CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - MONDAY, APRIL 21, 2025

Business people in hard hats looking at plans

Attorneys Gaetano P. Piccirilli and C. Quincy Conrad discussed the frequently disputed and convoluted classification of damages as direct or consequential in construction disputes.

Toolbox Talk Series: Direct Versus Consequential Damages--Is There a Clear Demarcation?

April 15, 2025
Brendan J. Witry - The Dispute Resolver

In Hadley v Baxendale, 9 Ex. 341 [1854], of 1L Contracts lore, the Court of Exchequer set out the dichotomy of direct damages and consequential (or indirect) damages. In the 170 years that have followed, lawyers on both sides of the Atlantic have sought to parse out what are direct damages and what are consequential damages. In the March 20, 2025 installment of the Toolbox Talk Series, Gaetano P. Piccirilli and C. Quincy Conrad discussed this frequently disputed and convoluted classification of damages as direct or consequential in construction disputes.

Gaetano and Quincy noted the traditional explanations of direct and consequential damages almost invariably use those terms without explaining how the differ. For example, direct damages are frequently described as "necessary and usual" flowing from the breach. Consequential damages are described as "naturally, but not necessarily" flowing from the breach. Gaetano and Quincy recommend avoiding the use of whether the damages are "foreseeable."

Mr. Witry may be contacted at bjw@cmcontractors.com

Reprinted courtesy of Brendan J. Witry, Laurie & Brennan LLP

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CDJ NEWS THIS WEEK



Man Installing Smoke or Carbon Monoxide Detector

There are several takeaways from the Alaska Supreme Court’s decision for policyholders to consider in navigating pollution exclusions in homeowners and many other insurance policies.

Alaska Supreme Court Rules That “Total Pollution Exclusion” in Homeowners Insurance Policy Does Not Bar Coverage for Carbon Monoxide Poisoning

April 15, 2025 — Geoffrey B. Fehling, Andrew S. Koelz & Lorelie S. Masters - Hunton Insurance Recovery Blog

For decades, homeowners and other insurance policies have included broad pollution exclusions, often referred to as a “total pollution exclusion.” In a recent decision in Wheeler v. Garrison Prop. & Cas. Ins., No. S-18849 (Alaska Feb. 28, 2025), the Alaska Supreme Court held that a “total pollution exclusion” in a homeowners insurance policy did not apply to exclude coverage for injury arising out of exposure to carbon monoxide emitted by an improperly installed home appliance. Examining the breadth of the exclusion and applying the generally held principle that exclusions are to be construed narrowly, the court thus fulfilled the policyholder’s reasonable expectation of coverage for injuries resulting from the carbon monoxide exposure.

Background
A 17-year-old minor rented a cabin in Alaska and, during his tenancy, was found dead in the cabin’s bathtub. An autopsy and investigation by the deputy fire marshal determined that the tenant died of acute carbon monoxide poisoning caused by an improperly vented propane water heater installed in the same bathroom. Testing showed that the bathroom had accumulated high levels of carbon monoxide when the water heater was running.

Reprinted courtesy of Geoffrey B. Fehling, Hunton Andrews Kurth LLP, Andrew S. Koelz, Hunton Andrews Kurth LLP and Lorelie S. Masters, Hunton Andrews Kurth LLP

Mr. Fehling may be contacted at gfehling@hunton.com
Mr. Koelz may be contacted at akoelz@hunton.com
Ms. Masters may be contacted at lmasters@hunton.com

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Hologram Signed Approved Signature Document

A change order or bilateral modification is construed like a contract.

A Contract Is a Contract: Releases and Change Orders / Bilateral Modifications Are Construed as Contracts

April 15, 2025 — David Adelstein - Florida Construction Legal Updates

A contract is a contract. It should say what it means and means what it says. A release is construed like a contract. A change order or bilateral modification is construed like a contract. The decision out of the United States Court of Federal Claims, B.L. Harbert International, LLC v. US, 2025 WL 914388 (Fed.Cl. 2025), serves as a case on point.

In this case, the contractor had a claim related to a bilateral modification (i.e., change order #1) on a federal project which included a two-month extension of time to complete the contractor’s work. The modification stated the contractor and the contractor’s subcontractors waived the right to seek compensation for any other delays relating to the work. “When a contractor signs a general release, it is barred from seeking damages for the events connected to and contemplated by the release.” B.L. Harbert International, supra, at *4. Thus, the contractor’s claims related to this modification were waived.

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

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

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Businessman asleep on files beside Clock

The insured's property suffered damage during Hurricane Ian.

Failure to Strictly Adhere to Limitations for Flood Claim Leads to Denial

April 15, 2025 — Tred R. Eyerly - Insurance Law Hawaii

The federal district court agreed that the insurer properly rejected the insured's claim for flood damage after suit was not timely filed. 4922 Mgmt. LLC v. Selective Ins. Co. of the Southeast, 2025 U.S. Dist. LEXIS 21173 (M.D. Fla. Feb. 6, 2025).

The insured's property suffered damage during Hurricane Ian. Selective was a write-your-own program carrier participating in the National Flood Insurance Program. Selective issued to the insured a Standard Flood Insurance Policy.

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

Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert

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Gavel on Circumstantial Evidence File

The Perez case establishes that the circumstantial evidence approach for product liability claims is alive and well in New York.

A Matter of Circumstance: New York Court Finds Circumstantial Evidence Enough

April 15, 2025 — Gus Sara - The Subrogation Strategist

In State Farm Fire & Cas. Co. a/s/o Miriam Perez v. Pentair Flow Techs., LLC No. 7:21-CV-6679, 2025 U.S. Dist. LEXIS 36875, the United States District Court for the Southern District of New York (District Court) reconsidered whether the plaintiff established sufficient circumstantial evidence to move forward with its product liability claim against the defendant. The District Court, again, denied the defendant’s motion for summary judgment, finding that the circumstantial evidence presented by the plaintiff satisfied the two-prong test for establishing products liability through a circumstantial approach.

The plaintiff, State Farm Fire & Casualty Company (Insurer), brought this subrogation action after its insured, Miriam Perez (Perez), sustained a fire loss at her home. The fire originated in the area of a Simer Submersible Utility Pump in the basement of the home. Perez made a claim to the Insurer, who investigated the origin and cause of the fire. After paying Perez over $285,000 for the damage, the Insurer filed a subrogation lawsuit against the defendant, the designer and manufacturer of the utility pump. The Insurer asserted a claim under New York’s strict product liability law. The Insurer relied on statements from witnesses of the pump emitting sparks, and evidence of arcing within the pump in support of its product defect claim. The defendant removed the case to federal court, and after extensive discovery, filed a motion for summary judgment.

Mr. Sara may be contacted at sarag@whiteandwilliams.com

Reprinted courtesy of Gus Sara, White and Williams

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Businesswoman frowning at a document

In Harrell, the Court considered a case where the Harrells entered into a residential sales contract to purchase property from DeLuca.

A Good Read on Fraud versus Contract

April 15, 2025 — Christopher G. Hill - Construction Law Musings

Here at Construction Law Musings, I have discussed the interwoven issues of fraud, contract, and the Virginia Consumer Protection Act (VCPA) on several occasions. In most cases, the three simply don’t mix, acting more like oil and water than parallel causes of action. There are exceptions however so these three are always worth exploring in most (particularly residential) construction matters.

A recent case out of the 4th Circuit Court of Appeals lays out a good roadmap for a properly pled, and properly tried in this case, VCPA, fraud, and contract matter. That case is Harrell v. Deluca and I recommend it to your reading.

In Harrell, the Court considered a case where the Harrells entered into a residential sales contract to purchase property from DeLuca. After that sales contract, the parties entered into an addendum for a list of improvements that DeLuca was to make to the property as part of the sale. After that, the parties entered into a construction contract for the completion of certain uncompleted improvements by August 15, 2019. Needless to say (or this wouldn’t be a blog post at a construction law blog) things did not go well and the Harrells sued Deluca for fraud, constructive fraud, breach of contract, and violation of the VCPA. Unsurprisingly, and after a 9-day bench trial, the district court found in DeLuca’s favor on the fraud claims (actual and constructive) and the VCPA claim. It found for the Harrells on the breach of contract claim and awarded $181,762.87.

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

Reprinted courtesy of The Law Office of Christopher G. Hill

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Tornado storm on plains

Unusually vicious and damaging weather across multiple U.S. states spawned violent tornadoes, blinding dust storms and fast-moving wildfires.

Massive US Storm Spawns Tornadoes, Wildfires, Leaving at Least 32 Dead

April 15, 2025 — Associated Press - Bloomberg

TYLERTOWN, Miss. (AP) — Unusually vicious and damaging weather across multiple U.S. states spawned violent tornadoes, blinding dust storms and fast-moving wildfires over the weekend, leaving at least 39 people dead.

In the latest tally of the destruction, the Oklahoma Department of Emergency Management said Sunday evening that more than 400 homes were damaged as wildfires swept across the state Friday. At least 74 homes in and around Stillwater were destroyed by wildfires, Mayor Will Joyce said Sunday night on Facebook.

The emergency management department also said the Oklahoma Office of the Chief Medical Examiner confirmed four fatalities related to the fires or high winds.

Reprinted courtesy of Bloomberg

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Green traffic signal

Jeff and Shanna’s client, driving a commercial vehicle, was headed north when he approached the intersection and observed that the traffic lights were malfunctioning.

Congratulations to Las Vegas Partner Jeff Saab and Associate Shanna Carter on Another Big Win at Arbitration!

April 15, 2025 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

The case arose from a motor vehicle versus motor vehicle accident wherein the Plaintiff, a driver, and her passenger alleged that the compact vehicle was t-boned in an intersection, resulting in severe and permanent physical injury.

Jeff and Shanna’s client, driving a commercial vehicle, was headed north when he approached the intersection and observed that the traffic lights were malfunctioning. Consequently, he came to a complete stop and then entered the intersection, at which point a collision occurred with Plaintiffs’ vehicle, which was headed west. Plaintiffs argued that their traffic light was functioning correctly, that they had the right of way, and that Jeff and Shanna’s client failed to yield, causing the collision. However, under examination, Jeff and Shanna were able to impeach both Plaintiffs multiple times and elicited testimony from the Plaintiff driver that Jeff and Shanna’s client entered the intersection first and, therefore, had the right of way. Based on Plaintiffs’ testimony and other evidence presented during arbitration, the arbitrator was compelled to adopt the arguments of the defense, resulting in a complete defense award.

Reprinted courtesy of Dolores Montoya, Bremer Whyte Brown & O'Meara LLP

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Money Red Pen on W-2

If the work is contractually required and integral to the public works project, contractors may still have an obligation to pay prevailing wages—even if that work takes place off-site.

Prevailing Wages Don’t Stop at the Jobsite, Says Washington Court

April 15, 2025 — Margarita Kutsin - Ahlers Cressman & Sleight PLLC

In Glacier Nw., Inc. v. Dep’t of Lab. & Indus., 32 Wn. App. 2d 189, 201, 555 P.3d 896 (2024), a recent published decision from Division I of the Washington Court of Appeals, the Court held a public works contractor’s obligation to pay prevailing wages does not necessarily end at the jobsite. Instead, if the work is contractually required and integral to the public works project, contractors may still have an obligation to pay prevailing wages—even if that work takes place off-site.

Offsite Quarry Workers Sought Prevailing Wages
In 2010, the Washington State Department of Transportation (WSDOT) contracted with Seattle Tunnel Partners (STP) to replace the Alaskan Way Viaduct on SR99 with an underground tunnel. Thereafter, STP subcontracted Glacier Northwest, Inc (Glacier) to manage, handle, store, and dispose of tunnel spoils—clean soil excavated from the SR99 site—at Glacier’s Mats Mats quarry near Port Ludlow, Washington. The spoils were transported from the SR99 site to Mats Mats by barge by a separate contractor.

Ms. Kutsin may be contacted at margarita.kutsin@acslawyers.com

Reprinted courtesy of Margarita Kutsin, Ahlers Cressman & Sleight PLLC

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Exchange of document

Potential impacts caused by tariffs and immigration enforcement should be evaluated during pricing, contract negotiations, and throughout the construction project.

Construction Contracts that Mitigate Impacts from Tariffs and Immigration Enforcement

April 15, 2025 — Tiffany A. Harrod & Joshua M. Pruett - Peckar & Abramson, P.C.

Tariffs and immigration enforcement are at the forefront of the federal government’s agenda in today’s world, and both can have a substantial impact on a construction contractor’s cost and time to perform its work. However, with proper planning and contract negotiations, contractors can eliminate, or at least, minimize the risk of delays and cost increases driven by tariffs and immigration enforcement efforts. Potential impacts caused by tariffs and immigration enforcement should be evaluated during pricing, contract negotiations, and throughout the construction project. Current contracts should be reviewed to assess contractors’ rights to change orders and time extensions, and drafting and negotiating of new contracts should include planning for price increases resulting from the impact of tariffs and immigration enforcement.

This article discusses ways that contractors can proactively address impacts and reduce the risk of costly disputes related to steel and aluminum tariffs, labor shortages, supply chain disruptions, force majeure events, supplier and subcontractor changes and renegotiations, communication and notice management, and timing and delay impact management.

Reprinted courtesy of Tiffany A. Harrod, Peckar & Abramson, P.C. and Joshua M. Pruett, Peckar & Abramson, P.C.

Ms. Harrod may be contacted at tharrod@pecklaw.com
Mr. Pruett may be contacted at jpruett@pecklaw.com

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Woman with magnifying glass on contract

The case arose out of a residential construction project and the loan associated with the same.

Cross-Office Team Secures Summary Judgment for Clients in Construction Loan Fraud Case

April 15, 2025 — Lewis Brisbois Newsroom

St. Louis, Mo./Fort Lauderdale, Fla. (April 7, 2025) - St. Louis Partner Alejandro P. Frank and Ft. Lauderdale Partner Katina Hardee, with assistance from St. Louis Associate Aidan Hayward, recently secured summary judgment in the Circuit Court for Palm Beach County, Florida on behalf of two clients in a construction loan fraud case. The Court accurately determined that neither of the Lewis Brisbois clients owed a duty to the plaintiffs to prevent the alleged fraud from occurring.

The case arose out of a residential construction project and the loan associated with the same. The construction loan agreement required the plaintiff-borrowers and their general contractor to submit draw requests to one of the Lewis Brisbois clients, the disbursing agent, in order to facilitate the construction loan draw process. However, the plaintiffs and their general contractor permitted the construction manager to submit the draw requests without supervision by either the plaintiff-borrowers or the general contractor. The construction manager then allegedly defrauded the plaintiff-borrowers, who were not paying attention to the loan disbursement process. The other Lewis Brisbois client, a draw request inspector, and the disbursing agent were only in privity of contract with the lender, and had no interactions with the plaintiff-borrowers or the general contractor throughout the construction process.

Reprinted courtesy of Lewis Brisbois

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Five Stars

The firm is currently ranked among the 15 largest law firms in the U.S., the top 70 firms for diverse attorneys, and the top 10 firms for female attorneys in the Am Law 100.

GRSM Offices Earn Top Recognitions in 2025 Lists by The Business Journals Regional Publications

April 15, 2025 — Gordon Rees Scully Mansukhani, LLP

Gordon Rees Scully Mansukhani has been recognized in multiple 2025 rankings by The Business Journals’ regional publications, showcasing the firm’s national reach and strong presence in key legal markets across the United States.

The following lists rank law firms by the number of local attorneys in the city, region, or state.

Austin

  • Law Firms in the Austin area
    • No. 45

Birmingham

  • Birmingham’s Biggest Law Firms
    • No. 51

Dallas

  • Law firms in North Texas
    • No. 29

Reprinted courtesy of Gordon Rees Scully Mansukhani, LLP

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Top Twenty-Five

AEC Business podcast has been named one of Feedspot’s Top 25 Construction Technology Podcasts to follow in 2025.

AEC Business Is a Top 25 Podcast in Construction Tech

April 15, 2025 — Aarni Heiskanen - AEC Business

Great news! I’m excited to share that the AEC Business podcast has been named one of Feedspot’s Top 25 Construction Technology Podcasts to follow in 2025.

Since its launch in 2012, the AEC Business podcast has been about bringing you the latest and greatest in construction innovation and technology.

Hosted by me, Aarni Heiskanen, a Finnish construction innovation agent recognized as a Top 100 influencer in construction, we’ve had the pleasure of chatting with a wide range of guests. From industry pioneers to up-and-coming tech entrepreneurs, they’ve shared their insights and experiences with our audience.

Reprinted courtesy of Aarni Heiskanen, AEC Business

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Seventieth Anniversary

Morgan-Keller Celebrates 70th Anniversary

April 15, 2025 — Morgan-Keller

FREDERICK, Md., March 26, 2025 /PRNewswire/ -- Team members at Morgan-Keller celebrated their 70th anniversary on Thursday, March 20th. Founded in 1955 as a small, family-owned custom home builder in Wolfsville, MD, Morgan-Keller has grown into a prominent commercial construction firm in the Mid-Atlantic region, with offices in Frederick, MD, and Richmond, VA.

Over the past seven decades, Morgan-Keller has established itself as a trusted leader in the construction industry, successfully completing projects across various sectors, including multi-family, industrial, and office spaces. The company has built more than just structures; it has fostered strong client relationships, developed careers, and created a legacy of excellence.

Employing approximately 250 people, Morgan-Keller offers a range of services, including general contracting, construction management, commercial facilities maintenance, and concrete construction.

Construction Trends Economy

Tariffs Likely to Hurt Construction Economy, Experts Say

April 15, 2025 — Alisa Zevin - Engineering News-Record

Industry experts are bracing for impact after President Donald Trump announced April 2 a 10% tariff on all countries beginning April 5, with roughly 60 countries, among them China and the European Union, subject to higher rates starting April 9.

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

Reprinted courtesy of Alisa Zevin, Engineering News-Record

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Law Costs

Excess Policy that Follows Form Does Not Agree to Pay Defense Costs

April 15, 2025 — Tred R. Eyerly - Insurance Law Hawaii

The Texas Supreme Court determined that language in the following form excess policy did not obligate it to defend the insured. Ohio Cas. Ins. Co. v Patterson UTI Energy, Inc., 2025 Tex. LEXIS 1123 (Tex. Sup. Ct. Dec. 20, 2024).

Patterson provided oil-and-gas equipment and services. Patterson was insured by a primary policy and multiple layers of excess coverage. For the 2017-2018 policy year, Patterson bought several lines of insurance through its broker, Marsh USA, Inc. The underlying policy was an umbrella policy issued by Liberty Mutual Insurance Europe, Ltd. Among the excess policies Patterson obtained through Marsh was one from Ohio Casualty Insurance Company.

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

Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert

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Conference

2025 IRMI Energy Risk & Insurance Conference

April 15, 2025 — Beverley BevenFlorez – CDJ Staff

The annual IRMI energy risk and insurance conference is being held in San Antonio for the first time. It’s relevant for those “involved in creating, selling, purchasing, or underwriting insurance programs for energy or power companies.” The event will provide energy professionals with networking opportunities, strategies to strengthen their programs, and ways to enhance cost efficiency for energy insurance solutions. Participants will also have the opportunity to renew their Energy Risk and Insurance Specialist (ERIS) certification.

June 16th-18th, 2025
InterContinental San Antonio Riverwalk Hotel
1111 E. Pecan St.
San Antonio, TX 78205

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L.A. Wildfires 90 Days Later; Rebuilding Progress Report

Today marks the three-month anniversary of the Eaton and Palisades fires in Los Angeles, with city and county leaders assessing the progress of recovery efforts. Mary Beth McDade reports April 7, 2025.

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Maui Wildfire Recovery Threatened by Funding Freeze

Maui's wildfire recovery is threatened by a federal funding freeze affecting FEMA disaster aid, Island News reported.

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