Michigan Court Waives Goodbye to Subrogation Claims, Except as to Gross Negligence
March 13, 2023 —
Lian Skaf - The Subrogation StrategistIn Ace American Insurance Company, et. al. v. Toledo Engineering Co., Inc., et. al., No. 18-11503, 2023 U.S. Dist. LEXIS 15222 (Ace American), the United States District Court for the Eastern District of Michigan determined whether insurers could pursue their subrogation claims against the defendants despite a waiver of subrogation in each of the contracts the insured had with the respective defendants. Based on the language of the contracts and the circumstances leading up to the loss, the court held that the insurers could not pursue their subrogation claims – other than their claims for gross negligence – due to waivers of subrogation in the applicable contracts.
In Ace American, the insured, Guardian Industries, LLC (Guardian), retained Toledo Engineer Co., Inc. (TECO) and Dreicor, Inc. (Dreicor) to renovate a glass furnace in the insured’s glass manufacturing plant. Guardian and TECO entered into a contract on December 6, 2016. Guardian and Dreicor entered into a contract on September 29, 2013, that the parties later updated on June 3, 2016. Both defendants began work on the project in the spring of 2017 and were finished with the portion of the work known as the “Cold Tank Repair” prior to the loss.
On June 3, 2017, there was an explosion and fire at the plant that caused significant property damage. The plaintiff insurers (Plaintiffs) made payments in the amount of $80 million and became subrogated to its insured’s rights. Plaintiffs then initiated this action.
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Lian Skaf, White and Williams LLPMr. Skaf may be contacted at
skafl@whiteandwilliams.com
Environmental Justice: A Legislative and Regulatory Update
November 01, 2021 —
Anthony B. Cavender - Gravel2GavelEnvironmental Justice, as an urgent policy priority of the Federal Government, dates back to 1994, and President Clinton’s issuance of Executive Order 12898. This order directed federal agencies to identify and address, as appropriate, “the disproportionately high and adverse human health and environment effects of its many programs, policies, and procedures on minority populations and low-income populations.” Executive Order 12898 supplements Executive Order 12550 (1980), whose primary legal basis was Title VI of the Civil Rights Act of 1964, in particular, Sections 601 and 602, which prohibit discrimination in programs and activities receiving federal financial aid and assistance.
Over the years, the Supreme Court has reviewed the scope and importance of Title VI. For example, in Alexander v. Sandoval, decided in 2001, the Court concluded that while private parties could sue to enforce Section 601 or its implementing regulations, Section 601 only prohibits intentional discrimination; which is very difficult to prove. In addition, the Court ruled in Sandoval, that private parties cannot sue to enforce regulations implementing Section 602. Perhaps as an acknowledgement of these shortcomings, the Environmental Protection Agency (EPA) has for many years operated an administrative system to process environmental justice complaints (see 40 CFR Part 7). The process is complex and the results—usually whether a state agency has failed to uphold Title VI—have generally been unsatisfactory. To be successful, many proponents of environmental justice believe that a statutory foundation must be established, and significant efforts have been made to do so.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Nevada Senate Bill 435 is Now in Effect
February 24, 2020 —
Bremer Whyte Brown & O'Meara LLPATTENTION: Nevada liability departments and auto insurance carriers! Nevada Senate Bill No. 435 was recently signed into law and there are two key points to be aware of: Disclosure of Policy Limits Demand and Voiding Releases. These both deal with pre-litigation situations.
1) Nevada law now requires a motor vehicle insurer to disclose the limits of the policy if the claimant provides a HIPAA authorization which allows the carrier to “receive all medical reports, records and bills related to the claim from the providers of health care.” This is a change from the previous Nevada statute which required the disclosure of policy limits only after litigation was commenced.
However, it appears from the language of the statute that there are limits to this new mandate. Section 4 of the new law is written in such a way to allow the argument that the new law applies only to accidents that occurred after 10/1/19, and that the insurance company has to request the HIPAA waiver from the claimant in order for the disclosure requirement to apply.
The plaintiff’s bar is already attempting to address this language in the legislature. As written, subsection (4) is governed by subsection (1) which states that the insurance company “may require the claimant … to provide … a written authorization.” The following subparts all appear to be triggered only by the act of the insurance company requesting a HIPAA waiver. The plaintiff’s bar is pushing for clarifying language that would make it clear that once the claimant sent a HIPAA waiver, irrespective of whether the document was requested by the insurance company or not, the insurance company is required to disclose policy limits. This is not how the law reads on its face, and the change would make a significant difference from a practical perspective.
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Bremer Whyte Brown & O'Meara LLP
Duty To Defend Construction Defect Case Affirmed, Duty to Indemnify Reversed In Part
May 07, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe Eleventh Circuit affirmed the district court's finding of a duty to defend, but reversed, in part, the insurer's duty to indemnify. Carithers v. Mid-Continent Cas. Co., 2015 U.S. App. LEXIS 5540 (11th Cir. April 7, 2015).
After discovering a number of defects in their home, the Carithers sued their homebuilder, Cronk Duch Miller & Associates. Cronk Duch's insurer, Mid-Continent Casualty Company, refused to defend.The parties entered into a consent judgment for $90,000 in favor of the Carithers. Cronk Duch then assigned to the Carithers the right to collect the judgment from Mid-Continent.
The Carithers then sued Mid-Continent. Florida law applied. Mid-Continent has issued four policies to Cronk Duch from March 2005 to October 2008. The parties filed cross-motions for summary judgment on the duty to defend issue. The underlying complaint alleged that the defects could not have been discovered until 2010, after the last policy period. The district court rejected Mid-Continent's argument that property damage occurred when it was discovered or when it reasonably could have been discovered. Therefore, summary judgment on the duty to defend was granted to the Carithers.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Thank You to Virginia Super Lawyers
July 13, 2017 —
Christopher G. Hill - Construction Law MusingsThank you to all of my peers and those at Virginia Super Lawyers for nominating and electing me to the
Virginia Super Lawyers Rising Stars for 2011. I am particularly honored because this puts me in a group of only 2.5% of lawyers in Virginia. I am truly honored to be a part of this list. Add this honor to my
election to the Virginia Business Legal Elite in Construction Law and 2010 has been a great year for my new firm!
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
More (and Simpler) Options Under New Oregon Retention Law
October 21, 2024 —
Michael Yelle - Ahlers Cressman & Sleight PLLCSimilar to the changes made by the Washington Legislature last year, the Oregon Legislature recently changed its retention law. Oregon public works agencies and large commercial project owners are now required to accept surety bonds in lieu of withholding retainage on construction projects. There is also no longer a requirement to deposit retention funds in an interest-bearing escrow account.
The owner or public agency must accept the bond in lieu of retainage unless specific grounds exist. For example, public agencies must find there is “good cause” for rejection of the bond based on the “unique project circumstances. Private owners have less discretion to reject a bond and if the bond meets the statutory requirements, per ORS 701.435(1)(a) “the owner and lender shall accept” the bond “in lieu of all or any portion of the retainage…”
Courts have not analyzed when “good cause” exists for public agencies to reject bonds or exactly what will allow a private owner to reject a bond. However, an agency or owner cannot have a general policy to reject retention bonds. The statute does not provide next steps if the contractor disagrees with a decision to reject the bond. It may be necessary to proceed under the contract’s dispute resolution procedure or it may be more appropriate to take the issue directly to the courts.
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Michael Yelle, Ahlers Cressman & Sleight PLLCMr. Yelle may be contacted at
michael.yelle@acslawyers.com
Lien Waivers Should Be Fair — And Efficient
February 18, 2015 —
Christopher G. Hill – Construction Law MusingsThis week for our Guest Post Friday here at Construction Law Musings, we welcome back my good friend Scott Wolfe. Scott, a thought leader in the construction industry, combines his construction background, tech experience, entrepreneurial spirit, and legal education to bring a unique perspective to the industry’s construction payment problem. Scott is the founder of zlien, a venture-backed construction payment platform. A licensed attorney in six states, his writing has appeared in the New York Times, CFMA’s Building Profits, Supply House Times, Construction Executive, and tED Magazine. He has been a Keynote Speaker for the American Subcontractors Association annual conference, and spoken at CFMA events.
Lien waivers are perhaps the most legally and practically complicated documents exchanged in the construction industry. Unfortunately, this results in huge corporate inefficiencies, and worse, provides an opportunity for some parties to exert undue leverage over others.
Lien waivers — or lien releases, as they are commonly (but mistakenly) called — aren’t supposed to be complicated, though. They are designed to make the complex construction payment process easy and fair.
This article will address why that is, how it works, and where things have gone awry.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit
September 09, 2011 —
CDJ STAFFThe Alabama Court of Civil Appeals has upheld a summary judgment in the case of Franklin v. Mitchell. Walter Mitchell, doing business as Southern Classic Construction built a new home for the Franklins. The Franklins moved into the home in October 2001. In April 2006 they discovered sagging floors in both the bathroom and kitchen. They contacted Mitchell who suggested the flooring might be defective. The Franklins spent eight months attempting to contact the flooring manufacturer.
In March 2007, the Franklins had the home inspected. The sagging was determined to be due to a loss of strength in the decking because of condensation from the air conditioning system. Air returns were not properly sealed and drawing moisture into the structure. There was mold on the decking and floor joints.
When Mitchell was contacted by the Franklins, he told them his one-year warranty had expired but had the HVAC subcontractor, Southern Mechanical Heating & Air (owned by Mitchell’s father, Jim Mitchell), look at the situation. SMHA replaced and braced subfloors. Later, they entered the crawl space to tape ducts, seal the air return, and insulate the air vent housing. The Franklins were not satisfied with the repairs, as not all the ducts were taped, nor were the air vent housings insulated.
Franklin complained to Walter Mitchell who again cited his one-year warranty. Jim Mitchell said he would not report complaints to his insurer, stating that the repairs were unnecessary, that the work had been done correctly in the first place, and it was only done at the request of Walter Mitchell.
In February 2009, the Franklins sued Walker Mitchell. Mitchell denied the claims, citing in part the statute of limitations. Mitchell also filed complaints against three subcontractors, including his father’s firm. Mitchell received a summary judgment as the case started after Alabama’s six-year statute of limitations.
The appeals court rejected the Franklin’s argument that the claim of damage did not start until they were aware it was due to a construction defect. The court noted that as Walter Mitchell was licensed as a “residential home builder, the statute the Franklins cite did not apply, as it concerns architects, engineers, and licensed general contactors.”
Nor did they feel that Mitchells’ claim that his warranty had expired were sufficient to override the statute of limitations, quoting an earlier case, “Vague assurances do not amount to an affirmative inducement to delay filing suit.” Their claim of subsequent negligent repairs was rejected because Mitchell did not direct the specific actions taken by his father’s firm.
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