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CONSTRUCTION DEFECT NEWS

California Court Confirms Broad Coverage Under “Ongoing Operations” Endorsements

Friday, December 1, 2017 — Kevin C. Brantley - Payne & Fears

A California Court of Appeal has confirmed that additional insured endorsements (“AIE”) granting coverage for liability arising out of a named insured’s “ongoing operations,” and in effect during those “ongoing operations,” do not require that the liability arise while the named insured is performing work. McMillin Mgmt. Servs., L.P. v. Financial Pacific Ins. Co., Cal. Ct. App., November 14, 2017, Case No. D069814.

In McMillin, a construction defect insurance coverage action, Lexington Insurance Company argued that McMillin had no liability to homeowners until after their homes closed escrow; thus, McMillin did not face liability while the named insureds’ work was ongoing. The Court of Appeal rejected Lexington’s argument, finding that the “ongoing operations” AIEs provide only that McMillin’s liability “be ‘linked’ through a ‘minimal causal connection or incidental relationship’ with [the named insureds’] ongoing operations.” (internal citations omitted). The Court reasoned that Lexington had not established that all of the damage in the underlying action occurred after the named insureds completed their work, thus Lexington had not established as a matter of law that there was no potential for coverage for McMillin under the policies.

Reprinted courtesy of Kevin C. Brantley, Payne & Fears

Mr. Brantley may be contacted at kcb@paynefears.com

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The U.S. Flooded One of Houston’s Richest Neighborhoods to Save Everyone Else

Friday, December 1, 2017 — Shannon Sims - Bloomberg

“Next contestant, come on down.” On Oct. 6, in a bright courtroom in downtown Houston, Susan Braden, chief justice of the U.S. Court of Federal Claims, opens a preliminary hearing with a joke, beckoning a lawyer forward. Braden has flown in from Washington to oversee disputes involving the homes and businesses flooded in West Houston after Hurricane Harvey made landfall over Texas in late August. She has summoned attorneys interested in suing, to get their thoughts on how the proceedings should unfold.

Almost 100 lawyers are present, combed and buzzing in anticipation of what promises to be some of the most complex and expensive litigation ever brought against the federal government. Observers speculate that thousands of plaintiffs could eventually join in, and that the total damages claimed could reach $10 billion or more, especially if the big energy and oil companies—whose presence in one section of West Houston gave it the nickname the Energy Corridor—sue over their flooded headquarters. Eighty suits, 11 of which are seeking class-action status, have been filed by homeowners against the federal government, though many of the Energy Corridor’s approximately 9,500 residents are still weighing their options, speed-dating lawyers by phone and at community meetings.

Reprinted courtesy of Shannon Sims, Bloomberg

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AB 1701 – General Contractor Liability for Subcontractors’ Unpaid Wages

Friday, December 1, 2017 — Alex Baghdassarian, Eric M. Gruzen, & Kerri Sakaue – Peckar & Abramson, P.C.

Contractors will soon find themselves on the frontline of wage disputes on projects if laborers working on behalf of their subcontractors or vendors are unpaid. On October 14, 2017, Governor Jerry Brown signed into law AB 1701, which will allow laborers to seek direct compensation from the general contractors on private projects, if their wages remain unpaid.

The legislative mandate requires direct contractors—defined as contractors who have a direct contractual relationship with an owner—to assume liability for any debt incurred by a subcontractor, at any tier, for a wage claimant’s performance of labor included in the subject of the original contract between the general contractor and the owner. The California bill will apply to all private construction contracts entered into on or after January 1, 2018. Previously, all laborers could maintain a mechanic’s lien claim against private property, without needing to serve a 20-day preliminary notice, but there was no statutory obligation on the “direct contractors” to reimburse the laborers their unpaid wages.

Reprinted courtesy of Peckar & Abramson, P.C. attorneys Alex Baghdassarian, Eric M. Gruzen and Kerri Sakaue
Mr. Baghdassarian may be contacted at abaghdassarian@pecklaw.com
Mr. Gruzen may be contacted at egruzen@pecklaw.com
Ms. Sakaue may be contacted at ksakaue@pecklaw.com


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L.A. Gives Notice to Owners of Older Concrete Structures About Seismic Retrofits

December 1, 2017 — Nadine M. Post - Engineering News-Record

Earlier this month, just over two years after Los Angeles passed a law requiring seismic retrofits of older, nonductile concrete buildings, the city’s Dept. of Building and Safety began sending compliance orders to owners. The L.A. retrofit ordinance, which also includes requirements for weak first-story wood-framed buildings, was the first of its kind in the U.S.

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

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Insurer Has Duty to Indemnify But No Duty to Defend

December 1, 2017 — Tred R. Eyerly - Insurance Law Hawaii

The court found that the insurer was obligated to indemnify, but not to defend the insured. Old Republic Ins. Co. v. Kenny Constr. Co., 2017 U.S. Dist. LEXIS 189412 (N.D. Ill. Oct. 31, 2017).

Kenny Construction Company was hired by the Army Corp of Engineers to work on the Chicago Deep Tunnel flood control project. Kenny hired Meccon Industries, Inc. as a subcontractor to perform mechanical work and furnish materials for the project. The subcontract required Meccon to provide coverage for the contractor and any other additional insureds as required on the Insurance Requirement Sheet attached to the contract. Neither party was able to produce the Insurance Requirement Sheet.

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

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Hong Kong Property Doom Doesn't Begin at 1%

December 1, 2017 — Nisha Gopalan - Bloomberg

Hong Kong's one-month interbank rate has reached its highest level since the global financial crisis. But don't expect the city's real estate prices to halt their spiral anytime soon, whatever the International Monetary Fund may say.

Blame banks and property developers.

Around 94 percent of mortgages in the world's least affordable property market are tied to the Hong Kong interbank offered rate, so the surge above 1 percent will cause some pain.

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Lorman Seminar: Ethics of Electronic Discovery and Forensics: Don’t Let Your Evidence Be Disqualified

December 1, 2017 — Beverley BevenFlorez - CDJ STAFF

This one-day live webinar “will delve into the rules that govern the identification, preservation, collection and presentation of electronic evidence, with a specific focus on the ethical rules governing such activities.” Topics include Common Types of Electronic Evidence and Sources of Electronic Evidence, Ethical Boundaries for Identifying and Gathering Electronic Evidence, Preservation of Electronic Evidence, and many more.

December 5th, 2017
Live Webinar

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Insurer's Attempt to Limit Additional Insured Status Fails

Friday, December 1, 2017 — Tred R. Eyerly - Insurance Law Hawaii

The court disagreed with the insurer's attempt to limit additional insured status based upon the contract between the parties. Mays v. In re All C-Dive LLC, 2017 U.S. Dist. LEXIS 185874 (E.D. La. Nov. 9, 2017).

Five employees of C-Dive LLC filed a lawsuit after belng injured in a pipeline explosion aboard a vessel servicing a pipeline owned by Gulf South Pipeline Company. During the work, there was a release of gas that caused an explosion and injured the employees.

Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii

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

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Five-Year Statute of Limitations on Performance-Type Surety Bonds

Friday, December 1, 2017 — David Adelstein - Florida Construction Legal Updates

The statute of limitations on a claim against a performance-type bond is 5 years from the breach of the bond, i.e., the bond-principal’s default (based on the same statute of limitations that governs written contracts / obligations). See Fla. Stat. s. 95.11(2)(b). This 5-year statute of limitations is NOT extended and does NOT commence when the surety denies the claim. It commences upon the default of the bond-principal, which would be the act constituting the breach of the bond. This does not mean that the statute of limitations starts when a latent defect is discovered. This is not the case. In dealing with a completed project, the five-year statute of limitations would run when the obligee (beneficiary of the bond) accepted the work. See Federal Insurance Co. v. Southwest Florida Retirement Center, Inc., 707 So.2d 1119, 1121-22 (Fla. 1998).

This 5-year statute of limitations on performance-type surety bonds has recently been explained by the Second District in Lexicon Ins. Co. v. City of Cape Coral, Florida, 42 Fla. L. Weekly D2521a (Fla. 2d DCA 2017), a case where a developer planned on developing a single-family subdivision.

Reprinted courtesy of David Adelstein, Florida Construction Legal Updates

Mr. Adelstein may be contacted at dadelstein@gmail.com

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When is a Residential Subcontractor not Subject to the VCPA? Read to Find Out

Friday, December 1, 2017 — Christopher G. Hill - Construction Law Musings

The Virginia Consumer Protection Act (VCPA) can and often does apply to residential construction. The transaction between a residential contractor and an homeowner has been held to fall under the consumer transaction language of the VCPA and on occasion been used to avoid the issues with the economic loss doctrine in Virginia. However, there are limits to how far down the contractual chain the VCPA applies, particularly in the case where a supplier or subcontractor does not provide the services or materials for a personal, consumer purpose.

An example of this fact is found in the case of Johnston v. Stephan. In that case, a couple hired a general contractor to build a home and the general contractor hired Cole Roofing System, Inc. to provide the roof of the home. The first couple subsequently sold the home and the second homeowners sought further work on the roof from Cole Roofing. After Cole Roofing refused further work, the homeowners brought an action seeking to enforce a warranty and for a violation of the VCPA. For the warranty claim, the homeowners relied on the contract between them and the prior homeowners that referenced a 10 year warranty on the roof and the subcontract between the homebuilder and Cole Roofing. Cole Roofing sought dismissal of the VCPA and warranty claims by demurrer and further sought by demurrer to have the matter dismissed as being filed after the running of the statute of limitations.

Reprinted courtesy of Christopher G. Hill, The Law Office of Christopher G. Hill

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

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CONSTRUCTION DEFECT NEWS

Exponential Acceleration—Interview with Anders Hvid

Friday, December 1, 2017 — Aarni Heiskanen - AEC Business

Anders Hvid is a Danish consultant, speaker, and author. He talks about digital disruption, exponential acceleration, and paradigm shifts that are taking place in a world that is moving from local and linear into global and exponential.

“I have a background in social studies. My interest is in humans, and systems in which they work together. I’ve always had a deep fascination with technology and how it influences our society, our jobs, our democracies, and systems,” Anders says. He visited Singularity University back in 2010, and that experience made a lasting impression on him. “It freaked me out, to be honest, and it opened my eyes to how important technology is.”

Reprinted courtesy of Aarni Heiskanen, AEC Business

Mr. Heiskanen may be contacted at info@aepartners.fi

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General Contractor’s Professional Malpractice/Negligence Claim Against Design Professional

Thursday, November 30, 2017 — David Adelstein - Florida Construction Legal Updates

A recent case supports a professional malpractice (negligence) claim by a general contractor against a design professional by reversing a trial court’s entry of summary judgment in favor of the design professional and finding a question of fact remained as to an architect’s role in the renovation of a public construction project. By the appellate court finding that a question of fact remained, the appellate court was finding that it was a triable issue, which is exactly what the general contractor wanted in this case. Getting this issue and the facts to the jury is the leverage the general contractor presumably wanted.

Reprinted courtesy of David Adelstein, Florida Construction Legal Updates

Mr. Adelstein may be contacted at dadelstein@gmail.com

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Earthquake Hits Mid-Atlantic Region; No Immediate Damage Reports

Thursday, November 30, 2017 — The Associated Press (Randall Chase) - Bloomberg

Dover, Del. (AP) -- An earthquake has jolted the Mid-Atlantic region of the East Coast, but there are no immediate reports of damage or injuries.

The U.S. Geological Survey says the 4.1 magnitude quake struck just after 4:45 p.m. Thursday, and was centered about 6 miles (10 kilometers) east-northeast of Dover, Delaware. It was felt as far away as Baltimore.

Reprinted courtesy of The Associated Press (Randall Chase), Bloomberg
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Construction Worker Rescued From Trench

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CONSTRUCTION DEFECT NEWS

Production of Pre-Denial Claim File Compelled

Thursday, November 30, 2017 — Tred R. Eyerly - Insurance Law Hawaii

The appellate court found that the claims file that existed before the insurer's denial was discoverable. Cascade Builders Corp. v. Rugar, 2017 N.Y. App. Div. LEXIS 7357 (N.Y. App. Div.. Oct. 19, 2017).

Cascade Builders was the general contractor for the homeowners. In May 2011, Cascade subcontracted with John Rugar to perform certain exterior power washing on the residence. The contract between Cascade and Rugar required Rugar to indemnify and hold Cascade harmless for any work performed by Rugar and to obtain coverage naming Cascade as an additional insured. Rugar procured the required CGL policy from Utica First Insurance Company.

Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii

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

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OSHA Again Pushes Back Record-Keeping Rule Deadline

Thursday, November 30, 2017 — Tom Ichniowski - Engineering News-Record

The federal Occupational Safety and Health Administration is extending again—this time, by two weeks—the compliance date for its rule requiring companies to file annual electronic reports of workplace injuries and illnesses.

Reprinted courtesy of Tom Ichniowski, ENR

Mr. Ichniowski may be contacted at ichniowskit@enr.com

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Visual Construction Diaries – Interview with Jeff Sassinsky of Fovea Aero

Thursday, November 30, 2017 — Aarni Heiskanen - AEC Business

Jeff Sassinsky, President of Fovea Aero, gave me a live demonstration on Fovea Aero Vision – an app that allows you to a get a fully immersive visual construction diary of your project.

The idea for the development of Fovea Aero Vision came from discussions with general contractors, owners, and other construction industry professionals. They were talking about the use of smartphones, particularly phone cameras, in construction. The photos, for example, of a fitting that does not look right end up in a folder on a server or goes back and forth in email messages. “The lack of any structure behind both the collection and the storage and sharing of the photos is hampering their usage,” Jeff said. “We wanted to solve the problem by creating a full record of everything that takes place on a construction site, on a regular basis, sharing it among the stakeholders, and making it super easy to use.”

Reprinted courtesy of Aarni Heiskanen, AEC Business

Mr. Heiskanen may be contacted at info@aepartners.fi

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Power of Workers Compensation Immunity on Construction Project

Thursday, November 30, 2017 — David Adelstein - Florida Construction Legal Updates

On construction projects, workers compensation immunity is real and it is powerful. (See also this article.) Workers compensation immunity is why all general contractors should have workers compensation insurance and they should ensure the subcontractors they hire have workers compensation insurance. Workers compensation insurance becomes the exclusive form of liability for an injured worker thereby immunizing an employer (absent an intentional tort, which is very hard to prove as a means to circumvent workers compensation immunity).

If a general contractor, with workers compensation insurance, hires a subcontractor without workers compensation insurance, the general contractor’s workers compensation insurance will be responsible in the event an injury occurs to a subcontractor’s employee. The general contractor becomes the statutory employer.

Reprinted courtesy of David Adelstein, Florida Construction Legal Updates

Mr. Adelstein may be contacted at dadelstein@gmail.com

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