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June 2016

Construction Law Update

Second Quarter 2016

Gordon & Rees's Construction Group is pleased to publish the latest issue of our Construction Law Update, a quarterly take on trends of interest to design professionals, contractors, and developers throughout the country.

  1. Florida Federal Court Bars Coverage Under “Your Work” Exception

  2. What Happens When You Mix the Real Estate Crash Of 2008?

  3. Sustainable Construction: Too Good to Be True?

  4. Federal Government Must Timely Issue Final Decisions on Contractor Claims or Risk an Appeal

  5. Gordon & Rees Construction Attorneys Making Headlines

  6. Gordon & Rees Construction Law Blog

  7. About Gordon & Rees's Construction Group

I. Florida Federal Court Bars Coverage Under “Your Work” Exception
  By Amy M. Darby

The Middle District of Florida recently held that an insurer did not have a duty to defend a contractor under a commercial general liability (CGL) policy that includes a “your work” exclusion where the Complaint proscribes merely the inference of personal property damages. Auto-Owners Insurance Co. v. Elite Homes, Inc., et al., No. 14-1182, M.D. Fla.; 2016 U.S. Dist. LEXIS 12910. The issue addressed was whether damages from water intrusion through defective windows were precluded under a “your work” exclusion. Unfortunately for the contractor, Elite Homes, on February 3, 2016, the Court ruled that the insurer, Auto-Owners Insurance Co., had no duty to defend the homeowner’s claims.

To read a full, expanded version of this article, click here.

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II. What Happens When You Mix the Real Estate Crash Of 2008?
  By David L. O'Daniel

What happens when you mix the real estate crash of 2008, equitable subrogation claims, mechanics’ liens, title insurance, reservations of rights, clever (or not so clever) clients and attorneys, and a Morris agreement? You get the Arizona Court of Appeals decision in Fidelity Nat’l Title Ins Co. v. Centerpoint Mechanic Lien Claims, LLC, 238 Ariz. 135, 357 P.3d 170 (App. 2015) in which the court of appeals addressed the issue of whether a title insurance company is liable under United Services Automobile Ass'n v. Morris, 154 Ariz. 113, 741 P.2d 246 (1987), for damages agreed to by its insureds in a settlement agreement resolving third-party mechanics' lien claims against the insureds' interest in a real estate development.

To read a full, expanded version of this article, click here.

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III. Sustainable Construction: Too Good to Be True?
  By Matthew T. Hawk

Over the past decade, sustainable—or green—construction has moved from the periphery into the spotlight in many parts of the country. With states such as California and New York writing sustainable building requirements into their building codes, green construction has now become the norm for most newly constructed projects. With the rapid growth of the green construction industry, one of the key concerns raised by many has been the concern over the new risks that may exist to those entities involved with the green construction movement. With new project delivery methods, stricter performance criteria for building systems, and the utilization of new and mostly untested building materials and equipment, the chance for new liability exposure for designers and contractors alike seemed almost inevitable. However, after over a decade of green construction, the Armageddon that many thought was inevitable (yours truly included) has not manifested itself. In fact, litigation related to green construction has been almost non-existent throughout the country. So the question that is begging to be answered is, why? Construction litigation continues to be as prevalent as ever, so why does green construction appear to be immune? This article explores some of the potential reasons for this anomaly and whether we can expect the good times to continue for the foreseeable future.

To read a full, expanded version of this article, click here.

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IV. Federal Government Must Timely Issue Final Decisions on Contractor Claims or Risk an Appeal
  By Daniel E. Evans

Often times, contractors to the United States Government find themselves in a situation requiring them to file a claim to assert their rights. A contractor contracted to the United States is held to the provisions of the Contract Disputes Act (41 U.S.C. 7101-7109) and the Federal Acquisition Regulation (“FAR”).

The claim process under the CDA contains specific timeliness and submission requirements. These are strict deadlines which, if not satisfied, could bar a contractor’s claim. The good news for contractors, as reaffirmed by a February 2016 decision by the Armed Services Board of Contract Appeals, is that the Government is also required to meet timeliness requirements.

To read a full, expanded version of this article, click here.

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V. Gordon & Rees Construction Attorneys Making Headlines

Boston partner Jay Gregory, assisted by associate Saraa Basaria, recently wrapped up a two-week construction trial involving a disgruntled homeowner and Gregory's two clients, a general contractor and architect. The subject of the trial was the adequacy of the design and construction of a $1.2 million interior pool and three-car garage (“man cave”) addition to a high-end home in Wellesley, Massachusetts. More

On May 12, 2016, Gordon & Rees partners Jay Gregory and Tom Cronin presented on Construction Defect Trends in Litigation as part of the firm’s Legal Education Conference held in New York. The presentation focused on the top five claims trends in construction defect litigation while also providing an overview of claims likely to be anticipated in the near future. The presentation was attended by numerous claims handlers, underwriters, and attorneys and was a part of the firm’s full-day conference.

Partner Ernest Isola and senior counsel Christine Barker also presented the topic of Owner Controlled Insurance Programs (OCIPs) and Contractor Controlled Insurance Programs (CCIPS) at the firm’s New York Legal Education Conference in May. The presentation provided an introduction into OCIPs/CCIPS and the various methods used by parties in navigating coverage and litigation issues under these types of insurance policies.

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VI. Gordon & Rees Construction Law Blog

The Gordon & Rees Construction Law Blog continues to post new content addressing topical issues affecting the construction industry throughout the country. From analysis of new court decisions, discussions of timely legislation, and commentary on real-world, project-specific issues, Gordon & Rees’s Construction Law Blog provides insight on the issues that affect the construction industry now.

We invite you to visit the blog at and see for yourself what we are up to. If you like what you see, do not hesitate to subscribe under the “Stay Connected” tab on the right side of the blog. There you can choose how you would like to be informed of new content (Twitter, LinkedIn, email, etc.). If you have any questions about the blog or would like to discuss further any of its content, please do not hesitate to contact us.

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VII. About Gordon & Rees's Construction Group

Gordon & Rees's Construction Group consists of more than 80 lawyers covering the nation in 38 offices. In 2015, the firm opened offices in Harrisburg, Penn., Boston, Mass., Wheeling, W. Virg., and Columbus, Oh.

Gordon & Rees’s construction attorneys focus their practice on the comprehensive range of legal service required by all participants in the construction industry – architects, engineers, design professionals, design joint ventures, owners, developers, property managers, general contractors, subcontractors, material suppliers, product manufacturers, lenders, investors, state agencies, municipalities, and other affiliated consultants and service providers.

We serve clients who design, develop, or build all types of structures, including commercial buildings, single and multifamily residential projects, industrial facilities, universities, hospitals, museums, observatories, amusement parks, hotels, shopping centers, high-rise urban complexes, jails, airports, bridges, dams, and power plants. We also have been involved in projects for tunnels, freeways, light rail, railway stations, marinas, telecom systems, and earth-retention systems. Our experience includes private, public, and P3 construction projects.

If you have questions about this issue of the Construction Law Update or our nationwide construction practice, click here to visit our practice group page or contact partner Tom Cronin.

Thomas G. Cronin
Gordon & Rees, LLP
1 North Franklin
Suite 800
Chicago, IL 60606
(312) 980-6770

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