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DIRECTORY AND CAPABILITIES

California Superior Court Overrules Insurer's Demurrer on COVID-19 Claim

February 15, 2021 — Tred R. Eyerly - Insurance Law Hawaii
A Superior Court in California overruled the insurer's demurrer to the policy holder's complaint seeking business interruption coverage after government shutdown orders were issued because of the coronavirus pandemic. Goodwill Industries of Orange County, California v. Philadelphia Indemnity Ins. Co., Cal. Superior Ct., Civil No. 30-2020-01169032-CU-IC-CXC (Minute Order Jan. 28,, 2021). The minute order is here [Goodwill Decision]. The insurer demurred on the ground that the insured had not alleged sufficient facts to show "direct physical loss" under the business income, extra expenses and civil authority provisions in the policy because coronavirus and COVID-19 did not physically alter the structure. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Colorado Supreme Court Decision Could Tarnish Appraisal Process for Policyholders

September 16, 2019 — Michael V. Pepe - Saxe Doernberger & Vita, P.C.
On June 24, 2019, the Colorado Supreme Court ruled that the plain language of appraisal provisions in insurance policies, requiring “impartial appraisers,” direct appraisers to be “unbiased, disinterested, and unswayed by personal interest,” regardless of who hires them, and prohibits the party-appointed appraisers from acting as advocates. A common and attractive alternative dispute resolution option, the appraisal process usually entails the policyholder and insurer each hiring their own appraiser, who estimates how much the claim is worth. These appraisers also select a third-party umpire, and if they cannot agree upon one, a court appoints one. The umpire analyzes the conflicting estimates and presents a number to resolve the dispute. If two of the three parties agree with the outcome, the number becomes binding. Owners Ins. Co. v. Dakota Station II Condo. Ass'n, Inc.1 began when Dakota Station II Condominium Association Inc. (“Dakota”) and its insurer, Owners Insurance Company (“Owners”) could not agree on how to value two claims arising out of weather damage. To settle the differences and come to a resolution, Dakota invoked the appraisal provision in the insurance policy instructing each party to select its own “competent and impartial appraiser.” Ultimately, a court-appointed umpire considered six cost categories in dispute and adopted four of Owners’ estimates and two of Dakota’s. Read the court decision
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Reprinted courtesy of Michael V. Pepe, Saxe Doernberger & Vita, P.C.
Mr. Pepe may be contacted at mvp@sdvlaw.com

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The Unthinkable Has Happened. How Should Contractors Respond?

May 11, 2020 — Bruce Orr - AEC Business
Any construction veteran expects the economy to contract and expand. However, the global pandemic presents contractors with a challenge unlike any in recent memory. How should they respond in an environment of such uncertainty? For some perspective, I chatted with Dr. John Killingsworth, a construction management professor at Colorado State University who has conducted extensive research on how contractors can weather economic downturns. BRUCE ORR: John, let’s say you’re in IT or are a c-suite executive at a contracting firm. This event has occurred. What are some of the questions you should be asking right now? JOHN KILLINGSWORTH: For starters, we have to acknowledge that the uncertainties are so tremendous that many contractors have no choice but to be reactive in the short term. They’re literally not sure whether particular job sites will be open or closed tomorrow or whether they’ll go to work next week. They’re also looking at predictions—from highly qualified statisticians, public health officials and others—that are just all over the map due to the limited nature of the data we have at hand. Read the court decision
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Reprinted courtesy of Bruce Orr, AEC Business
Mr. Orr may be contacted at bruce@pronovos.com

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Bidder Be Thoughtful: The Impacts of Disclaimers in Pre-Bid Reports

August 04, 2021 — Joshua A. Morehouse - ConsensusDocs
When bidding a project, subsurface or latent site conditions that are not immediately apparent can massively impact the costs of performance to general contractors. Were contractors required to bid on projects without any information on pre-existing conditions, they would need either to be assured that any additional costs would be reimbursed by the owner, or to include significant contingencies for subsurface conditions in their bids. For owners, these options result in either increased risk or increased cost—neither of which is particularly palatable. Owners therefore implement several contractual tools to minimize these risks and costs. One of these tools is providing bidders with a report on latent conditions, often called a “geotechnical data report” or “GDR”, but otherwise shifting as much of the subsurface-related risk as possible to the contractor. In theory, these reports permit contractors to appropriately adjust their contingencies for latent conditions, thus saving owners money. However, several independent and thorny issues arise where site reports provided by the owner are either inconsistent with or silent on the actual conditions of a project site. Hence owners often include disclaimers with these reports, such as noting that the report is for “informational purposes only” or that the report is “not part of the contract documents." Read the court decision
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Reprinted courtesy of Joshua A. Morehouse, Peckar & Abramson, P.C.
Mr. Morehouse may be contacted at jmorehouse@pecklaw.com

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Negligent Failure to Respond to Settlement Offer Is Not Bad Faith

May 03, 2017 — Tred R. Eyerly - Insurance Law Hawaii
The Ninth Circuit found that the insurer's negligent failure to respond to a settlement offer did not constitute bad faith. McDaniel v. Gov't Employees Ins. Co., 2017 U.S. App. LEXIS 4029 (9th Cir. March 7, 2017). McDaniel was the assignee of claims against GEICO assigned by the insured after settling a wrongful death suit. McDaniel alleged that GEICO unreasonably refused to accept a $100,000 policy limits offer. The case went to trial and a jury awarded McDaniel over $3 million against the insured. On August 7, 2009, McDaniel's attorney Steven Nichols extended a $100,000 policy limits settlement offer with a fifteen day acceptance deadline to GEICO's attorney Michael Griott. The parties subsequently agreed to extend the acceptance deadline to ten days following MacDaniel's service of responses to outstanding interrogatories, which Nichols hand-delivered to Griott on August 27, 2009. On September 1, 2009, Griott emailed GEICO claims adjuster Aldin Buenaventura with a letter attachment indicating that Nichols had submitted the requested interrogatories and, in bold and underlined text, that "[o]ur response to Plaintiff's policy limits demand is due on or before September 11, 2009. Read the court decision
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Reprinted courtesy of Tred R. Eyerly - Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Not Our Territory: 11th Circuit Dismisses Hurricane Damage Appraisal Order for Lack of Jurisdiction

July 24, 2023 — Veronica P. Adams & Koorosh Talieh - Hunton Insurance Recovery Blog
The hurdles policyholders have faced with the appraisal process in Florida are far from over. In the past, many Florida courts have limited the scope for appraisal, strictly construing the policy provision against the policyholder. Yet, recently, in Positano Place at Naples I Condominium Association, Inc., et al. v. Empire Indemnity Insurance Company, the Eleventh Circuit dismissed an insurer’s appeal of the district court’s ruling compelling appraisal and a stay of a pending litigation. In Positano Place at Naples I Condominium Association, Inc., et al. v. Empire Indemnity Insurance Company, the policyholder Positano filed a claim for property insurance benefits under the policy as a result of damage to the property from Hurricane Irma in 2017. After investigating the claim, Empire found that there was damage to only three of the five properties covered under the policy and disputed the amount of loss. Reprinted courtesy of Veronica P. Adams, Hunton Andrews Kurth and Koorosh Talieh, Hunton Andrews Kurth Ms. Adams may be contacted at vadams@HuntonAK.com Mr. Talieh may be contacted at ktalieh@HuntonAK.com Read the court decision
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Real Estate & Construction News Round-Up (05/11/22)

May 30, 2022 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
The supply of homes for sale is on the uptick, the White House releases a plan to improve the permitting process for infrastructure projects, cryptocurrency opens the door to a new class of property owners, and more.

• Though the number of active listings is still down 67% from pre-pandemic levels, the supply of homes for sale is finally showing signs of improvement. (Diana Olick, CNBC)
• Large corporations and institutional investors are flocking to buy digital real estate, with parcels being bought faster than they can be created. (Dan Patterson, CBS News)
• London-based company, Admix, has been purchasing real estate in various Metaverse platforms and leasing them to companies interested in becoming involved in the online virtual space. (Nate Berg, Fast Company)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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New York Appellate Division Reverses Denial of Landlord’s Additional Insured Tender

December 07, 2020 — Eric D. Suben - Traub Lieberman
In Wesco Insurance Co. v. Travelers Property & Cas. Co. of America, 2020 WL 6572489 (1st Dep’t Nov. 10, 2020), the New York Appellate Division found that a commercial landlord was owed additional insured coverage in connection with an incident in which a plaintiff slipped and fell on the sidewalk while exiting the leased premises. The tenant, Capital One, was the named insured in a CGL policy issued by Travelers. The policy added the landlord as an additional insured, but “only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to [Capital One] and shown in the Schedule.” The lease defined the demised premises to include the building and “all appurtenances.” Travelers denied the landlord’s tender on the basis that the sidewalk did not constitute “that part of the premises leased to” Capital One. In the ensuing declaratory judgment action brought by Wesco (the landlord’s insurer), the court granted Travelers’ motion for summary judgment on this ground. Read the court decision
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Reprinted courtesy of Eric D. Suben, Traub Lieberman
Mr. Suben may be contacted at esuben@tlsslaw.com

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