Intentional Mining Neighbor's Property is Not an Occurrence

Gold mining equipment in yard

Tred R. Eyerly discusses Am. Mining Ins. Co. v. Peters Farms, LLC.

October 30, 2018
Tred R. Eyerly - Insurance Law Hawaii

The Kentucky Supreme Court determined there was no coverage when the insured was sued for mineral trespass. Am. Mining Ins. Co. v. Peters Farms, LLC, 2018 Ky. LEXIS 287 (Ky. Aug. 16, 2018).

Beginning in 2007, Ikerd Mining. LLC removed 20,212 toms of coal from land belonging to Peters Farms, LLC. Of that amount, 10,012 tons were wrongfully mined under Ikerd's alleged mistaken belief as to the correct location of Peters' boundaries. The other 1,200 tons were mined by Ikerd knowing that the land thereunder belonged to Peters, but pursuant to a disputed oral lease agreement between the two. Peters claimed that the lease was an ongoing negotiation that was never finalized.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Almost Nothing Is Impossible

Possible Impossible Buttons

The doctrines of impossibility and impracticability, if proven, can serve as powerful defenses and excuse performance of a construction contract.

October 30, 2018
Brian N. Krulick - Smith Currie

In today’s ever-changing legal and political climate, contractors are being forced to deal with events and circumstances that seemed improbable just a short time ago. These changing circumstances have led some contractors to question whether they are required to continue performing in the face of uncertainty and, in many cases, potentially large losses. The doctrines of impossibility and impracticability, if proven, can serve as powerful defenses and excuse performance of a construction contract. However, contractors should exercise great caution before relying on these defenses as an excuse for nonperformance, as the consequences of stopping work without proper justification can be disastrous.

Mr. Krulick may be contacted at bnkrulick@smithcurrie.com


Builders Beware: Smart Homes Under Attack by “Hide ‘N Seek” Botnet

businessman at desk covered with smart technology objects

While many of the precautions will undoubtedly come from the device manufacturers, homebuilders can still take some precautions to protect their customers.

October 30, 2018
Scott L. Satkin & Amtoj S. Randhawa - Newmeyer & Dillion LLP

German manufacturer eQ-3 has found itself under siege by a botnet known as "Hide 'N Seek." This pernicious malware has infected tens of thousands of eQ-3's smart home devices by compromising the device's central control unit. Once a device has been infected, the malware spreads to other Internet of Things ("IoT") devices connected to the same wireless network. IoT devices have become the prime target for botnet attacks. As opposed to computers, laptops, or other larger computing devices, the smaller storage capacity and lower processing power of IoT devices limit the amount and complexity of the security measures that can be installed—making them an easier target for botnets.

What is a Botnet?
For those unfamiliar with the term, a botnet is a network of devices infected with a malware program allowing the infector to control and/or exploit the devices. Once a suitable number of devices are infected, the person or group controlling the botnet can harness the computing power of each infected device to perform activities which were previously constrained by a single device's capabilities (i.e. DDoS attacks, spamming, cryptocurrency mining, etc.).

Hide 'N Seek – History and Capabilities
The Hide 'N Seek botnet first appeared in January 2018 and has since spread rapidly. Its sophisticated design and capabilities have captivated the attention of many security watchdogs and researchers. While many botnets are designed to be "quick and dirty" (i.e. infect a few devices, eke out a little profit, and inevitably be cleared out or rendered ineffective by security updates and fixes), Hide 'N Seek was designed to maintain itself in the host's system indefinitely. When it was first released, Hide 'N Seek primarily targeted certain routers and internet-enabled security cameras; however, it has now began targeting digital video recorders, database servers, and most recently, smart home hubs.
Hide 'N Seek's communication capabilities are also more advanced than previous botnets. Previous botnets relied on existing communications protocols to communicate with other another, but Hide 'N Seek uses a custom-built peer-to-peer system to communicate. This advancement allows Hide 'N Seek to spread more rapidly than previous botnets.

Hide 'N Seek is also capable of extracting a device owner's personal information (i.e. name, address, e-mail, telephone numbers, etc.) whereas previous botnets were not. Most importantly, Hide 'N Seek is consistently updated to increase its infection rate, decrease its detection probability, and bypass any security measures designed to detect and remove it from the system. This modularity has proved to be Hide 'N Seek's greatest strength.

Protecting Against Hide 'N Seek and Other Botnets
While many of the precautions will undoubtedly come from the device manufactures vis-à-vis software programming and updates, homebuilders can still take some precautions to protect their customers.

  1. When selecting a smart home system to incorporate into a home's construction, be sure to evaluate its security features including, but not limited to its: wireless connectivity, password/passphrase requirements, interconnectedness with other IoT devices, etc. Third-party reviews from tech-oriented outlets will likely have useful information on a device's security measures, vulnerabilities, and any recent security compromises.
  2. Be vigilant in installing any eQ-3 smart home systems. The extent of the damage caused by Hide 'N Seek botnet remains unknown, as does damage from other potentially-infected technology. Thus, it may be prudent to avoid installing any eQ-3 device until it becomes evident that the threat has been neutralized and all security vulnerabilities have been remedied.
  3. If a builder uses technology other than eQ-3, precautions must be taken. Ensure that technology providers are thoroughly researched. It is also recommended to include strong contractual indemnity provisions, and require vendors to carry cyber-specific insurance policies.
  4. Homebuilders should consider purchasing their own stand alone cyber liability policies as a safety net, should potential exposure arise.

Scott Satkin and Amtoj Randhawa are associates in the Cybersecurity group of Newmeyer & Dillion. Focused on helping clients navigate the legal dispute implications of cybersecurity, they advise businesses on implementing and adopting proactive measures to prevent and neutralize cybersecurity threats. For questions on how they can help, contact Scott at scott.satkin@ndlf.com and Amtoj at amtoj.randhawa@ndlf.com.


Teaching An Old Dog New Tricks: The Spearin Doctrine and Design-Build Projects

Stick figure teacher and student

The Spearin doctrine reaches its centennial anniversary this year on December 9, 2018.

October 30, 2018
John Castro - Gordon & Rees Construction Law Blog

The United States District Court for the Southern District of California has now held that the Spearin doctrine applies to design-build subcontractors where the subcontractor is expected to design a portion of their work. The case is United States for the use and benefit of Bonita Pipeline, Inc., et al. v. Balfour Beatty Construction, LLC, et al. (“Bonita Pipeline”) (Case No. 3:16-cv-00983-H-AGS).

In Bonita Pipeline, a subcontractor sued the general contractor and its sureties alleging breach of contract, breach of implied warranty, declaratory relief, and recovery under the Miller Act. The subcontractor then filed a motion for partial summary judgment against the general contractor on its declaratory relief cause of action, seeking a finding that the general contractor could not shift legal responsibility for its defective plans and specifications to the subcontractor.

Mr. Castro may be contacted at jcastro@grsm.com


OH Supreme Court Rules Against General Contractor in Construction Defect Coverage Dispute

Three Judges Sitting at Court Illustration

The Ohio Supreme Court found that a general contractor was not entitled to defense or indemnity from its CGL insurer in a construction defect suit brought by a project owner post-project completion.

October 30, 2018
Theresa A. Guertin - Saxe Doernberger & Vita, P.C.

On October 9, 2018, the Ohio Supreme Court issued a decision in Ohio Northern University v. Charles Construction Services, Inc., Slip Op. 2018-Ohio-4057, finding that a general contractor was not entitled to defense or indemnity from its CGL insurer in a construction defect suit brought by a project owner post-project completion. With this decision, Ohio has solidified its place amongst a diminishing number of states, including Pennsylvania and Kentucky, which hold that there is no coverage for defective construction claims because those losses do not present the level of fortuity required to trigger CGL coverage. This places Ohio amongst the worst in the country on this issue at a time when numerous states have abandoned old precedent and moved towards a policyholder friendly analysis.

Ohio Northern University (“ONU”) hired Charles Construction Services, Inc. (“CCS”) to construct the University Inn and Conference Center, a new hotel and conference center on their campus in Ada, Ohio. CCS purchased CGL insurance from Cincinnati Insurance Company (“CIC”) insuring the project. Following completion of the project, ONU sued CCS alleging defects in the construction of the completed project, including allegations that windows improperly installed by one subcontractor led to damage to walls built by another subcontractor. CIC agreed to defend CCS under a reservation of rights but intervened in the action between ONU and CCS to pursue a declaratory judgment that it had no obligation to defend or indemnify its insured for the alleged losses.

Ms. Guertin may be contacted at tag@sdvlaw.com


Verdict In Favor Of Insured Homeowner Reversed For Improper Jury Instructions

Illustration of judge sitting behind court desk

Tred R. Eyerly discusses the case Citizens Prop. Ins. Corp. v Mendoza.

October 23, 2018
Tred R. Eyerly - Insurance Law Hawaii

The appellate court reversed the jury verdict in favor of the homeowners based upon improper instructions purporting to impose a duty to adjust the claim and how to construe a contract. Citizens Prop. Ins. Corp. v Mendoza, 2018 Fla. App. LEXIS 9497 (Fla. Ct. App. July 5, 2018).

The insureds incurred water damage to their home caused by a water heater leak. After a claim was filed, the insurer sent an adjuster to investigate the claim. The insurer denied the claim due to an exclusion for constant or repeated seepage or leakage.

At trial, the insurer offered testimony that the leak was a continued and repeated seepage of water over a long period of time, which was excluded under the policy, and not a sudden and accidental discharge of water, which would have been covered.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Bond Principal Necessary on a Mechanic’s Lien Claim

Payment bond document glasses resting on

The Virginia statute allows a party to essentially substitute a bond valued at a court set multiple of the principal amount of the mechanic’s lien for the memorandum.

October 23, 2018
Christopher G. Hill - Construction Law Musings

As anyone that reads this construction law blog knows, mechanic’s liens are a big part of the Virginia landscape for a construction attorney like me.

One option for dealing with a mechanic’s lien here in Virginia that we have not discussed but so often is the ability to “bond off” a lien. In short, the Virginia statute allows a party to essentially substitute a bond valued at a court set multiple of the principal amount of the mechanic’s lien for the memorandum. In exchange, the lien is released of record. Any enforcement action can still proceed with security for the claimant and the property owner feeling better about things because there will be no lien on the title to the land.

In many ways this process provides an easier path to resolution for both owner and claimant. First of all, the claimant does not have to deal with a bank or other interest holders in the property (though a recent case discussed below reminds us that certain other parties are necessary). Second of all, the owner does not have the cloud on the title of a mechanic’s lien that may have been filed by a subcontractor over which he has no control.

Mr. Hill may be contacted at chrisghill@constructionlawva.com


Recovery Crews Swing Into Action as Hurricane Michael Departs

Two construction workers in front of mobile cranes

Impacts extend from the Gulf Coast to New York

October 23, 2018
Tom Sawyer, Luke Abaffy, Thomas F. Armistead, & Jim Parsons - Engineering News-Record

By the time the blustery remnants Hurricane Michael departed the East Coast around mid day on Oct. 12, with one last lashing of eastern regions from Virginia to New York, the trail of woe stretched from the Florida Panhandle through the southeastern states and well up the Eastern Seaboard. Authorities report the death toll stood at 16, with victims in Florida, Georgia, North Carolina and Virginia.

Reprinted courtesy of ENR reporters Tom Sawyer, Luke Abaffy, Thomas F. Armistead and Jim Parsons
Mr. Sawyer may be contacted at sawyert@enr.com


Oregon Codifies Tall Wood Buildings

Wood frame of building

Oregon is the first state to allow wood buildings to exceed six stories without special consideration.

October 23, 2018
Joanna Masterson - Construction Executive

Oregon is the first state to allow wood buildings to exceed six stories without special consideration under the Oregon Building Codes Division’s recent statement of alternative method (SAM), which provides prescriptive path elements for mass timber construction. The SAM establishes three new types of construction—Type IV A, B and C—that allow buildings to go as high as nine to 18 stories with varying percentages of exposed timber surfaces and sprinkler system requirements.

Reprinted courtesy of Joanna Masterson, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


"Abrupt Falling Down of Building or Part of Building" as Definition of Collapse Found Ambiguous

Hotel building

Tred R. Eyerly analyzes Hoban v. Nova Cas. Co.

October 23, 2018
Tred R. Eyerly - Insurance Law Hawaii

The federal district court predicted the California Supreme Court would find the definition of collapse, calling for the abrupt falling down or caving in of a building or part of a building, to be ambiguous. Hoban v. Nova Cas. Co., 2018 U.S. Dist. LEXIS 139116 (N.D. Cal. Aug. 15, 2018).

The insureds' bowling center had two roof trusses that helped support the roof. The truss failures caused the building ceiling, overhead monitors, and disco ball to drop approximately six to ten inches, and also caused ceiling tiles and a layer of insulation to fall from the ceiling. A general contractor, named Tom Powers, and the county building inspector inspected the damage. The building inspector immediately ordered the business closed until necessary repairs could be completed. Powers was hired to shore up the roof support system to prevent a complete collapse. Thereafter, the insureds were able to re-open the bowling alley.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Are You Satisfying WISHA Standards?

Big blue question mark

Under WISHA, general contractors and some property management companies/owners are still responsible for workplace safety for the employees of their subcontractors and independent contractors.

October 23, 2018
Ceslie Blass - Ahlers Cressman & Sleight PLLC Blog

Many general contractors and property management companies hand over project sites to subcontractors and have little, if anything, to do with the construction work that occurs. However, under RCW 49.17, the Washington Industrial Safety and Health Act (WISHA), general contractors and some property management companies/owners are still responsible for workplace safety for the employees of their subcontractors and independent contractors.

The Washington Supreme Court held in Stute v. PBMC that a general contractor could be held liable for injury to a subcontractor’s employee sustained as a result of a WISHA violation.[1] The Stute decision changed the landscape of workplace safety, imposing an expansive, per se liability on general contractors for workplace injuries. Stated differently, general contractors have a specific, non-delegable duty to ensure compliance with WISHA regulations, which extends to all employees on the project site.[2] Washington courts have held that such “expansive liability is justified because ‘a general contractor’s supervisory authority is per se control over the workplace.’”[3] Thus, the non-delegable duty requires general contractors to ensure care is exercised by anyone, even an independent contractor to whom the performance of the duty is entrusted.

Ms. Blass may be contacted at ceslie.blass@acslawyers.com


U.K. Broadens Crackdown on Archaic Property Leasehold System

Archaic ruins of sanctuary of apollo hylates

A consultation will review the whole process of buying, selling and property management of leasehold homes.

October 23, 2018
Sree Vidya Bhaktavatsalam - Bloomberg

The U.K. government is cracking down on what it called “unfair” leasehold practices as part of sweeping reforms to its housing system, in a move that would modernize the property market to bring it more in line with nations such as the U.S.

Initially prompted by a malpractice scandal, the proposed scope of the focus by the Ministry of Housing, Communities & Local Government has become far broader. A consultation will seek views not only on the practice of charging buyers an annual fee for owning leasehold properties -- known as ground rents -- it will review the whole process of buying, selling and property management of leasehold homes.


Raising the Bar for Project Coordinators

October 23, 2018
Lauren Pinch - Construction Executive

When contractors talk certification, they’re often referring to apprenticeship, craft training and safety qualifications for field workers. But at a time when the industry is eager to fill jobs and skills gaps across the board, from the office to the field, some firms are getting creative to help all types of construction employees reach the next level of leadership.

Associated Builders and Contractors’ Wisconsin Chapter is already ahead of the game. Through its award-winning Construction U certificate programs, the chapter provides practical, management-level education for local employees who learn how to better plan, organize, communicate and monitor their daily activities, while leveraging both the hard and soft skills necessary to overcome obstacles with increased confidence.

Reprinted courtesy of Lauren Pinch, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Terminating Notice of Commencement Without Contractor’s Final Payment Affidavit

Fountain pen hovering over Notice

Lenders or others will want the Notice of Commencement to be terminated when the job is complete by recording in the official records a Notice of Termination of the Notice of Commencement.

October 23, 2018
David Adelstein - Florida Construction Legal Updates

Prior to construction work being performed on your property, a Notice of Commencement should be recorded. Among other things, construction liens will relate back in time to an effective Notice of Commencement (meaning it has not expired). For this reason, lenders or others will want the Notice of Commencement to be terminated when the job is complete by recording in the official records a Notice of Termination of the Notice of Commencement. There is a statutory procedure to terminate a Notice of Commencement pursuant to Florida Statute 713.132.

Frequently, a clerk will want the Notice of Termination of the Notice of Commencement to be accompanied with a Contractor’s Final Payment Affidavit because 713.132 says, in material part:

(2) An owner has the right to rely on a contractor’s affidavit given under s. 713.06(3)(d), except with respect to lienors who have already given notice, in connection with the execution, swearing to, and recording of a notice of termination. However, the notice of termination must be accompanied by the contractor’s affidavit.

Mr. Adelstein may be contacted at dma@kirwinnorris.com


City Development with Interactive 3D Models

3D Models Homes and Skyscrapers

Tiihonen has initiated three government-supported KIRA-digi experimentation projects to experiment with how to connect models with web-based city development processes.

October 23, 2018
Aarni Heiskanen - AEC Business

The Finnish city of Hyvinkää has developed a unique internet service for collaborative 3D city planning. It gives real estate owners, investors, developers, designers, authorities, and citizens easy-to-use tools to publish their 3D plans and ideas for the built city environment.

Participants can comment on the 3D plans directly in the city model. The 3D app is integrated with Facebook, which enables further conversation.

Building the 3D City Model
Päivi Tiihonen is the manager of the information services unit of the city’s technical and environmental sector. The city started building a browser-based 3D city model when Tiihonen assumed her position in 2014.

Mr. Heiskanen may be contacted at aec-business@aepartners.fi


Design for Salesforce Transit Center Flange Fracture Fix Coming Soon

October 23, 2018
Nadine M. Post - Engineering News-Record

Investigators for San Francisco’s Transbay Joint Powers Authority are searching for the cause of brittle fractures in the tapered bottom flanges of twin 80-ft-long built-up plate girders in San Francisco’s Salesforce Transit Center. With shoring in place to relieve the loads on the problem girders, which span Fremont Street, shoring contractors are turning their attention to similar parallel girders that span nearby First Street, though no cracks have surfaced there.

Ms. Post may be contacted at postn@enr.com


Governor Signs Permit Extension Bill Extending Permit Deadlines to One Year

Businessman signing document

AB 2913 provides a uniform 12-month period across California for work to commence before a building permit expires.

October 23, 2018
Garret Murai - California Construction Law Blog

It’s like that feeling you got when your teacher said you have another week to complete your group project.

On September 21, 2018, Governor Brown signed AB 2913, which, for the first time, provides a uniform 12-month period across the state for work to commence before a building permit expires. Previously, the period was six months.

In addition to doubling the expiration period, the statute includes a “justifiable cause” provision permitting local building departments to extend the time for one or more additional periods of not more than 180 days per extension upon written demonstration of “justifiable cause for the extension.”

Mr. Murai may be contacted at gmurai@wendel.com


FEMA Administrator Slams Failures to Prepare, Evacuate Before Storms

Red Notebook of Losses

FEMA Administrator Brock Long criticized the failure of citizens to heed evacuation warnings and leaders to better prepare for natural disasters.

October 23, 2018
Christopher Flavelle - Bloomberg

Federal Emergency Management Agency Administrator Brock Long angrily criticized the failure of citizens to heed evacuation warnings and leaders to better prepare for natural disasters such as Hurricane Michael.

"It's frustrating to us because we repeat this same cycle over and over again," Long said during a press briefing Friday at FEMA headquarters in Washington. "If you want to live in these areas, you've got to do it in a more resilient fashion."


Denial of Coverage for Late Notice Upheld

October 23, 2018
Tred R. Eyerly - Insurance Law Hawaii

The insurer's denial of coverage for receipt of late notice of a claim was upheld by the federal district court. Evanston Ins. Co. v. Yeager Painting, LLC, 2018 U.S. Dist. LEXIS 130316 (N.D. Ala. Aug. 3, 2018).

Yeager Painting was in the business of sandblasting and painting. Yeager Painting was hired as a subcontractor to sandblast water tanks in the city of Pelham, Alabama. Yeager Painting subcontracted the work to Delgado Painting. An employee of Delgado Painting was seriously injued when he fell 25 to 30 feet to the ground from a man-lift basket.

Mr. Eyerly may be contacted at te@hawaiilawyer.com


Fed. Judge Blocks Release of Records on FIU Bridge Collapse, Citing NTSB Investigation

Traffic on bridge

Stafford's ruling essentially overturns a previous decision from a state court that would have released the records under Florida's broad public records law.

October 23, 2018
Miami Herald - Engineering News-Record

Oct. 05 --A federal judge Friday blocked the release of documents that could shed light on why a busy road outside Miami was not shut down before a brand-new bridge developing severe cracks collapsed and killed six people.
Judge William Stafford said the National Transportation Safety Board , the federal agency investigating the Florida International University bridge disaster, "was exercising its valid federal regulatory authority" in keeping the documents confidential from the media.

ENR may be contacted at ENR.com@bnpmedia.com



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