Auditor: Prematurely Awarded Contracts Increased Honolulu Rail Cost by $354M
February 11, 2019 —
Honolulu Star-Advertiser - Engineering News-RecordJan. 10 --A series of "prematurely" awarded rail contracts doled out to construction companies as early as 2009 prompted delay claims and change orders that increased the cost of the Honolulu rail project by more than $354 million , according to a new report by the Hawaii State Auditor released today.
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Engineering News-RecordENR may be contacted at
ENR.com@bnpmedia.com
Do You Really Want Mandatory Arbitration in Your Construction Contract?
June 25, 2019 —
Christopher G. Hill - Construction Law MusingsIf you are in construction, you have likley run across (or even drafted) a dispute resolution provision into your construction contract. If you’ve been building for any length of time, you’ve read dispute resolution provisions containing mandatory arbitration clauses. These clauses can be found in the AIA documents and in many of the contracts that I review for my clients in my role as construction lawyer and counselor. More often than not, these arbitration clauses require arbitration (read “private court”) and refer to one of several sets of rules, though most likely the American Arbitration Association (“AAA”) Construction Industry rules. In Virginia, as in most of the United States, these clauses are read liberally and enforced by courts except in limited cases such as waiver.
The main justification for requiring arbitration over litigation is to avoid the fees and expense of the litigation process. In the right circumstances, arbitration does just that. With a carefully drafted arbitration clauses and with the right case that requires expertise in construction that a judge does not have (they have to liten to all manner of disputes so are necessarily generalists), arbitration can and should be a streamlined and less expensive version of litigation.
However, in my time as a construction attorney, I have more often run into situations where the arbitration process is at least equally expensive and frankly not much more streamlined. The additional administrative burden coupled with the possibility of paying for at least half of the hourly charges of one to three arbitrators is often not worth the additional expertise of those arbitrators. Many construction claims simply come down to non-payment and whether the work was performed properly. In my opinion, the fine judges in the Commonwealth of Virginia are more than capable of hearing this evidence and making a ruling.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Federal Arbitration Act Preempts Pennsylvania Payment Act
June 15, 2020 —
Wally Zimolong - Supplemental ConditionsI 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.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Montana Supreme Court Tackles Decade-Old Coverage Dispute Concerning Asbestos Mineworker Claims
December 20, 2021 —
Patricia B. Santelle & Paul A. Briganti - White and WilliamsOn November 23, 2021, the Montana Supreme Court issued an almost unanimous decision in National Indemnity Company v. State of Montana, a ten-year-old coverage dispute arising from claims against the State of Montana alleging it had failed to warn of asbestos dust conditions at vermiculite mining and milling operations in and around Libby, Montana (the Libby Mine) run by W.R. Grace & Company and its predecessors. Affirming in part and reversing in part rulings by the trial court that culminated in a $98 million judgment against the State’s CGL insurer from 1973 to 1975, the court addressed issues including the duty to defend/estoppel, the number of occurrences, “trigger of coverage,” and, in a case of first impression, allocation under Montana law.
Whether the Insurer Breached the Duty to Defend Depended Upon the Timeframe
The court looked at whether (1) the insured provided sufficient information to bring the claims within the possibility of coverage under the subject policy and (2) the insurer gave “the necessary substance to” fulfilling its duty to defend at four points in the relevant timeframe:
- The insurer did not breach its duty at the time the State initially tendered the Libby Mine claims because the State defended the claims through its self-insurance program, hired its own counsel, managed the litigation, made its own defense decisions, and took the position with the insurer that the matter was “under control” and “nothing was left to be done[.]”
Reprinted courtesy of
Patricia B. Santelle, White and Williams and
Paul A. Briganti, White and Williams
Ms. Santelle may be contacted at santellep@whiteandwilliams.com
Mr. Briganti may be contacted at brigantip@whiteandwilliams.com
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Mid-Session Overview of Colorado’s 2017 Construction Defect Legislation
March 16, 2017 —
David McClain - Colorado Construction LitigationAs the 2017 Colorado legislative session reaches the halfway point, I thought it an opportune time to provide a quick overview of the construction defect bills introduced so far this session.
Senate Bill 17-045, “Concerning a Requirement for Equitable Allocation of the Costs of Defending a Construction Defect Claim,” sponsored by Senators Grantham and Angela Williams and Representatives Duran and Wist, was introduced on January 11th and assigned to the Senate Business, Labor, and Technology Committee. This bill affects construction defect actions in which more than one insurer has a duty to defend a party by providing that if the carriers cannot agree regarding how to allocate defense costs within 45 days of the filing of a contribution action, a court must conduct a hearing regarding the apportionment of the costs of defense, including reasonable attorneys’ fees, among all carriers sharing in the duty to defend within 60 days after an insurer files its claim for contribution, unless the carriers agree to resolve the issue through a mutually agreeable, alternative process. The bill further provides that the court must make a final apportionment of costs after entry of a final judgment resolving all of the underlying claims against the insured. The bill also makes clear that an insurer seeking contribution may also make a claim against an insured or additional insured who chose not to procure liability insurance during any period of time relevant to the underlying action. Finally, the bill states that a claim for contribution may be assigned and that bringing such a claim does not affect any insurer’s duty to defend. The Senate Business, Labor, and Technology Committee heard SB 17-045 on February 8th and referred the bill, as amended, to the Senate Appropriations Committee.
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David M. McLain, Higgins, Hopkins, McLain & Roswell, LLCMr. McLain may be contacted at
mclain@hhmrlaw.com
Free Texas MCLE Seminar at BHA Houston June 13th
May 29, 2014 —
Beverley BevenFlorez-CDJ STAFFThere are just two weeks remaining to sign up for Bert L. Howe & Associate’s next Texas MCLE seminar, THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION.
This activity will be presented on Friday, June 13th at noon, at BHA’s Houston offices, located at:
800 Town & Country Blvd.
Suite 300
Houston, TX 77024
There is no cost for attendance at this seminar and lunch will be provided.
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.
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
*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
Course #: 901290467 / Sponsor #: 14152. To register for the event, please email Don MacGregor at dmac@berthowe.com. If you have any questions, please feel free to contact Don at (800) 482-1822 (office) or (714) 713-4956 (cell).
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Fourth Circuit Finds Insurer Reservation of Rights Letters Inadequate to Preserve Coverage Defenses Under South Carolina Law
January 17, 2023 —
Jason Taylor - Traub Lieberman Insurance Law BlogIn Stoneledge at Lake Keowee Owners Ass'n v. Cincinnati Ins. Co., 2022 U.S. App. LEXIS 34292 (D.S.C. Dec. 13, 2022), the Fourth Circuit Court of Appeals addressed the adequacy of reservation of rights letters issued by Builders Mutual Insurance Company (“Builders Mutual”) and Cincinnati Insurance Company (“Cincinnati”) to their insureds, Marick Home Builders, LLC (“Marick”) and Rick Thoennes (“Thoennes”), Marick’s managing member, for an underlying construction defect lawsuit. In short, the Fourth Circuit found that the reservation letters were inadequate to preserve the insurers’ coverage defenses because they did not sufficiently explain the basis of the carriers’ position.
Stoneledge, a homeowners association, managed a community of 80 townhomes on South Carolina’s Lake Keowee. In 2009, Stoneledge brought suit against Marick and Thoennes, among other defendants, alleging construction defects in the townhomes that resulted in water intrusion and other physical damage. Marick and Thoennes held commercial general-liability policies through Cincinnati and Builders Mutual covering, in relevant part, “property damage” as defined by the policies. Builders Mutual issued policies covering the period from January 2004 to October 2007, and Cincinnati issued policies covering the period from April 2008 to April 2012. After Marick notified the insurers of the underlying action, Builders Mutual sent Marick two reservation of rights letters, one in May 2009 and one in July 2009. Cincinnati sent Marick one reservation of rights letter in March 2010.
In March 2014, Stoneledge brought a declaratory-judgment action against Cincinnati seeking coverage for a judgment entered in the underlying action. The insurers removed the case to federal court, and in September 2016, Stoneledge amended its complaint, adding Builders Mutual as a defendant and seeking coverage for additional damages pursuant to a settlement agreement entered into by Stoneledge, Marick, Thoennes. The district court granted Stoneledge's motion for summary judgment, primarily on the ground that the insurers failed to reserve the right to contest coverage. The insurers appealed to the Fourth Circuit, which affirmed.
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Jason Taylor, Traub LiebermanMr. Taylor may be contacted at
jtaylor@tlsslaw.com
Privileged Communications With a Testifying Client/Expert
June 10, 2019 —
Shannon M. Warren - The Subrogation StrategistIn
In re City of Dickinson, 568 S.W.3d 642 (Tex. 2019), the Supreme Court of Texas recently assessed whether a client’s emails with its counsel were subject to disclosure after the client was designated as a testifying expert witness. In re City of Dickinson involved a coverage dispute between a policyholder and its insurer. The policyholder moved for summary judgment on the issue of causation, essentially alleging that its insurer did not pay all damages caused by Hurricane Ike. In responding to the motion, the insurer relied upon an affidavit by one of its employees, a claims examiner, that included both factual testimony and expert witness testimony.
The policyholder subsequently filed a motion to compel, seeking the production of emails between the claims examiner and the insurer’s counsel that were generated while the affidavit was being drafted. The emails contained numerous revisions of the affidavit. The insurer objected, asserting that the emails were protected by the attorney-client privilege and were generated in the course of the rendition of legal services.
The trial court granted the motion to compel, ordering production. Ultimately, after a series of appeals, the Supreme Court had to decide whether the documents in dispute were subject to discovery. In resolving this issue, the court examined the rules pertaining to expert disclosures. As noted by the court, the rules authorize the production of all documents provided to a testifying expert witness. Thus, the court was faced with determining if its rules required the disclosure of documents that are also subject to the attorney-client privilege.
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Shannon M. Warren, White and WilliamsMs. Warren may be contacted at
warrens@whiteandwilliams.com
