FAIRFIELD CONNECTICUT BUILDING EXPERT
DIRECTORY AND CAPABILITIES

How Contractors Can Prevent Fraud in Their Workforce

August 13, 2019 — Sarah Hofmann - Construction Executive
The word fraud might conjure up images of Wall Street executives led out to police cars in cuffs, or sleazy conmen with slicked-back hair. While these ideas might be popular in movies and TV, and often in the news, many small and large businesses fall victim to fraud. Whether it’s a trusted site manager who needed a little extra cash to cover an unexpected bill or the accountant who’s been on board for years and has been slowly siphoning an extra paycheck through a ghost employee each month, fraud might be hitting businesses without them even knowing it. The construction industry is hardly immune to such schemes. According to the ACFE’s 2018 Report to the Nations on Occupational Fraud and Abuse, organizations lose an estimated 5% of their revenue each year to fraud. The median amount lost per instance of fraud was $130,000 across all industries, but fraud cases in the construction industry cost almost twice that much at $227,000 per fraud. They also last longer on average: fraud schemes in the construction industry continue for 24 months before being detected versus the overall median average of 16 months. The more time a scheme continues, the more money is lost for organizations. What types of fraud schemes are most common in the construction industry? The construction industry is more susceptible to certain types of fraud than other industries due to the nature of the work. The companies may be smaller in size leading to fewer resources to combat fraud and more trust among employees. Also, construction companies inherently deal with many vendors, subcontractors, bidding organizations and other various third parties, which can all pose fraud risks. Reprinted courtesy of Sarah Hofmann, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Coverage Rejected Under Owned Property and Alienated Property Exclusions

June 06, 2011 — Tred R. Eyerly

The insured’s request for a defense when sued in a construction defect action was denied under the owned property exclusion and the alienated property exclusion in1777 Lafayette Partners v. Golden Gate Ins. Co., 2011 U.S. Dist. LEXIS 48562 (N.D. Cal. April 29, 2011).



In 1999, Lafayette Partners purchased an abandoned walnut processing factory to convert into living and working units. The property was developed into a rental property from 2000-2001, and thereafter rented. In May 2003, Lafayette Partners entered into a sales agreement with Wolff Enterprises LLC. The sale closed in February 2005. Wolff then converted the rental units into condominiums.



In December 2007, the Walnut Factory Owners Association sued Wolff for construction defects. In Lafayette Partners was added to the suit in 2009. The suit alleged a variety of defective conditions, including the roofs, exteriors, windows, electrical , plumbing, and mechanical components and systems.



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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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Georgia Amends Anti-Indemnity Statute

June 02, 2016 — David R. Cook Jr. – AHHC Construction Law Blog
In its most recent session, the Georgia General Assembly passed HB 943, which amends Georgia’s Anti-Indemnity Statute. The amendment expands the Anti-Indemnity Statute beyond construction contracts to include contracts for engineering, architectural, and land surveying services (“A/E Contracts”). In a prior post, we discussed Georgia’s Anti-Indemnity Statute, which generally prohibits indemnity clauses in construction contracts that require one party (the “Indemnitor”) to indemnify another party (the “Indemnitee”) if property damage or bodily injury results from the Indemnitee’s sole negligence. The prior post, discussed the Supreme Court of Georgia’s broad interpretation of the Anti-Indemnity Statute. HB 943 adds subpart (c), which states:

A covenant, promise, agreement, or understanding in or in connection with or collateral to a contract or agreement for engineering, architectural, or land surveying services purporting to require that one party to such contract or agreement shall indemnify, hold harmless, insure, or defend the other party to the contract or other named indemnitee, including its, his, or her officers, agents, or employees, against liability or claims for damages, losses, or expenses, including attorney fees, is against public policy and void and unenforceable, except for indemnification for damages, losses, or expenses to the extent caused by or resulting from the negligence, recklessness, or intentionally wrongful conduct of the indemnitor or other persons employed or utilized by the indemnitor in the performance of the contract. This subsection shall not affect any obligation under workers’ compensation or coverage or insurance specifically relating to workers’ compensation, nor shall this subsection apply to any requirement that one party to the contract purchase a project specific insurance policy or project specific policy endorsement.

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Reprinted courtesy of David R. Cook Jr., Autry, Hanrahan, Hall & Cook, LLP
Mr. Cook may be contacted at cook@ahclaw.com

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Effects of Amendment to Florida's Statute of Repose on the Products Completed Operations Hazard

November 06, 2018 — Richard W. Brown & Grace V. Hebbel - Saxe Doernberger & Vita, P.C.
Recent amendments to Florida’s Statute of Repose have resulted in concerns as to the scope of risk Florida homebuilders face as a result, and the availability of insurance coverage for such exposures. Previously, the statute provided for a strict, yet straightforward 10-year limitation for latent construction defect claims. Under that language, issues arose when suits were filed near expiration of the statute, because parties seeking to defend claims were given little time to effectively assert related claims. The amendment to the statute serves to lengthen the statute of repose to 11 years for certain cross-claims, compulsory counterclaims, and third-party claims, and in limited circumstances, potentially even longer. Most policies in the Florida marketplace serve to limit coverage under the products-completed operations hazard (“PCO”) to 10 years, and thus, in very limited circumstances, an insured contractor may be exposed to third-party claims under the revised statute. It is important to note, however, that coverage under most CGL policies is occurrence-based, meaning that the policy is triggered by property damage that occurs during the policy period, and therefore, any subsequent claims permitted under the amended statute will necessarily relate to the original property damage that occurred during the 10-year period, and thus, would be covered under the standard 10-year PCO extension. This paper will analyze the anticipated effect of the amendments upon coverage under a 10-year PCO extension. Reprinted courtesy of Richard W. Brown, Saxe Doernberger & Vita P.C. and Grace V. Hebbel, Saxe Doernberger & Vita P.C. Mr. Brown may be contacted at rwb@sdvlaw.com Ms. Hebbel may be contacted at gvh@sdvlaw.com Read the court decision
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Lis Pendens – Recordation and Dissolution

July 28, 2016 — David Adelstein – Florida Construction Legal Updates
When you file a construction lien foreclosure lawsuit, you must also record a lis pendens in the official (public) records against the property. This lis pendens serves as written notice that there is a lawsuit concerning the real property, and more specifically, title relating to that real property. If the property is then sold or rented, the buyer or tenant will ultimately be bound by a final determination relating to the lawsuit concerning title to the property. This is the value in recording a lis pendens and why it is a MUST in any foreclosure lawsuit. (This is the same value in any mortgage foreclosure lawsuit and why lis pendens are recorded in these lawsuits too.) A lis pendens will show up in a title report. In most instances, title companies will not issue a title policy if there is a lis pendens or may require a certain amount of money escrowed as a result of the lis pendens and pending action in order to issue a title policy. Also, a buyer, in particular, and a tenant are not going to want to invest in property where the title to that property is at-issue in a lawsuit. Hence, the lis pendens impacts the sale and potential re-financing of the property. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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U.S. Architecture Firms’ Billing Index Faster in Dec.

February 05, 2015 — Bloomberg News
(Bloomberg) -- Billings at U.S. architecture firms grew at a higher rate in December, according to the American Institute of Architects. Billings at architecture firms, tracked by the Work-on-the-Boards survey, measured 52.2 in December compared to 50.9 a month earlier. The inquiry index, which tracks a firm’s capacity to take on additional work, moved to 58.2. Read the court decision
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Reprinted courtesy of Bloomberg News

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Does the New Jersey Right-To-Repair Law Omit Too Many Construction Defects?

January 06, 2012 — CDJ STAFF

A post on the blog of Liberty Building Forensics Group find fault with the New Jersey Home Warranty and Builders’ Registration Act for not being stringent enough. The poster notes the coverage given under the bill. In the first year, builders are responsible to remedy faulty workmanship and materials and major structural defects. While other protections expire in the first or second year, there is a ten year coverage of major construction defects.

The blogger finds fault with the exclusion New Jersey law places on these claims, arguing that “due to the stringent definition of ‘major construction defects,” the warranty affords no coverage unless the house is practically collapsing.” The bill excludes leaks, cracks, and mold, and further limits claims if the homeowner has failed to inform the builder or insurer of defects, failure to maintain the home, and alterations made by the homeowner.

The intent of the New Jersey law is given as “requiring that newly constructed homes conform to certain construction and quality standards as well as to provide buyers of new homes with insurance-backed warranty protection in the event such standards are not met.” It’s argued in the piece that it instead serves to “strip homeowners of any meaningful means of recovery for discovered construction defects.”

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Coverage Article - To Settle or Not To Settle?

September 20, 2017 — Tred R. Eyerly - Insurance Law Hawaii
My colleagues Rina Carmel, Karin Aldama and I authored an article entitled, "To Settle or Not to Settle? Bad-Faith Implications in Resolving Underlying Actions." The article appears in the current edition of Coverage, published by the Insurance Coverage Litigation Committee of the ABA. The article is here. The article addresses the obstacles faced when settling liability claims. The insurer and insured may have fundamental disagreements on whether to settle or how much to pay in settlement. Should the insured contribute to the settlement? Whether the insurer should seek from the policyholder, or the policyholder offers to make, a settlement contribution presents thorny issues, including whether such a contribution can convert an excess demand into a demand within limits—which, in turn, affects the standard for evaluating the insurer’s response to the third-party demand. On the other hand, the policy holder may not want to settle and set a bad precedent. 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

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