Are Construction Defect Claims Covered Under CGL Policies?
January 27, 2014 —
Beverley BevenFlorez-CDJ STAFFCourts have ruled differently as to whether a construction defect is or is not an “occurrence,” according to the publication Business Insurance. Four states—Colorado, Arkansas, Hawaii and South Carolina—have sought to remove ambiguity by passing statutes that define construction defect claims as occurrences.
Colorado, the first state to create such a statue, passed H. B. 10-1394 in May 2010. The state legislature passed the statute “because of the complex and lengthy endorsements and exclusions facing construction professionals, according to the bill” reported Business Insurance.
The article stated that “incongruous court decisions over whether construction defect claims are covered under CGL policies continue to drive uncertainty in coverage and increase litigation costs.”
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Falling Tree Causing Three Injuries/Deaths Is One Occurrence
September 28, 2017 —
Tred R. Eyerly - Insurance Law HawaiiIn a decision by Judge Sutton, the Sixth Circuit affirmed the district court's ruling that a falling tree causing one injury and two deaths was the result of a single occurrence. Evanston Ins. Co. v. Housing Auth. of Somerset, 2017 U.S. App. LEXIS 15199 (6th Cir. Aug. 15, 2017).
A large tree fell on cousins Kaitlyn Griffin and Joshua Thacker. Kaitlyn died within minutes. She was pregnant at the time. Doctors delivered her baby, but the baby died shortly thereafter. Joshua survived but suffered serious injury. In December 2013, a state court jury found the Housing Authority liable for the accident and awarded $3.7 million in damages.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Five-Year Statute of Limitations on Performance-Type Surety Bonds
December 01, 2017 —
David Adelstein - Florida Construction Legal UpdatesThe statute of limitations on a claim against a performance-type bond is 5 years from the breach of the bond, i.e., the bond-principal’s default (based on the same statute of limitations that governs written contracts / obligations). See Fla. Stat. s. 95.11(2)(b). This 5-year statute of limitations is NOT extended and does NOT commence when the surety denies the claim. It commences upon the default of the bond-principal, which would be the act constituting the breach of the bond. This does not mean that the statute of limitations starts when a latent defect is discovered. This is not the case. In dealing with a completed project, the five-year statute of limitations would run when the obligee (beneficiary of the bond) accepted the work. See Federal Insurance Co. v. Southwest Florida Retirement Center, Inc., 707 So.2d 1119, 1121-22 (Fla. 1998).
This 5-year statute of limitations on performance-type surety bonds has recently been explained by the Second District in Lexicon Ins. Co. v. City of Cape Coral, Florida, 42 Fla. L. Weekly D2521a (Fla. 2d DCA 2017), a case where a developer planned on developing a single-family subdivision.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.com
Facebook Posts “Not Relevant” Rules Florida Appeals Court
February 07, 2014 —
Beverley BevenFlorez-CDJ STAFFA Cape Coral, Florida resident is suing the city and construction companies over alleged negligence “for failing to use reasonable care in keeping the construction site safe for pedestrians,” according to News-Press. The lawsuit was filed after a three-year old boy “jumped out of a wagon pulled by his aunt and darted across the construction zone before being” hit and dragged by a vehicle. The boy “suffers neurological problems from the crash.” The defendants wanted to use Facebook posts made by the Plaintiff about the city, contractors, and subcontractors, as evidence. However, the 2nd District Court of Appeals ruled that the Facebook posts were irrelevant to the case.
Todd Robert Falzone, the Plaintiff attorney, said that “it’s becoming more common for defense lawyers to try and introduce social media into any case, but the law is new and there isn’t a lot of guidance for lawyers or judges,” according to News-Press. The defendants’ attorneys did not return News-Press’s calls asking for comments.
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Balfour Taps Qinetiq’s Quinn as new CEO to Revamp Builder
October 15, 2014 —
Benjamin Katz and Simon Thiel – BloombergBalfour Beatty Plc (BBY) named Leo Quinn as new chief executive officer to revamp Britain’s biggest builder which has suffered from mismanaged projects and a lack of demand.
Quinn will start on Jan. 1 after five years as CEO of defense specialist Qinetiq Group Plc, Balfour Beatty said today. The executive began his career at Balfour Beatty in 1979 as a civil engineer and later worked as president of Honeywell Building Controls and CEO of banknote printer De La Rue Plc. The stock gained 5.3 percent in London trading today.
Balfour Beatty, which rejected a merger proposal from British rival Carillion Plc in August, has struggled since the global recession slashed orders and prices. Its stock had fallen 48 percent this year before today, reducing the company’s value to 1 billion pounds ($1.6 billion). In September, Balfour Beatty cut its U.K. construction-services unit’s profit forecast and said Chairman Steve Marshall plans to leave.
Mr. Thiel may be contacted at sthiel1@bloomberg.net; Mr. Katz may be contacted at bkatz38@bloomberg.net
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Benjamin Katz and Simon Thiel, Bloomberg
New York Appellate Court Holds Insurers May Suffer Consequences of Delayed Payment of Energy Company Property and Business Interruption Claims
March 16, 2020 —
Syed S. Ahmad & Geoffrey B. Fehling - Hunton Andrews KurthA New York appellate court recently held that renewable bio-diesel fuel manufacturer BioEnergy Development Group LLC may pursue tens of millions of dollars in damages from its insurers under two all-risk insurance policies, including amounts in excess of the policy limits, where the insurers refused to pay claims in a timely manner.
BioEnergy purchased two all-risk property policies from Lloyd’s to provide coverage for its manufacturing plant in Memphis, Tennessee. A fire destroyed the Memphis plant in March 2016, eliminating BioEnergy’s production capacity and sole source of revenue. BioEnergy made claims under the policies and sought to rebuild its plant. The insurers acknowledged coverage and eventually made approximately $8 million in interim payments, but the parties disagreed over the value of the total property damage claim, which BioEnergy contended was in excess of $24 million. The disputed claim was submitted to appraisal, which resulted in the insurers agreeing to pay the full business interruption limit of $15.1 million.
The insurers filed a declaratory judgment lawsuit, however, seeking to limit BioEnergy’s recovery to the policy limits of $15.1 million. BioEnergy alleged that the insurers failed to make interim payments in a timely manner after the fire and, as a result, the company suffered increased losses because it could not rebuild without the insurance proceeds. BioEnergy sought actual and consequential damages, plus attorneys’ fees, arising from the delayed payments, including payment of its business interruption losses in excess of the policy limits.
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Syed S. Ahmad, Hunton Andrews Kurth and
Geoffrey B. Fehling, Hunton Andrews Kurth
Mr. Ahmad may be contacted at sahmad@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
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Number of Occurrences Is On the Agenda at This Year's ICLC Seminar
February 05, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThis year's Insurance Coverage Litigation Committee's CLE Seminar will be conducted in Tucson, Arizona, from March 4-7, 2015. Each year, the conference offers informative, cutting-edge sessions on a variety of insurance-related topics. Participants from across the country with varying perspectives on insurance coverage, including lawyers, judges, risk managers, and insurance professionals, will be attendance. The seminar's brochure is attached
here.
"Number of Occurrences" will be the topic my panel presents on March 7. We will be honored to have on our panel Alaska Supreme Court Justice Peter Maassen, my old skiing and running buddy from my Alaska days. Justice Maassen's opinion in United Servs. Auto. Ass'n. v. Neary, 307 P.3d 907 (Alaska 2013) was the genesis for our topic.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
The "Dark Overlord" Strikes The Practice Of Law: What Law Firms Can Do To Protect Themselves
April 17, 2019 —
Ivo G. Danielle – Newmeyer & DillionCybersecurity breaches involving law firms are on the rise with each passing year. Law firms are prime targets for cyber criminals seeking confidential and sensitive information because of the various types of legal work that law firms normally handle for their clients. Whether it be mergers and acquisitions, the use of intellectual property, purchase agreements, bankruptcy or even litigation involving divorce, law firms are a rich depository for highly confidential and sensitive information. As a result, law firms must employ comprehensive security measures to protect themselves from security breaches or risk being on the losing end of a costly malpractice claim, and suffer severe reputational harm.
Law Firms Continue To Be Targeted By Cybercriminals
According to the American Bar Association ("ABA") 2018 Legal Technology Survey Report, 23% of the law firms who participated in the survey reported that their law firm experienced a data breach. Although this may be just a 1% increase from the 22% who reported a breach in 2017, it is important to understand that this is an increase of 8% from the stable percentages reported from 2013 through 2016.1 The 2018 survey report also revealed that security breaches fluctuated with firm size – 14% for solo law firms, 24% for firms employing 2-9 attorneys, approximately 24% for firms with 10-49 attorneys, 42% for firms with 50-99 attorneys, and approximately 31% for those firms employing 100 or more attorneys.
Latest Law Firm Security Breaches
The notorious criminal group called "The Dark Overlord" has a history of committing data breaches of high profile companies such as Gorilla Glue, Netflix, Larson Studios, multiple healthcare companies, and Little Red Door Cancer Agency. Their goal is simple – steal sensitive information and then extort payment from the victims by threatening to release the sensitive information to the public.
On December 31, 2018, this cybercriminal group announced to the world that they had acquired 18,000 documents containing highly sensitive legal information related to insurance based litigation connected to the 9/11 tragedy. The stolen information was the attorney/client property of Lloyd's of London, Silverstein Properties, and Hiscox Syndicates, Ltd. In its announcement, The Dark Overlord boasted that they were in possession of client sensitive information, such as: "emails; retainer agreements; non-disclosure agreements; settlements, litigation strategies; liability analysis; defense formation; collection of expert witness testimonies; communication with government officials in countries all over the world; voice mails; dealings with the FBI, USDOJ, DOD, confidential communications, and so much more."
Subsequent to the data breach, The Dark Overlord announced to the public that they designed a compensation plan that would allow for public crowd-funding for its organization to permit the public to view the stolen information in exchange for bitcoin payment. The more public funding it receives, the more stolen sensitive information will be unlocked and released to the public. It is estimated that this cybercriminal group already distributed information to the public on two separate occasions during the month of January 2019.
High profile cybersecurity breaches of law firms is nothing new – for example, the infamous Panama Papers breach, where cybercriminals leaked 11.5 million documents exposing the shadowy business of setting up offshore corporations as tax shelters for businesses, celebrities, and politicians - and the infamous Petya Malware attack which resulted in a digital lockdown of one of the world's largest law firms, DLA Piper. However, despite the infrequency of publicized cyber-attacks of law firms by the media, the FBI has recently announced that law firms should expect an increase in security attacks by cybercriminals because law firms are now viewed as "one-stop shops" for cybercriminals. Therefore, in order to combat the inevitable increase in cyber-attacks, law firms must get prepared.
How Law Firms Can Protect Themselves
All law firms will agree that the most serious consequence of a security breach for their firm would be the unauthorized access to sensitive client data. The American Bar Association's Model Rules of Professional Conduct, specifically Rules 1.1 and 1.62 and related Comments, require an attorney to take competent and reasonable measures to safeguard information relating to their clients. This duty to "safeguard' information imposes a significant challenge to firms when using technology in connection with protecting client information because most law firms are not savvy with technology and lack proper cyber security training.
In order for a law firm to protect itself from security breaches and inadvertently violate its duty of safeguarding a client's sensitive information, it is important to take the following actions:
- Start by taking an inventory and risk assessment of the firm to determine what needs to be protected – the inventory should include both technology and data;
- Develop, implement and maintain an appropriate cybersecurity program that complies with applicable ethical and legal obligations;
- Ensure the cybersecurity program addresses people, policies and procedures, and technology. The cybersecurity program must designate an individual or a group to be in charge and coordinate security;
- Develop an incident response plan scaled to the size of the firm;
- Continually train staff and attorneys to identify and understand potential cybersecurity threats;
- Consider implementing a third-party assessment of firm's cybersecurity program and policies;
- Purchase cyber liability for insurance which not only covers first party losses to law firms (like lost productivity, data restoration, and legal expenses) but also liability protection to third parties;
- Implement authentication and access controls for network, computers and mobile devices used by the firm's staff and attorneys;
- Consider the use of full-drive encryption for computers and mobile devices;
- Have staff and attorneys avoid and/or limit the use of public WiFi when working remotely; and
- Create a disaster recovery plan to backup all data in the event of a cyber-attack or natural catastrophe.
Continually reviewing, implementing, training and updating a firm's cybersecurity program and protocols will help safeguard sensitive and confidential client information and/or data. No law firm wants to be the next data breach headline – so take the necessary steps to avoid a potential disaster.
1 Past ABA Legal Technology Surveys reported 14% in 2016, 15% in 2015, 14% in 2014 and 15% in 2013.
2 On November 1, 2018, California adopted ethics rules patterned after the ABA Model Rules of Professional Conduct.
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 almost 35 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 law, privacy & data security, employment, real estate, construction, insurance law and trial work, 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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