Pennsylvania Supreme Court Adopts New Rule in Breach-of-the-Consent-to-Settle-Clause Cases
August 19, 2015 —
Sean Mahoney – White and Williams LLPIn Babcock & Wilcox Company, et al. v. America Nuclear Insurers, et al., the Pennsylvania Supreme Court recently held that where a liability insurer has agreed to provide a defense to its insured in an underlying tort action subject to a reservation of rights but refuses to consent to a settlement in that action, the insured may nevertheless accept the settlement over the insurer’s objection where the settlement is “fair, reasonable, and non-collusive” from the perspective of a reasonably prudent person in the insured’s position in light of the totality of the circumstances and is covered. Babcock & Wilcox Company v. America Nuclear Insurers, No. 2 WAP 2014, 2015 WL 4430352 (Pa. Jul. 21, 2015). This decision fills an important gap in Pennsylvania precedent addressing the rules applicable when an insurer refuses to consent to an insured’s settlement of a lawsuit.
In Babcock, the underlying plaintiffs sued Babcock & Wilcox Company and Atlantic Richfield Company (“the Insureds”) alleging that the Insured’s nuclear facilities caused bodily injury and property damage. The Insureds’ liability insurers agreed to defend the Insureds subject to a reservation of rights. The insurers later refused to consent to an offer to settle the underlying action for a total of $80 million because they believed the Insureds were likely to succeed on the merits. Nevertheless, in 2009, the Insureds accepted that offer and settled the underlying action for $80 million, notwithstanding the insurer’s refusal. The Insureds then sought reimbursement of the $80 million settlement from their insurers, who rejected that request on the ground that the Insureds had breached the consent-to-settlement/cooperation provisions of the implicated policies.
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Sean Mahoney, White and Williams LLPMr. Mahoney may be contacted at
mahoneys@whiteandwilliams.com
It’s All a Matter of [Statutory] Construction: Supreme Court Narrowly Interprets the Good Faith Dispute Exception to Prompt Payment Requirements in United Riggers & Erectors, Inc. v. Coast Iron & Steel Co.
May 30, 2018 —
Erinn Contreras & Joy O. Siu - Sheppard Mullin Construction & Infrastructure Law BlogOn May 14, 2018, the California Supreme Court issued its opinion in United Riggers & Erectors, Inc. v. Coast Iron & Steel Co., No. S231549, slip. op. (Cal. Sup. Ct. May 14, 2018). In it, the Court narrowly construed the “good faith” exception to the general rule that a direct contractor must make retention payments to its subcontractors within 10 days of receiving any retention payment. The exception provides that “[i]f a good faith dispute exists between the direct contractor and a subcontractor, the direct contractor may withhold from the retention to the subcontractor an amount not in excess of 150 percent of the estimated value of the disputed amount.” Cal. Civ. Code section 8814(c).
Reprinted courtesy of
Erinn Contreras, Sheppard Mullin and
Joy O. Siu, Sheppard Mullin
Ms. Contreras may be contacted at econtreras@sheppardmullin.com
Ms. Siu may be contacted at jsiu@sheppardmullin.com
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BHA has a Nice Swing: Firm Supports CDCCF Charity at 2014 WCC Seminar
April 29, 2014 —
Beverley BevenFlorez-CDJ STAFFStop by the Bert L. Howe & Associates (BHA) booth at the 2014 West Coast Casualty Construction Defect Seminar at the Disneyland Hotel on May 15th and 16th, and Sink A Putt For Charity!
This year, seminar attendees and would-be duffers who try their hand at the golf putting game at the Bert L. Howe & Associates booth will not only have the chance to win a free gift card, they’ll also have the opportunity to help raise funds for a very important cause, the Construction Defect Community Charitable Foundation (CDCCF).
Throughout this year’s seminar, with every hole-in-one made at their booth, BHA will make a $25.00 cash donation in the golfer’s name to the CDCCF.
Bert L. Howe & Associates strongly supports the goals and principles of the CDCCF, and is honored to assist the foundation in fulfilling its mandate of assisting those in the construction defect community who are in need.
Read how the CDCCF assists the construction defect community...
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Fifth Circuit Holds Insurer Owes Duty to Defend Latent Condition Claim That Caused Fire Damage to Property Years After Construction Work
October 05, 2020 —
Jeremy S. Macklin - Traub Lieberman Insurance Law BlogMost general liability policies only provide coverage for “property damage” that occurs during the policy period. Thus, when analyzing coverage for a construction defect claim, it is important to ascertain the date on which damage occurred. Of course, the plaintiffs’ bar crafts pleadings to be purposefully vague as to the date (or period) of damage to property. A recent Fifth Circuit decision applying Texas law addresses this coverage issue in the context of allegations of a condition created by an insured during the policy period that caused damage after the policy expired.
In Gonzalez v. Mid-Continent Cas. Co., 969 F.3d 554 (5th Cir. 2020), Gilbert Gonzales (the insured) was a siding contractor. In 2013, the underlying plaintiff hired Gonzales to install new siding on his house. In 2016, the underlying plaintiff’s house was damaged in a fire. The underlying plaintiff sued Gilbert in Texas state court alleging that when Gonzalez installed the siding in 2013, he hammered nails through electrical wiring and created a dangerous condition that caused a fire three years later in 2016.
At the time Gilbert performed construction work, he was insured by Mid-Continent Casualty Company. Mid-Continent disclaimed coverage to Gonzales on the basis that the complaint unequivocally alleged that property was damaged in 2016 and there were no allegations that property damage occurred prior to 2016 or was continuing in nature.
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Jeremy S. Macklin, Traub LiebermanMr. Macklin may be contacted at
jmacklin@tlsslaw.com
Illinois Federal Court Determines if Damages Are Too Remote
July 13, 2020 —
Lian Skaf - The Subrogation StrategistForeseeability is a tort concept that tends to permeate several aspects of legal analysis, often causing confusion in litigants’ interpretation of, and courts’ application of, foreseeability to their cases. In Cincinnati Ins. Co. v. Progress Rail Services. Corp., 2020 U.S. Dist. LEXIS 73967 (C.D. Ill.), the United States District Court for the Central District of Illinois took on the task of analyzing a case dealing with foreseeability issues to determine if the defendant owed the plaintiff a duty and if the damages were so remote as to violate public policy. The court held that since the defendant’s actions contributed to the risk of harm to the plaintiff and the facts satisfied the four-prong duty test, the defendant owed the plaintiff’s subrogor a duty of reasonable care. It also held that the plaintiff’s damage claim did not open the defendant up to liability that would violate public policy.
In the case, an employee of defendant Progress Rail Services Corporation (Progress Rail) was operating a crane at Progress Rail’s Galesburg location on May 7, 2018. The employee struck an overhead power line while working, causing a power disruption to nearby businesses. The plaintiff’s subrogor, Midstate Manufacturing Company (Midstate), was one of the affected businesses, reporting that its Amada hydraulic punch was damaged. Midstate submitted a property damage claim to its carrier, Cincinnati Insurance Company (Cincinnati), who reimbursed it under its policy. Subsequent to its payment, Cincinnati filed suit against Progress Rail in Illinois state court. Progress Rail then removed the case to federal court and filed a motion to dismiss.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
New OSHA Regulations on Confined Spaces in Construction
May 20, 2015 —
Craig Martin – Construction Contractor AdvisorOn May 1, OSHA announced its final rules for construction workers in confined spaces. The Final Rules, which will take effect August 3, 2015, will require more comprehensive training , with the goal of providing construction workers the same or similar protections as employees in manufacturing and general industry.
The final rule will cover confined spaces such as:
- Crawl spaces
- Manholes
- Tanks
- Sewers
The final rule will require the following:
- Confined spaces must be large enough for an employee to enter and have a means of exiting.
- The air in confined spaces must be tested before workers enter them to ensure that the air is safe.
- Construction workers must share safety information with others when they are going to work in enclosed/confined spaces.
- Hazards associated with confined spaces must be continuously monitored and abated to the extent possible.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
New York Court Holds That the “Lesser of Two” Doctrine Limits Recoverable Damages in Subrogation Actions
September 23, 2019 —
Michael L. DeBona - The Subrogation StrategistIn New York Cent. Mut. Ins. Co. v. TopBuild Home Servs., Inc., 2019 U.S. Dist. LEXIS 69634 (April 24, 2019), the United States District Court for the Eastern District of New York recently held that the “lesser of two” doctrine applies to subrogation actions, thereby limiting property damages to the lesser of repair costs or the property’s diminution in value.
In New York Cent. Mut. Ins. Co., New York Central Mutual Insurance Company’s (New York Central) insureds, Paul and Karen Mazzola, suffered a fire to their home. After the fire, New York Central paid the Mazzolas $708,465.74 to repair the property. New York Central brought a subrogation action against TopBuild Home Services, Inc. (TopBuild), alleging that the fire was caused by negligent work performed by TopBuild. New York Central sought to recover the repair costs it paid to the Mazzolas. TopBuild conceded liability but disputed the proper measure of damages.
TopBuild filed a motion for partial summary judgment, arguing that under the “lesser of two” doctrine, New York Central could recover only the lesser of the costs to repair the property or the property’s diminution in value. TopBuild, therefore, asserted that New York Central was not entitled to the repair costs of $708,465.74 but, rather, could recover only the property’s decline in value following the fire – approximately $250,000.[1] In response, New York Central argued that New York’s “lesser of two” doctrine does not apply to subrogation actions because an insurance company cannot mitigate the payment it makes to its insured.
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Michael L. DeBona, White and Williams LLPMr. DeBona may be contacted at
debonam@whiteandwilliams.com
Illinois Law Bars Coverage for Construction Defects in Insured's Work
September 24, 2014 —
Tred R. Eyerly – Insurance Law HawaiiApplying Illinois law, the Seventh Circuit determined there was no coverage for faulty workmanship causing property damage to the insured's project. Nautilus Ins. Co. v. Board of Directors of Regal Lofts Condominium Ass'n, 2014 U.S. App. LEXIS 16250 (7th Cir. Aug. 21, 2014).
The developer converted a vacant building into a condominium. The construction was completed in 2000. The Condominium Board took control of the condo association on July 27, 2000. As early as May 2000, one homeowner was aware of water damage problems in the building. Other complaints surfaced. An investigation found that the exterior brick masonry walls were not fully waterproofed, which caused leaks. The investigation further showed that deteriorated conditions had likely developed over many years, even prior to the condominium conversion, but the present water penetration was caused by the inadequate restoration of the walls to a water-tight condition.
The underlying action was filed against the developer for failure to properly construct the exterior walls. The developer's carrier, Nautilus, denied coverage. In an amended complaint, the Board added a count of negligence. Again, Nautilus denied coverage. The Board's second amended complaint alleged that the developer's negligence had caused damage to personal property within the building, in addition to the interior of the building and the building itself. For the third time, Nautilus denied coverage and filed for declaratory relief.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
