A Lack of Sophistication With the Construction Contract Can Play Out In an Ugly Dispute
November 07, 2022 —
David Adelstein - Florida Construction Legal UpdatesThere are times where a lack of sophistication can come back to haunt you. This is not referring to a lack of sophistication of the parties. The parties, themselves, could be quite sophisticated. This is referring to a lack of sophistication with the construction contract forming the basis of the relationship. While parties don’t always want to buy into the contract drafting and negotiation process, it is oftentimes the first document reviewed. Because contract terms and conditions are important. They govern the relationship, the risk, scope, amount, and certain outcomes with disputes. However, a lack of sophistication can play out when that contract that should govern the relationship, the risk, the scope, the amount, and certain outcomes doesn’t actually do that, or if it does, it does it poorly. An example of how bad a dispute can play out when it comes to the lack of sophistication on the front end is Avant Design Group, Inc. v. Aquastar Holdings, LLC, 2022 WL 6852227 (Fla. 3d DCA 2022), where a cost-plus contract was treated as a lump sum contract.
Here, an owner planned to perform an extensive interior build-out to a residential unit. The owner had an out-of-country architect; because the architect was not licensed in Florida, the owner hired a local architect/designer to oversee construction and obtain goods and services for the residential interior build-out. The contract was nothing but a proposal of items and costs. The proposal stated the owner “would pay the cost of goods and services of the vendors, plus pay a ‘20% Interior Design & Administrative Fee’” to the local designer. Avant Design Group, 2022 WL at *1. The proposal further stated, “This preliminary budget of the Client’s construction costs include [sic] anticipated costs for construction materials, labor and sales tax. Any other cost, including but not limited to freight, cartage, shipping, receiving, storage and delivery are not included in the preliminary budget and will be invoiced separately.” Id., n.2.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Massive Redesign Turns Newark Airport Terminal Into a Foodie Theme Park
March 05, 2015 —
Belinda Lanks – BloombergYou wait on what looks like a Soviet bread line. You show your I.D. to a guard. You take off your shoes, empty your pockets, and surrender to a digital scanner.
Fortunately, there’s always a bevy of gleaming cocktail bars and foodie outposts welcoming you to the other side.
No? Get ready. That’s the plan for United Airlines’ Terminal C at Newark Liberty International Airport—a $120 million redesign that includes 55 dining venues with enough celebrity-chef cameos to rival the glitziest of Las Vegas casinos. Instead of the usual McDonald’s, TCBY, and Sbarro, there will be restaurants serving up far-ranging cuisine, from authentic ramen and tacos to gourmet, Neapolitan-style pizza and Swedish meatballs. Since the terminal must remain in operation, all the structures will be assembled off-site and dropped in next year to keep construction time to a minimum.
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Belinda Lanks, Bloomberg
Insurer Must Defend Construction Defect Claims
October 07, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court found that under New York law, the insurer had a duty to defend construction defect claims where damage to property other than the insured's work product was possible. Am.Home Assur. Co. v. Allan Window Techs., 2016 U.S. Dist. LEXIS 101118 (S.D. N. Y. Aug 2, 2016).
Kent Avenue Property ("Kent") sued Allan Window Technologies, Ltd. ("Allan"), alleging that Allan entered a written contract for the design, manufacture, assembly and installation of the window wall systems for a residential condominium building. Pursuant to the contract, Allan agreed to correct all work rejected as defective and to bear all costs for correcting the work. According to the complaint, the window wall systems and vent windows installed by Allan were not water-tight or air-tight, and therefore did not meet the air and water penetration requirements of the contract.The contract had an indemnification provision under which Allan agreed to indemnify, defend and hold harmless Kent from all losses, claims, lawsuits, etc. arising out of damage or injury to property at the project site. Kent sued for: (1) breach of contract; (2) breach of warranty, and (3) contractual indemnity.
American Home agreed to defend Allan under a full reservation of rights. American Home then sued for a declaratory judgment to establish it had no duty to defend or indemnify.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Reasons to Be Skeptical About a Millennial Homebuying Boom in 2016
December 10, 2015 —
Patrick Clark – BloombergPredicting whether millennials are finally going to start buying homes in large numbers has become a seasonal sporting event for real estate experts (also something resembling a periodic parental nag). There's good reason for the abiding fixation. Millennials are the largest generation in the U.S. labor force and something akin to guppies in the housing market food chain: When a first-time buyer moves into an entry-level house, it lets the sellers upgrade. But they've been held back by housing price increases that outpace wage hikes, not to mention limited access to credit, and rising rents that make it harder to save for a down payment.
Will next year be the year that millennials1 finally satisfy builders and real estate agents (not to mention mom and dad) by making their presence felt in the housing market? Yes, but not to the degree that many might hope.
Millennials will make up the largest share of homebuyers in 2016
This is more of a demographic inevitability than a prediction. Historically, the largest share of U.S. homebuyers have been between 25 and 34 years old. Millennials will buy one out of three homes in 2016, predicts Jonathan Smoke, chief economist for Realtor.com, a small uptick from this year. If you prefer your glass half empty, though, Zillow Chief Economist Svenja Gudell thinks the median age of first-time home buyers will hit a new high next year. In either case, Americans will continue the trend of buying their first homes later in life than they did in past decades, as the chart below shows—likely due to some mix of wage stagnation, rising housing costs, and a tendency to start families later in life.
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Patrick Clark, Bloomberg
Negligent Failure to Respond to Settlement Offer Is Not Bad Faith
May 03, 2017 —
Tred R. Eyerly - Insurance Law HawaiiThe Ninth Circuit found that the insurer's negligent failure to respond to a settlement offer did not constitute bad faith. McDaniel v. Gov't Employees Ins. Co., 2017 U.S. App. LEXIS 4029 (9th Cir. March 7, 2017).
McDaniel was the assignee of claims against GEICO assigned by the insured after settling a wrongful death suit. McDaniel alleged that GEICO unreasonably refused to accept a $100,000 policy limits offer. The case went to trial and a jury awarded McDaniel over $3 million against the insured.
On August 7, 2009, McDaniel's attorney Steven Nichols extended a $100,000 policy limits settlement offer with a fifteen day acceptance deadline to GEICO's attorney Michael Griott. The parties subsequently agreed to extend the acceptance deadline to ten days following MacDaniel's service of responses to outstanding interrogatories, which Nichols hand-delivered to Griott on August 27, 2009. On September 1, 2009, Griott emailed GEICO claims adjuster Aldin Buenaventura with a letter attachment indicating that Nichols had submitted the requested interrogatories and, in bold and underlined text, that "[o]ur response to Plaintiff's policy limits demand is due on or before September 11, 2009.
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Tred R. Eyerly - Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
The California Legislature Return the Power Back to the People by Passing the California Consumer Privacy Act of 2018
January 02, 2019 —
Richard H. Glucksman, Esq., David A. Napper, Esq., & Lana Halavi – Chapman Glucksman Dean Roeb & BargerIntroduction
Data breaches and social media hacks are becoming increasingly common stories on the news cycle. Meanwhile, companies have made fortunes on unsuspecting individuals by selling information gathered on the user. Every internet user has wondered why a pop-up ad or banner on an unrelated website relates to something you purchased or searched for "that one time. The California legislature has decided to return some power back to the people with the California Consumer Privacy Act of 2018. California is the first state to introduce privacy protection for individuals personal data and could pave the way for other states to follow suit in the near future.
The California Consumer Privacy Act of 2018
On June 28, 2018, California Governor Jerry Brown signed into law the California Consumer Privacy Act of 2018 ("the Act"). The California Legislature eagerly passed the Act, which comes into effect on January 1, 2020, granting broad new privacy rights to "consumers" and enforcing requirements on the protection of their personal data allowing consumers the right to take back control of their personal information.
A "consumer" is defined as a "resident of California as defined by California's personal income tax regulations. "Personal information" pursuant to the Act is defined as "information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household." Personal information is generally recognized in California as information that can identify a specific individual. The Act also includes information that can be used to identify a household.
Provisions of the Act
Pursuant to the Act, consumers are given the right to know upon request if their personal information is disclosed, and to whom it is disclosed, the right to know what personal information has been collected about them by a business, the right to object to the sale of their personal information, the right to obtain data collected about them, the right to require businesses to obliterate their personal information, and the right to be given equal service and pricing from businesses, including equal prices and quality of goods or services. The Act forbids discrimination by businesses against consumers for exercising their privacy rights pursuant to the Act.
Businesses are, however, permitted to charge different prices or provide different quality of service to consumers if the difference is "reasonably related to the value provided to the consumer by the consumer’s data." Additionally, businesses must allow consumers to exercise their rights by providing to consumers toll-free telephone numbers and/or websites to request such information or privacy. If a consumer sends a verified request for information to a business, the business subsequently has 45 days to give the consumer the requested information from the preceding 12 months with no charge to the consumer.
Who Must Comply with the Act
The Act will apply to for-profit businesses that do business in the State of California, deal with personal information of California residents, and either·(1) have more than $25 million in annual gross revenues, or (2) receive or disclose more than 50,000 California residents' personal information, or(3) derive 50% or greater of California residents' annual revenues from selling their personal information.
Who is Exempted from Compliance with the Act
A for-profit company, a small company, and/or a company that does not derive large amounts of personal information and does not share a brand with an affiliate covered by the Act is exempted from complying with the Act. Additionally, a company is exempted from compliance with the Act "if every aspect of . . . commercial conduct takes place wholly outside of California," meaning: (1) the personal information was collected from the consumer while they were outside California, (2) no sale of their personal information took place in California, and (3) there was no sale of personal information that was collected while the consumer was in California.
Impact
According to 2017 estimates, California's population totaled approximately 39 million people. Clearly the Act will affect an incredibly large amount of people considering it concerns the most populous state in America. The California Consumer Privacy Act of 2018, which is being compared to the EU General Data Protection Regulation for its all-encompassing method and resilient privacy protections is also speculated to have an impact on businesses throughout the nation and around the world. While the costs will likely go up for companies to do business in California, the transparency and trust earned by business and gained by consumers in this new landscape could potential overcome the initial costs to provide these required services. Perhaps most importantly however, is if California consumers decide to take advantage of the new protections, they will no longer have to wonder what for-profit businesses are doing with their data.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard H. Glucksman,
David A. Napper and
Lana Halavi
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
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Independent Contractor v. Employee. The “ABC Test” Does Not Include a Threshold Hiring Entity Test
October 03, 2022 —
Garret Murai - California Construction Law BlogIn 2018, in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018), the California Supreme Court overturned nearly thirty years of jurisprudence governing the manner in which workers are classified as employees or independent contractors. The Dynamex decision replaced the “Borello test,” derived from a case of the same name, S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal.3d 341 (1989), in which the California Supreme Court at the time set forth a variety of factors to be considered when determining whether a worker was an employee or independent contractor.
The Dynamex decision replaced with the “Borello test” with the “ABC test.” Under the ABC test, a worker can be deemed an independent contractor if three conditions are met:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independent established trade, occupation, or business
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Water Damage: Construction’s Often Unnoticed Threat
November 02, 2020 —
Yaron Dycian - Construction ExecutiveFire damage to commercial buildings might get headlines, but water damage, whether to projects under construction or completed buildings, delivers massive financial blows to owners, developers and contractors. The impact is massive, reaching many billions of dollars per year. One water leak on the 19th floor at a construction site of a high-end apartment building in New York City resulted in $30 million in property damage and millions in delayed delivery penalties.
Imagine this all-too-typical scenario: A 20-story building has thousands of pipe connections and many tens of thousands throughout the entire building. It only takes one of those joints failing, perhaps due to human oversight. Early on a Saturday morning when no one is onsite, one of the connections inside a wall begins to leak, slowly at first. In a couple hours the connection fails completely, sending a cascade of water into the building. The site is located next to a highway, so the security guards don’t hear the water flowing.
The leak goes undetected until crews come back onsite on Monday morning. By that point, lower levels of the building have been inundated with thousands of gallons of water that has destroyed construction material, carpeting and electrical switchgear. It’s flowed into the elevator pits and mechanical room.
Reprinted courtesy of
Yaron Dycian, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Dycian may be contacted at
yaron@wint.ai
