Texas Supreme Court Rules on Contractual Liability Exclusion in Construction Cases
January 22, 2014 —
Beverley BevenFlorez-CDJ STAFFThe Texas Supreme Court ruled on Ewing v. Amerisure Ins. Co. on January 17th, a “much-anticipated” decision according to Carl A. Salisbury of Kilpatrick Townsend & Stockton LLP. “Construction projects are always the subject of contracts among owners and contractors” Salisbury stated in his article on Lexology.com. The recent decision demonstrates that “an exclusion in the standard Comprehensive Liability Insurance policy that precludes coverage for ‘liabilities assumed under contract’” does not usually “apply to construction contracts.”
In 2008, Ewing Construction Company built a set of tennis courts in Corpus Christi, according to Salisbury. “Shortly after construction was complete, according to the school district, ‘the courts started flaking, crumbling, and cracking, rendering them unusable for their intended purpose of hosting competitive tennis events.’” After the school district sued Ewing in state court, Ewing “turned the suit over to Amerisure, its CGL insurer, seeking a defense and indemnity. Amerisure denied all coverage, citing the contractual liability exclusion in its policy. This inspired Ewing to sue the carrier in federal district court for the Southern District of Texas.”
After several rulings and appeals, the case eventually reached the Texas Supreme Court: “According to the Ewing court, the contract claims that Ewing failed to perform in a good and workmanlike manner ‘are substantively the same as its claims that Ewing negligently performed under the contract because they contain the same factual allegations and alleged misconduct.’ Failure to perform in a ‘good and workmanlike manner’ is functionally and substantively the same as performing negligently. ‘Accordingly,’ the Ewing court said, ‘we conclude that a general contractor who agrees to perform its construction work in a good and workmanlike manner, without more, does not enlarge its duty to exercise ordinary care in fulfilling its contract, thus it does not ‘assume liability’ for damages arising out of its defective work so as to trigger the Contractual Liability Exclusion.’”
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Mobile Home Owners Not a Class in Drainage Lawsuit
March 01, 2012 —
CDJ STAFFComparing it to a “complex construction defect action,” the California Court of Appeals for Orange County has rejected the claims of a group of mobile home owners that they should be certified as a class in their lawsuit against Huntington Shorecliffs Mobilehome Park. The Appeals court sustained the judgment of the lower court. The court issued a decision in the case of Criswell v. MMR Family LLC on January 17, 2012.
The claims made by the group were that the owners and operators of the mobile home park had known of an “on-going and potentially worsening shallow groundwater condition on the property” and had “exacerbated the problem by changing ‘the configuration and drainage related to the hillside that abuts’ the park.” The homeowners claimed that the class should consist of “any past or current homeowner during the same time frame” who had experienced “the accumulation of mold, fungus, and/or other toxins,” “property damage to his/her mobilehome and/or other property resulting from drainage problems, water seepage, water accumulation, moisture build-up, mold, fungus, and/or other toxins,” emotional distress related to drainage problems or mold, and finally health problems “resulting from exposure to drainage problems, water seepage, water accumulation, moisture build-up, mold, fungus, and/or other toxins, in or around one’s home, lot, or common areas of the park.”
The lower court concluded that while the limits of the class were identifiable, they failed to constitute a class in other ways. First, the people affected were small enough in number that they could be brought together. They “are not so numerous that it would be impracticable to bring them all before the Court.”
The court noted that while many of the homeowners would have issues in common, they did not find “a well-defined community of interest among the class members.” The Appeals Court wrote that “the individual issues affecting each mobile home and homeowner will predominate over the common issue of the presence of standing or pooling water in and around the park.” The court noted that each home would be affected differently by water and “the ‘accumulation of mold, fungus, and/or other toxins.’”
While the court conceded that there would be common issues, such as the “defendants’ alleged concealment of excess moisture conditions and their allegedly negligent roadwork and landscaping,” they noted that “these common issues would be swamped by the swarm of individual determinations of property damage, emotional distress, and personal injury.” The Appeals Court cited an earlier case that ruled against certification “if a class action ‘will splinter into individual trials.’” The court affirmed the judgment of the lower court that they could not proceed as a class.
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Construction Law Client Advisory: What The Recent Beacon Decision Means For Developers And General Contractors
August 20, 2014 —
Steven M. Cvitanovic and Whitney L. Stefko - Haight Brown & Bonesteel LLPOn July 3, 2014, the California Supreme Court (the “Court”) came out with its decision in Beacon Residential Community Association v. Skidmore, Owings & Merrill, et al. The Beacon decision settled a long-standing dispute in California about whether design professionals such as architects and engineers owe a duty to non-client third parties. In finding that the plaintiffs in Beacon could state a claim against the architects of the Beacon project, the Court also sowed the seeds of change in the way contracts are structured between developers, architects, engineers, and even general contractors.
So, how will Beacon change the landscape for developers and general contractors? It is important to understand the factual background in Beacon to predict how the decision may alter the playing field. For a detailed analysis of the Amicus briefs in the Beacon matter from the AIA, the CBIA, and the Consumer Attorneys of California, please click here.
The Beacon case arose from a common development model in California: a developer conceives a multi-unit project, maps the project as a condo development but rents as apartments. Shortly after completion of the Beacon project, the developer sold the entire project and the new owner finalized the existing condominium map and placed the units on the market as condominiums. Although the architects always knew they had designed a residential structure, the project ultimately became a condominium development. The newly formed homeowners’ association filed a construction defect suit against the developers, general contractor, the subcontractors and the architects for design and construction defects.
Reprinted courtesy of
Steven M. Cvitanovic, Haight Brown & Bonesteel LLP and
Whitney L. Stefko, Haight Brown & Bonesteel LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com; Ms. Stefko may be contacted at wstefko@hbblaw.com
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Brooklyn’s Industry City to Get $1 Billion Modernization
March 12, 2015 —
David M. Levitt – Bloomberg(Bloomberg) -- A late 19th century industrial complex on New York’s Brooklyn waterfront is slated for a $1 billion makeover that aims to transform the property into a modern hub for manufacturing and technology.
The owners of Industry City, Atlanta-based Jamestown and its partners, plan to invest about $890 million over the next 12 years, and anticipate tenants will put in about $150 million of their own money, according to a proposal announced Monday. The project will create one of the largest centers for the “innovation economy” in the U.S., and one of New York’s biggest engines of job growth, said Andrew Kimball, chief executive officer of Industry City.
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David M. Levitt, BloombergMr. Levitt may be contacted at
dlevitt@bloomberg.net
Oregon Court of Appeals Rules That Negligent Construction (Construction Defect) Claims Are Subject to a Two-Year Statute of Limitations
October 20, 2016 —
John P. Ahlers – Ahlers & Cressman PLLCStatutes of limitations are distinct from statutes of repose. There is a lot of confusion between the two.
Generally, a statute of limitations is a law which sets the maximum period of time which one can wait before filing a lawsuit, depending on the type of case or claim. The periods vary by state and by type of claim. Most states also employ a “discovery rule,” which provides that the statute of limitations does not “accrue” until such time as the plaintiff knew or should have reasonably known that the injury or property damage has occurred.
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John P. Ahlers, Ahlers & Cressman, PLLCMr. Ahlers may be contacted at
jahlers@ac-lawyers.com
Federal Government Partial Shutdown – Picking Up the Pieces
February 27, 2019 —
Jacob W. Scott - Now that the partial shutdown has ended (though with the specter of another just around the corner), contractors are asking, “What now?” and “What did that cost me?” Although every case is fact-specific, following are some guidelines for moving forward after the shutdown.
Following up on our previous guidance, contractors should make sure that any court, board, or agency filings made during the shutdown were received and properly docketed. If there is any question whether a filing was received, file it again as soon as possible with proof of the earlier attempt to file. The busiest tribunals, such as the federal courts, the Court of Federal Claims, the Boards of Contract Appeals, and the Government Accountability Office, remained open, or at least open to accept filings, and all indications are that filings made during the shutdown were received and acknowledged. But for some of the other tribunals or agencies, such as the Small Business Administration (“SBA”) Office of Hearings and Appeals and the SBA Office of Government Contracting and Business Development, prudence dictates double-checking that all filings were received. In many cases, non-statutory deadlines have been or will be adjusted by the court, board, or agency.
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Jacob W. Scott, Smith CurrieMr. Scott may be contacted at
jwscott@smithcurrie.com
Colorado Court of Appeals Finds Damages to Non-Defective Property Arising From Defective Construction Covered Under Commercial General Liability Policy
December 20, 2012 —
HEIDI GASSMAN, HIGGINS, HOPKINS, MCLAIN & ROSWELLThe recently decided case of Colorado Pool Systems, Inc. v. Scottsdale Insurance Company (Colo. Ct. App. 10CA2638, October 25, 2012), confirms that absent specific exclusions in the policy, a commercial general liability (“CGL”) policy covers damages to non-defective property arising from a builder’s own defective workmanship.
Colorado Pool Systems, Inc. (“Colorado Pool”) was hired as a subcontractor to install a swimming pool at Founders Village Pool and Community Center (“Founders Village”) in Castle Rock, Colorado. After the concrete shell of the pool was placed, some of the rebar frame was found to be too close to the surface. Founders Village demanded that Colorado Pool remove and replace the pool, and Colorado Pool contacted its insurance carrier, Scottsdale Insurance Company (“Scottsdale”), with which Colorado Pool held a CGL policy. After inspecting the pool, Scottsdale’s claims adjuster stated that the insurance policy would cover losses associated with removing and replacing the pool.
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Heidi Gassman, Higgins, Hopkins, McLain & Roswell, LLC.Ms. Gassman can be contacted at
gassman@hhmrlaw.com
Massachusetts High Court: Attorney's Fee Award Under Consumer Protection Act Not Covered by General Liability Insurance Policy
September 19, 2022 —
Jeffrey J. Vita & David G. Jordan - Saxe Doernberger & Vita, P.C.In the case of
Vermont Mutual Insurance Co. v. Poirier, 189 N.E.3d 306 (Mass. 2022), Massachusetts’ Supreme Judicial Court concluded that an award of attorney's fees pursuant to
Chapter 93A (Massachusetts’ Consumer Protection Act) is not covered under an insured’s general liability insurance policy. Applying Massachusetts law, the Court found that a statutory award of attorney’s fees stemming from a bodily injury claim is not reasonably considered “damages because of bodily injury” or “costs taxed against the insured” so as to trigger general liability coverage.
Facts of the Case
A Servpro company (owned by Mr. and Mrs. Poirier) was hired to clean up a basement after a sewage spill. The owners of the home were injured by fumes from chemicals used in the cleanup and accordingly brought suit against the Poiriers and their Servpro business. In the lawsuit, the homeowners alleged negligence, breach of contract, and also a Chapter 93A claim, asserting breach of warranty of merchantability and warranty of fitness for a particular purpose. Prior to trial, the plaintiffs waived the negligence and breach of contract claims and sought a bench trial on the Chapter 93A claims alone.
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Jeffrey J. Vita, Saxe Doernberger & Vita, P.C. and
David G. Jordan, Saxe Doernberger & Vita, P.C.
Mr. Vita may be contacted at JVita@sdvlaw.com
Mr. Jordan may be contacted at DJordan@sdvlaw.com
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