Property Damage, Occurrences, Delays, Offsets and Fees. California Decision is a Smorgasbord of Construction Insurance Issues
November 15, 2017 —
Garret Murai - California Construction Law BlogI read once that 97 percent of cases never go to trial. However, there are still the ones that do. And, then, there are the ones that do both. The following case, Global Modular, Inc. v. Kadena Pacific, Inc., California Court of Appeals for the Fourth District, Case No. E063551 (September 8, 2017), highlights some of the issues that can arise when portions of cases settle and other portions go to trial, the recovery of delay damages on a construction project through insurance, and the recovery of attorneys’ fees.
Global Modular, Inc. v. Kadena Pacific, Inc.
The U.S. Department of Veterans Affairs contracted with general contractor Kadena Pacific, Inc. (Kadena) to oversee construction of its Center for Blind Rehabilitation in Menlo Park, California. Kadena, in turn, contracted with subcontractor Global Modular, Inc. (Global) to construct, deliver and install 53 modular units totaling more than 37,000 square feet for a contract price of approximately $3.5 million.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Tennessee High Court Excludes Labor Costs from Insurer’s Actual Cash Value Depreciation Calculations
May 27, 2019 —
Michael S. Levine & Geoffrey B. Fehling - Hunton Andrews KurthThe Tennessee Supreme Court has refused to construe an ambiguous definition of actual cash value to allow for deduction of labor costs as part of depreciation calculations where that subset of repair costs are not clearly addressed in the policy. Despite the split of authority nationwide, the Tennessee case presents a straightforward application of policy interpretation principles to a common valuation issue in first-party property claims.
In Lammert v. Auto-Owners (Mutual) Insurance Co., No. M2017-2546-SC-R23-CV (Tenn. Apr. 15, 2019), insureds brought a class-action lawsuit against their property insurer, Auto-Owners, alleging breach of contract. The plaintiffs each owned buildings damaged by a hail storm and had each submitted claims to Auto-Owners. Auto-Owners accepted the claims and determined that the losses would be determined on an actual cash value basis. In performing those valuations, Auto-Owners depreciated both the building materials and the labor costs associated with repairing the properties. The insureds challenged the labor cost depreciation. Auto-Owners moved to dismiss the lawsuit. In response, the insureds requested that the district court certify to the Tennessee Supreme Court whether, “[u]nder Tennessee law, may an insurer in making an actual cash value payment withhold a portion of repair labor as depreciation when the policy (1) defines actual cash value as ‘the cost to replace damaged property with new property of similar quality and features reduced by the amount of depreciation applicable to the damaged property immediately prior to the loss,’ or (2) states that ‘actual cash value includes a deduction for depreciation?”’
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Geoffrey B. Fehling, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
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Maryland Finally set to Diagnose an Allocation Method for Progressive Injuries
February 18, 2020 —
William S. Bennett - Saxe Doernberger & Vita, P.C.Maryland’s highest court recently heard arguments regarding the proper method of allocation of the covered damages from a slowly progressing asbestos injury amongst insurance policies in place over a period of years. Rossello v. Zurich American Insurance Company, Case No. 2436 (Md. 2019). The court may also be forced to determine what the proper trigger of coverage is for latent bodily injury claims, although the plaintiff has not framed the issue in that manner.
In Rossello, the plaintiff, Patrick Rossello, worked for a period of years for the now-defunct Lloyd E. Mitchell, Inc. (“Mitchell”), a construction company operating until 1976. In 1974 he was exposed to and inhaled asbestos fibers. He was ultimately diagnosed in 2013 with malignant mesothelioma as a result of that exposure. Rossello obtained a judgment for approximately $2,700,000 against Mitchell and secured the right to pursue its insurance. As relevant to this dispute, Mitchell carried liability insurance policies, which provide coverage for asbestos related claims, from 1974 to 1977.
Rossello seeks to hold Zurich, as successor to Maryland Casualty Company, accountable for the full value of his award, based on the 1974 policy. Although this contention actually implicates two separate issues, plaintiff’s counsel passed over the initial trigger of coverage issue and focused instead on the issue of allocation of coverage.
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William S. Bennett, Saxe Doernberger & Vita, P.C.Mr. Bennett may be contacted at
wsb@sdvlaw.com
Governor Murphy Approves Legislation Implementing Public-Private Partnerships in New Jersey
August 28, 2018 —
Steven M. Charney & Charles F. Kenny - Peckar & Abramson, P.C.On Tuesday, August 14, 2018, New Jersey Governor Phil Murphy signed Senate Bill S-865, creating the state’s new Public-Private Partnership (PPP) law, making New Jersey the latest state to embrace this burgeoning delivery system for the construction of public infrastructure projects. The new law goes into effect 180 days from today.
Peckar & Abramson (P&A) has teamed with both The Associated Construction Contractors of New Jersey (ACCNJ) and the Association for the Improvement of American Infrastructure (AIAI) who have been at the forefront in promoting this landmark legislation. P&A anticipates that the new law will create multiple opportunities for much needed public building and infrastructure projects in the state. In our recent Client Alert (June 29, 2018), we highlighted the numerous opportunities that will be available as a result of the PPP legislation, notably for the delivery of projects that may not have otherwise come to fruition.
Reprinted courtesy of
Steven M. Charney, Peckar & Abramson, P.C. and
Charles F. Kenny, Peckar & Abramson, P.C.
Mr. Charney may be contacted at scharney@pecklaw.com
Mr. Kenny may be contacted at ckenny@pecklaw.com
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Release Of “Unknown” Claim Does Not Bar Release Of “Unaccrued” Claim: Fair Or Unfair?
July 15, 2019 —
David Adelstein - Florida Construction Legal UpdatesA general release of “unknown” claims through the effective date of the release does NOT bar “unaccrued” claims. This is especially important when it comes to fraud claims where the facts giving rise to the fraud may have occurred prior to the effective date in the release, but a party did not learn of the fraud until well after the effective date in the release. A recent opinion maintained that a general release that bars unknown claims does NOT mean a fraud claim will be barred since the last element to prove a fraud had not occurred, and thus, the fraud claim had not accrued until after the effective date in the release. See Falsetto v. Liss, Fla. L. Weekly D1340D (Fla. 3d DCA 2019) (“The 2014 [Settlement] Agreement’s plain language released the parties only from “known or unknown” claims, not future or unaccrued claims. Because there is a genuine issue of material fact as to whether the fraud claim had accrued — that is, whether Falsetto [party to Settlement Agreement] knew or through the exercise of due diligence should have known about the alleged fraud at the time the 2014 Agreement was executed — the trial court erred in granting summary judgment on those fraud claims.”).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Quick Note: Don’t Forget To Serve The Contractor Final Payment Affidavit
July 30, 2019 —
David Adelstein - Florida Construction Legal UpdatesIf you are a contractor in DIRECT CONTRACT with an owner, serve a contractor final payment affidavit on the owner, as a matter of course, and without any undue delay, particularly if you are owed money and have recorded a construction lien. In numerous circumstances, I like to serve the contractor final payment affidavit with the construction lien.
The contractor final payment affidavit is not a meaningless form. It is a statutory form (set forth in Florida Statute s. 713.06) required to be filled out by a lienor in direct privity of contract with an owner and served on the owner at least 5 days prior to the lienor foreclosing its construction lien. The contractor final payment affidavit serves as a condition precedent to foreclosing a construction lien. Failure to timely serve a contractor final payment affidavit should result in a dismissal of the lien foreclosure lawsuit, presumably by the owner moving for a motion for summary judgment. This should not occur.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Exception to Watercraft Exclusion Does Not Apply
September 24, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe court determined that an additional insured was not entitled to coverage despite an exception to the watercraft exclusion. Holden v. U.S. United Ocean Serv., LLC, 2014 U.S. App. LEXIS 15954 (5th Cir. Aug. 19, 2014).
United entered a contract with Buck Kreihs Company, Inc. under which Buck Kreihs would perform ship-repair work for United. Under the contract, Buck Kreihs would indemnify United for all liabilities arising out of the work or services performed by Buck Kreihs for United. The contract further provided that Buck Kreihs was to procure general liability coverage and name United as an additional insured. Buck Kreihs did so under a policy issued by St. Paul.
Holden, an employee of Buck Kreihs, was injured while preparing to remove a gangway that led from a dock at Buck Kreihs's facility to a barge owned by United. Holden sued United, which tendered to St. Paul as an additional insured. St. Paul denied coverage under the policy's watercraft exclusion. Holden and United settled. United pursued its third party suit against St. Paul. The district court granted summary judgment to St. Paul.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
SCOTUS, Having Received Views of Solicitor General, Will Decide Whether CWA Regulates Indirect Discharge of Pollutants Into Navigable Water Via Groundwater
April 17, 2019 —
Anthony B. Cavender - Gravel2GavelPrior to deciding whether to review an important February 1, 2018, U.S. Court of Appeals for the Ninth Circuit decision involving the jurisdictional reach of the Clean Water Act (CWA), Hawai’i Wildlife Fund, et al., v. County of Maui, the Supreme Court asked the Solicitor General for the views of the U.S. on the holdings of this case and the April 12, 2018 U.S. Court of Appeals for the Fourth Circuit decision, Upstate Forever, et al., v. Kinder Morgan Energy Partners, L.P., et al.
On February 19, the Supreme Court confirmed that certiorari was granted to Question 1 presented by the Petition,
Whether the CWA requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, such as groundwater. (33 U.S.C. § 1362 (12)
In County of Maui , the Ninth Circuit held that indirect discharges to navigable waters through groundwater may be subject to the Environmental Protection Agency’s (EPA) CWA the National Pollutant Discharge Elimination System (NPDES) permitting authority, and in Kinder Morgan, the Fourth Circuit held that such an indirect discharge may be subject to regulation under the CWA when there is a direct hydrological connection between the discharge into groundwater and the direct discharge into navigable, surface waters.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com