you can show someone took a bribe, its hard to show corruption. To determine what type of process to pursue, these are the issues to be considered. Joinder of parties Cost Prep time Time from start to finish Predictability of decision Review of decision Hybrid dispute resolution clause: This gives one party the right to any form of dispute resolution and limits the other party to one form of dispute. No arbitration against state of NJ. When they consent to arbitration, notice provisions must be followed. Courts may order mediation or arbitration. Rules 1:40-4; 4:21A-1. In such cases you must do at least one hour, which is free, to demonstrate good faith.

 In this instance, it is called mandatory non-binding arbitration If within 30 days of this award they don't go back to court and complain, it is binding. And there is an actual trial within 90 days. Known as trial de novo

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