Construction Contract Waivers of Subrogation, Indemnity and - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Construction Contract Waivers of Subrogation, Indemnity and Contribution Navigating the Complexities and Pitfalls of Waiver Provisions for Contractors, Owners and Insurers THURSDAY, SEPTEMBER 4, 2014 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: G. Edgar James, Shareholder, Polsinelli , Kansas City, Mo. Holly A. Streeter-Schaefer, Shareholder, Polsinelli , Kansas City, Mo. Lisa A. Weixelman, Senior Partner, Polsinelli , Kansas City, Mo. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Construction Contract Waivers of Subrogation, Indemnity, and Contribution Presentation by: Eddie James Holly Streeter-Schaefer Lisa Weixelman Polsinelli PC. In California, Polsinelli LLP

Construction Contract Waivers of Subrogation, Indemnity, and Contribution  Where we are going: – Construction Contract Clauses – Insurance and Construction – Impact on parties to the contract and recent case law 6 real challenges. real answers. sm

Construction Contract Waivers of Subrogation, Indemnity, and Contribution  Construction Contracts may be complicated  Read Incorporated Documents  Be aware of Order of Precedence, if any  Be aware of statutes impacting enforceability 7 real challenges. real answers. sm

Construction Contract Waivers of Subrogation, Indemnity, and Contribution  A key purpose of Construction Contracts is Risk Management  Numerous Types of Construction Contract Clauses impact risk management 8 real challenges. real answers. sm

Risk Management Clauses in Contracts  Pay When Paid Clauses  Liquidated Damages  Waiver of Consequential Damages  No Damages for Delay Clauses  Differing Site Conditions  Notice Provisions  Indemnity  Insurance 9 real challenges. real answers. sm

10 real challenges. real answers. sm

Risk Allocation  Allocate risk to party best to able to manage  Traditional contract: Owner contracts with contractor and architect separately; owner responsible for coordinating between design and construction; architect/engineer responsible for design; contractor responsible for construction means and methods  Design-build: Owner responsible for performance criteria; design-builder responsible for design and construction, including coordination; bridging 11 real challenges. real answers. sm

Indemnity Clauses  Indemnification – Indemnity against loss: actual loss, expense, cost, damage – Indemnity against liability: claims, suits, complaints, allegations – Must know state law – broad, intermediate, limited – Anti-indemnity statutes – Does clause require indemnitor to indemnify/defend for indemnitee’s negligence – Insurance coverage 12 real challenges. real answers. sm

Indemnity Clauses  Broad Form – Consultant agrees to hold harmless and indemnify Client from any and all loss or liability, including cost of defense, arising out of performance of the services described herein.  Intermediate – Consultant agrees to defend, hold harmless and indemnify Client from any and all loss or liability arising out of Consultant’s performance except for the sole negligence or willful misconduct of Client. – Consider “to the extent caused by Consultant’s negligence or wrongful act”  Limited – Consultant agrees to hold harmless and indemnify Client from and against liability arising out of Consultant’s negligent performance of services. 13 real challenges. real answers. sm

Contribution Clauses  Contribution – Construction contracts rarely address the issue of contribution – Contribution: The sharing of a loss or payment among several. The act of any one or several of a number of co-debtors, co-sureties, etc., in reimbursing one of their number who has paid the whole debt or suffered the whole liability, each to the extent of his proportionate share 14 real challenges. real answers. sm

Waivers  Waiver - the intentional relinquishment of a known right  The renunciation, repudiation, abandonment, or surrender of some claim, right, privilege  Courts generally review waivers of rights with scrutiny & skepticism  If a waiver is deemed ambiguous, it may not be enforced as intended  Ambiguous - susceptible to more than one reasonable interpretation 15 real challenges. real answers. sm

Insurance/Risk Management  Builder’s Risk – Who buys (lowest rates, coverage) – Who is an insured – Who is responsible for deductible – What does it cover – When does coverage end 16 real challenges. real answers. sm

Builder’s Risk Insurance  Before commencing the Work, the Owner shall obtain and maintain a Builder's Risk Policy upon the entire Project for the full cost of replacement at the time of loss. This insurance shall also name the Constructor, Subcontractors, Subsubcontractors, Material Suppliers, and the Design Professional as insureds. This insurance shall be written as a Builder's Risk Policy or equivalent form to cover all risks of physical loss except those specifically excluded by the policy, and shall insure (a) at least against the perils of fire, lightning, explosion, windstorm, hail, smoke, aircraft (except aircraft, including helicopter, operated by or on behalf of the Contractor) and vehicles, riot and civil commotion, theft, vandalism, malicious mischief, debris removal, flood, earthquake, earth movement, water damage, wind damage, testing if applicable, collapse however caused, and (b) damage resulting from defective design, workmanship, or material. The Owner shall be solely responsible for any deductible amounts or coinsurance penalties. This policy shall provide for a waiver of subrogation in favor of the Constructor, Subcontractors, Subsubcontractors, Material Suppliers, and the Design Professional. This insurance shall remain in effect until final payment has been made or until no person or entity other than the Owner has an insurable interest in the property to be covered by this insurance, whichever is sooner. Partial occupancy or use of the Work shall not commence until the Owner has secured the consent of the insurance company or companies providing the coverage required in this subsection. Before commencing the Work, the Owner shall provide a copy of the property policy or policies obtained in compliance with this subsection. 17 real challenges. real answers. sm

CGL Coverage  Commercial General Liability The CGL policy shall include coverage for liability arising from premises, operations, independent contractors, products-completed operations, personal injury and advertising injury, contractual liability, and broad form property damage. The Constructor shall maintain completed operations liability insurance for one year after Substantial Completion, or as required by the Contract Documents, whichever is longer. – Operations/completed operations – Exclusions – Policy/insurance certificate – Limits (based on scope of work, project size/value) – Insured/Additional Insured 18 real challenges. real answers. sm