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Crack going through house

Before tearing out or fixing defective work, consider the need to allow the opposing party to inspect, test and document it.

When Construction Defects Appear, Don’t Choose Between Rebuilding and Building Your Case

Monday, October 11, 2021 — Curtis Martin - ConsensusDocs

When construction defects occur during construction, they intensify pressure from a schedule that may already be tight. Defects must be analyzed, confirmed, removed, and replaced and this can be time consuming. Or course, a construction schedule rarely anticipates defects, demolition, and rework and the owner will still expect the project to be completed on time; however, pressing forward with immediate remediation may have unintended consequences.

Before starting demolition, consider the evidentiary doctrine of spoliation. Spoilation occurs when a party destroys or unreasonably deprives another party of evidence and courts have imposed sanctions on a party that deprives an opponent of evidence. The doctrine has historically concerned documents, but its application has extended to electronic data, and courts also apply it to building conditions in construction defects cases. So, before tearing out or fixing defective work, consider the need to allow the opposing party to inspect, test and document it.

Imagine this scenario. The concrete in a slab placed by your subcontractor shows low compressive strength results in the 28-day cylinder tests. Tearing out the slab and replacing it will put you at least a month behind schedule and you don’t want to waste any time before removing and replacing it. Nevertheless, while you’re rebuilding the defective slab, be mindful that you are also building a case. If you plan to recover the costs you incur because of the defective concrete from the responsible parties, you should allow the subcontractor (and possibly the concrete supplier and other implicated parties) to examine, preserve, and/or test the work in question. Failure to do so may subject you to spoliation sanctions and jeopardize your right to recover damages.

Reprinted courtesy of Curtis Martin, Peckar & Abramson

Mr. Martin may be contacted at cmartin@pecklaw.com

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Law scales of justice

What happens when the cost of repairing or removing defective work results in loss of use of the tangible property which is not physically injured?

Eleventh Circuit Finds No “Property Damage” Where Defective Component Failed to Cause Damage to Other Non-Defective Components

Monday, October 11, 2021 — Anthony L. Miscioscia & Margo Meta - White and Williams

In Florida, damage caused by faulty workmanship constitutes “property damage;” however, the cost of repairing or removing defective work does not. Amerisure Mutual Insurance Company v. Auchter Company, 673 F.3d 1294 (11th Cir. 2012) (Auchter). But what happens when the cost of repairing or removing defective work results in loss of use of the tangible property which is not physically injured?

The United States Court of Appeals for the Eleventh Circuit was recently faced with this question in Tricon Development of Brevard, Inc. v. Nautilus Insurance Company, No. 21-11199, 2021 U.S. App. LEXIS 27317 (11th Cir. Sep. 10, 2021). Tricon arose out of the construction of a condominium. Tricon was hired to serve as general contractor for the project and hired a subcontractor to fabricate and install metal railings. The railings installed by the subcontractor were defective and damaged, improperly installed, and failed to meet the project’s specifications. Tricon filed an insurance claim with Nautilus Insurance Company, the subcontractor’s commercial general liability insurer, for the cost to remove and replace the railings.[1]

Reprinted courtesy of Anthony L. Miscioscia, White and Williams and Margo Meta, White and Williams

Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Ms. Meta may be contacted at metam@whiteandwilliams.com


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Insurance notebook file

The Ninth Circuit Court of Appeals ruled on a trio of cases involving COVID-19 business interruption losses, in a series of written opinions with results favoring the insurers.

Ninth Circuit Court Weighs In On Insurance Coverage For COVID-19 Business Interruption Losses

Monday, October 11, 2021 — Rondi J. Walsh - Newmeyer Dillion

On October 1, 2021, the Ninth Circuit Court of Appeals ruled on a trio of cases involving COVID-19 business interruption losses, in a series of written opinions with results favoring the insurers. Despite the slate of wins for insurers in this round of cases, these rulings are limited to cases where policyholders either did not allege the presence of COVID-19 on their premises causing “physical alteration” of the property itself, or had a virus exclusion in their policy, or both. This leaves room for future cases potentially ruling in favor of coverage where the insureds allege the presence of coronavirus on the premises, and that there was a detrimental physical alteration of the property as a result. To date, the Ninth Circuit has not ruled on such a situation.

RULING 1: Mudpie v. Travelers Casualty Insurance Co. of America

The Ninth Circuit first considered a proposed class action brought by a children’s store operator, Mudpie. Mudpie sought business income and extra expense coverage from Travelers after California and local authorities issued shutdown orders impacting Mudpie’s operations due to COVID-19. (Mudpie, Inc. v. Travelers Casualty Insurance Company of America, Case No. 20-16858, --- F.4th --- (9th Cir. Oct. 1, 2021).) Travelers denied coverage, asserting that the claim did not involve “direct physical loss of or damage to” property “caused by or resulting from a covered Cause of Loss.” Travelers also denied coverage under language excluding “loss or damage caused by or resulting from any virus…that induces…physical distress, illness or disease.” Applying California law, the trial court agreed with Travelers on both accounts.

Reprinted courtesy of Rondi J. Walsh, Newmeyer Dillion

Ms. Walsh may be contacted at rondi.walsh@ndlf.com

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Preparing for Another Wave of Construction Project Demand

October 11, 2021 — Brian Cooper & Jackie Robinson - Construction Executive

First, the pandemic changed the way people live and work. Then, it caused massive disruption in the supply chain, leading to a shortage of most materials like lumber, steel, pipe, etc. Now the country is facing a lack of skilled labor across many industries. This trifecta of cultural shifts has put a heavy burden on the construction industry in the midst of increasing demand for its products and services.

What’s driving this wave of construction demand? Simply put, Americans embraced the new normal, including flexible work and school options. Business executives are reimagining the physical workplace and homeowners are moving or renovating to meet a new hybrid lifestyle.

Reprinted courtesy of Brian Cooper and Jackie Robinson, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Hurricane Ida Could Cost Insurers as Much as $30 Billion, Swiss Re Says

October 11, 2021 — Christian Baumgaertel - Bloomberg

The insurance industry could face claims of as much as $30 billion from hurricane Ida, which caused extreme wind and flood damage across parts of the U.S. after making landfall in late August.

Insured losses from the storm, the second-most intense hurricane to hit the state of Louisiana, will probably range between $28 million and $30 million, the reinsurer said in a statement Tuesday. It estimated its own cost from claims related to the storm at about $750 million.

Omnis Report Demonstrates Residential Construction Boom

October 11, 2021 — Beverley BevenFlorez – CDJ Staff

Despite “unprecedented labor and construction shortages,” home construction has risen across the country, data from a report by Omnis shows.

Omnis “analyzed the data from 368 permit-issuing municipalities across the country, to understand new construction trends at both the national and local levels.” They focused their attention “on two periods: the number of permits issued in the first six months of 2020 and the number of permits issued in the first six months of 2021.”

Across the nation, the numbers demonstrated an “undeniable boom in new residential construction.” For instance, “over the past two years, permits issued increased 36 percent nationally, for all sized residential projects. For single-family homes, the increase was 30 percent. For large buildings containing five or more units, the increase was 21 percent. Also during this period, the average value of a newly constructed single-family home increased seven percent.”

CLE Bootcamp

October 11, 2021 — Beverley BevenFlorez – CDJ Staff

The 20th annual CLE Bootcamp is a “way to earn a lot of CLE Credits in a unique and entertaining format.” It includes “timely and relevant issues in the law covering a wide span of specialties” such as Real Estate and Housing, Climate Change, Insurance Law, Construction Defects, and three hours of Ethics.

December 7th-8th, 2021
Washington Athletic Club
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Sun sets over old ruined building

It is imperative that construction industry professionals be aware of the legal issues that are raised by such ill-fated events.

Broken Buildings: Legal Rights and Remedies in the Wake of a Collapse

Monday, October 11, 2021 — David J. Pfeffer - Construction Executive

A tragedy transpired on June 24 in Surfside, Florida, when the Champlain Towers South suddenly fell, becoming one of the country’s most deadly unintentional building collapses. It is imperative that construction industry professionals be aware of the legal issues that are raised by such ill-fated events.

Who Is Held Responsible?

Who can be held responsible for such disasters lies among several possible parties:

  • The building’s design professionals, particularly its architects and structural engineers. They are charged with ensuring that the building’s design is safe. They must take many factors into account, including, but not limited to, the materials that are used, the foundation, the weight and the height.
  • General contractors and the subcontractors. General contractors implement the design created by the architects and engineers and are responsible for appropriate materials. The general contractor also supervises the subcontractors aiding with multiple areas of the building’s construction and which also share the responsibility of executing the design and maintaining the building’s structural integrity.

Reprinted courtesy of David J. Pfeffer, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. Pfeffer may be contacted at dpfeffer@tarterkrinsky.com

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Hand raised in stop

A recent decision on the issue from the federal Southern District of New York sheds light on New York law regarding this pressing issue.

Federal Court in New York Court Dismisses Civil Authority Claim for COVID-19 Coverage

Monday, October 11, 2021 — Eric D. Suben - Traub Lieberman

Courts nationwide have been grappling with coverage for business interruption claims arising from closures occasioned by the COVID-19 pandemic, with mixed results by jurisdiction. A recent decision on the issue from the federal Southern District of New York sheds light on New York law regarding this pressing issue.

In Elite Union Installations, LLC v. National Fire Insurance Company of Pittsburgh, PA, 2021 WL 4155016 (Sept. 13, 2021), directives issued by governmental authorities required the insured construction company to shut its doors, leading to a layoff of some employees while others continued to work from home. The insured made a claim under its commercial property coverage for damage to its premises, which it claimed were rendered “uninhabitable” and required repair in the form of alterations to comply with social distancing requirements. In the ensuing coverage litigation, National Union moved to dismiss the complaint alleging covered first-party property damage defined in the policy as “direct physical loss of or damage to property.”

Reprinted courtesy of Eric D. Suben, Traub Lieberman

Mr. Suben may be contacted at esuben@tlsslaw.com

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White question marks on ground

There were enough questions regarding the statute of limitations defense that the Surety was well within its rights to settle the claim and therefore the Court dismissed the Motion for Summary Judgment.

Is Settling a Bond Claim in the Face of a Seemingly Clear Statute of Limitations Defense Bad Faith?

Monday, October 11, 2021 — Christopher G. Hill - Construction Law Musings

We have often discussed payment and performance bonds here at Construction Law Musings, most often in the context of payment bond claims relating to federal and state-owned. construction projects. A late 2020 case out of the Eastern District of Virginia federal court examined what happens after such a claim, in this case, based upon a developer’s subdivision bonds, is made and negotiations commence between the surety and the claimant. Specifically, Fidelity & Deposit Co. of Maryland v. Ransgate Corp., et. al. looked at claims for indemnity by a surety and the principal/indemnitors in the event that the Surety settled such a claim.

In the Ramsgate case, Surety provided two separate subdivision subcontract bonds to Ramsgate. Pursuant to those bonds and the indemnity clause of its indemnity agreement, the Surety sought reimbursement of its $80,000.00 settlement payment to the local building authority that it paid to resolve what was originally a claim for over $420,000.00 by the City. The project was started in 2002 and after many years of failures to complete (according to the City of Suffolk), the City made its claim for expenses in 2017. Ramsgate claimed that it completed the subdivisions in 2003.

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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CONSTRUCTION DEFECT NEWS
Credit loan mortgage signpost

Attorney David Adelstein analyzes Custom Design Expo, Inc. v. Synergy Rents, Inc.

Difficulty in Defending Rental Supplier’s Claim Under Credit Application

Monday, October 11, 2021 — David Adelstein - Florida Construction Legal Updates

In construction, one of the easiest claims to prove from a burden of proof standpoint is that of a supplier, particularly a rental equipment supplier. Oftentimes, these claims are more in the realm of a collection claim because a rental supplier will generally be able to establish that a party opened an account with them, signed a credit application and personal guaranty, and equipment was rented and even delivered to a specific jobsite during set dates. Defending these claims is not so easy. And even if there is a defense as it relates to some amounts, there needs to be an upside challenging those amounts when factoring in the attorney’s fees, costs, and interest on the other amounts and on continuing the dispute.

An example of the difficulty in defending these claims from rental suppliers can be found in the recent case of Custom Design Expo, Inc. v. Synergy Rents, Inc., 2021 WL 4125806 (Fla. 2d DCA 2021). Here, a contractor rented equipment (e.g, forklifts) from a supplier. The equipment was rented on an open account and the contractor signed a personal guaranty. The supplier sued the contractor for about $81,000 that remained unpaid. The supplier appeared to waste no time and moved for summary judgment with an affidavit from its credit manager. The credit manager affirmed that the contractor executed a credit application for purposes of renting equipment on an open account, the application contained a personal guaranty, and the credit application formed the basis of a contract. The credit manager authenticated the credit application and affirmed that the contractor owed it about $81,000 in unpaid amounts for rental equipment that was furnished under the credit application.

Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.

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

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Woman and man reading book

This handbook intends to be a practical guide on policyholder issues, both homeowners and business owners alike, when preparing for hurricane season and handling claims after a loss due to a hurricane.

Hurricane Handbook: A Policyholder's Guide to Handling Claims during Hurricane Season

Monday, October 11, 2021 — Tracy Alan Saxe, Kelly A. Johnson, Samantha M. Oliveira & R. G. Nelson - Saxe Doernberger & Vita

SDV's Natural Disaster Recovery Group presents the Hurricane Handbook: A Policyholder's Guide to Handling Claims during Hurricane Season. This handbook intends to be a practical guide on policyholder issues, both homeowners and business owners alike, when preparing for hurricane season and handling claims after a loss due to a hurricane. The handbook is a living document that will evolve over time, as our Natural Disaster Recovery Group members continue to contribute new and expansive content on the complex issues arising in this area. Remember to check back for additional information and updated content regarding the Hurricane Season Policyholder’s Handbook.

I. Are You Adequately Insured for a Hurricane?
Understanding the various types of coverage policyholders can purchase is vital to weathering the financial storm following a natural disaster.

Reprinted courtesy of Tracy Alan Saxe, Saxe Doernberger & Vita, Kelly A. Johnson, Saxe Doernberger & Vita, Samantha M. Oliveira, Saxe Doernberger & Vita and R. G. Nelson, Saxe Doernberger & Vita

Mr. Saxe may be contacted at TSaxe@sdvlaw.com
Ms. Johnson may be contacted at KJohnson@sdvlaw.com
Ms. Oliveira may be contacted at SOliveira@sdvlaw.com
Ms. Nelson may be contacted at RNelson@sdvlaw.com


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Glass ceiling

Significantly, Lewis Brisbois also ranked among the top 25 law firms included in the National Law Journal's 2021 Women in Law Scorecard.

Lewis Brisbois Ranks 11th in Law360’s Glass Ceiling Report on Gender Parity in Law Firms

Monday, October 11, 2021 — Lewis Brisbois

Lewis Brisbois has ranked 11th in Law360’s 2021 Glass Ceiling report, moving up from 37th place in 2020. The report measures female presence and gender parity in law firms, this year evaluating 269 organizations.

As described in the Law360 Pulse article titled "Glass Ceiling Report: How Does Your Firm Stack Up?," the publication redesigned its report this year to evaluate female attorneys’ industry standing from a new angle by showing how the percentage of women across three levels within law firms compared with the potential marketplace of hires. This evaluation resulted in the firms’ "pipeline scores," which measure a firm’s percentage points above or below a set of benchmarks assembled with data from the American Bar Association and previous Law360 submissions.

Lewis Brisbois’ Los Angeles Co-Managing Partner Jana Lubert and Chief Strategy Officer Janet Eskow, the co-chairs of Lewis Brisbois' Women's Initiative, each expressed excitement about the report, along with resolve to further promote gender diversity. "We are proud that Lewis Brisbois has moved up in these rankings because we have focused diligently on hiring and retaining the best legal talent from a diverse pool of candidates nationwide," Ms. Lubert said. "At the same time, we recognize that there is more to be done to further improve gender equity and inclusion. We remain committed to this important goal, both as it pertains to Lewis Brisbois and to the entire legal industry," she added.

Reprinted courtesy of Lewis Brisbois
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Most Expensive Construction Mistakes in the World (Part 3)

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CONSTRUCTION DEFECT NEWS
Businessman in front of multiple tech devices

John Toohey and his industry peers recently presented on the topic Handling Construction Defect Cases in Arbitration: The Good and the Bad.

Register and Watch Partner John Toohey Present on the CLM Webinar Series!

Monday, October 11, 2021 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

Bremer Whyte Brown & O’Meara is proud to announce that Partner John Toohey was invited to speak on a panel for the CLM Webinar Series alongside Attorney Rembold Hirschman, and Senior Claims Examiner Brett Reuter. John and his industry peers recently presented on the topic Handling Construction Defect Cases in Arbitration: The Good and the Bad.

About the webinar: Unfortunately, many construction projects end in dispute and the parties frequently find themselves in the middle of uncharted territory – arbitration! Subscribe and watch as they explore the pitfalls, debunk the myths, and discuss the benefits of arbitration in construction disputes.

About John Toohey: John H. Toohey is a Partner for Bremer Whyte Brown & O’Meara, LLP. Mr. Toohey is an A.V. Preeminent rated attorney with a practice focused on contract negotiation and litigation, complex product liability, and construction. He has successfully represented hundreds of clients in alternative dispute resolution and trial, including multiple cases to jury verdict.

Reprinted courtesy of Dolores Montoya, Bremer Whyte Brown & O'Meara LLP
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Person signing paperwork

The study recommends “multiple lines of defense for the Texas coast.”

Corps Releases Final Report on $29B Texas Gulf Coast Hurricane Defense Plan

Monday, October 11, 2021 — James Leggate - Engineering News-Record

A $28.87 billion plan to protect the Texas Gulf Coast’s residents and infrastructure against hurricanes and storm surge with a series of coastal storm risk management and ecosystem restoration projects took a step closer to reality Sept. 10 with the release of a final feasibility report and final environmental impact statement from the U.S. Army Corps of Engineers and Texas General Land Office (GLO).

Reprinted courtesy of James Leggate, Engineering News-Record

Mr. Leggate may be contacted at https://www.enr.com/leggatej@enr.com

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Human eye

As work continues on projects throughout the region, firms are wary of what 2022 holds as the pandemic continues to change client needs.

Subcontractors Eye 2022 with Guarded Optimism

Monday, October 11, 2021 — Louise Poirier - Engineering News-Record

While work continues to be plentiful for specialty contractors across the five-state region of Arkansas, Louisiana, Mississippi, Oklahoma and Texas, concerns remain for how the project landscape will continue to evolve as the impacts of the COVID-19 pandemic continue to weigh on the world.

Reprinted courtesy of Louise Poirier, Engineering News-Record

Ms. Poirier may be contacted at poirierl@enr.com

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Abstract blue globe technology

Researchers continue to look for new ways machines and technology can be used to solve complex engineering challenges.

Smart Construction and the Future of the Construction Industry

Monday, October 11, 2021 — Caroline A. Harcourt, James W. McPhillips & Adam J. Weaver - Gravel2Gavel Construction & Real Estate Law Blog

“Smart Construction” is a loose term but generally refers to the development and use of processes and applications that improve construction planning and the management of projects (thereby potentially streamlining costs of construction).

The increased deployment of collaboration tools (e.g., Zoom, Microsoft Teams, WebEx) and other cloud-based technology solutions during the COVID-19 pandemic will invariably result in more efficient project management in construction going forward. These type of efficiencies are sorely needed, especially as the industry is trying to recover from supply chain issues, lockdown challenges and social distancing requirements resulting from the pandemic.

However, smart construction goes well beyond those basic business efficiency and collaboration tools. For example, drones are regularly used on construction projects to monitor site conditions, detect problems, and assess conditions safely. Meanwhile, newer technologies such as “programmable” cement, “self-healing” concrete, and autonomous and robotic machinery are increasingly being deployed in construction projects. And yet, these current technology solutions are just the tip of the iceberg as researchers continue to look for new ways machines and technology can be used to solve complex engineering challenges.

Reprinted courtesy of Caroline A. Harcourt, Pillsbury, James W. McPhillips, Pillsbury and Adam J. Weaver, Pillsbury

Ms. Harcourt may be contacted at caroline.harcourt@pillsburylaw.com
Mr. McPhillips may be contacted at james.mcphillips@pillsburylaw.com
Mr. Weaver may be contacted at adam.weaver@pillsburylaw.com



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Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

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714.701.9180