Cambridge Massachusetts Building Expert Directory

New York Restrictions on Flow Through Provision in Subcontracts

August 14, 2023 — Bill Wilson - Construction Law Zone
Most subcontracts include a flow through provision (also called flow down and incorporation clauses) stating that the subcontractor and contractor are bound by the same obligations as set forth in the prime contract between the contractor and owner. Many jurisdictions interpret such provisions narrowly, as illustrated in a recent case out of New York. In Amerisure Insurance Company v. Selective Insurance Group, Inc., 2023 WL 3311879, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s interpretation of a flow through clause in a construction subcontract. The Amerisure case involved a dispute over insurance coverage for a personal injury to a subcontractor’s employee on a construction project. The owner of the project sought defense and indemnity from the general contractor (GC) and its insurance company, who in turn sought coverage for the owner as an additional insured under the subcontractor’s policy. The GC based its argument for coverage on the flow through provision in the subcontract. The prime contract required the GC to procure commercial liability insurance including the owner as an additional insured for claims caused by the GC’s negligent acts or omissions. The subcontract likewise required the subcontractor to procure commercial general liability insurance but required only that the GC be named as an additional insured. However, the subcontract also included a flow through clause, binding the subcontractor to the terms of the prime contract and assuming toward the GC all the obligations and responsibilities that the GC assumed toward the owner. However, the subcontract did not expressly require that the subcontractor name the owner as an additional insured, and in order for the owner to qualify as an additional insured under the subcontractor’s insurance policy, the subcontractor must have agreed in the subcontract to name the owner as an additional insured. Read the court decision
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Reprinted courtesy of Bill Wilson, Robinson & Cole LLP
Mr. Wilson may be contacted at wwilson@rc.com

Retainage: What Contractors Need to Know and Helpful Strategies

June 04, 2024 — Gerard J. Onorata - ConsensusDocs
Introduction Most, if not all, construction contracts contain a provision for “retainage.” The origin and concept of retainage dates back to the railroad boom that embraced Great Britain in the 1840s. In its simplest terms, retainage is a mechanism by which an owner or general contractor withholds disbursement of funds from the payment of a requisition in order to secure future performance of a contract and/or to pay for repair of defectively performed work. Retainage typically ranges from five to ten percent, with the amount being reduced as the project progresses to substantial and final completion. One of the reasons for withholding retainage is to incentivize a contractor to complete its work in accordance with the contract terms and conditions. While this may be well-intentioned in concept, it all too often leads to abuse that impacts project cash flow and raises tension between the parties. This typically happens on projects that have delay issues, deficient drawings, and/or claims of defective work. When a project has “gone bad,” the withholding of retainage is one of the first things that an owner will latch onto in order to leverage its position against a contractor. In order for a contractor to put itself in the best position possible, the following negotiation techniques and protective measures should be kept in mind. Know Your Applicable Statute Every state except West Virginia has statutes in place that govern the payment of retainage on public projects. On federal projects, the amount of retainage withheld shall not exceed ten percent as set forth in the Federal Acquisition Regulations (“FAR”). The common thread running through these statutes is the payment of interest as a remedy when the retainage is not timely paid. Historically, most retainage statutes were applicable only to publicly funded projects. This has recently changed with a substantial number of state legislatures recognizing that the payment of retainage on private projects was a serious enough problem to warrant regulation. These include Alabama, Arizona, California, Colorado, Connecticut, Idaho, Illinois, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, and Vermont. New York’s retainage laws relating to private projects were enacted only this past November. Read the court decision
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Reprinted courtesy of Gerard J. Onorata, Peckar & Abramson
Mr. Onorata may be contacted at gonorata@pecklaw.com

DOI Aims to Modernize its “Inefficient and Inflexible” Type A Natural Resource Damages Assessment Regulations

March 25, 2024 — Amanda G. Halter, Jillian Marullo & Ashleigh Myers - Gravel2Gavel Construction & Real Estate Law Blog
The U.S. Department of the Interior (DOI) published a proposed rule aimed at modernizing and streamlining the “Type A” Natural Resource Damage Assessment (NRDA) regulations under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Clean Water Act (CWA). (The comment deadline was later extended.) The revisions, first previewed in a January 2023 Advanced Notice of Proposed Rulemaking (ANPR), are intended to fulfill “the original statutory purpose of providing a streamlined and simplified assessment process” with the overarching goal of facilitating settlements and expediting restoration efforts following injury resulting from pollution in a broader range of cases. The NRDA regulations provide two paths to assessing natural resource damages (NRD): (1) the more complex, site-specific Type B procedures for detailed NRDAs and (2) what is intended to be the standard, simplified Type A assessment procedures requiring minimal field observation. Particularly, the Type A process is reserved for two specific aquatic environments (coastal and marine areas or Great Lakes environments) when a relatively minor release of a single hazardous substance occurs, resulting in a smaller scale and scope of natural resource injury, and the rebuttal presumption for the Type A procedure is limited to damages of $100,000 or less under the current version of the rule. Reprinted courtesy of Amanda G. Halter, Pillsbury, Jillian Marullo, Pillsbury and Ashleigh Myers, Pillsbury Ms. Halter may be contacted at amanda.halter@pillsburylaw.com Ms. Marullo may be contacted at jillian.marullo@pillsburylaw.com Ms. Myers may be contacted at ashleigh.myers@pillsburylaw.com Read the court decision
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America’s Infrastructure Gets a D+

March 16, 2017 — Garret Murai – California Construction Law Blog
The American Society of Civil Engineers (ASCE) has issued their 2017 Infrastructure Report Card, which assigns a letter grade to the nation’s infrastructure. Our country’s grade in 2017? A disappointing D+. Although, if you’re a glass half full kind of person (bless your soul) at least our grade didn’t fall since the last report card was issued in 2013, when our grade was a D+ as well. In short, we suck. Although, apparently, we don’t suck evenly across the board. ASCE has divided its cumulative GPA into grades for specific courses, if you will. Our transit systems received a grade of D-; our airports, dams, drinking water and waste water plants, inland waterways, levees and roads received a grade of D; our power plants, hazardous waste plants, public parks and schools received a grade of D+; our bridges, ports and solid waste plants a grade of C+, and our rail systems received a grade of B. 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

Courts Will Not Rewrite Your Post-Loss Property Insurance Obligations

June 14, 2021 — David Adelstein - Florida Construction Legal Updates
In the preceding posting, I wrote about making sure you comply with your property insurance policy’s post-loss policy obligations. By failing to comply, you can render your policy ineffective meaning you are forfeiting otherwise valid insurance coverage, which was the situation discussed in the preceding posting. As an insured, you should never want this to occur! In another case, discussed here, the property insurance policy had a preferred contractor endorsement. This means that instead of paying the insured insurance proceeds, the insurer could perform the repairs with its preferred contractor. Typically, the insured will pay a discount on their premium for this preferred contractor endorsement. The insurer elected to move forward with the repairs based on the preferred contractor endorsement but the insured performed the repairs on his own and then sold the house. By doing this, the appellate court held the insured rendered his policy ineffective by breaching his own policy (and failing to allow this post-loss obligation to take place). The explicit terms of the policy allowed the insurer to perform the repairs instead of paying the insured insurance proceeds. The court could NOT rewrite the post-loss obligations in the policy by requiring the insurer to pay insurance proceeds when the insurer, per the preferred contractor endorsement, elected to perform the repairs. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

You Can Now Build a Multi-Million Dollar Home via Your iPad

January 07, 2015 — Sara Pepitone – Bloomberg
There are apps for real estate sales, apps for paint color, apps for arranging furniture, and apps for making the best use of natural light. But until now, there was no app for that most fundamental process of homesteading: creating a new one from scratch. In the coming weeks Al Hamra Real Estate Development will unveil its all-inclusive Home Builder app. All you need is an iPad and five million UAE Dirham ($1.36 million), to start. Swipe and spend has never been so elite. Designed by A++ Architecture Design and Communication, Home Builder starts with property acquisition and ends with finishes and furnishings. Well, to be precise, it ends with a form sent to a sales person to calculate a price to purchase. This means less time and fewer people and permits in your way, plus a more gratifying (literal) hands-on experience in the process. Read the court decision
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Reprinted courtesy of Sara Pepitone, Bloomberg

Spearin Doctrine: Alive, Well and Thriving on its 100th Birthday

January 15, 2019 — John P. Ahlers - Ahlers Cressman & Sleight PLLC
On December 9, 2018, United States v. Spearin, [1] a landmark construction law case, will be 100 years old. The Spearin “doctrine”[2] provides that the owner impliedly warrants the information, plans and specifications which an owner provides to a general contractor. The contractor will not be liable to the owner for loss or damage which results from insufficiencies or defects in such information, plans and specifications. Some construction lawyers questioned whether the Spearin doctrine was still viable in Washington after the Washington Court of Appeals decided the recent case of King County v. Vinci Constr. Grand Projets.[3] Some concerned contractor industry groups even considered a “statutory fix” in the wake of the Court of Appeals Vinci decision. It is our opinion that the facts in the Vinci case are distinguishable and the Spearin doctrine is alive and thriving in Washington. Read the court decision
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Reprinted courtesy of John P. Ahlers, Ahlers Cressman & Sleight PLLC
Mr. Ahlers may be contacted at john.ahlers@acslawyers.com

Court Finds Matching of Damaged Materials is Required by Policy

April 02, 2024 — Tred R. Eyerly - Insurance Law Hawaii
The court granted, in part, the insured's motion for summary judgment by finding that matching roof tiles were required under the policy. Bertisen v. Travelers Home and Marine Ins. Co., 2024 U.S. Dist. LEXIS 3907 (D. Colo. Jan. 8, 2024). The insureds sued Travelers for breach of contract, common law bad faith, and unreasonable delay or denial of benefits. They alleged that their residence was damaged by a hailstorm and that Travelers breached their policy and acted in bad faith in the handling of the claim. The insureds demanded an appraisal to determine the "amount of loss" under the policy and an appraisal award was issued. Travelers then denied payment for all roof tiles that were contemplated by the appraisal award. 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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