In this second of two short videos, a/e ProNet Associate Member Kent Holland, JD. addresses key risk allocation issues in a typical indemnification clause.
Kent shows how he would recommend redlining to revise an uninsurable indemnity clause under a professional insurance policy. His revisions limit indemnity to third party tort claims and the damages from such claim only to the extent caused by the Indemnitor’s willful misconduct or negligence.
Kent also deletes from the list of Indemnitees “agents and representatives” as being too broad, and shows other ideas as well.
Author Information
Kent Holland, J.D.
Construction Risk, LLC Visit > 1950 Old Gallows Rd., Suite 750 Tysons Corner, VA 22182 kent@constructionrisk.com p: (703) 992-9480
In this first of two short videos, a/e ProNet Associate Member Kent Holland, JD. reviews recent litigation concerning contractual indemnification clauses, and discusses risk management tips learned from these court decisions.
Topics Include:
Limiting indemnity to damages resulting from third party claims.
Avoiding an obligation to duty against professional liability claims.
Limiting indemnity to damages to the extent caused by the Indemnitor’s negligence instead of allowing the broader indemnity for the damages “arising out of” negligence.
Author Information
Kent Holland, J.D.
Construction Risk, LLC Visit > 1950 Old Gallows Rd., Suite 750 Tysons Corner, VA 22182 kent@constructionrisk.com p: (703) 992-9480
a/e ProNet has officially announced two recipients for the 2021-2022 David. W. Lakamp Scholarship.
Initially launched in 1990, the scholarship was renamed after a/e ProNet’s Founder, David W. Lakamp in 1999. Lakamp was a trusted advisor to the profession and left behind a legacy of professionalism and integrity that set new standards in the field of insurance services.
The company awards two $5,000 scholarships in Lakamp’s name every year to the two students who best demonstrate strong interest in practice management.
One of the two 2021-2022 scholarship recipients is Alexandra Gottlin. A native of Stanford, CT, Alexandra grew up on the East Coast. Her undergraduate work led her to a degree in mathematics and she started in the trade as an estimator and project manager in construction. She quickly gravitated towards risk management, a concept that usually comes later on in similar careers. Armed with a deep-seated desire to gain a deeper experience, she decided to pursue an architectural master’s degree at the University of Oregon, Eugene, OR. As an East Coast native, she quickly found out how uniquely cold the Pacific Ocean is to the Atlantic. She is aiming her career toward bringing contract reviews and estimations into a career in hospitality and residential architecture, particularly creating warm interior designs. “I want to create unique experiences,” said Alexandra to a/e ProNet Executive Director Lynda Colucci and Member Stan Pease of Shipley & Pease.
The second scholarship recipient is Philadelphia, PA native Schola Eburuoh. Schola’s interest in architectural design and helping people started as a child. With a real estate agent for a father and a doctor as a mother she had some practice early on building houses from the ground up. From her participation in the design, colors, and feel of the house her family built, to her time as a volunteer with Habitat for Humanity, she knew that she wanted to incorporate both of her parent’s ethos into her future. She received her undergraduate architectural degree at The Catholic University of America in Washington D.C. and is preparing to head to Harvard Graduate School of Design this fall, where she will pursue an architectural career centered around public interest designs. “I want to give back and be able to help people,” Schola told a/e ProNet Executive Director Lynda Colucci. “I hope to use and develop skills to transform the world around me.” Schola’s dream job is to someday own her own firm with some like-minded collegiate friends.
“In this third year of administering the a/e ProNet David W. Lakamp scholarship, we continue to be impressed with the exemplary quality of the applications for this highly competitive award,” said R. Steven Lewis, FAIA, NOMAC, Architects Foundation President. “We look forward to Schola and Alexandra joining the distinguished network of Architects Foundation Scholars and Alumni paving a bright future for the profession.”
We are very proud of both Alexandra and Schola and we look forward to watching their dreams become reality!
Meet Jillian Brislin, a/e ProNet’s 2021 ACEC Scholarship winner. Ever since her grandfather (a civil engineer) bought her her first Erector Set as a child, it has been Jillian’s dream to build bridges. She recently sat down with a/e ProNet member Brent Gough of Ames & Gough (MA) and a/e ProNet Executive Director, Lynda Colucci to discuss her career dreams.
A native Philadelphian, Jillian is now in her fourth year at Northeastern University in Boston, MA. She intends to graduate with a bachelor’s degree in Civil Engineering and will further pursue a Master’s Degree with emphasis in Structural Engineering (as well as the coveted PR and/or SE designations.) These are lofty goals, but they are certainly achievable for such an ambitious young woman. One of Jillian’s dreams is to travel around the world and study the works (and structures) of old cathedrals and mosques. How is it they still stand century after century?
Jillian is humbled and excited to receive a/e ProNet’s scholarship and she is looking forward to someday working on new bridges and infrastructures here at home. Congratulations Jillian! We are proud to invest in your education and we know you will go on to do great things!
With Courts closed in DC, Maryland and Virginia, civil jury trials became impossible for the foreseeable future.
Delays usually resulted in additional discovery, additional motions or opportunities for settlement negotiations.
During the past year, the courts and the bar have adjusted and managed to push through these challenges.
Like everyone else in America, COVID-19 brought our world to a screeching halt last March. For litigators, it instantly meant that all Courts were closed, deadlines were postponed, and trials were impossible. Instead of juggling schedules between court appearances, depositions, mediations and trials, we were initially at home telecommuting and discovering creative alternatives how to handle the new covid challenges the pandemic created. How do you litigate your client’s case when you can’t see anyone in person or go to court? Gradually, we adjusted and learned to solve this problem in a variety of new ways.
With Courts closed in DC, Maryland and Virginia, civil jury trials became impossible for the foreseeable future or at best six months or more away. Consequently, we could not seek the ultimate resolution of “going to trial” that litigation offers. Early on, Courts in Maryland actually discouraged filings because it would require more staff to enter the building and risk more potential exposure to COVID. All of this can be frustrating to clients who want their cases to be heard in court. These delays usually resulted in additional discovery, additional motions or opportunities for settlement negotiations. Earlier this year, we had two extremely protracted and difficult cases which were destined for jury trials, settle, in part, because the parties preferred settlement to the unforeseeable future of actually getting to a jury perhaps sometime in late 2022. Last year and this year, we saw cases progress through zoom discovery, zoom court conferences and zoom mediation reach settlement despite the lack of reasonable access to civil jury trials in the courts.
The downside of the delays are increased litigation fees and expenses. Attorneys have time to investigate more facts or file more motions. We have a summary judgment motion that was filed in the summer of 2019 but hasn’t been ruled upon because of the shutdown. In that time period, the plaintiff worked feverishly to dredge up new facts to justify an amended opposition. This will inevitably require amended reply briefs from our office with additional factual investigation and legal research. Some of our cases have higher costs now because they weren’t resolved in the typical pre-Covid timeframe.
One positive note is the flexibility of the legal profession to innovate in these times. We’ve found new ways to communicate with clients over Zoom so that we can still make a personal connection without travelling. Attorneys and staff discovered that we can work from almost anywhere as long as you can connect to the internet. We think that at least some of the changes to the legal profession from COVID will be permanent such remote attendance at many depositions, court conferences, some mediation hearings. However, everyone is looking forward to some return to a “New Normal” with some opportunity for in person contact with our clients, other attorneys, judges and juries.
In March of 2020, the COVID-19 shutdown at first looked like an existential threat to traditional practice of litigation law firms. During the past surreal year of the pandemic, the courts and the bar have adjusted and managed to push through these challenges. Now, with the increasing availability of the Covid vaccines and light “at the end of the tunnel”, the profession should come out of it stronger and more efficient than it was before. Thankfully, we have survived the past year and we are all eagerly awaiting to return to the “New Normal”.
The ongoing COVID-19 global pandemic’s impact on the A/E community has been, at best, unsettling. With due recognition of the countless personal and professional tragedies experienced and to be experienced, here, we will focus primarily on the impact of COVID-19 on construction litigation and some potential contractual tools to consider to mitigate against this and potentially future pandemics.
Clearly, the construction industry at large has suffered from the additional burdens and public policy implications COVID-19 has had on ongoing and planned projects. National organizations such as the AIA and ASCE have cited factors such as funding delays, intermittent and unpredictable suspensions of work, shortages in material and labor, and often confusing and haphazardly enforced health precautions having a profound and adverse effect on both design and construction activities. Contractual, legal, and insurance aspects (i.e., the potential impact of force majeure clauses, the determination of excusable and non-excusable delays, and “for cause” terminations) are amongst the areas of primary concern. The depth and breadth of issues are well beyond those that can be addressed here, but we can (and hopefully do) provide some meaningful background information from a legal perspective and some practical mitigation suggestions.
Impacts on Construction Litigation
“Justice delayed is justice denied”
Simply put, if you have or expect to have an affirmative claim as against your client or others (fee claims, copyright violations, etc.), justice will be delayed.
Access to the California judicial system is the subject of both “Orders” from Governor Newsom and from Presiding Judges for each county.
Overview of State and Local Rules of Court
With the COVID-19 closures and stay-at-home orders, the Court system throughout California and the nation have been forced to deal with substantial delays to all aspects of the judicial system. There is a constitutional requirement for “speedy” criminal trials and practical considerations for fast-tracking divorce, child custody, and probate matters. With these priorities, civil litigation of all stripes, including construction litigation, has come to almost a complete standstill. Courts are setting trial dates up to three years down the road (typically 18-24 months), and there is substantial concern that even those trial dates will need to be pushed back.
Beyond the inherent delays, COVID-19 has also dragged litigation procedures into the 21st Century, though with much gnashing of teeth. At the outset of the pandemic, the California Judicial Council passed a series of emergency rules which set out how to conduct litigation when many attorneys and their staff were not allowed in their offices and people were not allowed to congregate. These rules included the requirement that attorneys accept electronic service of documents (via email instead of US Mail) and allowed for witnesses to appear remotely for depositions. Many of these emergency rules have now been converted into statute, and now Court hearings and video depositions using Zoom, Microsoft Teams, WebX and others are now the norm throughout the State.
Further, each Court has, or is in the process of developing, their own local rules in an effort to practically account for the social distancing requirements in largely antiquated courtrooms, public corridors and even elevators.
Practical impacts on litigation:
Remote depositions are now the “new norm” and are well supported technologically. While many initially bemoaned the lack of control occasioned by the deponent being in a separate location, practically, they proceed without incident and serve their intended purpose. It should be noted that while there may be some cost savings involved as there is typically no travel required, preparation time, especially in document intensive cases will likely increase as documents (exhibits) need to be pre-organized and sometimes delivered in advance to the witness, and/or posted on the court reporter’s case website.
Remote mediations are also now normal but, especially in complex multi-party cases, significantly less effective. While there are a multitude of variables, these mediations typically involve a brief “all party” session followed by individual sessions with each party who are, essentially, isolated from the other parties. One result of this is rather than engaging/cajoling with other parties and counsel around the snacks, each party sits in their own virtual room, often convincing themselves of the righteousness of their case assessments. The mediator then becomes the only point of connection between the parties, and their ability to assess the factual and legal issues and to persuade the parties as to the risks of their position becomes the only (or at least primary) means of reaching a compromise resolution. That is a heavy load and as a result, while many cases still settle, the more complex and litigious matters often become more so.
Remote trials are amongst the suggestions being contemplated by Trial Judges and parties with, as you might imagine, lukewarm reactions. Initially, it is highly doubtful that remote Jury Trials will happen as the jury pool’s access to technology is severely compromised (see the failings of online education amongst the underprivileged) and high-speed reliable internet access, not just computers/tablets, would be required. However, the potential for remote non-jury Trials is a distinct possibility, subject to technological upgrades.
It should be noted that remote Arbitrations are becoming more common and efficient and many parties in construction litigation are voluntarily seeking alternative dispute resolution processes, including binding Arbitration, even when the applicable written agreements do not call for it. The hope is that private Arbitrations will give the parties some semblance of justice without having to wait a currently unknowable period of time.
Finally, while fairly unique, private Trials or Trials by reference have been utilized on large/lengthy/complex matters and they may become more prevalent as the possibilities of a Jury Trial remain remote. All of the regular Court rules would apply, but the costs could be prohibitive as the parties would have to front all costs for room rentals, jury fees, technological support and administrative personnel. While we have yet to see this happen, if Arbitration is simply inappropriate, Private trials may/could be an option.
Potential COVID-19 Mitigation Tools
At least two contractual tools should be considered if not implemented:
Expanded Force Majeure Clauses
The “act of god” contract avoidance provision known as a force majeure clause can be useful to escape some of the effects of the COVID-19 related shutdowns. However, many of the AIA form contracts do not contain a force majeure provision and many of the industry standard agreements do not include a force majeure provision that would include COVID-19 and related shutdowns. Going forward, we recommend adding force majeure provisions to all contracts which include a specific reference to “pandemics, epidemics, and plagues”.
A party may also consider adding additional contractual provisions for aggressively resolving disputes privately between the contracted parties during the course of the project in order to avoid protracted litigation, which may take years to resolve. Obviously, the final resolution should be reviewed by your local counsel to ensure you have been properly protected.
Court v. Arbitration
As set forth above, while the judicial system may be 2-5 years (if ever) from fully recovering from the pandemic, Arbitrations are proceeding with increased frequency, and reasonably well. Those concerned about the lack of meaningful appellate rights in Arbitration should note that the AAA has a procedure for Appeals of Arbitration awards and recommended contract language.
Conclusion
As the Court systems continue to be disrupted, parties are seeking alternative methods of resolution with some modest success. It is anticipated that lingering effects of COVID-19 on the Court will go on for years and the parties should adjust their contractual provisions accordingly.
Author Information
Murtaugh Treglia Stern & Deily, LLP is an Orange County, California based law firm proudly serving the A/E community for over 40 years. For more on the firm please visit us at https://www.murtaughlaw.com/
I am currently President of the Ohio Chapter of the American Board of Trial Advocates (ABOTA). Our chapter has about eighty members comprising of plaintiff and defense attorneys throughout Ohio. One of the main missions of ABOTA is to protect the right to civil jury trials so we are generally attuned to what is going on in the State. The three largest counties, Franklin (Columbus), Cuyahoga, (Cleveland), and Hamilton (Cincinnati) had not scheduled any jury trials until mid-April (Franklin) and mid- March (Cuyahoga, Hamilton) while smaller counties had pushed forward sooner. Civil cases are now slowly moving forward all across the State with court rooms made as COVID safe as possible.
I am General Counsel for ACEC Ohio and made a presentation for their “Rising Leaders” program in late March. COVID protocol was observed with those in attendance at separate tables 8-10 feet apart. Masks were worn at all times. My practice is entirely representing architects and engineers. For the most part my clients have been able to weather the COVID storm. Many projects were slowed but few were entirely shut down.
The lack of courtroom availability has forced counsel for parties involved in construction disputes to be more creative/cooperative in resolving issues. We have had mediations both in person and via ZOOM in an effort to resolve matters knowing that the normally long litigation process has gotten even longer due to COVID. Trials that were scheduled over the past year which were initially stayed, have all been reset toward end of the year or into the first half of 2022 assuming COVID will be in the rearview mirror. Discovery has taken place on limited basis as to depositions with most being done via ZOOM.
In conclusion, the trial slow down due to COVID has not greatly affected my clients from the legal standpoint as much as had been anticipated. In fact, it forced counsel and parties to find solutions which hopefully will carry on regardless of COVID.
As legal professionals representing design professionals, we have been grappling with the implications of delayed justice for over a year while trying to balance the safety of clients, jurists, court personnel and lawyers during the pandemic. The pandemic, however, presented an opportunity few could have foreseen — a chance to modernize an archaic system, riddled with decades-old rules and practices, previously resistant to internet transformation.
In spring 2020, the largest, busiest and most complex court system in the country came to a screeching halt, at a time when hundreds of civil trials packed New York’s state courts and the city’s courthouses were at their busiest. All trials statewide were postponed and the courts that were briefly reopened in the fall were again suspended mid-November amidst a rise in infections. Only recently, on March 22, 2021, civil trials resumed throughout the state. In New York City, there were 26 jury trials, 19 civil trials and seven criminal trials on schedule for the first week of courts’ reopening. By comparison, in November 2020, the New York state court system had over 1.1 million pending civil actions and over 100 thousand criminal actions in the pipeline.
Federal District Courts fared better with advancing the civil actions, primarily because of the more stringent procedural rules and more hands-on involvement from the federal jurists. Still, the challenges to evidentiary hearings with jurors presented an insurmountable obstacle. Most participants in these court disputes will not have their day in court for years to come.
Last year, most states, including New York, allowed virtual depositions, court appearances, and hearings. This was a much-needed change in how the legal system operated to date. With any hope, gone are the days when attorneys bill a client for hours spent traveling to court for a quick five to ten-minute preliminary or pretrial conference.
In December 2020, the federal judiciary announced a two-year pilot program to livestream the audio of hearings in 13 district courts. Arguments have now even been livestreamed before the U.S. Supreme Court. In late January 2021, the New York City Civil Court in Manhattan, hearing cases with a monetary limit of up to $10,000, launched an online dispute resolution pilot program for small claims matters.
With trials on hold, we have seen exponential growth in virtual mediations and arbitrations, as alternatives to litigation. Early on, there was great apprehension among litigators to partake in the Alternative Dispute Resolution (ADR) proceedings, primarily due to technical challenges with document sharing and the inability to evaluate witnesses’ non-verbal cues. This quickly changed, as attorneys realized virtual proceedings were the only means available to them and their clients. As the year progressed, these ADR proceedings proved to be the main avenues for advancing the disputes to a conclusion, as state courts grappled with administrative quagmire and awaited decisions on reopening policies and guidelines.
What does the future hold for design professionals and insured policyholders?
Virtual hearings and proceedings, with all their inherent anomalies and awkward moments, are here to stay. But audio livestreams and video appearances should not replace in-person proceedings. Non-verbal communication, facial expressions and body language are lost or absent altogether if a hearing is audio-only or may become distorted in a video feed or if a connection gets dropped. We expect courts to continue to upgrade their antiquated infrastructure to accommodate more virtual attendance and participation for parties, jurors (with court-issued tablets or laptops), judges and attorneys.
Fortunately for the state court proceedings, early mediation has now become a mandatory step in every case filed in the state courts in New York. With a recent amendment to the state trial court rules, parties can jointly request a settlement conference before the assigned justice or another judge at any time during the litigation. Courts remain fully committed to implementing a model of presumptive early ADR procedures in order to transform the old culture of “litigate first” to the new culture of “mediate first” in all appropriate cases. This is a welcome development, considering the potential expense, time-commitment and uncertainty of a judge/jury ruling on a dispute’s outcome.
ADR proceedings, however, will remain the leading dispute resolution forum for design professionals and other construction industry stakeholders for years to come. Standard forms of agreement for the A/E community, offered by the American Institute of Architects (AIA) or Engineers Joint Contract Documents Committee (EJCDC), will continue to emphasize the industry’s deference for mediation. Leading dispute resolution centers, including the American Arbitration Association, JAMS and others, are likely to expand their virtual dispute resolution offerings – both mediations and binding arbitrations – for construction/contract disputes with experienced construction industry professionals, frequently non-lawyers, serving as neutrals.
The following is a by the numbers report from the ACEC Research Institute as of the end of 2019. These numbers speak loudly and lays out just how impactful the Engineering & Architecture industry is, and how it contributes to the overall GDP. Download here.
