Following a presentation I made at a Seminar Group conference in Oregon on crane easements, one of my colleagues brought to my attention the recent NY case of Lend Lease (US) Construction LMB Inc. v. Zurich American Insurance Co. The NY Court of Appeals found that damage caused to a tower crane when
Self-Imposed ADA Audits: The Developer’s Best Option
Recent rulings indicate that courts across the country view project owners’ and developers’ liability for ADA claims differently than they do other compliance violations. Owners’ attempts to raise questions of contractor negligence, breach of contract or breach of warranty are being rejected. So what can a project owner do? In my recent article for the
Architect Off the Hook for ADA Defects
Continuing a disturbing trend, another recent case finds that an architect is not liable for a design that failed to comply with the ADA and Section 504 of the Rehabilitation Act (RA). In Chicago Housing Authority v. DeStefano & Partners, Ltd. (here), an Illinois appellate court followed several other federal and state decisions
Termination Clauses a Must for Owners
The recent termination of the joint venture of Skanska-Hunt from the Washington State Convention Center project (article here) is a good reminder of the importance of well-written termination clauses in your owner-contractor contracts. The reasons for termination (or “severance,” a slightly kinder word) can be many, including failure to agree on pricing (the reason
NYC Crane Collapse Likely to Fuel Crane Objections and Easements
On Friday, February 5, one man died and three were injured when a 565-foot crane toppled in gusty winds in lower Manhattan, not far from the World Trade Center. The investigation will likely take weeks to months as experts try to reconstruct whether the engineering, erection, operation or manufacture of the crane, or some combination
The Trend Towards Liability Waivers in Design and Construction
The increasing presence of liability waivers in construction and design contracts is of concern to owners, general contractors and architects alike. In my recent article for the Daily Journal of Commerce, I address a variety of clauses that limit liability and offer tips for negotiating more reasonable conditions and limits. Read the full article
Construction Projects and the Clean Water Act: Revised Turbidity Standards for NPDES Permits
Authored by Daniel Lee
On March 6, 2014, EPA revised its Clean Water Act regulations for construction projects that are required to obtain NPDES permits for discharges of stormwater and other wastewater. The revised regulations clarify required management practices and provide some additional flexibility for implementing them. The revisions include three elements.
First, the rule provides a
Multi-Family Sellers Beware: Don’t “Alienate” Your Project from Insurance Coverage for Construction Defects
The apartment business is booming right now. Unfortunately, construction defects persist as well, particularly in garden-style and wood-framed construction. Most developers are savvy enough to maintain a good insurance program, but many do not understand (until too late) that the policies they bought may not cover the risk of construction defects.
As an owner-developer, neither your property insurance policy (including your builder’s risk policy) nor your general liability policy is likely to protect you from the cost of repairing defects to property you own. Most likely, your property policy has an exclusion for any damages caused by defects in construction or design. And your liability policy has exclusions for property damage to any property you currently “own, rent, or occupy.” (See exclusion J(1) below.)
Even more surprising to some is another exclusion that prevents coverage for property damage to property that you “sell, give away or abandon” (known as the “alienated property exclusion”). (See exclusion J(2) below) This means that for projects you develop, occupy (i.e., rent) and sell, you likely have no coverage during your occupancy of that project or after you sell (whether to unit owners through a condo conversion or to another apartment owner).
j. Damage to Property
“Property damage” to:
(1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another’s property;
(2) Premises you sell, give away or abandon, if the “property damage” arises out of any part of those premises;
Upon learning of this unfortunate situation, many developers ask: What good is the policy if it doesn’t cover me when I own the project and it doesn’t cover me after I sell it? Good question. The insurer’s response is that the policy only covers damage to other people’s property (like the project next door), not damage to your own property or the property you once occupied and sold. Strangely, if you sell the project before you occupy it, coverage is more likely.
Solutions? There are steps you can take to minimize your risk:
“Best Law Firms” Survey Results: Stoel Rives Recognized Nationally for Construction Law Practice
The 2014 U.S. News – Best Lawyers “Best Law Firms” survey was published November 1, and we were pleased to learn that you—our clients and professional colleagues—helped us achieve another prestigious national first-tier ranking in Construction Law for Stoel Rives.
We’d like to thank all of you who took the time to respond to the
SB 254A and Oregon’s CMGC Rules Are Overblown
Oregon Senate Bill 254A and the CMGC method generally garner more attention than is justified. Here is the background.
On a typical non-CMGC project, the general contractor will bid on a complete or nearly complete set of design documents. This is referred to as “design-bid-build.” In public construction, competitive bidding is required by statute to reduce expenditure of taxpayer funds. In the CMGC method, rather than awaiting a complete design, the contractor is chosen early and asked to (1) review the developing design of the architects and engineers, and (2) perform certain other planning and organizational work that theoretically benefits the project. The “early” work is generally considered the “CM” portion of the CMGC scope, while the post-bid or post-GMP (guaranteed maximum price) work is generally considered the “GC” portion.
What is so different about this process? Not much, really, but there are a couple of considerations that differ from traditional design-bid-build. First, because the CMGC is chosen before design is complete, the CMGC is not able to provide concrete pricing at the time it is selected; by the time the design is sufficiently complete to allow pricing, the CMGC has already been chosen. Critics argue (accurately) that this dynamic puts more leverage in the hands of the CMGC during price negotiations because the owner has now invested time and CM dollars in the CMGC and probably does not want to manage a second-round selection process to get a new contractor if the original CMGC’s price is not competitive. While this poses a theoretical problem for owners, the CMGC provides its percentage fee (markup) at the time of selection and is required to competitively bid all subcontractor work, reducing if not eliminating the concerns over cost control and negotiating leverage.