Excess Carrier's Declaratory Judgment Action Stayed While Underlying Case Still Pending
June 11, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court determined the excess carrier's declaratory judgment action to establish it had no coverage obligations should be stayed while the underlying case was still pending. Scottsdale Ins. Co. v. Ortiz & Assocs., 2014 U.S. Dist. LEXIS 64286 (D. Ore. May 9, 2014).
The subcontractor's employee was killed on the job site when struck by a dump truck owned by the general contractor, Inland Asphalt Co. Island was sued for wrongful death. Island was an additional insured under the subcontractor's primary policy and excess policy with Scottsdale.
Inland put Scottsdale on notice of the underlying wrongful death lawsuit, but did not tender its defense to Scottsdale.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
When “Substantially Similar” Means “Fundamentally Identical”: Delaware Court Enforces Related Claim Provision to Deny D&O Coverage for Securities Class Action
August 10, 2021 —
Geoffrey B. Fehling, Lawrence J. Bracken II & Lorelie S. Masters - Hunton Andrews KurthA company faces two class action lawsuits—filed by different plaintiffs, complaining of different allegedly wrongful conduct, asserting different causes of action subject to different burdens of proof, and seeking different relief based on different time periods for the alleged harm. Those facts suggest the suits are not “fundamentally identical,” but that is what a Delaware Superior Court recently concluded in barring coverage for a policyholder seeking to recover for a suit the court deemed “related” to an earlier lawsuit first made outside the policy’s coverage period. First Solar Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. N20C-10-156 MMJ CCLD (Del. Super. Ct. June 23, 2021). The decision, which is not on all fours with some of the authority upon which it relies, underscores the inherent unpredictability of “related” claim disputes and need for careful analysis of the policy language against the factual and legal bases of the underlying claims.
Underlying Shareholder Class Actions and D&O Claims
Shareholders of solar panel manufacturer First Solar sued the company and its directors and officers in a class action lawsuit (the “Smilovits Action”) for the class period April 2008 to February 2012. The Smilovits Action asserted federal securities violations arising from First Solar’s alleged misrepresentations about the company’s business strategies, product design, financial strength, and ability to offer solar electricity at comparable rates to conventional energy producers (i.e., achieving “grid parity”), artificially inflated stock price, insider trading, manipulation of solar power metrics, and violations of GAAP accounting standards. First Solar submitted a claim to its D&O insurer, National Union, which provided coverage for the Smilovits Action and exhausted the policy.
Reprinted courtesy of
Geoffrey B. Fehling, Hunton Andrews Kurth,
Lawrence J. Bracken II, Hunton Andrews Kurth and
Lorelie S. Masters, Hunton Andrews Kurth
Mr. Fehling may be contacted at gfehling@HuntonAK.com
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Ms. Masters may be contacted at lmasters@HuntonAK.com
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Contractor Haunted by “Demonized” Flooring
December 14, 2020 —
Garret Murai - California Construction Law BlogThe most un-Halloween of Halloweens has come and gone. If you ask me though, between COVID, protests, fires, hurricanes, the passing of a Supreme Court Justice, and one of the most hotly contested elections in U.S. history, we’ve had enough scares this year to make up for it and then some.
In the next case, Sieg v. Registrar of Contractors, Case No. A156089 (September 28, 2020), 1st District Court of Appeal, one contractor, haunted by “demonized” flooring, and who couldn’t catch a break even with the talisman of a release of liability signed by the homeowner, can add one more to his list of reasons why 2020 needs to be relegated to the history books.
The Sieg Case
In January 2012, homeowners Dennis and Ana Torchia purchased wood flooring for their home in Windsor, California. Specifically, they selected Brazilian Ebony, an exotic species of unusually hard wood, for its appearance and durability.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Key Economic & Geopolitical Themes To Monitor In 2024
January 16, 2024 —
Global Insights Center Staff - The HartfordSlowing US Economic Growth and Flattening Interest Rates
Growth in the first half of 2023 averaged approximately 2.0%, driven mainly by private sector investments outside of the residential housing sector, government spending, and strong consumer demand. In 2024, The Hartford’s Global Insights Center is expecting investments and government spending to continue and may support growth in the year. However, consumer health may start to weaken due to elevated leverage, higher interest rates, and sticky inflation.
Since the Federal Reserve began to increase interest rates, consumer activity and household finances have not been tremendously affected. However, as revolving interest rates (credit card loans) continue to reset that may change, especially since household savings rates fell below pre-pandemic levels and may affect consumer demand.
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Global Insights Center Staff, The Hartford
3 Common Cash Flow Issues That Plague The Construction Industry
August 20, 2019 —
Patrick Hogan, HandleThe construction industry has its fair share of serious cash flow problems. The nature of the industry with long periods between billing and collection, the unpredictability of some business factors, and even the day-to-day decisions of stakeholders have a huge effect on cash reserves.
So how can you protect your business from these cash flow problems? Having a greater awareness of the most common cash flow problems is the key to maintaining your financial stability. Here are some of the top cash flow issues that construction companies need to watch out for.
1. Uncontrolled business growth
The growth of a business as a cash flow problem sounds unintuitive. It is supposed to be a positive thing. So how could it hurt your construction business? When it goes out of control.
During the growth phase, the company will need to expand its operations to meet the increasing demand. This means renting a larger office space, hiring more staff, and buying more inventory, all of which can burn through the company’s cash quickly. The more substantial the level of your growth is, the more your cash flow is affected.
Growth is a good thing, but it is important to be aware of the pitfalls that you could encounter that can lead to cash flow problems. If you are dealing with a volatile growth instead of a stable one, you have to think twice before expanding your operations. A quarter with a large number of construction project deals does not guarantee the same happening in a subsequent quarter.
2. Change of scope or scope creep
The scope, or the statement of work, is the foundation that guides a construction project from start to finish. It specifies all the deliverables needed by the project as agreed by all stakeholders. When the existing requirements are altered, new features are added, or project goals are changed uncontrollably, what happens is scope creep and it can hurt a company’s cash flow.
Construction projects can take a long time before they are finished. A lot of factors can result in changes in the scope. There may be changes in the market strategy, market demand, and other unpredictable variables that make changes in the project requirements a necessity. These changes build up and the project may shift away from what was intended, causing delays, loss of quality, and the rise of planned costs.
One way to prevent scope creep from affecting cash flow significantly is charging a fee for variations of the scope of work. However, having a solid and clear scope baseline is still the best way to combat scope creep. Reminding clients of what you signed up for by referring to the baseline is a good strategy to deal with pushy clients.
3. Payment delays and nonpayment
As previously mentioned, the construction industry tends to have a lengthy period between sending an invoice and collecting payments. And if you are too passive in your collection, clients are more likely to extend pay periods and delay paying you.
Unexpected delays in payment and other payment issues can have a devastating effect on companies that have little to no cash reserves. Without a cash cushion to fall back on, payment issues can threaten the existence of the business itself. If you are unable to manage your receivables, you will not have enough cash to pay the bills, pay employees, and fund your growth.
Payment delays and nonpayment can happen for several reasons. They can be simple like mistakes in the invoicing or the person needed to approve the invoice is unavailable. More serious reasons like a client unsatisfied with your service or, worse, trying to scam you are also possibilities. For these reasons, it is crucial to communicate with clients properly and see if you can agree with a payment structure or pursue legal action.
The construction industry operates slightly differently from other industries. Different projects produce different cash flow issues and require different strategies. By being aware of the top cash flow problems that can hurt your construction business, you will be better equipped in dealing with them in case they happen.
About the Author:
Patrick Hogan is the CEO of Handle, where they build software that helps contractors, subcontractors, and material suppliers secure their lien rights and get paid faster by automating the collection process for unpaid construction invoices. Read the court decisionRead the full story...Reprinted courtesy of
Patrick Hogan, CEO, Handle
The Importance of a Notice of Completion to Contractors, Subcontractors and Suppliers
August 12, 2024 —
William L. Porter - Porter Law GroupThe recording of a valid “Notice of Completion” with the County Recorder is an event of significance to owners, contractors, subcontractors and suppliers alike. The recording of a Notice of Completion is one of several methods used to trigger the time period for the recording of mechanics liens and service of stop payment notices. Although the recording of a Notice of Completion is not absolutely required on any given project, all those working in the construction industry should understand its significance.
When a valid Notice of Completion has not been recorded in relation to a construction project, a contractor, subcontractor, or supplier might from ninety to one hundred fifty days after completion of the project to record a mechanics lien or serve a stop payment notice to secure payment for their services on the project, depending on the facts. However, if a valid Notice of Completion is recorded, then the deadline under most circumstances accelerates and subcontractors and suppliers must record a mechanics lien or serve a stop payment notice within only thirty days thereafter. Under the same circumstances, a prime contractor has only sixty days after the recording of a valid Notice of Completion to record a mechanics’ lien. Failure to meet these deadlines often results in loss of the right to a mechanics lien or stop payment notice. There are limited exceptions to these general deadlines, depending on the facts. If you believe you may have missed an important deadline to seek collection of a construction debt, you should consult with a construction attorney immediately to secure your avenues of collection, including the mechanics lien and stop payment notice remedies, if still available.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Housing Affordability Down
November 20, 2013 —
CDJ STAFFIn what Rick Judson, the chairman of the National Association of Home Builders, describes as a “‘perfect storm’ scenario,” home prices and interest rates are up “at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor.” Residential housing is becoming less affordable.
David Crowe, the Chief Economist for the NAHB, attributes this to “higher mortgage rates and the more than year-long steady increase in home prices,” but he notes that “a family earning a median income can afford 65% of homes recently sold.”
For the last four quarters, the San Francisco-San Mateo-Redwood City area in California holds the dubious distinction of being the nation’s least affordable area. There, a family earning the area’s median income of $101,200 (nearly double the national median) could only afford 16% of the homes sold in the area.
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How Berlin’s Futuristic Airport Became a $6 Billion Embarrassment
October 28, 2015 —
Joshua Hammer – BloombergThe inspectors could hardly believe what they were seeing. Summoned from their headquarters near Munich, the team of logistics, safety, and aviation experts had arrived at newly constructed Berlin Brandenburg International Willy Brandt Airport in the fall of 2011 to begin a lengthy series of checks and approvals for the €600 million ($656 million) terminal on the outskirts of the German capital. Expected to open the following June, the airport, billed as Europe’s “most modern,” was intended to handle 27 million passengers a year and crown Berlin as the continent’s 21st century crossroads.
The team of inspectors, known as ORAT, for Operations Readiness and Airport Transfer, brought in a dummy plane and volunteers as test passengers. They examined everything from baggage carousels and security gates to the fire protection system. The last was an especially high priority: None could forget the 1996 fire that roared through Düsseldorf Airport’s passenger terminal, killing 17.
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Joshua Hammer, Bloomberg
