Best Practices After Receiving Notice of a Construction Claim
July 18, 2022 —
Lauren Meadows - Construction ExecutiveBeing served with a lawsuit is typically not a welcomed experience. However, a construction professional that has been proactive in an early investigation of the claim will be better equipped to defend the case. The following best practices should be used by construction professionals as soon as a potential claim becomes evident.
Notify
Immediately after the receipt of a claim or notice of an incident, efforts should be made to notify all essential parties. This includes any potential insurers that may provide coverage for the claim as well as any parties to whom notice may be required or warranted under the project contract and/or scope of work. Some construction contracts contain an insurance clause that requires one party to provide additional insured coverage under its liability policy to another party. Notice should be given to any insurer that potentially provides additional insured coverage as soon as possible. The failure to provide an insurance company with prompt notice of a potential claim could result in the denial of the claim.
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Lauren Meadows, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Changes to Pennsylvania Mechanic’s Lien Code
November 05, 2014 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome Jim Fullerton. Jim is the President of the law firm of
Fullerton & Knowles, P.C., which has attorneys licensed in Virginia, Maryland, Pennsylvania, and the District of Columbia, is a Martindale Hubbell Peer Rated Lawyer AV® Preeminent.™ The firm represents owners, lenders, design professionals, suppliers, subcontractors, general contractors and other members of the real estate and construction industries, filing mechanic’s liens, surety bond and other construction claims across all of the states in the Mid Atlantic region. He also represents creditors in bankruptcy issues nationwide, particularly defense of bankruptcy preference claims; advises owners and lenders in real estate lending and acquisition transactions; on all real estate and construction law issues; contract formation and disputes.
The firm’s Construction Law Survival Manual is well known and widely used by participants in the construction process. The 550 page manual provides valuable information about construction contract litigation, mechanic’s liens, payment bond claims, bankruptcy and credit management and contains over 30 commonly used contract forms. All of this information and recent construction law issues are constantly updated on the firm’s website.
There are two changes to the Pennsylvania Mechanic’s Lien Code that became effective September 2014. First, residential properties built by an owner for their own residence will now have a defense of payment to subcontractor mechanic’s liens. This protects homeowners from mechanic’s liens if they have paid their general contractors in full. Second, construction loan open end mortgages will have priority over mechanic’s liens, as long as at least sixty per cent (60%) of the loan proceeds are used for construction costs. This change was pushed by Pennsylvania lenders in response to a recent court case.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Don’t Be Lazy with Your Tenders
October 24, 2022 —
Rick Erickson - Snell & Wilmer Real Estate Litigation BlogOur clients probably spend significant time, money and effort refining and updating their contract provisions covering indemnification and the duty to defend claims arising on their projects. But they should also consider spending an appropriate and adequate amount of time, money and effort when sending notices, or “tenders,” to enforce those critical provisions. Tenders demanding defense and indemnity are strictly interpreted based on what the contract documents require. Getting tenders wrong can result in losing one of the most significant risk-shifting tools in the contract. It can also be a monumental mistake if insurance coverage for indemnification damages and defense costs are lost because of an inadequate tender.
The legal definition of “tender” is simple; it is “[a]n unconditional offer of money or performance to satisfy a debt or obligation.” Black’s Law Dictionary 1479-80 (7th ed. 1999). Whereas “tender of defense” for insurance is “the act in which one party places its defense and all costs associated with said defense with another due to a contract or other agreement … [which] transfers the obligation of the defense and possible indemnification to the party to which the tender was made.” Int’l Risk Mgmt. Inst., Glossary. Thus, when claims arise on your projects, notice by tenders of defense and indemnity will often determine dispute resolution and available insurance proceeds.
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Rick Erickson, Snell & WilmerMr. Erickson may be contacted at
rerickson@swlaw.com
Pallonji Mistry, Indian Billionaire Caught in Tata Feud, Dies at 93
August 15, 2022 —
Bhuma Shrivastava - BloombergPallonji Mistry, the Indian-born billionaire whose engineering empire built luxury hotels, stadiums, palaces and factories across Asia and whose family’s epic showdown with the Tata Group sparked India’s biggest corporate feud, has passed away in Mumbai. He was 93.
A company spokesperson confirmed the death of the Indian tycoon after social media posts on the news spread.
Mistry and his family control the Shapoorji Pallonji Group, which started more than 150 years ago and today employs more than 50,000 people in over 50 countries, according to its website. Its landmark projects include the Reserve Bank of India and the Oberoi Hotel in Mumbai and the blue-and-gold Al Alam palace for the Sultan of Oman.
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Bhuma Shrivastava, Bloomberg
New Safety Requirements added for Keystone Pipeline
June 11, 2014 —
Beverley BevenFlorez-CDJ STAFFAfter learning about construction defects on the “southern leg of the Canada-to-Texas project,” safety regulators have added two additional conditions “on construction of TransCanada Corp.’s Keystone XL oil pipeline,” according to Claims Journal. The defects, which have been fixed, included “high rates of bad welds, dented pipe and damaged pipeline coating.”
The first condition requires “TransCanada to hire a third-party contractor chosen by the pipeline safety agency to monitor the construction” and report to the U.S. government, while the second condition requires “TransCanada to adopt a quality management program.”
Both conditions were “buried near the end of the 26 appendices in a voluminous environmental impact statement on Keystone XL released by the State Department on Jan. 31.”
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Third Circuit Follows Pennsylvania Law - Damage Caused by Faulty Workmanship Does Not Arise from an Occurrence
May 10, 2013 —
Tred EyerlyThe Third Circuit followed Pennsylvania law in determining that damage caused by faulty workmanship did not arise from an occurrence. Zurich Am. Ins. Co. v. R. M. Shoemaker Co., 2013 U.S. App. LEXIS 6093 (3d Cir. March 27, 2013).
The County sued R. M. Shoemaker, alleging faulty construction of an addition to a correctional institution. The County alleged Shoemaker negligently supervised its subcontractor, thereby permitting the subcontractor to engage in willful misconduct, resulting in damage to structural elements of the correctional institution. The County alleged that Shoemaker's negligence permitted water to intrude, damaging the electrical systems, acoustic ceilings and miscellaneous equipment.
Zurich sought a declaratory judgment that it was not required to defend or indemnify Shoemaker. The district court granted Zurich summary judgment. Relying on Pennsylvania law, the district court found that the allegations in the underlying action did not arise from an occurrence.
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Tred EyerlyMr. Eyerly can be contacted at
te@hawaiilawyer.com
Insurance Alert: Insurer Delay Extends Time to Repair or Replace Damaged Property
November 26, 2014 —
Valerie A. Moore & Christopher Kendrick – Haight Brown & Bonesteel LLPIn Stephens & Stephens XII v. Fireman's Fund Ins. (No. A135938, filed November 24, 2014), the plaintiffs obtained property insurance on a warehouse. Within a month, it was discovered to be stripped of all wiring and metal. Fireman's Fund paid for emergency repairs but nothing more, concerned that the damage had occurred outside the policy period.
The policy provided for valuation of either "replacement cost," meaning the expenditure required to replace the damaged property with "new property of comparable material and quality," or "actual cash value," defined as the actual, depreciated value of the damaged property. For replacement cost, Fireman’s Fund was not required to pay "until the lost or damaged property is actually repaired ... as soon as reasonably possible after the loss or damage," and only "[t]he amount [the insured] actually spend[s]...."
In the subsequent bad faith lawsuit, the jury awarded the full cost of repair, despite there being no repairs. The appeals court reversed, holding that there was no right to an immediate award for the costs of repairing the damage; however, the court nonetheless held that the insured was entitled to a "conditional judgment," awarding those costs if repairs were actually made.
Reprinted courtesy of
Valerie A. Moore, Haight Brown & Bonesteel LLP and
Christopher Kendrick, Haight Brown & Bonesteel LLP
Ms. Moore may be contacted at vmoore@hbblaw.com; Mr. Kendrick may be contacted at ckendrick@hbblaw.com
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You're Doing Construction in Russia, Now What?
May 16, 2022 —
Anazette Ray & Michael Vardaro - Zetlin & De Chiara LLPIn recent weeks, there has been a long list of companies, from all industries spanning from construction/engineering to fashion and hospitality, that have announced that they are completely severing ties with Russia, while a host of others have announced a temporary halt. See Jeffrey A. Sonnenfeld, Over 400 Companies Have Withdrawn from Russia – But Some Remain, Yale School of Management (Updated Mar. 21, 2022), https://som.yale.edu/story/2022/over-400-companies-have-withdrawn-russia-some-remain?utm_campaign=mb. For those developers, EPC contractors, and design professionals (engineers and architects) who have construction projects in Russia, the question is, “How should we proceed?”
The U.S. initially stated that it was not issuing a total embargo on business dealings and trade relations with Russia in response to the nation’s invasion of Ukraine. Instead, the U.S., along with many other Western nations, issued targeted sanctions. See Francesco Giumelli, Understanding Targeted U.N. Sanctions: An Empirical Analysis, International Affairs, 91(6), 1351-1368 (explaining the difference between embargoes and targeted sanctions). However, after evidence of war crimes by Russia emerged, President Biden issued an Executive Order prohibiting U.S. individuals, whether in the states or abroad, from new investments in Russia and prohibiting U.S. individuals from transactions with Russian state-owned entities. See April 6, 2022, Presidential Actions, https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/06/prohibiting-new-investment-in-and-certain-services-to-the-russian-federation-in-response-to-continued-russian-federation-aggression/. This new Executive Order is said to not affect existing contracts in Russia, but instead prohibits new ones.
Reprinted courtesy of
Anazette Ray, Zetlin & De Chiara LLP and
Michael Vardaro, Zetlin & De Chiara LLP
Ms. Ray may be contacted at aray@zdlaw.com
Mr. Vardaro may be contacted at mvardaro@zdlaw.com
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