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Property Damage, Occurrences, Delays, Offsets and Fees. California Decision is a Smorgasbord of Construction Insurance Issues

November 21, 2017 — Garret Murai - California Construction Law Blog
Originally published by CDJ on November 15, 2017 I read once that 97 percent of cases never go to trial. However, there are still the ones that do. And, then, there are the ones that do both. The following case, Global Modular, Inc. v. Kadena Pacific, Inc., California Court of Appeals for the Fourth District, Case No. E063551 (September 8, 2017), highlights some of the issues that can arise when portions of cases settle and other portions go to trial, the recovery of delay damages on a construction project through insurance, and the recovery of attorneys’ fees. Global Modular, Inc. v. Kadena Pacific, Inc. The U.S. Department of Veterans Affairs contracted with general contractor Kadena Pacific, Inc. (Kadena) to oversee construction of its Center for Blind Rehabilitation in Menlo Park, California. Kadena, in turn, contracted with subcontractor Global Modular, Inc. (Global) to construct, deliver and install 53 modular units totaling more than 37,000 square feet for a contract price of approximately $3.5 million. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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Denver Court Rules that Condo Owners Must Follow Arbitration Agreement

November 07, 2012 — CDJ STAFF
Prior to initiating a construction defect lawsuit, the Glass House Residential Association voted to invalidate the arbitration agreement that had been written into its declaration and bylaws by the developer and general contractor. After the association started their construction defect claims, the developer and general contractor argued that the case must go to arbitration, as the arbitration clause contained a provision that it could not be altered without the agreement of the developer and general contractor. The Denver District Court has ruled against that association, determining that the res triction was not in violation of Colorado condominium law. And, as a post from Polsinelli Shughart PC on JDSupra notes, the Colorado Common Interest Ownership Act encourages the use of arbitration procedures to settle disputes. The CCIOA does prohibit “certain restrictions on the homeowners association’s ability to amend the condominium declarations,” however, preserving an arbitration agreement is not one of them. Read the court decision
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Not If, But When: Newly Enacted Virginia Legislation Bans “Pay-If-Paid” Clauses In Construction Contracts

August 22, 2022 — Joseph A. Figueroa & Thomas E. Minnis - ConsensusDocs
Recently passed legislation in Virginia is likely to dramatically change contractual relationships between prime contractors and subcontractors in the Commonwealth. Abrogating well-established common-law principles set forth by the Supreme Court of Virginia, on April 27, 2022, the Virginia General Assembly, after receiving input from Virginia Governor Glenn Youngkin, passed Senate Bill 550 banning “pay-if-paid” clauses in public and private construction contracts. Contractors performing work in Virginia should take note of the new law, which goes into effect next year and will apply to any contracts executed after January 1, 2023. The History Of Pay-if-Paid Clauses In Virginia Broadly speaking, “pay-if-paid” clauses are a commonly used tool by prime contractors on construction projects to shift the risk to subcontractors in the event that the owner does not pay the prime contractor for work. Such clauses usually include language creating an express condition precedent to the subcontractor’s right to be paid for work under a subcontract, stating that the prime contractor shall be under no obligation to pay the subcontractor for work unless and until the prime contractor first receives payment for that work by the project owner. The “pay-if-paid” clause also has a less extreme cousin, the “pay-when-paid” clause, which merely delays the time in which the prime contractor is obligated to pay the subcontractor to the time in which the prime contractor is paid by the owner. It does not, however, extinguish the prime contractor’s ultimate obligation to pay the subcontractor. Reprinted courtesy of Joseph A. Figueroa, Watt, Tieder, Hoffar, & Fitzgerald, LLP (ConsensusDocs) and Thomas E. Minnis, Watt, Tieder, Hoffar, & Fitzgerald, LLP (ConsensusDocs) Mr. Figueroa may be contacted at jfigueroa@watttieder.com Read the court decision
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A Court-Side Seat: Recent Legal Developments at Supreme and Federal Appeals Courts

December 18, 2022 — Anthony B. Cavender - Gravel2Gavel
This is a review of initial Supreme Court and Federal Appeals Courts oral arguments and other matters in October 2022. Oral Arguments at the Supreme Court Michael Sackett, et ux., v. Environmental Protection Agency The Supreme Court’s 2022 term began on October 3, 2022, with this important oral argument. For many years, the petitioner has encountered EPA opposition to the construction of a home on his property located near a lake in Idaho. The agency insists that the land is subject to federal regulatory jurisdiction, in that a Clean Water Act permit will be needed before work can proceed. Several courts have already weighed in on this issue; whether the land in question is considered a regulated “wetlands” pursuant to the “significant nexus” test developed by the Court in the Rapanos case decided in 2006. The oral argument was fairly long and spirited. The justices appear to believe that the “significant nexus” is unworkable because in many instances it provides little or no guidance to landowners as to whether their property may be subject to federal jurisdiction, and thus subject to civil and even criminal penalties. Justice Kavanaugh remarked that “this case is going to be important for wetlands throughout the country and we have to get it right.” Later, Justice Gorsuch lamented the fact that implementing a test for federal jurisdiction under the Clean Water Act test is so difficult to apply: “If the federal government doesn’t know [if a property is adjacent to navigable water and is regulated,] “does a reasonable landowner have any idea.” The issue is very difficult to resolve, and the Congress has indicated that is has no interest in entering this regulatory thicket. Read the court decision
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Reprinted courtesy of Anthony B. Cavender, Pillsbury
Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com

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Construction Defect Lawsuit May Affect Home Financing

February 14, 2013 — CDJ STAFF
Homeowners in the Burlingame Ranch I Condominium Association already say they have problems with the siding on their units. The Aspen Business Journal says that their next problem might be with lenders. According to the homeowners’ attorney, Chris Brody, the association attempted to work things out, but this was not successful. Mr. Brody was unaware of any issues with sales or refinancing, but the article notes that “at least one homeowner was told he could not refinance with a Fannie Mae backed loan if there’s pending litigation.” Last year, Fannie Mae did adopt a guideline that made homes involved in construction defect lawsuits ineligible for home loans. Read the court decision
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Business Insurance Names Rachel Hudgins Among 2024 Break Out Award Winners

April 22, 2024 — Hunton Insurance Recovery Blog
We are pleased to announce that counsel Rachel E. Hudgins has been recognized as one of Business Insurance’s 2024 Break Out Award winners. The magazine’s Break Out Awards honor 40 top professionals each year from a competitive field of nominees who have under 15 years’ experience in the insurance and risk management sector and are “on track to be the next leaders in the risk management and property/casualty insurance field.” Clients describe Rachel as their “chief contact for high-exposure coverage work.” She meets clients where they are with a curiosity and interest in their business strategies, as well as an ability to distill complex insurance concepts into digestible terms. Rachel also has depth of experience in coverage litigation. She has litigated hundreds of insurance coverage and bad faith claims in state and federal courts across the country and US territories. Read the court decision
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Reprinted courtesy of Hunton Andrews Kurth LLP

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Is Arbitration Okay Under the Miller Act? It Is if You Don’t Object

October 15, 2014 — Christopher G. Hill – Construction Law Musings
I have discussed both payment bond claims under the Miller Act and alternate dispute resolution (ADR) here at Construction Law Musings on many an occasion. A question that is sometimes open is what to do when there is contractually mandated arbitration for claims “relating to the contract or the work.” While here in Virginia, as in most places, the courts will almost automatically send any breach of contract case with such a clause to arbitration, a question exists whether the claim against the bond held by a surety that is not a party to the contract is subject to being referred. Well, in a recent opinion the District Court for the Eastern District of Virginia in Norfolk weighed in on this question where there was no opposition or objection to a motion to stay pending arbitration. In U.S. for Use of Harbor Construction Co. Inc. v. THR Enterprises Inc. the Court considered a fairly typical payment dispute leading to a Miller Act claim. The general contractor and surety filed a motion to dismiss or alternatively stay the litigation based upon a clause in the contract between general contractor and subcontractor allowing the general contractor to elect the type of ADR to be used to resolve the dispute. Read the court decision
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Reprinted courtesy of Christopher G. Hill, Law Office of Christopher G. Hill, PC
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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JD Supra’s 2017 Reader’s Choice Awards

March 22, 2017 — Garret Murai – California Construction Law Blog
JD Supra, one of the world’s leading content distribution companies for the legal industry, announced its Readers’ Choice Awards for 2017 earlier this week. We were honored to be among a group of 200 authors selected from over 40,000 who published legal news, commentary and analysis on legal issues of importance to the clients we serve. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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