October 10, 2017

What Cal U hasn’t divulged since collapse at parking garage last year

Source: http://www.post-gazette.com, October 7, 2017
By: Bill Schackner

Michael Kanalis knew early on that the state university where he works was looking straight up at a problem — a big one.

When a concrete chunk longer than a car inexplicably fell to the floor inside a five-story parking garage that had opened just six years before, California University of Pennsylvania lost not only prime parking in the heart of campus but fees it sorely needed to offset its growing yearly debt.

In an email days after the August 2016 collapse, Mr. Kanalis, interim director of facilities, said he informed an outside engineer that Cal U needed reassurance that the problem would not occur in other parts of the garage — and it needed to know in a timely fashion.

“I told him that for each day the garage is off line it is creating a growing financial burden to the university,” wrote Mr. Kanalis in a Sept. 16, 2016 email.

The email was among hundreds of pages of correspondence obtained by the Pittsburgh Post-Gazette through the state’s Right-to Know Law.

More than a year later, Vulcan Garage remains closed, which means those parking fees are not available to pay off publicly financed bonds on the $12 million building.…

October 10, 2017

Risk Management 101: Tailor Your Construction Insurance Requirements to the Discipline so You Don’t Get Taken to the Cleaners

Source: https://www.lexology.com, October 3, 2017
By: James P. Bobotek, Pillsbury Winthrop Shaw Pittman LLP

In the world of construction, whether you’re a lender, owner, contractor or subcontractor, your success hinges largely on risk management. While there’s no substitute for sound business and construction practices (such as proper preconstruction planning, proven construction means and methods, use of experienced personnel, and stringent safety programs), among the most important project risk allocation tools are the contracts governing the various parties’ rights and obligations. Within those contracts, risk is primarily allocated through indemnity and insurance requirement provisions. When preparing insurance requirements for construction-related contracts, it is crucial to ensure these pieces are well-fitted and comfortable, like a good piece of tailoring. This requires the indemnity and risk obligations associated with each project discipline to be clearly identified and addressed.

Design professional contract requirements should include auto and commercial general liability, workers’ compensation/employer’s liability and, most importantly, professional liability coverages. Pay particular attention to the limits of the professional liability coverage; requiring excess limits for this coverage may be appropriate depending on the project’s size. Consider requiring that the coverage be “project specific,” either through a separate project policy or sublimits applicable only to the project. For large projects, a lender may consider requiring, or an owner may consider obtaining, owner’s protective professional insurance coverage, which indemnifies the owner directly for losses arising out of professional negligence of architects/engineers exceeding the limits available under the architects’/engineers’ own professional liability policies.…

October 9, 2017

Insurance Coverage – Analysis of Professional Liability Exclusion

Source: http://www.jdsupra.com, September 28, 2017

Energy Insurance Mutual Limited v. ACE American Insurance Company

Court of Appeal, First District (July 11, 2017)

This case involves an insurance coverage dispute arising from an explosion that occurred when an excavator struck an unmarked petroleum pipeline.

Kinder Morgan, Inc. owns and operates oil and gas pipelines. Comforce Corporation is a staffing company that supplied two temporary employees to work as construction inspectors for Kinder Morgan. Kinder Morgan selected and trained the inspectors.

On November 9, 2004, an excavator punctured a high-pressured petroleum line owned by Kinder Morgan. An explosion occurred and killed five individuals and injured four others. Cal/OSHA conducted an investigation and concluded the primary cause of the accident was a failure to properly mark the petroleum pipeline. Cal/OSHA issued two “serious willful” citations to Kinder Morgan due to its employee’s failure to mark the location of the pipeline prior to excavation. Numerous wrongful death and personal injury lawsuits were filed against Kinder Morgan and Comforce, alleging that the explosion was caused by the parties’ negligence in failing to mark the location of the Kinder Morgan pipeline, and failing to properly supervise contractors.…

September 29, 2017

UCF sues over defects to football stadium

Source: http://www.orlandosentinel.com, September 29, 2017
By: Mary Shanklin

The University of Central Florida’s football stadium has some problems, according to a construction-defect lawsuit the school filed against architects and contractors.

Nicknamed the Bounce House when it opened a decade ago because it shifted slightly as fans jumped in unison, the venue’s metal framing for seating now has “defects and deficiencies” according to the university’s complaint filed this month. in Orange County Circuit Court. The school cited defects with “other framing accessories” in the stadium, too, although it did not elaborate on those in the lawsuit.

UCF has filed a lawsuit to hold the companies involved in constructing the stadium accountable for their role in creating premature wear of the steel,” spokesman Chad Binette said. “We contend that it is requiring more maintenance than it should for its age and use.”

UCF owns Spectrum Stadium and oversaw construction of the 45,000-seat arena together with the Golden Knights direct support group.…

September 29, 2017

Foundation flaws at center of lawsuit filed by Keller school district

Source: http://www.star-telegram.com, September 29, 2017
By: Sandra Engelland

It was a few years ago when maintenance workers and staff at Trinity Meadows Intermediate School began to notice problems.

Cracks in the walls. Doors that would stick. Heaving sidewalks and widening gaps and cracks in visible parts of the concrete slab.

Now, 11 years after the Keller district’s school opened in north Fort Worth, officials say the problems are much worse than the structure’s age and have filed a lawsuit against the firms that designed and built the $23 million school.

The culprit, according to the lawsuit, is a faulty foundation.

No extensive repairs have been required to date at Trinity Meadows, said Hudson Huff, director of facilities services for the Keller school district. But some work may be needed in the next five years, Huff said.

Officials say it was necessary to file a suit to protect the school district’s interests.…

September 28, 2017

Officials say Oroville Dam’s design and construction caused spillway failure

Source: http://www.constructiondive.com, September 6, 2017
By: Mary Tyler March

Dive Brief:

  • Months after a spillway failure forced the temporary evacuation of 188,000 Sacramento, CA, area residents, independent safety experts say poor design and construction, as well as inadequate inspections, caused February’s collapse at the Oroville Dam, The Mercury News reported.
  • Thin concrete, insufficient foundations and ill-placed drains caused water to seep through cracks and seams in the dam. Officials said the state could have found such faults if it had used contemporary engineering standards to inspect the 50-year-old structure, though that still could not have corrected the initial problems.
  • The Association of State Dam Safety and the U.S. Society on Dams are performing an independent review of the incident to inform other dam managers of failure warning signs. State and federal teams are also investigating the collapse.
September 28, 2017

Professional Services Exclusion Negates Coverage for Liability Arising Out of Insured’s Failure to Mark Oil Pipeline

Source: https://www.lexology.com, September 18, 2017
By: Jeffrey S. Crowe and Jennifer Hoffman, Sheppard Mullin Richter & Hampton LLP

Energy Insurance Mutual Limited v. Ace American Insurance Company, 14 Cal.App.5th 281 (2017); First Appellate District Court of Appeal, Division Four, Case No. A140656 (July 11, 2017). In Energy Insurance Mutual Limited v. Ace American Insurance Company, the California Court of Appeal held that a “professional services” exclusion applied to bar coverage for claims made against an oil pipeline owner, Kinder Morgan, and its temporary staffing agency, Comforce, following an explosion at a construction site. Kinder Morgan had hired two temporary employees from Comforce to work as construction inspectors on a water supply line project. As a result of Kinder Morgan’s alleged failure to properly mark the oil pipeline, an excavator punctured a high-pressured petroleum line and caused the explosion.…

September 27, 2017

Limitation of Liability Clause Enforced to Limit Recovery to only $550,000 of a $9.5 Million Jury Verdict

Source: https://www.constructionrisk.com, September 2017
By: J. Kent Holland, Jr.

Where a housing developer won a jury verdict for more than $9.5 million against a geotechnical engineer, the court applied the limitation of liability (LoL) clause in the geotech’s contract to cap the liability at $550,000. The developer attempted to avoid the LoL by arguing that the geotech’s conduct was willful and wanton. The trial court allowed evidence in that regard, but the jury found the conduct was not willful and wanton. Therefore, the LoL clause withstood the challenge.  Taylor Morrison of Colorado, Inc. v. Terracon Consultants, Inc., 2017 WL 2180518, 2017 COA 64 (2017).

Of note was the fact that the court allowed the plaintiff’s expert witness to describe in detail the actions of the geotech it deemed to be at fault, but it excluded testimony by the expert that this conduct was “willful and wanton” because that is “not an engineering concept” but rather a “legal concept” for which an engineer cannot testify.

There was a question of whether the geotech’s deposit of $550,000 into the court registry, and an email to counsel for the developer addressing a “mutual dismissal” constituted a statutory “offer of settlement” that would have allowed the geotech to recover an award of its costs and fees of litigation. The court held it did not.…

September 27, 2017

Crum & Forster prevails in claims-made policy period dispute

Source: http://www.businessinsurance.com, August 23, 2017
By: Judy Greenwald

A federal appeals court has upheld Crum & Forster Specialty Insurance Co. Inc.’s denial of an insurance claim for a claims-made policy by a construction firm because the claim was not submitted within the policy period, even though it was submitted during the policy’s subsequent renewal period.

Morristown, New Jersey-based Crum & Forster issued a professional errors and omissions liability claims-made policy to Anchorage-based Alaska Interstate Construction L.L.C. with an initial policy period of Dec. 1, 2011, to May 1, 2013, and then a renewal policy with a policy period of May 1, 2013, to May 1, 2014, according to Tuesday’s ruling by the 9th U.S. Circuit Court of Appeals in San Francisco in Alaska Interstate Construction L.L.C. v. Crum & Forster Specialty Insurance Co. Inc.

A claim against the policy was made by a wine producer on Jan. 10, 2013, during the initial policy period.  But Alaska Interstate did not report the claim until June 19, 2013, during the renewal policy period, according to the ruling.

After Crum & Forster denied coverage, Alaska Interstate filed suit in U.S. District Court in Anchorage, which granted the insurer summary judgment.

A three-judge appeals court panel unanimously upheld the lower court. Alaska Interstate argues “‘policy period’ can reasonably be interpreted as encompassing both the initial and renewal policy periods,” said the ruling.  “Under this interpretation, (Alaska Interstate) would have made and reported the claim within the single continuous policy period.”

But this proposed interpretation of “policy period” is not reasonable, said the ruling.  “According to the plain language of the policies, a claim must be made and reported within a single policy period, as stated in the Declarations for a given policy,” it said.

“An insured cannot reasonably expect coverage under such circumstances,” the ruling said, in upholding the lower court.…

September 15, 2017

Keeping Construction Risks Less Risky

Source: https://www.lexology.com, August 14, 2017
By: John J. Sylvanus, Barley Snyder

Major construction is full of risk and reward. Owners, architects, engineers, contractors and subcontractors – all are bound to each other by a web of agreements, common schedules and desired outcomes. Everyone on a project is dependent on everyone else and subject to events beyond their control. Your ability to complete work timely and on budget depends on others.

Controlling risk requires recognition of events with risk potential and taking appropriate steps to limit its potential impact. Risk events will occur, and when they do, you need to be prepared to act promptly and appropriately. It is critical to remember that the process of determining the appropriate response to such an event requires looking at it not only from your viewpoint and determining how best to respond based on your potential costs and losses, but also considering how others may react and the risk of that reaction to you. When foreseeable but unanticipated problems occur, you can incur losses by having your schedule disrupted or pushed back, your work interfered with or problems caused for others. Although delays and additional costs you may incur are easy to determine, the biggest risks might be those that don’t affect you directly. Follow these rules to minimize risk factors:…