Uniformity in Florida’s Construction Bond Laws Brings About Fairness for the Industry
August 17, 2020 —
Gary L. Brown - Construction ExecutiveBefore Florida updated its laws for construction bonds, there were some significant differences between how liens and bond claims were litigated. Forms and procedures lacked uniformity that created unnecessary challenges for the construction industry and legal practitioners serving the industry.
Now, more consistency among the laws should benefit contractors, as well as lower-tiered subcontractors and suppliers. Since the updates were instated in October 2019, some of the procedures and rules used for lien enforcement have been extended to bond claims, which may make it easier to resolve differences over payment and performance.
That should come as a relief to local contractors and law firms, as well as to the numerous developers and construction companies based outside of Florida that operate in the state or are considering doing so. Florida is now the number one destination for new residents, especially from high-tax states, according to IRS data. With them come new homes, retail centers, offices, industrial space, roads and other infrastructure in what is now the third-most-populous state in the nation.
Reprinted courtesy of
Gary L. Brown, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Brown may be contacted at
gbrown@kklaw.com
Prospective Additional Insureds May Be Obligated to Arbitrate Coverage Disputes
September 07, 2020 —
Danielle S. Ward - Balestreri Potocki & HolmesThe Court of Appeal closed out 2019 by ruling that an additional insured can be bound to the arbitration clause in a policy when a coverage dispute arises between that additional insured and the carrier. (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal. App. 5th 834, 837.)
In 2009, Future Farmers of America (“Future Farmers”) entered into a license agreement with SMG Holdings Incorporated (“SMG”) to use the Fresno Convention Center. As part of the agreement, Future Farmers was required to secure comprehensive general liability (“CGL”) coverage and name SMG and the City of Fresno as additional insureds (“AI”) on its policies.
Future Farmers purchased a general liability policy from Plaintiff Philadelphia Indemnity Insurance Company (“Philadelphia”). Neither SMG nor the City of Fresno were added as AIs, but the policy contained a “deluxe endorsement” which extended coverage to lessors of premises for “liability arising out of the ownership, maintenance or use of that part of the premises leased or rented” to the named insured. The policy also contained an endorsement that extended coverage where required by a written contract for liability due to the negligence of the named insured. Philadelphia’s policy also stated that if the insurance company and insured “do not agree whether coverage is provided . . . for a claim made against the insured, then either party may make a written demand for arbitration.”
A patron to Future Farmer’s event at the Fresno Convention Center was seriously injured after he tripped over a pothole in the parking lot and hit his head. He sued both Fresno and SMG. In turn, Fresno and SMG tendered their defense to Philadelphia. Philadelphia denied coverage finding that the incident did not arise out of Future Farmer’s negligence, and that SMG had the sole responsibility for maintaining the parking lot. Consequently, Philadelphia concluded that neither Fresno nor SMG qualified “as an additional insured under the policy” for the injury in the parking lot.
The coverage dispute continued, and in 2016, Philadelphia issued a demand for arbitration which was rejected by SMG. Philadelphia then petitioned the state court to compel arbitration arguing that SMG could not avoid the burdens of the policy while seeking to obtain policy benefits. SMG used Philadelphia’s conclusion that it did not qualify as an AI under the policy to argue that Philadelphia was “estopped from demanding arbitration”. In other words, SMG argued that it could not be held to the burdens of the policy without being provided with the benefits of the policy.
The trial court sided with SMG finding that there was no arbitration agreement between the parties. The court noted that while third party beneficiaries can be compelled to arbitration there was no evidence that applied here, and Philadelphia could not maintain its inconsistent positions on the policy as its respects SMG.
Disagreeing with the trial court, the Court of Appeal concluded that SMG was a third-party beneficiary of the policy. The AI obligations in the license agreement and the deluxe endorsement in the Philadelphia policy collectively establish an intended beneficiary status. The Court saw SMG’s tender to Philadelphia as an acknowledgement of that status.
Relatedly, the Court found that SMG’s tender to Philadelphia – its demand for policy benefits – equitably estopped them from avoiding the burdens of the policy. The Court stated it defied logic to require a named insured to arbitrate coverage disputes but free an unnamed insured demanding policy coverage from the same requirement. Conversely, the Court found no inconsistency in Philadelphia’s denial of coverage to SMG and its subsequent demand for arbitration. Philadelphia did not outright reject SMG’s status as a potential insured, but rather concluded that there was no coverage because the injury occurred in the parking lot. In other words, the coverage determination turned on the circumstances of the injury not SMG’s status under the policy.
In short, the Court concluded that the potential insured takes the good with the bad. If one seeks to claim coverage as an additional insured, they can be subject to the restrictions of the policy including arbitration clauses even if they did not purchase the policy.
Securing additional insurance has become increasingly more difficult and limited over the years, and this holding presents yet another hurdle to attaining AI coverage. For those seeking coverage, it is important to note that the Court’s ruling may have turned out differently had the carrier outright denied SMG’s AI status, rather than concluding that the injury was not covered.
Your insurance scenario may vary from the case discussed above. Please contact legal counsel before making any decisions. BPH’s attorneys can be reached via email to answer your questions.
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Danielle S. Ward, Balestreri Potocki & HolmesMs. Ward may be contacted at
dward@bph-law.com
First-Time Buyers Home Sales Stagnates
October 22, 2014 —
Beverley BevenFlorez-CDJ STAFFDespite a rise overall in home sales, “first-time buyer share remained unchanged from the previous two months at 29%, far behind the historical average first-time buyer share of about 40%,” reported National Association of Home Builders’ Eye on Housing. However, “[e]xisting home sales increased to the highest level of the year, having posted gains for five of the last six months, despite weakness among first-time buyers. Existing home sales increased 2.4% in September, but remain 1.7% below the same period a year ago.”
According to Eye on Housing, existing sales is expected to continue to increase throughout the year, though the first-time buyer segment is “the weak spot.”
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U.S. Tornadoes, Hail Cost Insurers $1 Billion in June
July 09, 2014 —
Kelly Gilblom – BloombergTornadoes, hail and windstorms that pounded the U.S. from the Rocky Mountains to the Tennessee Valley last month will probably cost insurers more than $1 billion, Aon Plc said in a report.
Hailstorms and winds greater than 90 miles an hour (145 kilometers) in June caused billions of dollars of economic losses, led by a full week of storms early in the month, the London-based insurance broker said today.
More than 300 tornadoes hit the U.S. last month, compared with 125 a year earlier and 111 in June 2012, according to preliminary data from the National Weather Service’s Storm Prediction Center. May, June and July tend to be the worst months for twisters, it said.
Severe weather from June 3 to June 9 this year killed three people and led to more than 100,000 claims, Aon said. Later in the month, “hail and winds gusting to hurricane strength tracked eastward,” the broker said in its report. The storm “shattered windows, punctured roofs and downed trees onto homes, structures and vehicles.”
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Kelly Gilblom, BloombergMs. Gilblom may be contacted at
kgilblom@bloomberg.net
Approaches in the Absence of a Differing Site Conditions Clause
April 10, 2019 —
Parker A. Lewton - Smith CurrieA contractor who has encountered unforeseen conditions will typically rely on the contract’s differing site conditions clause as a means to recovery. Most construction contracts address those issues directly. In ConsensusDocs Standard Agreement and General Conditions between Owner and Constructor, the starting point is § 3.16.2. But what if the contract does not contain a differing site conditions clause? Or, what if the contract does contain such a clause, but the contractor failed to provide adequate notice or satisfy other conditions or requirements of the contract? When reliance on a differing site conditions clause is impractical, a contractor still may seek recovery in certain instances under one or more of the following legal theories: misrepresentation; fraud; duty to disclose; breach of implied warranty; and mutual mistake.
Misrepresentation
Misrepresentation occurs when an owner “misleads a contractor by a negligently untrue representation of fact[.]” John Massman Contracting Co. v. United States, 23 Cl. Ct. 24, 31 (1991) (citing Morrison–Knudsen Co. v. United States, 170 Ct. Cl. 712, 718–19, 345 F.2d 535, 539 (1965)). A contractor may be able to recover extra costs incurred, under a theory of misrepresentation, if it can show that (1) the owner made an erroneous representation, (2) the erroneous representation went to a material fact, (3) the contractor honestly and reasonably relied on that representation, and (4) the contractor’s reliance on the erroneous representation was to the contractor’s detriment. See T. Brown Constructors, Inc. v. Pena, 132 F.3d 724, 728–29 (Fed. Cir. 1997). These four requirements can be satisfied, for example, through the use of deposition testimony detailing the owner’s representations and the contractor’s reliance thereon. See, e.g., C & H Commercial Contractors, Inc. v. United States, 35 Fed. Cl. 246, 256–57 (1996).
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Parker A. Lewton, Smith CurrieMr. Parker may be contacted at
palewton@smithcurrie.com
BHA Has a Nice Swing
May 03, 2018 —
Beverley BevenFlorez-CDJ STAFFBert L. Howe & Associates, Inc., (BHA) raises thousands of dollars each year with their Sink a Putt for Charity campaign. This year, participant’s efforts on the green will help benefit three cancer fighting institutions that are dedicated to treating and eradicating children’s cancer: Hawaii’s Children’s Cancer Foundation, St. Jude Children’s Research Hospital, and Shriners Hospital for Children. As in the past, attendees can participate for free in the BHA golf challenge and win a $25 Amazon gift card, and for every successful putt made, BHA will make a $25 cash donation in the golfer’s name to be distributed equally between each worthy organization.
While at the booth, don’t forget to test out BHA’s industry leading data collection and inspection analysis systems. BHA’s data collection process includes video overviews as well as next-day viewing of inspection data via their secured BHA Client Access Portal. Discover meaningful cost improvements that translate to reduced billing while providing superior accuracy and credibility. Also learn about BHA’s expanding market presence and full range of services in Texas, Florida, and across the Southeast United States.
Attendees can also enter to win Dodger baseball tickets! Other BHA giveaways include LED flashlights, tape measures, multi-tools and stress balls.
For more information on these worthwhile charities or to make a donation directly, please visit their websites:
Hawaii’s Children’s Cancer Foundation ,
St. Jude Children’s Research Hospital, and
Shriners Hospital for Children.
Read the full story, Bert L. Howe & Associates, Inc....
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Poor Pleading Leads to Loss of Claim for Trespass Due to Relation-Back Doctrine, Statute of Limitations
April 13, 2017 —
Brett G. Moore & Lawrence S. Zucker II - Haight Brown & Bonesteel LLPIn Scholes v. Lambirth Trucking Co. (No. C070770, Filed 4/6/2017), the California Court of Appeal for the Third Appellate District held that the relation-back doctrine could not save a property owner’s trespass claim against an adjacent neighbor where the property owner’s original complaint was factually devoid and was later amended to include the trespass claim after the statute of limitations had run.
The relation-back doctrine is a well-settled legal principle which allows a plaintiff to amend a complaint to add a cause of action which would otherwise be barred by the statute of limitations. As long as the factual allegations “relate back” to the those alleged in the original complaint, an additional cause of action will not be subject to the applicable statute of limitations. The policy behind statutes of limitation is to put a defendant on notice of the need to defend against a claim in time to prepare an adequate defense.
On May 21, 2007, a fire broke out at defendant Lambirth Trucking Company’s (“Lambirth”) soil enhancement facility adjacent to plaintiff Vincent Scholes’ (“Scholes”) property. Scholes had previously notified Lambirth that wood chips and rice hulls were accumulating on his property as a result of Lambirth’s operations. Local authorities also warned Lambirth of the hazards presented by storage of those materials.
Reprinted courtesy of
Brett G. Moore, Haight Brown & Bonesteel LLP and
Lawrence S. Zucker II, Haight Brown & Bonesteel LLP
Mr. Moore may be contacted at bmoore@hbblaw.com
Mr. Zucker may be contacted at lzucker@hbblaw.com
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Pine River’s Two Harbors Now Targets Non-Prime Mortgages
November 05, 2014 —
Jody Shenn - BloombergCount Two Harbors Investment Corp. (TWO) among investors looking for profits in riskier home loans -- and expecting a market for bonds backed by them to re-emerge even with safer issuance showing limited signs of life.
The real-estate investment trust, whose 74 percent total return over the past three years is almost double that of peers, recently told the lenders that have been selling it big, high-quality mortgages that it’s now also seeking to purchase non-prime loans and those with low down payments, Chief Investment Officer Bill Roth said today during a conference call for analysts and investors.
“Our expectation and certainly hope would be as this market opens up and becomes fairly meaningful that a securitization market would develop,” he said. Of course, he sees the timeline as “probably measured in years, not months.”
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Jody Shenn, BloombergMs. Shenn may be contacted at
jshenn@bloomberg.net
