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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Ahlers & Cressman Presents a Brief History of Liens
August 20, 2014 —
Beverley BevenFlorez-CDJ STAFFBrad Westmoreland on Ahlers & Cressman PLLC’s blog, presented the history of liens in the U.S., going back to 1789. In fact, the lien was created in response to the need of swift and extensive construction in Washington D.C.
“Although it had an abundance of land at the time, America was short on labor and capital,” Westmoreland wrote. “Knowing the state of things, builders were hesitant to provide labor and materials without guarantees that owners would be able to pay.”
According to the Ahlers & Cressman PLLC blog, Thomas Jefferson solved the issue by urging “the Legislature of Maryland to pass a law giving builders ‘a lien upon newly created values of [their] labors.’ The new law would provide builders with the assurance that contracts would not result in a total loss should the owners fail to pay.”
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Lawsuits over Roof Dropped
December 04, 2013 —
CDJ STAFFAn Iowa roofing contractor has dropped its lawsuit over a contract to re-roof a condominium complex. The condominium association has dropped its counterclaim against the roofer. Hansel Construction alleged that the Harbourage Owners Association failed to fulfill the contract’s provisions, which prevented Hansel Construction from fulfilling its contract. Further, Hansel alleged that it had expenses, losses, and damages, as a result of Harbourage’s actions.
In response, Harbourage sued James Hansel. Now, both lawsuits have been dismissed by the parties.
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DC District Court Follows Ninth Circuit’s Lead Dismissing NABA’s Border Wall Case
April 10, 2019 —
Anthony B. Cavender - Gravel2GavelOn February 14, the U.S. District Court for the District of Columbia dismissed the complaint of the National American Butterfly Association (NABA) alleging that the U.S. Government’s border wall preparation and law enforcement activities at NABA’s National Butterfly Center, located in South Texas along the Rio Grande River, violated federal environmental laws (National Environmental Policy Act (NEPA)) and the Endangered Species Act (ESA)) as well as NABA’s constitutional rights. The case is National American Butterfly Association v. Nielsen, et al.
On January 25, 2017, the President issued an Executive Order to the Secretary of the Department of Homeland Security (Secretary) to “take all appropriate steps to immediately plan, design, and construct a physical wall along the southern border” with Mexico. A few weeks later, the Secretary issued a memorandum to the U.S. Customs and Border Enforcement to implement the Executive Order. The land occupied by the NABA has been affected by these actions, as well as other actions taken by the Secretary pursuant to her authority under the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), located at 8 U.S.C. § 1103.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Free Texas MCLE Seminar at BHA Houston June 13th
May 29, 2014 —
Beverley BevenFlorez-CDJ STAFFThere are just two weeks remaining to sign up for Bert L. Howe & Associate’s next Texas MCLE seminar, THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION.
This activity will be presented on Friday, June 13th at noon, at BHA’s Houston offices, located at:
800 Town & Country Blvd.
Suite 300
Houston, TX 77024
There is no cost for attendance at this seminar and lunch will be provided.
This course has been approved for Minimum Continuing Legal Education credit by the State Bar of Texas Committee on MCLE in the amount of 1.0 credit hours, of which 0.0 credit hours will apply to legal ethics/professional responsibility credit. The seminar will be presented by Don MacGregor, general contractor and project manager.
Water intrusion through doors, windows and roofing systems, as well as soil and foundation-related movement, and the resultant damage associated therewith, are the triggering effects for the vast majority of homeowner complaints today and serve as the basis for most residential construction defect litigation. The graphic and animation-supported workshop/lecture activity will focus on the residential construction process from site preparation through occupancy, an examination of associated damages most often encountered when investigating construction defect claims, and the inter-relationships between the developer, general contractor, sub trades and design professionals. Typical plaintiff homeowner/HOA expert allegations will be examined in connection with those building components most frequently associated with construction defect and claims litigation.
The workshop will examine:
*Typical construction materials, and terminology associated with residential construction
*The installation process and sequencing of major construction elements, including interrelationship with other building assemblies
*The parties (subcontractors) typically associated with major construction assemblies and components
*An analysis of exposure/allocation to responsible parties.
Attendance at THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION seminar will provide the attendee with:
*A greater understanding of the terms and conditions encountered when dealing with common construction defect issues
*A greater understanding of contractual scopes of work encountered when reviewing construction contract documents
*The ability to identify, both quickly and accurately, potentially responsible parties
*An understanding of damages most often associated with construction defects, as well as a greater ability to identify conditions triggering coverage
Course #: 901290467 / Sponsor #: 14152. To register for the event, please email Don MacGregor at dmac@berthowe.com. If you have any questions, please feel free to contact Don at (800) 482-1822 (office) or (714) 713-4956 (cell).
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Washington High Court Holds Insurers Bound by Representations in Agent’s Certificates of Insurance
March 16, 2020 —
Michael S. Levine & Michelle M. Spatz - Hunton Insurance Recovery BlogIn responding to a certified question from the Ninth Circuit in T-Mobile USA Inc. v. Selective Insurance Company of America, the Washington Supreme Court has held that an insurer is bound by representations regarding a party’s additional insured status contained in a certificate of insurance issued by the insurer’s authorized agent, even where the certificate contains language disclaiming any effect on coverage. To hold otherwise, the court noted, would render meaningless representations made on the insurer’s behalf and enable the insurer to mislead parties without consequence.
The certified question and ruling stem from T-Mobile USA’s appeal of the district court’s summary judgment ruling in favor of Selective Insurance Company on T-Mobile USA’s breach of contract and declaratory judgment claims. Selective issued the insurance policy at issue to a contractor of T-Mobile Northeast, LLC, a wholly owned subsidiary of T-Mobile USA. Through endorsement, the policy extended “additional insured” status to T-Mobile NE because the contract between T-Mobile NE and the insured required that T-Mobile NE be added as an additional insured. Additional insured status was not, however, extended to T-Mobile USA, as T-Mobile USA had not entered a written contract with the insured.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Michelle M. Spatz, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Spatz may be contacted at mspatz@HuntonAK.com
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Save a Legal Fee: Prevent Costly Lawsuits With Claim Limitation Clauses
April 25, 2012 —
Douglas Reiser, Builders Council BlogEver had that lingering problem with a contracting partner that went away for awhile and then came back to bite you ? years later? In Washington, construction contract claims can be raised for up to six years after substantial completion. Six years!? Why would I want to wait that long to find out if I have a problem? You don’t have to.
Over the past few years, I have discussed the notion of “contractual claim periods” on The Builders Counsel. For today’s Save a Legal Fee column, I cannot think of a better topic. These provisions are specifically intended to save you from unnecessary legal fees that might arise if a problem goes unnoticed for too long.
Contractual claim periods are simply a way to reduce the amount of time that a contracting party has to raise a claim against its contracting partner. For example, a subcontractor might require that a general contractor raise any claim that it might have ? for defective or incomplete work, injury, damages, etc ? within a particular amount of time or forever lose the ability to raise the claim in a legal proceeding.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
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Changes to Pennsylvania Mechanic’s Lien Code
July 13, 2017 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome Jim Fullerton. Jim is the President of the law firm of Fullerton & Knowles, P.C., which has attorneys licensed in Virginia, Maryland, Pennsylvania, and the District of Columbia, is a Martindale Hubbell Peer Rated Lawyer AV® Preeminent.™ The firm represents owners, lenders, design professionals, suppliers, subcontractors, general contractors and other members of the real estate and construction industries, filing mechanic’s liens, surety bond and other construction claims across all of the states in the Mid Atlantic region. He also represents creditors in bankruptcy issues nationwide, particularly defense of bankruptcy preference claims; advises owners and lenders in real estate lending and acquisition transactions; on all real estate and construction law issues; contract formation and disputes.
The firm’s Construction Law Survival Manual is well known and widely used by participants in the construction process. The 550 page manual provides valuable information about construction contract litigation, mechanic’s liens, payment bond claims, bankruptcy and credit management and contains over 30 commonly used contract forms. All of this information and recent construction law issues are constantly updated on the firm’s website.
There are two changes to the Pennsylvania Mechanic’s Lien Code that became effective September 2014. First, residential properties built by an owner for their own residence will now have a defense of payment to subcontractor mechanic’s liens. This protects homeowners from mechanic’s liens if they have paid their general contractors in full. Second, construction loan open end mortgages will have priority over mechanic’s liens, as long as at least sixty per cent (60%) of the loan proceeds are used for construction costs. This change was pushed by Pennsylvania lenders in response to a recent court case.
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Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
