Ortega Outbids Pros to Build $10 Billion Property Empire
March 19, 2014 —
Jesse Drucker – BloombergAmancio Ortega Gaona, already the world’s fourth-richest person based on the success of his Zara fashion retail stores, has quietly amassed a real estate empire worth as much as $10 billion and is emerging as a formidable competitor for prime properties from London to Beverly Hills.
Relying on all-cash offers, he has outbid the world’s biggest institutional funds and professional property investors, such as Tishman Speyer Properties LP.
“He’s at the very highest levels of high net worth investment and competing with some of the biggest sovereign wealth funds for the primest properties in the market,” said Joseph Kelly, director of market analysis for Real Capital Analytics in London, a real estate research firm.
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Jesse Drucker, BloombergMr. Drucker may be contacted at
jdrucker4@bloomberg.net
If a Defect Occurs During Construction, Is It an "Occurrence?"
February 12, 2024 —
Brendan J. Witry - The Dispute ResolverEstablishing insurance coverage for construction defects is almost as important as establishing liability in the underlying construction defect litigation itself.
The risk to the defendant contractor of defending a construction claim can place significant burdens on a contractor’s operations and an uninsured judgment might even put the contractor out of business.
For owners, suing a contractor for construction defects can become academic if there is no prospect of insurance coverage; obtaining a $1 million judgment against a contractor with limited assets would be a pyrrhic victory.
Commercial General Liability (CGL) carriers are obligated to defend claims that potentially fall within the coverage granted by the policy.[1] When presented with a claim, CGL insurers typically have three options: (1) assume the defense without reservation; (2) assume the defense asserting defenses to coverage, and depending on the state, reserving the right to recover defense costs if it later determines there is no duty to defend; or (3) deny the claim outright and seek a declaratory judgment holding that the insurer has no duty to defend or indemnify. An insurer may deny the claim outright and not seek a declaratory judgment, but does so at its peril because it can expose the insurer to significant liability if the insured later shows the insurer in fact had a duty to defend.
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Brendan J. Witry, Laurie & Brennan LLPMr. Witry may be contacted at
bwitry@lauriebrennan.com
Once Again: Contract Terms Matter
May 11, 2020 —
Christopher G. Hill - Construction Law MusingsI know, you’ve heard this over and over again here at Construction Law Musings: courts in Virginia will interpret a contract strictly and in a manner that gives meaning to its unambiguous terms.
A recent case out of the Eastern District of Virginia federal court, White Oak Power Constructors v. Mitsubishi Hitachi Power Systems, reinforces this point. The basic facts of the case relevant to this discussion and the Court’s opinion are these. Old Dominion Electric Cooperative (ODEC) hired White Oak Power Constructors (White Oak) to build a natural gas power plant. The contract between ODEC and White Oak provided for liquidated damages for delay and also contained a risk of loss provision making ODEC responsible for certain losses or damages due to property damage at the plant. I highly recommend that you read the facts of the case in full to get the details of the terms of these clauses.
Needless to say (or this case wouldn’t be the subject of a construction law blog), the project ran past completion date and liquidated damages were assessed to the tune of more than $50,000,000.00. The delay was alleged to have been caused in substantial part by property damage due to weather, fire, and ice among other causes.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Revisiting the CMO; Are We Overusing the Mediation Privilege?
November 19, 2021 —
Michael T. Kennedy Jr. - BERDING|WEILOne of the most common features in construction defect cases is the Case Management Order (“CMO”) or Pre-Trial Order (“PTO”) to govern pre-trial and mediation procedures. CMOs and PTOs arose in the days when the HOA would sue the developer, the developer would cross-complaint against the subcontractors, and each defendant and cross-defendant might have 2 or 3 insurance carriers defending, each of whom may retain their own panel counsel. In a large case there may have been 20 parties and 30 defense attorneys. In order to avoid the cost and chaos of all of those parties propounding their own discovery, and in order to prepare these cases for mediation well before trial and the associated costs, it became standard practice in California to include provisions in the CMO to stay all discovery until just before trial.
Plaintiff would provide a Defect List or Statement of Claims and the parties experts would meet and exchange information as part of the mediation process. All of the information exchanged would be subject to mediation privileges and inadmissible at trial. The benefit of this practice was that the parties (and carriers) would avoid the cost of formal discovery and allow the experts to discuss compromised scopes of repair to help settle the case while being able to take a more aggressive position at trial. The disadvantages are that each party uses its privileged initial expert reports to stake out negotiating positions more extreme than what they would put on at trial, with each side losing credibility with the other in assessing the value of the case, and for those cases that did not settle, the parties would be faced with having to do all of the depositions and discovery in the last 60 days, or delaying trial, or both.
Over the last 10 or 15 years with the advent of wrap-up insurance policies, these cases now usually involve 2 sides instead of 20; only the HOA and the developer remain in the case. However, old habits die hard, and the standard CMO/PTO hasn’t evolved with other aspects of these cases. The practice of staying all discovery and exchanging information only under mediation privileges remains, and as a result insurance carriers don’t receive the admissible evidence that they need to determine coverage and evaluate the real settlement value of the case until just before trial. On the plaintiff’s side, if most of the experts’ work is done under the guise of mediation privilege, those costs may not be recoverable. Outside the context of mediation, costs incurred in investigation of the defects and preparation of a scope and cost of repair are recoverable.
This reflexive claim of mediation privilege over all information exchanged during the case has outlived its usefulness. The CMO can and should remain to regulate formal discovery and to help the parties prepare for mediation, but regulated discovery should be opened early in the case. In California, the SB800 process already provides for the exchange of admissible information during the prelitigation right to repair process. Continuing that exchange during the early litigation allows the parties to continue to prepare for mediation, but waiving privileges had advantages for both sides.
A senior claims manager once commented that Plaintiff’s mediation-protected Statement of Claims “might as well be a stack of blank paper” for all of its usefulness to the carrier in assessing the value of the case. If the Plaintiff and it expects are free to inflate their claims early in the case without having to worry about every supporting those claims in front of a jury, they have little or no credibility. And if those claims are inflated or not “real,” not only can the carrier not properly assess the verdict range and settlement value of the case, but it may also be hampered in making a coverage determination. Simply put, if the exchange of real information through formal discovery is put off until just before trial, the defense cannot be ready to settle until then. Worse, the cost of defense goes through the roof in the last 60 days before trial as the lawyers’ scramble to take all of the depositions and to all of the other work that had been stayed for the previous year or two.
The Plaintiff is faced with the same question of credibility of defense experts where they are free to take a “low ball” negotiating position without having to support that position through cross-examination in front of the jury. Just as the carrier behind the defense attorney needs the Plaintiff’s “real” evidence to assess the claim, so does the HIOA Board of Directors behind the Plaintiff’s counsel. Additionally, in California as in most states, the cost of experts’ preparation for mediation may not be recoverable as costs or damages, but investigation of the defects and preparation of the scope and cost of repair is recoverable.
The biggest challenge is resolving construction defect claims for both sides is how to resolve these cases quickly while keeping costs under control. Practices that worked 20 years ago are no longer applicable with changes in insurance, and in light of some of the bad habits that arise when all of the information exchanged was confidential.
The CMO/PTO process can still be useful to regulate the discovery and mediation schedule given the volume of documents and other information to be exchanged but exchanging “real” information in a form that may come into evidence at trial should foster earlier resolution, resulting in cost savings for the parties. The CMO can provide for the parties to respond to controlled discovery, and the exchange of expert reports and potentially depositions can and should be done earlier in the case, well before the eve of trial. The parties can then assess the true value of each case and prepare for more substantive mediation without waiting until they are on the figurative courthouse steps.
Construction defect cases have a pattern, and it is tempting for busy lawyers to just put each case through the same algorithms that they have used for years. However, these cases have evolved and those of us handling these cases need to reevaluate our approach to these cases. Taking aggressive negotiating positions that no longer have any credibility with the other side has become counterproductive, and the exchange of real evidence earlier in the case would better serve our clients and carriers.
BERDING|WEIL is the largest and most experienced construction defect and common interest development law firm in California. For more information, please visit https://www.berding-weil.com
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Michael T. Kennedy Jr., BERDING|WEILMr. Kennedy may be contacted at
mkennedy@berdingweil.com
Insurer's Summary Judgment Motion to Reject Claim for Construction Defects Upheld
August 15, 2018 —
Tred R. Eyerly - Insurance Law HawaiiThe Third Circuit upheld the district court's order granting summary judgment in favor of the insurer on a claim seeking coverage for construction defects. Lenick Constr. v. Selective Way Ins. Co., 2018 U.S. App. LEXIS 15197 (3d Cir. June 6, 2018).
Westrum was the general contractor for a 92 unit development, and it subcontracted with Lenick to perform rough and finish carpentry and to install paneling, windows, and doors provided by the developer. After the project was completed, it was discovered that some units experienced water infiltration, leaks and cracked drywall.
The condominium development sued Westrum, alleging contract and warranty claims. Westrum impleaded Lenick, asserting claims for breach of contract and indemnification. Lenick sought a defense from its insurer, Selective. Selective defended under a reservation of rights.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Co-Founding Partner Jason Feld Named Finalist for CLM’s Outside Defense Counsel Professional of the Year
March 19, 2024 —
Linda Carter - Kahana FeldKahana Feld congratulates Co-Founding Partner Jason Daniel Feld, Esq., for being named one of three finalists for Claims & Litigation Management Alliance (CLM) Outside Defense Counsel Professional of the Year.
Mr. Feld is a nationwide leader in construction claims and an active industry speaker, serving as panel counsel for many prominent insurance carriers, and personal counsel to multiple national and regional homebuilders, developers, and general contractors.
Co-Founding Partner, Amir Kahana, states, “Jason is incredibly deserving of this recognition. When he joined our firm, we were 3 lawyers in one city, and seven years later, we are a national firm with over 65 attorneys in 10 cities and 6 states. Jason is a natural leader who is highly respected. He has earned the trust of his carrier clients, as well as his colleagues in the industry. In addition to everything he does for Kahana Feld, he also works tirelessly on behalf of CLM and has been a great leader in the Orange County Chapter. I am thrilled to see Jason receive the recognition he richly deserves.”
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Linda Carter, Kahana FeldMs. Carter may be contacted at
lcarter@kahanafeld.com
Peru’s Former President and His Wife to Stay in Jail After Losing Appeal
August 10, 2017 —
John Quigley - BloombergFormer President Ollanta Humala and his wife Nadine Heredia will remain in jail while they are investigated for campaign donations involving Brazilian construction companies and the Venezuelan government, a Peruvian court said Friday.
The couple, who were given pre-trial detention three weeks ago, had asked the appeal court judges to change the order for one requiring them not to leave the country and to appear regularly before the authorities.
The couple turned themselves in on July 13 after Judge Richard Concepcion ordered 18 months of preventive detention for suspected money laundering. Concepcion had said there was sufficient evidence of wrongdoing and grounds to believe Humala and his wife would seek to obstruct the ongoing investigation by the Attorney General’s office.
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John Quigley, Bloomberg
Navigating the Construction Burrito: OCIP Policies in California’s Construction Defect Cases
November 16, 2023 —
Alexa Stephenson & Ivette Kincaid - Kahana FeldIn the early 2000’s, Owner-Controlled Insurance Programs (OCIP) or WRAPS, were traditionally used in large commercial projects of over $50 million in construction costs. As construction defect lawsuits became more prevalent, subcontractors found themselves unable to meet the insurance requirements of their contracts with developers and general contractors because they could not find insurance companies that were willing to insure the risk. This presented a problem for developers and general contractors and left them with no option but to look into new insurance products that would insure them and all subcontractors who worked on the project. OCIPs became in some instances the only insurance option for developers, general contractors, and subcontractors to build single-family or multi-family projects in California and other western states.
OCIPS or WRAPS, often likened to the layers of a savory burrito, offer both enticing benefits and potential pitfalls. Just as a burrito’s ingredients can harmonize or clash, OCIP policies can shape the outcome of legal battles, impacting contractors, developers, and insurers alike.
Pros – Savoring the OCIP Burrito:
1. Wrapped Protection: Much like a well-folded burrito envelops its contents, OCIP policies offer comprehensive coverage for construction projects. Developers, general contractors, and subcontractors find comfort in knowing that their liability risks are bundled into a single policy, ensuring all enrolled parties have coverage in the event of a claim.
Reprinted courtesy of
Alexa Stephenson, Kahana Feld and
Ivette Kincaid, Kahana Feld
Ms. Stephenson may be contacted at astephenson@kahanafeld.com
Ms. Kincaid may be contacted at ikincaid@kahanafeld.com
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