No Negligence? No Causation? No Problem. Arizona Appellate Court Holds General Contractor Need Not Prove Subcontractor’s Negligence or Causation To Be Indemnified

Amberwood Dev., Inc. v. Swann’s Grading, Inc., No. 1 CA-CV 15-0786, 2017 Ariz. App. Unpub. LEXIS 207 (Ct. App. Feb. 23, 2017)

This case arose out of a housing development project, with Amberwood Development Inc. (“Amberwood”) acting as the general contractor and Swann’s Grading, Inc. (“SGI”), as a subcontractor. In their subcontract agreement, SGI agreed to defend, indemnify and hold harmless Amberwood from claims and “liability of every kind whatsoever arising out of or in connection with [SGI’s] work.”  This indemnity extended to any claims asserted by any subsequent owner alleging improper or defective workmanship.

After construction concluded, eighteen homeowners sued Amberwood, alleging numerous construction defects. Amberwood then sought indemnification from its subcontractors, including SGI. Ten of the eighteen homeowners arbitrated their claims to award and the remaining eight settled with Amberwood.  Amberwood then settled with all of its subcontractors except SGI. Continue reading

Posted in Indemnity, Uncategorized | Tagged , , , , , , ,

Supreme Court of California Holds That a Losing Bidder on a Public Works Contract Cannot Sue the Winning Bidder for Intentional Interference with Prospective Economic Advantage

Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc., 2017 Cal. LEXIS 1024 (Cal. February 16, 2017)

This tort lawsuit relates to a dispute over the bidding process on several public works contracts in California. Between 2009 and 2012, American Asphalt outbid Roy Allan Slurry Seal and Doug Martin Contracting on 23 public works contracts for the application of slurry seal to roadways in five California counties.

Allan and Martin suspected that American illegally underbid them, and they sued American for intentional interference with prospective economic advantage. They alleged that American illegally under-paid its employees to ensure that it won the bid as the lowest “responsible” bidder.  Allan and Martin alleged that but for American’s illegal conduct, they would have been awarded the contracts because they were the second lowest bidders.

The trial court dismissed Allan and Martin’s complaint holding that it failed to state a viable claim for intentional interference with prospective economic advantage. The appellate court reversed the trial court, but American appealed to the Supreme Court of California.   Continue reading

Posted in Competetive Bidding, Uncategorized | Tagged , ,

New York Court of Appeals Holds That Tower Crane Damaged By Superstorm Sandy Is Not Covered by Project’s Builder’s Risk Insurance Program

Lend Lease (US) Constr. LMB Inc. v. Zurich Am. Ins. Co., No. 11, 2017 N.Y. LEXIS 112 (N.Y. Feb. 14, 2017)

Early, in its opinion, the New York Court of Appeals noted that “[o]ne of the most dramatic images of [Superstorm Sandy] depicts the damage caused to [a] crane [being used on the construction of a 74-story skyscraper] when the boom of the crane collapsed in high winds and teetered precariously from a height equal to the top of the building.” At the time of the incident, Extell, the owner of the project, was the named insured on a $700 million builder’s risk insurance program comprised of five separate insurance policies.  Lend Lease, the contractor, was an additional insured on the policies.

Following the incident, Extell and Lend Lease submitted a claim to the insurers seeking to recover the damages incurred by Extell and Lend Lease resulting from weather-related harm to the crane. The insurers denied the claim and disclaimed that there was coverage under the policies.  This action ensued.  Both parties filed motions seeking summary judgment on the coverage issue.  The trial court denied the motions, ruling that there was an issue of fact regarding the applicability of certain exclusions in the policies.  On appeal, the Appellate Division granted the insurers’ motion for summary judgment, finding that there was no coverage because the crane did not fall within the policies’ definition of “temporary works.”  This appeal followed.

Resolving the appeal required the Court of Appeals to answer two questions. First, was the damage to the crane covered under the policies in the first instance.  Second, if there was coverage, was it defeated by the policies’ contractor’s tools exclusion.  As explained below, the court concluded that although there may have been coverage in the first instance, the coverage was defeated by the exclusion. Continue reading

Posted in Insurance, Uncategorized | Tagged , , ,

Federal Court in Alabama Rules that 1999 Amendment to the Miller Act Does Not Preclude Arbitration of Underlying Claims

United States v. Int’l Fid. Ins. Co., No. 16-0472-WS-C, 2017 U.S. Dist. LEXIS 16791 (S.D. Ala. Feb. 7, 2017)

This action arose out of a payment dispute between Bay South Limited, Inc. (“Bay South”) and Stephens Construction & Concrete, Inc. (“Stephens”). Bay South entered into two subcontracts with Stephens, whereby Bay South agreed to furnish labor and materials to Stephens on two federal construction projects.  In connection therewith, International Fidelity Insurance Company (“Fidelity”) issued payment bonds (the “Bonds”) to Stephens.  Bay South filed a complaint in federal court to assert claims against the Bonds under the Miller Act (40 U.S.C. §3133), as well as other claims.  Stephens sought to compel arbitration of Bay South’s claims, pursuant to the arbitration provision in the subcontracts, which provided:

“In the event of a dispute arising between [Stephens] and [Bay South] under the Subcontract Agreement, the dispute shall be settled by arbitration in accordance with the Construction Industry Rules of the American Arbitration Association then in effect …”

Bay South argued that the 1999 Amendment to the Miller Act prohibits such claims from being arbitrated, and, in the alternative, even if these claims may be arbitrated generally, Bay South’s specific claims are not subject to arbitration because they are not within the scope of the parties’ arbitration agreement. Continue reading

Posted in Miller Act, Uncategorized | Tagged , , ,

Montana Supreme Court Rules That Statute of Repose Is an Absolute Bar to Claims and Cannot be Tolled for Any Reason, Including Concealment

Hill County High School District No. A v. Dick Anderson Construction, Inc., 2017 Mont. LEXIS 38 (Mt. Feb 7, 2017)

This action arose out of the design and construction of a new roof for a high school in Hill County, Montana. The roof was built by Dick Anderson Construction, Inc. (“Contractor”) and designed by Springer Group Architects, P.C. (“Architect”). While the parties disputed whether the roof was ever completed to the School District’s satisfaction, the school was in full use by April 1998 and final payment was issued around that same time.

Problems emerged with the roof almost immediately. The Contractor and Architect worked with the School District to address the problems through October 2003 when the Architect informed the School District that repairs were finished and that no further work was necessary. But the roof partially collapsed in 2010 and the School District filed suit the following year. Continue reading

Posted in statute of repose, Uncategorized | Tagged , , , , ,