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Real Estate & Construction News Roundup (1/10/24) – New Type of Nuclear Reactor, Big Money Surrounding Sports Stadiums, and Positivity from Fannie Mae’s Monthly Consumer Survey

February 05, 2024 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
In our latest roundup, the commercial real estate market poses a risk to financial stability, New York City moves towards net-zero building emissions, workers at several Los Angeles area hotels tentatively agree to a new contract, and more!

• For the first time since Fannie Mae’s monthly consumer survey was launched in 2010, more homeowners overall believe rates will go down rather than up. (Diana Olick, CNBC)
• According to U.S. regulators, the commercial real estate market is potentially a leading risk to financial stability in 2024, noting rising vacancy rates, declining values of office properties, high interest rates and the possibility of an economic slowdown. (Jim Tyson, CFO Dive)
• New York City will soon begin penalizing owners of buildings that emit too much greenhouse gas — a move toward requiring net-zero building emissions by 2050. (Jennifer Kingson, Axios)

Read the full story...
Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Emerging World Needs $1.5 Trillion for Green Buildings, IFC Says

December 11, 2023 — Natasha White - Bloomberg
The International Finance Corporation is looking to develop a guarantee facility for private investors to boost finance for greener construction in emerging markets, as growing populations, urbanization and industrialization are set to spur pollution far beyond safe limits. IFC, the world’s largest global development institution focused on the private sector in low-income countries, is working with its counterparts in the World Bank Group to “create a one-stop shop for guarantees offered to private investors,” Susan Lund, vice president for economics and private sector development, told Bloomberg in an interview. We have “really high aspirations to scale that up dramatically for climate finance and in particular for green buildings and decarbonizing the construction sector,” she said. Lund’s comments follow a recent speech given by World Bank President Ajay Banga who said the bank is working to better unify guarantee insurance across the institutions. Read the full story...
Reprinted courtesy of Natasha White, Bloomberg

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Breach of Contract Exclusion Bars Coverage for Construction Defect Claim

March 19, 2024 — Tred R. Eyerly - Insurance Law Hawaii
The court determined the policy's breach of contract exclusion precluded coverage for a claim against the general contractor insured for construction defects. Mt. Hawley Ins. Co. v. McAtamncy, 2024 U.S. Dist. LEXIS 497 (N. D. Cal. Jan. 2, 2024). McAtamney, a general contractor dong business as Kilrea Construction, was hired by Jeffrey Horowitz for a home-renovation project. After completion of the project, Horowitz discovered defects in the work. He filed a complaint alleging that Kilrea breached obligations to construct and complete the work in an expeditious and workmanlike manner, free from any faults and defects. He brought claims for breach of contract, breach of implied warranty, negligence, neglignet supervision, and declaratory relief. Kilrea's insurer, Mt. Hawley, agreed to defend, but reserved the right to later deny coverage for any uncovered claims. The breach of contract exclusion provided there was no duty to defend a claim for property damage arising from breach of an express or implied contract or warranty. Read the full story...
Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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No Subrogation, Contribution Rights for Carrier Defending Construction Defect Claim

December 23, 2023 — Tred R. Eyerly - Insurance Law Hawaii
The Court held that the insurer defending the additional insured general contractor had no right to equitable subrogation or equitable contribution from a separate carrier who also insured the general contractor as an additional insured. Old Republic Gen. Ins. Co. v. Amerisure Ins. Co., 2023 U.S. Dist. LEXIS 170293 (N.D. Ill. Sept. 25, 2023). Tanger Grand Rapids, LLC hired Rockford Construction Company to build the Tanger Outlet Center. Rockford subcontracted with Kamminga & Roodvoeis, Inc. (K&R) to work on the pavement for the outlet mall. Under the subcontract, K&R agreed to maintain primary commercial general liability insurance for itself, with Rockford as an additionial insured. K&R obtained a policy from Amerisure. For additional paving work, Rockford subcontracted with Michigan Paving & Materials, CP. The subcontract also required Michigan Paving to maintain primary coverage, with Rockford as an additional insured. Michigan Paving obtained a policy from Liberty Mutual. Read the full story...
Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Finding an "Occurrence," Appellate Court Rules Insurer Must Defend

March 11, 2024 — Tred R. Eyerly - Insurance Law Hawaii
Reversing the trial court, the Wisconsin Court of Appeals found the insurer must defend a cross-claim against the insured owner of a building after an explosion occurred. LBC, LLC v Spectrum Brands, Inc., 2023 Wis. App. LEXIS 1251 (Wis. Ct. App, Nov. 30, 2023). LBC leased commercial property to Spectrum. Spectrum stored lithium on the property. The lithium exploded when it came into contact with water that entered the premises during historic flooding in August 2018. Spectrum remediated the premises, vacated the premises prior to the lease's termination date, and stopped paying rent. LBC sued Spectrum, alleging that Spectrum negligently stored the lithium and that Spectrum breached the lease. Spectrum counterclaimed, alleging that LCB breached the lease in various respects, that LCB negligent allowed water to infiltrate the premises, and that Spectrum was constructively evicted. LCB tendered the counterclaim to its insurer, General Casualty. The tender was denied and LCB sued. Read the full story...
Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Wyoming Supreme Court Picks a Side After Reviewing the Sutton Rule

January 16, 2024 — Ryan Bennett - The Subrogation Strategist
In a matter of first impression, the Supreme Court of Wyoming (Supreme Court), in West American Insurance Company v. Black Dog Consulting Inc., No. S-23-0052, 2023 WY 109, 2023 Wyo. LEXIS 111, examined whether a landlord’s insurer could pursue a subrogation claim against a tenant who caused a fire loss. The Supreme Court, applying a case-by-case approach, found that the insurer could not subrogate against the tenant. West American Insurance Company (West) insured Profile Properties (Profile), which owned commercial property in Cheyenne, Wyoming. Black Dog Consulting Inc., d/b/a C.H. Yarber (Yarber) leased commercial space from Profile where it operated a metal fabrication business. The lease agreement between Profile and Yarber required Yarber to pay the full expense of Profile’s blanket insurance policy, which included general commercial liability insurance and fire and extended coverage insurance on the building. Read the full story...
Reprinted courtesy of Ryan Bennett, White and Williams LLP
Mr. Bennett may be contacted at bennettr@whiteandwilliams.com

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Risky Business: Contractual Versus Equitable Rights of Subrogation

December 16, 2023 — Kyle Rice - The Subrogation Strategist
In Zurich Am. Ins. Co. v. Infrastructure Eng’g. Inc., 2023 Ill. App. LEXIS 383, the insurer, Zurich American Insurance Company (Insurer) proceeded as subrogee of Community College District No. 508 d/b/a City Colleges of Chicago and CMO, a Joint Venture. The Appellate Court of Illinois, First District (Appellate Court) addressed whether Insurer – who issued a builder’s risk policy to insure a building during construction – could subrogate on behalf of the building owner, City Colleges of Chicago (City Colleges), who was part of the joint venture and an additional named insured, but who had not been directly paid for the underlying loss. The Appellate Court determined that the policy language established that the carrier was contractually permitted to subrogate on behalf of all additional named insureds on the policy, including the building owner. Read the full story...
Reprinted courtesy of Kyle Rice, White and Williams
Mr. Rice may be contacted at ricek@whiteandwilliams.com

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Port Authority Revises Plans for $10B Midtown NYC Bus Terminal Replacement

March 04, 2024 — Marigo Farr - Engineering News-Record
New York City's Midtown Manhattan bus terminal replacement project advanced last week after the Port Authority of New York and New Jersey released a draft environmental impact statement and a revised project plan based on feedback from commuters, residents and local officials. Reprinted courtesy of Marigo Farr, Engineering News-Record ENR may be contacted at enr@enr.com Read the full story...

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