American Bar Association Forum on Construction Law

You Can't Take My Equipment - Extraordinary Times Call for Extraordinary Measures

James Landgraf Dilworth Paxson LLP

Cherry Hill, NJ

John W. Ralls Ralls Gruber & Niece LLP

San Mateo, CA

Presented at the 2015 Annual Meeting April 15-18, 2015

Boca Raton Resort & Spa, Boca Raton, FL

©2015 American Bar Association

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When a dispute arises among the parties on a construction project, an attorney having familiarity with

construction law will recognize a number of obvious tools to protect or further the client’s interests. The

owner’s attorney will look to contract rights, including the right to perform work, the right to reject work,

the right to withhold payment, the right to declare default under the terms of the contract, and the right

to seek relief under bonds, if any were required. The contractor’s attorney will look to the contractor’s

contractual right to make a claim, to cease work, to terminate and, if applicable, to record liens or pursue

other payment remedies. Either party may be entitled, by contract or by law, to invoke a mediation or

other ADR clause or to institute litigation.

Sometimes, however, these well-known rights and remedies do not address a particular issue

arising from the project, or at least, do not provide remedial protection as thoroughly or quickly as a party

may desire. In those instances, construction counsel must look beyond the standard entitlements. This

paper explores some of the additional tools that a construction attorney should be aware of and should

consider depending upon the nature of the dispute and the need to customize appropriate remedies.

I. Replevin

A. The Remedy of Replevin in General

A party claiming title and possession of property may have available to them the opportunity to

bring the action of replevin. Replevin is a legal form of action ordinarily employed to recover possession

or value of specific personal property claimed to be unlawfully withheld from the plaintiff.1 It may also

include a claim for damages for the detention of the property. It is primarily a possessory action in which

the issues are ordinarily limited to title or right to possession of the goods.2 Although a replevin action

typically is possessory, it has been deemed an action at law with ultimate decisions to be made by a jury

or other trier of fact.3

At the center of a replevin action is the plaintiff’s need to establish title or other right to

immediate possession.4 It is notable that a plaintiff may invoke a right of recovery of property under

replevin even if it is not the “title holder” where it holds a right of possession at the time of bringing the

suit.5 That right to possession need only exist as against the main defendant and the Plaintiff is not

required to set up title or right as against the whole world.6

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Following establishing the right of title or possession, a claim under replevin must establish a

taking or detention by the named defendant. Simply put, an action of replevin cannot be maintained

against a person not in actual or constructive possession of the property sought to be recovered.7

Historically, many states have required that there also be evidence of a demand for possession

having been made by the plaintiff to the defendant prior to institution of the action.8 The requirements

to bring an action in replevin may be included within statutory provisions.9 In certain instances, the

statutory provisions will have an overlayment of court rule process particularly when replevin actions are

brought seeking immediate relief pending final determination which provides for the issuance of a writ of

replevin on notice and alternatively under special circumstances for a writ of replevin issued ex parte.10

Applicable rules may further provide that if the writ is for wrongful detainer, the plaintiff must allege and

prove a demand and refusal of possession for commencing the action and if the plaintiff’s title to the

goods or chattels in replevin rests upon a third person or upon special property.11 Similarly, a defendant

claiming title through a third person or upon special property shall allege and prove such facts.

Finally, where immediate possession is sought prior to a full determination upon the merits, a

replevin bond—to be posted by the party holds the property pending final determination—may be

required.12

B. Use of Replevin in a Construction Dispute Context

1. Hurdles to Overcome

To apply these principles in the context of a construction dispute, consider an on-going project in

which the owner and original contractor have terminated their relationship. There may be separate

litigation pending between them. The owner may seek immediate delivery of purchased materials that

have not yet been delivered to the site. These materials may be in the possession of the contractor,

separately stored, or still in the possession of a supplier. The materials may still be in fabrication. The

supplier may or may not have already been paid, even if the contractor has received payment.13

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Owner’s counsel faces a number of issues with regard to obtaining possession of the undelivered

materials, based upon the required proofs, discussed above. If the contractor does not have possession

of the materials, any action against the contractor to demand delivery would be meaningless particularly

given the case law and the typical replevin requirement that the defendant have possession of the goods

or chattels. If the materials are still with the supplier, the owner’s claims become entangled with the

contractor/supplier relationship.

Similarly, the owner may have a difficult task of establishing right to possession. If payment has

not been made, the owner will be hard pressed to establish such a right of possession. If payment was

made, but no bill of sale was issued, the owner does not have any single document that provides a right

of title or possession. If the owner has paid, but has retained 10% pursuant to the contract, it is evident

that the owner has not paid 100 percent of that invoice. While this may be overcome where the materials

or equipment is in the possession of the contractor who has received all that it is entitled to under the

contract, again this can be an issue where a supplier/fabricator has possession but has not been paid in

full. The owner will have to obtain the subcontract purchase order or other documentation establishing

the relationship between the general contractor and the fabricator, and obtain the general contractor’s

bid estimate in an effort to establish cost and materials versus overhead and profits. The owner will also

need to obtain the invoicing and payment records as between the fabricator and the general contractor.

If the contractor did not make payment in full to the contractor (whether the monies were being withheld

for general reasons or whether the monies were not due until delivered or whether the monies were

being held as retainage), the fabricator would have as a defense that it had a superior possessory interest

and title to the goods in question. In this case, the owner would have to further establish that the

fabricator had received all that it was entitled to under its agreement with the contractor.

2. But, What If....?

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As described above, the owner would have numerous issues and hurdles in meeting the

requirements of showing title or immediate possessory rights and the lack of superior possessory interest

as against the fabricator. The owner will also suffer from the fact that its contract is with the general

contractor and not with the fabricator. The general contractor, assuming conditions were met entitling it

to possession of the materials, would have a better and more direct interest and possessory right. Since

the owner does not have privity with the fabricator, it would have to get past this additional roadblock.

One variable would be if the owner required, as a condition precedent to issuing the payment to

allow commencement of the fabrication, bills of sale or other appropriate documents placing ownership

of the materials with the owner upon owner’s payment. The difficulty that can arise from this option is

that unless specific arrangements are otherwise made, the owner may have the risk of the loss and could

have the added expense of insuring the materials or fabrication prior to delivery to the site. However,

armed with such a bill of sale or other document transferring title and interest to the owner, the owner’s

ability to establish its legal title and/or possessory rights to the materials could defeat a claim by the

fabricator to possessory rights.

If the owner wishes to avoid the risk of loss problems, it could require as part of the prepayment

process that upon payment of the general contractor to the fabricator, title would pass to the general

contractor by way of a bill of sale or other documentation. This requirement could be combined with an

obligation on the part of the general contractor to arrange for insurance to cover risk of loss until the

materials are delivered to the site and an assignment of the title to the owner or alternatively a second

level bill of sale or title transfer to the owner. In this fashion, the owner would have the transfer of title

that protects its possessory interests in the materials but at the same time have the contractor

responsible for the potential risk of loss.

As further condition precedent to approving such a prepayment, the owner should and could

require a copy of the underlying agreement the general contractor and the fabricator as well as issue the

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payment on a joint check basis. The first would allow the owner to have assurance as to the actual costs

of the materials and fabrication and the second would protect against a payment to the contractor which

does not make it to the fabricator.

With these processes in order, in the event of the dispute discussed above, the owner’s ability to

seek immediate possession of the partially or fully fabricated materials or equipment would be

significantly increased as it would have documented proof of title and/or possessory right, it would have a

record confirming the payment for the materials and fabrication, and it would have an acknowledgement

by the fabricator that in exchange for the prepayment, it was agreeing to issue title and possessory rights.

The AIA General Conditions (A201-2007) touches on providing these protections for the owner.

Section 9.3.2 allows for payment for materials and equipment stored offsite at a location agreed in

writing, if approved in advance by the owner. It further provides that payment for such materials and

equipment shall be “conditioned upon compliance by the Contractor with procedures satisfactory to the

Owner to establish the Owner’s title to such materials and equipment or otherwise protect the Owner’s

interests and shall include the costs of applicable insurance, storage, and transportation to the site for

such materials and equipment stored off the site.”14

The provisions of section 9.3.2 provide for the underlying support for an ultimate replevin action

if that is needed. It also removes the risk of loss concern if one of the preconditions is that insurance

coverage be obtained and costs be covered by the contractor (as well as storage and additional

transportation). Accordingly, if the parties are using the AIA General Terms and Conditions, the owner

should acquaint itself with the terms of section 9.3.2 and insist on strict compliance in instances where

the contractor is seeking payment for offsite materials or equipment. In preparing or reviewing a

customized contract, if the form of contract does not include such a provision, counsel’s best practice in

preparing contract documents for the owner should be to include such a provision.

II. Injunctive Relief/Temporary Restraining Orders

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In some respects the reverse side of seeking a writ of replevin is the ability to seek temporary

restraints through temporary or preliminary injunctive relief. Where a writ of replevin is an effort to

require the defendant to turn over certain property, relief available under a temporary restraining order

is typically to prevent the defendant from acting in a manner that would affect the rights to such

property.

A. Temporary Restraining Orders in General

The owner on a construction project is interested in assuring that materials delivered to the

project, or identified to the project will not be removed or otherwise lost. Where such materials are

essential to the progress of the job and cannot be obtained by other means, the owner should consider

applying for injunctive relief. In most jurisdictions, the courts under prescribed circumstances will issue

temporary and immediate injunctive or restraining relief. Each of the states have their nuances, but the

basic requirements are similar. In New Jersey, for example, the process involved in filing for injunctive

relief, which would include temporary restraints and interlocutory injunctions, provides for an Order to

Show Cause and Process.15 This is typically filed with the initial pleadings with notice to the targeted

defendant, although exceptional circumstances may exist that allow for the relief to be granted without

prior notice. If the requisite showings are present in a verified complaint, a temporary restraining order

may be issued with a return date normally no more than thirty five (35) days after the execution of order

although a defendant is entitled to seek a more immediate hearing on two days’ notice.

On the return date, the defendant may present any evidence or information to “show cause why”

the restraints should not continue. If the defendant is unable to make such showings, the restraints will

continue until there is a full plenary proceeding. If defendant is able to show that the restraints should

not continue, on a practical level, many of the cases are then concluded. However, simply showing that

there is an inadequate basis for the temporary restraints does not in itself constitute a final

determination of the case.

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In reviewing the plaintiff’s complaint and the issues before it, a court in New Jersey is guided by

the multi-part test enunciated in Crowe v. DeGoia: (1) plaintiff has a reasonable probability of success on

the merits, (2) if relief is not granted, plaintiff will sustain immediate and irreparable harm, (3) there exists

no adequate remedy of law, (4) the requested relief will not cause undue harm to the defendant or third

parties, and (5) plaintiff’s potential hardship in the event of the lack of restraints will outweigh the

hardship that may be sustained by the defendant.16 Although unstated within the five-prong test of

Crowe v. DeGoia, a further consideration made by the Court is whether to protect or maintain the status

quo while the underlying action is proceeding.17

Although not always stated in the same fashion, other states provide similar processes and similar

considerations when reviewing a temporary restraining order request. These include protection of the

status quo.18 Similarly, the states, in one fashion or another, have adopted through their case law the

requisite tests needed to be met by a plaintiff seeking temporary restraints under terms similar to that of

Crowe v. DeGoia.19

1. Likelihood of Success on the Merits

The first prong on the Crowe v. DeGoia test is that the Plaintiff must demonstrate a likelihood

that it will succeed upon the merits under the particular facts and law associated with the claims that it is

making.20 A court is not going to provide the extraordinary relief available under a temporary restraining

order where the relief sought by the plaintiff is neither supported by the facts nor the applicable law. As

an initial showing, the plaintiff has the burden in a preliminary injunction proceeding to demonstrate the

reasonable probability of success at trial.21 Notably, however, the standard of reasonable probability of

ultimate success is significantly lower than the higher standard of proof of clear establishment of a legal

right, which may be required at trial.22 The purpose of this lesser standard is to place the burden upon

the plaintiff at least sufficient to generate the court’s willingness to maintain the status quo until a final

verdict can be rendered on the merits.23

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2. Establishing Immediate and Irreparable Harm and No Adequate Remedy at Law

These two requirements are often combined or sometimes used interchangeably. Establishing

immediate and irreparable harm is a primary basis of a temporary restraint. The lack of an adequate

remedy at law damages is often interchangeable with requirement that there be immediate and

irreparable harm. The plaintiff must establish that in the absence of the temporary restraints, it will

sustain immediate damage and loss that cannot be adequately remedied by a monetary judgment.

Conversely, if a court can be convinced by the defendant that the plaintiff can be fully made whole by a

monetary judgment at the end of a trial upon merits, the defendant has a reasonable opportunity to

prevent the entry of temporary restraints. Harm is generally considered irreparable in equity if it cannot

be redressed adequately by monetary damages.24 Courts have allowed temporary relief where damages

are simply difficult to quantify.25

3. Relief Will Not Cause Undue Harm and Balancing of Equities or Hardship

Again, these two requirements often are decided in the same breath. A review of the potential

hardship upon the defendant and balancing of hardships is the final analyses to be performed. In

evaluating the need for a preliminary injunction, the court must balance the plaintiff’s need for protection

against any harm that can be reasonably expected to fall upon the defendants, and if the former

outweighs the latter, the courts will are instructed by case law granting the injunction assuming the other

showings have been met.26 Put another way, a preliminary injunction will not be issued unless greater

injury will be done by refusing it than by granting it.27

When reviewing the equities or relative harm to the parties, the courts are typically again guided

by whether or not the relief sought would create simply a monetary disadvantage for the defendant,

which may be recoverable by monetary damages, or whether it will create a less compensable hardship

or loss.

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B. Application to a Construction Case

A contractor, subcontractor, or supplier, in the event of a dispute involving the owner, may wish

to recover materials held at a separate site, remove materials that have been delivered to the project site

but not installed, or remove materials that have been installed. The owner, conversely, is anxious to

prevent any such actions by the on the basis that the owner has claimed that it has paid, at least in part,

for those materials that the owner is in possession of at least a portion of those materials that were

delivered to the site, that the owner’s project will be immediately and irreparably harmed by the loss of

the materials, including the removal of materials that have already been installed, and that the owner has

no adequate remedy at law. The owner will further take the position that leaving the materials in place

will maintain the status quo while the case proceeds on a trial on the merits. Accordingly, even if the

owner cannot establish the requisite showings for replevin, it may have a basis to at least keep things in

place until there is a full hearing.

1. Likelihood of Success on the Merits

On the first prong of the traditional test for injunctive relief (likelihood of success on the merits),

the owner will claim that it has paid for the materials, that the materials have identified to the project,

and that, at least in part, the materials have been incorporated into the project. As the owner had paid

the general contractor prior to fabrication, the owner will make a claim similar to that in the previously

discussed replevin action, that the owner has an immediate claim to title and/or possession, even of the

materials that have not yet been delivered to the site. Accordingly, the owner will seek a temporary

restraint to prevent the fabricator from removing materials from the site from reclaiming the materials

from storage or using the materials for a separate project. The owner will also want to seek the ability to

continue with its installation of the materials and will also try to seek the ability to have the materials

delivered from storage to the site.

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In response, the fabricator will argue that there does not exist a likelihood of success on the

merits for the owner on the basis that the fabricator has not relinquished title to the materials

particularly those that are held in storage. The fabricator will assert that until it is paid in full for the

materials, it continues to have a superior title and possessory interest in the materials.

The owner has a viable argument for a likelihood of success on the merits where it has made

payments, at least with respect to the materials that are on the site (whether they have been installed or

not). As they have been delivered and accepted, risk of loss has passed from the fabricator to the owner,

thereby providing further support to the owner’s superior possessory rights to those materials. With

respect to the materials that are held in storage, and assuming that a bill of sale, as discussed in the

previous section of this article, has not been issued, the owner’s likelihood of success on the merits is

more tenuous. Who retains the risk of loss of those materials may be a determining factor. If the storage

has been arranged for by the fabricator or even the contractor and the materials are being insured by the

fabricator or contractor, the owner’s likelihood of success on the merits may not exist.

2. Adequate Remedy at Law/Immediate & Irreparable Harm

On these portions of the test, the owner will claim that it will sustain immediate and irreparable

harm to the project since repossession of the materials or re-use of the materials by the fabricator or

contractor will cause significant delay to completion of the project while the owner must arrange for

alternate materials. With respect to the materials that have already been incorporated into the project,

the owner will also have available to it, the argument that immediate and irreparable harm would occur

as a result of damage to the building caused by the removal of such previously installed components. The

owner’s argument will extend this immediate and irreparable harm to materials on the ground and to

those in storage as again it would result in delay to the project and presently incalculable damages which

could not be adequately addressed by monetary damages unless or until months or years down the road

when the final project was completed.

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In countering the arguments of the owner, the contractor/fabricator/subcontractor can raise the

point that even though damages may be difficult to presently calculate, they can be ultimately

determined and therefore, all the owner has is a claim for monetary damages associated with the delay in

construction, increased costs in replacement of the materials, and similar compensatory losses. Where

materials have not been delivered, but are not custom materials, there is a further argument against

irreparable harm, since the materials can be duplicated.

The owner can counter, if the materials are in fact customized for this project, that it does not

have the immediate ability to provide substitute materials and certainly cannot determine what the costs

to substitute custom materials would be, how much damage could potentially occur as a result of an

unenclosed building, what delay costs would be incurred as a result of awaiting a wholly new (perhaps

specially fabricated) component, and what losses may result from the inability to occupy the building at

the anticipated date. Although there is a potential future ability to quantify the damages that may

ultimately be sustained, there is support for equating difficulty in establishing damages with the

impossibility of establishing damages as the courts are hesitant to deal with conjectural or speculative

damages.28

3. Balancing of the Equities and Undue Hardship

Under these prongs of the test, the owner will assert that it will sustain irreparable harm and

presently incalculable damages if the materials are repossessed and removed from the site or storage or

otherwise used by the contractor, subcontractor or supplier. As to their potential “hardships” the owner

will take the position that the issue is simply that someone has not been paid in full for its work. Using

the “immediate and irreparable harm” analogy, the owner will argue that the contractor, subcontractor

or fabricator has available to it a remedy of seeking monetary damages against the appropriate party for

the failure to make payment for the materials. For purposes of temporary restraints, the owner may

even concede that the defendant would have a potential claim against the owner for damages, but again

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such would be monetary damages. The owner further has available to it the clear argument that this is a

commercial transaction, and there is no overriding harm to the public if the preliminary restraints are

granted. Finally, if the material or equipment was largely a customized fabrication, the owner can assert

the argument that repossessing the materials is not going to provide any real benefit to the contractor or

fabricator, since they have already been customized for this project and are not readily capable of

transformation for a different project.

On these prongs of the test, the contractor, subcontractor or fabricator will, frankly, be hard-

pressed to establish that it will be harmed more significantly than the owner if the restraints are granted.

They could conceivably argue that the general contractor is no longer a viable entity, assuming that it is

accurate, and that even though the materials were custom fabricated for this project, there remains

some value in those materials from which the fabricator can salvage certain of the losses. It is

questionable, however, whether those arguments would prevail on the balancing of the hardship and

equities.

4. Status Quo

Going past the above separate considerations and assuming that there are no clear overriding

public considerations, courts would very likely turn to the “status quo” position. A court may issue

temporary or preliminary restraints on a less than exacting showing if necessary to prevent the subject

matter of the litigation from being lost or destroyed. Under this consideration, each side could come

away less than satisfied. On the one hand, maintaining the status quo would preclude the immediate

removal and re-claiming possession of the materials regardless of their location. On the other hand, a

court applying the tests conservatively may also restrict the temporary restraints to the extent that they

would have allowed the owner to continue to install materials that were onsite and/or to have stored

materials delivered to the site. Under the status quo approach, by leaving all of the materials in their

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present condition (those that were installed, stored onsite, or stored at the warehouse), the court has at

least determined that nothing will change pending a hearing on the request for temporary restraints.

5. But What If...?

What if the fabricator had executed security agreements with its own creditors that included

granting a security interest in its inventory? That creditor is now attempting to enforce its security

agreement by seeking possession of the materials in storage, onsite, and installed. The same action

seeking temporary restraints would be brought by the owner. The same arguments and positions would

be raised by the owner. In this case, however, instead of the fabricator pursuing a claim based on a

breach of contract claim with a general contractor, the bank or other secured creditor is now attempting

to raise a superior title to the materials. The owner, who has requested relief, must now identify that

secured creditor and the fabricator as defendants. The owner will make the basic argument that simply

because a bank has a security interest in the fabricator’s inventory, the bank does not have a greater right

than what the fabricator would have had. Obviously, if title documents had been issued as a result of the

offsite material prepayment or if risk of loss had been transferred from the fabricator to the owner or

contractor, the claims of the secured creditor would diminish. Even if that documentation did not exist,

however, the secured creditor, while arguing that it has right and title of inventory, would face the same

limitation that the fabricator had in preventing the issuance of a temporary restraint.

Where the secured creditor may have a stronger argument over the fabricator would be at a

point after initial issuance of the temporary restraints and with respect to the materials held in storage.

The secured creditor may have a strong argument that it does not matter whether these were custom

fabricated materials or not, or how much the fabricator has been paid. As long as title remains with the

fabricator, under the security agreement, the secured creditor would typically have absolute title to those

goods until it could be established that title has changed hands. Under these circumstances, while the

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owner may be able to obtain the temporary restraints at the outset, it may not ultimately prevail in being

able to take possession in materials that had not already been delivered to the site.

III. Prejudgment Writs of Attachment

Prejudgment attachment is a powerful remedy that can be used at the outset of litigation. As

one U.S. District Court put it, “Attachment is an ancillary remedy by which a plaintiff acquires a lien upon

the property of a defendant in order to obtain satisfaction of a judgment that the plaintiff may ultimately

obtain at the conclusion of the litigation.”29 Obtaining such a lien early in the case can exert great

pressure on a defendant to settle. It is a remedy well worth exploring.

A. How Prejudgment Attachment Works

Attachment is a statutory remedy and so the exact procedures vary from jurisdiction to

jurisdiction.30 Generally, a written application has to be filed with the court. Generally, the application

must set forth a meritorious contract claim in a certain amount. (The “certain amount” requirement

makes the remedy inappropriate in many construction cases—consider most delay or disruption claims.)

Most states require, prior to issuing a writ of attachment, a bond or undertaking for paying the defendant

any damages that may result from a wrongful attachment.31

The circumstances and types of actions authorized for attachment vary across states, but the

requirement of proving “probably validity” of the claim is universal. “The statutes typically permit the

court to issue the attachment order on an ex parte basis. With a few exceptions (most commonly for

wages and property exempt from execution), virtually all of the defendant’s real and personal property is

subject to prejudgment attachment, whether tangible or not. Even property in the hands of third-party

garnishees may be subject to prejudgment attachment.”32 Attachment remedies are generally available

for actions for a “debt” or “on a contract.”33 As noted above, in most states, the sum claimed to be owed

must be a sum certain.34

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Once the bond is posted and a writ of attachment has been issued, the order granting the

issuance of the writ of attachment will direct the sheriff to attach the debtor’s property.35 “The statutes

usually permit the defendant (or the garnishee) to post a bond to obtain the return of the attached

property, and often permit the defendant to obtain its return without posting a bond upon a showing

that the attachment order issued improperly.”36

B. What Jurisdictions Recognize Prejudgment Attachment

Pennsylvania is the only state that does not recognize prejudgment attachment as legal remedy.37

Prejudgment attachment statutes differ with respect to the types of actions, parties, and property that

may be subject to the remedy. Many states (including California) limit the remedy to contract actions for

a “fixed or readily ascertainable amount.”38 Other states (Delaware is one) limit the availability of the

remedy based upon the residency or location of the defendant.39 State attachment remedies generally

are limited by territory—only allowing for the attachment of property found within the state in which suit

is pending. The attachment of property as an ancillary remedy to secure a debt “is based on the theory

that a state has comprehensive authority over all property within its territorial limits and may seize such

property for payment of claims asserted in actions in its courts.”40 Consequently, courts will generally

only issue writs of attachment for property found within the state in which the suit is pending.41

“Twenty-seven states, as well as the District of Columbia, permit attachments only when some

extraordinary circumstance is present. In such cases, pre-attachment hearings are not required but

post-attachment hearings are provided. Ten states permit attachment without the presence of such

factors but require pre-writ hearings unless one of those factors is shown. Six states limit attachments to

extraordinary circumstance cases, but the writ will not issue prior to a hearing unless there is a showing

of some even more compelling condition.”42

Attachment is also available in federal court. The federal rule on prejudgment seizure—Federal

Rule of Civil Procedure 64—makes all state law remedies “for seizing a person or property to secure

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satisfaction of the potential judgment” available in federal courts. The Federal Rules of Civil Procedure

govern the general procedural aspects of an attachment action (service of process, time limitations, and

appearance requirements).43 Otherwise, and absent a conflict with some Federal Rule, the other

provisions of the applicable state’s attachment remedy apply (including what must be shown). Federal

Rule of Civil Procedure 64 is also limited in that creditors may only use the federal rule to reach a debtor’s

assets held within the state in which the federal court sits.44

C. California Example

California has a detailed attachment procedure that represents a good example of how

attachment works. California’s attachment law is set forth in pages of statutes.45 California permits

attachment for monetary claims, based on an implied or express contract, in a “fixed or readily

ascertainable amount….”46 The claimed contract damages must be measurable by reference to the

contract itself.47 The plaintiff must also demonstrate that it is “more likely than not that the plaintiff will

obtain a judgment against the defendant....”48 Probability of success on the merits limits the availability

of the remedy, since the remedy might otherwise offend due process: “Attachment is a harsh remedy

because it causes the defendant to lose control of his property before the [plaintiff’s] claim is

adjudicated.”49

As a remedy not recognized at common law, the California prejudgment attachment statute is

subject to “strict construction.”50 Applying the strict statutory compliance standard, one U.S. district

judge in California’s Central District summarized the significant evidentiary burden on the party seeking

attachment: 51

The application for a right to attach order must be supported by an affidavit or declaration showing that the applicant, on the facts presented, would be entitled to a judgment on the claim upon which the attachment is based. C.C.P. § 484.030. The affidavit or declaration must state the facts ‘with particularity.’ C.C.P. § 482.040. Except where matters are specifically permitted to be shown upon information and belief, each affidavit or declaration must show that the affiant or declarant, if sworn as a witness, can testify competently to the facts stated therein. Id. At a minimum, this means that the affiant or declarant must

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show actual, personal knowledge of the relevant facts, rather than the ultimate facts commonly found in pleadings, and such evidence must be admissible and not objectionable. Calif. Evid. C. § 702.

D. Notice or Ex Parte

An important distinction is whether attachment can be obtained on an ex parte basis or whether

notice and an opportunity to be heard is required.

In most states, writs of attachment may be obtained ex parte upon a showing of exigent

circumstance or if the creditor posts a bond. For example, California requires that the claimant both post

a bond and show that “great or irreparable injury would result to the plaintiff if issuance of the order

were delayed until the matter could be heard on notice.”52 In order to establish “great or irreparable

injury,” a California claimant has to submit declarations that would permit the court to infer “that there is

a danger that the property sought to be attached would be concealed, substantially impaired in value, or

otherwise made unavailable to levy” absent a noticed hearing.53

“In some cases, the utility of a prejudgment attachment may be undermined if the plaintiff is

compelled to proceed on notice. The defendant or a third person in possession of the defendant’s

property may use the time between service of the notice and a decision on the plaintiff’s motion to

dispose of the property sought to be attached. For this reason, some states permit the court to grant a

temporary restraining order forbidding any transfer of the defendant’s assets while the court considers a

plaintiff’s motion for an order directing issuance of a writ of attachment.”54 California and New York, for

example, allow creditor’s to seek temporary restraining orders in addition to writs of attachment so that

the debtor’s assets are preserved during the pendency of an underlying suit.55 Similarly, under Missouri’s

attachment statute, a debtor’s property can be attached upon a showing to the court that the debtor

“conceals himself, so that the ordinary process of law cannot be served upon him.”56

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E. Advantages of Attachment over Other Payment and Creditor Remedies

Prejudgment attachment provides the unpaid contactor greater relief than foreclosing on a

mechanics’ lien where the equity remaining in the real property is less than the other property that may

be preserved through attachment. If the contractor has failed to record or otherwise perfect a

mechanics’ lien, attachment may be the contractor’s only remedy for effectively enforcing an eventual

money award against the owner. Of course, mechanic’s liens attach to the real property that is the

subject of the construction contract. If the owner holds real or personal property interests other than the

real property attached by a mechanics’ lien, then attachment may reach additional assets.57

“[A]ttachment deprives the defendant of possession and use of her personal property as well as

unencumbered title to her real estate. The severity of these deprivations has caused some commentators

and courts to note that an attachment order dramatically changes the bargaining power between plaintiff

and defendant, giving the plaintiff substantial leverage over the defendant.”58 A fast settlement prior to

the hearing and favoring the contractor may be preferable to the contractor, but even if settlement

cannot be reached, the hearing may serve as an indicator of success at trial.

F. Lien Priority and Bankruptcy Advantages

“During the pendency of most tort cases and many contract cases, the plaintiff has no security

interest in any of the defendant’s property.” 59 In other words, most plaintiffs are unsecured creditors,

subordinate to other creditors who have some kind of lien right in the assets of the defendant. The

position of a secured creditor in a bankruptcy proceeding is far better than the position of an unsecured

creditor.60

If the plaintiff obtains a prejudgment attachment against a defendant, the plaintiff acquires an

attachment lien in the attached property. The attachment lien gives the plaintiff priority over unsecured

creditors and claimants who obtain liens on the same property that were created or perfected later than

the attachment. Because this attachment lien also constitutes a “judicial lien” in a bankruptcy

19

proceeding, the plaintiff is treated as a secured creditor with a substantially improved position on the

totem pole of claims when distributions are made in bankruptcy.

Because the attachment lien benefits the plaintiff vis-à-vis other creditors of the defendant, the

other creditors may feel compelled to protect themselves by forcing the debtor into involuntary

bankruptcy. In fact, such other creditors may be under time pressure to do so, because they may be able

to have the attachment lien avoided if they file the bankruptcy petition within 90 days of the levy on the

attachment order. As a result, the plaintiff seeking an attachment order may alarm the defendant’s other

creditors and push the defendant into bankruptcy.61

IV. Prejudgment Remedies—Pre-Litigation Discovery

Most procedural rules allow—under limited circumstances—for discovery to start even before

suit is filed.

A. How Pre-Suit Discovery Statutes Differ

One commentator nicely summarized the different types of pre-suit discovery rules:62

Nearly all jurisdictions, by rule, statute, or common law, allow prospective parties to petition the court for discovery before filing a formal lawsuit. In most instances, however, the right to use discovery devices before litigation is narrowly tailored. Presuit discovery typically may only be taken to preserve witness testimony when there is a credible risk that the testimony may be lost if it is not recorded immediately. In several jurisdictions, the formal law permits discovery before suit for the broader purpose of confirming the proper party to name as a defendant and/or to gather additional information when necessary to institute legal proceedings. Even in these forums, however, the formal law purports to disallow discovery for the broader investigatory purpose of determining whether a cause of action exists. Few jurisdictions stretch the presuit investigatory discovery entitlement to its farthest limit.

Some state courts (generally, those with fact-pleading requirements) permit pre-suit discovery

for the purpose of obtaining the factual information necessary to draft a complaint. In other states,

however, pre-suit discovery is limited to the preservation of evidence that is likely to be lost or

destroyed.”63

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B. Pre-Suit Discovery under the Federal Rules (FRCP 27)

Federal Rule of Civil Procedure 27 has a narrow pre-litigation discovery rule. Such discovery is

allowed to perpetuate testimony only. Federal courts generally only grant Rule 27 petitions for the

preservation of evidence that is likely to be lost. The underlying purpose of Rule 27 is for “the

preservation of evidence which would be unavailable otherwise” rather than as a means for pre-

complaint discovery.64 It is with this underlying purpose in mind that courts frequently observe how

“[Rule 27] is not a substitute for broad discovery.”65 Moreover, petitions for pre-suit depositions may

only be granted under Rule 27 where a witness may leave the jurisdictional reach of the court’s subpoena

power, if where a key witness may become terminally ill. The success of a Rule 27 petition for pre-suit

discovery will likely depend upon the preservation of evidence that is likely to be lost otherwise.

An order granting the petition for pre-suit discovery may be granted “if the court finds that

perpetuating the testimony may prevent a failure or delay of justice.” Rule 27 pre-suit discovery is

therefore unavailable to plaintiffs that need more facts to allege in order to meet the federal pleading

standard.66 Unlike those state statutes that allow pre-suit discovery for evaluation of claims purposes,

“[Rule 27] does not provide a method of discovery to determine whether a cause of action exists, or

against whom an action should be initiated.”67

C. Broadest Pre-Suit Discovery Statutes

The broadest pre-suit discovery statutes are those in Texas and Alabama.

1. Texas

Texas pre-suit “Rule 202 discovery” requires significant judicial oversight. This rule allows “[a]

person [to] petition the court for an order authorizing the taking of a deposition on oral examination or

written questions either: (a) to perpetuate or obtain the person’s own testimony or that of any other

person for use in an anticipated suit; or (b) to investigate a potential claim or suit.”68 Before trial courts

will grant Rule 202 petitions they are required to make a determination that “the likely benefit of allowing

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the petitioner to take the requested deposition to investigate a potential claim outweighs the burden or

expense of the procedure.”69

Proponents of Rule 202 argue that such a broad rule is needed to overcome increasingly difficult

barriers to filing suit, such as onerous pleading standards and the threat of sanctions for filing frivolous

claims.70 Texas courts have cautioned against Rule 202 discovery abuses, which can burden both courts

and litigants. The Supreme Court of Texas has stated that “[t]he intrusion into otherwise private matters

authorized by Rule 202 outside a lawsuit is not to be taken lightly”71 in the pre-suit context, and

consequently it suggested that “judges should maintain an active oversight role to ensure that [Rule 202

discovery is] not misused.”72 Rule 202 discovery is not intended to apply to a majority of cases. However,

a recent survey of “lawyer respondents indicated that Rule 202 is used about 40% of the time for the

uncontroversial purpose of perpetuating a witness’s testimony; the remaining 60% of the time, the rule

apparently was used for investigating a claim before filing suit.”73

2. Alabama

Alabama law favors broad pre-suit discovery for claim investigation. Rule 27 of the Alabama Rules

of Civil Procedure authorizes pre-suit discovery but only for the stated purpose of perpetuating

testimony.74 However, the Alabama Supreme Court interprets Rule 27 to apply “regardless of any need

to perpetuate evidence”75 if the plaintiff seeks pre-suit discovery to determine whether there is a

“reasonable basis for filing an action.”76 Therefore, Alabama courts may permit pre-suit discovery under

Rule 27 for the purposes of investigation and evaluation of potential claims.77

3. Other Broad Pre-Suit Discovery Statutes (New York, Pennsylvania, and Florida)

New York law permits pre-suit discovery only upon a showing that it is necessary to plead a cause

of action.78 “Before an action is commenced, disclosure to aid in bringing an action, to preserve

information or to aid in arbitration, may be obtained, but only by court order.”79 The New York rule also

authorizes a court to “appoint a referee to take testimony.”80 Contrary to the expansive interpretation of

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the Alabama statute by Alabama courts, the New York courts interpret the pre-suit statute narrowly.81

New York courts usually will not allow this pre-suit discovery rule if it will only be used by the plaintiff to

evaluate whether “facts exist sufficient to create a meritorious cause of action.”82

Another example is Ohio, which adopts a pre-suit discovery rule similar to the broad investigatory

purpose of Federal Rule 27. The Ohio pre-suit discovery statute is authorized for the preservation of

evidence or to assist a prospective party in ascertaining the identity of a potential defendant.83

Additionally, the Ohio statute authorizes a court to grant an applicant’s petition under this rule if the

applicant cannot plead a cause of action “without discovery of a fact from the adverse party.”84

Pennsylvania authorizes pre-suit discovery through a balancing test. Under Pennsylvania law,

pre-suit discovery may be granted “where the information sought is material and necessary to the filing

of the complaint and the discovery will not cause unreasonable annoyance, embarrassment, oppression,

burden or expense to any person or party.”85 If these forgoing requirements are satisfied, the defendant

may still object. Upon the defendant’s objection to pre-suit discovery under this rule, a court may require

the plaintiff to “state with particularity how the discovery will materially advance the preparation of the

complaint.”86 This functions as an added “safeguard against charges that the plaintiff filed a frivolous

lawsuit in a case where the wrongdoer or a third party has the ability to hide the facts needed by the

plaintiff to determine who is the wrongdoer and exactly what wrong occurred.”87

The Florida pre-suit discovery statute is limited to preservation of evidence.88 But Florida courts

alternatively recognize a right to bring an equitable bill of discovery “to obtain the disclosure of facts

within the defendant’s knowledge or deeds or writings or other things in his custody, in aid of the

prosecution or defense of an action pending or about to be commenced in some other court.”89

D. Narrow Pre-Suit Discovery Statutes

The majority of state statutes have adopted pre-suit discovery rules nearly identical to Rule 27.

The states of Alaska, Arizona, Arkansas, California, Florida, Iowa, Kansas, Michigan, Minnesota, New

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Mexico, Rhode Island, and Vermont have all adopted pre-suit discovery statutes limiting pre-suit

discovery for the purpose of the perpetuation of testimony. Like Rule 27, these states do not permit the

use of pre-suit discovery for the purpose of evaluating potential claims. Some of these states are even

more restrictive by prohibiting the use of pre-suit depositions for discovery or evaluation of claims

purposes. California’s pre-suit discovery rule cannot be used “for the purpose of either ascertaining the

possible existence of a cause of action or a defense to it, or of identifying those who might be made

parties to an action not yet filed.”90 Moreover, pre-suit discovery is substantively the same in both state

and federal courts in California: “Even if there is a possibility that discovery could turn up some

hypothetical evidence to support a cause of action, plaintiffs cannot unlock the doors of discovery if they

are armed with nothing more than conclusions.”91 Iowa and Kansas have adopted the same rule by only

allowing pre-suit depositions “not for the purpose of discovery.”92 It follows that most states only permit

depositions under such limited circumstances, and other tools like pre-suit inspection of documents are

not authorized under these rules. Another large minority of states have adopted statutes similar to Rule

27, except they also allow for the pre-suit inspection of documents and medical exams.93

E. Pre-Arbitration Discovery

As one would expect, court-supervised pre-arbitration discovery is more limited that pre-

litigation discovery. Pre-arbitration discovery is typically limited to ascertaining the enforceability of an

arbitration clause.94 Arbitrability is generally considered a legal issue for courts not arbitrators.95 The FAA

authorizes a federal district court to enforce an arbitration agreement: 96

The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.

State courts similarly restrict pre-arbitration discovery to the threshold issue of whether the parties

intended to form an agreement to arbitrate: “[T]he FAA contemplates not just a stay of the trial, but a

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stay of the trial proceedings involving matters other than threshold issues such as whether the parties

entered into a valid and enforceable arbitration agreement.”97

V. Letters of Credit

A. In General and How Letters of Credit Are Used in Construction

Letters of credit ensure payment for goods delivered or services performed. The letter of credit

itself is a simple document that reads like a letter—typically from a large bank—saying that the bank (the

“issuer”) will pay to the beneficiary the amount specified upon the presentation of specified documents

(generally, a statement that the bank’s customer—the “applicant” is obligated to the beneficiary in the

stated amount).98

When used on construction projects, the applicant is typically the prime contractor and the

beneficiary is typically the project owner. Letters of credit may also be used to guarantee the

performance of subcontracts. In these situations, the applicant is typically a subcontractor and the

beneficiary is the prime contractor.99

When a letter of credit is used, the beneficiary will have the right to draw on funds from the

issuing bank. The process is almost immediate and far less cumbersome that making a claim on a

performance bond. Whereas a performance bond surety will investigate the claim, a bank that has issued

a letter of credit has the obligation to pay the beneficiary upon the presentation of stated documents.

B. Basic Principles: “Strict Compliance,” the “Independence Principle,” and the “Fraud Exception”

Three basic principles define how letters of credit are used.

Strict compliance refers to the rule that the documents presented by the beneficiary to the bank

must comply strictly with the terms and conditions of the letter of credit. If the documents presented do

not comply strictly, the issuing bank must dishonor it.

Under the independence principle, the letter of credit obligates the issuer (the bank) to pay drafts

or other demands presented by the beneficiary, independent of any underlying contract between the

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bank’s customer and the beneficiary. As long as the demand for payment accompanied by the

appropriate documents, if any, in proper form, the issuer is obligated to make payment. In short, the

issuer is neither required nor even permitted to look behind the documents to determine whether there

is any defect in the underlying transaction. Among other things, this means that the issuer can generally

ignore claims by its customer that the beneficiary has breached the contract, breached any warranty, or

even committed fraud.100

The fraud exception was developed to prevent a beneficiary from taking advantage of the strict

compliance and independence principles and obtain payment based on the presentation of documents

that appear to comply with the letter of credit but are false or forged. Most states have adopted the

fraud exception, under which the issuing bank may dishonor drafts where fraud is involved—giving the

bank’s customer the opportunity to see injunctive relief.101

C. Types of Letters of Credit

There are several different types of letters of credit. The most widely used are “commercial”

letters of credit and “standby” letters of credit. Commercial letters of credit facilitate the sale of goods,

particularly in international sales, and serve as the payment mechanism. The purpose of standby letters

of credit is to guard against nonperformance on an underlying agreement. Issuing banks do not presume

they will pay under standby letters of credit, and only about 0.03 percent of all standby letters of credit

end up as losses to the bank.102

1. Standby versus Commercial Letters of Credit

In addition to the “commercial” letter of credit in the sale of goods, letters of credit may be used

as “standbys” in a variety of business settings to guarantee various types of obligations. The standby

letter of credit resembles the commercial letter of credit. Both involve three separate contracts: “the

underlying contract between the customer and the beneficiary; the contract between the issuer and the

customer; and the letter of credit contract between the issuer and the beneficiary.”103 The fundamental

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difference between the standby letter of credit and the commercial letter of credit is that the financial

obligation for the latter arises out of documents that show that the beneficiary has performed. In

contrast, the financial obligation for the standby letter of credit arises from documents indicating that the

customer has failed to perform or failed to repay a debt.

Thus, the characteristic distinguishing the standby letter of credit from other letters of credit is

the documentation of nonperformance or default required for the beneficiary to obtain payment.

Standbys are usually payable upon presentation of a certified statement that the bank’s customer has not

performed as required by the underlying agreement. This documentation “could range from elaborate

third-party certifications to terse statements by the beneficiary in the form of “simple demands’ of

payment.”104 It is this documentation of nonperformance that identifies the standby letter of credit.

2. Revocable versus Irrevocable Letters of Credit

Letters of credit may be either revocable or irrevocable. Although the issuer of a revocable letter

of credit may unilaterally amend or cancel the credit at any time prior to the beneficiary’s presentation,

once an issuer has established an irrevocable letter of credit, the issuer may not amend or cancel the

credit without the beneficiary’s consent until the term set forth in the letter of credit expires. Letters of

credit are presumed to be irrevocable unless the letter of credit expressly permits revocation.105

3. Clean versus Documentary Letters of Credit

A “documentary” letter of credit requires specific documentation at presentment of the draft for

payment.106 A “clean” letter of credit is payable upon the presentation of a draft; no accompanying

documents are necessary.107 Commercial letters of credit and most standby letters of credit are

documentary—meaning that something other than a bank of site draft must be presented.108

D. The Uniform Commercial Code and Letters of Credit

Article 5 of the UCC governs letters of credit and codifies the strict compliance standard, the

independence principle, and the fraud exception.

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UCC § 5-108(a), “Issuer’s Rights and Obligations” sets forth the strict compliance standard:

Except as otherwise provided in Section 5-109 [“Fraud and Forgery”], an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e), appears on its face strictly to comply with the terms and conditions of the letter of credit. Except as otherwise provided in Section 5-113 and unless otherwise agreed with the applicant, an issuer shall dishonor a presentation that does not appear so to comply.

The “strict compliance” standard expressly adopted by the UCC does not require “slavish conformity to

the terms of the letter of credit”109 meaning that a draft containing immaterial errors should still meet the

strict compliance standard.110 But, strict compliance is nonetheless what a party seeking relief under a

letter of credit should strive for.

UCC § 5-103(d) embodies the independence principle, as follows:111

Rights and obligations of an issuer to a beneficiary . . . under a letter of credit are independent of the existence, performance, or nonperformance of a contract or arrangement out of which the letter of credit arises or which underlies it, including contracts or arrangements between the issuer and the applicant and between the applicant and the beneficiary.

This “fraud exception” is codified in UCC § 5-109.112

§ 5-109. Fraud and Forgery.

(a) If a presentation is made that appears on its face strictly to comply with the terms and conditions of the letter of credit, but a required document is forged or materially fraudulent, or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer or applicant:

(1) the issuer shall honor the presentation, if honor is demanded by (i) a nominated person who has given value in good faith and without notice of forgery or material fraud, (ii) a confirmer who has honored its confirmation in good faith, (iii) a holder in due course of a draft drawn under the letter of credit which was taken after acceptance by the issuer or nominated person, or (iv) an assignee of the issuer’s or nominated person’s deferred obligation that was taken for value and without notice of forgery or material fraud after the obligation was incurred by the issuer or nominated person; and

(2) the issuer, acting in good faith, may honor or dishonor the presentation in any other case.

According to UCC commentary, the issuer is under no duty to investigate before payment:113

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When a document labeled a ‘letter of credit’ requires the issuer to pay not upon the presentation of documents, but upon the determination of an extrinsic fact such as the applicant’s failure to perform a construction contract, and where that condition appears on its face to be fundamental and would, if ignored, leave no obligation to the issuer under the document labeled letter of credit, the issuer’s undertaking is not a letter of credit. It is probably some form of suretyship or other contractual relationship, and may be enforceable as such.

E. The Uniform Customs and Practice for Documentary Credits

The International Chamber of Commerce publishes the Uniform Customs and Practice for

Documentary Credits—a set of rules and practices that are frequently incorporated into letters of credit.

When the provisions of the UCP are incorporated into a letter of credit, they do not preempt applicable

law. In fact, Article 5 of the UCC anticipates that the parties may adopt rules of practice to govern the

credit. When parties adopt such rules, the UCC still governs the credit except to the extent that “a rule

explicitly stated in the UCP or other practice is different from a rule specifically stated in Article 5.” Some

provisions of Article 5 are mandatory and cannot be preempted. For instance, the UCC fraud provisions

apply even where UCP expressly governs.114 When the UCP is incorporated, it should be read as carefully

as the terms of the letter of credit itself.

F. Advantages and Disadvantages of Letters of Credit Compared to Performance Bonds

Letters of credit may be used in lieu of bid bonds as bid security. However, “[b]ecause most

sureties do not charge a premium for bid bonds for contractors to whom they provide bond lines of

credit, and because cash deposits or letters of credit (treated by banks as loans) can materially affect the

contractor’s working capital and bank line of credit, bid bonds are the bid security of choice.”115 As a

result, when used in the construction industry, letters of credit are more frequently used as substitutes

for performance bonds.116, 117

For the most part, the standby letter of credit is more useful to the beneficiary than the

performance bond.118 The beneficiary benefits from the greater “automaticity and brevity” of payment

under the standby letter of credit. The bank may inspect only the tendered documents, and payment will

29

not be delayed by the bank’s investigation of the underlying contract.119 Bank guarantees and standby

letters of credit are desirable to the project owner because of the ease with which the owner may draw

on the instrument. In most cases, the owner need only provide notice to the issuing bank.120 On

construction projects, these instruments provide the owner with powerful tools. The owner may draw

money without having to demonstrate or prove to the bank that the contractor is in default. At most, the

owner will have to furnish a certificate or other documents asserting that the contractor is in default. For

this reason, these instruments are inherently dangerous to the contractor who furnishes them.121

In addition, the administrative expenses involved with a standby letter of credit may be lower

than those involved with a performance bond, thus reducing the cost of a standby letter of credit;

because the bank is only responsible for scrutinizing the documents presented upon demand, and

because the bank will often already be very familiar with the customer’s creditworthiness and with the

underlying transaction, it will often be able to avoid incurring the additional or duplicative expenses of

investigating and monitoring the underlying contract. Moreover, the standby letter of credit has the

advantage that the bank incurs a much lower risk of becoming embroiled in litigation with the beneficiary

than does a surety.122 The fees and costs of letters of credit are annual and typically a small percentage

(one percent) of the amount of the letter of credit, although all applicants, except those extremely well-

heeled, must fully collateralize the issuer for the life of the letter of credit. For this reason, letters of

credit to secure construction obligations are often in an amount that is a small percentage (i.e., 10 to 20

percent) of the under lying contract’s price. Timely and proper presentation is mandatory. Although most

letters of credit are relatively simple to enforce upon timely and proper presentation, there are some

relatively rare instances when a draw on a letter of credit can be blocked through injunction based on

fraud. Finally, just like surety bonds, the bankruptcy of the underlying applicant for which the letter of

credit is provided does not generally affect enforcement against the issuer of the letter of credit.123

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In other ways, performance bonds offer advantages over letters of credit. For one thing, letters

of credit are of limited value to the project owner in the prequalification of contractors. During the

underwriting process, the bank looks at the contractor as if it were applying for a loan, and is primarily

concerned with the contractor’s asset pool to collateralize its potential liability to the bank if there is a

draw on the credit.124 If the bank finds that the contractor has adequate collateral to secure repayment,

it will issue the undertaking. If the bank believes the contractor is a credit risk, it may require the

contractor to maintain funds on deposit in the bank equal to the amount of the guarantee or standby

credit.125 Another examples has to do with the typical amount of letters of credit as opposed to

performance bonds. Performance bonds may offer greater total (if slower) relief because they are

typically in a higher amount. Whereas letters of credit are typically in an amount less than the contract

price, surety bond amounts are frequently 100 percent of the contract price.126

* * *

The “tried and true” remedies familiar to construction lawyers are used frequently for a reason—

they work and give clients a forum to have the issues decided on the merits (encouraging settlement to

be explored along the way). But circumstances may call for alternate approaches, especially where the

progress of a project is in danger or when a key participant appears to be diverting assets or resources or

is insolvent. These other approaches are worth review and consideration in all but the most

commonplace situations.

1 “An action for the repossession of personal property wrongfully taken or detained by the defendant,

whereby the plaintiff gives security for and holds the property until the court decides who owns it.”

Replevin, Black’s Law Dictionary (9th ed. 2009), available at Westlaw BLACKS. 2 Brandt v. Hershey, 182 A.2d 219, 222 (Pa. Super. Ct. 1962).

3 See, e.g., In Re Markel, 254 A.2d 236, 239 (Del. 1969) (“Ordinarily, a disputed claim of the right to

possession of chattels is determined in an action of replevin in the Superior Court before a jury.”); Child’s

Play Ltd. v. A & A Inc., 642 A.2d 170, 173 (Me. 1994) (“Replevin is specifically designed for the speedy

recovery of property before a trial on the merits.”). 4 See, e.g., 254 A.2d 236, 239 (“While the right asserted in replevin is on its face a right to possession,

nevertheless, it has become over the years a useful method to determine the title to goods and chattels.”)

(emphasis added).

31

5 See, Mechanicks Nat’l Bank v. Parker, 242 A.2d 69, 109 (N.H. 1968).

6 See, e.g., Ford Motor Credit Co. v. Caiazzo, 564 A.2d 931, 937 (Pa. Super. Ct. 1989) (“Thus, a plaintiff

in a replevin action must show good title and right to possession as against the defendant, but is not

required to set up such a title or right as against the whole world.”). 7 State v. Wetherbee, 177 Vt. 274, 286, 866 A.2d 527, 537 (Vt. 2004).

8 E.g., F. A. N. Co. v. McClellan, 182 A. 875 (N.J. 1936); Atlas Ins. Co. v. Gibbs, 183 A. 690 (Conn.

1936). 9 See, Conn. Gen. Stat. § 52-515 (2014) (“The action of replevin may be maintained to recover any goods

or chattels in which the plaintiff has a general or special property interest with a right to immediate

possession and which are wrongfully detained from him in any manner, together with the damages for

such wrongful detention.”); Me. Rev. Stat. Ann. tit. 4, § 152-N (2014) “Civil actions for redelivery of

goods or chattels taken or detained from the owner and secreted or withheld so that the goods or chattels

cannot be replevied, and in civil actions by creditors to reach and apply in payment of a debt any

property, right, title or interest, legal or equitable, of a debtor or debtors, which cannot be attached on writ

or taken on execution in a civil action, and any property or interest conveyed in fraud of creditors…”);

N.J. Stat. Ann. § 2B:50-1 (2015) (“A person seeking recovery of goods wrongly held by another may

bring an action for replevin in the Superior Court. If the person establishes the cause of action, the court

shall enter an order granting possession.”). 10

N.J. Stat. Ann. 4:61-1 (2015). 11

N.J. Stat. Ann. 4:61-2 (2015). 12

See, Me. Rev. Stat. Ann. tit. 14, §§ 7301-7312 (2014); Me. R. Civ. P. 64 (2015); N.J. Stat. Ann. §

2B:50-4 (providing for security); Pa. R. Civ. P. 1071. 13

See Ellie B. Word, “Checklist 36: Replevin and Recovery of Materials from the Jobsite,” in

Construction Checklists: A Guide to Frequently Encountered Construction Issues (Fred D. Wilshusen,

Eric A. Berg, Terrence L. Brookie, and Carrie L. Okizaki, eds., ABA Publishing 2008). 14

ConsensusDOCS 200, Standard Agreement and General Conditions Between Owner and Constructor,

section 9.2.2 is similar. 15

N.J. Stat. Ann. 4:61-1 (2015). 16

Crowe v. DeGoia, 447 A.2d 173 (N.J. 1982) 17

Waste Mgmt. of New Jersey, Inc. v. Union County Utilities Auth., 945 A. 2d 73 (App. Div. 2008). 18

See generally Gerdis v. Bloethe, 467 A.2d 689 (Conn. Super. Ct. 1983); Maryland Comm’n on Human

Relations v. Downey Commc’ns, Inc., 678 A.2d 55 (Md. Ct. Spec. App. 1996); Herman v. Dixon, 141

A.2d 576 (Pa. 1958); Am. Medi-Lab, Inc. v. Kennedy, 492 A.2d 1234, 1235 (R.I. 1985). 19

447 A.2d 173. 20

Id. at 177 (“…a preliminary injunction should not issue where all material facts are controverted.”). 21

See, Unitrin, Inc. v. Am. Gen. Corp., 651 A.2d 1361, 1371 (Del. 1995) (“The legal paradigm which

guides the Court of Chancery before entering a preliminary injunction is well established. First, the

plaintiff must demonstrate a reasonable probability of success on the merits at trial.”). 22

See, Mesa Partners v. Phillips Petroleum Co., 488 A.2d 107, 112 (Del. Ch. 1984) (“The next, and

crucial, determination is whether Mesa has demonstrated a reasonable probability that it will succeed at

final hearing in proving that the Standstill Agreement does not run to Phillips’ benefit. Without such a

showing a preliminary injunction is not earned and will not issue.”). 23

See, Fleet Nat. Bank v. Burke, 727 A.2d 823, 826 (Conn. Super. Ct. 1998) “The plaintiffs must show

that they are in danger of sustaining substantial and immediate injury if the injunction is not granted ...

Past injury alone is insufficient, although it may support the likelihood of future recurrences; but, to

obtain an injunction, the plaintiffs must demonstrate either present continuing injury or the likelihood of

future injury.”). 24

See, e.g., Crowe v. De Gioia, 447 A.2d 173, 176-77 (N.J. 1982) (“In this case, Crowe was threatened

with the loss of her home of 14 years and her only means of support. The interest of an unmarried

cohabitant in enforcement of a support agreement and the trauma of eviction from one’s home may well

32

justify the intervention of equity. Neither an unwarranted eviction nor reduction to poverty can be

compensated adequately by monetary damages awarded after a distant plenary hearing.”). 25

E.g., Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 586 (Del. Ch. 1998) (“Despite my conclusion

that Plaintiff seems reasonably likely to succeed on the merits of its claim of wrongful conduct by its

limited partners, I cannot conclude my level of confidence on that point overcomes my judgment that the

record simply does not support imminent, non-speculative damages that can be stemmed only by

preliminary injunctive relief.”). 26

See Mills Acquisition Co. v. Macmillan, Inc., 559 A.2d 1261, 1279 (Del. 1989) (“[T]he Court must

balance the plaintiff’s need for protection against any harm that can reasonably be expected to befall the

defendants if the injunction is granted. When the former outweighs the latter, then the injunction should

issue.”); But see, In re Nash, 158 Vt. 458, 464, 614 A.2d 367, 369 (Vt. 1991) (“State appellate courts

remain divided on this issue. Some courts follow the federal standard…while others [e.g., Mills Court]

will not accord deference to findings that are based solely on documentary evidence.”). 27

See, Milk Mktg. Bd. v. United Dairy Farmers Co-op Ass’n, 299 A.2d 191, 194 (1973) (“It is true, as

stated in the brief of the intervening appellants, that a preliminary injunction will not be issued unless

greater injury will be done by refusing it than by granting it.”). 28

See, Ambrogi v. Reber, 2007 PA Super 278, ¶ 24 (“If we accepted Appellants’ argument in this regard,

we essentially would be ruling that whenever a defendant contests liability, the trial court may not issue a

preliminary injunction—when necessary to preserve the status quo. This would mean that a preliminary

injunction could be entered only in cases in which all defendants acknowledge that they are at fault and

are liable for the plaintiff’s injuries. If this were the law of Pennsylvania, a preliminary injunction could

issue only if summary judgment is appropriate. But if summary judgment were to be deemed proper, the

trial court simply would grant it and there never would be any need for an injunction at all.”). 29

Mitsubishi Int’l Corp. v. Cardinal Textile Sales, Inc., 14 F.3d 1507, 1521 (11th Cir. 1994). 30

Connecticut v. Doehr, 501 U.S. 1, 17 (1991) [hereinafter Doehr]. 31

3-30 Debtor-Creditor Law § 30.02 (Theodore Eisenberg & Erik F. Gerding eds., 2014), available at

Lexis. 32

Rhonda Wasserman, Equity Renewed: Preliminary Injunctions to Secure Potential Money Judgments,

67 Wash. L. Rev. 257, 270-71 (1992) [hereinafter Wasserman]; see also id. at 271 n.44 (listing

jurisdictions where third-party garnishees may be subject to prejudgment attachment such as CO, DL,

D.C., FL, IL and NY.). 33

C. S. Patrinelis, Annotation, What is an Action for “Debt” within Attachment or Garnishment Statute,

12 A.L.R.2d 787, § 3 (1950), available at WL-ALR. 34

Id. at § 2. 35

Wasserman, supra note 32, at 271. 36

Id. 37

See Wasserman, supra note 32, at 276 (“Pennsylvania has rescinded all of its statutory provisions for

attachment.”). 38

Cal. Civ. Proc. Code § 483.010 (West 2015). 39

See Del. Trust Co. v. Partial, 517 A.2d 259, 262 (Del. Ch. 1986) (holding that the “policy of the

legislature with respect to the seizure or garnishment of funds held by Delaware banks . . . may [not] be

ignored by the simple expedient of denominating the writ sought as one of injunction rather than one of

garnishment.”). 40

Restatement (Second) of Judgments § 8 cmt. a (1982). 41

Wasserman, supra note 32, at 278 (“[N]o state statute purports to authorize the attachment of property

outside the territory of the state.”). 42

Doehr, supra note 30, at 17-18. 43

See Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 330-31 (1999)

(holding that Rule 64 authorizes the federal courts to use state prejudgment remedies, because an all-

purpose federal court injunction power pursuant to Rule 65 would render Rule 64 virtually irrelevant).

33

44

Paul H. Aschkar & Co. v. Curtis, 327 F.2d 306, 310 (9th Cir. 1963). 45

Cal. Civ. Proc. Code §§ 483.010 - 493.060 (West 2015); see generally Bank of Am. v. Salinas Nissan,

Inc. 254 Cal. Rptr. 748 (Ct. App. 1989). 46

Cal. Civ. Proc. Code § 483.010(a) (West 2015). 47

See Kemp Bros. Const., Inc. v. Titan Elec. Corp., 53 Cal. Rptr. 673, 678 n.5 (Ct. App. 2007). 48

Cal. Civ. Proc. Code § 481.190 (West 2015). 49

Martin v. Aboyan, 148 Cal. App. 3d 826, 830 (Ct. App. 1983). 50

Lyon Prods., Ltd. v. Cineplex Odeon Corp., 29 Cal. App. 4th 1459, 1466 (Ct. App. 1994). 51

Pos-A-Traction, Inc. v. Kelly Springfield Tire Co., 112 F. Supp. 2d 1178 (C.D. Cal. 2000) 52

Cal. Civ. Proc. Code § 485.010(a) (West 2015). 53

Cal. Civ. Proc. Code 485.010(b)(1) (West 2015). 54

3-30 Debtor-Creditor Law § 30.02 (Theodore Eisenberg & Erik F. Gerding eds., 2014), available at

Lexis. 55

Cal. Civ. Proc. Code § 486.010 (West 2015); N.Y. C.P.L.R. 6210 (McKinney 2015) 56

Mo. Rev. Stat. § 521.010(3) (West 2015); see generally Kern Alexander, The Mareva Injunction

Andanton Piller Order: The Nuclear Weapons of English Commercial Litigation, 11 Fla. J. Int’l L. 487,

510-11 (1997) (“In particular, the attachment procedure is available in a situation where a defendant is

likely to avoid payment of the debt if judgment is secured. Most state laws will allow an attachment to

issue if the defendant is a nonresident, has been absent from the jurisdiction for a long period, has

attempted to avoid being served with a summons, is on the verge of removing or has already removed

property from the state, or has sold or transferred property with intent to avoid payment to creditors.”). 57

See also Doehr, supra note 30, at 11 (“Attachment ordinarily clouds title; impairs the ability to sell or

otherwise alienate the property; taints any credit rating; reduces the chance of obtaining a home equity

loan or additional mortgage; and can even place an existing mortgage in technical default where there is

an insecurity clause.”). 58

Wasserman, supra note 32, at 282. 59

Id., at 282-83. 60

Id.. 61

Id., at 282-84. 62

Lonny Sheinkopf Hoffman, Access to Information, Access to Justice: The Role of Presuit Investigatory

Discovery, 40 U. Mich. J.L. Reform 217, 225-26 (2007) [hereinafter Hoffman]. 63

1 Steven H. Steinglass, Section 1983 Litigation in State Cts. § 8:8 (2014), available at Westlaw. 64

In re Storck, 179 F.R.D. 57, 58 (D. Mass. 1998). 65

Deiulemar Compagnia Di Navigazione v. M/V Allegra, 198 F.3d 473, 485 (4th Cir. 1999) 66

1 Steven H. Steinglass, Section 1983 Litigation in State Cts. § 8:8 (2014), available at Westlaw. 67

In re I–35W Bridge Collapse Site Inspection, 243 F.R.D. 349, 353 (D. Minn. 2007). 68

Tex. R. Civ. P. 202.1 (West 2014). 69

Jessica B. Pulliam, Tricks and Traps of Pre-Arbitration Discovery, 32 Rev. Litig. 91, 96 (2013)

(footnotes omitted) [hereinafter Pulliam]. 70

Hoffman, supra note 62, at 254 71

In re Does 1 and 2, 337 S.W.3d 862, 865 (Tex. 2011). 72

Id. 73

Hoffman, supra note 62, at 254. 74

Ala. Code § 27-a-1 (2015) 75

Ex parte Anderson, 644 So. 2d 961, 964 (Ala. 1994). 76

Driskill v. Culliver, 797 So. 2d 495, 497-98 (Ala. Civ.App. 2001). 77

See Young v. Hyundai Motor Mfg. Ala., LLC, 575 F. Supp. 2d 1251, 1253–55 (M.D. Ala. 2008)

(“Though the stated purpose of [Alabama] Rule 27 is the perpetuation of testimony, it has been construed

as being broader than its federal counterpart in this respect…Where the federal rule strictly limits pre-suit

34

discovery to perpetuation purposes, [Alabama] Rule 27 permits persons to seek pre-suit discovery for the

purpose of investigating and evaluating a potential claim.”) 78

See Scott Dodson, Federal Pleading and State Presuit Discovery, 14 Lewis & Clark L. Rev. 43, 58

(2010) [hereinafter Dodson] (“To be entitled to this presuit discovery, the applicant must make a prima

facie showing that a cause of action exists. But that does not mean that the applicant must already be able

to plead the cause of action; to the contrary, the application will be denied if the applicant already has

sufficient information upon which to frame a complaint.”). 79

N.Y. C.P.L.R. §3102(c) (McKinney 2011). 80

Id. 81

Pulliam, supra note 69, at 94. 82

In re Pelley, 252 N.Y.S.2d 944, 945-46 (N.Y. Cnty. Ct. 1964). 83

Ohio Rev. Code Ann. §2317.48 (West 2014) 84

Id. 85

Pa. Cons. Stat. Ann. § 4003.8(a). 86

Id. 87

Dodson, supra note 78, at 58. 88

See Fla. Stat. Ann. § 1.280 (West 2014). 89

Pulliam, supra note 69, at 95. 90

Cal. Civ. Proc. Code § 2035.010(b) (West 2011). 91

Patterson v. O’Neal, 673 F. Supp. 2d 974 (N.D. Cal. 2009). 92

Iowa Code Ann. § 1.725 (West 2014); Kan. Stat. Ann. § 60-227(3) (West 2011). 93

E.g., Haw. R. Civ. P. 27; Ind. R. Civ. P. 27; La. Code Civ. P. Ann. art. 1429 (2011); Me. R. Civ. P. 27;

Mass. R. Civ. P. 27; Miss. R. Civ. P. 27; Mo. R. Civ. P. 57.02; Mont. R. Civ. P. 27; Neb. Ct. R. Disc. § 6-

327; Nev. R. Civ. P. 27; N.C. R. Civ. P. 27; N.D. R. Civ. P. 27; Okla. Stat. Ann. tit. 12, § 3227 (2012);

Or. R. Civ. P. 37; S.C. R. Civ. P. 27; S.D. Codified Laws § 15-6-27 (2012); Tenn. R. Civ. P. 27.01; Utah

R. Civ. P. 27; Wash. Super. Ct. Civ. R. 27; W. Va. R. Civ. P. 27; Wis. Stat. § 804.02 (2011); Wyo. R.

Civ. P. 27. 94

9 U.S.C. § 4 (2006). See also Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999) (“The

FAA provides for discovery and a full trial in connection with a motion to compel arbitration only if ‘the

making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue.”‘ 95

9 U.S.C. § 3 (2006). 96

9 U.S.C. § 3 (2006). 97

In re Heritage Bldg. Sys., 185 S.W.3d 539, 542 (Tex. App. 2006) 98

“A letter of credit is defined to be an undertaking by an issuer (usually a financial institution) made at

the request of an applicant (usually a customer of the financial institution), that meets the formal

requirements of Article 5, which provides that the issuer will honor a documentary presentation by

making payment as specified in the letter of credit.” 1 Williston on Contracts § 2:23 (4th ed.) (footnotes

omitted). See also Gerald T. McLaughlin & Neil B. Cohen, Letters of Credit and Interpleader, N.Y. L.J.

(Jun. 12, 1991) (“A letter of credit is a payment obligation—normally, in irrevocable form—running from

the issuer (usually a bank) to the beneficiary (usually a seller or creditor). This letter of credit payment

obligation possesses certain unique characteristics that assure swift payment by the issuer of the credit.

First, the issuer must determine whether or not to pay the credit based solely on a review of documents,

not on a review of any facts underlying those documents. Second, the issuer must pay the credit even if

disputes arise with respect to the commercial or financial contracts that underlie the credit. Thus, the

proceeds of the letter of credit should be swiftly paid to a seller even if a dispute should arise between the

seller and the buyer over the quality of the goods. A buyer’s remedy for receiving defective goods would

be to seek recovery for breach of warranty from the seller after payment of the credit. The essential

purpose of the letter of credit is to make the beneficiary of the credit (or the assignee of its proceeds) the

stakeholder of the money during any ensuing litigation between the buyer and the seller.”)

35

99

David J. Barru, How To Guarantee Contractor Performance on International Construction Projects:

Comparing Surety Bonds with Bank Guarantees and Standby Letters of Credit, 37 Geo. Wash. Int’l L.

Rev. 51, 61 [hereinafter Barru]; Jonathan J. Dunn, Jocelyn Knoll & Megan Dempsey, Letters of Credit in

Construction Projects, Constr. Law. (Winter 2009) at 33. 100

1 Williston on Contracts § 2:23 (4th ed.) (footnotes omitted), available at Westlaw. 101

Id. 102

Jonathan J. Dunn and John J. Petro, The Rumble in the Jungle: Letters of Credit, Bonding, and

Default Insurance—Hedging Bets in a Roller-Coaster Market, 32 Construction Law 5, 11 (Fall 2012).

These authors cite to Standby letters of credit—Issuing bank’s risk, Corp Couns Gd to Letters of Credit

§ 1:110 for the 0.03 percent figure. 103

Cobb Restaurants, L.L.C. v. Texas Capital Bank, N.A., 201 S.W.3d 175 (Tex. App. 2006); accord

3Com Corp. v. Banco do Brasil, S.A., 171 F.3d 739, 741 (2d Cir. 1999). 104

Boris Kozolchyk, The Emerging Law of Standby Letters of Credit and Bank Guarantees, 24 Ariz. L.

Rev. 319, 321 (1980). 105

Jonathan J. Dunn, Jocelyn Knoll & Megan Dempsey, Letters of Credit in Construction Projects,

Constr. Law (Winter 2009) at 33 (citation omitted). 106

White & R. Summers, Handbook of the Law Under the Uniform Commercial Code, § 18-1 (1972). 107

Id. 108

Barru, supra note 99, at 61-68. To avoid the inherent risks associated with “clean” credits, “[m]any

standby credits require the beneficiary to present, along with his draft or demand, a certification reciting

that … the applicant has failed to perform the underlying contract.” The beneficiary must make such

certification with caution. False certification has been grounds for court-ordered injunctive relief

preventing payment of the letter of credit based on fraud, and has been the basis for breach of warranty

claims. Guarantees or standby letters of credit can be structured to afford the contractor more protection

by requiring that the beneficiary submit a certification from an independent third party attesting to the

contractor’s non-performance. Id. at 64-65. 109

U.C.C. § 5-108 cmt. 1 (2002) (“This section adopts strict compliance, rather than the standard which

commentators have called ‘substantial compliance.’”). 110

Id. 111

UCC § 5-103(d); see also Barru, supra note 99, at 78-79 (observing that “the independence principle

was reinforced and strengthened by the 1995 revisions to UCC Article 5.”) 112

UCC § 5-109(a); see also Barru, supra note 99, at 78-79 (“[T]he Revised Code (UCC § 5-

109(a)(1)-(2)) provides that if what looks like a strictly compliant presentation for payment is made, and

in fact a required document has been forged or is materially fraudulent, or if honoring the presentation

would facilitate a material fraud by the beneficiary, the issuer must nevertheless honor the letter in favor

of four entities: (1) a good faith nominee who has given value and taken without notice of the forgery or

fraud; (2) a confirming entity that has in good faith honored its confirmation; (3) a holder in due course of

any draft drawn under the letter as long as the draft was taken after acceptance by the issuer or a nominee;

and (4) an assignee of the issuer’s or a nominee’s deferred obligation, as long as the assignment was taken

after the obligation was incurred by the nominee or issuer, and the assignee gave value and took without

notice of the fraud or forgery. As to any other entity, when there’s a forgery or fraud as set forth above,

the issuer has the discretion, acting in good faith, to honor or dishonor the presentation.”). 113

UCC § 5-102 cmt. 6 (2002); see also Wichita Eagle & Beacon Publ’g Co. v. Pac. Nat’l Bank of San

Francisco, 493 F.2d 1285 (9th Cir. 1974). 114

Barru, supra note 99, at 71-72; see, e.g., Mid-America Tire, Inc. v. PTZ Trading Ltd., 768 N.E.2d 619

(Ohio 2002). 115

1 Bruner & O’Connor Construction Law § 2:68, available at Westlaw (footnotes omitted).

36

116

Letters of credit may also be substitutes for payment bonds. In fact, in 1991, the federal

government authorized the use of irrevocable letters of credit as a substitute for Miller Act

bonds. See Office of Fed. Procurement Policy Letter No. 91-4; F.A.R. §§ 28.102-1(b)(1)(ii) & 28.204-3. 117

In 1994, Congress encouraged the executive branch to develop “alternatives to payment

bonds” on contracts between $25,000 and $100,000. See Pub. Law 103-355 § 4104(b)(2) (1994)

(authorizing payment bond alternatives on contracts in amounts between $25,000 and $100,000). See also

Gutierrez v. American Intern. Ins. Co. of P.R., 247 F. Supp. 2d 83 (D.P.R. 2003) (surety guaranteed

performance by issuing an instrument construed to be an unconditional letter of credit rather than a

performance bond). 118

Michael Stern, The Independence Rule in Standby Letters of Credit, 52 U. Chi. L. Rev. 218, 224. 119

Id. 120

Id. 121

Barru, supra note 99, at 62. 122

M. Stern, 52 U. Chi. L. Rev. 218, 224. 123

32 Construction Law 5, 11 (Fall 2012). 124

Id., 56-57. 125

Id., 57. 126

32 Construction Law 5, 15 (Fall 2012).