U.S. Homebuilder Sentiment Unexpectedly Rises With Solid Demand

November 6, 2018
Sarah Foster - Bloomberg

Confidence among U.S. homebuilders unexpectedly rose in October, registering the first gain in five months amid falling lumber prices and solid demand, according to a report Tuesday from the National Association of Home Builders/Wells Fargo.

Recent Bad Faith Decisions in Florida Raise Concerns

Concerned coworkers discussing issue

For decades, the bad faith standard in Florida, known as the “totality of the circumstances” standard, was set forth in Boston Old Colonial Insurance Company v. Gutierrez.

November 6, 2018
Michael Kiernan, Lauren Curtis & Ashley Kellgren - TLSS Insurance Law Blog

The State of Florida has long been known as one of the most challenging jurisdictions for insurance carriers in the context of bad faith – to say the least. Two recent appellate decisions have taken an already difficult environment and seemingly “upped the ante” in what constitutes good faith claims handling in the context of third-party liability claims. Set forth below is an analysis of the Bannon v. Geico Gen. Ins. Co. and Harvey v. Geico Gen. Ins. Co. decisions.

Reprinted courtesy of Traub Lieberman Straus & Shrewsberry LLP attorneys Michael Kiernan, Lauren Curtis and Ashley Kellgren
Mr. Kiernan may be contacted at mkiernan@tlsslaw.com
Ms. Curtis may be contacted at lcurtis@tlsslaw.com
Ms. Kellgren may be contacted at akellgren@tlsslaw.com

Union Handbilling: When, Where, and Why it is Legal

Construction worker on site

Unions handbill for any number of reasons, allegedly unfair wages. Frequently, handbilling occurs when a non-union construction company is working on a project.

November 6, 2018
Wally Zimolong - Supplemental Conditions

A few days ago, IBEW Local 98 began began protesting a restaurant owned by professional football player Jahri Evans. The organizers are accusing Evans of violating local construction wage standards and are advertising their dispute with “handbills.”

What are handbills?

Walking down Fremont Street in Las Vegas is impossible without one or several characters putting a small business card with “questionable” adult entertainment advertisements in your hand. Some will slap papers to your chest, leaving you no choice but to grab the flyers.

On a different level, this action occurs on a regular basis by union member. But instead of shady characters pushing questionable entertainment, it is union representatives pushing a dispute with a local employer over working conditions. However, in either case the practice is known as i as handbilling.

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

Report Finds Construction Labor Shortage Impacts Jobsite Safety

November 6, 2018
Donna Laquidara-Carr - Construction Executive

Safety has been a top concern in the construction industry for decades, but there are new challenges on jobsites whose safety implications need to be addressed. The most recent USG Corporation + U.S. Chamber of Commerce Commercial Construction Index, a quarterly report based on surveys of general and trade contractors conducted and analyzed by Dodge Data & Analytics, explores the degree to which several factors that now impact jobsites raise safety concerns among contractors. Findings show that factors such as skilled worker shortages, shorter construction schedules, greater project complexity, an aging workforce and the use of marijuana, alcohol and opioids all play a role.

Reprinted courtesy of Donna Laquidara-Carr, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Note on First-Party and Third-Party Spoliation of Evidence Claims

Businessman taking note in office

There is an affirmative claim for third-party spoliation of evidence.

October 30, 2018
David Adelstein - Florida Construction Legal Updates

In an earlier posting, I talked about spoliation of evidence. This posting discussed first-party spoliation of evidence which is where a party in a lawsuit has destroyed or lost potentially important documents or evidence. This type of spoliation of evidence does not give rise to an affirmative claim, but could be addressed by the trial court imposing sanctions or giving the devastating adverse inference jury instruction.

Mr. Adelstein may be contacted at dma@kirwinnorris.com

New York Court Holds Radioactive Materials Exclusion Precludes E&O Coverage for Negligent Phase I Report

Nuclear site with businessman holding nuclear sign

Brian Margolies discusses the case Merritt Environmental Consulting Corp. v. Great Divide Ins. Co.

October 30, 2018
Brian Margolies - TLSS Insurance Law Blog

In its recent decision in Merritt Environmental Consulting Corp. v. Great Divide Ins. Co., 2018 U.S. Dist. LEXIS 175527 (E.D.N.Y. Oct. 10, 2018), the United States District Court for the Eastern District of New York had occasion to consider the application of a radioactive materials exclusion in a professional liability policy.

Great Divide’s insured, Merritt Environmental, was hired as an environmental consultant by a bank in connection with a mortgage refinance of a property located in Westchester County, New York. Merritt’s responsibility was to prepare a Phase I environmental report concerning the property, which the bank ultimately relied on in agreeing to the refinance. It was later claimed, however, that Merritt’s report failed to document the full extent of the property’s radium and uranium contamination resulting from its use in the Manhattan Project. Merritt was named in two separate lawsuits as a result of its allegedly faulty report, including one by the bank alleging that Merritt negligently prepared its report.

Mr. Margolies may be contacted at bmargolies@tlsslaw.com

Kenya Sees $545 Million for Affordable-Housing Fund in 2018

October 30, 2018
Adelaide Changole - Bloomberg

Kenya plans to raise as much as 55 billion shillings ($545 million) this fiscal year for an affordable-housing fund through a new tax, helping the state to finance 500,000 new low-income units promised by President Uhuru Kenyatta.

Tests Find Pollution From N.C. Coal Ash Site Hit by Florence Within Acceptable Levels

Blue large checkmark

Water tests so far show heavy metals contained in coal ash are within North Carolina standards.

October 30, 2018
Associated Press - Engineering News-Record

RALEIGH, N.C. (AP) — Despite the gray muck that fouled the Cape Fear River near a Wilmington power plant after Hurricane Florence, water tests so far show heavy metals contained in coal ash are within state standards, North Carolina environmental officials said Thursday.

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

Carillion Fallout Affects Major Hospital Project in Liverpool

Scientists and doctors in hospital

Following cancellation of the contractor’s other large U.K. hospital P3, near Birmingham, project lenders face large losses.

October 30, 2018
Peter Reina - Engineering News-Record

Managers of a 90%-complete, 646-bed hospital in Liverpool will take charge of the project after unravelling a public-private partnership with the contractor Carillion Plc, which collapsed ignominiously in January (ENR 1/22 p. 12). Following cancellation of the contractor’s other large U.K. hospital P3, near Birmingham, project lenders face large losses.

Mr. Reina may be contacted at reina@btinternet.com

Uruguay's No.1 Construction Firm Smells Opportunity in Argentina

October 30, 2018
Ken Parks - Bloomberg

Uruguay’s largest construction firm is scouting for highway, rail and energy projects in Argentina even as South America’s second-largest economy slips into a recession and a corruption scandal stalls investment.

Insurer's Judgment on the Pleadings Based Upon Expected Injury Exclusion Reversed

Courthouse exterior

Tred R. Eyerly analyzes Allstate Indemn. Co. v. Contreras.

October 30, 2018
Tred R. Eyerly - Insurance Law Hawaii

The appellate court reversed the trial court's granting of a judgment on the pleadings based upon the expected injury exclusion in a homeowner's policy. Allstate Indemn. Co. v. Contreras, 2018 Ill. App. LEXIS 170964 (Ill. Ct. App. July 20, 2018).

Alejandra Contreras owned Jasmine's Day Care. Her husband, Adan Contreras, was not an employee of the Day Care. Alejandra and Adan had a homeowner's policy which provided day care liability coverage through an endorsement.

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

Pennsylvania Modernizes State Building Code

Modern building exterior curve

The Pennsylvania Independent Regulatory Review Commission has updated the state’s Uniform Construction Code.

October 30, 2018
Joanna Masterson - Construction Executive

The Pennsylvania Independent Regulatory Review Commission has updated the state’s Uniform Construction Code to align with the 2015 International Code —a family of comprehensive and coordinated building codes used in all 50 states that are updated regularly and take into account the latest health and safety technology and building science advancements.

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

“Crypto-Property:” Ohio Court Says Crypto-Currency is Personal Property Under Homeowners’ Policy

October 30, 2018
Michael S. Levine - Hunton Insurance Recovery Blog

In what appears to be a case of first impression, an Ohio trial court ruled in Kimmelman v. Wayne Insurance Group, that the crypto-currency, Bitcoin, constitutes personal property in the context of a first-party homeowners’ insurance policy and, therefore, its theft would not be subject to the policy’s $200 sublimit for loss of “money.”

Mr. Levine may be contacted at mlevine@HuntonAK.com

25 Days After Explosion, Another Utility Shuts Off Gas in Boston Area


Columbia Gas upgrading system following September explosions.

October 30, 2018
Johanna Knapschaefer - Engineering News-Record

Three hundred thirty-nine homes in Woburn, Mass., were without power on Oct. 8 after National Grid shut off gas meters following the inadvertent over-pressurization of the natural gas line on Oct. 8, according to the Woburn Fire Dept.

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

North Dakota Supreme Court Clarifies Breadth of Contractual Liability Coverage

Businessmen signing contract over coffee

Commercial General Liability (“CGL”) policies generally exclude an insured’s contractual assumption of another party’s liability.

October 30, 2018
Michael S. Levine & Latosha M. Ellis - Hunton Insurance Recovery Blog

North Dakota’s highest court delivered a blow to Mid-Continent Casualty Company in Borsheim Builders Supply, Inc. v. Manger Insurance Co., ruling that a contract between a policyholder and general contractor fit the insured contract exception of contractual liability.

Commercial General Liability (“CGL”) policies generally exclude an insured’s contractual assumption of another party’s liability. The exclusion typically contains an exception for what is known as an “insured contract.” However, many policyholders and insurance claims personnel often miss the significance of the insured contract exception. This was the case in Borsheim.

Mr. Levine may be contacted at mlevine@HuntonAK.com

ABA Conference: Public Construction Projects: Not Always a Hollywood Ending

October 30, 2018
Beverley BevenFlorez - CDJ STAFF

This American Bar Association (ABA) 2019 meeting will include a series of plenary sessions and workshops as well as networking opportunities. Topics will include Back to the Future: Economic Outlook & Challenges in Construction; The Subcontracting Game: From Flirting with Disaster to
Happy Marriages on Public Projects; Creative Collateral Claims Against Public Entities
and their Agents and many others.

January 30th – February 1st, 2019
Millennium Biltmore Hotel
506 S Grand Avenue
Los Angeles, CA 90071

Intentional Mining Neighbor's Property is Not an Occurrence

Gold mining equipment in yard

Tred R. Eyerly discusses Am. Mining Ins. Co. v. Peters Farms, LLC.

October 30, 2018
Tred R. Eyerly - Insurance Law Hawaii

The Kentucky Supreme Court determined there was no coverage when the insured was sued for mineral trespass. Am. Mining Ins. Co. v. Peters Farms, LLC, 2018 Ky. LEXIS 287 (Ky. Aug. 16, 2018).

Beginning in 2007, Ikerd Mining. LLC removed 20,212 toms of coal from land belonging to Peters Farms, LLC. Of that amount, 10,012 tons were wrongfully mined under Ikerd's alleged mistaken belief as to the correct location of Peters' boundaries. The other 1,200 tons were mined by Ikerd knowing that the land thereunder belonged to Peters, but pursuant to a disputed oral lease agreement between the two. Peters claimed that the lease was an ongoing negotiation that was never finalized.

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

Almost Nothing Is Impossible

Possible Impossible Buttons

The doctrines of impossibility and impracticability, if proven, can serve as powerful defenses and excuse performance of a construction contract.

October 30, 2018
Brian N. Krulick - Smith Currie

In today’s ever-changing legal and political climate, contractors are being forced to deal with events and circumstances that seemed improbable just a short time ago. These changing circumstances have led some contractors to question whether they are required to continue performing in the face of uncertainty and, in many cases, potentially large losses. The doctrines of impossibility and impracticability, if proven, can serve as powerful defenses and excuse performance of a construction contract. However, contractors should exercise great caution before relying on these defenses as an excuse for nonperformance, as the consequences of stopping work without proper justification can be disastrous.

Mr. Krulick may be contacted at bnkrulick@smithcurrie.com

Builders Beware: Smart Homes Under Attack by “Hide ‘N Seek” Botnet

businessman at desk covered with smart technology objects

While many of the precautions will undoubtedly come from the device manufacturers, homebuilders can still take some precautions to protect their customers.

October 30, 2018
Scott L. Satkin & Amtoj S. Randhawa - Newmeyer & Dillion LLP

German manufacturer eQ-3 has found itself under siege by a botnet known as "Hide 'N Seek." This pernicious malware has infected tens of thousands of eQ-3's smart home devices by compromising the device's central control unit. Once a device has been infected, the malware spreads to other Internet of Things ("IoT") devices connected to the same wireless network. IoT devices have become the prime target for botnet attacks. As opposed to computers, laptops, or other larger computing devices, the smaller storage capacity and lower processing power of IoT devices limit the amount and complexity of the security measures that can be installed—making them an easier target for botnets.

What is a Botnet?
For those unfamiliar with the term, a botnet is a network of devices infected with a malware program allowing the infector to control and/or exploit the devices. Once a suitable number of devices are infected, the person or group controlling the botnet can harness the computing power of each infected device to perform activities which were previously constrained by a single device's capabilities (i.e. DDoS attacks, spamming, cryptocurrency mining, etc.).

Hide 'N Seek – History and Capabilities
The Hide 'N Seek botnet first appeared in January 2018 and has since spread rapidly. Its sophisticated design and capabilities have captivated the attention of many security watchdogs and researchers. While many botnets are designed to be "quick and dirty" (i.e. infect a few devices, eke out a little profit, and inevitably be cleared out or rendered ineffective by security updates and fixes), Hide 'N Seek was designed to maintain itself in the host's system indefinitely. When it was first released, Hide 'N Seek primarily targeted certain routers and internet-enabled security cameras; however, it has now began targeting digital video recorders, database servers, and most recently, smart home hubs.
Hide 'N Seek's communication capabilities are also more advanced than previous botnets. Previous botnets relied on existing communications protocols to communicate with other another, but Hide 'N Seek uses a custom-built peer-to-peer system to communicate. This advancement allows Hide 'N Seek to spread more rapidly than previous botnets.

Hide 'N Seek is also capable of extracting a device owner's personal information (i.e. name, address, e-mail, telephone numbers, etc.) whereas previous botnets were not. Most importantly, Hide 'N Seek is consistently updated to increase its infection rate, decrease its detection probability, and bypass any security measures designed to detect and remove it from the system. This modularity has proved to be Hide 'N Seek's greatest strength.

Protecting Against Hide 'N Seek and Other Botnets
While many of the precautions will undoubtedly come from the device manufactures vis-à-vis software programming and updates, homebuilders can still take some precautions to protect their customers.

  1. When selecting a smart home system to incorporate into a home's construction, be sure to evaluate its security features including, but not limited to its: wireless connectivity, password/passphrase requirements, interconnectedness with other IoT devices, etc. Third-party reviews from tech-oriented outlets will likely have useful information on a device's security measures, vulnerabilities, and any recent security compromises.
  2. Be vigilant in installing any eQ-3 smart home systems. The extent of the damage caused by Hide 'N Seek botnet remains unknown, as does damage from other potentially-infected technology. Thus, it may be prudent to avoid installing any eQ-3 device until it becomes evident that the threat has been neutralized and all security vulnerabilities have been remedied.
  3. If a builder uses technology other than eQ-3, precautions must be taken. Ensure that technology providers are thoroughly researched. It is also recommended to include strong contractual indemnity provisions, and require vendors to carry cyber-specific insurance policies.
  4. Homebuilders should consider purchasing their own stand alone cyber liability policies as a safety net, should potential exposure arise.

Scott Satkin and Amtoj Randhawa are associates in the Cybersecurity group of Newmeyer & Dillion. Focused on helping clients navigate the legal dispute implications of cybersecurity, they advise businesses on implementing and adopting proactive measures to prevent and neutralize cybersecurity threats. For questions on how they can help, contact Scott at scott.satkin@ndlf.com and Amtoj at amtoj.randhawa@ndlf.com.

Teaching An Old Dog New Tricks: The Spearin Doctrine and Design-Build Projects

Stick figure teacher and student

The Spearin doctrine reaches its centennial anniversary this year on December 9, 2018.

October 30, 2018
John Castro - Gordon & Rees Construction Law Blog

The United States District Court for the Southern District of California has now held that the Spearin doctrine applies to design-build subcontractors where the subcontractor is expected to design a portion of their work. The case is United States for the use and benefit of Bonita Pipeline, Inc., et al. v. Balfour Beatty Construction, LLC, et al. (“Bonita Pipeline”) (Case No. 3:16-cv-00983-H-AGS).

In Bonita Pipeline, a subcontractor sued the general contractor and its sureties alleging breach of contract, breach of implied warranty, declaratory relief, and recovery under the Miller Act. The subcontractor then filed a motion for partial summary judgment against the general contractor on its declaratory relief cause of action, seeking a finding that the general contractor could not shift legal responsibility for its defective plans and specifications to the subcontractor.

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


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