Construction Defect News You May Have Missed

N.J. Appellate Court Applies Continuous Trigger Theory in Property Damage Case and Determines “Last Pull” for Coverage

November 15, 2017
K. Alexandra Byrd – Saxe Doernberger & Vita, P.C.

The New Jersey Superior Court, Appellate Division, published an important decision addressing several fundamental issues regarding how a commercial general liability (CGL) policy applies to long-term property damage. The court held that: (1) a continuous trigger theory of coverage may be applied to third-party liability claims involving progressive property damage caused by an insured’s allegedly defective work; (2) the “last pull” (i.e., the cutoff point) of the continuous trigger is when the “essential nature and scope” of the property damage first becomes known or could reasonably be known; and (3) the “last pull” is not when the property damage is “attributed” to the insured’s faulty work.

The underlying action in Air Master & Cooling Inc. v. Selective Ins. Co., et al. 1 concerned property damage arising out of the construction of a seven-story, 101-unit condominium building in Montclair, New Jersey. The project’s construction manager hired Air Master & Cooling, Inc. (Air Master) to perform HVAC work on the project, including installing individual HVAC equipment in each resident’s unit from 2005 to 2008. In early 2008, unit owners began complaining about water infiltration and damage to their windows, ceilings, and other portions of their units. The general contractor and developer began assessing the damage and making repairs. Eventually, in April 2010, an expert consultant performed a moisture survey of the roof and discovered 111 areas that were damaged by water infiltration. The expert report indicated that “it [was] impossible to determine when [the] moisture infiltration occurred.”

Ms. Byrd may be contacted at kab@sdvlaw.com


Honoring Veterans Under Our Roof & Across the World

November 15, 2017
Newmeyer & Dillion, LLP

November 11, 2017 - In honor of Veterans Day, we would like to take time to acknowledge, honor and thank those who have served in the United States Armed Forces. We are also proud to recognize eleven of our own who have served our great country.

Ben Ammerman – United States Navy
Philip Kopp – United States Air Force
Ryan Manning – United States Marine Corps
Jason Morris – United States Marine Corps
Tyson Nakagawa - United States Marine Corps
Richard Protzmann - United States Marine Corps
Francis Quinlan - United States Marine Corps
Louis “Dutch” Schotemeyer - United States Marine Corps
Christina Soto-Maynez – United States Army
Michael Studenka - United States Marine Corps
Paul Tetzloff - United States Marine Corps

About Us
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.


Property Damage, Occurrences, Delays, Offsets and Fees. California Decision is a Smorgasbord of Construction Insurance Issues

November 15, 2017
Garret Murai - California Construction Law Blog

I read once that 97 percent of cases never go to trial. However, there are still the ones that do. And, then, there are the ones that do both. The following case, Global Modular, Inc. v. Kadena Pacific, Inc., California Court of Appeals for the Fourth District, Case No. E063551 (September 8, 2017), highlights some of the issues that can arise when portions of cases settle and other portions go to trial, the recovery of delay damages on a construction project through insurance, and the recovery of attorneys’ fees.

Global Modular, Inc. v. Kadena Pacific, Inc.

The U.S. Department of Veterans Affairs contracted with general contractor Kadena Pacific, Inc. (Kadena) to oversee construction of its Center for Blind Rehabilitation in Menlo Park, California. Kadena, in turn, contracted with subcontractor Global Modular, Inc. (Global) to construct, deliver and install 53 modular units totaling more than 37,000 square feet for a contract price of approximately $3.5 million.

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


Are You a Construction Lienor?

November 15, 2017
David Adelstein - Florida Construction Legal Updates

When it comes to construction lien rights, not everyone that touches the project is a proper lienor. Forget about timely serving a Notice to Owner or recording a claim of lien, if you are not a proper lienor, it does not matter if you properly perfected your lien rights. If you are not a proper lienor, you have NO lien rights under the law!
Florida Statue s. 713.01(18) defines a lienor as follows:

(18) “Lienor” means a person who is:

(a) A contractor;

(b) A subcontractor;

(c) A sub-subcontractor;

(d) A laborer;

(e) A materialman who contracts with the owner, a contractor, a subcontractor, or a sub-subcontractor; or

(f) A professional lienor under s. 713.03;

and who has a lien or prospective lien upon real property under this part, and includes his or her successor in interest. No other person may have a lien under this part.

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


Collaborating or Competing with Construction Tech Startups

November 15, 2017
Aarni Heiskanen - AEC Business

I recently interviewed 20 experts and thought leaders about real estate and construction technology and innovation. Many of the interviewees talked about collaboration with startups and how to make the most of it.

There’s a growing interest in construction technology. Construction tech firms have garnered $10 billion in investment funding from 2011 through early 2017, according to McKinsey & Company. AngelList, a startup and investor website, currently features over 13,000 companies with “construction” as a keyword.

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


Growth to Remain Modest in 2018

November 15, 2017
Alisa Zevin & Tim Grogan – Engineering News-Record

A dip in public works combined with a substantial decrease in utility work, weak industrial markets and slower-than-anticipated growth in residential construction all put a damper on general construction growth in 2017. The consensus among economic forecasts analyzed by ENR indicates a very modest rebound in growth in 2018.

Reprinted courtesy of Alisa Zevin, ENR and Tim Grogan, ENR
Ms. Zevin may be contacted at zevina@enr.com


Ownership is Not a Conclusive Factor for Ongoing Operations Additional Insured Coverage

November 15, 2017
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP

In McMillin Management Services v. Financial Pacific Ins. Co. (No. D069814, filed 11/14/17), a California appeals court held that an insurer had a duty to defend a general contractor under an “ongoing operations” additional insured (AI) endorsement for damage occurring after the named insured subcontractor completed its work, because the endorsement did not limit coverage solely to liability during the subcontractors’ ongoing operations, but rather, broadly provided coverage for liability “arising out of” such operations.

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


Insurer's Summary Judgment Motion on Business Risk Exclusions Fails

November 15, 2017
Tred R. Eyerly - Insurance Law Hawaii

The insurer unsuccessfully moved for summary judgment on the CGL policy's business risk exclusions. Scottsdale Ins. Co. v. TL Spreader, LLC, (W.D. La. Oct. 20, 2017).

Helena Chemical Company contracted with its customer Wild Farms to sell and apply certain herbicides and pesticides to Wild Farms' 123 acre rice filed. Helena subcontracted the TL Spreader, LLC (TLS) to apply the chemicals to Wild Farm's rice field. The TLS employee failed to properly neutralize a chemical being used in the spray.

TLS finished its work on May 6, 2014, completing all its work for Helena's contract with Wild Farms. Three days after completion of the spraying, the rice crop first began to exhibit physical damage in the form of abnormal stunting, lesions, yellowing and death.

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


House Passes Bill to Renew Flood Insurance Program

November 15, 2017
Associated Press – Engineering News-Record

WASHINGTON (AP) — The House on Tuesday backed legislation that will increase flood insurance premiums for many property owners to help firm up a program under stress from ever-more frequent and powerful storms.

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


Does Your U.S. Company Pull Data From European Citizens? Fall In Line With GDPR by May 2018 or Suffer Substantial Fines

November 15, 2017
Jeff Dennis & Ivo Daniele – Newmeyer & Dillion, LLP

The European Union (“EU”) has enacted a strict, comprehensive framework of security regulations aimed to protect its citizens. These regulations, known as the General Data Protection Regulation (“GDPR”), provide a blueprint for a combination of required legal, technological and work habits within an organization. Although this is an EU regulation, the new laws will apply to any organization within or outside the EU that collects or processes data of EU citizens. Therefore, U.S. companies must analyze their data and processes to determine whether compliance with the GDPR is necessary. A quickly-approaching deadline of May 25, 2018 must be met to avoid massive fines.

What is the GDPR?

In order to address the creation of social networking sites, cloud computing, and location-based services, the EU set in motion a process to implement a vigorous set of rules to ensure the right to personal data protection for all European citizens. In April 2016 the European Parliament, the Council, and the Commission adopted a new GDPR, which will take affect on May 25, 2018.

This GDPR will streamline cooperation between the data protection authorities on personal data issues allowing companies to deal with one authority - not each of the 28 EU member states. This will allow for quicker decisions by the data protection authorities and greatly reduce the red tape in both compliance and enforcement under the GDPR. This will also create a level playing field by forcing non-EU companies to comply with the same strict regulations - regardless of whether or not the company is established in the EU.

Territorial scope of the GDPR

The GDPR applies directly to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the EU - regardless of whether the processing takes place in the EU. Additionally, there are specific provisions under the GDPR that apply to non-EU companies if their processing activities relate to (a) the offering of goods or services (irrespective of whether a payment of the data subject is required) or (b) monitoring the behavior of individuals within the EU. Therefore, all companies must determine whether they process or monitor information of EU citizens. If a company falls within one of these categories, compliance with the GDPR is mandatory.

What happens if a company fails to comply with the GDPR?

Failure to comply with the GDPR could subject a company to crushing administrative fines.

The supervisory authority has the power to impose administrative fines under the GDPR. The following violations and breaches would subject a company to administrative fines:

  • Not adhering to the core principles of processing personal data,
  • Breach of notification to EU citizens by controllers and processors,
  • Wrongful transfer of personal data to non-EU countries,
  • Breach of obligations regarding certification,
  • Ignoring the mandates asserted by the supervisory authority,
  • Breach by those responsible for impact assessment, and
  • Wrongful processing of employee data.

The extent of the violation and type of personal data involved will dictate the severity of the administrative fines imposed on a company. For example, under the GDPR, a company could be subject to administrative fines up to 20,000,000 EUR, or up to 4% of the total worldwide annual revenue of the preceding financial year. Obviously, these fines would be financially crippling to any company.

Preparing for May 25, 2018

The May 25, 2018 deadline is fast approaching and preparing for full compliance with the GDPR is paramount. Simple steps should be taken to ensure compliance including to:

(1) Review and analyze data repositories for sensitive data,
(2) Perform an analysis/accounting of procedure for data collection, and
(3) Create an oversite committee dedicated to data activities and compliance.

Most importantly, however, is to determine whether compliance with the GDPR is necessary, and strictly follow the requirements of the GDPR to protect from potentially massive fines.

Jeffrey M. Dennis currently serves as Newmeyer & Dillion’s Managing Partner and as a business leader, advises his clients on cybersecurity related issues, introducing contractual and insurance opportunities to lessen their risk. You can reach Jeff at jeff.dennis@ndlf.com.

Ivo Daniele is a seasoned associate in Newmeyer & Dillion’s Walnut Creek office. His practice includes representing private and public companies with both their transactional and litigation needs. You can reach Ivo at ivo.daniele@ndlf.com.

About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.

Does Your U.S. Company Pull Data From European Citizens? Fall In Line With GDPR by May 2018 or Suffer Substantial Fines


Got Licensing Questions? CSLB Licensing Workshop November 17th and December 15th

November 15, 2017
Garret Murai - California Construction Law Blog

A rare opportunity to hear it straight from the folks who process the applications . . .

CSLB Licensing Workshop Offers Helpful Information for Applicants

The Contractors State License Board (CSLB) is hosting free workshops for those looking to become a licensed contractor. Current licensees are encouraged to pass this information along to their workers and to those who might be interested in learning more about the application process.

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


Home Depot Says Slashing Tax Deductions Won't Hurt Housing Boom

November 15, 2017
Matthew Townsend - Bloomberg

Home Depot Inc. isn’t buying the real estate industry’s claims that a provision in the House Republicans’ tax plan to reduce the mortgage-interest deduction would cause U.S. home prices to plummet.

“We don’t see much of an impact,” Home Depot Chief Financial Officer Carol Tome said in an interview Tuesday after the retailer reported third-quarter results. “There is no real empirical evidence that suggests mortgage-interest deductibility is at all correlated to home ownership.”


New Jersey Court Adopts Continuous Trigger for Construction Defect Claims

November 15, 2017
Tred R. Eyerly - Insurance Law Hawaii

The New Jersey Superior Court, Appellate Division, adopted the continuous trigger for establishing which insurers were on the risk for construction defect claims. Air Master & Cooling, Inc. v. Selective Ins. Co. of Am., 2017 N.J. Super. LEXIS 144 (N.J. Super. Ct., App. Div. Oct. 10, 2017).

The insured, Air Master, worked as a subcontractor on the construction of a condominium building. Air Master performed HVAC work in the building between November 2005 and April 2008. Air Master's work consisted of installing condenser units on rails on the building's roof, and also HVAC devices within each individual unit.

Starting in early 2008, some of the unit owners began to notice water infiltration and damage in their windows, ceilings, and other portions of their units. On April 29, 2010, an expert consultant, Jersey Infrared Consultants, performed a moisture survey of the roof for water damage. A report identified 111 spots on the roof damaged by moisture from water infiltration. The report noted it was impossible to determine when moisture infiltration occurred. The expert recommended that these damaged areas of the roof be removed and replaced.

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


A UK Bridge That Is a Lesson on How to Build Infrastructure

November 15, 2017
Cameron J. Bell - Engineering News-Record

This country’s infrastructure—bridges, airports, dams and levees—needs wide-scale repair and renewal. The United Kingdom’s new Queensferry Crossing bridge, connecting Edinburgh to Fife in Scotland, sets a new standard for how to do it. The result speaks for itself: The Queensferry Crossing, a three-tower, 1.7-mile-long cable-stayed bridge, debuted in early September well within budget and a manageable eight-month time delay—a rare occurrence among bridges. According to research at the University of Oxford’s Saïd Business School, nine out of 10 fixed links (bridges and tunnels) suffer an average cost overrun of 34% and a time delay of roughly two years.

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


HalfMoon Seminar: 2015 International Residential Code

November 15, 2017
Beverley BevenFlorez – CDJ Staff

This one-day seminar presented by HalfMoon Education Services, will cover the following topics: Developing and Enforecement of Internation Residential Code, Building Planning and Shell Construction (Chapters 2-10), Energy Efficiency (Chapter 11), and Mechanical, Fuel, Plumbing and Electrical Systems. The seminar will be taught by Jared Agee, MCP, CBO, Director of Building and Code Enforcement for St. Charles County, Missouri.

December 20th, 2017
Holiday Inn Forest Park
5915 Wilson Avenue
St Louis, MO 63110


California Fire Lawyers File Suit Against PG&E on Behalf of More Than 50 Wildfire Victims

November 15, 2017
David Suggs – Bert L. Howe & Associates, Inc.

Digital Journal reports that the California fire lawyers are comprised of four law firms, Baron & Budd, Singleton Law Firm, Dixon Diab & Chambers LLP, and Thornes Bartolotta McGuire. These firms filed suit against PG&E (Pacific Gas and Electric Company) on October 27th alleging that the brutal wildfires that swept through Northern California started when electrical infrastructure encountered vegetation.

According to Digital Journal, more than 50 plaintiffs are being represented in this case who endured damages including “wrongful death, personal injuries, damage to or destruction of property, loss of cherished possessions, medical bills, evacuation expenses and lost wages.”

John Fiske, an attorney at Baron & Budd stated, “through our team’s investigation to date, we believe that PG&E may have played a role in causing these fires.” Holding PG&E accountable for the 40 people killed, 8,400 structures destroyed, and 210,000 acres burned is their goal.


NYC Condo Skyscraper's Builder Wins a Round -- With a Catch

November 15, 2017
Oshrat Carmiel - Bloomberg

The battle over whether an 800-foot condo tower planned for Manhattan’s East Side can be built to its full height took a step forward Wednesday -- with city officials saying both yes, and no.

A years-long neighborhood lobbying effort to cap the height of new towers near the East 50s riverfront won an endorsement Wednesday from the planning commission, which agreed to rezone the area in a way that would make skyscraping condo towers impossible to build. But commissioners also voted to allow Sutton 58, the under-construction project that inspired the rezoning push, to be grandfathered in under the new law, and proceed as is.


FEMA, Congress Eye Pre-Disaster Funding, Projects

November 8, 2017
Pam Radtke Russell - Engineering News-Record

Federal Emergency Management Agency Administrator Brock Long wants to revamp the way federal disaster funds are distributed, putting a greater emphasis on building more-resilient structures and communities before disasters strike, Long told a House panel reviewing federal response to the recent slate of disasters.

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


No Coverage for Foundation Collapse

November 8, 2017
Tred R. Eyerly - Insurance Law Hawaii

Coverage for the collapse of a foundation was not covered under the contractor's builder's risk policy. Taja Investments LLC v. Peerless Ins. Co., 2017 U.S. App. LEXIS 19855 (4th Cir. Oct. 11, 2017).

Taja Construction LLC was renovating a row house owned by Taja Investments LLC when the east wall of the property collapsed. Taja submitted a claim for repair costs in the amount of $400,000. Peerless denied coverage because the collapse was caused by Taja's failure to support the building's foundation properly while excavating the basement. The policy excluded coverage for defects in construction or workmanship. The claim was also denied under the earth movement exclusion.

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


Lorman Live Webinar: Basic Principles of Construction Insurance

November 8, 2017
Beverley BevenFlorez-CDJ STAFF

This seminar will address excessive insurance policies, builders’ risk insurance, and errors and omissions (aka professional liability) policies for design professionals and typical exemptions. After attending this one-day webinar, participants will be able to describe design liability, identify comprehensive general liability, discuss builder’s risk, and review exclusions typically involved in construction claims.

November 16th, 2017
Live Webinar



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