Ahead of the Storm: Preparing for Irma
September 07, 2017 —
Stephen H. Reisman – Peckar & Abramson, P.C.While Hurricane Irma boils in the Atlantic and seems to be aiming towards Florida, storm preparations are well underway. As contractors are busy organizing efforts to secure their job sites, we at Peckar & Abramson offer some quick reminders that may prove helpful when the dust finally settles:
- Review your contracts, particularly the force majeure provisions, and be sure to comply with applicable notice requirements.
- Even if not expressly required at this point in time, consider providing written notice to project owners that their projects are being prepared for a potential hurricane or tropical storm and that productivity and the progress of the work will be affected, with the actual time and cost impact to be determined after the event.
- Consult your hurricane plan (which is often a contract exhibit) and confirm compliance with all specified safety, security and protection measures.
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Stephen H. Reisman, Peckar & Abramson, P.C.Mr. Reisman may be contacted at
sreisman@pecklaw.com
Contract Void Ab Initio: Key Insights into the KBR vs. Corps of Engineers Affirmative Defense
February 12, 2024 —
Matthew DeVries - Best Practices Construction LawIn a recent Board decision dated December 13, 2023, the United States Army Corps of Engineers sought to amend its answer in the case of APPEALS OF – KELLOGG BROWN & ROOT SERVICES, INC., under Contract No. W912GB-13-C-0011. The proposed amendment introduces an affirmative defense, contending that Kellogg Brown & Root Services, Inc. (KBR) made material misrepresentations in its proposal, rendering the fully-performed contract void ab initio.
Background: The contract in question, executed on July 9, 2013, was for the construction of an Aegis Ashore Missile Defense System site in Deveselu, Romania, with a firm, fixed-price amount of $134,211,592. The Corps moved to amend its answer to allege that KBR’s material misrepresentations induced the Corps to enter the contract, justifying the voiding of the contract. The alleged misrepresentations include issues related to subcontractor quotes, firm fixed prices, subcontracting plans, and more.
Motion to Amend and Legal Defense: The Corps, despite delays in formally amending its answer, argued that KBR was aware of the potential affirmative defense before the conclusion of fact discovery. The proposed affirmative defense asserts that KBR made eight material misrepresentations in its proposal, upon which the Corps relied in awarding the contract and defending against a GAO protest.
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Matthew DeVries, Burr & Forman LLPMr. DeVries may be contacted at
mdevries@burr.com
Justice Didn’t Ensure Mortgage Fraud Was Priority, IG Says
March 19, 2014 —
Tom Schoenberg and Phil Mattingly – BloombergThe U.S. Justice Department failed to pursue mortgage fraud in the years following the 2008 financial crisis with the same level of commitment that it publicly touted, an internal watchdog said.
While Attorney General Eric Holder said mortgage-fraud cases were among the department’s top priorities, the Federal Bureau of Investigation internally ranked them the lowest of six criminal threats, according to a report released today by Inspector General Michael Horowitz. The FBI devoted fewer resources to such cases even though Congress allocated $196 million for fiscal years 2009 to 2011 to pursue such conduct.
The Justice Department has been criticized by lawmakers and judges for not bringing more criminal cases against individuals following the collapse in housing prices and ensuing market turmoil. In August, Holder retracted a public statement after Bloomberg News reported that the department had inflated its track record of mortgage-fraud prosecutions.
Mr. Schoenberg may be contacted at tschoenberg@bloomberg.net; Mr. Mattingly may be contacted at pmattingly@bloomberg.net
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Tom Schoenberg and Phil Mattingly, Bloomberg
Insurer’s Duty to Defend: When is it Triggered? When is it Not?
February 18, 2015 —
Zach McLeroy – Colorado Construction LitigationIn Colorado it is well recognized that an insurer has a broad duty to defend its policyholder against pending claims. An insurer’s duty to defend is triggered when the underlying complaint against the insured alleges any set of facts that might fall within the coverage policy. Greystone Construction, Inc. v. National Fire & Marine Insurance, Co., 661 F.3d 1272, 1284 (10th Cir. 2011). Even if the insurer’s duty to defend is not clear from the pleadings filed against the insured, the insurer’s duty to defend is triggered if the claim is potentially or arguably within the policy coverage. Id. If there is any doubt as to whether a theory of recovery falls within the policy coverage, such doubt is decided in favor of the insured and the insurer’s duty to defend is triggered. Id. In order to avoid this duty to defend, an insurer must show that an exemption to the policy applies and that no other basis exists for coverage under the policy.
In Cornella Brothers, Inc. v. Liberty Mutual Fire Insurance Company, 2014 WL 321335 (D. Colo. Jan. 29, 2015), the Court was to determine whether Liberty Mutual Fire Insurance Company (“Liberty Mutual”) had a duty to defend a lawsuit filed against its insured, Cornella Brothers, Inc. (“Cornella”). The underlying lawsuit alleged construction defects at a recharging facility. Upon being named a party to the underlying litigation, Cornella provided notice to Liberty Mutual and demanded that Liberty Mutual defend Cornella.
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Zach McLeroy, Higgins, Hopkins, McLain & Roswell, LLCMr. McLeroy may be contacted at
mcleroy@hhmrlaw.com
New York Restrictions on Flow Through Provision in Subcontracts
August 14, 2023 —
Bill Wilson - Construction Law ZoneMost subcontracts include a flow through provision (also called flow down and incorporation clauses) stating that the subcontractor and contractor are bound by the same obligations as set forth in the prime contract between the contractor and owner. Many jurisdictions interpret such provisions narrowly, as illustrated in a recent case out of New York. In Amerisure Insurance Company v. Selective Insurance Group, Inc., 2023 WL 3311879, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s interpretation of a flow through clause in a construction subcontract. The Amerisure case involved a dispute over insurance coverage for a personal injury to a subcontractor’s employee on a construction project. The owner of the project sought defense and indemnity from the general contractor (GC) and its insurance company, who in turn sought coverage for the owner as an additional insured under the subcontractor’s policy. The GC based its argument for coverage on the flow through provision in the subcontract.
The prime contract required the GC to procure commercial liability insurance including the owner as an additional insured for claims caused by the GC’s negligent acts or omissions. The subcontract likewise required the subcontractor to procure commercial general liability insurance but required only that the GC be named as an additional insured. However, the subcontract also included a flow through clause, binding the subcontractor to the terms of the prime contract and assuming toward the GC all the obligations and responsibilities that the GC assumed toward the owner. However, the subcontract did not expressly require that the subcontractor name the owner as an additional insured, and in order for the owner to qualify as an additional insured under the subcontractor’s insurance policy, the subcontractor must have agreed in the subcontract to name the owner as an additional insured.
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Bill Wilson, Robinson & Cole LLPMr. Wilson may be contacted at
wwilson@rc.com
Federal Contractors – Double Check the Terms of Your Contract Before Performing Ordered Changes
July 08, 2019 —
Jonathan Schirmer - Ahlers Cressman & Sleight PLLCAs federal contractors may be aware, the general rule when performing a contract for the federal government is that only the contracting officer (“CO”) can bind the government. Often, the CO delegates responsibility to a contracting officer’s representative (“COR”). While in some cases a COR may be able to bind the federal government, the contract may limit that ability exclusively to the CO.
Important for our clients, it is the responsibility of the contractor to determine whether the COR can legally bind the federal government when ordering changes to the scope of work. [1] This is true even when a COR possesses apparent authority to order changes to the work, and when the project is almost exclusively overseen by COR’s. [2]
A recent case highlights the dangers of a contractor relying on the orders of a COR when performing work outside the scope of a contract. In Baistar Mechanical Inc., a contractor was awarded a maintenance and snow removal contract with the federal government. The contract expressly stated that only the CO had contracting authority regarding additional or changed work. [3] However, Baistar, the contractor, argued it was directed by the contracting officer’s representatives to perform work outside of the contract.
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Jonathan Schirmer, Ahlers Cressman & Sleight PLLCMr. Schirmer may be contacted at
jonathan.schirmer@acslawyers.com
Prompt Payment More Likely on Residential Construction Jobs Than Commercial or Public Jobs
May 02, 2022 —
LevelsetNEW ORLEANS, May 02, 2022 (GLOBE NEWSWIRE) -- In construction, no line of work guarantees prompt and in-full payments, but contractors working on residential jobs say their rate of prompt payment is significantly better than commercial or public jobs, according to the
2022 Levelset Cash Flow and Payment Report. However, the report revealed that residential construction jobs require increased communication to improve the chance of prompt payment when compared to commercial or public jobs.
Contractors working on residential projects are more than twice as likely as those working on public projects to report getting paid within 30 days, with residential construction contractors saying they are paid in 30 days or less 48% of the time and public construction contractors saying that only happens 21% of the time.
Significantly slow payments of 60 days or more are three times more likely on public construction projects than on residential construction projects, according to the survey participants. Residential contractors say it happens rarely, just 6% of the time, while public project contractors say it happens nearly one out of five times (18%).
For more information about the report and a detailed summary of findings, please visit: www.levelset.com/survey
About Levelset
Levelset's mission is to empower contractors to always get what they earn. Levelset's products help millions in the construction industry each year to make payment paperwork and compliance easier, get cash faster, monitor the risk on jobs and contractors, and better understand payment processes and rules. The results are faster payments, access to capital, and fewer surprises. Founded in 2012, Levelset is based in New Orleans, Louisiana, with offices in Austin, Texas, and Cairo, Egypt, and is owned and operated by Procore Technologies, Inc. For more information, visit www.levelset.com.
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Co-Housing Startups Fly in the Face of Old-School NYC Housing Law
December 18, 2022 —
Amelia Pollard & Diego Lasarte - BloombergA room in an eight-bedroom Bed-Stuy brownstone with “charming views.” A five-bedroom “modern Manhattan” home. In a housing market as hot as New York City’s, these units advertised on co-housing companies’ websites sound promising. According to the city’s housing regulations, however, neither is legal.
That hasn’t stopped companies from offering the rooms, as renters clamor for affordable living space. With the average studio apartment in Manhattan going for nearly $3,100 a month, newcomers to the city often find living with multiple roommates to be their best affordable-housing option. It’s a trend that startups have jumped on, and one some experts endorse as a way to quickly scale up affordable housing — even though municipal housing laws aren’t on board yet.
The reality is that in many cities, housing laws that limit the number of unrelated individuals in a dwelling are still in place. New York, for instance, doesn’t allow more than three unrelated people to live in the same unit. To be sure, New Yorkers often break that law, as expensive housing forces people to find roommates through friends or on sites like Craigslist. But multimillion-dollar companies breaking that law is new.
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Amelia Pollard, Bloomberg and
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