New Jersey Supreme Court Rules that Subcontractor Work with Resultant Damage is both an “Occurrence” and “Property Damage” under a Standard Form CGL Policy
September 01, 2016 —
Beverley BevenFlorez-CDJ STAFFAccording to a client alert by the firm Peckar & Abramson, P.C. (P&A), “In a recent significant decision, the Supreme Court of New Jersey held that defective work of a subcontractor that causes consequential property damage is both an ‘occurrence’ and ‘property damage’ under the terms of a standard form commercial general liability (“CGL”) insurance policy.”
Patrick J. Greene, Jr., and Frank A. Hess of P&A wrote that the Cypress Point Condominium Assoc., Inc. v Adria Towers, LLC, 2016 N.J. Lexis 847 (Aug.4,2016) “decision is important in New Jersey and in other jurisdictions that had relied upon the influential New Jersey case, Weedo v. Stone–E–Brick, Inc., 81 N.J. 233 (1979), that had determined that such claims involved non-insured ‘business risks.’”
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One More Statutory Tweak of Interest to VA Construction Pros
April 25, 2022 —
Christopher G. Hill - Construction Law MusingsWhile I have focused on the
recent “pay if paid” legislation in recent posts, the Virginia General Assembly has taken other action that is of interest to
those of us that represent construction professionals in Virginia.
One such action is yet another tweak to the so-called “wage theft” statute that essentially made a general contractor the guarantor of all wage payments of its downstream construction partners. The first of the tweaks to the statute passed in 2020 was to create a defense for a general contractor if it obtained a written certification of wage payment from its immediate downstream subcontractor. This year, the General Assembly expanded the protection provided by such certification to all subcontractors. In other words, any contractor or subcontractor can now protect itself from wage theft claims by the use of a certification that all wages were paid from its immediate downstream partner. The text of the changes can be found
here. [note that the Governor has sent suggested grammatical amendments that did not affect the substance]
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Insurer Has Duty to Defend Despite Construction Defects
January 06, 2012 —
CDJ STAFFIn a case the judge attributed to “shoddy masonry work,” the US District Court of Illinois has rendered a decision in AMCO Insurance Company v. Northern Heritage Builders. Northern Heritage built a home in Chicago for Michael McGrath (who joined Northern Heritage as a defendant). According to the decision, “seven months after he moved into the house, McGrath noticed water coming in the house and warped millwork.” This was attributed to porous block, installed by the mason with Northern Heritage’s knowledge.
McGrath sued National Heritage for both the damage to his house and its contents. The court rejected his claim for the contents. For the damages to his house, he was awarded $601,570.50 in damages. He also sued his homeowner’s insurance carrier for damages not covered in his suit against National Heritage. There he was awarded $1,130,680.16.
AMCO informed National Heritage that it had neither duty to defend nor duty to indemnify. The judge considered whether AMCO had a duty to defend. Under Illinois law, “damage to a construction project resulting from construction defects is not an ‘accident’ or ‘occurrence’ because it represents the natural and ordinary consequence of faulty construction.” However, it is noted that while if the defects lead only to damage to the project itself, there is no occurrence, “if the building owner asserts damages to other property besides the construction itself, there is an ‘occurrence’ and ‘property damage.’” The judge further noted that were construction defects an occurrence, “shoddy work” would be rewarded by double pay, once by the homeowner and a second time by the insurer. Judge Kendall concluded that as McGrath had alleged damage to the contents of his house, AMCO had a duty to defend National Heritage.
She then looked at the issue of whether AMCO had a duty to indemnify. Should they pay the $601,570.50? Judge Kendall noted that “the duty to indemnify is narrower than the duty to defend.” The key point here was that once McGrath’s insurance carrier covered him for the damage to the contents of his house, “AMCO’s duty to defend ended.” Once McGrath “only sought damages for the natural consequences of faulty workmanship” there was no occurrence, hence nothing for AMCO to cover.
Judge Kendall granted a summary dismissal of AMCO’s claim that they had no duty to defend while upholding their claim that they had no duty to indemnify.
Read the court’s decision…
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World Cup May Pull Out of Brazil because of Construction Delays
January 28, 2014 —
Beverley BevenFlorez-CDJ STAFFBack in October of last year, CNN reported that a judge suspended construction at one of the stadiums being built for this summer’s World Cup in Brazil. The judge stated that the dangers for construction workers included "being buried, run over, falling from heights and being hit by material, among other serious risks,” according to CNN.
Recently, the Los Angeles Times reported that FIFA is threatening to pull out of Brazil because of construction delays: “We cannot organize a match without a stadium,” Jerome Valcke, FIFA’s secretary general, as quoted in the Los Angeles Times. “This has reached a critical point.”
The deadline for completion of the 12 World Cup stadiums was January 1st, but various delays—including “fatal construction accidents at stadiums in Sao Paulo, Brasilia, and Manaus” as well as worker walk offs over pay—forced FIFA to “relax” the deadline.
Read the full story at CNN...
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Future Army Corps Rulings on Streams and Wetlands: Changes and Delays Ahead
November 06, 2023 —
Mark Sudol - Engineering News-RecordNew regulations published by the U.S. Environmental Protection Agency and U.S. Army Corps of Engineers dramatically reduce federal protections of previously regulated streams and wetlands. This change will lead to further controversy and litigation as the legal terms are applied to physical features on the ground leading to conflicting interpretations by the regulated public, environmentalists and federal agencies.
Reprinted courtesy of
Mark Sudol, Engineering News-Record
ENR may be contacted at enr@enr.com
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7 Areas where Technology is Shifting the Construction Business
November 21, 2018 —
Eric Weisbrot – JW Surety BondsThe digital transformation of the last two decades has taken hold of the business environment in a powerful way. Companies in nearly all sectors are experiencing a significant shift in the way business is done, with a heavy focus on improved productivity, increase profitability, and enhanced product and service offerings. The construction industry has been historically slow to update its processes and business models in-line with other industries, but technology is currently making its long-awaited appearance in the sector. Construction professionals can embrace these new solutions to run more efficient businesses and keep a closer eye on profitability by reducing
common costs over time.
These are the seven major areas where technology is changing construction.
1 - Business Management
One of the most apparent shifts taking place in the construction industry thanks to technology is the advancement of business processes and systems behind the scenes. Construction managers and job site owners have countless
digital tools at their fingertips to help with managing all aspects of the business. This includes more efficient ways to manage material use and equipment inventory, logging subcontractor hours and pay, and maintaining reporting requirements from regulatory perspectives. Many software solutions integrate with older, legacy systems, making this change an easy one for construction businesses across the board.
2 – Jobsite Productivity
Another area of transformation in construction is productivity on each job site. Technology has offered job owners and general contractors more efficient methods to keep track of project timelines as well as subcontractor progress from start to finish. The technology advancements in this arena come in the form of wearable devices that track work performed, as well as mobile devices that help keep the often mundane tasks necessary for a project’s success up to date and completed on time.
3 – Worker Safety
Although wearables are being utilized in several different ways in the construction business, these devices are making a significant difference in the safety of workers. From smart helmets to digitally enhanced eyewear, workers are alerted to potential hazards on the job that they otherwise could not identify. Similarly, augmented and virtual reality solutions are being used to train workers before they arrive at a job, preparing them for safety concerns well in advance. Even though most licensed and
bonded construction workers have appropriate training throughout their careers, the addition of these resources has the ability to further reduce the risks often associated with construction work.
4 – Surveying and Monitoring
Unmanned aerial vehicles, also known as
drones, are being used throughout construction. These digital tools are equipped with cameras to offer a bird’s eye view of a construction site to help with surveying and identifying potential hazards for workers. Drones also help with inspections throughout a project’s progression, offering some reduction in cost and improving efficiencies.
5 – Improved Materials
Technology is also playing a role in the materials used on job sites. The addition of 3D printing has proven beneficial for construction companies, as concrete composites, plastics, and other materials are being printed and used to create structures on-site. This offers a more cost-effective and accurate way to complete a project.
6 – Self-operating Equipment
Some technology firms are making waves in the construction industry because they are currently developing and implementing
autonomous equipment solutions. Heavy machinery, like excavators, bricklayers, and bulldozers, are already being used on construction sites to help ease the burden of the labor shortage in the industry. While these machines are not yet mainstream, the benefits they offer mean they are likely to become a staple in construction in the years to come.
7 – Big Data
Finally, technology is shifting the construction business by way of big data analytics. With the detailed information from new software solutions, wearable tech, and drones, construction site managers have more data than they have ever had. This influx of information offers a way to analyze job site progress, budgets, timelines, and efficiency for companies large and small.
Author:
Eric Weisbrot is the Chief Marketing Officer of
JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.
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Guarantor’s Liability on Partially Secured Debts – The Impacts of Pay Down Provisions in Serpanok Construction Inc. v. Point Ruston, LLC et al.
October 24, 2021 —
Margarita Kutsin - Ahlers Cressman & SleightIn
Serpanok Construction, Inc. v. Point Ruston, LLC, Division Two of the Washington Court of Appeals decided an issue of first impression in Washington—whether a guarantor of a partially secured debt remains liable until the last dollar of the entire debt is paid off. After examining cases from other jurisdictions, the court held that that a guarantor is liable until the underlying debt is paid in full unless the agreement contains an express pay down provision. A pay down provision sets forth the guarantor’s right to reduce its obligation to the extent of any payment toward the debt, and it establishes that the guaranty applies only until an amount equivalent to the guaranteed amount is paid off.
The Serpanok decision addressed several other issues, but the published portion of this part-published case focused on whether an entity involved in a real estate development, Point Ruston LLC, was discharged from its guaranty obligation following a foreclosure sale where the proceeds did not cover the entire debt owed to a subcontractor. Point Ruston LLC, Point Ruston Phase II LLC (“Phase II”), and Century Condominiums (“Century”) were affiliated entities (collectively “Point Ruston parties”) that constructed retail and residential structures on a site in Point Ruston. Serpanok Construction Inc. (“Serpanok”) entered into subcontract agreements with Phase II and Century to perform concrete and steel work on a parking garage and movie theater for the project. Point Ruston LLC was not a party to either subcontract.
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Margarita Kutsin, Ahlers Cressman & SleightMs. Kutsin may be contacted at
margarita.kutsin@acslawyers.com
Required Contract Provisions for Construction Contracts in California
October 08, 2014 —
Garret Murai – California Construction Law BlogOne question I get fairly often when drafting or reviewing construction contracts is what provisions, if any, are required in construction contracts in California. This is, of course, different than what should be included in a construction contract which is a post for another day. So, here you go:
Provisions Required in All Construction Contracts
There’s only one requirement applicable to all construction contracts in California. And, that is, that you must include your California contractor’s license number if you are performing or bidding on work requiring a license. California Business and Professions Code section 7030.5 requires that licensed contractors include their license number in “(a) all construction contracts; (b) subcontracts and calls for bid; and (c) all forms advertising, as prescribed by the register of contractors, used by such person.”
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Garret Murai, Kronick Moskovitz Tiedemann & GirardMr. Murai may be contacted at
gmurai@kmtg.com
