THE WINNER'S CIRCLE

"As a man sow, shall he reap, and I know that talk is cheap. But the heat of the battle is as sweet as the victory". 





DEEP THOUGHTS

Bob Marley
Welcome to the new and improved CSI Indy newsletter!  

As we embark on our adventure of providing YOU with the most up-to-date (and relevant) information in the construction industry, we encourage you to provide us with any and all feedback.  Good, bad, and even the ugly is welcome.  What type of articles would you like to read?  What type of events are you interested in?  Anything you think the chapter should be aware of is welcome.
Your Humble Narrator,
Mike Halstead
Indianapolis CSI Newsletter Co-Editor
mikeh@halstead-architects.com
Mild Mannered Reporter,
Ryan Muzzillo

Indianapolis CSI Newsletter Co-Editor
ryanm@halstead-architects.com

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THE INSIDER
WOO HOO!  The 43rd Annual CSI Indy Trade Show at the JW Marriott on September 28 went like clockwork - A Clockwork Orange my droogs!  Attendance increased - last year we had approximately 300 in attendance and this year we had nearly 400 architects, interior designers, contractors and specification writers.  We still need to get over 500 attendees - so we need to continue raising the bar.  Please get us your input and recommendations so we can continue to make improvements - one day we hope to achieve perfection.  A big pat on the back to all of our exhibitors and the Trade Show Committee led again by Brian Detty.  The Trade Show income goes right back into maintaining our Chapter as the greatest CSI Chapter in the world!  The AIA also did a great job getting attendance to our trade show and our seminar on the new 2017 AIA Documents - thanks again to our legal partners Drewry Simmons Vornehm.  We already have 10 booths sold for 2018.          

Apparently we had a rowdy crew at CSI National "Construct" - we actually have photographic evidence.  October 19 our program will be on Drawings and Specs by Ron Guerin, November 16 will be Firestopping, December 14 will be our Annual Holiday Party and January will be a Certification Quiz presented by "Captain" Jack Morgan and Chuck "The Lovemaster" Thompson.  February is TBD, March is Facts about PVC Roofing and April is Corporate Mindfulness.  Also in April is the Great Lakes Region Conference to be held on Friday, April 20.   The GLRC will be held somewhere downtown Indianapolis - plenty of opportunities for leadership training for incoming chapter officers and committee chairs.  Sponsorship opportunities include:  Breakfast, Lunch, Awards Dinner, Refreshment Breaks & The Hoosier Hospitality Suite.  Contact Glen Baines and Ken Schmidt for information - more details to come. 

And don't forget the Louisville Chapter meeting at Churchill Downs - we need to support our Louisville brothers and sisters - now that they have lost their basketball program and head coach they need all the love they can get.  Now IU should be a lock to get Romeo Langford - one of the top 5 basketball prospects in the US who plays high school basketball for New Albany and will most likely be Mr. Basketball this year.  " O Romeo, Romeo! Wherefore art thou Romeo"?

NHL hockey started last week - thank you snow angels.  Your Chicago Blackhawks roared out with a 10-1 spanking of the Pittsburgh Penguins - mostly due to the reacquisition of Brandon Saad who got a hat trick in his first game back with the Hawks.  Too bad they had to trade away Artemi "The Breadman" Panarin to get him back - the Hawks could have had them both!  Strangely enough there were 4 hat tricks on opening night - very rare.  The NHL didn't treat the defending Stanley Cup champions very well - to start the season the Pens had back-to-back games against St. Louis and Chicago.  I bet the Commish hears about that.

The NBA season starts next week - looking forward to watching our new look Pacers without George Paul - maybe now we can spread the ball.  The Lord needs to continue helping our Colts - is it true Andrew Luck's guardian angel is allowing him to practice?  My favorite Colt is the rookie Malik Hooker who plays safety - how can you not love that last name?  And how about Da Bears Mitch Trubinsky - is he the next Sid Luckman or what?  He may still make a few rookie mistakes but he can throw from the pocket and throw on the run - which in Chicago is a must.  Hopefully Da Bears won't have to carry him off on his shield like the last 70 years of quarterbacks.

A few months ago I asked you all for Americana - I was thinking Johnny Cash, Elvis, James Dean, Marilyn Monroe, apple pie, baseball and Chevrolet.  I understand if you feel Donald Trump falls into the category of Americana - but I can't take anymore - his mouth is so big it should have a hook in it.  And only one Buck Wilhite story?   Not one bit of feedback? My wife Lisa always has plenty of feedback for me.  D on't be shy - send me some fun stuff - or I will have to keep creating my own fake news.  As Lisa likes to say "More is More".         

Angelo "A2Z" Zarvas and "Master Blaster" Kellie Cheslyn are healing well - great news.  Angelo and Kellie are both working very hard on our house addition - or as I call it the bitchin kitchen - - so they better get better!  I know what you're thinking - that's not very nice - but that's me way.  Hey - you have to see the new Blade Runner 2049 movie.  I didn't think there was any way the sequel could measure up to the original - but it does.  Harrison Ford was the star and narrator of the original Blade Runner - so I guess that makes me the new Harrison Ford.


- Your Humble Narrator 

VIEW FROM THE TOWER
If you weren't there you missed a great Trade Show.

I want to thank the Brian Detty and his Team for a job well done in organizing the 43 Annual Trade Show. The booths were a sell out and attendance was up from last year. The comments I heard from the vendors were positive and encouraging. Brian, we look forward to next year.

Indy CSI had a great turn out for Construct in Providence, RI. Congratulations to Chuck Thompson for receiving the "Robert P. Brosseau Award" and Indianapolis CSI received the "Outstanding Chapter Award". Next year we'll meet in Long Beach, CA.

Just a quick update regarding our contract with Mattison, it has been reviewed by our legal team and the Board of Directors and we look forward to signing by the end of the month.

The Board and I have decided to change the Board of Directors meeting date. We will now be meeting on the same night as the Chapter Meeting only an hour earlier, 4:30. Also, I want to welcome all the Committee Chairs to attend. After the meeting I buy you dinner.
I want to restate that CSI must and will be the organization that will serve each member for their entire career.

Gene King, CSI, CCCA
Indianapolis Chapter CSI - President 2017-18  

UPCOMING EVENTS
The Indianapolis CSI Chapter wants YOU to join other architects, engineers, contractors, product manufacturers and others in the construction industry for DRINKS AND DINNER at the upcoming meeting on October 19th!

Bar opens at 5:30 - sharp!
Dinner at 6:30

Following dinner will be a presentation on the 'Coordination of Drawings and Specifications' - or more accurately 'How to keep your liability insurer happy.'

Location:
Willows on Westfield
6729 Westfield Blvd, Indianapolis, IN 46220

Fees:
Member - FREE
Guest - $20
Student - $10

Click HERE to read more about the presentation and reserve your spot now!

Not a member?  Don't worry - contact David Young at davidyoung327@gmail.com to become a member today!

November 10, 2017
Gates Open at 11:30 P.M.
First Race Post Time 12:45 P.M.
Buffet Lunch Open 12:30 P.M.

$40 per ticket includes:
- Admission to Millionaire's Row 4th Floor
- Daily Racing Program
- Buffet Luncheon 12:30 P.M. - 3:30 P.M.
- Desserts and Snacks
- Free Parking- Longfeld Parking Lot-Gate 10
- Free Tours of the grounds at Churchill Downs
- Raffle Prizes

CHURCHILL DOWNS
700 Central Ave, Louisville, KY 40208
Dress: Business Casual - Rain or Shine
Wait a second... is that the Hat in the lead?!?  
Dude gets around...  Don't miss him this year!

November 16, 2017
Willows on Westfield
6729 East Westfield Blvd.
Indianapolis, IN

I can already tell - this presentation will be fire!!

Registration coming soon
CSI Indy Holiday Party
December 14, 2017

Mark your calendars NOW for the annual end of year family gathering that you won't want to miss!
No, seriously, you don't want to miss this - how often are you going to see Chuck Thompson smiling?!?
January 18, 2018
Willows on Westfield
6729 East Westfield Blvd.
Indianapolis, IN

January's chapter meeting will be the Certification Quiz presented by Jack Morgan and Chuck Thompson.

Will there be prizes?  Only those that show up to the meeting will know!

Registration coming soon
February 15, 201
Willows on Westfield
6729 East Westfield Blvd.
Indianapolis, IN

Please let Jack Morgan - morwalsoplad1@gmail.com know if you would like to give a presentation for the February meeting. 

Otherwise, I hear Ken Schmidt has volunteered to do stand up comedy.  
Not sure anyone is ready for that...
March 15, 2018
Willows on Westfield
6729 East Westfield Blvd.
Indianapolis, IN

More details coming soon!
April 19, 2018
Willows on Westfield
6729 East Westfield Blvd.
Indianapolis, IN

More details coming soon!
TABLETOPS
The Indianapolis Chapter of CSI is accepting reservations for Table Tops for upcoming Chapter meetings. The list of programs for upcoming Chapter meetings is published in this newsletter, the web site, or contact Program chairman Jack Morgan - morwalsoplad1@gmail.com , if you would like to target a particular meeting, be sure to make your reservation early. We do have a limit of four spaces available for Table Tops in a standard meeting room and 10 if we have a double room.
 
Table Tops are an opportunity to promote your company, products, or services to all attendees of our regular chapter meeting during the social hour. There is a maximum of 20 minutes for Table Top presentation at a regular Chapter meeting. You have the floor for maximum of five minutes after dinner before the speaker to communicate to the entire group if there are four presenters. If there is a greater demand, the 20 minutes will be divided by the number of presenters and rounded down to the nearest 30 seconds.
 
The Table Top presentations are FREE, one time, to new members, and cost current Indianapolis Chapter members only $75. Non-members get the same opportunity for $125. A 30 by 60 table with a cover and skit will be included. All proceeds go to support the Chapter. Payment is due at the time of setup.

Another opportunity for a Table Top is during an Education Seminar. The cost is if you combine it with the Chapter meeting and Education Seminar the cost would be $100 for current members and $150 for non-members.

If you would like to schedule a Table Top for a future meeting or seminar, contact:
 
Kent A. Hughes RA CDT - American Structurepoint
khughes@structurepoint.com - 317.690.5820
 
Be sure to put 'Table Top Request in the subject line
CERTIFICATION QUIZ
Jack P. Morgan
Indianapolis Chapter Quizmaster
1. Which of the following is not a management expertise that contractors bring to the project delivery process?

a. Knowledge of factors that influence cost, time, and quality
b. Identifying codes and regulations applicable to the design
c. Ability to manage multiple subcontractors and suppliers
d. Experience with managing a construction budget in a risk-based setting

2. Equipment and system review and training should occur:

a. Immediately after Substantial Completion
b. Prior to Substantial Completion
c. After system commissioning
d. During the submittal review period

3. When interpreting contract documents, the A/E:

a. Show no partiality to Owner or Contractor
b. Protect the client's best interests
c. Protect the A/E from possible liabilities
d. Achieve the original design intent of the A/E

4. Payment and Performance Bonds are which type of document?

a. Information available to bidders
b. Construction document
c. Preconstruction submittal
d. Closeout submittal

5. Subcontractors are not:

a. The principal providers of labor
b. Original source of most materials
c. Provider of services
d. Providers of technical information
CONSTRUCT 2017 REPORT
Session 3 - AIA 2017 Documents / Salvatore Verrastro, Lane Beougher

This session discussed changes in the 2017 AIA primary contract documents - the Owner-Architect agreements and the Owner-Contractor agreements and General Conditions.

New Documents:
  • B106 - Owner-Architect Agreement for Pro-Bono Work
  • B108 - Owner Architect Agreement for Federally Funded Work
  • The SP series of Sustainable Design documents are discontinued and requirements captured in a revised E204 document.
B101 Owner-Architect Agreement Changes:
  • Contract still includes the traditional 5 phases of service (schematics, design development, construction documents, bidding and negotiation, construction administration) but expands and clarifies the scope of additional services.
  • Owner-Architect Agreement conditions are transferred by reference to the C401 Architect-Consultant Agreement, the E203 BIM and Digital Data Exhibit, and the E204 Sustainable Projects Exhibit.
  • Percentage Fee claw-backs are limited, basing fee on projected costs instead of actual costs.
  • Removes requirement for redesign at no cost when project is over budget due to market conditions.
  • Provides additional fees for consideration of substitutions during bidding and additional services.
  • Project Costs will include the value of donated items.
  • The contract term ends by default 1 year after the date of Substantial Completion.
  • The contract includes a place to list project milestone dates.
  • The Geotechnical Engineer and the Civil Engineer are identified by name, like other primary consultants (Structural and MEP).
  • The Architect's insurance requirements are better defined.
  • It adds a duty for the Owner to defend the use of the Architect's Instruments of Service (supporting the Owner's Spearin Doctrine duty to provide sufficient documents to construct the structure).  This puts a further burden on us to adequately review the documents during the CD phase.
  • A severability clause is added to separate sections invalidated by the courts from the rest of the agreement.
  • The Table of Extended Services (4.1.1.1) requires a selection on each line.
  • The Architect is required to provide documentation of licensing.
  • The term "Procurement" is used instead of "Bidding and Negotiation", in order to align it with other industry formats and general usage.
  • Owner-Architect communications during construction are only required when communication regards some aspect of the Architect's services or responsibilities, not all construction issues.  The Owner and Contractor can (and should) communicate about issues solely in regard to their construction issues without passing it through the Architect or copying the Architect.  Non-pertinent communications are recognized as placing the Architect at risk for issues to which they are not a contractual party.
B103 Owner-Architect Agreement for Complex Projects:
  • Previously titled "for Large Projects", this contract should be used for accelerated or fast-track projects, multiple bid-packages, phased construction, and other project types with more demanding requirements.
  • The Owner provides cost estimating services and the Architect is relieved of the duty to redesign if cost is over budget, since design should be based on Owner-provided cost projections.
C401 Architect-Consultant Agreement:
  • Includes strict flow-down provisions from the Owner-Architect Agreement.
  • Introduces the same standard of care provisions as the Owner-Architect agreement.
  • Includes requirements for site observation.
E204 Sustainable Projects Exhibit:
  • Should be included on all sustainable projects.
  • Replaces the Sustainable Design practices from the B10x-SP documents.
  • Defines the Objective, measurement plan, Certification level, Documentation requirements, the Certifying Authority, and who submits certification documents.
  • The Architect is required to provide a workshop, sustainability plan, review submittals, provide construction observation, and document certification compliance.
  • The Contractor is required to conform to the sustainability plan, meet requirements at substantial completion, and complete documentation prior to final payment.
A101 Owner-Contractor Agreement and A201 General Conditions Considerations:
  • The presentation mentioned all of the flavors of Owner-Contractor agreements - Stipulated Sum, Cost + Fee, Cost + Fee with GMP, CM, Design-Build, and integrated Design, but focused on the traditional delivery contracts.
  • Points of difference between the different delivery methods include:
    • o    When does the contractor come on board?
    • o    When and how project cost is identified?
    • o    Points of responsibility.
    • o    Degrees of collaboration.
    • o    Owner checks and balances (audits).
    • Delivery methods balance information available, time, cost, and risk.
    • Traditional delivery method documents are both time and court tested.
    • Division 01 sections are necessary to coordinate the General Conditions and the contracts.
A101 Owner-Contractor Agreement and A201 General Conditions Changes:
  • There are default answers for fill points in the contract.  These are more explicit than the 2007 versions.
  • There is simplified referencing to the A201 General Conditions.  It has been refined for easier reference.
  • The Date of Commencement is will be indicated by check boxes, not a fill-in-the-blank line, with the default as the date of the Agreement.
  • The Substantial Completion date will be indicated by calendar days or a fixed date.
  • There is a new paragraph 4.5 covering Liquidated Damages.
  • There is a new paragraph 4.6 covering incentives.  Incentives require careful consideration of delay claims, the CD's, and how incentives are measured.
  • Paragraphs 4.2, 4.3, and 4.4 include places to enumerate Alternatives, Allowances, and Unit Prices, respectively.  Rules for each are specified in appropriate Division 01 sections.
  • The payments procedure is simplified.  The approach is more clearly spelled out to determine costs included in the application and then how it is reduced (previous payments and retainage).
  • Retainage provisions are revised to clarify and enumerate exclusions, reductions, remove requirement for consent from the Surety, and are paid at Substantial Completion.
    • o    Amounts retained for work not completed at Substantial Completion is not taken out of retainage, but as a reduction in the Work completed to date.
    • Provisions are added for a Termination Fee payable to the Contractor for costs associated with termination by the Owner without cause.
A102 O-C Agreement for Cost + Fee with GMP and A103 O-C Agreement for Cost + Fee without GMP:
  • Most important change is adding the Owner's right to audit the expenses for the Work.
  • The GMP (A102) must delineate all assumptions, which must be accepted by the Owner in a Contract amendment.
  • A Control Estimate (A103) is the primary means of controlling costs and states the probable cost.  The Control Estimate is revised monthly.
  • The Cost of the Work is all Work included that is approved by the Owner.  Owner approval is required and many items have agreed-upon rates.  The Owner has more control over rejection of items but assumes more cost risk than a Stipulated Sum project.
  • Related parties are defined and their importance clarified.  Related parties are entities having a business connection to the Contractor, like a separate division for specialized work, that has a subcontractual relationship with the Contractor.
  • Costs that are not included are spelled in a specific section (7.1).
  • The Owner has an open-book auditing process with the Contractor.
Insurance Exhibit:
  • A new insurance exhibit is added for the A10x contract documents.  It is form-based and defines appropriate coverage and delegation of liability.
  • Not all pre-2017 A201 provisions are carried to it.
  • It is attached to both the Owner-Architect agreement and the Owner-Contractor agreement.

Paul M. Sternberg , RA CSI CCS CCCA LEED-AP
pmsternberg@bsu.edu

THE MAKING OF A CONVENTION
A lot goes into a convention: location, scheduling, publicity, solicitation of exhibitors, invitations to potential attendees, and more. Although the exhibit floor is extremely important to exhibitor and attendee alike, the educational seminars and activities are equally important.

Those activities take many forms. The traditional lecture format continues to be popular, but interactive presentations have been increasing. Panel discussions, which seem to be either dreadful or very interesting, allow audience participation. In the last few years, we have had presentations and live demonstrations on the exhibit floor. On occasion, these involve one of my favorite activities - getting your hands dirty. Another recent addition has been YP Day (Young Professionals Day), a collection of special events aimed at young professionals and others new to the construction industry.

I've always known that choosing presentations and speakers must be difficult, and this year I learned how true that is. In December of last year, I was asked to serve on the CONSTRUCT 2017 Education Advisory Council, the group that helped selected this year's speakers and presentations. The Council was led by Jennifer Hughes, Informa Education Manager. In the past, I had made suggestions about presentations, so I felt obligated to accept the challenge.
We started by reviewing a list of about ten possible tours. Even though I love tours, especially of production facilities, I have arrived at convention early enough to go on one only a couple of times. The calls for speakers were still coming in, so we didn't start on those for a while.
As you're probably aware, CSI and other organizations typically send out calls for presentations shortly after the previous year's event. In the past, I wondered why they started so far in advance, but there are three good reasons. First, there's a lot more to the selection process than you might realize, and it takes a lot of time. Then, there is human nature; it seems that no matter how much time is allowed, most people wait until the last minute to submit. Finally, advertising and schedules for the next convention begin to appear months before the event. With registration set to open in May, we had to complete our work by the end of February.

The original deadline for proposals for CONSTRUCT 2017 was 9 January; at the time, I was disappointed to learn that only thirty-four had been submitted. With that few, the rest of the process would have been easy, as we would have had to use all of them. After the deadline was extended by one week, we received a list of nearly two hundred proposals - and then the fun began.

Jennifer asked us to review and score the proposals early in February. The spreadsheet she sent had two tabs. The first included information about the proposals, including title, description, speakers, learning objectives, estimated "grade level" (100, 200, 300), primary audience, and secondary audience. It also indicated which speakers had submitted multiple proposals. The second tab contained information about the speakers, including bios and speaking experience.

Evaluating presentations is not an easy task. The titles sometimes are misleading, the descriptions sent by the presenters can be confusing, and the most important parts - the speakers' abilities and the actual content - remain unknowns to those who haven't heard the speakers. Many of the council members had heard a few of the presenters, so we took their observations into account. Another factor is length of the presentation. Most of them were set at 60 minutes, but some were given 75 or 90 minutes, the intent being to give more time to those speakers who are covering complex subjects.

Some topics were the subject of many speakers, so we had to decide who would do the best job. Credentials are useful information, but they don't apply to presentation style or ability to make the subject interesting. On the other hand, having multiple presentations about a given subject is good for attendees, who often have to choose between two or more topics they want to learn about.

After initial comments had been submitted, we went through a series of scheduling options, which included changes in titles, descriptions, and times. Given the number of options and the amount of information, each iteration took a lot of time. But we did it! In the end, the scheduled events were: 41 seminars, 2 tours, 22 presentations on the show floor, the YPD events, a keynote speaker, and the "game changer" speaker.
A few observations

One of my standard comments about convention presentations is, "How many built-up roofing seminars can you see in one lifetime?" I heard similar comments during the convention; "I heard that two years ago", "I talked about that ten years ago!", and so on. While repetition might seem a problem to the veteran, though, we always have new people who need the same basic information. We'll always have 100 level presentations.

One of the most difficult things to evaluate is the grade level of a presentation you haven't heard. The description might sound like it's for those with more experience, but too often the comments are "That was a waste of time." When you consider the experience that most specifiers have, it's not surprising to hear those comments.

The spreadsheet was so large it couldn't be printed. I displayed it on two 24-inch monitors but still had to do a lot of scrolling, and I used a third monitor for other files and for looking up speakers online.

"Interactive PowerPoint" is not the same as an interactive presentation.

One of the first things I did after joining the group was contact Paul Doherty, and I encouraged having him as the keynote speaker. I have skipped many general sessions because the keynote speakers too often are motivational speakers who may be entertaining but have little to say. However, I did attend and enjoy Thom Mayne's presentation. I'm not a big fan of celebrity architects, but his firm's involvement in design goes beyond making pretty pictures; they apparently get into the details and material properties. I don't care for their results, but the process is interesting, and I hope it inspires other architects to care more about how their buildings work.

Thanks to Jennifer for assembling and managing the Advisory Council, and for her dedication to the educational part of the convention. If you have comments about this year's programs, or suggestions for future topics, I encourage you to send them to both Jennifer at Jennifer.hughes@informa.com, and to CSI staff at memberservices@csinet.org. And as always, I invite you to post your comments on my blogsite.

© 2017, Sheldon Wolfe, RA, FCSI, CCS, CCCA, CSC
WALKER PROFESSIONAL NEWS
Circumstance and Claim Reporting Non-Compliance Fatal to Triggering Professional Liability Coverage 

Professional liability insurance is a necessary business expense.  The  professional liability policy provides the design professional with a sense of financial security against errors and omis sions.  The policy also provides project owners and contractors with a level of comfort that a "deep pocket" will be available for any additional project costs caused by professional negligence. Too often project professionals, owners and contractors consider the purchase of the professional policy to be sufficient for ensuring negligence coverage.

In The University of Pittsburgh, et al v. Lexington Insurance Company, et al, No 1:2013cv00335 (S.D.N.Y. 2016), the U.S. District Court for the Southern District of New York recently issued two rulings barring professional liability coverage from attaching to a claim for damages.  Lexington Insurance Company ("Lexington") issued a claims-made professional liability policy to an architectural firm known as The Ballinger Company ("Ballinger").  Subsequent to    the expiration of the Lexington policy, Ballinger secured a claims-made professional liability policy from Axis Insurance Company ("Axis").

In 2008 Ballinger was retained by the University of Pittsburgh to design an addition to Salk Hall, a well-known on-campus art deco structure.  The project general contractor was Burchick Construction Co.
("Burchick").  Burchick notified the University of Pittsburgh in 2011 that it may sue the university as a result of cost overruns and delays.  The university advised Ballinger of Burchick's notice.  On January 31, 2012, a day before the Lexington policy was to expire, Ballinger advised Lexington that "problems and delays" existed on the project.  Burchick filed suit nine (9) months later .
 
Lexington denied coverage for the claims arising from the Salk Hall project.  Lexington asserted that Ballinger failed to comply with various policy provisions including the reporting of circumstances and claims.  Ballinger's notice that project "problems and delays" existed was not sufficient to trigger coverage under policy.  The Court agreed with Lexington.  The Court ruled that Ballinger's notice was too ambiguous and therefore was deficient in meeting policy circumstance and claim reporting requirements.

After the Court ruled in favor of Lexington, Axis brought a motion to confirm that it was also not obligated to provide coverage.  The Court, in a separate decision, ruled that Ballinger's notice of circumstance to Lexington indicated that Ballinger had a reasonable expectation that a claim would arise from the "problems and delays" incurring on the project.  While Ballinger's notice was not sufficient to trigger Lexington policy coverage, the Court stated it was sufficient enough to create a "reasonable expectation" by Ballinger that a claim existed prior to the issuance of the Axis policy.  Claims or potential claim situations existing prior to the issuance of a claims-made policy are typically excluded from coverage under that policy.  The Court found this to be the situation in this case.

In addition to being a tough law school exam question, this case highlights the importance of knowing all terms and conditions of a professional liability policy, especially those that could affect coverage.  Professional liability carriers are not in the business of collecting premiums and denying coverage.  Terms and conditions, such as reporting procedures, are contained in a policy to protect the carrier from being placed in a position of being unable to properly defend the design professional and itself in a circumstance or claim situation.  For example, a failure to report a claim in a timely manner may prevent a carrier from mitigating damages.  Also, an untimely or improper notice may cause evidence to be compromised, lost or unavailable, thereby prejudicing the carrier's ability to defend its insured as well as itself.   Therefore, it is important that design professionals know their policy's obligations and take those steps necessary to comply with them.
 
When it comes to reporting circumstances or claims, the design professional needs to comply with all aspects of the reporting requirements of the policy.  The design professional should not hesitate in reporting a circumstance or claim.  Even if it does not look like a circumstance will be become a claim, it should be promptly reported to the professional liability policy carrier.  A good carrier will not count circumstance reporting against the design professional at the time of renewal.  Early and often circumstance reporting will be seen by a good carrier as the sign of a partner that is concerned about avoiding, mitigating and resolving claims.

In addition to complying with the policy's reporting requirements the design professional should obtain written confirmation from the carrier that the notice was received and when.  The design professional should ask the carrier if it has sufficient information in order to evaluate the circumstance or claim.  And finally, the design professional should cooperate fully with the carrier in obtaining additional information or taking specific action requested by the carrier.

Understanding and conforming to policy terms and conditions is as important as obtaining professional liability coverage.  The failure to comply with policy terms and conditions, such as in The University of Pittsburgh, et al v. Lexington Insurance Company, et al can result in a design professional having to pay more than just its policy deductible in defending a claim and paying awarded damages.  It can also leave injured parties without sufficient financial recourse.

About the author:   Bruce Demeter

Bruce is the developer and manager of professional liability insurance programs and an expert in risk exposure avoidance, assessment and resolution.  In his career he has been a Construction Manager and the co-founder of a construction industry litigation law firm.  Bruce has published articles on the construction industry and has been a featured speaker at many national association and organization meetings. He has developed course work on reviewing contracts, protecting contract rights, and avoiding risk.  He authors the AIC "Mr. Ethics" column. Bruce holds a J.D. from Rutgers School of Law with Honors as well as a MA and BA with Honors from the University of Delaware where he was also a member of the Political Science faculty.  Bruce can be reached at brucedemeter@gmail.com.



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Walker & Associates is a member of a/e ProNet, and this newsletter is provided thanks to this relationship. The content of this newsletter was reprinted with permission.
LEGAL CORNER
1. Issue: Viability of supplier's claim against design engineer. State Ready Mix, Inc., v. Moffatt & Nichol. Court of Appeals of California (2015).

Summary: Bellingham Marine, as "project manager," (in reality a design-builder) hired Moffatt & Nichol, an engineering firm, to design a travel lift pier at the Channel Islands Harbor. Bellingham contracted with Major Engineering Marine to construct the pier. Major subcontracted with State Ready Mix to supply the concrete.

Moffatt's design included concrete specifications for air entrainment and for compressive strength after 28 days. As the work progressed, State Ready Mix wrote a concrete mix design (in essence the "recipe" for preparing the concrete). The case definitively states that Moffatt had no duty to review or approve the mix design, suggesting that it was not a contractually required submittal. At any rate, at some point Major, the contractor, asked Moffatt to review and approve the mix design. Moffatt did so "gratuitously."

The concrete mix design called for the addition of an air entrainment chemical, Micro Air-in quantities 32 times greater than recommended by the manufacturer. Moffatt's review did not identify this flaw. Later, a substantial portion of concrete was found to be substandard in compressive strength and needed to be removed and replaced. An investigation by the contractor revealed that on the day of the pour of the substandard concrete, State Ready Mix had experienced a mechanical failure and added the air entrainment chemical manually (in a manner that was "the antithesis of precision"), in amounts that differed from its own flawed mix design. The end result was concrete that contained Micro Air at 6.5 times the necessary rate, seriously reducing the compressive strength.

The contractor, Major, sued State Ready Mix, which in turn pulled Moffatt into the lawsuit, under various liability theories all linked to the voluntary review of the concrete mix design. The trial court rejected the claim against Moffatt; State Ready Mix then appealed to the California Court of Appeals.

Decision: The core of the appellate decision was a routine determination that because there was no contractual privity between the concrete supplier and the design engineer, and because there was no element of property damage or injury, the economic loss rule barred the claim. The court also concluded that Moffatt's review of the concrete design mix was intended solely for the benefit of the design-builder, Bellingham, not for the contractor or concrete supplier.

State Ready Mix advanced a spin on its claim contending that there were special factors at play that justified survival of the claim, as a matter of public policy under California tort law. The court held that State Ready Mix was unable to satisfy any of the six required factors, concluding that "Moffatt was not State's insurer or guardian angel." In approving the mix design, Moffatt did not warrant that the concrete would work "if overdosed with the Micro Air additive."

The court concluded with one final blast for the concrete supplier, stating that if the supplier "wants to see who is at fault, it should look in the mirror." The failure to follow its own mix design compelled the conclusion that the supplier "alone is responsible for the bad concrete."
Comment: This decision illustrates the dangers that accompany straying from the contractual scope of services. An engineer that receives an unrequired submittal should politely return it without review.

There was no discussion in the case of the contractual procedures that governed legitimate submittals. EJCDC's submittal procedures in C-700, the standard general conditions for construction, define and limit the purpose of the review and approval.
CHAPTER PHOTOS
CONSTRUCT 2017
INDY CSI TRADESHOW 2017
MINUTES
Minutes of the Indianapolis Chapter CSI Board of Directors can be read HERE.  Please contact the president with any comments or questions.
MONTHLY CARTOON
QUIZ ANSWERS
1. - b (PDPG 2.3 & 2.4.1)
2. - b (PDPG 14.1.2)
3. - a (AIA A201 4.2.12)
4. - c (PDPG 13.4.4)
5. - b (PDPG 12.10)

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