SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Are Construction Defect Claims Covered Under CGL Policies?

January 27, 2014 — Beverley BevenFlorez-CDJ STAFF
Courts have ruled differently as to whether a construction defect is or is not an “occurrence,” according to the publication Business Insurance. Four states—Colorado, Arkansas, Hawaii and South Carolina—have sought to remove ambiguity by passing statutes that define construction defect claims as occurrences. Colorado, the first state to create such a statue, passed H. B. 10-1394 in May 2010. The state legislature passed the statute “because of the complex and lengthy endorsements and exclusions facing construction professionals, according to the bill” reported Business Insurance. The article stated that “incongruous court decisions over whether construction defect claims are covered under CGL policies continue to drive uncertainty in coverage and increase litigation costs.” Read the court decision
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Homebuyers Get Break as Loan Rates Defy Fed Tapering: Mortgages

February 14, 2014 — Kathleen M. Howley – Bloomberg
Ashley Underwood is taking advantage of the unexpected drop in mortgage rates by rushing to buy her first home before they go up again. “I’m ready to cancel plans at a moment’s notice to go look at a house,” said Underwood, 27, who lives in Indianapolis, Indiana. “I didn’t expect to see rates falling again, and I want to lock in something before I lose out.” The drop in the last month proved forecasters wrong, said Douglas Duncan, chief economist of Fannie Mae in Washington. After the Federal Reserve announced in December that it would begin tapering purchases of mortgage-backed securities, all the major housing forecasters said rates would jump this quarter. Economists didn’t foresee that investors would react to the Fed’s retreat by moving money from emerging markets into U.S. Treasuries, driving down home-loan rates. Read the court decision
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Reprinted courtesy of Kathleen M. Howley, Bloomberg
Ms. Howley may be contacted at kmhowley@bloomberg.net

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Who is Responsible for Construction Defect Repairs?

August 24, 2017 — Laura Parsons-CDJ STAFF
An appellate court has ruled that the sponsor and not the condo board is responsible for repairing construction defects at 50 Madison Avenue, a multi-story apartment building in New York City across from Madison Square Park, Habitat reported. Plaintiff’s Simon and Ludmilla Lorne have brought upon three lawsuits in a legal battle lasting a decade. The first came in 2007, two years after the Lorne’s purchased their $3 million seventh-floor apartment. At that time, the sponsor offered to repair the concrete slab under the hardwood floors that had not been properly leveled. However, the Lorne’s and the condo board disagreed about who and how the repairs would be accomplished. The second lawsuit wherein the court ruled that repairing the construction defects was the responsibility of the sponsor occurred in 2009. However, the Lorne’s sued the board yet again in 2015, citing failure to maintain and repair the building. Since the 2015 suit was based on the same allegations as the 2007 suit, it was dismissed by the judge. Read the court decision
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“Time Is Money!” In Construction and This Is Why There Is a Liquidated Damages Provision

February 01, 2022 — David Adelstein - Florida Construction Legal Updates
In construction, the adage “Time is Money!” rings true for all parties involved on a project. This includes an owner of a project that wants a project completed on time, i.e., by a substantial completion date. While substantial completion is often defined as when an owner can use a project for its intended purpose, this intended purpose typically equates to beneficial occupancy (in new construction) and other factors as identified in the contract. The best mechanism for an owner to reinforce time and the substantial completion date is through a liquidated damages provision (also known as an LD provision) that includes a daily monetary rate for each day of delay to the substantial completion date. A liquidated damages provision is not designed, and should NEVER be designed, to serve as a penalty because then it would be unenforceable. Instead, it should be designed to reasonably compensate an owner for delay to the substantial completion date that cannot be ascertained with any reasonable degree of certainty at the time the contract is being negotiated and executed. (Liquidated damages are MUCH easier to prove than actual damages an owner may incur down the road.) As an owner, you don’t really want to assess liquidated damages because that means the project is not substantially completed on time. And, in reality, a timely completed and performing project should always be better and more profitable than a late and underperforming project. However, without the liquidated damages provision, there isn’t a great way to hold a contractor’s feet to the fire with respect to the substantial completion date. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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Fungi, Wet Rot, Dry Rot and "Virus": One of These Things is Not Like the Other

November 02, 2020 — Hugh D. Hughes - Saxe Doernberger & Vita
The Hartford’s so-called virus exclusion in its commercial property forms is getting a workout, and policyholders now have an argument that may help their cases move past the pleadings stage. A U.S. District Court in Florida has deemed the exclusion ambiguous and denied an insurer’s motion to dismiss.1 The exclusion applies to “presence, growth, proliferation, spread, or any activity of ’fungi’, wet rot, dry rot, bacteria or virus.”2 The Court held that the parties did not necessarily intend to exclude a pandemic. In Urogynecology, the plaintiff sought coverage for the loss of the usefulness and functionality of its business location due to the Florida Governor’s shutdown order. The policy contained a 'fungi', wet rot, dry rot, bacteria, or virus” exclusion.3 The carrier moved to dismiss, and the plaintiff argued that the exclusion only applied if COVID-19 was present on-site, which was not the case. The Court addressed none of the issues regarding direct physical loss and instead decided the motion on the fungi exclusion. The Court held the exclusion ambiguous because the exclusion of virus “does not logically align with the grouping of the virus exclusion with other pollutants such that the Policy necessarily anticipated and intended to deny coverage for these kinds of business losses.”5 In addition, the Court stated that pollution case law was not on point because “none of the cases dealt with the unique circumstances of the effect COVID-19 has had on our society – a distinction this Court considers significant.” Read the court decision
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Reprinted courtesy of Hugh D. Hughes, Saxe Doernberger & Vita
Mr. Hughes may be contacted at hdh@sdvlaw.com

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Real Estate & Construction News Round-Up (07/13/22)

August 07, 2022 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
The Biden administration will use infrastructure funds to upgrade 85 airports across the U.S., The Affordable New York tax provision expires, homebuyers in China refuse to pay mortgages, and more.

• Hines, a Houston-based real estate giant, set a target of its 1,530 properties in 28 countries being net-zero operational carbon by 2040. (John Egan, Innovation Map)
• The Biden administration announced it will spend roughly $1 billion from the infrastructure package to upgrade 85 airports across the country, including terminals and other facilities. (Jeff Mordock, The Washington Post)
• The Affordable New York tax provision, which offered a property tax exemption for housing projects that include a percentage earmarked for lower-income renters, expired in June, creating an unsettled future for the city’s multifamily development. (Rebecca Picciotto, The Wall Street Journal)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Herman Russell's Big Hustle

May 20, 2024 — Maggie Murphy - Construction Executive
“Any person that I knew of in the city of Atlanta who did anything ran it by Herman before they did anything else.” These are the words of Anthony Dixon, senior project manager and 47-year veteran employee with H. J. Russell & Company. But ask anyone who knows anything about H. J. Russell, and they’ll say the same thing: The story of the company is the story of Herman J. Russell himself. From humble beginnings in Atlanta’s Summerhill neighborhood came a young man with an unbreakable entrepreneurial spirit, who used that drive to forge an unlikely path to success in the Jim Crow–era South. What began as a plastering company in 1952 is today one of the largest Black-owned contractors in the United States, with Herman’s children—Donata Russell Ross, H. Jerome Russell and Michael B. Russell Sr.—at the helm (a natural fit for the family-focused firm). Over its 72-year history, H. J. Russell has grown exponentially, contracted when necessary and persevered through segregation, the turbulence of the Civil Rights Movement and multiple economic downturns. Now, in the next five years, they’re poised to become a billion-dollar company. But long before any of that, there was just a boy and a dream. Reprinted courtesy of Maggie Murphy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Construction Law Advisory: Mechanical Contractor Scores Victory in Prevailing Wage Dispute

September 03, 2014 — Steven M. Cvitanovic & Jessica M. Lassere Ryland - Haight Brown & Bonesteel LLP
On August 27, 2014, the First District Court of Appeal weighed in on whether prevailing wages are required for public contracts in situations where work is performed in furtherance of the project but at a permanent offsite manufacturing facility that is not exclusively dedicated to the project. In Sheet Metal Workers' International Association, Local 401 v. John C. Duncan and Russ Will Mechanical, the project at issue was for a community college district where Russ Will was the HVAC subcontractor. The contract documents required contractors to pay prevailing wages but they did not limit where or how Russ Will would fabricate sheet metal required for the job. Russ Will used its existing fabrication facility to form the sheet metal. An employee of Russ Will filed a complaint with the DIR alleging he should have been paid prevailing wages for work related to the project. The worker fabricated sheet metal for the project but at Russ Will’s Hayward facility, not at the site. The DIR issued a coverage determination in which it concluded that Russ Will was required to pay prevailing wages for the offsite fabrication work associated with the project. The DIR's determination turned on whether Russ Will was exempt from the prevailing wage law as a material supplier. To qualify for the material supplier exemption, the employer must sell supplies to the general public and its fabrication or manufacturing facility must not be established for the particular public works contract or be located at the site of the public work. Following the DIR determination, Rush Will filed an administrative appeal. The department reversed its initial coverage determination, concluding that the offsite fabrication performed by Russ Will was not subject to the prevailing wage law. Reprinted courtesy of Steven M. Cvitanovic, Haight Brown & Bonesteel LLP and Jessica M. Lassere Ryland, Haight Brown & Bonesteel LLP Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com; Ms. Ryland may be contacted at jlassere@hbblaw.com Read the court decision
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