Columbus Ohio Building Expert Directory

M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic

April 06, 2020 — Lori Smith & Patrick Devine - White and Williams Taking Care of Business Blog
Increasingly, M&A transactions are using representation and warranty insurance (RWI) to bridge the gap between a buyer’s desire for adequate recourse to recover damages arising out of breach of representations in the purchase agreement and a seller’s desire to minimize post-closing risk and holdbacks or purchase price escrows traditionally used as the means to satisfy such obligations. When it works, RWI provides a significant benefit to both parties: it mitigates the buyer’s risk in the event that the seller’s representations and warranties prove untrue, and it permits the seller to reduce the portion of the purchase price that it would otherwise have to leave in escrow to cover future claims for breach of those representations and warranties. However, as the coronavirus pandemic ravages the global economy, insurers are now expressly adding COVID-19 exclusions to their RWI policies. If RWI insurers decline coverage for these losses, the allocation of risk in the representations and warranties (and related indemnity provisions) will be more critical than the parties contemplated when they negotiated the transaction documents. Unlike in the case of a natural disaster, insurers cannot quantify the economic fallout that may result from the coronavirus pandemic. This uncertainty breeds systemic concern about the number of insurance claims that covered parties of all varieties will bring, which in turn creates an industry-wide reluctance to cover the claims. Based on discussions with market participants, we understand that, at the present time, 70% to 80% of RWI insurers are broadly excluding losses resulting from COVID-19 and similar viruses, epidemics, and pandemics (including government actions in response thereto), 5% to 10% are narrowly excluding specific coronavirus-related losses that are more likely to be implicated in a particular transaction (e.g., losses caused by business interruption), and 10% to 15% may be willing to narrow their exclusions upon completion of the underwriting process, depending on their comfort level after conducting rigorous and heightened diligence. Insurers’ concerns are wide-ranging, but the representations and warranties causing the greatest distress appear to be those regarding customer retention, supply chain matters, undisclosed liabilities, and the absence of changes between the date of the seller’s most recent financial statements and the transaction closing date. Reprinted courtesy of Lori Smith, White and Williams and Patrick Devine, White and Williams Ms. Smith may be contacted at smithl@whiteandwilliams.com Mr. Devine may be contacted at devinep@whiteandwilliams.com Read the court decision
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Manhattan Condo Resale Prices Reach Record High

September 03, 2014 — Oshrat Carmiel – Bloomberg
Prices for previously owned Manhattan condominiums rose to a record last month even as an increase in the supply of units eased competition among buyers. An index of resale prices climbed 1.1 percent from June to reach the highest level in data going back to 1995, StreetEasy.com, a New York real estate website, said in a report today. The inventory of condos on the market grew 5.4 percent from a year earlier, the biggest annual gain since October 2009. The market is still tight, with the number of available condos about 16 percent below the five-year average for Manhattan. That will continue to drive up prices, according to StreetEasy, which projects a 0.4 percent increase for August. Read the court decision
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Reprinted courtesy of Oshrat Carmiel, Bloomberg
Ms. Carmiel may be contacted at ocarmiel1@bloomberg.net

No Coverage For Damage Caused by Chinese Drywall

December 02, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The Florida Court of Appeals determined that there was no coverage for damage to the insured's home caused by the installation of Chinese drywall. Peek v. Am. Integrity Ins. Co., 2015 Fla. App. LEXIS 14147 (Fla. Ct. App. Sept. 25, 2015). Chinese drywall was installed in the Peek's new home. After moving in, the Peeks reported to American Integrity a sulfur odor caused by the Chinese drywall. The odor caused the Peeks to vacate their home. The Peeks also claimed corrosion and deterioration of copper coils in the air conditioning system were caused by the Chinese drywall. American Integrity denied coverage based upon policy exclusions for latent defects, corrosion, pollutants, and faulty, inadequate or defective constrution materials. The Peeks sued American Integrity. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

Federal Court Sets High Bar for Pleading Products Liability Cases in New Jersey

November 11, 2024 — Lian Skaf - The Subrogation Strategist
Products liability is an area of law that both sides of the aisle vigorously litigate. Like in most litigation, products liability claims provide subrogation attorneys with an important means of prosecuting cases against manufacturers, sellers, and other entities in the stream of commerce. Of course, these claims also come with numerous “buyer beware” requirements. New Jersey allows products liability claims and the United States District Court for the District of New Jersey (District Court) clarified how such claims should be plead in Cambridge Mut. Fire Ins. Co. a/s/o David Krug vs. Stihl, Inc., No. 22-05893, 2024 U.S. Dist. LEXIS 178804 (D. N.J.). After becoming subrogated to the rights of its insured, Cambridge Mutual Fire Insurance Company (Cambridge) filed suit against Stihl, Inc. (Stihl) in the Superior Court of New Jersey, Morris County, Law Division. Stihl then removed the case to federal court. Once in federal court, Stihl filed a motion to dismiss the action. The District Court granted the motion, doing so in part with prejudice and in part without prejudice. Read the court decision
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Reprinted courtesy of Lian Skaf, White and Williams LLP
Mr. Skaf may be contacted at skafl@whiteandwilliams.com

Real Estate & Construction News Round-Up (02/08/23) – The Build America, Buy America Act, ESG Feasibility, and University Partnerships

February 27, 2023 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
This week’s round-up explores President Joe Biden’s recent State of the Union address and plans for the Build America, Buy America Act, the feasibility of real estate companies achieving their ESG goals, and how developers, lenders, and tenants are partnering with universities to solve real estate challenges.

During his annual State of the Union address, President Joe Biden detailed his Build America, Buy America plans and standard to require all construction materials on federal infrastructure projects to be made in the United States. (Jennifer Goodman & Zachary Phillips, Construction Dive)
Speculation surrounding the economic environment and real estate stability is testing the feasibility and resilience of the environmental, social and corporate governance (ESG) framework used by corporations to measure their societal impact. (Anna Staropoli, Commercial Observer)
Adopting Web3 and decentralization in the real estate industry is projected to bring about significant changes and improvements. (David Bitton, Forbes)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

Quick Note: Discretion in Determining Prevailing Party for Purposes of Attorney’s Fees

January 25, 2021 — David Adelstein - Florida Construction Legal Updates
In prior articles I have discussed that courts apply the significant issues test to determine the prevailing party for purposes of being entitled to attorney’s fees. A party that recovers an affirmative judgement is NOT the de facto prevailing party for purposes of an entitlement to attorney’s fees in a breach of contract action (or a construction lien foreclosure action). This was the issue in a recent appeal discussed here where the party that recovered an affirmative judgment on a breach of contract case was not deemed the prevailing party for purposes of attorney’s fees. While the party prevailed on one of its claims, it did not prevail on others, and it recovered less than half of the damages it originally sought. The appellate court, affirming the trial court, held that the trial court has discretion to determine that the party that recovered an affirmative judgement was not the prevailing party entitled to its attorney’s fees under the signifiant issues test. This was not what the party was expecting when the attorney’s fees it expended far exceeded the judgment it recovered. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

Amazon’s Fatal Warehouse Collapse Is Being Investigated by OSHA

December 13, 2021 — Josh Eidelson & Spencer Soper - Bloomberg
The Occupational Safety and Health Administration has opened an investigation into the collapse of an Amazon.com Inc. warehouse, according to a Labor Department spokesperson. A tornado struck the Amazon delivery station in Edwardsville, Illinois, on Friday, killing six workers and destroying much of the facility at the peak of the holiday shopping season. “OSHA has had compliance officers at the complex since Saturday, Dec. 11, to provide assistance,” the spokesperson said. “OSHA has six months to complete its investigation, issue citations and propose monetary penalties if violations of workplace safety and or health regulations are found.” Reprinted courtesy of Josh Eidelson, Bloomberg and Spencer Soper, Bloomberg Read the court decision
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Conflicting Exclusions Result in Duty to Defend

October 21, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The Seventh Circuit affirmed the district court's finding that the insurer had a duty to defend in light of conflicting endorsements in the policy. Panfil v. Nautilus Ins. Co., 2015 U.S. App. LEXIS 14621 (7th Cir. Aug. 20, 2015). JRJ Ada, LLC was a contractor. JRJ's two members, Joe Panfil and Renee Michelon, had a CGL policy with Nautilus. The employee of JRJ's subcontractor, Astro Insulation, fell through a hole while performing insulation work, injuring himself. The employee sued JRJ, who sought a defense from Nautilus. Nautilus refused to defend because JRJ was not an insured under the policy. Further, Nautilus relied upon the policy's Contractor-Subcontrated Work Endorsement and Employee Exclusion to deny coverage. Panfil and Michelon sued Nautilus. Cross-motions for summary judgment were filed and the court granted plaitniffs' motion while denying Nautilus' motion. The district court first found that the policy should be reformed to inlcude JRJ as an insured. Nautilus did not appeal this determination. The court also found that Nautilus breached its duty to defend and was therefore estopped from asserting policy defenses to coverage. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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