Seattle Washington Building Expert Directory

New York Appellate Division: Second Department Contradicts First Department, Denying Insurer's Recoupment of Defense Costs for Uncovered Claims

March 01, 2021 — Jasjeet K. Sahani - Saxe Doernberger & Vita, P.C.
New York law has historically allowed insurers to recoup defense costs paid on behalf of an insured if there is ultimately no coverage for the underlying action, provided that the insurer reserved its rights to seek reimbursement. On December 30, 2020, the New York Appellate Division, Second Department declined to follow this longstanding principle in American Western Home Insurance Co. v. Gjonaj Realty & Mgt. Co.,1 by holding that the insurer was not entitled to recoup defense costs, even where it was determined that the claim was not covered under the insurance policy. In American W. Home Ins. Co., the insureds were named as defendants in an underlying personal injury action. More than four years after the accident, and a $900,000 default judgment against the insureds, they tendered the lawsuit to their commercial general liability insurer, American Western Home Insurance Company (“American”). American denied coverage based on untimely notice, but after the default judgment was subsequently vacated, it agreed to defend the underlying action subject to a reservation of rights. The reservation of rights specifically reserved American’s right to deny coverage if the vacatur of the default judgment against the insureds was reversed. Further, American reserved its right to recover the costs of defending the underlying litigation. Read the court decision
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Reprinted courtesy of Jasjeet K. Sahani, Saxe Doernberger & Vita, P.C.
Mr. Sahani may be contacted at JSahani@sdvlaw.com

Bertha – The Tunnel is Finished, but Her Legacy Continues

September 28, 2017 — John P. Ahlers - Ahlers & Cressman PLLC
The Tunnel Boring Machine (“TBM”) known as “Bertha,” built by Hitachi Zosen Corp in Osaka, Japan, was the world’s largest TBM at 57.5 ft. in diameter. The TBM was built to drill the Seattle SR 99 Viaduct replacement tunnel. Seattle Tunnel Partners (“STP”) has a contract with the Washington State Department of Transportation (WSDOT) to dig the two-mile tunnel which is now complete. In December of 2013, tunneling was stopped ostensibly because a 119 ft.-long, eight-inch diameter steel well casing halted the TBM. See 2/15 Blog “Bertha is Stuck and She Remains Mired in Controversy.” Reports are that WSDOT installed the pipe in 2002 to measure groundwater levels and the pipe was allegedly mentioned in the reference material provided to bidders. STP had assumed that the pipe had been removed until the steel casing got stuck in Bertha’s cutting teeth, halting progress. See 1/30/14 Blog “Big Bertha Stuck: Differing Site Condition Principles Revisited.” STP had a design-build contract with WSDOT. The contract contains a Differing Site Conditions (“DSC”) clause pursuant to which if the contractor can prove that the eight-inch pipe was an unforeseen condition (not disclosed in the contract documents), and that the unforeseen condition caused the TBM’s failure, STP is entitled to an equitable adjustment of its contract. Read the court decision
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Reprinted courtesy of John P. Ahlers, Ahlers & Cressman PLLC
Mr. Ahlers may be contacted at jahlers@ac-lawyers.com

Homeowners Must Comply with Arbitration over Construction Defects

January 06, 2012 — CDJ STAFF

The California Court of Appeals has upheld a decision by the Superior Court of Kern County that homeowners must comply with arbitration procedures in their construction defect claim. The California Court of Appeals ruled on December 14 in the case of Baeza v. Superior Court of Kern County, denying the plaintiff’s petition that the trial court vacate its order.

The plaintiffs in the case are homeowners in various developments built by Castle & Cook. The homes were sold with a contract that provided for “nonadversarial prelitigation procedures, including mediation, and judicial reference.” The homeowners made defect claims and argued that Castle & Cooke failed to comply with statutory disclosure requirements and that some of the contracts violate related statutes.

The appeals court found that there was no ground for appeal of the lower court’s order to continue with prelitigation procedures. The court noted that the plaintiffs could not seek a review of the mediation until a judgment was issued, but that then the issue would be moot. The court felt that there were issues presented that needed clarification, and so they reviewed this case. This was cleared for publication.

The court considered the intent of the legislature in passing the Right to Repair Act, noting that “under the statutory scheme, the builder has the option of contracting for an alternative nonadversarial prelitigation procedure,” as established in Chapter 4. The court noted that Chapter 4 “contains no specifics regarding what provisions the alternative nonadversarial contractual provisions may or must include.”

The plaintiffs contended that the builder was in violation of the standards set out in Section 912, however the court responded that these sections set out one set of procedures, but they concluded that “if the Legislature had intended the section 912 disclosure provisions…it could have made the requirements applicable to all builders by locating them in a section outside Chapter 4.”

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Federal Arbitration Act Preempts Pennsylvania Payment Act

June 15, 2020 — Wally Zimolong - Supplemental Conditions
I am back. It feels like an entirety since I last posted. But a hellacious trial schedule got me off the blogosphere for some time. Plus, there was nothing to write about. But I am back with a bang thanks to a decision from the Eastern District of Pennsylvania concerning the interplay of a forum selection clause appearing in an arbitration clause in a construction contract and the Pennsylvania Contractor and Subcontractor Payment Act. In Bauguess Electrical Services, Inc. v. Hospitality Builders, Inc., the federal court (Judge Joyner) ruled that the federal arbitration act preempted the Payment Act’s prohibition on forum selection clauses and held that an arbitration must proceed in South Dakota even though the construction project were the work was performed was located in Pennsylvania. The Payment Act applies to all commercial construction projects performed in Pennsylvania. As some you might know, Section 514 of the Payment Act, 73 P.S. 514, prohibits choice of law and forum selection clauses. It states “[m]aking a contract subject to the laws of another state or requiring that any litigation, arbitration or other dispute resolution process on the contract occur in another state, shall be unenforceable.” Therefore, if a construction contract is for a project located in Pennsylvania, Pennsylvania law must apply and all disputes must be adjudicated in Pennsylvania. Read the court decision
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Reprinted courtesy of Wally Zimolong, Zimolong LLC
Mr. Zimolong may be contacted at wally@zimolonglaw.com

Housing Stocks Rally at End of November

December 04, 2013 — CDJ STAFF
The homebuilding industry had something to be thankful for this year. In a report on stocks issued just before the Thanksgiving holiday, Standard Pacific Group and Toll Brothers where outperforming the S&P 500 (Gafisa S.A., a Brazilian firm that trades on the New York Stock Exchange also outperformed the index). Both of the U.S. firms traded about their 50-day moving averages. A third U.S. home builder, The Ryland Group, traded above its 50-day moving average, but did not outperform the S&P 500. Read the court decision
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Reprinted courtesy of

Acord Certificates of Liability Insurance: What They Don’t Tell You Can Hurt You

June 28, 2013 — David McLain
As anyone involved in construction knows, one of the most heavily used forms for tracking insurance information during the subcontracting phase of a project is the Acord Certificate of Liability Insurance. General contractors often require subcontractors to provide these ubiquitous forms as evidence that the subcontractor maintains adequate insurance or insurance which complies with the requirements of the subcontract. Unfortunately, experience has shown that the Acord forms being used today are insufficient sources of the information needed by the developer and general contractor. Historically, developers and GCs would require Acord forms to ensure that a subcontractor had a CGL insurance policy, with sufficient limits, and which named them as additional insureds. More recently, developers and GCs took the additional step of requiring a confirmation on the Acord forms that they were named as additional insureds for both ongoing and completed operations. This is important because coverage for ongoing operations only provides coverage during the construction process. Once the homes are put to their intended use, developers and GCs must be named as additional insureds for completed operations also in order to avail themselves of the benefits of the policy. Unfortunately, this is where the evolution of the use of the Acord forms ended, resulting in a failure to provide sufficient information to protect developers and GCs from the unknown. My firm has had a rash of recent experience where our clients have not obtained the benefit of additional insured coverage for which they bargained because they relied on Acord forms which failed to provide sufficient information to allow them to protect themselves from insufficient insurance coverage on the part of the subcontractors with which they did business. For example, in one recent case a homeowners association alleged insufficient grading and drainage away from the homes within a development built by one of our clients. In reviewing the insurance information from the construction files, we found the Acord forms from the excavating company that performed all of the grading work around the homes. To our delight, the Acord form listed our client as an additional insured for both ongoing and completed operations. Read the court decision
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Reprinted courtesy of David M. McLain
David M. McLain can be contacted at mclain@hhmrlaw.com

Attorneys’ Fees Are Available in Arizona Eviction Actions

December 19, 2018 — Ben Reeves - Snell & Wilmer Real Estate Litigation Blog
The Arizona Court of Appeals recently held that any successful plaintiff in a forcible detainer action (i.e., an eviction action) may recover an award of its attorneys’ fees and costs incurred at trial under A.R.S. § 12-1178(A). See Bank of New York v. Dodev, 1 CA-CV 17-0652 (Ct. App. Nov. 20, 2018). Prior to this decision, caselaw held that fees were only awardable in actions arising out of the termination of a residential lease. RREEF Mgmt. Co. v. Camex Prods., Inc., 190 Ariz. 75, 945 P.2d 386 (Ct. App. 1997). Changes to the statute, however, rendered the prior caselaw obsolete. Although the holding in Dodev is important, the facts of the case are truly astonishing…and somewhat depressing. The Facts In Dodev, Ivaylo Dodev (Dodev) defaulted on his home loan in 2008. He nevertheless “succeeded in remaining on the [p]roperty by filing numerous legal actions that delayed the foreclosure and subsequent trustee’s sale” at least through the date of the opinion—a ten (10) year period. Read the court decision
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Reprinted courtesy of Ben Reeves, Snell & Wilmer
Mr. Reeves may be contacted at breeves@swlaw.com

Construction Contract Terms Matter. Be Careful When You Draft Them.

February 01, 2022 — Christopher G. Hill - Construction Law Musings
In a prior post, I discussed the case of Fluor Fed. Sols., LLC v. Bae Sys. Ordinance Sys in the context of the interplay between fraud, contract, and statutes of limitation. Some cases just keep on giving. This time the case illustrates the need for careful drafting of those pesky, and highly important, clauses in your construction documents. In the current iteration of this ongoing saga, the Court considered the contractual aspects of the matter. As a reminder, the facts are as follows: In May 2011, the United States Army (“Army) awarded BAE Systems Ordnance Systems, Inc. (“BAE”) a contract to design and construct a natural gas-fired combined heating and power plant for the Radford Army Ammunition Plant (“RAAP”). On October 7, 2015, BAE issued a request for a proposal from Fluor Federal Solutions, LLC (“Fluor”) to design and build a temporary boiler facility at a specific location on the RAAP property. On October 13, 2015, the Army modified the prime contract to change the location of the boiler facility. On December 10, 2015, the Army modified the prime contract to require BAE to design and construct a permanent boiler facility. On December 30, 2015, Fluor and BAE executed a fixed-price subcontract for Fluor to design and construct the temporary boiler. Throughout 2016, BAE issued several modifications to Fluor’s subcontract to reflect the modifications BAE received from the Army on the prime contract. On March 23, 2016, BAE directed Fluor to build a permanent – rather than temporary – boiler facility. On March 28, 2016, Fluor began construction of the permanent facility and began negotiations with BAE about the cost of the permanent facility. On September 1, 2016, the parties reached an agreement on the cost for the design of the permanent facility, but not on the cost to construct the permanent facility. On November 29, 2016, the parties executed a modification to the subcontract, officially replacing the requirement to construct a temporary facility with a requirement to construct a permanent facility and agreeing to “negotiate and definitize the price to construct by December 15, 2016.” The parties were unable to reach an agreement on the construction price. 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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