FAIRFIELD CONNECTICUT BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Insurer Has Duty to Defend Despite Construction Defects

January 06, 2012 — CDJ STAFF

In a case the judge attributed to “shoddy masonry work,” the US District Court of Illinois has rendered a decision in AMCO Insurance Company v. Northern Heritage Builders. Northern Heritage built a home in Chicago for Michael McGrath (who joined Northern Heritage as a defendant). According to the decision, “seven months after he moved into the house, McGrath noticed water coming in the house and warped millwork.” This was attributed to porous block, installed by the mason with Northern Heritage’s knowledge.

McGrath sued National Heritage for both the damage to his house and its contents. The court rejected his claim for the contents. For the damages to his house, he was awarded $601,570.50 in damages. He also sued his homeowner’s insurance carrier for damages not covered in his suit against National Heritage. There he was awarded $1,130,680.16.

AMCO informed National Heritage that it had neither duty to defend nor duty to indemnify. The judge considered whether AMCO had a duty to defend. Under Illinois law, “damage to a construction project resulting from construction defects is not an ‘accident’ or ‘occurrence’ because it represents the natural and ordinary consequence of faulty construction.” However, it is noted that while if the defects lead only to damage to the project itself, there is no occurrence, “if the building owner asserts damages to other property besides the construction itself, there is an ‘occurrence’ and ‘property damage.’” The judge further noted that were construction defects an occurrence, “shoddy work” would be rewarded by double pay, once by the homeowner and a second time by the insurer. Judge Kendall concluded that as McGrath had alleged damage to the contents of his house, AMCO had a duty to defend National Heritage.

She then looked at the issue of whether AMCO had a duty to indemnify. Should they pay the $601,570.50? Judge Kendall noted that “the duty to indemnify is narrower than the duty to defend.” The key point here was that once McGrath’s insurance carrier covered him for the damage to the contents of his house, “AMCO’s duty to defend ended.” Once McGrath “only sought damages for the natural consequences of faulty workmanship” there was no occurrence, hence nothing for AMCO to cover.

Judge Kendall granted a summary dismissal of AMCO’s claim that they had no duty to defend while upholding their claim that they had no duty to indemnify.

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Extreme Flooding Overwhelms New York Roadways, Killing 1 Person

July 24, 2023 — Associated Press - Bloomberg
NEW YORK (AP) — Heavy rain spawned extreme flooding in New York’s Hudson Valley that killed at least one person, swamped roadways and forced road closures on Sunday night, as much of the rest of the Northeast U.S. braced Monday for potentially punishing rains. As the storm moved east, the National Weather Service extended flash flood warnings into Connecticut, including the cities of Stamford and Greenwich, before creeping into Massachusetts. Forecasters said some areas could get as much as 5 inches (12 centimeters) of rain. In New York's Hudson Valley, rescue teams found the body of a woman in her 30s who drowned after being swept away while trying to evacuate her home, Orange County Executive Steven Neuhaus told WABC-TV. Officials were waiting for the medical examiner's office to arrive, he said. Read the court decision
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Reprinted courtesy of Bloomberg

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Loss Caused by Subcontractor's Faulty Work Covered in Georgia

January 17, 2013 — Tred Eyerly, Insurance Law Hawaii

The Georgia Court of Appeals found a subcontractor was covered under a CGL policy for loss caused by alleged faulty workmanship. Maxum Indem. Co. v. Jimenez, 2012 Ga. App. LEXIS 970 (Ga. Ct. App. Nov. 20, 2012).

 

Jimenez was hired as a subcontractor to install pipes for a dormitory construction project at Georgia Southern University. Subsequent to the construction, a pipe burst occurred at the dormitory, causing damage to several units. After a jury trial, Jimenez was found liable for $191,382 in damages that arose from his negligent pipe work. 

 

Jimenez was insured under a CGL policy issued by Maxum. Maxum filed a suit for a declaratory judgment, seeking a declaration that the claim against Jimenez was not covered.

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Reprinted courtesy of Tred Eyerly
Tred Eyerly can be contacted at te@hawaiilawyer.com

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United States Supreme Court Limits Class Arbitration

May 13, 2019 — Jeffrey K. Brown & Raymond J. Nhan - Payne & Fears
On April 24, 2019, the United States Supreme Court held that the Federal Arbitration Act ("FAA") bars orders requiring class arbitration when an agreement is ambiguous about the availability of such a procedure. Lamps Plus v. Varela, 587 U.S. __ , 2019 WL 1780275, (2019). In Lamps Plus, the Court clarified a 2010 case in which it held that a court may not compel arbitration on a class-wide basis when an agreement is silent on the availability of class arbitration. Stolt-Nielsen S.A. v. Animal Feeds Int'l Corp., 559 U.S. 662, 687 (2012). In Lamps Plus, a 5-4 decision authored by Chief Justice Roberts, the Court explained that because the FAA envisions the use of traditional individualized arbitration, a party cannot be forced under the FAA to submit to class arbitration unless the parties explicitly agreed to do so. Because class arbitration does not share the benefits of traditional arbitration -- lower costs, greater efficiency and speed, and the parties' choice of a neutral -- the FAA requires more than an "ambiguous" agreement to show that the parties bound themselves to arbitrate on a class-wide basis. Unlike individualized arbitration, or even traditional class actions, class arbitration raises serious due process concerns because absent class members will have limited judicial review. Based on these critical differences between individual and class arbitration, the Court reiterated in Lamps Plus that "courts may not infer consent to participate in class arbitration absent an affirmative contractual basis for concluding that the party agreed to do so." Reprinted courtesy of Jeffrey K. Brown, Payne & Fears and Raymond J. Nhan, Payne & Fears Mr. Brown may be contacted at jkb@paynefears.com Mr. Nhan may be contacted at rjn@paynefears.com Read the court decision
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With Trump's Tariff Talk, Time to Negotiate for Escalation Clauses in Construction Contracts

December 17, 2024 — Richard Korman - Engineering News-Record
Remember 2019? That’s when contractors faced sudden material price surges from tariffs during then-President Donald Trump’s first term in office. How about 2021? That's when contractors saw new price surges and long delivery delays because of Covid-19. Read the court decision
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Reprinted courtesy of Richard Korman, ENR
Mr. Korman may be contacted at kormanr@enr.com

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The Importance of Retrofitting Existing Construction to Meet Sustainability Standards

December 18, 2022 — Chris Gray - Construction Executive
Just about every industry is looking for ways in which they can go “green,” with varying degrees of success. Historically, the real estate industry has underinvested in the infrastructure, even with government incentives and initiatives, buildings and construction continue to pollute our atmosphere and release excess amounts of carbon into the air. As it stands, existing buildings are, and will continue to be, a main problem. Right now, the real estate sector is responsible for a whopping 40% of global carbon emissions, along with 70% of the world’s electricity, and while we must continue to prioritize new, sustainable buildings, that does not address the countless buildings that are already standing and producing mass amounts of carbon emissions detrimental to our earth’s environment. It is predicted that 70% of the existing buildings across the world will still be standing by the year 2050, meaning these outdated, inefficient warehouses and office parks aren’t going anywhere. To address the real estate carbon footprint, the industry needs to use modern technological solutions to combat this massive issue and implement new technology that transforms dated buildings into high-value decarbonized assets. Reprinted courtesy of Chris Gray, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Previously Owned U.S. Home Sales Rise to Eight-Month High

July 23, 2014 — Victoria Stilwell – Bloomberg
Sales (ETSLTOTL) of previously owned U.S. homes climbed in June to an eight-month high as more listings helped prices cool, luring buyers into the market. Sales increased 2.6 percent to a 5.04 million annual rate last month, led by gains in all four U.S. regions, figures from the National Association of Realtors showed today in Washington. The median forecast of 78 economists surveyed by Bloomberg projected sales would rise to a 4.99 million rate. Prices advanced at the slowest pace since March 2012 and inventories rose to an almost two-year high. Historically low interest rates and smaller price increases are helping bring homeownership within reach for more Americans. A pickup in employment opportunities that lead to faster wage growth would provide an added spark for a residential real-estate market that began to soften in the middle of 2013. Read the court decision
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Reprinted courtesy of Victoria Stilwell, Bloomberg
Ms. Stilwell may be contacted at vstilwell1@bloomberg.net

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Got Licensing Questions? CSLB Licensing Workshop November 17th and December 15th

November 15, 2017 — Garret Murai - California Construction Law Blog
A rare opportunity to hear it straight from the folks who process the applications . . . CSLB Licensing Workshop Offers Helpful Information for Applicants The Contractors State License Board (CSLB) is hosting free workshops for those looking to become a licensed contractor. Current licensees are encouraged to pass this information along to their workers and to those who might be interested in learning more about the application process. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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