Construction Defect News You May Have Missed

Risk Spotter Searches Internal Data Lakes For Loaded Words

October 11, 2017
Tom Sawyer - Engineering News-Record

A tech start-up recently announced that it has been granted seven U.S. patents for a system that applies a “deep learning” algorithm to examine corporate e-mail databases and flag those with message fields or attachments containing language that might increase risk for a company involved in a federal discrimination lawsuit.

Mr. Sawyer may be contacted at

Wage Theft Investigations and Citations in the Construction Industry

October 11, 2017
Evelin Y. Bailey - California Construction Law Blog

This month we share some cautionary tales for employers in the construction industry. During the past several months the California Labor Commissioner has cited or filed suit against several construction companies. In one investigation, a general contractor was held equally responsible for wages owed by a subcontractor to its employees. The lesson learned from these stories is that now more than ever it is important to have in place proper wage and hour practices and to conduct periodic audits of those practices, including those of your lower tiered contractors, preferably by experienced legal counsel.

Interior Designer Licensure

October 11, 2017
David Adelstein - Florida Construction Legal Updates

An interior designer that provides residential interior design services does NOT need to be registered or licensed with the state. On this point, Florida Statute s. 481.229(6)(a) specifies:

(6) This part shall not apply to:

(a) A person who performs interior design services or interior decorator services for any residential application, provided that such person does not advertise as, or represent himself or herself as, an interior designer. For purposes of this paragraph, “residential applications” includes all types of residences, including, but not limited to, residence buildings, single-family homes, multifamily homes, townhouses, apartments, condominiums, and domestic outbuildings appurtenant to one-family or two-family residences. However, “residential applications” does not include common areas associated with instances of multiple-unit dwelling applications.

Mr. Adelstein may be contacted at

Utility Contractor Held Responsible for Damaged Underground Electrical Line

October 11, 2017
Brett M. Hill - Ahlers & Cressman, PLLC

The Washington State Court of Appeals recently addressed an excavation contractor’s responsibilities under the Underground Utilities Damage Prevention Act (UUDPA), RCW 19.122. That statute was enacted in 2011 and imposed certain statutory duties on parties involved with projects requiring excavation.

In this case, Titan Earthworks, LLC contracted with the City of Federal Way to perform certain street improvements including installation of a new traffic signal. During the process of excavating for the traffic signal, Titan drilled into an energized underground Puget Sound Energy power line. PSE sought damages from Titan and Titan sued the City of Federal Way.

Mr. Hill may be contacted at

Federal Interpleader Dealing with Competing Claims over Undisputed Payable to Subcontractor

September 28, 2017
David Adelstein - Florida Construction Legal Updates

What do you do if you are holding undisputed money owed to a subcontractor? Well, you make an effort to pay it or tender it! Right? I am never a fan of a client holding undisputed sums without a legitimate contractual basis.

There are circumstances, however, where the effort to pay an undisputed payable is not so easy. In fact, it is challenging, as in the below case example where the subcontractor filed for an Assignment for the Benefit of Creditors (referred to as an “ABC”). An ABC, in a nutshell, allows an insolvent entity to file an insolvency action in state court governed by state law and choose its assignee (versus a federal bankruptcy action governed by federal law where a trustee is appointed). One major difference is that there is no automatic stay in an ABC as there is in a federal bankruptcy action. Thus, the insolvent entity can still be sued, but, while that entity is in an ABC, there are many creditors that will not be able to enforce a judgment. (See Florida Statute Ch. 727).

Mr. Adelstein may be contacted at

Insured's Motion for Reconsideration on Protecting the Integrity of Referral Sources under Florida Statute s. 542.335

September 28, 2017
David Adelstein - Florida Construction Legal Updates

Referral sources are generally important for all businesses. Due to their importance, certain businesses require employees to execute non-solicitation or even non-compete agreements to protect the integrity of their referral sources. Now, whether referral sources for a particular business constitutes a legitimate business interest (very important words) is a question where the context must be examined. Nonetheless, in a case that is certainly important for businesses, the Florida Supreme Court held that referral sources can serve as a legitimate business interest. While this case dealt with home health care companies, the rationale would be the same no matter the business, provided that referral sources are contextually a legitimate business interest for that business.

Mr. Adelstein may be contacted at

Kiewit’s Women’s Construction Leadership Seminar

September 28, 2017
Beverley BevenFlorez-CDJ STAFF

This two-day seminar is a seminar for collegiate women who are interested in developing their leadership skills. Participants will gain hands-on experience and industry knowledge. Kiewit will begin accepting applications in October for their January 2018 seminar.

January 23rd-24th, 2018
Training Center
Denver, Colorado

Reminder: In Court (as in life) the Worst Thing You Can Do Is Not Show Up

September 28, 2017
Christopher G. Hill - Construction Law Musings

As long time (and possibly recent) readers of Construction Law Musings know, I am a Virginia Supreme Court Certified Mediator. In that capacity, I spend quite a bit of time sitting in general district court courtrooms in places like Goochland and Caroline Counties “court sitting” awaiting a referral from the judge of a case with parties ready and willing to take advantage of the mediation process.

As I sit there wearing my mediator “hat,” I see case after case be called for the first return date. Without fail, several cases are called where the defendant fails to appear after being served with process. There are even a case or two where the plaintiff (the party that picked the return date in the first place) fails to appear. In the first instance, where the defendant doesn’t appear, the judge almost inevitably enters a judgment for the amount sued for by the plaintiff. In the latter instance, the case is dismissed without prejudice to the plaintiff with a shake of the head by the judge at the wasted time and filing fee. This post focuses on the first case.

Mr. Hill may be contacted at

Rancosky Adopts Terletsky: Pennsylvania Supreme Court Sets Standard for Statutory Bad Faith Claims

September 28, 2017
John Anooshian & Sean Mahoney - White & Williams LLP

Earlier today, in a case of first impression, the Pennsylvania Supreme Court adopted the Terletsky two-part test for proving a statutory “bad faith” claim under 42 Pa. C.S.A. § 8371, which requires that a plaintiff present “clear and convincing evidence (1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis.” Rancosky v. Washington National Insurance Company, No. 28 WAP 2016 (Pa. Sept. 28, 2017). The court further ruled that proof of an insurer’s “subjective motive of self-interest or ill-will,” while potentially probative of the second prong of the test, is not a requirement to prevail under § 8371. Evidence of an insurer’s “knowledge or reckless disregard for its lack of a reasonable basis” for denying a claim alone, according to the court, is sufficient even in cases seeking punitive damages.

Reprinted courtesy of John Anooshian, Saxe Doernberger & Vita, P.C. and Sean Mahoney, Saxe Doernberger & Vita, P.C.
Mr. Anooshian may be contacted at
Mr. Mahoney may be contacted at

Falling Tree Causing Three Injuries/Deaths Is One Occurrence

September 28, 2017
Tred R. Eyerly - Insurance Law Hawaii

In a decision by Judge Sutton, the Sixth Circuit affirmed the district court's ruling that a falling tree causing one injury and two deaths was the result of a single occurrence. Evanston Ins. Co. v. Housing Auth. of Somerset, 2017 U.S. App. LEXIS 15199 (6th Cir. Aug. 15, 2017).

A large tree fell on cousins Kaitlyn Griffin and Joshua Thacker. Kaitlyn died within minutes. She was pregnant at the time. Doctors delivered her baby, but the baby died shortly thereafter. Joshua survived but suffered serious injury. In December 2013, a state court jury found the Housing Authority liable for the accident and awarded $3.7 million in damages.

Mr. Eyerly may be contacted at

Affirmed: Insureds Bear the Burden of Allocating Covered Versus Uncovered Losses

September 28, 2017
C. Lily Schurra & K. Alexandra Byrd – Saxe Doernberger & Vita, P.C.

The Second Circuit recently affirmed a district court decision that an insured bears the burden of establishing what portion of a jury verdict constitutes covered damages1.

The case arose out of claims for property damage resulting from construction defects in a homebuilding project. The homeowners fired the construction manager, J. Barrows, Inc. (“JBI”), who then sued the homeowners in state court for unpaid fees (the “Underlying Action”). The homeowners counterclaimed, alleging breach of contract and negligence. JBI’s commercial general liability insurer, Harleysville Worcester Insurance Company (“Harleysville”), agreed to defend JBI under a reservation of rights.

Reprinted courtesy of C. Lily Schurra, Saxe Doernberger & Vita, P.C. and K. Alexandra Byrd, Saxe Doernberger & Vita, P.C.
Ms. Schurra may be contacted at
Ms. Byrd may be contacted at

Puerto Rico and the Consequences of Postponed Electrical Grid Upgrades

September 28, 2017
Pam Radtke Russell - Engineering News-Record

The devastation wrought by Hurricane Maria on Puerto Rico is exhibit “A” in the importance of maintaining and upgrading infrastructure despite the costs of doing so. It has driven home the point that infrastructure is costly, but its benefits are essential to life safety, the economy and human health and comfort. The storm has left almost all the island’s 3.5 million inhabitants without power. They must contend with the prospect of living without electricity for months.

Ms. Russell may be contacted at

Negligence of Property Appraiser

September 28, 2017
David Adelstein - Florida Construction Legal Updates

A new appellate decision came out discussing the statute of limitations associated with a negligence claim against a property appraiser. In this case, Llano Financing Group, LLC v. Petit, 42 Fla. L. Weekly D2071a (Fla. 1st DCA 2017), the court held that the four year statute of limitations for negligence claims commences when the lender relied on the appraisal to fund the loan. The statute of limitations does not commence years later when the property is ultimately sold at a loss. Oh no. Once the lender receives the appraisal and funds the loan, the statute of limitations for the negligence claim begins. Applying this rationale in other contexts, the statute of limitations to sue a property appraiser in negligence would commence once an appraisal is received and relied on.

Mr. Adelstein may be contacted at

WSDOT Seeks Retraction of Waiver Excluding Non-Minority Woman-Owned Businesses from Participation Goals

September 28, 2017
Lindsay K. Taft - Ahlers & Cressman PLLC

If you are a regular reader of our blog, you will likely recognize that our firm has been actively involved and concerned with the results of Washington State Department of Transportation’s (“WSDOT”) Disparity Study, which impacts both Disadvantaged Business Enterprises (“DBE”) and general contractors who bid on federally-funded projects with DBE goals. On June 1, 2017, WSDOT implemented a “waiver”, which excluded Caucasian women-owned firms (“WBEs”) from qualifying for Condition of Award DBE Goals on federally-funded projects. This drastic action was the result of WSDOT’s highly criticized 2012 Disparity Study conducted by BBC Research & Consulting of Denver, Colorado, which concluded non-minority women-owned firms do not face “substantial disparities” in the federally-funded transportation contracting market.

BBC’s study was criticized for a number of reasons, but most concerning was BBC’s flawed and unreliable statistical methodology that did not accurately represent true marketplace conditions. See Ahlers & Cressman letter of January 9, 2014 and Associated General Contractors of Washington article. For example, BBC’s results showed both decreasing WBE availability and availability vastly out of range with other states (e.g., the availability of women-owned construction firms in Washington was just 1.5% compared to 11.96% in Oregon). Nevertheless, based on this flawed BBC study and BBC’s assertion that women-owned firms did not face disparities, WSDOT sought and on June 1, 2017 was granted a waiver precluding general contractors from counting WBE firms towards their DBE goals on federally funded public works projects.

Ms. Taft may be contacted at

When Your “Private” Project Suddenly Turns into a “Public” Project. Hint: It Doesn’t Necessary Turn on Public Financing or Construction

September 28, 2017
Garret Murai - California Construction Law Blog

In 1931, during the Great Depression, the federal government enacted the Davis-Bacon Act to help workers on federal construction projects. The Davis-Bacon Act, also known as the federal prevailing wage law, sets minimum wages that must be paid to workers on federal construction projects based on local “prevailing” wages. The law was designed to help curb the displacement of families by employers who were recruiting lower-wage workers from outside local areas. Many states, including California, adopted “Little Davis-Bacon” laws applying similar requirements on state and local construction projects.

California’s current prevailing wage law requires that contractors on state and local public works projects pay their employees the general prevailing rate of per diem wages based on the classification or type of work performed by the employee in the locality where the project is located, as well as to hire apprentices enrolled in state-approved apprentice programs and to make monetary contributions for apprenticeship training.

Mr. Murai may be contacted at

What Happens When a Secured Creditor Files a Late Claim in an Equity Receivership?

September 28, 2017
Ben Reeves - Snell & Wilmer Real Estate Litigation Blog

Pitting a receivership court’s inherent equitable powers against pre-existing property rights can lead to some pretty interesting questions. In SEC v. Wells Fargo Bank, N.A., 848 F.3d 1339, 1343-44 (11th Cir. 2017), the Eleventh Circuit recently examined whether a district court’s inherent authority to establish a claims submission process allowed the court to extinguish a security interest in real property based solely upon an untimely proof of claim. Much to the relief of secured creditors, the Eleventh Circuit held that the district court erred, as a matter of law, by extinguishing the creditor’s pre-existing property rights under those circumstances.


Equity vests a district court with “‘broad powers and wide discretion to determine relief in an equity receivership.’” Wells Fargo, 848 F.3d at 1343-44 (quoting SEC v. Elliot, 953 F.2d 1560, 1566 (11th Cir. 1992)). These powers include: (i) establishing procedures for the submission of claims to a receiver, and (ii) setting a claims bar date. Id. at 1344 (citing SEC v. Tipco, Inc., 554 F.2d 710, 711 (5th Cir. 1977)).

Mr. Reeves may be contacted at

The Dog Ate My Exclusion! – Georgia Federal Court: No Reformation to Add Pollution Exclusion

September 28, 2017
Philip M. Brown-Wilusz - Saxe Doernberger & Vita, P.C.

While schoolchildren know that the classic “the dog ate my homework” excuse doesn’t work, insurance companies are willing to try a variation of that excuse. Ace American Insurance Company (Ace), sold a property policy (the Policy) to Exide Technologies, Inc. (Exide). Exide sought coverage under the Policy for acid damage at its former battery factory. Ace denied coverage, citing to the pollution exclusion. The only problem? The Policy contained no pollution exclusion!

Exide had procured policies from other insurers for several years prior to the inception of the Policy, all of which contained pollution exclusions. Exide instructed Marsh USA Inc. (Marsh), its broker, to procure insurance “on the same or better terms and conditions.” The resulting policy contained no pollution exclusion, and Exide sought coverage under the Policy for pollution-related losses.

Mr. Brown-Wilusz may be contacted at

Claim Made During Second Consecutive Policy Period Properly Denied

September 28, 2017
Tred R. Eyerly - Insurance Law Hawaii

The court found that the insurer properly denied a claim made under the claims-made policy during the second policy period when the incident occurred during the first policy period. Alaska Interstate Constr. v. Crum & Forster Specialty Ins. Co., 2017 U.S. App. LEXIS 15997 (9th Cir. Aug. 22, 2017).

Mr. Eyerly may be contacted at

Insured's Motion for Reconsideration on Denial of Coverage Unsuccessful

September 28, 2017
Tred R. Eyerly - Insurance Law Hawaii

The insured's motion to reconsider an order granting the insurer summary judgment challenges the insured's theory it was an additional insured was rejected by the federal district court. Hanover Ins. Co. v. Superior Labor Servs., 2017 U.S. Dist. LEXIS 133127 (E.D. La. Aug. 21, 2017).

The court previously granted Lexington Insurance Company's motion for summary judgment, finding Allied Shipyard, Inc. was not an additional insured and was not entitled to a defense in the underlying actions. On reconsideration, Allied argued the court ruled it was not a "certificate holder" under the Lexington policy, but Allied was not given the opportunity to conduct discovery with respect to whether it was a "certificate holder." Summary judgment was granted before Allied answered Lexington's amended complaint in intervention. Allied submitted its answer could have raised a genuine issue of material fact because it was entitled to coverage under the policy if it was a certificate holder.

Mr. Eyerly may be contacted at

Reducing Uncertainty in Construction – Interview with Brittanie Campbell-Turner

September 28, 2017
Aarni Heiskanen - AEC Business

Brittanie Campbell-Turner is a Construction Management professional and a podcast host. In this interview, we discuss construction productivity, ways to make it better, and the Constructrr podcast.

Brittanie Campbell-TurnerHere’s what Brittanie says about herself and her podcast: “I’ve been servicing the engineering and construction management industry for 10+ years having specialized in project controls and schedule management. I’m currently a Project Management Consultant at Mace, and I am always researching ways to positively impact the construction industry by implementing best practices and innovative ideas through The Constructrr Podcast at

Mr. Heiskanen may be contacted at


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