Anti-Concurrent, Anti-Sequential Causation Clause Precludes Coverage
February 26, 2015 —
Tred R. Eyerly – Insurance Law HawaiiWhere the building was damaged by both a covered cause and a non-covered cause, the policy's anti-concurrent/anti-sequential causation clause barred coverage for a collapsed building. Ashrit Realty LLC v. Tower Nat'l Ins. Co., 2015 N.J. Super. Unpub. LEXIS 107 (N.J. Super. Ct. App. Div. Jan. 20, 2015).
The property sustained moderate damage during a storm on August 14, 2011. More extensive damage was caused by Hurricane Irene two weeks later. After the hurricane, a large hole formed due to the collapse of a pipe which ran underneath the property. Once the pipe collapsed, leaking water caused substantial soil erosion, which led to the collapse of the rear portion of the building.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Another Colorado Construction Defect Reform Bill Dies
May 07, 2014 —
Beverley BevenFlorez-CDJ STAFFColorado construction defects reform Senate Bill 220 died when “Senate President Morgan Carroll, D-Aurora, declined to call a second committee to hear” the bill, according to Ed Sealover writing for the Denver Business Journal. Sen. Carroll declared that the “bill backers” did not incorporate any of the “suggestions she or House Speaker Mark Ferrandino had given them.”
“SB 220 would have required condo-unit owners to submit to alternative-dispute resolution such as arbitration or mediation if the unit developer required it,” Sealover reported. “And it would have required that a majority of members of a homeowners association agree to file a lawsuit, a standard significantly larger than the two-person bar that now must be met.”
Bill Cosponsor Sen. Mark Scheffel, R-Castle Rock, “believes litigation reform” will become “an election issue and” that it “has strong momentum heading into the 2015 session.”
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Practical Pointers for Change Orders on Commercial Construction Contracts
December 31, 2014 —
John E. Bowerbank - Newmeyer & DillionConstruction projects pose unique challenges, including keeping costs within budget, meeting project deadlines, and coordinating the work of numerous contractors and subcontractors in the wake of inevitable design revisions and changes to the plans. Anticipating potential project challenges and negotiating contract provisions before commencing work on a project is critical for all parties. Careful planning should reduce the number of contract disputes. This, in turn, can facilitate the completion of a project within budget and on schedule.
“Changes” Clauses in Construction Contracts
Most commercial construction contracts have a clause addressing changes to the contract. A “changes” clause typically requires the mutual agreement of the parties on the scope of any modifications to the contract, as well as the effect on the contract price and timeframe for the work to be performed. This results in what is generally referred to as a “change order.” Many projects have a large number of change orders, which can result in significant cost overruns and delays to the project if the contract contains a complicated change order process. Therefore, in order to minimize cost overruns and project delays, it is crucial to keep the change order process as simplified and streamlined as possible.
In the most basic terms, change orders memorialize modifications to the original contract, and typically alter the contract's price, scope of work, and/or completion dates. A typical change order is a written document prepared by the owner or its design professional, and signed by the owner, design professional, and affected contractors and subcontractors. An executed change order indicates the parties’ agreement as to what changes are taking place, including approval for additional costs and schedule impacts.
While the reasons for change orders and the parties initiating them may vary, all change orders have one feature in common. Effective change orders alter the original contract and become part of the contract. Therefore, from a legal standpoint, change orders must be approached with the same caution and forethought as the original contract.
Practice Pointers for Change Orders
In light of the foregoing, some practice pointers for change orders in commercial construction contracts are as follows:
- Carefully Negotiate and Draft Change Order Provisions in the Original Contract.
A carefully negotiated and drafted “changes” clause that accounts for “unexpected circumstances” or “hidden conditions” can protect the parties from downstream costly disputes.
- Immediately Address Changes by Following the Change Order Process, Including Obtaining Necessary Signatures.
Regardless if you are an owner, general contractor or subcontractor, you should address any proposed change order immediately. Even if a decision maker gives “verbal” approval to go ahead with changed work, the work should not proceed without following the change order process in the original contract. This includes making sure to obtain any necessary signatures for the change order, if at all possible.
- Analyze the Plans and Specifications to Determine Whether “Changes” are Within the Scope of the Original Contract, or Whether They are Extra Work.
Prior to entering an original contract, it is imperative that the parties review the plans and specifications for ambiguities regarding work included in the original contract, versus potential extra work that would require a change order. This is important because a careful review of the plans and specifications sometimes reveals that work believed to be a change order is, in fact, original work, or vice versa.
- Make Sure Requests and Approvals for Change Orders are Done by an Authorized Representative.
When a party requests or gives its approval to a change order, it is important to confirm the request or approval came from an authorized representative.
- Avoid Vague and Open-Ended Change Orders.
Indeed, the vaguer a change order, the more likely it can lead to a dispute. Vague and open-ended change orders, including change orders that provide for payment on a time and materials basis, can be difficult for an owner to budget and schedule. This can lead to disputes as to cost and/or time extensions.
- Oral Assurances for Payment Without a Signed Change Order May Not Be Recoverable.
When a party provides verbal assurances to another party for extra work without following the change order process, there is a much higher likelihood that disputes will occur. Although there is case law that may allow a contractor to recover for extra work in private contracts based on oral promises, the parties should avoid placing themselves in such a legal position. Notably, in public contracts, a contractor may not be able to recover for any extra work without a signed changed order, even with verbal assurances of payment from the owner.
About the Author:
John E. Bowerbank, Newmeyer & Dillion
Mr. Bowerbank is a partner in the Newport Beach office and practices in the areas of business, insurance, real estate, and construction litigation. You can reach John at john.bowerbank@ndlf.com
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Illinois Court Determines Insurer Must Defend Property Damage Caused by Faulty Workmanship
July 11, 2011 —
Tred R. Eyerly - Insurance Law HawaiiThe Illinois Court of Appeals determined the insurer must defend allegations of property damage arising from faulty workmanship. Milwaukee Mut. Ins. Co. v. J.P. Larsen, Inc., 2011 Ill. App. Unpub. LEXIS 1443 (Ill. Ct. App. June, 20, 2011).
Larsen was a subcontractor for Weather-Tite in a condominium building. Weather-Tite installed windows on the project and hired Larsen to apply sealant to the windows. The windows subsequently leaked and caused water damage within the complex.
The homeowner’s association sued Weather-Tite for breach of express and implied warranties. Weather-Tite filed a third-party complaint against Larsen, seeking contribution and alleging that Larsen was in breach of contract by failing to add Weather-Tite as an additional insured under Larsen’s CGL policy.
Both Weather-Tite and Larsen tendered to Larsen’s insurer. Both tenders were denied because the insurer contended the complaints alleged only construction defects, and not “property damage” or an “occurrence” within the terms of the policy.
The insurer filed suit for a declaratory judgment. The trial court granted the insurer’s motion as to Weather-Tite, but granted Larsen’s cross-motion for summary judgment.
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Attorneys' Fees Awarded "Because Of" Property Damage Are Covered by Policy
August 29, 2018 —
Tred R. Eyerly - Insurance Law HawaiiThe Ninth Circuit upheld the District Court's decision that the insured Association of Apartment Owners was entitled to coverage for the attorneys' fees incurred [prior post here].Assoc'n of Apartment Owners of the Moorings, Inc. v. Dongbu Ins. Co., Ltd., 2018 U.S. App. LEXIS 20251 (9th Cir. July 20, 2018).
The District Court for the District of Hawaii granted summary judgment to the AOAO, requiring Dongbu to indemnify the AOAO for an award of attorney's fees that an arbitrator ordered the AOAO to pay to the underlying claimants. The claimants prevailed on a claim that their condominium unit incurred water damage due to a common roof leak. Dongbu's policy required it to reimburse those sums that the AOAO was legally obligated to pay as damages because of property damage. The AOAO became legally obligated to pay the claimants' fees once the state court confirmed the arbitration award. Further, the water damage to the home constituted covered property damage under the policy.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
New York's De Blasio Unveils $41 Billion Plan for Affordable Housing
May 07, 2014 —
Henry Goldman – BloombergNew York Mayor Bill de Blasio presented plans to build and preserve 200,000 units of affordable housing in the next decade by increasing rent protections for the poor and requiring developers to include below-market apartments in newly zoned areas.
The $41.1 billion program, paid for with city, state, federal and private funds, would focus 60 percent on preservation and 40 percent on new construction. About $8.2 billion of the cost would be borne by the city, according to a 116-page report detailing the plan, which de Blasio called the “largest, fastest” affordable-housing program ever attempted at the local level.
De Blasio, 52, a self-described progressive and the city’s first Democratic mayor in 20 years, took office in January after describing income inequality as the most serious issue facing the most populous U.S. city. He turned his attention to housing today after pushing the state legislature in March to grant the city $300 million to institute universal all-day pre-kindergarten.
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Henry Goldman, BloombergMr. Goldman may be contacted at
hgoldman@bloomberg.net
Connecticut Grapples With Failing Concrete Foundations
June 22, 2016 —
Nadine M. Post – Engineering News-RecordConnecticut’s commissioner of consumer protection, Jonathan A. Harris, expects to issue a report this fall on the “potential cause or causes” of failing concrete foundations in northeastern Connecticut. To date, the state Dept. of Consumer Protection has 225 complaints about foundation troubles from owners of single-family houses built between 1983 and 2003. But other building types also are affected, says William F. Neal, a professional engineer who, since 2010, has examined 300 buildings in 19 towns.
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Nadine M. Post, Engineering News-RecordMs. Post may be contacted at
postn@enr.com
The Construction Lawyer as Counselor
June 10, 2019 —
Christopher G. Hill - Construction Law MusingsIt’s been a while since I discussed the role that I believe a construction lawyer should serve. Back in 2013, I discussed how those of us that practice construction law are seen as “necessary evils.” I was thinking over the weekend about certain clients and matters (as I often do, particularly in the shower) and came to the conclusion that the best role for me as a Virginia construction attorney is that of counselor and sounding board for my clients. Sure I come from a litigation background, enjoy working with other construction lawyers here in the Commonwealth, and often the first contact that I have with clients is when there is a problem, but I enjoy my practice, and I believe clients are more satisfied with their interactions with me when I try and provide a more cost effective and pragmatic solution than that which litigation or arbitration provides.
The six years of solo construction practice since 2013 (yes, I’m close to the 9 year mark with my practice) has only served to cement the fact that construction professionals need and want the “counselor” portion of “attorney and counselor at law.” Working as a sort of “in house counsel” to various construction companies, as opposed to simply dealing with the litigation, allows me to better understand their businesses and assist them in avoiding problems through contract review, discussions of situations that come up short of claims, and general risk management. I also get to know these mostly small business owners on a more personal level (sometimes even resulting in a fishing trip or two).
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
