First Circuit Rejects Insurer’s “Insupportable” Duty-to-Cooperate Defense in Arson Coverage Suit
October 24, 2023 —
Geoffrey B. Fehling & Yaniel Abreu - Hunton Insurance Recovery BlogIn
Philadelphia Indemnity Insurance Co. v. BAS Holding Corp., the Court of Appeals for the First Circuit rejected an insurer’s “insupportable” defense that the insured company had breached its duty to cooperate by refusing the insurer’s request for an examination under oath of the company’s president. The decision is a reminder that, while examinations under oath can be effective tools to allow the insurer to properly investigate a claim, an insured’s duty to cooperate is not boundless and does not demand attendance at examinations that are not reasonably requested.
Background
BAS Holding involves the destruction of a landmark building in Boston by an arsonist. The owner, BAS Holding Corporation, submitted an insurance claim to its property insurer to recover insurance proceeds for the damage to the building. The insurer investigated the claim to determine whether the damage to the building was covered and issued a reservation of rights letter suggesting that the policy may not provide coverage for the fire. As part of its investigation, the insurer requested an examination under oath as a condition to coverage under the policy, which led to BAS presenting the property’s operations coordinator for an interview. Shortly after examining the operations coordinator, the insurer sought another examination of BAS’s president and owner, as well as five other employees. In response, BAS questioned whether the additional examinations were “reasonably required” and said that it would consider the requests if the insurer could explain why they were necessary.
Reprinted courtesy of
Geoffrey B. Fehling, Hunton Andrews Kurth and
Yaniel Abreu, Hunton Andrews Kurth
Mr. Fehling may be contacted at gfehling@HuntonAK.com
Mr. Abreu may be contacted at yabreu@HuntonAK.com
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Policyholders' Coverage Checklist in Times of Coronavirus
March 16, 2020 —
Richard W. Brown & Andres Avila - Saxe Doernberger & Vita, P.C.Every state but West Virginia have reported hundreds of Coronavirus (COVID-19) cases in the U.S. More than half are in California, Washington, New York, and Massachusetts. The unprecedented social and economic impact of the Coronavirus makes it necessary for policyholders to keep open all lines of communications with their insurance brokers, insurance carriers, financial advisors, safety & compliance experts, and insurance coverage counsel even if it is not certain whether they will need to file insurance claims.
As always, the specific terms of the insurance policies and the way losses are documented and presented to insurance carriers will be pivotal in securing coverage for Coronavirus-related exposures, such as jobsite closures, stop-work orders, remote work mandated measures, business interruption, event cancelation, employees’ claims, among others.
Policyholders should consider the following checklist of key insurance coverage tasks to be better positioned to face the risks posed by the Coronavirus:
- Pre-Loss Risk Management: A careful review of the policyholder’s insurance program may show coverage for the Coronavirus outbreak. Now is the time to assess, with the guidance of your brokers and insurance coverage counsel, the specific coverages in place. Policyholders may want to particularly review the terms and conditions of their Property, General Liability, Pollution, Directors & Officers, Professional Liability, Fiduciary Liability, as well as Event Cancelation Insurance coverages, among others depending on their specific business trade. For instance, Policyholders would want to assess, ahead of time, whether there are bacterial/virus/communicable diseases/pandemics exclusions in their policies. It is also relevant to review, with a keen eye, the insuring agreements and pose hypotheticals to stress test them and see how far coverage would go with respect to a Coronavirus exposure;
Reprinted courtesy of
Richard W. Brown, Saxe Doernberger & Vita, P.C. and
Andres Avila, Saxe Doernberger & Vita, P.C.
Mr. Brown may be contacted at rwb@sdvlaw.com
Mr. Avila may be contacted at ara@sdvlaw.com
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California Supreme Court Finds that the Notice-Prejudice Rule Applicable to Insurance is a Fundamental Public Policy of the State
October 14, 2019 —
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLPIn Pitzer College v. Indian Harbor Ins. Co. (No. S239510, filed 8/29/19), the California Supreme Court held that California’s notice-prejudice rule is a fundamental public policy in the insurance context, supporting the application of California law under a choice of laws analysis. In addition, the Court held that the rule generally applies to consent (aka “no voluntary payments”) provisions in first party insurance policies but not to consent provisions in third party liability policies.
Pitzer College discovered soils contamination while building a new dormitory. Under pressure to complete construction before the start of the school year, Pitzer proceeded to remediate the soils, incurring $2 million in expense. Pitzer submitted a claim to Indian Harbor, which provided Pitzer insurance covering legal and remediation expenses resulting from pollution conditions discovered during the policy period.
The policy contained a notice provision requiring Pitzer to provide oral or written notice of any pollution condition to Indian Harbor and, in the event of oral notice, to “furnish … a written report as soon as practicable.” In addition, a consent provision required Pitzer to obtain Indian Harbor’s written consent before incurring expenses, making payments, assuming obligations, and/or commencing remediation due to a pollution condition. The consent provision had an emergency exception for costs incurred “on an emergency basis where any delay … would cause injury to persons or damage to property or increase significantly the cost of responding to any [pollution condition],” in which case Pitzer was required to notify Indian Harbor “immediately thereafter.” Lastly, a choice of law provision stated that New York law governed all matters arising under the policy.
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
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A Court-Side Seat: Permit Shields, Hurricane Harvey and the Decriminalization of “Incidental Taking”
May 31, 2021 —
Anthony B. Cavender - Gravel2GavelThis is a brief review of some of the significant environmental (and administrative law decisions) released the past few weeks.
THE U.S. SUPREME COURT
On April 22, 2021, the Court decided two important administrative law cases: Carr, et al. v. Saul and AMG Capital Management v. Federal Trade Commission.
Carr, et al. v. Saul
In this case, the constitutionality of Social Security Administrative Law Judges (ALJs) hearing disability claims disputes was at issue. More precisely, were these ALJs selected in conformance with the Appointments Clause of the Constitution? A similar issue was litigated in the case of Lucia v. Securities and Exchange Commission. There, the Court held that many of the agency’s ALJs were not selected in conformance with the Appointment’s Clause. Here, the Court held that this issue could be decided by the courts without compelling the litigants to first exhaust their administrative remedies. Thousands of ALJs are employed by the federal government, and it may take some time to resolve this question for every agency.
AMG Capital Management v. Federal Trade Commission
In this case, the court held, unanimously, that the Commission does not presently have the authority to employ such equitable remedies as restitution or disgorgement.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Liquidating Agreements—Bridging the Privity Gap for Subcontractors
September 03, 2015 —
Craig Martin – Construction Contractor AdvisorWhat is a subcontractor to do when the owner has demanded additional work, but has refused to pay for it? Typically, a subcontractor cannot sue the owner because the subcontractor doesn’t have a contract with the owner. Perhaps the subcontractor and general contractor should enter into a liquidating agreement through which the general contractor can pursue the claim on behalf of the subcontractor.
Liquidating agreements bridge the privity gap between owners and subcontractors who sustain damages because of the others actions. Liquidating agreements or pass-through agreements grant the general contractor a release of its liability to the subcontractor after the general contractor prosecutes the subcontractor’s pass-through claim against the owner and gives the subcontractor any recovery.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Association Bound by Arbitration Provision in Purchase-And-Sale Contracts and Deeds
January 11, 2022 —
David Adelstein - Florida Construction Legal UpdatesWhen an association files a lawsuit pertaining to matters of common interest, the lawsuit is typically filed as a class on behalf of the owners that make up the association (i.e., the association’s members). How do you deal with an arbitration provision that is included in an owner’s purchase-and-sale agreement or recorded in the deed? The recent opinion in Lennar Homes, LLC v. Martinique at the Oasis Neighborhood Association, Inc., 47 Fla. L. Weekly D15c (Fla 3rd DCA 2021) dealt with this exact issue with a homeowner’s association ruling that the association was required to arbitrate its latent construction defect claims against the developer (homebuilder).
In this case, a community in Miami consisted of 26 townhouse buildings. There was a broad arbitration provision in each owner’s purchase-and-sale agreement that included disputes relating to property damage. Further, with each closing, a special warranty deed was recorded that included a nearly identical arbitration provision.
The association became aware of latent defects relating to the exterior walls of the buildings and filed a lawsuit against the developer (homebuilder). The developer moved to compel the dispute to arbitration which was denied by the trial court because there was no specific agreement between the association and the developer that required arbitration and the lawsuit dealt with matters that the association was obligated to maintain.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Does Arbitration Apply to Contemporaneously Executed Contracts (When One of the Contracts Does Not Have an Arbitration Provision)?
January 10, 2018 —
David Adelstein - Florida Construction Legal UpdatesBinding arbitration is an alternative to litigation. Instead of having your dispute decided by a judge and/or jury, it is decided by an arbitrator through an arbitration process. Arbitration, however, is a creature of contract, meaning there needs to be a contractual arbitration provision requiring the parties to arbitrate, and not litigate, their dispute. Just like litigation, there are pros and cons to the arbitration process, oftentimes dictated by the specific facts and legal issues in the case.
What happens when a person executes two (or more) contemporaneous contracts, one with an arbitration provision and one without? Are the parties required to arbitrate the dispute arising out of the contract that does not contain the arbitration provision?
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.com
ASCE Statement On House Passage Of The Precip Act
May 16, 2022 —
Dennis D. Truax, President, American Society of Civil Engineers (ASCE)Washington, DC. – ASCE congratulates the U.S. House of Representatives on passage of the PRECIP Act, H.R. 1437 which requires the National Oceanic and Atmospheric Administration (NOAA) to update precipitation frequency estimates every five years, and encourages its swift passage in the Senate.
To build for the future and prioritize the resilience of our nation's critical infrastructure systems, civil engineers require the most current precipitation data available. Unfortunately, too often the rainfall data that engineers must rely on to design our nation's infrastructure is out-of-date and does not account for the increasingly heavy rains and less predictable weather patterns of today. The lack of current data poses significant challenges for engineers as they attempt to protect public health, safety and welfare and impacts the security of the nation's dams, levees, wastewater and stormwater infrastructure. Design and protection of all infrastructure systems depend on current, accurate and reliable precipitation data that adequately accounts for ongoing climate changes.
The PRECIP Act provides needed resources to help NOAA produce more accurate data and serves to strengthen the nation's infrastructure so that it can withstand the increasingly severe effects of climate change. Passage of this legislation is a critically vital step toward meeting the goals set forth in the recently passed Infrastructure Investment and Jobs Act to ensure resilient infrastructure so that every community can thrive.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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