“Bound by the Bond”

Construction meeting over plans

The case involved the construction of an 85-story skyscraper in midtown Manhattan, and the performance of the subcontract for the building’s superstructure.

September 2, 2024
Daniel Lund III - Lexology

A New York trial court granted judgment in favor of a performance bond surety on a construction project, based upon the failure of the claiming party to abide by the terms of the bond.

The “AIA Document A312” bond form – described by the court (quoting surety law authority) to be “one of the clearest, most definitive, and widely used type of traditional common law ‘performance bonds’ in private construction” – contains various procedures which must be honored as a “condition precedent to an action to recover” on the bond/against the surety. One of those prerequisites is a “declaration of default” concerning the contractor principal (here, a subcontractor).

The case involved the construction of an 85-story skyscraper in midtown Manhattan, and the performance of the subcontract for the building’s superstructure. The bonded contract was at a value of approximately $25,000,000 and obligated the sub to provide a performance bond “in a form similar to the [A312 bond],” and which was otherwise satisfactory to the obligee/construction manager.

Mr. Lund may be contacted at daniel.lund@phelps.com


Singer Akon’s Multibillion-Dollar Futuristic City in Africa Gets Final Notice

Urban skyline

Akon’s African metropolis plagued by controversies and delays.

September 2, 2024
Katarina Hoije & Fred Ojambo - Bloomberg

A single arched concrete block juts out of a field in Senegal where R&B singer Akon first laid the foundation stone for his $6 billion metropolis four years ago.

The West African nation granted the artist 136 acres of land on its Atlantic Coast in 2020 to build his Akon City — envisioned as a real-life Wakanda, the fictional country from Marvel Studios’ Black Panther films.

Complete with condominiums, amusement parks and a seaside resort in gravity-defying skyscrapers rising above the rural landscape, Akon City would run on solar power and his Akoin cryptocurrency, the American-Senegalese singer said during a flashy presentation in Senegal’s capital, Dakar.

Today, goats and cows graze the deserted pasture 60 miles south of Dakar, and authorities are growing increasingly impatient.

Reprinted courtesy of Katarina Hoije, Bloomberg and Fred Ojambo, Bloomberg


The Benefits of Trash Talking: A Cautionary Tale of Demolition Gone Wrong

3d characters holding hands reaching for another

This case study explores the risks of miscommunication when it comes to demolition.

September 2, 2024
Joshua Levy, Anne O'Meara & Kimberly Gutierrez - Construction Executive

That sinking feeling has crossed everyone’s mind at some point: "Did I accidentally throw out...?” It can happen to anyone, from valuable jewelry to uncashed checks or even (in the case of one contractor) to fire-pump control cabinets.

Demolishing the wrong equipment is a concern construction and demolition contractors should review before beginning any project. Recently, one general contractor and its demolition subcontractor would have benefitted from a more detailed “trash” talking session, which could have helped them avoid a dumpster-fire of a legal dispute.

In this case, the general contractor was contracted to renovate a hangar for a military base. The company subcontracted the demolition work to a local, family-owned contractor to demolish aspects of the hangar’s fire-suppression room. The two companies met many times, from planning to daily field walk-downs. They discussed that any equipment that was tagged with bright orange tags would remain in the fire-suppression room. The contractor also reviewed the demolition plans with the demolition company, detailing what should and should not be removed.

Reprinted courtesy of Joshua Levy, Anne O'Meara & Kimberly Gutierrez, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


From ‘Cuckoo’s Egg’ to Today’s Cyber Threat Landscape

Finger on digital hologram

A 2023 survey found that 59% of AEC firms had faced a cybersecurity threat within two years.

September 2, 2024
Aarni Heiskanen - AEC Business

In 1990, I read an exciting book titled The Cuckoo’s Egg: Tracking a Spy Through the Maze of Computer Espionage. The author, astronomer Clifford Stoll, managed computers at Lawrence Berkeley National Laboratory (LBNL) in California. He was tasked with resolving an accounting error of 75 cents in the computer usage accounts.

The tedious process eventually led him to disclose a German hacker who had gained access to U.S. military secrets through LBNL’s computers. He had been selling information to the KGB for years.

Today’s threat landscape in construction
The LBNL incident was one of the first—if not the first—documented cases of a computer break-in. Fast-forward to today and cyber-attacks are an everyday phenomenon that occurs more often in construction.

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


Federal District Court Addresses Material Misrepresentation in First Party Property Damage Claim

Law keys on keyboard

Subsequent to a pipe burst event which caused damage to a number of the floors in the insured building, the insured submitted a claim to Travelers and also submitted a damage estimate of the damages at the property.

August 26, 2024
James M. Eastham - Traub Lieberman

In Pittsfield Dev. LLC v. Travelers Indem. Co., 2024 U.S. Dist. LEXIS 117530 (N.D. Ill. July 3, 2024), the United States District Court for the Northern District of Illinois addressed an alleged material misrepresentation by an insured during the course of the adjustment of a water loss claim at an insured property. Subsequent to a pipe burst event which caused damage to a number of the floors in the insured building, the insured submitted a claim to Travelers and also submitted, with the assistance of a retained public adjuster, a damage estimate of the damages at the property. Included within the estimate submitted by the insured was a line item for "Lead Paint & Asbestos Removal" with a corresponding dollar amount of $1,140,000. It was this line item which formed the basis of Travelers' claim of misrepresentation.

At his deposition, the public adjuster testified that the $1,140,000 figure was an oral estimate received over the phone from an asbestos remediation company. Travelers disputed the testimony and contended that no such estimate was ever provided. For support, Travelers pointed to deposition testimony from a remediation company employee that while rough estimates were occasionally given verbally, the largest over the phone estimate she could recall was in the $20,000-$25,000 range. It was also disputed that the company would ever provide an oral quote of that magnitude sight unseen, especially since the largest project the remediation company had ever completed was less than $250,000.

Mr. Eastham may be contacted at jeastham@tlsslaw.com


Nine ACS Lawyers Recognized as Super Lawyers – Two Recognized as Rising Stars

Shooting star

Ahlers, Cressman, & Sleight is pleased to announce that nine members of their firm have been selected to the 2024 Washington Super Lawyers list.

August 26, 2024
Ahlers Cressman & Sleight PLLC

Going outside the norm of our blogs, which usually discuss construction related issues, Ahlers, Cressman, & Sleight is pleased to announce that nine members of our firm have been selected to the 2024 Washington Super Lawyers list.

Each year, a rigorous process that involves a nomination by peers and a third-party verification of honors, awards, verdicts, settlements, and other criteria relating to their work as an attorney, aims to select no more than five percent of the lawyers in Washington state from no more than seventy practice areas for this distinction. As mentioned, the first step in the process is to be evaluated on their work as an attorney, next candidates are evaluated by their peers and given ratings based on the information known about their work. Finally, candidates are grouped into four firm-size categories and final selections are made. The grouping process is done so that candidates are compared fairly to their peers by firm size, eliminating the potential unfairness that comes with comparing large and small firm outcomes and attorney practices.

The Rising Star list involves an even narrower criteria than the Super Lawyers list. The initial process is the same, however, candidates for the Rising Stars list must be under the age of forty or have less than ten years of experience. For this category less the two and a half percent of lawyers in Washington are selected, making this quite a feat for those who have accomplished the honor.


California Supreme Court Finds Vertical Exhaustion Applies to First-Level Excess Policies

Illustration of judge sitting behind bench

By 2004, more than 24,000 claimants had filed product liability claims against Kaiser alleging that they had suffered bodily injury as a result of exposure to Kaiser's asbestos products.

August 26, 2024
Tred R. Eyerly - Insurance Law Hawaii

Addressing issues left open in its seminal decision in Montrose, the California Supreme Court found that the language in the first-level excess policies meant that the insured could access the policies upon exhaustion of the directly underlying policies purchased for the same policy period. Truck Ins. Exchange v. Kaiser Cement & Gypsum Corp., 2024 Cal. LEXIS 3271 (Cal. June 17, 2024).

From 1944 through the 1970's, Kaiser manufactured asbestos-containing products at numerous different facilities. By 2004, more than 24,000 claimants had filed product liability claims against Kaiser alleging that they had suffered bodily injury as a result of exposure to Kaiser's asbestos products. Kaiser tendered these claims to Truck, one of several primary insurers that had issued CGL policies to Kaiser.

In 2001, Truck initiated this coverage action to determine its indemnity and defense obligations to Kaiser. Truck later amended its complaint to add a cause of action for contribution against several of Kaiser's excess insurers. The issue presently before the court was whether Truck was entitled to contribution from various coinsurers that issued first-level excess policies to Kaiser during the period in question.

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


Viva La France! 2024 Summer Olympics Construction Features Sustainable Design, Including, Simply Not Building at All

Stadium with lights

Olympic construction costs have skyrocketed, often vastly exceeding the planned budgets of the host cities.

August 26, 2024
Garret Murai - California Construction Law Blog

If you’re like me and many others you’ve probably been watching the 2024 Summer Olympics in Paris, France. We were in Paris last year and we passed the construction site of the Aquatics Centre, one of only three new permanent facilities that was constructed for this year’s Olympics. On a side note, Parisian Uber drivers are some of the most aggressive drivers I’ve seen, replete with honking, hand gestures, and cursing at other drivers and pedestrians in, of course, French. Putain!

In recent history, Olympic construction costs have skyrocketed, often vastly exceeding the planned budgets of the host cities, and, in recent years, has caused even some host city hopefuls to reconsider whether to even throwing their hats in the ring. The 2020/2021Summer Olympics in Tokyo, for example, had an original budget of $7.5 billion. The actual cost was over $13 billion and, depending on what beans you count, may have been over twice that! Paris seeks to change all of this.

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


Full Coverage for Phishing Scam Not Established

August 26, 2024
Tred R. Eyerly - Insurance Law Hawaii

The California Court of Appeal affirmed the trial court's dismissal of the insured's claim for full coverage after suffering from the phishing scam. Door Sys. v. CFC Underwriting Limited, 2024 Cal. App. Unpub. LEXIS 3441 (Cal. Ct. App. June 3, 2024).

Door Systems was a leading distributer of integrated fire doors and fire protection smoke curtains. It alleged that on January 20, 2021, someone impersonating its President sent electronic correspondence to one of its clients, X-Act Finish & Trim, Inc. (X-Act). At the time, X-Act owed Door Systems $395,000. The impersonator demanded $395,000. X-Act made payment, but was later informed by Door Systems that the money had not been deposited into Door System's account. A subsequent investigation recovered $160,419.20, leaving a balance of $234,580 that Door Systems sought to recover from its insurer, CFC Underwriting Limited, under a cybersecurity policy.

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


Bremer Whyte Sets New Precedent in Palos Verdes Landslide Litigation

Rocks

Bremer Whyte’s litigation team contended that their clients could not be held legally responsible for natural soils movement and that geological issues, including landslides, have been ongoing in Palos Verdes for decades.

August 26, 2024
Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

In what is believed to be a groundbreaking new precedent, Bremer Whyte Brown & O’Meara’s Los Angeles litigation team has obtained a landmark ruling on behalf of residents in the “Portuguese Bend” neighborhood of Palos Verdes, California. Congratulations to Partner Michael D’Andrea and Senior Associate Shelly Mosallaei in receiving this result for our clients.

Plaintiff, a real estate developer, sued a number of local residents and property owners, including our client, alleging that their failure to address landslides and geological disturbances around Plaintiff’s property constituted a legal trespass and nuisance. Plaintiff alleged that its plans to develop multiple lots in Palos Verdes was thwarted because Defendant’s soil and land encroached onto Plaintiff’s property. Plaintiff’s suit against multiple residents created an uproar in the community regarding who was ultimately responsible (if anyone) for natural soils movement that has plagued this neighborhood for years.


Kahana Feld Partner Jeff Miragliotta and Senior Associate Rachael Marvin Obtain Early Dismissal of Commercial Litigation Cases in New York and New Jersey

Businesswoman holding clock

KF attorneys successfully argued that the statute of limitations had run for each of plaintiff’s claims by utilizing a decision from the Supreme Court of New Jersey in an underlying case filed against Union County.

August 26, 2024
Rachael Marvin - Kahana Feld

KF attorneys Jeff Miragliotta and Rachael Marvin recently secured early dismissal for a commercial real estate client on pre-answer motions to dismiss for two cases involving disputes over commercial properties in Union County, New Jersey and Suffolk County, New York.

Plaintiff argued it was entitled to damages in excess of 50 million dollars, including punitive damages, for claims involving trade libel, defamation, conspiracy, and tortious interference with contract and prospective economic advantage for reports that were prepared in connection with the use of a commercial building in Union County, New Jersey. KF attorneys successfully argued that the statute of limitations had run for each of plaintiff’s claims by utilizing a decision from the Supreme Court of New Jersey in an underlying case filed against Union County.

Ms. Marvin may be contacted at rmarvin@kahanafeld.com


NAHB Professional Women in Building Week

August 26, 2024
Beverley BevenFlorez – CDJ Staff

The NAHB Professional Women in Building Week (PWB Week) showcases “the achievements of women across all facets of the industry and the efforts to promote, train, advance and add more women in the field.” The NAHBNow blog will provide “fresh news and content about women in building each day.” Each day of the PWB week will feature a different topic. Monday, September ninth’s theme is “support the residential construction industry’s next generation.” Tuesday and Thursday will feature Shop Talks, “How to Recruit and Retain Women in the Residential Construction Industry” and “Allies for Women in the Residential Construction Industry.” Wednesday will allow participants to “learn about women making an impact in the industry" and will showcase "PWB award winners from over the years.” Friday will be about “celebrating PWB members and local councils with a social media takeover.”

September 9th-13th, 2024


Lexology Panoramic: Construction 2025

August 26, 2024
Jerry P. Brodsky, Denis Serkin & Michael S. Zicherman - Peckar & Abramson, P.C.

P&A partners Jerry P. Brodsky, Denis Serkin, and Michael S. Zicherman, served as exclusive contributing editors and authors of Lexology’s Panoramic: Construction 2025 – US and Global guide. This guide, formerly known as Getting the Deal Through, provides a comprehensive international expert analysis in key areas of law, practice, and regulation for construction industry members, construction-related legal professionals, and business providers.

Reprinted courtesy of Jerry P. Brodsky, Peckar & Abramson, P.C., Denis Serkin, Peckar & Abramson, P.C. and Michael S. Zicherman, Peckar & Abramson, P.C.

Mr. Brodsky may be contacted at jbrodsky@pecklaw.com
Mr. Serkin may be contacted at dserkin@pecklaw.com
Mr. Zicherman may be contacted at mzicherman@pecklaw.com


Colorado Court of Appeals’ Ruling Highlights Dangers of Excessive Public Works Claims

Vintage steam train

The Colorado Court of Appeals reviewed a complex contract dispute related to the design and construction of a transit rail line.

August 26, 2024
David M. McLain – Colorado Construction Litigation

In the case of Ralph L. Wadsworth Construction Company, LLC v. Regional Rail Partners (2024 COA 78), the Colorado Court of Appeals reviewed a complex contract dispute related to the design and construction of a transit rail line. The project, commissioned by the Regional Transportation District (“RTD”), involved a collaboration between Regional Rail Partners and Ralph L. Wadsworth Construction Company (“Wadsworth”) to build the North Metro Rail Line between Denver Union Station and Thornton.

Key Facts:

  1. Contracts and Payments: Regional Rail Partners contracted with Wadsworth to perform specific construction tasks with a total contract value of $60,210,783. By the time of the trial, Regional Rail had paid almost $58 million of this amount.
  2. Disputes and Delays: The project faced numerous delays and disputes, leading to Wadsworth claiming significant financial damages attributed to these disruptions. In April 2018, Wadsworth’s expert estimated that Regional Rail owed them $12,408,496.60.

Mr. McLain may be contacted at mclain@hhmrlaw.com


Homebuilder D.R. Horton Soars to Record on Strong Profit Margin

August 26, 2024
Prashant Gopal - Bloomberg

D.R. Horton Inc. shares soared to a record high after the homebuilder reported a stronger-than-expected quarterly profit margin and expectations for lower mortgage rates lifted investor optimism.

The company’s gross margin for the quarter through June was 24%, according to Bloomberg Intelligence analyst Drew Reading. That beat D.R. Horton’s earlier guidance and the consensus of analysts surveyed by Bloomberg. The builder said it expects closings for 90,000 to 90,500 homes for its full fiscal year, which ends Sept. 30. The top end of that forecast also beat analysts’ expectations.

The shares surged 10% to an all-time high of $173.82 at 11:26 a.m. New York time.


Real Estate & Construction News Roundup (7/17/24) – Housing Inflation to Remain High, Proptech Investment to Fall and Office Vacancy Rates to Reach Peak in 2025

Newspaper

Pillsbury's Real Estate & Construction Law Team discusses recent industry news.

August 26, 2024
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog

In our latest roundup, construction backlog to see positives signs, regional banks to be conservative on buybacks, U.S. metro areas to permit few new housing units, and more!

  • Venture capital investments in proptech and adjacent companies fell 14.3% in the first half of the year. (Leslie Shaver, Multifamily Dive)
  • The expectation of interest rate cuts by the Federal Reserve later this year due to easing inflation and cooling economic growth is a positive sign for construction backlog. (Sebastian Obando, Construction Dive)
  • The U.S. office real estate sector is now in three markets, each with different performance, but the overall office vacancy rate will reach a 21.6% peak in the second half of 2025. (Nish Amarnath, Construction Dive)

Benefit of the Coblentz Agreement and Consent Judgment

Person pointing where to sign document

In Barrs v. Auto-Owners Ins. Co., 2024 WL 3673089 (11th Cir. 2024), an owner asserted a construction defect claim against its contractor.

August 26, 2024
David Adelstein - Florida Construction Legal Updates

If you are not familiar with the concept of what is commonly known as a Coblentz agreement relative to an insurance coverage dispute, review these prior postings (here and here and here). This is a good-to-know agreement if you are a claimant and need to consider an avenue of collection if the insured’s carrier denies coverage out of the gate (meaning the carrier has denied both the duty to defend and the duty to indemnify).

A recent Eleventh Circuit Court of Appeals opinion demonstrates the Coblentz agreement concept. In Barrs v. Auto-Owners Ins. Co., 2024 WL 3673089 (11th Cir. 2024), an owner asserted a construction defect claim against its contractor. The owner hired the contractor to deconstruct a building and the contractor hired a demolition subcontractor. The owner noticed work was not being performed and materials (e.g., lumber) were missing; the demolition subcontractor had stolen materials. The subcontractor was terminated, and the owner claimed the contractor’s negligence allowed the theft and delayed his project. The contractor’s commercial general liability (CGL) insurer notified the insured-contractor that coverage did not exist and refused to defend the contractor. The owner sued the contractor under various theories of liability. The owner and contractor entered into a settlement agreement (i.e., the Coblentz agreement) where the contractor “admitted liability in the amount of $557,500.00….A consent judgment was entered against [the contractor] that closely tracked the settlement agreement but did not indicate which portion of the damages award was attributed to which claims. The agreement also assigned [owner] and all of [the contractor’s] rights to claim coverage and to recover available funds under [the contractor’s CGL policy].”

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


'You're Talking About Lives': The New Nissan Stadium

Silhouette of person entering stadium

A first-of-its-kind public-private partnership between Tennessee OSHA and the Tennessee Builders Alliance is creating a safety blitz on Nashville’s $2.1-billion Nissan Stadium project.

August 26, 2024
Grace Austin - Construction Executive

The new Tennessee Titans sports complex rising up on the banks of the Cumberland River in Nashville is a big project no matter how you look at it. Nissan Stadium will have 60,000 seats, cover 1.85 million square feet and cost an estimated $2.1 billion. Four contractors are involved, operating under a joint venture called the Tennessee Builders Alliance: Turner Construction Co., AECOM Hunt, Polk & Associates Construction and I.C.F. Builders & Consultants. And nearly 20,000 workers will play a role over the project’s three-year timeline.

The sheer size and scope of the job led Tyler White, TBA’s environmental health and safety director, to think that the project needed to approach safety on a similar scale. The result is a first-of-its-kind public-private partnership between the Tennessee Occupational Safety and Health Administration and TBA.

“I thought it would be a good idea,” White says. “I know they’re stretched thin, but [we’re] very appreciate of advocating and allocating their resources.”

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


Wildfire Risk Harms California Home Values, San Francisco Fed Study Finds

Firefighters with fire in background

Acres burned and number of homes damaged increased recently and insurance access doesn’t seem to help high-risk properties.

August 26, 2024
Laura Curtis - Bloomberg

California’s wildfires are weighing on home prices more than in the past, and insurance availability does little to help in areas considered to be at higher risk, according to a Federal Reserve Bank of San Francisco study.

“Our results suggest that property values have been more adversely impacted in recent years by being close to past wildfires than was the case previously,” economists Leila Bengali, Fernanda Nechio and Stephanie Stewart wrote in a paper published Monday on the Fed bank’s website.

While the effect of the proximity may be relatively small now, the economists warned “this pattern may become stronger in years to come if residential construction continues to expand into areas with higher fire risk and if trends in wildfire severity continue,” the study cautioned.


A “Flood” of Uncertainty; Massachusetts SJC Finds Policy Term Ambiguous

Flooded rivers land

Based on the definition and its reference to “surface water,” the insurers limited coverage to only that available under the sublimited coverage for “Flood.”

August 26, 2024
Michael S. Levine & Torrye Zullo - Hunton Insurance Recovery Blog

The highest court in Massachusetts recently held that term “Flood” and the associated phrase “surface waters,” as used in two all-risk insurance policies, is ambiguous in the context of water that accumulated on a parapet roof and rooftop courtyard, thereby negating the insurers’ attempt to limit coverage to a sublimited coverage for “Flood.”

Background
In June 2020, a severe storm caused damage to Norwood Hospital, owned by Medical Properties Trust, Inc. (“MPT”) and leased to Steward Health Care System (“Steward”), the policyholders. The relevant portion of the damage included damage from rain that accumulated on the rooftop courtyard and seeped into the interior of the building causing damage to the building and its contents.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Torrye Zullo, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Zullo may be contacted at tzullo@HuntonAK.com


714.701.9180

johnspringman

markchapman

johntolman

mattnardella

alansturm

davesuggs










Construction Defect News Channel - The Latest News and Video From The Construction Defect Journal

Construction defect and claims video channel.  For access to full construction defect channel content visit the construction defect channel homepage at... ConstructionDefectChannel
Southern California Wildfire Forces Thousands to Evacuate

The line fire also threatens 35,000 homes and buildings. The area is now under a state of emergency, just 60 miles east of Los Angeles. NBC News’ Dana Griffin reports.

Post Fire Burns 130 Acres and Prompts Evacuations in Riverside County

Cal Fire issued evacuation orders for people living near the Post Fire in unincorporated Riverside County, Gio Insignares of KCAL News reports.

Construction Workers Flood Australian City Streets to Oppose CFMEU Crackdown | ABC News

Thousands of construction workers have walked off the job and taken to the streets across Australia’s major cities to protest the government’s decision to put the Construction, Forestry, Mining and Energy Union (CFMEU) into administration, reported ABC News (Australia).

Tempe Town Lake Site Brings 'Amazing Views' and Challenges to Residential Towers

Construction is in full swing on three residential towers at South Pier as part of a multiphased, $1.8-billion mixed-use development in Arizona, ENR reported.

Couple's Stony Brook Home Suffers Major Damage in Storm | NBC New York

Carolyn Manno reporting on a couple's Stony Brook home suffering major damage in storm.

Why The U.S. Can’t Build Homes Fast Enough

Large homebuilders have used mergers and acquisitions to grow their positions in several key housing markets since the 2008 subprime mortgage crisis.

Construction Defect Journal Archives - Recent CD News for Construction Claims Professionals

 

Construction Defect Journal is aggregated from a variety of news sources, article submissions, contributors, and information from industry professionals.

No content on this site should be construed as legal advice or expert opinion. By viewing this site you agree to be bound by its terms and conditions

 

Copyright - Construction Defect Journal – All Rights Reserved