Federal Court of Appeals Signals an End to Project Labor Agreement Requirements Linked to Development Tax Credits
October 20, 2016 —
Gregory R. Begg & Aaron C. Schlesinger – Peckar & Abramson, P.C.What Action Should Owners, Developers and Contractors Take in Anticipation of Successful Challenges to PLA Requirements?
Recently, a federal court in New Jersey issued a decision which very well may invalidate all Project Labor Agreements (“PLA’s”) entered into as a condition to receipt of tax incentives for private development. Tax incentives utilized to promote private development are different, according to the court, than typical public works projects where PLA requirements have generally been held valid. Owners, developers, contractors and governmental entities must assess the consequences of this decision upon contracts already and to be awarded in the future where tax benefits may be linked to a PLA requirement.
In 1993, in what has become known as the Boston Harbor Case, the United States Supreme Court held that state and local governmental entities may condition the award of public works contracts on the contractor’s agreement to enter into PLA’s.
That decision has been followed nationwide since then to uphold the validity of various state and local law bidding conditions requiring successful bidders to negotiate and enter into project labor agreements as a condition to the award of public works contracts. The rationale is that when the government, like any other private party, is participating in an economic market, it may exercise its discretion in setting terms and conditions it believes best suit its interests in the efficient procurement of goods and services in that market. Therefore, a PLA requirement by a governmental entity engaged in market activity is no more or less valid than a PLA requirement on a purely private project.
Reprinted courtesy of
Gregory R. Begg, Peckar & Abramson, P.C. Aaron C. Schlesinger, Peckar & Abramson, P.C.
Mr. Begg may be contacted at gbegg@pecklaw.com
Mr. Schlesinger may be contacted at aschlesinger@pecklaw.com
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Ninth Circuit Holds Efficient Proximate Cause Doctrine Applies Beyond All-Risk Policies
April 20, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe Ninth Circuit held that the efficient proximate cause doctrine is not limited to all-risk policies. Olin Corp. v. Continental Cas. Co., 2016 U.S. App. LEXIS 4905 (9th Cir. March 17, 2016).
Olin operated a plant that produced industrial chemicals. Continental issued a policy covering the plant's boilers and machinery. In late 2008, the machinery was damaged. Continental denied coverage for damage to Olin's diaphragm cells, which were tanks containing metal cathodes covered by asbestos diaphragms. Continental argued that the damage to the cells was not covered because it was not caused by an "accident." The jury returned a verdict in favor of Olin.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Texas Supreme Court: Breach of Contract Not Required to Prevail on Statutory Bad Faith Claim
June 06, 2018 —
Bethany L. Barrese - Saxe Doernberger & Vita, P.C.In USAA Texas Lloyds Company v. Menchaca, the Supreme Court of Texas clarified long-standing confusion regarding whether damages for bad faith are recoverable in the absence of a breach of contract under Texas law. The Menchaca case takes an in-depth dive into decades’ worth of Texas precedent and concludes that, under certain circumstances, an insured can recover policy benefits as damages for bad faith without finding that the insurer was in breach of contract.
The story of this case begins with Hurricane Ike in September 2008. Homeowner Gail Menchaca contacted her homeowner’s insurance company, USAA Texas Llloyds Company (“USAA”) to report that the storm had damaged her home. USAA sent an adjuster to investigate the claim, and USAA determined that although the policy covered some of the damage, no benefits would be paid under the policy because the repair estimate did not exceed the policy deductible. Five months later, at Ms. Menchaca’s request, another USAA adjuster inspected the property and reached the same conclusion.
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Bethany L. Barrese, Saxe Doernberger & Vita, P.C.Ms. Barrese may be contacted at
blb@sdvlaw.com
Subcontractors Have Remedies, Even if “Pay-if-Paid” Provisions are Enforced
February 19, 2019 —
John P. Ahlers - Ahlers Cressman & Sleight PLLCIn 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.
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John P. Ahlers, Ahlers Cressman & Sleight PLLCMr. Ahlers may be contacted at
john.ahlers@acslawyers.com
New York’s Lawsky Proposes Changes to Reduce Home Foreclosures
May 20, 2015 —
Jesse Westbrook – BloombergNew York’s banking regulator proposed changes to the foreclosure process to try to help borrowers in the state keep their homes.
One reason New York has a high rate of foreclosures is that mandatory settlement meetings between borrowers and mortgage servicers typically don’t take place for months after a bank initiates a foreclosure, Benjamin Lawsky, superintendent of New York’s Department of Financial Services said in prepared remarks Tuesday.
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Jesse Westbrook, Bloomberg
Why You Make A Better Wall Than A Window: Why Policyholders Can Rest Assured That Insurers Should Pay Legal Bills for Claims with Potential Coverage
March 14, 2018 —
Alan Packer and Graham Mills - Newmeyer & Dillion, LLPUnfortunately, policyholders, such as manufacturers and contractors, routinely face the unnecessary challenge of how to access all of the insurance coverage which they have purchased. Frequently, the most pressing need is to get the insurance company to pay the legal bills when the policyholders have been sued. The recent Iowa federal district court opinion in
Pella Corporation v. Liberty Mutual Insurance Company should help a policyholder in a dispute to require its insurance company to pay those legal bills sooner rather than later by highlighting that the duty to defend arises from the potential for coverage, and the insurer may not force the policyholder to prove the damage to obtain a defense.
In
Pella, a window manufacturer purchased several years of insurance coverage from Liberty Mutual. Similar to many companies, Pella had many “layers” of insurance coverage in any given year. These layers collectively function like a tower. The general idea is that each layer provides a certain amount of coverage after the insurance policy below it had paid its money. The Liberty Mutual insurance policies provided excess coverage.
After the
Pella window manufacturer made and sold its windows, it was sued in numerous lawsuits alleging that its windows were defective and that those defective windows caused a wide variety of damage to the structures in which they were installed. The window manufacturer tendered those lawsuits to its insurance companies in its tower of coverage, asking that the insurance companies pay its legal bills incurred in its defense. As to Liberty Mutual, the window manufacturer argued that the Liberty Mutual insurance policies were triggered, and so obligated to reimburse it, if a window was installed during the years that those policies provided coverage or if there was a mere allegation that a window was installed during the years that those policies provided coverage. Liberty Mutual opposed, arguing that the date of installation of the windows was insufficient to trigger the policies, and that the manufacturer was required to demonstrate the date that damage actually occurred to trigger a defense.
The key issue before the
Pella Court in this decision was a simple one: which insurance policies, if any, issued by Liberty Mutual had an obligation to pay the window manufacturer’s legal bills? The answer to that question is critical and financially significant. Getting an insurance company to honor its obligations and start paying the legal bills as soon as possible is very important for a policyholder because of the cost of defending oneself in a lawsuit; often the key reason why an insurance policy is even purchased is to provide the policyholder with the right to call upon the insurance company’s financial resources to defend it should it be sued.
In a ruling that will be welcomed by policyholders, the
Pella Court held that Liberty Mutual’s multiple insurance policies were triggered, and so obligated to pay for the window manufacturer’s defense, if one of two events occurred during the years in which those insurance policies provided coverage: (1) a window was actually installed during a year when the insurance policy provided coverage or (2) the window was alleged to be installed in the year that the insurance policy provided coverage. The Court agreed with the policyholder that once the windows were installed, property damage was alleged and “may
potentially have occurred” from that point on, thus the policies on the risk from that point forward. The practical effect of this ruling meant that Liberty Mutual had to reimburse the window manufacturer for the defense fees and costs that it had paid.
While
Pella was decided under Iowa law, the principles upon which it relied are similar to those applied under California law. Importantly, both California and Iowa law hold that an insurance company must provide a defense in response to a claim that is, or could be, covered by the insurance policy. The mere potential that the claim might be covered is enough for the insurance company to be obligated to pay for policyholder’s legal fees and costs.
Establishing that an insurance company must pay legal fees and costs as soon as possible allows a policyholder to save its own money. Why should a policyholder pay legal bills when it purchased an insurance policy as protection to ensure that it did not have to pay those bills? The answer is that a policyholder should not and, under
Pella, the policyholder does not have to. Rather, the insurance company must start paying for that defense from a very early date. Pella confirms for policyholders the position that their insurance companies should pay legal bills earlier rather than later.
Alan Packer is a partner in the Walnut Creek office for Newmeyer & Dillion, LLP, representing homebuilders, property owners, and business clients on a broad range of legal matters, including risk management, insurance matters, wrap consultation and documentation, efforts to counter solicitation of homeowners, subcontract documentation, as well as complex litigation matters. Alan can be reached at alan.packer@ndlf.com.
Graham Mills is a partner in the Walnut Creek offce of Newmeyer & Dillion, LLP, representing clients in the area of complex insurance law with an emphasis on insurance recovery, construction litigation, real estate litigation, and business litigation. He regularly examines and analyzes a wide variety of insurance policies. Graham can be reached at graham.mills@ndlf.com.
ABOUT NEWMEYER & DILLION LLP
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review’s AV Preeminent® highest rating.
For additional information, call 949.854.7000 or visit www.ndlf.com.
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Residential Contractors, Be Sure to Have these Clauses in Your Contracts
December 23, 2023 —
Christopher G. Hill - Construction Law MusingsI have often “mused” on the need to have a good solid construction contract at the beginning of a project. While this is always true, it is particularly true in residential contracting where a homeowner may or may not know the construction process or have experience with large scale construction. Often you, as a construction general contractor, are providing the first large scale construction that the homeowner has experienced. For this reason, through meetings and the construction contract, setting expectations early and often is key.
As a side note to this need to set expectations, the Virginia Department of Professional and Occupational Regulation (DPOR) and the Virginia General Assembly require certain clauses to be in every residential construction contract. DPOR strictly enforces these contractual items and failure to put them in your contracts can lead to fines, penalties and possibly even revocation of a contractor’s license.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
ASCE Joins White House Summit on Building Climate-Resilient Communities
October 09, 2023 —
The American Society of Civil EngineersRESTON, Va. – The White House Climate Policy Office hosted the Summit on Building Climate Resilient Communities today and unveiled its
National Climate Resilience Framework for communities to build more resiliently as they face increasingly severe weather events. The framework features comprehensive recommendations and opportunities for action, including partnerships between federal agencies and leading standards development organizations such as the
American Society of Civil Engineers (ASCE), to improve the resilience of buildings and other infrastructure. ASCE president Maria Lehman, P.E., was in attendance for the Summit.
ASCE's most widely adopted standard,
ASCE 7-22, is the primary reference of structural design requirements in all U.S. building codes and is updated every six years to reflect the latest data and trends presented by an ever-changing climate. Its most recent update, published in 2022, includes updates to environmental hazards used for building design including new wind speeds along the hurricane coastline, a completely new chapter for tornado loads, and the most substantial update to its chapter on flood loads since the inception of ASCE 7-22 – calling for structures to be built to withstand 500-year floods rather than the previous standard of 100-year flood mitigation.
Although modern codes and standards, such as ASCE 7-22, can mitigate climate hazards, many communities throughout the U.S. have not yet adopted these practices. The new White House framework calls for ensuring federal funding requires climate-resilient infrastructure investments by encouraging government at all levels to adopt consensus-based engineering standards, which would go a long way towards addressing vulnerabilities posed by future climate impacts.
ASCE, in conjunction with industry leaders represented at the Summit, supports federal efforts to improve climate data, enforce the most stringent codes and standards, and provide technical assistance to building and infrastructure stakeholders. To learn more about environmental hazard mitigation resources, follow
ASCE's Pathways to Resilient Communities Toolkit, a plain-language guide for federal, state, and local leaders as they seek out standards, best practices, data, and strategies that can be implemented to safeguard communities across the country from increasingly severe weather events.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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