CAMBRIDGE MASSACHUSETTS BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Construction Contract Clauses That May or May Not Have Your Vote – Part 3

November 23, 2016 — Garret Murai – California Construction Law Blog
Scope, time and cost provisions may be the most important clauses in your construction contract but they’re not the only ones which can impact your bottom line. The third in a multi-part series, here are some other important construction contract clauses that may determine whether you come out a winner.

Provision: Supervisory Personnel, Employees, and Authority to Bind Provisions

• Typical Provision: ”At all times during performance of the Work, Subcontractor shall have at the job site a competent supervisor approved by Owner. Subcontractor’s supervisor shall be deemed a representative of Subcontractor and all communications given to Subcontractor’s supervisor shall be as binding as if such communications were given to Subcontractor. Should Contractor object to Subcontractor’s supervisor’s presence at the job site, or the presence at the job site, or the presence at the job site of any other employee or agent of Subcontractor or any employee or agent of Subcontractor of Subcontractor, Subcontractor shall cause such persons to be replaced immediately as directed by Contractor.”
• What it Means: Higher-tiered parties have a legitimate interest in ensuring that only competent individuals are allowed to perform work on a project and in ensuring that there are peaceable relations at a job site. Higher-tiered parties also have an interest in ensuring that directives and agreements made and reached in the field are followed. However, it is unreasonable for higher-tiered party or to require that such personnel be able to bind that lower-tiered party to agreements best decided by others.
• What You Can Do: Lower-tiered parties should seek to include language which provides that only “reasonable” changes to personnel are allowed and, as necessary, limit by category or issue the types of items on-site personnel can bind the lower-tiered party to.

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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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South Carolina’s New Insurance Data Security Act: Pebbles Before a Landslide?

June 13, 2018 — Richard Borden, Sedgwick Jeanite & Joshua Mooney - White and Williams LLP
The ramp-up of cybersecurity regulation, albeit in a patchwork fashion through state-level legislation, has begun. On May 18, 2018, South Carolina enacted the Insurance Data Security Act (Act), becoming the first state to pass legislation based upon the Insurance Data Security Model Law that was approved by the National Association of Insurance Commissioners (NAIC) last October. The Act makes very little change to the model law’s text, which in turn, is based on 23 NYCRR § 500, et seq., the cybersecurity regulations promulgated by the New York State Department of Financial Services in March 2017. The Act establishes stringent standards for both data security programs, and an entity’s response to a “cybersecurity event” through an organized and methodical investigation and notification to the state’s Department of Insurance. Like New York’s cybersecurity regulations, the Act requires insurers to submit to the Department of Insurance annual certification of compliance and has a ratcheted implementation of portions of the legislation on insurers and brokers operating or otherwise licensed to do business in the state. It does not create a private cause of action. Reprinted courtesy of White and Williams LLP attorneys Richard Borden, Sedgwick Jeanite and Joshua Mooney Mr. Borden may be contacted at bordenr@whiteandwilliams.com Mr. Jeanite may be contacted at jeanites@whiteandwilliams.com Mr. Mooney may be contacted at mooneyj@whiteandwilliams.com Read the court decision
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Meet Your Future Team Members: AI Agents

December 10, 2024 — Aarni Heiskanen - AEC Business
If you’ve been following the discussion around AI, you’re familiar with the concept of AI agents. AI agents can be understood as intelligent automation that operates independently, monitoring its environment and taking action without constant human input. Unlike traditional software requiring specific inputs to produce predictable outputs, AI agents can adapt to varying conditions and user needs. AI agents can be based on various technologies, including Large Language Models. They can also be constructed using other AI technologies, such as rule-based systems, machine learning algorithms, and specialized models tailored to specific tasks. Read the court decision
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Reprinted courtesy of Aarni Heiskanen, AEC Business
Mr. Heiskanen may be contacted at aec-business@aepartners.fi

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First Suit to Enforce Business-Interruption Coverage Filed

April 20, 2020 — Lorelie S. Masters & Michael S. Levine - Hunton Insurance Recovery Blog
On Monday, Oceana Grill, a restaurant in New Orleans, Louisiana, became the first to file a lawsuit over coverage for COVID-19 business interruption losses. The lawsuit, styled Cajun Conti, LLC, et al. v. Certain Underwriters at Lloyd’s of London, et al. (La. Dist. Court, Orleans Parish), seeks a declaratory judgment that an “all risks” property insurance policy issued by Lloyd’s of London must cover losses resulting from the closure of the restaurant following an order by the Governor of Louisiana restricting public gatherings and the Mayor of New Orleans’ order closing restaurants. The Lloyds’ policy, like most first-party property insurance policies, affords coverage for business- interruption losses and contains an “extension of coverage in the event of the businesses closure by order of Civil Authority.” Specifically, the lawsuit seeks a declaration that “the policy provides coverage to plaintiffs for any future civil authority shutdowns of restaurants in the New Orleans area due to physical loss from Coronavirus contamination and that the policy provides business income coverage in the event that the coronavirus has contaminated the insured premises.” Furthermore, according to the complaint, “[t]he policy does not provide any exclusion due to losses, business or property, from a virus or global pandemic.” As the complaint implies, an important issue will be whether the novel coronavirus constitutes the requisite “direct physical loss or damage” under the policy. Understanding COVID-19, its manner of transmission and its ability to live beyond a host organism helps support a conclusion that COVID-19 does indeed amount to the required direct physical loss or damage. Reprinted courtesy of Lorelie S. Masters, Hunton Andrews Kurth and Michael S. Levine, Hunton Andrews Kurth Ms. Masters may be contacted at lmasters@HuntonAK.com Mr. Levine may be contacted at mlevine@HuntonAK.com Read the court decision
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Lien Release Bonds – Remove Liens, But Not All Liability

February 20, 2023 — Mia Hughes - ConsensusDocs
Lien 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. Read the court decision
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Reprinted courtesy of Mia Hughes, Jones Walker LLP (ConsensusDocs)
Ms. Hughes may be contacted at mhughes@joneswalker.com

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Insurer's Appeal of Jury Verdict Rejected by Tenth Circuit

March 06, 2023 — Tred R. Eyerly - Insurance Law Hawaii
After a jury awarded damages related to the insurer's delayed payment under the claim and the insurer's post trial motions to set aside the verdict were denied, the Tenth Circuit affirmed. US General, LLC v. GuideOne Mut. Ins. Co., 2022 U.S. App. LEXIS 34066 (10th Cir. Dec. 12, 2022). Crossroads American Baptist Church submitted a claim to GuideOne for hailstorm damage. Crossroads hired US General as the general contractor to perform the repairs and later assigned its interest in the insurance policy to US General. Numerous disputes arose between Crossroads and GuideOne regarding the cost of the repairs. There were delayed payments and portions of the repairs were never paid for. The delayed payments meant GuideOne's ability to begin making the repairs was hindered because it was more expensive to start and stop a project. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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U.S. Supreme Court Allows Climate Change Lawsuits to Proceed in State Court

May 01, 2023 — George Leahy - Lewis Brisbois
Washington, D.C. (April 25, 2023) - On Monday, April 24, the U.S. Supreme Court refused to hear appeals by several major energy companies that sought to remove lawsuits filed by state and local governments from state court into federal court. The Court’s certiorari denials reject companies’ appeals in five separate cases, which involved claims brought by municipalities in Colorado, Maryland, California, Hawaii, and Rhode Island. Each municipality claims that it has been harmed by the effects of climate change, allegedly attributed to the companies’ carbon emissions. The Court’s denials effectively allow the lawsuits to continue in state court, often seen as favorable for plaintiffs due to a greater potential for jury trials and associated damages awards than might be available in federal court. Following a 2021 Supreme Court ruling in a related case that granted the companies an additional chance to argue that their cases should be heard in federal court, the lower federal appeals courts in each of the five cases concluded that the companies had not established sufficient grounds to establish proper venue and jurisdiction in federal court. The Supreme Court’s April 24 denial leaves those decisions unaltered, allowing the lawsuits to continue in state court for further consideration. Read the court decision
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Reprinted courtesy of George Leahy, Lewis Brisbois

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Car Crashes Through Restaurant Window. Result: Lesson in the History of Additional Insured Coverage

December 29, 2020 — Randy J. Maniloff - White and Williams LLP
Back in the day, additional insureds were oftentimes afforded coverage for liability “arising out of” the named insured’s work for the additional insured. When confronted with such language, courts often concluded that it dictated “but for” causation. In other words, but for the named insured doing the work for the additional insured, the additional insured would not be in the liability-facing situation that it is in. The result in some cases: additional insureds were entitled to coverage for their sole negligence. Decisions reaching such a conclusion were generally not well-received by insurers. This was especially so when you consider that the premium received by insurers, for the AI coverage, may not have been enough to buy a package of Twizzlers. Insurer frustration with such decisions -- which insurers did not believe expressed the intent of additional insured coverage -- led ISO to make revisions to additional insured forms in 2004 (later revisions followed). At the heart of these revisions was an attempt to require fault on the part of the named insured before coverage could be afforded to the additional insured. (This is a very brief and simple history of this complex issue.) Read the court decision
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Reprinted courtesy of Randy J. Maniloff, White and Williams LLP
Mr. Maniloff may be contacted at maniloffr@whiteandwilliams.com

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