Cambridge Massachusetts Building Expert Directory

Properly Trigger the Performance Bond

January 05, 2017 — David Adelstein – Florida Construction Legal Updates
A performance bond is a valuable tool designed to guarantee the performance of the principal of the contract made part of the bond. But, it is only a valuable tool if the obligee (entity the bond is designed to benefit) understands that it needs to properly trigger the performance bond if it is looking to the bond (surety) to remedy and pay for a contractual default. If the performance bond is not properly triggered and a suit is brought upon the bond then the obligee could be the one materially breaching the terms of the bond. This means the obligee has no recourse under the performance bond. This is a huge downside when the obligee wanted the security of the performance bond, and reimbursed the bond principal for the premium of the bond, in order to address and remediate a default under the underlying contract. A recent example of this downside can be found in the Southern District of Florida’s decision in Arch Ins. Co. v. John Moriarty & Associates of Florida, Inc., 2016 WL 7324144 (S.D.Fla. 2016). Here, a general contractor sued a subcontractor’s performance bond surety for an approximate $1M cost overrun associated with the performance of the subcontractor’s subcontract (the contract made part of the subcontractor’s performance bond). The surety moved for summary judgment arguing that the general contractor failed to property trigger the performance bond and, therefore, materially breached the bond. The trial court granted the summary judgment in favor of the performance bond surety. Why? Read the court decision
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Reprinted courtesy of David Adelstein, Florida Construction Legal Updates
Mr. Adelstein may be contacted at dma@katzbarron.com

Florida Governor Signs Construction Defect Amendments into Law

September 17, 2015 — Beverley BevenFlorez-CDJ STAFF
According to Jeffrey Gilbert and Anaysa Gallardo Stutzman of Cozen O’Connor, Rick Scott, governor of Florida, signed HB 87 into law, which “amends the notice and opportunity to cure provisions of Chapter 558, Florida’s Construction Defect Statute.” The amendments go into effect October first. HB 87 requires “property owners to provide concrete details of the alleged defects.” Gilbert and Stutzman claimed, “Overall, these amendments seek to further the intended public policy purpose of Chapter 558, which is to provide an alternative dispute resolution mechanism and result in fewer lawsuits and lower litigation costs incurred by parties involved in construction defect matters.” Read the court decision
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Will Future Megacities Be a Marvel or a Mess? Look at New Delhi

November 14, 2018 — Jill Ward - Bloomberg
The effects of unbridled urbanization are inescapable in India’s capital city. Smog blankets landmarks like India Gate in winter, delaying flights at the airport due to poor visibility. Traffic jams are part of the daily routine and slums abut New Delhi’s luxury hotels and private mansions, testifying to a growing wealth divide and chronic housing shortage. And every day, the problem gets bigger. More than 27 million people live in and around Delhi with about 700,000 more joining them each year, according to research firm Demographia. The United Nations forecasts that by 2028 the population could outstrip Tokyo’s to make Delhi the world’s biggest megacity. Read the court decision
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Reprinted courtesy of Jill Ward, Bloomberg

An Era of Legends

May 03, 2018 — Beverley BevenFlorez-CDJ STAFF
In 2010, West Coast Casualty’s Construction Defect Seminar added a new award: The Legend of an Era. West Coast Casualty recognizes “those in the construction defect community who inspire, contribute, advocate and influence others for the benefit and betterment of this community, making it a better place.” They define Legend as “One that inspires or achieves legendary fame based upon ones own achievement(s) which promises to be enduring” and Era, as “A fixed point of time from which a series of years is reckoned and an order of things prevail.” This annual award is presented at the West Coast Casualty Construction Defect Seminar. Read the court decision
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Bridge Disaster - Italy’s Moment of Truth

September 10, 2018 — Flavia Krause-Jackson & Kathleen Hunter - Bloomberg
The tragedy of modern Italy, so beautiful yet so decrepit, can be told through its bridges. Italians love to point to the Romans as the first engineers – the country boasts some of the world’s oldest viaducts. It’s a source of national pride that blinded the nation to the reality of today, where decades of neglect led to a moment of reckoning. The collapse of the Morandi bridge in Genoa, leaving 43 dead, was followed by the usual mud-slinging, including within a tenuous ruling coalition and more importantly, to soul-searching. Meant to last 100 years, the bridge was hated more than loved – everyone who crossed it felt unsafe. Reprinted courtesy of Flavia Krause-Jackson, Bloomberg and Kathleen Hunter, Bloomberg Read the court decision
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Topic 606: A Retrospective Review of Revenue from Contracts with Customers

October 12, 2020 — Christopher Sisk & Robert Mercado - Construction Executive
The anticipation has been building regarding implementation of the new revenue recognition standard, known as Topic 606, by private companies. Public companies have reported under Topic 606 since the beginning of 2019. For private companies, the time is now. As of January 2020, private companies became subject to Topic 606 for all entities with a year-end of Dec. 31, 2019, or subsequent. However, with the COVID-19 pandemic affecting businesses across the board, this year any company with a year-end financial statement not yet issued can defer implementation of Topic 606 until the contractors’ next year end that falls after Dec. 15, 2020. What have we learned about the impact of Topic 606, if any, on construction contractors’ financial statements? The most significant impact relates to the presentation of contract assets and contract liabilities, and the disclosures associated with Topic 606. The recording of what is known as “the cost to fulfill a contract” is another area that has been affected. PRESENTATION OF CONTRACT ASSET AND CONTRACT LIABILITY A contract asset is defined in Topic 606 as an entity’s right to consideration in exchange for goods or services the entity has transferred to a customer, conditional on something other than the passage of time. Reprinted courtesy of Christopher Sisk & Robert Mercado, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Mr. Sisk may be contacted at Christopher.sisk@marcumllp.com Mr. Mercado may be contacted at Robert.mercado@marcumllp.com Read the court decision
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Insurer Wrongfully Denies Coverage When Household Member Fails to Submit to EUO

May 06, 2024 — Tred R. Eyerly - Insurance Law Hawaii
The court determined that coverage for a loss by fire could not be denied when the insured's son failed to appear for a examination under oath (EUO). Adekola v. Allstate Vehicle & Prop. Ins. Co., 2024 U.S. Dist. LEXIS 27125 (E.D. Pa. Feb. 16, 2024). Plaintiff had a homeowners policy with Allstate. Plaintiff - Michele Adekola - was the named insured under the policy. After the fire, Allstate provided payments for temporary housing. Allstate requested examinations under oath of Plaintiff and her son, Nico. Plaintiff and her son were examined by Zoom. Allstate then sought to examine Plaintiff's other son, Lemmeco, but these efforts were unsuccessful. Allstate then stopped paying for Plaintiff's temporary housing and informed Plaintiff that Lemmeco's failure to participate in an EUO was a material breach of duties under the policy and the breach was prejudicial to Allstate. Allstate further contended that Lemmeco had a duty to submit to an EUO. 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

Funding the Self-Insured Retention (SIR)

August 17, 2020 — David Adelstein - Florida Construction Legal Updates
Unlike a deductible, a self-insured retention (referred to an “SIR”) is, as the name suggests, a self-insured obligation of the insured before its insurer picks up coverage. The SIR needs to be exhausted by the insured (as the primary self-insurance component) before the carrier’s excess defense and indemnification obligations kick-in under the terms of the policy. However, an insured can generally exhaust an SIR by paying legal fees and costs associated with a claim. Oftentimes, the language in the policy requires the SIR to be paid for by the named insured or an insured under the policy. This was an issue addressed by the Florida Supreme Court in Intervest Const. of Jax, Inc. v. General Fidelity Ins. Co., 133 So.3d 494 (Fla. 2014). In this matter, a personal injury claimant asserted a claim against the contractor dealing with a residential home. The contractor hired a subcontractor to install attic stairs and the subcontract required the contractor to indemnify it. The owner of the house injured herself on the attic stairs and sued the contractor. The contractor, in turn, sought indemnification against the subcontractor that installed the attic stairs. 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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