Subcontractors Aren’t Helpless
July 26, 2017 —
Christopher G. Hill - Construction Law MusingsAs a construction attorney here in Virginia, I often have the pleasure of assisting subcontractors seeking advice on their all important contracts with general contractors. I often sense that these subcontractors feel that they are at the bottom of the food chain and don’t have the “clout” necessary to push back at all against the myriad clauses in these contracts that seek to push the risk downhill. “Pay if Paid” clauses, subordination of lien clauses (which may or may not be enforceable), indemnification language that seems to make the subcontractor liable for way too much, and the dreaded incorporation clauses , would seem to make the subcontractor hold one big “bag of risk” on any construction project.
While this may seem bleak, never fear, as a subcontractor you are not totally helpless. Remember, you don’t have to take a job from a general contractor that you get a bad feeling about. Often the best indicator of whether you want to move forward is your “spidey sense” that something seems a bit off or that the GC is trying to cram too much down your throat. Use your experience in the construction industry to guide your contracting activities. It is better to avoid the bad job than to take it in the long run. If you are a quality subcontractor (and I know you are or you wouldn’t be reading this), other work will come along because general contractors need good subs to get their work done.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
No Duty to Defend Construction Defect Claims under Kentucky Law
March 25, 2024 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court determined that the insurer was not obligated to defend construction defect claims under Kentucky law. Westfield Ins. Co. v. Kentuckiana Commercial Concrete, LLC, 2023 U.S. Dist. LEXIS 222674 (W.D. Ky. Dec. 14, 2023).
HRB, the owner of an apartment complex, filed an arbitration demand against the general contractor, Doster Commercial Construction, for allegedly doing faulty concrete work in the construction of the apartments. Doster added its concrete subcontrator Kentuckiana Commercial Concrete - and 16 other subcontractors - to the arbitration. Kentuckiana tendered the claim to its insurer, Westfield. Wesfield defended. Doster claimed it was an additional insured under the Westfield policy and also sought coverage. Westfield refused the defend Doster. Westfield argued there was no "occurrence."
Westfield then sued both Doster and Kentuckiana in federal court, seeking a declaration that it had no duty to defend either. Westfield moved for a judgment on the pleadings.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Hunton Andrews Kurth Insurance Attorney, Latosha M. Ellis, Honored by Business Insurance Magazine
May 03, 2021 —
Andrea DeField & Michael S. Levine - Hunton Andrews KurthWe are proud to share that Business Insurance has named Hunton Andrews Kurth insurance coverage associate, Latosha M. Ellis, one of the magazine’s 2021 Break Out Award winners. Business Insurance’s Break Out Awards honor 40 top professionals from around the country each year who are expected to be the next leaders in risk management and the property/casualty insurance field. Business Insurance reviewed hundreds of nominees, all of whom have worked in commercial insurance or related sectors for under 15 years. Out of those hundreds, Latosha was selected as one of the 40 honorees for 2021.
Latosha is well-deserving of this honor. She is committed to excellence in the practice of law and in her service to clients, both of which have earned her a sterling reputation in the Virginia and District of Columbia legal communities. In addition to her litigation success and excellent client service skills, Latosha is a leader, both in the firm and in the legal community. Latosha not only serves as a mentor to several young attorneys at our firm, but she is also a board member of the University of Richmond Law School Alumni Board (currently serving on a three-year term) and a planning member of the American Bar Association’s (ABA) professional development committee. She also co-chaired the 2021 ABA Insurance Coverage and Litigation Committee Annual CLE Conference, for which she implemented new diversity and inclusion standards and ensured several program sessions geared towards young lawyers. In addition, Latosha was selected as the firm’s 2019 Pathfinder for the Leadership Council for Legal Diversity, serves on the executive board of the Women’s Bar Association of the District of Columbia, and was inducted into the American Bar Association’s Section of Litigation Young Lawyer Leadership Program.
Reprinted courtesy of
Andrea DeField, Hunton Andrews Kurth and
Michael S. Levine, Hunton Andrews Kurth
Ms. DeField may be contacted at adefield@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
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Florida’s “Groundbreaking” Property Insurance Reform Law
April 18, 2023 —
Bradley S. Fischer & Laura Farrant - Lewis BrisboisFort Lauderdale, Fla. (April 18, 2023) – On December 16, 2022, Florida Governor Ron DeSantis signed into law Senate Bill 2-A (S.B. 2-A, or the Act). Widely touted as “groundbreaking,” S.B. 2-A reforms many aspects of the claims process, including the timing for paying and adjusting claims, eliminating one-way attorneys’ fee awards, and banning assignment-of-benefits agreements. This alert provides an overview of the key provisions of S.B. 2-A. Unless otherwise stated in each amended statute, December 16, 2022 appears to be the effective date of the Act.
I. Assignment of Benefits – Section 627.7152 (effective January 1, 2023)
- A policyholder may not assign any post-loss insurance benefits under any residential or commercial property insurance policy. Any attempt to assign such benefits is void, invalid, and unenforceable.
Reprinted courtesy of
Bradley S. Fischer, Lewis Brisbois and
Laura Farrant, Lewis Brisbois
Mr. Fischer may be contacted at Bradley.Fischer@lewisbrisbois.com
Ms. Farrant may be contacted at Laura.Farrant@lewisbrisbois.com
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Safety Guidance for the Prevention of the Coronavirus on Construction Sites
May 25, 2020 —
Heather Whitehead - Newmeyer DillionAlthough construction projects are generally allowed to proceed under most COVID-19 stay at home orders, owners and contractors need to know how to proceed safely on their construction sites. Not only do workers and others on site need to be protected, but implementation of these protocols is also critical to avoid potential liabilities. Last week, the California Department of Industrial Relations – Division of Occupational Safety & Health (CAL/OSHA) released guidance regarding safety and health procedures to prevent the spread of COVID-19 at construction sites. A link to the CAL/OSHA Safety and Health Guidance is provided here.
While the guidance states that it is not imposing any new legal obligations, it is imperative for businesses to not only be aware of these safety practices, but to incorporate these practices as appropriate on each construction site to protect its employees as well as subcontractors, suppliers and others who may be present on site. Otherwise, owners and contractors face potential exposure to regulatory action, including potential penalties and other liabilities, if they fail to properly incorporate these guidelines into the Injury and Illness Prevention Program (IIPP) at each construction site. Now is the time to update your current Injury and Illness Prevention Program (IIPP) to include recommended protocols for preventing the spread of the Coronavirus.
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Heather Whitehead, Newmeyer DillionMs. Whitehead may be contacted at
heather.whitehead@ndlf.com
Giving Insurance Carrier Prompt Notice of Claim to Avoid “Untimely Notice” Defense
June 12, 2023 —
David Adelstein - Florida Construction Legal UpdatesWhen it comes to giving your insurance carrier notice of claim, I am an advocate of providing that notice as soon as possible, i.e., prompt notice. The reason is to take away the carrier’s argument to deny coverage because you, as the insured, failed to provide it with prompt notice—the “untimely notice” defense. It doesn’t matter whether it is a first party property insurance claim or third-party liability policy claim, provide notice as soon as reasonably possible to take away that “untimely notice” defense.
The “untimely notice” defense was the issue in Benson v. Privilege Underwriters Reciprocal Exchange, 48 Fla.L.Weekly D1085a (Fla. 6th DCA 2023) dealing with a first party property insurance policy. In this case, eighteen months after Hurricane Irma, the plaintiff noticed a smell and observed brown stains on walls and ceiling in his home. The plaintiff called roofing companies to inspect the damage and perform certain repairs. However, the plaintiff still noticed the smell so he called a company to test and remediate mold. The plaintiff, then, contacted his property insurer with numerous claims relative to the leaks and damage. Although there was an initial property insurance payment made, the carrier ultimately denied coverage for subsequent claims stating that “the late notice of the claim and the prior repairs to the roof substantially prejudiced its ability to complete an inspection of [plaintiff’s] property to evaluate the claim.” Benson, supra.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
2023’s Bank Failures: What Contractors, Material Suppliers and Equipment Lessors Can Do to Protect Themselves
May 15, 2023 —
Garret Murai - California Construction Law BlogIt has been a tumultuous year for the banking industry. Since the beginning of this year the industry has seen the collapse of Silicon Valley Bank and Signature Bank, the shotgun marriage between failing Credit Suisse and USB, and, most recently, the collapse of First Republic Bank this past week and its purchase by JP Morgan Chase. Indeed, according to the New York Times, these three bank failures cum bailouts alone were bigger than the 25 banks that collapsed during the financial crises of 2008 and some are concerned that it is just the beginning.
This, of course, has impacted the stock market, with Forbes reporting that the banking industry lost more than $300 billion in market value as of the end of March. However, it also raises concerns regarding liquidity on construction projects.
While the failing banks have either been bought out by other banks or shored up by the federal government, which, in the case of Silicon Valley Bank and Signature Bank, involved the Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve stepping into to protect depositors by
guaranteeing deposits in excess of the current FDIC limit of $250,000, there continues to be concerns over access to cash. This can impact construction projects in several ways.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Construction Defect Lawsuit Came too Late in Minnesota
June 28, 2013 —
CDJ STAFFThe Minnesota Court of Appeals has upheld a summary judgment in a construction defect case, Lee v. Gorham. Minnesota law requires that contractors warranty that the home will be free of major construction defects during the first ten years, but claims must “be brought within two years of the discovery of the breach.” The Lees received a home inspection report in 2009 that identified a variety of defects, including “several possible structural defects.” The court noted that the report stated, “Contact your builder in writing of the findings, and discuss your options with an attorney.”
The Lees contacted the contractor, Gorham Builders. After initial silence, Gorham told the Lees that problems would “have to be ‘turned over to [the] insurance company.’” Rodney noted in his testimony that he had two choices, to either sue Gorham or hire an outside contractor. Mr. Lee had concluded that the legal costs were likely to be equal to the cost of the contractor.
In June, 2011, the Lees changed their mind about bringing a suit. Gorham sought and received a summary judgment dismissing the case on the grounds that too much time had passed since the Lees learned of the construction defect. The Lees appealed.
The appeals court upheld the summary judgment. The Lees claimed that the 2009 home inspection did not alert them of a “major construction defect,” but the court concluded that the language of the report fit within the Minnesota statutory definition of a “major construction defect.”
Nor was the appeals court convinced that at any time did Gorham provide “assurances that it would cure the defects to the home.” Within the same month as the May 2009 inspection, Gorham had made it clear that any problems were an issue for the insurance company. Thus, the appeals court concluded that the Lee’s equitable-estoppel argument was without merit.
The Lees also brought to appeal the new argument that they did not realize they were dealing with “major construction defects” until they received a subsequent home inspection in 2011. The court noted that the second report does not detail “new defects or structural issues not identified in the 2009 inspection report.” In addition to being “without merit,” the court noted that this claim was not made in the district court and so the appeals court “need not consider this issue on appeal.”
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