Hawaii Court Looks at Changes to Construction Defect Coverage after Changes in Law
November 06, 2013 —
CDJ STAFFA construction defect case lead at the U.S. District Court for Hawaii involved the insurer’s changed views on what was covered based on court decisions that came after the policy was written. John R. Casciano and Jessica L. Urban of Steptoe & Johnson LLP discuss the case on their firm’s website. They note that in Illinois National Insurance Company v. Nordic PCL Construction, Inc., Nordic built a retail building which soon afterwards had water leaks and property damage, due to alleged defects in the roof construction.
Nordic had purchased comprehensive general liability and umbrella polices, with coverage that included property damage. Mr. Casciano and Ms. Urban note that “at the time of contracting, the Ninth Circuit had predicted that, ‘if the Hawaii Supreme Court examined the matter, it would rule that, for purposes of insurance coverage, construction defects were “not occurrences.”’” After the policy was written, the Hawaii Intermediate Court of Appeals did rule that “construction defect claims do not constitute an ‘occurrence’ under a CGL policy.” On the basis of this, Illinois National determined that they had no duty to defend or indemnify their client.
Nordic made a claim of bad faith, but the court determined that “an insurer that denies coverage based on an open question of law does not act in bad faith, an insurer that actually relies on governing law, even if the insurer only belatedly learns of the law, cannot be said to thereby act in bad faith.”
However, the court denied a summary judgment of Nordic’s claim of negligent misrepresentation, determining that there was “a question of fact as to whether the Policies covered [or were represented as covering] only damage to third parties caused by subcontractors’ defective work.” Finally, the court found that “a reasonable jury could infer that, at the time the Polices were issued, the insurers meant to cover claims arising out of the defective work” of Nordic’s subcontractors.
They conclude that the Nordic decision “recognizes the varying consequences for coverage claims when post-contracting changes to the law may not coincide with the expectations of at least one of the parties at the time of contracting.”
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Motion to Dismiss Denied Regarding Insureds' Claim For Collapse
October 29, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court denied the insurer's motion to dismiss claims for loss due to the imminent collapse of the insureds' basement walls. Belz v. Peerless Ins. Co., 2014 WL 4364914 (D. Conn. Sept. 2, 2014).
The insureds noticed cracks throughout their basement walls. It was discovered that the condition was the result of a chemical compound used in the concrete of certain basement walls in the late 1980s and early 1990s. The insureds contended that due to the cracking, the basement walls suffered a substantial impairment to their structural integrity making it only a matter of time until the walls collapsed.
The insureds notified their insurer, Peerless. An engineer hired by Peerless determined the walls' condition was caused by poor workmanship and defective materials. On this basis, Peerless denied coverage.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Construction defect firm Angius & Terry moves office to Roseville
January 09, 2013 —
CDJ STAFFThe law firm Angius & Terry LLP has closed its office on River Park Drive in Sacramento and opened a Roseville office that will allow for growth. The new office at 3001 Lava Ridge Court provides more usable space in a nice area for less money, said Brad Epstein, a local partner with the firm.
Five attorneys and three staff moved to the new space in Roseville on Jan. 2. “It can house three additional attorneys — and we plan to grow,” Epstein said. The firm specializes in construction defect litigation and general corporate work for community associations.
There are about 800 community associations in the Sacramento area and a handful of small firms that divvy up the work.
“Condominium developments and homeowners’ associations never die and always have legal issues,” Epstein said.
Angius & Terry has a total of 20 lawyers in six offices, four in California and two in Nevada.
Besides Roseville, the firm has offices in Walnut Creek, Manteca, Newport Beach, Reno and Las Vegas.
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Does Your U.S. Company Pull Data From European Citizens? Fall In Line With GDPR by May 2018 or Suffer Substantial Fines
November 15, 2017 —
Jeff Dennis & Ivo Daniele – Newmeyer & Dillion, LLPThe European Union (“EU”) has enacted a strict, comprehensive framework of security regulations aimed to protect its citizens. These regulations, known as the General Data Protection Regulation (“GDPR”), provide a blueprint for a combination of required legal, technological and work habits within an organization. Although this is an EU regulation, the new laws will apply to any organization within or outside the EU that collects or processes data of EU citizens. Therefore, U.S. companies must analyze their data and processes to determine whether compliance with the GDPR is necessary. A quickly-approaching deadline of May 25, 2018 must be met to avoid massive fines.
What is the GDPR?
In order to address the creation of social networking sites, cloud computing, and location-based services, the EU set in motion a process to implement a vigorous set of rules to ensure the right to personal data protection for all European citizens. In April 2016 the European Parliament, the Council, and the Commission adopted a new GDPR, which will take affect on May 25, 2018.
This GDPR will streamline cooperation between the data protection authorities on personal data issues allowing companies to deal with one authority - not each of the 28 EU member states. This will allow for quicker decisions by the data protection authorities and greatly reduce the red tape in both compliance and enforcement under the GDPR. This will also create a level playing field by forcing non-EU companies to comply with the same strict regulations - regardless of whether or not the company is established in the EU.
Territorial scope of the GDPR
The GDPR applies directly to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the EU - regardless of whether the processing takes place in the EU. Additionally, there are specific provisions under the GDPR that apply to non-EU companies if their processing activities relate to (a) the offering of goods or services (irrespective of whether a payment of the data subject is required) or (b) monitoring the behavior of individuals within the EU. Therefore, all companies must determine whether they process or monitor information of EU citizens. If a company falls within one of these categories, compliance with the GDPR is mandatory.
What happens if a company fails to comply with the GDPR?
Failure to comply with the GDPR could subject a company to crushing administrative fines.
The supervisory authority has the power to impose administrative fines under the GDPR. The following violations and breaches would subject a company to administrative fines:
- Not adhering to the core principles of processing personal data,
- Breach of notification to EU citizens by controllers and processors,
- Wrongful transfer of personal data to non-EU countries,
- Breach of obligations regarding certification,
- Ignoring the mandates asserted by the supervisory authority,
- Breach by those responsible for impact assessment, and
- Wrongful processing of employee data.
The extent of the violation and type of personal data involved will dictate the severity of the administrative fines imposed on a company. For example, under the GDPR, a company could be subject to administrative fines up to 20,000,000 EUR, or up to 4% of the total worldwide annual revenue of the preceding financial year. Obviously, these fines would be financially crippling to any company.
Preparing for May 25, 2018
The May 25, 2018 deadline is fast approaching and preparing for full compliance with the GDPR is paramount. Simple steps should be taken to ensure compliance including to:
(1) Review and analyze data repositories for sensitive data,
(2) Perform an analysis/accounting of procedure for data collection, and
(3) Create an oversite committee dedicated to data activities and compliance.
Most importantly, however, is to determine whether compliance with the GDPR is necessary, and strictly follow the requirements of the GDPR to protect from potentially massive fines.
Jeffrey M. Dennis currently serves as Newmeyer & Dillion’s Managing Partner and as a business leader, advises his clients on cybersecurity related issues, introducing contractual and insurance opportunities to lessen their risk. You can reach Jeff at jeff.dennis@ndlf.com.
Ivo Daniele is a seasoned associate in Newmeyer & Dillion’s Walnut Creek office. His practice includes representing private and public companies with both their transactional and litigation needs. You can reach Ivo at ivo.daniele@ndlf.com.
About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.
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Does Your U.S. Company Pull Data From European Citizens? Fall In Line With GDPR by May 2018 or Suffer Substantial Fines
School System Settles Design Defect Suit for $5.2Million
October 01, 2013 —
CDJ STAFFA school district in New York State has settled a dispute with its architectural and engineering firm for $5.2 million. Greece School District alleged that the multi-million dollar remodel lead to a variety of problems due to design defects. The problems included leaking roofs, malfunctioning drainage systems, and problems with heating systems. Tetra Tech had one work at 20 schools in the district.
The state Comptroller audited the $119.5 million renovation project and concluded that haste in the planning resulted in costly changes. Prior to the lawsuit, the architectural and engineering firm managed to recoup about $200,000 on behalf of the school district for work that was defective.
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Why Are Developers Still Pouring Billions Into Waterlogged Miami?
November 30, 2016 —
James Tarmy – BloombergOn Sunday, an ebullient procession of artists, performers, and city residents filled Collins Avenue between Miami Beach’s 32nd and 36th streets to inaugurate the Faena Forum, a 43,000--square-foot, $150 million, performing- and visual-arts space that’s the cultural centerpiece of the Faena District, a $1 billion development comprising luxury hotels, restaurants, and real estate. The complex is the brainchild of Alan Faena, an Argentinian fashion designer-cum-developer known for his all-white outfits, and Len Blavatnik, a Ukrainian born, New York-based billionaire whose net worth is estimated by Bloomberg Billionaires to be $18.6 billion.
The parade/carnival/performance was was titled “Side by Tide,” which might be an overly optimistic assessment of Miami Beach's sea level. With "king tides" flooding parking garages and a University of Miami study reporting that Miami Beach has seen a 200 percent increase in flooding in the last decade, the tide isn’t on anyone’s side. It’s already beneath the city, seeping upward, often as not, through the ground’s porous limestone and into buildings’ backlogged storm drains. Aside from ruining the undercarriages of residents’ Porsches, this ground-up flooding has a second, perhaps more deleterious effect on the long-term feasibility of Miami Beach: Normal defenses against a rising ocean—such as sea walls or dykes—are useless.
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James Tarmy, BloombergMr. Tarmy may be followed on Twitter @jstarmy
Insurance Law Alert: California Appeals Court Allows Joinder of Employee Adjuster to Bad Faith Lawsuit Against Homeowners Insurer
April 08, 2014 —
Valerie A. Moore and Christopher Kendrick - Haight Brown & Bonesteel LLPIn Bock v. Hansen (No. A136567, filed 4/2/14), a California appeals court held that an adjuster employed by an insurer can be sued personally for falsely representing that a first party claimant's policy does not cover a loss.
In Bock, a 41-foot long, 7,300 pound tree limb crashed onto the insureds' home, damaging the roof, chimney, living room walls, windows and floors. The assigned adjuster was alleged to have engaged in "appalling" conduct, including instructing the insureds to clean up the damage themselves (leading to personal injury); denying that the tree cracked the chimney; insulting and disparaging the insureds; altering the scene before taking photographs; misrepresenting the terms of the policy; preparing false claim reports; conspiring with a contractor to prepare an intentionally false report; and knowingly relying on the false report in order to deny a legitimate claim.
The homeowners sued the insurer and named the adjuster personally on causes of action for negligent misrepresentation and intentional infliction of emotional distress. But the adjuster demurred arguing that he could not be sued personally because, as an employee of the insurer, he owed no duty to the insureds. The adjuster relied on Sanchez v. Lindsey Morden Claims Services, Inc. (1999) 72 Cal.App.4th 249 and Lippert v. Bailey (1966) 241 Cal.App.2d 376, to argue that employees and agents of insurers cannot be held personally liable since, under the law of agency, the proper cause of action is against the principal and not the agent.
Reprinted courtesy of
Valerie Moore, Haight Brown & Bonesteel LLP and
Christopher Kendrick, Haight Brown & Bonesteel LLP
Ms. Moore may be contacted at vmoore@hbblaw.com; Mr. Kendrick may be contacted at ckendrick@hbblaw.com
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Considerations in Obtaining a Mechanic’s Lien in Maryland (Don’t try this at home)
February 23, 2016 —
Christopher G. Hill – Construction Law MusingsFor this week’s Guest Post Friday at Construction Law Musings I welcome Matthew Evans. Matt is the owner of
Law Offices of Matthew S. Evans, III, LLC located in Annapolis, Maryland. He has practiced construction, real estate and land use law in Maryland and D.C. for thirteen years. Prior to opening his own firm in May 2011, Mr. Evans was a partner at a mid-sized firm in Anne Arundel County, Maryland. Mr. Evans lives in Historic Annapolis (only three short blocks from his office) with his wife Margaret, and three children, Matthew (5), Bo (4) and Peyton (2).
Some of the most common calls I get are from irate contractor or subcontractor clients who have not been paid demanding that I “lien the property”. Many times after calming the client down, I determine, to their dismay, that they are not entitled to a mechanic’s lien. In Maryland, the mechanic’s lien law is driven by statute, which contains specific requirements which must be met before the client is entitled to a lien.
The first question is whether the contractor or subcontractor is entitled to a lien for the work performed. Under Maryland law, “every building erected and every building repaired, rebuilt, or improved to the extent of 15 percent of its value is subject to establishment of a lien…for the payment of all debts.” It’s easy when dealing with new construction. No matter how small your portion of the work, the property is subject to the establishment of a lien. It is more difficult to determine entitlement when there is either a total or partial renovation or other work. The question becomes how do you determine the value of the building, and whether it has been improved “to the extent of 15 percent of its value.” Believe me, I have seen creative and some not so creative methods of calculation used by counsel to prove that certain work does or does not meet the requirement.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
