McGraw Hill to Sell off Construction-Data Unit
March 19, 2014 —
Beverley BevenFlorez-CDJ STAFFMcGraw Hill Financial announced “plans to sell a construction-data unit concentrated on the U.S. market” according to The Wall Street Journal. This follows McGraw Hill’s determination to “focus on global operations and cutting costs.”
“The construction division ‘is not a business linked to the global markets,’” Douglas L. Peterson, McGraw Hill’s Chief Executive said to The Wall Street Journal. “’It's very different’ than its other units, such as Standard & Poor's Ratings Services, J.D. Power or S&P Capital IQ, with the potential for larger international footprints.”
McGraw Hill’s construction division “sells commercial-real-estate information to developers and manufacturers” and “generates about $170 million in annual revenue.” The division “employs about 650 people.”
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Is Your Business Insured for the Coronavirus?
March 16, 2020 —
J. Kelby Van Patten & Jared De Jong - Payne & FearsHow bad will the pandemic get? How much will it spread in the United States? Will we develop a vaccine in time to do any good?
As insurance lawyers, we have no idea. But we can help you figure out whether your business is insured for the coronavirus risks that keep business owners up at night.
Risk 1: An outbreak forces my business to close until the outbreak ends. Are my financial business losses covered?
Maybe. Many commercial property policies provide “business interruption coverage” which may apply.
This coverage typically requires that:
(i) Your business is shut down. If your business actually closes for a period of time, you may meet this requirement. However, you wouldn’t meet it if your business slows because half of your staff is home sick.
(ii) The shutdown is necessary. “Necessary” means something different than “desirable” or “prudent.” Whether a shutdown is necessary depends on the facts. If it is physically or legally impossible to enter your building, then closure is necessary. But if the government issues a public advisory recommending that businesses close, and you voluntarily comply, that’s a different story.
(iii) The shutdown is caused by physical damage to your property. Is a viral outbreak “damage” to your property? There’s not a clear answer. On the one hand, courts have found that hazardous contamination of a building constitutes property damage to the building. For example, asbestos incorporated into a building constitutes property damage to the building under a commercial general liability policy. Environmental contamination can also constitute property damage to the contaminated property. Policyholders whose businesses close during an outbreak will argue that property contaminated by the virus satisfies the “physical damage to property” requirement. On the other hand, insurers may argue that the real cause of the shutdown is not the contaminated building surfaces, but the need for social distancing in a neighborhood with many contagious people. Coverage will depend on the policy language and the details of the shutdown.
Reprinted courtesy of
J. Kelby Van Patten, Payne & Fears and
Jared De Jong, Payne & Fears
Mr. Van may be contacted at kvp@paynefears.com
Mr. Jong may be contacted at jdj@paynefears.com
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Auburn Woods Homeowners Association v. State Farm General Insurance Company
January 11, 2021 —
Michael Velladao - Lewis BrisboisIn Auburn Woods HOA v. State Farm Gen. Ins. Co., 56 Cal.App.5th 717 (October 28,2020) (certified for partial publication), the California Third District Court of Appeal affirmed the trial court’s entry of judgment in favor of State Farm General Insurance Company (“State Farm”) regarding a lawsuit for breach of contract and bad faith brought by Auburn Woods Homeowners Association (“HOA”) and property manager, Frei Real Estate Services (“FRES”) against State Farm and the HOA’s broker, Frank Lewis. The parties’ dispute arose out of the tender of two different lawsuits filed against the HOA and FRES by Marva Beadle (“Beadle”). The first lawsuit was filed by Beadle as the owner of a condominium unit against the HOA and FRES for declaratory relief, injunctive relief, and an accounting related to amounts allegedly owed by Beadle to the HOA as association fees. The second lawsuit filed by Beadle was for the purpose of setting aside a foreclosure sale, cancelling the trustee’s deed and quieting title, and for an accounting and injunctive relief against an unlawful detainer action filed by Sutter Group, LP against Beadle. The complaint filed in the second lawsuit alleged that Allied Trustee Services caused Beadle’s property to be sold at auction and that Sutter Capital Group, LP purchased the unit and obtained a trustee’s deed upon sale. Beadle claimed the assessments against her were improper and the trustee’s deed upon sale was wrongfully executed. Beadle sought an order restoring possession of her unit and damages.
The HOA and FRES tendered both lawsuits to State Farm. As respects the first lawsuit, State Farm denied coverage of the lawsuit based on the absence of alleged “damages” covered by the policy issued to the HOA affording liability and directors and officers (“D&O”) coverages. State Farm agreed to defend the HOA under the D&O coverage in the second lawsuit. However, State Farm denied coverage of FRES in both lawsuits as it did not qualify as an insured under the State Farm policy issued to the HOA. Subsequently, the HOA and FRES filed an action against State Farm arguing that a duty to defend was triggered under its policy for the first lawsuit and a duty to defend FRES was also owed under the D&O policy for the second lawsuit. After a bench trial, the trial court entered summary judgment in favor of State Farm based on the failure of the first lawsuit to allege damages covered by the State Farm policy under the liability and D&O coverages afforded by the policy. As respects the second lawsuit, the trial court held that FRES did not qualify as an insured and State Farm did not act in bad faith by refusing to pay the HOA’s alleged defense costs in the second lawsuit before it agreed to defend the HOA against such lawsuit.
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Michael Velladao, Lewis BrisboisMr. Velladao may be contacted at
Michael.Velladao@lewisbrisbois.com
Policyholder Fails to Build Adequate Record to Support Bad Faith Claim
May 19, 2011 —
Tred R. EyerlyThe importance of careful preparation and documentation was the take away lesson in a Texas bad faith case, C.K. Lee v. Catlin Specialty Ins. Co., 2011 U.S. Dist. LEXIS 19145 (S.D. Tex. Feb. 28, 2011).
C.K. Lee owned a commercial shopping center in Houston. Catlin issued a commercial property policy to Lee. On September 12, 2008, Hurricane Ike hit and caused substantial property damage throughout the Texas Gulf Coast area. On September 24, 2008, Lee submitted a claim for damage to the roof of his shopping center to Catlin.
Catlin hired Engle Martin to represent its interests in adjusting the claim. Engle Martin eventually adjusted over 200 Ike-related claims for Catlin.
In November 2008, Engle Martin and Emergency Services Inc., retained by Lee, inspected Lee’s property. Engle Martin observed evidence of roof repairs that had apparently been made both before and after Hurricane Ike. Engle Martin decided it was necessary to use an infrared scan of the roof to help identify which damages, if any, were attributable to wind and which, if any, were attributable to sub par, prior repairs or natural deterioration.
Engle Martin retained Project, Time & Cost (PT&C) to conduct the infrared inspection. PT&C’s inspection determined there was no wind-related damage to the roof and no breaches or openings created by wind. Instead, the roof had exceeded its life expectancy and was in need of replacement due to normal wear and weathering. Consequently, Catlin decided that the damage to Lee’s roof was not caused by winds from Hurricane Ike.
Meanwhile, Lee’s contractor, Emergency Services, prepared a report estimating that the total cost of repairing the roof would be $871,187. Engle Martin’s estimate for repair of the roof was $22,864.
Lee filed suit for breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Insurance Code. Catlin moved for summary judgment on all claims but breach of contract, arguing that because there was a bona fide dispute concerning the cause of the damages and whether they were covered under the policy, there was no evidence of bad faith or violations of the Texas Insurance Code.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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2011 Worst Year Ever for Home Sales
September 09, 2011 —
CDJ STAFFSo few new single-family homes have sold in 2011 that expectations are that this will be the worst year for new homes sales since the Commerce Department started tracking this in 1963. The Harford Courant notes that previously builders created a new supply to which was added homes under foreclosure.
Ed Leamer, economist and director of UCLA’s Anderson Forecast, says that recovery would be driven by two sectors, manufacturing and construction. “It doesn’t look like there is going to be a big recovery in manufacturing,” he says. “It is going to have to come in housing.”
The soft housing market, however, is leading to a loss of construction jobs, as reported by the Associated General Contractors of America. As a result, stock prices for the twelve largest publicly-traded home builders have declined 22.7 percent in a market that has declined 4.2 percent overall.
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California Supreme Court Finds that the Notice-Prejudice Rule Applicable to Insurance is a Fundamental Public Policy of the State
October 14, 2019 —
Christopher Kendrick & Valerie A. Moore – Haight Brown & Bonesteel LLPIn Pitzer College v. Indian Harbor Ins. Co. (No. S239510, filed 8/29/19), the California Supreme Court held that California’s notice-prejudice rule is a fundamental public policy in the insurance context, supporting the application of California law under a choice of laws analysis. In addition, the Court held that the rule generally applies to consent (aka “no voluntary payments”) provisions in first party insurance policies but not to consent provisions in third party liability policies.
Pitzer College discovered soils contamination while building a new dormitory. Under pressure to complete construction before the start of the school year, Pitzer proceeded to remediate the soils, incurring $2 million in expense. Pitzer submitted a claim to Indian Harbor, which provided Pitzer insurance covering legal and remediation expenses resulting from pollution conditions discovered during the policy period.
The policy contained a notice provision requiring Pitzer to provide oral or written notice of any pollution condition to Indian Harbor and, in the event of oral notice, to “furnish … a written report as soon as practicable.” In addition, a consent provision required Pitzer to obtain Indian Harbor’s written consent before incurring expenses, making payments, assuming obligations, and/or commencing remediation due to a pollution condition. The consent provision had an emergency exception for costs incurred “on an emergency basis where any delay … would cause injury to persons or damage to property or increase significantly the cost of responding to any [pollution condition],” in which case Pitzer was required to notify Indian Harbor “immediately thereafter.” Lastly, a choice of law provision stated that New York law governed all matters arising under the policy.
Reprinted courtesy of
Christopher Kendrick, Haight Brown & Bonesteel LLP and
Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com
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California Case That Reads Like Russian Novel Results in Less Than Satisfying Result for Both Project Owner and Contractors
May 01, 2019 —
Garret Murai - California Construction Law BlogSometimes you can see a train wreck coming a mile away. The next case, Design Built Systems v. Sorokine, Court of Appeal for the First District, Case Nos. A151264 and A152059 (February 26, 2019), is one of those cases. It also happens to read like a Tolstoy novel.
The Beginning of the Train Wreck
Alexei Sorokine and Elena Koudriavtseva, husband and wife, owned a single family home in San Rafael, California. Sorokine had acquired the house prior to his marriage to Koudriavtseva. In 2010, he traveled to Russia and, for reasons unexplained, has not been able to return.
Following a landslide on the property in 2006, Sorokine entered into a construction contract with Design Built Systems to design and build a series of retaining walls. DBS was also retained to remedy a stop work notice issued by the City of San Rafael following work performed by others.
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Garret Murai, Wendel RosenMr. Murai may be contacted at
gmurai@wendel.com
Create a Culture of Safety to Improve Labor Recruitment Efforts
September 12, 2022 —
Grant Robbins - Construction ExecutiveThe commercial construction industry must rely on skilled labor to survive. Skilled labor, however, is hard to come by. In fact, many construction firms report projects being delayed because of shortages in the workforce.
Part of the problem is training. Few companies have the time, resources or opportunities to train new construction workers. But the biggest reason for the labor shortage in the construction industry is simply a lack of people joining the trades. Decades ago, construction was a respected career choice. Over the years, however, the pressure to get into a four-year college has created negative perceptions of working in the trades.
Some commercial construction companies choose to work with fewer crews as a result of the lack of skilled labor, therefore limiting the number of jobs they can handle. The labor shortage in the construction industry has simply made it nearly impossible to find subcontractors to adequately staff upcoming projects (one survey found that 35% of contractors had to turn down jobs due to a lack of skilled laborers). This then leads to hikes in construction costs and delays in scheduling, which can take a major toll on business.
Reprinted courtesy of
Grant Robbins, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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