Fairfield Connecticut Building Expert Directory

What You Need to Know About “Ipso Facto” Clauses and Their Impact on Termination of a Contractor or Subcontractor in a Bankruptcy

September 12, 2022 — Martha B. Chovanes & Laurie A. Stanziale - ConsensusDocs
While contractor bankruptcies have long been an issue in the construction industry, in the aftermath of COVID-19 and the resultant labor, material and supply-chain delays, contractor bankruptcies are of even greater concern. Many construction contracts attempt to protect the upstream party from a bankruptcy filing of its contractor or subcontractor by providing for an automatic right to terminate a contract, referred to as “ipso facto” clauses. However, such clauses are generally unenforceable as bankruptcy laws, specifically Section 365(e) of Title 11 of the United States Code, protect the party filing for bankruptcy (the “Debtor”) from unilateral termination of the contract by the non-Debtor party. What is an “Ipso Facto” clause? An ipso facto clause is a provision in an agreement which permits its termination by one party due to the bankruptcy, insolvency or financial condition of the other party. Reprinted courtesy of Martha B. Chovanes, Fox Rothschild LLP (ConsensusDocs) and Laurie A. Stanziale, Fox Rothschild LLP (ConsensusDocs) Ms. Chovanes may be contacted at mchovanes@foxrothschild.com Ms. Stanziale may be contacted at lstanziale@foxrothschild.com Read the court decision
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Musk Backs Off Plan for Tunnel in Tony Los Angelenos' Backyard

December 19, 2018 — Sarah McBride & Edvard Pettersson - Bloomberg
Elon Musk’s futuristic tunneling company, Boring Co., is no longer embroiled in a lawsuit with the residents of West Los Angeles. A May lawsuit aimed at stopping the Boring Co.’s proposed tunnel under Sepulveda Boulevard has been settled, according to a notice filed at the Superior Court of Los Angeles County. Neighbors in the Brentwood and Sunset Boulevard areas, near the proposed tunnel, had sued the City of Los Angeles over the Boring Co.’s plans to build a test tunnel without going through an environmental review process, as recommended in April by the city’s public works committee. Read the court decision
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Reprinted courtesy of Sarah McBride & Edvard Pettersson, Bloomberg

Court Grants Motion to Dismiss Negligence Claim Against Flood Insurer

December 22, 2019 — Tred R. Eyerly - Insurance Law Hawaii
The insurer successfully moved to dismiss the insured's negligence claim and demand for jury trial, leaving only the insured's breach of insurance contract claim under the National Flood Insurance Program (NFIP). La Mirage Homeowners Association Inc. v. Wright National Flood Ins. Co., 2019 U.S. Dist. LEXIS 147667 (S.D. Tex. Aug 29, 2019). Hurricane Harvey damaged three of insured homeowner's association condominium's buildings. Wright National Flood Insurance Company was the insurer pursuant to the NFIP when the hurricane damaged the insured's property. The insured alleged that Wright breached the policy by underpaying on the flood loss claims and by not initiating the appraisal the insured demanded. The insured sought recovery for negligence, consequential damage, statutory penalties, attorney's fees and pre-and-post judgment interest. Wright moved to dismiss the extra-contractual claims and to strike the jury demand. The NFIP's regulations allowed homeowners to purchase policies either directly from FEMA or from private insurers that functioned as Write Your Own (WYO) providers and fiscal agents of the United States. The Fifth Circuit had previously held that state law tort claims arising from claims handling by a WYO were preempted under federal law. The court, therefore, was faced with the issue of whether the insured's claims of negligence, attorney's fees, statutory penalties, and interest were policy-handling claims which were preempted by federal law. 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

Supreme Court Finds Insurance Coverage for Intentional (and Despicable) Act of Contractor’s Employee

July 21, 2018 — Garret Murai - California Construction Law Blog
Not to cast shade on your fun in the sun, but here’s an unusual, albeit sad and creepy, one for you. I’m bummed even writing about this one. In Liberty Surplus Insurance Corporation v. Ledesma & Meyer Construction Company, Inc., Case No. S236765 (June 4, 2018), the California Supreme Court addressed whether a general contractor’s commercial general liability carrier was obligated to defend and whether the carrier was liable for damages sustained by a young girl who was molested by an employee of the general contractor during construction at a school. At issue was whether the policy’s definition of an “occurrence,” which was defined, like most policies, as “an accident,” was triggered by the “intentional” and clearly not accidental act of the general contractor’s employee. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel, Rosen, Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

Contractor’s Claim for Interest on Subcontractor’s Defective Work Claim Gains Mixed Results

April 27, 2020 — John J. Gazzola, Associate, Pepper Hamilton LLP - ConsensusDocs
This case concerns calculation of a damages award to a general contractor, Skanska USA Building, Inc., on its claim for breach of contract against its masonry subcontractor, J.D. Long Masonry, Inc., arising from Long’s faulty construction of a masonry façade at a medical research facility in Baltimore. When the façade collapsed and Long failed to repair it, Skanska hired a replacement subcontractor, C.A. Lindman, to remediate Long’s defective work and filed suit against Long to recover the resulting damages. After the court granted Skanska’s motion for summary judgment as to liability, Skanska moved for summary judgment on the issue of damages, relying on the indemnification provision of the subcontract to seek compensatory damages, pre- and post-judgment interest, and litigation fees. In the subcontract, Long agreed to indemnify and hold Skanska harmless from all claims, losses, costs and expenses, including attorneys’ fees, arising before or after completion of Long’s work, caused by, arising out of, resulting from, or occurring in connection with Long’s performance of the work or breach of the subcontract. The court first applied the terms of this provision to award Skanska compensatory damages, holding that Skanska was, as a matter of law, entitled to recover the amount of the Lindman subcontract and general conditions incurred to supervise remediation of Long’s work. The court, however, denied Skanska’s claim for pre-judgment interest on the entirety of these damages. Skanska asserted that it was entitled to pre-judgment interest on the full award, calculated from the date on which it first paid Lindman. The court disagreed, explaining that, under Maryland law, a claimant is entitled to an award of pre-judgment interest as of right only when the amount due is certain, definite and liquidated by a specific date prior to judgment. The court reasoned that, because much of the Lindman subcontract value was composed of later-executed change orders, an award of pre-judgment interest could not be uniformly calculated back to the date of Skanska’s first payment to Lindman. And moreover, because Skanska continued to withhold sums due to Lindman pending resolution of certain issues, awarding Skanska pre-judgment interest on amounts it had not yet paid would result in a “windfall” to Skanska because there was no “use of income” loss to be compensated. Read the court decision
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Reprinted courtesy of John J. Gazzola, Pepper Hamilton LLP
Mr. Gazzola may be contacted at gazzolaj@pepperlaw.com

You May Be Able to Dodge a Bullet, But Not a Gatling Gun

November 16, 2020 — Garret Murai - California Construction Law Blog
In the days before cable, and long before Netflix, I watched my fair share of spaghetti westerns on lazy weekend afternoons. Bullets zinging past cowboys, knocking off hats, and ricocheting off rocks. But while you might get lucky and dodge a bullet, not so with a Gatling gun.* In the next case, C. W. Johnson & Sons, Inc. v. Carpenter, Case No. B300187 (August 7, 2020), a contractor who was unlicensed during a portion of a project dodged a bullet. However, I’m not so sure that he’s going to be able to dodge the hail of bullets that are coming after. The C. W. Johnson & Sons Case As cases go, the C. W. Johnson & Sons case is pretty straightforward. In March 2016, Contractor C. W. Johnson & Sons, a family owned flooring company, was contracted to install flooring at Randall Carpenter’s house for a total contract price of $68,343. Work was performed between March and September 2016 including some warranty, repair and corrective work after September 2016. Read the court decision
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Reprinted courtesy of Garret Murai, Nomos LLP
Mr. Murai may be contacted at gmurai@nomosllp.com

Montrose III: Appeals Court Rejects “Elective Vertical Stacking,” but Declines to Find “Universal Horizontal Exhaustion” Absent Proof of Policy Wordings

September 14, 2017 — Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP
In Montrose Chemical Corp. v. Superior Court (No. B272387; filed 8/31/17) (Montrose III), a California appeals court found that excess insurance is not triggered for continuous and progressive losses until there has been horizontal exhaustion of underlying insurance, but there is no “universal horizontal exhaustion” because the order or sequence in which excess policies may be accessed depends on the specific policy wording at issue. The coverage lawsuit was initiated by Montrose in 1990, when it was named in environmental actions for continuous and progressive property damage emanating from its Torrance chemical plant since the 1960s. Montrose had varying levels of insurance coverage throughout, but the total limits and attachment points of differing levels of excess coverage in any given year had changed from year-to-year. The coverage action was stayed in 2006 due to concern of prejudice to the underlying defense, but the stay was lifted in 2014 with Montrose entering a consent decree in the CERCLA action. Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP Mr. Kendrick may be contacted at ckendrick@hbblaw.com Ms. Moore may be contacted at vmoore@hbblaw.com Read the court decision
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There’s the 5 Second Rule, But Have You Heard of the 5 Year Rule?

April 23, 2024 — Garret Murai - California Construction Law Blog
They’re called deadlines for a reason. Usually, because something really bad could happen if you fail to meet the deadline. For those in the construction industry, you probably aware of the “deadline” to bring a claim for latent defects (10 years from substantial completion); the deadline to file suit to foreclose on a mechanics lien (90 days from the date of recording the mechanics lien), and the deadline for serving a preliminary notice (generally, 20 days from the date labor and/or materials are first furnished). Well, here’s another deadline: Under Code of Civil Procedure section 585.310, you have 5 years after a complaint is filed to bring a case to trial, absent the court granting relief. I could leave it at that, but in the next case, Oswald v. Landmark Builders, Inc., 97 Cal.App.5th 240 (2023), was too interesting to pass up. The Oswald Case On June 28, 2016, homeowners Jack Oswald and Anne Seley sued their general contractor and its subcontractors alleging construction defects at their home. Answers and cross-complaints were filed and on February 2017 the trial court determined the case to be complex and appointed a discovery master. A discovery master, for those who may be unfamiliar, is usually a retired judge or third-party lawyer appointed by a court to oversee discovery in a case such as written discovery, depositions, site inspections, etc. Read the court decision
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Reprinted courtesy of Garret Murai, Nomos LLP
Mr. Murai may be contacted at gmurai@nomosllp.com

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