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Can a commercial condo association’s carrier subrogate against the tenants of one of its member unit owners?

California Court Invokes Equity to Stretch Anti-Subrogation Rule Principles

Tuesday, June 18, 2019 — Gus Sara & William L. Doerler - The Subrogation Strategist

In Western Heritage Ins. Co. v. Frances Todd, Inc. 2019 Cal. App. Lexis 299, the Court of Appeals of California, First Appellate District, addressed whether a commercial condominium association’s carrier could subrogate against the tenants (aka lessees) of one of its member unit owners. After examining the condominium association’s declarations, as well as the lease terms between the owner and the lessees, the court held that the association’s carrier could not subrogate against the lessees because they were implied co-insureds on the policy. To reach its decision, the court explained that an insurer steps into the shoes of its insured, not the party with whom it is in privity. Although the first-party property portion of the association’s insurance policy did not, as required by the association’s declarations, have the owner listed as an additional named insured, the court held that it would be inequitable to treat the association as the sole insured for purposes of determining Western Heritage’s right to bring a subrogation action.

In Western Heritage, William R. de Carion d/b/a Surfwood Properties (de Carion or Lessor), owned a commercial unit within a multi-unit commercial building. The building was managed by the East Shore Commercial Condominiums Owners’ Association (the Association). As a unit owner, de Carion was a member of the Association. The Association’s Declarations of Codes, Covenants and Restrictions (CC&Rs) required the Association to procure fire insurance for the commercial units by adding the unit owners as additional named insureds. The CC&Rs also prohibited owners and their “tenants” from procuring their own fire insurance policies for the premises. In 2013, de Carion leased his commercial space to Frances Todd, Inc. d/b/a The Wooden Duck, Eric Todd Gellerman and Amy Frances Feber (Lessees).

Reprinted courtesy of Gus Sara, White and Williams LLP and William L. Doerler, White and Williams LLP
Mr. Sara may be contacted at sarag@whiteandwilliams.com
Mr. Doerler may be contacted at doerlerw@whiteandwilliams.com


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The AZ Legislature created the Arizona Tourism and Sports Authorityto build and/or operate a variety of sports-related facilities.

Arizona Supreme Court Upholds Constitutionality of Provision Relating to Statutory Authority for Constructing and Operating Sports and Tourism Complexes

Tuesday, June 18, 2019 — Amanda Z. Weaver - Snell & Wilmer

In an opinion published February 25, 2019, the Arizona Supreme Court held that Maricopa County’s surcharge on car rental agencies to fund a stadium and other sports- and tourism-related projects did not violate either the dormant Commerce Clause of the United States Constitution or the anti-diversion provision of the Arizona Constitution, art. 9, § 14. Saban Rent-a-Car LLC v. Ariz. Dep’t of Revenue.

In 2000, the Arizona Legislature created the Arizona Tourism and Sports Authority (the Authority) to build and/or operate a variety of sports-related facilities, including Major League Baseball spring training facilities, and youth and amateur sports and recreation centers. Taxes and surcharges, approved by voters, are the sole funding for the Authority’s construction projects, including the challenged surcharge in Maricopa County. This surcharge is based on the income from car rental companies leasing vehicles to customers for less than one year, and is the greater of $2.50 per rental or 3.25% of the company’s gross proceeds or income. A.R.S. § 5-839. The state treasurer deposits $2.50 per rental transaction into the Maricopa County Stadium District, as it has since 1991, and the remaining amount of the difference between $2.50 per transaction and 3.25% of the company’s gross income or proceeds is distributed to the Authority. Rental car companies often pass this surcharge on to their customers.

Reprinted courtesy of Amanda Z. Weaver, Snell & Wilmer

Ms. Weaver may be contacted at aweaver@swlaw.com

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Tred R. Eyerly analyzes the case Bahama Bay II Condo. Ass'n. v. Untied Nat'l Ins. Co.

No Coverage for Sink Hole Loss

Tuesday, June 18, 2019 — Tred R. Eyerly - Insurance Law Hawaii

The federal district court found there was no coverage under the commercial property policy for loss suffered by the insured condominium association due to a sink hole. Bahama Bay II Condo. Ass'n. v. Untied Nat'l Ins. Co., 2019 U.S. Dist. LEXIS 67487 (M.D. Fla. April 11, 2019).

The plaintiff condominium association had thirteen buildings inside their complex. On December 9, 2016, a sinkhole appeared near Building 43. The building was vacated and declared unsafe. Plaintiff's board excused Building 43 owners from paying association dues.

Plaintiff submitted a claim to the insurer for benefits under the policy. The insurer inspected and accepted coverage for Building 43 under the policy's Catastrophic Ground Cover Collapse (CGCC) provision and issued a check for $290,000 for immediate repairs. The insurer denied coverage for Buildings 42, 44, and 45; repairs to the foundation of all buildings, the retaining wall and outdoor fences; land, landscaping, and patios, uncollected association dues, and condominium unit owner property.

Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert

Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Construction Fire Safety Practices: What Superintendents Need to Know

June 18, 2019 — Raymond O’Brocki - Construction Executive

Fire safety in buildings under construction is a hugely important topic due to the devastating impact large construction fires can have. While rare, the consequences of construction fires are attracting more attention in the public and private sectors, pointing to the need for more accountability on construction sites and greater enforcement of existing fire and building codes.

A variety of best practice manuals and training videos are available on www.constructionfiresafety.org to help reduce the frequency and severity of construction fires. These materials are designed to educate and inform construction crews, including site superintendents, local building and fire regulators, and responding fire departments on how to prevent fires, reduce losses and ensure overall safety at large construction sites.

Reprinted courtesy of Raymond O’Brocki, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

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Protect Against Wood-frame Construction Hazards With CPL Insurance

June 18, 2019 — Drew Rothman - Construction Executive

Low cost and availability have combined in recent years to make wood-frame construction extremely popular for building everything from apartment complexes to mixed use facilities. In addition to conforming easily to the designs of most structures, cedar, pine and other types of softwood are currently meeting the growing demands of owners and developers for green building and sustainability products.

However, a learning curve does exist in the United States for wood-frame contractors looking to overcome the safety, project management, structural, moisture and design challenges that can plague these projects—many of which can result in pollution conditions. This includes the implementation of risk management strategies such as the adoption of insurance forms to control wide-ranging pollution problems and better schedule planning to avoid the adverse effects of seasonal weather conditions. Other strategies entail the negotiation of contract terms that protect against delayed claims; combating mold through procedures that ensure the building’s dryness; and protecting against moisture problems during the wood’s transport and storage.

Reprinted courtesy of Drew Rothman, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

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U.S. Housing Starts Climb More Than Forecast as Permits Rise

June 18, 2019 — Reade Pickert - Bloomberg

U.S. new-home construction rose for a second month and topped estimates in April in a sign of positive momentum for the housing sector at the start of the second quarter.

Residential starts increased 5.7% to a 1.24 million annualized rate after a 1.7% gain in March that was previously reported as a drop, according to government figures released Thursday. Permits, a proxy for future construction, advanced 0.6% to a 1.30 million rate.
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The Intersection of Insurance Coverage Issues and Underlying Claims in Construction Mediations: Perspectives from the Mediator and Coverage Counsel

June 18, 2019 — Beverley BevenFlorez – CDJ Staff

This one-day American Bar Association seminar “explores the intersection of coverage issues and underlying claims in the context of construction mediations. The program focuses on the perspectives of the mediator and coverage counsel.”

July 17th, 2019
Live Webinar

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Husam Ahmad and Shahid Akhtar, the former CEO and CFO, respectively, entered the pleas.

NYC Design Firm Executives Plead Guilty in Pay-to-Play Scheme

Tuesday, June 18, 2019 — Engineering News-Record

Two former top executives of New York City-based engineer HAKS pleaded guilty in city court May 13 to bribe charges related to efforts to gain municipal water infrastructure contracts, according to court filings, an attorney for its ex-chief financial officer and plea agreements provided to ENR by the Manhattan district attorney's office.

Reprinted courtesy of Engineering News-Record

ENR may be contacted at ENR.com@bnpmedia.com

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A storefront becomes “Vacant or Abandoned” once it has been unoccupied for 30 days.

Tighter Requirements and a New Penalty for Owners of Vacant or Abandoned Storefronts in San Francisco

Tuesday, June 18, 2019 — Matt Olhausen - Gravel2Gavel

Ordinance 52-19 became effective in April 2019 and expands upon existing San Francisco Building Code registration requirements for “Vacant or Abandoned” “Commercial Storefronts.”

A storefront becomes “Vacant or Abandoned” once it has been unoccupied for 30 days (among other earlier triggers for blighted or unsecured storefronts). A “Commercial Storefront” is broadly defined as “any area within a building that may be individually leased or rented for any purpose other than Residential Use as defined in Planning Code.” (See § 103.A.5.1 of the San Francisco Building Code.) So, a building that is 97% leased could still contain a Vacant or Abandoned Commercial Storefront, which would technically require registration under the Building Code.

Reprinted courtesy of Matt Olhausen, Pillsbury

Mr. Olhausen may be contacted at matt.olhausen@pillsburylaw.com

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A recent case from the Norfolk, Virginia Circuit Court examined when notice is “given” under the Little Miller Act.

Payment Bond Claim Notice Requires More than Mailing

Tuesday, June 18, 2019 — Christopher G. Hill - Construction Law Musings

It’s been a while since I posted something new relating to Virginia’s “Little Miller Act” and its various notice requirements for a subcontractor to make a payment bond claim.

I have posted on the basics of a Virginia payment bond claim previously here at Musings. One of these basics is the 90 day notice requirement for suppliers or second tier subcontractors with no direct contractual relationship to the general contractor. A recent case from the Norfolk, Virginia Circuit Court examined when notice is “given” under the Little Miller Act.

In R T Atkinson Building Corp v Archer Western Construction, LLC the Court looked at the question of whether mailing of the notice of claim is enough to constitute notice being “given” in a manner that would satisfy the statutory requirements. In that case, the supplier mailed the notice within the 90 day window, but the defendant argued on summary judgment that it did not receive the notice until 2 days after the 90 day window had closed. In support of this contention, the defendant provided tracking information showing delivery by the USPS on the non-compliant date.

Reprinted courtesy of The Law Office of Christopher G. Hill

Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Most construction projects end up in some form of litigation.

No Rest for the Weary: Project Completion Is the Beginning of Litigation

Tuesday, June 18, 2019 — Albert Li & Bob Fitzsimmons - Construction Executive

In today’s environment, most construction projects end up in some form of litigation. Construction is full-time employment for lawyers – from contract negotiation to project management, lien and payment issues. Years after project completion, a company still can face construction defect litigation and be served with a Notice of Opportunity to Repair, which in most states is now codified into statute. This is the beginning of what most likely will become a lawsuit, involving many of the subcontractors.

Watch Out for the Construction Contract Blame Game
The first phase of post construction litigation involves the review of contract and insurance policy language in an attempt to transfer responsibility in the litigation to other parties.

Before construction began, contract negotiation focused on budget and timeline. In the post-construction phase, two less noticed provisions of the contract are critical – indemnity and insurance.

Reprinted courtesy of Albert Li & Bob Fitzsimmons, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Fitzsimmons may be contacted at rfitzsimmons@rumberger.com
Mr. Li may be contacted at ali@rumberger.com


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There is an independent cause of action for third-party spoliation of evidence.

Quick Note: Independent Third-Party Spoliation Of Evidence Claim

Tuesday, June 18, 2019 — David Adelstein - Florida Construction Legal Updates

In an earlier posting I discussed the difference between first-party spoliation of evidence and third-party spoliation of evidence.

There is NO independent cause of action for first-party spoliation of evidence because that can be dealt with directly in the underlying lawsuit. This deals with the assertion that an actual party to a lawsuit spoiled evidence.

Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.

Mr. Adelstein may be contacted at dma@kirwinnorris.com

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The Texas Supreme Court ruled that the TCEQ misapplied the Texas property tax’s exemption.

A Property Tax Exemption, Misapplied, in Texas

Tuesday, June 18, 2019 — Anthony B. Cavender - Gravel2Gavel

In an important ruling for Texas businesses, the Texas Supreme Court has unanimously ruled that the TCEQ misapplied the Texas property tax’s exemption for specified pollution control equipment.

Since 1993, the Texas Constitution has included a provision which authorizes the Texas Legislature to exempt from ad valorem taxation “all or part of real and personal property used … wholly or partly … for the control or reduction of air, water or land pollution.” This provision is implemented by Section 11.31 of the Texas Tax Code, which is administered by the Texas Commission on Environmental Quality. (See the rules at Title 30, Chapter 17 of the Texas Administrative Code.) If the Executive Director of the TCEQ determines that the equipment is used wholly or partly for pollution control, he issues a “positive use determination”; in the event it does not, the Executive Director issues a “negative use determination and rejects the application for the exemption. In 2007, Section 11.31 was amended at 11.31 (k) to list several items of equipment that are presumed to be pollution-control equipment, including “heat recovery steam generators” or HRSGs. This equipment is used by powerplants to reduce nitrogen oxide emissions that are the product of generation of electricity. Several applications were submitted to the TCEQ by the Brazos Electric Power Cooperative, seeking a tax exemption for its HRSG units. In July 2012, the TCEQ denied these applications, with the flat declaration that HRSGs are not pollution-control equipment—“they are used solely for production.” The Brazos Cooperative sued the Commission, and on May 3, 2019, in the case of Brazos Electric Power Cooperative, Inc. v. TCEQ, the Texas Supreme Court issued a unanimous opinion reversing the Commission, and the lower court (the Eight Court of Appeals, sitting in El Paso) that affirmed the Commission’s action.

Reprinted courtesy of Anthony B. Cavender, Pillsbury

Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com

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Abandoned – Disney’s Legendary Resort

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Over 20 attorneys from Snell & Wilmer have been selected for the 2019 Mountain States Super Lawyers.

Mountain States Super Lawyers 2019 Recognizes 21 Nevada Snell & Wilmer Attorneys

Tuesday, June 18, 2019 — Snell & Wilmer

Snell & Wilmer is pleased to announce that 21 attorneys from the Nevada offices have been selected for inclusion in the 2019 Mountain States Super Lawyers publication. Of those 21, 12 were recognized as Mountain States Rising Stars. Patrick Byrne was also named to the Top 100 list of attorneys for the Mountain States region.

Super Lawyers, part of Thomson Reuters, is a listing of lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes independent research, peer nominations and peer evaluations.

Reprinted courtesy of Snell & Wilmer
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Mayors and Army Corps look toward resilient solutions.

Mississippi River Spends 40 Days At Flood Stage, Mayors Push for Infrastructure Funding

Tuesday, June 18, 2019 — Jeff Yoders - Engineering News-Record

As record flooding continues across the Midwest, the region’s mayors and the Army Corps of Engineers are looking for solutions to mitigate future floods.

Reprinted courtesy of Jeff Yoders, ENR

Mr. Yoders may be contacted at yodersj@enr.com

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Walmart attempts to lure young, tech-savvy workers to northwestern Arkansas.

Walmart Seeks Silicon Valley Vibe for New Arkansas Headquarters

Tuesday, June 18, 2019 — Matthew Boyle - Bloomberg

Walmart Inc. took inspiration from McDonald’s Corp., Apple Inc. and locations like Stanford University when designing the new headquarters that will start taking shape this summer.

The 350-acre campus will be located just a few blocks east of Walmart’s current home, a patchwork of more than 20 buildings in Bentonville, Arkansas. It will feature bike paths, food trucks and outdoor meeting areas -- part of an effort to lure younger, digitally-savvy workers to northwestern Arkansas.

Reprinted courtesy of Matthew Boyle, Bloomberg
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Can algorithmic design help streamline the interaction between architects and structural engineers?

How Algorithmic Design Improves Collaboration in Building Design

Tuesday, June 18, 2019 — Aarni Heiskanen - AEC Business

Design, like everything else in a construction project, is a collaborative effort. Even with digital tools, collaboration across design disciplines is not yet optimal. An experimental project thus set out to test whether algorithmic design could help streamline the interaction between architects and structural engineers.

Design data originating from an architect is used in several engineering tools for visualization, analysis, and calculation. Ideally, changes in the architect’s design would propagate automatically across all the software. Unfortunately, the process is in fact mostly manual. Hence, the design data is seldom, if ever, in perfect sync on all systems.

Reprinted courtesy of Aarni Heiskanen, AEC Business

Mr. Heiskanen may be contacted at aec-business@aepartners.fi

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Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

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