No Coverage for Property Damage That is Limited to Work Completed by Subcontractor
April 25, 2012 —
Tred R. Eyerly - Insurance Law HawaiiThe issue before the 11th Circuit was whether, under Florida law, a general contractor had coverage for a property damage claim limited to the defective work performed by a subcontractor, and not affecting any other portion of the project. The court found no coverage in Amerisure Mut. Ins. Co. v. Auchter Co., 2012 U.S. App. LEXIS 5412 (11th Cir. March 15, 2012).
Amelia Island Company contracted with Auchter Company, a general contractor, for construction of an inn and conference room. Auchter subcontracted with Register Contracting Company to install the Inn’s roof. Pursuant to the Florida Building Code, installation of the roof required that it be able to withstand 110 m.p.h. winds.
Register completed installing the roof tiles in January 1998. Beginning in 2002, the tiles began dislodging from the roof. During the 2004 hurricane season, three hurricanes caused more tiles to come off the roof. Some of these tiles hit other tiles, cracking them.
In 2006, the parties went to arbitration over the costs of repairs for the roof.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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Construction Litigation Roundup: “Apparently, It’s Not Always Who You Know”
December 16, 2023 —
Daniel Lund III - LexologyA respondent party in a pair of international arbitrations on the losing end of roughly $285,000,000 in adverse awards attacked the awards based upon arbitrator bias.
“If there is one bedrock rule in the law of arbitration, it is that a federal court can vacate an arbitral award only in exceptional circumstances. … The presumption against vacatur applies with even greater force when a federal court reviews an award rendered during an international arbitration.”
Applying the Federal Arbitration Act (according to the court, the international arbitrations were “seated” in the United States and fell under the New York Convention, such that the FAA is required to be the basis for vacatur efforts), the court examined assertions that certain alleged non-disclosures by the panel “concealed information related to the arbitrators’ possible biases and thereby ‘deprived [respondent] of [its] fundamental right to a fair and consensual dispute resolution process.’” The aggrieved party urged that one arbitrator’s undisclosed nomination of another arbitrator to serve as president of another arbitral panel – “a position that sometimes pays hundreds of thousands of dollars” – possibly influenced the second arbitrator to side with the first. Assertions were also levied that the arbitrators’ undisclosed work with the attorneys for the claimant in other arbitrations “allowed them to become familiar with each other, creating a potential conflict of interest.”
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Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
Punchlist: The News We Didn’t Quite Get To – May 2016
May 12, 2016 —
Garret Murai – California Construction Law BlogIf you’re a solar contractor make sure you don’t get burned. The California Contractors State License Board (“CSLB”) is taking a closer look at solar contractors as the industry grows in the Golden State. Only contractors holding a Class “A” Engineering, Class “B” General Contractor, or Class C-46 Solar license can perform solar construction and installation.
The CSLB has clarified that C-39 Roofing contractors can install installation as part of an overall roofing job. The CSLB considers such insulation work as “incidental and supplemental” under Section 831 of the California Code of Regulations and does not require a separate C-2 Insulation and Acoustical contractor license.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Washington Supreme Court Finds Agent’s Representations in Certificate of Insurance Bind Insurance Company to Additional Insured Coverage
February 03, 2020 —
Jason Taylor - Traub LiebermanIn T-Mobile USA Inc. v. Selective Ins. Co. of Am., 450 P.3d 150 (Wash. 2019) the Washington Supreme Court addressed whether an insurance company is bound by its agent’s written representation—made in a certificate of insurance—that a particular corporation is an additional insured under a given policy. The question arose in a case where: (1) the Ninth Circuit had already ruled that the agent acted with apparent authority, but (2) the agent’s representation turned out to be inconsistent with the policy and (3) the certificate of insurance included additional text broadly disclaiming the certificate’s ability to “amend, extend or alter the coverage afforded by” the policy. According to the Court, under Washington law the answer is yes: an insurance company is bound by the representation of its agent in those circumstances. Otherwise, the Court reasoned, an insurance company’s representations would be meaningless and it could mislead without consequence.
At the heart of this case were two T-Mobiles entities: T-Mobile USA and T-Mobile Northeast (“T-Mobile NE”), which were distinct legal entities. T-Mobile NE engaged a contractor to construct a cell phone tower on a rooftop in New York City. The contract between T-Mobile NE and the contractor required the contractor to obtain a general liability insurance policy, to annually provide T-Mobile NE “with certificates of insurance evidencing [that policy’s] coverage,” and to name T-Mobile NE as an additional insured under the policy. T-Mobile USA was not a party to the contract, but was nonetheless aware of it and approved the contract as to form.
The contractor obtained the required insurance policy from Selective. The policy provided that a third party would automatically become an “additional insured” under the policy if the contractor and the third party entered into their own contract that required the contractor to add the third party to its insurance policy as an additional insured. Because T-Mobile USA did not have a contract with the contractor, it did not automatically become an additional insured under the policy. Nevertheless, over the course of several years, Selective’s agent issued a series of certificates of insurance to “T-Mobile USA Inc., its Subsidiaries and Affiliates” that stated that those entities were “included as an additional insured [under the policy] with respect to” certain areas of coverage. The agent signed those certificates as Selective’s “Authorized Representative.”
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Jason Taylor, Traub LiebermanMr. Taylor may be contacted at
jtaylor@tlsslaw.com
Tennessee Civil Engineers Give the State's Infrastructure a "C" Grade
December 05, 2022 —
American Society of Civil EngineersNASHVILLE, TN. — The Tennessee Section of the American Society of Civil Engineers (ASCE) released the 2022 Report Card for Tennessee's Infrastructure today, with 13 categories of infrastructure receiving an overall grade of a 'C', the same grade given by the section in its 2016 report. That means Tennessee's infrastructure is in mediocre condition and requires attention, but is a step ahead of the national average of "C-" given in the 2021 Report Card for America's Infrastructure. Tennessee's freight network is strong and plays a major role in the national economy as a key mobility hub and its energy grid has been reliable, allowing families and businesses to operate efficiently. Many of the state's systems are performing at or above national averages; however, a surge in population growth, increasingly severe weather impacts, and insufficient data on the current condition of several infrastructure sectors threaten the long-term viability of the state's overall network. Civil engineers graded aviation (C+), bridges (B), dams (D+), drinking water (C+), energy (C+), inland waterways (C), parks (C+), rail (C), roads (C), solid waste (C+), stormwater (C+), transit (D+), and wastewater (C-).
"As one of the most prominent mobility hubs in all of America, infrastructure is the backbone to all we do here in Memphis, and everything we can accomplish throughout the great state of Tennessee," said Memphis Mayor Jim Strickland. "Our airports, roads and bridges keep our economy flowing, drawing more jobs and businesses in the future. The ASCE report is a critical tool for tracking our progress, in addition to highlighting where we could use some work. With more people flocking to Tennessee than ever before, this is an exciting time and our infrastructure networks must be ready to help us capitalize on the opportunity."
To view the report card and all five categories, visit https://infrastructurereportcard.org/state-item/tennessee/.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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Insurance Policy’s “No Voluntary Payment” Clauses Lose Some Bite in Colorado
October 22, 2013 —
Brady Iandiorio — Higgins, Hopkins, McLain & Roswell, LLC.The Colorado Court of Appeals recently handed down an opinion dulling the teeth of the “no voluntary payment” clauses found in many contractors’ insurance policies. In the case of Stresscon Corporation v. Travelers Property Casualty Company of America, 2013 WL 4874352 (Colo. App. 2013), the Court of Appeals found that an insured’s breach of the “no voluntary payment” clause does not always bar the insured from receiving benefits from its insurance company.
In July 2007, at a construction project run by Mortenson (the “GC”), a partially erected building collapsed, killing one worker and gravely injuring another. The collapse was caused by a crane hook pulling a concrete component off of its supports. The GC contracted with Stresscon Corporation (“Stresscon”) to build pre-cast concrete components for the project, and in turn Stresscon hired two sub-subcontractors, RMS and Hardrock (the “Crane Team”) to work together to erect those concrete components. Stresscon and the Crane Team had liability insurance, and Stresscon was insured by Travelers Property Casualty Company of America (“Travelers”).
The accident led to three separate lawsuits: 1) one brought by the deceased worker; 2) one brought by the injured worker; and 3) one brought by the GC against Stresscon claiming it was entitled to contract damages incurred because the project was delayed.
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Brady IandiorioBrady Iandiorio can be contacted at
Iandiorio@hhmrlaw.com
Scotiabank Is Cautious on Canada Housing as RBC, BMO Seek Action
April 12, 2021 —
Shelly Hagan & Erik Hertzberg - BloombergBank of Nova Scotia, Canada’s third-largest lender, waded into the burgeoning debate over whether Justin Trudeau’s government should take immediate steps to cool the nation’s hot housing market, issuing a report that cautioned against rushing to implement new constraints.
In a report released Sunday, Scotiabank’s chief economist Jean-Francois Perrault said the recent run-up in home prices nationally over the past year was in large part driven by sluggish supply that failed to keep up with higher demand -- a trend that could reverse itself as new sellers enter the market in coming weeks. If the government does decide to take action, it should target housing speculators, he said.
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Shelly Hagan, Bloomberg and
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Illinois Supreme Court Holds that Constructions Defects May Constitute “Property Damage” Caused By An “Occurrence” Under Standard CGL Policy, Overruling Prior Appellate Court Precedent
January 08, 2024 —
Jason Taylor - Traub Lieberman Insurance Law BlogOn November 30, 2023, the Illinois Supreme Court issued an opinion that overturned precedent in Illinois regarding whether faulty workmanship that only caused damage to the insured’s own work constituted “property damage” caused by an “occurrence” under Illinois law. In Acuity v. M/I Homes of Chicago, LLC, 2023 IL 129087, the Illinois Supreme Court considered whether Acuity, a mutual insurance company, had a duty to defend its additional insured, M/I Homes of Chicago, LLC (M/I Homes), under a subcontractor’s commercial general liability (CGL) policy in connection with an underlying lawsuit brought by a townhome owners’ association for breach of contract and breach of an implied warranty of habitability. The Cook County Circuit Court granted summary judgment in favor of Acuity finding no duty to defend because the underlying complaint did not allege “property damage” caused by an “occurrence” under the initial grant of coverage of the insurance policy. The appellate court reversed and remanded, finding that Acuity owed M/I Homes a duty to defend. The Illinois Supreme Court affirmed, in part, holding construction defects to the general contractor’s own work may constitute “property damage” caused by an “occurrence” under the standard CGL Policy. This is significant as it overrules prior Illinois precedent finding that repair or replacement of the insured’s defective work does not satisfy the initial grant of coverage of a CGL Policy.
By way of background, the underlying litigation stems from alleged construction defects in a residential townhome development in the village of Hanover Park, Illinois. The townhome owners’ association, through its board of directors (the Association) subsequently filed an action on behalf of the townhome owners for breach of contract and breach of the implied warranty of habitability against M/I Homes as the general contractor and successor developer/seller of the townhomes. The Association alleged that M/I Homes’ subcontractors caused construction defects by using defective materials, conducting faulty workmanship, and failing to comply with applicable building codes. As a result, “[t]he [d]efects caused physical injury to the [t]ownhomes (i.e. altered the exterior’s appearance, shape, color or other material dimension) after construction of the [t]ownhome[ ] was completed from repeated exposure to substantially the same general conditions.” The defects included “leakage and/or uncontrolled water and/or moisture in locations in the buildings where it was not intended or expected.” The Association alleged that the “[d]efects have caused substantial damage to the [t]ownhomes and damage to other property.”
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Jason Taylor, Traub LiebermanMr. Taylor may be contacted at
jtaylor@tlsslaw.com
