FAIRFIELD CONNECTICUT BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Recovering For Inflation On Federal Contracts: Recent DOD Guidance On Economic Price Adjustment Clauses

October 24, 2022 — Amanda L. Marutzky - ConsensusDocs
Since October 2020, inflation in the United States has seen its fastest increase in more than 30 years. In the last year alone, inflation has remained as high as 8.6%. This hike has impacted everything from diesel to steel. In the construction industry, the higher prices of goods and services directly affect how contractors draft their construction contracts. The Department of Defense (DoD) has taken note of this dramatic price increase and recently issued guidance to its commanding officers and the procurement community. On May 5, 2022, DoD issued a memorandum titled “Guidance on Inflation and Economic Price Adjustments.” The stated purpose of the memo is “to assist COs to understand whether it is appropriate to recognize cost increases due to inflation under existing contracts as well as offer considerations for the proper use of EPA when entering into new contracts.” DoD’s memo responds to contractor and contracting officer concerns about the sudden and unexpected cost increases in labor and materials. Economic Price Adjustments, or EPAs, are adjustments to a stated contract price upon the occurrence of certain contingencies. FAR 16.203-1. They are of three general types – (1) adjustments based on established prices, (2) adjustments based on actual costs of labor or material, or (3) adjustments based on cost indexes of labor or material. Id. Because EPAs allow for adjustments in a contract price, EPA clauses allow a contractor to recover unanticipated increases in its project costs. For example, FAR 52.216-4, Economic Price Adjustment-Labor and Material, authorizes a contractor to recover for increases in the cost of material or labor. Such recovery is available when costs increase more than 3%, with a maximum recovery of 10% of the original contract price. See also FAR 52.216-2 through FAR 52.216-4. These EPA clauses provide contractors with relief and protection from issues such as dramatic inflation. EPA clauses, however, are not included in all contracts. Read the court decision
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Reprinted courtesy of Amanda L. Marutzky, Watt, Tieder, Hoffar, & Fitzgerald, LLP (ConsensusDocs)
Ms. Marutzky may be contacted at amarutzky@watttieder.com

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Ensuing Loss Provision Does Not Salvage Coverage

December 09, 2011 — Tred R. Eyerly - Insurance Law Hawaii

Water intrusion caused by a construction defect was not covered under the all risk policy’s ensuing loss provision. See Friedberg v. Chubb & Son, Inc., 2011 U.S. Dist. LEXIS 123582 (D. Minn. Oct. 25, 2011).

Extensive water damage was discovered in the insureds’ home when a small hole in the exterior wall was being repaired. Chubb’s adjuster and an expert found water intrusion causing rot, mold, and damage to the home’s wood framing and insulation. Chubb denied coverage because water intruded through the roof and wall, resulting in gradual deterioration. The insureds filed suit.

The policy excluded coverage for construction defects, but insured "ensuing covered loss unless another exclusion applies."

The court agreed there was a prima facie case for coverage because the home suffered a physical loss.

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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com

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Design Professional Needs a License to be Sued for Professional Negligence

January 13, 2017 — David Adelstein - Florida Construction Legal Updates
“With regard to claims for professional negligence, the Florida Supreme Court has explained that ‘where the negligent party is a professional, the law imposes a duty to perform the requested services in accordance with the standard of care used by similar professionals in the community under similar circumstances.’” Sunset Beach Investments, LLC v. Kimley-Horn and Associates, 42 Fla. L. Weekly D130a (Fla. 4th DCA 2017) quoting Moransais v. Heathman, 744 So.2d 973, 975-76 (Fla. 1999). When it comes to professional negligence, two things are important: 1) the person being sued is a professional under the law (person has special education, training, experience, and skill) and 2) the standard of care for that professional (e.g, licensed, professional engineer). In a recent case, an engineering intern—not, a licensed, professional engineer–was sued for professional negligence. The Fourth District Court of Appeal held that an engineering intern is not a person that can be sued for professional negligence, unlike a licensed, professional engineer. Sunset Beach Investments, supra. 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

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Although Property Damage Arises From An Occurrence, Coverage Barred By Business Risk Exclusions

July 08, 2011 — Tred R. Eyerly - Insurance Law Hawaii

The homeowners hired the insured to raise the structure of their home twenty-four inches above the flood zone. Lafayette Ins. Co. v. Peerboom, 2011 U.S. Dist. LEXIS 58985 (S.D. Miss. June 2, 2011). When the insured’s crew returned from lunch one day, they found the house had fallen from hydraulic jacks being used to raise the structure a few inches at a time. There was substantial damage to the entire structure.



The homeowners sued, asserting several claims, including negligence and breach of contract. The complaint alleged the homeowners entered a contract with the insured to raise their structure while maintaining its integrity. However, the insured failed to use proper equipment, which caused the house to fall and be completely destroyed.



The insured tendered the claim to its insurer, Lafayette Insurance Company. Lafayette defended under a reservation of rights and filed suit for a declaratory judgment. Lafayette’s subsequent motion for summary judgment contended there was no “occurrence” alleged in the underlying complaint and, even if there was, the business risk exclusions barred coverage.

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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com

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Beware of Statutory Limits on Change Orders

February 18, 2015 — Craig Martin – Construction Contractor Advisor
While change orders are always part of construction projects, it’s important to know whether a public agency is limited on how much it can increase the scope of the work through change orders. A contractor in Virginia found out the hard way that the state agency did not have the authority to increase the scope of the project and thus the contractor could not collect for the extra work. In Carnell Construction Corp. v. Danville Redevelopment & Housing Authority, the contractor was hired by the housing authority to prepare a site for construction. The project did not go well and both sides blamed the other for delays and increased costs. After being removed from the project, the contractor sued the housing authority for, among other things, breach of contract. The jury awarded the contractor a total of $915,000 for the housing authority’s failure to pay for extra work and improper removal. Read the court decision
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Reprinted courtesy of Craig Martin, Lamson, Dugan and Murray, LLP
Mr. Martin may be contacted at cmartin@ldmlaw.com

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Second Circuit Denies Petitions for Review of EPA’s Final Regulations to Establish Requirements for Cooling Water Intake Structures

August 20, 2018 — Anthony B. Cavender - Gravel2Gavel
On July 23, 2018, the U.S. Court of Appeals for the Second Circuit decided the case of Cooling Water Intake Structure Coalition v. EPA. Environmental conservation groups and industry associations petitioned for review of a final rule promulgated by the U.S. Environmental Protection Agency (EPA) pursuant to section 316(b) of the Clean Water Act (CWA), establishing requirements for cooling water intake structures at existing facilities. Denying the petitions for review, the Court of Appeals summarized:

“Because we conclude, among other things, that both the Rule and the biological opinion are based on reasonable interpretations of the applicable statutes and sufficiently supported by the factual record, and because the EPA 3 gave adequate notice of its rulemaking, we DENY the petitions for review.”

This is a significant CWA and Endangered Species Act (ESA) decision involving the operation of major industrial facilities requiring the daily use of large amounts of water taken from adjacent bodies of water. Read the court decision
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Reprinted courtesy of Anthony B. Cavender, Pillsbury
Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com

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Building a Strong ESG Program Can Fuel Growth and Reduce Company Risk

June 19, 2023 — The Hartford Staff - The Hartford Insights
Companies are addressing today’s evolving ESG (Environmental, Social and Governance) issues like they never have before. From climate change to diversity, equity and inclusion, these topics are at the forefront of discussion for businesses, with many seeking to understand stakeholder concerns and implement strategies to improve their ESG efforts. Stakeholders – consumers, investors and employees alike – have recently become more vocal and united in their demand for sustainable corporate behavior. In fact, 83% of consumers think companies should be actively working on Environmental, Social and Governance (ESG) program best practices and 86% of employees prefer to support or work for companies that care about the same issues they do.1 In turn, companies are addressing these issues like they never have before, in recognition of their importance as indicators of long-term value. Read the court decision
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Reprinted courtesy of The Hartford Staff, The Hartford Insights

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Big Data Meets Big Green: Data Centers and Carbon Removal Compete for Zero-Emission Energy

October 15, 2024 — Robert A. James, Sidney L. Fowler & Ashleigh Myers - Gravel2Gavel Construction & Real Estate Law Blog
Artificial intelligence, data centers, carbon removal and zero-emission power may sound like a winning line (plus the Free Space) on a 2024 Buzzword Bingo card. But the concepts have come into dramatic real-world tension as private and public actors seek to accommodate the digital and environmental imperatives for green energy. After years of fairly stable demand, punctuated by declines during the pandemic and economic slumps, electricity demand is projected to double by 2050. A principal cause is the rapid expansion in the power needed to energize and cool servers amid explosive growth in the number and size of data centers, crypto miners, and other point sources of computation. Data centers were 3% of U.S. demand and are projected to be up to 9% or more by 2030; AI will drive a 160% surge in data center demand by 2030. A commentator notes, “We haven’t seen [growth like] this in a generation.” Reprinted courtesy of Robert A. James, Pillsbury, Sidney L. Fowler, Pillsbury and Ashleigh Myers, Pillsbury Mr. James may be contacted at rob.james@pillsburylaw.com Mr. Fowler may be contacted at sidney.fowler@pillsburylaw.com Ms. Myers may be contacted at ashleigh.myers@pillsburylaw.com Read the court decision
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