Inability to Confirm Coverage Supports Setting Aside Insured’s Default Judgment on Grounds of Extrinsic Mistake
January 21, 2019 —
Christopher Kendrick & Valerie A. Moore - Haight Brown & Bonesteel LLPIn Mechling v. Asbestos Defendants (No. A150132, filed 12/11/18), a California appeals court affirmed the trial court’s grant of an insurer’s motion to set aside default judgments entered against its defunct insured pursuant to the trial court’s inherent, equitable power to set aside defaults on the ground of extrinsic mistake, thereby allowing the insurer to intervene and defend its own interests in the case.
In Mechling, Fireman’s Fund insured Associated Insulation of California, which was named as a defendant in asbestos litigation filed in 2009. Associated had ceased operating in 1974, but was somehow successfully served with the complaint and defaulted, leading to default judgments of several million dollars. Notice of the judgments was served on Associated but not Fireman’s Fund.
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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Bert L. Howe & Associates Celebrates 21-Year Success Story
July 31, 2014 —
Beverley BevenFlorez-CDJ STAFFJuly 31, 2014 marks the 21st anniversary of Bert L. Howe & Associates, Inc. (BHA). The company commenced operations on this date 21 years ago today. During the last two decades, the landscape of the construction defect industry as a whole has shifted significantly. In the early nineties, the industry consisted substantially of multi-family residential projects, and construction defect litigation was a regional concern focused primarily on Southern California.
In the intervening 21 years, the construction defect industry has become a nationwide concern with the majority of states adopting builders’ right to repair legislation. To mark the 21st anniversary of BHA, we spoke with some of the key personnel to get some insights and impressions of how the industry and the company have evolved throughout the years.
On July 31st, 1993, Bert formed the company after a long career as a general contractor. He had become involved in the construction forensics field in 1988, providing general construction investigation and expert support services to legal professionals handling multifamily residential cases.
James Howe, the firm's current President and Chief Operating Officer, joined the company in November 1993. Previously, he had been recruited by The New York Times and served as operations manager for their Orange County, Los Angeles, and Inland Empire operations.
In January of 1994, operations were relocated to a small, 1,100-square foot, two-story walk-up in Anaheim Hills, California. James stated that they purchased furniture from Plummers, and he and Bert carted all of the furniture up the stairs and assembled it themselves over the weekend.
Immediately, they hired the first employee, Matthew J. Nardella, an architect and graduate from Cal Poly University, who also came to the firm with substantial construction and design experience.
Matt was scheduled to begin work on January 17th, 1994, the day of the Northridge earthquake. “I remember calling Bert,” Matt said. “‘Bert, is everything okay down there? Do you want me to come in?’ All of the news said freeways collapsed. I didn’t know what was going on with the roads,” Matt continued. “Bert’s like, ‘Yeah, nothing happened here, get over here.’ I said, ‘Okay, I’ll be there.’” Matt chuckled at the memory.
Even back in early 1994, Bert was in high demand as an expert witness. “He was everyone’s go-to-guy,” Matt Nardella stated. “The day a case was filed they would call him first.”
“He had a real desire,” Susan Howe, BHA’s Chief Executive Officer, said. “The primary way Bert worked on growing the business was by showing up, being prepared, and being full of ideas. If there was a problem or an issue, he would come up with a solution on how to handle it in the scope of what we were doing. He identified solutions and provided additional benefits to his clients. That’s how he grew the business, really. He grew each individual relationship.”
During that period, the type and scope of projects began to shift into a more diversified mix, including hotels, resorts, warehouses, storage facilities, restaurants, and more, though, at the time, BHA mainly provided expert witness support in construction defect cases involving attached housing developments, such as condominiums and townhomes.
Many of the other current key employees within the firm were hired during the mid-90s and continue with the firm today. Don MacGregor, John B. A. Mancini, and Jorge Porter were hired during this period. “The business was growing quickly and constantly from the moment I walked in the door,” Don MacGregor said, speaking of his early days with BHA. “Within just a few months of me being hired, the firm added six additional architects, engineers, and design professionals to meet client demands.”
Between 1995 and 1996, the company moved to a larger office (about 2,000 square feet), then added an additional 1,000 square feet of office space by adding on an adjoining unit. However, by 1997, James started looking for new, bigger office space. It was during this time that the firm’s current Chief Executive Officer joined the company.
Susan G. Howe left an executive position at a Newport Beach based business bank to focus her energy full time on the company's financial affairs and regulatory compliance issues.
When James walked in to what is now the firm’s Corporate Headquarters at 5415 E. La Palma in Anaheim Hills, it seemed enormous. At 5,500 square feet, it was twice the size of the modest current office. The space had previously been built out by American Express Travel Related Services.
In 1998, shortly after moving operations to Anaheim Hills, another key person in the BHA story joined the firm, Mark Chapman. "I remember interviewing Mark and feeling strongly that he was destined to become a recognized presence within this industry,” James Howe stated. “I was particularly intrigued with his dual credentials. Being a licensed professional engineer and a licensed general contractor provided the credibility he needed to speak to both civil engineering issues and general contracting or cost issues. This seemed like a win-win for the client. He was also a very strong negotiator coming in, and I respected that," James mused.
Mark recalled the recruitment process and his early discussions with James. "The job at BHA was different and intriguing enough to get me to make what ultimately turned out to be the right decision,” Mark stated. “I had been concerned with design for most of my career, but was interested in this highly specialized niche industry. I knew the industry existed, but it was still highly specialized at the time. I had no idea that I could make a career out of it. Nor did I realize that my skill set as an engineer and contractor was the perfect fit to handle the multi-faceted analysis that is sometimes required. The combination of design analysis, field work, meetings, and mediations turned out to be a refreshing career change.
"Working with Bert was a learning experience I will always remember and cherish,” Mark said. “He always said his door was open anytime I needed anything. When I did have a question, he would always take whatever time was needed to listen, think about it, and give me an answer. I was always impressed because not only did he always have an answer, it was always the right answer. Bert made me feel like family. I knew I had made it and gained his confidence when I walked into his office one day and asked his opinion and he simply said ‘You can handle it, I trust you.’ The past 16 years of my life have been the most rewarding personally and professionally. I owe it mostly to my experience at BHA, the Howe family's generosity, and my associates. It takes a great team to be successful. No one can do it by themselves.”
Soon enough, the once cavernous space was too small. The company was still growing, and arrangements were made to lease the adjoining unit, 5413, doubling the corporate office's footprint to a little over 12,000 square feet. James wondered if the firm would once again fill the new space: “Again, it seemed big at the time,” James said. “Somehow we filled it up, and now we’re busting out of it.”
John Springman joined BHA in June of 2000. John had worked with Bert throughout the years on several cases, John as the architectural expert and Bert as the general contracting/cost designee. They had worked so well together, that Bert spent a year or two recruiting him to join BHA.
By this time, Bert, Susan, and James had expanded their vision from only Bert as an expert witness, to BHA becoming a ‘multi-disciplinary’ firm with experts in differing fields. “At first, [Bert’s] primary form of testimony was cost estimating and standard of care for general contracting practices,” Susan said, “but he soon realized the value in developing a construction experts group comprising licensed architects, engineers, roofing and waterproofing experts, and building envelope specialists."
Susan explained how innovative the one-stop shop philosophy was back then. “[Bert] had not only to recruit John Springman and people like him, but we had to communicate the synergies, cost and productivity benefits to our existing client base, because it was innovative and different.”
However, it didn’t take long for BHA’s clients to reap the great benefits having access to a multi-disciplinary integrated support solution offered: “We were able to provide cost savings to our clients, because we were collecting the data and sharing it to all of the different disciplines within our own organization,” Susan said.
In the early 2000s, the projects began changing from condominium developer cases to single-family home cases. According to John, “The insurance industry started to write in exclusions for condominiums. Forced to go elsewhere for business, it went to single family homes.”
Also around this time, the Aas court decision changed the construction defect industry in California. The court ruled that you have to have damage to have a claim. “Just because a code wasn’t followed didn’t matter unless damage occurred from it,” John said. “It is under breach of contract and other things, but not negligence. Insurance covered negligence, so it took away insurance coverage. Then SB 800 [California’s Right to Repair Act] came about and took a lot of those things and brought them back in.”
While continuing to grow its California market, in 1999 BHA extended its reach into other regions beginning with Nevada and Arizona. By 2003, their reach extended to the east coast with satellite offices in Ohio, Kentucky, and South Carolina.
The types of projects BHA handled also diversified. BHA continued their work with production housing and condominiums and other attached housing, and they supplemented this work with cases involving high-rise and mid-rise buildings, hospitals, hotels, schools and universities, religious institutions, sprawling custom homes, retail complexes, as well as handling delay claims, premises liability, trip-and-fall cases, worker compensation files, and others.
Susan recalled one of BHA’s first international cases that involved a mining operation in Chile. “The core of it was construction defect, but our main job was design analysis and estimating on a really huge scale,” Susan said. The firm was engaged directly through AIG. “An adjuster there contacted Bert at the West Coast Casualty seminar, a few weeks later Bert and half of the office were in Santiago. It was a very memorable assignment; I remember the litigation part of the case was handled largely in the capital city of Santiago. But the mining operations were quite remote. Each of our employees had to undergo altitude testing prior to being performing site investigations at the mining and processing facilities.”
By 2010, BHA had grown to a staff of over forty associates, with satellite offices across the country to support the growing regional businesses. However, in September of 2011, BHA’s beloved founder and President Bert Howe passed away after suffering a heart attack.
While Bert’s presence is still missed by the associates and, most especially, his wife and son, the company was well-positioned to continue on. Susan explained that James for about five years before Bert’s death had been slowly deleveraging Bert from the business. “He was helping his father to be able to work less,” Susan stated. “And as a result of that, we had all these great people like Matt Nardella, John Springman, Mark Chapman, Brad Hughes, John Tolman, Charlie Miller, Jerry Miles, and others who had significant tenure with the firm. They had all worked very closely with Bert, and had really matured, and now they had a few extra gray hairs."
So what’s next for Bert L. Howe & Associates, Inc.? Susan sees greater technological changes, as well as diversification in the types of projects, and the ability to offer additional value added services to their clients.
James stated that BHA has the capability to competitively enter new markets providing a superior credibility, cost, and customer service proposition. “Leveraging from our smart office techniques, proprietary construction forensics technologies, and mature business processes, we could effectively go into any regional market as efficiently as any other company, more efficiently than most, and bring a great deal of value to clients with minimal capital investment in these various markets.”
James also sees more opportunities for career BHA employees who are ready to take on new responsibilities. “I would like to see, and I’m trying to create, new opportunities and challenges for people to continue to be upwardly mobile,” James said. “I am energized by the prospect of delivering additional value to clients, and providing additional opportunities for key people here to grow and improve their lives economically through the growth of the company."
BHA currently is comprised of sixty employees, serving clients throughout the U.S. with offices in Anaheim Hills, California; Sacramento, California; San Diego, California; Las Vegas, Nevada; Salt Lake City, Utah; Denver, Colorado; Phoenix, Arizona; Miami, Florida; Houston, Texas; and San Antonio, Texas.
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Why Is California Rebuilding in Fire Country? Because You’re Paying for It
March 14, 2018 —
Christopher Flavelle – BloombergAfter last year’s calamity, officials are making the same decisions that put homeowners at risk in the first place.
At the rugged eastern edge of Sonoma County, where new homes have been creeping into the wilderness for decades, Derek Webb barely managed to save his ranch-style resort from the raging fire that swept through the area last October. He spent all night fighting the flames, using shovels and rakes to push the fire back from his property. He was even ready to dive into his pool and breathe through a garden hose if he had to. His neighbors weren’t so daring—or lucky.
On a recent Sunday, Webb wandered through the burnt remains of the ranch next to his. He’s trying to buy the land to build another resort. This doesn’t mean he thinks the area won’t burn again. In fact, he’s sure it will. But he doubts that will deter anyone from rebuilding, least of all him. “Everybody knows that people want to live here,” he says. “Five years from now, you probably won’t even know there was a fire.”
As climate change creates warmer, drier conditions, which increase the risk of fire, California has a chance to rethink how it deals with the problem. Instead, after the state’s worst fire season on record, policymakers appear set to make the same decisions that put homeowners at risk in the first place. Driven by the demands of displaced residents, a housing shortage, and a thriving economy, local officials are issuing permits to rebuild without updating building codes. They’re even exempting residents from zoning rules so they can build bigger homes.
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Christopher Flavelle, Bloomberg
Insurer in Bad Faith For Refusing to Commit to Appraisal
October 08, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe court denied State Farm's motion for summary judgment on the insured homeowners' bad faith claim for State Farm's failure to agree to an appraisal. Currie v. State Farm Fire and Cas. Co., 2014 WL 4081051 (E.D. Pa. Aug. 19, 2014).
Superstorm Sandy caused a tree to crash in the insureds' home. The loss was reported to State Farm. The State Farm adjuster verbally quoted the roof replacement at more than $100,000. State Farm eventually paid $60,000 for the roof replacement. The insureds' adjuster estimated the loss at $363,804.98.
The insureds demanded an appraisal. State Farm rejected the demand because the claim involved certain items for which State Farm did not admit liability, including damage to the interior hardwood floors. State Farm contended that since the dispute went beyond the amount of loss, an appraisal was not an appropriate method of resolution.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Powering Goal Congruence in Construction Through Smart Contracts
February 22, 2021 —
Michael Matthews - Construction ExecutiveThe $814 billion U.S. commercial construction market requires a unique assembly of designers, contractors, subcontractors and suppliers to work together in a highly orchestrated manner to make sure that the right labor, material, equipment, tools and information all comes together at the right place and time. Alignment and coordination between companies is critical for a project to be successful; completed safely, on time, on budget and resulting in an asset that performs as designed.
Yet the industry is slowed by an operating model bogged down by transactional and informational barriers that destroys value across the construction supply chain. Companies are connected through contracts and purchase orders that are undercut by mistrust that yields adversarial relationships and conflicting priorities that result in restricted transparency, elongated payment cycles and an abundance of resource-sucking reconciliations, audits and disputes.
With margins already razor thin, company protectionism cascades down from owners, developers and operators to contractors, subcontractors and suppliers with each player focused on optimizing their piece at the expense of the whole. Perhaps this is part of the reason 98% of megaprojects experience cost overruns or delays, 95% of projects are unable to meet even one business objective; and 70% of all construction projects are not completed within 10% of the proposed budget.
Reprinted courtesy of
Michael Matthews, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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ASCE Statement on Senate Passage Of Infrastructure Investment and Jobs Act
August 16, 2021 —
Jean-Louis Briaud, President, American Society of Civil Engineers (ASCE)WASHINGTON, DC. –
The American Society of Civil Engineers (ASCE) applauds the U.S. Senate for passing the bipartisan Infrastructure Investment and Jobs Act (IIJA), proving once again that the strength and reliability of our nation's infrastructure systems is an issue that unites us all.
With this legislation, the federal government will restore their critical partnership with cities and states to modernize our nation's infrastructure, including transit systems, drinking water pipes, school facilities, broadband, ports, airports and more.
We commend the Senate for prioritizing American communities by passing this bipartisan infrastructure legislation and urge the U.S. House of Representatives to do the same.
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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A Quick Checklist for Subcontractors
January 26, 2017 —
Christopher G. Hill – Construction Law MusingsAfter the last two weeks’ analyses of a couple of big construction decisions that came out recently, I thought I’d keep this week’s post practical and short for those that are not construction lawyers. So without further ado, here is a short checklist of the top things (aside from calling their local experienced construction attorney) a construction subcontractor should do or look for when reviewing a construction contract from a general contractor (and for a couple of these that a general contractor can look for in its prime contract).
- ALWAYS get a copy of the Prime Contract between the Owner and the General Contractor. This contract will contain terms that will “flow down” to you through the incorporation clause that almost every subcontract contains. You can’t do much to change these terms, but you will need to know them as the job progresses.
- READ every provision of the subcontract. I know this sounds simple, but not all subcontracts hide the red flags in the same places. Remember the details of a subcontract can sink you later if you aren’t prepared.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
The Complex Insurance Coverage Reporter – A Year in Review
February 27, 2019 —
White and Williams LLPWelcome to CICR’s annual review of insurance cases. Here, we spotlight five (actually, seven) decisions from the last year that you should know about, and five pending cases—all before state high courts—to keep an eye on. The choices were not always easy.
That is because 2018 saw a number of notable insurance coverage developments. Among them was the “Restatement of the Law – Liability Insurance,” a nearly five hundred-page document that the American Law Institute (ALI) adopted after eight years and twenty-nine drafts.
Already, much has been written about the ALI Restatement, including by us. There will be more to come. Going forward, we will continue to highlight significant examples where courts address its provisions.
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White and Williams LLP
