Real Estate & Construction News Roundup (1/16/24) – Algorithms Affect the Rental Market, Robots Aim to Lower Construction Costs, and Gen Z Struggle to Find Their Own Space
February 12, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, New York’s Prompt Payment Act comes into question, vacancy rates rise in commercial office space, the Biden administration applies project labor agreements on certain federal construction projects, and more!
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Pillsbury's Construction & Real Estate Law Team
If a Defect Occurs During Construction, Is It an "Occurrence?"
February 12, 2024 —
Brendan J. Witry - The Dispute ResolverEstablishing insurance coverage for construction defects is almost as important as establishing liability in the underlying construction defect litigation itself.
The risk to the defendant contractor of defending a construction claim can place significant burdens on a contractor’s operations and an uninsured judgment might even put the contractor out of business.
For owners, suing a contractor for construction defects can become academic if there is no prospect of insurance coverage; obtaining a $1 million judgment against a contractor with limited assets would be a pyrrhic victory.
Commercial General Liability (CGL) carriers are obligated to defend claims that potentially fall within the coverage granted by the policy.[1] When presented with a claim, CGL insurers typically have three options: (1) assume the defense without reservation; (2) assume the defense asserting defenses to coverage, and depending on the state, reserving the right to recover defense costs if it later determines there is no duty to defend; or (3) deny the claim outright and seek a declaratory judgment holding that the insurer has no duty to defend or indemnify. An insurer may deny the claim outright and not seek a declaratory judgment, but does so at its peril because it can expose the insurer to significant liability if the insured later shows the insurer in fact had a duty to defend.
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Brendan J. Witry, Laurie & Brennan LLPMr. Witry may be contacted at
bwitry@lauriebrennan.com
Seattle’s Audacious Aquarium Throws Builders Swerves, Curves, Twists and Turns
January 08, 2024 —
Nadine M. Post - Engineering News-RecordPatrick Nation describes the reinforcing steel for the main tank of the 50,000-sq-ft Seattle Aquarium Ocean Pavilion as a “monster” job for CMC Rebar. In his mind, it was like bending 496 tons of bars “on a golf ball.” In reality, the operation was more like weaving a giant steel basket. Ironworkers had to painstakingly hand-thread the reinforcing steel for the doubly curved and slanted concrete walls of the 350,000-gallon saltwater exhibit—one bar at a time—to create the dense latticework for the 41-ft-tall basket.
Reprinted courtesy of
Nadine M. Post, Engineering News-Record
Ms. Post may be contacted at postn@enr.com
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Certificates of Merit: Is Your Texas Certificate Sufficient?
January 22, 2024 —
Gus Sara - The Subrogation StrategistIn Eric L. Davis Eng’g, Inc. v. Hegemeyer, No. 14-22-00657-CV, 2023 Tex. App. LEXIS 8899, the Court of Appeals of Texas (Court of Appeals) considered whether the plaintiffs’ certificate of merit, in support of their professional malpractice claim against the defendant engineers, adequately set forth the experience and qualifications of the expert who submitted the certificate. The defendants filed a motion to dismiss, alleging that the certificate of merit was inadequate because it failed to establish that the expert practiced in the same specific areas as the defendants in relation to the work at issue. The lower court denied the defendants’ motion. The Court of Appeals affirmed the lower court’s decision, finding that there was sufficient information for the lower court to have reasonably found that the plaintiffs’ expert practiced in the same area as the defendants.
In Hegemeyer, the plaintiffs sued Eric L. Davis Engineering, Inc. (Davis) and Kenneth L. Douglass (Douglass), alleging improper design of their home’s foundation. The plaintiffs retained Davis to design and engineer the home and Douglass prepared the plans for the home. The plans called for the installation of post-tension cables in the home’s foundation. The plaintiffs alleged that the foundation design was improper and brought professional malpractice claims against Davis and Douglass.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Navigating the Construction Burrito: OCIP Policies in California’s Construction Defect Cases
November 16, 2023 —
Alexa Stephenson & Ivette Kincaid - Kahana FeldIn the early 2000’s, Owner-Controlled Insurance Programs (OCIP) or WRAPS, were traditionally used in large commercial projects of over $50 million in construction costs. As construction defect lawsuits became more prevalent, subcontractors found themselves unable to meet the insurance requirements of their contracts with developers and general contractors because they could not find insurance companies that were willing to insure the risk. This presented a problem for developers and general contractors and left them with no option but to look into new insurance products that would insure them and all subcontractors who worked on the project. OCIPs became in some instances the only insurance option for developers, general contractors, and subcontractors to build single-family or multi-family projects in California and other western states.
OCIPS or WRAPS, often likened to the layers of a savory burrito, offer both enticing benefits and potential pitfalls. Just as a burrito’s ingredients can harmonize or clash, OCIP policies can shape the outcome of legal battles, impacting contractors, developers, and insurers alike.
Pros – Savoring the OCIP Burrito:
1. Wrapped Protection: Much like a well-folded burrito envelops its contents, OCIP policies offer comprehensive coverage for construction projects. Developers, general contractors, and subcontractors find comfort in knowing that their liability risks are bundled into a single policy, ensuring all enrolled parties have coverage in the event of a claim.
Reprinted courtesy of
Alexa Stephenson, Kahana Feld and
Ivette Kincaid, Kahana Feld
Ms. Stephenson may be contacted at astephenson@kahanafeld.com
Ms. Kincaid may be contacted at ikincaid@kahanafeld.com
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Navigating Threshold Arbitration Issues in Construction Contracts
April 29, 2024 —
Daniel D. McMillan and TJ Auner - The Dispute ResolverIncluding an arbitration clause in your construction contract may not mean that your dispute will be confined to arbitration. Instead, parties often find themselves in court litigating threshold issues related to the existence and/or enforceability of an arbitration clause. Common issues include whether the underlying contract containing the arbitration clause is valid, whether the dispute falls within the scope of the clause, whether the parties complied with contractual prerequisites to arbitration, whether issues related to arbitrability are decided by the court or arbitrator, and whether one of the parties has waived their right to arbitrate. This blog post highlights two recent construction cases addressing threshold issues that a party seeking to enforce—or oppose enforcing—an arbitration clause might face.
Seifert v. United Built Homes, LLC: Delegating Issues of Arbitrability to the Arbitrator
In Seifert, an owner sued a homebuilder in Texas federal court for breach of contract and sought damages and declaratory relief. No. 3:22-CV-1360-E, 2023 WL 4826206 (N.D. Tex. July 27, 2023). The builder moved to compel arbitration. The owner opposed and argued that: (1) there was no agreement to arbitrate because the underlying contract was null and void, and (2) its claim for declaratory relief fell outside the scope of the arbitration clause. The court did not address the merits of either argument. Instead, it determined that these were issues for the arbitrator to decide.
Reprinted courtesy of
Daniel D. McMillan, Jones Day and
TJ Auner, Jones Day
Mr. McMillan may be contacted at ddmcmillan@jonesday.com
Mr. Auner may be contacted at tauner@jonesday.com
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Real Estate & Construction News Roundup (10/11/23) – Millennials Struggle Finding Homes, Additional CHIPS Act Funding Available, and the Supreme Court Takes up Hotel Lawsuit Case
November 16, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, EV charging stations become more prevalent at commercial locations, home ownership becomes more difficult for younger Americans, Macy’s announces plans to build additional stores within strip malls, and more!
- Due to several factors including overpriced housing and student debt, millennials will not have the same level of home ownership as previous generations. (Jordan Rosenfeld, Yahoo)
- With the U.S. being short about 3.8 million housing units according Freddie Mac, 3-D printing may prove to be the answer while also being cost effective and environmentally friendly. (Lesley Stahl, Aliza Chasan, Shari Finkelstein and Collette Richards, CBS)
- The Department Commerce of announced a new initiative to funnel $500 million in CHIPS Act funding to projects with capital investments below $300 million that support the construction, expansion or modernization of semiconductor-related facilities in the U.S. (Sebastian Obando, Construction Dive)
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Pillsbury's Construction & Real Estate Law Team, Pillsbury
HB24-1014: A Warning Bell for Colorado Businesses Amid Potential Consumer Protection Changes
February 26, 2024 —
Jennifer Brockel - Colorado Construction Litigation BlogHB24-1014 stands to eliminate the longstanding public impact requirement found within C.R.S. § 6-1-105(2) of the Colorado Consumer Protection Act (“CCPA”). While this proposed change professes the noblest intentions of “public peace, health or safety,” its effect portends a large detriment to Colorado business and an astronomical payday for Colorado plaintiffs’ attorneys.
Brief History
For over 100 years, Colorado recognized the need to protect its citizens from deceptive trade practices through a mechanism akin to the Federal Trade Commission Act that preceded it. In 1915, Colorado passed legislation prohibiting “untrue, deceptive, or misleading” advertising. C.L. 1921 § 6942 evolved into the broader protections afforded in the more recent consumer protection law from 1969 that prohibited “deceptive trade practices, and included protections from unfair, unconscionable, and deceptive acts or practices.”
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Jennifer Brockel, Higgins, Hopkins, McLain & Roswell, LLCMs. Brockel may be contacted at
brockel@hhmrlaw.com