Anti-Concurrent Causation Endorsements in CGL Insurance Policies: A Word of Caution
August 29, 2022 —
David M. McLain – Colorado Construction LitigationWhile I have not performed exhaustive research into the origin of anti-concurrent causation (“ACC”) endorsements on insurance policies, or how or when they migrated from first-party property policies to commercial general liability (“CGL”) policies, they have done so. The result for Colorado’s construction professionals may rear its ugly head as an unwelcome and surprise outright declination of coverage for construction defect claims.
ACC endorsements state that if there are two causes of damage: one of which is covered by a policy and one of which is not, the carrier can invoke the ACC endorsement to disclaim coverage for all of the damage. An exemplar ACC endorsement is ISO Form CG 21 67, entitled “Fungi or Bacteria Exclusion.”
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David McLain, Higgins, Hopkins, McLain & RoswellMr. McLain may be contacted at
mclain@hhmrlaw.com
New York Instructs Property Carriers to Advise Insureds on Business Interruption Coverage
April 13, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe New York Department of Financial Services (DFS) took the unusual step last week of instructing all property/casualty insurers to provide information on commercial property insurance and details on business interruption coverage in light of the COVID-19 outbreak. The notice is
here.
The notice recognizes that policyholders have urgent questions about the business interruption coverage under their policies. Insurers must explain to policyholders the benefits under their policies and the protections provided in connection with COVID-19.
The explanation to policyholders is to include the following relevant information.
What type of commercial property insurance or otherwise related insurance policy does
the insured hold?
Does the insured's policy provide "business interruption" coverage? If so, provide the
"covered perils" under such policy. Please also indicate whether the policy contains a
requirement for "physical damage or loss" and explain whether contamination related
to a pandemic may constitute "physical damage or loss." Please describe what type of
damage or loss is sufficient for coverage under the policy.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Walmart Seeks Silicon Valley Vibe for New Arkansas Headquarters
June 18, 2019 —
Matthew Boyle - BloombergWalmart Inc. took inspiration from McDonald’s Corp., Apple Inc. and locations like Stanford University when designing the new headquarters that will start taking shape this summer.
The 350-acre campus will be located just a few blocks east of Walmart’s current home, a patchwork of more than 20 buildings in Bentonville, Arkansas. It will feature bike paths, food trucks and outdoor meeting areas -- part of an effort to lure younger, digitally-savvy workers to northwestern Arkansas.
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Matthew Boyle, Bloomberg
Nevada Bill Would Bring Changes to Construction Defects
February 21, 2013 —
CDJ STAFFIf Nevada Senate Republicans get there way, changes are afoot for construction defect law in Nevada. Senate Minority Leader Michael Roberson has introduced a bill that, according to the Las Vegas Sun, “redefines what constitutes a construction defect, reduces the time in which lawsuits can be filed, and removed automatic awarding of attorney fees.” Roberson notes that over the last six years, construction defect claims have more than tripled.
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When Customers Don’t Pay: What Can a Construction Business Do
June 06, 2022 —
Patrick Hogan – Handle.comLate payments are not unusual in construction. From general contractors to subs and material suppliers, every construction project participant has dealt with delayed payments as part of business. However, there’s the issue of clients who refuse to pay. Not late--just no payment. For businesses big and small, a client who refuses to pay can make a significant impact financially and operationally. Many construction transactions are made on trust, and when a client doesn’t pay, some contractors and suppliers may make poor decisions. Yet, to get out of a project going sideways--with payment in hand or lessons learned--you need to be smart and proceed with your business interest in mind.
Why is the customer not paying?
This is where it begins. You must first identify the reasons why a customer refuses to pay. Were they unsatisfied with the quality of work? Do they feel that what was delivered was not aligned with what’s contractually obligated? Do they feel like the work was rushed or the materials used inferior? Was the job finished later than agreed? All these are possibilities that need to be investigated.
If the customer has not volunteered any of this information, it’s best to personally visit the project or set a meeting with the customer to discuss issues in person. If the problems the customer has raised are valid, plan how to resolve them right away. Suppose, after the discussion, you’ve determined that the customer demands things beyond what’s contractually obligated, and you cannot resolve them without incurring unreasonable time and costs. In that case, you might have a delinquent customer in your hands.
Let the customer know your decision. If you’ve decided to proceed and fix the issues they’ve raised, send the invoice for the unpaid work immediately upon commencing the remedial work. Of course, there is no guarantee that addressing their concerns will result in swift payment, so exercise your best judgment. If you think you’ve exhausted all the cordial means to get them to pay as the contract requires, you might need to consider your legal options.
A legal option to recover payments: Filing a mechanics lien
State laws protect construction providers like contractors and material suppliers from non-payment through lien laws. Mechanics liens work by placing a hold on the property where the work or materials were provided as a security in case of non-payment. Mechanics liens can result in a sale of the property where the lien is attached, and the proceeds will be used to pay unpaid vendors.
When a client fails to pay after a good-faith pursuit to resolve the payment issue, filing a mechanics lien becomes the smartest next move. However, note that to file a mechanics lien, you must have fulfilled the requirements of lien laws specific to the state where the project is located. For many states, the main requirement is sending a preliminary or pre-lien notice to secure your right to file liens. It’s only good business practice to
file preliminary notices for every project you work on. It’s not an indication of distrust in the client’s ability to pay–and that is mentioned in the wording of many statutory statements included in preliminary notices. It’s just industry standard to file prelim notices.
Filing a mechanics lien includes a period where the client still has the opportunity to pay arrears before the lien is enforced. Suppose the client fails to pay in this period. You are now allowed to enforce the mechanics lien through a lawsuit. This is a complex process, but it presents itself as the last resort to recover payments. As long as all your documents are in check, you’ve filed the necessary notices in the time and manner required by law, and you’ve fulfilled your contractual obligations to the client, a ruling in your favor is the likely outcome.
Promoting timely payments
It’s in your best interest to promote timely payments from your customers. While construction contracts are primarily reliant on trust, there are many things you can do to encourage and facilitate timely payments from your clients. Here are some ideas:
- Use detailed contracts and progress billing
- Vet clients through background research, credit history, references, and public financial records
- Send regular on-time invoices
- Ensure your invoices are aligned with the formats used by your client’s payables department
- Provide multiple payment methods
- File the necessary preliminary notices throughout the project
In the case of construction payments, the adage prevention is better than cure applies. There are many reasons why payments get delayed or skipped, some malicious, some not. It’s in your best interest to ensure that you are doing everything from your end to promote timely payments and that you’re fully protected by rights granted to construction businesses by law.
About the Author:
Patrick Hogan is the CEO of
Handle.com, where they build software that helps contractors and material suppliers with lien management and payment compliance. The biggest names in construction use Handle on a daily basis to save time and money while improving efficiency.
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Ohio Supreme Court Holds No Occurence Arises from Subcontractor's Faulty Workmanship
January 09, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe Ohio Supreme Court bucked the modern trend by finding that there was no coverage under CGL policy's the subcontractor's exception for faulty workmanship claimed against the insured. Ohio N. Univ. v. Charles Constr. Servs. 2018 Ohio LEXIS 2375 (Ohio Oct. 9, 2018).
The University contracted with Charles Construction Services, Inc. to build a new luxury hotel and conference center on campus. After work was completed, the University discovered extensive water damage from hidden leaks that it believed were caused by the defective work of Charles Construction and its subcontractors. Repairs were made at the cost of $6 million.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Constructive Notice Established as Obstacle to Relation Back Doctrine
March 01, 2021 —
Nicholas B. Brummel & Lawrence S. Zucker II - Haight Brown & Bonesteel LLPIn Organizacion Comunidad de Alviso v. City of San Jose, the Sixth Appellate District held that the relation back doctrine was inapplicable where a plaintiff received constructive notice of a defendant’s identity months prior to the last date where filing was permitted pursuant to an applicable statute of limitations.
In Organizacion Comunidad de Alviso, Mark Espinoza, an Organizacion Comunidad de Alviso (OCA/Plaintiff) representative, asked the City of San Jose (“the city”) to place him on the public notice list for a proposed rezoning project. He also twice specifically requested a copy of the notice of determination (NOD) documenting the city’s certification of an environmental impact report (EIR) and approval of the project. Despite Espinoza diligently requesting all notices for the project, the city, in violation of the California Environmental Quality Act (CEQA), failed to send Espinoza the legally operative second NOD for the project; the first NOD was provided to OCA, but named an incorrect party in interest.
Reprinted courtesy of
Nicholas B. Brummel, Haight Brown & Bonesteel LLP and
Lawrence S. Zucker II, Haight Brown & Bonesteel LLP
Mr. Brummel may be contacted at nbrummel@hbblaw.com
Mr. Zucker may be contacted at lzucker@hbblaw.com
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Water Damage Sub-Limit Includes Tear-Out Costs
June 06, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe Florida Court of Appeals affirmed the trial court's ruling that the homeowner policy's sub-limit for water damage included tear-out costs. Sec. First Ins. Co. v. Vazquez, 2022 Fla. App. LEXIS 1205 (Fla. Ct. App. Feb. 18, 2022).
A discharge of water from the cast iron pipes caused damage to the home. The water escaped as a result of the failed cast iron pipes due to wear and tear, deterioration, and corrosion. The insurer acknowledged coverage for the water damage and paid $10,000 under the Limited Water Damage Endorsement (LWD Endorsement). The provision recited that "'[t]he limit of liability for all damage to covered property provided by this endorsement is $10,000 per loss." The insureds' suit argued they were entitled to additional benefits for the cost to tear out and replace a part of the concrete slab - an action necessary to reach the corroded pipes. The parties stipulated that the cost of the tear-out would be $40,000.
The parties agreed that the LWD Endorsement provided coverage of both water damage and tear-out costs. They also agreed that the cost to repair and/or replace the corroded pipes was not covered. They disagreed, however, over the proper interpretation of the limitation of liability provision in the LWD Endorsement. The insured argued that the $10,000 limit applied to both water damage and tear-out costs. The insureds argued that the $10,00 limit applied only to water damage to covered property.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
