No Coverage Where Cracks in Basement Walls Do Not Amount to Sudden Collapse
January 10, 2018 —
Tred Eyerly - Insurance Law HawaiiIn another of a series of collapse cases arising out of Connecticut, the federal district court found there was no coverage for the homeowner's cracked basement wall caused by defective concrete. Liston-Smith v. CSAA Fire & Cas. Ins. Co., 2017 U.S. Dist. LEXIS 206211 (D. Conn. Dec. 15, 2017).
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Tred Eyerly, Insurance Law HawaiiTred Eyerly may be contacted at
te@hawaiilawyer.com
The Clock is Ticking: Construction Delays and Liquidated Damages
September 18, 2023 —
Tiffany Harrod - ConsensusDocsWith the on-going shortage of construction workers in the industry and other factors ranging from weather to procurement problems, the threat of project delay is real. When a contract contains a liquidated damages clause for assessing project delays, real financial consequences for contractors can result. Courts have long allowed parties to apportion contractual risks as they deem appropriate especially in the commercial context where the parties are considered to be sophisticated even if their bargaining power is not equal. Liquidated damage provisions such as those for delay that are found in construction contracts are not unusual but they must be crafted in such a way as to be enforceable and not violate public policy.
A liquidated damage clause in a construction contract is a customary way for the parties to deal with the possibility of delay in the completion of a project and the potential losses flowing from the delay.[
1] In their most basic form, the party in breach, which is more often than not the contractor, is obligated to pay the non-breaching party, usually the project owner, some fixed sum of money for the period that exceeds the designated completion date that was agreed upon in advance and memorialized in the contract. (It is after all no secret that these provisions are primarily for the owner’s benefit.) The non-breaching party is then compensated for losses associated with the delay without the time and expense of having to prove in either a civil suit or an arbitration proceeding what the actual damages are. This option is particularly attractive to project owners because the liquidated damages assessment can simply be withheld from payments owed to the contractor once the agreed-upon completion date has been passed.
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Tiffany Harrod, Peckar & AbramsonMs. Harrod may be contacted at
tharrod@pecklaw.com
Determination That Title Insurer Did Not Act in Bad Faith Vacated and Remanded
March 30, 2016 —
Tred R. Eyerly – Insurance Law HawaiiIn an important decision regarding bad faith and the application of the work product doctrine to work performed by an insurer's in-house counsel, the Hawaii Supreme Court vacated the Intermediate Court of Appeals's upholding the trial court's award of summary judgment to a title insurer on the issue of bad faith. Anastasi v. Fid. Nat'l Title Ins. Co., 2016 Haw. LEXIS 30 (Feb. 4. 2016).
Llyod Anastasi loaned Alajos Nagy $2.4 million. The loan was secured by a mortgage on property. After Nagy executed the $2.4 million mortgage, a warranty deed was signed by Paul Stickney and purported to deed the property from Stickney to Nagy in exchange for $10 in consideration. Fidelity issued Anastasi a title insurance policy on the property in the amount of $2.4 million. The policy promised to provide a defense where a third party asserted a claims adverse to the interest of the insured.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Adaptive Reuse: Creative Reimagining of Former Office Space to Address Differing Demands
March 27, 2023 —
Cait Horner, Allan C. Van Vliet & Adam J. Weaver - Gravel2Gavel Construction & Real Estate Law BlogEmpty office buildings downtown. A housing shortage in almost every major market. Is there a way to address both issues at once by converting historic but underutilized office buildings into apartments and condos in city centers? It’s an idea that has been discussed, and in some cities, implemented in recent years. But while the idea seems simple enough—repurpose existing office space for residential and mixed-use projects—there are some real challenges limiting the feasibility of large-scale office to residential conversion.
The commercial real estate market is facing an uncertain future. Even as some companies have started requiring that their workers return to the office, many continue to operate under their hybrid or fully remote working models, which companies may commit to permanently. And while some big cities have seen office occupancy levels increase in the past few months (CBRE notes that Austin and Houston both saw occupancy levels above 60% in January, up around 25% from 2022 levels), the ongoing impact of COVID-19 and uncertainty in the global financial markets are keeping many office buildings empty in major cities around the country. Those tenants who are returning to the office are focusing their search for office space on high-quality, sustainable, amenity-filled spaces to entice workers to return to the office. This flight to quality leaves some older and, in many cases, architecturally relevant, office buildings behind. As a result, there are growing opportunities for the potential adaptive reuse of these existing underutilized structures.
Reprinted courtesy of
Cait Horner, Pillsbury,
Allan C. Van Vliet, Pillsbury and
Adam J. Weaver, Pillsbury
Ms. Horner may be contacted at cait.horner@pillsburylaw.com
Mr. Van Vliet may be contacted at allan.vanvliet@pillsburylaw.com
Mr. Weaver may be contacted at adam.weaver@pillsburylaw.com
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TOP TAKE-AWAY SERIES: The 2023 Fall Meeting in Washington, D.C.
November 13, 2023 —
Marissa L. Downs & Jennifer M. Kanady - The Dispute ResolverOver 500 construction lawyers, experts, and consultants descended on Washington last week for the Forum’s 2023 Fall Meeting. Newly minted Forum Chair John Cook and Program Coordinators Catherine Delorey and Brian Zimmerman put together a stellar program focused on navigating government construction. For this installation of the post-meeting post, I'm teaming up with guest contributor, Jennifer Kanady, to bring you 10 of our top take-aways from this unique program.
10. Contracting with the government is replete with risk that could easily trap the unwary. Nobody likes to be taken advantage of. But hell hath no fury like the U.S. Government scorned. Erin Cannon-Wells and Aaron Silberman, gave a (truly) delightful, Indiana-Jones-inspired presentation on the regulations that can doom the unwitting contractor who is less than perfectly forthright in its dealings. The government has created financial incentives for members of the public to report your company’s violations as part of a qui tam action. When you consider the number of potential whistleblowers in the bidding process and the contracting chain, a qui tam action would seem more likely than not. Add to that the sanctions contractors might face for even innocent errors either by their own companies or their downstream subs, and government contracting begins to sound increasingly like the Temple of Doom. Oh, and in case you were only focused on affirmative claims, beware the “reverse false claim” which is concealing information that would rightfully entitle the government to a credit…
Reprinted courtesy of
Marissa L. Downs, Laurie & Brennan, LLP and
Jennifer M. Kanady, FAC Services, LLC
Ms. Downs may be contacted at mdowns@lauriebrennan.com
Ms. Kanady may be contacted at JKanady@facfin.com
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SIGAR Report Finds +$15 Billion in “Waste, Fraud and Abuse” in Afghanistan
August 20, 2018 —
Pillsbury's Construction & Real Estate Law Team - Gravel2GavelToday, our colleagues Alex Ginsberg, Glenn Sweatt and Kevin Massoudi published their Client Alert on a recently issued Special Inspector General for Afghanistan Reconstruction (SIGAR) Report that finds over $15 billion in waste, fraud and abuse. In New SIGAR Report Identifies “Waste, Fraud and Abuse” in Afghanistan, our colleagues identify key takeaways from the Report include:
- The Report reviewed public spending for Afghanistan reconstruction efforts and identified at least $15.5 billion in waste, fraud and abuse.
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Pillsbury's Construction & Real Estate Law Team
SEC Approves New Securitization Risk Retention Rule with Broad Exception for Qualified Residential Mortgages
November 26, 2014 —
Neil P. Casey & Lori S. Smith – White and Williams LLPThe Securities and Exchange Commission (SEC) and five other federal agencies recently approved a joint rule (the “Risk Retention Rule”) mandating that sponsors of certain types of securitizations retain a minimum level of credit risk exposure in those transactions and prohibiting such sponsors from transferring or hedging against that retained credit risk.[i]The final Risk Retention Rule will be effective one year after its publication in the Federal Register for securitizations of residential mortgages, and two years after publication for securitizations of all other asset types. The SEC vote was 3-2, with sharp dissents from Commissioners Gallagher and Piwowar concluding that the adopting agencies had missed a prime opportunity to rein in risky mortgage lending practices that had precipitated the 2008 financial crisis.
Background
Following the meltdown of the securitization markets in 2007 (particularly subprime residential mortgage-backed securities), and the resulting global financial crisis, the Dodd-Frank Act mandated that the U.S. federal banking, securities and housing agencies adopt and implement rules to require sponsors of most new securitizations to retain not less than five percent of the credit risk of any assets that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party. It was thought that requiring securitization sponsors to keep “skin in the game” would align the interests of the sponsors with the interests of investors and thereby incentivize the sponsors to ensure the quality of the assets underlying the securitization through appropriate due diligence and underwriting procedures when selecting assets for securitization. Although the Dodd-Frank Act explicitly exempted securitizations of certain types of mortgage loans called “qualified residential mortgages” (or “QRMs”) from this risk retention requirement, it invited the rulemaking agencies to define that key term, provided that their definition could be no broader than the definition of “qualified mortgage”adopted by the Consumer Financial Protection Bureau (CFPB) pursuant to the Truth in Lending Act.[ii] In considering how to define QRM, the rulemaking agencies were directed by the Dodd-Frank Act to take into consideration “underwriting and product features that historical loan performance data indicate result in a lower risk of default.”[iii]
Reprinted courtesy of
Neil P. Casey, White and Williams LLP and
Lori S. Smith, White and Williams LLP
Mr. Casey may be contacted at caseyn@whiteandwilliams.com; Ms. Smith may be contacted at smithl@whiteandwilliams.com
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Gilbert’s Plan for Downtown Detroit Has No Room for Jail
October 08, 2014 —
Chris Christoff – BloombergBillionaire Dan Gilbert envisions a vibrant and shiny downtown Detroit, where he owns a casino and about 60 buildings. His urban Eden doesn’t include a jail with 2,000 criminals.
Gilbert is resisting county officials’ plans to restart construction on a half-finished jail mired in cost overruns, criminal investigations and debt. The project, which the Wayne County Commission may revive tomorrow, would replace a complex on land that Gilbert, the 52-year-old founder and chairman of Detroit-based Quicken Loans Inc., offered to buy for $50 million to build a hotel, housing and stores.
The dispute over the jail, which has sat unfinished for 16 months, pits one of Detroit’s most prominent boosters against a county government over how to reinvigorate the city’s heart. Gilbert, whose company is the nation’s largest online retail mortgage lender, has invested $1.3 billion there, betting on the former auto-manufacturing capital’s resurgence after decades of decline that pushed it into a record $18 billion municipal bankruptcy.
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Chris Christoff, BloombergMr. Christoff may be contacted at
cchristoff@bloomberg.net
