Construction Litigation Roundup: “Builder’s Risk Indeed”
October 24, 2023 —
Daniel Lund III - LexologyA contractor for a hotel in Seattle was tasked with constructing the hotel utilizing premanufactured modular hotel rooms. The modular unit portion of the project was the subject of a $15.8 million subcontract between the general contractor and the manufacturer. The manufacturer was also responsible to the GC for shipping and installing the modular units.
Shipping was to be “DDP,” or “Delivery Duty Paid” – which, according to a New York federal court, “is an international shipping term meaning that the seller assumes all responsibilities and costs for delivering property to the named place of destination, including export and import clearance, fees, duties, and taxes.” Additionally, per the subcontract, the manufacturer was responsible for “ensur[ing] all modular units [were] covered, secured[,] and protected from damage during the shipping process….” The modular units were shipped from Poland to Seattle. In the shipping process, the units spent some time in the Port of Everett in Washington state, where the units sustained water damage while sitting in port.
A related damage claim made by the subcontractor against the general contractor’s builder’s risk policy. On the face of the policy, the policy covered subcontractors as “additional insured” parties, covered all manner of materials and the like to be used on the project, and would provide that coverage in the process of transporting the materials insofar as “inland or coastal waters” were concerned. Yet, the builder’s risk insurer refused to cover the claim for the damages to the modular units which occurred while sitting in port in Everett.
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
Surplus Lines Carrier Can Force Arbitration in Louisiana Despite Statute Limiting Arbitration
February 12, 2024 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court granted the surplus lines insurer's motion to compel arbitration despite a Louisiana statute barring policies from depriving courts of jurisdiction in cases against insurers. Queens Beauty Supply, LLC v. Indep.Specialty Ins. Co., 2023 U.S. Dist. LEXIS 195372 (E.D. La. Oct. 31, 2023).
Hurricane Ida damaged property leased by Queens. Queens filed suit against its insurer, Independent Specialty Insurance Company (ISIC) for breath of contract and bad faith for failing to pay the full amount Queens contends it was owed for the damage. ISIC moved to compel arbitration.
Queens argued that ISIC waived its right to enforce the policy's arbitration clause by its actions before the court, including failing to opt-out of the settlement program adopted for Hurricane Ida cases. The court disagreed, ISIC had taken no overt act that evidenced a desire to resolve the instant dispute through litigation rather than arbitration. ISIC asserted as an affirmative defense that Queens's claims were barred by the arbitration clause in the policy. ISIC then participated in the settlement program for Hurricane Ida cases, which evidences a desire to settle the dispute, not to resolve it by litigation. Therefore, ISIC had not waived its right to arbitrate.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
John Paulson’s $1 Billion Caribbean Empire Faces Betrayal
November 27, 2023 —
Jim Wyss & Tom Maloney - BloombergIn the decade since hedge fund billionaire John Paulson took a grand gamble on Puerto Rico, he’s faced the wrath of the markets and mother nature.
He’s navigated hurricanes, earthquakes, the pandemic and the largest municipal bankruptcy in US history to amass a portfolio of luxury hotels and resorts, high-end office blocks, and auto dealerships catering to the island’s rich.
Now, just a few months after breaking ground on one of San Juan’s tallest and most exclusive residential towers, Paulson is facing a new wave of threats: lawsuits that strike at the heart of his Caribbean empire.
Reprinted courtesy of
Jim Wyss, Bloomberg and
Tom Maloney, Bloomberg Read the full story...
Meet the Forum's ADR Neutrals: LISA D. LOVE
March 19, 2024 —
Marissa L. Downs - The Dispute ResolverCompany: JAMS
Office Location: New York, NY
Email: llove@jamsadr.com
Website: https://www.jamsadr.com/love/
Law School: Georgetown University Law Center (J.D. 1984)
Types of ADR services offered: Arbitration, mediation, neutral evaluation and special master services
Affiliated ADR organizations: JAMS, Chartered Institute of Arbitrators, and CPR
Geographic area served: Domestic and International
Q: Describe the path you took to becoming an ADR neutral.
A: I started my legal career practicing law as a complex commercial transactions attorney in the corporate department of a major New York law firm for eleven years. After leaving the firm, I served as chief legal counsel to several municipalities and as co-founding partner of a boutique finance, infrastructure and real estate law firm.
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Marissa L. Downs, Laurie & Brennan, LLPMs. Downs may be contacted at
mdowns@lauriebrennan.com
Wyncrest Commons: Commonly Used Progress Payments in Construction Contracts Do Not Render Them Installment Contracts
December 11, 2023 —
Benjamin J. Hochberg - Peckar & Abramson, P.C.In BIL-JIM Construction Company, Inc. v. Wyncrest Commons, LP, 2023 WL 7276637 (Unpublished, decided November 3, 2023), the New Jersey Appellate Division was asked to consider two issues regarding the interpretation and application of a construction contract that utilized the standard form American Institute of Architects owner/contractor agreement (AIA Document A101-2007) (the “AIA Contract”). Specifically, it was asked to consider: 1) whether a modified AIA Contract was an “installment contract,” whereby each progress payment was subject to its own statute of limitations; and 2) whether and when work had been approved in the context of New Jersey’s Municipal Land Use Law. While the decision is presently unpublished, it provides guidance as to how form contracts utilizing the same or similar terms will be treated by New Jersey’s courts and is a reminder that the potential for future claims must be considered during contract negotiations.
Discussion
The primary issue in Wyncrest was whether an AIA Contract was an “installment contract,” and the remaining issues turned on the resolution of this question. Wyncrest, the owner for the project at issue, did not dispute that its contractor, BIL-JIM Construction Company, Inc., had not been fully paid for work that it had performed in connection with a construction project located in Ocean County, New Jersey. Instead, Wyncrest argued that because its AIA Contract with BIL-JIM required that invoices be presented and paid monthly, it constituted an “installment contract.” As such, older payments would be treated as individual transactions and were time barred by the applicable statute of limitations. The trial court agreed with Wyncrest’s characterization of the AIA Contract as an “installment contract,” and found that BIL-JIM’s invoices were each subject to their own statute of limitations. However, the trial court disagreed with Wyncrest’s argument that BIL-JIM’s claim for retainage—which was submitted at the end of its work at the project—was time barred.
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Benjamin J. Hochberg, Peckar & Abramson, P.C.Mr. Hochberg may be contacted at
bhochberg@pecklaw.com
Insurer's Bad Faith is Actionable Tort for Purposes of Choice of Law Analysis
January 08, 2024 —
Janeen M. Thomas - Saxe Doernberger & Vita, P.C.When an insurer handles a claim in violation of its duty to act in good faith, policyholders are often eager to sue the insurer for bad faith, seeking extra contractual damages. Before filing suit, however, it is critical that policyholders consider what state’s law applies to the bad faith claim.
In the recent case of Scott Fetzer Co. v. Am. Home Assurance Co., Inc.1, the Ohio Supreme Court held that Restatement (Second), Conflict of Laws, § 145 (“Section 145"), governed the choice of law dispute, which meant that the insured would be able to obtain discovery of Travelers’ claims-handling procedures, guidelines, internal documents, and communications relating to the claim.2 The insured, Scott Fetzer, argued that the materials were discoverable because documents evidencing an insurer’s bad faith are not protected by attorney-client privilege in Ohio. In response, Travelers argued that the laws of either Indiana (the place where the parties entered into the insurance contract), or Michigan (the location of the insured risk) governed the discovery dispute because Restatement (Second) § 193 (“Section 193”) governs the choice of law analysis for claims that “arise out of insurance contracts.”3 The laws of either Indiana or Michigan were more favorable for Travelers because Indiana does not allow discovery of materials covered by attorney-client privilege, and Michigan does not even recognize a cause of action for bad faith.
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Janeen M. Thomas, Saxe Doernberger & Vita, P.C.Mr. Thomas may be contacted at
JThomas@sdvlaw.com
Unpredictable Power Surges Threaten US Grid — And Your Home
April 08, 2024 —
Naureen S Malik - BloombergPaul LeBlanc was barefoot when he stepped outside that morning.
He was taking the trash out when he saw the red glow of flames engulfing a nearby home. A former firefighter, LeBlanc grabbed his shoes before racing across the street. He smashed a window, then rushed inside. The only person believed to be home was a teenage boy who had already escaped, luckily with just minor burns. Alarms blared “fire” loudly, again and again, blasting from homes through the area.
“I’ve been in buildings without protection before — I just wanted to make sure no one was stuck in there,” said LeBlanc, who spent more than three decades as a firefighter before retiring.
The damage to the Alonge family’s four-bedroom home built in the early 1800s was so bad they haven’t been able to return since the blaze in June. The source of the conflagration in Waltham, Massachusetts, came from a facility about 2 miles west of the home. An electric substation, which had been dealing with a rodent infestation, had a sudden, unstable surge in voltage.
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Naureen S Malik, Bloomberg
Unesco Denies Claim It Cleared Construction of Zambezi Dam
November 06, 2023 —
Antony Sguazzin - BloombergUnesco denied that it cleared Zimbabwe and Zambia to proceed with the construction of a $5 billion hydropower dam downstream from the Victoria Falls, which it has designated as a World Heritage Site.
Munyaradzi Munodawafa, chief executive officer of the Zambezi River Authority, said in an
earlier interview that Unesco’s World Heritage Committee “agreed that Batoka could go ahead,” referring to the planned dam and 2,400-megawatt power plant on the Zambezi River. Munodawafa didn’t answer calls or text messages to his mobile phone.
“The decision taken by the committee raises several concerns regarding the site, including the inevitable negative impacts of the Batoka Gorge” project, Unesco said in a response to queries.
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Antony Sguazzin, Bloomberg
