Idaho Supreme Court Address Water Exclusion in Commercial Property Exclusion
March 09, 2020 —
James M. Eastham - Traub LiebermanIn ABK, LLC v. Mid-Century Ins. Co., 2019 WL 7046393 (Idaho Dec. 23, 2019) an insured gas station owner sued its property insurance carrier for breach of contract and bad faith after the carrier denied coverage for loss caused by water contamination of the insured’s underground storage tanks. Mid-Century had denied coverage because the underground storage tanks were damaged by water -- which was an excluded peril under the policy. Mid-Century issued Business Owners Special Property Coverage to the insured which provided all-risk coverage for physical loss or damage. The policy contained a number of exclusionary provisions including a water exclusion which provided that the policy did not pay for loss or damage caused directly or indirectly by:
- Flood, surface water, waves, tides, tidal waves, overflow or any body of water, or their spray, all whether driven by wind or not; ...
- Water under the ground surface pressing on, or flowing or seeping through:
- Foundations, walls, floors or paved surfaces:
- Basements, whether paved or not; or
- Doors, windows or other openings.
In upholding the District Court’s ruling in favor of Mid-Century, the Idaho Supreme Court held that a clear reading of the unambiguous policy provides damage caused by surface water or water under the ground when flowing or seeping through other openings is excluded from coverage.
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James M. Eastham, Traub LiebermanMr. Eastham may be contacted at
jeastham@tlsslaw.com
Owner’s Obligation Giving Notice to Cure to Contractor and Analyzing Repair Protocol
November 23, 2016 —
David Adelstein – Florida Construction Legal UpdatesRecently, I read an informative article from another attorney addressing considerations of an owner when it receives a repair protocol in response to a Florida Statutes Chapter 558 notice of defect letter. This is a well-written article and raises two important issues applicable to construction defect disputes: 1) how is an owner supposed to respond to a repair protocol submitted by a contractor in accordance with Florida’s 558 notice of construction defects procedure and 2) irrespective of Florida’s 558 procedure, how is an owner supposed to treat a contractual notice to cure / notice of defect requirement that requires the owner to give the contractor a notice to cure a defect. This article raises such pertinent points that I wanted to address the issues and topics raised in this article.
558 Procedure–Owner’s Receipt of Contractor’s Repair Protocol
When a contractor submits a repair protocol to an owner in response to a notice of construction defects letter per Florida Statutes Chapter 558, the owner should seriously consider that protocol. The owner does this by discussing with counsel and any retained expert. The owner needs to know whether the protocol is a reasonable, cost-effective protocol to repair the asserted defects or, alternatively, whether the protocol is merely a band-aid approach and/or otherwise insufficiently addresses the claimed defects. Every scenario is different.
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David Adelstein, Katz, Barron, Squitero, Faust, Friedberg, English & Allen, P.A.Mr. Adelstein may be contacted at
dma@katzbarron.com
Insurer Prohibited from Bringing Separate Contribution Action in Subrogation to Rights of Suspended Insured
January 15, 2019 —
Christopher Kendrick & Valerie A. Moore - Haight Brown & Bonesteel LLPIn Travelers Property Casualty Co. of Amer. v. Engel Insulation, Inc. (No. C085753, filed 11/30/18), a California appeals court held that an insurer may not file its own action to assert claims solely as a subrogee of a suspended corporation, where the corporation could not otherwise assert the claims on its own behalf.
In Engel, a homeowners association filed a construction defect action against the developer, Westlake. Travelers defended Westlake as an additional insured on the policy of a subcontractor. After the case settled, Travelers brought a subrogation action against another subcontractor for contribution to the defense costs. However, Westlake had its corporate status suspended for failure to pay taxes, and the subcontractor moved for judgment on the pleadings, which was granted.
Reprinted courtesy of
Christopher Kendrick, Haight Brown & Bonesteel LLP and
Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com
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Landowners Try to Choke Off Casino's Water With 19th-Century Lawsuit
December 17, 2015 —
Edvard Pettersson – BloombergCalifornia’s latest water war is being waged at the edge of wine country against an Indian tribe planning a massive casino expansion as a group of landowners tries to stop them with a lawsuit from 1897.
The Santa Ynez Band of Chumash Indians is spending $170 million to build out its resort, featuring a 12-story tower on a bucolic landscape where only the mountains are higher. The tribe has also snapped up 1,400 more acres to house cramped residents of its reservation.
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Edvard Pettersson, Bloomberg
Before Celebrating the Market Rebound, Builders Need to Read the Fine Print: New Changes in Construction Law Coming Out of the Recession
November 26, 2014 —
Alan H. Packer - Newmeyer & Dillion, LLPAs the homebuilding market continues to improve, many builders find themselves maneuvering familiar roads. That said, important new realities have taken hold since the market collapse. Navigating these changes requires extra thought for practical and legal reasons.
Using Old Designs “Off the Shelf”?
The adoption of the California Building Standards Code in 2010, with an updated schedule to go into effect January 1, may complicate the use of older designs. In addition, some builders are contemplating building on pads constructed five or more years ago, temporarily shelved until market conditions improved. Because of changes in both the applicable Code and due to possible changes in the underlying soils and drainage, these projects require additional scrutiny before starting construction.
Mechanic’s Lien Law Changes
Not too long ago, the California Legislature recently overhauled the entire mechanic’s lien law system in California. New forms, new statutory references, new rules and deadlines are all applicable to projects under construction now. Make sure your documents are up to date, as the use of older forms (particularly for liens, progress payments, and final payments) could create legal problems in the future.
Indemnity Law Changes
Since 2006, California lawmakers have passed four rounds of legislation aimed at limiting indemnity provisions in construction contracts. The laws are aimed at two aspects of indemnity law: “Type 1” indemnity provisions, and liability for the costs of defending a claim.
Type 1 Indemnity. California law previously permitted a builder to obtain “Type 1” indemnity from its subcontractors for all claims. Under a Type 1 provision, if a claim arose out of the trade’s work, the trade was fully responsible to defend and indemnify the builder – even if other trades or the Builder were partially at fault. Some cases even allowed, typically in a commercial context, the builder to obtain Type 1 indemnity even if the trade was not negligent, as long as the claim involved its work.
Defense Obligation. In 2008, California’s highest court issued an opinion in Crawford v. Weather Shield, evaluating an indemnity provision requiring trade (a window supplier/manufacturer) to defend the builder in claims involving allegations of damages arising out of the trade’s work. Because the trade had contractually agreed to defend the builder, the Court held it responsible for the builder’s defense costs -- even though, ultimately, the trade was found
not liable for the actual damages claimed.
Recent legislation after Crawford has dramatically shifted how indemnity provisions will be enforced. Builders may no longer obtain Type 1 indemnity for residential construction defect claims covered by SB800; instead, indemnity is limited to the extent a claim arises out of the trade’s work. Even more recent legislation applied these changes to claims arising out of commercial construction projects. The recent legislation allows the trades “options” on how to defend the builder, with an eye toward requiring that they pay only a “reasonably allocated” portion for the builder’s defense costs.
Smart builders are refining their contract documents to take into account these new limitations on indemnity provisions.
Insurance Market Changes
Due to uncertainties in subcontractor insurance and other factors, many builders have also converted their liability insurance from a “bring your own” model to “wrap-up” insurance, where the builder’s policy also covers their trades. Builders should carefully examine their subcontracts in light of this change as well.
Trade Partner Changes
On a practical level, many trade partners, particularly in the residential sector, have gone out of business or moved on to greener pastures. Builders need to find and negotiate contracts with new trade partners on the fly, and educate them on the builders’ procedures for payment and construction.
SB800 documentation
A decade ago, most builders updated their purchase documents and subcontracts for California’s “Right to Repair Law” (also known as SB800), which set forth functionality standards for construction defects in residential housing, and procedures for resolving claims prior to litigation. Builders ramping up to meet market demand should examine how they implemented SB800 changes in contract documents. Issues to consider:
- Whether to opt out of -- or back into -- statutory procedures.
- Whether to include arbitration or judicial reference provisions to control where claims are litigated after the SB800 process.
- Re-training personnel to preserve SB800 rights, including sign-offs on purchase documentation and recordation of key documents.
- Recent Court of Appeal decisions have complicated the SB800 landscape, potentially opening the door to “common law” tort claims in at least subrogation contexts. Strategic planning at the document stage may be a good way to mitigate this risk as the cases wind their way through the judicial process.
The continuing surge in building activity is a welcome sign for builders who have weathered the storm. Before taking too many steps, builders should consult with counsel, their designers, and their insurance advisors to take into account the new realities of this recovering housing market.
About the Author
Alan H. Packer is a partner in the expanding Walnut Creek, CA, office of the law firm of
Newmeyer & Dillion LLP whose specialties include real estate, insurance, and construction litigation. To reach Alan, call 925.988.3200 or email him at alan.packer@ndlf.com.
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Real Estate & Construction News Roundup (08/08/23) – Buy and Sell With AI, Urban Real Estate Demand and Increasing Energy Costs
September 18, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, we look at AI’s ability to buy and sell real estate, good news from the Labor Department for federally contracted construction workers, the continued promise of proptech, and more!
- With economic hardships for urban commercial real estate, the suburbs may be where the next opportunities lie. (Larry Goodman, Forbes)
- Being able to better meet tenant needs and alleviating the redundant, time-consuming tasks continue to drive interest in, and use of, proptech in the real estate sector. (Kerri Davis, Forbes)
- Imagine using AI to determine which real estate properties to buy and sell. A former real-estate analyst has built a tool for this exact task. (Kelsey Neubauer, Business Insider)
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Pillsbury's Construction & Real Estate Law Team
Partner Jonathan R. Harwood Obtained Summary Judgment in a Coverage Action Arising out of a Claim for Personal Injury
December 22, 2019 —
Jonathan R. Harwood - Traub Lieberman PerspectivesOn August 16, 2019, Traub Lieberman partner obtained summary judgment in a declaratory judgment action involving a claim for coverage for a personal injury action involving injuries suffered on a construction site. The plaintiff in the underlying action was performing excavation in a basement of a building in Manhattan so the owner could install a pool. During the course of the excavation plaintiff fell 13 feet from a plank, into the excavated pit, suffering serious injuries. Traub Lieberman’s client issued a CGL policy to the building owner and the insured sought coverage for the suit under that policy. The insurer denied coverage based on an endorsement to the policy that stated the insured could only contract directly with a specified general contractor. The plaintiff was an employee of a subcontractor and the insurer believed the insured had contracted directly with that unapproved subcontractor. The insured denied it had done, contending the subcontractor had been hired by the general contractor identified in the endorsement.
Reprinted courtesy of
Jonathan R. Harwood, Traub Lieberman
Mr. Harwood may be contacted at jharwood@tlsslaw.com
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Garlock Five Years Later: Recent Decisions Illustrate Ongoing Obstacles to Asbestos Trust Transparency
September 03, 2019 —
Amy E. Vulpio - Complex Insurance Coverage ReporterIn In re Garlock Sealing Technologies, LLC, 504 B.R. 71 (Bankr. W.D.N.C. 2014), the court confirmed what many asbestos defendants and their insurers long suspected: that “the withholding of exposure evidence by plaintiffs and their lawyers was significant and had the effect of unfairly inflating the recoveries against Garlock” and other defendants. This “startling pattern of misrepresentation” included plaintiffs’ attorneys who, out of “perverted ethical duty,” counseled their clients to file claims against multiple trusts without valid factual grounds for so doing. Such “double dipping” and other abuse not only harms asbestos defendants and insurers, but also dilutes recoveries for legitimate claims. Now – five years after Garlock – the Department of Justice (DOJ) has launched a coordinated initiative to fight asbestos trust fraud and mismanagement. However, a series of recent bankruptcy court rulings suggests that this initiative stumbled out of the gate by focusing on the wrong issues. Asbestos defendants and their insurers can learn from the DOJ’s missteps.
In November 2017, invoking Garlock, 20 state attorneys general wrote to then-Attorney General Jeff Sessions asking him to devote DOJ resources to fighting asbestos trust abuse. A September 13, 2018 DOJ press release announced an initiative to increase the transparency and accountability of asbestos trusts. Through its United States Trustee Program (UST), the DOJ objected to the debtors’ proposed legal representative for future claims (FCR) in several Chapter 11 cases involving asbestos liabilities: Lawrence Fitzpatrick in Duro Dyne and James L. Patton, Jr. in Maremont, Fairbanks and Imerys Talc.
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Amy E. Vulpio, White and Williams LLPMs. Vulpio may be contacted at
vulpioa@whiteandwilliams.com
