SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic

April 06, 2020 — Lori Smith & Patrick Devine - White and Williams Taking Care of Business Blog
Increasingly, M&A transactions are using representation and warranty insurance (RWI) to bridge the gap between a buyer’s desire for adequate recourse to recover damages arising out of breach of representations in the purchase agreement and a seller’s desire to minimize post-closing risk and holdbacks or purchase price escrows traditionally used as the means to satisfy such obligations. When it works, RWI provides a significant benefit to both parties: it mitigates the buyer’s risk in the event that the seller’s representations and warranties prove untrue, and it permits the seller to reduce the portion of the purchase price that it would otherwise have to leave in escrow to cover future claims for breach of those representations and warranties. However, as the coronavirus pandemic ravages the global economy, insurers are now expressly adding COVID-19 exclusions to their RWI policies. If RWI insurers decline coverage for these losses, the allocation of risk in the representations and warranties (and related indemnity provisions) will be more critical than the parties contemplated when they negotiated the transaction documents. Unlike in the case of a natural disaster, insurers cannot quantify the economic fallout that may result from the coronavirus pandemic. This uncertainty breeds systemic concern about the number of insurance claims that covered parties of all varieties will bring, which in turn creates an industry-wide reluctance to cover the claims. Based on discussions with market participants, we understand that, at the present time, 70% to 80% of RWI insurers are broadly excluding losses resulting from COVID-19 and similar viruses, epidemics, and pandemics (including government actions in response thereto), 5% to 10% are narrowly excluding specific coronavirus-related losses that are more likely to be implicated in a particular transaction (e.g., losses caused by business interruption), and 10% to 15% may be willing to narrow their exclusions upon completion of the underwriting process, depending on their comfort level after conducting rigorous and heightened diligence. Insurers’ concerns are wide-ranging, but the representations and warranties causing the greatest distress appear to be those regarding customer retention, supply chain matters, undisclosed liabilities, and the absence of changes between the date of the seller’s most recent financial statements and the transaction closing date. Reprinted courtesy of Lori Smith, White and Williams and Patrick Devine, White and Williams Ms. Smith may be contacted at smithl@whiteandwilliams.com Mr. Devine may be contacted at devinep@whiteandwilliams.com Read the court decision
Read the full story...
Reprinted courtesy of

---

When is Construction Put to Its “Intended Use”?

October 10, 2013 — Brady Iandiorio — Higgins, Hopkins, McLain & Roswell, LLC.
Defining words and phrases in the law can be a tricky proposition. In everyday life one would presume to know what the phrase “intended use” would mean, but when it comes to litigation, oftentimes the definitions become much more nuanced. On March 12, 2013, in the Bituminous Cas. Corp. v. Hartford Cas. Ins. Co. v. Canal Ins. Co., WL 950800 (D. Colo. 2013) case, Senior District Court Judge Wiley Y. Daniel denied Third-Party Defendant Canal Insurance Company’s (“Canal”) motion to dismiss Third-Party Plaintiff Hartford Casualty Insurance Company’s (“Hartford”) third-party complaint. The case arose out of a liability insurance coverage dispute related to an underlying construction defect lawsuit. In the construction defect suit, a plaintiff homeowner’s association brought a suit against a developer and a general contractor (“GC”) among others. While the underlying action was settled, a dispute remained between Bituminous Casualty Corporation, which insured the GC, and Hartford, which insured the developer. Hartford asserted third-party claims against Canal seeking a declaration of Canal’s obligations and contribution in the event Hartford owed any defense or indemnity obligations to the GC. Hartford’s claims are based on the premise that Canal owed a duty to defend and/or indemnify the GC in the underlying action. Read the court decision
Read the full story...
Reprinted courtesy of Brady Iandiorio
Brady Iandiorio can be contacted at Iandiorio@hhmrlaw.com

---

Real Estate & Construction News Round-Up (10/05/22) – Hurricane Ian, the Inflation Reduction Act, and European Real Estate

October 24, 2022 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
This week’s round-up features Hurricane Ian’s effect on the construction labor pool, the Inflation Reduction Act’s projected impact on the real estate and construction industry, Europe’s real estate market, and more.

• The Inflation Reduction Act (IRA), designed to reduce the nation’s carbon footprint by jump-starting innovation and adoption of cleaner energy sources, also contains large segments aimed at real estate and construction. (Chava Gourarie, Commercial Observer)
• Damage caused by Hurricane Ian’s massive storm surge, flooding and winds is projected to hike demand for experienced construction workers. (Zachary Phillips, Construction Dive)
• According to the National Multifamily Housing Council’s monthly construction survey released Sept. 29, 2022, almost all developers are experiencing construction delays. (Paul Bergeron, Globest)

Read the court decision
Read the full story...
Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

---

Common Law Indemnity Claim Affirmed on Justifiable Beliefs

June 30, 2016 — Rick Erickson – Snell & Wilmer Real Estate Litigation Blog
Yesterday, the Arizona Court of Appeals issued an interesting opinion in Hatch Development v. Solomon. Hatch illustrated two key points in real estate and construction litigation: (1) a contractor’s indemnity does not always require an expressly written obligation; and (2) when facts are undisputed that a contractor is solely at fault for a construction defect, a property owner can be indemnified after paying a neighboring property owner for damages caused by the contractor’s defective work. Read the court decision
Read the full story...
Reprinted courtesy of Rick Erickson, Snell & Wilmer
Mr. Erickson may be contacted at rerickson@swlaw.com

---

Submitting Claims on Government Projects Can Be Tricky

March 19, 2015 — Craig Martin – Construction Contractor Advisor
The Federal Circuit Court of Appeals opinion in K-Con Building Systems, Inc. v. United States illustrates the difficulties a contractor may face when pursuing a claim before a Contracting Officer. After nearly 10 years of litigation, the court found that the contractor’s claim to the Contracting Officer did not contain enough detail to allow the claim to proceed. That’s a lot of time and resources wasted on a claim that was dead from the start. K-Con was awarded a $582,000 job to design and build a Coast Guard support building in Michigan. K-Con was unable to complete the project by the finish date and the Coast Guard assessed liquidated damages of $109,554. K-Con contested the assessment of liquidated damages by submitting a one paragraph letter asserting that it was not the sole cause of the alleged delays; that the government was at fault for the delay; and the liquidated damages were an impermissible penalty. The Contracting Officer ultimately denied K-Con’s claim and K-Con appealed to the Court of Claims. Read the court decision
Read the full story...
Reprinted courtesy of Craig Martin, Lamson, Dugan and Murray, LLP
Mr. Martin may be contacted at cmartin@ldmlaw.com

---

Attorney Writing Series on Misconceptions over Construction Defects

June 28, 2013 — CDJ STAFF
Mark Wiechnik, a litigation partner at Herrick, Feinstein LLP, has started a seven-part series in which he looks at the misconceptions homeowner board members have when they’re facing construction defect lawsuits. He opens by setting the scene of unit owners “complaining of leaks, roof problems, mold and myriad of other issues”, but conflicting views on what to do about them. In his series, he looks at some of the most common mistaken assumptions and discusses how board members should respond. Wiechnik’s first misconception examined is the claim that “we should file a homeowners warranty claim right away!” He notes that this is “rarely a good idea,” since if the building is more than two years old, the warranty will only be worthwhile if the building is near collapse. He also notes that once you file a warranty claim, “the association is precluded from ever filing a lawsuit on that issue.” Additionally, Wiechnik points out that filing a warranty claim puts everything into the hands of an arbitrator, who gets control of the whole process and whose decision is final, whether the association is happy with the results. Further, he notes, “the program favors builders and contractors over the homeowners.” In his second section, he looks at the fears that if the developer is bankrupt, there is no point is suing. Here he notes that the money for repairs does not come from the developer, but “from the developer’s and subcontractor’s insurance carriers.” Read the court decision
Read the full story...
Reprinted courtesy of

---

Property Owner Entitled to Rely on Zoning Administrator Advice

May 16, 2018 — Kevin J. Parker - Snell & Wilmer Real Estate Litigation Blog
In the recent case of In Re Langlois/Novicki Variance Denial, 175 A.3d 1222, 2017 VT 76 (2017), the Vermont court addressed the question of whether a property owner could enforce – by equitable estoppel principles – a representation by a town zoning administrator that no permit or variance was needed for the property owner’s proposed construction. In that case, a landowner wanted to add a pergola to an existing concrete patio on his land. During a social visit at the property, the property owner asked the town zoning administrator if he needed a permit. The town zoning administrator told the property owner that no permit was needed. The property owner thereafter showed the zoning administrator a sketch of the planned construction, and again asked if a permit was required. The town zoning administrator looked at the sketch and repeated his prior advice that no permit was needed. The property owner then spent $33,000 to build the pergola. After incurring the expense, the property owner was advised that the structure violated zoning regulations. The property owner requested a variance, which the zoning board denied. The Court held that the town was estopped from requiring removal of the pergola. Read the court decision
Read the full story...
Reprinted courtesy of Kevin J. Parker, Snell & Wilmer
Mr. Parker may be contacted at kparker@swlaw.com

---

How the Pandemic Pushed the Construction Industry Five Years Into the Future

September 06, 2021 — Alexandra McManus & Hussein Cholkamy - Construction Executive
On any given day, there are a multitude of variables playing out on construction jobsites, from maintaining daily logs to track hundreds of workers to creating daily schedules to keep projects on track. What made an industry that’s arguably about 20 years in the past get a dramatic technology boost five years into the future? A global pandemic that nobody saw coming. When COVID-19 made its first appearance on construction sites in early 2020, the domino effect of project shutdowns and labor shortages created uncertainty along with budget and timeline nightmares. The pandemic shook up the industry, with many projects coming to a screeching halt. As general contractors scrambled to keep their projects moving and workers safe, technology proved to be the solution. With jobsites shutting down, coupled with a nationwide labor shortage, real-time visibility over workforce variables, such as who was on-site, where they were and who they interacted with was more important than ever. Safe proximity tracking, virtual density and access control technologies helped construction companies gain more control, visibility and the ability to deal with the ever-changing regulations due to the global pandemic. More importantly, it helped keep their valuable workforce safe. Reprinted courtesy of Alexandra McManus & Hussein Cholkamy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Mr. Cholkamy may be contacted at hussein@eyrus.com Ms. McManus may be contacted at alex@eyrus.com Read the court decision
Read the full story...
Reprinted courtesy of

---