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Motions to Dismiss, Limitations of Liability, and More

January 23, 2023 — Christopher G. Hill - Construction Law Musings
Remember BAE Sys. Ordnance Sys. V. Fluor Fed. Sols? I examined that case on two occasions previously here at Construction Law Musings. Previously the discussions were about the mix (or lack thereof) between fraud and contract and about how careful contract drafting is key. In the most recent opinion in this ongoing litigation from March of 2022, the Court examined various motions to dismiss the Complaint and Counterclaim in the matter. As a reminder, the basic facts are as follows. The US Army Joint Munitions Command (“Army”) contracted with BAE Systems OrdnanceSystems, Inc. (“BAE”) to operate and maintain the Radford Army Ammunition Plant (“RFAAP”)under a basic ordering agreement (“BOA”). Under BOA Task Order 002, BAE contracted to replace the legacy NC facility at the RFAAP with a newer one (the “NC Project”). Initially, BAE subcontracted the NC Project to Lauren Engineers & Constructors (“Lauren”), but later terminated Lauren. Despite terminating Lauren, BAE’s timeline to complete the NC Project remained unchanged and BAE was required to use Lauren’s design for the NC Project. BAE gave interested bidders access to the Lauren design and other related documents and required the selected subcontractor to perform in accordance with the 85% complete Lauren design, that the Lauren design could be relied on for accuracy, and the selected subcontractor only had to complete the unfinished parts. Fluor Federal Solutions, LLC (“Fluor”) submitted a request for information (“RFI”) asking BAE about the standards referenced in the SOW. Fluor was unable to determine the completeness of the Lauren design but relied on BAE’s assertion that the design was 85% complete. BAE rejected Fluor’s initial bid as being too high given what BAE had already paid Lauren for its design and told Fluor to lower its bid because the design was close to complete. Fluor lowered its price and submitted another bid proposal that outlined a firm-fixed-price design/build that forecasted 32 months to complete the NC Project. BAE awarded Fluor an Undefinitized Contract Action (“UCA”) in the amount of $9 million dollars, later increased to $32 million. Under the UCA, Fluor began procuring materials and physical construction before a formal subcontract was agreed upon. On December 17, 2015, BAE and Fluor agreed to a fixed-price design and build subcontract (the “Subcontract”) in which Fluor agreed to design, construct, and partially commission the NC Project for $245,690,422.00, which included money spent already in the UCA. When this litigation began, Fluor was scheduled to complete its work by December 2020, 2.5 years beyond the originally agreed-upon completion date. 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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3M PFAS Water Settlement Could Reach $12.5B

July 16, 2023 — Jim Parsons, Debra K. Rubin
3M Co. has offically moved to settle claims of fouled drinking water stemming from the use of so-called “forever chemicals,” striking a deal with U.S. public water systems that could total $10.5 billion to $12.5 billion over 13 years, it said in a June 22 federal filing. Reprinted courtesy of Jim Parsons, Engineering News-Record and Debra K. Rubin, Engineering News-Record Ms. Rubin may be contacted at rubind@enr.com Read the full story... Read the court decision
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Additional Insured Not Covered Where Injury Does Not Arise Out Of Insured's Work

April 15, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The court found the contractor did not have coverage as an additional insured under the subcontractor's policy. Walton Constr. v. First Fin. Ins. Co., 2015 US. Dist. LEXIS 30710 (E.D. La. March 12, 2015). John Maestri was injured while working on a construction project for the Jefferson Parish School Board. Maestri was a commercial glazier for A-1 Glass Services Inc. A-1 was a subcontractor for Walton Construction. While Maestri was installing glass on the project, a high-voltage power line maintained by Entergy Louisiana, LLC electrocuted him, causing burns on his body. Maestri sued Entergy. Entergy filed a third-party complaint against A-1 and Walton, alleging that the Louisiana Overhead Power Line Safety Act had been violated by failing to give advance notice that their workers would be working near the power lines. Entergy argued that under the statute, A-1 and Walton are liable for any damages that Entergy had to pay Maestri. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Construction Defects Up Price and Raise Conflict over Water Treatment Expansion

August 27, 2013 — CDJ STAFF
The owner of a regional water treatment plant in California has filed a lawsuit against the where they operate. Construction defects lead to cost overruns at the Modesto Irrigation District’s water treatment plant. Now the question is whether MID or Modesto will be paying for the expenses. Both parties sued Black & Veatch and others, receiving $14.9 million. But the problems have lead to the cost of the water treatment plant expansion ballooning to $107.5 million, a big jump over the planned $62.9 million. Also, instead of being completed in 2009, the completion date has been pushed to 2015. Modesto originally agreed to pay for the expansion, which will increase plant’s ability to provide drinking water to 66 million gallons per day with the agreement that MID would provide the water at the cost of producing it. But now the cost to Modesto of those additional 36 million gallons a day is an additional $44.6 million. Read the court decision
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Wildfire Insurance Coverage Series, Part 3: Standard Form Policy Exclusions

July 11, 2022 — Scott P. DeVries & Yosef Itkin - Hunton Insurance Recovery Blog
Even when claims are within the scope of coverage, insurers often rely on exclusions in an attempt to avoid coverage for wildfire claims. In this post in the Blog’s Wildfire Insurance Coverage Series, we discuss the interplay between coverage grants and exclusions, and the “anti-concurrent cause” provision. Insurers may cite exclusions in an attempt to reduce or avoid liability. The insurance industry has long relied on the Insurance Services Office (ISO) to draft standard form policy language and secure approval as required by state regulatory agencies. ISO Form HO 00 03 10 00 (Section I—Exclusions, Part B) provides the following form exclusionary language: We do not insure for loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not precluded by any other provision in this policy is covered. Reprinted courtesy of Scott P. DeVries, Hunton Andrews Kurth and Yosef Itkin, Hunton Andrews Kurth Mr. DeVries may be contacted at sdevries@HuntonAK.com Mr. Itkin may be contacted at yitkin@HuntonAK.com Read the court decision
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Missouri Protects Subrogation Rights

April 15, 2024 — Lian Skaf - The Subrogation Strategist
The point at which an insurance carrier possesses the equitable right of subrogation is an issue on which the states have differed. Some allow carriers to pursue rights of subrogation immediately upon payment and some have taken stricter approaches. Missouri falls into the latter group. By not allowing the carrier the right to file suit against third-party tortfeasors until the insured provides its carrier with an assignment of all its rights, Missouri’s approach has opened the door for challenges to subrogation rights. In Megown v. Auto Club Fam. Ins. Co., 2024 Mo. App. LEXIS 82, the plaintiff-insureds Michael and Jane Megown (the Megowns) suffered a house fire on February 8, 2016. Their insurance carrier, Auto Club Family Insurance Company (Auto Club) reimbursed the Megowns for their property damage in the amount of $722,433.56. Subsequently, the Megowns sued Auto Club for breach of contract and later amended their complaint to add claims against Tyberius Enterprises, LLC d/b/a Crag Electric (Craig Electric), the third-party tortfeasor, for direct negligence, alleging both property damage and personal injuries. Auto Club intervened in the Megowns’ claim against Craig Electric to protect its interest as subrogee for its property damage payment to the Megowns. Craig Electric settled prior to trial, paying $1,000,000.00 to both the Megowns and Auto Club, to be allocated at a later date. After a bench trial that apportioned the settlement with $722,433.56 paid to Auto Club and $277,566.44 paid to Megowns – and a jury trial awarding no further damages – the Megowns appealed. Read the court decision
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Reprinted courtesy of Lian Skaf, White and Williams LLP
Mr. Skaf may be contacted at skafl@whiteandwilliams.com

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Contractor Liable for Soils Settlement in Construction Defect Suit

February 10, 2012 — CDJ STAFF

The California Court of Appeals ruled on January 9 in Burrow v. JTL Dev. Corp., a construction defect case in which houses suffered damage due to improperly compacted soil, upholding the decision of the lower court.



Turf Construction entered into a deal with JTL to develop a parcel they acquired. A third firm, Griffin Homes, withdrew from the agreement “when a geotechnical and soils engineering firm reported significant problems with soil stability on 14 of the lots.” Turf Construction then took over compacting and grading the lots. Turf “had never compacted or graded a residential tract before.” Robert Taylor, the owner of Turf, “testified he knew there was a significant problem with unstable soils.”



After homes were built, the plaintiffs bought homes on the site. Shortly thereafter, the homes suffered damage from soil settlement “and the damage progressively worsened.” They separately filed complaints which the court consolidated.



During trial, the plaintiff’s expert said that there had been an inch and a half in both homes and three to five inches in the backyard and pool areas. “He also testified that there would be four to eight inches of future settlement in the next fifteen to twenty years.” The expert for Turf and JTL “testified that soil consolidation was complete and there would be no further settlement.”



Turf and JTL objected to projections made by the plaintiffs’ soil expert, William LaChappelle. Further, they called into question whether it was permissible for him to rely on work by a non-testifying expert, Mark Russell. The court upheld this noting that LaChappelle “said that they arrived at the opinion together, through a cycle of ‘back and forth’ and peer review, and that the opinion that the soil would settle four to eight inches in fifteen to twenty years was his own.”



Turf and JTL contended that the court relied on speculative damage. The appeals court disagreed, stating that the lower court based its award “on evidence of reasonably certain damage.”



Turf also that it was not strictly liable, since it did not own or sell the properties. The court wrote that they “disagree because Turf’s grading activities rendered it strictly liable as a manufacturer of the lots.” The court concluded that “Turf is strictly liable as a manufacturer of the lots.”



Judge Coffee upheld the decision of the lower court with Judges Yegan and Perren concurring.

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Denver Airport Terminates P3 Contract For Main Terminal Renovation

November 12, 2019 — Mark Shaw - Engineering News-Record
In a move that stunned transportation planners around the country, Denver International Airport terminated the contractor team working on a $650-million terminal renovation. The move also ended the airport’s $1.8-billion public-private partnership with Great Hall Partners, a consortium led by Ferrovial Airports, with partners Saunders/JLC Infrastructure. Mark Shaw, Engineering News-Record Mr. Shaw may be contacted at shawm@enr.com Read the full story... Read the court decision
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