Mandatory Arbitration Isn’t All Bad, if. . .
August 13, 2019 —
Christopher G. Hill - Construction Law MusingsIn the past week or so mandatory arbitration has been all the rage. From those that argue that arbitration is becoming more burdensome than litigation, to my friend and fellow construction attorney Scott Wolfe who gives great advice on how to make arbitration worth it again. You can place me in the camp of those that think that mandatory arbitration clauses of the type typically found in contracts can add a layer of expense that can be unnecessary.
However, if an arbitration clause is carefully drafted, and properly used, these clauses an be helpful in assuring that the streamlining effect for which arbitration was created actually occurs. Because the contract is king in Virginia, these provisions can essentially create the rule of civil procedure used to resolve any dispute relating to the project.
Anything from the number and method of appointing the arbitrators, to the ability to use attorneys, to the time between notice and arbitration hearing and whether mediation is a requirement, to the documents and other pre-arbitration exchanges can and should be specifically outlined. The construction contract can also state who decides between court or arbitration. This can be one party or both. The possibilities are almost endless.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Risky Business: Contractual Protections in the 'New Normal'
January 04, 2023 —
Daniel Lund III - Construction ExecutiveThe point of contracts is to create certainty to avoid litigated or arbitrated disputes. Still, the various parties in the construction process may have different risk tolerances. For example, general contractors are often characterized as “risk-tolerant.” That risk, though, is usually calculated by the contractor internally, outside the terms of the written contract, based on an assumption that the contractor can get the work done more cheaply and more quickly than the owner anticipated. Project owners typically want and expect close-to-absolute certitude—absolutely as to cost—in their construction contracts. The standard fixed-price or lump-sum construction contract is geared toward protecting that interest.
Post-COVID-19, however, the discussion in the industry suggests that all bets are off when pricing and agreeing to construction work. Labor and materials shortages have sent owners and their design consultants backpedaling when general contractors pursuing a fixed-price contract seek contractual concessions that “un-fix” the price.
Reprinted courtesy of
Daniel Lund III , Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Late Notice Bars Insured's Claim for Loss Caused by Hurricane
October 24, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe court found that the failure to provide prompt notice of damage caused by Hurricane Irma barred plaintiff's claim for coverage. Garcia v. Scottsdale Ins. Co., 2022 U.S. Dist. LEXIS 149312 (S.D. Fla. Aug. 18, 2022).
On September 10, 2017, plaintiff's property allegedly suffered damage due to Hurricane Irma. Shortly thereafter, plaintiff observed a water stain on the ceiling of the bedroom which was painted over. She did not take any pictures of the water stain before repainting. Plaintiff reported to her experts that she observed other water stains in various areas in 2017, 2018 and 2019, and that she painted over them each time. She again observed water stains in several rooms in 2020, at which time she became aware of the magnitude of the problem and went to an attorney. Plaintiff did not report her claim until May 27, 2020.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Landmark Contractor Licensing Case Limits Disgorgement Remedy in California
November 09, 2020 —
Candace Matson - Construction & Infrastructure Law BlogContractors performing work in California are required to be licensed by the California State License Board (“CSLB”). Cal. Bus. & Prof. Code §7065. Except for sole proprietors, contractors are typically licensed through “qualifiers,” i.e., officers or employees who take a licensing exam and meet other requirements to become licensed on behalf of the contractor’s company. Contractors who perform work in California without being properly licensed are subject to a world of hurt, including civil and criminal penalties (see, e.g., Cal. Bus. & Prof. Code §§ 7028, 7028.6, 7028.7, 7117, and Cal. Labor Code §§ 1020-1022), and the inability to maintain a lawsuit to recover compensation for their work. Cal. Bus & Prof. Code § 7031(a); Hydra Tech Systems Ltd. v. Oasis Water Park, 52 Cal.3rd 988 (1991).
But arguably the worst ramification of not being property licensed is that established in Business & Professions Code Section 7031(b), which provides that any person who uses the services of an unlicensed contractor may bring an action for the return of all compensation paid for the performance of the work, commonly known as “disgorgement.” This remedy is particularly harsh (often described as “draconian”) because it makes no allowance for the fact that an unlicensed contractor will likely have already paid out the bulk of its compensation to its subcontractors, suppliers and vendors, but nevertheless can be ordered to disgorge all compensation.
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Candace Matson, Sheppard MullinMs. Matson may be contacted at
cmatson@sheppardmullin.com
Depreciating Labor Costs May be Factor in Actual Cash Value
April 20, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe Minnesota Supreme Court considered a certified question from the the U.S. District Court regarding consideration of depreciating labor costs in determining the actual cash value of a loss. Wilcox v. State Farm Fire & Cas. Co., 2016 Min. LEXIS 50 (Minn. Feb. 10, 2016).
The insureds' home was damaged by hail. State Farm provided a written estimate that calculated the actual cash value of the loss. To estimate the actual cash value of the damaged property, State Farm first calculated the replacement costs of individual items, such as roof flashing, siding, fascia, gutters, and window screens. Next, State Farm subtracted the pre-loss depreciation of some, but not all, individual items. For example, State Farm depreciated the cost of removing and replacing certain materials, such as siding. State Farm did not depreciate the cost of the new siding separately from the cost of the labor required to install the new siding on the home. Instead, State Farm calculated the removal and replacement of the siding as a single cost, then depreciated the removal-and-replacement cost as a whole. The cost of labor to repair or replace the damaged property was referred to by the court as "embedded labor costs."
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Dispute Over Exhaustion of Primary Policy
May 20, 2015 —
Tred R. Eyerly – Insurance Law HawaiiIn a dispute between the excess and primary carriers, the Fifth Circuit determined the primary policy was exhausted, triggering coverage under the excess policy. Amerisure Mut. Ins. Co. v. Arch Spec. Ins. Co., 2015 U.S. App. LEXIS 6627 (5th Cir. April 21, 2015).
Amerisure issued a CGL policy to Admiral Glass & Mirror Co. The policy provided excess over any coverage under a controlled insurance program policy. Arch issued an Owner Controlled Insurance Program (OCIP) policy to Endeavor Highrise, LP and to its contrators and subcontractors for bodily injury and property damage arising out of the construction of the Endeavor Highrise. Admiral was a subcontractor insured under the OCIP.
The OCIP had combined bodily injury and property damage limits of $2,000,000 per occurrence, a general aggregate limit of $2,000,000 and a products-completed operations aggregate limit of $2,000,000. The OCIP contained a Supplementary Payments provision which provided that Arch would pay "[a]ll expenses we incur" in connection with any covered claim, and that "[t]hese payments will not reduce the limits of insurance." Endorsement 16, however, expressly deleted and replaced this statement with: "[supplementary payments] will reduce the limits of insurance." The OCIP also provided that Arch's duty to defend ended "when we have used up the applicable limit of insurance in the payment of judgments or settlements."
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
New Report: Civil Engineering Salaries and Job Satisfaction Are Strong and Climbing at a Faster Rate Than Past Reports
October 16, 2023 —
The American Society of Civil EngineersRESTON, Va. – Civil engineering salaries continue to trend up and at a higher rate than recent years according to the
2023 ASCE Civil Engineering Salary Report today released by the
American Society of Civil Engineers (ASCE), which cites a median pre-tax income from all sources of $128,000. Base salaries have risen by approximately 7% from 2022 to 2023, up from approximately 6% from 2021 to 2022 and 5% from 2020 to 2021. The median primary income for those civil engineers with a Professional Engineers license was $132,000, nearly $30,000 more than those with no licenses or certifications.
"The current workforce crisis has created a great demand for civil engineers that the U.S. Bureau of Labor Statistics states will continue for the next decade," said ASCE 2023 President Maria C. Lehman, P.E., ENV SP, NAC, F.ASCE. "When you consider the age and condition of much of our infrastructure, along with the additional funding being brought to bear, the demand will continue."
The report also shows high job satisfaction and opportunities for career growth in 2023. Of the salary survey respondents, 66.3% reported being satisfied or very satisfied with their financial compensation, up from 63.3% in 2022. That number was even higher, though, when asked about overall job satisfaction: 86.7% said they were satisfied or very satisfied with their jobs. In a field that plays such a large role in giving back to and shaping communities, employees want to feel like their role is impactful and creating positive change for others.
The ASCE Civil Engineering Salary Report is released every fall, collected from responses of Society members about their jobs and financial compensation. This year's report is derived from over 3,200 member responses.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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Lien Release Bonds – Remove Liens, But Not All Liability
February 20, 2023 —
Mia Hughes - ConsensusDocsLien Release Bonds – Remove Liens, But Not All Liability
Among owners and contractors, payment and performance bonds are commonly used together in an effort to mitigate future risk against derivative subcontractor claims. But what happens when despite the effort to mitigate risk, a derivative claimant nevertheless files a mechanics’ lien on the owner’s real property? Not all hope is lost. There is another classification of bond, a “lien release bond”—also commonly referred to as an indemnity bond or a mechanics’ lien bond—which provides protections for real property after a mechanics’ lien has already been filed. The purpose of a lien release bond is to remove claims against the relevant real property. Notably, a lien release bond does not necessarily eliminate all liability of an owner or a general contractor. In number of states, an owner or a general contractor can be held personally liable for derivative claims despite a valid lien release bond.
What is a Lien Release Bond?
A lien release bond is a specific type of surety bond that removes an existing mechanics’ lien from an owner’s real property. In an effort to protect real property, an owner, or a general contractor, can obtain a lien release bond that will substitute or take the place of a mechanics’ lien. In the event a lien claimant files suit on the mechanics’ lien and seeks to collect on their claim, any proceeds recovered will come from the lien release bond rather than proceeds from the sale or foreclosure of the real property. The threat of mechanics’ liens is always present on a construction project— it is estimated that over 60,000 mechanics liens were filed in 2021 alone. Lien release bonds are an added layer of protection for an owner’s real property against a pending mechanics’ lien.
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Mia Hughes, Jones Walker LLP (ConsensusDocs)Ms. Hughes may be contacted at
mhughes@joneswalker.com
