Hawaii Federal District Court Rejects Insurer's Motion for Summary Judgment on Construction Defect Claims
November 06, 2018 —
Tred R. Eyerly - Insurance Law HawaiiTaking into consideration a "Revised Occurrence Endorsement," the federal district court determined the insurer had a duty to defend. Gemini Ins Co. v. Constrx Ltd., 2018 U.S. Dist. LEXIS 163453 (D. Haw. Sept. 24, 2018).
Constrx Ltd. (CRX) contracted with the AOAO to perform remedial construction repairs to condominium buildings and apartment units. CRX asserted that it completed all work, including charge orders and punch list items and it left the site. CRX was paid less that the contract amount and demanded arbitration against the AOAO. In the arbitration the AOAO relied upon a report by Posard Brock & Associates (PBA) Report which set forth the AOAO's claims against CRX, including corrective work, remaining punch list work, construction delay costs, cost overruns, and other items justifying its payment than less that the contract amount.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Second Circuit Finds Potential Ambiguity in Competing “Anti-Concurrent Cause” Provisions in Hurricane Sandy Property Loss
November 28, 2018 —
CDJ STAFFThe Second Circuit recently held that competing “anti-concurrent cause” provisions in a commercial property policy present a potential ambiguity that could result in favor of coverage for losses sustained by Madelaine Chocolate after storm surge from Hurricane Sandy combined to cause substantial damage to Madelaine’s property and a resulting loss of income.
Madelaine was insured under an all-risk insurance policy issued by Chubb subsidiary Great Northern Insurance Company. By endorsement, Madelaine’s policy added “windstorm” as a covered peril and defined “windstorm” as “wind… regardless of any other cause or event that directly or indirectly contributes concurrently to, or contributed in any sequence to, the loss or damage.” The policy also included a common flood exclusion that removed coverage for loss or damage caused by or resulting from waves, tidal water, or tidal waves, or the rising, overflowing, or breaking of any natural harbors, oceans, or any other body of water, whether driven by wind or not. Like the windstorm endorsement, the flood exclusion contained concurrency language that broadened the exclusion to any loss to which flood contributed, regardless of any other cause or event that directly or indirectly contributed to the loss.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Tae Andrews, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Andrews may be contacted at tandrews@HuntonAK.com
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Evergrande’s Condemned Towers on China’s Hawaii Show Threat
January 24, 2022 —
Bloomberg NewsThe wrecking ball headed for 39 apartment blocks on a tropical island at the southern tip of China poses the latest threat for China Evergrande Group as local governments race to reclaim land ahead of a looming restructuring of the embattled developer.
The government of Danzhou, a city in the province of Hainan, has asked Evergrande to tear down what it says are illegal buildings within 10 days. The order was signed Dec. 30, meaning the company could start demolition work on the near-complete condos by Jan. 9. Evergrande has appealed the order, according to a media report.
The Hainan edict is among the most extreme in a spate of government actions to seize Evergande’s property and land holdings, underscoring risks to its most-prized assets as the firm prepares for what could be the largest restructuring ever in China. In recent months, at least 11 land parcels have been targeted for confiscation by local authorities for reasons ranging from idle projects to missing fee payments.
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Bloomberg
San Francisco House that Collapsed Not Built to Plan
February 14, 2014 —
Beverley BevenFlorez-CDJ STAFFLast December, a San Francisco, California “developer’s Twin Peaks house collapsed and slid down a hill during renovations.” The San Francisco Chronicle reported that the house “was being supported by three reinforcing towers, rather than the nine required under its approved plans, according to documents provided to city building inspectors.”
According to a report by Department of Building Inspection chief Tom Hui, developer Mel Murphy "’failed to follow and implement the approved plans and the sequence of construction’ in his permit,” as quoted by The San Francisco Chronicle. The report also stated that the work “was not independently inspected as required” though this is “vehemently disputed by Murphy.”
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Federal Court Dismisses Coverage Action in Favor of Pending State Proceeding
October 12, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court declined to exercise jurisdiction over the coverage action that was parallel to a case pending in state court involving the same parties and same issues pending. Navigators Ins, Co. v. Chriso's Tree Trimming, 2020 U.S. Dist. LEXIS 129711 (E.D. Calif. July 22, 2020).
Pacific Gas & Electric (PG&E) entered into a tree, brush and wood removal contract with Mount F Enterprises, Inc. Mountain F subsequently entered into a subcontractor agreement with Chriso Tree Trimming, Inc. for work to be performed for PG&E. In August 2017, Chriso attempted to remove a tree, but the tree accidentally fell in the wrong direction and knocked down nearby powerlines. The powerlines came into contact with surrounding brush and started the "Railroad Fire." The fire was eventually contained on September 15, 2017, after 12, 407 acres were burned and 7 structures and 7 homes were destroyed.
Five subrogation lawsuits were filed in state court against Chriso and Mountain F by various insurance companies that paid for the damage caused by the Railroad Fire. A policy limits demand to settle all claims against Chriso and Mountain F was made. Navigators insured Chriso for $9 million through a Commercial Excess Liability Policy, payable once all other insurance was exhausted. The policy included a "Professional Services Endorsement" (PSE Exclusion) that excluded coverage of "professional services." "Professional services" was defined through a list of 12 non-exclusive professions and services that generally referred to activities involving specialized knowledge or skill that was predominantly mental or intellectual in nature rather than physical or manual.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Construction Law Client Alert: California Is One Step Closer to Prohibiting Type I Indemnity Agreements In Private Commercial Projects
June 15, 2011 —
Haight Brown & Bonesteel, LLPOn June 1, 2011 by majority vote, the California Senate passed Senate Bill 474, which would amend Civil Code section 2782, and add Civil Code section 2782.05. The passage of this new law is a critical development for real estate developers, general contractors and subcontractors because it will affect how these projects are insured and how disputes are resolved.
Civil Code section 2782 was amended in 2007 to prohibit Type I indemnity agreements for residential projects only. Since 2007, various trade associations and labor unions have lobbied to expand those very same restrictions to other projects. These new provisions apply to contracts, entered into after January 1, 2013, that are not for residential projects, and that are not executed by a public entity. The revisions provide that any provision in a contract purporting to indemnify, hold harmless, and defend another for their negligence or other fault is against public policy and void. These provisions cannot be waived.
A provision in a contract requiring additional insured coverage is also void and unenforceable to the extent it would be prohibited under the new law. Moreover, the new law does not apply to wrap-up insurance policies or programs, or a cause of action for breach of contract or warranty that exists independently of the indemnity obligation.
The practical impact of this new law is that greater participation in wrap-up insurance programs will likely result. While many wrap-up programs suffer from problems such as insufficient limits, and disputes about funding the self-insured retention, the incentive for the developer or general contractor to utilize wrap-up insurance will be greater than ever before because they will no longer be able to spread the risk of the litigation to the trades and the trade carriers.
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Reprinted courtesy of Steve Cvitanovic of Haight Brown & Bonesteel, LLP.
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SCOTUS Opens Up Federal Courts to Land Owners
July 15, 2019 —
Wally Zimolong - Supplemental ConditionsFor nearly 36 years, the United States Supreme Court’s decision in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985) severely frustrated, if not all but foreclosed, a property owner’s right to bring a claim in federal court based on a regulatory taking. Under the Fifth Amendment, a property owner whose land has been “taken” by the government is entitled to just compensation. There are two types of takings direct or “inverse” or regulatory takings. A direct taking is where the government declares that it needs your land for public use and offers to pay you compensation. You might disagree with the amount offered – and that often is the case. But, a mechanism exists whereby a neutral third party – a condemnation board – will arrive at the compensation that is owed. On the other hand, an inverse condemnation or regulatory taking occurs when the government takes some action that restricts the use of the land in such a way as to severely impact it beneficial economic use. For example, if you own a strip of commercial property and intend to develop it and then the municipality comes along and suddenly changes the zoning classification of the parcel such that you can no longer develop it in a beneficial way, then you might have a regulatory takings case.
Under the Court’s Williamson County decision, property owners falling within the later category were required to exhaust state remedies before proceeding to federal court under a claim that their Fifth Amendment rights were violated. The problem with this is that, as the Supreme Court explained, it creates a Catch-22. If property owners exhaust their state remedies and the state remedies result in an unfavorable outcome, the federal court is powerless to overturn that decision under the doctrines of res judicata and the full faith and credit clause of the Constitution.
Well, yesterday, the Court overturned Williamson County, in Knick v. Township of Scott, 588 U.S. _____ (2019). There the Court held unequivocally a “property owner has suffered a violation of his Fifth Amendment rights when the government takes his property without just compensation, and therefore may bring his claim in federal court under Section 1983 at that time.”
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Constructive Notice Established as Obstacle to Relation Back Doctrine
March 01, 2021 —
Nicholas B. Brummel & Lawrence S. Zucker II - Haight Brown & Bonesteel LLPIn Organizacion Comunidad de Alviso v. City of San Jose, the Sixth Appellate District held that the relation back doctrine was inapplicable where a plaintiff received constructive notice of a defendant’s identity months prior to the last date where filing was permitted pursuant to an applicable statute of limitations.
In Organizacion Comunidad de Alviso, Mark Espinoza, an Organizacion Comunidad de Alviso (OCA/Plaintiff) representative, asked the City of San Jose (“the city”) to place him on the public notice list for a proposed rezoning project. He also twice specifically requested a copy of the notice of determination (NOD) documenting the city’s certification of an environmental impact report (EIR) and approval of the project. Despite Espinoza diligently requesting all notices for the project, the city, in violation of the California Environmental Quality Act (CEQA), failed to send Espinoza the legally operative second NOD for the project; the first NOD was provided to OCA, but named an incorrect party in interest.
Reprinted courtesy of
Nicholas B. Brummel, Haight Brown & Bonesteel LLP and
Lawrence S. Zucker II, Haight Brown & Bonesteel LLP
Mr. Brummel may be contacted at nbrummel@hbblaw.com
Mr. Zucker may be contacted at lzucker@hbblaw.com
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