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Insurers Subrogating in Arkansas Must Expend Energy to Prove That Their Insureds Have Been Made Whole

August 06, 2019 — Michael J. Ciamaichelo - The Subrogation Strategist
Arkansas employs the “made whole” doctrine, which requires an insured to be fully compensated for damages (i.e., to be “made whole”) before the insurer is entitled to recover in subrogation.[1] As the Riley court established, an insurer cannot unilaterally determine that its insured has been made whole (in order to establish a right of subrogation). Rather, in Arkansas, an insurer must establish that the insured has been made whole in one of two ways. First, the insurer and insured can reach an agreement that the insured has been made whole. Second, if the insurer and insured disagree on the issue, the insurer can ask a court to make a legal determination that the insured has been made whole.[2] If an insured has been made whole, the insurer is the real party in interest and must file the subrogation action in its own name.[3] However, when both the insured and an insurer have claims against the same tortfeasor (i.e., when there are both uninsured damages and subrogation damages), the insured is the real party in interest.[4] In EMC Ins. Cos. v. Entergy Ark., Inc., 2019 U.S. App. LEXIS 14251 (8th Cir. May 14, 2019), EMC Insurance Companies (EMC) filed a subrogation action in the District Court for the Western District of Arkansas alleging that its insureds’ home was damaged by a fire caused by an electric company’s equipment. EMC never obtained an agreement from the insureds or a judicial determination that its insureds had been made whole. In addition, EMC did not allege in the complaint that its insureds had been made whole and did not present any evidence or testimony at trial that its insureds had been made whole. After EMC presented its case-in-chief, the District Court ruled that EMC lacked standing to pursue its subrogation claim because “EMC failed to obtain a legal determination that its insureds had been made whole . . . prior to initiating this subrogation action.” Thus, the District Court granted Entergy Ark., Inc.’s motion for judgment as a matter of law and EMC appealed the decision. Read the court decision
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Reprinted courtesy of Michael J. Ciamaichelo, White and Williams LLP
Mr. Ciamaichelo may be contacted at ciamaichelom@whiteandwilliams.com

First Circuit Rejects Insurer’s “Insupportable” Duty-to-Cooperate Defense in Arson Coverage Suit

October 24, 2023 — Geoffrey B. Fehling & Yaniel Abreu - Hunton Insurance Recovery Blog
In Philadelphia Indemnity Insurance Co. v. BAS Holding Corp., the Court of Appeals for the First Circuit rejected an insurer’s “insupportable” defense that the insured company had breached its duty to cooperate by refusing the insurer’s request for an examination under oath of the company’s president. The decision is a reminder that, while examinations under oath can be effective tools to allow the insurer to properly investigate a claim, an insured’s duty to cooperate is not boundless and does not demand attendance at examinations that are not reasonably requested. Background BAS Holding involves the destruction of a landmark building in Boston by an arsonist. The owner, BAS Holding Corporation, submitted an insurance claim to its property insurer to recover insurance proceeds for the damage to the building. The insurer investigated the claim to determine whether the damage to the building was covered and issued a reservation of rights letter suggesting that the policy may not provide coverage for the fire. As part of its investigation, the insurer requested an examination under oath as a condition to coverage under the policy, which led to BAS presenting the property’s operations coordinator for an interview. Shortly after examining the operations coordinator, the insurer sought another examination of BAS’s president and owner, as well as five other employees. In response, BAS questioned whether the additional examinations were “reasonably required” and said that it would consider the requests if the insurer could explain why they were necessary. Reprinted courtesy of Geoffrey B. Fehling, Hunton Andrews Kurth and Yaniel Abreu, Hunton Andrews Kurth Mr. Fehling may be contacted at gfehling@HuntonAK.com Mr. Abreu may be contacted at yabreu@HuntonAK.com Read the court decision
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Court Narrowly Interprets “Faulty Workmanship” Provision

March 28, 2018 — Jeffrey J. Vita and Thersa A. Guertin – SDV Blog
In a recent victory in their home state of Connecticut, Saxe Doernberger & Vita partners, Jeffrey Vita and Theresa Guertin, representing owner-developer 777 Main Street, LLC, overcame a summary judgment motion filed by Liberty Mutual Fire Insurance Company. The Connecticut Superior court refused to adopt the insurer’s broad interpretation of the “faulty workmanship” exclusion in an all-risk builders’ risk insurance policy. In 2014, 777 Main Street, LLC began renovations on the 27-story former Hartford National Bank building in downtown Hartford, converting the property from an office building to a mixed residential and commercial space. During the renovation, a subcontractor hired to perform the cleaning the concrete façade of the building accidentally over-sprayed the cleaning material onto the property’s windows. The subcontractor’s attempts to clean the overspray further damaged the structural integrity and cosmetic look of the windows. As a result, the owner was forced to replace over 1,800 windows, costing millions. Mr. Vita may be contacted at jjv@sdvlaw.com Ms. Guertin may be contacted at tag@sdvlaw.com Read the court decision
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Maryland Legislation Prohibits Condominium Developers from Shortening Statute of Limitations to Defeat Unit Owner Construction Defect Claims

May 16, 2018 — Nicholas D. Cowie - Maryland Condo Construction Defect Law Blog
New Maryland legislation prevents developers from shortening the time period within which condominium associations and their unit owner members can assert claims for hidden construction defects in newly constructed condominium communities. The legislation known as HB 77 and SB 258 passed both houses of the Maryland General Assembly and was signed into law by Governor Lawrence J. Hogan on April 24, 2018 (see photo above). Nicholas D. Cowie, Esq. is the author of the legislation, which will be codified as Section 11-134.1 of the Maryland Condominium Act, effective October 1, 2018. This article discusses how this new legislation ends the practice by which some condominium developers attempted to use condominium documents to shorten the normal statute of limitations in order to prevent condominium associations and their unit owner members from having a fair opportunity to assert their warranty and other legal claims for latent construction defects. Read the court decision
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Reprinted courtesy of Nicholas D. Cowie, Esq., Cowie & Mott
Mr. Cowie may be contacted at ndc@cowiemott.com

L.A. Mixes Grit With Glitz in Downtown Revamp: Cities

May 13, 2014 — James Nash and Nadja Brandt – Bloomberg
Near streets so gritty they were used as the backdrop for a shootout in the next “Fast & Furious” movie, million-dollar condos and $38 racks of lamb beckon the urban pioneers of Los Angeles. The rehab of warehouses and factories in the Arts District is the latest wave in a revival transforming the core of the second-largest U.S. city. Since 2011, about $7 billion has been poured into downtown. A decade ago its most prominent residents were the homeless. Now condos sell for a median of $523.36 a square foot -- more than in Beverly Hills. Alma, Bon Appetit magazine’s best new U.S. restaurant in 2013, is a few blocks from the convention center the city plans to renovate. “All of a sudden, overnight, you have more cranes going up in downtown L.A. than any other neighborhood in Southern California, by far,” said Lew Horne, head of the regional CBRE Real Estate Group Inc. (CBG) office. Mr. Nash may be contacted at jnash24@bloomberg.net; Ms. Brandt may be contacted at nbrandt@bloomberg.net Read the court decision
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Reprinted courtesy of James Nash and Nadja Brandt, Bloomberg

Don MacGregor of Bert L. Howe & Associates Awarded Silver Star Award at WCC Construction Defect Seminar

May 24, 2018 — CDJ STAFF
The staff of the Construction Defect Journal would like to extend their congratulations to Don MacGregor of Bert L. Howe & Associates, Inc., in recognition of his receipt of the Silver Star Award as “Best Expert” at the 25th Anniversary of the West Coast Casualty Construction Defect Seminar, hosted at the Disneyland Resort Hotel, in Anaheim CA. Recipients of the Silver Star Awards were nominated and voted on by their peers, colleagues, and the Construction Defect Community at large, as represented by the 25,000 members who received emails on the subject. Along with “Best Expert,” recognition was also given to the best judge, mediator, plaintiff attorney, developer attorney, subcontractor attorney, coverage counsel, and insurance claims professional. Awards were handed out last Thursday during a special ceremony at this year’s Seminar. To Don, and all the worthy awardees, congratulations again! Read the court decision
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The ARC and The Covenants

May 30, 2018 — Christopher G. Hill - Construction Law Musings
For this week’s Guest Post Friday here at Musings, we welcome back Mike Collignon. Mike is a co-founder of the Green Builder Coalition. The Green Builder® Coalition amplifies the voice of green builders and professionals to drive advocacy and education for more sustainable building practices. As we start to see signs of a housing recovery, slow as it may be, I feel the industry is in a great position. All the effort put in by so many to improve our energy codes, green building programs & rating systems will finally be able to bear fruit. We can start to build homes that are much more environmentally responsible. Sure, we can have a lengthy debate about implementation and adoption rates, but you’ve got to walk before you can run. Unfortunately, I can see that progress getting shackled by an unexpected impediment: the architectural review committee (ARC; sometimes called “architectural committee” or “architectural control authority”) and the covenants of a homeowners’ association. Read the court decision
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Reprinted courtesy of Christopher G. Hill, The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

The “Builder’s Remedy” Looms Over Bay Area Cities

February 20, 2023 — Allan C. Van Vliet, Cara M. MacDonald, Robert G. Howard & Robert C. Herr - Gravel2Gavel Construction & Real Estate Law Blog
Cities in the San Francisco Bay Area are frantically working to finalize their state-mandated “housing elements” in their General Plans by the January 31, 2023, deadline imposed by the California Department of Housing and Community Development (HCD). For Bay Area cities like San Francisco, Oakland, San Jose and Berkeley, the plans must be approved by HCD on or before January 31, 2023. California municipalities have extra incentive to get their housing elements approved this year, because the failure to meet the deadline may subject them to a remedy known as the “builder’s remedy.” The failure of cities in California to adopt and implement adequate housing elements as part of their General Plans has contributed to the state’s serious housing affordability crisis. The “builder’s remedy” incentivizes cities to meet housing element deadlines, because failure to do so could cause cities to lose control over certain land use entitlement decisions for projects that include housing under the state’s Housing Accountability Act (HAA). Reprinted courtesy of Allan C. Van Vliet, Pillsbury, Cara M. MacDonald, Pillsbury, Robert G. Howard, Pillsbury and Robert C. Herr, Pillsbury Mr. Van Vliet may be contacted at allan.vanvliet@pillsburylaw.com Ms. MacDonald may be contacted at cara.macdonald@pillsburylaw.com Mr. Howard may be contacted at robert.howard@pillsburylaw.com Mr. Herr may be contacted at robert.herr@pillsburylaw.com Read the court decision
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