Last month New York's Supreme Court, Appellate Division 1st Department affirmed the Supreme Court, New York County's decision granting partial summary judgment in favor of an insured freezer manufacturer, I.J White Corp., which sought defense and indemnity under a CGL policy for claims against it brought by Hill Country Bakery for breach of contract, breach of warranties, and fraudulent inducement. See I.J. White v. Columbia Casualty Co., 2013 N.Y. Slip Op 02500 (NY A.D., 1st Dept., April 16, 2013). The court held that Hill Country's underlying complaint against I.J. White seeking damages because of a defect in its freezer system alleged both an "occurrence "and "property damage" within the meaning of the policy, triggering the insurer's duty to defend.
Hill Country, a maker and distributor of baked goods, bought a spiral freezer system from I.J. White which was to freeze freshly baked goods within 150 minutes to a temperature necessary for proper handling and packaging. Once installed, however, the freezer failed to freeze the cakes as required, which became evident when workers cut into the cakes as part of the packaging process.
THE QUESTION: (A question pondered as far back as October 1981.) What do you do when the only way for 16,000 cars to get from point A to point B each weekday is to go through congested streets of downtown Miami?
THE ANSWER: The Port of Miami Tunnel (POMT) - a $1 billion tunnel connecting I-395 to the Port of Miami.
THE DILEMMA: How exactly does one build a tunnel (twin tunnels actually) approximately 4,2000 feet long, almost 40 feet in diameter, and 120 feet below the surface of the water?
A few weeks ago I posted about an Eighth Circuit case that once again illustrated how, despite the drafter's precision carrying the day most of the time, sometimes a litigator's creativity can trump it. Well, it's happened again. And again the issue is whether a dispute between and insured and a carrier is subject to arbitration. And again, the carrier wanted to arbitrate but the court kept the case. This time it's the Second District California Court of Appeal, in Diamond Blue Enterprises v. Gemini Insurance Company. Before I say more, let me caution all the lawyers preparing to cite the case that it's unpublished.
Don't worry. That shaking you feel isn't an earthquake. It's the construction of the new Tappan Zee bridge across the Hudson River north of New York. I'm kidding of course. Construction on the $3.9 billion project hasn't even started yet, but much of the geotechnical work, not to mention the design, has. Now they are planning on picking up good vibrations with highly sophisticated shoebox-sized sensors posted around the construction site. This is nothing new, but the plan to make the data available online 24/7 is--at least as far as I know. Check back here in a few weeks to see the monitoring page.
But lest you think that the only people interested in the movers and shakers at the bridge are the contractor and the nimbies and gadflies nearby, note this: Columbia University's Lamont-Doherty Earth Obversvatory is just downriver on the West side, home to gobs of the largest and most sophisticated earth measuring equipment you'll find. My geotechnical engineer friends tell me that every year Lamont-Doherty hosts an open house, which is generally geared toward kids, but is fascinating for geeks (like me) of all ages. It's usually in early October, so check their website if you're anywhere near New York and take the kids. While you're there you can swing by and see a pretty cool construction site at the new bridge.
OK, this post isn't about construction. But it is about law--civil procedure, to be precise. Anyone who has been through a trial knows how much persuasiveness expert witnesses can have, particularly with juries, but with judges and arbitrators as well. It's been 20 years since the U.S. Supreme Court started reining in slick experts with Daubert v. Merrill Dow Pharmaceuticals, putting trial judges in a gatekeeper role to only allow reliable expert opinions to reach a jury. The high court followed its Daubert decision with General Electric v. Joiner (1997) and Kumho Tire (1999) which clarified the standard of review for a trial judge's decision whether to admit expert testimony and also that the Daubert standard applies to all experts -- not just scientific experts. Daubert and its progeny are now well-established rules in federal courts. Not so much in state courts, but that's about to change for at least one state.
And over in Mexico, while this building may not be designed to grow, the modules on the facade "are coated with a special pigment that, when hit by ambient ultraviolet light, reacts with urban air pollutants, breaking them down into less noxious compounds like carbon dioxide and water"...in other words, it eats smog.
In a previous post, we reported that the American Society of Civil Engineers ("ASCE") released its 2013 Report Card for America's Infrastructure. America's cumulative GPA for infrastructure was a D+. One of the categories in this report focused on ports, which received a C grade. Now a new report goes into more depth on one particular part of our infrastructure: Ports. The question, it seems, is: CapEx or Capsize. More, after the jump.
I occasionally give a presentation called "That's not what I meant!" which is subtitled "Usually the drafter's precision carries the day, but sometimes the litigator's creativity trumps it." Our legal system generates seemingly endless material for this presentation and last week the Eighth Circuit gave us more in Union Electric v. AEGIS Energy Syndicate. The policy had a mandatory arbitration provision, but an endorsement specified that Missouri law governed and a Missouri statute prohibits mandatory arbitration of insurance disputes, so while the carrier wanted to compel arbitration, Judge Jean Hamilton refused and the Eighth Circuit affirmed her decision. So, the drafters may have intended that any disputes would be arbitrated, but if so, they should have done some more homework.
There are a couple of lessons here. First, read the entire policy, including the endorsements. The endorsements are like change orders to construction contracts and until you've read them, you don't know what the policy provides for. Second, just because a policy (or any other contract, for that matter) says something doesn't mean it has to be. Many common contractual clauses are rendered unenforceable by either caselaw or statutes. Third, because insurance policies are governed by state laws, and in light of the differing interpretations and statutory schemes amongst the states, there can be wide variations of the procedural and substantive effect of policies depending on what state's law governs. So, do your homework.
For a visual tour of the construction of New York's Second Avenue Subway line, the Big Apple's first major expansion of its subway system since 1932, check out CBS Sunday Morning's video, NYC's subway, still under construction.
Amidst the obligatory interviews on the surface with planners, engineers, and inconvenienced neighbors, the video offers interesting glimpses of the excavation and construction of the first phase of the $4.5 billion project. Phase 1 of the planned four phase, two-track line will provide service from 96th to 63rd Streets and is expected to be complete in December 2016. The new line, once all four phases are completed, is to shuttle commuters up the East Side from Hanover Square to 125th Street.
If you don't have time for the six and half minute video, skip to the photo gallery, Building NYC's Second Ave. Subway, for photos and renderings of the project and equipment. For more detailed information on the project, including monthly project updates, go straight to the horse's mouth at MTA.info.
The Second Circuit's recent decision in Scottsdale Insurance Company v. R.I. Pools, Inc., Case No. 11-3529, 2013 WL 1150217 (2d Cir. March 21, 2013) should be welcome news for Connecticut contractors insured under CGL policies with Broad Form Property Damage Coverage, seeking coverage for losses to their work caused by their subcontractors. In RI Pools, the Second Circuit vacated the district court's grant of summary judgment in favor of an insurer, including a ruling that the insurer was entitled to a return of funds it spent on the insured's defense, after concluding that the district court erred when it ruled that a swimming pool contractor's liability for cracked concrete could not be covered by its insurance. The district court relied on the "your work" exclusion, but in doing so, it read the "subcontractor exception" out of the policy. The Second Circuit put it back in.
Do you really need that progress payment lien release notarized? It's such a pain in the rear, isnt' it? Isn't a signature enough? After all, you don't get your contracts notarized--well, not most of them.
This was the discussion around our water cooler the other day, initiated while some of our lawyers were re-writing a standard form subcontract for a client who does work in many states. Notarizing documents certainly seems like something from a bygone era--when there were horses, buggies, and buggy-whips. Maybe notaries will be like those notorious buggy-whip makers a century ago. After all, the federal government has long accepted un-notarized declarations in lieu of notarized affidavits. See 28 USC § 1746.
So why do we still need notaries? Because some people are liars. Or, more accurately, forgers. Check out this nightmare.
Sadly, one good reason to have your lien releases notarized is to provide a last check that the party who supposedly executed it doesn't say their signature was forged. Of course, a forged lien release is a lot different than a forged performance bond--but they're both likely to land someone in the pokey.
But the first answer to the question is much less interesting: Many states require notarized lien releases by statute. Of course, those can change too.
The American Society of Civil Engineers ("ASCE") has released its 2013 Report Card for America's Infrastructure. The Report Card assigns a letter grade to sixteen major categories of infrastructure - such as bridges, dams, and roads - based on capacity, condition, funding, future need, operation and maintenance, public safety, and resilience. The individual categories ranked by the Report Card range from a high of B- for solid waste to a low of D- for inland waterways and levees. The 2013 Report Card gives the nation's infrastructure a D+ GPA and estimates that $3.6 trillion in investment will be needed by 2020 to maintain a state of good repair.
The D+ rating is up only slightly from the D GPA given by the ASCE's last Report Card in 2009. And the study is replete with grim statements. For example, it notes that, "much of our drinking water infrastructure is nearing the end of its useful life," "one in nine of the nation's bridges are rated as structurally deficient," and "[f]orty-two percent of America's major urban highways remain congested, costing the economy an estimated $101 billion in wasted time and fuel annually."
The ASCE's President, Gregory E. DiLoreto, notes that much of the nation's infrastructure was put into place over fifty years ago and is simply "overwhelmed or worn out." Mr. DiLoreto notes the current backlog of infrastructure projects and deferred maintenance, and he stresses the need for innovative solutions and increased investment. According to Mr. DiLoreto, failure to address these projects will cost American families an estimated $3,100 per year in personal disposable income.
So how does America improve these abysmal grades? According to the ASCE, the solution is simple - "when investments are made and projects move forward, the grades rise." With many cash-strapped states now looking to public-private partnerships to address their infrastructure needs, perhaps the 2017 Report Card will be an improvement.
On March 1, 2013, President Obama ordered the implementation of across-the-board cuts - sequestration - primarily directed to military and domestic discretionary spending because the White House and congressional leaders could not agree to an alternative. The Balanced Budget and Emergency Deficit Control Act of 2011 requires this sequestration, which means that the executive branch must implement $85 billion in cuts over the remaining months of Fiscal Year 2013. This alert provides background on the expected cuts and how the sequestration may affect contractors. Notably, the sequestration is separate from the continuing resolution funding the federal government that ends on March 27, 2013. If Congress does not act to fund discretionary spending for the remainder of Fiscal Year 2013, then the government will shut down. We have also prepared pointers for federal contractors in the event of a shutdown.