Midwest Floods are Hampering River Projects

July 15, 2019
Engineering News-Record

The Midwest’s waterways have been hit hard by an unusually rainy and snowy spring. Since March, the Mississippi River has maintained high water levels and crested at near-record levels on May 1. The flooding is also impacting construction operations along the river.

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

When an Insurer Proceeds as Subrogee, Defendants Cannot Assert Contribution Claims Against the Insured

Two businessmen shaking hands

Attorney Shannon M. Warren analyzes the case Farmers Mut. Ins. Co. of Mason County v. Stove Builder Int’l.

July 15, 2019
Shannon M. Warren - The Subrogation Strategist

In Farmers Mut. Ins. Co. of Mason County v. Stove Builder Int’l, 2019 U.S. Dist. Lexis 46993 (E.D. Ky.), the United States District Court for the Northern Division of the Eastern District of Kentucky, by adopting a Magistrate Judge’s report and recommendations, see Farmers Mut. Ins. Co. v. Stove Builder, Int’l, Inc., 2019 U.S. Dist. LEXIS 48103 (E.D. Ky. Feb. 11, 2019), considered whether to allow the defendants to file a third-party complaint against the plaintiff’s insureds-subrogors. Finding that the defendants could not pursue contribution claims against the plaintiff’s insureds-subrogors, the court denied the defendant’s motion to file a third-party complaint.

The underlying subrogation action involved allegations of strict liability, negligence and breach of warranty against a pellet heater manufacturer and the retailer who sold the heater. The claims arose from a fire allegedly originating from the heater, which spread to the insureds-subrogors’ home causing property damage, along with consequential damages. Pursuant to the applicable insurance policy, the insureds-subrogors’ insurer issued payments to its insureds-subrogors. Thereafter, the insurer filed suit against the heater manufacturer and retailer.

The defendants filed a motion for leave to file a third-party complaint against the plaintiff’s insureds-subrogors, seeking to assert a contribution claim. The defendants alleged that the insureds-subrogors failed to properly install and maintain the pellet heater. The defendants also sought a jury instruction that would permit the jury to apportion fault to the insureds-subrogors, resulting in a reduction of the plaintiff’s recovery. The court looked to federal procedural law, but Kentucky substantive law to decide the defendants’ motion.

Ms. Warren may be contacted at warrens@whiteandwilliams.com

Skilled Labor Shortage Implications for Construction Companies

Hardhat gloves measuring tape and plans resting on wooden table

from Amerisure discuss how to address labor shortage issues.

July 15, 2019
Tony James & Keith Maciejewski - Construction Executive

The construction industry is facing one of the most significant labor shortages it has ever seen. This labor shortage has far-reaching implications for worker safety and construction quality—both of which could adversely impact a company’s bottom line if investments are not made to address the issue.

What’s causing the labor gap?

There are two underlying trends driving this phenomenon:

  1. More experienced workers have either not returned to the industry after the Great Recession or are now retiring as they’ve concluded their careers.
  2. The construction industry has long struggled to attract new, younger workers to the industry, and this problem has only worsened as the broader economy boomed. As a result, construction firms must compete with other industries, such as health care, technology and engineering, for young talent.

Reprinted courtesy of Tony James & Keith Maciejewski, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Few Insurance-Related Bills Passed by 2019 Session of Hawaii Legislature

July 15, 2019
Tred R. Eyerly - Insurance Law Hawaii

Only four insurance-related measures were enacted by the Hawaii Legislature in the recently concluded 2019 session. The legislation is as follows:

HB 273 - This bill establishes an exemption for insurers issuing group policies from the required annual privacy notice to individual customers under certain circumstances. The bill was transmitted to the Governor on April 24, 2019.

SB 25 - Related to health insurance, the measure amends portions of the Hawaii Insurance Code under title 24 to update and improve existing code provisions. It allows the Insurance Division to create stopgap measures to implement the National Association of Insurance Commissioners' Health Benefit Plan. The bill was enrolled to the governor on May 6, 2019.

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

Release Of “Unknown” Claim Does Not Bar Release Of “Unaccrued” Claim: Fair Or Unfair?

Blue question mark

A recent opinion maintained that a general release that bars unknown claims does NOT mean a fraud claim will be barred since the last element to prove a fraud had not occurred.

July 15, 2019
David Adelstein - Florida Construction Legal Updates

A general release of “unknown” claims through the effective date of the release does NOT bar “unaccrued” claims. This is especially important when it comes to fraud claims where the facts giving rise to the fraud may have occurred prior to the effective date in the release, but a party did not learn of the fraud until well after the effective date in the release. A recent opinion maintained that a general release that bars unknown claims does NOT mean a fraud claim will be barred since the last element to prove a fraud had not occurred, and thus, the fraud claim had not accrued until after the effective date in the release. See Falsetto v. Liss, Fla. L. Weekly D1340D (Fla. 3d DCA 2019) (“The 2014 [Settlement] Agreement’s plain language released the parties only from “known or unknown” claims, not future or unaccrued claims. Because there is a genuine issue of material fact as to whether the fraud claim had accrued — that is, whether Falsetto [party to Settlement Agreement] knew or through the exercise of due diligence should have known about the alleged fraud at the time the 2014 Agreement was executed — the trial court erred in granting summary judgment on those fraud claims.”).

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

Construction Bonds Explained

July 9, 2019
Todd Bryant - Construction Executive

Surety bonds play a vital role in the construction industry. They guarantee that contractors perform on jobs in compliance with contractual conditions and legal requirements. They protect project owners, other contractors and the public by playing the role of a financial security mechanism. However, they also provide contractors with legitimacy and help build up their capacity and industry reputation.

Yet, for many contractors, especially those new to the industry, surety bonds and their purpose remain somewhat unclear.

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

Quick Note: Remember to Timely Foreclose Lien Against Lien Transfer Bond

Post its on cork board

David Adelstein discusses the intricacies of lien laws.

July 9, 2019
David Adelstein - Florida Construction Legal Updates

When a construction lien is transferred to a lien transfer bond pursuant to Florida Statute s. 713.24, instead of foreclosing the lien against the real property, you are foreclosing the lien against the lien transfer bond. This is not a bad deal and, oftentimes, is probably ideal. Remember, however, just because a construction lien was transferred to a lien transfer bond (pre-lawsuit) does not mean you get more time to file your lien foreclosure lawsuit. A lawsuit must still be filed within one year (short of that period being specifically shortened under operation of the law).

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

26th Annual Washington Construction Law Seminar

July 9, 2019
Beverley BevenFlorez – CDJ Staff

Attendees of this two-day seminar will include architects, attorneys, contractors, engineers, government employees, and municipal employees. Sponsored by the firms Jameson Babbitt Stites & Lombard PLLC and Ahlers Cressman & Sleight PLLC, the faculty will cover Alternative Dispute Resolution, Bankruptcy, Construction, Contracts, Ethics, Government, Insurance, Litigation, Product Liability, Professional Liability, Public Works.

September 19th-20th, 2019
Columbia Tower Club
701 Fifth Avenue
Seattle, WA 98104

Washington Court Tunnels Deeper Into the Discovery Rule

Blue vortex tunnel

Attorney Lian Skaf analyzes the case Dep’t of Transp. v. Seattle Tunnel Partners.

July 9, 2019
Lian Skaf - The Subrogation Strategist

Often times, properly analyzing when a statute of limitations begins to run – not just how long it runs – is crucial to timely pleading. In Dep’t of Transp. v. Seattle Tunnel Partners, 2019 Wash.App. LEXIS 281 (Was. Ct. App. Feb. 5, 2019), Division Two of the Court of Appeals of Washington addressed when the discovery rule starts the statute of limitations clock on a negligence cause of action. The court held that the statute of limitations begins to run when the plaintiff knows that the factual elements of the claim against the defendant exist. The clock starts to run even if the plaintiff wants to investigate the possibility of other contributing factors or the defendant identifies opposing viewpoints on the theory of the claim.

In this matter, the Washington State Department of Transportation (WSDOT) contracted with an engineering firm, WSP USA, Inc. (WSP), for an evaluation of the Alaskan Way Viaduct in 2001. As part of this project, WSP retained the services of Shannon and Wilson (S&W), another engineering firm, to conduct geological profile logs, groundwater-pumping tests, and prepare technical memoranda. In 2002, WSP and S&W installed a pumping well with an eight-inch steel casing (TW-2). In 2009, apparently based on the work done by WSP and S&W, WSDOT determined that a bored underground tunnel was the best option for replacing the viaduct.

Mr. Skaf may be contacted at skafl@whiteandwilliams.com

Fatal Crane Collapse in Seattle Prompts Questions About Disassembly Procedures

Question mark in maze

Four killed as crane mast falls onto busy city roadway

July 9, 2019
Jeff Rubenstone - Engineering News-Record

A tower crane being dismantled collapsed Saturday, April 27 in Seattle, killing four people, including two ironworkers on the crane and two bystanders on the street below. The jobsite, located in a Google office development in Seattle's bustling South Lake Union neighborhood, is adjacent to a busy intersection where traffic had not been blocked off during the crane’s disassembly. It is the first fatal crane accident in the Puget Sound region since a crane collapse in Bellevue, Wash., in 2006 that killed one person.

Mr. Rubenstone may be contacted at rubenstonej@enr.com

Claims for Negligence? Duty to Defend Triggered

Businessman with red cape and arms folded in superhero stance

Hunton Andrews Kurth attorneys discuss Zurich American Ins. Co v. Electricity Maine, LLC.

July 9, 2019
Michael S. Levine & Adriana A. Perez - Hunton Andrews Kurth

On June 17, 2019, the First Circuit held that an insurer’s duty to defend was triggered because the underlying complaint set forth claims that required a showing of intent as well as claims that sought recovery for conduct that “fits comfortably within the definition of an ‘accident.’” In Zurich American Ins. Co v. Electricity Maine, LLC, Zurich sought declaratory judgment that, under a D&O policy, it had no duty to defend the insured, Electricity Maine, an electrical utility company being sued in the underlying class action. Zurich argued it had no duty to defend because the underlying complaint failed to allege that Electricity Maine engaged in conduct that qualified as an “occurrence” or that caused “bodily injury” under the terms of the policy. The First Circuit disagreed.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Adriana A. Perez, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Perez may be contacted at aperez@HuntonAK.com

Think Twice About Depreciating Repair Costs in Our State, says the Tennessee Supreme Court

Illustration of three judges sitting behind bench

Tennessee joins other states like California and Vermont that prohibit the depreciation of repair labor costs in property policies.

July 9, 2019
Andres Avila - Saxe Doernberger & Vita, P.C.

Tennessee’s Supreme Court recently held that an insurer may not withhold repair labor costs as depreciation when the policy definition of actual cash value is found to be ambiguous. Tennessee joins other states like California and Vermont that prohibit the depreciation of repair labor costs in property policies.

In Lammert v. Auto-Owners (Mut.) Ins. Co., No. M201702546SCR23CV, 2019 WL 1592687, the Lammerts and other insureds sought property damage coverage from Auto Owners Insurance for hail damage to a home and other structures they owned in Tennessee.

Auto-Owners Insurance agreed to settle the claims on an actual cash value basis (ACV), which is a method of establishing the value of insured property that must be replaced to determine the indemnity by the insurer. There are multiple methods to calculate ACV. Auto-Owners decided to use the ACV calculation method of deducting depreciation from the cost to repair or replace the damaged property. Depreciation is the decline in value of a property since it was new because of use, age or wear. The rationale behind this method is that an insured should not make a profit by recovering the cost of, for example, a new roof for a damaged roof that was ten years old, and thus depreciation is deducted from the indemnity.

Mr. Avila may be contacted at ara@sdvlaw.com

2019 Legislative Changes Affecting the Construction Industry

Legislation word on paper in typewriter

This article was co-authored by Melinda S. Gentile, Partner, Peckar & Abramson, P.C., Miami and Cadian T. Baker, Paralegal, Peckar & Abramson, P.C., Miami.

July 9, 2019
Melinda S. Gentile & Cadian T. Baker - Peckar & Abramson, P.C.

The 2019 Florida Legislative Session recently concluded and a number of important construction-related House Bills (HB) and Senate Bills (SB) were presented during the Session. Below is a summary of those construction-related bills set to become law in 2019.

Bills Becoming Law in 2019

HB 1247: Relating to Construction Bonds. This bill passed both the House and the Senate and is awaiting the Governor’s signature. Once the Governor has approved the bill it becomes effective as of October 1, 2019.

This bill addresses how to properly perfect a claim against a contractor’s payment bond.

(1) The Notice of Nonpayment that must be served on the contractor and the surety, must be made under oath and include the following provisions:

The nature of the labor or services performed or to be performed;
The materials furnished or to be furnished;
The amount paid on the account; and if known, the amount owed and the amount to become due.
A Notice of Nonpayment that includes the sums for retainage must specify the portion of the amount claimed for retainage.

(2) A subcontractor, laborer, or material supplier (claimant) who files a fraudulent Notice of Nonpayment loses their rights under the bond. The filing of a fraudulent notice is a complete defense to claimant’s claim against the bond. A notice is fraudulent if the claimant willfully exaggerated the amount due, willfully included a claim for work not performed or materials not furnished or prepared the notice with willful and gross negligence, which resulted in willful exaggeration. However, a minor mistake in the notice, or a good faith dispute as to the amount due, is not considered fraudulent. Please note that this provision mirrors the existing statute relative to a fraudulent lien.

Ms. Gentile may be contacted at mgentile@pecklaw.com

Environmental Roundup – May 2019

Earth globe sitting on grass

Attorney Anthony B. Cavender covers recent environmental law trends.

July 9, 2019
Anthony B. Cavender - Gravel2Gavel

Federal Courts of Appeal

Dam Claims Collapse

On May 7, 2019, the U.S. Court of Appeals for the Eleventh Circuit decided the case of Navelski, et al. v. International Paper Company. After a major storm, a dam constructed by International Paper to serve the operations of its local paper mill, was breached, releasing millions of gallons of water into a nearby creek resulting in the flooding of many homes located downstream from the creek. IP was sued by the homeowners in a class action, alleging negligence and strict liability for conducting an abnormally dangerous activity. The trial court dismissed the strict liability claim, and the jury found IP was not negligent in the operation of the dam. On appeal, the court upheld the jury verdict, agreeing that the verdict was supported by the evidence heard by the jury. The appeals court also agreed that the strict liability claim was properly dismissed as a matter of law because the operation of this dam was not an abnormally dangerous activity under Florida law. The plaintiffs had also argued that the jury should not have been advised that the home county, Escambia County, has applied for a FEMA grant which apparently made the case that some of the downstream homes were naturally prone to flooding. A redacted version of the application was allowed to be shown to the jury, but the appeals court held that the plaintiffs had not demonstrated that the court ruling was prejudicial.

Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com

This House Is Built to Stare Down a Hurricane

July 9, 2019
Jim Efstathiou Jr & Prashant Gopal - Bloomberg

Breezy Point is beautiful in the summertime, a quaint neighborhood sitting on a slim peninsula that juts out into the Atlantic just south of New York City.

In a storm, though, that dreamy setting can become a nightmare.

Picketing Threats

Stick figures holding picket signs

Letters from unions to owners, general contractors and other contractors informing them of the union’s dispute with one or more of the subcontractors may constitute unlawful threats of secondary boycott.

July 9, 2019
Jerry Morales - Snell & Wilmer Under Construction

Letters from unions to owners, general contractors and other contractors informing them of the union’s dispute with one or more of the subcontractors, working at a common construction project site (or common situs), and of the union’s plans to engage in “public informational campaigns” at the site, in furtherance of the dispute, may constitute unlawful threats of secondary boycott.

Unions often send letters to various employers that share a common construction project site, informing them that the union has a dispute with one or more of the subcontractors working or scheduled to work at the same site. In labor law, the employers that do not have a dispute with the union are referred to as “neutral employers,” in contrast with the employers with which the union has the dispute, referred to as “primary employers.”

In the letters, the unions typically describe the reason for the labor dispute (e.g., alleged failure to pay “area standards”), request that the neutrals use their “managerial discretion” not to allow the primary employers to perform work at the project site until the dispute is resolved, and inform that the union will engage in public information campaigns against the primary employer at the common situs. The “public information campaign” is described in the union’s letter as including banner displays, distribution of handbills, picketing and other demonstration activity.

Mr. Morales may be contacted at jmorales@swlaw.com

Number of Women in Construction Rises, but Underrepresentation Persists

July 9, 2019
Joanna Masterson - Construction Executive

The number of women working in construction trades increased 17.6 percent between 2017 and 2018, rising to more than a quarter of a million women (276,000), according to new analysis by the Institute for Women’s Policy Research. This is five-fold better than the 3.7 percent job growth in construction occupations overall.

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

Iconic Seattle Center Arena Roof the Only Piece to Stay in $900-Million Rebuild

Money-Time-Quality triangle with Money in bold red

Mortenson crews must remove the entire existing Seattle Center Arena bowl.

July 9, 2019
Tim Newcomb - Engineering News-Record

The roof covering the under-construction Seattle Center Arena will remain. And it won’t move, even as contractors remake the entire arena beneath it.
OVG-Seattle has started the task of remaking the city-owned structure—and the only major arena within a park in North America—into the home for the expansion NHL Seattle franchise and the start of the 2021 NHL season.

Mr. Newcomb may be contacted at

Trump Tower Is Now One of NYC’s Least-Desirable Luxury Buildings

Hotel building

The 36-year-old building has been turned into a fortress since Trump won the presidency.

July 8, 2019
Shahien Nasiripour - Bloomberg

Trump Tower, once the crown jewel in Donald Trump’s property empire, now ranks as one of the least desirable luxury properties in Manhattan.

The 36-year-old building has been turned into a fortress since Trump won the presidency, ringed with concrete barriers and the two main entrances partially blocked off. It hasn’t been substantially updated in years. And Trump’s name has been a huge turnoff in liberal New York City.

For anyone who owns a unit in the tower, the past two years have been brutal. Most condo sales have led to a loss after adjusting for inflation, property records show. Several sold at more than a 20% loss. By contrast, across Manhattan, just 0.23% of homes over the past two years sold at a loss, according to real-estate data provider PropertyShark, although the firm doesn’t adjust for inflation.

Federal Contractors – Double Check the Terms of Your Contract Before Performing Ordered Changes

Two businessmen across from table with contracts

A recent case highlights the dangers of a contractor relying on the orders of a COR when performing work outside the scope of a contract.

July 8, 2019
Jonathan Schirmer - Ahlers Cressman & Sleight PLLC

As federal contractors may be aware, the general rule when performing a contract for the federal government is that only the contracting officer (“CO”) can bind the government. Often, the CO delegates responsibility to a contracting officer’s representative (“COR”). While in some cases a COR may be able to bind the federal government, the contract may limit that ability exclusively to the CO.

Important for our clients, it is the responsibility of the contractor to determine whether the COR can legally bind the federal government when ordering changes to the scope of work. [1] This is true even when a COR possesses apparent authority to order changes to the work, and when the project is almost exclusively overseen by COR’s. [2]

A recent case highlights the dangers of a contractor relying on the orders of a COR when performing work outside the scope of a contract. In Baistar Mechanical Inc., a contractor was awarded a maintenance and snow removal contract with the federal government. The contract expressly stated that only the CO had contracting authority regarding additional or changed work. [3] However, Baistar, the contractor, argued it was directed by the contracting officer’s representatives to perform work outside of the contract.

Mr. Schirmer may be contacted at jonathan.schirmer@acslawyers.com


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