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CONSTRUCTION DEFECT NEWS
Two contractors in front of crane

The general contractor asserted that the pay-if-paid provision in the subcontract precluded recovery by the subcontractor.

Subcontractors Have Remedies, Even if “Pay-if-Paid” Provisions are Enforced

Tuesday, February 19, 2019 — John P. Ahlers - Ahlers Cressman & Sleight PLLC

In a recent case in Kentucky[1], a sub-tier subcontractor sued the general contractor and owner for failure to pay for extra work. At the trial, the court held the subcontractor was entitled to recover under the theories of implied contracts and unjust enrichment, even though the subcontract contained a “pay-if-paid” clause. All parties appealed. In particular, the general contractor asserted that the pay-if-paid provision in the subcontract precluded recovery by the subcontractor. The issue was petitioned to the Supreme Court of Kentucky.

The question to be resolved by the Supreme Court of Kentucky was whether a pay-if-paid provision was enforceable as between a general contractor and subcontractor, and if so, whether the subcontractor could nevertheless pursue the owner directly for payment notwithstanding a lack of privity between the owner and subcontractor.

Reprinted courtesy of John P. Ahlers, Ahlers Cressman & Sleight PLLC

Mr. Ahlers may be contacted at john.ahlers@acslawyers.com

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Worried businesswoman reading contract

A cautionary tale for companies acquiring other companies.

Don’t Assume Your Insurance Covers A Newly Acquired Company

Tuesday, February 19, 2019 — Patrick M. McDermott & Michael S. Levine - Hunton Insurance Recovery Blog

The Supreme Court of Virginia’s decision yesterday finding no coverage for fire damage to a building is a cautionary tale for companies acquiring other companies. Erie Ins. Exch. v. EPC MD 15, LLC, 2019 WL 238168 (Va. Jan. 17, 2019). In that case, Erie Insurance issued a property insurance policy to EPC. The policy covered EPC only and did not cover any subsidiaries of EPC. EPC then acquired the sole member interest in Cyrus Square, LLC. Following the acquisition, fire damaged a building that Cyrus Square owned.

EPC sought coverage under its property insurance policy. Because the policy did not cover Cyrus Square, EPC argued that a provision extending coverage to “newly acquired buildings” applied, contending that EPC had newly acquired Cyrus Square’s building by virtue of becoming the sole member interest in the LLC. Based on the law relative to LLCs and its interpretation of the policy, the Supreme Court of Virginia ruled against EPC. It found that although EPC had acquired Cyrus Square, it had not “newly acquired” the building and so the “newly acquired buildings” coverage extension did not apply.

Reprinted courtesy of Patrick M. McDermott, Hunton Andrews Kurth and Michael S. Levine, Hunton Andrews Kurth
Mr. McDermott may be contacted at pmcdermott@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com


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Contractor on construction site

Sarah E. Carson relates proactive steps to avoid costly obstacles that may cause a project’s success to go awry.

Differing Site Conditions Produce Differing Challenges

Monday, February 18, 2019 — Sarah E. Carson - Smith Currie

The saying “The best laid plans of mice and men often go awry” can too often apply in the construction industry. A contractor may receive a description of site conditions that is ultimately found flawed or misleading. The costs associated with addressing these surprise conditions often fall on the contractor to pay. The following article details proactive steps to avoid costly obstacles that may cause a project’s success to go awry.

What are Differing Site Conditions?

There are generally two recognized types of differing site conditions. The first, often referred to as a “Type I Changed Condition,” exists when a specification in the conditions indicated in the contract documents varies from what is represented. The second category, generally referred to as a “Type II Changed Condition,” is a variance so unusual in its nature that it materially differs from conditions ordinarily encountered in performing the type of work called for in the geographic area where the project is located.

Reprinted courtesy of Sarah E. Carson, Smith Currie

Ms. Carson may be contacted at secarson@smithcurrie.com

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Contractors Report Strong Opposition to PLA Mandates

February 19, 2019 — Joanna Masterson - Construction Executive

In a survey of more than 500 members of Associated Builders and Contractors, 98 percent said they were less likely to bid on a taxpayer-funded construction contract if the bid specifications required the winning firm to sign a project labor agreement with labor unions. Additionally, 97 percent stated that a construction contract mandating a PLA would be more expensive compared to a contract procured via free and open competition.

There was near unanimous consent that a PLA would result in worse local hiring outcomes for a project, and almost 90 percent of respondents agreed that a PLA would decrease the hiring of women, veterans and disadvantaged business enterprises.

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

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Year in Review: Top Insurance Cases of 2018

February 19, 2019 — Michael S. Levine & Latosha M. Ellis - Hunton Andrews Kurth

2018 was a busy year for courts deciding insurance coverage disputes. Many of those decisions will shape the coverage landscape for years to come. Policyholders enjoyed their fair share of the wins, including substantial victories in areas involving social engineering to disgorgement of corporate gain. We take this opportunity to reflect on some of the year’s most notable coverage decisions.

Social Engineering
2018 was a banner year for decisions addressing losses resulting from social engineering phishing, spoofing and other schemes of trickery and deception.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Latosha M. Ellis, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Ellis may be contacted at lellis@HuntonAK.com

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2018 International Green Construction Code: Streamlined Code Development

February 19, 2019 — ASHRAE - Construction Executive

ASHRAE’s 2018 International Green Construction Code® (2018 IgCC®), a joint initiative of the U.S. Green Building Council, International Code Council, ASHRAE and the Illuminating Engineering Society aligns the technical requirements of ANSI/ASHRAE/ICC/USGBC/IES 189.1-2017-Standard for the Design of High-Performance Green Buildings Except Low Rise Residential Buildings, with ICC’s multi-stakeholder IgCC.

Goals of the updated code are to help governments streamline code development and adoption and improve building industry standardization by integrating the two previously separate guidance documents. As a result, the 2018 IgCC is now a unified code that emphasizes adoption, ease of use and enforcement for building projects.

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

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Sherman & Howard’s Annual Construction Law Seminar

February 19, 2019 — Beverley BevenFlorez – CDJ Stafff

This one-day seminar will cover Liquidated Damages, Contract Termination, New Contracting Issues, Legislative Update, OSHA, Arbitration, Contracting with the City and County of Denver, and more topics.

March 15th, 2019
National Western Complex
4655 Humboldt Street
Denver, CO 80216

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Builders Standard of Care Expert Witness and Consulting General Contractor area area area

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Consulting General Contractor and Building Expert Witness Specializing in Construction Remediation and defect claims area areaarea

Legislation on paper in typewriter

Contractors who fail to institute a program to comply with AB 3018’s reporting requirements do so at their peril.

AB 3018: Amendments to the Skilled and Trained Workforce Requirements on California Public Projects

Monday, February 18, 2019 — Alex R. Bagdassarian & Nathan A. Cohen - Peckar & Abramson

What California Contractors Need To Know About AB 3018

California contractors used to face limited consequences for non-compliance with the state’s skilled and trained workforce requirements on public works projects. A sea-change to the statutory landscape went into effect on January 1, 2019 as a result of Assembly Bill No. 3018 (“AB 3018”).1 The Code re-defines what constitutes a skilled/trained workforce by eliminating existing exemptions, strengthens monthly reporting guidelines and agency oversight, and empowers the Labor Commissioner and public agencies with enforcement tools that include monetary penalties and debarment. Contractors who fail to institute a program to comply with AB 3018’s reporting requirements do so at their peril.

What Does The 30% Requirement Mean?

Previously, in order to comply with the skilled workforce requirements2, 30% of skilled journeypersons had to be graduates of an apprenticeship program, except for certain listed trades which were exempt from the apprenticeship percentage requirement3. AB 3018 eliminates this exception for the listed occupations and requires 30% of all trades to be comprised of apprenticeship program graduates.

Reprinted courtesy of Alex R. Baghdassarian, Peckar & Abramson and Nathan A. Cohen, Peckar & Abramson
Mr. Baghdassarian may be contacted at Abaghdassarian@pecklaw.com
Mr. Cohen may be contacted at ncohen@pecklaw.com


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Angry senior couple having an argument

The Supreme Court of Wisconsin addressed the issue of contribution rights as among co-insurers.

Supreme Court of Wisconsin Applies Pro Rata Allocation Based on Policy Limits to Co-Insurance Dispute

Monday, February 18, 2019 — Brian Margolies - TLSS Insurance Law Blog

In its recent decision in Steadfast Insurance Company v. Greenwich Insurance Company, 2019 WL 323702 (Wis. Jan. 25, 2019), the Supreme Court of Wisconsin addressed the issue of contribution rights as among co-insurers.

Steadfast and Greenwich issued pollution liability policies to different entities that performed sewer-related services for the Milwaukee Metropolitan Sewerage District (MMSD) at different times. MMSD sought coverage under both policies in connection with underlying claims involving pollution-related loss. Both insurers agreed that MMSD qualified as an additional insured under their respective policies, but Greenwich took the position that its coverage was excess over the coverage afforded under the Steadfast policy, at least for defense purposes, and that as such, it had no defense obligation.

Reprinted courtesy of Brian Margolies, Traub Lieberman

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

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Decision Blue Key on Keyboard

Any Commonwealth project with a project labor agreement attached to it is ripe for a challenge.

Pennsylvania Commonwealth Court Holds that Nearly All Project Labor Agreements are Illegal

Monday, February 18, 2019 — Wally Zimolong - Supplemental Conditions

In what is nothing short of a monumental decision, on January 11, 2019, the Pennsylvania Commonwealth Court in Allan Myers L.P. v. Department of Transportation ruled that nearly all project labor agreements in Pennsylvania are illegal under the Commonwealth’s procurement code.

What are Project Labor Agreements?

In short, Project Labor Agreements (PLAs) are pre-hire agreements that set the working conditions for all employees of contractors working on a construction project. Typically, a PLA is entered into between an public or private construction project owner and certain local building trade unions. PLAs require the use of union labor that is to be hired exclusively through the hiring halls of the unions who are parties to the PLA. PLAs are controversial because, among other reasons, while not expressly excluding non-union contractors from performing work on the project, they require non-union firms to use union members instead of their regular employees.

Reprinted courtesy of Wally Zimolong, Zimolong LLC

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

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CONSTRUCTION DEFECT NEWS
Three judges sitting behind the bench

Anthony B. Cavender discusses the case Gadsden Industrial Park LLC v. United States of America, CMC Inc., and Harsco Corporation.

Eleventh Circuit Holds that EPA Superfund Remedial Actions are Usually Entitled to the FTCA “Discretionary Function” Exemption

Monday, February 18, 2019 — Anthony B. Cavender - Gravel2Gavel

An unusual Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, known also as Superfund) remedial action has resulted in a broad ruling that Environmental Protection Agency (EPA) remedial actions and their implementation by EPA contractors may be entitled to broad protection from liability insofar as the Federal Tort Claims Act (FTCA) is involved. The case is Gadsden Industrial Park LLC v. United States of America, CMC Inc., and Harsco Corporation, an unpublished opinion released by the court on November 30, 2018.

After the Gulf States Steel Corporation, the owner and operator of a former steel manufacturing facility located in Gadsden, AL, declared bankruptcy, in 2002, Gadsden Industrial Park LLC (Gadsden) purchased 434 acres of the 761 acre site, as well as assets located in what is described as the “Excluded Real Property”—recyclable materials generated in the steel making process known as “kish” and “slag,” and a track of a railroad line located in this area. However, in the 2007 or 2008, the Eleventh Circuit observes, EPA began a CERCLA remedial cleanup action on the Excluded Real Property and barred Gadsden from entering the Excluded Real Property to make use of its new assets.

Reprinted courtesy of Anthony B. Cavender, Pillsbury

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

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Black background with gold stars and white circles

Wilke Fleury is a thriving mid‐sized general practice law firm located in California’s capital.

Wilke Fleury Celebrates the Addition of Two New Partners

Monday, February 18, 2019 — Wilke Fleury

Wilke Fleury celebrates the addition of two new partners – Shannon Smith-Crowley and Daniel J. Foster – who complement the firm’s shifting generations of leadership. Shannon and Danny bring unique perspective and excellent capability to Wilke Fleury’s partnership effective January 1, 2019.

Shannon has been a registered lobbyist in California for 20 years. After a career in managed care, she started lobbying with the California Medical Association before founding her own firm, Partners In Advocacy to specialize in medical and reproductive health advocacy. At Wilke Fleury, her areas of practice include health care, women’s equity, life sciences, the biomedical industry, new family formation and emerging technologies in green energy. After a four year tenure with the firm, she has been elevated to the partnership.

Click here to read more about Shannon Smith-Crowley.

Daniel Foster’s litigation practice is composed of matters involving complex construction defect litigation, mechanics liens claims, stop notice actions and Miller Act claims. He represents clients before the Contractors State License Board and handles matters involving breach of warranty, the Song-Beverly Consumer Warranty Act, indemnity agreements and liability insurance coverage.

Click here to read more about Daniel J. Foster

Reprinted courtesy of Wilke Fleury
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Time for Change written on clock

Sureties play a vital role on construction projects.

Timely Legal Trends and Developments for Construction

Monday, February 18, 2019 — Matt Viator - Construction Executive

The construction industry is broad and the legal concerns of industry members can be far-reaching. What seems like tomorrow’s problem often jumps to the forefront and becomes a high priority today. 2018 was full of moments like these – and it’s important to keep track of legal developments for a glimpse at what may be waiting around the corner. With that in mind, here are some of the most important legal developments for the construction industry from the second half of 2018.

Sureties and Litigation – a Broad Topic

Sureties play a vital role on construction projects. On federal jobs and state, county or municipal jobs, surety bonds are typically required. That means it’s important to stay on top of how the courts are treating surety agreements.

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


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Construction Crew Restoring Ancient Castle Uncovers Lost Underground City

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CONSTRUCTION DEFECT NEWS
Legislation in torn paper

The firm Smith Currie has summarized some of the more important California laws that affect the construction industry.

New California Employment Laws Affect the Construction Industry for 2019

Monday, February 18, 2019 — Smith Currie

The California Legislature introduced more than 2637 bills in the second half of the 2017-2018 session that became law effective January 1, 2019, many of which address employment issues facing California employers in the construction industry. Below we have summarized some of the more important laws (the summary titles are live links to the text of the new law), and employers are urged to protect their companies by updating contracts, policies, and/or practices for compliance. The following is for general knowledge, and we recommend you consult with your attorney for specific legal advice.

AB 1565 – Contractor Wage Liability: AB 1565 repeals the provision that relieved direct contractors for liability for anything other than unpaid wages and fringe or other benefit payments or contributions, including interest owed. In the past, a direct contractor could withhold “disputed” sums owed to a subcontractor if the subcontractor failed to provide “information” about their and lower-tier subcontractors’ payroll records.

Reprinted courtesy of Smith Currie

Smith Currie attorneys may be contacted at info@smithcurrie.com

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Disaster Goes Down in the center of burned paper

California contractors should be conservative and over-cautious in licensing decisions.

Avoiding Disaster Due to Improper Licensing

Monday, February 18, 2019 — Candace Matson - Construction & Infrastructure Law Blog

IT’S NOT ENOUGH FOR A CONTRACTOR TO BE LICENSED . . . it must be properly licensed.

We are reminded of this by the recent case of JMS Air Conditioning and Appliance Service, Inc. v. Santa Monica Community College District, Bernards Bros., Inc., 30 Cal. App. 5th 945 (2018). In that case, JMS entered into an $8.2M subcontract with Bernards to install an HVAC system in a new facility being built for the District. JMS held a C-20 warm-air heating, ventilating and air-conditioning license. A year into the project, Bernards sought permission from the District to substitute another subcontractor for JMS (as required under Public Contract Code Section 4107 for listed subcontractors on public works of improvement). Among other things, Bernards contended that JMS was not properly licensed to perform that portion of the work which consisted of hydronic plumbing and hydronic boiler work. JMS countered that this work was an integral part of installing an HVAC system, and relied on Business & Profession Code Section 7059, which permits work that is “incidental and supplemental to the performance of the work for which the specialty contractor is licensed,” and a California State Licensing Board regulation which defines “incidental and supplemental” as meaning “essential to accomplish the work in which the contractor is classified.” (Cal. Code Regs., tit. 16, §831.)

Reprinted courtesy of Candace Matson, Sheppard Mullin

Ms. Matson may be contacted at cmatson@sheppardmullin.com

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3d concept of architectural design

Both augmented reality and virtual reality will continue to have many uses in construction.

Going Digital in 2019: The Latest Technology for a Bright Future in Construction

Monday, February 18, 2019 — Jim Romeo - Construction Executive

The spectrum of technology available to today’s contractors is wide and deep. This techno-ecosystem will change just about every operational tick and tock needed to build world-class projects—from where and how people work to what equipment they use and how they record payments.

“Generally speaking, the use of technology in construction is surging, particularly in the past three to five years,” says Chris Amato, principal and national advisory leader for the Chicago-based management consultancy Grant Thornton. “It’s becoming the cost of doing business; every player, at some point or another, is going to need to embrace it to some degree. The key questions are where to start, where to invest and how to minimize risk.”

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



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Businessman with red superhero cape

His Make It Right Foundation built 109 homes in New Orleans, but critics say many of them are badly flawed.

When Brad Pitt Tried to Save the Lower Ninth Ward

Monday, February 18, 2019 — Rob Walker - Bloomberg

In the months that followed Hurricane Katrina in 2005, there was much ­discussion about how to rebuild the New Orleans neighborhoods devastated by flooding. Some even questioned whether certain areas should be rebuilt at all: The city’s population would likely be smaller; perhaps its footprint should be revised? The Lower Ninth Ward, for instance—a working-class black neighborhood ravaged when a floodwall failed—might be a lost cause, some said, because it was so severely damaged.

Neighborhood residents and activists pushed back, insisting the Lower Nine deserved rebuilding. One of the most high-­profile efforts to do so came from an unlikely figure: Brad Pitt. In 2007 the actor founded the Make It Right Foundation, a nonprofit whose mission was to build affordable housing to help Lower Nine residents come home. Attracting designs from prize-­winning architects and committing to the highest energy-efficiency standards, Make It Right pledged to build 150 residences. As Pitt later wrote, the organization aimed to make “a human success story of how we can build in the future, how we can build with equality, how we can build for families."

Reprinted courtesy of Rob Walker, Bloomberg
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Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

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