Carwash Prosecutors Seek $1.6 Billion From Brazil Builders
February 26, 2015 —
Sabrina Valle – Bloomberg(Bloomberg) -- Some of Brazil’s biggest building companies were targeted for the first time in an investigation into alleged kickbacks at Petroleo Brasileiro SA, with prosecutors seeking 4.47 billion reais ($1.6 billion) in compensation.
Federal prosecutors in Parana state accused Camargo Correa, Mendes Junior, OAS, Galvao Engenharia, Grupo Engevix and Sanko of diverting public funds and called for them to be banned from new state contracts, the prosecutors said in an e-mailed statement Friday.
The allegations -- called acao de improbidade in Portuguese, or misconduct action -- mark the first time companies have been singled out in connection with Brazil’s biggest-ever corruption scandal, in which Petrobras executives are accused of accepting bribes from a cartel of builders. Until now, only individuals have been accused of wrongdoing. Executives from companies including OAS and Camargo Correa have been jailed since November as part of the first sweep against contractors in the case known as Carwash.
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Sabrina Valle, BloombergMs. Valle may be contacted at
svalle@bloomberg.net
Staying the Course, Texas Supreme Court Rejects Insurer’s Argument for Exception to Eight-Corners Rule in Determining Duty to Defend
April 27, 2020 —
John C. Eichman, Sergio F. Oehninger, Grayson L. Linyard & Leah B. Nommensen - Hunton Insurance Recovery BlogIn responding to a certified question from the Fifth Circuit in Richards v. State Farm Lloyds, the Texas Supreme Court held that the “policy-language exception” to the eight-corners rule articulated by the federal district court is not a permissible exception under Texas law. See Richards v. State Farm Lloyds, 19-0802, 2020 WL 1313782, at *1 (Tex. Mar. 20, 2020). The eight-corners rule generally provides that Texas courts may only consider the four corners of the petition and the four corners of the applicable insurance policy when determining whether a duty to defend exists. State Farm argued that a “policy-language exception” prevents application of the eight-corners rule unless the insurance policy explicitly requires the insurer to defend “all actions against its insured no matter if the allegations of the suit are groundless, false or fraudulent,” relying on B. Hall Contracting Inc. v. Evanston Ins. Co., 447 F. Supp. 2d 634, 645 (N.D. Tex. 2006). The Texas Supreme Court rejected the insurer’s argument, citing Texas’ long history of applying the eight-corners rule without regard for the presence or absence of a “groundless-claims” clause.
The underlying dispute in Richards concerned whether State Farm must defend its insureds, Janet and Melvin Richards, against claims of negligent failure to supervise and instruct after their 10-year old grandson died in an ATV accident. The Richardses asked State Farm to provide a defense to the lawsuit by their grandson’s mother and, if necessary, to indemnify them against any damages. To support its argument that no coverage under the policy existed, and in turn, it had no duty to defend, State Farm relied on: (1) a police report to prove the location of the accident occurred off the insured property; and (2) a court order detailing the custody arrangement of the deceased child to prove the child was an insured under the policy. The federal district court held that the eight-corners rule did not apply, and thus extrinsic evidence could be considered regarding the duty to defend, because the policy did not contain a statement that the insurer would defend “groundless, false, or fraudulent” claims. In light of the extrinsic police report and extrinsic custody order, the district court granted summary judgment to State Farm.
Reprinted courtesy of Hunton Andrews Kurth attorneys
John C. Eichman,
Sergio F. Oehninger,
Grayson L. Linyard and
Leah B. Nommensen
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Linyard may be contacted at glinyard@HuntonAK.com
Ms. Nommensen may be contacted at leahnommensen@HuntonAK.com
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Consumer Confidence in U.S. Increases More Than Forecast
August 26, 2015 —
Victoria Stilwell – BloombergConsumer confidence climbed more than forecast in August to the second-highest level in eight years as Americans held more favorable views of the labor market.
The Conference Board’s index rose to 101.5 this month from a revised July reading of 91, the New York-based private research group said Tuesday. The gauge exceeded the highest estimate in a Bloomberg survey of economists, whose median forecast was 93.4. The cutoff date for the survey was Aug. 13, before the recent stock-market sell-off.
Americans remained emboldened by job gains, cheaper gasoline and rising home prices in the period leading up to a slump in stock prices as global financial markets took a turn for the worse. The risk for the economy is that households will reassess their spending plans as they wait for evidence the U.S. expansion can withstand such shocks.
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Victoria Stilwell, Bloomberg
The Fourth Circuit Applies a Consequential Damages Exclusionary Clause and the Economic Loss Doctrine to Bar Claims by a Subrogating Insurer Seeking to Recover Over $19 Million in Damages
February 23, 2016 —
William L. Doerler – White and Williams LLPIn Severn Peanut Company, Inc. v. Industrial Fumigant Company, 807 F.3d 88 (4th Cir. (N.C.) 2015), the United States Court of Appeals for the Fourth Circuit (Fourth Circuit), applying North Carolina law, considered whether a consequential damages clause in a contract between the Severn Peanut Company, Inc. (Severn) and Industrial Fumigant Company (IFC) barred Severn and its subrogating insurer, Travelers Property Casualty Company of America (Travelers), from recovering over $19 million in damages that Severn suffered as the result of a fire and explosion at its Severn, North Carolina plant. The Fourth Circuit, rejecting Severn’s unconscionability and public policy arguments related to the consequential damages clause and finding that the economic loss doctrine barred Severn from pursuing negligence claims, affirmed the trial court’s judgment granting summary judgment in IFC’s favor.
As noted in the Severn decision, the facts showed that Severn and IFC signed a Pesticide Application Agreement (PAA) requiring IFC to use phosphine, a pesticide, to fumigate Severn’s peanut storage dome and to apply the pesticide “in a manner consistent with instructions . . . and precautions set forth in [its] labeling.” With respect to damages, the PAA specified that IFC’s charge for its services, $8,604 plus applicable sales tax, was “based solely upon the value of the services provided” and was not “related to the value of [Severn’s] premises or the contents therein.” In addition, the PAA specified that the $8,604 sum to which the parties agreed was not “sufficient to warrant IFC assuming any risk of incidental or consequential damages” to Severn’s “property, product, equipment, downtime, or loss of business.”
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William L. Doerler, White and Williams LLPMr. Doerler may be contacted at
doerlerw@whiteandwilliams.com
Court Rules that Damage From Squatter’s Fire is Not Excluded as Vandalism or Malicious Mischief
April 15, 2015 —
Valerie A. Moore, Christopher Kendrick, and Colin T. Murphy – Haight Brown & Bonesteel LLPIn Ong v. Fire Insurance Exchange (No. B252773, filed 4/3/15), a California appeals court ruled that a vacancy exclusion limited to damage caused by “vandalism or malicious mischief” did not bar coverage for damage to a vacant property caused by a warming fire purposely started by a transient that got out of control and spread to other parts of the property.
In Ong, the insured’s rental premises had been vacated by tenants and the utilities turned off. Nearly two years later, the insured submitted a claim for fire damage that had just occurred. An investigator reported finding signs that a squatter had been living in the building, stating that: “[I]t appears the fire may have been initiated as the result of an uncontrolled warming fire started by an unauthorized inhabitant.” The investigator found firewood and a mattress, and concluded that holes burned in the floor were the result of the squatter attempting to throw burning wood out the door when the fire got out of control.
The policy excluded vandalism as follows: “We do not cover direct or indirect loss from: . . . 4. Vandalism or Malicious Mischief, breakage of glass and safety glazing materials if the dwelling has been vacant for more than 30 consecutive days . . . just before the loss. A dwelling under construction is not considered vacant.” The term “Vandalism” was not defined in the policy. The insurer denied coverage based on the exclusion, stating: “Our investigation indicates that this loss was the result of vandalism. A trespasser entered the vacant dwelling and intentionally set a fire on the kitchen floor.”
Reprinted courtesy of Haight Brown & Bonesteel LLP attorneys
Valerie A. Moore,
Christopher Kendrick and
Colin T. Murphy
Ms. Moore may be contacted at vmoore@hbblaw.com.
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Mr. Murphy may be contacted at cmurphy@hbblaw.com
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NY Appeals Court Ruled Builders not Responsible in Terrorism Cases
January 13, 2014 —
Beverley BevenFlorez-CDJ StaffIn a ruling on a case related to the September 11, 2001 attacks, New York federal appeals court stated that builders and developers could not be held responsible for losses linked to terrorism, Reuters reports. Circuit Judge Rosemary said the building “would have collapsed regardless of any negligence ascribed by plaintiffs' experts.”
Scott Sweeney writing for the Schinnerer's RM Blog explained, “This decision should make it harder for constructors and designers to be held responsible for damages resulting from major acts of terrorism and unforeseeable events that can be nearly impossible to prepare for.”
Read the full story at Reuters...
Read the full story at Schinnerer's RM Blog...
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Fundamental Fairness Trumps Contract Language
September 24, 2014 —
Craig Martin – Construction Contractor AdvisorThe Texas Supreme Court recently ruled that a “no-damages-for-delay” clause would not be enforced where the delay was caused by the owner. The court’s ruling flies squarely in the face of the contract language that attempted to insulate the owner from any delay claims, even those it caused.
In the case of Zachary Construction v. Port of Houston underlying contract, proposed by the Port of Houston, was heavy handed, to say the least. The contract provided:
“[Contractor] shall receive no financial compensation for delay or hindrance to the Work. In no event shall the Port Authority be liable to [Contractor] … for any damages arising out of or associated with any delay or hindrance to the Work, regardless of the source of the delay or hindrance, including events of Force Majeure, AND EVEN IF SUCH DELAY OR HINDRANCE RESULTS FROM, ARISES OUT OF OR IS DUE IN WHOLE OR IN PART, TO THE NEGLIGENCE, BREACH OF CONTRACT OR OTHER FAULT OF THE PORT AUTHORITY. [Contractor’s] sole remedy in any such case shall be an extension of time.”
Wow, that’s some one-sided language. If the contract was enforced, the contractor could not get any damages for delay, even those damages caused by the active interference of the Port of Houston.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Sixth Circuit Holds that Some Official Actions Taken in the “Flint Water Crisis” Could Be Constitutional Due Process Violations
March 27, 2019 —
Anthony B. Cavender - Gravel2GavelIn what the Court of Appeals describes as “the infamous government-created environmental disaster known at the Flint Water Crisis,” a panel of the U.S. Court of Appeals for the Sixth Circuit has ruled that some of the government personnel responsible for this disaster may be liable, under 42 U.S.C. § 1983, for monetary damages based on the Substantive Due Process Clause of the Fourteenth Amendment to the Constitution. The case is Guertin, et al., v. State of Michigan, et al., decided on January 4, 2019.
On April 25, 2014, the City of Flint, MI, facing a financial crisis, agreed to switch its drinking water supply from the water provided by the Detroit Water and Sewerage Department to untreated water available from the Flint River that would be treated in the waterworks owned and operated by the City. However, the City waterworks could not provide the needed treatment, which resulted in the corrosive Flint River water leaching lead out of the old Flint water pipes. Soon thereafter, a public health and environmental crisis enveloped Flint. Many lawsuits have been filed against many defendants, and many civil and criminal investigations have been opened.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
