Second Circuit Finds Potential Ambiguity in Competing “Anti-Concurrent Cause” Provisions in Hurricane Sandy Property Loss
November 28, 2018 —
CDJ STAFFThe Second Circuit recently held that competing “anti-concurrent cause” provisions in a commercial property policy present a potential ambiguity that could result in favor of coverage for losses sustained by Madelaine Chocolate after storm surge from Hurricane Sandy combined to cause substantial damage to Madelaine’s property and a resulting loss of income.
Madelaine was insured under an all-risk insurance policy issued by Chubb subsidiary Great Northern Insurance Company. By endorsement, Madelaine’s policy added “windstorm” as a covered peril and defined “windstorm” as “wind… regardless of any other cause or event that directly or indirectly contributes concurrently to, or contributed in any sequence to, the loss or damage.” The policy also included a common flood exclusion that removed coverage for loss or damage caused by or resulting from waves, tidal water, or tidal waves, or the rising, overflowing, or breaking of any natural harbors, oceans, or any other body of water, whether driven by wind or not. Like the windstorm endorsement, the flood exclusion contained concurrency language that broadened the exclusion to any loss to which flood contributed, regardless of any other cause or event that directly or indirectly contributed to the loss.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Tae Andrews, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Andrews may be contacted at tandrews@HuntonAK.com
Read the court decisionRead the full story...Reprinted courtesy of
Right to Repair Reform: Revisions and Proposals to State’s “Right to Repair Statutes”
April 01, 2015 —
Richard H. Glucksman, Jon A. Turigliatto, and David A. Napper – Chapman Glucksman Dean Roeb & Barger BulletinVirtually all of the states in the country have "Right to Repair" statutes. We follow the various states legislatures to determine what trends or developments are occurring. For years, Chapman, Glucksman, Dean, Roeb, and Barger has prepared a compendium that provides the salient points of these Right to Repair statutes. In this extended BULLETIN we provide a discussion of important and very recent developments that are occurring in
Nevada,
Arizona,
Florida, and
Colorado.
In Nevada, Governor Brian Sandoval very recently signed The Homeowner Protections Act of 2015, representing a massive transformation to Nevada's Right to Repair Act in the builder's favor, including but not limited to removal of the attorney fees provision as part of claimant's damages.
In Arizona, Governor Doug Ducey signed House Bill 2578 in March 2015, amending Arizona Revised Statutes § 12-1361 et. Seq. by eliminating a homeowner’s statutory opportunity to recover attorney and expert fees and providing a builder the right to repair the alleged defects.
In Florida, Bill 87 proposes to shorten the statute of limitations, requires more detail in the Homeowner's notice of defects, and allows a builder to use a prior settlement in lieu of repair as an affirmative defense against subsequent claims.
In Colorado, lawmakers are proposing to place additional conditions in front of an HOA board before filing suit and require alternative dispute resolution for HOA Condominium Defect Claims even if the requirement no longer exists at the time the claim is brought.
NEVADA: GOVERNOR SIGNIFICANTLY MODIFIES NEVADA'S RIGHT TO REPAIR ACT WITH THE SIGNING OF ASSEMBLY BILL 125
Nevada's Right to Repair Act has been extensively modified by the signing of Assembly Bill 125 also known as the Homeowner Protections Act of 2015. The Act considerably revises Chapter 40 of the Nevada Revised Statute ("NRS") governing construction defect actions. According to Governor Brian Sandoval, the signing of the first major bill of the legislative session in Nevada "discourages frivolous litigation and strengthens Nevada's rebounding housing market."1 Among other provisions, the Homeowner's Protection Act removes a claimant's ability to recover reasonable attorney fees as part of the claimant's damages, shortens the statutes of repose, defines the duty to defend, and prohibits a claimant from filing a notice of construction defects unless the claimant has submitted a claim under the homeowner's warranty and the insurer has denied the claim. Only claims that have been denied under the homeowner's warranty may be claimed.
Additionally, the term "construction defect" is now defined as a defect "(1) which presents an unreasonable risk of injury to a person or property; or (2) which is not completed in a good and workmanlike manner and proximately causes physical damage to the resident or appurtenance."
Critically, the Act now requires that the notice of construction defects (1) state in "specific detail" rather than reasonable detail, each defect, damage, and injury to each residence or appurtenance that is subject to the notice; (2) state the exact location of each defect, damage, and injury, rather than describe in reasonable detail the location of the defect; and (3) include a statement signed by the owner of the residence or appurtenance in the notice that the owner verifies that each defect, damage and injury exists in the residence or appurtenance.
Although not every revision is set forth above, the passing of The Homeowner's Protection Act appears to be a colossal victory for builders as the majority of the revisions to NRS Chapter 40 are favorable to the builder while additional or heightened requirements have been placed upon homeowners who wish to bring a claim. The following two Right to Repair updates concern proposed bills that also seek to radically change the pre-claim construction defect landscape.
ARIZONA: BUILDERS NOW HAVE THE RIGHT TO REPAIR INSTEAD OF AN OPPORTUNITY TO REPAIR WHILE HOMEOWNERS NO LONGER HAVE A STATUTORY RIGHT TO ATTORNEY FEES AND EXPERT FEES
In March 2015, Arizona Governor Doug Ducey signed into law House Bill 2578, revising key portions of the Right to Repair pursuant to the Purchaser Dwelling Act (Arizona Revised Statute ("A.R.S.") Section 12-1361 et. seq. Important categories of the Act affected by the new law include the builder's right to repair or replace, the process of repair or replacement, dwelling actions, and homeowners' association dwelling actions. Most notably, prior to filing a construction defect suit, or a "dwelling action" as defined in A.R.S. Section 12-1361 et. seq., a homeowner must provide written notice detailing the basis of a dwelling action and must allow the builder to repair or replace the alleged construction defects.
Another significant revision includes the elimination of the prevailing homeowner's statutory right to reasonable attorney fees, witness fees and taxable costs in a dwelling action. Bill 2578 also revised the definitions of "Construction Codes," "Construction Defect," "Construction Professional," and "Material Deficiency." Homeowner Associations now must disclose additional information regarding the claim to its members and must show compliance with procedures set forth in the community documents. Clearly, Arizona's legislature is seeking to reduce the amount of frivolous construction defects suits with the elimination of a prevailing homeowner's right to reasonable attorney fees and expert fees. Moreover, the Legislature now provides builders in Arizona with the right to make repairs to alleged construction defects if they so choose.
FLORIDA: FLORIDA GENERAL CONTRACTORS SEEK AGGRESSIVE AMENDMENT TO PRE-CLAIM CONSTRUCTION DEFECT PROCESS WITH BILL 87
Florida's Right to Repair Act, Chapter 558 of the Florida Statutes, may be extensively revised in the near future. With the help of the South Florida Chapter of the Associated General Contractors of America, House of Representatives Bill 87 will be presented as an amendment to the Pre-Claim Construction Defect requirements set forth in Chapter 558.
The proposed bill is aggressive and seeks to address issues in the current statute. These deficiencies have seemingly prevented construction defect claims from being resolved without the filing of a civil suit. Notably, the statute of limitations period for a property owner to file suit for construction defects would be shortened based upon the revision of the term "completion of a building or improvement" to include issuance of a temporary certificate of occupancy. Additionally, property owners would be subject to additional requirements for issuing a notice of claim, including specific identification of locations of each alleged construction defect as well as the specific provisions of the building code, project plans, project drawings, project specifications, or other documentation, information or authority that serve as the basis of the claim for each alleged construction defect.
Perhaps most importantly, the bill provides that if a construction defect is settled by repairs offered by the contractor during the Chapter 558 claims process but the repairs fail to fully correct the defects and the owner or association then files suit because the issue was not resolved, the defendant may claim that the issue was previously resolved and the plaintiff owner may face sanctions. Even if the bill as proposed does not pass in its current form, on the heels of Nevada's Right to Repair Act overhaul, it may serve to encourage other states, including California, to take another look at their Right to Repair Act procedures.
COLORADO: UPDATE FROM CGDRB SEPTEMBER 2014 BULLETIN: COLORADO PROPOSED LEGISLATION RE: HOA CONDOMINIUM DEFECT CLAIMS
In September 2014, we provided an important discussion of potential significant tort reform legislation presented in Colorado regarding construction claims by homeowner associations for condominiums. This Bulletin serves as an update to that discussion as intense debate over legislative reform to provide condominium builders in Colorado more legal protections has heated up again.
On October 13, 2014, the city of Lakewood became the first Colorado municipality to pass a “right to repair” measure with respect to common interest communities. The Lakewood measure gives builders a right to repair construction defects before homeowner associations take legal action and requires a homeowner majority approval before legal action is taken.
On February 10, 2015, two bipartisan Senators introduced Senate Bill 177, a bill proposing changes to the prerequisites for a homeowner association to file a construction defect action under the Colorado Common Interest Ownership Act. SB 177, if passed in its current form, would require:
- That when the governing documents of a common interest community require mediation or arbitration of a construction defect claim and the requirement is later amended or removed, mediation or arbitration is still required for a construction defect claim;
- That the mediation or arbitration take place in the judicial district in which the common interest community is located;
- That the arbitrator (1) be a neutral third party; (2) make certain disclosures before being selected; and (3) be selected as specified in the community's governing documents or, if not specified, in accordance with the Uniform Arbitration Act;
- That before a construction defect claim is filed on behalf of the homeowner association: (1) the parties must submit the matter to mediation; and (2) the board must give advance notice to all unit owners, together with a disclosure of the projected costs, duration, and financial impact of the construction defect claim, and must obtain the written consent of a majority of the unit owners.
- That the disclosures required prior to the purchase and sale of property in a common interest community a notice that the community's governing documents may require binding arbitration of certain disputes.
As explained in our previous Bulletin, currently, in Colorado, homeowner association boards are only required to obtain two condominium owners’ consent to file a construction defect suit. Similar to SB 220, which proposed a number of the same requirements, SB 177 would likely have the potential effect of reducing the number of lawsuits filed against builders and decrease the treat of frivolous claims; and allow the parties an opportunity to resolve their issues short of litigation.
On March 18, 2015, the Colorado Senate Committee on Business, Labor, and Technology voted 6-2 to forward SB-177 to the full Senate with four minor amendments. The amendments provide:
- The homeowner association’s attorney can prepare the disclosures that must be presented to unit owners prior to filing a construction defect claim;
- Voting may be done by proxy;
- The parties must agree on an arbitrator. If they cannot agree, they may petition the court to appoint one. Preference will be given to the arbitrator designated in the community’s governing documents; and
- A different list of disclosure topics is required.
Also introduced this year is SB 091, a bill to shorten the Colorado’s construction defect statute of repose to a homeowner from bringing an action after three years. On March 16, 2015, the Colorado Senate Committee on State, Veterans & Military Affairs voted to pass SB 091 to the full Senate with two substantive amendments. The first amendment excludes any multifamily developments from being effected by the shortened statute of repose. The second amendment proposes the statute of repose only be shortened to five years, plus an additional year if the defect manifests in year five. Currently, in Colorado, if a homeowner does not discover a construction defect within six years of a house’s completion, the homeowner may forfeit all legal rights to seek repair. Again, SB 091 would protect builders from frivolous or untimely claims by homeowners.
We will continue to monitor development of these bills and others that may be proposed in the future. If we can provide any further information concerning these developments or you are interested in receiving our compendium of the various right repair statutes please let us know.
1 As reported by KTVN-TV in Reno, Nevada: http://www.ktvn.com/story/28163519/senate-passes-constructiondefect-bill-sends-to-governor-sandoval.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard H. Glucksman,
Jon A. Turigliatto and
David A. Napper
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
Read the court decisionRead the full story...Reprinted courtesy of
$48 Million Award and Successful Defense of $135 Million Claim
June 04, 2024 —
Peckar & AbramsonPeckar & Abramson is proud to have represented one of the nation’s largest general contractors in the achievement of a $48 million award in its favor and the denial of a $135 million claim against it in Federal Court in the Middle District of Florida on May 3, 2024 arising out of the FDOT’s $2.3 billion reconstruction of I-4, a P3 project and the Department’s largest project ever in the State of Florida.
After a 2-week bench trial, P&A secured the favorable decision which found that the general contractor client was entitled to recover $48 million on its affirmative claim against the party who initiated the lawsuit and that it did not breach its fiduciary duties and was not grossly negligent as was claimed which resulted in a denial of the initiating party’s $135 million claim in its entirety.
Read the court decisionRead the full story...Reprinted courtesy of
Peckar & Abramson
Ninth Circuit Construes Known Loss Provision
August 19, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe Ninth Circuit reversed the district court's award of summary judgment to the insurer after analyzing the known loss provision in the insured subcontractor's policy. Kaady v. Mid-Continent Cas. Co., 2015 U.S. App. LEXIS 10754 (9th Cir. June 25, 2015).
The insured was awarded a subcontract to install manufactured stone at the residential project. The stone was affixed to the wall sheathing. The insured also wrapped deck posts with manufactured stone and installed masonry caps on the toe of the stone that was wrapped around the deck posts.
After construction was completed, the insured was called back to the project to inspect cracks in the manufactured stone and masonry caps he installed. The insured told the general contractor that the cracks were likely due to settling. Three months after inspecting the cracks, the insured purchased a CGL policy from Mid-Continent.
Read the court decisionRead the full story...Reprinted courtesy of
Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Include Contract Clauses for Protection Against Ever-Evolving Construction Challenges
May 30, 2022 —
Michael Henry & Kevin J. Riexinger - Construction ExecutiveThe first quarter of 2022 provided a valuable glimpse into some of the major issues the construction industry can expect to continue impacting jobsites for the rest of the year.
Early in the pandemic, construction was not immune from the shut-downs that swept across market sectors. Workers were staying home to shield themselves and their families from the COVID-19 virus (and variants). This caused delays with construction projects and failures to meet negotiated benchmarks or deadlines. Contractors were left to wonder whether they remained obligated to perform under their contracts, or whether COVID-19 allowed them to invoke force majeure clauses. Over the past two years, there has been much debate about whether force majeure clauses encompass COVID-19 risks.
Traditionally, force majeure is only invoked for significant weather events or natural disasters. Unsurprisingly, outcomes of legal actions regarding COVID-19 and force majeure varied by state and by contract. It didn’t take long for contractors to seek a more predictable and certain solution.
Reprinted courtesy of
Michael Henry & Kevin J. Riexinger, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Mr. Riexinger may be contacted at kriexinger@gllawgroup.com
Mr. Henry may be contacted at MbHenry@tcco.com
Read the court decisionRead the full story...Reprinted courtesy of
Colorado Finally Corrects Thirty-Year Old Flaw in Construction Defect Statute of Repose
March 29, 2017 —
Jesse Howard Witt - The Witt Law FirmThe Colorado Supreme Court has finally settled a decades-old conundrum surrounding the state’s construction defect statute of repose.
A statute of repose is similar to a statute of limitations insofar as both restrict the time a party can bring a claim. A statute of repose period begins on a fixed date (such as the day someone finishes work on a project), while a statute of limitations period begins when someone discovers an injury (such as a defectively installed window).
In 1986, at the height of the so-called “tort reform” movement, the Colorado General Assembly voted to shorten both the statute of repose and the statute of limitations for construction defect claims. Historically, Colorado’s statute of repose had given a homeowner ten years following construction to file an action, and its statute of limitations had required that any such action be filed within three years of the date that the claimant discovered a defect. After 1986, however, these time periods changed; the new statute of repose required suits to be filed within six years of the end of construction, and the new statute of limitations gave claimants only two years following discovery of the physical manifestation of a defect to seek legal relief.[1]
Reprinted courtesy of
Jesse Howard Witt, Acerbic Witt
Mr. Witt may be contacted at www.witt.law
Read the full story...
Read the court decisionRead the full story...Reprinted courtesy of
Construction Lien Waiver Provisions Contractors Should Be Using
January 06, 2020 —
Jason Lambert - Construction ExecutiveIt is common in construction for a subcontractor or material supplier of any tier to be required to provide a lien waiver when receiving payment. But not all lien waivers are created equal. While at a minimum, a lien waiver, by definition, needs to include a release of liens, it can also include many other terms that can tie up loose ends or resolve potential problems before they begin.
Additional Releases
A typical lien release is going to release any liens and right to claim liens on the subject property. But a lien waiver can also include releases of any claims against surety bonds, other statutory rights or claims, and at its broadest, claims against the paying party. One example of a provision that could help accomplish this is a release of “any right arising from a payment bond that complies with a state or federal statute, any common law payment bond right, any claim for payment, and any rights under any similar ordinance, rule, or statute related to claim or payment rights.” Broad release language can also be used to effectively preclude any claims arising prior to the date of the release.
Payment Representations and Warranties
A typical lien release has no representations or warranties about payment to subcontractors or material suppliers of a lower tier. But contractors can include language requiring the company receiving payment to represent and warrant that all subcontractors of a lower tier have been paid or will be paid within a certain timeframe using the funds provided and that these are material representations and inducements into providing payment. On a related note, if the contract requires subcontractors to provide lien releases from lower tier subcontractors in addition to their own release when seeking payment, contractors can require the sub-subcontractor releases to include representations that they have been paid by the subcontractor to try and tie up payment loose ends all around.
Reprinted courtesy of
Jason Lambert, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Read the court decisionRead the full story...Reprinted courtesy of
Mr. Lambert may be contacted at
jason.lambert@nelsonmullins.com
Hunton Partner Michael Levine Appointed to Law360’s 2024 Insurance Authority Property Editorial Advisory Board
May 20, 2024 —
Hunton Insurance Recovery BlogWashington, DC-based partner
Michael Levine has been recognized for his extensive experience and insights into emerging and legacy property and business interruption insurance coverage issues by being selected to Law360’s 2024 Editorial Advisory Board for Insurance Authority Property. As a member of the board, Mike will provide feedback on Law360’s coverage of property issues and expert insight on how best to shape future reporting of issues affecting businesses across all industry sectors.
Reprinted courtesy of
Hunton Andrews Kurth llp
Read the full story... Read the court decisionRead the full story...Reprinted courtesy of
