Seattle Washington Building Expert Directory

CA Supreme Court Finds “Consent-to-Assignment” Clauses Unenforceable After Loss Occurs During the Policy Period

August 26, 2015 — Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP
In Fluor Corporation v. Superior Court (No. S205889; filed 8/20/15), the California Supreme Court overruled its earlier decision in Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934, holding that notwithstanding the presence of a consent-to-assignment clause in a liability policy, Insurance Code section 520 bars an insurer from refusing to honor the insured’s assignment of coverage after a loss has taken place during the policy period. In Henkel, the Supreme Court limited the ability of corporate successors to obtain coverage under predecessors’ policies on a contract theory. The Henkel Court held that where a successor corporation contractually assumed liabilities of the predecessor corporation, the insurance benefits would not automatically follow. The Henkel Court ruled that if the predecessor company’s policy contains a consent-to-assignment clause, any assignment of insurance policy benefits to a successor corporation required the insurer’s consent. The Court said that policy benefits are not transferable choses in action unless at the time of corporate transfer they could be reduced to a monetary sum certain. The Court reasoned that historic product or environmental liabilities might not even be known to the predecessor at that time, much less reduced to a sum certain, so coverage for such risks could not be considered a transferable chose in action. Thus, where the liability was inchoate at the time of the corporate transaction, the Henkel Court said that coverage would not necessarily follow because the insurer’s duties had not yet attached. Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP Mr. Kendrick may be contacted at ckendrick@hbblaw.com; Ms. Moore may be contacted at vmoore@hbblaw.com Read the court decision
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Jinx: Third Circuit Rules in Favor of Teamsters in Withdrawal Case

July 28, 2018 — Wally Zimolong - Supplemental Conditions
Bad omen. Last week, I wrote about a Appeals Court decision that affirmed a contractor’s escape from an over $600,000 withdrawal liability assessment from the Laborers Union. The next day the Third Circuit (which covers PA, NJ, and DE) handed down a decision affirming a federal court’s decision to assess withdraw liability. This one shows the dark side of not reading and understanding your CBA. The belligerents in the litigation were, Penn Jersey, a construction material supplier, and Teamsters Local 676. Their collective bargaining agreement contained a clause purportedly covering withdrawal liability. Specifically, the clause stated “should the Employer withdraw from the Agreement in the future, there will be no withdrawal liability. The CBA expired and Penn Jersey did not renew its agreement with the Teamsters. Read the court decision
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Reprinted courtesy of Wally Zimolong, Zimolong LLC
Mr. Zimolong may be contacted at wally@zimolonglaw.com

Texas Supreme Court to Rehear Menchaca Bad Faith Case

January 10, 2018 — Sean P. Mahoney – Complex Insurance Coverage Reporter
On December 15th, the Texas Supreme Court agreed to revisit its April 7, 2017 decision in USAA Texas Lloyds Co. v. Menchaca, No. 14-0721, a “bad faith” case arising out of Hurricane Ike damage, in which the court held that a policyholder could potentially recover policy benefits for statutory bad faith under Texas law, even though a jury concluded that the insurer did not breach the terms of the policy, if the policyholder could show that she was nevertheless entitled to the benefit. The decision to rehear this matter comes at the urging of insurers and interested groups, including the Insurance Council of Texas and the U.S. Chamber of Commerce, who argued that the April 7, 2017 ruling substantially unsettled Texas insurance law. Menchaca is a first-party property insurance coverage case. After Hurricane Ike struck in 2008, plaintiff Menchaca submitted a claim under her homeowners policy to USAA. A USAA adjuster later concluded that Menchaca’s property suffered only “minimal damage” that fell below the deductible. Menchaca sued claiming breach of contract and unfair claims settlement practices in violation of the Texas Insurance Code. As damages, she sought only the policy benefit, court costs, and attorneys’ fees. Read the court decision
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Reprinted courtesy of Sean P. Mahoney, White and Williams LLP
Mr. Mahoney may be contacted at mahoneys@whiteandwilliams.com

COVID-19 Could Impact Contractor Performance Bonds

March 30, 2020 — Ben Williams & MG Surety - Construction Executive
As 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. Read the court decision
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Mr. Williams may be contacted at benw@mgsuretybonds.com

Corps of Engineers to Prepare EIS for Permit to Construct Power Lines Over Historic James River

May 01, 2019 — Anthony B. Cavender - Gravel2Gavel
On March 1, the U.S. Court of Appeals for the District of Columbia decided National Parks Conservation Assoc. v. Todd T. Simonite, Lieutenant General, et al. The case involves an application to the U.S. Army Corps of Engineers (Corps) for a construction permit to build electric power lines over the “historic James River, from whose waters Captain John Smith explored the New World.” The Corps concluded after reviewing the thousands of comments submitted to it in connection with this application, and after considering the views of several government agencies and conservation groups, that an Environment Impact Statement (EIS) was not required, and that its Environmental Assessment assured the Corps that the project would not result is significant environmental impacts. The Court of Appeals has concluded that, based on this evidence, the Corps’ refusal to prepare an EIS thoroughly discussing all these points was arbitrary and capricious. The Corps has been ordered to prepare the EIS and to take special note of its obligations under the National Environmental Protection Act (NEPA), the Clean Water Act (CWA) and its obligations under the National Historic Preservation Act. Read the court decision
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Reprinted courtesy of Anthony B. Cavender, Pillsbury
Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com

A Loud Boom, But No Serious Injuries in World Trade Center Accident

March 01, 2012 — CDJ STAFF

The Wall Street Journal reports that nearly twenty tons of steel fell forty stories at the World Trade Center site on February 16. One person was checked by medical personnel. One person who works in the Financial District said it was “almost like thunder.” Frank Pensabene, one of the ironworkers on the site said that after “loud boom,” “all hell broke loose.” The steel beams and cables fell onto a flatbed truck, which was not occupied at the time.

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What Makes Building Ventilation Good Enough to Withstand a Pandemic?

January 11, 2021 — Linda Poon - Bloomberg
In October, students at the University of Illinois, Urbana-Champaign, held an intimate jazz concert at a bar downtown, with an audience of about 20 peers and faculty members — all of whom held digital passes indicating they’d recently tested negative for Covid-19. Two jazz ensembles performed, sometimes with masks and coverings for their instruments, and other times without. Behind the scenes, mechanical engineering professor Ty Newell tinkered with the airflow, turning the exhaust and recirculation fans on and off at different points during the night. His students monitored for changes in the air quality, using a special instrument to measure the concentrations of carbon dioxide and fine particulate matter, both key to determining if a building is well ventilated. The experiment sought to highlight the significance of proper ventilation, something that Newell said hadn’t been paid enough attention, until now. As evidence suggesting Covid-19 can spread through aerosol transmission continues to mount, health experts are focused less on sanitizing surfaces and more on improving indoor air quality. In December, the U.S. Centers for Disease Control and Prevention finally put out its ventilation recommendations to combat Covid-19, based on standards set by ASHRAE, or the American Society of Heating, Refrigerating and Air-Conditioning Engineers. Read the court decision
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Reprinted courtesy of Linda Poon, Bloomberg

Be Careful with Good Faith Payments

February 24, 2020 — Christopher G. Hill - Construction Law Musings
Sometimes doing the expedient thing and what looks good at the time can come back to bite you. Just ask 3M Company. In Faneuil, Inc. v. 3M Co., the Virginia Supreme Court considered a customer services subcontract between Faneuil and 3M relating to a toll collection contract 3M entered into with ERC. The subcontract had a “pay if paid” clause in it requiring payment to 3M from ERC before ERC was required to pay Faneuil, a written change order provision and a base monthly payment to Faneuil for the services that could be reduced in the event of less than expected toll collections. Further, the subcontract stated that if either party settled 3rd party claims, that settlement would not bind the other party to the subcontract absent consent or Court order. Faneuil was then alleged to have been required to provide “Special Services” relating to manual identification of license plates and other information necessary for toll billing due to 3M’s alleged failure to provide adequate imaging services. Faneuil requested (without written change order) and 3M promised to pay extra for these services. When 3M was slow to pay for the special services, Faneuil did what you would expect and threatened to stop providing them. Instead of contesting the right to the work, 3m made sporadic “good faith” payments to induce continued Special Services from Faneuil. Eventually 3M’s issues caused ERC to stop payments and thus 3M stopped paying Faneuil. 3M then settled the payment claims with ERC and still failed to pay Faneuil. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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