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Top Five General Tips for All Construction Contracts

October 26, 2020 — Christopher G. Hill - Construction Law Musings
For this week’s Guest Post Friday here at Musings we welcome Spencer Wiegard. Spencer is a Partner with Gentry Locke Rakes & Moore, LLP. He is a member of the firm’s Construction Law and Commercial Litigation practice groups. Spencer focuses his practice in the areas of construction law and construction litigation. Spencer is a member of the Board of Governors for the Virginia State Bar Construction Law and Public Contracts Section, and a member of the Legislative Committee of the Associated General Contractors of Virginia and the Executive Committee for the Roanoke/SW Virginia District of the Associated General Contractors of Virginia. I would like to thank Chris for inviting me to author today’s guest post. Over the past few days, I have found myself wading through the terms and conditions of a lengthy and complicated construction contract, while at the same time aggressively negotiating for Houston house leveling cost readjustments. As I slogged through the legalese, I was reminded of a presentation that I gave earlier this year to the Roanoke District of the Virginia Associated General Contractors. The district’s executive committee asked me to speak to its members concerning the broad topic of “Construction Contracts 101.” At the beginning of my presentation, I passed along my top five general tips for all construction contracts. Although some of these tips may sound like common sense, I often encounter situations where these basic rules are violated by experienced contractors, subcontractors, suppliers and design professionals. My top five general tips for all construction contracts are:

1. Reduce the terms of the agreement to writing.
   1. The written agreement should include all important and relevant information and terms. If it was important enough to discuss prior to signing the contract, it is important enough to include in the written contract;
   2. At a minimum, include who, what, when, where, how, and how much;
   3. Both parties should sign the written agreement; and
   4. Don’t ignore handwritten changes to the contract, as these changes may either mean that you don’t have a deal, or they may become part of the contract when you sign it.
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   Reprinted courtesy of The Law Office of Christopher G. Hill
   Mr. Hill may be contacted at chrisghill@constructionlawva.com

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   Cerberus, Blackstone Loosening Credit for U.S. Landlords

   July 09, 2014 — Heather Perlberg and John Gittelsohn – Bloomberg
   U.S. property owners with just one rental house can now get cash from Wall Street to buy more. Cerberus Capital Management LP, which initially targeted landlords with multimillion-dollar loans, is financing low-volume deals for small investors through its FirstKey Lending, with looser terms than government-backed mortgages from Fannie Mae and Freddie Mac, said Randy Reiff, the business’s chief executive officer. Blackstone Group LP (BX)’s rental lending arm, B2R Finance LP, is making a similar push to mom-and-pop landlords. “Our premise has always been to be able to lend to the middle market and entrepreneurial borrowers in the space, not just the institutional borrowers,” Reiff said. “The biggest guys have always enjoyed access to capital. The largest part of this market is really the entrepreneurial owners.” The companies are competing to lend to owners of the almost 14 million rental houses in the U.S. at a time when many Americans are struggling to get a mortgage and homeownership is declining. Cerberus and Blackstone, along with Colony Capital LLC, also are racing to package debt on homes managed by separate landlords for the first multiborrower bond sale. Ms. Perlberg may be contacted at hperlberg@bloomberg.net; Mr. Gittelsohn may be contacted at johngitt@bloomberg.net Read the court decision
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   Reprinted courtesy of Heather Perlberg and John Gittelsohn – Bloomberg
   

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   Wisconsin Supreme Court Holds Fire Damage Resulted from Single Occurrence

   November 21, 2018 — Brian Margolies - TLSS Insurance Law Blog
   In its recent decision in Secura Ins. v. Lyme St. Croix Forest Co., LLC 2018 WI 103 (Oct. 30, 2018), the Wisconsin Supreme Court had occasion to consider whether a forest fire that caused damage to several homes and properties should be considered a single or multiple occurrences. Secura insured Lyme St. Croix Forest Company under a general liability policy. Of relevance was the policy’s $500,000 sublimit of coverage for property damage due to fire arising from logging or lumbering operations, subject to a $2 million general policy aggregate limit. Lyme St. Croix sought coverage under the policy for a fire that resulted from its logging equipment. The fire lasted for three days, burning nearly 7,500 acres and causing damage to numerous homes and businesses. Read the court decision
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   Reprinted courtesy of Brian Margolies, Traub Lieberman Straus & Shrewsberry LLP
   Mr. Margolies may be contacted at bmargolies@tlsslaw.com

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   Alleged Serious Defects at Hanford Nuclear Waste Treatment Plant

   August 26, 2015 — Beverley BevenFlorez-CDJ STAFF
   According to the Los Angeles Times, “A team of nuclear waste experts has found hundreds of serious defects at an Energy Department plant designed to turn millions of gallons of highly radioactive sludge into more stable solid glass at the former weapons facility in Hanford, Wash.” The report from 2014 was leaked, and stated that the “partially built facility is riddled with 362 ‘significant design vulnerabilities’ that could affect safety and future operations.” Thirty-seven experts led by two senior managers created the report. The Los Angeles Times reported that the report findings “are significant because the plant is part of the Energy Department’s 2013 initiative to fix earlier problems that stalled construction of other parts of the treatment system at Hanford, the site of the nation’s worst radioactive contamination.” Read the court decision
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   Illinois Supreme Court Limits Reach of Implied Warranty Claims Against Contractors

   April 10, 2019 — Thomas Cronin - Gordon & Rees Construction Law Blog
   In a recent decision, the Illinois Supreme Court held that a purchaser of a newly constructed home could not assert a claim for breach of the implied warranty of habitability against a subcontractor where the subcontractor had no contractual relationship with the purchaser. Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, ¶ 1. The decision overruled Minton v. The Richards Group of Chicago, which held that a purchaser who “has no recourse to the builder-vendor and has sustained loss due to the faulty and latent defect in their new home caused by the subcontractor” could assert a claim of a breach of the warranty of habitability against the subcontractor. 116 Ill. App. 3d 852, 855 (1983). In Sienna Court Condo. Ass’n, the plaintiff alleged that the condo building had several latent defects which made individual units and common areas unfit for habitation. 2008 IL 122022 at ¶ 3. The Court rejected the plaintiff’s argument that privity should not be a factor in determining whether a claim for a breach of the warranty of habitability can be asserted. Id. at ¶ 19. The Court also rejected the plaintiff’s argument that claims for a breach warranty of habitability should not be governed by contract law but should instead be governed by tort law analogous to application of strict liability. Id. The Court reasoned that the economic loss rule, as articulated in Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 91 (1982), refuted the plaintiff’s argument that the implied warranty of habitability should be covered by tort law. 2008 IL 122022 at ¶ 20. Under the economic loss rule, a plaintiff “cannot recover for solely economic loss under the tort theories of strict liability, negligence, and innocent misrepresentation.” National Tank Co., 91 Ill. 2d at 91. The Court explained that the rule prevented plaintiffs from turning a contractual claim into a tort claim. 2008 IL 122022 at ¶ 21. The Court further noted that contractual privity is required for a claim of economic loss, and an economic loss claim is not limited to strict liability claims. Id. Because the plaintiff’s claim was solely for an economic loss, it was a contractual claim in nature; therefore, the Court concluded that “the implied warranty of habitability cannot be characterized as a tort.” Id. at ¶ 22. Read the court decision
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   Reprinted courtesy of Thomas Cronin, Gordon & Rees Scully Mansukhani
   Mr. Cronin may be contacted at tcronin@grsm.com

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   South Carolina Supreme Court Asked Whether Attorney-Client Privilege Waived When Insurer Denies Bad Faith

   September 18, 2018 — Tred R. Eyerly - Insurance Law Hawaii
   The Fourth Circuit certified the following question to the South Carolina Supreme Court: Does South Carolina law support application of the "at issue" exception to the attorney-client privilege such that a party may waive the privilege by denying liability in its answer? In Re: Mt. Hawley Ins. Co., 2018 U.S. App. LEXIS 17910 (4th Cir. June 28, 2018). Mt. Hawley insured Contravest Construction Company under an excess commercial liability policy from July 21, 2003 to July 21, 2007. During this period, Contravest constructed a development in South Carolina. In 2011, the Owners Association sued Contravest for alleged defective construction. Mt. Hawley denied tenders to defend or indemnify. Contravest ultimately settled the case. Read the court decision
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   Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
   Mr. Eyerly may be contacted at te@hawaiilawyer.com

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   Motion to Dismiss Denied Regarding Insureds' Claim For Collapse

   October 29, 2014 — Tred R. Eyerly – Insurance Law Hawaii
   The federal district court denied the insurer's motion to dismiss claims for loss due to the imminent collapse of the insureds' basement walls. Belz v. Peerless Ins. Co., 2014 WL 4364914 (D. Conn. Sept. 2, 2014). The insureds noticed cracks throughout their basement walls. It was discovered that the condition was the result of a chemical compound used in the concrete of certain basement walls in the late 1980s and early 1990s. The insureds contended that due to the cracking, the basement walls suffered a substantial impairment to their structural integrity making it only a matter of time until the walls collapsed. The insureds notified their insurer, Peerless. An engineer hired by Peerless determined the walls' condition was caused by poor workmanship and defective materials. On this basis, Peerless denied coverage. Read the court decision
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   Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
   Mr. Eyerly may be contacted at te@hawaiilawyer.com

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   Former NYC Condo Empire Executive Arrested for Larceny, Tax Fraud

   March 11, 2024 — Ava Benny-Morrison - Bloomberg
   A former New York executive facing lawsuits over the collapse of real estate empire HFZ Capital Group has been arrested in Miami, charged with grand larceny and tax fraud. Nir Meir, 48, was arrested Monday, a spokesperson for the Miami-Dade Police Department confirmed. Meir was detained on an out-of-state warrant, suggesting his arrest may be the result of an investigation by law enforcement in New York. A spokesperson for the Manhattan District Attorney’s Office didn’t immediately respond to a request for comment. Meir’s attorney also didn’t immediately respond to an email. Meir, the former managing principal of HFZ Capital Group, has been battling multiple lawsuits in New York over his involvement in the once-prominent real estate firm. He’s denied wrongdoing. Read the court decision
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   Reprinted courtesy of Ava Benny-Morrison, Bloomberg
   

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