COVID-19 Could Impact Contractor Performance Bonds
March 30, 2020 —
Ben Williams & MG Surety - Construction ExecutiveAs COVID-19 continues to expand around the United States and the world, it may only be a matter of time before U.S. construction projects are affected by the virus. Performance bonds guarantee that a project will be completed by a contractor according to the contract. However, what if a contractor cannot complete a project on time due to widespread disease? What, if any, impact could the virus have on a contractor’s surety bond program?
Risk Factors
Several risks associated with the virus could trigger a performance bond claim.
1. Materials. The Chinese account for a large supply of construction materials, including steel, copper, cabinetry, etc. An inability to obtain these materials could significantly delay or stop a project all together. Even if a contractor is able to obtain them from other sources, it may be at a significantly higher cost than they put into the bid.
2. Labor. There is already a shortage of qualified labor in the construction industry. Additionally, construction already lends itself to the spreading of viruses; workers are often in close proximity, handling common materials, and they may not have an easily accessible place to wash their hands. Furthermore, even though many now have paid sick leave, there is often pressure not to use it. These things could magnify the labor shortage and make it difficult to complete projects on time.
3. Safety. Finally, the world is having a serious shortage of respirators. Because of widespread panic, many people have been purchasing N95 respirators—so much that the Surgeon General has asked people to stop buying them. It has created a shortage for people who really need them, like contractors. If contractors can’t get these safety masks, certain trades will either be unable to work, or risk continuing the project without masks, which would endanger workers and open them up to OSHA penalties.
Reprinted courtesy of
Ben Williams and MG Surety, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Williams may be contacted at
benw@mgsuretybonds.com
Las Vegas’ McCarran Tower Construction Issues Delays Opening
August 13, 2014 —
Beverley BevenFlorez-CDJ STAFFThe Las Vegas Review-Journal reported that an improperly applied chemical coating might delay the opening of McCarran International Airport’s Federal Aviation Administration tower by a year and cost millions of dollars to repair.
The chemical coating was intended “to prevent the spread of toxic fungus,” but was “improperly applied and is ineffective,” workers on the site told the Las Vegas Review-Journal.
“Officials said the” $99 million, 352-foot “tower was expected to be operational by 2015, but the FAA now says it won’t be able to use the facility until late 2016 or early 2017.”
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Top 10 Cases of 2019
February 10, 2020 —
Jeffrey J. Vita, Grace V. Hebbel & Andrew G. Heckler - Saxe Doernberger & Vita, P.C.In the 2019 edition of SDV’s Top Ten Insurance Cases, we probe wiretapping claims under an armed security services policy, delicately sniff out E&O coverage for a company using cow manure to create electricity, scour the earth for coverage for crumbling foundation claims, and inspect D&O policies for government investigation coverage. In addition, we preview some important and exciting decisions due in 2020. Without further ado, SDV raises the curtain on the most informative and influential insurance
coverage decisions of 2019.1
1.
ACE American Ins. Co. v. American Medical Plumbing, Inc.,
206 A.3d 437 (N.J. Super. Ct. App. Div. 2019)
April 4, 2019
Is waiver of subrogation language in a standard AIA201 contract sufficient to bar an insurer’s subrogation rights?
The New Jersey Supreme Court held that it was. Equinox Development obtained a comprehensive blanket all-risk policy with limits of $32 million per occurrence from ACE American Ins. Co. (“ACE”). The policy covered Equinox’s new project in Summit, New Jersey. Equinox hired Grace Construction as GC, who in turn subcontracted the plumbing scope of work to American Medical Plumbing, Inc. (“American”). After completion of the work under the subcontract, a water main failed and flooded the entire project. ACE paid the limits of the policy and subrogated against American to recover its losses. American argued that there was a waiver of subrogation in the AIA201 contract that barred the suit. ACE challenged the validity of the AIA provision, arguing that it applied only to claims before completion of construction and that it only applied to damage to the work itself and not to adjacent property. The court rejected both arguments, finding that the AIA provision effectively barred ACE’s subrogation claim. This decision provides guidance on a frequently used contract form for contractors across the country.
Reprinted courtesy of Saxe Doernberger & Vita, P.C. attorneys
Jeffrey J. Vita,
Grace V. Hebbel and
Andrew G. Heckler
Mr. Vita may be contacted at jjv@sdvlaw.com
Ms. Hebbel may be contacted at gvh@sdvlaw.com
Mr. Heckler may be contacted at agh@sdvlaw.com
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Speeding up Infrastructure Projects with the Cloud
July 28, 2018 —
Aarni Heiskanen - AEC BusinessInfrakit, a cloud service developed by a Finnish startup company, is accelerating infrastructure projects both in Finland and, increasingly, abroad. Automatic transfer of information among parties involved in a project saves time, reduces paperwork, and facilitates the work of land surveyors. In addition to excavators, rock drills can now also be viewed on the map.
The CEO and founder of DSC Finland, the supplier of Infrakit, is Teemu Kivimäki. He states that despite the name of the company changing over the years, its principles have stayed the same. Kivimäki describes the functions of the service: “The digital site plans are added to Infrakit, and they can then be viewed on a map and in a 3D view with a browser. When the working machines are also linked to the service, the user can see if the work has been executed according to plan.”
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
New Jersey Federal Court Examines And Applies The “j.(5)” Ongoing Operations Exclusion
October 07, 2019 —
Anthony L. Miscioscia and Timothy A. Carroll - White and Williams LLPIn PJR Construction of N.J. v. Valley Forge Insurance Company, 2019 U.S. Dist. LEXIS 127973 (D.N.J. July 31, 2019) (PJR Construction), a New Jersey federal court held that the “j.(5)” “Ongoing Operations Exclusion” applied to bar coverage for property damage to property on which a construction company allegedly performed faulty work. The court’s opinion follows prior New Jersey state court precedent, including Ohio Casualty Insurance Company v. Island Pool & Spa, Inc., 12 A.3d 719 (N.J. Super. Ct. App. Div. 2011) (Island Pool), but also provides additional guidance on the elements which can make the Ongoing Operations Exclusion applicable to exclude coverage.
In PJR Construction, a commercial property owner engaged a construction company to build a 26,000 square foot swim club and related 3,000 square foot pavilion building in New Jersey. After about 75% of the work was completed, the property owner fired the construction company and denied it access to the property. The owner later sued the construction company in New Jersey state court alleging “shoddy workmanship” in, among other things, sealants, flashing, water resistant barriers, masonry and the handicap ramps. The construction company sought coverage from its CGL insurer, which denied coverage based on, among other things, the j.(5) Ongoing Operations Exclusion. After the denial of coverage, the company sued the insurer in New Jersey federal court seeking a declaration of coverage.
Reprinted courtesy of
Anthony L. Miscioscia, White and Williams LLP and
Timothy A. Carroll, White and Williams LLP
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Mr. Carroll may be contacted at carrollt@whiteandwilliams.com
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Job Growth Seen as Good News for North Carolina Housing Market
November 20, 2013 —
CDJ STAFFDavid Mayo, the president of the Home Builders Association of Hendersonville told housing professionals that “it’s been a tough few years, but by all accounts it’s better now.” Currently, Henderson County, North Carolina is seeing three new jobs created for every building permit issued, which is seen as the critical measure of a region’s economic health, according to Dale Akins, a market research firm.
Henderson County has seen a rise in building permits, with 32% more permits issued in the first nine months of 2013 than in the same period of 2012. By contrast, adjacent Transylvania County has seen little job growth and a housing market that has shrunk by 25%.
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New World to Demolish Luxury Hong Kong Towers in Major Setback
August 04, 2021 —
Shawna Kwan - BloombergNew World Development Co. will demolish two towers at Hong Kong’s most popular housing development in decades and compensate buyers after finding unexpected defects, in a major setback for the real estate company.
The developer will pull down and rebuild the existing floors of Towers 1 and 8 at its Pavilia Farm III project near Tai Wai station after it found the concrete strength in some areas did not meet design requirements, the Hong Kong-based company said in a statement.
Shares of New World fell as much as 4.8% Thursday in Hong Kong, the most in more than seven months, before recovering to close 3.9% lower.
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Shawna Kwan, Bloomberg
Gillotti v. Stewart (2017) 2017 WL 1488711 Rejects Liberty Mutual, Holding Once Again that the Right to Repair Act is the Exclusive Remedy for Construction Defect Claims
November 21, 2017 —
Richard H. Glucksman, Esq. & Chelsea L. Zwart, Esq. - Chapman Glucksman Dean Roeb & Barger BulletinOriginally published by CDJ on June 5, 2017
Background
In Gillotti v. Stewart (April 26, 2017) 2017 WL 1488711, which was ordered to be published on May 18, 2017, the defendant grading subcontractor added soil over tree roots to level the driveway on the plaintiff homeowner’s sloped lot. The homeowner sued the grading subcontractor under the California Right to Repair Act (Civil Code §§ 895, et seq.) claiming that the subcontractor’s work damaged the trees.
After the jury found the subcontractor was not negligent, the trial court entered judgment in favor of the subcontractor. The homeowner appealed, arguing that the trial court improperly construed the Right to Repair Act as barring a common law negligence theory against the subcontractor and erred in failing to follow Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98. The Third District Court of Appeal disagreed and affirmed the trial court’s judgment in favor of the subcontractor.
Impact
This is the second time the Third District Court of Appeal has held that Liberty Mutual (discussed below) was wrongly decided and held that the Right to Repair Act is the exclusive remedy for construction defect claims. The decision follows its holding in Elliott Homes, Inc. v. Superior Court (Hicks) (2016) 6 Cal.App.5th 333, in which the Court of Appeal held that the Right to Repair Act’s pre-litigation procedures apply when homeowners plead construction defect claims based on common law causes of action, as opposed to violations of the building standards set forth in the Right to Repair Act. Elliott is currently on hold at the California Supreme Court, pending the decision in McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132, wherein Liberty Mutual was rejected for the first time by the Fifth District. CGDRB continues to follow developments regarding the much anticipated McMillin decision closely, as well as all related matters.
Reprinted courtesy of
Richard H. Glucksman, Chapman Glucksman Dean Roeb & Barger and
Chelsea L. Zwart, Chapman Glucksman Dean Roeb & Barger
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Ms. Zwart may be contacted at czwart@cgdrblaw.com
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