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
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Seven Proactive Steps to Avoid Construction Delay Disputes
September 29, 2021 —
Michael Pink - Construction ExecutiveDelays, cost overruns and disputes have long been part of the commercial construction industry, making the work of reactive forensic analysis by consultants and attorneys a necessary component. Yet many internal practices and issues within construction companies strongly correlate with projects that result in legal disputes and financial losses. There are seven proactive steps that can help companies minimize losses and claims.
Prepare a Cost- and Resource-Loaded Critical Path Method Schedule
This is the first step any contractor can take to establish and document a manpower plan, a timeline and an intended flow for its work. Doing so is beneficial for two reasons: it will become the basis for measuring impacts and variances to both cost and schedule in a delay, dispute or claim setting; and it will serve as a great project management resource or tool. Without thinking through manpower, durations and workflow in great detail at the beginning of the project, contractors put themselves at risk of becoming delayed and blowing the budget.
Reprinted courtesy of
Michael Pink, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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The Project “Completion” Paradox in California
April 06, 2016 —
Garret Murai – California Construction Law BlogWe’ve written before about why the date of “completion” on a California construction project is important, and why, if I may be blunt, determining that date can be as frustrating as a one-legged man in a game of kickass.
You see, in California the deadline to record a mechanics lien, serve a stop payment notice, or make a payment bond claim – important construction payment remedies the California State Legislature saw fit to help you get paid – often depends on when a project is “completed.” So, for example, the deadline for direct contractors to record a mechanics lien is 90 days from completion of the project.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
New York Bridge to Be Largest Infrastructure Project in North America
October 22, 2013 —
CDJ STAFFNew York’s Tappan Zee Bridge is going to be replaced by the New NY Bridge, but it might be a while in coming. Work has begun, but the project is expected to last most of the next five years. Howard P. Milstein, chairman of the Thruway Authority notes that “the New NY Bridge is the largest transportation infrastructure project in North America and one of the largest construction contracts in New York State history.”
The current bridge was designed for 100,000 vehicles daily, or about 38,000 fewer than cross the bridge each day. Maintenance costs have been hundreds of millions of dollars in the last few years. The cost of the new bridge is expected to be less than $4 billion. The initial estimate was that it would cost more than $5 billion to build the new bridge.
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Insurance Policy to Protect Hawaii's Coral Reefs
December 26, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe New York Times recently reported on an insurance policy issued to the non-profit Nature Conservancy to protect coral reefs in Hawaii. Cihistopher Flavelle, Catrin Einhorn, In a First, Nonprofit Buys Insurance for Hawaii's Threatened Coral Reefs, N.Y. Times, Nov. 21, 2022.
If damaged by a storm, coral reefs need immediate attention if they are going to recover. The Nature Conservancy plans a four step process to save damaged reefs:
- Purchase a policy for all 400,000 acres of coral reefs surrounding the Hawaii island.
- If reefs are sufficiently damaged by a storm the policy will pay out within two weeks.
- The Nature Conservancy will ask the State of Hawaii, owner of the reefs, for a permit to repair the storm damage.
- Finally, if the state officials issue the permit, the insurance proceeds will pay teams of divers to repair the damage. Crews will have about six weeks before coral begins to die.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Insurer Granted Summary Judgment on Faulty Workmanship Claim
October 20, 2016 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court found no coverage for the insured developer after water intruded into the homeowners' basements. W. Bend Mut. Ins. Co. v. Cleland Homes, 2016 U.S. Dist. LEXIS 108030 (N.D. Ind. Aug. 16, 2016).
The underlying complaint alleged that the subdivision was designed to create a run off of ground water onto the lots where Cleland built plaintiffs' homes. The design of the subdivision and construction of the homes was defective in that the plaintiffs' homes were situated so that the water table underneath their homes was so high that their basements flooded and damage occurred to the structure of their homes. Cleland was allegedly negligent in designing and/or constructing the homes or negligent in the water drainage plan for the subdivision.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Thanks for the Super Lawyers Nod for 2019!
May 20, 2019 —
Christopher G. Hill - Construction Law MusingsIt is with humility and a sense of accomplishment that I announce that I have been selected for the third straight year to the Virginia Super Lawyers in the Construction Litigation category for 2019. Add this to my recent election to the Virginia Legal Elite in Construction and I’ve had a pretty good year. As always, I am thrilled to be included on these peer elected lists.
So without further ado, thank you to my peers and those on the panel at Virginia Super Lawyers for the great honor. I feel quite proud to be part of the 5% of Virginia attorneys that made this list for 2019.
The full lists of Virginia Super Lawyers will appear in the May edition of Richmond Magazine. Please check it out.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Life After McMillin: Do Negligence and Strict Liability Causes of Action for Construction Defects Still Exist?
January 24, 2018 —
Thomas Balestreri and Amanda Crawley - Balestreri, Potocki, & HolmesThe ruling is in but the battle will likely continue over the practical application of SB 800. On January 18, 2018 the California Supreme Court issued its decision in
McMillin Albany, LLC v. Superior Court (Van Tassel) (January 18, 2018, S229762) __ Cal.4th __, holding that the statutory prelitigation scheme in The Right to Repair Act (“the Act”) that provides for notice and an opportunity for the Builder to repair defects applies to all claims for construction defects in residential construction sold on or after January 1, 2003, regardless whether the claim is founded on a violation of the Act’s performance standards or a common law claim for negligence or strict liability. (
McMillin Albany, LLC v. Superior Court (Van Tassel) (January 18, 2018, S229762) __ Cal.4th __.) With this holding, has the Court ruled that common law causes of action for construction defect still survive? If so, what will they look like and what standards will be applied?
The short answer is that it appears that common law causes of action still survive, at least for now, but it is not clear from this decision what they will look like and what standards will apply.
Portions of the decision seem to suggest that the Act is the sole and exclusive remedy for construction defect claims: “…even in some areas where the common law had supplied a remedy for construction defects resulting in property damage but not personal injury, the text and legislative history [of the statute] reflect a
clear and unequivocal intent to supplant common law negligence and strict product liability actions under the Act.” (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 6].) (Italics added for emphasis) However, at the end of the decision, the Court seems to be saying that there may still be a place for common law claims for negligence and strict liability alongside the Act but that these causes of action may be subject to the performance standards in the Act.
The
McMillin case went up to the Supreme Court on a procedural issue: whether a common law action alleging construction defects resulting in both economic loss and property damage is subject to the Act’s prelitigation notice and cure procedures. The Van Tassels had dismissed their claims under the Act opting to proceed solely on their common law claims including negligence and strict liability. McMillin sought a stay to force the Van Tassels to comply with the Act’s prelitigation procedures. The Supreme Court held that the Van Tassels must comply with the statutory procedures and affirmed the stay issued by the trial court. But the question remained: now that the Van Tassels were left only with common law claims, how would they proceed under the Act?
To understand how the Court dealt with this question, one must first understand how the Court dealt with the narrow procedural question presented by the case. The Court provides a very detailed, clear explanation of the reasons why it felt the Legislature intended for all construction defect claims involving residential construction must comply with the prelitigation requirements of the Act. In summing up its conclusions the Court makes three definitive holdings.
First, for claims involving economic loss only—the kind of claims involved in
Aas—the Court holds that the Legislature intended to supersede
Aas and provide a statutory basis for recovery. (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 10].) In other words, the Court clearly agrees that the Act was meant to allow recovery of damages based solely on economic damages. No surprise there. Second, the Court held for personal injuries, the Legislature made no changes to existing law that provides common law remedies for the injured party. (Id.) Nobody has ever contested that. Finally, the Court held that for construction defect claims involving property damage and not just economic loss “the Legislature replaced the common law
methods of recovery with the new statutory scheme.” (
Id.,) (Italics added for emphasis.)
In other words, the Court is not saying that negligence and strict liability are not permitted causes of action. The Court is merely stating that these causes of action must comply with the Act’s statutory scheme just as the same as a claim for economic loss. Here the Court is focusing on the procedure that must be followed. “The Act, in effect, provides that construction defect claims not involving personal injury will be treated the same procedurally going forward whether or not the underlying claims gave rise to any property damage.” (
Id.)
Having laid out its fundamental premise, the Court then deals with Plaintiff’s arguments regarding the intent of the Legislature and makes light work of them all. In the process, the Court disapproves
Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal. App. 4th 98, and
Burch v. Superior Court (2014) 223 Cal. App. 4th 1411, to the extent they are inconsistent with the views expressed in the
McMillin opinion.
This is where the decision gets interesting. The Court reminds us that the Van Tassels had dismissed their statutory causes of action for violation of the performance standards under Section 896. One would think at that point that Plaintiffs had to be wondering if they had any claims left given that the Court had ruled that the Act was the sole means of recovery for construction defects. Not so fast. The Court points out that the complaint still rests on allegations of defective construction and that the suit remains an “ ‘action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction’ of the plaintiffs’ homes (§896)
and McMillin’s liability under the Van Tassels’ negligence and strict liability claims depends on the extent to which it [McMillin] violated the standards of sections 896 and 897.” (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 19].) (Emphasis added.) WHAT DID THE COURT JUST SAY? Did the Court just say that a plaintiff could bring a common law cause of action for negligence or strict liability based on a violation of the performance standards under Section 896? What exactly would that claim look like? What would be the elements of such a cause of action?
To answer these questions, the Court states in the very next paragraph, which also happens to be the last paragraph in the decision: “In holding that claims seeking recovery for construction defect damages are subject to the Act’s prelitigation procedures regardless of how they are pleaded,
we have no occasion to address the extent to which a party might rely upon common law principles in pursuing liability under the Act.” (
McMillin (January 18, 2018, S229762) __Cal.4th.__ [p. 19].) (Italics added for emphasis) Is the Court answering “No” to the questions posed above? Probably not. It is simply following the age old rule that an appellate court will
not rule on an issue that is not specifically presented by an appeal, leaving that question for another day.
All we know for sure from
McMillin is that every claim for construction defects falling within the scope of the Act must follow the prelitigation procedure. There are no hall passes for negligence and strict liability. The larger question posed by the last two paragraphs in the decision, is whether the law recognizes a cause of action for negligence and strict liability for construction defects based on the standards in Section 896. The answer will have to be worked out by judges and trial attorneys in courtrooms across the State! The parameters of this hybrid cause of action that the Court seems to have posited will need more careful consideration than can be offered on first reading of
McMillin v. Superior Court.
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Balestreri, Potocki, & Holmes
