Second Circuit Certifies Question Impacting "Bellefonte Rule"
December 15, 2016 —
Ellen Burrows – White and Williams LLPCalling into question the continued validity of the so-called “Bellefonte Rule,” on December 8, 2016, the United States Court of Appeals for the Second Circuit certified to the New York Court of Appeals the question whether a facultative reinsurance contract limit is presumptively all-inclusive and “caps” the reinsurer’s total exposure even where the reinsured policy pays defense costs in addition to the limit. Global Reinsurance Corporation v. Century Indemnity Company Docket No. 15-2164-cv (December 8, 2016).[1]
In Bellefonte Reinsurance Company v. Aetna 903 F.2d 910 (2d Cir. 1990), the court ruled that a reinsurer was not liable to pay defense costs above the stated reinsurance contract limit. Although litigants argued that this ruling was dependent on the fact that the reinsured policy limits were defense cost-inclusive, a later panel of the Second Circuit applied the “cap” ruling in Bellefonte to a situation where the reinsured policy limit was not cost-inclusive and where the insurer was obligated to pay defense costs in addition to the policy limit. Unigard Security Insurance Company v. North River Insurance Company 4 F.3d 1049 (2d Cir. 1993).
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Ellen Burrows, White and Williams LLPMs. Burrows may be contacted at
burrowse@whiteandwilliams.com
Brown Paint Doesn’t Cover Up Construction Defects
April 25, 2012 —
CDJ STAFFIn a decision that describes the case as illustrating “the perils that real estate brokers and their agents assume when acting as a dual listing agent to both the buyers and sellers of the same house,” the California Court of Appeals has issued a decision in William L. Lyon & Associates v. The Superior Court of Placer County. Lyon & Associates sought summary judgment to dismiss the claims of the Henleys who bought a home in a transaction where a Lyon agent represented both sides.
The prior owners of the home, the Costas, had used a Lyon agent in purchasing their home. When they later sought to sell it, that agent “became aware of some of the house’s defects and problems.” In response, the Costas sought the help of another agent, Connie Gidal, also of Lyons & Associates. Photos taken in the presence of Ms. Gidal show defects of the paint and stucco. The Costas also took the step of painting the house dark brown. During the sale process, “rain caused many of the painted-over defects to reappear.” The Costas “purchased more dark brown paint and covered up the newly visible damage prior to inspection by the Henleys.”
With the damage concealed, the Henleys bought the home in May 2006. The agreement with Lyons & Associates noted that “a dual agent is obligated to disclose known facts materially affecting the value or desirability of the property to both parties.” Escrow closed on May 9, 2006. The contract with the broker included a two-year limit on the time to bring legal action.
The Henleys moved in during June 2006, and “began to discover construction defects that had been concealed by the Costas.” In addition to the painted-over stucco problems, the Henleys found that the Costas had “installed quartzite stone overlays on the backyard steps in a manner that caused water intrusion on the house’s stucco walls.”
In May 2009, the Henleys sued the Costas, Ron McKim Construction, Lyons & Associates, and Ms. Gidal. Their complaint alleged that Lyons & Associates had committed breach of contact, negligence, fraud, breach of fiduciary duty, and negligent nondisclosure in connection with the construction defects. The Costas named Lyons in a cross complaint. Lyons moved for summary judgments on the grounds that the two-year statute of limitations had expired before the complaint and cross-complaint were filed. Both the Henleys and the Costas opposed this claim. The court denied the motion and Lyons appealed.
The appeals court upheld the denial, noting that the both California Supreme Court decision and later action by the legislature compels real estate brokers and salespersons “to conduct a reasonably competent and diligent visual inspection of the property offered for sale.” The court noted that under California law, brokers have responsibilities to both sellers and buyers. The section of law cited by Lyons applies to seller’s agents. The court rejected the contention by Lyons that they were “cooperating brokers.” The Henleys were “not constrained by the two-year statute of limitations.”
Lyons contended that even if California’s statute did not apply, there was a contractual limit of two years. The court also rejected this, agreeing with the Henleys that “the two-year limitation period must be extended by the discovery rule.”
The court noted that “Lyon & Associates may not reap the benefit of a shortened contractual limitation period when its own alleged malfeasance contributed to the delay in the discovery of the buyer’s injury.” The court found that the Henleys could proceed with their breach of contract claim, because, “when a breach of contract is committed in secret, such as the intentional nondisclosure of a real estate broker regarding a previously visible construction defect, the contractual limitations period is properly held subject to the discovery rule.” The court felt that the interpretation favored by the California Association of Realtors would “halve the applicable statute of limitations period.”
In addition to rejecting Lyon request for summary judgment on the claims made by the Henleys, the court also rejected the request of summary judgment on the claims made by the Costas, concluding that neither claim is time-barred. Costs were awarded to both the Henleys and Costas.
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Are Mechanic’s Liens the Be All End All of Construction Collections?
August 12, 2024 —
Christopher G. Hill - Construction Law MusingsFor those of you familiar with
Construction Law Musings, you are aware of my affinity and discussion of those
powerful but tricky collection tools: mechanic’s liens. You have heard me tout their ability to secure payment when a contractor or subcontractor has not been paid on a construction project (
even in the face of bankruptcy). If you read my construction law blog regularly (though recently not-so-regularly updated), you could get the impression that a mechanic’s lien is an automatic avenue to payment.
While
mechanic’s liens can be a powerful collection tool, this post is going to discuss some pros and cons of recording, and ultimately suing to enforce, a mechanic’s lien in Virginia.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
The Looming Housing Crisis and Limited Government Relief—An Examination of the CDC Eviction Moratorium Two Months In
December 14, 2020 —
Zachary Kessler - Gravel2GavelMonths after the Centers for Disease Control and Prevention (CDC) issued a nationwide eviction moratorium using its emergency pandemic powers under the Public Health Service Act, the efficacy of this unprecedented measure remains unclear. While the Order ostensibly protects tenants facing homelessness or housing insecurity due to the financial impacts of the COVID-19 pandemic through the end of 2020, legal challenges have been initiated in Ohio and Georgia, with additional lawsuits appearing likely. Further, even barring legal challenges, courts have not handled these cases in a uniform manner. With lawmakers unable to reach any stimulus or COVID-19 relief agreement before the election, the CDC Order appears likely to remain the only federal eviction moratorium through its expiration on December 31, 2020.
Since the Order’s enactment, the CDC has since released new guidance, answering some of the open questions not covered by the initial Order. This guidance, while non-binding, is largely more favorable to landlords and property management companies than the initial text of the Order, as it provides that landlords are not required to make tenants aware of the Order’s protections and may challenge the truthfulness of the tenants’ declarations in any state or municipal court. The guidance also clarified the potential criminal penalties for violating the Order and the criminal penalties for perjury for bad faith submissions of the requisite declaration by tenants.
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Zachary Kessler, PillsburyMr. Kessler may be contacted at
zachary.kessler@pillsburylaw.com
West Coast Casualty’s Quarter Century of Service
May 03, 2018 —
Beverley BevenFlorez-CDJ STAFFWest Coast Casualty's Construction Defect Seminar has been promoting charitable work for the past twenty-five years. Each year, they promote different charities, and provide multiple ways for individuals and companies to contribute. Whether it’s Buy a Banner, Tennis Shoe Thursday, or Flip Flop Friday, industry members are given opportunities to support worthwhile causes.
This year, West Coast Casualty is supporting
Hawaii’s Children’s Cancer Foundation ,
St. Jude Children’s Research Hospital, and
Shriners Hospital for Children.
WCC also supports charitable organizations through every award that they present each year. Donations are made in the winner’s name: For Jerrold S. Oliver Award of Excellence awardees,
Habitat for Humanity as well as a local California and Nevada charity; For Legend of an Era Award, the designated charity of West Coast Casualty’s Construction Defect Seminar; and for The Larry Syhre Commitment to Service Award, a donation to The Larry Syhre Foundation.
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Best Practices for Installing Networks in New Buildings
August 14, 2023 —
Patrick Chown - Construction ExecutiveA previous article, "
How to Install Networks in an Old Building," discussed the various challenges of implementing networking infrastructure in older spaces. The building layout, age of the building and use cases were the major challenges involved. New buildings provide an opportunity to incorporate state-of-the-art networking infrastructure from the ground up. Careful planning and foresight are essential to ensure optimal network performance and avoid future issues.
In new buildings, including corporate offices, multifamily residential complexes, hospitals, educational institutions and retail spaces, the potential use cases and users can vary significantly. Each of these spaces comes with its unique networking requirements. Regardless of the specific network applications, there are fundamental frameworks and best practices that can be employed to build a solid network foundation. By following these guidelines and adapting them to the specific needs of your new building, you can ensure a robust and flexible network infrastructure that accommodates ever-evolving technological demands.
Reprinted courtesy of
Patrick Chown, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Leveraging the 50-State Initiative, Connecticut and Maine Team Secure Full Dismissal of Coverage Claim for Catastrophic Property Loss
March 23, 2020 —
Regen O'Malley - Gordon & Rees Insurance Coverage Law BlogOn behalf of Gordon & Rees’ surplus lines insurer client, Hartford insurance coverage attorneys Dennis Brown, Joseph Blyskal, and Regen O’Malley, with the assistance of associates Kelcie Reid, Alexandria McFarlane, and Justyn Stokely, and Maine counsel Lauren Thomas, secured a full dismissal of a $15 million commercial property loss claim before the Maine Business and Consumer Court on January 23, 2020. The insured, a wood pellet manufacturer, sustained catastrophic fire loss to its plant in 2018 – just one day after its surplus lines policy expired.
Following the insurer’s declination of coverage for the loss, the wood pellet manufacturer brought suit against both its agent, claiming it had failed to timely secure property coverage, as well as the insurer, alleging that it had had failed to comply with Maine’s statutory notice requirements. The surplus lines insurer agreed to extend the prior policy several times by endorsement, but declined to do so again. Notably, the insured alleged that the agent received written notice of the non-renewal prior to the policy’s expiration 13 days before the policy’s expiration. However, the insured (as well as the agent by way of a cross-claim) asserted that the policy remained effective at the time of the loss as the insured did not receive direct notice of the decision not to renew coverage and notice to the agent was not timely. Although Maine’s Attorney General and Superintendent intervened in support of the insured’s and agent’s argument that the statute’s notice provision applied such that coverage would still be owed under the expired policy, Gordon & Rees convinced the Court otherwise.
At issue, specifically, was whether the alleged violation of the 14-day notice provision in Section 2009-A of the Surplus Lines Law (24-A M.R.S. § 2009-A), which governs the “cancellation and nonrenewal” of surplus lines policies, required coverage notwithstanding the expiration of the policy. The insured, the agent, and the State of Maine intervenors argued that “cancellation or nonrenewal” was sufficient to trigger the statute’s notice requirement, and thus Section 2009-A required the insurer to notify the insured directly of nonrenewal. In its motion to dismiss, Gordon & Rees argued on behalf of its client that Section 2009-A requires both “cancellation and nonrenewal” in order for the statute to apply. Since there was no cancellation in this case – only nonrenewal – Gordon & Rees argued that Section 2009-A is inapt and that the insurer is not obligated to provide the manufacturer with notice of nonrenewal. Alternatively, it argued that the statute is unconstitutionally vague and unenforceable.
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Regen O'Malley, Gordon & ReesMs. O'Malley may be contacted at
romalley@grsm.com
Parking Reform Takes Off on the West Coast
January 23, 2023 —
Allan Van Vliet - Gravel2Gavel Construction & Real Estate Law BlogStarting January 1, 2023, real estate developers in Oregon and California will no longer be required to build off-street parking facilities for certain projects located near public transit. Both states enacted new rules during the course of 2022 which are effective as of the beginning of 2023, and which seek to reduce the costs of building at least some new projects in major population centers.
In California, A.B. 2097 was signed by Governor Gavin Newsom in September, and prohibits city governments throughout the state (including in charter cities) from enforcing any local land use provisions which would require the developer to build parking spaces as part of their project if the project is located within one half-mile of a major public transit stop. The law applies to both residential and commercial projects. Cities can continue mandating parking for individual projects if they find that doing so is important to support the development of affordable housing—this exception was added to allay concerns that the bill would undermine “density bonus” programs which have become an important tool for the promotion of new affordable housing development around the state.
In Oregon, following a 2020 executive order by Governor Kate Brown, the state Land Conservation and Development Commission (the body responsible for land use and planning regulation in Oregon) embarked on a two-year rulemaking process which culminated in July of 2022 with the approval of a set of “Climate Friendly and Equitable Communities Rules.” Like the California legislation, these rules (in part) limit the ability of Oregon’s most populous cities to enforce parking minimums for new development projects. Unlike the California law, the Oregon rules encourage cities simply to repeal their parking mandates entirely. Cities subject the new rules which choose not to repeal their parking mandates in full must, as an alternative, adopt new local policies to reduce the amount of land dedicated to parking in certain geographies or in connection with certain uses.
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Allan Van Vliet, PillsburyMr. Van Vliet may be contacted at
allan.vanvliet@pillsburylaw.com
