Concrete Omission: Obtaining Professional Liability Coverage
A large Mid-Atlantic contractor was subcontracted to provide construction of a cast-in-place concrete foundation and structure for a new, 17-story high-rise in Wheaton, Maryland, with approximately 800,000 square feet, including 486 apartment suites, residential amenities, a ground-floor Safeway grocery store with associated retail conveniences, and below and above-grade parking. Additionally, the Mid-Atlantic contractor was contracted to provide the layout for all the work to be performed by other trades. Pursuant to these requirements, the Mid-Atlantic contractor performed surveying work to establish the layout for the cast-in-place concrete and transferred control lines from floor to floor to be used as a reference by subcontractors in all trades (masonry, plumbing, electrical, mechanical, elevator, partition walls, courting wall, misc. metals, etc.), as well as themselves.
Upon completion, the general contractor made certain claims, alleging negligence and errors and omissions by the Mid-Atlantic contractor in the surveying, building layout, elevation designations, and technology services. The alleged layout errors were in bringing the building corner control points vertically up to each successive level by use of the survey instruments. The control points on each floor elevation were the basis for laying out snapped marking survey lines, which the other subcontractors used to locate their work. The errors in surveying, layout, and transferring and reestablishing controls from floor to floor necessitated substantial alterations of design and work that had already been done by the Mid-Atlantic contractor and other contractors.
The general contractor established procedures for tracking the additional costs necessitated by the remediation work, which totaled approximately $1.7 million. The Mid-Atlantic contractor enlisted the services of Maslon to obtain coverage under a professional liability policy for losses arising out of the concrete work performed in the construction of this combined commercial and residential complex.
A team of Maslon attorneys, led by James Duffy O'Connor, assisted in tendering the claim to the client's professional liability insurer. The insurer initially resisted coverage on the basis of several policy terms and exclusions, among which it alleged that the client did not satisfy the policy definition of "professional services." However, Maslon was able to persuade the insurer that coverage was triggered by the policy, and the team negotiated a settlement without the necessity of commencing suit. The settlement payment totaled 100% of the claim against the client by the general contractor and 100% of the direct costs incurred by the client in additional work it was required to perform as a result of the original layout work.