Toxic Drywall Not Covered Under Homeowner’s Policy
March 28, 2012 —
CDJ STAFFThe Duphuys of Baton Rouge Louisiana found themselves needing to argue both sides of an issue, according to the judge in Duphuy v. USAA Casualty Insurance Company. The Duphuys alleged that the drywall in their home “emits odorous gases that cause damage to air-condition and refrigerator coils, copper tubing, electrical wiring, computer wiring, and other household items.” Additionally, they reported damage to “their home’s insulation, trimwork, floors, cabinets, carpets, and other items” which they maintained were “covered under the ‘ensuing loss’ portion of their policy.”
Their insurer declined coverage, stating that the damages were not a “direct, physical loss,” and even if they were “four different exclusions independently exclude coverage, even if such loss occurred.” The policy excludes defective building materials, latent defects, pollutants, and corrosion damage. The court noted that “ambiguities in policy exclusions are construed to afford coverage to the insured.”
The court did determine that the Duphuys were not in “a situation where the plaintiffs caused the risk for which they now seek coverage.” The judge cited an earlier case, In re Chinese Drywall, “a case with substantially similar facts and construing the same policy” and in that case, “property damage” was determined to “include the loss of use of tangible property.” The court’s conclusion was that the Duphuys “suffered a direct, physical loss triggering coverage under their policy.”
Unfortunately for the Duphuys, at this point the judge noted that while they had a “direct, physical loss,” the exclusions put them “in the tough predicament of claiming the drywall is neither defective nor its off-gassing corrosive or a pollutant, but nonetheless damage-causing.”
In the earlier Chinese Drywall case, the judge found that “faulty and defective materials” “constitutes a physical thing tainted by imperfection or impairment.” The case “found the drywall served its intended purpose as a room divider and insulator but nonetheless qualified under the exclusion, analogizing the drywall to building components containing asbestos that courts have previously determined fit under the same exclusion.” In the current case, the judge concluded that the drywall was “outside the realm of coverage under the policy.”
The court also found that it had to apply the corrosion exclusion, noting that the plaintiffs tried to evade this by stating, “simplistically and somewhat disingenuously, that the damage is not caused by corrosion but by the drywall itself.” The plaintiffs are, however, parties to another Chinese drywall case, Payton v. Knauf Gips KG, in which “they directly alleged that ‘sulfides and other noxious gases, such as those emitted from [Chinese] drywall, cause corrosion and damage to personal property.’” As the court pointed out, the Duphuys could not claim in one case that the corrosion was caused by gases emitted by the drywall and in another claim it was the drywall itself. “They hope their more ambiguous allegations will be resolved in their favor and unlock the doors to discovery.”
The court quickly noted that “the remaining damage allegations are too vague and conclusory to construe” and permitted “exploration of the latent defect and pollution exclusions.”
The judge concluded that the plaintiffs did not provide sufficient facts to establish coverage under the ensuing loss provision, stating that the “plaintiffs must allege, at the very least, how the drywall causes damage to the trimwork, carpet, etc., not simply that it does so.” Given the court’s determinations in the case, the plaintiffs’ motion was dismissed.
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Analysis of the “owned property exclusion” under Panico v. State Farm
March 08, 2011 —
Colorado Construction LitigationThe U.S. Court of Appeals for the Tenth Circuit recently concluded that the “owned property exclusion” applied to bar coverage for claims of property damage. See Panico v. State Farm Fire and Cas. Co., 2011 WL 322830 (10th Cir. 2011). In Panico, the plaintiffs sold property in Aspen, Colorado to the Taylors, who sued the Panicos upon discovering the property was not as represented. After refusing to defend, the Panicos sued State Farm for breach of contract. The district court concluded that the Taylors’ claims were not covered under the Panicos insurance policies and granted summary judgment in State Farm’s favor. The U.S. Court of Appeals for the Tenth Circuit affirmed.
Mr. Panico built the house on the property as well as several additions to the house. As the Taylors lived in Florida, they primarily relied on their real estate agent and an inspector to ensure the property was acceptable. According to their complaint, the Taylors discovered that the house was “virtually uninhabitable due to serious design and construction defects, mold, rodents, and drainage problems.” Id. at *1. In their complaint, the Taylors asserted three claims for relief against the Panicos based upon misrepresentation and fraudulent concealment about the condition of the property.
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Reprinted courtesy of Heather M. Anderson of Higgins, Hopkins, McClain & Roswell, LLP. Ms Anderson can be contacted at anderson@hhmrlaw.com
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Taking Care of Infrastructure – Interview with Marilyn Grabowski
February 06, 2019 —
Aarni Heiskanen - AEC BusinessMarilyn Grabowski leads Atlantic Infrared with a mission to protect and improve infrastructure. In this interview, we discuss her professional background, the technologies that her team uses, and why more women should consider construction as a career.
Marilyn Grabowski, known as “The Lady in Red”, and her team Atlantic Infra employees dubbed “The Red Crew” have been seamlessly filling potholes across the state of New Jersey since 2002. Under her leadership, The Red Crew uses infrared technology and unfailing attention to detail to expertly repair potholes, failed utility cuts and sunken trenches with no break in the road – creating safe and aesthetically pleasing repairs statewide, at a clip of 15,000 potholes per year.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Construction Law Advisory: Mechanical Contractor Scores Victory in Prevailing Wage Dispute
September 03, 2014 —
Steven M. Cvitanovic & Jessica M. Lassere Ryland - Haight Brown & Bonesteel LLPOn August 27, 2014, the First District Court of Appeal weighed in on whether prevailing wages are required for public contracts in situations where work is performed in furtherance of the project but at a permanent offsite manufacturing facility that is not exclusively dedicated to the project. In Sheet Metal Workers' International Association, Local 401 v. John C. Duncan and Russ Will Mechanical, the project at issue was for a community college district where Russ Will was the HVAC subcontractor. The contract documents required contractors to pay prevailing wages but they did not limit where or how Russ Will would fabricate sheet metal required for the job. Russ Will used its existing fabrication facility to form the sheet metal.
An employee of Russ Will filed a complaint with the DIR alleging he should have been paid prevailing wages for work related to the project. The worker fabricated sheet metal for the project but at Russ Will’s Hayward facility, not at the site. The DIR issued a coverage determination in which it concluded that Russ Will was required to pay prevailing wages for the offsite fabrication work associated with the project. The DIR's determination turned on whether Russ Will was exempt from the prevailing wage law as a material supplier. To qualify for the material supplier exemption, the employer must sell supplies to the general public and its fabrication or manufacturing facility must not be established for the particular public works contract or be located at the site of the public work.
Following the DIR determination, Rush Will filed an administrative appeal. The department reversed its initial coverage determination, concluding that the offsite fabrication performed by Russ Will was not subject to the prevailing wage law.
Reprinted courtesy of
Steven M. Cvitanovic, Haight Brown & Bonesteel LLP and
Jessica M. Lassere Ryland, Haight Brown & Bonesteel LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com; Ms. Ryland may be contacted at jlassere@hbblaw.com
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Proposed Florida Construction Defect Act
January 09, 2015 —
Beverley BevenFlorez-CDJ STAFFMichael J. Furbush and Thomas P. Wert of Roetzel & Andress discussed Florida’s House Bill 87, which proposes to “substantially overhaul Florida’s Construction Defect Act, Chapter 558, requiring property owners to provide more detailed notice of the alleged defect and imposing sanctions on property owners who make frivolous claims.”
Representative Kathleen Passidomo sponsored the bill, which “requires claimants to provide additional details about the alleged defect in the notice of claim, including the specific location of each alleged defect, and the specific provisions of the building code, plans, or specifications that serve as the basis of the defect claim. The failure to include this information in the notice of claim would be considered prima facie evidence of a defective notice.”
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Does Article 2 of the Uniform Commercial Code Impact Your Construction Project?
November 07, 2022 —
Chris Cazenave - ConsensusDocsThe Uniform Commercial Code (UCC) is a set of statutes governing commercial transactions. Every state has adopted the UCC or some version of it. Understanding when and how the UCC applies to construction contracts is important because it can affect the agreement’s terms.
Article 2 of the UCC applies to the sales of goods, which the UCC defines very broadly to mean “all things (including specialty manufactured goods) which are movable . . . other than money in which the price is to be paid . . . .” UCC § 2-105. For the construction industry, UCC Article 2 governs most, if not all, purchases of materials and equipment installed or incorporated into the project. As a result, contractors and subcontractors should be familiar with the circumstances under which Article 2 may apply and how it may affect the project.
This article provides a brief overview of when Article 2 may affect your construction project and why it matters. The article also generally covers the UCC’s potential effects on the applicable statute of limitations, implied warranties, and when the obligation to make the payment arises.
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Chris Cazenave, Jones Walker LLP (ConsensusDocs)Mr. Cazenave may be contacted at
ccazenave@joneswalker.com
Cherokee Nation Wins Summary Judgment in COVID-19 Business Interruption Claim
February 01, 2021 —
Sergio F. Oehninger, Geoffrey B. Fehling & Matt Revis - Hunton Insurance Recovery BlogIn a resounding victory for policyholders, an Oklahoma state court granted partial summary judgment for the Cherokee Nation in its COVID-19 business interruption claim. The Cherokee Nation is seeking coverage for losses caused by the pandemic—specifically, the inability to use numerous tribal businesses and services for their intended purpose.
Based on the “all risks” nature of the policy and the fortuitous nature of its loss, the Cherokee Nation sought a partial summary judgment ruling that the policies afford business interruption coverage for COVID-19-related losses. The policy provided coverage for “all risk of direct physical loss or damage,” which the Cherokee Nation contended was triggered when the property was “rendered unusable for its intended purpose.” In support of this view, and consistent with established insurance policy interpretation principles, such as providing meaning to every term and reading the policy as a whole, the Cherokee Nation argued that a distinction must exist between “physical loss” and “physical damage.” This distinction demands an interpretation supporting the “intended purpose” reading of the policy language. Thus, the physical presence of COVID-19 depriving the Cherokee Nation of the use of covered property for its intended purpose triggered a covered loss.
Reprinted courtesy of
Sergio F. Oehninger, Hunton Andrews Kurth,
Geoffrey B. Fehling, Hunton Andrews Kurth and
Matt Revis, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
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Newark Trial Team Secures Affirmance of ‘No Cause’ Verdict for Nationwide Housing Manager & Developer
January 07, 2025 —
Lewis Brisbois NewsroomNewark, N.J. (December 30, 2024) - Newark Partner Afsha Noran and Managing Partner Colin Hackett recently obtained a ruling by a New Jersey Appellate Division panel affirming a unanimous "no cause" defense verdict obtained on behalf of a nationwide housing developer and manager.
In this case, the plaintiff and her two minor children brought suit against the firm's client. They appealed a unanimous no-cause jury verdict rendered in May 2023 that found the defendants not liable for mold exposure in their apartment. The plaintiffs argued that several trial errors, including improper jury instructions, a confusing verdict sheet, and prejudicial remarks by defense counsel led to an unjust result. However, the appellate court affirmed the trial court's decision, concluding that there was no miscarriage of justice and that the trial court properly exercised its discretion in handling the case.
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Lewis Brisbois
