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Appellate Court of Maryland Construes Notice Conditions of A312 Performance Bond in Favor of Surety

January 02, 2024 — Joel P. Williams - White and Williams LLP
The Appellate Court of Maryland issued a reported opinion in a case construing an American Institute of Architects (“AIA”) A312 performance bond. In Wildewood Operating Company, LLC v. WRV Holdings, LLC, et al. 2023 Md. App. LEXIS 720 (Oct. 30, 2023), the Appellate Court of Maryland held that a performance bond surety was discharged from liability where the owner/obligee failed to give the surety notice of the contractor’s default termination until after a third party had completed the work. The project concerned the construction of an assisted living facility in St. Mary’s County, Maryland. The owner, Wildewood Operating Company, LLC, entered into an A312-2010 performance bond with Clark Turner Construction, LLC, as contractor, and First Indemnity of America Insurance Company, as surety. When Clark Turner failed to complete certain stormwater management work adjacent to the site, Wildewood, Clark Turner, and other parties entered into a Work Agreement to address completion of the work. The surety was not a party to the Work Agreement. Read the court decision
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Reprinted courtesy of Joel P. Williams, White and Williams LLP
Mr. Williams may be contacted at williamsj@whiteandwilliams.com

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Uniformity in Florida’s Construction Bond Laws Brings About Fairness for the Industry

August 17, 2020 — Gary L. Brown - Construction Executive
Before Florida updated its laws for construction bonds, there were some significant differences between how liens and bond claims were litigated. Forms and procedures lacked uniformity that created unnecessary challenges for the construction industry and legal practitioners serving the industry. Now, more consistency among the laws should benefit contractors, as well as lower-tiered subcontractors and suppliers. Since the updates were instated in October 2019, some of the procedures and rules used for lien enforcement have been extended to bond claims, which may make it easier to resolve differences over payment and performance. That should come as a relief to local contractors and law firms, as well as to the numerous developers and construction companies based outside of Florida that operate in the state or are considering doing so. Florida is now the number one destination for new residents, especially from high-tax states, according to IRS data. With them come new homes, retail centers, offices, industrial space, roads and other infrastructure in what is now the third-most-populous state in the nation. Reprinted courtesy of Gary L. Brown, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Mr. Brown may be contacted at gbrown@kklaw.com

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Professional Services Exclusion Bars Coverage Where Ordinary Negligence is Inseparably Intertwined With Professional Service

August 17, 2017 — Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP
In Energy Ins. Mutual Ltd. v. Ace American Ins. Co. (No. A140656, filed 7/11/17, ord. Pub. 8/10/17), a California appeals court found that a professional services exclusion barred coverage for wrongful death and other claims blamed on pipeline inspectors’ failure to identify and properly mark a gas pipeline that was ruptured during construction of another pipeline, resulting in an explosion and fire. In Energy Ins. Mutual, a pipeline owner hired two temporary construction inspectors through a staffing company. The inspectors had to ensure compliance with engineering and safety standards, practices and procedures for pipeline construction, and understand construction drawings and blueprints. They worked together with one of the owner’s employees to perform daily surveillance to ensure the integrity of the pipeline and avoid third party damage. Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP Mr. Kendrick may be contacted at ckendrick@hbblaw.com Ms. Moore may be contacted at vmoore@hbblaw.com Read the court decision
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"Your Work" Exclusion Bars Coverage

July 06, 2020 — Tred R. Eyerly - Insurance Law Hawaii
Although the appellate court agreed there was property damage caused by an occurrence, the "your work" exclusion barred the insured contractor's claim. King's Cove Marina, LLC v. Lambert Commercial Construction. LLC, 2019 Minn. App. LEXIS 389 (Minn. Ct. App. Dec. 16, 2019). King's Cover Marina sought to expand and remodel its main building. The marina hired Lambert to perform the remodeling project. Lambert hired Roehl Construction, Inc. as a subcontractor to install new concrete footings on the main level of the building and to provide concrete for the second-level mezzanine floor. After completion, the marina sued Lambert for breach of contract and negligence. The marina alleged that the concrete floors on the first and second levels were not constructed in accordance with industry standards or with project plans and specifications, resulting in excessive movement and cracking of the new concrete floors. Lambert tendered its defense to its insurer, United Fire & Casualty Company. United Fire defended under a reservation of rights and later sued Lambert for declaratory judgment. 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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Real Estate & Construction News Round-Up (08/17/22) – Glass Ceilings, Floating Homes and the Inflation Reduction Act

September 12, 2022 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
This week’s round-up features the construction industry’s latest happenings: the Inflation Reduction Act, women shattering the glass ceiling, eco-friendly floating homes, and more.

• The Inflation Reduction Act contains approximately $5 billion for programs to accelerate the construction industry’s shift toward green building materials. (Julie Strupp, Construction Dive)
• According to a new analysis from consultancy Rider Levett Bucknall, the speed of growth for construction costs has only gotten faster. (Erik Sherman, Globe St.)
• Record vacancies in the construction industry has created the opportunity for women to step into what’s previously been an all-male business. (Craig Torres & Maria Paula Mijares Torres, Bloomberg)
• A midlife crisis hits office buildings, with the late-30s/early-40s stable of office product accounting for about a third of the national market today. (Commercial Observer)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Michigan Supreme Court Concludes No Statute of Repose on Breach of Contract

July 19, 2011 — CDJ STAFF

Judge Marilyn Kelly of the Michigan Supreme Court has remanded the case of Miller-Davis Co. v. Ahrens Constr. Inc. (Mich., 2011) to the Court of Appeals, after determining that the court had improperly applied the statute of repose. She reversed their judgment, pending a new trial.



Ahrens Construction was a subcontractor, hired by Miller-Davis to build and install a natatorium room at a YMCA camp in Kalamazoo, Michigan. After its installation, the YMCA discovered a severe condensation problem, causing moisture to “rain” from the roof. The architect, testifying for Miller-Davis, alleged that the problems were due to improper installation by Ahrens. Ahrens claimed that the condensation problem was due to a design error.



When the roof was removed and reconstructed, the moisture problem ended. Ahrens argued that the alleged defects were caused by the removal. Further, in trial Ahrens raised the issue of the statute of repose. The court found in favor of Miller-Davis and did not address the statute of repose.



The Court of Appeals reversed the trial court, determining that the statute of repose had barred the suit. This rendered the other issues moot.



The Michigan Supreme concluded that the issue at hand was “a suit for breach of contract,” and that the Michigan statute of repose is limited to tort actions. They remanded the case to the Court of Appeals to address the issues that had been mooted by the application of the statute of repose.



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FEMA Offers to Review Hurricane Sandy Claims

May 20, 2015 — Beverley BevenFlorez-CDJ STAFF
According to NJ, the Federal Emergency Management Agency (FEMA) will be sending 141,800 letters to homeowners offering to review their Hurricane Sandy claims to see if the homeowners had been shortchanged. Homeowners who do not wish to wait for their letter can call 866-337-4262 or download a form online, reported NJ. If after the initial FEMA review the homeowner remains unsatisfied, he or she can request an additional review by an independent party. Read the court decision
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New York Restrictions on Flow Through Provision in Subcontracts

August 14, 2023 — Bill Wilson - Construction Law Zone
Most subcontracts include a flow through provision (also called flow down and incorporation clauses) stating that the subcontractor and contractor are bound by the same obligations as set forth in the prime contract between the contractor and owner. Many jurisdictions interpret such provisions narrowly, as illustrated in a recent case out of New York. In Amerisure Insurance Company v. Selective Insurance Group, Inc., 2023 WL 3311879, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s interpretation of a flow through clause in a construction subcontract. The Amerisure case involved a dispute over insurance coverage for a personal injury to a subcontractor’s employee on a construction project. The owner of the project sought defense and indemnity from the general contractor (GC) and its insurance company, who in turn sought coverage for the owner as an additional insured under the subcontractor’s policy. The GC based its argument for coverage on the flow through provision in the subcontract. The prime contract required the GC to procure commercial liability insurance including the owner as an additional insured for claims caused by the GC’s negligent acts or omissions. The subcontract likewise required the subcontractor to procure commercial general liability insurance but required only that the GC be named as an additional insured. However, the subcontract also included a flow through clause, binding the subcontractor to the terms of the prime contract and assuming toward the GC all the obligations and responsibilities that the GC assumed toward the owner. However, the subcontract did not expressly require that the subcontractor name the owner as an additional insured, and in order for the owner to qualify as an additional insured under the subcontractor’s insurance policy, the subcontractor must have agreed in the subcontract to name the owner as an additional insured. Read the court decision
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Reprinted courtesy of Bill Wilson, Robinson & Cole LLP
Mr. Wilson may be contacted at wwilson@rc.com

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