Why Financial Advisers Still Hate Reverse Mortgages
October 01, 2014 —
Ben Steverman – BloombergA reverse mortgage is a little like a car airbag. It's nice to know it's there. But if it ever has to be used, the driver’s already in trouble.
New regulations are supposed to improve the unsavory reputation of reverse mortgages, which are loans against a home that don't need to be repaid until the borrower moves. "It used to be the Wild West out there, without much regulation and enormous fees," says financial planner Warren Ward.
While stronger oversight is helping to end past abuses, the number of people taking out reverse mortgages is shrinking. The pace is down 24 percent from last year, government data show, and less than half its peak in 2009. One reason: Many advisers say the loans remain a last resort and can handcuff homeowners who have better options.
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Ben Steverman, BloombergMr. Steverman may be contacted at
bsteverman@bloomberg.net
Eastern District of Pennsylvania Clarifies Standard for Imposing Spoliation Sanctions
October 19, 2020 —
Kean Maynard - The Subrogation StrategistCourts are faced with the difficult task of drawing a line to determine when the failure to preserve evidence becomes culpable enough to permit a judicial remedy. In State Farm Fire & Cas. Co. v. Cohen, No. 19-1947, 2020 U.S. Dist. LEXIS 163681, the United States District Court for the Eastern District of Pennsylvania (District Court) made clear that a party is not entitled to a spoliation sanction without proof that the alleged spoliation was beyond accident or mere negligence. The District Court emphasized that when evidence goes missing or is destroyed, the party seeking a spoliation sanction must show that the alleged spoliation was intentional and that the alleged spoliator acted in “bad faith” before adverse inferences will be provided.
In Cohen, Joshua Cohen (Cohen) rented a residential property to Lugretta Bryant (Bryant). Bryant’s property suffered damages as a result of a kitchen fire. Bryant’s insurer, proceeding as subrogee, hired a fire investigator to determine the cause and origin of the fire. Based on eyewitness testimony and examination of the burn patterns, the fire investigator concluded that the fire started at the General Electric (GE) microwave located in the kitchen. The investigator advised all parties to preserve the microwave so that a joint examination could take place with the property owner and GE present. In the following weeks, the tenant returned to the property to collect belongings and perform some cleaning in anticipation of repairs beginning. Importantly, the tenant claimed the microwave was preserved during these cleaning efforts and remained at the site as instructed. However, in the fall of 2017, one of Cohen’s workers discovered that the microwave was missing and its whereabouts remain unknown.
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Kean Maynard, White and WilliamsMr. Maynard may be contacted at
maynardk@whiteandwilliams.com
Construction Law Alert: A Specialty License May Not Be Required If Work Covered By Another License
March 07, 2011 —
Steven M. CvitanovicContractors should always be sure that they understand the licensing in any Subcontract or Prime Contract before entering into any agreement. However, on March 3, 2011, in the case of Pacific Casson & Shoring, Inc. v. Bernards Bros., Inc. 2011 Cal.App.Lexis 236, the Court of Appeal determined that if a specialty license is subsumed within another license, the specialty license may not be required.
Bernards entered into a subcontract with Pacific to excavate, backfill, grade and provide geotechnical design parameters for a hospital. The Prime Contract required the bidder to maintain a Class C-12 specialty earthwork license. However, Pacific only held a Class A general engineering license which it turns out was suspended during the performance of the work. Pacific sued Bernards for nonpayment of $544,567, but the lawsuit was dismissed because the trial court found that Pacific (1) lacked a C-12 license, and (2) Pacific’s Class A license was suspended for failure to pay an unrelated judgment. Pacific was also ordered to disgorge $206,437 in prior payments.
The Court of Appeal reversed and remanded. The Court of Appeal agreed with Pacific and held that a C-12 specialty license was not required despite the Prime Contract. The Court of Appeal found that the C-12 specialty license would have been “superfluous” since it was fully encompassed within the Class A requirements. However, the Court of Appeal also remanded the case for further
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Reprinted courtesy of Steve Cvitanovic of Haight Brown & Bonesteel, LLP.
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Pennsylvania Supreme Court Dismisses Appeal of Attorney Fee Award Under the Contractor and Subcontractor Payment Act
February 16, 2016 —
William J. Taylor – White and Williams LLPIn late December, the Supreme Court of Pennsylvania dismissed, as improvidently granted, the appeal in Waller Corporation v. Warren Plaza, Inc., No. 6 WAP 2015 (December 21, 2015). As a result, the Superior Court’s holding in that case that there is no good faith exception to the attorney fee provision of the Pennsylvania Contractor and Subcontractor Payment Act (CASPA), 73 P.S. §§ 501-516, remains intact.
In its decision in Waller, 95 A.3d 313 (Pa. Super. 2014), the Superior Court considered if there was a “good faith” exception to the interest and penalties provision of CASPA, 73 P.S. § 512(a), and whether there was a similar good faith exception to the attorney fee provision of the statute, 73 P.S. § 512(b). The court held that while an award of interest and penalties under § 512(a) could be denied if a party had a good faith basis for withholding payments due under a construction contract, no such exception exists for an award of attorney fees under § 512(b). Rather, an award of attorney fees is appropriate for the “substantially prevailing party” under a CASPA claim, and a claimant can be the substantially prevailing party even if the other party withheld payments in good faith.
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William J. Taylor, White and Williams LLPMr. Taylor may be contacted at
taylorw@whiteandwilliams.com
Los Angeles Wildfires Will Cause Significant Insured Losses, Ranking Amongst the Most Destructive in California's History
January 14, 2025 —
Morningstar DBRSWildfires currently burning in the Pacific Palisades, Eaton, Hurst and other Los Angeles neighborhoods will cause significant losses for the insurance industry, in
Morningstar DBRS’ view. The fires have already burned more than 1,100 homes and threaten more than 28,000 additional structures, according to local fire officials. Preliminary estimates point to total insured losses in excess of $8 billion depending on the final number of properties being affected by the wildfires. By way of comparison, the 2018 Woolsey Fire, which destroyed 1,643 structures just north of Los Angeles, caused more than $6 billion in property damages at that time. Morningstar DBRS expects the ongoing wildfires to have a negative but manageable impact on major property insurers active in the Californian market, with the impact somewhat mitigated by their use of reinsurance and their high degree of diversification. Similarly, losses should be manageable for the global reinsurance industry and not affect their credit profiles.
While leading U.S. property insurers are in good financial condition, the California property insurance market has been challenging because of high wildfire and other natural catastrophe risks combined with regulatory restrictions on coverage and pricing, leading many insurers to re-think their product offering, including an outright exit from the market. For example, market leaders such as State Farm and Allstate started reducing their exposure to the California market beginning 2022-2023. It is therefore possible that a larger than usual portion of the losses caused by the wildfires will be uninsured or may be covered under the California FAIR Plan, which is designed to provide fire coverage up to $3 million per home and spread the risk across the industry when it is not available from traditional carriers.
This event reinforces the need for adequate rate increases on home insurance in California, based on forward-looking pricing and catastrophe modelling, as well as for additional fire prevention and mitigation initiatives. However, property insurance affordability is likely to remain a challenge in the state going forward, with many property owners opting to remain uninsured or under-insured because of the high costs.
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Insurer Must Defend Construction Defect Claims
October 07, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court found that under New York law, the insurer had a duty to defend construction defect claims where damage to property other than the insured's work product was possible. Am.Home Assur. Co. v. Allan Window Techs., 2016 U.S. Dist. LEXIS 101118 (S.D. N. Y. Aug 2, 2016).
Kent Avenue Property ("Kent") sued Allan Window Technologies, Ltd. ("Allan"), alleging that Allan entered a written contract for the design, manufacture, assembly and installation of the window wall systems for a residential condominium building. Pursuant to the contract, Allan agreed to correct all work rejected as defective and to bear all costs for correcting the work. According to the complaint, the window wall systems and vent windows installed by Allan were not water-tight or air-tight, and therefore did not meet the air and water penetration requirements of the contract.The contract had an indemnification provision under which Allan agreed to indemnify, defend and hold harmless Kent from all losses, claims, lawsuits, etc. arising out of damage or injury to property at the project site. Kent sued for: (1) breach of contract; (2) breach of warranty, and (3) contractual indemnity.
American Home agreed to defend Allan under a full reservation of rights. American Home then sued for a declaratory judgment to establish it had no duty to defend or indemnify.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
XL Group Pairs with America Contractor’s Insurance Group to Improve Quality of Construction
November 13, 2013 —
CDJ STAFFInsurers XL Group and America Contractor’s Insurance Group have teamed up to use “Big Data” to help their clients maintain quality in construction. “Quality is the second leading cause of subcontractor defaults, and one of the biggest areas of profit loss for a General Contractor,” said Jason LaMonica, the profit center head for XL Group’s Subcontractor Default business.
ACIG says that their methods “allow us to correlate their quality assurance programs with actual claims results.” ACIG will be adding XL Group’s data to their own, which will allow contractors to “implement best practices leading to continuous improvement in their quality assurance program.”
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California’s Right to Repair Act not an Exclusive Remedy
August 20, 2014 —
Beverley BevenFlorez-CDJ STAFFKaren L. Moore of Low, Ball & Lynch in JD Supra Business Advisor analyzed “two decisions holding that California’s Right to Repair Act ('SB 800') is not the exclusive remedy for a homeowner seeking damages for construction defects that have also resulted in property damage.” If property damage occurs due to construction defects, a homeowner “may also pursue common law tort causes of action.”
After providing a brief background of California’s SB 800 and Aas v. Superior Court (which precluded the Right to Repair Act), Moore discussed the results of Liberty Mutual Insurance Company v. Broofield Crystal Cove, LLC, followed by a review of Burch v. Superior Court. Moore commented that “[t]hese two cases will likely be used by homeowners to avoid application of the Right to Repair Act’s pre-litigation procedures.”
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