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CONSTRUCTION DEFECT NEWS
Baseball stadium

An insurer improperly seeking to deny or restrict coverage, incorrectly relying on notice and contractual liability exclusions in their policies.

Construction Group Seeks Defense Coverage for Hard Rock Stadium Claims

Monday, December 9, 2019 — Sergio F. Oehninger & Daniel Hentschel - Hunton Insurance Recovery Blog

In an insurance coverage action pending in the S.D.N.Y., Hunt Construction Group (Hunt) contends that Berkley Assurance Company wrongfully denied defense coverage for claims arising out of the renovation of Hard Rock Stadium (home to the Miami Dolphins and Miami Hurricanes football teams).

The stadium owner, South Florida Stadium LLC (SFS), hired Hunt to serve as the construction manager for the renovation project. Hunt subcontracted with Alberici Constructors Inc. (Alberici) to design and fabricate roof structures for the stadium.

Hunt and SFS sued Alberici over its work on the project. In March 2017, Alberici asserted counterclaims against Hunt and SFS. In May 2018, SFS sought defense and indemnification from Hunt with respect to Alberici’s coverage claims.

Hunt is insured under claims made and reported professional liability insurance policies issued by Berkley with policy periods from June 15, 2016 to June 15, 2017 (with an automatic extended reporting period through August 14, 2017) and from July 15, 2017 to June 15, 2018. Hunt notified Berkley of Alberici’s counterclaim on July 20, 2017 (within the extended reporting period of the 2016-2017 policy) and of SFS’s indemnity claim on June 5, 2018 (within the 2017-2018 policy period).

Reprinted courtesy of Sergio F. Oehninger, Hunton Andrews Kurth and Daniel Hentschel, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com


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Businessman holding red umbrella in yellow meadow

The Ongoing Operations Exclusion precluded coverage.

Ongoing Operations Exclusion Bars Coverage

Monday, December 9, 2019 — Tred R. Eyerly - Insurance Law Hawaii

The insurer denied the insured contractor's claim seeking a defense for faulty workmanship based upon the ongoing operations exclusion. PJR Constr. of N.J. v. Valley Forge Ins. Co., 2019 U.S. Dist. LEXIS 127973 (D. N. J. July 31, 2019).

PJR Construction was the general contractor to build a swim club and pavilion building for Cambridge Real Property, LLC. PJR began construction on May 29, 2012, and was to complete the construction by March 1, 2013. The project took much longer than anticipated. PJR was denied access to the site on November 13, 2014. Cambridge contended PJR tolerated shoddy workmanship and breached the terms of the contract documents. Cambridge estimated that the project was between 55% and 74.3% complete.

PJR and Cambridge went to arbitration. PJR sought a defense from the insurers. Coverage was denied based upon exclusions j (5) and j (6). Exclusion j (5), which the court referred to as the "Ongoing Operations Exclusion," provided the policy did not apply to,

Property Damage to . . . [t]hat particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the property damage arises out of those operations.

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

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

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Attorney David Adelstein discusses Westchester Fire Ins. Co, LLC v. Kesoki Painting, LLC.

General Contractor Supporting a Subcontractor’s Change Order Only for Owner to Reject the Change

Monday, December 9, 2019 — David Adelstein - Florida Construction Legal Updates

The opinion in Westchester Fire Ins. Co, LLC v. Kesoki Painting, LLC, 260 So.3d 546 (Fla. 3d DCA 2018) leads to a worthy discussion because it involves a common scope of work occurrence on construction projects involving a general contractor and subcontractor. The contractor submits a subcontractor’s change order request to the owner and the owner rejects the change order. What happens next is a scope of work payment dispute between the general contractor and subcontractor. Yep, a common occurrence.

In this case, a general contractor hired a subcontractor to perform waterproofing and painting. A scope of work issue arose because the specifications did not address how the window gaskets should be cut and then sealed. The owner wanted the window gaskets cut at a 45-degree angle and the subcontractor claimed this resulted in increased extra work. The general contractor agreed and submitted a change order to the owner to cover these costs. The owner rejected the change order claiming it was part of the general contractor’s scope of work even though the cutting of window gaskets at a 45-degree angle was not detailed in the specifications.

After the subcontractor filed a suit against the general contractor’s payment bond surety, the project architect further rejected the change order because gasket cutting was part of the specification requirements. (Duh! What else was the architect going to say? It was not going to concede there was an omission that resulted in a change order to the owner, right?)

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

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

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Corps Calls For $1 Billion Cape Cod Bridge Replacements

December 9, 2019 — Johanna Knapschaefer - Engineering News-Record

Replacing two Cape Cod Canal bridges for an estimated $1 billion rather than rehabilitating them would be more cost-effective, according to a federal study announced on Oct. 3.

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

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Six Ways to Combat Workforce Risks

December 9, 2019 — John Wagner - Construction Executive

According to the U.S. Chamber of Commerce, nine out of 10 U.S. contractors report skilled labor shortages. Yet, cities such as Atlanta, Houston and Nashville, Tennessee, seem to be permanently under construction. There are simply not enough qualified employees to fill the ever-growing number of projects.

Before the 2008 recession, there were 7.7 million construction workers; today there are 7.1 million—meaning 600,000 workers have not returned to the industry. Slow population growth and an aging workforce also have contributed to the lack of available labor.

Following are six risk management strategies construction companies should consider as they face today’s workforce challenges.

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

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D.R. Horton Surges as Orders Beat Pushes Shares to Record High

December 9, 2019 — Prashant Gopal - Bloomberg

Homebuilder D.R. Horton Inc. reported quarterly orders that beat analysts’ estimates, sending its shares to a record high.

In the three months through September, purchase contracts jumped 14% from a year earlier to 13,130, the Arlington, Texas-based company said in a statement Tuesday. Analysts surveyed by Bloomberg were expecting a gain of 7.9%. The company also posted higher than expected profit and boosted its dividend, sending its shares higher.

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AGC’s 2020 Construction Safety & Health Conference

December 9, 2019 — Beverley BevenFlorez – CDJ Staff

Educational options at this annual 3-day seminar include the following topics: Managing safety & health requirements and risk, Factoring safety & health concerns into phases of a project, and Expanding your knowledge and skills. Attendees include Safety Director/Manager/Coordinator, EHS Directors, Risk and, Compliance Directors, Project Managers, Project Superintendents, Safety Engineers, Site Safety & Health Officers, Risk & Loss Control Managers, Human Resource & Safety Managers, Attorneys, Federal Government Officials, and Safety Consultants.

January 15th-17th, 2020
Sheraton Austin Hotel at the Capitol
701 E 11th Street
Austin, TX 78701

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Earth and space

The Supreme Court decided whether the earth-movement exclusion precluded coverage for the damage to Smith’s foundation.

Mississippi Supreme Court Addresses Earth Movement Exclusion

Monday, December 9, 2019 — Anthony Hatzilabrou - Traub Lieberman

Recently, the Mississippi Supreme Court held that structural damages to the foundation of an insured’s home came within the earth movement exclusion in a homeowner’s policy, notwithstanding a provision in the policy which provided coverage for water damage resulting “from accidental discharge or overflow of water … from within … [p]lumbing, heating, air condition or household appliance.”

In Mississippi Farm Bureau Cas. Ins. Co. v. Smith, 264 So. 3d 737 (Miss. 2019), the appellee, Smith, filed a lawsuit against her homeowner's insurance company, Mississippi Farm Bureau Casualty Insurance Company (“Farm Bureau”) for its refusal to pay for repairs to the foundation of Smith’s home. Smith alleged that the refusal to pay for repairs amounted to breach of contract and asserted claims for bad faith and tortious breach of contract. In response, Farm Bureau filed a motion for summary judgment on the basis of the policy’s earth-movement exclusion, which provided that Farm Bureau “did not insure for loss caused directly or indirectly by…Earth Movement…[which] means…[a]ny other earth movement including earth sinking, rising or shifting... caused by or resulting from human or animal forces.” Smith filed a cross-motion for partial summary judgment on the basis that the earth-movement exclusion did not preclude coverage because her insurance policy also contained a clause expressly covering water damage.

Reprinted courtesy of Anthony Hatzilabrou, Traub Lieberman

Mr. Hatzilabrou may be contacted at thatzilabrou@tlsslaw.com

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Two businessmembers back to back

The U.S. District Court for the Missoula, Montana Division, issued a ruling in the case of Western Organization of Resource Councils v. Bernhardt.

Montana Federal Court Holds that an Interior Department’s Federal Advisory Committee Was Improperly Reestablished

Monday, December 9, 2019 — Anthony B. Cavender - Gravel2Gavel

On August 13, 2019, in a case that may have an impact on the leasing of federal lands for energy development in the future, the U.S. District Court for the Missoula, Montana Division, issued a ruling in the case of Western Organization of Resource Councils v. Bernhardt, which involves the application of the Federal Advisory Committee Act (FACA) to the Department of the Interior’s Royalty Policy Committee. This advisory committee, initially established in 1995 to provide advice to the Secretary on issues related to the leasing of federal and Indian lands for energy and mineral resources production, is subject to the provisions of FACA, codified at 5 U.S.C. app. Sections 1-16. The plaintiffs challenged the operations of this advisory committee, which was reestablished for two years beginning in 2017, because it allegedly “acts in secret and works to advance the goals of only one interest: the extractive industries that profit from the development of public gas, oil, and coal.” More specifically, the plaintiffs alleged that this advisory committee violated FACA because: (a) it was not properly established as provided in the implementing GSA rules (which are located at 41 CFR Section 102-3); (b) did not provide public notice of its meetings and publicly disseminate its materials; (c) ensure that its membership was fairly balanced; and (d) failed to exercise independent judgment without inappropriate influences from special interests.

Reprinted courtesy of Anthony B. Cavender, Pillsbury

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

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Blue check mark

AB 3018 dramatically increased the penalties for non-compliance with the existing skilled and trained workforce requirements in California.

California’s Skilled and Trained Workforce Requirements: Public Works and AB 3018, What You Need to Know

Monday, December 9, 2019 — Brenda Radmacher & Nicholas Krebs - Gordon & Rees Construction Law Blog

Do you have the proper skilled and trained workforce for your construction projects? If you take on public works projects in California, you may not be in compliance with the new changes in the law. To avoid civil penalties or nonpayment and potentially being precluded from future bids on public works contracts, you must critically review your team and proposal prior to accepting an award. Once awarded a public contact requiring a skilled and trained workforce, diligent reporting practices and oversight are required to maintain compliance.

Compliance with California’s skilled and trained workforce requirements for contractors, engineers, architects, design professionals, and suppliers competing for public works construction projects in California is mandated through enforcement with the enactment of AB 3018. Signed by Governor Brown in his last legislative session, AB 3018 dramatically increased the penalties for non-compliance with the existing skilled and trained workforce requirements in California. The new penalties include civil fines by the Labor Commissioner up to $10,000 per month per non-compliant contractor, disqualification from bidding on future public works contract, and withholding of payment for delinquent contractors. This update provides information on California’s skilled and trained workforce requirements, identifies key issues on compliance to avoid penalties, and discusses the impact of enforcement on construction professionals’ business practices.

Reprinted courtesy of Brenda Radmacher, Gordon & Rees Scully Mansukhani and Nicholas Krebs, Gordon & Rees Scully Mansukhani
Ms. Radmacher may be contacted at bradmacher@grsm.com
Mr. Krebs may be contacted at nkrebs@grsm.com


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CONSTRUCTION DEFECT NEWS
Legislative building

AB5 will increase the cost of construction in California.

AB5, Dynamex, the ABC Standard, and their Effects on the Construction Industry

Monday, December 9, 2019 — Donald A. Velez - Smith Currie

Last year, we reported that the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (“Dynamex”) adopted a new, pro-employment standard (the “ABC Standard”), which presumes a worker is an employee versus an independent contractor under California wage orders and regulations.

Assembly Bill 5 (“AB5”) has now been passed by the California Legislature and signed by Governor Newsom. Bill AB5 codifies the ABC Standard and brings increased costs, administrative duties, and legal risks for hiring parties on multiple fronts, including, but not limited to:

  • Payroll taxes;
  • Meals, breaks and overtime policies and enforcement and premium pay;
  • Benefits;
  • Leave and PTO policies, requirements and enforcement;
  • Wage order violations;
  • Labor Code violations and Private Attorney General Actions (“PAGA”) claims;
  • Unemployment insurance; and
  • Workers’ compensation coverage, claims, and premiums.
Reprinted courtesy of Donald A. Velez, Smith Currie

Mr. Velez may be contacted at davelez@smithcurrie.com

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Gold stars and circles on black background

The lawyers named to this year's Super Lawyer list represent a multitude of practices throughout the firm.

Congratulations 2019 DE, MA, NJ, NY and PA Super Lawyers and Rising Stars

Monday, December 9, 2019 — White and Williams LLP

Fifteen White and Williams lawyers have been named by Super Lawyers as a Delaware, New Jersey or Pennsylvania "Super Lawyer" while eight received "Rising Star" designations. Each lawyer who received the distinction competed in a rigorous selection process which took into consideration peer recognition and professional achievement. The lawyers named to this year's Super Lawyer list represent a multitude of practices throughout the firm.

Super Lawyers 2019

John Balaguer, PI Defense: Med Mal
David Chaffin, Business Litigation
Kevin Cottone, PI Defense: Med Mal
Steven Coury, Real Estate: Business
John Eagan, Tax: Business
Randy Friedberg, Intellectual Property
Bridget La Rosa, Estate Planning & Probate
Christopher Leise, Civil Litigation: Defense
Randy Maniloff, Insurance Coverage
David Marion, Business Litigation
John McCarrick, Insurance Coverage
Peter Mooney, Business Litigation
Michael Olsan, Insurance Coverage
John Orlando, General Litigation
Wesley Payne, Insurance Coverage
Daryn Rush, Insurance Coverage
Anthony Salvino, Workers’ Comp
Patricia Santelle, Insurance Coverage
Jay Shapiro, Business Litigation
Heidi Sorvino, Bankruptcy: Business
Craig Stewart, Business Litigation
Andrew Susko, Civil Litigation: Defense
Robert Wright, Insurance Coverage

Reprinted courtesy of White and Williams LLP
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Dollar bill black and white

Attorney Christopher G. Hill analyzes Precision Contractors Inc. v. Masterbuilt Companies Inc.

Reminder: Pay if Paid Not All Encompassing (but Could it be?)

Monday, December 9, 2019 — Christopher G. Hill - Construction Law Musings

On numerous occasions, I have discussed the need to be careful with so called “pay if paid” clauses in construction contracts. While such clauses are enforceable in Virginia (when phrased correctly), there are exceptions and limitations (for instance in the Miller Act context).

One such exception (that I frankly would have thought to be obvious) is that such clauses do not protect a general contractor from paying all subcontractors. Such a clause only protects a general contractor from payment to those subs for whose work the general contractor has not been paid. In other words, if a general contractor has been paid by an owner for a particular subcontractors work, it cannot use the pay if paid clause to deny payment even in the event that other subcontractors were deficient in their work or the owner has failed to pay the general contractor in full.

In Precision Contractors Inc. v. Masterbuilt Companies Inc. (PDF) the Fairfax, VA Circuit Court reiterated this principal stating that nothing in the contract suggests that either party to the lawsuit had any intention to shift the risk of non-payment by the owner or non-performance of other subcontractors to the plaintiff (Precision).

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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CAUTION - The Wrong Insulation Strategy could Ruin this 120 Year Old House!

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CONSTRUCTION DEFECT NEWS
San Diego city skyline

The firm was excited to announce their expansion to North San Diego County.

BWB&O Expands to North San Diego

Monday, December 9, 2019 — Bremer Whyte Brown & O’Meara

Bremer Whyte Brown & O’Meara is excited to announce our expansion to North San Diego County. Our new office location in Encinitas is strategically located between our Newport Beach and Downtown San Diego offices. The new North San Diego office will provide further resources to better serve our clients.

Reprinted courtesy of Bremer Whyte Brown & O’Meara
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Man in suit running across finish line

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 2020

Monday, December 9, 2019 — Haight Brown & Bonesteel LLP

Haight Brown & Bonesteel LLP is listed in the U.S. News – Best Lawyers® (2020 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 worker in funny pose

General contractors and project leadership must emphasize safety preparation and procedures from the start.

Jobsite Safety Should Be Every Contractors' Priority

Monday, December 9, 2019 — Ray Reese - Construction Executive

Any general contractor understands the range of factors that go into building and sustaining a successful jobsite: hiring the right team, maintaining cutting-edge equipment, ensuring constant communication with clients and effectively leveraging the newest building technologies, just to name a few.

But any good general contractor understands that there is one factor that should always be considered as top priority: jobsite safety.

The health and wellbeing of a project’s team is paramount for obvious reasons, and it isn’t a lighthearted matter. Injuries and fatalities have too often been a piece of our industry’s story. In 2017 alone, there were 971 reported deaths on construction sites, which accounted for 20% of total worker fatalities, according to a report from the Occupational Safety and Health Administration. Of these 971 fatalities, 582 were the result of construction’s “fatal four”—falls, workers being struck by objects, electrocutions and workers being caught between equipment. For members of the industry, these are difficult numbers to read and to process; yet, it is extremely important to consider the injuries and lives lost when we take into consideration the seriousness of jobsite safety.

Often, general contractors’ and superintendents’ greatest challenge isn’t being convinced of the necessity of jobsite safety practices in protecting employees or the value of safety in creating a productive work environment. Instead, the focus should be providing industry leaders tips on exactly how to improve safety measures on their own jobsites. Understanding that safety is everyone’s responsibility is paramount.

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


Mr. Reese may be contacted at rreese@rives.com

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Money floating

The government action follows its investigation in the 4 regions.

French Government Fines National Architects' Group $1.6M Over Fee-Fixing

Monday, December 9, 2019 — Debra K. Rubin - Engineering News-Record

The French government’s anti-trust agency has fined the national architects’ registration group and four regional councils $1.64 million (€1.5 million) for price-fixing design fees on public works.

Reprinted courtesy of Debra K. Rubin, Engineering News-Record

Ms. Rubin may be contacted at rubind@enr.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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