Consequential Damages From Subcontractor's Faulty Work Constitutes "Property Damage" and An "Occurrence"
September 03, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe New Jersey appellate court found that the unintended and unexpected consequential damages caused by the subcontractor's defective work constituted "property damage" and an "occurrence." Cypress Point Condo. Ass'n v. Adria Towers, L.L.C., 2015 WL 4111890 (N.J. Super. Ct. App. Div. July 9, 2015).
The insured developer hired subcontractors to perform all of the construction work at a condominium project. The subcontractors failed to properly install the roof, flashing, gutters and leaders, brick and EIFS facade, windows, doors and sealants. The AOAO sued the developer, who served as the general contractor, its insurers, and various subcontractors.The AOAO conceded that replacement costs did not constitute "property damage" and an "occurrence" under the policy.
The faulty workmanship, however, also caused consequential damages to the common areas and unit owners' property, including damage to steel supports, exterior sheathing and interior sheathing and sheetrock, insulation and other interior areas of the building. Nevertheless, the trial judge determined there was no property damage or "occurrence", and granted summary judgment to the insurers.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Traub Lieberman Partner Colleen Hastie and Associate Jeffrey George Successfully Oppose Plaintiff’s Motion to Vacate Dismissal
September 11, 2023 —
Colleen E. Hastie & Jeffrey George - Traub LiebermanTraub Lieberman Partner Colleen Hastie and Associate Jeffrey George successfully opposed Plaintiff’s motion to vacate a prior dismissal of plaintiff’s medical malpractice action brought before the Supreme Court of the State of New York, Bronx County.
The lawsuit, commenced by Plaintiff in 2015, alleged medical malpractice stemming from treatment Plaintiff received at a New York medical facility after falling out of a window at a rental property owned by Traub Lieberman’s client (“Property Owner”). Property Owner moved to dismiss Plaintiff’s complaint or preclude Plaintiff from offering evidence in support of its claims, or in the alternative, compel plaintiff to produce all outstanding discovery. The Medical Facility cross-moved for the same relief. Defendants agreed to adjourn the motion until after plaintiff’s deposition, but plaintiff made no effort to secure an adjournment with the court and plaintiff filed no opposition to the motion, allowing the motion to be granted on default. Plaintiff waited nearly a year to file a motion to vacate the default judgment, despite receiving notification of the default from defense counsel. Property Owner, in opposing plaintiff’s motion, pointed to plaintiff’s long history of dilatory conduct and failure to comply with discovery orders in support of its position that plaintiff failed to show any good cause for its default on the motion to dismiss.
Reprinted courtesy of
Colleen E. Hastie, Traub Lieberman and
Jeffrey George, Traub Lieberman
Ms. Hastie may be contacted at chastie@tlsslaw.com
Mr. George may be contacted at jgeorge@tlsslaw.com
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Public Works Bid Protests – Who Is Responsible? Who Is Responsive?
December 14, 2020 —
Eric Divine - Porter Law GroupMost Public Works Solicitations Are Low Bid
The process for awarding public works projects in California is controlled by the Public Contract Code. Generally, regardless of whether the public agency is the State, a county, a city or a local district, the project is awarded to the contractor who is “responsible” and submits the least expensive “responsive” bid. This is generally known as a “low bid” contract. In the context of public works, the terms responsible and responsive have very important meanings. As a result, State and local governments have gotten into very expensive trouble for not following the law. So, to understand how to best present a bid protest on a low bid solicitation, you, as a contractor should have a good understanding of the meaning of these terms.
Note: There are other methods of contracting for public works that are not low bid, which are typically called “best value” contracts because the procurement process considers factors other than just price. These methods are typically used for large projects because the added complexity and expense of the procurement process only makes sense when the project is itself complex and expensive.
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Eric Divine, Porter Law GroupMr. Divine may be contacted at
edivine@porterlaw.com
Holding the Bag for Pre-Tender Defense Costs
February 02, 2017 —
John J. Kozak, Esq. - Florida Construction Law NewsFor a variety of reasons, additional insureds (and even named insureds) under commercial general liability policies will sometimes wait months, and even years, to tender the defense of a claim or lawsuit, incurring significant legal fees in the interim. When the claim finally is tendered, a dispute often arises over who should pay the pre-tender defense costs. Surprisingly, there is very little Florida legal authority specifically dealing with this issue. However, the recent federal 11th Circuit Court of Appeals case of EmbroidMe.com, Inc. v. Travelers Property Casualty Co. of America, No. 14-10616, 2017 U.S. App. LEXIS 368 (11th Cir. Jan. 9, 2017), applying Florida law, addresses the issue head-on and provides CGL carriers with a large hammer in refusing to pay pre-tender fees.
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John J. Kozak, Esq., Cole, Scott & Kissane, P.A.Mr. Kozak may be contacted at
john.kozak@csklegal.com
Texas EIFS Case May Have Future Implications for Construction Defects
October 02, 2013 —
CDJ STAFFLennar Homes addressed a problem with EIFS in homes built in Texas in the 1990s by replacing every roof they had built. Some of those homes had problems with leaks, rotting, or termites, but other roofs hadn’t suffered any problems. Lennar’s insurers initially refused coverage. Lennar managed to settle with all but one, Markel American Insurance.
Their dispute formed the case Lennar Corp. v. Markel American Insurance Co. This was first tried before a jury and eventually appealed to the Texas Supreme Court. Brian S. Martin of Thompson Coe Cousins & Irons LLP discusses this case at Insurance Journal.
Markel’s claim was that under the policy language, Lennar could not make voluntary payments without getting Markel’s consent, which they did not. But the Texas Supreme Court disagreed, determining that Lennar took, as Mr. Martin notes, “a reasonable approach to a serious problem.”
Markel also made the claim that the whole amount of the damages was not covered by the policy, as they did not view the policy as covering the cost of determining the extent of the damage. The Court disagreed, noting that “under no reasonable construction of the phrase can the cost of finding EIFS property damage in order to repair it not to be considered ‘because of the damage.’”
Mr. Martin concludes by calling the Texas Supreme Court decision “a frontal assault on several critical provisions of liability policies that will assuredly lead to further litigation.” He also notes that the decision “may indicate a shift in the Court’s approach in insurance cases to a more result-oriented jurisprudence.”
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Ninth Circuit Upholds Corps’ Issuance of CWA Section 404 Permit for Newhall Ranch Project Near Santa Clarita, CA
April 11, 2018 —
Anthony B. Cavender - Gravel2Gavel Construction & Real Estate Law Blog On April 9, the U.S. Court of Appeals for the Ninth Circuit, in a unanimous opinion, rejected the challenges to the U.S. Army Corps of Engineers’ (Corps) decision to issue a Clean Water Act (CWA) Section 404 permit to the Newhall Land and Farming Company (Newhall), which is planning a large residential and commercial project in Los Angeles County near Santa Clarita, CA (the Newhall Ranch project). The Newhall Ranch project, which involves the discharge of dredge and fill materials into the Santa Clara River, has been scaled back and modified, and the Ninth Circuit held that it is consistent with the CWA, the Corps’ regulations and procedures, as well as the National Environmental Policy Act (NEPA) and Endangered Species Act (ESA). The Ninth Circuit provides an excellent primer on the Section 404 permitting process. The case is
Friends of the Santa Clara River v. U.S. Army Corps of Engineers. Read the court decisionRead the full story...Reprinted courtesy of
Anthony B. Cavender, Pillsbury Winthrop Shaw Pittman LLPMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Effective October 1, 2019, Florida General Contractors Have a Statutory Right to Recovery of Attorney Fees Against a Defaulted Subcontractor’s Surety
July 01, 2019 —
Warren E. Friedman - Peckar & Abramson, P.C.Florida contractors will soon have a level playing field, at least related to the right to recovery of attorney fees in certain circumstances. Effective October 1, 2019, the Florida statute by which legal fees may be recovered from insurers and sureties was amended to expressly afford that right to contractors.
Florida’s Insurance statute, Chapter 627, affords a right to recovery of attorney fees when a judgment is obtained against an insurer and in favor of any insured pursuant to a policy or contract executed by the insurer. See Fla. Stat. § 627.428. In the construction context, the Florida Legislature has also applied this right to the recovery of attorney fees from sureties, for example in circumstances where suit is brought against a surety under a payment or performance bond. See Fla. Stat. § 627.756.
But there was an oddity to this statute – it specifically provided this right for “owners” and “subcontractors”, but “contractors” were skipped over. For as long as Section 627.756, Florida Statutes has been on the books, the right to recovery of attorney fees against a surety under a payment or performance bond was only afforded to owners, subcontractors, laborers, and materialmen. Specifically, since at least 1977, Section 627.756, Florida Statutes substantially provided as follows (emphasis added):
Section 627.428 applies to suits brought by
owners, subcontractors, laborers, and materialmen against a surety insurer under payment or performance bonds written by the insurer under the laws of this state to indemnify against pecuniary loss by breach of a building or construction contract. Owners, subcontractors, laborers, and materialmen shall be deemed to be insureds or beneficiaries for the purposes of this section.
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Warren E. Friedman - Peckar & Abramson, P.C.Mr. Friedman may be contacted at
wfriedman@pecklaw.com
How Contractors Can Prevent Fraud in Their Workforce
August 13, 2019 —
Sarah Hofmann - Construction ExecutiveThe word fraud might conjure up images of Wall Street executives led out to police cars in cuffs, or sleazy conmen with slicked-back hair. While these ideas might be popular in movies and TV, and often in the news, many small and large businesses fall victim to fraud. Whether it’s a trusted site manager who needed a little extra cash to cover an unexpected bill or the accountant who’s been on board for years and has been slowly siphoning an extra paycheck through a ghost employee each month, fraud might be hitting businesses without them even knowing it.
The construction industry is hardly immune to such schemes. According to the ACFE’s 2018 Report to the Nations on Occupational Fraud and Abuse, organizations lose an estimated 5% of their revenue each year to fraud. The median amount lost per instance of fraud was $130,000 across all industries, but fraud cases in the construction industry cost almost twice that much at $227,000 per fraud. They also last longer on average: fraud schemes in the construction industry continue for 24 months before being detected versus the overall median average of 16 months. The more time a scheme continues, the more money is lost for organizations.
What types of fraud schemes are most common in the construction industry?
The construction industry is more susceptible to certain types of fraud than other industries due to the nature of the work. The companies may be smaller in size leading to fewer resources to combat fraud and more trust among employees. Also, construction companies inherently deal with many vendors, subcontractors, bidding organizations and other various third parties, which can all pose fraud risks.
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Sarah Hofmann, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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