Washington Business Journal. MGM National Harbor has retained a handful of local companies to perform various tasks related to the future $925 million resort-casino, including an architect of record and project manager, but the big hire is still to come: general contractor. Full story click here.
Developer not insured under SDI policy, cannot claim damages
“In a recent appellate decision in New York, a developer sued its construction manager for fraudulent misrepresentation that the construction manager had obtained full Subguard™ coverage [subcontractor default insurance or “SDI”] to protect developer against default by the largest subcontractor – concrete superstructure – on a Manhattan hi-rise project. The developer alleged it relied on defendant’s representation and suffered damages when the subcontractor defaulted and there was no SDI for the default.
The court affirmed the trial court’s dismissal of the complaint because (1) the developer was not an insured under the SDI policy (only contractors are named insureds under such SDI policies), thus it could not claim damages under the policy even if it had been in place, (2) the failure of the construction manager to perform a contract duty cannot be transformed into a tort by merely alleging a fraud of its performance, (3) the construction manager had no “special relationship of trust and confidence” with the developer merely from an arm’s length business relationship and thus claims of reliance on the construction manager’s expertise did not give rise to a confidential relationship that might support such a claim, and (4) the developer could not support its claim that it justifiably relied on the representation because the developer did not inquire if the subcontractor was covered and the contract acknowledged that not all subcontractors may be qualified to be admitted into the SDI program.”
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Survived the Recession? Beware Recovery Risks
“If you’re blaming all the contractor and subcontractor defaults lately on the recession and how thin times lead to management mistakes, such as chasing unprofitable work, here’s yet another concern. Business in some sectors is picking up enough or may pick up soon and could create perils from recovery risk.
Based in Farmers Branch, Texas, Trainor Glass shuttered its nine locations Feb. 22 and has made no public statements since then. Trainor was one of two major cladding fabricators and contractors to get into financial trouble this winter.?? The other was the default and temporary shutdown just before New Year’s Day of Whitestown, Ind.-based ASI Ltd., a principal subcontractor on the $825-million Barclays Center in Brooklyn, N.Y. That default delayed completion of the arena’s enclosure and forced extra effort by the prime contractor, Hunt Construction Group, to stay on track for scheduled completion later this year.”
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