CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Archive for the ‘Construction & Design Professional’ Category

Federal Court Rules No “Insured” Status for General Contractor and Subcontractor under Builders Risk Insurance Policy

Posted on: September 17th, 2020

By: Ben Dunlap

A recent ruling by the United States District Court for the District of Massachusetts underscores the importance of confirming the effectiveness of coverage for contractors and subcontractors on construction projects. In Factory Mut. Ins. Co. v. Skanska United States Bldg., No. 18-cv-11700-DLC, 2020, the Court ruled that a general contractor and subcontractor were not entitled to insured status under the project owner’s Builders Risk insurance policy (“the Policy”). The case arose from the construction of a biomedical facility in Cambridge, Massachusetts. During construction, a threaded cleanout plug at the project allegedly failed and released water into the construction site, causing substantial damage. The project owner submitted a claim for the property damage to the Builders Risk insurer, which paid the claim. The insurer then filed a subrogation action against the general contractor and subcontractor, alleging their negligence caused the damage.

The general contractor and subcontractor sought to dismiss the suit against them by filing motions for summary judgment, arguing they were insureds under the Policy and therefore could not be liable in subrogation, based on the “anti-subrogation” doctrine. The anti-subrogation doctrine provides that an insurer has no right of subrogation against its own insured, and thus may not seek indemnification against a third party if the third party also happens to qualify as an insured under the policy.

The general contractor and subcontractor argued they qualified as insureds because the Policy’s “Property Damage” provision “also insures the interest of contractors and subcontractors in insured property during construction at an insured location. . . to the extent of the Insured’s legal liability for insured physical loss or damage to such property,” “limited to the property for which they have been hired to perform work.”

The Court denied the motions for summary judgment, concluding that the  general contractor and the subcontractor were not entitled to insured status under the Policy.  The Court reasoned that an “insured” under the Policy would be one whose liability would be purely vicarious “to the extent of the insured’s legal liability for insured physical loss or damage.” The suit alleged the contractor and subcontractor were directly liable, not vicariously liable, and the named insured project owner was not alleged to have any legal liability for the loss, so the contractor and subcontractor were not “insured” with respect to the alleged damage.  Further, the language of the Policy itself indicated that it applied to only one insured, meaning only the project owner. As a result, the Court concluded that the anti-subrogation doctrine did not apply, and the subrogation lawsuit could proceed.

The ruling offers lessons for contractors and subcontractors evaluating litigation risk on construction projects.  When considering coverage under another party’s insurance policy, interested parties must proceed with care, including having that insurance policy reviewed by a professional and obtaining an opinion as to whether such insurance coverage is afforded.

If you have questions or would like more information, please contact Ben Dunlap at [email protected].

Statute of Limitations Tolled in California Amid Pandemic

Posted on: August 3rd, 2020

By: Matthew Jones

In response to the COVID-19 pandemic, California’s Governor Gavin Newsom issued a “state of emergency” for the entire State. In response, the California Judicial Council adopted several Emergency Rules to implement during the pandemic. In particular, Rule 9 states that all statute of limitations for civil causes of action are tolled from April 6, 2020 until 90 days after the state of emergency related to COVID-19 is lifted by the Governor. Therefore, if a party’s claim would have expired pursuant to the applicable statute of limitations during this timeframe, such claims are still very much alive. In regard to those claims, there is currently no deadline to file them since the “state of emergency” has yet to be lifted by the Governor. Once lifted, claimants will have six months to file their respective claims.

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Are Construction Codes Copyrightable?

Posted on: July 10th, 2020

By: Catherine Bednar and Kathleen Cusack

A case pending in the Southern District of New York is exploring the question of whether model construction codes can be copyrighted.  The case, International Code Council v. UpCodes, was filed in 2017 and debates whether various construction codes that were drafted by a non-governmental entity, International Code Council (ICC), are protectable by copyright. 

ICC is a non-profit corporation that develops model codes, which it calls “I-Codes”.  I-Codes include, for example, the International Building Code, International Plumbing Code, International Mechanical Code and International Zoning Code.  ICC develops the I-Codes and routinely publishes updated versions to reflect changes in the industry.  ICC offers users free copies of current codes, as well as versions of a few select codes showing historical changes.  ICC allows jurisdictions to incorporate I-Codes by reference rather than draft unique codes and standards. 

While UpCodes provides free access to the I-Codes, it charges users for the ability to search, bookmark, highlight, and comment.  ICC claims that UpCodes infringed its copyrights by posting: (1) I-Codes online without ICC’s permission, (2) state and local building codes that incorporate I-Codes by reference, and (3) unadopted model code with “redline” formatting to show differences in state or local codes.  On May 26, 2020 the Southern District of New York denied both parties’ motions for summary judgment.  Although the May 26 decision is not the final ruling in the case, the court noted that “if Defendants are liable for copyright infringement, it will not be for accurate copying of the I-Codes as adopted [into law].” 

In its decision, the district court relied on a recent Supreme Court decision published in April 2020, Georgia v. Public.Resource.Org.  In that case, the Supreme Court held that annotations to public code that were drafted under the supervision of the Georgia legislature were ineligible for copyright protections because they are not “original works of authorship” as defined in the Copyright Act.  Following the logic of earlier Supreme Court precedent that legal explanations are not copyrightable if penned by judges who possess authority to make and interpret the law, the court held that explanatory legal materials created by a legislative body are similarly ineligible.  The court explained, “If judges, acting as judges, cannot be ‘authors’ because of their authority to make and interpret law, it follows that legislators, acting as legislators, cannot be either. . . . In the same way that judges cannot be authors of their headnotes and syllabi, legislators cannot be the authors of (for example) their floor statements, committee reports, and proposed bills.” The Court was unpersuaded by Georgia’s argument that annotations in all forms are protectable, explaining that the pertinent question was authorship rather than the type of work produced.

The ICC v. UpCodes case differs from Georgia v. Public.Resource.Org. because the ICC is not a governmental body.  UpCodes is nonetheless encouraged by the Supreme Court case, citing it as validation that “no one can own the law.” The Southern District of New York noted in its May 26 judgement, however, that simply because “a law references a privately-authored, copyrighted work does not necessarily make that work ‘the law,’ such that the public needs free access to the work.”  The court specified that such a work might become the law if, for example, the private author intended the work to be adopted into law, “the work comprehensively governs public conduct,” the work expressly regulates an industry, the work provides for penalties or sanctions in the event that its rules are violated, and the work is identified as part of the law rather than as a copyrighted work.

The ongoing ICC v. UpCodes litigation will resolve the fact-dependent questions as to what was copied and whether UpCodes violated copyright law. The decision in ICC v. UpCodes could create cost-saving opportunities for members of the construction industry, who must often purchase multiple codes governing their projects.

If you have questions or would like more information, please contact Catherine Bednar at [email protected] or Kathleen Cusack at [email protected]

States Target Infrastructure Investment to Spark Economic Recovery

Posted on: June 22nd, 2020

By: Thomas Hay

Government leaders and industry groups are contemplating a major investment in infrastructure in the anticipated “Phase 4” coronavirus relief package. Last week, the American Public Works Association (APWA) called upon Congress to include infrastructure investment as a key component in the next COVID-19 recovery package. Congress will likely pursue the next federal stimulus bill in July.

In the meantime, numerous states have begun their own infrastructure investments to boost the economy. With hopes of speeding up New York’s economic recovery, Governor Andrew Cuomo recently announced plans to fast-track several major NYC regional infrastructure projects. One of the infrastructure projects aims to transport “low-cost renewable power downstate and production upstate” with the addition of new transmission cables which will run across the state. The project will also include an expedited power cable running from Quebec to NYC. The power cable will transport hydropower to the city. Other planned infrastructure projects include an ongoing upgrade to LaGuardia airport and several railway expansions, including an AirTrain link from LaGuardia to local NYC rail lines.

In Massachusetts, the state Senate recently voted to approve a bill for financing to improve municipal roads and bridges and create a new oversight board for the Massachusetts Bay Transit Authority. The bill authorizes increased funding to cities and towns for roadwork through the apportionment of state resources. If passed, the proposed $300-million investment could aid the economy by financing critical local infrastructure projects to advance the statewide transportation system.

In California, the recently proposed Sustainable Transportation COVID-19 Recovery Act seeks to exempt sustainable transportation projects from the lengthy environmental protection reviews mandated by the California Environmental Quality Act (CEQA). Lawsuits brought under CEQA can delay projects by 1-5 years. The proposed bill focuses on transportation projects involving public transit, pedestrians, and bicycle traffic in order to provide environmentally friendly and sustainable public transportation options for commuters. In addition, the California High-Speed Rail Authority recently announced more than 4,000 construction jobs have been created to build the 119-mile long high-speed rail line.

These and other state initiatives, along with federal programs, will create significant opportunities for the construction industry as it recovers from the impacts of the pandemic.

If you have questions or would like more information, please contact Thomas Hay at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you. We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Art or Blight? Developers Should Think Twice Before Removing Graffiti

Posted on: June 3rd, 2020

By: Jennifer Adair

In an opinion heralded by the street art community, the United States Court of Appeals for the Second Circuit affirmed a $6.75 million award of statutory damages against a building developer who willfully violated the Visual Artists Rights Act of 1990 (“VARA”) when he painted over popular graffiti.  Castillo v. G&M Realty L.P., 950 F.3d 155 (2020) presented an extreme example of VARA litigation involving Long Island City’s 5Pointz, a series of dilapidated warehouses that became a popular art installation when the building developer permitted prominent street artists to cover the walls with aerosol art. The developer brought in an acclaimed street artist to act as a curator of the building, selecting artists who displayed their works on a rotating basis. 5Pointz became an area attraction, featured in movies, TV shows, music videos, and countless Instagram posts.

That is, until the developer decided to revamp the property.  Over the objections of the curator, the artists, and the community, and while litigation concerning the matter was ongoing, the developer instructed workers to enter the property in the dark of night and paint over the artwork, an act that was found to constitute a willful violation of VARA.

VARA, 17 U.S.C. § 106A, was created to give artists a non-transferable lifetime authorship interest in works, even if the artists are no longer in possession of their works, in order to prevent “distortion, mutilation, or other modification of the work which would be prejudicial to his honor or reputation.” Further, it gives artists the right to “prevent any destruction of a work of recognized stature” by requiring building owners to provide the artist with a reasonable opportunity to remove the work before its destruction.

After an extensive factual inquiry spanning three weeks, the 5Pointz artists persuaded the court to award statutory damages for the destruction of their work, even though by its very nature aerosol art is temporary. At what point does cleaning up blight become destruction of art under VARA?  Developers should ask themselves:

  • Does modification of the work prejudice the honor or reputation of the author?
  • Is the work of a recognized stature?
  • Does the work have artistic quality?
  • Has the work been recognized within the artistic community?
  • Has the high status of the work been acknowledged?

If the answer to any of these questions might be “yes,” developers would be well-served by seeking legal advice.

For more information, please contact Jennifer Adair at [email protected].