The Utility of Arbitration Agreements in the Construction Industry
December 30, 2019 —
Brian L. Gardner & Jason R. Finkelstein - Construction ExecutiveIn today’s ever-evolving world of employment law, it is far from an easy task for construction industry employers to operate their business while successfully navigating all of the potential legal potholes that continue to abound and multiply seemingly with every passing day. This is particularly true in the face of the onslaught of claims lodged by current and former employees in recent years for alleged unpaid wages. While there may not be a “sure bet” way of avoiding such claims, one tool that employers should strongly consider in their arsenal are arbitration and class action waiver agreements.
To that end, last year, the United States Supreme Court rendered its ground-breaking decision in Epic Systems Corp. v. Lewis, 584 U.S. ___ (2018). In Epic Systems, the Supreme Court held that arbitration agreements containing class and collective action waivers of wage and hour disputes are enforceable. At the time of the decision, a split of authority existed among courts across the country as to whether such agreements were viable. On the one hand, several courts contended that class waivers unfairly violated employees’ rights to collectively bargain under the National Labor Relations Act. On the other hand, many other courts were finding that such agreements were fully enforceable and supported by the policies promoted under the Federal Arbitration Act. The Epic Systems Court sided with this latter viewpoint, concluding that the FAA’s clear policy promoting arbitration as a dispute resolution mechanism and private parties’ rights to freely negotiate contracts outweighed any potential arguments against such agreements under the NLRA.
With wage and hour lawsuits being filed against construction industry employers practically daily, the Epic Systems decision is critically important. Construction employers can now freely enter into arbitration and class waiver agreements with their laborers and thereby potentially limit the cost, expense and exposure of fighting such actions in a public forum on a collective or class-wide basis. To be clear, such agreements will not eliminate employees from bringing such wage and hour claims entirely, nor should the use of those agreements signal to employers that they need not make every good-faith effort to comply with their obligations under the Federal Labor Standards Act and/or any applicable state wage and hour laws. But the reality is that arbitration and class waiver agreements can work to avoid tens or hundreds or even thousands of employees from banding together in some of the massive wage and hour lawsuits being filed across the country. Instead, employers can require that those legal battles be conducted by a single plaintiff in a more controlled environment before an arbitrator (or panel of arbitrators).
Reprinted courtesy of
Brian L. Gardner & Jason R. Finkelstein, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Mr. Gardner may be contacted at bgardner@coleschotz.com
Mr. Finkelstein may be contacted at jfinkelstein@coleschotz.com
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Consider the Risks Associated with an Exculpatory Clause
November 24, 2019 —
David Adelstein - Florida Construction Legal UpdatesAn exculpatory clause in a contract is a clause aimed at relieving another party from certain liability. A disclaimer and insulation from liability. Obviously, if you are the party relieving the other party from liability, you want to consider this risk including the potential enforceability of this risk if something goes wrong. If you are the party asking for the insulation from liability, you do not want to create an exculpatory provision that disclaims and insulates you of all liability arising from the contract as it may create an illusory effect – that the agreement is nothing but a naked promise on your end because your promise is fully disclaimed and you are insulated from liability if you break your promise. This could result in an unenforceable contract.
The validity of such an exculpatory clause was at-issue in Pier 1 Cruise Experts v. Revelex Corp., 2019 WL 3024618 (11thCir. 2019). Although not a construction dispute, the exculpatory clause in this case was with two fairly sophisticated parties and expressly insulated one of the contracting parties from “any…damages regardless of kind or type…whether in contract, tort (including negligence), or otherwise.” Pier 1 Cruise Experts, 2019 WL at *7. This is a powerful exculpatory clause because it could be broadly construed to insulate that party from its own breaches of the contract.
In Florida:
[A]n exculpatory clause is enforceable so long as (1) the contracting parties have equal bargaining power and (2) the clause’s provisions are clear and unambiguous. With respect to the latter requirement, ‘the intention to be relieved from liability [must be] made clear and unequivocal and the wording must be so clear and understandable that an ordinary and knowledgeable person will know what he is contracting away.” In the same vein, exculpatory clauses are ‘strictly construed against the party seeking to be relieved of liability.’
Pier 1 Cruise Experts, 2019 WL at *7 (internal citations omitted).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Connecticutt Class Action on Collapse Claims Faces Motion to Dismiss
January 02, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court dismissed some insurers from a class action suit alleging failure to provide coverage for collapse claims. Halloran v. Harleysville Preferred Ins. Co., 2018 U.S. Dist. LEXIS 179807 (D. Conn. Oct. 19, 2018).
A class of homeowners brought suit in 2016 against their homeowners insurance companies ("defendants") for failure to cover collapse claims. Plaintiffs alleged they bought their homes between 1984 and 2015. Each of the homes had basement walls that were "crumbling and cracking due to the oxidation of certain minerals contained in the concrete." As a result of the deteriorating concrete, plaintiffs claimed that their basement walls were in a state of collapse.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Bert L. Howe & Associates Brings Professional Development Series to Their San Antonio Office
March 28, 2014 —
Beverley BevenFlorez-CDJ STAFFMirroring similar seminars currently provided in other regional markets, BHA’s Professional Development Series provides seminar attendees with a heightened level of knowledge and understanding on a wide range of subjects covering construction and construction defect litigation, tailored to the unique needs of local counsel and insureds.
The first seminar in this series will be presented on May 9th, and is entitled THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION.
This course has been approved for Minimum Continuing Legal Education credit by the State Bar of Texas Committee on MCLE in the amount of 1.0 credit hours, of which 0.0 credit hours will apply to legal ethics/professional responsibility credit.
The seminar will be presented by Don MacGregor, general contractor and project manager, at BHA’s San Antonio office during the noontime hour, and luncheon will be provided. As with all BHA Professional Development activities, there is no cost for participation.
Water intrusion through doors, windows and roofing systems, as well as soil and foundation-related movement, and the resultant damage associated therewith, are the triggering effects for the vast majority of homeowner complaints today and serve as the basis for most residential construction defect litigation.
The graphic and animation-supported workshop/lecture activity will focus on the residential construction process from site preparation through occupancy, an examination of associated damages most often encountered when investigating construction defect claims, and the inter-relationships between the developer, general contractor, sub trades and design professionals.
Typical plaintiff homeowner/HOA expert allegations will be examined in connection with those building components most frequently associated with construction defect and claims litigation.
The workshop will examine:
* Typical construction materials, and terminology associated with residential construction
* The installation process and sequencing of major construction elements, including interrelationship with other building assemblies
* The parties (subcontractors) typically associated with major construction assemblies and components
* The various ASTM standard testing protocols utilized to field test buildings
* An analysis of exposure/allocation to responsible parties
Attendance at THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION seminar will provide the attendee with:
* A greater understanding of the terms and conditions encountered when dealing with common construction defect issues
* A greater understanding of contractual scopes of work encountered when reviewing construction contract documents
* The ability to identify, both quickly and accurately, potentially responsible parties
* An understanding of damages most often associated with construction defects, as well as a greater ability to identify conditions triggering coverage
* Assistance in the satisfaction of important continuing education requirements.
Course #: 901290467 / Sponsor #: 14152
To register for the event, please email Don MacGregor at dmac@berthowe.com.
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The United States Court of Appeals, Fourth Circuit, Finds Wrap-Up Exclusion Does Not Bar Coverage of Additional Insureds
February 18, 2020 —
Callie E. Waers - Florida Construction Law NewsThe United States Court of Appeals, Fourth Circuit, recently took a close look at the application of a “controlled insurance program exclusion” (wrap-up exclusion) to additional insureds on a commercial general liability policy. In Cont’l Cas. Co. v. Amerisure Ins. Co., 886 F.3d 366 (4th Cir. 2018), the Fourth Circuit examined the interplay of an enrolled party’s additional insured status on an unenrolled party’s commercial general liability (“CGL”) policy with a wrap-up exclusion. The court applied North Carolina law and found that pursuant to the policy’s own language, the exclusion only applied to the original named insured, not the additional insureds.
The case arose out of an injury incurred by an employee of a second-tier subcontractor during the construction of a hospital. On this particular project, the owner maintained a “rolling owner controlled insurance program” (wrap-up insurance program) in which all tiers of contractors were required to enroll, but enrollment was not automatic. The general contractor was enrolled in the owner’s wrap-up policy, but neither the steel manufacturer subcontractor nor its sub-subcontractor, the steel installation company, were enrolled. The underlying plaintiff was injured while he was an employee of the steel installation company, but he did not name his employer in his personal injury lawsuit.
The Cont’l Cas. Co. case was instituted by Continental Casualty Company (“Continental”) after it defended and settled the underlying plaintiff’s claims against its insured and additional insured, the steel manufacturer and general contractor, respectively. Continental sought to be reimbursed for the $1.7 million settlement and attorneys’ fees and costs incurred for the defense and indemnity of the underlying lawsuit.
Continental alleged that Amerisure Insurance Company (“Amerisure”) breached its duty to defend and Amerisure’s policy provided the primary coverage for both the general contractor and steel manufacturer, who were additional insureds on the Amerisure policy. Amerisure denied a duty to defend the additional insureds based on the presence of the wrap-up exclusion.
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Ryan M. Charlson, Cole, Scott & Kissane, P.A.Mr. Charlson may be contacted at
Ryan.Charlson@csklegal.com
Skanska Will Work With Florida on Barge-Caused Damage to Pensacola Bay Bridge
October 19, 2020 —
Jim Parsons - Engineering News-RecordFlorida Dept. of Transportation investigators continue to assess damage to the Pensacola Bay Bridge, which sustained multiple impacts from two construction barges unmoored by Hurricane Sally’s storm-driven waves on Sept. 15.
Reprinted courtesy of
Jim Parsons, Engineering News-Record
ENR may be contacted at ENR.com@bnpmedia.com
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Illinois Favors Finding Construction Defects as an Occurrence
September 23, 2019 —
Ashley L. Cooper - SDV InsightsA recent Illinois Appellate Court’s decision in, Acuity Ins. Co. v. 950 West Huron Condominium Owners Association, 2019 IL App (1st) 180743 (2019), strengthens Illinois’ precedent favoring construction defects as an occurrence under a Commercial General Liability (“CGL”) insurance policy. Acuity also broadens an insurance carrier’s obligation to defend its insured against construction defect allegations.
In Acuity, the court determined whether claims for construction defect filed against a subcontractor, triggered a duty to defend under a CGL policy. To make its determination, the court focused on the subcontractor’s scope of work. The court notes that a subcontractor normally contracts for a discrete scope of work on a project. Unlike a general contractor, who has control over or contractual obligations for all aspects of the project, a subcontractor does not have those board responsibilities. The court explained that “[f]rom the eyes of the subcontractor, the ‘project’ is limited to the scope of its own work, and the precise nature of any damage that might occur to something outside of that scope is as unknown or unforeseeable as damage to something entirely outside of the construction project.”
Accordingly, the court in Acuity held that when a complaint alleges that a subcontractor’s negligence caused damage to a part of the construction project outside of the subcontractor’s scope of work, the allegations are enough to trigger the insurer’s duty to defend the subcontractor under a CGL policy. The court’s decision in Acuity relied on a similar Illinois Appellate Court decision, Milwaukee Mut. Ins. Co. v. J.P. Larsen, Inc., 956 N.E.2d 524 (Ill. App. 2011). In Larsen, the court reached a similar conclusion where a third-party complaint by a general contractor against a subcontractor alleged that the subcontractor’s improper window caulking caused water intrusion and property damage to other parts of the building. The court in Larsen held that because the complaint alleged not only construction defects, but also damage to other property outside the subcontractor’s scope of work, the insurer had a duty to defend the subcontractor.
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Ashley L. Cooper, Saxe Doernberger & Vita, P.C.Ms. Cooper may be contacted at
alc@sdvlaw.com
Why Financial Advisers Still Hate Reverse Mortgages
October 01, 2014 —
Ben Steverman – BloombergA reverse mortgage is a little like a car airbag. It's nice to know it's there. But if it ever has to be used, the driver’s already in trouble.
New regulations are supposed to improve the unsavory reputation of reverse mortgages, which are loans against a home that don't need to be repaid until the borrower moves. "It used to be the Wild West out there, without much regulation and enormous fees," says financial planner Warren Ward.
While stronger oversight is helping to end past abuses, the number of people taking out reverse mortgages is shrinking. The pace is down 24 percent from last year, government data show, and less than half its peak in 2009. One reason: Many advisers say the loans remain a last resort and can handcuff homeowners who have better options.
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Ben Steverman, BloombergMr. Steverman may be contacted at
bsteverman@bloomberg.net
