Commercial Contractors

May 29, 2013

Demolition Activities Cause Release

Source: Great American Environmental Division, May 2013

A redevelopment project was underway where all existing structures were being razed and the site was to be re-graded. During demolition activities, the General Contractor punctured an unknown heating oil tank. Residual heating oil was still located within the tank and was released when the tank was punctured. Due to sandy soils and a shallow groundwater table, the oil was able to spread quickly. Although the tank was only 500-gallons, the clean-up became very involved due to the required excavation of impacted soils and the regular monitoring of groundwater until closure could he granted by the environmental regulators.


October 17, 2012

Owner’s approval of means and methods may not relieve contractor of liability

Source:, October 11, 2012
By: James Warmoth, Bradley Arant Boult Cummings LLP

When faced with a risky means and methods issue—excavating near an existing structure, for example—contractors frequently seek or otherwise receive input (whether they want it or not) from the owner or its on-site representative. In other cases, the contractor may simply take comfort in the fact that the owner is observ-ing the means and methods in progress and is not objecting to them. In either case, the contractor may assume that so long as the owner somehow “buys in” to the contractor’s plan and the contractor properly exe-cutes it, the owner will bear some or all of the risk if something goes wrong. This is not a sure assumption.

Generally, a contractor is solely responsible to implement the owner’s design concept through means and methods of its choosing, so long as the owner or owner’s designer does not dictate in the design that the contractor employ specific means and methods. More-over, inspection provided by or for the owner generally does not guarantee the contractor’s performance or relieve its obligation to perform work in accordance with the drawings and specifications. It is common for contracts to spell out these principles. The AIA A201 (2007), for example, provides that the “Contractor shall be solely responsible for, and have control over, construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract, unless the Contract Documents give other specific instructions concerning these matters.”…

December 27, 2010

GC/CM Held Responsible for Site Safety

A worker was seriously injured during construction by a collapsing wall. In his lawsuit, he alleged that the general contractor/construction manager was negligent for failing to provide for safety precautions. The courts agreed and held that the general contractor/construction manager was responsible for inspecting continuously or supervising the work of the subcontractors, including the right to require compliance with safety. The case settled for over $250,000.

This is a claim scenario developed from a single claim or several claims and has been developed for illustrative purposes only.

December 23, 2010

Water Infiltration on Condo Project

A construction manager was hired to construct a condominium project.  Water infiltration occurred around the windows that was caused by defective construction including the improper installation of flashing.  Accusations were made for negligent construction management.  Five million dollars in damages were sought.

This is a claim scenario developed from a single claim or several claims and has been developed for illustrative purposes only.

December 23, 2010

Negligence and Design Error Leads to Costly Settlement

A claim alleging negligence and design error was issued against a design/build contractor, resulting in a $4.5 million settlement not including high defense costs.  Elevated levels of mold were discovered in the HVAC system at a convention center and hotel.  The owner demanded remediation and repair to all the HVAC units throughout the hotel to prevent any further mold growth.  At the same hotel/convention center, the architect was sued for various construction and design defects on structural beams, exterior waterproofing, capacity deficiency, and the plumbing system.  There are reported damages of over $30 million including delays.

This is a claim scenario developed from a single claim or several claims and has been developed for illustrative purposes only.

December 22, 2010

General Contractor/Construction Manager Quadruples Coverage for Only Double the Premium

A prominent General Contractor/Construction Manager recently took advantage of the availability of limits and the overall soft market. The expiring limits were $2 million/$2 million for Professional/ Pollution coverage. Considering the number of projects and the type of work done – as well as some previous claims activity – the decision was made to increase their limits.

The policy was renewed for $10 million/$10 million with the incumbent carrier, who now provides the catastrophic coverage that was lacking previously. The premium nearly doubled but for a four-fold increase in coverage! This demonstrates the following:

  • The availability of limit in the market
  • The softness of the pricing
  • The realization of a general contractor/construction manager to get truly catastrophic coverage
  • An idea of the pricing scale with the addition of more limits
September 21, 2010

Improper Duct Sealing Leads to Legionella

Acknowledgement to Great American

Several office employees became ill from legionella. The cause of the legionella was the improper sealing of the ducts during the installation of a new HVAC unit which allowed condensation to build up. The employees brought suit against the property owner and the contractor.…

September 21, 2010

Faulty Window Installation Leads to Mold

Acknowledgement to Great American

Two years after the completion of a new high school, it was determined that the window system used during construction was allowing water to infiltrate the building. Mold was discovered. Faulty installation was part of the issue. The cost to remediate the problem was shared by the General Contractor and the manufacturer of the windows. The sub-contractor who installed the windows was no longer in business. The General Contractor did not have pollution coverage for Mold and paid over $900,000.…