Fairfield Connecticut Building Expert Directory

The Requirement to Post Collateral Under General Agreement of Indemnity Is Real

May 16, 2022 — David Adelstein - Florida Construction Legal Updates
In prior postings, I have discussed the all-powerful General Agreement of Indemnity (click here and here). This is the document a bond-principal executes to obtain bonds (e.g., performance and payment bonds). Not only does the bond-principal execute this General Agreement of Indemnity, but typically, so do other indemnitors such as the company’s principals and their spouses, other related companies, etc. The objective is that the surety has financial comfort that if a claim is made against the bond, there are avenues where it will get reimbursed and indemnified for any cost it incurs, or payment it makes, relative to that claim against the bond. When a surety issues bonds, the objective is that all losses it incurs gets reimbursed because the bonds are NOT insurance policies. One of the powerful tools the surety can exercise in the General Agreement of Indemnity is to demand the bond-principal and other indemnitors to post collateral in an amount the surety deems sufficient to cover any losses it may incur. This is a right in any General Agreement of Indemnity I have seen and is a right the surety can rightfully exercise. A recent example is shown from the opinion in Philadelphia Indemnity Ins. Co. v. Quinco Electrical, Inc., 2022 WL 1230110 (M.D.Fla. 2022), which pertains to the surety’s motion for preliminary injunction. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

Construction Contract Basics: No Damages for Delay

May 06, 2024 — Christopher G. Hill - Construction Law Musings
After WAY too long a hiatus, I am back with another in my series of “Construction Contract Basics” posts. In past posts, I’ve covered venue provisions, attorney fee provisions, and indemnity clauses. In this post, I’ll share a few thoughts (or “musings”) on the topic of so-called “no damages for delay” clauses. These clauses essentially state that a subcontractor’s only remedy for a delay caused by any factor beyond its control (including the fault of the general contractor), after proper notice to the owner or general contractor, is an extension of time to complete the work. These types of clauses generally make it impossible for a subcontractor (if found in a Subcontract) or Contractor (if found in a Prime Contract) that is delayed through no fault of its own to recover any damages relating to the expenses that are inevitably caused by such delays. Such expenses/damages could include additional supervisory time (including more high-dollar superintendent payments), acceleration costs, demobilization/mobilization costs, and other related expenses. These can add up to real money. Couple that with the inevitable liquidated damages or delay damages that will occur should a contractor or subcontractor cause any delay, and this becomes a very one-sided proposition. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

Rhode Island Affirms The Principle That Sureties Must be Provided Notice of Default Before They Can be Held Liable for Principal’s Default

August 21, 2023 — Dennis Cavanaugh & Tasnuva Islam - Construction Law Zone
Most bond forms in use today, including the standard form AIA A312-2010, contain express condition precedents that trigger a surety’s obligations under the bond. Under a performance bond, the bond obligee is required to provide formal notice to the surety that the principal has materially defaulted and that the surety must begin to perform under the terms of the bond. This principle is grounded in the idea that the surety should have an opportunity to address the default and investigate the claim so as to mitigate its own liability. Failure to provide sufficient notice will discharge the surety of its obligations under the bond. Reprinted courtesy of Dennis Cavanaugh, Robinson & Cole LLP and Tasnuva Islam, Robinson & Cole LLP Mr. Cavanaugh may be contacted at dcavanaugh@rc.com Ms. Islam may be contacted at tislam@rc.com Read the court decision
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Mechanic’s Liens- Big Exception

January 22, 2024 — Christopher G. Hill - Construction Law Musings
Musings has discussed mechanic’s liens on numerous occasions. As we discussed in earlier posts, the general rule is that a mechanic’s lien jumps to the head of the line of liens when filed. This is true in most instances. In the typical case, a contractor puts up a building and, when the owner refuses payment, it files a mechanic’s lien that takes priority over all other liens on that property, including the construction loan deed of trust (or mortgage, depending on your state’s property laws). Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

The Project “Completion” Paradox in California

April 06, 2016 — Garret Murai – California Construction Law Blog
We’ve written before about why the date of “completion” on a California construction project is important, and why, if I may be blunt, determining that date can be as frustrating as a one-legged man in a game of kickass. You see, in California the deadline to record a mechanics lien, serve a stop payment notice, or make a payment bond claim – important construction payment remedies the California State Legislature saw fit to help you get paid – often depends on when a project is “completed.” So, for example, the deadline for direct contractors to record a mechanics lien is 90 days from completion of the project. 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

Don’t Waive Your Right to Arbitrate (Unless You Want To!)

October 19, 2017 — David Adelstein - Florida Construction Legal Updates
Does your construction contract require you to arbitrate (instead of litigate) disputes arising out of the contract? If so, and you want to arbitrate, you do NOT want to do anything inconsistent or adverse with your right to arbitrate. Arbitration can be waived and you do not want arbitration to be waived if you believe this is the best forum to resolve your construction dispute. For instance, actively participating in a lawsuit through the prosecution or defense of issues in the lawsuit is certainly inconsistent with your right to arbitrate. This will result in a waiver of your right to compel arbitration. In a non-construction dispute—a dispute involving a law firm and its former partner—the law firm sued the partner. Chaikin v. Parker Waichman LLP, 42 Fla. L. Weekly D2165b (Fla. 2d DCA 2017). There was a partnership agreement that required disputes to be resolved by arbitration. The law firm sued the partner claiming he violated a previously entered employment agreement that did not require arbitration. When the partner counterclaimed, the law firm claimed that the counterclaim must be compelled to arbitration because the counterclaim arose out of the partnership agreement that required arbitration. Guess what? The trial court actually compelled the counterclaim to arbitration! Crazy! Clearly, any employment agreement and partnership agreement were intertwined such that the dispute would involve the same set of facts and any claims would have a significant relationship to the partnership agreement. Read the court decision
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Reprinted courtesy of David Adelstein, Florida Construction Legal Updates
Mr. Adelstein may be contacted at dadelstein@gmail.com

Ninth Circuit Holds Efficient Proximate Cause Doctrine Applies Beyond All-Risk Policies

April 20, 2016 — Tred R. Eyerly – Insurance Law Hawaii
The Ninth Circuit held that the efficient proximate cause doctrine is not limited to all-risk policies. Olin Corp. v. Continental Cas. Co., 2016 U.S. App. LEXIS 4905 (9th Cir. March 17, 2016). Olin operated a plant that produced industrial chemicals. Continental issued a policy covering the plant's boilers and machinery. In late 2008, the machinery was damaged. Continental denied coverage for damage to Olin's diaphragm cells, which were tanks containing metal cathodes covered by asbestos diaphragms. Continental argued that the damage to the cells was not covered because it was not caused by an "accident." The jury returned a verdict in favor of Olin. 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

When Is an Arbitration Clause Unconscionable? Not Often

April 05, 2021 — Christopher G. Hill - Construction Law Musings
Here at Construction Law Musings, I have discussed the pros and cons of various forms of Alternative Dispute Resolution (ADR), including arbitration. I am a fan of most ADR, but less of one for arbitration than for mediation. However, where the arbitration can be done under a good set of cost-containing rules and with an arbitrator that is experienced in construction, arbitration can help with the resolution of construction claims. Of course, arbitration provisions in construction contracts are routinely upheld by the courts of Virginia with limited exceptions. One of these exceptions is where the arbitration clause is unconscionable and therefore unenforceable. A recent case out of the Western District of Virginia, Marroquin v. Dan Ryan Builders Mid-Atlantic LLC, shows how high a hurdle it is to get a court to invalidate an arbitration provision. In this case, the Marroquins purchased a new construction home from the Defendants. As is often the case in such purchase transactions, Defendant provided a limited warranty agreement (in this case provided by Quality Builders Warranty Corporation (“QBW”)) that along with the sales contract contained a mandatory arbitration provision. The parties executed the limited warranty and the sale proceeded with the Marroquins taking possession. Over the next year or so, the County inspector’s office issued several correction orders to Defendant, and the Marroquins, through counsel, identified numerous defects in construction, many of which they alleged to remain unremedied. Needless to say, they sued for breach of statutory warranty and for breach of the limited warranty. Defendant removed the case to Federal District Court and then moved to compel arbitration. Read the court decision
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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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