Change #7- Contractor’s Means & Methods (law note)

March 28, 2018
Melissa Dewey Brumback - Construction Law in North Carolina

First, a little history: as you know, means, methods, techniques, sequences, and procedures are all part of the Contractor’s responsibility on a construction site. However, when the AIA A201 was last revised, in 2007, there was a provision put in for that rare time when the Contract Documents gave specific instructions concerning a particular construction method. If the Contractor viewed such instructions as unsafe, he was to give notice to the Owner and Architect, and was not to proceed with that portion of the Work without further written instructions from the Architect. If the Architect directed him to proceed, the Contractor was absolved from any risks with following that instruction. Instead, the Owner assumed the responsibility for any loss or damage.


Why Insurers and Their Attorneys Need to Pay Close Attention to Their Discovery Burden in Washington

March 28, 2018
Neal Philip – Insurance Law Blog

As previously reported in this blog, Washington case law generally affords insureds a broad right to the discovery of claim file materials, including information that should be protected from disclosure by attorney/client privilege or the work product doctrine. Cedell v. Farmers Ins. Co. of Washington, 176 Wn.2d 686, 295 P. 3d 239 (2013). The discovery pitfalls created by Cedell were on full display in a recent Western District of Washington decision that granted an insured’s motion to compel production of work product and attorney/client communications from an insurer’s claims file. Westridge Townhomes Owners Ass’n v. Great American Assur. Co., 2018 U.S. Dist. LEXIS 27960 (W.D. Wash. February 21, 2018)

The background facts are somewhat unclear, but it appears that the insured in this case made a claim for coverage under two insurance policies and there was an allegedly inadequate response from the insurers. The insured sued its insurers for coverage in 2016 before the insurers issued a declination of coverage letter. The two insurers retained the same attorney to represent them, and that attorney subsequently wrote a declination letter on behalf of the insurers, which was sent to the insured on April 12, 2017. The insured ultimately sought production of the entire claim file, which had not been split between the claim investigation and the coverage litigation. The insurers argued, among other things, that the insured was not entitled to anything after the litigation commenced in 2016 on work product grounds, and certainly was not entitled to communications with their attorney.

Mr. Philip may be contacted at nphilip@grsm.com


The General Assembly Adds Some Clarity to Contracts and Unlicensed Contractors

March 28, 2018
Christopher G. Hill – Construction Law Musings

For years, the statute regarding performing construction without a valid license (Va. Code 54.1-1115) was a bit murky. While that statute listed several prohibited acts, among them contracting without the proper class of license or use of the license of another, the consequences of such activity, in particular the effect that such action would have on the enforcement of a construction contract (Section C of the statute), were less than clear.

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


Court of Appeal Confirms Privette Doctrine as Applied to Passive Conduct of Property Owner

March 22, 2018
Bruce Cleeland and Frances Ma – Publications & Insights

In Delgadillo v. Television Center, Inc., 2018 No. B270985, the California Court of Appeal examined and refined the Privette doctrine.

Mr. Delgadillo worked as a supervisor/window cleaner for a company named Chamberlin Building Services (CBS). Television Center, Inc. (TCI) purchased an existing building and thereafter contracted with CM Cleaning Solutions, Inc. (CMC) to provide cleaning and janitorial services. CMC, on behalf of TCI, solicited a proposal from CBS to wash the building’s windows. CBS and its employees made all decisions about how the window washing would be accomplished. The window washing equipment used on the job was owned, inspected and maintained by CBS. In violation of CBS’ policy, Mr. Delgadillo, attached a safety line to a single connector which was not an acceptable anchor point. The bracket failed and Mr. Delgadillo fell 50 feet to his death.

Survivors of Mr. Delgadillo filed suit against TCI for negligence and negligence per se, alleging that Mr. Delgadillo was fatally injured because TCI failed to install structural roof anchors, as required by several statutes.

Reprinted courtesy of Bruce Cleeland, Haight Brown & Bonesteel LLP and Frances Ma, Haight Brown & Bonesteel LLP

Mr. Cleeland may be contacted at bcleeland@hbblaw.com
Ms. Ma may be contacted at fma@hbblaw.com


Negligence Against a Construction Manager Agent

March 22, 2018
David Adelstein – Florida Construction Legal Updates

Can a construction manager-agent / owner’s representative hired directly by the owner be liable to the general contractor in negligence? An argument likely posited by many general contractors on projects gone awry where there is a separate construction manager. Well, here is an interesting case out of Louisiana that supports a negligence claim against a construction manager-agent.

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


Fire Tests Inspire More Robust Timber Product Standard

March 22, 2018
Nadine M. Post– ENR

Based on recent fire test results, mass timber groups have adjusted product certification standards to require the use of cross-laminated timber with structural adhesives tested to demonstrate better fire performance.

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


Blaze at Denver Construction Site Kills Two, Injures at Least Six More

March 22, 2018
Mark Shaw - ENR

Two people are dead after a three-alarm fire erupted at a construction site near downtown Denver on March 7. The mid-day fire, which destroyed a partially completed apartment building and burned hot enough to damage at least 40 cars in the area, forced construction workers to leap to safety from second and third floors.

Mr. Shaw may be contacted at shawm@enr.com


Insurer's Motion to Dismiss Complaint for Collapse Coverage Fails

March 22, 2018
Tred R. Eyerly.- Insurance Law Hawaii

The insurer's motion for summary judgment seeking dismissal of the insured's claim for collapse coverage was rejected by the Supreme Court of New York. Parauda v. Encompass Ins. Co. of Am., 2018 N.Y. Misc. LEXIS 269 (N.Y. Sup. Ct. Jan. 25, 2018).

The insureds submitted a claim to Encompass for damage to the brick siding, or façade, of their home, which was bulging near the front door. Encompass hired H2M Architects and Engineers to inspect the home and issue a report. H2M determined that the brick façade near the front door was separated from the house. Photos showed that the bricks had separated, the mortar joints were cracked, and there were cracks and deterioration in the mortar. H2M concluded that the brick façade was in poor condition and need repairs and/or replacement. H2M concluded that the separation of the brick façade was caused by water infiltration behind the wood trim and brick façade, occurring over a several year period. Encompass denied the claim based upon exclusions for "freezing, thawing," "wear and tear," and "inadequate maintenance."

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


Jury Instruction That Fails to Utilize Concurrent Cause for Property Loss is Erroneous

March 22, 2018
Tred R. Eyerly - Insurance Law Hawaii

The Florida District Court reversed erroneous jury instructions that adopted the efficient proximate cause doctrine in determining whether the insurer was responsible for the insureds’ collapsed roof. Jones v. Federated National Ins. Co., 2018 Fla. App. LEXIS 561 (Fla. Ct. App. Jan. 17, 2018).

The insureds filed a claim for their damaged roof, contending that the damage was caused by a hailstorm. Federal National Insurance Company denied the claim based upon exclusions for “wear and tear, marring, deterioration;” “faulty, inadequate or defective design;” “neglect;” “existing damage;” or “weather conditions.”

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


Princeton Must Build More Affordable Housing, N.J. Judge Rules

March 22, 2018
Elise Young - Bloomberg

Princeton, one of America’s richest towns, must build more affordable housing, a judge ruled in a decision that may have ripple effects across New Jersey.

The home of Princeton University, the state’s only Ivy League school, must plan for 753 low-and middle-income homes, more than double what the borough had anticipated, according to the March 8 ruling by Superior Court Judge Mary Jacobson. Its wealthy neighbor, West Windsor, has a burden of 1,500 homes for people of little means in a state with high living costs, Jacobson ruled.


CA Supreme Court Set to Rule on Important Occurrence Issue Certified by Ninth Circuit

March 22, 2018
William S. Bennett – SDV Blog

The California Supreme Court recently heard oral arguments over whether an insurer is required to cover allegations that a builder negligently failed to supervise an employee who sexually assaulted a middle school student while working at the student’s school. The question was originally certified to the California Supreme Court by the Ninth Circuit in 2016, but nothing happened until the court heard arguments on March 6, 2018.

Mr. Bennett may be contacted at wsb@sdvlaw.com


New Tariffs Could Shorten Construction Expansion Cycle

March 22, 2018
Anirban Basu - Construction Executive, A publication of Associated Builders and Contractors. All Rights Reserved.

The Trump administration’s recent focus on tariffs on steel and aluminum has largely been in the context of potential trade wars, discordant views regarding globalism, renegotiating NAFTA, and exemptions for key allies and trading partners such as Canada and Mexico. But there is a broader context that implicates not only the construction industry and materials prices, but also the future trajectory of the U.S. economy.

The tariffs come during the ninth year of U.S. economic expansion. The economy gained momentum for much of 2017 and enters 2018 with considerable strength. The broadening of the U.S. economic expansion from merely being consumer led to also being associated with surging manufacturing output, construction activity, rising exports and business investment is attributable to many factors, including elevated business confidence and recently enacted tax reform.

Mr. Basu may be contacted at basu@abc.org


Absence of Property Damage Leads to Rejection of Insured's Claim

March 22, 2018
Tred R. Eyerly - Insurance Law Hawaii

Affirming the district court, the Eighth Circuit found that deteriorated bags which unintentionally mixed with landscaping materials did not amount to property damage under the CGL policy. Decker Plastics Corp. v. West Bend Mut. Ins. Co., 2018 U.S. App. LEXIS 2085 (8th Cir. Jan. 29, 2018). The district court's decision was the subject of a prior post [here].

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


Construction Lien Needs to Be Recorded Within 90 Days from Lienor’s Final Furnishing

March 22, 2018
David Adelstein – Florida Construction Legal Updates

A lienor needs to record its construction lien within 90 days of its final furnishing date. This final furnishing date excludes punchlist, warranty, or the lienor’s own corrective work. A lien recorded outside of the 90-day window will be deemed invalid.

The opinion in In re: Jennerwein, 309 B.R. 385 (M.D. Fla. 2004) provides a good discussion of this 90-day window. This matter dealt with a debtor / owner’s bankruptcy where the owner was contesting the validity of a construction lien by its pool contractor. The owner contended that the lienor’s lien was recorded outside of this 90-day window thus rendering the lien invalid. The bankruptcy court was determining the validity of the lien.

In this matter, the owner hired a swimming pool contractor to construct a pool. On October 25, 2002, the pool contractor installed pavers around the pool. After this was performed, the pool contractor realized the owner was unable to obtain the financing to pay for the pool. As a result, the pool contractor ceased doing any more improvements. But, neither the pool contractor nor the owner terminated the contract. Then, on November 27, 2002, the pool contractor sent a supervisor to the property to inspect the pool (work-in-place), the pool equipment, the installed pavers, made a list of the unfinished work, and remove any debris. On January 27, 2003, the pool contractor recorded its lien.

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


Legislative Update – The CSLB’s Study Under SB465

March 22, 2018
John Castro - Construction Law Blog

Following the tragic Berkeley balcony collapse in 2015, the Legislature enacted California Senate Bill 465 which commissioned the Contractors State License Board (“CSLB” or “Board”) to perform a study regarding the efficacy of having contractors report settlements to the Board. In December 2017 the CSLB released their findings in a report. The ultimate conclusion of the report is to recommend to the Legislature that the ability of the CSLB to protect the public “would be enhanced by regulations requiring licensees to report judgments, arbitration awards, or settlement payments of construction defect claims for rental residential units.” Senator Jerry Hill authored SB465, and his office is presently now drafting legislation on settlement reporting based in part on this study.

The most troubling concern about the study is transparency. The report references nine exhibits, all of which have been withheld from publication under purposes of confidentiality. Therefore, much of the CSLB’s study must be taken at face value because much of the data they rely on to formulate their conclusions cannot be independently verified.

One of the factors that the CSLB undertook in its study was to determine criteria for when a settlement was “nuisance value,” and therefore less important for reporting purposes. The CSLB acknowledged there was no industry-wide definition for “nuisance value,” whether it be in the insurance industry, construction industry, or otherwise. Insurer survey respondents reached a general consensus on aspects of what can constitute a “nuisance value” settlement, including the amount of the settlement and the size of the case. However, the response rate to the insurer survey was only 3.3 percent. In general, the concern with using settlement amount and size of the case as indicative factors is the fact that a large settlement size, for instance, may still constitute a “nuisance value” settlement. One example would be a large settlement figure in a case involving hundreds of homes in multiple subdivisions.

Mr. Castro may be contacted at jcastro@grsm.com


Lorman Live Webinar: How to Read Key Clauses in Boilerplate Contracts

March 22, 2018
Laura Parsons – CDJ Staff

Earn AIA, CLE, or ENG credits while learning about contracts. Topics covered encompass what to include and not include in a contract, clauses, and key phrases. This one-day live Webinar is being taught by Larry P. Lubka, a partner at Lubka & White LLP.

April 16, 2018
Live Webinar


Construction Feb. Jobs Jump by 61,000, Jobless Rate Up from Jan.

March 22, 2018
Tom Ichniowski – ENR

Construction jobs soared by 61,000 in February, and the industry's unemployment rate improved year over year, but last month's rate did rise from January's level, the federal Bureau of Labor Statistics reported.

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


Court Holds That Property Insurance Does Not Cover Economic Loss From Purchasing Counterfeit Vintage Wine

March 22, 2018
Christopher Kendrick and Valerie A. Moore – Publications & Insights

In Doyle v. Fireman's Fund Insurance Co. (No. G054197, filed 3/7/18), a California appeals court held that financial loss from purchasing counterfeit vintage wine was not direct and accidental loss or damage to covered property within the coverage of a valuable possessions property policy.

In Doyle, the insured was a collector of rare, vintage wine that was housed in a wine storage facility. He had purchased nearly $18 million of purportedly rare, vintage wine from a dealer, and insured the collection under a valuable possessions policy. But a law enforcement investigation revealed that the dealer had been filling empty wine bottles with his own wine blend and affixing counterfeit labels. The dealer was convicted of fraud and was sent to prison for 10 years.

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie Moore, Haight Brown & Bonesteel LLP

Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


“Good Faith” May Not Be Good Enough: California Supreme Court to Decide When General Contractors Can Withhold Retention

March 22, 2018
Erinn Contreras and Joy O. Siu – Construction & Infrastructure Law Blog

It is industry standard in California for owners of a construction project to make monthly payments to a contractor for work it has completed, less a certain percentage that is withheld as a guarantee of future satisfactory performance. This withholding is called a retention. Contractors generally pass these withholdings on to their subcontractors via a retention clause in the subcontract. Under such clause, if a subcontractor fails to complete its work or correct deficiencies in its work, the owner and the general contractor may use the retention to bring the subcontractor’s work into conformance with the requirements of the contract.

When and how retention payments must be released are governed by, among other statutes, Civil Code section 8800 et seq. Specifically, Civil Code section 8814, subdivision (a), states that a direct contractor must pay each subcontractor its share of a retention payment within ten days after the general contractor receives all or part of a retention payment. Failure to make payments in accordance with Section 8814 can subject an owner or a contractor to a (1) two percent penalty per a month on the amount wrongfully withheld, and (2) claim for attorney’s fees for any litigation required to collect the wrongfully withheld retention payments. (Civ. Code, § 8818.)

Reprinted courtesy of Erinn Contreras, Sheppard, Mullin, Richter & Hampton LLP and Joy Siu, Sheppard, Mullin, Richter & Hampton LLP

Ms. Contreras may be contacted at econtreras@sheppardmullin.com
Ms. Siu may be contacted at jsiu@sheppardmullin.com


Comparing Contracts: A Review of the AIA 201 and ConsensusDocs - Part I

March 22, 2018
Michael Sams and Amanda Cox – Construction Executive, A publication of Associated Builders and Contractors. All Rights Reserved.

Here’s a helpful comparison of and analysis of some important contract sections in the AIA 201 (2007 and 2017 versions) and ConsensusDocs (2014 and 2017 versions). While not intended to be all inclusive, this summary comparison of the contract documents will run as a three-part series. Part I covers Financial Assurances, Design Risk, Project Management and Contract Administration. Part II will cover Schedule/Time, Consequential Damages/LDs, Claims and Disputes/ADR. Part III will cover Insurance and Indemnification and Payment.

FINANCIAL ASSURANCES

  • What assurances are there that the owner can pay for the project?
  • The Contractor should have the right to request and obtain proof that the Owner has funding sufficient to pay for the Work. The provision should also provide that the Contractor may terminate the Contract if the Owner refuses to allow a review of funding documents, or should the Contractor reasonably determine that the Owner does not have sufficient funds to pay for the Work.

Relevant Sections:

  • A201 2007 Section 2.2.1; 2017 Section 2.2.1-2.2.2 A201
  • 2014 & 2017 ConsensusDocs 200: Section 4.2

AIA:

  • Section 2.2.1 A201 2007 & 2017: Both editions require the Owner, upon Contractor’s written request, to provide, “reasonable evidence that the Owner has made financial arrangements to fulfill the Owner’s obligations under the Contract.” Thereafter, the Contractor may only request such evidence if (1) the Owner fails to make payments; (2) a change in the Work materially changes the Contract Sum; or (3) the Contractor identifies in writing a reasonable concern regarding the Owner’s ability to make payment when due. If the Owner does not comply, the Contractor may stop work.
  • Additionally, A201 2017 Section 2.2.2 awards costs to the Contractor for demobilization and remobilization.

Reprinted courtesy of Michael Sams , Kenney & Sams and Amanda Cox, Kenney & Sams

Mr. Sams may be contacted at mpsams@KandSlegal.com
Ms. Cox may be contacted at ajcox@KandSlegal.com



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