Want More Transit (and Federal Funding)? Build Housing That Supports It
January 08, 2024 —
M. Nolan Gray - BloombergAfter
decades of planning (and $2.1 billion spent), Los Angeles’ newest light rail line opened in October 2022. Joined by geeky rail obsessives and chaperoned children, I rode the K Line on opening day. A blend of underground, elevated and at-grade track, it’s a route only a politician could love. Stations were lavished with public art, and when the train wasn’t stuck in traffic, it glided through the sprawl.
Yet one year later, it is Los Angeles’ least-used line, averaging
just over 2,000 riders on an average weekday this fall.
It isn’t hard to see why: The line begins at a vacant patch in Crenshaw and ends in a low-slung industrial park about six miles away, lined by strip malls the entire way. Walk one block east or west from any given station, and you’ll find yourself amid single-story postwar bungalows on 7,500-square-foot lots — all illegal to redevelop into apartments, thanks to local zoning. The Hyde Park Station deposits riders into a cluster of gas stations and drive-thru fast-food joints.
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M. Nolan Gray, Bloomberg
M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic
April 06, 2020 —
Lori Smith & Patrick Devine - White and Williams Taking Care of Business BlogIncreasingly, M&A transactions are using representation and warranty insurance (RWI) to bridge the gap between a buyer’s desire for adequate recourse to recover damages arising out of breach of representations in the purchase agreement and a seller’s desire to minimize post-closing risk and holdbacks or purchase price escrows traditionally used as the means to satisfy such obligations. When it works, RWI provides a significant benefit to both parties: it mitigates the buyer’s risk in the event that the seller’s representations and warranties prove untrue, and it permits the seller to reduce the portion of the purchase price that it would otherwise have to leave in escrow to cover future claims for breach of those representations and warranties. However, as the coronavirus pandemic ravages the global economy, insurers are now expressly adding COVID-19 exclusions to their RWI policies. If RWI insurers decline coverage for these losses, the allocation of risk in the representations and warranties (and related indemnity provisions) will be more critical than the parties contemplated when they negotiated the transaction documents.
Unlike in the case of a natural disaster, insurers cannot quantify the economic fallout that may result from the coronavirus pandemic. This uncertainty breeds systemic concern about the number of insurance claims that covered parties of all varieties will bring, which in turn creates an industry-wide reluctance to cover the claims. Based on discussions with market participants, we understand that, at the present time, 70% to 80% of RWI insurers are broadly excluding losses resulting from COVID-19 and similar viruses, epidemics, and pandemics (including government actions in response thereto), 5% to 10% are narrowly excluding specific coronavirus-related losses that are more likely to be implicated in a particular transaction (e.g., losses caused by business interruption), and 10% to 15% may be willing to narrow their exclusions upon completion of the underwriting process, depending on their comfort level after conducting rigorous and heightened diligence. Insurers’ concerns are wide-ranging, but the representations and warranties causing the greatest distress appear to be those regarding customer retention, supply chain matters, undisclosed liabilities, and the absence of changes between the date of the seller’s most recent financial statements and the transaction closing date.
Reprinted courtesy of
Lori Smith, White and Williams and
Patrick Devine, White and Williams
Ms. Smith may be contacted at smithl@whiteandwilliams.com
Mr. Devine may be contacted at devinep@whiteandwilliams.com
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California Supreme Court Adopts “Vertical Exhaustion” in the Long-Storied Montrose Environmental Coverage Litigation
June 08, 2020 —
Gregory S. Capps & Michael E. DiFebbo - White and Williams LLPOn April 6, 2020, the California Supreme Court issued a decision that held a policyholder is entitled to access available excess coverage under any excess policy once it has exhausted directly underlying excess policies for the same policy period in Montrose Chemical Corporation v. the Superior Court of Los Angeles County, Supreme Court of California, case number S244737. In its unanimous decision adopting this “vertical exhaustion” requirement, the court rejected the “horizontal exhaustion” rule urged by the policyholder’s excess insurers, under which the policyholder would have been able to access an excess policy only after it had exhausted other policies with lower attachment points from every policy period in which the environmental damage resulting in liability occurred.
In 1990, Montrose sought coverage under primary policies and multiple layers of excess policies issued for periods from 1961 through 1985 for environmental damage liabilities arising from its production of insecticide in the Los Angeles area between 1947 and 1982. The ongoing dispute currently arises out of Montrose’s Fifth Amended Complaint which was filed in 2015 seeking declarations concerning exhaustion and the manner in which Montrose may allocate its liabilities across the policies. Each of the excess policies at issue contained a requirement of exhaustion of underlying coverage. The various policies described the applicable underlying coverage in four main ways: (1) some policies contained a schedule of underlying insurance listing all of the underlying policies in the same policy period by insurer name, policy number, and dollar amount; (2) some policies referenced a specific dollar amount of underlying insurance in the same policy period and a schedule of underlying insurance on file with the insurer; (3) some policies referenced a specific dollar amount of underlying insurance in the same policy period and identified one or more of the underlying insurers; and (4) some policies referenced a specific dollar amount of underlying insurance that corresponds with the combined limits of the underlying policies in that policy period. The excess policies also provided, in various ways, that “other insurance” must be exhausted before the excess policy can be accessed.
Reprinted courtesy of
Gregory S. Capps, White and Williams LLP and
Michael E. DiFebbo, White and Williams LLP
Mr. Capps may be contacted at cappsg@whiteandwilliams.com
Mr. DiFebbo may be contacted at difebbom@whiteandwilliams.com
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Department of Transportation Revises Its Rules Affecting Environmental Review of Transportation Projects
December 04, 2018 —
Anthony B. Cavender - Gravel2Gavel Construction & Real Estate Law BlogOn October 29, the U.S. Department of Transportation (DOT) published a final rule in the Federal Register which amends and revises the environmental National Environmental Policy Act (NEPA) procedures rules employed by the Federal Highway Administration (FHWA), the Federal Railroad Administration (FRA), and the Federal Transit Administration (FTA). There is a renewed interest in transportation infrastructure projects, and recent legislation is intended to accelerate required environmental reviews.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Coverage Under Builder's Risk Policy Properly Excluded for Damage to Existing Structure Only
April 05, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe Tenth Circuit affirmed the District Court's determination that there was no coverage under the builder's risk policy. Gerald H. Phipps, Inc. v. Travelers Prop. Cas. Co. of Am., 2016 U.S. App. LEXIS 2764 (10th Cir. Feb. 16, 2017).
GH Phipps Construction Company (GHP) was hired to renovate and expand the University of Denver's library. GHP was completing installation of a new roof on the library when water from melting snow leaked into the building. The water damaged existing drywall and insulation in the stairwells and elevator shafts that GHP planned to preserve and update. Before the snow melt mishap, GHP had completed some preliminary work in the damaged areas to designate locations for future installation of mechanical, plumbing and electrical systems. But GHP had not yet installed any new materials, updated any lighting fixtures, or patched and painted any existing drywall in the damaged areas.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
General Indemnity Agreement Can Come Back to Bite You
October 21, 2019 —
Christopher G. Hill - Construction Law MusingsI talk about payment bonds often here at Construction Law Musings. I talk a bit less about performance bonds and even less about the General Indemnity Agreements (GIA) that are signed by companies and their principals as part of the agreement between a construction company and its bonding company for the provision of these bonds. However, this does not mean that these GIA’s are not important. In fact, these are the agreements that allow a bonding provider to recoup any money paid out pursuant to either a payment or performance bond.
A 2018 case illustrates their importance. In Allegheny Cas. Co. v. River City Roofing, LLC, the Court considered a claim by Allegheny seeking both specific performance of the collateral agreement and reimbursement of certain expenses and investigative costs expended by Allegheny pursuant to its performance bond. Allegheny sought to be reimbursed for certain payments for siding work, investigative costs, and costs spent enforcing the GIA. Allegheny further sought to force the defendants to post sufficient collateral. To do so, Allegheny sued in the Eastern District of Virginia and then moved for summary judgment stating that the GAI uneuivocally required such a result due to the good faith payment for the siding work and the plain language of the GIA.
In response, the Defendants, River City Roofing and its principals that had personally guaranteed the indemnity, argued that the GIA did not apply to the siding work because only the roofing contract was subject to the performance bond and that any bond claims for which collateral was demanded were inchoate and therefore not proper for specific performance.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Think Before you Execute that Release – the Language in the Release Matters!
June 17, 2024 —
David Adelstein - Florida Construction Legal UpdatesIf you execute a release in exchange for payment or other consideration, remember the language in the release means something. THE RELEASE LANGUAGE MATTERS! And the meaning in the release may be way more than you intended so please make sure you truly digest and consider release language before executing.
This sentiment could not be truer than in the 2009 decision Bell BCI Company v. United States, 570 F.3d 1337 (Fed. Cir. 2009). In this case, a contractor entered into a modification (change order) with the government. The modification included the following language:
increase the contract amount by $2,296,963 … as full and equitable adjustment for the remaining direct and indirect costs of the Floor 4 Fit-out (EWO 240–R1) and full and equitable adjustment for all delays resulting from any and all Government changes transmitted to the Contractor on or before August 31, 2000.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
South Carolina Legislature Redefining Occurrences to Include Construction Defects in CGL Policies
April 01, 2011 —
Beverley BevenFlorez CDJ STAFFThe question of what circumstances must be in place for construction defects to be covered in a general commercial liability (CGL) policies is being raised by the courts and the legislature in South Carolina. The Insurance Journal reports that the American Insurance Association as well as the Property and Casualty Insurers Association of America are speaking out on the issue.
The problem seems to be centered on what defines an “occurrence.” CGL policies were not meant to cover faulty workmanship, according to the filing by the South Carolina Supreme Court. In January of this year, the South Carolina Supreme Court reversed the ruling in Crossmann Communities v Harleysville Mutual declaring that “Respondents cannot show the damage here was the result of an occurrence. Rather, the damage was a direct result and the natural and expected consequence of faulty workmanship; faulty workmanship did not cause an occurrence resulting in damage.” They focused their attention on the word “accident,” stating that there is a fortuity element that is not diminished.
The South Carolina legislature reacted by producing a bill that would add new language directly negating the ruling by the Supreme Court. The South Carolina bill S-431 would change the definition of an occurrence in regards to construction defects as follows: “For a liability insurance policy issued to a construction professional, an ‘occurrence’ means, at a minimum: (1) an accident; or (2) continuous or repeated exposure to substantially the same general harmful condition or substance. No additional requirement of a fortuitous event is needed to constitute an ‘occurrence.’”
S-431 is currently residing in the House Committee on Labor, Commerce and Industry.
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