SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Risk-Shifting Tactics for Construction Contracts

February 24, 2020 — Nate Budde - Construction Executive
Anyone who has worked in the construction industry is familiar with the financial risks involved. With thin margins, cash flow issues and the litany of potential claims and damages that can arise, contractors need to be able to manage that risk properly. There is the right way of going about it, and there's a wrong way. Unfortunately, the wrong way (which involves using leverage and shifting risk to other parties) is the more prevalent approach. There are different contractual tactics employed by owners and general contractors alike to shift financial risk to other parties. Why is construction so financially risky? There are a few different reasons there is so much risk involved. First and foremost, the construction payment chain itself is inherently risky. Owners and lenders release project funds and trust that the money will reach everyone on the job. But that can’t happen unless each link in the payment chain passes payment to the next. That's a lot of trust for an industry that's not particularly known for it. Another reason is how construction projects begin. Upfront payment is rare in this industry. This leads to floating the initial costs, extending credit and potentially borrowing money to do so. And those who typically bear this burden, lower-tier subs and suppliers, are the least equipped for that level of risk. Reprinted courtesy of Nate Budde, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Mr. Budde may be contacted at nate@levelset.com

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South Adams County Water and Sanitation District Takes Proactive Step to Treat PFAS, Safeguard Water Supplies

November 28, 2022 — Cameron McWilliam – Brown and Caldwell
DENVER, Colo., Nov. 15, 2022 — The South Adams Country Water and Sanitation District (District) is enhancing its water treatment process to meet EPA Health Advisory Levels (HALs) for per- and polyfluoroalkyl substances (PFAS) in drinking water supplies. Deemed “forever chemicals,” PFAS is a group of human-made chemicals used in many applications, including stain- and water-resistant fabrics and carpeting, cleaning products, paints, and firefighting foams. PFAS are resistant to grease, oil, water, and heat and may enter water supplies from landfills, the use of firefighting foam (e.g., at airports, fire training facilities, petroleum fires, etc.), industrial sites, and wastewater treatment plant discharge. The District’s water supply, serving over 67,000 residents in Commerce City and parts of unincorporated Adams County, comes primarily from 13 groundwater supply wells. As it continues to meet all federal and state drinking water requirements, the District has been proactively pursuing PFAS reduction strategies since it first discovered a low-level presence in its water supply through voluntary testing in 2018. Upon discovery, the District stopped drawing from its most impacted wells and has been purchasing additional treated water to blend into its supply to reduce PFAS levels along with optimizing use of their existing granular activated carbon treatment system. “Ever since the District first began voluntarily testing for PFAS, we have been monitoring for these compounds and working to reduce their impact on our customers,” said District Manager Abel Moreno. “The EPA has moved the goalposts, and we are taking steps to reduce the presence of PFAS even further. We are committed to finding long-term, sustainable solutions to offer our community high-quality drinking water.” To tackle the challenge, the District has hired leading environmental and construction services firm Brown and Caldwell to design a new 18 million gallons per day (MGD) ion exchange (IX) process at its Klein Water Treatment Facility. IX treatment is currently the most effective technology in removing PFAS/PFOA, consisting of a highly porous resin that acts as a powerful magnet to adsorb and hold onto the substances. The new system at the Klein facility will consist of seven IX treatment trains, a 375,000-gallon equalization tank, and six vertical turbine pumps to feed the IX trains from the District’s 13 groundwater supply wells. Furthermore, nine 5-micron cartridge filters will be installed to remove particulate matter in the water before reaching the IX trains, thus increasing the efficacy of the treatment process. Scheduled for completion by the end of 2026, the new IX treatment facility will provide a peak combined capacity of 26 MGD. About South Adams County Water and Sanitation District The South Adams County Water and Sanitation District is a special district providing water and sanitary sewer service to over 67,000 residents in Commerce City and parts of unincorporated Adams County. For more information about the District, please visit www.sacwsd.org About Brown and Caldwell Headquartered in Walnut Creek, California., Brown and Caldwell is a full-service environmental engineering and construction services firm with 52 offices and 1,800 professionals across North America and the Pacific. For 75 years, our creative solutions have helped municipalities, private industry, and government agencies successfully overcome their most challenging water and environmental obstacles. As an employee-owned company, Brown and Caldwell is passionate about exceeding our clients’ expectations and making a difference for our employees, our communities, and our environment. For more information, visit www.brownandcaldwell.com Read the court decision
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Eighth Circuit Remands to Determine Applicability of Collapse Exclusion

January 06, 2012 — Tred R. Eyerly - Insurance Law Hawaii

The Eighth Circuit determined a jury instruction regarding the applicability of the "all-risk" policy’s exclusion for "collapse" was inadequate. See KAAPA Ethanol, LLC v. Affiliated FM Ins. Co., 2011 U.S. App. LEXIS 22158 (8th Cir. Nov. 3, 2011).

KAAPA had nine large, cylindrical, stainless steel tanks fabricated at its location. Soon after operations began in 2003, some of the tanks experienced unusual movement and began to shift. A geotechnical engineer found "silty clay" had been used for infill instead of compacted granular fill called for in engineering drawings. A year long plan to repair all nine tanks was implemented.

Affiliated’s "all-risk" policy excluded damage caused by faulty workmanship. It also excluded damage caused by settling or cracking. The settling exclusion went on to provide, "This exclusion will not apply to loss or damage resulting from collapse of: a building or structure; or material part of a building or structure." Affiliated denied coverage because of the faulty workmanship and settling exclusions.

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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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Timely Legal Trends and Developments for Construction

February 18, 2019 — Matt Viator - Construction Executive
The construction industry is broad and the legal concerns of industry members can be far-reaching. What seems like tomorrow’s problem often jumps to the forefront and becomes a high priority today. 2018 was full of moments like these – and it’s important to keep track of legal developments for a glimpse at what may be waiting around the corner. With that in mind, here are some of the most important legal developments for the construction industry from the second half of 2018. Sureties and Litigation – a Broad Topic Sureties play a vital role on construction projects. On federal jobs and state, county or municipal jobs, surety bonds are typically required. That means it’s important to stay on top of how the courts are treating surety agreements. Reprinted courtesy of Matt Viator, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Denver Parking Garage Roof Collapses Crushing Vehicles

February 12, 2014 — Beverley BevenFlorez-CDJ STAFF
On Monday night, a parking garage ceiling collapsed at the Park Mayfair Condos in Denver, Colorado, according to KKTV News. Residents claim that “between five and ten vehicles were completely destroyed after the ceiling of the underground garage caved in.” No one was injured from the incident. Structural engineers have not commented “yet on how the collapse occurred, but residents told sister station KCNC that the ceiling fell after a cement beam holding up one side of the roof collapsed.” According to KWGN News, FOX31 interviewed a “passerby” who alleged that he lived in the condominium five years ago, but moved out “because inspectors repeatedly sent notices to fix problems with the garage, but, to his knowledge, no action was taken by the condo complex.” Read the full story at KKTV News... Read the full story at KWGN News... Read the court decision
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Product Defect Allegations Trigger Duty To Defend in Pennsylvania

August 31, 2020 — Stacy M. Manobianca - Saxe Doernberger & Vita
The Third Circuit Court of Appeals recently concluded, in Nautilus Insurance Co. v. 200 Christian Street Partners, LLC., that a duty to defend is triggered when product-related allegations are pled in connection with a claim for defective construction. In Nautilus, the coverage dispute arose out of two independent underlying lawsuits in which homeowners alleged that the homes built by 200 Christian Street Partners (“Christian Street”) were defectively constructed. Christian Street tendered the claim to its insurer, Nautilus Insurance Co. (“Nautilus”), for defense and indemnity.1 Nautilus filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania, seeking a declaration that it was not obligated to defend Christian Street in the underlying actions.2 Specifically, Nautilus asserted that it was not required to provide a defense in the underlying actions because Pennsylvania law does not consider faulty workmanship to constitute an “occurrence” and, therefore, to trigger the policy’s insuring agreement and the insurer’s duty to defend.3 Read the court decision
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Reprinted courtesy of Stacy M. Manobianca, Saxe Doernberger & Vita
Ms. Manobianca may be contacted at smm@sdvlaw.com

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Texas Court Construes Breach of Contract Exclusion Narrowly in Duty-to-Defend Case

September 10, 2018 — Lorelie S. Masters & Tae Andrews - Hunton Insurance Recovery Blog
In a victory for policyholders, a recent decision from the Western District of Texas narrowly construed a common breach-of-contract exclusion and held that the insurer had a duty to defend its insured against an underlying lawsuit over construction defects. The allegations potentially supported a covered claim, as the conduct of the insured’s subcontractor could have been an independent, “but for” cause of the property damage at issue, thereby triggering the insurer’s duty to defend. In Slay, the insured – a construction company – was hired by a city to design and construct a municipal sports complex, including Little League baseball fields, a softball field, parking lots, and a swimming pool. The construction company hired a subcontractor to perform various services on the project, including paving parking lots and laying the cement for the pool. After completing the project, one of the construction company’s employees noticed cracking in the parking lot and the pool. The construction company notified the city and tried to work out a repair plan, but the city refused and eventually sued, alleging construction defects and asserting claims for breach of contract and negligence. Reprinted courtesy of Lorelie S. Masters, Hunton Andrews Kurth and Tae Andrews, Hunton Andrews Kurth Ms. Masters may be contacted at lmasters@HuntonAK.com Mr. Andrews may be contacted at tandrews@HuntonAK.com Read the court decision
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Insurer Incorrectly Relies Upon "Your Work" Exclusion to Deny Coverage

June 10, 2019 — Tred R. Eyerly - Insurance Law Hawaii
The Eleventh Circuit reversed the district court's determination that there was no coverage based upon the policy's "your work" exclusion. Southern-Owners Ins. Co. v. Mac Contractors of Fla, LLC, 2019 U.S. App. LEXIS 10689 (11th Cir. April 11, 2019). Mac Contractors contracted with the homeowners to custom build their home. After construction began, Mac left the site before completing the project and before the issuance of a certificate of occupancy. The homeowners sued, alleged damage to wood floors and the metal roof. Southern-Owners originally agreed to defend under the CGL policy, but later withdrew the defense and filed this action for declaratory relief. The parties cross-filed motions for summary judgment. Southern-Owners argued that the "your work" exclusion applied to bar coverage. The "your work" exclusion barred coverage for "'property damage' to 'your work' arising out of it or any part of it and included in the 'products' completed operations hazard.'" The "products' completed operations hazard" included all "'property damage' occurring away from premises you own or rent and arising out of . . . 'your work' except . . . (1) products that are still in your physical possession; or (2) work that has not yet been completed or abandoned." 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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