SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Contractor Side Deals Can Waive Rights

October 02, 2023 — Christopher G. Hill - Construction Law Musings
Here at Construction Law Musings, we are quite fond of the Federal Miller Act and it’s Virginia counterpart, the “Little” Miller Act. Both of these statutes allow a subcontractor or supplier on a government construction project the security to perform their work with the knowledge that a bonding company will back their claim for payment. These acts are necessary because a construction company cannot file a mechanic’s lien on a government owned piece of property. As a general rule the Miller Acts impose almost strict liability on a contractor and its surety to pay for work performed by a downstream supplier or subcontractor. However, as a recent case out of the Fourth Circuit Court of Appeals makes clear, this rule is not without exceptions. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Texas Federal District Court Dismisses COVID-19 Claim

October 25, 2020 — Tred R. Eyerly - Insurance Law Hawaii
Judge Ezra, formerly on the bench in Hawaii, dismissed a COVID-19 claim pursued by a Texas policy holder. Diesel Barbershop, LLC v. State Farm Lloyds, 2020 U.S. Dist. LEXIS 147276 (W.D. Texas Aug. 13, 2020). Local and state officials in Texas issued shutdown orders in March 2020 due to the spread of the cornavirus. All non-essential businesses, including the insureds' barbershop businesses, were ordered closed from April 2, 2020 until April 30, 2020. The insureds submitted a claim for business interruption and civil authority coverage to their carrier, State Farm. The claim was denied based on the policy's exclusion for loss caused by enforcement of ordinance or law, virus, and consequential losses. For Civil Authority coverage, State Farm contended the policy required that there by physical damage within one mile of the described property and that the damage be the result of a Covered Cause of Loss, which, State Farm asserted, a virus was not. The insureds sued and State Farm moved to dismiss. The court noted cases in which courts had found physical loss even without tangible destruction to the covered property. Yet, the court found that the line of cases requiring tangible injury to property were more persuasive. Therefore, the court found that the insureds failed to plead a direct physical loss. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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False Implied Certifications in Making Payment Requests: What We Can Learn from Lance Armstrong

January 20, 2020 — Brian S. Wood & Alex Gorelik - ConsensusDocs
In April 2018, the Department of Justice announced a $5M settlement reached in its lawsuit against former professional cyclist, Lance Armstrong. While the fallout from Armstrong’s latently-admitted use of performance-enhancing drugs (“PEDs”) was well-publicized, including lost sponsorship deals, stripped Tour de France titles, and damage to his reputation, few were aware of Armstrong’s exposure to liability and criminal culpability for false claims against the government. The DOJ’s announcement reminded Armstrong and the rest of us of the golden rule of dealing with the government: honesty is the best policy. The corollary to that rule is that dishonesty is costly. Armstrong’s liability stemmed from false statements (denying the use of PEDs) he made, directly and through team members and other representatives, to U.S. Postal Service (“USPS”) representatives and to the public. USPS was the primary sponsor of the grand tour cycling team led by Armstrong. The government alleged in the lawsuit that Armstrong’s false statements were made to induce USPS to renew and increase its sponsorship fees, in violation of the False Claims Act. The Statute Enacted in 1863, the False Claims Act (“FCA”) was originally aimed at stopping and deterring frauds perpetrated by contractors against the government during the Civil War. Congress amended the FCA in the years since its enactment, but its primary focus and target have remained those who present or directly induce the submission of false or fraudulent claims. The current FCA imposes penalties on anyone who knowingly presents “a false or fraudulent claim for payment or approval” to the federal Government. A “claim” now includes direct requests to the Government for payment, as well as reimbursement requests made to the recipients of federal funds under federal benefits programs (such as Medicare). Thirty-one states, the District of Columbia, and Puerto Rico have also enacted laws imposing penalties for false claims against state agencies and their subdivisions, with most of these laws modelled after the federal FCA. Reprinted courtesy of Brian S. Wood, Smith, Currie & Hancock, LLP and Alex Gorelik, Smith, Currie & Hancock, LLP Mr. Wood may be contacted at bswood@smithcurrie.com Mr. Gorelik may be contacted at agorelik@smithcurrie.com Read the court decision
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Delaware “occurrence” and exclusions j(5) and j(6)

June 10, 2011 — CDCoverage.com

In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects. Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property

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Apartment Construction Increasing in Colorado while Condo Construction Remains Slow

March 12, 2014 — Beverley BevenFlorez-CDJ STAFF
Dennis Huspeni writing for the Denver Business Journal reported that Colorado is having a surge of new apartment construction, but very little condominium building. According to Huspeni, “some business leaders and government officials worry that Colorado’s construction defect laws” are the reason for the lack of condominium construction. Huspeni in the Denver Business Journal alleged that there is a large “liability risk for builders, developers and subcontractors” because current state laws “make it easier for homeowners’ associations to file large, class-action lawsuits against builders for construction problems associated with new condominiums.” Huspeni spoke with John Batug, senior vice president and regional manager of Wells Fargo’s community banking real estate group, who stated that condo development usually occurs at the same rate as apartment development. Batug alleged that construction defect litigation “seems to have pushed that component of the market out.” A bill that is supposed to “jump-start” the “condominium construction sector will be introduced this session, but its sponsor said he remains unsure what types of legal reform will be a part of it,” reported Ed Sealover in the Denver Business Journal. Lakewood Mayor Bob Murphy told Sealover that “city and business leaders would like to see two particular changes in the law: 1.They want to require a super-majority of condo owners to have to agree to legal action before any lawsuit is filed — instead of just needing two of them to move forward. 2.They want a requirement to attempt some sort of alternative dispute resolution before a suit can be filed.” However, not everyone is in favor of the proposed suggestions. Jonathan Harris, vice president of The Point Homeowners Association, told Sealover that the “bill that the Metro Mayors Caucus wants ignores the fact that arbitration can be an expensive process for property owners.” Read the full story, Huspeni Article... Read the full story, Sealover Article... Read the court decision
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COVID-19 Is Not Direct Physical Loss Or Damage

April 13, 2020 — Joseph Blyskal, Dennis Brown & Michelle Bernard - Gordon & Rees Insurance Coverage Law Blog
Is a cash register that is not being used damaged property? When you need to wash a table, a chair, or a section of flooring with readily available cleaning products to make them safe and useable, are you repairing damaged property? Is a spilled cup of coffee waiting to be wiped up actual damage to the premises? If your customers stay home to help stop the spread of a virus, has there been a physical loss inside your shuttered store or restaurant? The insuring agreements typically found in commercial property insurance policies require “direct physical loss of or damage to” covered property as the triggering event. Without establishing direct physical loss or damage a policyholder cannot meet its burden to trigger coverage for a purely economic loss of business income resulting from shuttering its business due to concerns over exposure to—or even the actual presence of—COVID-19. Despite this well-understood policy language, it is already beyond question that insurers will confront creative—albeit strained—arguments from policyholder firms attempting to trigger coverage for pure economic loss. The scope of the human and economic tragedy we all face will be matched by the scope of the effort to force the financial harm onto insurance companies. The plaintiffs in what appears to be the first-filed case seeking a declaratory judgment in the context of first-party insurance coverage rely on the assertion that “contamination of the insured premises by the Coronavirus would be a direct physical loss needing remediation to clean the surfaces” of its establishment, a New Orleans restaurant, to trigger coverage for business interruption.[1] See Cajun Conti, LLC, et. al. v. Certain Underwriters at Lloyd’s, London, et. al. Civil District Court for the Parish of Orleans, State of Louisiana. The complaint alleges that the property is insured under an “all risk policy” defining “covered causes of loss” as “direct physical loss.” The plaintiffs rely on the alleged presence of the virus on “the surface of objects” in certain conditions and the need to clean those surfaces. They go so far as to claim that “[a]ny effort by [the insurer] to deny the reality that the virus causes physical damage and loss would constitute a false and potentially fraudulent misrepresentation. . . .” Reprinted courtesy of Gordon & Rees attorneys Joseph Blyskal, Dennis Brown and Michelle Bernard Mr. Blyskal may be contacted at tblatchley@grsm.com Mr. Brown may be contacted at dbrown@grsm.com Ms. Bernard may be contacted at mbernard@grsm.com Read the court decision
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WCC and BHA Raised Thousands for Children’s Cancer Research at 25th West Coast Casualty CD Seminar

May 24, 2018 — Beverley BevenFlorez-CDJ STAFF
This year’s annual West Coast Casualty Construction Defect Seminar was once again, a huge success. On May 16-18, 2018 attendees from the legal, insurance, builder, contractor, subcontractor and numerous other industries came from across the United States and several foreign countries to discuss current trends, learn about new laws and regulations affecting the construction defect industry, and meet up with colleagues. Bert L. Howe & Associates, Inc.’s (BHA) Has a Nice Swing Golf Challenge raised $3,500.00 split evenly between the three deserving charities supported by West Coast Casualty: Hawaii’s Children’s Cancer Foundation , St. Jude Children’s Research Hospital, and Shriners Hospital for Children. The West Coast Casualty Construction Defect Seminar has been promoting charitable work for the past twenty-five years. Each year, they promote different charities, and provide multiple ways for individuals and companies to contribute. Whether it’s Buy a Banner, Tennis Shoe Thursday, or Flip Flop Friday, industry members are given opportunities to support worthwhile causes. WCC also supports charitable organizations through every award that they present each year. Donations are made in the winner’s name: For Jerrold S. Oliver Award of Excellence awardees, Habitat for Humanity as well as a local California and Nevada charity; For Legend of an Era Award, the designated charity of West Coast Casualty’s Construction Defect Seminar; and for The Larry Syhre Commitment to Service Award, a donation to The Larry Syhre Foundation. BHA hopes to see you at the next West Coast Casualty Construction Defect Seminar in 2019! Read the court decision
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Design Firm Settles over Construction Defect Claim

July 31, 2013 — CDJ STAFF
A Pennsylvania township has announced that it has reached a settlement with the architectural firm that designed its administration building. Cee Jay Frederick Associates will be paying than $1.05 million to settle claims of defects in the design of the building. West Whiteland’s administration building was completed in July 2007. The first leaks were noticed in November and December 2008. In response, the township stopped payments to the contractor, Magnum, Inc. Magnum sued, claiming that their work was not to blame for the leaks. Magnum joined the township in suing the design firm. Although Cee Jay Frederick Associates will be paying the township to settle the claim, West Whiteland will be paying $75,000 of that back to the firm to settle outstanding bills that had been withheld during litigation. Read the court decision
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