Applying Mighty Midgets, NY Court Awards Legal Expenses to Insureds Which Defeated Insurer’s Coverage Claims
February 10, 2020 —
Anthony L. Miscioscia & Timothy A. Carroll - White and Williams LLPIs an insured (or putative insured) entitled to recover its legal expenses if it is successful in coverage litigation? In some states, no. In many other states, yes – based on either a statute or the common law. In New York, an insured may recover such expenses if it was “cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations,” and, while forced into that posture, the insured defeats the insurer’s claim. Mighty Midgets, Inc. v. Centennial Ins. Co., 389 N.E.2d 1080, 1085 (N.Y. 1979). As a corollary to that rule, the insured is not entitled to its expenses “in an affirmative action brought by [the insured] to settle its rights. . . .” Id. at 1085. Earlier this week, the New York federal court in United Specialty Ins. Co. v. Lux Maint. & Ren. Corp., 2019 U.S. Dist. LEXIS 201805 (S.D.N.Y. Nov. 20, 2019) became the latest to apply the Mighty Midgets rule, awarding several insureds their legal expenses after defeating the insurer’s declaratory judgment action.
In Lux, the CGL insurer of a façade-renovation contractor sued the contractor (its named insured) and several owners of a hospital (putative additional insureds) at which the façade-renovation work took place, claiming that the insurer did not owe a defense or indemnity to any of those companies in connection with an underlying bodily injury action brought by an employee of the contractor who was injured while performing the work. The insurer and the putative additional insureds filed cross-motions for summary judgment on the coverage issues, with the putative additional insureds also seeking to recover their legal expenses for defending against the insurer’s action. The U.S. District Court for the Southern District of New York concluded that, based on the contractor’s agreement to provide coverage for the hospital owners, and a comparison between the underlying allegations and the policy, the insurer owed the hospital owners coverage as additional insureds to the contractor’s policy; the court also concluded that the insurer owed coverage for the contractor’s contractual defense and indemnity obligations to the hospital owners. After concluding that the insurer’s claim that it did not owe coverage lacked merit, the court turned to the additional insureds’ request for their legal expenses.
The court examined the “well settled” rule under New York law “that an insured cannot recover his legal expenditure in a dispute with an insurer over coverage, even if the insurer loses and is obligated to provide coverage,” but also New York’s “limited exception” to that rule, “under which an insured who is ‘cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations, and who prevails on the merits, may recover attorneys’ fees incurred in defending against the insurer’s action.’ ” Lux, 2019 U.S. Dist. LEXIS 201805, at *18 (quoting Mighty Midgets, 389 N.E.2d at 1085).
Reprinted courtesy of
Anthony L. Miscioscia, White and Williams and
Timothy A. Carroll, White and Williams
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Mr. Carroll may be contacted at carrollt@whiteandwilliams.com
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Florida’s Supreme Court Resolves Conflicting Appellate Court Decisions on Concurrent Causation
December 21, 2016 —
Afua S. Akoto – Saxe Doernberger & Vita, P.C.The Supreme Court of Florida kicked off December with an opinion that determined which theory of recovery applies when multiple perils combine to create a loss, and at least one of those perils is excluded by the terms of a policy. In Sebo v. American Home Assurance Company, Inc.,1 the court resolved the conflict between the Florida Appellate Courts for the Second District and the Third District and declared the concurrent cause doctrine (CCD) as the more applicable theory of recovery over the efficient proximate cause doctrine (EPC).
The underlying dispute concerned damage to a home Sebo purchased in Naples, Florida in April 2005. The American Home Assurance Company (AHAC) insured the home under a manuscript policy specifically created for the property with limits of over eight million dollars. In May 2005, Sebo discovered major water leaks in the main foyer, master bathroom, exercise room, piano room, and living room of the home. In August, paint fell off the walls after it rained, and it became clear that the house suffered from major design and construction defects. When Hurricane Wilma struck in October, the house was further damaged by rain water and high winds, and was eventually demolished.
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Afua S. Akoto, Saxe Doernberger & Vita, P.C.Ms. Akoto may be contacted at
asa@sdvlaw.com
Don’t Kick the Claim Until the End of the Project: Timely Give Notice and Preserve Your Claims on Construction Projects
December 10, 2015 —
Christopher G. Hill – Construction Law MusingsFor this week’s Guest Post Friday, we welcome
Tara L. Chadbourn. Tara is an attorney with
ReavesColey PLLC in Chesapeake, VA, where she concentrates her practice on construction law, litigation and commercial litigation. Tara counsels owners, contractors, subcontractors and materials suppliers in various government and commercial construction matters. Tara can be reached at tara.chadbourn@reavescoley.com.
You may have experienced and have certainly heard of the scenario in which a contractor waits to address a claim as part of project closeout, only to realize the applicable deadline has already passed. While there may have been discussions about claims during the course of the project, contractors cannot rely upon oral conversations about outstanding claims. Instead, contractors must be vigilant in satisfying notice requirements and preserving claims. While entitlement must still be proven, a contractor’s chances of recovery increase greatly if the contractor abides by notice requirements and consciously preserves claims in the following ways.
Contractors Must Acquaint Themselves with Contractual Notice Provisions:
Many prime and subcontract agreements contain stringent notice provisions that require the contractor to give notice within a certain time period or else the claim is expressly waived. The deadline for notice is often only a few days after the occurrence giving rise to the claim or the contractor becoming aware of the claim. To avoid waiver, contractors must carefully review their contracts for provisions requiring notice of a claims for adjustment for a variety of situations to include unforeseen site conditions, trade sequencing changes, project delay or scope of work changes.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Graham & Who May Trigger The Need To Protest
December 23, 2023 —
Hugo Fraga - Ahlers Cressman & Sleight PLLCOn May 30, 2023, the Washington Court of Appeals, Division I, issued a decision that appears to expand a contractor’s obligation with respect to WSDOT notice and claim procedures. In
Graham Contracting, Ltd. v. City of Federal Way, No. 83494-1-I, 2023 WL 3721171 (Wash. Ct. App. May 30, 2023) (Unpublished), the Court held that under the 2016 WSDOT Standard Specifications for Road, Bridge, and Municipal Construction (“Standard Specifications”), a Contractor must protest the actions of not only the “Engineer” but also the actions of any person or organization acting on behalf of the Owner.
This case arises out of a public construction contract in which Graham Contracting Ltd (“Graham”) built a multi-million dollar roadway improvement for the City of Federal Way along a stretch of Pacific Highway. The appeal was from the trial court’s granting of the City’s motion for summary judgment to dismiss claims by Graham for extra time and money due to delays and impacts to Graham’s construction of the Project.
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Hugo Fraga, Ahlers Cressman & Sleight PLLCMr. Fraga may be contacted at
hugo.fraga@acslawyers.com
The 2019 ISO Forms: Additions, Revisions, and Pitfalls
February 24, 2020 —
Richard W. Brown, Michael V. Pepe & Janie Reilly Eddy - Saxe Doernberger & Vita, P.C.The Insurance Services Office, Inc. (ISO) issued several new and revised endorsements for use with Commercial General Liability (CGL) coverage forms, which became effective December 1, 2019, in most jurisdictions. The new ISO endorsements include several notable changes that Policyholders should be aware of, including revisions to existing Additional Insured (AI), Primary and Noncontributory, and Waiver of Subrogation endorsements, as well as a number of new AI and other endorsement forms. A summary of the more significant elements of new ISO endorsements is provided below.
NEW ISO FORMS
- New AI Endorsements - Automatic Status for Completed Operations
For Contractors, Owners and other construction industry stakeholders, there are two new AI endorsements of note, CG 20 39 12 19 – Additional Insured – Owners, Lessee or Contractors – Automatic Status when Required in Written Construction Agreement with You (Completed Operations) and CG 20 40 12 19 – Additional Insured – Owners Lessees or Contractors – Automatic Status for Other Parties when Required in Written Construction Agreement (Completed Operations). AI coverage for Completed Operations is generally provided under form CG 20 37, which requires each additional insured to be listed in the endorsement schedule. The new ISO endorsements automatically extend AI status for Completed Operations without having to specifically identify each additional insured, thereby mirroring current AI endorsements that confer automatic AI status for Ongoing Operations (e.g. CG 20 33 and CG 20 38). Thus, the CG 20 39 and CG 20 40, correspond with CG 20 33 (ongoing operations), and CG 20 38 (ongoing operations), respectively, to extend AI coverage for Completed Operations.
Reprinted courtesy of Saxe Doernberger & Vita, P.C. attorneys
Richard Brown,
Michael V. Pepe and
Janie Reilly Eddy
Mr. Brown may be contacted at rwb@sdvlaw.com
Mr. Pepe may be contacted at mvp@sdvlaw.com
Ms. Eddy may be contacted at jre@sdvlaw.com
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If You Don’t Like the PPP Now, Wait a Few Minutes…Major Changes to PPP Loan Program as Congress Passes Payroll Protection Program Flexibility Act
July 27, 2020 —
Ryan J. Udell & Adam J. Chelminiak - White and Williams LLPOn June 5, 2020, President Trump signed into law the Payroll Protection Program Flexibility Act of 2020 (the Flexibility Act). The Flexibility Act provides much-needed flexibility for the Paycheck Protection Program (PPP) and its millions of business participants.
The PPP offers loans to small businesses that have been adversely impacted by the COVID-19 pandemic and the measures taken by various governmental authorities to stem the spread of the virus so that they could keep their employees on the payroll during an eight-week period after receiving the funds. The PPP was particularly alluring to borrowers because the loans could be forgiven. But as the duration of lockdown orders and the accompanying economic aftershocks have extended longer than initially anticipated, particularly in those sectors that depend on in-person business such as restaurants, hospitality and other “main street” retail establishments, many recipients of PPP loans have found it challenging to use the PPP funds for payroll and other authorized purposes within the eight-week period after they had received the PPP funds, as is necessary to preserve eligibility for forgiveness. The Flexibility Act makes several key changes to the PPP program in order to allow borrowers who need a longer re-opening runway to do so without jeopardizing their ability to qualify for loan forgiveness.
This alert outlines the key changes to the PPP made by the Flexibility Act.
Reprinted courtesy of
Ryan J. Udell, White and Williams LLP and
Adam J. Chelminiak, White and Williams LLP
Mr. Udell may be contacted at udellr@whiteandwilliams.com
Mr. Chelminiak may be contacted at chelminiaka@whiteandwilliams.com;
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Real Estate & Construction News Roundup (1/10/24) – New Type of Nuclear Reactor, Big Money Surrounding Sports Stadiums, and Positivity from Fannie Mae’s Monthly Consumer Survey
February 05, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, the commercial real estate market poses a risk to financial stability, New York City moves towards net-zero building emissions, workers at several Los Angeles area hotels tentatively agree to a new contract, and more!
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Pillsbury's Construction & Real Estate Law Team
How is Negotiating a Construction Contract Like Buying a Car?
March 01, 2017 —
Christopher G. Hill – Construction Law MusingsI know, you’re probably looking for a punchline, and likely thinking something along the lines of “only a construction attorney would be sitting in his office and come up with such an analogy,” but I really do think it’s a good one.
When you are buying a car, you look for priorities. Is the color what you want? Is the motor a hybrid or a v-6? Does it have Android Auto? What is the fuel mileage? All of these things may be more or less important to you. If you can get your priorities for a price that is attractive, you will likely let some other less important items, e. g. trunk space or rear seat leg room, slide and purchase the car anyway. Furthermore, you may use these minor items as negotiating points to either get one of the priorities or a lower price. Of course the dealership will want to get its priorities, likely a sale and a profit, when negotiating and will have certain items that it won’t move on just as you have terms that you won’t move on.
Much like when you walk onto the car lot, and particularly as a subcontractor looking at a contract from a general contractor, or a GC looking at the contract from the owner of a project, a construction contract presented to you is the starting point. When looking at the contract, be sure to have some non-negotiable items in mind when taking a critical eye to the terms of that contract. Some of these terms may be more or less negotiable depending on your experience with the other party to the construction contract. For instance, striking a pay if paid clause may be less important with a paying party with whom you have a 10 year history without payment problems. On the other hand, if it is your first contract with the other party, a stricter list may be required. So, much like a dealer that you know will stand behind its cars, you may be more willing to take more “risk” in entering a construction contract with a trusted/known owner or GC.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
