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Eric Grasberger

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Eric Grasberger focuses his practice on development and construction law, including development risk analysis and risk shifting, contract drafting and negotiating, insurance review and analysis, construction defect claims, delay and impact claims, lien and bond claims, and public contracts, bid disputes and public improvement exemptions. He has represented numerous private and public owners and developers, as well as contractors, in all facets of development and construction law. Eric, a partner in Stoel Rives' Construction and Design group, is chair of the Construction and Design group and co-chair of the firm's Sustainable Real Estate Development Team. He was selected by Best Lawyers® as Portland Construction Law Lawyer of the Year for 2018 and 2015.

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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: 

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 …

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.

In my latest Daily Journal of Commerce Construction column, I discuss the case for construction claims reform. Construction industry participants all have one thing in common: they hate litigation. While avoiding claims is not always possible, the number of disputed issues can be reduced.

Some states have enacted statutes eliminating much of the uncertainty surrounding…

In my latest Daily Journal of Commerce Construction column, I discuss tips for developers to help handle claims under the Americans with Disabilities Act. In the column, I recommend several mitigation efforts to reduce liability for ADA defects including: hire vendors with a track record of compliance and competence, verify that all participants insurance policies…

Litigation can be one of the most time-consuming and expensive ways to resolve disputes in the construction industry. Often, parties to construction-related disputes prefer to resolve them through alternate dispute resolution procedures, such as mediation or arbitration. However, sometimes litigation cannot be avoided. In his latest article in the Daily Journal of Commerce, Guy Randles…

The recent case of Ewing Constr. Co. v. Amerisure Ins. Co., 2012 U.S. App. Lexis 12154 (5th Cir. June 15, 2012) reminds us that, without an endorsement adding back to the policy specific coverage for contractual liabilities, defect claims arising from work under a construction contract may not be covered.  In Ewing, the …

In my recent article “Evolving Concepts of ‘Fairness’ in Construction Contracts,” published in the Daily Journal of Commerce, I outline the key battlegrounds in redefining a ‘fair’ construction contract. From limited liability to contractors signing waivers and claim releases, this article provides the foundation for understanding the evolving complexities in construction contracts. 

To read more, …