Construction

Overview

Arent Fox’s construction attorneys provide a full range of services to the real estate, construction and design industries. Our construction group consists of both accomplished transactional attorneys as well as experienced litigators. We represent owners, developers, contractors and architects, among others, in a wide variety of projects and objectives– including intricate multiparty transactions and involving interrelated real estate, corporate and financing issues.

Bridge and Building Failure and Collapse Experience

The catastrophic failure or collapse of a constructed facility and its aftermath is invariably a time of extreme anxiety for all involved, including owners and developers, designers, construction managers, contractors, subcontractors and third parties. Failure and collapse cases also raise unique and complex legal issues that often must be focused on almost immediately after the event.

Arent Fox lawyers are experienced with organizing and analyzing documents that number in the millions as well as assembling, organizing and directing forensic teams – both functions that are key to the prosecution or defense of failure and collapse cases. In addition, Arent Fox advises clients during the design and construction phases in order to best protect them from the exposures that result should a structure fail or collapse.

Representative cases include:

• Represented the City of New York in the defense of claims asserting that a fuel tank negligently constructed, located, operated or maintained by the city contributed to the fire at 7 World Trade Center, causing the building’s collapse in the wake of the September 11, 2001, terrorist attacks.
• Represented the structural engineer-of-record for the World Trade Center against multimillion dollar claims for personal injury and property damages in the wake of the 1993 terrorist attack on the World Trade Center. The matter was successfully resolved on motion practice without any payment by the client.
• Represented a structural engineering firm in the defense of claims by the owner of the John Hancock Building asserting that there were design defects in the superstructure of the building. Our attorneys retained a laboratory to conduct analyses to refute a theory developed by the plaintiff’s expert. The research, when coupled with other information obtained during the course of discovery, led to settlement with the plaintiff and payment by the client of a very modest amount.
• Represented the structural engineer who designed the Schoharie Bridge more than 40 years before. The bridge on the New York State Thruway collapsed after heavy rains and a series of floods in the area, killing 10 people. This engagement required our lawyers not only to formulate a defense strategy but also to protect the client and his design firm from the media, the National Transportation Safety Board (NTSB) and various governmental boards of inquiry. Our lawyers deployed forensic teams to gather information about both the original design of the bridge and the maintenance program implemented by the Thruway Authority during the years since its original design and construction. They managed the complex discovery process and the negotiation of multiple claims aggregating more than $200 million as well as developed a strategic plan that resulted in the collection of evidence that demonstrated others caused the failure. The client reached a highly favorable settlement that resulted in the payment of minimal settlement costs, unlike other defendants in this multiparty litigation who paid considerable sums.
• Represented the structural engineer who designed the East Coldenham Elementary School ( Newburgh, New York) after nine children were killed when the south façade of the school collapsed as the result of an extreme storm. The lawyers’ document control system facilitated the organization, retrieval and analysis of voluminous project documentation and experts’ reports. The case involved multiple plaintiffs and multiple insurance carriers. After several years of discovery, depositions and motion practice, the plaintiffs’ claims were settled, with the client making only a modest contribution to the overall settlement.
• Represented the structural engineer for the Javits Center ( New York City) in a multiparty dispute involving claims and cross-claims totaling more than $65 million arising out of alleged defects in the design and construction of the building’s intricate space frame. The lawyers eventually persuaded the parties to mediate the dispute, which involved seven teams of lawyers representing various parties and their insurance carriers. The matter was favorably resolved from the standpoint of the client.
• Represented the building owner afterthe collapse of a 90,000 square foot warehouse facility in Orange County, New York, under snow loading conditions similar to those that caused the Hartford Civic Center collapse during approximately the same period. After conducting significant discovery and motion practice, they settled this matter, following opening arguments to the jury, on a basis highly favorable to the client.
• Served as counsel to a prominent architectural/engineering firm in South Florida in defense of claims totaling $20 million in excess of the firm’s professional liability insurance coverage limits. The case was a subrogation action brought by an insurance company after the collapse of a new corporate headquarters building in the wake of Hurricane Andrew. The case was settled prior to trial in a manner favorable to the client.

Transactional Experience

Arent Fox represents corporate and institutional owners, developers, contractors, designers and architects in a broad range of projects, including office buildings, luxury and multifamily residential condominium and rental projects, educational and health care facilities, hotels, large downtown sports arenas, baseball stadiums, convention centers, waste-to-energy plants, shopping centers, theaters, museums and factories. We have experience in transactions involving multiple parties, and we handle complex legal structures involving public and private financing and public/private partnerships. We have extensive experience drafting construction agreements for corporate, institutional and residential facilities, health care, hospitality and arena construction projects.

Representative transactions include:

• Represented a film studio in connection with the design and construction contracts relating to the renovation and construction of new film studios at the site of the existing Brooklyn Navy Yard
• Development, construction and innovative financing (through lease revenue bonds) of 1,150,000 square foot commercial condominium consisting of 26 floors of court facilities and six floors of commercial office space
• Various projects involving the redevelopment of properties once occupied by post offices, in New York City, including the 40-story office tower known as 450 Lexington Avenue, the retail, residential and entertainment complex known as Lincoln Square, the office building at 90 Church Street and conversion of the James A. Farley Post Office Building to accommodate a new Penn Station
• Represented a developer over the course of four years in contract negotiations with several construction managers and design firms for construction of numerous high-rise residential condominiums in New York City
• Represented a major international engineering firm in the acquisition of several New York-based design firms
• Represented a leading nonprofit theater company in the construction and financing of a new playhouse and headquarters facility in Midtown Manhattan
• Represented an international architectural and design firm in connection with the construction of a hotel/casino and resort property, including negotiating design agreements and joint venture agreements
• Represented a contractor in connection with a construction contract for the Manulife Headquarters building in Boston
• Managed a project involving the construction of the $200 million Padres Ballpark and Garage in San Diego. Represented the designer/builder in negotiating the design/build agreement, joint venture agreement among contractors, agreement between the designer/builder and the architect, agreement between the designer/builder and other consultants, agreements between the lender and the designer/builder
• Represented the designer/builder and contractor in negotiating various agreements to provide development, finance, design, construction and operation services for privatized military housing on existing bases
• Continuing representation of a developer of hotels in the Middle Atlantic region consisting of negotiation of design and construction agreements; also represented contractors in connection with construction contracts relating to hotels in Chicago and Las Vegas
• Represented the team owner’s interests in connection with the City of Charlotte’s obligation to design and construction a new arena for the Charlotte Bobcats
• Represented The Phillips Collection in the construction and financing portions of its expansion project; Arent Fox negotiated the bond refinancing including drafting the letter of credit and negotiating swaps and negotiated the construction agreement between the architect and contractor.
• Represented a major university in negotiating a construction management agreement in connection with an expansion of research laboratories and academic facilities
• Represented a major retirement community in contract negotiations with the construction manager and design professionals for a major expansion and new construction of the community’s assisted living and skilled nursing facilities
• Represented a private school in Westchester County, New York, in negotiating a construction management agreement and design agreements for construction of additional academic facilities

Litigation Experience

Arent Fox represents clients in cases involving a wide range of projects, including office buildings, multifamily housing and residential condominiums, health care facilities, bridges, courthouses, industrial process facilities, sports stadiums, roads, shopping centers, power plants, subway stations and insurance-related claims.

We handle the full range of construction disputes, with particular experience and capability in delay, disruption and acceleration claims, default terminations, design changes and deficiencies, concealed conditions, structural failures and interpretation, reformation or rescission of contract terms. Our construction attorneys have litigated cases in virtually every forum in which construction disputes arise, including state and federal courts and American Arbitration Association proceedings throughout the United States to ICC arbitrations and sovereign boards of grievance internationally. We are familiar with the rules and practices for complex, multiparty litigation in these varied forums.

Arent Fox represents clients vigorously at every stage of proceedings, from initial claim through trial and appeal. Often, however, litigation is not in the client’s best interest, and we frequently utilize mediation and other alternative dispute resolution mechanisms to settle cases favorably without the necessity of trial.

Sample representations include:

• Represented a subcontractor in dismantlement and packaging for reassembly of an anhydrous ammonia facility resulting in a jury award of $1.7 million in favor of the subcontractor against the prime contractor and owner
• Represented the owner on the Federal Triangle project (the Ronald Reagan Building in Washington, DC) and negotiated more than $30 million in claims for extra work and delays. In a separate matter, we also obtained a judgment of more than $6 million in the General Services Board of Contract Appeals for a general contractor arising out of the construction of a federal building
• Represented the general contractor on a wood-fueled power plant in an arbitration proceeding brought by the mechanical and erection subcontractor to avoid responsibility for costs associated with design changes (subcontractor’s claims largely denied following a three-week arbitration)
• Represented contractor terminated from $12 million contract to abate and demolish an asbestos production facility; the contractor recovered $6 million in settlement on the eve of trial.
• Represented a general contractor on a $200 million project for new office complex for an insurance company; at mediation following massive discovery effort, negotiated settlement whereby owner relinquished all claims and agreed to substantial payment to contractor
• Represented a general contractor in litigation with subcontractor over defective performance on three separate construction projects; obtained summary judgment ruling on liability with respect to two of the projects and negotiated final settlement for damages
• Represented a general contractor in challenge to $32 million in Navy contracts for construction of a hangar and electrical distribution system at Miramar Naval Station in San Diego; US District Court enjoined award to competing contractor and directed award to contractor
• Represented a general contractor in action against surety for defaulting subcontractor on hospital project; pierced bond limit at trial and recovered all damages and attorneys’ fees

Insurance Coverage Issues

Arent Fox has for decades maintained a strong, multidimensional insurance coverage practice representing policyholders and additional insureds in a wide variety of businesses, including real estate owners, developers, construction companies, engineering and design firms, manufacturing companies and many others.

The firm has extensive experience pursuing property damage claims, complex environmental claims (including disputes over the appropriateness of replacements, remediations, etc.), business interruption claims and products liability claims as well as claims under specialized insurance policies covering builders risk, owner-controlled insurance programs for construction projects, financings, environmental contamination, anticipated revenue, fiduciary insurance, directors and officers’ liability, professional errors and omissions, and most property and casualty off-the-shelf and manuscript policies issued to insureds or for the benefit of our clients. We also have considerable experience in providing risk management advice to clients to anticipate their coverage needs and in negotiating policies that provide the broadest possible coverage to meet those needs.

We help our clients overcome exclusions related to construction defects and other matters in order to obtain coverage under general liability, directors and officers, errors and omissions, construction-related and property policies. We understand that the coverage available under such policies is frequently a necessary component of achieving a resolution of the disputes that may arise in a construction failure or collapse, and we have helped our clients use the proceeds of insurance to achieve successful resolutions of such disputes. In negotiating payments from insurers, we have frequently had to address questions important to the overall limits of liability provided by the policy, including whether or not given events comprise multiple “occurrences”; the impact of the trigger of multiple insurance policies for a single occurrence or set of related occurrences; the applicability of deductibles, self-insured retentions and retrospective premiums; and other areas of recurrent dispute between policyholders and insurers. At times our practice has also involved the successful assertion of claims against insurance brokers regarding the placement of insurance.