Contract Provisions That Help Manage Risk on Long-Term Projects
June 29, 2020 —
Jason Lambert - Construction ExecutiveFew things can dampen the thrill and promise of a newly closed construction deal than the realization that it could quickly become a losing proposition for the contractor depending on economic and other conditions. In an era of instant information, constantly adjusting markets and political extremes, projects that start under one set of assumptions or conditions can occur or conclude under much different ones. While no one has a crystal ball, there are contractual provisions that can provide clear guidance in the face of many “what ifs” that can arise in construction.
One of the chief concerns a contractor should have in a project lasting more than a few months is what impact price increases will have on the profitability of the job. On a true cost-plus project, this may be of little concern, but on any project with a limitation on costs or a guaranteed maximum price, contractors should insist on a procedure to revisit the limitation or price if certain conditions change.
This can be as simple as allowing the contractor to receive an upward adjustment in the price if costs increase by more than a certain percentage. It can be as complicated as requiring multiple new bids and disclosures to the property owner, architect or project manager and allowing approval of new suppliers or subcontractors to limit cost increases to the cheapest increase. The protection—and certainty—to the contractor though, comes from having a process in the contract to address cost increases, whether it is simple or complex.
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Jason Lambert, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Lambert may be contacted at
Jason.lambert@dinsmore.com
Insurer Not Required to Show Prejudice from an Insured’s Late Notice When the Parties Contract for a Specific Reporting Period
September 09, 2019 —
Christopher Raney - Gordon & Rees Insurance Coverage Law BlogThe Fifth Circuit Court of Appeals recently affirmed an order granting summary judgment in favor of the Firm’s insurer client on an issue of first impression in Texas. The issue before the trial court was whether, under Texas law, an insurer is required to demonstrate prejudice resulting from an insured’s failure to comply with an agreed term set in an endorsement to the parties’ insurance contract establishing a specific time limit for an insured to give the insurer notice of a claim.
The case involved alleged damage to an insured’s commercial property from a hailstorm. The insured did not report the alleged loss to its insurer until approximately 17 months after the date of loss. The insurer denied the claim based on a one-year notice requirement in a policy endorsement. The Texas Windstorm or Hail Loss Conditions Amendment Endorsement stated that:
In addition to your obligation to provide us with prompt notice of loss or damage, with respect to any claim where notice of the claim is reported to us more than one year after the reported date of loss or damage, this policy shall not provide coverage for such claims.
The insured sued the insurer in Houston federal court, alleging causes of action for breach of contract and violations of the Texas Insurance Code. The insured argued the insurer was required to show prejudice from the insured’s late notice; the insurer argued that a showing of prejudice was not required. The trial court recognized that this issue had not been decided by the Texas Supreme Court of the Fifth Circuit Court of Appeals.
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Christopher Raney, Gordon & Rees Scully MansukhaniMr. Raney may be contacted at
craney@grsm.com
A Sample Itinerary to get the Most out of West Coast Casualty’s Construction Defect Seminar
May 03, 2018 —
Beverley BevenFlorez-CDJ STAFFWith so many worthwhile events stretched across three days, as well as wanting to get out and explore the many attractions in Orange County, California, Construction Defect Journal has come up with a sample itinerary that balances work with recreation.
Day One: Wednesday, May 16th
9:00 a.m. – Breakfast at
Steakhouse 55 (Disneyland Hotel)
Meet up with colleagues at Disney’s Steakhouse 55 where you will find a more peaceful and upscale venue, perfect for networking or just catching up with friends.
10:00 a.m. -
Madara Spa at Disney’s Grand Californian Hotel
With a free morning, this is the perfect time to take advantage of one of the Disneyland Resort’s pools or schedule a massage at the Madara Spa located within the Grand Californian Hotel.
11:30 a.m. – Grab and Go Lunch at
The Coffee House (Disneyland Hotel)
Refuel with a salad or sandwich from one of Disneyland Resort’s quick service restaurants.
12:00 p.m. – Seminar Registration and Schwag Hunting
Start heading over to the seminar to register and be one of the first to check out the amazing exhibitors and grab the free items they have to offer. You don’t want to miss BHA’s golf challenge, where if you sink a putt you win a $25 Amazon gift card for yourself and BHA will match the $25 to the worthwhile WCC charities!
1:00 p.m. – Seminar Begins!
The afternoon starts with a not-to-be-missed panel, “Struggles and Successes of the Past 25 Years.” Next, you’ll learn about “Unwrapped and Unraveled - An insightful (or inciteful?) play at the
changing nature of the relationships between the parties in a wrap program who thought the wrap was supposed to take care of everything.”
3:00 p.m. – Afternoon Break
Get a cup of coffee or water, and head out into the exhibit hall. Don’t forget to go to BHA’s booth to enter to win Dodger tickets.
3:30 p.m. – Seminar Panels Continue
The seminar returns with two more amazing panels: “East Coast Meets West Coast –Hot Construction Defect Issues and Coverage Cases from the Other Coast” and “How to Conduct Your Claim Investigation and Early Claims Handling To Avoid Bad Faith Traps.”
6:00 p.m. – Attend an After Party
After taking a few minutes to unwind and freshen up, go and network as well as have some at one of the reception’s thrown by attending firms. No after party? Head over to the
Uva Bar at Downtown Disney for a cocktail and some people watching.
8:00 p.m. - Late Dinner at
Catal Restaurant (Downtown Disney)
Enjoy a relaxing and sumptuous meal at Catal in Downtown Disney, one of the famed Patina Group’s restaurants.
Day Two: Thursday, May 17th
7:30 a.m. – Breakfast in the Exhibit Hall
Take advantage of West Coast Casualty’s free breakfast, and peruse more exhibits. Check out BHA’s data process collection process and discover meaningful cost improvements that translate to reduced billing while providing superior accuracy and credibility.
8:30 a.m. – Seminar Panels
The seminar returns with more panels you won’t want to miss: “Recent Important Appellate Decisions in California, Nevada, and Arizona” and “Litigating In The Western States - A Judge’s Perspective.”
10:30 a.m. – Morning Break
Grab a cup of coffee or water and chat with your colleagues about the panels you just heard.
10:45 a.m. – Seminar Panel
Another important panel to finish the morning, “Subrogation is not the type of intervention I need. How a subrogated insurer affects construction defect matters.”
11:45 a.m. – Award Presentation
Find out this year’s winners of the Ollie, Legend of the Era and Silver Stars.
12:15 p.m. – WCC Luncheon
Network and chat with your colleagues at one of the meals provided by the seminar.
1:30 p.m. – Seminar Panel
Now that you’ve recharged, you’re ready for another incredible WCC panel: “What Comes Around (Sometimes) Goes Around: Dealing with Recalcitrant Carriers.”
2:30 p.m. – Afternoon Break
Stretch your legs in the exhibit hall and get yourself more schwag. Learn about BHA’s expanding market presence and full range of services in Texas, Florida, and across the Southeast United States.
3:00 p.m. – Seminar Panels Continue
Don’t miss the last two panels of the day: “Effective Use of Experts” and “Claims Managers Speak - A Retrospective & Prospective Discussion.”
5:30 p.m. – Cocktail Reception
With your glass of Cabernet, network with colleagues and then try your hand again at BHA’s golf challenge to win an Amazon gift card and earn money for WCC charities.
6:30 p.m. – Hit the Pool or Jacuzzi
Take those tired feet and soak them in one of the Disneyland Resort’s many pools and jacuzzi’s. Or schedule a spa treatment at
Madara in the Grand Californian Hotel.
7:00 p.m. – After Party or Ball Game
Now that you’ve given yourself some time to rejuvenate, you’re ready to meet up with friends and colleagues at one of the after parties and receptions. Or if you’re a sports fan and want a break from work, go cheer on the
Angel’s as they play Tampa Bay.
8:30 p.m. –
Uva Bar
Unless you chose to go to the game, enjoy a late supper and cocktail under the beautiful southern California sky at the Uva Bar in Downtown Disney.
Day Three: Friday, May 18th
7:30 a.m. – Breakfast at the Seminar
Take advantage of another free meal, and take the time to check out more exhibits as the last day of the seminar begins. Don’t forget to enter BHA’s raffle for Dodger tickets!
8:30 a.m. – Breakout Sessions I
Choose between one of three breakout sessions: “Known Knowns and Known: Unknowns, the Ins and Outs of Extrapolation,” “Risk Transfer Alphabet Soup - A twelve year lookback on legislative tinkering with anti-indemnity statutes - where are we now?” or “Florida – Opening Pandora's Box and How to Close It.”
9:30 a.m. – Breakout Sessions II
Three additional breakout sessions to choose from: “An Update on California’s Right to Repair Act, featuring McMillin Albany et al. v. Superior Court,” “Finding Evidence for your Coverage Case,” or “Northwest Insurance Coverage and Extra-Contractual Issues.”
10:30 a.m. – Morning Break
Refuel with coffee or water before the next group of exciting breakout sessions begins.
11:00 a.m. – Breakout Sessions III
You’ll want to go to one of these three breakout sessions: “Subcontractor Wars: The Last AI,” “Mediating the Luxury Single Family Home Construction Defect Case,” or “Creative Solutions to the Florida Problem: Making No Contribution and No State Law Work for You.”
12:00 p.m. – Breakout Sessions IV and the End of the Seminar
The seminar closes with the last trio of breakout sessions: “Everyone is a Small Player,” “Real World Solutions to the Real Problems Presented By Wrap Up Programs,” or “When Mother Nature Attacks, Are you Covered?”
1:30 p.m. – Lunch at
Corn Dog Castle in California Adventure Park OR
Hollinghead’s Delicatessen in Orange
If you’re a Disney lover, you’ll want to take advantage of the day by going to one of the Disney Resort Parks, of course. Get one of Disney’s amazing corn dogs at Corn Dog Castle in California Adventure Park.
Or if you would rather explore the greater Anaheim area, then head over to Hollinghead’s Delicatessen for a homemade sandwich and a glass of beer on tap.
3:00 p.m. –
Disney Entertainment OR Museum Exploring
If you chose to go to California Adventure, check out the event schedule for the day. Catch the show Frozen – Live at the Hyperion or get a
Fastpass for the Radiator Springs Racers and ride Soarin’ Around the World. If you purchased a two-park pass, don’t forget about Space Mountain or Star Tours located in the Disneyland Park.
North Orange county has many interesting museums. Head to the
Bowers Museum in Santa Ana or the
Muzeo in Anaheim.
7:00 p.m. – Dinner at the
Blue Bayou Restaurant OR the
Summit House Restaurant
Have a one-of-a-kind eating experience at the Blue Bayou in Disneyland Park. Enjoy a dinner in the midst of the Pirates of the Caribbean ride! If you wish to remain in the California Adventure Park, try an alfresco dinner at
Wine Country Trattoria or an indoor, upscale meal at
Carthay Circle.
After an afternoon perusing museums, enjoy a truly superb meal with attentive service at one of Anaheim’s premier restaurants, Summit House. Feeling like having some fun rather than a sedate meal? Head over to the
House of Blues in Anaheim for their Party Like It’s 1999! A Prince Tribute Party.
8:30 p.m. – Paint the Night Parade/Together Forever OR The Blind Rabbit Speakeasy
Head over to watch the
Paint the Night Parade at the California Adventure Park or the fireworks display,
Together Forever — A Pixar Nighttime Spectacular at the Disneyland Park. Be sure to check out the daily
event schedule for up to date information.
End your evening at Anaheim’s only speakeasy,
the Blind Rabbit, located in the Anaheim Meat Packing district. Be sure to check out their “rules” and reserve a table at this popular spot.
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Detroit Showed What ‘Build Back Better’ Can Look Like
May 10, 2021 —
Rip Rapson - BloombergAmerican cities stand at a precipice. Burdened by an overwhelming public health crisis, drained of resources by economic stagnation and torn apart by racial injustice and unrest, cities are confronting the reality that conventional formulas of municipal finance and practices of working cannot sustain our urban places.
The significance of this moment was not lost on the Biden-Harris administration, which quickly advanced an ambitious mandate commensurate with the challenge: a domestic Marshall Plan called Build Back Better. Already, the first prong — the $1.9 trillion American Rescue Plan — has helped shore up city budgets, restore desperately needed funding for public transportation and keep businesses open and families in homes. The second leg, the $2 trillion American Jobs Plan, represents a bold shift from short-term recovery to long-term transformation.
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The Ghosts of Baha Mar: How a $3.5 Billion Paradise Went Bust
January 06, 2016 —
John Lippert & Dawn McCarty – BloombergBeyond the tropical waters, across palm-fringed sands and behind locked gates, looms Baha Mar -- the largest and, at $3.5 billion, priciest resort in the Caribbean.
Here, no one frolics pool-side, pina colada in hand, or hits irons on the Jack Nicklaus golf course. No slot machines jingle-jangle in the casino. The Flamingo Bar, the Brasserie des Arts and the Cartier boutique lie dark. On this bright October morning in the Bahamas, all 2,200 guest rooms are empty.
The quiet is almost spooky here on the outskirts of Nassau, where the waterscape frills of nearby Paradise Island give way to the vast ghost-resort that is Baha Mar.
Just how the place ended up like this -- in a bankruptcy so colossal that it’s jeopardizing the Bahamas’s credit rating -- is the biggest business story to hit this Caribbean nation for as long as anyone here can remember. It stretches far beyond the white beaches and across time zones, to none other than the State Council of China.
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John Lippert, Bloomberg and
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Las Vegas’ McCarran Tower Construction Issues Delays Opening
August 13, 2014 —
Beverley BevenFlorez-CDJ STAFFThe Las Vegas Review-Journal reported that an improperly applied chemical coating might delay the opening of McCarran International Airport’s Federal Aviation Administration tower by a year and cost millions of dollars to repair.
The chemical coating was intended “to prevent the spread of toxic fungus,” but was “improperly applied and is ineffective,” workers on the site told the Las Vegas Review-Journal.
“Officials said the” $99 million, 352-foot “tower was expected to be operational by 2015, but the FAA now says it won’t be able to use the facility until late 2016 or early 2017.”
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Fannie-Freddie Elimination Model in Apartments: Mortgages
April 08, 2014 —
Sarah Mulholland – BloombergThe apartment-lending units of Fannie Mae (FNMA) and Freddie Mac were among their few money makers after the U.S. housing collapse. Now they should help transform the U.S. mortgage industry.
Lawmakers seeking to eliminate the two government lenders, which were seized by regulators during the 2008 credit crisis, see an antidote to the reckless lending that blew up the U.S. housing market in the structure of the firms’ multifamily operations, which share risks with lenders.
Senate Banking Committee Chairman Tim Johnson and Republican Mike Crapo are proposing legislation to create a new government-backed reinsurer of mortgage bonds that would require private investors to bear losses on the first 10 percent of capital. The model for the provision mirrors Fannie Mae and Freddie Mac (FMCC)’s multifamily lending operations, requiring lenders to shoulder some of the risk on loans they originate.
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Sarah Mulholland, BloombergMs. Mulholland may be contacted at
smulholland3@bloomberg.net
Maine Case Demonstrates High Risk for Buying Home “As Is”
August 27, 2014 —
Beverley BevenFlorez-CDJ STAFFAccording to Meredith Eilers of Bernstein Shur, writing in JDSupra Business Advisor, a Boston Appeals court “enforced an 'as is' provision in a purchase and sale agreement and concluded that the sale of a multimillion dollar oceanfront property in Bar Harbor was not accompanied by Maine’s implied warranty of habitability.”
Eilers explained that “the first circuit concluded that the bargained-for ‘as is’ provision that was incorporated into the purchase and sale agreement—in exchange for a reduction in the purchase price—essentially waived any claims from the buyer regarding misrepresentations by the sellers.” This left “the buyer to incur the repair costs without the ability to recover those costs from the seller” and it demonstrated “that agreeing to such a clause when closing a real estate deal has real risks.”
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