In Appellate Division First, New York Appellate Team Successfully Invokes “Party Finality” Doctrine to Obtain Dismissal of Appeal for Commercial Guarantors
December 23, 2024 —
Dean Pillarella - Lewis BrisboisNew York, N.Y. (November 20, 2024) - In Roc-Le Triomphe Associates, LLC v. DeSouza, 2024 NY Slip Op 05654 (1st Dep’t 2024), Associate Dean Pillarella, a member of the Appellate Practice, successfully invoked the party finality doctrine to obtain the dismissal of an appeal for the firm’s commercial guarantor clients.
The action concerned rent allegedly due and owing under a commercial lease by the lease’s tenant and guarantors. Pursuant to a 2022 order, the guarantors were awarded summary judgment and dismissal of all claims against them, with the landlord’s claims against the tenant left intact. After the decision and order was served with notice of entry by the prevailing party, the landlord did not file a notice of appeal from the order but, instead, filed a notice of appeal from a later judgment months after the time to appeal the order had expired.
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Dean Pillarella, Lewis BrisboisMr. Pillarella may be contacted at
Dean.Pillarella@lewisbrisbois.com
To Require Arbitration or Not To Require Arbitration
December 31, 2014 —
Christopher G. Hill – Construction Law MusingsMany, if not most, construction contracts that I review during the course of my practice day include a mandatory arbitration clause. Most of these refer in a blanket manner to AAA Construction Industry Rules. The topic for this post is not whether such clauses are enforceable or whether they are one tool in the contracting tool box in a state where the contract is king. I picked the title of this post carefully because I wanted to discuss whether such clauses should be required as a routine part of all construction contracts and, if so, how those clauses can and should be written.
I have previously shared my thoughts on mandatory arbitration and its desirability in numerous spots here at Construction Law Musings (you can search arbitration or check out the ADR page for more). In short, my opinion is that arbitration was initially conceived with the purpose of streamlining the dispute resolution process and to correspondingly lower the costs associated with such dispute resolution. Arbitration, when used correctly, can, in certain very industry specific cases, help by using an arbitrator or panel of arbitrators that have some expertise in the particular area of the construction industry or the particular specialized issue that will turn the case one way or the other. All of these goals are good and I applaud them.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
No Signature? Potentially No Problem for Sureties Enforcing a Bond’s Forum Selection Clause
March 21, 2022 —
Brian C. Padove - ConsensusDocsOne of the foundational tenets of contract law is that a party may only be bound by terms they agree to, or in other words, if the party did not sign a contract, that party cannot be bound by the terms thereof. While this principle is generally unwavering, there are certain situations in which a non-signatory to a contract may still be bound by the terms of a contract.
In particular, this non-signatory issue may arise when a payment bond claimant makes a bond claim, subsequently files a lawsuit, but the bond contains a forum selection clause different than the venue of the lawsuit and the surety seeks to enforce the bond’s forum selection clause. For example, the claimant may have filed its lawsuit against the surety in federal court, even though the bond provides language specifically mandating that no lawsuit shall be commenced by any claimant other than in a state court where the project is located. Thus, the question then becomes, can the surety enforce the forum selection clause against the claimant when the claimant did not sign the bond and/or never agreed to the terms thereof? The short answer, it depends (yes, that is a very lawyer-like answer). Given recent case law over the past decade, however, the surety has a strong argument in favor of enforcement of the forum selection clause.
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Brian C. Padove, Watt, Tieder, Hoffar & Fitzgerald, LLP (ConsensusDocs)Mr. Padove may be contacted at
bpadove@watttieder.com
Illinois Court Assesses Factual Nature of Term “Reside” in Determining Duty to Defend
October 30, 2023 —
James M. Eastham - Traub LiebermanIn State Farm Fire & Cas. Co. v. Guevara, 2023 IL App (1st) 221425-U, P2, the Illinois First District Court of Appeals addressed an insurance carrier’s duty to defend under a homeowners insurance policy. The underlying suit stemmed from an alleged injury suffered at a residence located in Berwyn, Illinois and owned by named insured Luz Melina Guevara, a defendant in the suit. After Guevara tendered the suit, State Farm filed a complaint for declaratory judgment seeking a declaration that it had no duty to defend or indemnify Guevara because Guevara did not “reside” at the insured premises.
The policy defined the "insured location" as the "residence premises," and residence premises was defined as "the one, two, three or four-family dwelling, other structures, and grounds or that part of any other building; where you reside and which is shown in the Declarations." In response to the underlying lawsuit, Guevara had filed an answer and affirmative defenses in which Guevara denied the allegation that "At all relevant times, [Guevara] resided in Berwyn, Cook County, Illinois." Guevara admitted that she owned the Berwyn property but denied that she "resided in, maintained and controlled the property". The declaratory judgment complaint alleged (among other things) that, based on admissions by Guevara in her answer, the Berwyn residence was not an "insured location" under the State Farm policy. State Farm moved for summary judgment at the trial court level on this ground and summary judgment was granted in State Farm’s favor. An appeal ensued wherein the parties disagreed as to whether there is a genuine issue of material fact that, under the language of the policy, State Farm had no duty to defend because the Berwyn property was not an "insured location" because she did not "reside" there.
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James M. Eastham, Traub LiebermanMr. Eastham may be contacted at
jeastham@tlsslaw.com
M&A Representation and Warranty Insurance Considerations in the Wake of the Coronavirus Pandemic
April 06, 2020 —
Lori Smith & Patrick Devine - White and Williams Taking Care of Business BlogIncreasingly, M&A transactions are using representation and warranty insurance (RWI) to bridge the gap between a buyer’s desire for adequate recourse to recover damages arising out of breach of representations in the purchase agreement and a seller’s desire to minimize post-closing risk and holdbacks or purchase price escrows traditionally used as the means to satisfy such obligations. When it works, RWI provides a significant benefit to both parties: it mitigates the buyer’s risk in the event that the seller’s representations and warranties prove untrue, and it permits the seller to reduce the portion of the purchase price that it would otherwise have to leave in escrow to cover future claims for breach of those representations and warranties. However, as the coronavirus pandemic ravages the global economy, insurers are now expressly adding COVID-19 exclusions to their RWI policies. If RWI insurers decline coverage for these losses, the allocation of risk in the representations and warranties (and related indemnity provisions) will be more critical than the parties contemplated when they negotiated the transaction documents.
Unlike in the case of a natural disaster, insurers cannot quantify the economic fallout that may result from the coronavirus pandemic. This uncertainty breeds systemic concern about the number of insurance claims that covered parties of all varieties will bring, which in turn creates an industry-wide reluctance to cover the claims. Based on discussions with market participants, we understand that, at the present time, 70% to 80% of RWI insurers are broadly excluding losses resulting from COVID-19 and similar viruses, epidemics, and pandemics (including government actions in response thereto), 5% to 10% are narrowly excluding specific coronavirus-related losses that are more likely to be implicated in a particular transaction (e.g., losses caused by business interruption), and 10% to 15% may be willing to narrow their exclusions upon completion of the underwriting process, depending on their comfort level after conducting rigorous and heightened diligence. Insurers’ concerns are wide-ranging, but the representations and warranties causing the greatest distress appear to be those regarding customer retention, supply chain matters, undisclosed liabilities, and the absence of changes between the date of the seller’s most recent financial statements and the transaction closing date.
Reprinted courtesy of
Lori Smith, White and Williams and
Patrick Devine, White and Williams
Ms. Smith may be contacted at smithl@whiteandwilliams.com
Mr. Devine may be contacted at devinep@whiteandwilliams.com
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The Hunton Policyholder’s Guide to Artificial Intelligence: SEC’s Recent AI-Washing Claims Present D&O Risks, Potential Coverage Challenges
July 08, 2024 —
Geoffrey B. Fehling, Michael S. Levine & Alex D. Pappas - Hunton Insurance Recovery BlogWe have previewed in prior posts the ways artificial intelligence is rapidly changing the way business operate, including the many ways AI has influenced the insurance market, creating both opportunities and risks for policyholders. We later highlighted, based on a recent securities lawsuit, how corporate management may be at risk for the alleged use or misuse of AI and how companies should evaluate their directors and officers (D&O) and management liability policies to ensure that they are prepared to respond to and mitigate AI-driven risks, including claims alleging that a company or its officers and directors made misrepresentations about AI.
That potential risk now has regulatory teeth, as the US Securities and Exchange Commission recently charged the founder of an AI hiring startup with fraud based on claims about using AI to help clients find diverse and underrepresented candidates to fulfill diversity, equity, and inclusion hiring goals.
Reprinted courtesy of
Geoffrey B. Fehling, Hunton Andrews Kurth,
Michael S. Levine, Hunton Andrews Kurth and
Alex D. Pappas, Hunton Andrews Kurth
Mr. Fehling may be contacted at gfehling@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Pappas may be contacted at apappas@HuntonAK.com
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Reaffirming the Importance of Appeal Deadlines Under the Contract Disputes Act
January 26, 2017 —
Chadd Reynolds – Autry, Hanrahan, Hall & Cook, LLPA recent United States Court of Federal Claims (“COFC”) decision emphasizes the importance of deadlines for appealing a contracting officer’s (“CO”) decision under the Contract Disputes Act (“CDA”). On July 22, 2016, the COFC granted the consolidation of two naval contract dispute appeals totaling nearly $12.4 million in response to Nova Group/Tutor-Saliba’s (“NTS”) motion to resolve two Requests for Equitable Adjustment (“REA”) in the same forum. See Nova Group/Tutor-Saliba v. United States, No. 15-885C, 2016 WL 4009886, at *5 (Fed. Cl. July 22, 2016). NTS’s motion before the COFC sought to transfer an appeal of a REA before the COFC to the Armed Services Board of Contract Appeals (“ASBCA”), where another appeal of a REA arising under the same contract was presently on appeal. The COFC rejected NTS’s appeal to transfer the REA to the ASBCA because NTS did not appeal the REA within the 90-day limit under the CDA. Instead, the COFC allowed NTS to transfer the REA before the ASBCA to the COFC because timeliness was not an issue.
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Chadd Reynolds, Autry, Hanrahan, Hall & Cook, LLPMr. Reynolds may be contacted at
reynolds@ahclaw.com
South Carolina’s New Insurance Data Security Act: Pebbles Before a Landslide?
June 13, 2018 —
Richard Borden, Sedgwick Jeanite & Joshua Mooney - White and Williams LLPThe ramp-up of cybersecurity regulation, albeit in a patchwork fashion through state-level legislation, has begun. On May 18, 2018, South Carolina enacted the Insurance Data Security Act (Act), becoming the first state to pass legislation based upon the Insurance Data Security Model Law that was approved by the National Association of Insurance Commissioners (NAIC) last October. The Act makes very little change to the model law’s text, which in turn, is based on 23 NYCRR § 500, et seq., the cybersecurity regulations promulgated by the New York State Department of Financial Services in March 2017. The Act establishes stringent standards for both data security programs, and an entity’s response to a “cybersecurity event” through an organized and methodical investigation and notification to the state’s Department of Insurance. Like New York’s cybersecurity regulations, the Act requires insurers to submit to the Department of Insurance annual certification of compliance and has a ratcheted implementation of portions of the legislation on insurers and brokers operating or otherwise licensed to do business in the state. It does not create a private cause of action.
Reprinted courtesy of White and Williams LLP attorneys
Richard Borden,
Sedgwick Jeanite and
Joshua Mooney
Mr. Borden may be contacted at bordenr@whiteandwilliams.com
Mr. Jeanite may be contacted at jeanites@whiteandwilliams.com
Mr. Mooney may be contacted at mooneyj@whiteandwilliams.com
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