Seattle Washington Building Expert Directory

Enforceability Of Subcontract “Pay-When-Paid” Provisions – An Important Update

June 15, 2020 — Patrick McNamara - Porter Law Group
A California Court of Appeals opinion published earlier this month brings a change to payment bond claims brought by unpaid subcontractors and suppliers. The decision (Crosno Construction, Inc. v. Travelers Casualty and Surety Company of America) places limitations on a payment bond surety’s ability to rely on subcontract “pay-when-paid” language, stating that a payment provision typically found in subcontracts is contrary to the “reasonable time” statutory requirement and will not be enforced. This represents a major shift in California construction payment bond claim rights. Plaintiff Crosno Construction, Inc. (“Crosno) was a subcontractor to general contractor Clark Brothers (“Clark”), who was principal on a public works payment bond issued by Travelers. The owner was a public agency district (“District.”) Crosno had completed most of its subcontract work when a dispute between District and Clark arose, causing the project to stop. Crosno then sought payment through a payment bond claim against Travelers. Travelers denied the claim, relying on the subcontract’s payment provisions and asserting the defense that it had no obligation to pay on the bond claim because the litigation between Clark and the District had not yet reached its conclusion. Subcontract. The subcontract between Clark and Crosno contained a “pay-when-paid” provision stating that Clark would pay Crosno within a reasonable time after receiving payment from the District. In defining “a reasonable time,” the subcontract language provided that the time for payment “in no event shall be less than the time [Clark] and [Crosno] require to pursue to conclusion their legal remedies against [District] or other responsible party to obtain payment.” Read the court decision
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Reprinted courtesy of Patrick McNamara, Porter Law Group
Mr. McNamara may be contacted at pmcnamara@porterlaw.com

Denver Airport's Renovator Uncovers Potential Snag

March 04, 2019 — Nadine M. Post - Engineering News-Record
The renovation of the Great Hall of Denver International Airport’s iconic Jeppesen Terminal, roofed by a series of peaked tensile tents that echo the nearby mountains, has hit a bump. Routine but limited concrete testing of the nearly quarter-century-old terminal’s elevated floor slab, to determine whether the floor could support crane loads, shows the compressive strength of the concrete in certain sections is lower than was specified for the original project, more than 25 years ago. Read the court decision
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Reprinted courtesy of Nadine M. Post, ENR
Ms. Post may be contacted at postn@enr.com

NTSB Faults Maintenance, Inspection Oversight for Fern Hollow Bridge Collapse

March 19, 2024 — Jim Parsons - Engineering News-Record
The City of Pittsburgh’s failure to act for more than a decade on repeated maintenance and repair recommendations regarding the Fern Hollow Bridge was the probable cause for the structure’s dramatic 2022 collapse, the National Transportation Safety Board (NTSB) said at its Feb. 21, 2024, meeting. The city is the owner of the bridge. Reprinted courtesy of Jim Parsons, Engineering News-Record ENR may be contacted at enr@enr.com Read the full story... Read the court decision
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Federal Court Sets High Bar for Pleading Products Liability Cases in New Jersey

November 11, 2024 — Lian Skaf - The Subrogation Strategist
Products liability is an area of law that both sides of the aisle vigorously litigate. Like in most litigation, products liability claims provide subrogation attorneys with an important means of prosecuting cases against manufacturers, sellers, and other entities in the stream of commerce. Of course, these claims also come with numerous “buyer beware” requirements. New Jersey allows products liability claims and the United States District Court for the District of New Jersey (District Court) clarified how such claims should be plead in Cambridge Mut. Fire Ins. Co. a/s/o David Krug vs. Stihl, Inc., No. 22-05893, 2024 U.S. Dist. LEXIS 178804 (D. N.J.). After becoming subrogated to the rights of its insured, Cambridge Mutual Fire Insurance Company (Cambridge) filed suit against Stihl, Inc. (Stihl) in the Superior Court of New Jersey, Morris County, Law Division. Stihl then removed the case to federal court. Once in federal court, Stihl filed a motion to dismiss the action. The District Court granted the motion, doing so in part with prejudice and in part without prejudice. Read the court decision
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Reprinted courtesy of Lian Skaf, White and Williams LLP
Mr. Skaf may be contacted at skafl@whiteandwilliams.com

California Supreme Court Adopts “Vertical Exhaustion” in the Long-Storied Montrose Environmental Coverage Litigation

June 08, 2020 — Gregory S. Capps & Michael E. DiFebbo - White and Williams LLP
On April 6, 2020, the California Supreme Court issued a decision that held a policyholder is entitled to access available excess coverage under any excess policy once it has exhausted directly underlying excess policies for the same policy period in Montrose Chemical Corporation v. the Superior Court of Los Angeles County, Supreme Court of California, case number S244737. In its unanimous decision adopting this “vertical exhaustion” requirement, the court rejected the “horizontal exhaustion” rule urged by the policyholder’s excess insurers, under which the policyholder would have been able to access an excess policy only after it had exhausted other policies with lower attachment points from every policy period in which the environmental damage resulting in liability occurred. In 1990, Montrose sought coverage under primary policies and multiple layers of excess policies issued for periods from 1961 through 1985 for environmental damage liabilities arising from its production of insecticide in the Los Angeles area between 1947 and 1982. The ongoing dispute currently arises out of Montrose’s Fifth Amended Complaint which was filed in 2015 seeking declarations concerning exhaustion and the manner in which Montrose may allocate its liabilities across the policies. Each of the excess policies at issue contained a requirement of exhaustion of underlying coverage. The various policies described the applicable underlying coverage in four main ways: (1) some policies contained a schedule of underlying insurance listing all of the underlying policies in the same policy period by insurer name, policy number, and dollar amount; (2) some policies referenced a specific dollar amount of underlying insurance in the same policy period and a schedule of underlying insurance on file with the insurer; (3) some policies referenced a specific dollar amount of underlying insurance in the same policy period and identified one or more of the underlying insurers; and (4) some policies referenced a specific dollar amount of underlying insurance that corresponds with the combined limits of the underlying policies in that policy period. The excess policies also provided, in various ways, that “other insurance” must be exhausted before the excess policy can be accessed. Reprinted courtesy of Gregory S. Capps, White and Williams LLP and Michael E. DiFebbo, White and Williams LLP Mr. Capps may be contacted at cappsg@whiteandwilliams.com Mr. DiFebbo may be contacted at difebbom@whiteandwilliams.com Read the court decision
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Fourth Circuit Clarifies What Qualifies As “Labor” Under The Miller Act

May 08, 2023 — Jeffrey Hummel - The Construction Seyt
Under the Miller Act, 40 U.S.C. §§ 3131 et seq., contractors hired to work on federal construction projects are required to furnish payment bonds in order to ensure payment to certain persons that provide labor for the project. The United States Court of Appeals for the Fourth Circuit recently issued a published decision clarifying the type of work that qualifies as “labor” under the Miller Act. Elliot Dickson v. Fidelity and Deposit Company (issued April 26, 2023). In that case, the U.S. Department of Defense hired Forney Enterprises (Forney) as the prime contractor on a renovation project at the Pentagon. Forney retained Fidelity and Deposit Company of Maryland (Fidelity) to provide the required Miller Act payment bond. Forney then entered into a subcontract with Elliott Dickson (Dickson), a professional engineer, to work as a project manager on the contract. Dickson primarily supervised labor on the site, but also performed other tasks, including logistical and clerical duties, taking various field measurements, cleaning the worksite, moving tools and materials, and sometimes even watering the concrete himself. Dickson’s work required him to be onsite on a daily basis. Read the court decision
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Reprinted courtesy of Jeffrey Hummel, Seyfarth
Mr. Hummel may be contacted at jhummel@seyfarth.com

Ownership is Not a Conclusive Factor for Ongoing Operations Additional Insured Coverage

November 15, 2017 — Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP
In McMillin Management Services v. Financial Pacific Ins. Co. (No. D069814, filed 11/14/17), a California appeals court held that an insurer had a duty to defend a general contractor under an “ongoing operations” additional insured (AI) endorsement for damage occurring after the named insured subcontractor completed its work, because the endorsement did not limit coverage solely to liability during the subcontractors’ ongoing operations, but rather, broadly provided coverage for liability “arising out of” such operations. 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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Senior Housing Surplus Seen as Boomers Spur Building Boom

May 19, 2014 — Brian Louis – Bloomberg
Real estate developers are betting big on U.S. housing for the elderly, preparing for a surge in demand as the population of senior citizens almost doubles in the next 35 years. They may be building too fast. A jump in supply is forecast to cut growth in senior-housing net operating income to 1.8 percent in 2015 and 1.4 percent in 2016 from 3.3 percent this year, according to Green Street Advisors Inc. The increase may hurt health-care real estate investment trusts and companies including Brookdale Senior Living Inc. (BKD), which is buying competitor Emeritus Corp. (ESC) for about $1.4 billion to become the biggest owner of senior properties, the research firm said. “Increased supply is always worrisome in any type of commercial real estate,” said Jim Sullivan, a managing director at Newport Beach, California-based Green Street. “In senior housing, new construction has ramped up considerably over the last two years.” Read the court decision
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Reprinted courtesy of Brian Louis, Bloomberg
Mr. Louis may be contacted at blouis1@bloomberg.net

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