Hurricane Ian: Discussing Wind-Water Disputes
October 10, 2022 —
Randy J. Maniloff - White and Williams LLP“Most of the Florida homes in the path of Hurricane Ian lack flood insurance, posing a major challenge to rebuilding efforts, new data show. In the counties whose residents were told to evacuate, just 18.5 percent of homes have coverage through the National Flood Insurance Program, according to Milliman, an actuarial firm that works with the program.”
That’s how a September 29th article on The New York Times website begins.
When it comes to insurance coverage for hurricanes, the oft-stated maxim is that homeowner’s policies cover damage caused by wind but not flood waters.
Such a low take-up rate for flood insurance policies would seemingly create an incentive for those affected by Hurricane Ian to argue, when feasible, that their property damage, despite appearing to have been caused by flood, was also caused by wind. [And, of course, businesses looking to make business interruption claims, under commercial property policies, will be in the same boat.]
Further, even when someone has a homeowner’s policy and a flood policy, there may still be a reason to argue that the loss was caused by wind, as homeowner’s policies often have greater limits than flood policies.
[As an important aside, when hurricane damages are covered, homeowner’s policies can have a significant deductible, perhaps up to 10% of a home’s insured value.]
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Randy J. Maniloff, White and Williams LLPMr. Maniloff may be contacted at
maniloffr@whiteandwilliams.com
Penalty for Failure to Release Expired Liens
April 02, 2024 —
William L. Porter - Porter Law GroupI was recently contacted by a commercial building owner in the process of trying to sell his building. Two years prior to this, a subcontractor had recorded a mechanics’ lien with the local County Recorder’s office in relation to the owner’s property. The subcontractor recorded the mechanics lien after the subcontractor was not paid by a prime contractor for work the subcontractor had performed on the property. Unfortunately, the subcontractor then failed to file a lawsuit to foreclose on the lien within the requisite ninety (90) day time period for filing a lawsuit to foreclose on the mechanics’ lien. Since the subcontractor missed this 90 day deadline to file the mechanics lien foreclosure lawsuit, the mechanics lien expired and became unenforceable.
Subject to certain exceptions, under California Civil Code Section 8460, a lawsuit to foreclose on a mechanics lien must be filed within ninety (90) days after the mechanics lien is recorded or the mechanics lien expires. Although the mechanics lien had expired, the title company and intended purchaser of the building and property were perhaps understandably insistent that the mechanics lien constituted a cloud on title to the property and must be removed from the official records for the property. The prospective purchaser would not buy the property unless the mechanics’ lien was removed.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
DC Circuit Issues Two Important Clean Air Act and Administrative Law Decisions
December 16, 2019 —
Anthony B. Cavender - Gravel2GavelThe U.S. Court of Appeals or the District of Columbia has recently issued two important rulings on the Clean Air Act in particular and administrative law in general: California Communities Against Toxics, et al., v. EPA and Murray Energy Corporation v. EPA.
The Battle of the Memos: Seitz Makes Way for Wehrum
In the California Communities case, decided on August 20, 2019, the court held, in a 2 to 1 decision, that a petition to review a change in EPA policy announced in an agency memorandum which reversed an agency policy announced nearly 25 years ago in another agency memo must be rejected because the memo at issue was not a “final agency action” subject to the Administrative Procedure Act (APA). In 1995, the “Seitz Memo,” which interpreted Section 112 of the Clean Air Act and addresses the regulation and control of hazardous air pollutants from stationary sources, stated that once a source of toxic emissions is classified as “major,” the facility remains subject to regulation as a major source even if the facility makes changes to the facility to limit its potential to emit such toxics below the major source threshold. Then, in 2018 under a new administration, the “Wehrum Memorandum” was issued which reversed this policy and its interpretation of the law. (Both memos were issued without any kind of advance notice or opportunity to comment.) If a source takes steps to limit its potential to emit, then it may be regulated as an area source, and subject to less rigid regulation. The court majority held that the Wehrum Memo was not a final agency action and was not subject to judicial review when it was measured against both prongs of the “finality test” devised by the Supreme Court in the cases of Bennet v. Spear, 520 US 154 (1997) and US Army Corps of Engineers v. Hawkes, 136 S. Ct. 1807 (2016). While the memo undoubtedly represented the consummation of the agency’s decision-making process, the memo had no direct and appreciable legal consequences, and not therefore being a final action, the case must be dismissed. Judge Rogers filed a strong dissenting opinion.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Connecticut Court Finds Anti-Concurrent Causation Clause Enforceable
March 19, 2015 —
Tred R. Eyerly – Insurance Law HawaiiCanvassing both case law and scholarly authority, the court determined that the anti-concurrent cause (ACC) provision barred coverage for loss caused by Tropical Storm Irene. Lombardi v. Universal N. Am Ins. Co., 2015 Conn. Super. LEXIS 138 (Conn. Super. Ct. Jan. 21, 2015).
Tropical Storm Irene caused the insured's home to shift and move from its concrete pier foundation. The house later had to be demolished.
The insurer's expert concluded that the house was removed from the foundation by storm surge and not by wind. The damage caused by wind was limited to 24 feet of trim missing from the roof and about 70 square feet of shingles that were blown away. The insured's expert concluded the house was removed from its foundation due to a combination of wind and water forces. The insured's expert reported that "the water wave action most probably caused most damage to the dwelling support pilings, with wind conditions contributing to the wave action."
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Before Celebrating the Market Rebound, Builders Need to Read the Fine Print: New Changes in Construction Law Coming Out of the Recession
November 26, 2014 —
Alan H. Packer - Newmeyer & Dillion, LLPAs the homebuilding market continues to improve, many builders find themselves maneuvering familiar roads. That said, important new realities have taken hold since the market collapse. Navigating these changes requires extra thought for practical and legal reasons.
Using Old Designs “Off the Shelf”?
The adoption of the California Building Standards Code in 2010, with an updated schedule to go into effect January 1, may complicate the use of older designs. In addition, some builders are contemplating building on pads constructed five or more years ago, temporarily shelved until market conditions improved. Because of changes in both the applicable Code and due to possible changes in the underlying soils and drainage, these projects require additional scrutiny before starting construction.
Mechanic’s Lien Law Changes
Not too long ago, the California Legislature recently overhauled the entire mechanic’s lien law system in California. New forms, new statutory references, new rules and deadlines are all applicable to projects under construction now. Make sure your documents are up to date, as the use of older forms (particularly for liens, progress payments, and final payments) could create legal problems in the future.
Indemnity Law Changes
Since 2006, California lawmakers have passed four rounds of legislation aimed at limiting indemnity provisions in construction contracts. The laws are aimed at two aspects of indemnity law: “Type 1” indemnity provisions, and liability for the costs of defending a claim.
Type 1 Indemnity. California law previously permitted a builder to obtain “Type 1” indemnity from its subcontractors for all claims. Under a Type 1 provision, if a claim arose out of the trade’s work, the trade was fully responsible to defend and indemnify the builder – even if other trades or the Builder were partially at fault. Some cases even allowed, typically in a commercial context, the builder to obtain Type 1 indemnity even if the trade was not negligent, as long as the claim involved its work.
Defense Obligation. In 2008, California’s highest court issued an opinion in Crawford v. Weather Shield, evaluating an indemnity provision requiring trade (a window supplier/manufacturer) to defend the builder in claims involving allegations of damages arising out of the trade’s work. Because the trade had contractually agreed to defend the builder, the Court held it responsible for the builder’s defense costs -- even though, ultimately, the trade was found
not liable for the actual damages claimed.
Recent legislation after Crawford has dramatically shifted how indemnity provisions will be enforced. Builders may no longer obtain Type 1 indemnity for residential construction defect claims covered by SB800; instead, indemnity is limited to the extent a claim arises out of the trade’s work. Even more recent legislation applied these changes to claims arising out of commercial construction projects. The recent legislation allows the trades “options” on how to defend the builder, with an eye toward requiring that they pay only a “reasonably allocated” portion for the builder’s defense costs.
Smart builders are refining their contract documents to take into account these new limitations on indemnity provisions.
Insurance Market Changes
Due to uncertainties in subcontractor insurance and other factors, many builders have also converted their liability insurance from a “bring your own” model to “wrap-up” insurance, where the builder’s policy also covers their trades. Builders should carefully examine their subcontracts in light of this change as well.
Trade Partner Changes
On a practical level, many trade partners, particularly in the residential sector, have gone out of business or moved on to greener pastures. Builders need to find and negotiate contracts with new trade partners on the fly, and educate them on the builders’ procedures for payment and construction.
SB800 documentation
A decade ago, most builders updated their purchase documents and subcontracts for California’s “Right to Repair Law” (also known as SB800), which set forth functionality standards for construction defects in residential housing, and procedures for resolving claims prior to litigation. Builders ramping up to meet market demand should examine how they implemented SB800 changes in contract documents. Issues to consider:
- Whether to opt out of -- or back into -- statutory procedures.
- Whether to include arbitration or judicial reference provisions to control where claims are litigated after the SB800 process.
- Re-training personnel to preserve SB800 rights, including sign-offs on purchase documentation and recordation of key documents.
- Recent Court of Appeal decisions have complicated the SB800 landscape, potentially opening the door to “common law” tort claims in at least subrogation contexts. Strategic planning at the document stage may be a good way to mitigate this risk as the cases wind their way through the judicial process.
The continuing surge in building activity is a welcome sign for builders who have weathered the storm. Before taking too many steps, builders should consult with counsel, their designers, and their insurance advisors to take into account the new realities of this recovering housing market.
About the Author
Alan H. Packer is a partner in the expanding Walnut Creek, CA, office of the law firm of
Newmeyer & Dillion LLP whose specialties include real estate, insurance, and construction litigation. To reach Alan, call 925.988.3200 or email him at alan.packer@ndlf.com.
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New Jersey Supreme Court Hears Arguments on Coverage Gap Dispute
October 26, 2017 —
Austin D. Moody - Saxe Doernberger & Vita, P.C.On Tuesday, October 24, the New Jersey Supreme Court heard arguments in a 17-year-old battle over whether Honeywell International Inc. (Honeywell) will have to help cover the costs of asbestos-related injury suits that were filed against it after insurers began to universally exclude coverage for asbestos-related liabilities. The Court considered the arguments made by two excess insurers, St. Paul Fire and Marine Insurance Co. (St. Paul) and parent Travelers Casualty and Surety Co. (Travelers), that the Court should overturn a state appellate court’s ruling that Honeywell does not have to contribute to these costs.
During the course of this case, Honeywell has sought coverage under more than 300 different policies, ultimately settling with all insurers except St. Paul and Travelers, who had issued a total of 10 excess policies to Honeywell’s predecessor, Bendix Corp. (Bendix) between 1968 and 1983. Honeywell has only sought coverage for claims made by individuals who allege that they were first exposed to asbestos prior to 1987.
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Austin D. Moody, Saxe Doernberger & Vita, P.C.Mr. Moody may be contacted at
adm@sdvlaw.com
West Coast Casualty’s Construction Defect Seminar Returns to Anaheim May 15th & 16th
February 25, 2014 —
Beverley BevenFlorez-CDJ STAFFThis year will be the twenty-first anniversary of West Coast Casualty’s Construction Defect Seminar, which brings together industry professionals locally as well as internationally. Early registration begins in the evening of Wednesday, May 14th, while the main events take place on May 15th and 16th at the Disneyland Hotel and Resort.
For attendees who wish to explore more of southern California before or after the seminar, you can show your badge and save at many venues including the Warner Bros. VIP Studio Tour, Medieval Times, Pinot Provence, Crossroads at House of Blues, Morton’s Steakhouse, as well as many other establishments.
You may register for the seminar online. They are offering a $50 discount to attendees who register before April 15th.
Download an invitation or register for the event...
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Coping with Labor & Install Issues in Green Building
October 08, 2014 —
Beverley BevenFlorez-CDJ STAFFBuilder reported on the problem that builders have with using green techniques—finding skilled laborers and subs. “If a green product is not installed correctly it most likely won’t do its job,” building scientist Carl Seville said to Builder.
Austin Trautman of Vali Homes told Builder that the biggest problem he had with his first net-zero prototype house was the HVAC work. “It’s actually a simpler system with straightforward installation, but they just couldn’t figure it out.”
Cliff Majersik, executive director of the Institute for Market Transformation, said that teaching subs the new techniques is worthwhile: “Once you know how to do it, an energy-efficient house can even be less expensive to build.”
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