Bailout for an Improperly Drafted Indemnification Provision
February 11, 2019 —
David Adelstein - Florida Construction Legal UpdatesA recent opinion came out that held that even though an indemnification provision in a subcontract was unenforceable per Florida Statute s. 725.06, the unenforceable portion is merely severed out of the indemnification clause leaving the rest of the clause intact. In essence, an otherwise invalid indemnification clause is bailed out by this ruling (which does not even discuss whether this subcontract had a severability provision that states that if any portion of any provision in the subcontract is invalid, such invalid portion shall be severed and the remaining portion of the provision shall remain in full force and effect).
This opinion arose from a construction defect case, CB Contractxors, LLC v. Allens Steel Products, Inc.,43 Fla.L.Weekly D2773a (Fla. 5thDCA 2018), where the general contractor, sued by an association, flowed down damages to subcontractors based on the contractual indemnification provision in the subcontracts. Subcontractors moved to dismiss the contractual indemnification claim because it was not compliant with Florida Statute s. 725.06. The indemnification provision required the subcontractors to indemnify the general contractor even for the general contractors own partial negligence, but failed to specify a monetary limitation on the extent of the indemnification as required by Florida Statute s. 725.06. (The indemnification clause in the subcontract was the standard intermediate form of indemnification that required the subcontractor to indemnify the general contractor for claims regardless of whether the claims were caused in part by the general contractor.)
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Insurers Can Sue One Another for Defense Costs on Equitable Indemnity and Equitable Contribution Basis
March 21, 2022 —
Garret Murai - California Construction Law BlogSince I don’t do insurance defense work, fights between insurers isn’t something I have to deal with. It’s good sport nonetheless. In the next case, Travelers v. Navigators Specialty Insurance Company, Case No. D078852 (October 15, 2021), three of the biggies – Travelers, Navigators and Mt. Hawley – got into it over indemnity.
The Travelers Case
General contractor TF McGukin, Inc. was involved in a construction defect lawsuit with respect to a condominium project. TFM entered into subcontracts with several subcontractors including F&F Steel and Stairway, Inc and Calvac Paving which required the subcontractor to defend and indemnify TFM against any claims arising out of the subcontractor’s work. The subcontracts also required the subcontractors to name TFM as an additional insured.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
BE PROACTIVE: Steps to Preserve and Enhance Your Insurance Rights In Light of the Recent Natural Disasters
October 19, 2017 —
Jacquelyn M. Mohr – Newmeyer & Dillion LLPOur hearts go out to those families and businesses who have suffered losses due to the recent fires, hurricanes, and other natural disasters. We hope that everyone in Sonoma, Napa, Orange County, and nationwide affected by these tragic events is somewhere safe. As someone who lost a house in a fire growing up and now is an attorney who helps both residential and business policyholders, there are a few pieces of wisdom I’d like to pass along to help prepare for the worst:
1) MAINTAIN DUPLICATES OF CRITICAL DOCUMENTS OFFSITE OR ONLINE
After the fire, you’re going to need your insurance policies and other critical documents. While it’s usually possible to request copies, this can take weeks, which will hold up your claims process. We are fortunate enough to have the technology for cloud-based storage of key documents – like your insurance policy, insurance broker contact information, tax returns, life insurance policies, will, business plan, inventories, etc. – oftentimes for free. Maintaining these records onsite during your daily life and business operations is important, but so is taking the time and trouble to make sure you have a back-up offsite. It’s easy to do, and so much easier than trying to recreate it after the fact.
2) MAKE A RECORD OF YOUR PROPERTY AND POSSESSIONS
If you are lucky enough to still be in your home or business property, I strongly recommend that you take a video of your property and possessions to keep for your records. A digital inventory with receipts would be great – but a video log will also be very helpful later.
- For your home: This includes the furniture, artwork, appliances, jewelry, electronics, collectibles, landscaping and custom features of the inside and outside of your house.
- For your business: This includes your furniture and artwork, your inventory and your electronics.
Look into offsite back-ups of your important electronic data – whether documents, e-mails, insurance policies, inventory logs, accounting data, client correspondence, or pictures of your kids or grandkids.
Why A Record Is Important in the Insurance Claims Process
Though I hope no one has to deal with this, a video record will make it much easier in the event of a tragedy to deal with insurance claims for two reasons:
- It is evidence to submit to the insurance company to show exactly what your property was like before disaster struck.
- For your home, you likely have a homeowner's insurance policy that covers your “3 bedroom, 2 bath, 2000 square foot home built in 1962,” but your insurer won’t know the quality of what is actually inside. It will be up to you to prove you had a brand new Viking stovetop, rather than a 20-year old Kitchenaid; custom built-in cabinets rather than Ikea furniture. (On this note, if you ever do any remodeling, be sure to tell your broker to make sure it's covered by your policy!)
- For your business, your policy will similarly be generic, and the insurer will similarly insist on evidence of your business inventory, sales orders, equipment, artwork, etc. in the event of a loss.
- A video record will also help to jog your memory to create itemized inventories to submit to the insurance company. Creating an inventory of everything lost after a casualty can be the most difficult and emotional part of the rebuilding process. I encourage you to do anything you can do now to lessen the stress later. After a traumatic loss, it’s impossible to remember everything, so most people never collect their full insurance benefits. United Policyholders, an amazing non-profit resource for policyholders, has a great app and other online tools to help create your inventory. You can find the app and other helpful information at http://www.uphelp.org/
3) CHECK YOUR POLICY
Even if you have not been personally affected by the recent disasters, these tragedies are an excellent reminder to check to make sure you are fully covered.
- Make sure you understand what is covered under your policy, and get confirmation that you are covered for a total loss. Talk with your broker to make sure your policy limits make sense, including those for separate structures, personal property, and additional living expenses, which are usually a percentage of your dwelling coverage limit.
- Check to make sure your personal property limits would cover your possessions– if you have a lot of artwork, jewelry, antiques, and other valuables, the standard limits might not be enough for you.
- Consider this question: Does your additional living expense/business interruption coverage (aka the amount your insurance company will pay while your home or business property is being rebuilt) provide enough for your needs? Even if your limits/coverage made sense when you purchased the policy, things may have changed.
You can usually increase your other coverage limits with a quick email to your insurance broker, often with very little impact on your annual premium.
4) DON’T BE AFRAID TO ASK FOR HELP
As simple as it sounds, don’t be afraid to ask for help. No one expects you to be an expert on this, and pretending you don’t need assistance can cost you thousands of dollars in insurance benefits in the future. So be sure to take advantage of the resources out there so that you are fully prepared to handle whatever disaster nature sends your way.
For any additional questions, and for help navigating the insurance claims process after a disaster, please do not hesitate to reach out.
Jacquelyn Mohr is an associate in the Walnut Creek office of Newmeyer & Dillion, focusing in business litigation, insurance coverage, securities fraud and construction disputes. Jacquelyn can be reached at Jacquelyn.Mohr@ndlf.com or 925.988.3200.
About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.
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Reprinted courtesy of Jacquelyn M. Mohr, Newmeyer & Dillion LLP
Ms. Mohr may be contacted at Jacquelyn.mohr@ndlf.com
Bank of America’s Countrywide Ordered to Pay $1.3 Billion
July 30, 2014 — Patricia Hurtado – Bloomberg
Bank of America Corp.’s Countrywide unit was ordered to pay $1.3 billion in penalties for defective mortgage loans it sold to Fannie Mae (FNMA) and Freddie Mac in the run-up to the 2008 financial crisis, a little more than half of what the U.S. had requested.
U.S. District Judge Jed Rakoff in Manhattan issued the civil penalty against the Charlotte, North Carolina-based bank today in the first mortgage-fraud case brought by the federal government to go to trial.
Countrywide and Rebecca Mairone, a former executive with the mortgage lender, were found liable in October for selling thousands of bad loans to the two government-sponsored enterprises. Mairone was ordered today to pay $1 million. Read the court decision
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Reprinted courtesy of Patricia Hurtado, Bloomberg
Ms. Hurtado may be contacted at pathurtado@bloomberg.net
Even Where Fraud and Contract Mix, Be Careful With Timing
April 12, 2021 — Christopher G. Hill - Construction Law Musings
I have often discussed the limited circumstances under which a construction contract claim and a fraud claim can coexist. A recent case from the Western District of Virginia federal court demonstrates that care is necessary even in those limited circumstances.
In Fluor Fed. Sols., LLC v. Bae Sys. Ordinance Sys., the Court examined the question of a fraud statute of limitations under Virginia law. The basic facts found in the Complaint are these:
In 2011, the United States Army awarded BAE Systems Ordinance Systems Inc. a basic ordering agreement under which BAE was responsible for modernization projects at the Radford Army Ammunition Plant. This action stems from a subcontract between Fluor Federal Solutions LLC and BAE, under which Fluor agreed to design and construct a new natural gas boiler at the plant. Fluor has completed work on the project, and BAE has accepted that work. Nonetheless, Fluor claims that BAE has refused or failed to pay for the balance of the project costs. Fluor alleges that BAE received several changes to its prime contract from the Army but did not pass those changes along to Fluor until after BAE solicited a bid from Fluor and entered a contract with Fluor to build a temporary facility. Instead, BAE continued to misrepresent the scope of the project. Fluor alleges that the change in plans increased costs substantially, but that BAE withheld information about those changes so that it could solicit lower bids. Fluor alleges that it requested a copy of BAE’s prime contract on numerous occasions, but BAE failed to provide a copy of it. Instead, Fluor submitted a request under the Freedom of Information Act. It received a copy of BAE’s prime contract on Oct. 3, 2018. 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
Court Says KBR Construction Costs in Iraq were Unreasonable
August 27, 2014 — Beverley BevenFlorez-CDJ STAFF
Mike Bosse of Bernstein Shur, analyzed a case involving Kellogg Brown and Root Services Inc. (KBR) and the U.S. Army for services that KBR provided during Operation Iraqi Freedom, according to JDSupra Business Advisor: “The court case involved KBR’s construction of dining facility services near Mosul, Iraq under a cost-plus fee arrangement. Under this contractual arrangement, all allowable costs were reimbursed by the government plus the contractor was paid an additional fee.”
KBR first started on a prefabricated metal dining hall that would serve 2,500 people, but part way into building they were told to stop construction and to instead start on a new reinforced concrete building that would serve almost three times as many people.
“After construction was finished, a defense contract auditing agency suspended some of the payments to KBR and instead of the $12.5 million it expected to receive, KBR was paid only $6.7 million,” reported JDSupra Business Advisor. “After trial, the court concluded KBR did not meet its burden to show the costs it incurred were reasonable under the circumstances.” Read the court decision
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Congratulations to Jonathan Kaplan on his Promotion to Partner!
February 10, 2020 — Bremer Whyte Brown & O'Meara LLP
Bremer Whyte Brown & O’Meara, LLP is proud to announce the promotion of Jonathan Kaplan to Partner!
Jonathan has been with the firm for nearly eight years out of our Newport Beach office. He focuses his practice on general liability defense and construction litigation matters, in addition to handling high-profile plaintiff defect cases. Jonathan earned his law degree from Chapman University School of Law, obtaining a certificate in Environmental, Real Estate and Land Use Law, and went to undergrad at the University of Washington. Jonathan is an active participant within the firm’s Hiring Committee and assists with legal recruitment at the prominent Orange County law schools. Jonathan is also an avid hiker and has coordinated several hiking events for our Southern California offices. Read the court decision
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Mortgage Battle Flares as U.K. Homebuying Loses Allure
January 28, 2015 — Neil Callanan and Richard Partington – Bloomberg
U.K. banks, which spent six years repairing their balance sheets after the 2008 property crash, want to advance more credit to homebuyers. Borrowers aren’t as enthusiastic.
Cheap funding costs and low default rates have made homebuyers attractive to lenders in recent years, boosting returns for companies such as Nationwide Building Society and Lloyds Banking Group Plc. (LLOY) Now, with demand for property cooling, they’re having to fight harder for business. Interest rates on the most popular mortgages fell to record lows in December, according to the Bank of England.
Mr. Callanan may be contacted at ncallanan@bloomberg.net; Mr. Partington may be contacted at rpartington@bloomberg.net
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Reprinted courtesy of Neil Callanan and Richard Partington, Bloomberg
