Floating Crane on Job in NYC's East River Has a Storied Past of Cold War Intrigue
January 04, 2018 —
Nadine M. Post - Engineering News-RecordOriginally Published by CDJ on March 22, 2017
The complex maneuver of lifting heavy prefabricated modules out of New York City's East River to build a university laboratory took careful planning and the work of one particular floating crane with a complicated past.
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Nadine M. Post, ENRMs. Post may be contacted at
postn@enr.com
Coverage Under Builder's Risk Policy Properly Excluded for Damage to Existing Structure Only
April 05, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe Tenth Circuit affirmed the District Court's determination that there was no coverage under the builder's risk policy. Gerald H. Phipps, Inc. v. Travelers Prop. Cas. Co. of Am., 2016 U.S. App. LEXIS 2764 (10th Cir. Feb. 16, 2017).
GH Phipps Construction Company (GHP) was hired to renovate and expand the University of Denver's library. GHP was completing installation of a new roof on the library when water from melting snow leaked into the building. The water damaged existing drywall and insulation in the stairwells and elevator shafts that GHP planned to preserve and update. Before the snow melt mishap, GHP had completed some preliminary work in the damaged areas to designate locations for future installation of mechanical, plumbing and electrical systems. But GHP had not yet installed any new materials, updated any lighting fixtures, or patched and painted any existing drywall in the damaged areas.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Pennsylvania Supreme Court’s Ruling On Certificates Of Merit And “Gist Of Action” May Make It More Difficult For An Architect Or Engineer To Seek An Early Dismissal
January 07, 2015 —
Jerrold P. Anders and Michael W. Jervis - White and Williams LLPIn Bruno v. Erie Ins. Co., the Pennsylvania Supreme Court clarified the gist of the action doctrine that distinguishes between tort and contract claims. In doing this, the Court also ruled that a Certificate of Merit in a professional liability claim is necessary only if the plaintiff is in a direct client relationship with the licensed professional. This clarification of the Certificate of Merit requirement may limit the ability of architects and engineers to obtain an early dismissal in lawsuits.
Bruno v. Erie Ins. Co. involves a common scenario. The Brunos filed a claim with their homeowners’ insurer after discovering mold in their home during remodeling. The policy included an endorsement providing coverage for mold. As part of the claim adjustment, Erie hired an engineer to inspect the mold and to provide an opinion on its severity to determine the extent of remediation required. The engineer hired by Erie reported to Mr. Bruno that the mold was harmless, that concern over health problems due to mold was merely a “media frenzy,” and that the Brunos should continue with their renovations.
Reprinted courtesy of
Jerrold P. Anders, White and Williams LLP and
Michael W. Jervis, White and Williams LLP
Mr. Anders may be contacted at andersj@whiteandwilliams.com
Mr. Jervis may be contacted at jervism@whiteandwilliams.com
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Insurance Firm Defends against $22 Million Claim
June 15, 2011 —
CDJ STAFFThe Houston law firm of Eggleston & Briscoe successfully defended their client, Colony Insurance Company, which was being sued for $22 million over roof hail damage. The Summer Hill Village Community Association did not convince a jury that the insurance company had violated state law or breached its contract when it denied coverage for the roofs. The homeowners association contended that the roof damage was due to a hail storm in 2007. The jury agreed with experts who contended the damage was already present at that time.
Mr. Eggleston noted that “when your client is sued for a claim of $22 million, it is very satisfying to hear a jury agree that they in fact acted honorably and owed nothing.”
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District Court's Ruling Affirmed in TCD v American Family Mutual Insurance Co.
May 10, 2012 —
CDJ STAFFIn the case, TCD, Inc. v American Family Mutual Insurance Company, the district court’s summary judgment was in favor of the defendant. In response, the Plaintiff, TCD, appealed “on the ground that the insurance company had no duty to defend TCD under a commercial general liability (CGL) insurance policy.” The appeals court affirmed the decision.
The appeals ruling provides a brief history of the case: “This case arises out of a construction project in Frisco, Colorado. The developer, Frisco Gateway Center, LLC (Gateway), entered into a contract with TCD, the general contractor, to construct a building. TCD entered into a subcontract with Petra Roofing and Remodeling Company (Petra) to install the roof on the building. The subcontract required Petra to "indemnify, hold harmless, and defend" TCD against claims arising out of or resulting from the performance of Petra’s work on the project. The subcontract also required Petra to name TCD as an additional insured on its CGL policy in connection with Petra’s work under the subcontract.”
Furthermore, “TCD initiated this case against Petra and the insurance company, asserting claims for declaratory judgment, breach of insurance contract, breach of contract, and negligence. The district court entered a default judgment against Petra, and both the remaining parties moved for summary judgment. The court granted summary judgment on the entirety of the action, in favor of the insurance company, concluding that the counterclaims asserted by Gateway against TCD did not give rise to an obligation to defend or indemnify under the CGL policy.”
The appeals court rejected each contention made by TCD in turn. First, “TCD contend[ed] that Gateway’s counterclaims constitute[d] an allegation of ‘property damage,’ which is covered under the CGL policy.” The appeals court disagreed. Next, “TCD argue[d] that [the court] should broaden or extend the complaint rule, also called the ‘four corners’ rule, and allow it to offer evidence outside of the counterclaims to determine the insurance company’s duty to defend in this case.” The appeals court was not persuaded by TCD’s argument.
The judgment was affirmed. Judge Roman and Judge Miller concur.
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2019 Legislative Changes Affecting the Construction Industry
July 09, 2019 —
Melinda S. Gentile & Cadian T. Baker - Peckar & Abramson, P.C.The 2019 Florida Legislative Session recently concluded and a number of important construction-related House Bills (HB) and Senate Bills (SB) were presented during the Session. Below is a summary of those construction-related bills set to become law in 2019.
Bills Becoming Law in 2019
HB 1247: Relating to Construction Bonds. This bill passed both the House and the Senate and is awaiting the Governor’s signature. Once the Governor has approved the bill it becomes effective as of October 1, 2019.
This bill addresses how to properly perfect a claim against a contractor’s payment bond.
(1) The Notice of Nonpayment that must be served on the contractor and the surety, must be made under oath and include the following provisions:
The nature of the labor or services performed or to be performed;
The materials furnished or to be furnished;
The amount paid on the account; and if known, the amount owed and the amount to become due.
A Notice of Nonpayment that includes the sums for retainage must specify the portion of the amount claimed for retainage.
(2) A subcontractor, laborer, or material supplier (claimant) who files a fraudulent Notice of Nonpayment loses their rights under the bond. The filing of a fraudulent notice is a complete defense to claimant’s claim against the bond. A notice is fraudulent if the claimant willfully exaggerated the amount due, willfully included a claim for work not performed or materials not furnished or prepared the notice with willful and gross negligence, which resulted in willful exaggeration. However, a minor mistake in the notice, or a good faith dispute as to the amount due, is not considered fraudulent. Please note that this provision mirrors the existing statute relative to a fraudulent lien.
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Melinda S. Gentile, Peckar & Abramson, P.C.Ms. Gentile may be contacted at
mgentile@pecklaw.com
Robots on Construction Sites Are Raising Legal Questions
September 18, 2023 —
Peter Sheridan - Construction ExecutiveMark Twain said that “good decisions come from experience. Experience comes from making bad decisions.” Aesop warns “be careful what you wish for….” But is there a good decision to be made now to employ robots on your next project? There is not a lot of experience to help us make that decision, and the robotic laborer that does not tire or need breaks or desire a raise or promotion looks like an option we might all wish for when planning our next project.
Are there pitfalls, traps for the unwary? Always. Spotting them is the trick. After a brief glimpse into the past for appropriate context, there are a few traps that need to be considered.
Reprinted courtesy of
Peter Sheridan, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Ruling Closes the Loop on Restrictive Additional Insured Endorsement – Reasonable Expectations of Insured Builder Prevails Over Intent of Insurer
July 31, 2019 —
Theodore L. Senet, Esq., Jason M. Adams, Esq. and Clayton Calvin - Gibbs GiddenOn June 5, 2019, the Court of Appeal in
McMillin Homes Construction, Inc. v. National Fire & Marine Insurance Company, 35 Cal. App. 5th 1042 (Cal. Ct. App. 2019) issued an important opinion on the scope of additional insured insurance coverage for developers and general contractors in California. Specifically, the “care, custody and control” (“CCC”) exclusion will be read to only exclude coverage for additional insureds who exercised exclusive control over the damaged property. Thus, general contractors who share control of the property with their subcontractors, as is typical on most projects, will not be denied coverage under this exclusion.
I. Facts & Procedural History
McMillin Homes Construction, Inc. was a Southern California developer and general contractor. In 2014, homeowners sued McMillin for roofing defects in a case called
Galvan v. McMillin Auburn Lane II, LLC. Pursuant to a subcontract, the roofer, Martin Roofing Company, Inc., provided McMillin with additional insured coverage under Martin’s general liability insurance policy. The insurer, National Fire and Marine Insurance Company, covered McMillin under an ISO Form CG 20 09 03 97 Additional Insured (“AI”) endorsement. After McMillin tendered its defense of the Galvan lawsuit under the AI endorsement, National Fire declined to provide McMillin with a defense to the homeowners’ lawsuit, relying on a CCC exclusion contained in the AI endorsement for property in the care, custody or control of the additional insured. McMillin then sued National Fire for breach of the policy, bad faith and declaratory relief in
McMillin Homes Construction, Inc. v. National Fire & Marine Insurance Company.
In
McMillin Homes, the trial court found the CCC exclusion in the AI endorsement applied and held in favor of the insurer, National Fire. The trial court found the exclusion for damage to property in McMillin’s “care, custody, or control” precluded coverage for the roofing defect claims, as well as any duty on the part of the insurer to defend the home builder, McMillin. McMillin filed an appeal from the trial court’s ruling.
II. Case Holding
The Court of Appeal reversed to hold in favor of McMillin, interpreting the CCC exclusion narrowly and finding a duty on the part of the insurer to defend the general contractor pursuant to the AI endorsement on the roofer’s insurance policy. It held that for the CCC exclusion to attach, it would require the general contractor’s exclusive control over the damaged property, but here, the general contractor shared control with the roofer. The Court of Appeal noted that where there is ambiguity as to whether a duty to defend exists, the court favors the reasonable belief of the insured over the intent of the insurer. Here, that reasonable belief was that the coverage applied and the exclusion was narrow.
The Court of Appeal relied upon
Home Indemnity Co. v. Leo L. Davis, Inc., 79 Cal. App. 3d 863 (Ct. App. 1978) (“Davis”), as a judicial interpretation of the CCC exclusion. That case synthesized a string of case law into a single conclusion: that courts may hold the exclusion inapplicable where the insured’s control is not exclusive. In the opinion in McMillin Homes, coverage turned upon whether control was exclusive: “[t]he exclusion is inapplicable where the facts at best suggest shared control.” The Court of Appeal stated the “need for painstaking evaluation of the specific facts of each case. Here, McMillin coordinated the project’s scheduling, but Martin furnished the materials and labor and oversaw the work; they therefore shared control.
Even if the rule in Davis did not apply and the exclusion was found to be ambiguous, the court stated that “control” requires a higher threshold than merely acting as a general contractor. Liability policies are presumed to include defense duties and exclusions must be “conspicuous, plain, and clear.” Furthermore, because “construction defect litigation is typically complex and expensive, a key motivation [for the endorsement] is to offset the cost of defending lawsuits where the general contractor’s liability is claimed to be derivative.” This is especially true because the duty to defend is triggered by a mere potential of coverage. Under the insurer’s construction of the exclusion, coverage would be so restrictive under the AI endorsement that it was nearly worthless to the additional insured.
III. Reasonable Expectation of the Insured Prevails over the Intent of the Insurer
Like most commercial general liability policies, National Fire’s policy excluded coverage for property damage Martin was contractually obliged to pay, with an exception for “insured contracts.” Typically, “insured contracts” include prospective indemnification agreements for third party claims. The National Fire policy contained a form CG 21 39 Contractual Liability Limitation endorsement, which deleted indemnity agreements from the definition of “insured contracts” to effectively preclude coverage for the indemnity provision between McMillin and Martin. National Fire argued that this endorsement demonstrated its intent to exclude coverage to McMillin for the homeowners’ defect lawsuit. The Court of Appeal stated that the insurer’s intent is not controlling and that the insureds reasonable expectation under the AI endorsement would control. As a result of its ruling, the Court also dealt a significant blow to the argument that the CG 21 39 endorsement is effective as a total bar to additional insured coverage for all construction defect claims.
IV. Conclusion
The decision is good news for developers and general contractors who rely on subcontractors to provide additional insured coverage. Unless the general contractor exercises exclusive control over a given project, the CCC exclusion in the CG 20 09 03 97 additional insured endorsement may not preclude the duty to defend. Demonstrating that a general contractor exercised exclusive control over the project would be extremely difficult to show under normal project circumstances because the any subcontractor participation appears to eliminate the general contractor’s exclusive control.
The case also highlights the need for construction professionals to regularly review their insurance programs with their risk management team (lawyers, brokers, and risk managers). As is often the case, a basic insurance policy review at the outset of the McMillin project could likely have avoided the entire dispute. For owners and general contractors, CG 20 10 (ongoing operations) and CG 20 37 (completed operations) additional insured forms are preferable to the CG 20 09 form at issue in the McMillin case because they do not contain the CCC exclusion. The CG 20 10 and 20 37 forms are readily available in the marketplace and are commonly added to most policies upon request. Had those forms been added, AI coverage likely would have been extended to McMillin without the need for litigation. Similarly, carriers will routinely delete the CG 21 39 Contractual Liability Limitation endorsement upon request. Deletion of the CG 21 39 would have circumvented National Fire’s second argument in its entirety.
Additionally, insurance policies, endorsements, and exclusions are subject to revision and are not always issued on standard forms. As a result, it is incumbent upon developers, contractors, and subcontractors to specify the precise overage requirements for construction projects and to review all endorsements, certificates, and policies carefully. Due to the difficulty in monitoring compliance with insurance requirements, project owners and general contractors are finding that it is better to insure projects under project specific wrap-up insurance programs which eliminate many of the issues pertaining to additional insured coverage. Wrap-up programs vary greatly as to their terms and conditions, so however a project is insured, insurance requirements and evidence of coverage should be carefully reviewed by experienced and qualified risk managers, brokers, and legal counsel to assure that projects and parties are sufficiently covered.
Gibbs Giden is nationally and locally recognized by U. S. News and Best Lawyers as among the “Best Law Firms” in both Construction Law and Construction Litigation. Chambers USA Directory of Leading Lawyers has consistently recognized Gibbs Giden as among California’s elite construction law firms. The authors can be reached at tsenet@gibbsgiden.com (Theodore Senet); jadams@gibbsgiden.com (Jason Adams) and ccalvin@gibbsgiden.com (Clayton Calvin). Read the court decisionRead the full story...Reprinted courtesy of
