To: The Lead Attorney, MGM.

From: Kiva Bass

Date: November 9, 2018
Subject: The Bond or Insurance Claim That may arise from the Harmon Case
Dear Mark Clay,
It is essential to note that, there had to be a surety bond between MGM, The contractors, and
a surety firm. In a surety bond, the contractor who acts as the principal gives assurance that
the contractual obligations of the contractor will be met in accordance with the contractual
terms. One form of a surety bond that would apply in the case is the performance surety
bond. As such, MGM (obligee) is eligible to raise a surety performance bond claim for the
financial loss that MGM will undergo due to the failure of the contractor to ensure the quality
of its work and policies during the construction process. MGM being a large company had
plans to open the Harmon Hotel but it could not due to the report and as such, it stands to
make financial losses.

The first insurance claim that would arise out of the case will be the builders' risk insurance
claim. It should be noted that the building was not complete and as such, if MGM decides to
bring down the building, there will be specific materials that will be destroyed in the process.
Secondly, MGM will also have to buy new materials to cater for the rebuilding. As such,
under these circumstances, MGM may call for the insurance company covering the
contractor/Engineer to cater for the full amount insured amount on the part of the contractor.
The insurance company may also decide to subrogate the claim and sue the inspection firm
for the total amount that it had to pay the contractor to cover the builder’s risk insurance
claim.

Another insurance claim that may arise out of the case may be the subcontractor default
insurance claim. As much as all the blame rests on the contractor for failing to oversee the
process that was contractually obligated to him by the contract, it is imperative to note that
the contractor delegated some duties to the subcontractor. A good example is the ironworker
subcontractor who was at the forefront in the wrong placing and configuration of the rebar.
As such, the subcontractor failed to adhere to the set contractual obligations. This will mean
that as much as the contractor may be faced with a claim for the owner of the building, they
may transfer this insurance burden to the ironworker subcontractor who started the entire
Horror at the Harmon.

As noted, the Harmon hotel had been expected to be opened by 2009. However, due to the
revelation of the fact that the still used in the first 26 floors was unable to support the rest of
the building, the opening plans were halted. One of the groups that suffered the most from
this were the individuals who bought the condominiums designed them but they were never
built. As such, they have a right to claim for commercial general liability on the contractor
and inspector of the building. It is critical to note that, commercial general liability is meant
to protect the owner be it an individual or a company against claims that may arise due to the
daily dispatch of business activities. In this case, a percentage of the public that had taken
their time and investments and relied on the assurances given to the owner by the contractor
stood to lose due to the decision by MGM to bring down the building. As such, these
individuals may fail for damages from the contractor, owner or inspection firm which will be
covered by the specific commercial general liability insurance taken by the companies in the
case.

Additionally, through the case, it was revealed that, the contractor had subcontracted an
inspector to inspect the work who then went forward to falsify safety standard documents. It
was also later revealed that the inspector was incompetent and had never worked alone prior
to this instance. As such, the contractor can also have remedies and claims against all the
claims leveled against him. After the contractor pays off the insurance claim under
commercial general liability, the insurance company may claim the insurance amount from
the inspecting company as it was direct action and negligence of the company that led to the
occurrence of the insured risk. Alternatively, the contractor may directly for commercial
liability cover from the inspection firm. If the inspection firm had acted with due diligence
and sent the right personnel to handle the inspections, then the Harmon may have been
opened as scheduled. However, the fact that the inspection company failed to be responsible,
the mess was made which led to the litigation process. On the same note, the contractor may
have requested the inspection firm and the ironworker subcontractors to get a performance
bond that would protect the contractor against defaults by the inspection firm and ironworker
subcontractors. As such, in the end, the construction company would claim for a performance
bond on the part of the inspection company for the wrong presentation of facts and the
subcontractor for incompetence.

Best Regards
Kiva Bass