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Archive for July, 2013

Do Arbitrator’s Always “Split the Baby?” Not this one.

Posted on: July 29th, 2013

By: Kamy Molavi

In 22 years as a construction lawyer after six years working as a construction project manager, I have heard and read numerous stories about arbitration awards that seems to represent a rough midpoint between the demands and expectations of each side.  The implication of these stories is that the arbitrators or the panel were universally lazy, and merely – and in a decidedly un-Solomonic manner – “split the baby” instead of truly analyzing the merits.  Based on my own experience as an advocate and as an arbitrator, I am not sure the allegation has merit.

Undeniably, in some of my arbitrations the outcome was very near the halfway point between where my client wanted to be and what the other parties sought.  On the other hand, in several of my contested cases the arbitrator(s) not only ruled completely in my client’s favor, but awarded attorneys’ fees.  The baby’s toes and fingers were intact.

Moreover, in each case where I have served as an arbitrator, I started the hearing quite prepared to award every part of a remedy sought if the evidence supported it, or deny the whole if it did not.  In fact, and to my great consternation and almost horror, in a recent case my utter open-mindedness afflicted me even after the evidence was closed!

In my deliberations as an arbitrator, I always spend hours reading the documents in evidence and reviewing my detailed notes, all the while preparing an Excel chart to track material evidence, arguments presented by the parties regarding each issue and each element of damages, as well as my observations, thoughts, and conclusions.  It is not an exaggeration to state that I agonize over each item, often revising my conclusions several times before I consider the award final.  While other arbitrators may utilize different or other techniques, I suspect most arbitrators approach their jobs in a serious and conscientious manner.

To be sure, sometimes an arbitration award appears to land somewhere between the contradictory demands and expectations of the opponents, but is that really surprising?  Construction disputes often involve numerous and disparate claims – the fact that one item of work was defective does not mean any other was, and the determination that one delay was excusable does not dictate the same conclusion regarding another.  Construction cases (whether in arbitration or not) sometimes are conglomerations are multiple disputes that may not be materially similar or related to each other.  Each claim must be evaluated on its own merits, as must each element of damages attributed to it.  Given this composition of their cases, parties should not automatically accuse their arbitrators of indolence merely because the award contains only a part of what they sought.

Am I saying that an award universally represents the arbitrator’s absolute certainty regarding every dime awarded or denied?  Of course not.  Time limitations, gaps in evidence, and other factors render that impossible.  But an award that may appear to be a facile splitting of claims may not be so, and probably is not.  For a survey regarding this issue, click here.

LEED Version 4 Approved by U.S. Green Building Council

Posted on: July 25th, 2013

By: Matt Foree

The Board of the U.S. Green Building Council (USGBC) recently approved version 4 of its Leadership in Energy and Environmental Design (LEED) program.  This version was the subject of lengthy commentary, delays, and controversy.  The new version of LEED will launch at the Greenbuild Conference and Expo, scheduled for November 18-23 in Philadelphia.

According to Christina Macken, the Assistant Project Manager of the LEED v4 Program at the USGBC, the new version focused on a more performance-based (measurable) system. The new version also addresses the need to tailor standards to buildings in certain markets, including data centers, warehouses, and distribution centers.

Recent actions by Skanska USA indicate LEED’s importance to some in the construction industry.  Skanska USA recently announced that it has resigned as a member of the U.S. Chamber of Commerce, to protest the Chamber’s support of an initiative to halt progress in sustainable building that would “effectively ban the future use of LEED for government buildings.” The President and CEO of Skanska USA, Michael McNally, had previously submitted commentary to the Washington Post foreshadowing Skanska’s decision.

Construction Defects Can In Fact Be Accidents

Posted on: July 24th, 2013

By: Jonathan Kandel  

The Supreme Court of Georgia has further clarified the scope of coverage for construction defect claims under commercial general liability (CGL) insurance policies.  In Taylor Morrison Services, Inc. v. HDI-Gerling America Insurance Company, No. S13Q0462 (Ga. July 12, 2013), the court clarified that a construction defect claim constitutes an “occurrence,” as defined in a standard CGL policy, when the only damage alleged is to the work of the insured contractor.  While the court’s decision does not change the substantive scope of insurance coverage for construction defect claims, it shifts the focus of coverage.

In Taylor, a home builder’s insurance company filed a declaratory judgment action, seeking a declaration that there was no coverage for a class action lawsuit filed against the home builder.  The insured home builder had been sued by numerous homeowners, alleging that they suffered property damage to their houses, including water intrusion, cracked concrete slabs, and broken floors, due to the home builder’s alleged failure to include sufficient gravel under the homes’ foundations.  On appeal of the declaratory judgment action, the U.S. Court of Appeals for the Eleventh Circuit asked the Supreme Court of Georgia to clarify whether Georgia law requires damage to property other than the insured’s completed work for an “occurrence” to exist.  The Eleventh Circuit’s request appears to be based on the Supreme Court of Georgia’s decision in American Empire Surplus Lines Insurance Company v. Hathaway Development Company, 288 Ga. 749, 707 S.E.2d 369 (2011), which held that “an occurrence can arise where faulty workmanship causes unforeseen or unexpected damage to other property.”

The Supreme Court analyzed the usual and common meaning of “accident” – the operative term in the definition of “occurrence” – and concluded that the term refers to whether an event was intended or expected, not the nature or extent of the injury caused by the event or the identity of the person injured.  Based on its conclusion, the court held that an “occurrence,” as defined in a standard CGL policy, “does not require damage to the property or work of someone other than the insured.”

Recognizing that CGL coverage is not intended to insure against liabilities for the repair or correction of the insured’s faulty workmanship, the court explained that other provisions in a standard CGL policy account for that limitation.  For example, the court explained that coverage under a standard CGL policy is trigged by an “occurrence” that causes “property damage,” and a claim for the repair or replacement of faulty workmanship usually will not be for “property damage.”  The court also noted that claims for faulty workmanship may fall within the scope of certain “business risk” exclusions.

Finally, the court addressed whether the legal theory (or claim) asserted impacts the “occurrence” analysis.  Prior to Taylor, many Georgia courts found that there was no coverage when the only claim asserted against the insured was for breach of contract (not negligence).  The Supreme Court concluded that the legal theory (or claim) asserted usually will not determine whether the incident constitutes an “occurrence,” with one notable exception.  That being, when a “theory of liability is absolutely and necessarily inconsistent with the notion of an ‘accident’ – that is, when the theory of liability and the idea of an ‘accident’ are mutually exclusive – a claim premised upon such a theory of liability” cannot possibly constitute an “occurrence.”  The court identified fraud claims as an example of a theory of liability that is necessarily inconsistent with meaning of “accident.”   Moving forward, the availability of insurance coverage for construction defect claims will turn on whether there is “property damage,” as defined in a standard CGL policy, and whether exclusions to coverage apply.  The court’s decision brings Georgia law in line with the strong recent trend in other jurisdictions, including Florida, Maryland, South Carolina, Texas, and Virginia, among others.


Reversing Course: Georgia Supreme Court Simplifies Analysis for Official Immunity for State-Employed Physicians

Posted on: July 23rd, 2013

By: Michael Eshman


The Georgia Supreme Court recently revisited and reversed its 1997 decision of Keenan v. Plouffe that applied a multi-factor analysis in determining whether a state-employed physician was entitled to official immunity from suit. Courts state-wide struggled with the scope and application of the Keenan decision, and the fact-specific analysis limited predictability of outcomes.  In Shekhawat v. Jones, the Georgia Supreme Court reversed its decision in Keenan, finding that the decision confused sovereign immunity and official immunity and created bad precedent.  According to the Court, the sole issue in determining whether a state-employed physician, or any state employee, is entitled to official immunity under the Georgia Tort Claims Act is whether the employee was acting within the scope of his or her employment with the State in committing the allegedly tortious act.  Moving forward, a state-employed physician acting within the scope of his or her employment in providing treatment that is the subject of a malpractice action will be entitled to official immunity, and such a physician cannot face personal liability.

Dangers of Hiring Independent Contractors

Posted on: July 22nd, 2013

By: Leanne Prybylski

Many contractors hire independent contractors, rather than employees, to avoid paying taxes and benefits.  Contractors should be aware, however, that the costs of misclassifying employees as an independent contractors could end up being more expensive than it would have been to pay the taxes and benefits for the employees in the first place.  For more information, see the recent article by Leanne Prybylski, “The Dangers of Hiring Independent Contractors.”