Construction Contracts Need Amending Post COVID-19 Shutdowns
October 19, 2020 —
Richard P. Higgins - Construction ExecutiveNo one could have expected the coronavirus pandemic in the beginning of 2020. True, there were rumblings about a sickness in China that was highly contagious and infecting many people. Death tolls began rising as the world watched in disbelieve. After all, this is 2020. This is not supposed to happen. We should have been able to control the spread of the virus, but we could not. COVID-19 quickly spread throughout the world causing havoc and economic despair.
While some sectors of the construction industry are not as impacted as others, contractors industry-wide need to consider how COVID-19 will impact their contractual obligations. Depending on what happens and what the government decides to do to stop the spread of the coronavirus, project delays, supply chain distributions, lost productivity and work stoppages may continue for months. All of this will impact the contracts that contractors have with owners. Contractors may not be able to preform according to the terms of the contract through no fault of their own. Owners may no longer qualify for the financing needed to pay for the project.
FORCE MAJEURE
According to Investopedia, “force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations.”
Reprinted courtesy of
Richard P. Higgins, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Read the court decisionRead the full story...Reprinted courtesy of
Mr. Higgins may be contacted at
Richard.Higgins@MCC-CPAs.com
New Mexico Architect Is Tuned Into His State
February 08, 2021 —
David M. Brown - Engineering News-RecordFor 40-plus years, Van Gilbert has combined his love for the topography, history and culture of New Mexico with an equally passionate dedication to designing not just structures, but buildings that help create communities.
Reprinted courtesy of
David M. Brown, Engineering News-Record
ENR may be contacted at ENR.com@bnpmedia.com
Read the full story... Read the court decisionRead the full story...Reprinted courtesy of
Surety's Settlement Without Principal's Consent Is Not Bad Faith
January 05, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe Sixth Circuit found that the surety did not act in bad faith when it settled the general contractor's claims against the State of Michigan over delays on a construction project. Great Am. Ins. Co. v. E.L. Bailey & Co., 2016 U.S. App. LEXIS 20018 (6th Cir. Nov. 7, 2016).
Bailey, the general contractor, entered into a surety agreement under which Great American would issue surety bonds on behalf of Bailey in the construction of a kitchen at a State prison. Bailey, the principal, paid Great American (GAIC), the surety, to provide bonds guaranteeing contract performance to the State, the obligee or owner. GAIC provided a performance bond, guaranteeing performance of the contract work, and a payment bond, guaranteeing payments to subcontractors and suppliers. Under the agreement, Bailey would indemnify GAIC for all payments or other expenses GAIC incurred due on either bond, and would pay upon demand collateral in an amount to be determined by GAIC. In the event of an alleged breach by Bailey, the agreement assigned to GAIC all Bailey's rights under its contract with the State and well as all its claims against any party.
Bailey never finalized completion, and GAIC reached agreement with the State for another contractor to complete the project.
Read the court decisionRead the full story...Reprinted courtesy of
Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Insurance Policy’s “No Voluntary Payment” Clauses Lose Some Bite in Colorado
October 22, 2013 —
Brady Iandiorio — Higgins, Hopkins, McLain & Roswell, LLC.The Colorado Court of Appeals recently handed down an opinion dulling the teeth of the “no voluntary payment” clauses found in many contractors’ insurance policies. In the case of Stresscon Corporation v. Travelers Property Casualty Company of America, 2013 WL 4874352 (Colo. App. 2013), the Court of Appeals found that an insured’s breach of the “no voluntary payment” clause does not always bar the insured from receiving benefits from its insurance company.
In July 2007, at a construction project run by Mortenson (the “GC”), a partially erected building collapsed, killing one worker and gravely injuring another. The collapse was caused by a crane hook pulling a concrete component off of its supports. The GC contracted with Stresscon Corporation (“Stresscon”) to build pre-cast concrete components for the project, and in turn Stresscon hired two sub-subcontractors, RMS and Hardrock (the “Crane Team”) to work together to erect those concrete components. Stresscon and the Crane Team had liability insurance, and Stresscon was insured by Travelers Property Casualty Company of America (“Travelers”).
The accident led to three separate lawsuits: 1) one brought by the deceased worker; 2) one brought by the injured worker; and 3) one brought by the GC against Stresscon claiming it was entitled to contract damages incurred because the project was delayed.
Read the court decisionRead the full story...Reprinted courtesy of
Brady IandiorioBrady Iandiorio can be contacted at
Iandiorio@hhmrlaw.com
Developer Boymelgreen Forced to Hand Over Financial Records for 15 Broad Street
September 24, 2014 —
Beverley BevenFlorez-CDJ STAFFThe Manhattan Supreme Court “denied a last-ditch effort by Jeshayahu Boymelgreen to avoid handing over financial records as part of a state investigation into the development of 15 Broad Street in the Financial District,” according to The Real Deal. Attorney General Eric Schneiderman had ordered Boymelgreen to turn over the records. Futhermore, according to court records (as reported in The Real Deal), “the developer was also seeking to reduce the amount of money required to fund a $470,000 escrow account to make repairs at the condo — known as Downtown by Starck — which Boymelgreen jointly developed with Africa Israel.”
“We’re glad to see that the courts are rejecting Boymelgreen’s arguments why he shouldn’t be required to maintain an escrow account as security for the sponsor to obtain a permanent certificate of occupancy for 15 Broad, as was set forth in the very offering he participated in with Africa Israel,” Steven Sladkus, attorney for unit owners at the condo, stated. “Accountability is one step closer to the light at the end of the tunnel.”
Brian Itzkowitz, an attorney representing Boymelgreen, did not return The Real Deal’s calls or emails.
Read the court decisionRead the full story...Reprinted courtesy of
Effective July 1, 2022, Contractors Will be Liable for their Subcontractor’s Failure to Pay its Employees’ Wages and Benefits
July 25, 2022 —
Edward O. Pacer & David J. Scriven-Young - Peckar & AbramsonOn June 10, 2022, Illinois Governor J.B. Pritzker signed two House Bills that amend the Illinois Wage Payment & Collections Act, 820 ILCS 115 et. seq. (“Wage Act”), to provide greater protection for individuals working in the construction trades against wage theft in a defined class of projects. Pursuant to this new law, every general contractor, construction manager, or “primary contractor,” working on the projects included in the Bill’s purview will be liable for wages that have not been paid by a subcontractor or lower-tier subcontractor on any contract entered into after July 1, 2022, together with unpaid fringe benefits plus to attorneys’ fees and costs that are incurred by the employee in bringing an action under the Wage Act.
These amendments to the Wage Act apply to a primary contractor engaged in “erection, construction, alteration, or repair of a building structure, or other private work.” However, there are important limitations to the amendment’s applicability. The amendment does not apply to projects under contract with state or local government, or to general contractors that are parties to a collective bargaining agreement on a project where the work is being performed. Additionally, the amendment does not apply to primary contractors who are doing work with a value of less than $20,000, or work that involves only the altering or repairing of an existing single-family dwelling or single residential unit in a multi-unit building.
Reprinted courtesy of
Edward O. Pacer, Peckar & Abramson and
David J. Scriven-Young, Peckar & Abramson
Mr. Pacer may be contacted at epacer@pecklaw.com
Mr. Scriven-Young may be contacted at dscriven-young@pecklaw.com
Read the court decisionRead the full story...Reprinted courtesy of
Additional Insured Secures Defense Under Subcontractor's Policy
October 14, 2013 —
Tred Eyerly — Insurance Law HawaiiThe court determined there were sufficient allegations in the underlying complaint and third party complaints to raise a duty to defend for the additional insured. Ill. Emcasco Ins. Co. v. Waukegan Steel Sales, 2013 Ill. App. LEXIS 624 (Ill. Ct. App. Sept. 13, 2013).
Waukegan was named as an additional insured under subcontractor I-MAXX Metalworks, Inc.'s policy with Emcasco. An employee of I-MAXX, John Walls, was injured on the job site and sued Waukegan. The complaint alleged Waukegan was negligent in failing to property manage, operate and maintain the premises.
I-MAXX had a policy with Emcasco which named Waukegan as an additional insured. The coverage was limited, however, to the additional insured's vicarious liability as a result of the insured's conduct.
Emcasco refused to defend Waukegan because the allegations of direct negligence against Waukegan were excluded by the vicariously liability provision.
Read the court decisionRead the full story...Reprinted courtesy of
Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
Avoid the Headache – Submit the Sworn Proof of Loss to Property Insurer
October 12, 2020 —
David Adelstein - Florida Construction Legal UpdatesProperty insurance policies (first party insurance policies) contain post-loss obligations that an insured must (and should) comply with otherwise they risk forfeiting insurance coverage. One post-loss obligation is the insurer’s right to request the insured to submit a sworn proof of loss. Not complying with a post-loss obligation such as submitting a sworn proof of loss can lead to unnecessary headaches for the insured. Most of the times the headache can be avoided. Even with a sworn proof of loss, there is a way to disclaim the finality of damages and amounts included by couching information as estimates or by affirming that the final and complete loss is still unknown while you work with an adjuster to quantify the loss. The point is, ignoring the obligation altogether will result in a headache that you will have to deal with down the road because the property insurer will use it against you and is a headache that is easily avoidable. And, it will result in an added burden to you, as the insured, to demonstrate the failure to comply did not actually cause any prejudice to the insurer.
By way of example, in Prem v. Universal Property & Casualty Ins. Co., 45 Fla. L. Weekly D2044a (Fla. 3d DCA 2020), the insured notified their property insurer of a plumbing leak in the bathroom. The insurer requested for the insured to submit a sworn proof of loss per the terms of the insured’s property insurance policy. The insurer follow-up with its request for a sworn proof of loss on a few occasions. None was provided and the insured filed a lawsuit without ever furnishing a sworn proof of loss. The insurer moved for summary judgment due the insured’s failure to comply with the post-loss obligations, specifically by not submitting a sworn proof of loss, and the trial court granted the insurer’s motion. Even at the time of the summary judgment hearing, the insured still did not submit a sworn proof of loss.
Read the court decisionRead the full story...Reprinted courtesy of
David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
