Insurer’s “Failure to Cooperate” Defense
November 14, 2018 —
David Adelstein - Florida Construction Legal UpdatesThe “failure to cooperate” defense is a defense an insurer may raise when its insured fails to cooperate with it in the defense of the claim against the insured. If an insurer takes this position, it will typically be denying both defense and indemnification obligations, meaning the insured could be forfeiting coverage that otherwise exists through his/her/its failure to cooperate with the insurer. This defense by the insurer is not absolute as recently explained by the Fourth District in Barthelemy v. Safeco Ins. Co. of Illinois, 43 Fla.L.Weekly D2379a (Fla. 4th DCA 2018) discussing the elements of this failure to cooperate defense.
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Ten-Year Statute Of Repose To Sue For Latent Construction Defects
November 12, 2019 —
David Adelstein - Florida Construction Legal UpdatesIf you are dealing with latent construction defects, it is imperative that you consult with counsel to understand your rights. This not only includes claims for property damage stemming from latent construction defects, but also personal injury stemming from such defects. There is a ten-year statute of repose to sue for latent construction defects. See Fla.Stat. s. 95.11(3)(c). After the expiration of this statute of repose you are out of luck, meaning you can no longer sue.
Now, I probably will not be the first to tell you that the statute of repose is not written so clear that you know the precise date it ends (or the last date you can sue for a latent defect). For this reason, you really want to operate conservatively, meaning it is always better to sue early if you think you could be running on the end of the statute of repose period. It is always advisable to avoid any legitimate argument that you filed your construction defect lawsuit too late.
In Harrell v. The Ryland Group, 44 Fla. L. Weekly D2054b (Fla. 1st DCA 2019), a subsequent owner of a house sued the original homebuilder in negligence for a construction defect causing a personal injury. The subsequent owner claimed the homebuilder defectively installed an attic ladder (that provided access to the attic for the original construction) which collapsed as he was using it. The homebuilder filed a motion for summary judgment that the statute of repose expired so the owner’s claim was time-barred. The First District agreed.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Be Proactive Now: Commercial Construction Quickly Joining List of Industries Vulnerable to Cyber Attacks
June 15, 2017 —
Jeffrey M. Dennis & Nathan Owens – Newmeyer & Dillion LLPCommercial contractors have long faced their own unique business risks - labor and material shortages, delay claims, bonding issues, and defects in workmanship. But, in today's ever-evolving cyber world, it is imperative that contractors understand they are vulnerable to risks beyond finishing a project on time and on budget. As we are seeing more and more each day, cyber threats impact all businesses, including the construction industry, and the failure to protect against these threats will cost your company millions in damages and reputational harm.
UNDERSTANDING CYBER THREATS
Traditionally, cyber threats are thought of as the theft of employee and customer information over the internet. Given the construction industry is the largest employer in the world, the need to protect this information is obvious. The release or loss of personnel or consumer data could lead to extensive liability under a variety of potential claims, including statutory fines. In addition to securing confidential information, companies have to protect against outside agents accessing control of a company’s security protocols, equipment or encrypting files using malicious software. The recent “WannaCry” attack demonstrates that no business is immune from cyber attacks.
EXAMPLES OF RELATED BREACHES
For those that think these scenarios do not happen, here are two examples of these types of breaches:
* In May 2013, Chinese hackers stole floor plans, server information, and security system designs from an Australian prime contractor. Fearing the risks of compromised physical and network security, the contractor incurred additional costs of $132.6 million in project delays and costs to rework the various components that had been stolen.
* Then, in December 2014, a German governmental office reported that a steel mill suffered massive damage when malware prevented a blast furnace from being properly shut down. Hackers gained access to key technology within the company, which eventually allowed them to control the production line.
THE NEW WORLD OF THE IoT
In addition to these types of “traditional” hacking threats, cybersecurity risks continue to evolve and become more complicated every day. Some of these new threats are driven by the development of a phenomenon known as the Internet of things, or IoT. The IoT is most basically defined as the interconnection of devices with on / off switches to the Internet and each other. Since the IoT is estimated to be 20 billion or more devices within 3 years, and can be combined with malicious software, IoT poses one of the most challenging risks for contractors to protect against.
The technology included in today's commercial buildings clearly opens this avenue of risk. A centralized computer control center, typically employed in new buildings, controls and maintains the systems that are vital to the operation of the building, e.g., power, elevators, HVAC, lighting, and security. What happens if a hacker gains control to one of these systems, let alone all of them? What if a hacker simply utilizes an IoT attack to overwhelm a building’s computer systems? In either scenario, at a minimum, significant disruption would occur. Worse, the health and safety of those within the building could be jeopardized. A hacker may utilize ransomware in combination with an IoT attack to take over control of the building and hold it and possibly the occupants “hostage” until a ransom is paid.
The first significant IoT attack happened in October 2016 when a major web hosting company was attacked through the IoT, causing the host site to crash. The attack did not steal information, it simply caused the site to crash. But, that crash caused world-wide disruption across the Internet.
Hackers used malicious software to access a hundred thousand common household devices — web cameras, fitness trackers, DVR’s, smart TVs and even baby monitors — to flood the hosting company’s servers with incredibly high internet traffic. This attack showed that everyday items can be hacked and controlled by cyber criminals and then used against anyone else.
As we have all seen in recent news, the WannaCry cyber attack impacted businesses across the globe. Days after the attacks, hospitals were still left feeling its impact with continued appointment and planned operation cancellations, and delays in service. We should expect to see these types of attacks increasing in frequency.
PAY ATTENTION OR FACE THE CONSEQUENCES
Make no mistake about it, the stakes are incredibly high in the realm of cyber security protection. By 2021, the annual worldwide cost attributable to cyber attacks is estimated to reach the trillions of dollars. If any of these potential attacks occur, a contractor faces significant exposure, in many forms, including:
* Monetary. Cybersecurity events result in direct monetary losses in the form of notification costs, data recovery costs, and, of course, legal and public relations fees. States are also starting to impose strict standards on companies which will result in significant regulatory punishment in the cases of cyber breaches, including the added costs associated with agency investigations, regulatory fines and consumer redress funds.
* Reputation. Perhaps more important than the monetary risk, a contractor may incur substantial reputational harm if such a breach or attack is successful. Recent data has shown that small to medium-sized companies that experience a significant cybersecurity breach go out of business within six months of the breach – due to not only high monetary costs, but severe reputational damage.
* Criminal. The recently passed New York cybersecurity regulations place potential criminal penalties on compliance personnel. Other states are likely to follow New York.
As a business leader and commercial builder, the time to act is now. While the purchase of specific cyber insurance is an important part of protecting against the risks of a cyber attack, many cyber policies contain exclusionary language embedded in the policy making coverage potentially illusory. Additional steps can and need to be taken immediately, including an honest discussion of internal cybersecurity protections, examination of risk management strategy, and the training of employees. Failure to take these important steps could result in a disastrous cybersecurity breach and the loss of millions of dollars.
Jeffrey M. Dennis currently serves as Newmeyer and Dillion’s Managing Partner and, as a business leader, advises his clients on cybersecurity related issues, introducing contractual and insurance opportunities to lessen their risk. You can reach Jeff at jeff.dennis@ndlf.com.
J. Nathan Owens is the Managing Partner for Newmeyer & Dillion’s Las Vegas office. With more than 10 years in the construction industry as a former contractor himself, Nathan understands the complex issues builders and developers face in all aspects of development and construction. You can reach Nathan at nathan.owens@ndlf.com.
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 http://www.newmeyeranddillion.com/.
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Safety Versus a False Sense of Security: Challenges to the Use of Construction Cranes
March 18, 2019 —
Christopher Machut - Construction ExecutiveThe history of safety is, in part, the history of resistance to safety. From transportation and travel to sports and entertainment, the safeguards taken for granted were once too allegedly controversial or costly for companies to grant to consumers. Imagine driving a car without a seatbelt or being a passenger in a minivan without side-impact airbags or anti-lock brakes, or playing football without a helmet or riding a roller coaster without a shoulder harness. Imagine, too, pulling out of parking space without a rear-view camera, unable to see passing cars or pedestrians.
Cameras are now as common among compact cars as on the most uncommonly expensive sports cars and sedans.
And yet, the technology that earns drivers a discount on car insurance is the same or mostly similar technology that insurers refuse to cover elsewhere. The technologies that makes parallel parking easier or easing a car into traffic a cinch is considered an extravagance on construction equipment, despite the dangers crane operators face but cannot see, despite what workers on the ground can see but not forecast, despite what cameras can record and capture.
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Christopher Machut, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Homebuilding Down in North Dakota
October 30, 2013 —
CDJ STAFFOnly eleven new homes have been started this year in the Pierre area in North Dakota. Last year saw 35 homes built in the same area. Brad Lawrence, the Fort Pierre Director of Public Works, blamed last year’s Hurricane Sandy in New Jersey, stating that “superstorm Sandy has just devoured a tremendous amount of building projects.”
Area builders did say that some building materials went up in price after the storm, describing it as an “availability scare,” but some prices went down during the summer of 2013. Susan Ogan, of Neil Ogan Construction said that “our biggest thing is that people cannot find a lot they can afford and still say within their budget for the overall project.”
Although single-family homes aren’t being built, apartments are. “We’ve got a 24-unit apartment going in as we speak,” said Mr. Lawrence. That, some feel, may be responsible for the lack of demand for single-family homes.
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Duty to Defend Bodily Injury Evolving Over Many Policy Periods Prorated in Louisiana
November 17, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe Louisiana Supreme Court held that the duty to defend in long latency disease cases should be prorated between the insurer and insured when the policies cover for only a portion of the time in which the exposure occurred. Arceneaux v. Amstar Corp., 2016 La. LEXIS 1675 (La. Sept. 7, 2016).
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Oregon Bridge Closed to Inspect for Defects
February 25, 2014 —
Beverley BevenFlorez-CDJ STAFFAccording to The Oregonian, the Morrison Bridge in Multnomah county, Oregon will be closed Sunday, February 23rd “so county crews can inspect the decking that has caused problems since it was installed” in 2012. The “southernmost eastbound lane has been closed for weeks while crews conducted inspections.”
The defects appeared “almost immediately after the project” was completed, reported The Oregonian. Drivers have “dealt with a bumpy, noisy ride as the loose decking panels flopped beneath them.”
Multnomah county has sued “Conway Construction, the company the installed the decking, as well as Strongwell Corp., the company that supplied Conway with the decking materials, and Zellcomp, the company that made the decking materials, to determine who should foot the bill for extensive repairs or outright replacement of the decking.”
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Application of Frye Test to Determine Admissibility of Expert
April 03, 2019 —
David Adelstein - Florida Construction Legal UpdatesFlorida went back to the Frye test/standard, instead of the Daubert test utilized in federal court, to determine the admissibility of expert testimony. The Frye test is more favorable to plaintiffs because it applies when an expert renders an opinion based on new or novel scientific principles. See D.R. Horton, Inc. v. Heron’s Landing Condominium Ass’n of Jacksonville, Inc., 44 Fla.L.Weekly D109b (Fla. 1st DCA 2018) (“The supreme court has described the Frye test as one in which the results of mechanical or scientific testing are not admissible unless the testing has developed or improved to the point where the experts in the field widely share the view that the results are scientifically reliable as accurate. Stated differently, under Frye, the proponent of the evidence has the burden of establishing by a preponderance of the evidence with the general acceptance of the underlying scientific principles and methodology. However, as stated, the Frye standard only applies when an expert attempts to render an opinion that is based upon new or novel scientific principles.”).
In D.R. Horton, Inc., a condominium association sued the developer and general contractor (same entity) for construction defects that included claims in negligence, violation of building code, and breach of statutory warranties. The developer/general contractor moved in limine / to strike the association’s experts under, at the time, a Daubert analysis, but which became a Frye analysis during the pendency of the appeal. The expert opined as to construction defects and damage and the appropriate repairs – really, no different than any construction defect dispute, from what it appeared. The trial court denied the motion and during trial the experts testified and a sizable damages judgment was entered against the developer/contractor prompting the appeal. One issue on appeal was the admissibility of the expert’s opinion. The appellate court noted that a Frye analysis is not necessary because the experts used a scientifically reliable and peer-reviewed methodology.
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David Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
