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Okada Ruling


(Okada Trucking Company, Ltd. v. Board of Water Supply) by the Hawaii State Supreme Court

In 1957, the legislature (HRS) 444-8 (c) gave specialty contractors the right to perform work under their license if it was “incidental and supplemental”. This allows C-specialty contractors to perform “minor” work outside their license that aids on the completion of their work.

Twenty three years later, the Construction Licensing Board defined the terms to mean “work in other trades directly related to and necessary for the completion of the project undertaken by a licensee pursuant to the scope of the licensee’s license.”

Recently, there is a case in which a B Contractor won a bid to do a government school project in Lanikila. No C-22 licensee was named although it was 20 -25% of the project.  The Construction Licensing Board (CLB) ruled that work was “incidental and supplemental” because it was related to and necessary for completion of the project. Attorney, Michael Lilly is taking this case to the Hawaii Supreme Court to re-define the Construction Licensing Board’s ruling regarding work done by a B contractor (general contractor) under a C-5 license to do a sub-contractors (C-22) work. Intention is to protect the subcontractor. However, the attorney in this case, Mike Lilly, is unlikely to win as the court has little leeway and must presume that the hearings officer from the CLB is correct unless there is some glaring omission of fact.

The point is that based on the CLB definition, a B contractor can perform the duties of a C-contractor under a C-5 license and could eliminate all C-specialty  work in a public bid.

Regardless of the aforementioned case, we feel it is important to support the effort. The Subcontractors Association of Hawaii retained attorney William (Bill) J. Nagle to draft a statement (Amicus Brief) that its members signed to support the position that generals should do the work of Contractors and order the CLB to require that specialty contractor licensees perform work within the scope of their licenses, as opposed to general engineering or general building contractor through their C-5 specialty contactor licenses. This statement will be submitted to the Intermediate Court of Appeals of the state of Hawaii.

Amicus Brief:
The “incidental ands supplemental” exception was designed to allow our members the right to perform work outside the trades necessary to complete a project. However, CLB’s expansion of the B contractor’s automatic C-5 license to include any work necessary to complete work, no matter how great its value or quantity, threatens the C-specialty contractor’s right to participate in public projects and violates Chapter HRS 444 (c).

June 5, 2008~The amicus brief was submitted to the Intermediate Court of Appeals of the state of Hawaii (District 50) on May 5, 2008.  The state’s brief was due on June 5, 2008 but the deadline passed. They will just review the hearings officer report from the CLB and will not hash out the facts.  Bill Nagle, attorney who wrote the amicus brief stated that Mike Lilly’s case may not go to trial until six months to one year.

There is also a gray area in which Renovation Contractors (C-5) such as those under the BIA can justify doing the work of a C-22 subcontractor.

The difference between the Okada Trucking ruling and the current lawsuit by Mike Lilly is that the Okada job was a NEW construction project versus the DOE project which was a RENOVATION.

Perhaps another brief may need to be submitted by the SAH. The state legislature may be the only entity who can clear up the matter and define “incidental and supplemental”.

There are 5,500 contractor licenses issued by the state, of which two-thirds are sub-contractors.  Therefore, there is strength in numbers.