Tennessee High Court Excludes Labor Costs from Insurer’s Actual Cash Value Depreciation Calculations
May 27, 2019 —
Michael S. Levine & Geoffrey B. Fehling - Hunton Andrews KurthThe Tennessee Supreme Court has refused to construe an ambiguous definition of actual cash value to allow for deduction of labor costs as part of depreciation calculations where that subset of repair costs are not clearly addressed in the policy. Despite the split of authority nationwide, the Tennessee case presents a straightforward application of policy interpretation principles to a common valuation issue in first-party property claims.
In Lammert v. Auto-Owners (Mutual) Insurance Co., No. M2017-2546-SC-R23-CV (Tenn. Apr. 15, 2019), insureds brought a class-action lawsuit against their property insurer, Auto-Owners, alleging breach of contract. The plaintiffs each owned buildings damaged by a hail storm and had each submitted claims to Auto-Owners. Auto-Owners accepted the claims and determined that the losses would be determined on an actual cash value basis. In performing those valuations, Auto-Owners depreciated both the building materials and the labor costs associated with repairing the properties. The insureds challenged the labor cost depreciation. Auto-Owners moved to dismiss the lawsuit. In response, the insureds requested that the district court certify to the Tennessee Supreme Court whether, “[u]nder Tennessee law, may an insurer in making an actual cash value payment withhold a portion of repair labor as depreciation when the policy (1) defines actual cash value as ‘the cost to replace damaged property with new property of similar quality and features reduced by the amount of depreciation applicable to the damaged property immediately prior to the loss,’ or (2) states that ‘actual cash value includes a deduction for depreciation?”’
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Geoffrey B. Fehling, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
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No Coverage for Subcontractor's Faulty Workmanship
November 28, 2022 —
Tred R. Eyerly - Insurance Law HawaiiFinding faulty workmanship that did not cause property damage beyond the subcontractor's work, the court found there was no coverage under the CGL policy. Middlesex Ins. Co. v. Dixie Mech., Inc., 2022 U.S. Dist. LEXIS 175190 (N. D. Ga. Sept. 27, 2022).
The case involved a construction project on Elba Island, Georgia. IHI E&C International Corporation (IHI) filed suit against Robinson Mechanical Contractors ("Robinson") for faulty construction work, including a pipe rack and process module installation. The pipe racks allegedly contained defective welds. Robinson filed a third-party complaint against Patriot Modular, Inc. (Patriot), Robinson's subcontractor, for faulty work for IHI. Finally, Patriot filed a fourth-party complaint against Dixie Mechanical, Inc. (Dixie), alleging it subcontracted with Dixie to perform fabrication, welding, testing, and inspection of pipes under Patriot's subcontract with Robinson. Patriot contended that to the extent it was found liable to Robinson for any defective work, delays or breaches of contract for Dixie's work, Patriot was entitled to recover such amounts from Dixie.
In this case, Dixie's insurer, Middlesex Insurance Company, sought a declaration that it had no duty to defend or to indemnify Dixie. Middlesex contended that the claims of faulty workmanship in the underlying complaints constituted neither an "occurrence" nor "property damage."
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
What Is the Best Way to Avoid Rezoning Disputes?
August 30, 2021 —
Collier Marsh - Construction ExecutiveConstruction companies and developers are accelerating projects in the southeast and throughout the country as the economy rebounds from the worst of the COVID-19 pandemic. Whether they are building commercial, industrial or residential projects, these developments often require rezoning to maximize an investment. But rezoning disputes can add significant delays and costs to a project and can even defeat the project altogether.
There are proactive steps construction companies can take to avoid disputes as they are working to secure rezoning approval, as well after the rezoning is complete. During the initial rezoning process, before a final municipal decision, one of the best practices is to anticipate opposition and address it head-on. As for post-approval disputes, those often come down to how carefully a company followed the local procedures and, where applicable, the local evidentiary requirements.
Reprinted courtesy of
Collier Marsh, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Marsh may be contacted at
colliermarsh@parkerpoe.com
Illinois Legislature Passes Bill Allowing Punitive Damages In Most Wrongful Death Actions
June 05, 2023 —
John Hackett & Jarred Reed - Lewis BrisboisMadison County, Ill. (May 19, 2023) – On May 18, 2023, the Illinois legislature passed House Bill 0219, amending the Illinois Wrongful Death Act to allow for the recovery of punitive damages in wrongful death actions. The bill will soon be sent to the Governor’s desk for signature. If signed into law, the statutory change will allow heirs of decedents to recover punitive damages in wrongful death actions.
The proposed amendment to the Illinois Wrongful Death Act is underlined below:
Whenever the death of a person shall be caused by wrongful act, neglect or default, and the act, neglect or default is such as would, if death had not ensued, have entitled the party injured to maintain an action and recover damages including punitive damages when applicable, in respect thereof, then and in every such case the person who or company or corporation which would have been liable if death had not ensued, shall be liable to an action for damages, including punitive damages when applicable, notwithstanding the death of the person injured, and although the death shall have been caused under such circumstances as amount in law to felony. Nothing in this Section affects the applicability of Section 2-1115 of the Code of Civil Procedure or Section 2-102 or 2-213 of the Local Governmental and Governmental Employees Tort Immunity Act. Punitive damages are not available in action for healing art malpractice or legal practice or in an action against the State or unit of local government or an employee of a unit of local government in his or her official capacity. The changes made to this Section by this amendatory Act of the 103rd general Assembly apply to actions filed on or after the effective date of this amendatory Act.
Reprinted courtesy of
John Hackett, Lewis Brisbois and
Jarred Reed, Lewis Brisbois
Mr. Hackett may be contacted at John.Hackett@lewisbrisbois.com
Mr. Reed may be contacted at Jarred.Reed@lewisbrisbois.com
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Are Modern Buildings Silently Killing Us?
May 16, 2022 —
Michael Rubino - Construction ExecutiveConstruction, in general, is a rapidly evolving industry as contractors, architects, and engineers are tasked with keeping up with government regulations, building practices and technological innovations. While growth and evolution are pivotal components of successful projects and businesses, it’s led to a few issues, one of which involves mold.
Like the construction industry, the world of mold is evolving as more research, understanding, and awareness develops, highlighting its prevalence in buildings and the effect it can have on the health of those exposed. What industry professionals are witnessing time and again is an increasing occurrence of individuals reaching out and asking for help after experiencing exposure that led to chronic illness. The reality is that modern buildings are contributing to this rise.
The Top of the Funnel
An issue aiding in mold’s prevalence in modern-day buildings is the way in which they are built. In an effort to achieve net-zero energy-efficient buildings, construction professionals have adopted the technique of sealing buildings as tightly as possible. While this transition reduces energy costs in the building, it also introduces a few new problems that aren't always addressed in modern construction. One such issue is how the lack of airflow between the indoor and outdoor environments can lead to a buildup of contaminant particles in the building.
Reprinted courtesy of
Michael Rubino, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Florida Federal Court to Examine Issues of Alleged Arbitrator Conflicts of Interests in Panama Canal Case
May 24, 2021 —
Sarah B. Biser & Philip Z. Langer - ConsensusDocsThe parties in a $238-million dispute over the construction of the third set of locks for the Panama Canal are raising issues concerning alleged conflicts of interest on the part of the International Chamber of Commerce (“ICC”) arbitrators in the United States District Court for the Southern District of Florida.[2] The case may address rarely litigated issues concerning whether arbitrators who sit on multiple arbitration panels together or who support appointment of each other to lead arbitration panels have disabling conflicts of interest.
The case pits Grupo Unidos por el Canal, S.A. (“Grupo”), a consortium of Spanish, Italian, Belgian, and Panamanian construction firms, against Autoridad del Canal de Panama (“ACP”), the Panamanian entity that operates the Panama Canal and that sponsored the multi-billion-dollar, decade-long project to expand the Canal’s capacity by building a new set of locks (the “Project”). The current dispute (the “Panama 1 Arbitration”), which centers on the suitability of the rock coming from the excavations to be used to produce concrete aggregates for the Project, was arbitrated before a three-member ICC Tribunal and resulted in a $238-million award to ACP and against Grupo. The ICC Tribunal reversed a decision of the dispute review board established in the parties’ contract.
Reprinted courtesy of
Sarah B. Biser, Fox Rothschild LLP and
Philip Z. Langer, Fox Rothschild LLP
Ms. Biser may be contacted at sbiser@foxrothschild.com
Mr. Langer may be contacted at planger@foxrothschild.com
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Vincent Alexander Named to Florida Trend’s Legal Elite
August 10, 2020 —
Vincent Alexander - Lewis BrisboisFort Lauderdale Partner Vincent F. Alexander has been named to Florida Trend’s Legal Elite as both a Legal Leader and an Up & Comer. In receiving this recognition, Mr. Alexander joins the less than 2% of active Florida Bar members who appear on this exclusive list. In addition, as a Legal Elite Up & Comer, Mr. Alexander is among only 112 attorneys who received the most votes in a special category for attorneys under the age of 40 who have exhibited leadership in the law and in their community.
Florida Trend’s Legal Elite, now in its 17th year, presents the state’s top licensed and practicing attorneys selected by their peers. In composing its 2020 edition of Legal Elite, Florida Trend invited all in-state Florida Bar members to name attorneys who they hold in high regard or who they would recommend to others. The publication also asked voters to name three up and coming attorneys. Nominated attorneys were then scored based on the number of votes that they received, with more weight assigned to votes from outside of their own firms.
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Vincent Alexander, Lewis BrisboisMr. Alexander may be contacted at
Vincent.Alexander@lewisbrisbois.com
Condominium Association Responsibility to Resolve Construction Defect Claims
July 23, 2014 —
Nicholas D. Cowie – Maryland Condo Construction Defect Law BlogThe Maryland Court of Special Appeals recently issued an opinion in Greenstein v. Council of Unit Owners of Avalon Court Six Condominium Inc. finding that an association can be sued by its unit owner members if it fails to take timely legal action against a developer. In that case, the association was aware of construction defects, but failed to take action to preserve its claim and then filed a lawsuit against the developer too late, after the statute of limitations expired. As a result, the suit against the developer was dismissed and the association was forced to assess its unit owner members for the $1 million in repair costs. Some of the unit owners then sued their association, seeking to recover the cost of their assessments on the ground that the association was negligent in failing to pursue a timely legal action against the developer.
On appeal, the court was asked to decide whether state law permits owners to sue their condominium association for negligently failing to sue a developer for common element construction defects. The court, in an unpublished opinion, found that an association could be held liable to its members. The court said: “The duty to maintain, repair and replace the common elements together with the exclusive right to initiate litigation regarding the common elements [which was stated in a provision of the association’s bylaws] creates a concomitant obligation on the part of the [association] to pursue recovery from [the developer] on behalf of [the unit owners] for damage to the common elements caused by [the developer’s] negligence, breach of contract or violation of any applicable law.”
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Nicholas D. Cowie, Maryland Condo Construction Defect Law BlogMr. Cowie may be contacted at
ndc@cowiemott.com
