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There’s no question about how huge the impact of the novel coronavirus crisis is on business operations.

4 Lessons Contractors Can Learn From The COVID-19 Crisis

Monday, May 25, 2020 — Patrick Hogan - Handle.com

At the start of 2020, the industry outlook in construction was positive. Many contractors were optimistic about what the year had in store for construction businesses in terms of profit, expansion of operations, and even payment issues. That was until the COVID-19 pandemic put a wrench in everyone’s business plans.

There’s no question about how huge the impact of the novel coronavirus crisis is on business operations. With the federal and state governments implementing strict measures to slow down the spread of COVID-19, construction businesses are experiencing significant delays and disruptions in their operations. Because of the lockdowns and stay-at-home orders, many construction projects are forced to postpone operations or, worse, cancel them altogether.

Nevertheless, there are lessons in the COVID-19 pandemic that contractors can learn. Here are some of them.

1. Contractors need to be proactive in meeting preliminary notice requirements

Cash is tight in times of crisis. As the economy comes to a standstill, construction businesses will need to deal with decreasing profits. They may even have to dip into their own cash reserves to cover fixed expenses and their employees’ salaries.

In times like this, it is crucial that contractors perform due diligence in protecting their right to get paid. The first step in doing so is to prepare preliminary notices. These notices are an important step in the mechanics lien process and without them, chances contractors will not be able to recover the unpaid compensation for the materials they furnished and services they rendered.

2. Force majeure provisions are crucial parts of a contract

The novel coronavirus pandemic has highlighted the importance of force majeure provisions in construction contracts. Before the COVID-19 crisis hit business operations, force majeure provisions were typically considered as simple boilerplate clauses. This means they were just there as a standard part of contracts.

However, the same force majeure clauses, as well as impossibility of performance provisions, have become crucial in the current crisis. As many construction businesses experience difficulties with their operations, they may not be able to fulfill their contractual responsibilities. The said clauses can give contractors a much-needed reprieve.

As the current crisis continues, contractors should review contracts as these provisions can give them more time to finish the job. And in the hopefully near future when the crisis ends, business owners should review the contract creation process and ensure that these clauses included in contracts will be able to address the impact of situations similar to COVID-19.

3. Having solid internal communication is crucial

There’s a lot of uncertainty with the COVID-19 situation. With work operations temporarily stopping, the circumstances can be quite stressful for employees. There will be doubts and fears within your workforce on whether work will be back to normal as soon as possible or not.

Keeping your workforce well-informed and trusting of your organization is crucial, especially in this time of uncertainty. That is why it is paramount that you have a solid internal communication infrastructure to disseminate information about the current work situation and the next steps that the business will take. In addition, only through proper employee communication can the implementation of social distancing and hygiene measures be effective.

4. Contractors can benefit from flexible work arrangements

As the coronavirus crisis has made it necessary for everyone to stay at home, construction businesses should look for ways to continue operations. Expanded work arrangements such as work-from-home setups may just be the solution.

Of course, most of the physical work that is needed to be done on-site will be impossible to do at home, but office-based functions such as sales, client relations, design, and administrative roles can still continue. This can even have additional benefits to productivity and health. And when the crisis is over, business owners should consider incorporating these work arrangements into their operations permanently.

The COVID-19 crisis is not showing any sign of stopping soon, and even when it ends, it will take quite a long time before we can be back to business as usual. As the crisis continues, however, business owners should take the situation as a learning experience.

Once the COVID-19 crisis is over, it will take a long time for things to go back to normal. In fact, things may not end up going back to the way they were before and businesses will need to adapt to the new normal. However the situation evolves, business owners should take this opportunity to learn new things and maintain resilience in trying times.

About the Author:
Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.



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Garret Murai analyzes Long Beach Unified School District v. Margaret Williams, LLC.

Heads I Win, Tails You Lose. Court Finds Indemnity Provision Went Too Far

Monday, May 25, 2020 — Garret Murai - California Construction Law Blog

We all love David and Goliath stories. The underdog winning against the far stronger (and dastardly) opponent. Think Rocky Balboa versus Ivan Drago, the Star Wars Rebellion versus the Galatic Empire, Indiana Jones versus a good chunk of the Third Reich. And now, we have Margaret Williams.

The Story of Margaret Williams and her LLC

The story, told in Long Beach Unified School District v. Margaret Williams, LLC, Case No. B290069 (December 9, 2019), is about Margaret Williams. Ms. Williams (we’ll just call her “Margaret” going forward because it just sounds better when telling a story) worked for nearly ten years full-time for the Long Beach Unified School District, toiling day in and day out doing construction management and environmental compliance work, including work involving the clean up of material at a school construction site contaminated with arsenic.

Although she worked full-time for the District for nearly ten years, she wasn’t an employee. Rather, she was a contractor. And, on top of it all, as a condition of working for the District, the District required that she form a company in order to contract with the District. According to Margaret, “In order to work with the District, I was directed . . . to form a corporation or partnership. This was the only way I could work for the District: I could not enter into a contract with the District as an individual.” So, in 2006, she formed a company, simply called Margaret Williams, LLC.

Reprinted courtesy of Garret Murai, Nomos LLP

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

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Not only do workers and others on site need to be protected, but implementation of these protocols is also critical to avoid potential liabilities.

Safety Guidance for the Prevention of the Coronavirus on Construction Sites

Monday, May 25, 2020 — Heather Whitehead - Newmeyer Dillion

Although construction projects are generally allowed to proceed under most COVID-19 stay at home orders, owners and contractors need to know how to proceed safely on their construction sites. Not only do workers and others on site need to be protected, but implementation of these protocols is also critical to avoid potential liabilities. Last week, the California Department of Industrial Relations – Division of Occupational Safety & Health (CAL/OSHA) released guidance regarding safety and health procedures to prevent the spread of COVID-19 at construction sites. A link to the CAL/OSHA Safety and Health Guidance is provided here.

While the guidance states that it is not imposing any new legal obligations, it is imperative for businesses to not only be aware of these safety practices, but to incorporate these practices as appropriate on each construction site to protect its employees as well as subcontractors, suppliers and others who may be present on site. Otherwise, owners and contractors face potential exposure to regulatory action, including potential penalties and other liabilities, if they fail to properly incorporate these guidelines into the Injury and Illness Prevention Program (IIPP) at each construction site. Now is the time to update your current Injury and Illness Prevention Program (IIPP) to include recommended protocols for preventing the spread of the Coronavirus.

Reprinted courtesy of Heather Whitehead, Newmeyer Dillion

Ms. Whitehead may be contacted at heather.whitehead@ndlf.com

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Construction Lien Foreclosure Action Must Be Brought In County Where Property Located

May 25, 2020 — David Adelstein - Florida Construction Legal Updates

A construction lien foreclosure action is an action against the real property and MUST be brought in the county where the property is located. It is an action concerning subject matter jurisdiction (the jurisdiction of the court to hear the matter) and, thus, can be raised at any time in a proceeding. If you are looking to foreclose a construction lien, please make sure 1) the lien is recorded in the right jurisdiction and 2) the lien is foreclosed on in the right jurisdiction.

In a recent case, Prime Investors & Developers, LLC v. Meridien Companies, Inc., 2020 WL 355930 (4th DCA 2020), a dispute arose between a general contractor and subcontractor on a hotel project in Miami-Dade County. The general contractor filed suit against the subcontractor for untimely and defective installation in Broward County. The subcontractor counter-sued the general contractor for breach of contract and asserted a claim against the developer of the hotel to foreclose a construction lien. Remember, the property was located in Miami-Dade County but the lawsuit was in Broward County.

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

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Will Contractors Limit Weather Risk With Indexed Insurance?

May 25, 2020 — Scott Van Voorhis & Richard Korman - Engineering News-Record

A winter nor’easter, described in the media as “snowzilla” because of its historic proportions, slammed the U.S. mid-Atlantic states on a January weekend in 2016, dumping more than 2 ft of snow on New York City. At times, winds exceeded 35 mph. Among the projects where heavy accumulations had to be shoveled the following Monday was Manhattan’s sprawling Hudson Yards mixed-use development. Photos (see cover) show crews doing the shoveling and a crane being used to remove the snow.

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

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U.S. Homebuilder Sentiment Advances After Worst Slump Ever

May 25, 2020 — Vince Golle - Bloomberg

U.S. homebuilder sentiment rose in May by more than forecast following a record slump a month earlier as a pickup in sales and demand expectations pointed to stabilization in the real estate market.

The National Association of Home Builders/Wells Fargo Housing Market Index increased by 7 points to 37, according to data Monday. In April, the gauge plummeted 42 points, the most in records to 1985. The median projection in a Bloomberg survey of economists called for 35 in May. Readings above 50 indicate more builders view conditions as good than poor.

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Business Interruption Loss – The Battle for Coverage During the COVID-19 Pandemic

May 25, 2020 — Beverley BevenFlorez – CDJ Staff

Newmeyer Dillion presents a webinar that will “dissect the current insurance landscape to understand current carrier trends, impacts of governmental actions in this arena, and [provide] practical tips companies can use to bring successful claims for business interruption.” Attendees will also be given an opportunity to ask questions during a half-hour Q&A session following the one-hour webinar. The program has also been approved for MCLE credit.

12:00pm-1:00pm PST
May 28th, 2020
Live Webinar

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Lack of litigation does not mean that you should let your guard down.

Just When You Thought the Green Building Risk Discussion Was Over. . .

Monday, May 25, 2020 — Christopher G. Hill - Construction Law Musings

As a reader of Construction Law Musings, you no doubt realize that I am a big proponent of “green” or sustainable building. I have also been known to sound a bit like Eeyore when discussing the charge into the breach of green building without considering the potential risks. Thankfully, and despite some of the risk predictions made here (and elsewhere for that matter) there have not been but so many major court cases relating to these risks.

However, as a recent article in ENR Magazine warns, this lack of litigation does not mean that you should let your guard down. Just because the economy, warnings by attorneys and others, and possible lack of financial incentive to sue have kept the litigation numbers down does not mean that the risks have gone away. LEED requirements, time horizons and other risks that have become evident during the process of vetting green building contracts and practices still must be dealt with in contracts and insurance policies. These risks are well laid out in the ENR article and in other places here at Musings so I won’t outline them in detail here.

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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If planned properly, the use of technology allows remote mediations to be conducted as seamlessly as in-person mediations.

Not Remotely Law as Usual: Don’t Settle for Delays – Settle at Remote Mediation

Monday, May 25, 2020 — Victor J. Zarrilli, Robert G. Devine & Michael W. Horner - White and Williams LLP

The emergence and rapid spread of COVID-19 has created extraordinary circumstances that have significantly impacted how we go about living, working and interacting with one another. The practice of law is no exception.

While most cases have been postponed and some extended indefinitely, the issues and disputes that first triggered the litigation remain. In fact, the burdens created by social distancing and other responses to the COVID-19 outbreak have served to only increase these disputes and create an urgent need in some for quick resolution.

In our previous article, we summarized some of the best practices that should be applied when taking and defending depositions in a remote, virtual setting. That technology can also offer the same benefits for alternative dispute resolutions. If planned properly, the use of technology allows remote mediations to be conducted as seamlessly as in-person mediations and, in some circumstances, affords additional benefits that can achieve the best possible resolution for all sides.

This article summarizes the opportunities technology has created by which parties can attempt to resolve their disputes through alternative dispute resolution methods, even in a time of social distancing.

Reprinted courtesy of White and Williams LLP attorneys Victor J. Zarrilli, Robert G. Devine and Michael W. Horner
Mr. Zarrilli may be contacted at zarrilliv@whiteandwilliams.com
Mr. Devine may be contacted at deviner@whiteandwilliams.com
Mr. Horner may be contacted at hornerm@whiteandwilliams.com


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Valid Process? Unconstitutional? Invitation for Legislative Change?

Can an Owner Preemptively Avoid a Mechanics Lien?

Monday, May 25, 2020 — William L. Porter - Porter Law Group

Various sections of the California Civil Code, beginning with section 8000, protect the right of contractors, subcontractors and suppliers in the construction industry to obtain payment for work performed and materials supplied to construction projects. Under these statutes, unpaid claimants are entitled to use mechanics liens, stop payment notices and other methods to protect their right to payment. Mechanics liens allow unpaid claimants to sell the property where the work was performed in order to obtain payment. Stop payment notices force the owner or the bank to set money aside to pay unpaid claimants. Article XIV of our California Constitution even elevates the mechanics lien remedy to a “constitutional right”. The system generally works well, and claimants are paid.

As someone who practices and teaches construction law, I have noticed a seldom used statutory tool that seems to provide a mechanism for property owners under certain circumstances to prevent subcontractors and suppliers from imposing enforceable mechanics lien on property where work was performed. Under California Civil Code section 8520, it appears that all that an owner of property need do to avoid a mechanics lien on its property is to give a proper notice (per Civil Code section 8100 et seq.) to a person who has a mechanics lien right (a subcontractor or supplier) that the owner is invoking Civil Code section 8520 and that if the claimant is unpaid for work performed or materials supplied to the owner’s property that the claimant must either provide the owner with a stop payment notice or forfeit the right to a mechanics lien on the owner’s property. This would allow an owner to avoid a mechanics lien on its property if the claimant failed to send a stop payment notice to the owner.

Providing the “notice” under Civil Code section 8100 appears to be easy. It can be sent by “registered or certified mail or by express mail or by overnight delivery by an express service carrier”. It can even be by “hand delivery”. As far as the notice itself, it would seem that it can be very simple and easily performed under the process described below, which can be implemented within the office of any owner or developer.

Reprinted courtesy of William L. Porter, Porter Law Group

Mr. Porter may be contacted at bporter@porterlaw.com

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Proposed federal legislation could completely and definitively resolve the debate in favor of coverage for policyholders.

Business Interruption Insurance Coverage Act of 2020: Yet Another Reason to Promptly Notify Insurers of COVID-19 Losses

Monday, May 25, 2020 — James Hultz - Newmeyer Dillion

Business interruption coverage stemming from the COVID-19 pandemic is a matter of intense debate. The number of policyholder lawsuits continues to rise sharply and an increasing number of state legislatures are considering laws to specifically address such coverage.

Now, additional proposed legislation at the federal level could completely and definitively resolve the debate in favor of coverage for policyholders.

The Business Interruption Insurance Coverage Act of 2020

On April 14, Congress introduced the Business Interruption Insurance Coverage Act of 2020 (the “Act”) which, if passed, would require insurance companies to cover business interruption losses due to “viral pandemics, forced closures of businesses, mandatory evacuations, and public safety power shut-offs.” The bill further states:

Any exclusion in a contract for business interruption insurance that is in force on the date of the enactment of this Act shall be void to the extent that it excludes losses specified . . . .

The draft legislation also specifies that it preempts state approval of any contrary exclusion and renders such approval “void to the extent that it excludes losses specified.”

Reprinted courtesy of James Hultz, Newmeyer Dillion

Mr. Hultz may be contacted at james.hultz@ndlf.com

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These accomplished lawyers have earned this advancement based on their contributions to the firm and their practices.

White and Williams Announces Lawyer Promotions

Monday, May 25, 2020 — White and Williams LLP

White and Williams is pleased to announce the election of Vincent Barbera and James Burger to the partnership. The firm has also promoted Victoria Fuller, Phyllis Ingram, William Johnston, Eric Porter, Gus Sara, Jenifer Scarcella, Lian Skaf and Brett Tishler from associate to counsel.

The newly elected partners and promoted counsel represent the wide array of practices that White and Williams offers its clients, including education, finance, financial lines, insurance coverage, labor and employment, litigation, real estate, and subrogation. These accomplished lawyers have earned this advancement based on their contributions to the firm and their practices.

“We are pleased to elect these two lawyers to the partnership and promote eight exceptional associates to counsel. The group demonstrates the legal talent and breadth of services White and Williams offers clients,” said Patti Santelle, Managing Partner of the firm. “The contributions of these lawyers have enhanced the growth and reputation of our firm and reflect our deep commitment to clients. We look forward to their continued success.”

Reprinted courtesy of White and Williams LLP
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Construction in Virginia is facing what is at best an uncertain future and at worst a series of large scale shutdowns due to COVID-19.

Keep Your Construction Claims Alive in Crazy Economic Times

Monday, May 25, 2020 — Christopher G. Hill - Construction Law Musings

Coronavirus is dominating the news. Construction in Virginia is facing what is at best an uncertain future and at worst a series of large scale shutdowns due to COVID-19. The number of cases seem to grow almost exponentially on a daily basis while states and the federal government try and patch together a solution. All of this adds up to the possibility that owners and other construction related businesses could shutter and importantly payment streams can slow or dry up. Aside from keeping your contractual terms in mind and meeting the notice deadlines found in your contract, these uncertain economic times require you to be aware of the claims process.

Along with whatever claims process is set out in the contract and your run of the mill breach of contract through non-payment type claims, in times like this payment bond and mechanic’s lien claims are a key way to protect your payment interest. The law has differing requirements for each of these unique types of payment claims.

Mechanic’s liens are technical and statute based with very picky requirements. The form and content of a memorandum of lien will be strictly read and in most cases form will trump substance. Further, among other requirements best discussed with a Virginia construction lawyer, you must keep in mind two numbers, 90 and 150. The 90 days is the amount of time that you have in which to record a lien. This deadline is generally calculated from the last date of work (or possibly the last day of the last month in which you did work). File after this deadline and your lien will be invalid because the right to record a lien has expired. The 150 days is a look back from the last day of work or the date of lien filing, whichever is sooner in time. The 150 days applies to the work that can be captured in the lien. In other words, it dictates the amount of the lien.

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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CONSTRUCTION DEFECT NEWS
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The way our planet’s waste and recycling is processed should matter to all of us.

Why Construction Firms Should Think Differently on the Issue of Sustainability

Monday, May 25, 2020 — Chris Batterson - Construction Executive

How does a construction company differentiate itself from the competition? If the company owner don’t know the answer to this question, or if the first thought that popped into his or her mind was a generic answer along the lines of customer service, keep reading.

While all businesses should strive to deliver better results for their customers, if a construction firm is looking to stand out from the crowd, putting sustainability at the very center of everything it does will be a clear difference maker.

Finding ways to divert construction and demolition (C&D) waste materials away from landfills and into recycling streams is a must. Keeping track of and measuring your C&D recycling rates on a per-project basis, and also company-wide, can be the difference between winning and losing a contract.

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


Mr. Batterson may be contacted at chris.batterson@rubiconglobal.com

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Attorney Garret Murai provides a primer on bankruptcies on a construction project.

Bankruptcy on a Construction Project: Coronavirus Edition

Monday, May 25, 2020 — Garret Murai - California Construction Law Blog

Experts are warning of a wave of bankruptcies in the wake of the coronavirus pandemic. In some industries, such as the hard hit retail sector, that rising tide has already begun as J. Crew and Neiman Marcus filed for bankruptcy protection this past week.

While the federal government’s stimulus package, including the $660 billion Paycheck Protection Program which is part of the larger 2.2 trillion CARES Act, may help to stem the tide of bankruptcies, Chapter 11 bankruptcy filings increased 26% in April over the same period last year.

How the pandemic will impact the construction industry is uncertain. Anecdotally, we’ve been hearing from clients that some project owners are stalling projects that are still in the planning stages as they evaluate the situation, which suggests long term impacts that can be ridden out rather than short term impacts that can devastate on-going construction projects.

Nevertheless, with 24-7 coverage of the pandemic, project owners, contractors, material suppliers, and equipment lessors are understandably concerned with the impact a bankruptcy might have on a construction project. So, here’s a primer on bankruptcies on a construction project.

Reprinted courtesy of Garret Murai, Nomos LLP

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

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The cost of defending against bodily injury claims can be astronomical, even where the injury itself is relatively minor.

Workarounds for Workers' Comp Immunity: How to Obtain Additional Insured Coverage when the Named Insured is Immune from Suit

Monday, May 25, 2020 — Bethany L. Barrese - Saxe Doernberger & Vita, P.C.

Construction is an inherently risky business, fraught with the potential for human error. Despite best efforts to ensure safety, accidents involving construction workers are common, with consequences ranging from your run-of-the-mill trip and fall to much more serious and debilitating injuries.

A worker who is injured on the job generally receives workers’ compensation benefits through their employer. Most states have enacted statutes stating that this is the exclusive remedy available from the employer, effectively making employers immune against civil lawsuits that might otherwise be brought by their injured employees.

However, workers’ compensation benefits do not always fully compensate the employee for their injuries. In the construction industry, this often leads to lawsuits against upstream parties, such as a general contractor or project owner.

Reprinted courtesy of Bethany L. Barrese, Saxe Doernberger & Vita, P.C.

Ms. Barrese may be contacted at blb@sdvlaw.com

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Remote working arrangements are the new norm.

Online Meetings & Privacy in Today’s WFH Environment

Monday, May 25, 2020 — Heather Whitehead & Joshua Anderson - Newmeyer Dillion

As a result of the COVID-19 (commonly referred to as the Coronavirus) pandemic, remote working arrangements have become the new norm. For those working from home (WFH), the software program “Zoom Meetings,” has found a substantial increase in demand and popularity as a means to facilitate meetings online rather than meeting in person. There are also a number of other similar platforms available for online meetings such as Skype and Teams (from Microsoft), Go to Meeting (from LogMeIn) and WebEx Meetings (Cisco).

Best Practices for Businesses - Privacy and Security Protocols

With these platforms becoming a necessity for businesses, there are a number of best practices that should be considered to safely conduct online meetings and teleconferences as well as protect information. These include the following:

  1. Upgrade to the most recent version of the program or application;
  2. Use passwords, especially with recurring meetings;
  3. Protect all passwords as well as personal meeting identifiers used in Zoom and other platforms;
  4. Carefully moderate meetings and ask meeting attendees to identify themselves at the beginning of a meeting;
  5. Consider allowing only authenticated users to participate in meetings;
  6. Use the Waiting Rooms feature in Zoom; and
  7. Enable features available only to meeting hosts.

Reprinted courtesy of Heather Whitehead, Newmeyer Dillion and Joshua Anderson, Newmeyer Dillion
Ms. Whitehead may be contacted at heather.whitehead@ndlf.com
Mr. Anderson may be contacted at joshua.anderson@ndlf.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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