English v. RKK. . . The Rest of the Story

Contract on typewriter

English won the prior battle, but lost the war.

December 4, 2018
Christopher G. Hill - Construction Law Musings

Back in February, I discussed a case relating to indemnity and ambiguity. The opinion in that case, W.C. English, Inc. v. Rummel, Klepper & Kahl, LLP et al., allowed a breach of contract and indemnity claim to move forward despite the fact that conflicting term sheets between the plaintiff and defendant could have been read to violate Virginia law by requiring indemnity for English’s own negligence. In other words, the ambiguity worked in English’s favor (though that is not something to count on). The Court did not however address whether there was any negligence on English’s part and if there was, what was the contractual effect.

I’ll bet you were wondering what happened later in that case. Well, here’s the answer. In a subsequent opinion, the Court looked at the same ambiguous and conflicting term sheets between and among those defendants that were required to provide quality assurance services for the construction of a bridge in western Virginia. For the full procedural and factual analysis, be sure to read the full memorandum opinion linked above.

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


Department of Transportation Revises Its Rules Affecting Environmental Review of Transportation Projects

Race track

There is a renewed interest in transportation infrastructure projects, and recent legislation is intended to accelerate required environmental reviews.

December 4, 2018
Anthony B. Cavender - Gravel2Gavel Construction & Real Estate Law Blog

On October 29, the U.S. Department of Transportation (DOT) published a final rule in the Federal Register which amends and revises the environmental National Environmental Policy Act (NEPA) procedures rules employed by the Federal Highway Administration (FHWA), the Federal Railroad Administration (FRA), and the Federal Transit Administration (FTA). There is a renewed interest in transportation infrastructure projects, and recent legislation is intended to accelerate required environmental reviews.

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


ABA Webinar: Additive Manufacturing in Construction: Impacts and Emerging Issues

December 4, 2018
Beverley BevenFlorez - CDJ STAFF

This American Bar Association live webinar discusses the advancing technology and new uses for AM in construction, as well as the emerging legal issues for the industry. Topics to be covered include the construction industry’s expanding interest in AM technology, the core issues with new uses for AM in construction, and potential benefits of advancing technology for AM in construction.

January 16th, 2019
Webinar


Relying Upon Improper Exclusion to Deny Coverage Allows Bad Faith Claim to Survive Summary Judgment

Legal books on bookshelves

Tred Eyerly practices law in Honolulu, Hawaii, and focuses on insurance coverage issues.

December 4, 2018
Tred R. Eyerly - Insurance Law Hawaii

The insurer was successful on summary judgment in establishing it correctly denied coverage for collapse, but its motion was denied regarding the insureds' bad faith claim. Jones v. State Farm Fire & Cas. Co., 2018 U.S. Dist. LEXIS 153102 (W.D. Wash. Sept. 7, 2018).

The insureds' retaining wall collapsed. They tendered to State Farm under their homeowners policy. An engineer retained by State Farm determined that the wall buckled due to "excessive lateral earth pressure from retained soils behind the wall." The parties agreed that the soil, saturated by water from frequent rain, grew too heavy for the retaining wall to bear, causing the collapse.

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


How AI and Machine Learning Are Helping Construction Reduce Risk and Improve Margins

Robot holding a screwdriver

According to a McKinsey report, almost 98 percent of projects incur cost overruns or delays.

November 28, 2018
Manu Venugopal - Construction Executive

The construction industry is often characterized as high risk and low margin. According to a McKinsey report, almost 98 percent of projects incur cost overruns or delays. Meanwhile, the construction productivity curve has remained flat when compared to other industries.

In the last decade, with the advent of cloud and mobile technologies, industry leaders have been focused on digitizing construction workflows. This has resulted in improved efficiencies, but also has created an explosion of new data sources in the construction industry. Project teams are now capturing and documenting data on mobile devices, site progress is documented via drones and sensors are used to create a connected jobsite.

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


Parametric Insurance: Mitigating Risk From Weather-related Events

November 28, 2018
Paul Ramiz & Michael DeLio - Construction Executive

In the last three years there have been record-breaking extreme weather events, changing seasonality, increases in temperature and rainfall and overall greater volatility globally. This specifically has created a challenge for the U.S. construction industry, which after a slight decline in construction spending in 2017 is expected to have six percent growth in 2018 and will to continue to grow through 2021. The recent increase in construction spending and expected projects to come has allowed the insurance and wider financial services sector to offer increasingly tailored solutions that allow both owners and operators of construction projects to manage the financial impact of adverse weather on revenues and costs.

Reprinted courtesy of Paul Ramiz & Michael DeLio, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Pollution Exclusion Does Not Apply To Concrete Settling Dust

Concrete wall

Tred R. Eyerly discusses the case Allied Prop. & Cas. Ins. Co. v. Zenith Aviation, Inc.

November 28, 2018
Tred R. Eyerly - Insurance Law Hawaii

Applying Virginia law, the federal district court determined that the pollution exclusion did not bar coverage. Allied Prop. & Cas. Ins. Co. v. Zenith Aviation, Inc., 2018 U.S. Dist. LEXIS 14727 (E.D. Va. Aug. 29, 2018).

Zenith Aviation, Inc. hired Abby Construction Company to install an elevator at its warehouse. A wet saw was used to cut away concrete, but Abby did not use any water with the wet saw. This created a significant amount of concrete dust to leave the warehouse. Surrounding businesses contacted the fire department because they thought the dust was smoke from a fire. The concrete dust settled inside Zenith's building, damaging airplane parts stored in the warehouse.

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


To Bee or Not to Bee - CA Court Finds Denial of Coverage Based on Exclusion was Premature Where Facts had not been Judicially Determined

Bee on yellow flower

As can be seen from the Perry decision, whether an exclusion applies often requires a factual determination.

November 28, 2018
Philip B. Wilusz - Saxe Doernberger & Vita, P.C.

While I typically discuss cases concerning pollution, today I will change a few letters around and discuss pollination. The case, Unigard Insurance Co. et al. v. George Perry and Sons Inc. et al., asks whether there is coverage for a lawsuit brought against a commercial farm that is alleged to have killed off bee colonies used for pollination. The farm, owned by George Perry & Sons Inc. (“Perry”), allegedly used a pesticide that killed off the bee colonies that Perry had hired from Gary Mattes (“Mattes”) pursuant to an oral agreement. The bees, operating well outside of their weight class, were hired to pollinate Perry’s crops of watermelons and pumpkins. Interestingly, the bees would be brought to the farm in either large hives or “nukes,” which are smaller versions of hives.

Mr. Wilusz may be contacted at pbw@sdvlaw.com


NBI Seminar: Troubleshooting Construction Project Legal Issues

November 28, 2018
Beverley BevenFlorez - CDJ STAFF

This one-day seminar presented by the National Business Institute (NBI) is relevant for Attorneys, Construction Contractors and Subcontractors, Real Estate Developers, Architects, Engineers, and Paralegals. A few of the topics to be covered are Construction Contracts: What Every Attorney and Contractor Should Know; Delays, Acceleration and Stopped Work: Proving or Disproving Liability and Calculating Damages; and Indemnity and Other Risk Transfer Clauses: Are You Picking Up the Other Guy's Tab.

December 11th, 2018
Pan American Conference and Media Center
601 Poydras Street, 11th Floor
New Orleans, LA 70170


Can Your Small Business Afford to Risk the Imminent Threat of a Cyber Incident?

Globe and keyboard representing internet

A main reason for not purchasing cyber insurance was a lack of understanding about this type of insurance and coverages available.

November 28, 2018
Jeffrey M. Dennis & Heather H. Whitehead – Newmeyer & Dillion LLP

Cybersecurity incidents are occurring on a daily basis and at an increasingly growing rate. Yet, many small businesses still have not obtained adequate (or any) cyber insurance to address these risks and the costly impacts to the business that will result. In a recent study completed by the Insurance Information Institute1, only about a third of all small businesses polled responded that they have cyber insurance in place, with 70% of respondents replying that they have no plans to purchase a cyber insurance policy in the next 12 months. Most of the businesses indicated that they do not believe they have any need for cyber insurance, yet almost half of those same companies stated they are unprepared to handle cyber threats. A main reason for not purchasing cyber insurance was a lack of understanding about this type of insurance and coverages available.

The Risks for Small Businesses

These statistics are alarming considering that the average cost of a cyber-related loss for a small business has increased 250% in the past two years, and now totals $188,400. In determining whether insurance coverage should be purchased, companies typically assess the perceived risks to the company, the likelihood of such risks occurring, as well as any costs or expenses that may result. For example, most companies regularly obtain a property policy to cover a fire or other casualty that may damage its business location even though such an event is unlikely or unexpected. Yet, cyber incidents are just as likely, if not more likely to occur, and the impacts to a company in the event of an incident are far worse. Many incidents result in a complete suspension of the daily operations of the company for several days or longer.

In addition to financial loss, companies may face the following as a result of a cyber incident:

  • Theft, breach or loss of information and data;
  • Damage to the company's reputation, brand or image; and
  • Regulatory, governance and legal issues.
  • How Cyber Insurance can Help

Cyber insurance policies can be obtained to address the losses related to a data breach and may include costs for investigating a breach, notifying people affected by a breach of personally identifiable information, managing the potential damage to reputation and other crisis-management expenses, recovering lost or corrupted data, and related legal expenses. More importantly, well-drafted policies can afford coverage for business interruption losses; i.e. those expenses and lost revenue resulting from a breached system and a company's inability to continue its usual operations. Coverage may also be obtained for "cyber extortion", which covers costs resulting from an extortion event such as ransomware or fraudulent wire transfers.

It is important to keep in mind that cyber insurance is only one component to consider when developing and implementing an overall risk management strategy to prevent cyber incidents. However, taking into account the exposure to a company if and when a cyber incident occurs, it is highly advisable to have this coverage in place.

1Insurance Information Institute, "Small business, big risk: Lack of cyber insurance is a serious threat," October 2018.

Jeff Dennis is the head of the firm's Privacy & Data Security practice. Jeff works with the firm's clients on cyber-related issues, including contractual and insurance opportunities to lessen their risk. For more information on how Jeff can help, contact him at jeff.dennis@ndlf.com.

Heather Whitehead is a Partner in the firm's Privacy & Data Security practice. Heather also practices insurance coverage matters for commercial, retail, industrial, mixed-use, multi-family and residential projects. For more information on how Heather can help, contact her at heather.whitehead@ndlf.com.


NTSB Cites Design Errors in Fatal Bridge Collapse

Photo of golden gate bridge

The bridge killed six when it suffered a sudden, catastrophic collapse on March 15.

November 28, 2018
Scott Judy - Engineering News-Record

Design errors may have played a role in the collapse of the 174-foot-long bridge span that was under construction at Florida International University, according to a Nov. 15 investigative update from the National Transportation Safety Board (NTSB). The structure, which was being constructed over live traffic along SW 8th Street, killed six when it suffered a sudden, catastrophic collapse on March 15.

Mr. Judy may be contacted at judys@enr.com


Second Circuit Finds Potential Ambiguity in Competing “Anti-Concurrent Cause” Provisions in Hurricane Sandy Property Loss

Flooded area

Madelaine is a win for policyholders and illustrates that concurrency provisions may operate to broaden coverage as well as narrow coverage, depending on where they appear in the insurance policy.

November 28, 2018
CDJ STAFF

The Second Circuit recently held that competing “anti-concurrent cause” provisions in a commercial property policy present a potential ambiguity that could result in favor of coverage for losses sustained by Madelaine Chocolate after storm surge from Hurricane Sandy combined to cause substantial damage to Madelaine’s property and a resulting loss of income.

Madelaine was insured under an all-risk insurance policy issued by Chubb subsidiary Great Northern Insurance Company. By endorsement, Madelaine’s policy added “windstorm” as a covered peril and defined “windstorm” as “wind… regardless of any other cause or event that directly or indirectly contributes concurrently to, or contributed in any sequence to, the loss or damage.” The policy also included a common flood exclusion that removed coverage for loss or damage caused by or resulting from waves, tidal water, or tidal waves, or the rising, overflowing, or breaking of any natural harbors, oceans, or any other body of water, whether driven by wind or not. Like the windstorm endorsement, the flood exclusion contained concurrency language that broadened the exclusion to any loss to which flood contributed, regardless of any other cause or event that directly or indirectly contributed to the loss.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Tae Andrews, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Andrews may be contacted at tandrews@HuntonAK.com


Could This Gel Help Tame the California Fires?

Question mark in middle of maze

Strong Water gel has the potential to help stave off blazes. Why isn’t it being used more?

November 28, 2018
Gordy Megroz - Bloomberg

In 2009, Jeff Denholm was making a living as an adventure athlete, competing in stand-up paddleboard races and riding giant waves at Mavericks, the famous surf break near his home in Santa Cruz, Calif. Denholm was sponsored by Patagonia Inc., but to generate extra cash—“Adventure athletes don’t make a ton of money,” he says—he had a side gig leasing a fire truck to state and county crews that had run out of equipment ­battling wildfires.

One firefighting tool that Denholm kept onboard was retardant, which helps tamp down existing fires and can prevent them; he used a type known as a foam suppressant. Last year the U.S. Forest Service spent about $72 million on retardants, but in researching them, Denholm discovered some discouraging information.


Washington Supreme Court Expands Contractor Notice Obligations

Expand elements glossy icon

The court expanded contractors’ obligations when providing notice on public works construction projects.

November 28, 2018
Brett M. Hill - Ahlers Cressman & Sleight Blog

The Washington State Supreme Court dealt another blow to public works contractors in Washington State. In a case recently issued by the court, Nova Contracting, Inc. v. City of Olympia, [1] the court expanded contractors’ obligations when providing notice on public works construction projects. The Nova Contracting case was the subject of a previous blog. The case involved Nova Contracting and the City of Olympia. Nova was the low bidder on the contract. Nova alleged that the City of Olympia did not want Nova to win the job and intentionally hindered Nova’s ability to perform the job. The facts alleged by Nova, which were covered in the previous blog, involved the City’s improper and apparently punitive rejection of submittals on the job and the City’s eventual wrongful termination of Nova. Of significance in the case is that Nova never actually began work on the job. All that Nova had done at the time of termination was begin mobilizing its equipment on site. The Court of Appeals found that Nova had alleged sufficient facts to establish that the City violated the duty of good faith and fair dealing by improperly rejecting Nova’s submissions and had breached the contract with Nova by improperly terminating.

Mr. Hill may be contacted at brett.hill@acslawyers.com


Fifth Circuit Concludes Government’s CAA Legal Claims are Time-Barred But Injunctive-Relief Claims are Not

Clock

Anthony B. Cavender analyzes the case U.S., et al., v. Luminant Generation Co., LLC, et al.

November 28, 2018
Anthony B. Cavender - Gravel2Gavel

In another recent U.S. Court of Appeals for the Fifth Circuit decision, on October 1, 2018, the Fifth Circuit affirmed, in part, the District Court’s ruling that the general federal statute of limitations, 28 U.S.C. § 2462, required the dismissal of the government’s civil enforcement action in the case of U.S., et al., v. Luminant Generation Co., LLC, et al.

The Fifth Circuit agreed that the statute barred the imposition of any civil fine for the alleged unlawful construction operations regarding the modification of major emitting facilities contrary to Section 7475(a) of the Clean Air Act (CAA). But, the Fifth Circuit remanded the injunctive-relief claims to the District Court for further consideration.

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


The Golden State Commits to Going Green – Why Contractors Will be in High Demand to Build the State’s Infrastructure

Close up of green grass

According to the California Energy Commission, by the end of 2017 California generated approximately 32 percent of its energy from renewable sources.

November 28, 2018
Karla Pascarella & Alexa Magrath - Peckar & Abramson, P.C.

On September 10, 2018 California’s Governor took an ambitious stance on environmental policy and signed Senate Bill 100 (“SB100”). The bill accelerates several Renewables Portfolio Standards (“RPS”) deadlines previously established by former Governor Arnold Schwarzenegger. The bill’s most notable effect—it requires that 100 percent of California’s electricity come from renewable and zero-carbon sources by 2045. California is the second state in the nation to pass such legislation; Hawaii passed a similar bill in 2015.

The passage of this bill could not be timelier as wildfires, drought, and record high temperatures continue to make national headlines. California, as it often does, has taken a contrarian position as the federal government attempts to reinvigorate the coal mining industry in America. Coal and other fossil fuels used to produce energy increase air pollution and deplete necessary ozone. California has been experimenting and utilizing renewable energy technology since as early as 1997. According to the California Energy Commission, by the end of 2017 California generated approximately 32 percent of its energy from renewable sources.

Reprinted courtesy of Karla Pascarella, Peckar & Abramson, P.C. and Alexa Magrath, Peckar & Abramson, P.C.
Ms. Pascarella may be contacted at kpascarella@pecklaw.com
Ms. Magrath may be contacted at amagrath@pecklaw.com


Homebuilders Finally See Some Relief After Analyst Upgrade

November 28, 2018
Lily Katz, Natalie Pertsovsky, & Vildana Hajric - Bloomberg

An exchange-traded fund tracking homebuilders climbed the most in more than six months Thursday, offering the battered sector a reprieve, following a bullish call on Wall Street and a rebound in U.S. pending home sales.

The 36-company SPDR S&P Homebuilders ETF, known as XHB, rose as much as 3.3 percent, the most intraday since April 4, after Evercore ISI analyst Stephen Kim upgraded six stocks. He said the sector’s winter rally, which usually begins in October or November, has “an impressive track record of outperformance.” Meritage Homes Corp., which was upgraded to overweight, jumped as much as 9.4 percent in its biggest gain since January 2016.


Addressing the Defective Stucco Crisis

Workers building wall

The Pennsylvania Legislature must act to change the insurance laws in Pennsylvania to make defective construction covered by a developer’s, contractor’s, and subcontractor’s commercial general liability policy (“CGL”).

November 28, 2018
Wally Zimolong - Supplemental Conditions

I received several emails regarding the expose by Caitlin McCabe and Erin Arvedlund in the Philadelphia Inquirer titled “Rotting Within.” The story outlines the epidemic of defective stucco and other “building envelope” issues in Southeastern Pennsylvania that is causing homes to literally rot from within. Having litigated several of these cases, they are frustrating for both the attorneys that handle them and the homeowners who must deal with the reality that their home is rotting away. The story points to the multiple (and all too common) causes for the epidemic: unskilled subcontractors, lack of oversight and care, and poor construction drawings. The is no quick solution to the crisis and litigation regarding these defects is sure to proliferate.

However, there is one potential solution that the story does not cover and which could help alleviate some of the challenges homeowners face in recovering damages for their claims. The Pennsylvania Legislature must act to change the insurance laws in Pennsylvania to make defective construction covered by a developer’s, contractor’s, and subcontractor’s commercial general liability policy (“CGL”). Most homeowners and many attorneys incorrectly assume that defective construction is covered by insurance. This assumption makes sense. If someone operates a car in a negligent manner and hits your car and causes damage, the negligent driver’s insurance company with cover your loss. In reality, Pennsylvania courts follows a minority of states that holds that generally speaking defective workmanship is not a “covered occurrence” under an insurance policy. (There are several exceptions to this rule and thorough discussion is beyond this blog post and would probably bore you.)

Mr. Zimolong may be contacted at wally@zimolonglaw.com


Third Circuit Affirms Use of Eminent Domain by Natural Gas Pipeline

Photo of long pipeline in wooded area

Under the Natural Gas Act (NGA), pipeline companies can exercise powers of eminent domain when they are acting in the public interest.

November 28, 2018
Anthony B. Cavender - Gravel2Gavel

On October 30, the U.S. Court of Appeals for the Third Circuit decided the case of Transcontinental Gas Pipe Line Co., LLC v. Permanent Easements for 2.14 Acres, et al. , affirming the District Court’s grant of a preliminary injunction to Transcontinental Gas Pipe Line Company, LLC (Transcontinental). This case involves the construction of the “Atlantic Sunrise Expansion Project,” a natural gas pipeline that runs through Pennsylvania, Maryland, Virginia, North Carolina and South Carolina.

Under the Natural Gas Act (NGA), pipeline companies can exercise powers of eminent domain when they are acting in the public interest. The Third Circuit cautions that this is a “standard” eminent domain power, and not a “quick take” that is permitted under another statute.

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


Shale Gas Fuels U.S. Chemical Plant Construction

November 28, 2018
Pam Radtke Russell - Engineering News-Record

McDermott project managers held their breath as a nearly 3,000-ton module journeyed on a carefully ballasted barge along the Gulf Coast to Lake Charles, La. Anticipation mounted as the module arrived safely to the site of the $1.9-billion ethane cracker McDermott was building for a joint venture of South Korean Lotte Chemical and Houston-based Westlake. Over the course of the next two days, self-propelled modular transporters shuttled the component to its intended spot, where it was placed carefully on preconstructed piers. As seamlessly as two Lego bricks snapping together, the module fit snuggly in place. Over the next two months, an additional two heater modules—each over 2,500 tons and 155 ft high—made the daylong journey from Gulf Island Fabrication in Houma, La., and were set in place without a problem.

Ms. Russell may be contacted at Russellp@bnpmedia.com



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