Seattle Washington Building Expert Directory

Prospective Additional Insureds May Be Obligated to Arbitrate Coverage Disputes

September 07, 2020 — Danielle S. Ward - Balestreri Potocki & Holmes
The Court of Appeal closed out 2019 by ruling that an additional insured can be bound to the arbitration clause in a policy when a coverage dispute arises between that additional insured and the carrier. (Philadelphia Indemnity Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal. App. 5th 834, 837.) In 2009, Future Farmers of America (“Future Farmers”) entered into a license agreement with SMG Holdings Incorporated (“SMG”) to use the Fresno Convention Center. As part of the agreement, Future Farmers was required to secure comprehensive general liability (“CGL”) coverage and name SMG and the City of Fresno as additional insureds (“AI”) on its policies. Future Farmers purchased a general liability policy from Plaintiff Philadelphia Indemnity Insurance Company (“Philadelphia”). Neither SMG nor the City of Fresno were added as AIs, but the policy contained a “deluxe endorsement” which extended coverage to lessors of premises for “liability arising out of the ownership, maintenance or use of that part of the premises leased or rented” to the named insured. The policy also contained an endorsement that extended coverage where required by a written contract for liability due to the negligence of the named insured. Philadelphia’s policy also stated that if the insurance company and insured “do not agree whether coverage is provided . . . for a claim made against the insured, then either party may make a written demand for arbitration.” A patron to Future Farmer’s event at the Fresno Convention Center was seriously injured after he tripped over a pothole in the parking lot and hit his head. He sued both Fresno and SMG. In turn, Fresno and SMG tendered their defense to Philadelphia. Philadelphia denied coverage finding that the incident did not arise out of Future Farmer’s negligence, and that SMG had the sole responsibility for maintaining the parking lot. Consequently, Philadelphia concluded that neither Fresno nor SMG qualified “as an additional insured under the policy” for the injury in the parking lot. The coverage dispute continued, and in 2016, Philadelphia issued a demand for arbitration which was rejected by SMG. Philadelphia then petitioned the state court to compel arbitration arguing that SMG could not avoid the burdens of the policy while seeking to obtain policy benefits. SMG used Philadelphia’s conclusion that it did not qualify as an AI under the policy to argue that Philadelphia was “estopped from demanding arbitration”. In other words, SMG argued that it could not be held to the burdens of the policy without being provided with the benefits of the policy. The trial court sided with SMG finding that there was no arbitration agreement between the parties. The court noted that while third party beneficiaries can be compelled to arbitration there was no evidence that applied here, and Philadelphia could not maintain its inconsistent positions on the policy as its respects SMG. Disagreeing with the trial court, the Court of Appeal concluded that SMG was a third-party beneficiary of the policy. The AI obligations in the license agreement and the deluxe endorsement in the Philadelphia policy collectively establish an intended beneficiary status. The Court saw SMG’s tender to Philadelphia as an acknowledgement of that status. Relatedly, the Court found that SMG’s tender to Philadelphia – its demand for policy benefits – equitably estopped them from avoiding the burdens of the policy. The Court stated it defied logic to require a named insured to arbitrate coverage disputes but free an unnamed insured demanding policy coverage from the same requirement. Conversely, the Court found no inconsistency in Philadelphia’s denial of coverage to SMG and its subsequent demand for arbitration. Philadelphia did not outright reject SMG’s status as a potential insured, but rather concluded that there was no coverage because the injury occurred in the parking lot. In other words, the coverage determination turned on the circumstances of the injury not SMG’s status under the policy. In short, the Court concluded that the potential insured takes the good with the bad. If one seeks to claim coverage as an additional insured, they can be subject to the restrictions of the policy including arbitration clauses even if they did not purchase the policy. Securing additional insurance has become increasingly more difficult and limited over the years, and this holding presents yet another hurdle to attaining AI coverage. For those seeking coverage, it is important to note that the Court’s ruling may have turned out differently had the carrier outright denied SMG’s AI status, rather than concluding that the injury was not covered. Your insurance scenario may vary from the case discussed above. Please contact legal counsel before making any decisions. BPH’s attorneys can be reached via email to answer your questions. Read the court decision
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Reprinted courtesy of Danielle S. Ward, Balestreri Potocki & Holmes
Ms. Ward may be contacted at dward@bph-law.com

Ten Years After Colorado’s Adverse Possession Amendment: a brief look backwards and forwards

September 25, 2018 — Luke Mecklenburg - Snell & Wilmer Real Estate Litigation Blog
In response to national outrage over an infamous adverse possession case in Boulder, Colorado, in which a lawyer and a judge intentionally took their neighbors’ undeveloped land through adverse possession, the Colorado legislature amended the state’s adverse possession statute (C.R.S. § 38-41-101) to make the claim significantly harder to prove. It did this because it believed “there were insufficient ‘obstacles’ to establishing a claim for adverse possession under the existing law.”[1] Effective July 1, 2008, the amendment created a heightened burden of proof, additional element requirements, and the possibility of a losing defendant recovering money from successful plaintiffs for the value of the land they took and the taxes the defendant had paid on that land. The Boulder case eventually settled, but the resulting statutory amendments have drastically changed the landscape of Colorado’s adverse possession law. Ten years later, this blog post takes a brief look at the amended statute, the impact it has had, and questions that have yet to be resolved. Read the court decision
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Reprinted courtesy of Luke Mecklenburg, Snell & Wilmer
Mr. Mecklenburg may be contacted at lmecklenburg@swlaw.com

Construction Project Bankruptcy Law

February 05, 2014 — Beverley BevenFlorez-CDJ STAFF
Garret Murai, on the California Construction Law Blog, discusses the ins and outs of bankruptcy in construction projects. Murai discusses “bankruptcy basics” and answers questions regarding filing for project owners, general contractors, and subcontractors. Murai explained the importance of learning about how bankruptcy affects construction projects: “Bankruptcy on a construction project is one of the biggest fears for owners and contractors. At best it can slow down a project and at worst it can cause a domino effect of bankruptcies as contractors and suppliers aren’t paid, causing the entire project to fail.” Read the court decision
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Hurry Up and Wait! Cal/OSHA Hits Pause on Emergency Temporary Standards for COVID-19 Prevention

June 14, 2021 — Michael Studenka & Jasmine Shams - Newmeyer Dillion
Employers scrambling to prepare for the June 15th Reopening announced by Governor Newsom have spent the last week pouring over the revised Emergency Temporary Standards for COVID-19 Prevention (“Revised ETS”) approved by the Cal/OSHA Standards Board on June 3, 2021. After last night’s meeting of the Standards Board, however, it’s time to hit pause. Last night, the Cal OSHA Standards Board held a specialty meeting to reconsider its Revised ETS in light of the latest guidance on face coverings issued by the California Department of Public Health (“CDPH”) on June 7, 2021. Following a presentation by the CDPH and extensive public comment, the Cal OSHA Standards Board voted unanimously to withdraw the Revised ETS and to take up the issue again at its next scheduled meeting on June 17, 2021. The net result in the interim is that California employers who intend to reopen on June 15 must initially comply with all of the requirements of the Cal/OSHA Standards Board Emergency Temporary Standards for COVID-19 Prevention as originally issued on November 20, 2020, including but not limited to, its social distancing, physical partitioning and mask wearing requirements. Reprinted courtesy of Michael J. Studenka, Newmeyer Dillion and Jasmine Shams, Newmeyer Dillion Mr. Studenka may be contacted at michael.studenka@ndlf.com Ms. Shams may be contacted at jasmine.shams@ndlf.com Read the court decision
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Unpredictable Opinion Regarding Construction Lien (Reinstatement??)

January 17, 2023 — David Adelstein - Florida Construction Legal Updates
Here comes the discussion of an appeal I was intimately involved in dealing with a construction lien. See Suntech Plumbing and Mechanical Corp. v. Bella Isla, LLC, 2022 WL 14672765 (Fla. 3d DCA 2022). Unfortunately, it was a losing result on my end but not a losing result to the issue at-hand. You should ask what in the world does this mean. I will tell you. Here is the fact pattern. A subcontractor files a construction lien foreclosure lawsuit against an owner for unpaid contract balance. In the same lawsuit, the subcontractor sues the general contractor for breach of contract and unjust enrichment associated with an approximate three-year delay on a construction project. The project was scheduled to be completed in 2019. It was not. The project was pushed into COVID and into 2022. (The subcontractor did not sue the general contractor for amounts subject to the lien foreclosure claim.) The general contractor, assuming the defense of the owner, moved to stay the lawsuit pending the outcome of arbitration based on an arbitration provision in the subcontract. The subcontractor did not dispute the arbitration provision, but argued that arbitration provision should not extend to the owner that was (a) not bound by the subcontract, (b) would not be a party to the arbitration, and (c) the amounts pled against the general contractor did not include the amounts subject of the lien foreclosure lawsuit. At a minimum, the lawsuit should be stayed, not dismissed. Nevertheless, the trial court dismissed the entire lawsuit in an order that states that it is a final order with language that the lien may be “reinstated” after the outcome of the arbitration (that the owner is not a party to). Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

A Matter Judged: Subrogating Insurers Should Beware of Prior Suits Involving the Insured

March 25, 2024 — Gus Sara - The Subrogation Strategist
In New Jersey Mfrs. Ins. Co. v. Lallygone LLC, No. A-2607-22, 2024 N.J. Super. Unpub. LEXIS 120, the Appellate Division of the Superior Court of New Jersey (Appellate Division) considered whether New Jersey Manufacturers Insurance Company (the carrier) could bring a subrogation action after its insured, Efmorfopo Panagiotou (the insured), litigated and tried claims related to the same underlying incident with the same defendant, Lallygone LLC (the defendant). The Appellate Division affirmed the trial court’s finding that the prior lawsuit extinguished the carrier’s claims. In Lallygone LLC, the insured hired the defendant to renovate a detached garage on his property. In March 2022, while the defendant’s employees were removing existing concrete slabs, the garage collapsed. After the incident, the insured stopped paying the defendant. In addition, the insured filed a claim with the carrier, which ultimately paid the insured over $180,000 for the damage under its property policy. The carrier sent a subrogation notice letter to the defendant. Read the court decision
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Reprinted courtesy of Gus Sara, White and Williams
Mr. Sara may be contacted at sarag@whiteandwilliams.com

Alert: AAA Construction Industry Rules Update

August 26, 2015 — Christopher G. Hill – Construction Law Musings
The American Arbitration Association has made some needed updates to their Construction Industry Arbitration and Mediation Rules, effective July 1, 2015. Among the changes listed at their website are:

A mediation step for all cases with claims of $100,000 or more (subject to the ability of any party to opt out).
Consolidation and joinder time frames and filing requirements to streamline these increasingly involved issues in construction arbitrations.
New preliminary hearing rules to provide more structure and organization to get the arbitration process on the right track from the beginning.
Information exchange measures to give arbitrators a greater degree of control to limit the exchange of information, including electronic documents.

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Reprinted courtesy of Christopher G. Hill, Law Office of Christopher G. Hill, PC
Mr. Hill may be contacted at chrisghill@constructionlawva.com

Georgia Law: “An Occurrence Can Arise Where Faulty Workmanship Causes Unforeseen or Unexpected Damage to Other Property”

March 05, 2011 — CDCoverage.com

In American Empire Surplus Lines Ins. Co. v. Hathaway Development Co., Inc., No. S10G0521 (Ga. March 7, 2011), insured plumbing subcontractor Whisnant was sued by general contractor Hathaway seeking damages for costs incurred by Hathaway in repairing damage to property other than Whisnant’s plumbing work resulting from Whisnant’s negligently performed plumbing work on three separate projects. On one project, Whisnant installed a pipe smaller

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Reprinted courtesy of CDCoverage.com

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SEATTLE WASHINGTON BUILDING EXPERT DIRECTORY AND CAPABILITIES