SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Did You Really Accept That Bid? – How Contractors Can Avoid Post-Acceptance Bid Disputes Over Contract Terms

July 28, 2016 — David A. Harris & Steven M. Cvitanovic – Haight Brown & Bonesteel LLP
When California general contractors submit bids to an owner, can they force their subcontractors to honor their bids? Can they recover damages if the subcontractor later refuses to do so? While the general rule in California is that a general contractor who reasonably relies on a subcontractor’s bid may recover damages when the subcontractor reneges, the Court of Appeal for the Second Appellate District recently held that there is a substantial and important exception to the general rule. In Flintco Pacific, Inc. v. TEC Management Consultants, Inc. (LASC No. YC067984), the Court of Appeal held that where a general contractor requires a subcontractor to enter into a “standard-form subcontract” which materially differs from the subcontractor’s bid, the general contractor has rejected the subcontractor’s bid and has instead issued a counteroffer. The subcontractor is thereafter free to walk, or accept the new terms. If the subcontractor walks, the general contractor may not seek to enforce the terms of the subcontract or seek reliance damages. Reprinted courtesy of David A. Harris, Haight Brown & Bonesteel LLP and Steven M. Cvitanovic, Haight Brown & Bonesteel LLP Mr. Harris may be contacted at dharris@hbblaw.com Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com Read the court decision
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Contractual Assumption of Liability Does Not Bar Coverage

August 27, 2014 — Tred R. Eyerly – Insurance Law Hawaii
The Michigan Court of Appeals rejected the insurer's argument that coverage was barred for the insured's contractual assumption of liability of another. Travelers Prop. Cas. Co. of Am v. Peaker Serv., Inc., 2014 WL 3605680 (Mich. Ct. App. July 22, 2014). The contractor was hired to install an "electronic over-speed system" at the University of Michigan. The hope was that the new system would prevent the steam turbines at the central power plant from turning too quickly. The parties' contract provided, “Section 15.18. Supplier Damage to University Property. Without regard to any other section of the Agreement, Supplier shall be responsible for the costs to return to ‘as was’ condition from any damage caused to the building, grounds, or other equipment and furnishings caused in whole or part by Supplier Personnel while performing activities arising under this Agreement.” The contractor improperly calibrated the system, causing one of the university's turbines to operate at twice the safe operational speed, causing significant damage to the generator equipment. The university sued the contractor for more than $3 million in damages. Travelers defended, but filed a declaratory judgment action, contending that coverage did not exist because the "contractual liability" exclusion applied. Section 15.18 of the contract purportedly constituted an "assumption" of the insured's own liability, and was therefore not covered under the CGL policy. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Embracing Generative Risk Mitigation in Construction

February 12, 2024 — Georgia Stillwell - Construction Executive
Project delays have long plagued the construction industry, with risk often identified as the primary culprit. However, finding effective solutions to mitigate risk on complex projects has remained daunting. Traditional methods for simulating risk primarily focus on extending project timelines, overlooking the diverse range of opportunities available for risk mitigation. With the construction industry’s digital transformation, generative methodologies have emerged to handle complex decision-making in uncertain situations. This article aims to shed light on the limitations of existing risk modeling and introduce a novel approach known as generative risk mitigation to enhance decision-making under deep uncertainty. According to McKinsey, 98% of megaprojects experience cost overruns exceeding 30%. Project delays have become so pervasive that the industry has grown accustomed to them. For example, in 2022, the UK government issued ‘The Green Book,’ which requires contingency funds in projects, such as a 44% contingency budget for standard civil projects. This implies that for a $100 million project, you should allocate $144 million to manage expected risks. There is no denying significant academic literature on the root cause of these delays: it is ‘risk,’ and there is an entire industry based on it. Conversations with project directors and risk experts reveal the same issue, different project. And that issue is that we cannot easily forecast risk, qualify the impacts or fully understand the opportunities that exist to mitigate risks and make timely decisions. A method that will finally help us overcome this has emerged within the industry. Reprinted courtesy of Georgia Stillwell, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Fifth Circuit Confirms: Insurer Must Defend Despite Your Work/Your Product Exclusion

February 14, 2022 — Nathan A. Cazier & Scott S. Thomas - Payne & Fears
The United States Court of Appeals for the Fifth Circuit recently confirmed that liability insurers have a duty to defend their insureds in construction defect cases when the underlying complaint alleges damage to property beyond the product and work of the insured – even if the complaint merely implies that the insured seeks such damage, without explicitly alleging so. Siplast, Incorporated v. Employers Mutual Casualty Company, No. 20-11076, 2022 WL 99303 (5th Cir. Jan. 11, 2022). The Archdiocese of New York replaced the roof over Cardinal Spellman High School in the Bronx, using a roofing membrane manufactured by Siplast, Inc. (“Siplast”). After a rainstorm a few years later, school officials reported water damage to the ceiling tiles throughout the school, and repair attempts only made the leaking worse. Siplast disputed that the leaks were its fault and refused to replace the roof, so the Archdiocese sued. Reprinted courtesy of Nathan A. Cazier, Payne & Fears and Scott S. Thomas, Payne & Fears Mr. Cazier may be contacted at nac@paynefears.com Mr. Thomas may be contacted at sst@paynefears.com Read the court decision
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Back to Basics – Differing Site Conditions

December 19, 2018 — Tracey W. Pruiett - Smith Currie
Encountering an unexpected site condition is one of the more common risks on a construction project. A “differing site condition”, or it is sometimes called a “changed condition”, is generally understood to be a physical condition that is discovered while performing work and that was not visible or otherwise expected at the time of bidding. Often, the condition could not have been discovered by a reasonable site investigation. Examples of common differing site conditions include: soil with inadequate bearing capacity to support the building being constructed, soil that cannot be reused as structural fill, unanticipated groundwater, quicksand, mud, rock formations, or other artificial subsurface obstructions. Differing site conditions may also occur within the walls or ceilings of a renovation project such as the renovation of a hospital or historic building. Read the court decision
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Reprinted courtesy of Tracey W. Pruiett, Smith Currie
Ms. Pruiett may be contacted at twpruiett@smithcurrie.com

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Sometimes It’s Okay to Destroy Evidence

August 17, 2011 — CDJ STAFF

The Minnesota Supreme Court has ruled in the case of Miller v. Lankow that Mr. Miller was within his rights to remediate his home, even though doing so destroyed the evidence of water intrusion.



Linda Lankow built a home in 1992. In 2001 or 2002, Lankow discovered a stucco problem at the garage which she attributed to moisture intrusion. She asked the original contractor to fix the wall. In 2003, Lankow attempted to sell her home, but the home inspection revealed fungal growth in the basement. Lankow made further repairs, including alterations to the landscaping.



In 2004, Lankow put her house on the market once again and entered into an agreement with David Miller. Miller declined to have an independent inspection, as the home had been repaired by professional contractors.



In 2005, Miller put the house on the market. A prospective buyer requested a moisture inspection. The inspection firm, Private Eye, Inc. found “significant moisture intrusion problems.”



Miller hired an attorney who sent letters to the contractors and to Lankow and her husband. Lankow’s husband, Jim Betz, an attorney, represented his wife and sent a letter to Miller’s attorney that Miller had declined an opportunity to inspect the home.



In 2007, Miller’s new attorney sent letters to all parties that Miller had decided to begin remediation work on the house. All stucco was removed. Miller then filed a lawsuit against the prior owners, the builders, and the realtors.



Two of the contractors and the prior owners moved for summary judgment on the grounds that Miller had spoliated evidence by removing the stucco. They requested that Miller’s expert reports be excluded. The district court found for the defendants and imposed sanctions on Miller.



The Minnesota Supreme court found that “a custodial party’s duty to preserve evidence is not boundless,” stating that “it may be particularly import to allow remediation in cases such as the one before us.” Their reasoning was that “remediation of the moisture intrusion problem in the home may be necessary, even essential, to address immediate health concerns.”



Given that Miller needed to remediate the problem in order to continue living there, and that he had given the other parties a “full and fair opportunity to inspect,” the court found that he was within his rights. The court reversed the judgment of the lower court and remanded it to them for review.

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CC&Rs Not the Place for Arbitration Agreement, Court Rules

May 24, 2011 — CDJ STAFF

In January, the California Court of Appeals ruled that an arbitration clause inserted in a development’s CC&Rs by the developer could not be enforced. The case, Villa Vicenza Homeowners Association v. Noble Court Development, involved a case in which, according to the opinion, “following the first sale Nobel controlled the board of directors of the Association and because the initial condominium buyers noticed defects in common areas and common facilities and did not believe Nobel had provided a reserve fund sufficient to repair the defects, the condominium owners brought a derivative action on behalf of the Association against Nobel.”

The court concluded, “The use of CC&R's as a means of providing contractual rights to parties with no interest in or responsibility for a common interest development is also problematic from the standpoint of determining what if any consideration would support such third-party agreements. By their terms the CC&R's bind all successors, even those with whom a third party such as Nobel has never had any contractual relationship and to whom Nobel has not provided any consideration.” The court determined that “the trial court did not err in denying Nobel's motion to compel arbitration.”

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House of Digital Twins

March 08, 2021 — Cristina Savian - AEC Business
As a vocal and passionate advocate for the adoption of Digital Twins for our built assets, I keep finding myself standing in, what feels like, the middle of a house of cards, observing its always rocky structure in constant danger of collapse. A wobbly system threatened by the tremors stressed by one of the most prominent digital revolutions that our construction industry has ever experienced. DIGITAL TWINS FOR OUR BUILT ASSET. This booming industry trend is gaining speed at a rate that the construction industry has never experienced before. Construction has always been slow at innovating and still holds its title as the least digitalised industry, but the Digital Twin revolution has now found our location and is ready to disrupt. I often witness how these forces attempt to pull down the cards, but, to my surprise, their resilience is what keeps holding the house together. Hold on, is this resilience or resistance? Read the court decision
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Reprinted courtesy of Cristina Savian, AEC Business

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