Supply Chain Delay Recommendations
August 07, 2022 —
Denise Motta - Gordon & Rees Construction Law BlogThis Bulletin provides guidance to contractors, subcontractors, suppliers, and others to ensure compliance with contractual change order requirements in the event work on a construction project is impacted by supply chain delays.
Contract Protection Tips:
The construction industry is being impacted substantially by inability to obtain necessary construction products due to supply chain issues. Most construction contracts do not accommodate time extensions due to supply chain impacts. To address this gap in contract terms, we recommend including language such as: “lack of or failure of or other inability to obtain necessary transportation, fuel, power, materials, machinery, equipment or facilities, delays caused by other contractors, subcontractors or their subcontractors of any tier, or any materialmen or suppliers” as part of the defined force majeure event under the contract.
This provision can be included in the Change Order section of the contract as well by including a provision such as: “If the Work is delayed by the failure of or other inability to obtain necessary transportation, fuel, power, materials, machinery, equipment or facilities, delays caused by other contractors, subcontractors or their subcontractors of any tier, or any materialmen or suppliers, contractor shall be entitled to a change order for its costs and time associated with the delay.”
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Denise Motta, Gordon Rees Scully Mansukhani, LLPMs. Motta may be contacted at
dmotta@grsm.com
Insurers' Motion to Void Coverage for Failure to Attend EUO Denied
January 04, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe insurer's motion for summary judgment and disposal of the insureds' claim due to failure to attend an examination under oath (EUO) was denied. Perkins v Syndicate 4242 of Lloyd's of London, 2022 U.S. Dist. LEXIS 196922 (W.D. La. Oct. 28, 2022).
The insureds' home suffered damage from Hurricane Laura on August 27, 2020, and Hurricane Delta on October 9, 2020. The insureds reported damage after Hurricane Laura under the homeowners policy. They filed suit in August 2021, alleging that Lloyds failed to adequately inspect their claims. The court issued a Case Management Order (CMO) that governed initial disclosures and the parties' participation in a streamlined settlement process for hurricane claims. The dispute did not settle, however, so the matter was set for a bench trial.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Pennsylvania Supreme Court Rules that Insurance Salesman had No Fiduciary Duty to Policyholders
July 19, 2017 —
Austin D. Moody - Saxe Doernberger & Vita, P.C.On June 20, 2017, the Pennsylvania Supreme Court ruled that a life insurance salesman had no fiduciary duty to his customers where the customers retained decision-making authority regarding which policies to purchase. In Yenchi v. Ameriprise Fin., Inc., the Court returned a 4-2 verdict, overturning the lower court’s finding that it was possible that a fiduciary relationship existed between the parties.
The suit arose from a series of transactions between Eugene and Ruth Yenchi and Bryan Holland, a financial advisor for IDS Life Insurance Corporation.
The relationship began when Holland cold-called the Yenchis and asked to meet with them regarding their “financial stuff.” For a fee of $350, Holland met with the Yenchis on several occasions and counseled them regarding their insurance needs. On Holland’s advice, the Yenchis cashed out several existing polices and purchased a whole-life policy for Mr. Yenchi and a deferred variable annuity in Mrs. Yenchi’s name.
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Austin D. Moody, Saxe Doernberger & Vita, P.C.Mr. Moody may be contacted at
adm@sdvlaw.com
$24 Million Verdict Against Material Supplier Overturned Where Plaintiff Failed to Prove Supplier’s Negligence or Breach of Contract Caused an SB800 Violation
March 16, 2017 —
Jon A. Turigliatto, Esq. & Chelsea L. Zwart, Esq. – Chapman Glucksman Dean Roeb & Barger BulletinAcqua Vista Homeowners Assoc. v. MWL Inc. (2017) 2017 WL 371379
COURT OF APPEAL EXTENDS GREYSTONE HOMES, INC. v. MIDTEC, INC., HOLDING THAT CIVIL CODE §936 CREATES A NEGLIGENCE STANDARD FOR CLAIMS AGAINST MATERIAL SUPPLIERS BROUGHT UNDER SB800.
The Fourth District California Court of Appeal recently published its decision Acqua Vista Homeowners Assoc. v. MWI, Inc. (2017) 2017 WL 371379, holding that claims against a material supplier under SB800 (Civil Code §895 and §936) require proof that the SB800 violation was caused by the supplier's negligence or breach of contract.
Civil Code §936 states in relevant part, that it applies "to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract .... [T]he negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional with respect to claims for which strict liability would apply."
Acqua Vista Homeowners Association (the "HOA") sued MWI, a supplier of Chinese pipe used in the construction of the Acqua Vista condominium development. The HOA's complaint asserted a single cause of action for violation of SB800 standards, and alleged that defective cast iron pipe was used throughout the building. After trial, the trial court entered a judgment against MWI in the amount of $23,955,796.28, reflecting the jury's finding that MWI was 92% responsible for the HOA's damages.
MWI filed a motion for a directed verdict and motion for judgment notwithstanding the verdict on the grounds that the HOA had failed to present any evidence that MWI had caused an SB800 violation as a result of its negligence or breach of contract, and had therefore failed to prove negligence and causation as required by SB800, citing to Greystone Homes, Inc. v. Midtec, Inc.(2008) 168 Cal.App.4th 1194. The trial court denied both motions, relying on the last sentence of Civil Code §936, which states in part, "[T]he negligence standard in this section does not apply to any ... material supplier ... with respect to claims for which strict liability would apply."
The Court of Appeal reversed and ordered the trial court to enter judgment in favor of MWI. The Court of Appeal relied on the legislative history of S8800 and Greystone, which held that the first sentence of Civil Code §936 contains an "explicit adoption of a negligence standard" for S8800 claims against product manufacturers. The Court of Appeal reasoned that since §936 treats product manufacturers and material suppliers identically, the holding of Greystone must equally apply to material suppliers.
Because the complaint did not state a common law cause of action for strict liability, the HOA was required to prove that the damages were caused by MWI' s negligence or breach of contract. Although, the Court of Appeal found that while the HOA's evidence may have supported a finding that the manufacturer of the leaking pipes was negligent, the HOA had not provided any evidence that MWI, the supplier, had failed to supply the type of pipe ordered, acted unreasonably in failing to detect any manufacturing defects present in the pipe, or damaged it during transportation. Accordingly, the HOA could not prove that the alleged S8800 violation was caused, in whole or in part, by MWI' s negligence, omission, or breach of contract.
In light of the decision, homeowner and associations that allege only violations of SB800 standards without asserting a common law cause of action for strict liability cannot prevail by simply producing evidence of a violation, and are required to prove that violation was caused by the negligent act or omission, or breach of contract, of the defendant contractor, material supplier, and/or product manufacturer.
Reprinted courtesy of
Jon A. Turigliatto, Esq, Chapman Glucksman Dean Roeb & Barger and
Chelsea L. Zwart, Esq., Chapman Glucksman Dean Roeb & Barger
Mr. Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Ms. Zwart may be contacted at czwart@cgdrblaw.com
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Understanding the California Consumer Privacy Act
March 02, 2020 —
Kevin Bonsignore - Wilke FleuryThe recently enacted California Consumer Privacy Act (“CCPA” or the “Act”) goes into effect on January 1, 2020 and with it comes enhanced consumer protections for California residents against businesses that collect their personal information. Generally speaking, the CCPA requires that businesses provide consumers with information relating to the business’ access to and sharing of personal information. Accordingly, businesses should determine whether the CCPA will apply to them and, if so, what policies and procedures they should implement to comply with this new law.
Application of the CCPA
Importantly, the CCPA does not apply to all California business. The requirements of the CCPA only apply where a for-profit entity collects Consumers’ Personal Information, does business in the State of California, and satisfies one or more of the following: (1) has annual gross revenues in excess of twenty-five million dollars ($25,000,000); (2) receives for the business’s commercial purposes, sells, or shares for commercial purposes the personal information of 50,000 or more consumers, households, or devices; or (3) derives 50 percent or more of its annual revenues from selling consumers’ personal information. (California Code of Civil Procedure § 1798.140(c)(1)(A)-(C).) Thus, as a practical matter, small “mom and pop” operations will likely not be subject to the CCPA, but most mid-size and large companies should review their own books or consult with an accountant to determine whether the CCPA applies to their business.
Rights Granted to Consumers
“Consumers,” as the term is used in the CCPA, means “any natural person who is a California resident…” (California Code of Civil Procedure § 1798.140(g).) This broad definition makes no carve-outs or exclusions for a business’s employees and, despite the traditional definition of the term “consumer,” does not seem to require that the resident purchase any goods or services. This definition seems intentional and was likely designed to prevent businesses from attempting to circumvent the requirements of the CCPA by arguing that the personal information they collect does not belong to “consumers” under the traditional meaning of the word.
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Kevin Bonsignore, Wilke FleuryMr. Bonsignore may be contacted at
kbonsignore@wilkefleury.com
California Supreme Court Holds “Notice-Prejudice” Rule is “Fundamental Public Policy” of California, May Override Choice of Law Provisions in Policies
November 12, 2019 —
Anthony L. Miscioscia & Timothy A. Carroll - White and Williams LLPOn August 29, 2019, in Pitzer College v. Indian Harbor Insurance Company, 2019 Cal. LEXIS 6240, the California Supreme Court held that, in the insurance context, the common law “notice-prejudice” rule is a “fundamental public policy” of the State of California for purposes of choice of law analysis. Thus, even though the policy in Pitzer had a choice of law provision requiring application of New York law – which does not require an insurer to prove prejudice for late notice of claims under policies delivered outside of New York – that provision can be overridden by California’s public policy of requiring insurers to prove prejudice after late notice of a claim. The Supreme Court in Pitzer also held that the notice-prejudice rule “generally applies to consent provisions in the context of first party liability policy coverage,” but not to consent provisions in the third-party liability policy context.
The Pitzer case arose from a discovery of polluted soil at Pitzer College during a dormitory construction project. Facing pressure to finish the project by the start of the next school term, Pitzer officials took steps to remediate the polluted soil at a cost of $2 million. When Pitzer notified its insurer of the remediation, and made a claim for the attendant costs, the insurer “denied coverage based on Pitzer’s failure to give notice as soon as practicable and its failure to obtain [the insurer’s] consent before commencing the remediation process.” The Supreme Court observed that Pitzer did not inform its insurer of the remediation until “three months after it completed remediation and six months after it discovered the darkened soils.” In response to the denial of coverage, Pitzer sued the insurer in California state court, the insurer removed the action to federal court and the insurer moved for summary judgment “claiming that it had no obligation to indemnify Pitzer for remediation costs because Pitzer had violated the Policy’s notice and consent provisions.”
Reprinted courtesy of
Timothy Carroll, White and Williams and
Anthony Miscioscia, White and Williams
Mr. Carroll may be contacted at carrollt@whiteandwilliams.com
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
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TARP Funds Demolish Homes in Detroit to Lift Prices: Mortgages
March 07, 2014 —
Brian Louis and Jeff Green - BloombergIn Flint, once a thriving auto-industry hub, excavators with long metal arms and shovels have begun tearing down 1,500 dilapidated homes in an attempt to lift the housing market.
The demolitions in this Michigan city of about 100,000 people are part of the stepped up efforts by officials in several Midwestern states to rid their blighted neighborhoods of decayed housing that’s depressing prices. The funding for the excavator work comes from a surprising source -- the Hardest Hit Fund of the Troubled Asset Relief Program, or TARP, created in 2008 to stabilize to the financial system.
The $7.6 billion Hardest Hit Fund was intended to help troubled property owners avoid foreclosure and keep their homes. As foreclosures fall in most parts of the country, the fund is using the unspent $3.2 billion to remedy the crisis of abandoned homes. In Detroit alone, 70,000 dwellings, or about 19 percent of the total, may need to be torn down, according to the city.
Mr. Louis may be contacted at blouis1@bloomberg.net. Mr. Green may be contacted at jgreen16@bloomberg.net.
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Brian Louis and Jeff Green, Bloomberg
New Jersey Firm’s Fee Action Tossed for not Filing Substitution of Counsel
August 13, 2014 —
Beverley BevenFlorez-CDJ STAFFEven though their client had terminated their services by email, a “New Jersey appeals court has tossed out a firm’s fee action” finding that the firm had “remained counsel of record because it did not file a substitution of counsel until almost a year later,” the New Jersey Law Journal reported.
In Arturi, D’Argenio, Guagliardi & Meliti v. Sadej, Jesse and Carla Sadej had retained the firm, Arturi, D’Argenio, Guagliardi & Meliti, “to defend them in the underlying land use litigation brought in 2002 by the borough of Seaside Park, N.J.” The case had been dismissed, but was reinstated in 2009 by an appeals court.
At that time, Arturi D’Argenio told the Sadejs that they would need to sign a new retainer agreement in order to continue representation. On July 18, 2010, the Sadejs emailed the firm stating that they were “officially terminated,” according to the opinion as quoted by the New Jersey Law Journal.
The firm sued the Sadejs “for about $100,000 in fees it was allegedly owed from the Seaside Park case and other matters on behalf of Jesse Sadej.” However, a substitution of attorney wasn’t filed until months later.
The case went to the appeals court, which stated that the firm should have withdrawn immediately after receiving the email notification from their client: “Because it failed to do so, it remained counsel of record and therefore was precluded from initiating the collection action at that point,” the judges said, as quoted by the New Jersey Law Journal.
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