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DIRECTORY AND CAPABILITIES

What Construction Contractors Should Know About the California Government Claims Act

May 28, 2024 — Garret Murai - California Construction Law Blog
If you work on state or local public works projects in California you should have at least a basic understanding of the Government Claims Act formerly known as the Tort Claims Act (Govt. Code §§ 900 et seq.). In the event of a dispute with a public entity, the Government Claims Act will usually apply, absent contractual provisions providing otherwise (Govt. Code §§930, 930.2) (e.g., in a construction contract), and requires that a “claim” first be presented to a “public entity” before a claimant files a lawsuit against the public entity. Failure to comply with the Government Claims Act can serve as a bar to maintaining a lawsuit against a public entity. What types of claims does the Government Claims Act apply to? The Government Claims Act broadly applies to most claims against state and local public entities. This is not limited to construction projects and includes all claims for “money or damage” arising from death, personal injury, breach of contract, and damage to real and personal property, wrongful death, or breach of contract. Read the court decision
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Reprinted courtesy of Garret Murai, Nomos LLP
Mr. Murai may be contacted at gmurai@nomosllp.com

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Hawaii Court Looks at Changes to Construction Defect Coverage after Changes in Law

November 06, 2013 — CDJ STAFF
A construction defect case lead at the U.S. District Court for Hawaii involved the insurer’s changed views on what was covered based on court decisions that came after the policy was written. John R. Casciano and Jessica L. Urban of Steptoe & Johnson LLP discuss the case on their firm’s website. They note that in Illinois National Insurance Company v. Nordic PCL Construction, Inc., Nordic built a retail building which soon afterwards had water leaks and property damage, due to alleged defects in the roof construction. Nordic had purchased comprehensive general liability and umbrella polices, with coverage that included property damage. Mr. Casciano and Ms. Urban note that “at the time of contracting, the Ninth Circuit had predicted that, ‘if the Hawaii Supreme Court examined the matter, it would rule that, for purposes of insurance coverage, construction defects were “not occurrences.”’” After the policy was written, the Hawaii Intermediate Court of Appeals did rule that “construction defect claims do not constitute an ‘occurrence’ under a CGL policy.” On the basis of this, Illinois National determined that they had no duty to defend or indemnify their client. Nordic made a claim of bad faith, but the court determined that “an insurer that denies coverage based on an open question of law does not act in bad faith, an insurer that actually relies on governing law, even if the insurer only belatedly learns of the law, cannot be said to thereby act in bad faith.” However, the court denied a summary judgment of Nordic’s claim of negligent misrepresentation, determining that there was “a question of fact as to whether the Policies covered [or were represented as covering] only damage to third parties caused by subcontractors’ defective work.” Finally, the court found that “a reasonable jury could infer that, at the time the Polices were issued, the insurers meant to cover claims arising out of the defective work” of Nordic’s subcontractors. They conclude that the Nordic decision “recognizes the varying consequences for coverage claims when post-contracting changes to the law may not coincide with the expectations of at least one of the parties at the time of contracting.” Read the court decision
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Montana Court Finds Duty to Defend over Construction Defect Allegation

February 14, 2013 — CDJ STAFF
The U.S. District Court for Montana recently ruled on a case with underlying construction defect issues. Brian Margolies discussed Lukes v. Mid-Continent on the blog run by his firm, Traub Lieverman Straus & Shrewsberry LLP. In the construction defect case, the homeowner “alleged that the siding warped and pulled away from the house, which allowed for water intrusion and resulting exterior and interior damage.” Further, there were claims that “the insured or its subcontractor failed to install proper flashing, which also allowed for water intrusion.” The insured was Bernie Rubio, who had a general liability policy from Mid-Continent. Mid-Continent disclaimed coverage, citing sections of the business risk exclusions. The court did not find the clauses ambiguous, but concluded that they didn’t apply to the facts of the case. While the court concluded that Mid-Continent had a duty to defend, they did not determine if there was a duty to indemnify. Read the court decision
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Another Reminder that Contracts are Powerful in Virginia

February 08, 2021 — Christopher G. Hill - Construction Law Musings
Regular readers of this construction law blog are likely tired of my refrain that the contract is king here in Virginia. With few exceptions, some of which have been passed in the last few years, the contract can and does essentially set the “law” for the transaction. A recent opinion from the 4th Circuit Court of Appeals confirms this principle. In Bracey v. Lancaster Foods, LLC, the Court looked at the question as to whether parties can contractually limit the statute of limitations in which a plaintiff or arbitration claimant can file its claim for relief. In Bracey, Michael Bracey, a truck driver, sued his former employer, Lancaster Foods, asserting various employment law claims. Lancaster moved to dismiss and compel arbitration based on the terms of an alternative dispute resolution agreement Bracey signed when he was hired, under which he consented to arbitration of any employment-related claim and waived all rights he may otherwise have had to a trial. Bracey challenged the arbitration clause, one that also included a 1-year limitation on the time in which Bracey was allowed to file any claim, as unconscionable. A federal judge in Maryland agreed and granted the motion to dismiss. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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CA Supreme Court Finds “Consent-to-Assignment” Clauses Unenforceable After Loss Occurs During the Policy Period

August 26, 2015 — Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLP
In Fluor Corporation v. Superior Court (No. S205889; filed 8/20/15), the California Supreme Court overruled its earlier decision in Henkel Corp. v. Hartford Accident & Indemnity Co. (2003) 29 Cal.4th 934, holding that notwithstanding the presence of a consent-to-assignment clause in a liability policy, Insurance Code section 520 bars an insurer from refusing to honor the insured’s assignment of coverage after a loss has taken place during the policy period. In Henkel, the Supreme Court limited the ability of corporate successors to obtain coverage under predecessors’ policies on a contract theory. The Henkel Court held that where a successor corporation contractually assumed liabilities of the predecessor corporation, the insurance benefits would not automatically follow. The Henkel Court ruled that if the predecessor company’s policy contains a consent-to-assignment clause, any assignment of insurance policy benefits to a successor corporation required the insurer’s consent. The Court said that policy benefits are not transferable choses in action unless at the time of corporate transfer they could be reduced to a monetary sum certain. The Court reasoned that historic product or environmental liabilities might not even be known to the predecessor at that time, much less reduced to a sum certain, so coverage for such risks could not be considered a transferable chose in action. Thus, where the liability was inchoate at the time of the corporate transaction, the Henkel Court said that coverage would not necessarily follow because the insurer’s duties had not yet attached. Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP Mr. Kendrick may be contacted at ckendrick@hbblaw.com; Ms. Moore may be contacted at vmoore@hbblaw.com Read the court decision
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Drop in Civil Trials May Cause Problems for Construction Defect Cases

August 27, 2013 — CDJ STAFF
Over the last fifty years, the number of lawsuits that have been settled by trial have dropped sharply, according to Kenneth Childs, writing in the Idaho Business Review. Childs notes that in 1962, 11.5% of federal civil cases were resolved at trial, but in 2002, only 1.8 % percent went to trial. He makes the supposition that, due to their complexity, construction defect trials are even less likely to be resolved at trial. Instead, they are being resolved in mandatory arbitration. Views on arbitration have changed over the years and the courts have gone from what he describes as “somewhat hostile to it” to embracing, encouraging, and even mandating it. Childs notes there are some problems to this climate of arbitration. He notes that arbitrators can “operate by their own rules and according to their own standards.” The decisions made by arbitrators “are not subject to appellate review,” which allows arbitrators “to ignore the law entirely.” Read the court decision
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Product Liability Economic Loss Rule and “Other Property” Damage

November 28, 2022 — David Adelstein - Florida Construction Legal Updates
One of the best defenses a manufacturer has, particularly in non-personal injury cases, is the economic loss rule. Lo and behold, a recent opinion out of the Middle District of Florida, Dero Roofing, LLC v. Triton, Inc., 2022 WL 14636884 (M.D.Fla. 2022), touches on this very subject with cogent analysis regarding “other property” damage for purposes of the economic loss rule. In Dero Roofing, a roofing contractor repaired hurricane damage to roofs of condominium buildings. The roofing contractor became a certified applicator of the manufacturer Triton’s products. After the roofer applied certain products with a sprayer, the products “streaked down the roof tiles onto ‘the exterior and interior of the [Condos], including penetration of the residents’ screens, gutters, and other related areas.” Dero Roofing, supra, at *1. The roofing contractor obtained an assignment of the condominium’s claims and sued the manufacturer and distributor of the (Triton manufactured) products. The defendants moved to dismiss under the economic loss doctrine. The economic loss doctrine “prohibits tort recovery when a product damages itself, causing economic loss, but does not cause personal injury or damage to any property other than itself.” Dero Roofing, supra, at *3 (quotation and citation omitted). Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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Gardeners in the City of the Future: An Interview with Eric Baczuk

July 08, 2019 — Aarni Heiskanen - AEC Business
I had the pleasure of interviewing Eric Baczuk, Designer at Google. We discuss his views on the future urban experience and design. We also touch on Sidewalk Labs of which Eric was a founding team member. What are you working on currently? I lead a design team imagining future of communication and thinking about possibilities for what–if anything–might replace the smartphone in our daily lives. What could be the next affordance or device that could offer us a more seamless interface with the digital world? Can you be more specific about the interfaces? It’s really just imagining a future with digital interfaces that might be a bit more natural and more humane than what is currently available. In many ways, I think the phone has monopolized social life. You see people standing on the street, for example, waiting for the bus, and 99 percent will have their noses glued to their phones. I think it’s quite anti-social, and in some ways, prevents the friendly, serendipitous encounters that used to be so characteristic of urban living. Read the court decision
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Reprinted courtesy of Aarni Heiskanen, AEC Business
Mr. Heiskanen may be contacted at aec-business@aepartners.fi

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