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DIRECTORY AND CAPABILITIES

Texas Federal District Court Dismisses COVID-19 Claim

October 25, 2020 — Tred R. Eyerly - Insurance Law Hawaii
Judge Ezra, formerly on the bench in Hawaii, dismissed a COVID-19 claim pursued by a Texas policy holder. Diesel Barbershop, LLC v. State Farm Lloyds, 2020 U.S. Dist. LEXIS 147276 (W.D. Texas Aug. 13, 2020). Local and state officials in Texas issued shutdown orders in March 2020 due to the spread of the cornavirus. All non-essential businesses, including the insureds' barbershop businesses, were ordered closed from April 2, 2020 until April 30, 2020. The insureds submitted a claim for business interruption and civil authority coverage to their carrier, State Farm. The claim was denied based on the policy's exclusion for loss caused by enforcement of ordinance or law, virus, and consequential losses. For Civil Authority coverage, State Farm contended the policy required that there by physical damage within one mile of the described property and that the damage be the result of a Covered Cause of Loss, which, State Farm asserted, a virus was not. The insureds sued and State Farm moved to dismiss. The court noted cases in which courts had found physical loss even without tangible destruction to the covered property. Yet, the court found that the line of cases requiring tangible injury to property were more persuasive. Therefore, the court found that the insureds failed to plead a direct physical loss. 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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Flint Water Suits Against Engineers Will Go to Trial, Judge Says

March 14, 2022 — James Leggate - Engineering News-Record
A federal judge in Michigan declined on Feb. 7 to accept the contention of engineer Lockwood, Andrews and Newnam Inc. that claims against it for professional negligence in its advisory role to Flint, Mich. ahead of the city's drinking water crisis should not go to trial. The civil case, set for trial on Feb. 15, was brought on behalf of four children who say they suffered neurocognitive harm from exposure to lead in the water supply. Reprinted courtesy of James Leggate, Engineering News-Record Mr. Leggate may be contacted at leggatej@enr.com Read the full story... Read the court decision
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New Opportunities for “Small” Construction Contractors as SBA Adjusts Its Size Standards Again Due to Unprecedented Inflation

September 11, 2023 — Hanna Lee Blake - ConsensusDocs
Thanks to the SBA’s November 17, 2022 adjustments to the size standards and monetary thresholds, a number of construction contractors will be able to retain their “small” status, and more contractors may benefit from federal assistance, programs, and contracts earmarked for “small” concerns. In the SBA’s view, small businesses should not lose their “small” status due solely to price level increases rather than from increases in business activity. It is anticipated that federal agencies may choose to set aside more construction contracts for competition among small businesses given the greater number of businesses that may be deemed “small” as a result of the SBA’s recent rule. In light of this, small construction contractors should consider whether it is prudent to register or update their existing profiles in the System for Award Management (SAM) to participate in federal contracting. The SBA’s Statutory Mandate The Small Business Act of 1953 (P.L. 83-163, as amended) authorized the SBA and justified the agency’s existence on the grounds that small businesses are essential to the maintenance of the free enterprise system. The congressional intent was to assist small businesses as a means to deter monopoly and oligarchy formation within all industries and the market failures caused by the elimination or reduction of competition in the marketplace. Congress delegated to the SBA the responsibility to establish size standards to ensure that only small businesses were provided SBA assistance. Since that time, the SBA has analyzed various economic factors, such as each industry’s overall competitiveness and the competitiveness of firms within each industry, to set its size standards. Read the court decision
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Reprinted courtesy of Hanna Lee Blake, Watt Tieder
Ms. Blake may be contacted at hblake@watttieder.com

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It’s a COVID-19 Pandemic; It’s Everywhere – New Cal. Bill to Make Insurers Prove Otherwise

August 17, 2020 — Scott P. DeVries & Andrea DeField - Hunton Andrews Kurth
On June 29, in a development that may fundamentally change the landscape for California businesses which have sustained COVID-19 related business interruption loss, two California legislators amended pending legislation to address several of the most hotly contested issues regarding insurance recovery for these devastating losses. The bill, Assembly Bill 1552, focuses on All-Risk property insurance policies. As amended, it would create a “rebuttable presumption” that COVID-19 was present on and caused physical damage to property which was the direct cause of business interruption. A similar rebuttable presumption would apply to orders of civil authority coverage and to ingress/egress coverage. The bill would further prohibit COVID-19 from being construed as a pollutant or contaminant for purposes of any policy exclusion unless the exclusion specifically referred to viruses. The bill would apply to any All-Risk policy in effect on or after March 4, 2020 and is written to satisfy the standards for an “urgency” statute, taking effect immediately upon being signed into law. Reprinted courtesy of Scott P. DeVries , Hunton Andrews Kurth and Andrea DeField, Hunton Andrews Kurth Mr. DeVries may be contacted at sdevries@HuntonAK.com Ms. DeField may be contacted at adefield@HuntonAK.com Read the court decision
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Smart Construction and the Future of the Construction Industry

October 11, 2021 — Caroline A. Harcourt, James W. McPhillips & Adam J. Weaver - Gravel2Gavel Construction & Real Estate Law Blog
“Smart Construction” is a loose term but generally refers to the development and use of processes and applications that improve construction planning and the management of projects (thereby potentially streamlining costs of construction). The increased deployment of collaboration tools (e.g., Zoom, Microsoft Teams, WebEx) and other cloud-based technology solutions during the COVID-19 pandemic will invariably result in more efficient project management in construction going forward. These type of efficiencies are sorely needed, especially as the industry is trying to recover from supply chain issues, lockdown challenges and social distancing requirements resulting from the pandemic. However, smart construction goes well beyond those basic business efficiency and collaboration tools. For example, drones are regularly used on construction projects to monitor site conditions, detect problems, and assess conditions safely. Meanwhile, newer technologies such as “programmable” cement, “self-healing” concrete, and autonomous and robotic machinery are increasingly being deployed in construction projects. And yet, these current technology solutions are just the tip of the iceberg as researchers continue to look for new ways machines and technology can be used to solve complex engineering challenges. Reprinted courtesy of Caroline A. Harcourt, Pillsbury, James W. McPhillips, Pillsbury and Adam J. Weaver, Pillsbury Ms. Harcourt may be contacted at caroline.harcourt@pillsburylaw.com Mr. McPhillips may be contacted at james.mcphillips@pillsburylaw.com Mr. Weaver may be contacted at adam.weaver@pillsburylaw.com Read the court decision
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Contractor Removed from Site for Lack of Insurance

October 28, 2011 — CDJ STAFF

The MetroWest Daily News reports that a demolition firm was told to leave the construction site at Natick High School since their failure to have workers compensation insurance makes them unable to work on the project. The contractor, Atlantic Dismantling and Site Construction, Inc. may have been working illegally since September.

The equipment that Atlantic had rented for the job was repossessed in August. Brait Builders Corp, the general contractor for the site had rented equipment so Atlantic could continue their work.

Their lack of insurance was discovered when a worker had a minor job-related injury. The state had issued a stop-work order for the firm and they could not legally bid on public projects. The school system did not receive any notice of this, and the school’s facilities director said of the general contractor, “chances are Brait never heard of anything either.”

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Warning! Danger Ahead for Public Entities

July 30, 2019 — Michael J. Baker - Snell & Wilmer Under Construction Blog
Public entities are known to assert False Claims actions “to up the ante” to intimidate and aggressively address contractor construction claims. This strategy in the case of John Ross of Industrial Sheet Metal, Inc. (JRI) V. City of Los Angeles Department of Airports (LAWA), 29 Cal. App. 5th 378 (2018), backfired on the public entity, LAWA, in a big way and should serve as a warning to public entities about expanding claims to include False Claim actions. In this case, LAWA was awarded $1 in contract damages, its California False Claims Act (CFCA) claim was rejected by the jury as were JRI’s claims against LAWA. Despite losing on the substantive contract claims, the trial court found that JRI “prevailed in the action” under the relevant CFCA fee provision, Government Code 12652, subd. (g)(9)(B), regardless of JRI’s failure to prevail in the action as a whole. The California Appellate Court (hereinafter “Court”) affirmed the trial court’s finding. The CFCA is analogous to the federal False Claims Act (FFCA; 31 U.S.C. 3729 et seq.). Since the CFCA is patterned on similar federal legislation, it was appropriate for the Court to look to precedent construing this similar federal act in interpreting the CFCA provisions. Accordingly, the Court looked at the False Claims Act cases for guidance in upholding the trial court’s decision in its determination that JRI was the “prevailing party” for determining an attorney’s fees award against LAWA. Read the court decision
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Reprinted courtesy of Michael J. Baker, Snell & Wilmer
Mr. Baker may be contacted at mjbaker@swlaw.com

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Challenging and Defending a California Public Works Stop Payment Notice: Affidavit vs. Counter-Affidavit Process

October 21, 2019 — William L. Porter - Porter Law Group
One of the most effective collection procedures available to subcontractors and suppliers to California Construction projects is the “stop payment notice” procedure found under California Civil Code sections 9350 – 9364. Under this procedure, the unpaid subcontractor or supplier may serve the stop payment notice on the public entity and the direct or “prime” contractor and cause the public entity to withhold from the direct contractor 125% of the funds identified in the stop payment notice. Thereafter, funds will not generally be released unless the parties reach a settlement agreement or the issue is decided through litigation, arbitration or mediation. There is however an alternative procedure available to direct contractors to expedite the determination of whether a stop payment notice is valid and to possibly obtain an early release of the funds withheld by the public entity. This “summary proceeding” process could result in release of funds to the direct contractor in less than 30 days. The summary proceeding can also be challenged by the unpaid subcontractor or supplier. All public works contractors, subcontractors and suppliers should be aware of the process. The process for direct contractors to release a stop payment notice and for subcontractors and suppliers to challenge the process works as follows: After a California stop payment notice has been served and the public entity has withheld funds accordingly, the direct contractor may challenge the stop payment notice by serving an “affidavit” (basically a sworn statement showing why the stop notice is not valid) on the public entity, demanding that the public entity release all funds withheld. Upon receipt of such an affidavit, the public entity will serve the subcontractor or supplier who served the stop payment notice with a copy of the affidavit, along with a “demand for release of funds”. If the stop payment notice claimant does not respond with a “counter-affidavit” by the date stated on the notice sent by the public entity (“not less than 10 days nor more than 20 days after service on the claimant of a copy of the affidavit”), then the public entity will be within its rights to release the withheld funds to the direct contractor, and the stop payment notice claimant will relinquish its stop payment notice rights. Read the court decision
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Reprinted courtesy of William L. Porter, Porter Law Group
Mr. Porter may be contacted at bporter@porterlaw.com

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