CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - SATURDAY, FEBRUARY 22, 2025

Scales of justice next to law books

MDK was hired as a subcontractor for extensive renovations at the Aspen Grove Condominium, a 96 unit condominium.

Materialmen’s Lien Against Condominium Name the Proper Parties

February 19, 2025
Lawrence S. Glosser - Ahlers Cressman & Sleight PLLC

In a recent unpublished opinion, MDK General Construction, LLC v. Aspen Grove Owners Association Case No. 85704-5-I Division One of the Court of Appeals, appealed the trial court’s grant of summary judgment in favor of Aspen Grove Owners Association (“the “Owners Association”) dismissing MDK’s materialmens’ lien against the Owners Association.

MDK was hired as a subcontractor for extensive renovations at the Aspen Grove Condominium, a 96 unit condominium. Specifically, MDK was hired to “perform construction services in the form of exterior siding and related work.” The party to the contract was the Owners Association, and that entity was named in a lien foreclosure action. The lien foreclosure action was instituted because the General Contractor failed to pay MDK for its subcontract work on the exterior.

The Owners Association asserted the defense that it was not the proper party because it was not an owner of any of the real property in question. The Court addressed the statutory provisions of both Chapter 64.34 RCW (the Condominium Act”) regarding the creation of a condominium and Chapter 60.04 RCW addressing materialmen’s liens. RCW 60.04.051 specifies the property subject to the lien as to “ the extent of the interest of the owner at whose instance, directly or through a common law or construction agent the labor, professional services, equipment, or materials were furnished.” (Emphasis added).

Mr. Glosser may be contacted at larry.glosser@acslawyers.com

Reprinted courtesy of Lawrence S. Glosser, Ahlers Cressman & Sleight PLLC

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CDJ NEWS THIS WEEK



Smoke

This article explores these cases, the influence of COVID-19 coverage litigation on the interpretation of “direct physical loss or damage,” and what policyholders can learn to better protect their rights.

Where There’s Smoke, Is There Coverage? A Closer Look at Bottega, LLC v. National Surety and Gharibian v. Wawanesa

February 19, 2025 — Rachel E. Hudgins & Scott P. DeVries - Hunton Insurance Recovery Blog

For policyholders, insurance is meant to provide peace of mind—a promise that when disaster strikes, they’ll have financial support to rebuild and recover. But as two recent cases show, the question of what qualifies as covered “direct physical loss or damage” can lead to drastically different outcomes in court.

In two recent California cases, both policyholders sought coverage after wildfire smoke and debris affected their properties. One court ruled in favor of coverage. Bottega, LLC v. National Surety Corporation, No. 21-cv-03614-JSC (N.D. Cal. Jan. 10, 2025). The other sided with the insurer. Gharibian v. Wawanesa General Insurance Co., No. B325859, 2025 WL 426092 (Cal. Ct. App. Feb. 7, 2025). These contrasting decisions highlight issues policyholders may encounter in securing coverage for smoke-related damage and the ongoing debate over what constitutes “direct physical loss or damage,” a key phrase in most property insurance policies.[1]

This article explores these cases, the influence of COVID-19 coverage litigation on the interpretation of “direct physical loss or damage,” and what policyholders can learn to better protect their rights.[2]

Reprinted courtesy of Rachel E. Hudgins, Hunton Andrews Kurth LLP and Scott P. DeVries, Hunton Andrews Kurth LLP

Ms. Hudgins may be contacted at rhudgins@hunton.com
Mr. DeVries may be contacted at sdevries@hunton.com

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Policies hologram from laptop

Per the endorsement, there was no coverage because the general contractor did not comply by requiring its subcontractor to name it as an additional insured on a primary and noncontributory basis.

Keep an Eye Out on What Your Insurance Policy and Contract Says

February 19, 2025 — David Adelstein - Florida Construction Legal Updates

There is a very good reason the contract requires the party providing a service (e.g., subcontractor) to name the paying party (e.g., general contractor) as an additional insured under its liability policies (e.g., CGL policy) on a primary and non-contributory basis.

There is also a very good reason why you, as an insured, should read the contracts you sign with the party providing a service for you.

In other words, keep an eye out on what your insurance policy says and what your contract says! This is an ABSOLUTE!!

If you want to know the good reasons, look no further to the recent case of Colony Insurance Co. v. Titan Restoration Construction, Inc., 2025 WL 45160 (Fla. 4th DCA 2025). In this case, a general contractor’s CGL policy contained an endorsement that stated there would be no coverage UNLESS the general and subcontractor executed an agreement containing, “A requirement for the [subcontractor] to name the insured [general contractor] as an additional insured under their Commercial General Liability policy on a primary and non-contributory basis in favor of the insured [general contractor].” Colony Insurance, supra. The general contractor hired a roofing subcontractor. There was no requirement for the roofing subcontractor to name the general contractor as an additional insured on a primary and noncontributory basis. Also, the proposal the general contractor signed contained a disclaimer from the roofing subcontractor that the subcontractor “will not be held responsible for water damage to the exterior or the interior of the premises.”

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

Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.

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Two people at meeting shaking hands over table

The title of Voss’s book is a direct challenge to one of the most common, yet flawed, negotiation strategies: compromise.

Winning Construction Disputes: Strategic Negotiation for Better Outcomes

February 19, 2025 — Mohamed Asker - The Dispute Resolver

Construction projects are inherently complex, and disputes seem to be inevitable. Whether it’s a disagreement over defective work, delayed payments, or unforeseen site conditions, effective negotiation can mean the difference between a favorable settlement and an expensive, drawn-out battle. While many in the industry rely on traditional bargaining tactics or the principles from “Getting to Yes,” Chris Voss’s “Never Split the Difference” provides a tactical, psychological approach that can give contractors, owners, and attorneys a decisive edge.

1. The Myth of Splitting the Difference
The title of Voss’s book is a direct challenge to one of the most common, yet flawed, negotiation strategies: compromise. In construction disputes, parties often propose to “meet in the middle” as a quick resolution. However, as Voss warns, “A woman wants her husband to wear black shoes with his suit. But her husband doesn’t want to; he prefers brown shoes. So what do they do? They compromise, they meet halfway. And, you guessed it, he wears one black and one brown shoe.” In construction, this can mean accepting an unsatisfactory repair or agreeing to partial payment for incomplete work—neither of which truly resolves the issue.

Mr. Asker may be contacted at masker@foxrothschild.com

Reprinted courtesy of Mohamed Asker, Fox Rothschild

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Boston, Massachusetts

The court of appeals left the door open for potential coverage for damage to non-defective, work arising from a subcontractor’s defective work even with the (j)(6) exclusion.

First Circuit Broadly Interprets Exclusion in Commercial General Liability Policy Under Current Massachusetts Law

February 19, 2025 — Bill Wilson - Construction Law Zone

In Admiral Insurance Co. v. Tocci Building Corp., 120 F.4th 933 (1st Cir. 2024), the federal Court of Appeals ruled that, under current Massachusetts law, a general contractor’s Commercial General Liability (CGL) policy does not cover damage to non-defective work resulting from defective work by subcontractors.

The defendant contractor was retained as a construction manager for an entire residential construction project. After several work quality issues and delays on the project, the contractor was terminated before the project’s completion. The owner of the project filed suit against the contractor for breach of contract and related claims but did not allege negligence by the contractor. The complaint included allegations of defective work by the contractor’s subcontractors leading to various instances of damage to non-defective work on the project including: (1) damage to sheetrock resulting from faulty roof work; (2) mold formation resulting from inadequate sheathing and water getting into the building; and (3) damage to a concrete slab, wood framing, and underground pipes resulting from soil settlement due to improper backfill and soil compaction. The contractor’s request for defense and indemnification coverage under its CGL policy was denied by its insurer. The insurer filed suit seeking a declaratory judgment confirming it had no obligation to defend or indemnify the contractor. The district court granted summary judgment in favor of the insurer and the contractor appealed.

Mr. Wilson may be contacted at wwilson@rc.com

Reprinted courtesy of Bill Wilson, Robinson & Cole LLP

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Rules policies standards compliance regulations

With its plaintiff-friendly state law that makes employers 100% negligent for many fall-related injuries, New York State courtrooms are always filled with personal injury cases.

Immigrants, Accidents and Lawsuit Loans: Does NY Need New Rules?

February 19, 2025 — Richard Korman - Engineering News-Record

It took eight months after construction worker Javier Bances Carranza injured himself in a fall for his lawyer to try to make him feel supported, but it was too late. When the lawyer learned Carranza intended to switch his negligence lawsuit against his employer to a more attentive law firm, according to Carranza’s affidavit, his current law firm texted him asking for explanations and threatened to “damage” his case. “I refused them and blocked their phone numbers,” he said.

Mr. Korman may be contacted at kormanr@enr.com

Reprinted courtesy of Richard Korman, Engineering News-Record

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Money trend down

The United States District Court for the Eastern District of Pennsylvania ruled that an excess policy did not incorporate the underlying insurance’s “per project” aggregate limit.

Your Excess Policy May Not “Follow Form” to Your Primary Policy’s Aggregate Limits: How to Avoid a Multi-Million Dollar Mistake

February 19, 2025 — Kyle A. Bechet & Richard W. Brown - Saxe Doernberger & Vita, P.C.

Commercial general liability (“CGL”) policies providing limits on a “per-project” basis have become standard in the construction industry. General contractors and other upstream parties on large construction projects, as a rule, require downstream subcontractors to maintain CGL coverage with limits provided on a “per project” basis. The goal is to ensure access to dedicated limits that are not exhausted or otherwise impaired due to losses on other projects. Contractors that require or are obligated to provide insurance with dedicated “per project” limits should, however, be aware that many excess policies ––which, despite “following-form” ––fail to provide the same “per project” aggregate limits as their underlying insurance. This issue is further illustrated in our discussion below of J.D. Eckman Inc. v. Starr Indemnity & Liability Company, wherein the United States District Court for the Eastern District of Pennsylvania ruled that an excess policy did not incorporate the underlying insurance’s “per project” aggregate limit.

The Background
In J.D. Eckman Inc., a highway construction company (“Eckman”) found itself simultaneously defending against ten Pennsylvania lawsuits. Eight of the lawsuits arose from a single project in Dauphin County, Pennsylvania, which caused several serious injuries and three fatalities. The other two lawsuits arose from a single project in Berks County, Pennsylvania, which caused two additional fatalities. The severity of the claims ensured that the company’s legal liability would exceed the limits of its primary insurance policy.

Reprinted courtesy of Kyle A. Bechet, Saxe Doernberger & Vita, P.C. and Richard W. Brown, Saxe Doernberger & Vita, P.C.

Mr. Bechet may be contacted at KBechet@sdvlaw.com
Mr. Brown may be contacted at RBrown@sdvlaw.com

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Arbitration Agreement

The appellate court found that the primary intent of the parties was to arbitrate disputes, not to designate an exclusive forum.

The Arbitration Club… Is Not So Exclusive

February 19, 2025 — Daniel Lund III - Lexology

What happens when your designated arbitration forum is no longer available?

Plaintiff entered a subcontract in 2017 for an oil-and-gas project, which included an arbitration clause referring disputes to arbitration under the rules of Dubai International Financial Centre’s joint partnership with the London Court of International Arbitration, a/k/a the DIFC-LCIA Arbitration Centre. However, in 2021, the DIFC-LCIA was abolished and replaced by the Dubai International Arbitration Centre (DIAC). When a dispute under the subcontract arose, plaintiff sought to compel arbitration, but the federal district court in New Orleans denied the motion, citing the non-existence of the designated forum. An appeal followed.

Mr. Lund may be contacted at daniel.lund@phelps.com

Reprinted courtesy of Daniel Lund III, Phelps

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ADU

After the fires, residents have sought out ADUs for temporary housing, with policymakers trying to fast-track even more construction.

LA’s Backyard-Home Boom Offers Wildfire-Hit Residents New Option

February 19, 2025 — Laura Curtis - Bloomberg

Alongside patios, pools and palm trees, Los Angeles backyards increasingly feature another element: small cottages for family members, renters or home offices.

The petite homes, meant to help ease the city’s housing crisis, are now becoming a key resource for residents displaced by the area’s devastating wildfires.

Residences known as accessory-dwelling units, or ADUs, have boomed in recent years, making up more than a third of the homes completed in Los Angeles County in 2023, according to state data. Many are now housing evacuees and are likely to be an important part of the building effort after the Palisades and Eaton fires, as California Governor Gavin Newsom seeks to fast-track construction in affected areas.

Reprinted courtesy of Laura Curtis, Bloomberg

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Playbook

This article aims to refocus general contractors on what matters—how to prepare for uncertainty and come out on top.

The Federal Freeze Playbook: Key Steps for Government Contractors Amid a Potential Federal Funding Freeze

February 19, 2025 — Abby Bello Salinas & Michael A. Branca - Peckar & Abramson, P.C.

This Alert will provide an overview of the current status of the Federal Funding Freeze and five key steps that can be taken in preparation for what may come.

Current Status of the Federal Freeze
The memorandum issued by the Office of Management and Budget (“OMB”) on January 27 required all federal agencies to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the [President’s] executive orders,” and to submit information regarding their federal financial assistance programs to OMB before February 10. Very quickly, the memorandum was enjoined by a federal court, rescinded, and then put back in flux by a tweet from the President’s press secretary claiming that the rescission did not stop the freeze.

As expected, a legal battle is underway, with a judge extending the injunction on February 3 despite the Trump Justice Department’s arguments that the federal court had no authority to intervene after OMB rescinded its January 27 memorandum.

Reprinted courtesy of Abby Bello Salinas, Peckar & Abramson, P.C. and Michael A. Branca, Peckar & Abramson, P.C.

Ms. Salinas may be contacted at asalinas@pecklaw.com
Mr. Branca may be contacted at mbranca@pecklaw.com

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Hands up in celebration

Law360 will be publishing profiles of the practices in the near future.

Seyfarth’s Construction and Government Contracts Teams Named 2024 Practice Groups of the Year by Law360

February 19, 2025 — Seyfarth Shaw LLP - The Construction Seyt

We are thrilled to share that Seyfarth’s Construction and Government Contracts practices were chosen by Law360 as 2024 Practice Groups of the Year. This special recognition spotlights the attorney teams “behind litigation wins and major deals that resonated throughout the legal industry this past year.”

Reprinted courtesy of Seyfarth Shaw LLP

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Sacramento, California

Founded in San Francisco in 1974, GRSM has grown to become the nation’s first and only law firm with offices in all 50 states.

Gordon Rees Scully Mansukhani Recognized as Largest Litigation Presence in Sacramento

February 19, 2025 — Gordon Rees Scully Mansukhani

Gordon Rees Scully Mansukhani was recently featured in the Sacramento Business Journal as the largest litigation presence in Sacramento, highlighting the firm’s leadership in the region’s legal market. This recognition underscores GRSM’s unparalleled growth and our reputation as a trusted partner for clients navigating complex legal challenges.

“As Sacramento continues to evolve as a regional hub for business and innovation, GRSM has grown alongside our community with a litigation team that reflects the needs of our clients,” said Mark Posard, the office’s Senior Partner and lead architect of its growth strategies. “This recognition underscores the trust our clients place in our attorneys, hiring the firm to handle their sophisticated engagements and even bet the company litigation.”

With a robust team of litigators, GRSM’s Sacramento office handles a broad range of disputes, including commercial litigation, employment matters, product liability, and class actions. The firm’s local strength is bolstered by its national platform, which spans all 50 states, offering clients both the depth of regional expertise and the breadth of nationwide resources.

Reprinted courtesy of Gordon Rees Scully Mansukhani

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Scale with tradition and innovation

Antti shares his journey from a business background to AI research and explores three institutional pillars—regulative, normative, and cultural cognitive—that impact AI adoption in AEC.

Balancing Tradition and Technology in Bringing AI to AEC

February 19, 2025 — Aarni Heiskanen - AEC Business

In this episode of the AI AEC show, host Aarni Heiskanen discusses the integration and challenges of AI in the architecture, engineering, and construction (AEC) industry with Antti Ainamo, a keynote speaker and an associate professor at the University of Tartu.

Antti shares his journey from a business background to AI research and explores three institutional pillars—regulative, normative, and cultural cognitive—that impact AI adoption in AEC. He emphasizes the necessity of balancing traditional and technological approaches and highlights the roles of business strategy, technology integration, and ecosystem evolution in driving industry transformation.

Antti underscores the importance of understanding user needs within the AEC industry. The adoption of AI should not be a top-down imposition of technology; rather, it should be a collaborative process that considers the perspectives of all stakeholders involved, including decision-makers and end-users such as construction workers, architects, and engineers.

Mr. Heiskanen may be contacted at aec-business@aepartners.fi

Reprinted courtesy of Aarni Heiskanen, AEC Business

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Atlanta, Georgia

New Toll Brothers Move-in Ready Homes Available in Freestone Station Community in Marietta, Georgia

February 19, 2025 — Toll Brothers, Inc.

ATLANTA, Jan. 24, 2025 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL), the nation's leading builder of luxury homes, announced its highly sought-after luxury new home community, Freestone Station, now has a limited number of move-in ready homes available in Marietta, Georgia. Freestone Station features flexible single-family homes with a wide array of design options in Cobb County. The community's Sales Center, located at 1961 Freestone Way in Marietta, is open daily for tours of the professionally decorated model home and quick move-in homes for sale.

Nestled in the heart of Marietta, Freestone Station offers Toll Brothers single-family homes with diverse architectural designs and high-end finishes. Home buyers can select from six spacious Toll Brothers home designs ranging from 3,249 to 3,545+ square feet of luxury living space. Contemporary and modern home designs feature up to 5 bedrooms, up to 5.5 baths, and 2- to 3-car garages. Homes are priced from the low $700,000s.

About Toll Brothers
Toll Brothers, Inc., a Fortune 500 Company, is the nation's leading builder of luxury homes. The Company was founded 58 years ago in 1967 and became a public company in 1986. Its common stock is listed on the New York Stock Exchange under the symbol "TOL." The Company serves first-time, move-up, empty-nester, active-adult, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds in over 60 markets in 24 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Indiana, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Washington, as well as in the District of Columbia. The Company operates its own architectural, engineering, mortgage, title, land development, smart home technology, and landscape subsidiaries. The Company also develops master-planned and golf course communities as well as operates its own lumber distribution, house component assembly, and manufacturing operations.

Judge holding gavel

Trump Orders, Directives Show New Social Engineering and Face More Court Risks

February 19, 2025 — Debra K. Rubin & Alisa Zevin - Engineering News-Record

The flurry of executive orders and directives by President Donald Trump and his newly confirmed cabinet chiefs to modify or cut Biden administration policies have some in the construction sector optimistic. But the actions also are disrupting key government functions with impacts feared for construction industry operations and costs.

Reprinted courtesy of Debra K. Rubin, Engineering News-Record and Alisa Zevin, Engineering News-Record

Ms. Rubin may be contacted at rubind@enr.com
Ms. Zevin may be contacted at zevina@enr.com

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Checklist

SDV’s 2025 Contractor’s Checklist for Owner-Placed Builder’s Risk Insurance

February 19, 2025 — Will S. Bennett & Jeremiah M. Welch - Saxe Doernberger & Vita, P.C.

I. Contract Terms Specifying Builder’s Risk Policy Requirements

Contract Term Notes Verified
“All Risk” coverage form “All Risk” means all perils are covered unless excluded, versus “specified peril” coverage – “all risk” is the broadest and industry-standard.  
All contractors should be named insureds Naming and insuring all stakeholders helps avoid disputes and project delay due to liability/contractual entitlement fights.  
Insured status shall not be limited “as their interest may appear” This language has been used to deny coverage based on interpretations of which party has an “interest” in which discrete components of the covered project and to support efforts to subrogate against insureds.  

 

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

Mr. Welch may be contacted at JWelch@sdvlaw.com

Reprinted courtesy of Saxe Doernberger & Vita, P.C.

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Women in seminar

Groundbreaking Women in Construction Seminar

February 19, 2025 — Beverley BevenFlorez – CDJ Staff

The Groundbreaking Women in Construction event is coming to San Diego in June. This three-day conference “draws a diverse mix of professionals from across the construction industry—from experienced leaders in architecture, engineering, and construction firms and associations to rising apprentices, legal experts, technology vendors, financial professionals, academics and forward-looking public and private project owners.” The event “is a hub for innovators, decisionmakers and influencers, a unique convergence of talent that creates unmatched opportunities for networking, learning and career advancement in the ever-evolving construction sector.”

June 8th-10th, 2025
Town and Country Resort
500 Hotel Cir N
San Diego, CA 92108

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Torrential Rain Triggers Mudslides In California, Sweeping Cars Away

Torrential rain is triggering devastating mudslides in Southern California with cars being swept off roads. Crews are now urging residents in neighborhoods still recovering from the deadly wildfires to evacuate once again. NBC’s Morgan Chesky reports for TODAY.

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Massive Mudslide Once Again Impacting Businesses Along Topanga Canyon

Laurie Perez reports from Topanga Canyon, where a massive mudslide brought on by recent rain is once gain impacting businesses that have already gone through a year of issues caused by Mother Nature.

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