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CONSTRUCTION DEFECT NEWS
Rejected red stamp

The Federal District Court, District of Hawaii, continued its long line of cases finding no coverage for claims of faulty workmanship.

Hawaii Federal District Rejects Another Construction Defect Claim

Monday, November 30, 2020 — Tred R. Eyerly - Insurance Law Hawaii

The Federal District Court, District of Hawaii, continued it long line of cases finding no coverage for claims of faulty workmanship. Nautilus Ins. Co. v. Summary Judgment RMB Enters., 2020 U.S. Dist. LEXIS 200468 (D. Haw. Oct. 28, 2020).

Property owners entered a construction contract with RMB Enterprises to develop and construct residential structures and a pond. The pond walls enclosed residential spaces, providing structural foundations for the walls of the building. After completion of the project, the pond leaked into its pump room. RMB performed remedial work by injecting epoxy into cracks. Later, water from the pondleaked into the interior of a residence near a staircase. Water also leaked into the master bedroom area causing musty odor, mood growth, and increased humidity.

The owners sued RMB asserting breach of contract, breach of warranty, misrepresentation, and negligence claims. Nautilus denied coverage. The policy provided that faulty workmanship did not constitute an "occurrence." But when faulty workmanship caused property damage to property other than "your work," then such property damage would be considered caused by an occurrence.

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

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

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Businesswoman looking pensive while reading contract

Force majeure is French for greater force.

Risk Protection: Force Majeure Agreements Take on Renewed Relevance

Monday, November 30, 2020 — Michael E. Carson - Construction Executive

Force majeure clauses have been standard in contracts dating back hundreds of years in the United States—and even longer in Europe. “Force majeure,” which is French for “greater force,” removes liability for unforeseen events that prevent parties from fulfilling contractual obligations.

In a year defined by the COVID-19 pandemic, these clauses have gone from boilerplate basics to something worthy of further examination and attention in order to minimize risk for all parties involved in a construction project. Prior to COVID-19, drafters might have considered a localized or regional event that would lead to invoking a force majeure clause. It is doubtful, however, that anybody envisioned the impact on such a world-wide scale.

UNDERSTANDING THE AGREEMENTS
Force majeure clauses cover unforeseen events, a broad term that encompasses both acts of God and human-caused incidents. These range from natural disasters like earthquakes and hurricanes to acts of terrorism, strikes, political strife, government actions, war and other difficult- or impossible-to-predict disruptions. When such an event occurs, the force majeure clause attempts to remove, or at least reduce, uncertainty as to the rights and liabilities of the parties to the agreement.

Reprinted courtesy of Michael E. Carson, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Carson may be contacted at michael.carson@nationwide.com

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Businesswoman holding umbrella on beach

Attorney Paul A. Briganti analyzes Carrier Corp. v. Allstate Ins. Co.

New York Appellate Court Addresses “Trigger of Coverage” for Asbestos Claims and Other Coverage Issues

Monday, November 30, 2020 — Paul A. Briganti - Complex Insurance Coverage Reporter

On October 9, 2020, the New York Supreme Court, Appellate Division, Fourth Department, decided an appeal from a trial court’s 2018 summary judgment ruling on a number of coverage issues arising out of asbestos-related bodily injury claims against plaintiffs Carrier Corporation (Carrier) and Elliott Company (Elliott). See Carrier Corp. v. Allstate Ins. Co., No. 396 CA 18-02292, Mem. & Order (N.Y. Sup. Ct. App. Div. 4th Dep’t Oct. 9, 2020).

The Fourth Department reversed the trial court’s ruling that, under New York’s “injury in fact trigger of coverage,” injury occurs from the first date of exposure to asbestos through death or the filing of suit as a matter of law. The parties agreed that, because the policy language at issue required personal injury to take place “during the policy period,” “the applicable test in determining what event constitutes personal injury sufficient to trigger coverage is injury-in-fact, ‘which rests on when the injury, sickness, disease or disability actually began.’” Id. at 3 (quoting Cont’l Cas. Co. v. Rapid-American Corp., 609 N.E.2d 506, 511 (N.Y. 1993)). The Fourth Department concluded that, in resolving the issue, the trial court erred by relying on inapposite decisions in other cases where: (1) the parties had stipulated or otherwise not disputed that first exposure triggered coverage[1]; or (2) the issue had not been resolved on summary judgment, but rather at trial based on expert medical evidence[2]. The Fourth Department further explained that, even if plaintiffs here had met their initial burden on summary judgment by submitting admissible evidence that asbestos-related injury actually begins upon first exposure, the defendant-insurer’s opposition – which included affidavits of medical experts contradicting that evidence and averring instead that “harm occurs only when a threshold level of asbestos fiber or particle burden is reached that overtakes the body’s defense mechanisms” – raised a triable issue of fact. Id. at 4. The Fourth Department also rejected plaintiffs’ argument that the defendant-insurer was collaterally estopped on the “trigger” issue by a California appellate court’s decision in Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co., 52 Cal. Rptr. 2d 690 (Cal. Ct. App. 1996). The Fourth Department reasoned that the issues litigated in the two cases were not identical because, among other things, California and New York “apply different substantive law in determining when asbestos-related injury occurs.” Carrier, Mem. & Order at 4.

Reprinted courtesy of Paul A. Briganti, White and Williams LLP

Mr. Briganti may be contacted at brigantip@whiteandwilliams.com

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Ford Begins Construction on $700-Million Rouge Center Expansion to Add Electric F-150 Production Line

November 30, 2020 — Jeff Yoders - Engineering News-Record

A 500,000-sq-ft hybrid electric F-150 truck manufacturing facility is being built at Ford Motor Co.'s Rouge Center in Dearborn, Mich. Once it's completed in summer 2021, the $700-million production facility is expected to add 300 jobs and produce Ford's F-150 PowerBoost hybrid truck.

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

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MDL Panel Denies Consolidation for COVID-19 Insurance Cases for All Insurers (with One Exception)

November 30, 2020 — Scott P. DeVries & Rachel E. Hudgins - Hunton Insurance Recovery Blog

As we reported in a prior blog, on August 14, the Judicial Panel on Multidistrict Litigation rejected plaintiffs’ request for a consolidation of all COVID-19 insurance coverage federal litigation, agreeing to consider mini-MDLs as respects five specific insurers, which accounted for roughly one-third of the federal cases. On October 2, the Panel rejected the concept of mini-MDLs as respects four of these five insurers and accepted an MDL for the fifth insurer.

Reprinted courtesy of Scott P. DeVries, Hunton Andrews Kurth and Rachel E. Hudgins, Hunton Andrews Kurth
Mr. DeVries may be contacted at sdevries@HuntonAK.com
Ms. Hudgins may be contacted at rhudgins@HuntonAK.com

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U.S. Existing-Home Sales Unexpectedly Rise to Highest Since 2005

November 30, 2020 — Henry Ren - Bloomberg

Sales of previously owned U.S. homes unexpectedly rose in October to the highest level in almost 15 years, extending a housing market boom fueled by record-low mortgage rates and buyers’ desire for properties in the suburbs.

Contract closings increased 4.3% from the prior month to an annualized 6.85 million, the strongest pace since November 2005, according to National Association of Realtors data released Thursday. The October rate exceeded all economists’ forecasts in a Bloomberg survey, which had a median estimate of 6.47 million.

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PLI Building Better Construction Contracts 2020

November 30, 2020 — Beverley BevenFlorez – CDJ Staff

The Practising Law Institute (PLI) presents a one-day seminar focusing on how to build construction contracts. A few of the many topics to be covered include Analysis of recent case law on force majeure, Review of Covid-19 related cost and impact claims, and Thinking ahead about mediation, arbitration, or litigation. The seminar is appropriate for “Practitioners, in-house counsel and finance professionals who draft, review, litigate, or otherwise advise on construction contract matters.”

December 11th, 2020
Live Webinar

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Pen resting on insurance policy

Wise contractors and project owners know that one of the best ways to mitigate risks is through insurance.

A Primer on Insurance for Construction Projects

Monday, November 30, 2020 — Garret Murai - California Construction Law Blog

People who live in glass houses should have insurance (in addition to not throwing stones). So too should your construction project.

The risks inherent on a construction project are many and varied, ranging from property damage to personal injury to pollution remediation costs, and wise contractors and project owners know that one of the best ways to mitigate these risks is through insurance. So, here’s a primer on what you need to know about insurance on construction projects.

Commercial General Liability Insurance (CGL)
What it Covers:

  • Property damage.
  • Bodily injury.
  • Personal and advertising injury (e.g., libel and slander).
Reprinted courtesy of Garret Murai, Nomos LLP

Mr. Murai may be contacted at gmurai@nomosllp.com

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Construction worker walking down hall

Attorney Tred R. Eyerly discusses Novak v. St. Maxent-Wimberly House Condo.

Sellers' Alleged Misrepresentation Does Not Amount To An Occurrence

Monday, November 30, 2020 — Tred R. Eyerly - Insurance Law Hawaii

The insurer successfully established on summary judgment that the insureds' alleged misrepresentation in the sale of a condominium was not an occurrence. Novak v. St. Maxent-Wimberly House Condo., 2020 U.S. Dist. LEXIS 167397 (E.D. La. Sept. 14, 2020).

State Farm issued the sellers a condominium unit owner's policy. The buyers sued the sellers, contending the sellers had made misrepresentations in the sale process. The sellers allegedly failed to disclose defects in the condominium before and at the time of the sale. State Farm intervened, seeking a declaration that it was not required to defend or indemnify the sellers because there was no occurrence.

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

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

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Gold stars on blue background

The U.S. News “Best Law Firms” list includes firms that are recognized for professional excellence and impressive ratings from clients and peers.

Haight has been named a Metropolitan Los Angeles Tier 1 “Best Law Firm” in four practice areas and Tier 2 in one practice area by U.S. News – Best Lawyers® “Best Law Firms” in 2021

Monday, November 30, 2020 — Haight Brown & Bonesteel LLP

Haight Brown & Bonesteel LLP is listed in the U.S. News – Best Lawyers® (2021 Edition) “Best Law Firms” list with five metro rankings in the following areas:

Los Angeles

  • Tier 1
    • Insurance Law
    • Personal Injury Litigation – Defendants
    • Product Liability Litigation – Defendants
    • Product Liability Litigation – Plaintiffs
  • Tier 2
    • Personal Injury Litigation – Plaintiffs
Reprinted courtesy of Haight Brown & Bonesteel LLP
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CONSTRUCTION DEFECT NEWS
Construction worker in car smiling

A recent case casts some doubt as to whether a general contractor is a “necessary” party to a lawsuit by a subcontractor in the case where a bond is posted for release of a mechanic’s lien.

Just When You Thought General Contractors Were Necessary Parties. . .

Monday, November 30, 2020 — Christopher G. Hill - Construction Law Musings

Did you think that a subcontractor had to name a general contractor in a mechanic’s lien suit? I did. Did you think that nothing about this changed in the case where a Virginia mechanic’s lien was “bonded off” pursuant to Va. Code Section 43-71? I did.

Well, a recent Virginia Supreme Court case, Synchronized Construction Services Inc. v. Prav Lodging LLC, seems to at least create some doubt as to whether the a general contractor is a “necessary” party to a lawsuit by a subcontractor in the case where a bond is posted for release of a mechanic’s lien.

In Prav Lodging, the facts were a bit unusual. The day after the mechanic’s lien was recorded by Synchronized Construction Services, Inc. (“Synchronized”) the construction manager, Paris Development Group, the construction manager and de facto general contractor, went out of business. Despite this fact, and after the lien was bonded off, Synchronized sued to enforce the lien and for breach of contract against Paris. The wrinkle here is that Synchronized was unable to serve several defendants, among them Paris, within one year of filing suit as required by Virginia statute. In the Circuit Court, the financing bank moved to dismiss the suit for failure to serve necessary parties. The Circuit Court dismissed the breach of contract count but refused to dismiss the mechanic’s lien count on this basis.

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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Trophy sitting on hill with green background (illustration)

Charles Eppolito is a recipient of a PBA “President’s Award” for his dedication and commitment to fulfilling the mission of the PBA COVID-19 Task Force.

Charles Eppolito Appointed Vice-Chair of the PBA Judicial Evaluation Commission and Receives Prestigious “President’s Award”

Monday, November 30, 2020 — Charles Eppolito, III - White and Williams LLP

Partner Charles (Chuck) Eppolito, III has been appointed as a Vice-Chair of the Pennsylvania Bar Association (PBA) Judicial Evaluation Commission. His three-year term begins immediately and will expire September 30, 2023. The PBA Judicial Evaluation Commission is responsible for developing and implementing a judicial evaluation process for appellate judicial candidates in the Commonwealth of Pennsylvania. As Vice-Chair, Chuck will oversee reviewing the investigative panel's report, interviewing each candidate, discussing qualifications and reaching an agreement upon and issuing a rating for each candidate for appellate judicial office.

Chuck has a long history of involvement with the 25,000-member organization, serving as PBA Secretary from 2007 to 2010, Chair of the House of Delegates from 2011 to 2013 and President from 2018 to 2019. Most recently, it was announced that Chuck is a recipient of a PBA “President’s Award” for his dedication and commitment to fulfilling the mission of the PBA COVID-19 Task Force. The award will be presented during the virtual PBA Awards Luncheon on Thursday, November 19, 2020.

Reprinted courtesy of Charles Eppolito, III, White and Williams LLP

Mr. Eppolito may be contacted at eppolitoc@whiteandwilliams.com

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Policy on ripped paper

By dealing with extensive changes, there is an unforeseeable impact imposed on the contractor relative to its unchanged or base contract work.

How the Cumulative Impact Theory has been Defined

Monday, November 30, 2020 — David Adelstein - Florida Construction Legal Updates

Largely in the federal contract arena, there is a theory referred to as “cumulative impacts” used by a contractor to recover unforeseeable costs associated with a multitude of changes that have an overwhelming ripple effect on its efficiency, particularly efficiency dealing with its original, base contract work. In other words, by dealing with extensive changes, there is an unforeseeable impact imposed on the contractor relative to its unchanged or base contract work. Under this theory, the contractor oftentimes prices its cumulative impact under a total cost approach with an examination on its cost overrun. However, this is not an easy theory to prevail on because there needs to be a focus on the sheer number of changes, causation supporting the impact, and whether there were concurrent impacts or delays that played a role in the ripple effect. See, e.g., Appeals of J.A. Jones Const. Co., ENGBCA No. 6348, 00-2 BCA P 31000 (July 7, 2000) (“However, in the vast majority of cases such claims are routinely denied because there were an insufficient number of changes, contractor-caused concurrent delays, disruptions and inefficiencies and/or a general absence of evidence of causation and impact.”).

To best articulate how the cumulative impact theory has been defined, I want to include language directly from courts and board of contract appeals that have dealt with this theory. This way the contractor knows how to best work with their experts with this definition in mind–and, yes, experts will be needed–to persuasively package and establish causation and damages stemming from the multitude of changes. While many of these definitions are worded differently, you will see they have the same focus dealing with the unforeseeable ripple effect of the extensive changes.

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

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

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What Pandemic? Downtown Orlando Sees Boom in Residential High-Rise Construction

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CONSTRUCTION DEFECT NEWS
Workers repairing power lines

A summary of three open cases of interest, where declaratory relief has been sought by energy providers’ insurance carriers, seeking an avoidance of coverage.

Power & Energy - Emerging Insurance Coverage Cases of Interest

Monday, November 30, 2020 — David G. Jordan & Tiffany Casanova - Saxe Doernberger & Vita, P.C.

The Power & Energy sector faces a multitude of risks that impact output and profitability, requiring sound risk management and robust insurance programs. As of recent, like most industries, there have been significant challenges facing the industry in light of COVID-19. These issues, including decreased product demand as well as supply- side issues, have been well documented. However, other issues continue to impact Power & Energy providers, with significant insurance coverage implications that are worthy of note. Below is a summary of three open cases of interest, where declaratory relief has been sought by energy providers’ insurance carriers, seeking an avoidance of coverage.

1. Fracking Dispute and “Intentional Acts”

In the Texas case of The James River Insurance Co. v. Clearpoint Chemicals LLC et al., No. 4:20-cv-0076 (N.D.Tex), James River Insurance Company (“James River”) is asking a federal district court to declare that it does not owe defense or indemnity to its insured for acts it defines as both intentional and/or malicious acts.

Reprinted courtesy of David G. Jordan, Saxe Doernberger & Vita, P.C. and Tiffany Casanova, Saxe Doernberger & Vita, P.C.
Mr. Jordan may be contacted at DJordan@sdvlaw.com
Ms. Casanova may be contacted at TCasanova@sdvlaw.com



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Red pencil on Insurance coverage document

Insurance can offer protection when even the most robust preventative measures fail to prevent an FCRA claim.

Mitigating FCRA Risk Through Insurance

Monday, November 30, 2020 — Sergio F. Oehninger, Geoffrey B. Fehling & Matt Revis - Hunton Insurance Recovery Blog

As reported in a recent Hunton Andrews Kurth client alert, Mitigating FCRA Risks in the COVID-19 World (Oct. 23, 2020), consumer litigation claims related to the Fair Credit Reporting Act (FCRA) doubled in the years leading up to the COVID-19 pandemic. After a slight decrease in FCRA filings due to court closures and other COVID-19 restrictions, claims will likely resume their previous upward trajectory. In fact, the Consumer Financial Protection Bureau (CFPB) has already seen an uptick in consumer complaints, many of which mention COVID-19 specific keywords.

Given the anticipated rise in FCRA complaints, the alert highlights the need for financial institutions and financial services companies to develop FCRA-compliant policies and procedures, including training on those policies and procedures, to mitigate the risk of FCRA-related enforcement actions and litigation claims, particularly in light of the regulatory changes relating to the COVID-19 pandemic.

Another important risk mitigation tool to consider is insurance, which can offer protection when even the most robust preventative measures fail to prevent an FCRA claim. Coverage for FCRA-related claims—often from directors’ and officers’ (D&O) or errors and omissions (E&O) policies—might be broader than one would initially expect. Policies may cover defense costs involving legal fees, as well as indemnification for damages.

Reprinted courtesy of Sergio F. Oehninger, Hunton Andrews Kurth, Geoffrey B. Fehling, Hunton Andrews Kurth and Matt Revis, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com



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Urban skyline with earth brown to green signalling climate change

The lid had to be kept safely in place due to a city-imposed imperative to preserve the old arena’s landmarked looks.

Keeping KeyArena's Landmark Lid Overhead at Climate Pledge Arena Redevelopment Is A 22,000-Ton Balancing Act

Monday, November 30, 2020 — Nadine M. Post - Engineering News-Record

Most contractors would jump at the chance to have a roof overhead during a major rebuild. But for the team turning earthquake-prone Seattle’s 411,000-sq-ft KeyArena into the 932,000-sq-ft Climate Pledge Arena, the city-owned facility’s historic helmet has been a 44-million-lb design and construction headache.

Reprinted courtesy of Nadine M. Post, Engineering News-Record

Ms. Post may be contacted at postn@enr.com

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Businesswoman holding contract

It is important to review each party’s right to terminate a construction contract and to examine some of the resulting consequences.

Termination of Construction Contracts

Monday, November 30, 2020 — Stuart Rosen - Construction Executive

Lately, in view of the COVID-19 pandemic, there is a heightened concern that some construction projects will not proceed as planned. Therefore, it is important to review each party’s right to terminate a construction contract and to examine some of the resulting consequences.

While the parties to a construction contract can, as always, agree to other mutually acceptable terms and provisions, in broad terms, a typical construction contract includes four triggering events that can lead to termination.

First, an owner can terminate a construction contract if the contractor defaults and thereafter fails to cure such default, which may include, without limitation, the failure to remediate deficient work, the failure to meet the construction schedule, the failure to pay subcontractors and the failure to comply with applicable law. A contractor must be mindful of the fact that in the case of such termination by the owner for cause, the vast majority of construction contracts provide that the contractor will not be entitled to receive any further payment for work performed by the contractor until the work is finished.

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


Mr. Rosen may be contacted at srosen@proskauer.com

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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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