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A Manhattan trial judge issued a series of decisions in the last few weeks in connection with a civil case stemming from the 91st Street crane collapse that occurred in May, 2008. The collapse received widespread media attention due to the deaths of two workers (including the crane operator), and subsequent criminal charges against a mechanic and the owner of New York Crane, James Lomma. The 91st Street collapse was just one in a series of tower crane accidents at the time, prompting the City to strengthen its crane safety laws.

The mechanic, Tibor Varganyi, pled guilty to negligent homicide in exchange for his testimony that Mr. Lomma had an important weld repair performed by an inexperienced company in China because he wanted to save money. However, Mr. Lomma was acquitted of serious charges including second-degree manslaughter after a lengthy bench trial.

In the civil case, the court granted summary judgment to an engineering firm (McLaren Engineering) that was hired by the New York City Buildings Department, because it was only contracted to inspect the tower mast upon which the crane rested. Although there were several theories as to the cause of the accident, including the failed weld and operator error, there was no claim that the tower mast had anything to do with the accident. Accordingly, the court dismissed the deceased workers’ claims against McLaren.

Earlier, on March 3, Justice Manual Mendez refused to dismiss welding contractor Brady Marine Repair Co., even though it did not work on the weld that caused the accident. Since Brady’s invoice stated that it would “test all welds” on the crane, Justice Mendez determined that a jury should decide the scope of work that it committed to perform.

The Construction Manager, DeMatteis Construction, also moved for summary judgment, claiming that its subcontractor, Sorbara Construction, was solely responsible for the selection, operation and maintenance of the crane, and that DeMatteis did not supervise or control Sorbara’s work. Justice Mendez similarly denied this motion, finding issues of fact as to whether DeMatteis was negligent. Various claims against Lomma and New York Crane, as well as Sorbara, will move forward.

Today’s post is for anyone who has ever looked around their house and imagined how much more fun it could be made for their pet with just a little time, money, and effort. Yes, today’s post is for me, I admit it.

Beginning with perhaps the least extravagant and easiest do-it-yourself project, from Ilana DeBare at Berkeleyside, we have the “catio”, an outdoor enclosure designed to let cats enjoy being outside while keeping the cats (and the neighborhood birds) safe. Lest you think this is just another Berkeley phenomenon, check out “Catios offer cats a secure way to enjoy the outdoors” from Michelle Spitzer at the Associated Press.

Laura Moss over at mother nature network has some great photos of tiny homes for feral cats designed by New York architects (including a time machine!).

Giving dogs their due, Janet Eastman’s article at the Oregonian on “unleashing pet designs,” includes some creative ideas for dog owners. Dogwash tunnel anyone? No? Then Beth J. Harpaz of the Associated Press has some more down-to-earth tips on pet-friendly furniture here at “Pet-owner challenge: buying new furniture.”

And finally, check out the amazing house in Margot Peppers’ Daily Mail article about a “purr-fect paradise.” My favorite part is the shark-mouth hideaway in the bathroom.

From everybody here at G2G, have a great weekend!

Not surprisingly, after the cyber-attacks that occurred at a couple (or perhaps few) large retailers over the holidays there has been much discussion about the need to ramp up efforts to protect against such attacks. According to a Guide entitled Cybersecurity in the Golden State that was recently issued by California Attorney General Kamala D. Harris, “[i]n just the first three months of 2013, there were more than one billion Cyberattacks,” and “[i]n 2012, 50 percent of all targeted attacks were aimed at businesses with fewer than 2,500 employees.” It might surprise you, but according to the Guide, “[s]ecurity threats can be broadly categorized in to the following categories:

1. Social Engineering Scams 2. Network Braches 3. Physical Breaches 4. Mobile Breaches

The Guide is directed at small businesses to assist them in protecting against cyber-attacks and data breaches. It outlines recommendations for “businesses to help protect against and respond to the increasing threat of malware, data breaches and other cyber risks.” More specifically, a “cyber-attack” (aka “cyber-warfare” or “cyber-terrorism”) is generally understood to include “any type of offensive maneuver employed by individuals or whole organizations that targets computer information systems, infrastructures, computer networks, and/or personal computer devices by various means of malicious acts usually originating from an anonymous source that either steals, alters, or destroys a specified target by hacking into a susceptible system.” Examples of cyber-attacks include installing spyware on a personal computer or mobile device.

A “data breach” (aka an “unintentional information disclosure,” “data leak” or “data spill”) is generally is understood to be “the intentional or unintentional release of secure information to an untrusted environment.” “Secure information” includes sensitive, protected or confidential data. Incidents range from attacks by “black hats with the backing of organized crime or national governments to careless disposal of used computer equipment or data storage media.” A data breach occurs when secure information is “copied, transmitted, viewed, stolen or used by an individual unauthorized to do so.” A data breach may involve financial information, personal health information, “personally identifiable information,” trade secrets of corporations or intellectual property.

The Guide offers practical steps to minimize cyber-attack and data breach vulnerabilities:

• Assume You’re a Target
• Lead by Example
• Map and Encrypt Your Data
• Encrypt Your Data
• Bank Securely
• Defend Yourself
• Educate Employees
• Be Password Wise
• Operate Securely
• Plan for the Worst

The Guide is reported to have been prepared as part of a collaborative effort between the California Attorney General’s office, CalChamber and Lookout, a mobile security company.

Additional Resources: CalChamber

Evidently, there is an app for everything. Construction Simulator 2014 may just have the answers you need? Gigaom’s Games for the Weekend explains that Construction Simulator 2014 “is a simulation game where you inherit your family’s construction company. Unfortunately do not know much about the family business and need to get up to speed quickly in order to make enough money to expand.”

According to Gigaom, the player starts out owning a deposit tipper for removing waste materials from construction sites, a small excavator for filling the tipper with waste material, a small flatbed truck for hauling and a forklift for loading; apparently the app has 14 different vehicles in all. Outside of town there is a factory, gravel pit and sawmill and, in town, there is a builder’s merchant where you pick up the material necessary for various types of construction, a harbor by the sea and your business. As the player takes on jobs, the player earns money that can be spent on additional equipment. The larger the equipment, the more money the player earns. If the play is willing, the player can provide the company with a cash infusion.

No, I haven’t played Construction Simulator 2014, but for $2.99, as recommended by Gigaom, I just might put on my hard hat, roll up my sleeves, and get to work this weekend because it sounds like loads of fun!

Additional Resource: Gigaom; Pillsbury’s Social Media & Games Law Blog

Photo: OiMax, Taken Aug. 17, 2006 – Creative Commons

January 8, 2014, Judge Jon S. Tigar, U.S. District Court for the Northern District of California, in Cordy v. USS-Posco Industries, et al., 2014 BL 4209, N.D. Cal., No. 3:12-cv-00553, granted preliminary approval of the amended settlement agreement between approximately 700 steelworkers and their employer for $3.5 million to settle claims that the company failed to pay its hourly employees for, among other things, time spent donning and doffing protective gear and denying them meal and rest periods. The amended settlement agreement also provides for injunctive relief, including requiring the employer to confirm that it is “routinely maintaining records of the actual hours worked by its employees” and that “employee wage statements contain all information required under California law.”

Pittsburg, California Plant Steelworkers’ Claims

The February 2012 complaint alleges causes of action for violations of California’s Labor Code, the California Industrial Welfare Commission Wage Orders and California’s Unfair Business Practices Act. According to the complaint, the employer allegedly failed to pay non-exempt hourly employees statutorily mandated wages for time spent (1) swiping-in using an electronic card system, (2) donning and doffing protective equipment and (3) communicating with workers from the previous shift regarding incidents, problems, etc. at the plant during the previous shift. It also alleged that the employer denied workers bonafide off-duty meal and rest periods and, in addition, that it did not provide the workers with timely and accurately itemized wage statements.

The Settlement Fund

Of the total settlement fund, (1) $3,480,379 is designated as structured settlement payments to class members, with an initial deposit of $19,621 due within 5 business days of the court’s preliminary approval order; (2) sub-class representatives Carl Cordy and Donald Jones may receive up to $8,000 and $1,500, respectively, as enhancement awards, according to an addendum to the agreement; (3) $33,333 is allocated to resolve the steelworkers’ Private Attorney General Act (PAGA) claims, with 75% of this amount payable to California’s Labor & Workforce Development Agency and the remainder to be distributed to the sub-classes. Judge Tigar, approving the amended settlement, confirmed his belief that the average award will vary depending on which sub-class a steelworker belongs too, but generally will fall between $984 and $5,300. The Legal Aid Society-Employment Law Center is designated as the sole cy pres recipient. In addition, class counsel is set to receive no more than 33% of the total settlement fund.

Judge Tigar: The Settlement Is “Fair, Adequate, And Reasonable”

After rejecting the original settlement agreement last August, conditionally certifying four sub-classes, Judge Tigar concluded that the amended settlement meets the “fair, adequate, and reasonable” standard in that it now calculates awards based on the nature of the alleged injuries, rather than the previous proposition of awarding settlement funds based solely on the number of weeks each employee worked at the Pittsburg, California plant, even if the person worked just one shift a week. “While class settlements need not treat all members precisely equally, the parties’ effort to tailor relief based on individual class members’ circumstances is substantially fairer than the previous proposal,” Judge Tigar wrote.

Additional Source: Cordy v. USS-Posco Industries, et al Docket; Department of Labor, Summary of the Major Laws of the Department of Labor

Photo: Richard, Taken on Oct. 19, 2012 (Steelworker riding steel beam, Frankford El Construction, 1913) – Creative Commons

The recent decision by the Texas Supreme Court in Ewing Constr. Co., Inc. v. Amerisure Ins. Co., No. 12-0661, 2014 WL 185035 (Tex. Jan. 17, 2014), has insureds in Texas and throughout the country breathing a sigh of relief. The decision confirms the limited scope of the Texas Supreme Court’s earlier decision in Gilbert Texas Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118 (Tex. 2010), and makes clear that the contractual liability exclusion in general liability policies does not preclude coverage where an insured contractually undertakes to perform its work in a good and workmanlike manner.

Ewing Construction Company served as the general contractor to renovate and build additions to a school in Corpus Christi, Texas, which work included the construction of tennis courts. Shortly after the tennis courts were completed, they began to flake, crumble and crack, rendering them unusable. Ewing was sued by the school district that hired it for breach of contract and negligence.

Ewing tendered the suit to its liability insurer, who denied coverage. The insurer argued that the claims, which were all tied to Ewing’s breach of contract for failure to perform its work in a good and workmanlike manner, were precluded by the contractual liability exclusion. The district court, relying in large part on Gilbert, 247 S.W.3d 118, agreed with the insurer. The district court explained that Gilbert “stands for the proposition that the contractual liability exclusion applies when an insured has entered into a contract and, by doing so, has assumed liability for its own performance under that contract.” Ewing Constr. Co. v. Amerisure Ins. Co., 814 F. Supp.2d 739, 746-48 (S.D. Tex. 2011).

The case of Gilbert involved the construction of a light rail system for the Dallas Rapid Transit Authority (“DART”), with Gilbert Texas Construction serving as the general contractor. The contract between Gilbert and DART required Gilbert to protect adjacent property, including property of a third party, and to repair any damage to that property resulting from a failure to comply with the requirements of the contract or a failure to exercise reasonable care in performing the work. Heavy rains during construction caused flooding to a building adjacent to the work site. The building’s owner, RTR, sued Gilbert for, among other claims, breach of contract as a third-party beneficiary of Gilbert’s contract with DART. After motions for summary judgment, only RTR’s claim for breach of contract remained.

Gilbert then settled with RTR and sought indemnification from its liability insurer. Gilbert’s general liability insurer denied Gilbert’s request based on the contractual liability exclusion. Agreeing with the insurer’s denial of coverage, the Texas Supreme Court explained:

The obligation to repair or pay for damage to RTR’s property “resulting from a failure to comply with the requirements of this contract” extends beyond Gilbert’s obligations under general law and incorporates contractual standards to which Gilbert obligated itself. The trial court granted summary judgment on all RTR’s theories of liability other than breach of contract, so Gilbert’s only potential liability remaining in the lawsuit was liability in excess of what it had under general law principles. Thus, RTR’s breach of contract claim was founded on an obligation or liability contractually assumed by Gilbert within the meaning of the policy exclusion.

Gilbert Texas Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 127 (Tex. 2010).

The Texas Supreme Court found that the facts in Ewing were different from those in Gilbert. The court explained that Ewing’s agreement to construct the tennis courts in a good and workmanlike manner did not enlarge Ewing’s obligations beyond any general common-law duty Ewing already had. By contrast, the obligation assumed by Gilbert – to protect adjacent property and to repair or pay for damage to property of third parties “resulting from a failure to comply with the requirements of this contract” – did enlarge and extend beyond Gilbert’s obligations under general law. Ewing, 2014 WL 185035 at *6.

In short, the court held that the contractual liability exclusion applies only where the “insured has assumed a liability for damages that exceeds the liability it would have under general law.” Id. The court concluded “that a general contractor who agrees to perform its construction work in a good and workmanlike manner, without more, does not enlarge its duty to exercise ordinary care in fulfilling its contract, thus it does not ‘assume liability’ for damages arising out of its defective work so as to trigger the Contractual Liability Exclusion.” Id. at *7.

In Stresscon Corp. v. Travelers Prop. Cas. Co. of Am., 2013 COA 131, 2013 WL 4874352 (Colo. Ct App. Sept. 12, 2013), http://www.cobar.org/opinions/opinion.cfm?opinionid=9084, the Colorado Court of Appeals addressed the question of whether an insured’s breach of a “no voluntary payment” clause will always bar the insured from receiving benefits and ruled that under Colorado’s notice-prejudice rule, the answer is no.

Stresscon began with a construction accident on the Fort Carson Army Base where sections of a partially erected building collapsed after a crane hook caught on a safety stanchion and pulled a concrete component off its support beams. Bodily injury claims were settled and the general contractor sought indemnity from its concrete subcontractor for delay damages on the project. The concrete subcontractor tendered the claim to its insurer. After the insurer issued two reservation of rights letters and a letter to the general contractor denying the subcontractor’s liability, the general contractor and the insured subcontractor reached a settlement, which included delay and other damages but no allocation between the types of damages settled. The subcontractor did not obtain the insurer’s consent for the settlement.

Thereafter, the subcontractor sued its insurer for bad faith under Colorado statute, C.R.S. §10-3-1116, which carries a statutory penalty of reasonable attorneys fees and two times the covered benefit that was wrongfully denied. The subcontractor also sued the crane team (its sub-subcontractors on the project) and their insurers for indemnity for the settlement with the general contractor. In the first of two trials, the jury first found the crane subcontractors liable. In the second trial, the jury found that the insurer had unreasonably denied the delay claim and that the insurer was not prejudiced by the insured’s failure to obtain the insurer’s consent to the settlement. It also made an allocation of the settlement to reflect the amount of covered versus uncovered damages.

On appeal, the insurer argued that the trial court erred in denying its motion for directed verdict in which it had asserted that Colorado’s notice-prejudice rule applies only to late notice and not to an insured’s violation of a “no voluntary payment” clause and also that an insurer is prejudiced as a matter of law when an insured settles with a third party claimant before that third party has filed a lawsuit.

In addressing the issue, the court of appeals first explained that under Colorado’s notice-prejudice rule courts do not strictly enforce notice-of-claim language unless the lack of notice prejudiced the insurer. Discussing Friedland v. Travelers Indemnity Co., 105 P.3d 639, 645-646 (Colo.2005), the court reported that the rule addresses three public policy concerns: “(1) the adhesive nature of insurance contracts, (2) the public policy objective of compensating tort victims, and (3) the inequity of an insurer receiving a windfall … due to a technicality.” Where notice is not given until after the insured has settled, the law presumes prejudice to the insurer. If the insured rebuts the presumption, the burden shifts to the insurer to prove actual prejudice. As there was sufficient evidence at trial for the jury to find that the insurer was not prejudiced, in particular that the insured had obtained all material information necessary to analyze the claim and that the insurance company would not have achieved a materially better result, the court affirmed this aspect of the judgment.
In applying the rule here, the court rejected the insurer’s argument that the notice-prejudice rule only applies to violations of notice of claim clauses. “The supreme court [in Friedland] made clear that the insured’s settlement was the reason for the creation of a presumption of prejudice in favor of the insurer.” It also rejected the insurer’s second argument that an insurer is prejudiced as a matter of law if the settlement occurs before the third party claimant files suit in favor of case-by-case analysis, observing that “[n]othing about the pre-suit nature of a settlement renders it any less trustworthy than the post-lawsuit settlement.” The court continued, “Even assuming, for the purposes of argument, that, without a bright-line rule, policyholders and third parties will be tempted to collude to “set up” insurers, we conclude that the presumption of prejudice, and the insurer’s opportunity to prove prejudice if the insured overcomes the presumption of prejudice, provide ample protection against this putative risk.”

On cross appeal, the appellate court, affirmed the trial court’s ruling that the concrete company’s repair and replacement costs for its concrete components damaged in the accident were excluded under the policy. In particular, as the losses at issue were to “that particular part” of the construction project on which the subcontractor and its sub-subcontractors were actively working, they fell within the policy’s (j)(1), (j)(5) and (j)(6) exclusions.

Also on cross appeal, the court affirmed the trial court’s reduction of the award against the insurer by the amount paid by one of the crane subcontractors to satisfy the judgment in the first trial.

Lastly, the court took up the issue of whether an insured is entitled to its attorneys fees for bringing a motion for attorney’s fees under the statute. The trial court had denied those fees to the concrete company reasoning that the statutory penalty already awarded sufficiently compensated the insured for its “fees-on-fees.” The appellate court reversed reporting that “If a fee-shifting provision in a statute is part of a larger remedial scheme, appellate courts in Colorado have upheld awards of “fees-on-fees” based on the compensatory purpose of fee-shifting.” As the court further explained, C.R.S. § 10-3-1116(1) states that an insured may bring an action to recover “attorney fees and court costs and two times the covered benefit.” The trial court’s action of denying fees-on-fees “effectively turned the statutory ‘and’ into ‘or.'”

The light at the end of the tunnel moved further away for California’s high speed rail project on Monday, as a California court’s rulings placed much of the project’s funding in limbo.

In one ruling, in an action brought by the High-Speed Rail Authority and High-Speed Passenger Train Finance Committee to validate the Finance Committee’s decision to authorize issue of over $8 billion in bonds, the court refused to validate the bonds. Two state agencies were involved in the issuance: the Authority, which is charged with building the project and requested the bonds, and the Finance Committee, which is responsible for authorizing the bonds and did so. The court held that the Finance Committee was required by law to rely on evidence other than the bald request by the Authority for the bonds. As noted by the court, “[a]n agency that is specifically assigned to the task of building a project . . . may have a very different view of what is desirable than the public officials who sit on the authorizing committee, whose responsibilities include taking a view of the State’s finances that is broader than a single project.” The court found no other evidence in the record than the Authority’s request and denied validation.

In the second ruling, the court issued a writ of mandate directing the Authority to rescind its funding plan because it had not obtained all required environmental clearances, but declined to order rescission of the existing construction contracts, including the Tutor-Perini-Parsons contract we last blogged about in June.

What these two rulings mean for the future of high-speed rail in California is open for debate. According to the Associated Press’s Juliet Williams, the Authority’s CEO said the Authority did not think that addressing the rulings “will have any material effect on the project.” On the other hand, Ms. Williams also notes the observation of Michael Brady, an attorney for parties suing to halt the project, that “[I]t’s taken them five years to [get environmental clearances for] 28 miles, so how long will it take them to do 300 miles?”

On Thursday, August 15, the three-member Toll Bridge Program Oversight Committee voted to open the new San Francisco-Oakland Bay Bridge September 3, as originally planned. On July 8, it had been announced that the bridge opening would have to be delayed beyond the originally planned Labor Day weekend because they didn’t expect the failed bolt retrofit work to be completed until mid-December. Days later, hope was rekindled that a short-fix could be implemented quickly to address the failure of nearly one-third of the 96 bolts that secure earthquake shock absorbers known as shear keys to the deck when they were tightened in March. The August 15 decision followed a ruling by the Federal Highway Transportation Administration that an interim fix to address the bolt failures that occurred in March would allow the new span to open safely while the defective bolts are being retrofitted.

The San Francisco-Oakland Bay Bridge Seismic Safety Projects website confirms that “The Bay Bridge Will Be Closed Labor Day Weekend 8 P.M. Wednesday, Aug. 28 to 5 A.M. Tuesday, Sept. 3.” During the closure, the original East Span will be taken out of service and efforts made to open the new East Span to traffic. Work will be performed at the east (aka the Oakland Touchdown) and west (aka the Yerba Buena Island Transition Structure) ends of the new bridge to connect it to the existing Toll Plaza and Yerba Buena Island. Other “essential construction activities, including paving, striping and erecting barrier rail” as well as work “on the West Span, replacing lighting fixtures, cleaning and painting the cable, and repairing finger joints” will be performed as well. When the new San Francisco-Oakland “bridge reopens to traffic on Tuesday, Sept. 3, motorists will encounter a new driving experience, as traffic moves from the upper and lower decks of the original bridge to the parallel, side-by-side decks of the new East Span.” “The new side-by-side configuration will open up panoramic views of the San Francisco bay and the East Bay hills.”

The short-term fix will involve “inserting large steel plates, known as shims, into each of four bearings, enhancing their ability to safely distribute energy during an earthquake.” “The long-term solution to fixing the broken bolts on the eastern span is to cover them with an exterior saddle and cable system that is encased in concrete.” Work on the long-term solution will continue after the short-term fix is completed.

Transportation officials decided to close the San Francisco-Oakland Bay Bridge over Labor Day weekend instead of another weekend in September because traffic is lighter at that time and a lot of planning had already been done for that weekend in anticipation of opening the new span after Labor Day weekend.

Other Sources: New Bay Bridge to Open Labor Day Weekend, Sources Tell KPIX 5, CBS San Francisco and Bay City News Service, Aug. 14, 2013; New Bay Bridge Scheduled to Open September 3 After Labor Day Weekend Closure, San Jose Mercury News, Aug. 15, 2013; Toll Authority Confirms New Bay Bridge to Open Labor Day Weekend, CBS San Francisco and Bay City News Service, Aug. 15, 2013

Reproduced by permission from Western Legal History, volume 24, number 2 (2011). Copyright © 2011 Ninth Judicial Circuit Historical Society.

This article describes and analyzes the policyholder coverage court decisions and opinions arising from the 1906 San Francisco earthquake and fire, starting with a summary of the factual background and concluding with comments about their historic significance. By showing that policyholders could recover even under strict policy language, these cases helped to spur settlements by reluctant insurers and determined the pace at which the city’s rebirth was completed in the years immediately following the disaster.

But these century-old cases are also important today. They are still relevant to the issue of “ensuing loss”–whether fires or other covered perils, stemming from earthquakes or other excluded perils, are nonetheless insured. This broader question is as current as Hurricanes Katrina and Sandy, and as imminent as the next calamity.

Click here to download the article in its entirety.