Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors, points out Larry P. Schiffer in Squire Patton Boggs’ Insurance and Reinsurance Disputes blog.

“These moving parts generally result in a web of interrelated insurance policies covering the project. Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” Schiffer writes.

In his post, he discusses what a New York appellate court recently called an “additional insured by written contract” clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.

Read the article.

Foley & Lardner LLP announced  that Kim Ashby has joined the firm’s Construction Litigation Practice as partner in the Orlando office. Ashby work in complex construction law includes a focus on appellate work.

In a release, the firm said Ashby represents developers, contractors and governmental entities on a range of complex litigation matters, including lenders and special servicers in commercial mortgage-backed securities foreclosures and workouts. She has experience in construction lien disputes, defect litigation, workouts & restructurings, construction contract formation and tax exemption issues.

The release continues:

“Kim has substantial experience successfully litigating matters in the construction industry, which aligns perfectly with our recognized national practice. Her experience and in-depth understanding of the industry will be a valuable asset as we continue to handle and attract some of the most complex construction cases,” said Jeff Blease, chair of Foley’s Construction Litigation Practice.

In addition, Ashby has represented public- and private-sector appellants across an array of appeals, including judgments for lender liability, review of non-compete clauses, review of construction conditional payment bond issues and the first conditional payment bond case.

“Kim’s arrival will further expand our existing construction practice in Florida and adds significant bench strength to our appellate practice,” said Michael Okaty, managing partner of Foley’s Orlando office.

Prior to joining Foley, Ashby was a partner at Akerman.

Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors. Larry P. Schiffer of Squire Patton Boggs writes that these moving parts generally result in a web of interrelated insurance policies covering the project.

“Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” he explains. “But not all additional insured clauses are the same. In this post, we discuss what a New York appellate court recently called an ‘additional insured by written contract’ clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.”

He concludes that the case demonstrates that New York courts will interpret insurance policies based on the plain meaning of the words used by the parties and will not alter the contracts for equitable reasons if the language is clear and unambiguous.

Read the article.

All contractors dread receiving the seemingly inescapable call that a preventable, yet too common, workplace accident occurred such as a crane collapse, the fall of an ironworker, or a delivery vehicle accident, writes James J. Buldas of Pietragallo Gordon Alfano Bosick & Raspanti LLP.

“Besides the human and project costs these accidents bring, claims and lawsuits nearly always follow,” he warns in his article. “While defending claims and lawsuits may cause even the most seasoned contractors to suffer from sleepless nights, responsible parties may take solace in knowing that their counsel negotiated defense and indemnity agreements in their contracts. Why then do such parties sometimes learn that because of the language in an insurance policy, the indemnity clause in the construction contract provides little or no protection?”

Because of unforeseen risk, additional insured endorsements have been revised to link contractual indemnity obligations to additional insured coverage. These new endorsements explicitly limit additional insured status to the indemnity clause of the underlying contract, regardless of whether the endorsement incorporates the “arising out of” or “caused, in whole or in part” language.

Read the article.

There are six questions that an owner can ask to evaluate what rights and obligations it will have upon entering into a construction contract, writes Daniel Bradfield, a partner in Arnall Golden Gregory LLP.

“Quite often owners simply verify the economic terms for the project, set a completion date, possibly include references to drawings or plans, and then sign a construction contract with little regard to the various provisions that will impact the amount of leverage available in the event a problem occurs with the project,” Bradfield writes in the article.

He discusses the six questions:

• What is being signed?
• What actions can an owner take if the contractor does not finish the work on time?
• What does the contractor need to provide the owner in order to receive payment?
• How are disputes to be resolved?
• What does the owner owe the contractor if the owner terminates the construction contract?
• What, if any, roles will the architect play in the project under the terms of the construction contract?

Read the article.

Owners who are dissatisfied with their contractors’ performance increasingly assert fraud-based claims in addition to breach of contract claims because fraud-based claims are not typically barred by contractual waivers and limits of liability, according to a client alert published by Pepper Hamilton.

“Fraud-based claims may also create the potential for punitive damages in addition to compensatory damages,” wrote the authors, Ralph A. Finizio, Robert A. Gallagher and Jane Fox Lehman. “Contractors and their counsel, however, can limit their potential exposure for fraud-based claims through careful contract drafting and thoughtful selection of the law to be applied to disputes.”

They wrote that contractors should first consider: the codified law of the jurisdiction where the project is to be built, statutes that regulate the availability of punitive damages, and differences in common law.

“Contractors should also keep in mind that their choice of law will likely impact the conduct and cost of any litigation, as well as the best choice of outside counsel to handle the matter,” they wrote.

Read the article.

A.M. Best and Best’s Directories of Insurance Professionals will host a webinar to explore the legal and insurance issues surrounding lead injuries.

The one-hour complimentary event will begin at 2 p.m. EDT on Wednesday, August 3.

Lead was once used in a variety of construction materials, especially paint. Lead poisoning can be disastrous, if not deadly, the company says on its website. A panel of legal and insurance professionals will discuss the sources of lead injury claims, developing liability issues and the industry impact of lead-based claims.

Panelists include:

• Phil Pizzuto, partner; Lindabury, McCormick, Estabrook & Cooper, P.C.;
• Eileen Buholtz, attorney/firm member; Connors, Corcoran & Buholtz, PLLC;
• Brian Hinton, attorney; Anderson Crawley & Burke, pllc; and
• Ken Gillespie, litigation specialist; Builders Mutual Insurance Company.

Best’s Directories’ Managing Editor John Czuba will moderate the discussion.

Register for the webinar.

The 7th Circuit Court of Appeals had to decide a case in which the parties disagreed as to whether there was even a contract, raising the obvious question is whether there is a document with both parties’ signatures. But this is not always definitive, explains Stephen M. Proctor in a Risk Management Update for Masuda Funai.

C.G. Schmidt, Inc. was a general contractor managing part of the construction of an 18-story office building in downtown Milwaukee for $52 million, explains Proctor. It negotiated with Permasteelisa North America to supply a custom outer covering for weatherproofing and aesthetics and a substantial part of the project. “CGS won the bid for the building relying on PNA’s bid. But PNA backed out. CGS claimed that it had an agreement with PNA for the curtainwall and relied on PNA’s Subcontract when it submitted the bid. CGS sued PNA for breach of contract and promissory estoppel,” Proctor explains.

It’s clear there was no formal written contract with both CGS’s and PNA’s signature, but this did not prevent CGS from prevailing. In the end, CGS did not prevail, but it raised some arguments that the judge discussed at length.

Read the article.

In St. John’s Holdings, LLC v. Two Electronics, LLC, the Massachusetts’ Land Court concluded (in what appears to be a case of first impression) that a string of text messages can constitute a writing under the Statute of Frauds sufficient to bind the parties to sell certain property, writes Matthew DeVries on Burr & Forman LLP‘s Best Practices Construction Law blog.

DeVries explains in the article: The transaction involved included four drafts of a letter of intent from Buyer to Seller for purchase of a piece of property, none of which were signed by Buyer. Ultimately, Seller’s agent texted Buyer’s agent, asking him to sign the letter and provide a deposit. About two hours later, after Buyer signed the letter and provided a deposit, Buyer’s agent sent a text to Seller’s agent saying he had signed the letter of intent. The two agents met later that day to deliver and accept the letter and deposit, and the seller’s agent sent a text saying the Seller was unavailable and would respond the next day. But it was determined later that the Seller accepted a third party’s offer to purchase the property at the same time, and refused to execute and deliver the letter of intent from the original Buyer.

“The court concluded that the text message from Seller’s agent was a writing that, read in the context of the email exchanges between the parties, contained sufficient terms to state a binding contract between Seller and Buyer. In addition, the court found that the final text message contained a valid electronic signature to be ‘signed’ within the meaning of the law,” DeVries explains.

Read the article.

An article written by Matthew DeVries on Burr & Forman LLP‘s Best Practices Construction Law blog illustrates an oft-repeated plea from lawyers: “Please, please, please read your contract.” In this instance, one party’s failure to strictly follow the contractual notice provision was a $209,235.36 mistake.

He describes a case in which a general contractor entered into an agreement with the City of New York Department of Sanitation to construct a garage. “The subcontractor agreed to to furnish and install five elevators for the project. Although the court’s decision does not elaborate on the details, the subcontractor filed suit and was awarded more than $200,000 in damages incurred as a result of delays in performance of the work.”

According to the article,”When you are required to strictly comply with a particular provision or legal requirement, then any departure from that requirement (no matter how insubstantial) can void the claim or provide an absolute defense.”

Read the article.

Considerable litigation has arisen as to whether a  waiver of subrogation provision in a construction contract applies to bar an insurer’s subrogation claim against a contractor to the extent the insurer covered damage to the owner’s “non-work” property under the owner’s existing property policy, writes Robert Barrack in Robinson Cole’s Construction Law Zone blog.

He explains that a majority of jurisdictions have held that the waiver of subrogation provision in the construction contract applies to bar subrogation claims where the owner’s property policy covers the damage to “non-work” property.

In his article, he explains waiver of subrogation provisions and discusses some cases that address the subject.

Read the article.

Ralf Rodriguez has joined Foley & Lardner LLP’s Construction Practice as of counsel in the Miami office, the firm announced. Rodriguez has international experience litigating including construction law, commercial litigation, white-collar criminal defense and transportation law.

Rodriguez represents domestic and international general contractors, construction managers, sureties and other construction professionals in the United States and abroad in the negotiation, litigation, arbitration and mediation of construction and design defect claims, insurance claims and surety bond claims, among others. He has experience representing clients in zoning waivers, landlord and tenant disputes, environmental compliance, bankruptcy litigation and compliance with the Americans with Disabilities Act. Rodriguez has assisted clients in connection with a variety of construction projects, including sports arenas, high rise condominium developments, manufacturing plants and hydroelectric power facilities. Projects include the Florida Marlins Baseball Park, the Florida Citrus Bowl, the Miami Intermodal Center and the Cerro De Aguila Hydroelectric Power Plant in Peru.

“As our clients look to expand globally, Ralf’s international experience litigating complex construction matters will be an extremely valuable asset,” said Jeff Blease, chair of Foley’s Construction Litigation Practice.

In a release, the firm said:

Rodriguez also represents corporate clients in internal investigations and government inquiries by defending regulatory actions and fraud claims, including advice regarding compliance with anti-corruption laws such as the False Claims Act, the Foreign Corrupt Practices Act and similar legislation. He has worked with numerous corporate clients to structure and reassess corporate compliance and training programs, and has counseled clients to complete numerous investigations of sensitive matters in foreign jurisdictions, including Latin America and the Caribbean.

In addition to his legal practice, Rodriguez served as a law enforcement professional with the Department of Treasury and completed many public corruption and organized crime investigations, while working closely with the U.S. Attorneys’ Office for the Southern District of Florida.

“Ralf’s knowledge and experience will serve our clients well, as the local construction industry continues to boom,” said William Davis, managing partner of Foley’s Miami office.

Prior to joining Foley, Rodriguez was at Peckar & Abramson.

A New Hampshire court has issued a decision on the duty to defend arising from an indemnity obligation in a design contract, distinguishing between the duty to defend often invoked for insurance coverage, from a duty to defend expressed in a contractual indemnity, writes Stan Martin of Commonsense Construction Law LLC.

The court found that an engineering firm owed a duty to defend the New Hampshire town that had hired the firm to design a wastewater treatment plant, from claims arising from the design against the town made by the contractor.

Martin describes the case and the arguments made by the parties. He concludes: “An explicit contractual duty to defend against allegations of negligence or breach by the indemnitor may well be construed to require such a defense from the outset, even when parties are still arguing over ultimate liability. And an indemnitor who has not been in breach of its contract up to that point may yet breach its contract by refusing to defend when required.:

Read the article.

Construction contracts are often such voluminous documents that it can be difficult for owners to recognize and adequately negotiate the key terms that play the largest role in how construction risk and costs are allocated, writes Mike Madigan in Kegler, Brown, Hill + Ritter‘s Ohio Construction Law blog.

In the article, he considers 10 questions owners should ask themselves before signing a contract with a contractor for a commercial project.

A few of those questions are: Is there a consequential damages waiver? Is there a liquidated damages provision? Is the contractor required to provide a performance and payment bond? What costs are recoverable by the contractor under a termination for convenience?and has the contract been coordinated with the requirements of the lending institution?

Read the article.

The Court of Appeals in North Carolina recently confronted the question of what happens when a contractor and subcontractor, having gone back and forth on a few contract terms while the sub is performing work, reach the end of the project – or at least the end of the sub’s work – without an agreed contract form. Stan Martin discussed the issue in a recent article posted on Commonsense Construction Law’s blog.

“Parties who allow the schedule to control performance without resolving the paperwork could find themselves in a mess, particularly if the back-and-forth on contract terms never stops,” Martin writes. “The sub is unhappy about not being paid, and the GC is unhappy about what it perceives to be a less-than-friendly forum. (Or maybe the GC simply wants the sub to bear the inconvenience of the 100-mile or so trip between counties.) And the court will have to sort out the mess, at a greater cost than either party wants.”

Read the article.

Timeliness is critical when submitting claims to the government, or any contracting party, for that matter — public or private, writes Brian Dobbs for Bass, Berry & Sims PLC. But, as a ruling in Kellogg Brown & Root Services, Inc. v. Murphy demonstrates, the law does not compel contractors to bring claims prematurely. The key is recognizing when the claim has ripened and the clock has begun to tick.

Dobbs writes that Kellogg Brown & Root Services filed a claim with the Army to recover costs associated with a subcontractor’s work on a dining facility in Iraq. The Army denied the claim and KBR appealed to the Armed Services Board of Contract Appeals. On the Army’s motion, the Board dismissed the claim, finding the six-year statute of limitations under the Contracts Dispute Act (CDA) had expired.

Read the article.

As general contractors take on more projects, they will likely find themselves working with new and unfamiliar subcontractors, warn James T. Dixon, P. Wesley Lambert, Amanda M. Leffler and Amanda P. Parker of Brouse McDowell.

“Whether parties are considering working with a new partner or simply re-evaluating existing relationships with long time partners, the parties should consider how to best allocate the risks associated with each project,” they write.

They discuss some of the key provisions contractors and subcontractors should understand when evaluating the risks allocated through subcontract agreements.

Read the article.

Before entering into a construction contract, consider how force majeure events are evolving in today’s world, advise Jonathan Massell and David A. Senter of Nexsen Pruet on the firm’s website.

“In construction contracts, force majeure clauses include events such as “riots” and “acts of war” but courts have found that acts of terrorism did not fit those descriptions,” they write. “After the September 11th attacks, clauses utilizing “acts of terrorism” became more common, but courts have not directly interpreted the phrase and it has not been scrutinized judicially.”

Read the article.

The protracted time for a construction case to get to trial and the attendant cost and expense has led the construction bar away from the courthouse and into the arbitration room, writes Ira M. Schulman of Pepper Hamilton LLP.

The prudent negotiation of an arbitration clause is as important to an arbitration as jury selection and jury charges are to litigation, Schulman explains.

He offers 10 individual pieces of advice, covering such topics as who can demand arbitration?, where will the arbitration be held?, how much discovery will be permitted?, how much discovery will be permitted?, and modification of award.

Read the article.

In petrochemical projects, the engineering, procurement and construction (EPC) contracts are often negotiated after the technology licenses have been negotiated between the technology licensors and the project owner, write Sean Goldstein, Jean Shimotake and Raymond Azar of White & Case LLP.

“Both sets of agreements are also typically settled before financing is sought for the project. Given the significant interrelationship between the EPC contracts and license agreements, and common lender requirements for the bankability of such project documentation, these timing differences may give rise to a number of issues.” they write.

They discuss issues for the EPC contractor, project owner and lenders, along with possible solutions.

Read the article.