Sixth Circuit Finds No Coverage for Faulty Workmanship Under Kentucky Law
December 30, 2013 —
Tred Eyerly — Insurance Law HawaiiFollowing Kentucky law, the Sixth Circuit determined there was no coverage for a construction defect claim. Liberty Mut. Fire Ins. Co. v. Kay & Kay Contracting, LLC, 2013 U.S. App. LEXIS 23587 (6th Cir. Nov. 19, 2013).
Walmart hired a contractor to build a new store. The contractor hired Kay and Kay to perform site preparation work and construct the building pad for the new store.
After Kay and Kay completed the building pad and the store was erected, cracks were noticed in the building's walls. Walmart contended there was settling in the some of the fill areas. Kay and Kay denied liability, but demanded coverage under its CGL policy with Liberty Mutual.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
Montana Supreme Court: Insurer Not Bound by Insured's Settlement
December 02, 2019 —
K. Alexandra Byrd - Saxe Doernberger & Vita, P.C.In Draggin’ Y Cattle Co., Inc. v. Junkermier, et al.1 the Montana Supreme Court held that where an insurer defends its insured and the insured subsequently settles the claims without an insurer’s participation, a court may approve the settlement as between the underlying plaintiff and underlying defendant, but the settlement will not be presumed reasonable as to the insurer. Therefore, an insurer who defends its insured cannot be bound by a stipulated settlement that the insurer did not expressly consent to.
The case involved Draggin’ Y Cattle Company (the “Cattle Company”), a ranching and cattle business that utilized the services of an accounting firm, Junkermier, Clark, Campanella, Stevens, P.C. (“Junkermier”), to structure the sale of real property to take advantage of favorable tax treatment. It was discovered that Junkermier’s employee misinformed the Cattle Company’s owners of the tax consequences of the sale. The Cattle Company’s owners subsequently filed suit against Junkermier and its employee and alleged nearly $12,000,000 in damages due to the error. Junkermier’s insurer, New York Marine, provided a defense for Junkermier and its employee.
The Cattle Company’s owners offered to settle the claims against Junkermier and its employee for $2,000,000, the policy limit of the New York Marine policy. New York Marine refused to give its consent or tender the policy’s limit. Subsequently, Junkermier, its employee, and the Cattle Company entered into their own settlement agreement for $10,000,000. The settlement was contingent upon a reasonableness hearing to approve the stipulated agreement.
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K. Alexandra Byrd, Saxe Doernberger & Vita, P.C.Ms. Byrd may be contacted by
kab@sdvlaw.com
Sometimes a Reminder is in Order. . .
February 18, 2020 —
Christopher G. Hill - Construction Law MusingsRecently, I was talking with my friend Matt Hundley about a recent case he had in the Charlottesville, VA Circuit Court. It was a relatively straightforward (or so he and I would have thought) breach of contract matter involving a fixed price contract between his (and an associate of his Laura Hooe) client James River Stucco and the Montecello Overlook Owners’ Association. I believe that you will see the reason for the title of the post once you hear the facts and read the opinion.
In James River Stucco, Inc. v. Monticello Overlook Owners’ Ass’n, the Court considered Janes River Stucco’s Motion for Summary Judgment countering two arguments made by the Association. The first Association argument was that the word “employ” in the contract meant that James River Stucco was required to use its own forces (as opposed to subcontractors) to perform the work. The second argument was that James River overcharged for the work. This second argument was made without any allegation of fraud or that the work was not 100% performed.
Needless to say, the Court rejected both arguments. The Court rejected the first argument stating:
In its plain meaning, “employ” means to hire, use, utilize, or make arrangements for. A plain reading of the contractual provisions cited–“shall employ” and references to “employees”–and relied on by Defendant does not require that the persons performing the labor, arranged by Plaintiff, be actual employees of the company or on the company’s payroll. It did not matter how the plaintiff accomplished the work so long as it was done correctly. The purpose of those provisions was to allocate to Plaintiff responsibility for supplying a sufficient workforce to get the work done, not to impose HR duties or require the company to use only “in house” workers. So I find that use of contracted work does not constitute a breach of the contract or these contractual provisions.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
New Jersey Supreme Court Upholds $400 Million Award for Superstorm Sandy Damages
February 22, 2021 —
Kerianne E. Kane - Saxe Doernberger & Vita In New Jersey Transit Corp. v. Certain Underwriters at Lloyd’s London,1 New Jersey’s highest court upheld an appellate decision2 finding that New Jersey Transit Corporation (“NJT”) was entitled to full coverage under its property insurance policy for damages caused by Superstorm Sandy.
In July 2012, NJT secured a multi-layered “all risks” property insurance program from eleven insurers for the policy period of July 1, 2012, to July 1, 2013. The policies covered all perils and damage to NJT’s property unless specifically excluded. The primary layer, issued by Lexington Insurance Company, provided the first $50 million of coverage. The second layer provided coverage up to $100 million, the third layer provided an additional $175 million, and the fourth layer provided coverage of $125 million, for a total of $400 million in coverage.
The excess layer insurers included Certain Underwriters At Lloyd’s, London, Torus Specialty Insurance Company, and several other carriers. All participating insurers’ policies included a standard policy form and separate endorsements, some of which were included in all policies and some of which were unique to specific insurers.
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Kerianne E. Kane, Saxe Doernberger & VitaMs. Kane may be contacted at
kkane@sdvlaw.com
Federal Court Reiterates Broad Duty to Defend in Additional Insured Cases
April 22, 2024 —
Craig Rokuson - Traub LiebermanIn the recent case of
Travelers Indem. Co. of Am. v. Accredited Sur. & Cas. Co., No. 21-CV-7189 (FB) (JRC), 2024 U.S. Dist. LEXIS 44634 (E.D.N.Y. Mar. 13, 2024), the Federal District Court for the Eastern District of New York had occasion to consider an additional insured tender on behalf of a prime contractor, Archstone, to a subcontractor, Topline, who was named as a direct defendant in a New York labor law case. Even though Topline’s carrier put forth evidence that Topline was not negligent, the court held, under New York’s broad duty to defend, that Topline’s carrier owed a duty to defend the prime contractor.
Initially, the court was satisfied that a purchase order, signed only by Topline and not Archstone, was binding on Topline. That purchase order specified that Topline agreed to name Archstone as an additional insured.
With respect to the duty to defend, the court found that it was enough that the underlying plaintiff alleged that all defendants, including Topline, were negligent in permitting a ladder that plaintiff was on to remain in a defective condition and in failing to foresee the existence of a hazard from the condition of the subject ladder.
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Craig Rokuson, Traub LiebermanMr. Rokuson may be contacted at
crokuson@tlsslaw.com
The Comcast Project is Not Likely to Be Shut Down Too Long
July 13, 2017 —
Wally Zimolong - Supplemental ConditionsJan Von Bergen at the Philadelphia Inquirer reported that work on Comcast’s new tower came to a halt this morning when striking members of Local 542 picketed the Comcast tower project and other union trades refused to cross the picket line. However, this show of solidarity (during the afternoon on the Friday before the Fourth of July) is unlikely to last past the long weekend. Why? Because any conduct by Local 542 aimed at encouraging a work stoppage by other union members is illegal and the companies that employ the sympathetic union members are in breach of contract if they do not work on Tuesday.
Any actions by Local 542 to encourage members of a different trade unions to honor their picket line is a secondary boycott. The National Labor Relations Act prohibits secondary boycotts. Specifically, the NLRA prohibits a union for inducing employees of an employer not subject to a labor dispute to refuse to work.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
The 2024 Colorado Legislative Session Promises to be a Busy One for the Construction Industry and its Insurers
January 16, 2024 —
David M. McLain – Colorado Construction LitigationJanuary 10th marked the first day of the 2024 Colorado legislative session. After the pomp and circumstance of opening day, a total of eighty-six bills were introduced. Among them, two impact the construction and insurance industries. First,
House Bill 24-1008 would make general contractors and their subcontractors, which are direct employers of an employee, jointly and severally liable for all debts owed based on wage claims or investigations. Essentially, if HB 24-1008 were to become law, general contractors would become the guarantors of wage payments to their subcontractors’ employees. The second bill,
House Bill 24-1083, would require the Colorado Division of Insurance to conduct a study of construction liability insurance for construction professionals in Colorado and would require that, 14 days prior to closing the sale of a new residence, the seller provide the purchaser and the county clerk and recorder’s office certain information regarding the insurance coverage for the home. In a year when the legislature should be focusing on construction defect reform and affordable housing for Coloradoans, these first two bills will likely drive up the cost of new construction.
House Bill 20-1008, sponsored by Representatives Duran and Froelich, Brown, deGruy Kennedy, Epps, Garcia, Hamrick, Hernandez, Joseph, Lieder, Lindstedt, Mabrey, Mauro, Ricks, Rutinel, Story, Velasco, and Vigil and Senators Danielson and Jaquez Lewis, Exum, Gonzales, Kolker, Marchman, and Sullivan, has been assigned to the House Committee on Business Affairs & Labor but has not yet been scheduled for a hearing. The bill summary states:
For wage claims brought by individuals working in the construction industry, the bill:
- Requires that a subcontractor that receives a written demand for payment forward a copy of the written demand for payment to the general contractor within 3 business days after receipt;
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Sept. 11 Victims Rejected by U.S. High Court on Lawsuit
July 01, 2014 —
Greg Stohr – BloombergThe U.S. Supreme Court turned away an appeal by thousands of Sept. 11 attack victims who sought to sue Middle Eastern companies and people for allegedly providing crucial support to al-Qaeda.
The victims sought to revive their claims against relatives of Osama bin Laden, Saudi Arabia’s state-owned National Commercial Bank and Saudi Binladen Group, a construction company controlled by the former al-Qaeda leader’s family.
A federal appeals court threw out those claims in 2013, saying the victims didn’t allege a close enough connection between the defendants’ activities and the attacks. The appellate panel also said some defendants lacked sufficient ties to the U.S. to bring them within the jurisdiction of American courts.
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Greg Stohr, BloombergMr. Stohr may be contacted at
gstohr@bloomberg.net