Endorsements Preclude Coverage for Alleged Faulty Workmanship
December 30, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe court found coverage for alleged faulty workmanship was barred by the Combination Construction Related Endorsement and Roofing Endorsement. Evanston Ins. Co. v. A&S Roofing, 2019 U.S. Dist. LEXIS 142828 (W.D. Okla. Aug. 22, 2019).
In 2010, A&S entered into a subcontract with the contractor to replace roofs on three buildings owned by Oklahoma Property Investors (OPI). Eagle was a subcontractor of A&S that installed the roofing. After the roofs were replaced, OPI filed suit against A&S, alleging that A&S provided 15-year warranties for the roofing work performed on the three buildings and that A&S breached each warranty by performing the work in a poor manner, resulting in failures to each of the roofs. OPI sought monetary relief including damages to its properties, of its tenants, and costs of repairs to its properties.
A&S's insurer, Evanston, denied coverage. Evanston pointed to the"legally obligated to pay" language of the CGL policy and argued coverage only extended to tort-based claims. Evanston argued the OPI lawsuit did not allege any tort claims, only warranty claims arising from contract. Second, Evanston contended the alleged "poor craftsmanship" giving rise to the claims in the OPI lawsuit that did not constitute an "occurrence" under the policy.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Trump Administration Waives Border Wall Procurement Rules
March 23, 2020 —
Mary B. Powers & Debra K. Rubin - Engineering News-RecordActing Homeland Security Secretary Chad Wolf on Feb. 20 waived federal contracting rules to expedite construction of the U.S-Mexico border wall in California, Arizona, New Mexico and Texas, citing legal authority under several U.S. laws, some dating back to the 1990s, to deal with what he claimed is "an acute and immediate need to construct physical barriers and roads ... to prevent unlawful entries."
Reprinted courtesy of
Mary B. Powers, Engineering News-Record and
Debra K. Rubin, Engineering News-Record
Ms. Rubin may be contacted at rubind@enr.com
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How Are You Dealing with Material Delays / Supply Chain Impacts?
June 07, 2021 —
David Adelstein - Florida Construction Legal UpdatesIn a prior article I discussed a material escalation provision in your construction contract to account for the volatility of the material price market. While including such a provision may not have been much of a forethought before, it is now!
What about concerns with the actual supply chain that impacts the availability of and the lead time of materials? How are you addressing this concern in your construction contract?
The pandemic has raised awareness to this issue as certain material availability has been impacted by the pandemic. As a result, parties in construction have tried to forecast those materials where delivery issues may occur including those materials with longer than expected lead times. But equally important is how this issue is being addressed in your construction contract including how you want to negotiate this risk in future construction contracts.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
What if the "Your Work" Exclusion is Inapplicable? ISO Classification and Construction Defect Claims.
February 14, 2023 —
David Humphreys - Carson Law Group, PLLCThis article was first published by the National Association of Home Builders (NAHB) on their NAHBNow blog
One of the risks faced by a residential builder is that, following completion of construction, the homeowner may assert a claim against the builder for damage to the home caused by an alleged construction defect. One of the ways a builder manages the risk of such construction defect claims is by purchasing commercial general liability (“CGL”) insurance.
A builder’s CGL policy covers those sums the builder is legally obligated to pay as damages because of bodily injury or property damage caused by an “occurrence,” that is, damage that is accidental rather than being expected or intended by the builder, so long as the claim does not fall within any of the policy’s several “exclusions” from coverage.
When faced with a construction defect lawsuit, our builder clients are often surprised—and dismayed—when their CGL insurer denies coverage and refuses to defend the builder. However, builders shouldn’t take their insurer’s denial of coverage at face value. This article discusses a new argument we recently discovered that has been a game-changer for our builder clients who were denied coverage in construction defect cases.
Whether coverage exists always depends on the specific language of the particular CGL policy, and courts generally construe exclusions against insurers. This allows experienced coverage attorneys to, at times, successfully challenge declinations of coverage and, at a minimum, convince insurers to pay for the builder’s defense.
A typical CGL policy provides products-completed operations coverage, which is sought by businesses that face potential liability arising out of the products that they have sold or operations that they have completed. Products-completed operations coverage allows builders to obtain many years of coverage for a completed project. Over the years, insurers have added to their policies modifications and exclusions that limit their exposure for claims that fall under that coverage.
Exclusion (l) or the “your work” exclusion, will often exclude coverage for a latent defect claim against the builder. A standard “your work” exclusion provides:
This insurance does not apply to: . . . “[p]roperty damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard.”
This “your work” and similar exclusions are designed to limit coverage for business risks that are within the contractor’s own control; e.g., a claim that the contractor caused damage to the contractor’s own work. These exclusions apply both to ongoing and completed projects, which can leave a builder unprotected from lawsuits for years after a project is completed.
However, builders who are classified on the declarations page with Code 91580 Contractors— Executive Supervisors or Executive Superintendents, may not be subject to the “your work” exclusion. 91580 is a common classification assigned to builders during insurance underwriting. This classification falls into what is referred to as “dagger class” or “plus sign class,” which indicates that Products and/or Completed Operations coverage is
included as part of and not separate from the Premises/Operations coverage (emphasis added).
It has been noted that dagger” and “plus sign” classifications create confusion because of the seeming contradiction between policy wording and coverage rules.* The CGL policy seems to expressly exclude products and/or completed operations losses for “dagger” or “plus sign” classes. In the definitions section we find the following:
“Products-completed operations hazard”: . . .b. Does not Include “bodily Injury” or “property damage” arising out of:. . . (3) Products or operations for which the classification, listed In the Declarations or in a policy schedule, states that products- completed operations are subject to the General Aggregate Limit.”
This apparent exclusionary language, however, must be read in conjunction with the Insurance Services Office’s (ISO) Rule 25.F.1.:
Rule 25. CLASSIFICATIONS
F. Symbols
1. Plus Sign
A plus sign when shown in the Premium Base column under General Liability insurance in the Classification Table - means that coverage for Products and/or Completed Operations is included in the Premises/Operations coverage at no additional premium charge. When this situation applies, the classification described in the policy schedule or Declarations must state that:
“Products-completed operations are subject to the General Aggregate Limit” to provide Products and/or Completed Operations coverage(s).
When read together then, the exclusionary wording in the policy definition removes any product or operation loss subject to the “dagger” or “plus sign” classification from the definition of Products Completed Operations Hazard. Under the dagger or plus sign classification of Rule 25, coverage for products and/or operations is included in the premises operations coverage. Consequently, a loss can no longer be defined as a product completed loss, and as a result it is no longer subject to the “your work” exclusion.
Recall that the standard “your work” exclusion quoted above excludes coverage for “property damage” to “your work” “arising out of it or any part of it
and included in the “products-completed operations hazard”.” Here, we emphasize “and” because the “your work” exclusion applies only to property damage that is also included in the “products-completed operations hazard.” Since property damage claims arising under “plus sign” classifications are expressly excluded from the “products-completed operations hazard” (they are included in the premises/operations coverage) the “your work” exclusion simply does not apply. This means that, if your CGL insurer denies your construction defect claim based on the “your work” exclusion, do what the title of this article suggests: Check your ISO classification! If 91580 “Executive Supervisors or Executive Superintendents” is listed on your Declarations page, you may be in luck.
This new ISO classification-based coverage argument will likely also apply to other exclusions and endorsements that CGL insurers routinely rely on in denying coverage in construction defect cases. We recently successfully challenged a coverage denial based on the following “prior work” exclusionary endorsement:
”This insurance does not apply to ‘your products’ or ‘your work’ completed prior to” a certain date listed in the endorsement. . .
“Specifically, this insurance does not apply to. . . “property damage”. . . included in the ‘products-completed operations hazard’ and arising out of. . . ‘your work’ performed by or on behalf of you prior to the date shown above.”
Again, this endorsement incorporates the “products-completed operations hazard,” which allowed us to successfully argue that the exclusion was inapplicable to a builder classified as a 91580 “Executive Supervisor or Executive Superintendent.”
To our knowledge, this new ISO classification-based coverage argument has not yet been addressed by a court. Our recent successes with it have concluded with favorable settlements for our clients. Accordingly, for now, the ISO classification-based argument is a powerful new tool to challenge denials of coverage in construction defect cases where the builder is classified under 91580 “Executive Supervisors or Executive Superintendents.”
David Humphreys is a Partner at Carson Law Group, PLLC, and has been representing construction contractors, subcontractors, and owners for more than two decades in Mississippi and throughout the Southeast.
*See “Dagger” or Plus Symbol Classes: What They Mean, Chris Boggs - Virtual University | “Dagger” or Plus Symbol Classes: What They Mean) (independentagent.com)
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A Court-Side Seat: Clean Air, Clean Water, Endangered Species and Deliberative Process Privilege
April 19, 2021 —
Anthony B. Cavender - Gravel2GavelThe federal courts have issued some significant environmental law rulings in the past few days.
THE U.S. SUPREME COURT
U.S. Fish and Wildlife Service v. Sierra Club, Inc.
On March 4, 2021, the court held that the deliberative process privilege of the Freedom of Information Act shields from disclosure in-house draft governmental biological opinions that are both “predecisional” and deliberative. According to the court, these opinions, opining on the Endangered Species Act (ESA) effects on aquatic species of a proposed federal rule affecting cooling water intake structures—which was promulgated in 2019—are exempt from disclosure because they do not reflect a “final” agency opinion. Indeed, these ESA-required opinions reflect a preliminary view, and the Services did not treat them as being the final or last word on the project’s desirability. The Sierra Club, invoking the FOIA, sought many records generated by the rulemaking proceeding, and received thousands of pages. However, the Service declined to release the draft biological opinions that were created in connection with the ESA consultative process.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
New York Appellate Team Obtains Affirmance of Dismissal of Would-Be Labor Law Action Against Municipal Entities
August 12, 2024 —
Lewis Brisbois NewsroomNew York, N.Y. (July 11, 2024) - In Charlot v. City of New York, ___ A.D.3d ___, 2024 NY Slip Op 03161 (2d Dep’t 2024), New York Associate Dean Pillarella, a member of the Appellate Practice, recently obtained an affirmance of the lower court’s dismissal of the plaintiff’s action against the City of New York (“the City”) for failure to timely serve a notice of claim. New York Partner Meghan Cavalieri, a member of the Construction Practice, and her team authored and argued the initial motion to dismiss.
The plaintiff alleged to have sustained injuries as a result of a construction-site accident on December 8, 2020, on City-owned property in the course of the construction of a school by the New York City School Construction Authority. N.Y. General Municipal Law (“GML”) § 50-e(1)(a), requires service of a notice of claim within 90 days after the claim arises as a condition precedent to the commencement of a tort action. The plaintiff served no notice of claim until June 2021 and commenced an action in January 2022, alleging violations of N.Y. Labor Law §§ 240(1), 241(6), and 200. Given the plaintiff’s failure to comply with GML § 50-e(1)(a), Meghan and her team rejected the notices of claim as untimely. The plaintiff then moved for leave to deem the notices of claim timely served nunc pro tunc. In response, Meghan and her team opposed the motion and cross-moved to dismiss the action.
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Lewis Brisbois
New Megablimp to Deliver to Remote Alaskan Construction Sites
January 13, 2017 —
Ryan W. Sternoff - Ahlers & Cressman PLLC BlogFor nearly 20 years, Lockheed Martin has been working on developing a “Hybrid Airship” that may transform the ability to construct facilities in remote project locations.[i]
On September 13, 2016, the Daily Journal of Commerce reported that the first of these “Hybrid Airships,” which can land in snow, ice, gravel, and water, are set to deliver from a facility operated by PRL Logistics in Kenai, Alaska, beginning in 2019.[ii] PRL will be operating the blimps in partnership with UK-based Straightline Aviation who placed the first order for the airships this year. According to PRL, the hope is that the airships will provide low cost solutions for moving freight in Alaska, where runways and roads are not always available. The helium-lifted behemoth blimps have space for 47,000 pounds of cargo and 18 passengers and cost about $40 million dollars.
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Ryan W. Sternoff, Ahlers & Cressman PLLCMr. Sternoff may be contacted at
rsternoff@ac-lawyers.com
No Coverage Under Property Policy With Other Insurance and Loss Payment Provisions
September 17, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe court determined that the other insurance and loss payment provisions relieved the insurer of coverage obligations. Moroney Body Works, Inc. v. Central Ins. Co., 2015 Mass. App. LEXIS 97 (Aug. 6, 2015).
A fire destroyed Moroney's custom-built bookmobile that had just been completed. Moroney had two policies: a commercial property policy issued by Central, and a garage insurance policy issued by Pilgrim Insurance Company. Central denied liability for the bookmobile. Pilgrim covered the cost of repairing the bookmobile. It paid $12,449.82 based on the appraiser's estimate of the repair costs. Moroney thought this amount was inadequate given its own estimate of the repair costs.
Moroney sued both insurers. Pilgrim settled by paying Moroney an additional amount which, when added to Pilgrim's earlier payment, resulted in Moroney receiving more than the repair cost. Moroney and Central both moved for summary judgment. The trial court granted Moroney's motion.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
