Seattle Washington Building Expert Directory

Contractual Setoff and Application When Performance Bond Buys Out of its Exposure

July 02, 2024 — David Adelstein - Florida Construction Legal Updates
The theory of “setoff” is an important theory in construction disputes. Florida’s Fourth District Court of Appeal recently provided worthy discussion on contractual setoffs:

Setoffs in contract claims are governed by [Florida Statute] section 46.015(2), which provides that if a plaintiff has released “any person in partial satisfaction of the damages sued for, the court shall [setoff] this amount from the amount of any judgment to which the plaintiff would be otherwise entitled at the time of rendering judgment.” The setoff statute intends to prohibit plaintiffs from getting double recoveries.

A setoff requires that settling and non-settling parties be jointly and severally liable. The settled damages must also be the same damages for which the setoff is sought; stated differently, a setoff is not proper where the trial damages to be setoff are separate and distinct from the settled damages.

Close Construction, LLC v. City of Riviera Beach Utility Special District, 49 Fla.L.Weekly D1184d (Fla. 4th DCA 2024) (internal citations omitted). 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

Zero-Energy Commercial Buildings Increase as Contractors Focus on Sustainability

February 10, 2020 — Jeffrey S. Wertman - Construction Executive
Imagine a functional, low energy commercial building that annually consumes only as much power as the building creates with on-site, clean, renewable resources. From coast to coast, there is considerable momentum for zero-energy (ZE) buildings, also known as ZEB’s or net-zero energy buildings (NZEBs). Although still an emerging market, the growth trend for ZEBs is steep. The world’s net-zero energy market for commercial and residential projects is expected to exceed $1.4 trillion by 2035. The number of ZEBs across North America has dramatically increased since 2010 which encompasses about 80 million square feet of commercial building space. ZE has captured the attention of building owners, developers, architects, engineers, contractors, designers, policymakers and others who see its potential to efficiently use clean energy resources to reduce the substantial carbon footprint of buildings. Real Applications of Net Zero From 2012 to 2019, the number of ZE projects has increased ten-fold. According to the “2019 Getting to Zero Project List” released in May 2019 by the New Buildings Institute, a nonprofit organization striving to achieve better energy performance in commercial buildings, the total number of certified, verified and emerging ZE projects grew to 607 in 2019. New projects continue to appear regularly. Today, hundreds of ZE buildings, including commercial buildings of all types (including retail, office, warehouse, hotel, educational and government) are being developed. Reprinted courtesy of Jeffrey S. Wertman, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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No Friday Night Lights at $60 Million Texas Stadium: Muni Credit

March 26, 2014 — Darrell Preston and Aaron Kuriloff – Bloomberg
Pervasive cracking has shuttered the $60 million home of a high-school football championship team in Texas after less than two years. Investors in the tax-free bonds that paid for the stadium are unscathed. Taxpayers in Allen Independent School District north of Dallas and the $29 billion Texas Permanent School Fund, a state bond insurer, are responsible for $119 million of debt that paid for the venue and other facilities, leading officials to find a new site for graduation and possibly games after closing 18,000-seat Eagle Stadium last month. The development suggests the fund, created in 1854 to help pay for education, shouldn’t be used for stadiums, said Colby Harlow, president of hedge fund Harlow Capital Management. The Permanent Fund has top credit ratings and secures about $55 billion of bonds, according to the Texas Education Agency. The pool has at times reached the limit of debt it can back, preventing districts from accessing it. The guarantee is still a boon to bondholders. Mr. Merelman may be contacted at smerelman@bloomberg.net; Mr. Sillup may be contacted at msillup@bloomberg.net Read the court decision
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Reprinted courtesy of Darrell Preston and Aaron Kuriloff, Bloomberg

Remediation Work Caused by Installation of Defective Tiles Not Covered

August 19, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The federal district court applied California law to find there was no coverage when the subcontractor was sued for broken tiles on a project. Am. Home Assur. Co. v. SMG Stone Co., 2015 U.S. Dist. LEXIS 75910 (N. D. Cal. June 11, 2015). The subcontractor installed stone floor tiles at the project. The developer discovered fractures in some of the tiles. The fractured tiles were removed and replaced. This remediation process required the removal and replacement of portions of drywall and concrete subfloor installed by other subcontractors. The developer sued the subcontractor, who tendered the defense to its insurer. The insurer denied coverage and filed for a declaratory judgment that there was no coverage for the floor tile fracture claims. 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

Flooded Courtroom May be Due to Construction Defect

September 01, 2011 — CDJ STAFF

The General Services Administration wouldn’t pin it on a construction defect, but a spokesperson said that a pipe that was misaligned during installation was the likely cause of a flood in the Thomas F. Eagleton US Courthouse on August 23. According to the St. Louis Dispatch, the burst pipe caused a 17-story waterfall in the courthouse, soaking ceilings and floors, and drenching the building’s contents.

The building was dedicated eleven years ago. During the nearly ten years before the building was complete, there were construction disputes and soil contamination issues.

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Department Of Labor Recovers $724K In Back Wages, Damages For 255 Workers After Phoenix Contractor Denied Overtime Pay, Falsified Records

February 01, 2023 — U.S. Department of Labor
PHOENIX – The U.S. Department of Labor has recovered $724,082 in back wages and damages for 255 employees of an electrical contractor in Phoenix who denied them overtime wages and falsified records. An investigation by the department’s Wage and Hour Division found IES Residential – a subsidiary of one of the nation’s largest electrical, HVAC and plumbing, solar and cable installation contractors – capped employees’ overtime at eight hours despite some employees working up to 60 hours in a workweek. The division also learned the employer told workers – some who arrived as early as 4:45 a.m. and worked as late as 7 p.m. to record 40 hours or less on their timesheets unless their overtime was pre-approved. When IES Residential did approve, the employer limited overtime to eight hours per week even when employees worked as many as 23 hours of overtime in a workweek. “The U.S. Department of Labor will hold employers accountable for wage theft, particularly in cases like this one, where IES Residential deliberately attempted to evade the law by instructing employees to falsify timesheets to avoid paying overtime wages,” said Wage and Hour Division District Director Eric Murray in Phoenix. “Employers who fail to pay workers their full wages may face costly consequences, including penalties for intentional acts to cover-up their violations.” In fiscal year 2022, the division recovered nearly $32.9 million in back wages for 17,127 construction industry workers. The division completed more than 2,200 investigations in FY22 in the construction industry and by wages recovered, the industry ranks second among the division’s low wage, high violation industries. Read the court decision
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Absence of Property Damage During Policy Period Equates to No Coverage

April 01, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The Montana Supreme Court determined there was no coverage for the insured due to a lack of property damage during the policy period. Truck Ins. Exchange v. O'Mailia, 2015 Mont. LEXIS 54 (Mont. Feb. 17, 2015). The insured plumbing company, Lolo Plumbing & Heating, installed a water heater at Famous Dave's restaurant. At the time of installation, the insured had a CGL policy with Truck. The policy provided coverage from July 10, 2006 to November 29, 2009. On March 12, 2010, three years after the water heater was installed, a burning smaell was detected in the restaurant's mechanical room. The fire department turned off the water heater and asked that a plumber look at it. Diamond Plumbing & Heating was called and replaced the combustion air fan assembly, but did not further examine the water heater. 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

A Word to the Wise: The AIA Revised Contract Documents Could Lead to New and Unanticipated Risks - Part II

October 16, 2018 — George Talarico - Construction Executive
Part I addressed general conditions, revised insurance terms, revisions that affect owner’s required insurance and revisions that affect contractor’s required insurance. REVISIONS THAT AFFECT DISPUTE RESOLUTION A seemingly minor but noteworthy change is to the definition of “Claim.” Under Section 15.1 a “Claim” is defined to:

include a request for a modification of contract time; and
exclude any requirement that an owner must file a claim to impose liquidated damages.

Notably, any request relating to contract time must be brought within the specified time period for Notice of Claim and in the prescribed manner. There are at least two traps for the unwary. First, even though email is regularly used for communications among the parties, the revised contract documents do not recognize email as an acceptable form of delivery of a Notice of Claim. Second, an unwary contractor may wrongly assume that an owner’s failure to assert a claim for LDs means that LDs will not be imposed. This may lull the contractor into failing to timely assert its own claim for a time extension and thereby waiving its ability to do so. Reprinted courtesy of George Talarico, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Mr. Talarico may be contacted at gtalarico@sillscummis.com

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