Contractor Prevailing Against Subcontractor On Common Law Indemnity Claim
June 29, 2020 —
David Adelstein - Florida Construction Legal UpdatesCommon law indemnity is not an easy claim to prove as the one seeking common law indemnity MUST be without fault:
Indemnity is a right which inures to one who discharges a duty owed by him, but which, as between himself and another, should have been discharged by the other and is allowable only where the whole fault is in the one against whom indemnity is sought. It shifts the entire loss from one who, although without active negligence or fault, has been obligated to pay, because of some vicarious, constructive, derivative, or technical liability, to another who should bear the costs because it was the latter’s wrongdoing for which the former is held liable.
Brother’s Painting & Pressure Cleaning Corp. v. Curry-Dixon Construction, LLC, 45 Fla. L. Weekly D259b (Fla. 3d DCA 2020) quoting Houdaille Industries, Inc. v. Edwards, 374 So.2d 490, 492-93 (Fla. 1979).
Not only must the one seeking common law indemnity be without fault, but there also needs to be a special relationship between the parties (indemnitee and common law indemnitor) for common law indemnification to exist. Brother’s Painting & Pressure Cleaning Corp., supra (citation omitted). A special relationship has been found to exist between a general contractor and its subcontractors. Id. at n.2.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Insurance Policies and Indemnity Provisions Are Not the Same
October 19, 2020 —
Garret Murai - California Construction Law BlogJust because you own a pair of Air Jordans doesn’t make you Michael Jordan. In the next case, Carter v. Pulte Home Corporation, Case No. A154757 (July 23, 2020), the 1st District Court of Appeal denied an insurance carrier’s equitable subrogation claim explaining that an insurer’s obligations under its insurance policy are not the same as an idemnitee’s obligations under an indemnity provision. Or, as aptly put by the Court of Appeal, while a “subrogated insurer is said to ‘stand in the shoes’ of its insured, because it has no greater rights than the insured. Here . . . [the insurer] is seeking to stand in a different, more advantageous set of shoes.”
Carter v. Pulte Home Corporation
Pulte Home Corporation was sued for construction defects by 38 homeowners in two housing developments. Various subcontractors had worked on the projects, but under their subcontracts, each subcontractor agreed to indemnify Pulte from and against “all liability, claims, judgments, suits, or demands for damages to persons or property arising out of, resulting from, or relating to Contractor’s performance of work under the Agreement (‘Claims’) unless such Claims have been specifically determined by the trier of fact to be the sole negligence of Pulte . . . ”
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Benford’s Law: A Seldom Used Weapon in Forensic Accounting
March 05, 2015 —
Roger Hughes – California Construction Law BlogWhat is Digit Analysis and Why it Should be of Interest to Construction Attorneys?
Benford’s Law was named after Frank Benford, a General Electric physicist. Mr. Benford was the first to discover that “leading digits” do not follow a uniform distribution pattern as suggested by intuition. If you are like me, the response to such a statement is “huh”? But stick with me because this is important stuff to anyone who suspects a claim presentation may have been rigged, a bit here or a bit there, or maybe all over. It turns out that calculations purportedly based upon naturally, randomly occurring numbers may have been contrived. By “randomly occurring” we mean numbers that occur naturally without human interference as opposed to a contrived selection. Said another way, it is now accepted as a mathematical truth that the pattern of numbers randomly generated can be distinguished from numbers influenced by human intervention. Yikes, glad you told me that before I prepared my taxes.
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Roger Hughes, Wendel Rosen Black & Dean LLPMr. Hughes may be contacted at
rhughes@wendel.com
COVID-19 Information and Resources
May 04, 2020 —
Richard H. Glucksman, Esq. & Brian D. Kahn, Esq. – Chapman Glucksman Dean & Roeb BulletinINTRODUCTION
The current COVID-19 health crisis has greatly impacted nearly every aspect of our business and personal lives. The constant flow of rapidly evolving, and often contradictory information creates its own challenges for those who are responsible for ensuring compliance with relevant regulations and best practices while still moving forward with their business and family activities.
This bulletin differs from most Chapman, Glucksman, Dean & Roeb bulletins in that it does not highlight a recent case, statute or a single development, but rather acts as a resource and “links” to provide you with needed information and to simplify your search for critical information during this unusual and challenging time.
CIVIL LITIGATION: CLOSURES AND RESTRICTIONS
The State and Federal Court systems in California have drastically reduced their operations. The Governor issued Executive Order N-38-20, this suspends certain limitations on the Chief Justice’s authority, making it possible for orders to be issued adapting the Court’s operations to address the COVID-19 health crisis. As of this time, the most recent statewide order from the Chief Justice is the March 30, 2020 Order which allows Courts to utilize remote technology when possible. The March 30, 2020 Order also clarifies a prior Order suspending all trials for 60 days. As many of you are aware, civil trials in California must commence within five years of the initiation of the action, this is commonly referred to as the “five year rule”. While the five year time period was initially extended by the Chief Justice for 60 days, the Judicial Council subsequently adopted a series of Emergency Rules, including one which extends this to six months for all civil actions filed on or before April 6, 2020. The Judicial Council also adopted rules tolling the statutes of limitation for civil causes of action are tolled from April 6, 2020 to 90 days after the state of emergency has ended.
In addition to the statewide orders and rules, counties have enacted their own rules. Los Angeles Superior Court, for instance, has closed some locations while others remain open on a limited basis. On March 17, 2020 an Order was issued limiting the Court to “essential functions” through April 16, 2020. However, on April 15, 2020, a further Order extended the closure through May 12, 2020. While truly urgent Ex Partes may go forward, all regularly set hearings will be continued until after June 22, 2020. Trials will begin after June 22, 2020 with non-priority trials anticipated to start in later August or September. Notably, any deadlines imposed by current trial or hearing dates still stand until the specific dates are continued.
As with other aspects of the COVID-19 health crisis, the impact upon Civil Litigation continues to evolve, for the most up to date information we include the following links to the California Courts. The first page includes links to all the State and County Orders, the second page is for the Judicial Council Rules.
Links:
https://newsroom.courts.ca.gov/news/court-emergency-orders-6794321
https://newsroom.courts.ca.gov/news/judicial-branch-emergency-actions-criminal-civil-and-juvenile-justice
STATE AND LOCAL STAY AT HOME ORDERS
The State of California declared a state of emergency on March 4, 2020. On March 13, 2020 the President declared a national state of emergency. On March 19, 2020 Governor Newsom issued Executive Order N-33-20, also known as the “Stay at Home” order. This orders all Californian’s to stay at home, unless they are part of an essential businesses are exempt which generally includes construction and insurance. Generally, Californians are allowed to run essential errands, but they are not to congregate with those outside of their household.
In addition to the State, many cities and counties have enacted additional orders regarding whether certain types of businesses can remain open, use of parks, trails and other public amenities as well as what type of protective measures must be adhered to such as covering your face in public. As with Civil Litigation, the State and Local Government regulations continue to evolve. A link to the State’s COVID-19 page is below and we also encourage you to check your local City and County sites for additional information.
https://covid19.ca.gov/
BUSINESS AND FINANCIAL GUIDELINES
The impact of COVID-19 is unprecedented. While “essential businesses” may remain open for customers, steps must be taken to protect the health of both employees and customers. There are both State and, in many instances, Local Government regulations addressing these precautions. In addition to taking safety measures to protect the health of all involved, there are a multitude of financial concerns to be addressed. While most people have already heard about the moratorium on residential and commercial evictions, this does little to address how property owners will receive funds to pay their financial obligations, how tenants can pay their other obligations, how either can make payroll and most importantly, how employees who can no longer work due to their “non-essential” business being closed can put food on their tables.
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES” act) may provide financial relief for many business by means of loans, some of which may be forgivable, and tax credits. The CARES act also modifies the Family Medical Leave Act (“FMLA”) to provide paid leave for those who cannot work due to COVID-19 as well as other benefits. The IRS has extended the deadline to file and pay taxes to July 15, 2020. Additionally, there are other Federal and State benefits which may be available for those whose jobs are impacted.
The financial impacts of COVID-19 are far reaching and continue to evolve. The Department of Insurance ordered insurance companies to return premiums for at least the months of March and April. This applies to certain lines of insurance where the risk of loss has fallen substantially. However, business interruption, environmental and pollution claims have increased exponentially. While most such policies require some physical damage in order to trigger an occurrence, there has been some discussion of legislation deeming the COVID-19 pandemic to fulfill the physical damage requirement.
If your business has been closed or impacted by COVID-19 we encourage you to review your insurance policies and key contracts to ascertain what your rights and obligations are as well as whether you may have any coverage for your losses. Just as importantly, speak with your business partners including vendors, customers and employees to ascertain their capabilities and willingness to work through this crisis.
US Department of Labor OSHA Guidelines:
https://www.osha.gov/SLTC/covid-19/
California Labor & Workforce Development Agency Resource Page:
https://www.labor.ca.gov/coronavirus2019/
California Employment Development Department:
https://www.edd.ca.gov/about_edd/coronavirus-2019.htm
CONSTRUCTION GUIDELINES
Many of our clients are involved in the construction industry. Construction has been deemed an essential activity and is exempt from many of the “stay at home” orders but certain protections and regulations still apply. In addition to the general workplace guidelines discussed above certain jurisdictions are providing guidance as to how to provide a safe construction site workplace. We have included a link the Los Angeles Department Building and Safety guidelines below.
However, in some instances work on a project may be delayed or may not be able to progress due to the project owner stopping work or the inability of subcontractors or suppliers to continue as originally intended. In this case one should review their contracts to see what justifies delay and inability to perform by either party and the impact thereof. Contracts should also be evaluated to ascertain whether the costs associated with compliance with the new COVID-19 regulations are a recoverable cost under the contract. As with the general business discussion above, contractors should review all available insurance, including builder’s risk to ascertain the existence of possible coverage.
LA DBS guidelines:
https://ladbs.org/docs/default-source/publications/misc-publications/construction-site-guidance.pdf
SUMMARY
The COVID-19 health crisis has had and, for the foreseeable future, will have a broad and severe impact on our society. The variety of evolving regulations on the Federal, State and Local Government levels make it challenging to comply, especially for businesses in operation. There are also a variety of resources available to help ensure compliance with these regulations as well as the financial and physical viability of our communities’ companies and employees. Please do not hesitate to contact us if you need any assistance in navigating these rules and resources.
Reprinted courtesy of
Richard H. Glucksman, Chapman Glucksman Dean & Roeb and
Brian D. Kahn, Chapman Glucksman Dean & Roeb
Mr. Glucksman may be contacted at rglucksman@cgdrlaw.com
Mr. Kahn may be contacted at bkahn@cgdrlaw.com
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Client Alert: Court of Appeal Applies Common Interest Privilege Doctrine to HOA Litigation Meetings
March 19, 2014 —
David W. Evans, Steven M. Cvitanovic, and Michael C. Parme - Haight Brown & Bonesteel LLPIn Seahaus La Jolla Owners Assoc. v. Superior Court (No. D064567, March 12, 2014), the California Court of Appeal held a homeowners association’s (“HOA”) litigation meetings related to the HOA’s construction defect lawsuit were subject to protection under the attorney-client privilege. Specifically, the court concluded the common interest doctrine applied to the subject litigation meetings, thereby barring the defendants in the HOA’s lawsuit from seeking discovery related to the content and disclosures made during those meetings.
The plaintiff HOA initiated a construction defect lawsuit against a residential developer and builder, seeking damages for construction defects related to common areas. The defendants took the depositions of individual homeowners and inquired regarding the communications and disclosures made at informational litigation update meetings. The meetings were conducted by the HOA’s counsel with groups of homeowners, some of whom had filed their own, separate lawsuits against the same defendants. Motions to compel were filed after attorney-client privilege objections were asserted by counsel for the HOA. After the court-appointed discovery referee opined that the common interest doctrine applied and that the communications presented at the meetings were subject to the attorney-client privilege, the trial court rejected this recommendation and overruled the HOA’s privilege objections. The HOA filed a petition for a writ of mandate.
The defendants argued the privilege had been waived based on the presence of persons who were not the clients of the HOA’s attorney, that the subject communications were not “confidential communications” and that the individual homeowners and the HOA did not share common interests at the time. After setting forth a comprehensive discussion of the statutory principles underlying the attorney-client privilege and the bases for waiver, as provided in California Evidence Code §§ 912 and 952, and summarizing applicable decisional law, the court specifically analyzed the question of whether the common interest doctrine applied in the context of the disputed HOA litigation meetings. The common interest doctrine protects confidential communications made by counsel to third parties if the third parties are present to further the interest of the client or are those to whom disclosure is reasonably necessary for the transmission of the information or the accomplishment of the purpose for which the lawyer was consulted.
Reprinted courtesy of
David W. Evans,
Steven M. Cvitanovic, and
Michael C. Parme of Haight Brown & Bonesteel LLP
Mr. Evans may be contacted at devans@hbblaw.com, Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com, and Mr. Parme may be contacted at mparme@hbblaw.com
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Inside the Old Psych Hospital Reborn As a Home for Money Managers
October 28, 2015 —
Simone Foxman – BloombergIt’s the most exclusive club for financiers in Dallas.
With seven Jeffersonian-style buildings and manicured lawns, Old Parkland looks more like a college campus than a hive of private-equity firms, hedge funds, foundations and family offices. But the 9.5-acre site, where an abandoned hospital once stood, is now home to some of the city’s wealthiest investors.
Old Parkland is the pet project of Harlan Crow, 66, a son of swashbuckling real estate developer Trammell Crow, whose empire was in tatters when he gave up control in the late 1980s. It’s also a symbol of a decades-long effort to rebuild the family’s legacy. Step inside any of the buildings and you might think you’re in a museum, with Rodin sculptures in the hallways, a 17th century antique sofa in a lobby and a piece of curtain Abraham Lincoln is said to have grabbed after being shot on display.
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Simone Foxman, Bloomberg
Connecticut Supreme Court Finds Duty to Defend When Case Law is Uncertain
October 12, 2020 —
Eric B. Hermanson & Austin D. Moody - White and WilliamsThe Connecticut Supreme Court recently addressed whether an insurer has a duty to defend when faced with legal uncertainty as to whether coverage is owed: for example, when there is no Connecticut case law on point, and courts outside of the state have reached conflicting decisions.
The Court suggested that an insurer, in these circumstances, should defend the insured, and should seek a declaratory judgment from a court as to whether coverage is owed.
The issue in Nash St., LLC v. Main St. Am. Assurance Co.,[1] arose out of a home collapse in Milford, Connecticut. The owner of the home (Nash) hired a contractor (New Beginnings) to renovate the home. New Beginnings, in turn, retained a subcontractor to lift the house and to do concrete work on the foundation. While the subcontractor was lifting the house, the house shifted off the supporting cribbing and collapsed.
Reprinted courtesy of
Eric B. Hermanson, White and Williams and
Austin D. Moody, White and Williams
Mr. Hermanson may be contacted at hermansone@whiteandwilliams.com
Mr. Moody may be contacted at moodya@whiteandwiliams.com
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Another Reason to Always Respond (or Hensel Phelps Wins One!)
September 16, 2019 —
Christopher G. Hill - Construction Law MusingsHere at Construction Law Musings, Hensel Phelps Construction Co. is best known as the company that got whipsawed between indemnity rules and the lack of a statute of limitations for state agencies. However a recent case out of the Federal District Court for the Eastern District of Virginia gave them a win and illustrates, once again, that failing to appear or respond is never a good option.
In Hensel Phelps Construction Co. v. Perdomo Industrial LLC, the Alexandria, VA federal court looked at an arbitration award entered for Hensel Phelps and against Perdomo under the Federal Arbitration Act. The facts of the case showed that Perdomo “double dipped” into the deep end of refusal or failure to respond. First of all, the contract required arbitration and any award was enforceable in any state or federal court having jurisdiction. Based upon this language, Hensel Phelps filed a demand for arbitration with the American Arbitration Association against Perdomo and its surety, AAA sent notice to both Perdomo and Surety, and. . . neither responded or appeared at what was ultimately 8 days of hearings. After hearing Hensel Phelp’s evidence and the total lack of defenses from Perdomo and Surety, the panel issued an award in favor of Hensel Phelps, finding Perdomo LLC in default and holding Perdomo LLC and Allied World jointly and severally liable in the amount of $2,958,209.71 and Perdomo LLC individually liable in the amount of $7,917,666.30 plus interest.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
