May 22, 2008, Introduced by Rep. Farrah and referred to the Committee on Regulatory Reform.
A bill to amend 1931 PA 259, entitled
"An act to protect the people of the state from imposition and
fraud in the building construction industry and to provide
penalties for the violation of this act,"
by amending the title and sections 1, 2, and 3 (MCL 570.151,
570.152, and 570.153) and by adding section 4.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to protect the people of the state from imposition and
fraud in the public and private building construction industry; to
provide for the imposition of a trust for certain funds held by
certain persons; and to provide penalties and remedies for the
violation of this act.
Sec. 1. (1) In the building construction industry, the
building contract fund paid by any person to a contractor,
subcontractor, or construction manager, or by such person or
contractor to a subcontractor, on a private or public works
project,
shall be considered by this act to
be a trust fund , for
the benefit of the person making the payment, contractors,
laborers,
subcontractors, or materialmen. , and the The contractor,
construction manager, or subcontractor shall be considered the
trustee of all funds so paid to him or her for building
construction purposes.
(2) As used in this act:
(a) "Construction manager" means an individual, sole
proprietorship, partnership, corporation, limited liability
company, or joint venture, or other legal entity that, pursuant to
an engagement by a public agency and acting primarily in an
administrative or managerial capacity, procures and enters into 1
or more contracts for the construction, alteration, demolition, or
repair of a private or public works project.
(b) "Contractor" means an individual, sole proprietorship,
partnership, corporation, or joint venture, that is a party to a
construction contract on a public or private project or with a
construction manager.
Sec. 2. (1) Any contractor, construction manager, or
subcontractor engaged in the building construction business, who,
with
intent to defraud, shall retain or use retains the proceeds or
any part therefor, of any payment made to him or her, for any other
purpose than to first pay laborers, subcontractors, and
materialmen, engaged by him or her to perform labor or furnish
material
for the specific improvement, shall be is guilty of a
felony in appropriating such funds to his or her own use while any
amount for which he or she may be liable or become liable under the
terms
of his the contract for such labor or material remains
unpaid. ,
and
(2) That contractor, construction manager, or subcontractor
may be prosecuted upon the complaint of any persons so defrauded,
and,
upon conviction, shall be punished by a fine of not less than
100
dollars or more than 5,000
dollars and/or 50% of the
amount of
the trust funds at issue and may be imprisoned not less than 6
months
nor or more than 3 years, imprisonment in a state
prison at
the
discretion of the court or
both.
Sec. 3. The appropriation by a contractor, construction
manager,
or any subcontractor, of any moneys money paid
to him or
her
for building operations before the
payment by him of all moneys
money due or so to become due laborers, subcontractors,
materialmen, or
others entitled to payment, shall be is evidence of
intent to defraud.
Sec. 4. (1) A contractor, construction manager, or
subcontractor violating section 2, as well as any individual
corporate officer or company representative that participated in or
permitted the appropriation or fraudulent detention of any trust
funds, is liable in a civil action brought by any person damaged by
the appropriation or fraudulent detention for the amount
appropriated or fraudulently detained. The court shall also award
the prevailing party the sum of $500.00 or the reasonable actual
amount of costs and attorney fees incurred in bringing such a
proceeding, whichever is larger.
(2) The burden of proving the lack of fraud or defalcation is
on the trustee and the individual officer trustee to account to the
trust beneficiaries for the disposition of the trust funds.
Enacting section 1. (1) This amendatory act takes effect
January 1, 2009.
(2) This amendatory act applies to any contracts entered into
on or after January 1, 2009.
Enacting section 2. This amendatory act does not take effect
unless all of the following bills of the 94th Legislature are
enacted into law:
(a) Senate Bill No.____ or House Bill No. 6175(request no.
04829'07).
(b) Senate Bill No.____ or House Bill No. 6174(request no.
04830'07).
(c) Senate Bill No.____ or House Bill No. 6173(request no.
04831'07).