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Construction Claims Advisor: Vol. 4 No. 12

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EDITOR'S NOTES
We’ve all come up a day late and a dollar short. On a construction project, if you can prove that the delay isn’t your fault, you just may be able to recoup that lost dollar, but only if it’s for extra labor and materials, according to a U.S. appeals court in Lexicon v. Safeco Insurance Co. Payment is a no-go, however, if a pay-if-paid clause precludes recovery from a contractor, as another appeals court ruled in MidAmerica Construction Management v. MasTec North America.

Honesty is usually the best policy, and we see two sides of what honesty can bring in this week’s last two cases. In Kinsman v. Unocal, the oil refinery is faulted for withholding information about hazardous toxins in the air. In Kootenia Homes v. Federated Mutual Insurance Co., the insurer shares too much information and gets stuck with the bill for defective stucco.

We conclude this week’s issue with the second half of Tom Frisby’s 12-step approach to effective construction contracting.

PROJECT DELAYS MAY WARRANT COST RECOVERY AGAINST SURETY
When a contractor isn’t to blame for delays, it may successfully seek cost recovery under a bond payment for extra labor and materials costs, but not for costs related to lost profit or overhead.

PAY-IF-PAID EFFECT TRICKLES DOWN WHEN OWNER GOES BELLY UP
A subcontractor faces an uphill (and futile) battle when it tries to seek payment from a contractor who hasn’t been paid by the owner. The contract’s “pay-if-paid” clause proves to be the demise of the subcontractor’s suit.

LANDOWNERS MUST DISCLOSE KNOWLEDGE OF CONCEALED HAZARDS TO INDEPENDENT CONTRACTORS
A California landowner that hired an independent contractor may be liable to the contractor’s employee for failure to inform of concealed hazards, says the state’s high court.

HONESTY PROVES COSTLY FOR INSURANCE COMPANY TRYING TO AVOID CLAIM PAYOUTS
An insurance company offers too much information, thus incurring liability for mold claims from a homebuilder. Its own admissions stick it with the entire bill.

THE 12 STEP APPROACH TO EFFECTIVE CONSTRUCTION CONTRACTING, PART 2
From adopting a team player approach to always looking for ways to improve, Tom Frisby offers effective ways to enhance the construction contracting process. This week’s article presents the final six concepts in his 12-step approach.