Blackstone Suffers Court Setback in Irish Real Estate Drama
August 20, 2014 —
Donal Griffin and Dara Doyle – BloombergAt 11:15 a.m. on July 29, Irish property developer Michael O’Flynn realized that Blackstone Group LP (BX) was trying to gain control of his real estate empire, which includes the country’s tallest residential tower.
Ten weeks earlier, the private equity firm had bought 1.8 billion euros ($2.4 billion) of loans to O’Flynn’s companies and the developer personally. Coming out of a meeting, he learned Blackstone was demanding the immediate repayment of 16 million euros of personal loans secured on his shareholdings -- even though he wasn’t in default. By the end of the day he had lost control of the business he’d spent more than 30 years building.
“I was shocked that they’d made this demand,” O’Flynn, 57, said in an interview. “It took time to understand the gravity of it because I’ve never been served with a demand in my 36 years of business. I was very recently transferred to Blackstone and I was doing my damnedest to work with them.”
Mr. Doyle may be contacted at ddoyle1@bloomberg.net; Mr. Griffin may be contacted at dgriffin10@bloomberg.net
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Donal Griffin and Dara Doyle, Bloomberg
Be Proactive Now: Commercial Construction Quickly Joining List of Industries Vulnerable to Cyber Attacks
June 15, 2017 —
Jeffrey M. Dennis & Nathan Owens – Newmeyer & Dillion LLPCommercial contractors have long faced their own unique business risks - labor and material shortages, delay claims, bonding issues, and defects in workmanship. But, in today's ever-evolving cyber world, it is imperative that contractors understand they are vulnerable to risks beyond finishing a project on time and on budget. As we are seeing more and more each day, cyber threats impact all businesses, including the construction industry, and the failure to protect against these threats will cost your company millions in damages and reputational harm.
UNDERSTANDING CYBER THREATS
Traditionally, cyber threats are thought of as the theft of employee and customer information over the internet. Given the construction industry is the largest employer in the world, the need to protect this information is obvious. The release or loss of personnel or consumer data could lead to extensive liability under a variety of potential claims, including statutory fines. In addition to securing confidential information, companies have to protect against outside agents accessing control of a company’s security protocols, equipment or encrypting files using malicious software. The recent “WannaCry” attack demonstrates that no business is immune from cyber attacks.
EXAMPLES OF RELATED BREACHES
For those that think these scenarios do not happen, here are two examples of these types of breaches:
* In May 2013, Chinese hackers stole floor plans, server information, and security system designs from an Australian prime contractor. Fearing the risks of compromised physical and network security, the contractor incurred additional costs of $132.6 million in project delays and costs to rework the various components that had been stolen.
* Then, in December 2014, a German governmental office reported that a steel mill suffered massive damage when malware prevented a blast furnace from being properly shut down. Hackers gained access to key technology within the company, which eventually allowed them to control the production line.
THE NEW WORLD OF THE IoT
In addition to these types of “traditional” hacking threats, cybersecurity risks continue to evolve and become more complicated every day. Some of these new threats are driven by the development of a phenomenon known as the Internet of things, or IoT. The IoT is most basically defined as the interconnection of devices with on / off switches to the Internet and each other. Since the IoT is estimated to be 20 billion or more devices within 3 years, and can be combined with malicious software, IoT poses one of the most challenging risks for contractors to protect against.
The technology included in today's commercial buildings clearly opens this avenue of risk. A centralized computer control center, typically employed in new buildings, controls and maintains the systems that are vital to the operation of the building, e.g., power, elevators, HVAC, lighting, and security. What happens if a hacker gains control to one of these systems, let alone all of them? What if a hacker simply utilizes an IoT attack to overwhelm a building’s computer systems? In either scenario, at a minimum, significant disruption would occur. Worse, the health and safety of those within the building could be jeopardized. A hacker may utilize ransomware in combination with an IoT attack to take over control of the building and hold it and possibly the occupants “hostage” until a ransom is paid.
The first significant IoT attack happened in October 2016 when a major web hosting company was attacked through the IoT, causing the host site to crash. The attack did not steal information, it simply caused the site to crash. But, that crash caused world-wide disruption across the Internet.
Hackers used malicious software to access a hundred thousand common household devices — web cameras, fitness trackers, DVR’s, smart TVs and even baby monitors — to flood the hosting company’s servers with incredibly high internet traffic. This attack showed that everyday items can be hacked and controlled by cyber criminals and then used against anyone else.
As we have all seen in recent news, the WannaCry cyber attack impacted businesses across the globe. Days after the attacks, hospitals were still left feeling its impact with continued appointment and planned operation cancellations, and delays in service. We should expect to see these types of attacks increasing in frequency.
PAY ATTENTION OR FACE THE CONSEQUENCES
Make no mistake about it, the stakes are incredibly high in the realm of cyber security protection. By 2021, the annual worldwide cost attributable to cyber attacks is estimated to reach the trillions of dollars. If any of these potential attacks occur, a contractor faces significant exposure, in many forms, including:
* Monetary. Cybersecurity events result in direct monetary losses in the form of notification costs, data recovery costs, and, of course, legal and public relations fees. States are also starting to impose strict standards on companies which will result in significant regulatory punishment in the cases of cyber breaches, including the added costs associated with agency investigations, regulatory fines and consumer redress funds.
* Reputation. Perhaps more important than the monetary risk, a contractor may incur substantial reputational harm if such a breach or attack is successful. Recent data has shown that small to medium-sized companies that experience a significant cybersecurity breach go out of business within six months of the breach – due to not only high monetary costs, but severe reputational damage.
* Criminal. The recently passed New York cybersecurity regulations place potential criminal penalties on compliance personnel. Other states are likely to follow New York.
As a business leader and commercial builder, the time to act is now. While the purchase of specific cyber insurance is an important part of protecting against the risks of a cyber attack, many cyber policies contain exclusionary language embedded in the policy making coverage potentially illusory. Additional steps can and need to be taken immediately, including an honest discussion of internal cybersecurity protections, examination of risk management strategy, and the training of employees. Failure to take these important steps could result in a disastrous cybersecurity breach and the loss of millions of dollars.
Jeffrey M. Dennis currently serves as Newmeyer and Dillion’s Managing Partner and, as a business leader, advises his clients on cybersecurity related issues, introducing contractual and insurance opportunities to lessen their risk. You can reach Jeff at jeff.dennis@ndlf.com.
J. Nathan Owens is the Managing Partner for Newmeyer & Dillion’s Las Vegas office. With more than 10 years in the construction industry as a former contractor himself, Nathan understands the complex issues builders and developers face in all aspects of development and construction. You can reach Nathan at nathan.owens@ndlf.com.
About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit http://www.newmeyeranddillion.com/.
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Defects, Delays and Change Orders
November 01, 2021 —
Jacob A. Epstein - Construction ExecutiveAs every construction professional is aware, unexpected events and problems are guaranteed on every large project. Defects, delays and change orders are sure to arise, and depending on how they are dealt with and addressed at the time, they can either have minimal effects on the overall project or they can have drastic, long-term and often costly effects, including but not limited to thousands of dollars in legal fees, increases in insurance premiums and/or years of litigation down the road.
There are many reasons why so many large construction projects end up in some type of litigation. Delay claims, construction contract disputes and construction defect lawsuits are so prevalent in certain parts of the country that certain judges designate specific time blocks in their courtrooms for construction cases only—just to deal with the large portions of their case dockets dealing with construction issues at the same time.
Reprinted courtesy of
Jacob A. Epstein, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Epstein may be contacted at
jepstein@haber.law
Are Housing Prices Poised to Fall in Denver?
December 10, 2015 —
Beverley BevenFlorez-CDJ STAFFDenver, Dallas, and Houston’s housing markets are rising too quickly and will soon hit “’bubble territory’” according to a housing market index by Florida Atlantic University and Florida International University, reported the Denver Business Journal.
"There is about a 70 percent chance that renters in Denver will get more wealth on average than buyers," Ken Johnson, a real estate economist at the university in Boca Raton, Florida, told the Denver Post.
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Double-Wide World Cup Seats Available to 6-Foot, 221-Pound Fans
June 18, 2014 —
Tariq Panja – BloombergSome of the double-wide seats that Brazilian law guarantees for obese World Cup fans are being occupied by people who don’t need that much extra space, and FIFA said it can’t do anything to prevent that from happening.
Soccer’s governing body said it is using World Health Organization and official Brazil Ministry of Health guidelines on who can be classified as obese. Those with a body mass index, or BMI, of 30 or higher can purchase a special-needs ticket at half price and get one of the special seats. Someone who is 6 feet tall and weighs 221 pounds (1.8 meters, 100 kilograms) would qualify.
“There are cases where a person doesn’t look obese but meets the guidelines,” Federico Addiechi, head of corporate hospitality, said after a briefing yesterday at Rio de Janeiro’s Maracana stadium, where the World Cup’s July 13 final will be held. “We cannot decide you are not obese if the law says you are obese.”
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Tariq Panja, BloombergMr. Panja may be contacted at
tpanja@bloomberg.net
Harmon Towers to Be Demolished without Being Finished
October 02, 2013 —
CDJ STAFFEngineering.com looks at why the Harmon Tower in Las Vegas will be coming down at some point in the future. Construction stopped, unfinished in 2008. Taking the building down will cost about $400 million, which the building’s owner feels that the developer should pay.
Inspectors concluded that the building did not meet the earthquake specifications for Las Vegas. The contractor claimed that the fault was due to the design specifications and that the supports were further weakened during destructive testing.
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Washington State May Allow Common Negligence Claims against Construction Professionals
November 20, 2013 —
CDJ STAFFLane Powell, a law firm with offices in Washington, Oregon, Alaska, and London has issued a construction law update on a recent decision of the Washington Supreme Court. The case involved a development firm that sued its engineering firm. The developer had gained preliminary approval to develop two short plats, and after the approvals expired, sought the assistance of the engineering firm in regaining approval. Eventually, the developer lost the plats to foreclosure and sued the engineering firm.
The Washington Supreme Court rejected most of the developer’s claims in the case, but sent the negligence claims back to the trial court. The Lane Powell construction law update notes that “the record didn’t adequately establish the scope of the professional obligations incorporated into the contract, the court refused to determine if any of the engineer’s duties to the plaintiffs arose independently of the contract.”
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Quick Note: Subcontractor Payment Bond = Common Law Payment Bond
February 16, 2017 —
David Adelstein – Florida Construction Legal UpdatesWhat is a common law payment bond? A common law payment bond is a bond not required or governed by a statute. For example, if a prime contractor provides the owner a payment bond, that bond will be a statutory payment bond. On the other hand, if a subcontractor provides the general contractor with a payment bond, that bond will be a common law payment bond. Why? Because there is not a statute that specifically governs the requirements of a subcontractor’s payment bond given to a general contractor. The subcontractor’s payment bond is aimed at protecting the general contractor (and the general contractor’s payment bond) in the event the subcontractor fails to pay its own subcontractors and suppliers. The subcontractor’s payment bond will generally identify that claimants, as defined by the bond, are those subcontractors and suppliers the subcontractor has failed to pay. This common law payment bond is not recorded in the public records so sometimes it can be challenging for a claimant (anyone unpaid working under the subcontractor that furnished the bond) to obtain a copy of the bond. With that said, an unpaid claimant should consider pursuing a copy of this bond in certain situations, particularly if it may not have preserved a claim against the general contractor’s statutory payment bond.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.com
