US District Court in New Jersey Holds Waiver of Subrogation in AIA General Conditions Applies to Post-Construction Policies and Losses

Argonaut Great Cent. Ins. Co. v. DiTocco Konstruction, Inc.
2007 U.S. Dist. LEXIS 93846 (D.N.J. Dec. 21, 2007)

After a fire destroyed a T.G.I. Friday’s restaurant and all of its equipment, the meaning of the subrogation continuation clause contained in the contract between the owner and the contractor who had performed renovations and remodeling of the restaurant five years earlier became the focal point of ensuing dispute.

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Pennsylvania Superior Court Holds That Under AIA Contract Requiring Owner to Purchase Builders Risk Insurance, Contractor Not Liable for Fire Damage Caused By Subcontractor’s Negligence Despite Owner’s Failure to Purchase the Insurance

Jalapenos, LLC v. GRC General Contractor, Inc.,
2007 PA Super 391, 2007 Pa. Super. LEXIS 4411 (Dec. 19, 2007)

Jalapenos, LLC, hired GRC General Contractor, Inc. to remodel a restaurant. The parties signed standard American Institute of Architects contracts (AIA Forms A101 and A201 – 1997). Under the contract, Jalapenos was required to obtain Builder’s Risk “all-risk” property insurance or equivalent, or inform the contractor in writing before the work began if it did not intend to purchase such insurance. Furthermore, if GRC was damaged by Jalapenos’ failure to maintain the required insurance without notifying GRC, then Jalapenos would be liable for all reasonable costs attributable to such failure.

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US Sixth Circuit Court of Appeals Rules That Change Order Settling All Claims for Changes Did Not Bar Claim for Acceleration Costs

Steel Services Corp. v. Board of County Commissioners
2007 U.S. App. Lexis 30052 (6th Cir. Dec. 27, 2007)

The Cincinnati Reds were building a new baseball stadium. Hamilton County (“County”) awarded Contractor, Steel Service Corp. (“Contractor”), a $33 million dollar contract for the fabrication and erection of the steel superstructure. The start of the Contractor’s work was delayed. The County’s construction manager directed the Contractor to accelerate its work due to the project delays and take extraordinary measures to comply with the contract and schedule. Contractor accelerated and submitted a claim for additional costs incurred by itself and its subcontractors. The County and Contractor executed a change order providing for a provisional payment to be applied against the amount, if any, to which the Contractor was ultimately determined to be entitled in reimbursement of the acceleration costs. Neither party accepted responsibility for the delays in the change order. The change order stated that Contractor had begun implementing extraordinary measure, had incurred additional costs and would continue to do so throughout the course of the project. Construction proceeded.

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