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Michigan Supreme Court Finds Faulty Subcontractor Work That Damages Insured’s Work Product May Constitute an “Occurrence” Under CGL Policy

November 02, 2020 — Jason Taylor - Traub Lieberman Insurance Law Blog
In Skanska USA Bldg. Inc. v. M.A.P. Mech. Contractors, Inc., 2020 WL 3527909 (Mich. June 29, 2020), the Michigan Supreme Court addressed whether unintentionally faulty subcontractor work that damages an insured’s work product constitutes an “accident” under a commercial general liability insurance policy. In aligning itself with a growing number of jurisdictions, the Michigan Supreme Court answered, “yes.” In Skanska, a construction manager brought an action against a commercial general liability (CGL) insurer seeking coverage as additional insured for the cost of repairs to correct faulty work performed by its subcontractor in renovation of medical center. In 2009, the construction manager hired MAP to install a steam boiler and related piping for the medical center’s heating system. MAP’s installation included several expansion joints, which it was later discovered, were installed backward. Significant damage to concrete, steel, and the heating system occurred as a result. The construction manager performed the work of repairing and replacing the damaged property to the tune of $1.4 million, and submitted a claim to MAP’s CGL insurer, Amerisure, seeking coverage as an additional insured. Amerisure denied the claim contending that MAP’s defective construction was not a covered “occurrence” within the CGL policy. The policy defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” but did not define the term “accident.” The trial court looked to the Court of Appeal’s decision in Hawkeye-Sec. Ins. Co. v. Vector Const. Co., 185 Mich. App. 369 (1990), which defined “accident” as “…a result which is not anticipated and…takes place without the insured’s foresight or expectation and without design or intentional causation on his part.” But, again citing Hawkeye, the trial court concluded that “[d]efective workmanship, standing alone, is not an occurrence within the meaning of a[ ] general liability insurance contract[;] an occurrence exists where the insured’s faulty work product damages the property of another.” Read the court decision
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Reprinted courtesy of Jason Taylor, Traub Lieberman
Mr. Taylor may be contacted at jtaylor@tlsslaw.com

Federal Courts Keep Chipping Away at the CDC Eviction Moratorium

March 22, 2021 — Kriston Capps - Bloomberg
In a March 10 decision, a federal court in Cleveland blocked the national eviction moratorium, making it the second court to challenge the emergency measure implemented under President Donald Trump and extended by the Biden administration. The order clears the way for courts and landlords to resume evictions against tenants across much of Ohio. But the landlord groups who brought the suit believe that the decision could have a broader national application, setting the stage for an earlier-than-anticipated resumption of eviction activity before the ban expires on March 31. The judge ruled that the Centers for Disease Control and Prevention, which introduced its ban on evictions in September, lacks the authority to enact such a policy. While the court stopped short of issuing an injunction against the CDC ban, its decision goes further than the Texas court that made a similar call late in February. Read the court decision
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Reprinted courtesy of Kriston Capps, Bloomberg

US Court Questions 102-Mile Transmission Project Over River Crossing

February 07, 2022 — Mary B. Powers - Engineering News-Record
A federal judge will decide in February whether to stop construction of a $492-million Iowa-to-Wisconsin transmission line, after issuing an opinion in mid-January “declaring” that federal rules preclude the 102-mile Cardinal-Hickory Creek project from crossing the 261-mile Upper Mississippi River National Wildlife and Fish Refuge by right-of-way or land transfer. Reprinted courtesy of Mary B. Powers, Engineering News-Record ENR may be contacted at enr@enr.com Read the full story... Read the court decision
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Be Careful with Continuous Breach and Statute of Limitations

January 21, 2019 — Christopher G. Hill - Construction Law Musings
If you are a construction attorney like me (or anyone that takes cases to court), you deal with statutes of limitation on a daily basis. These statutes seem pretty simple. A party has “X” amount of time in which to file its lawsuit after accural of the cause of action. In a breach of contract suit, the accrual is the date of breach. Easy, right? Wrong, at least in some circumstances. Take for example, the case of Fluor Fed. Sols., LLC v. PAE Applied Techs., LLC out of the 4th Circuit Court of Appeals. In this unpublished opinion the Court looked at “continuous breach” versus “series of separate breaches.” The basic facts are that in 2000 Flour entered into a contract with PAE whereby PAE requested and claims to have received consent from Flour to a 2.3% administrative cost cap on Flour’s work on an Air Force contract. Flour claimed that it did not agree to this cap. In 2002, Flour begain billing PAE for its costs plus the 2.3% administrative markup and billed in this fashion for the first full year. However, in subsequent years and for the next 11 years, Flour billed PAE at a higher markup rate than the 2.3%. PAE disputed the increased markup and paid Flour at the 2.3% rate. Flour periodically protested but made no move to court until it filed suit in March of 2016. After a bench trial, the district court found that Flour had agreed to the cap and found for PAE. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

Insurer Entitled to Reimbursement of Defense Costs Under Unjust Enrichment Theory

May 04, 2020 — Tred R. Eyerly - Insurance Law Hawaii
The federal district court for the district of Hawaii determined that the insurer could recover defense costs from an additional insured consistent with its Reservation of Rights letter under an unjust enrichment theory. Giga, Inc. v. Kiewit Infrastructure W. Co., 2020 U.S. Dist. LEXIS 10151 (D. Haw. Jan. 22, 2020). This case was related fall-out from the Arthur case. Arthur v. Dept. of Hawaiian Homelands, 185 Haw. 149 (Haw. Ct. App. 2015). A prior post on the case is here. In Arthur, a resident, Mona Arthur, of the Kalawahine Streamside Housing Development, was killed when she apparently slipped and fell from a hillside adjacent to the project. She was on the hillside tending to her garden there. At the bottom of the hill was a two foot fence in front of a drainage ditch, where Mona allegedly hit her head. Mona's husband, William Arthur, sued a variety of defendants including the land owner, designer, developer, civil engineer and others. William alleged the defendants were negligent in the design, construction and supervision of the construction of the hillside area. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

New Hampshire Applies Crete/Sutton Doctrine to Bar Subrogation Against College Dormitory Residents

May 17, 2021 — Kyle Rice - The Subrogation Specialist
Pursuant to the Sutton Doctrine, first announced in Sutton v. Jondahl, 532 P.2d 478 (Okla. Ct. App. 1975), some jurisdictions consider a tenant a coinsured of its landlord absent an express agreement to the contrary. In Ro v. Factory Mut. Ins. Co., No. 2019-0620, 2021 N.H. LEXIS 34 (Mar. 10, 2021), the Supreme Court of New Hampshire held that the Sutton Doctrine, adopted by New Hampshire in Cambridge Mut. Fire Ins. Co. v. Crete, 846 A.2d 521 (N.H. 2004), extends to resident students in a college dormitory. Thus, absent specific language to the contrary, a student is an implied coinsured under the fire insurance policy issued for his or her dormitory. In 2016, two students at Dartmouth College, Daniel Ro and Sebastian Lim, set up a charcoal grill on a platform outside of a fourth-floor window in the Morton Hall dormitory. The grill started a fire on the platform that ultimately spread to the roof of the dormitory. During fire suppression efforts, all four floors of the dormitory sustained significant water damage. Following the loss, the building’s insurer, Factory Mutual Insurance Company (Insurer), paid $4,544,313.55 to the Trustees of Dartmouth College for the damages. Read the court decision
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Reprinted courtesy of Kyle Rice, White and Williams
Mr. Rice may be contacted at ricek@whiteandwilliams.com

Florida Duty to Defend a Chapter 558 Right to Repair Notice

July 30, 2015 — Scott Patterson – CD Coverage
In Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Co., 2015 WL 3539755 (S.D. Fla. 2015), Altman was the general contractor for a residential condominium project. The condominium association served Altman with Chapter 558 notices. A Chapter 558 notice is a statutory prerequisite to a property owner’s construction defect lawsuit and provides the contractor with an opportunity to respond and avoid litigation. Altman demanded that its CGL insurer, Crum & Forster, provide a defense to the Chapter 558 notices by hiring counsel to represent Altman’s interests. While not disputing that the claimed defects may be covered under the policy, Crum & Forster denied any duty to defend against the notices on the basis that they did not constitute a “suit.” Altman filed suit. Read the court decision
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Reprinted courtesy of Scott Patterson, CD Coverage

Los Angeles Warehousing Mecca Halts Expansion Just as Needs Soar

September 05, 2022 — Ngai Yeung & Augusta Saraiva - Bloomberg
Communities in the Inland Empire, the US’s logistics mecca east of Los Angeles, are suspending new warehousing projects to examine the impact from decades of pollution -- putting the industry under pressure when it’s needed most. This week, the city council for Pomona is set to vote on extending a temporary halt on industrial developments to study the environmental impact, while the nearby city of Norco will decide whether to establish a 45-day moratorium. The actions follow similar freezes by a handful of Southern California cities like Riverside, Colton, Chino and Redlands over the past several years. Meanwhile, a state-level bill -- which is a long-shot to pass in the legislature but gives a reading of the mood -- proposes banning large industrial construction within 1,000 feet of non-industrial areas such as schools, homes and playgrounds in Riverside and San Bernardino counties, an area that spans 27,000 square miles. Reprinted courtesy of Ngai Yeung, Bloomberg and Augusta Saraiva, Bloomberg Read the court decision
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