Demonstrating A Fraudulent Inducement Claim Or Defense
May 18, 2020 —
David Adelstein - Florida Construction Legal UpdatesIn a recent case, Florida’s Fourth District Court of Appeal reversed a trial court’s denial of a motion for a temporary injunction sought by an employer due to an independent contractor’s violation of a non-compete and non-solicitation provision in an employment / independent contractor agreement (“employment agreement”). You can find more on this case and the enforcement of the non-compete and non-solicitation clause
here.
A worthy discussion in this case centers on the independent contractor’s fraudulent inducement defense. Specifically, the independent contractor, as a defense to the injunction, claimed that he was fraudulently induced into entering into the employment agreement because the employer promised he would make a certain amount of money and he would work predominantly in one geographic location. The employment agreement contained NO such representations. Instead, the employment agreement contained a fee and services schedule and the independent contractor would be compensated based on that schedule. It stated nothing as to the independent contractor only having to work, or predominantly working, in one geographic location, or that the independent contractor would be guaranteed “X” amount of money working in that location. Why is this important?
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Quick Note: Discretion in Determining Prevailing Party for Purposes of Attorney’s Fees
January 25, 2021 —
David Adelstein - Florida Construction Legal UpdatesIn prior articles I have discussed that courts apply the significant issues test to determine the prevailing party for purposes of being entitled to attorney’s fees. A party that recovers an affirmative judgement is NOT the de facto prevailing party for purposes of an entitlement to attorney’s fees in a breach of contract action (or a construction lien foreclosure action). This was the issue in a recent appeal discussed here where the party that recovered an affirmative judgment on a breach of contract case was not deemed the prevailing party for purposes of attorney’s fees. While the party prevailed on one of its claims, it did not prevail on others, and it recovered less than half of the damages it originally sought. The appellate court, affirming the trial court, held that the trial court has discretion to determine that the party that recovered an affirmative judgement was not the prevailing party entitled to its attorney’s fees under the signifiant issues test. This was not what the party was expecting when the attorney’s fees it expended far exceeded the judgment it recovered.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Georgia Court of Appeals Upholds Denial of Coverage Because Insurance Broker Lacked Agency to Accept Premium Payment
December 07, 2020 —
Lawrence J. Bracken II, Michael S. Levine & Rachel E. Hudgins - Hunton Insurance Recovery BlogIn American Reliable Insurance Company v. Lancaster, the Georgia Court of Appeals reversed the denial of a property insurer’s summary judgment motion concerning the insurer’s denial of a fire loss claim. The basis of the denial was that the policyholders had failed to pay the policy premium. The policyholders, Charlie and Wanda Lancaster, claimed that they had paid their policy premiums for several years to their insurance agent, Macie Yawn. In October 2014, American Reliable mailed a renewal notice to the Lancasters notifying them that premium payments had to be made directly to the insurer. After it did not receive payment from the Lancasters, American Reliable sent them a cancellation notice in December 2014, again notifying them that payments be made directly to the insurer. The Lancasters denied having received either notice from American Reliable, but the record included a receipt for certificate of mailing.
After the Lancaster’s home burned down in 2015, American Reliable denied coverage on the grounds that the policy had been cancelled for nonpayment of premium. In the subsequent coverage action, the trial court denied American Reliable’s motion for summary judgment, ruling that a factual issue existed as to the actual and apparent agency of the insurance agent, Yawn. On appeal, the Court of Appeals found that the trial court erred in deciding that there was a factual issue concerning Yawn’s agency. Specifically, the Court of Appeals ruled that the record showed American Reliable had terminated Yawn’s agency to accept policy premiums, and that the Lancaster’s received notice of that termination in the renewal and cancellation notices. In addition to determining that Yawn was not an actual agent, the Court held that Yawn did not have apparent agency, because the notices sent to the Lancasters stated that the premium payment was to be paid to American Reliable, not to the agent.
Reprinted courtesy of
Lawrence J. Bracken II, Hunton Andrews Kurth,
Michael S. Levine, Hunton Andrews Kurth and
Rachel E. Hudgins, Hunton Andrews Kurth
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Hudgins may be contacted at rhudgins@HuntonAK.com
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NY Construction Safety Firm Falsely Certified Workers, Says Manhattan DA
March 25, 2024 —
Johanna Knapschaefer - Engineering News-RecordA New York-based construction safety firm and 25 individuals were indicted Feb. 28 for allegedly operating a bogus safety training school, Manhattan District Attorney Alvin Bragg's office says. The firm, Valor Security & Investigations is also linked to “endangering the life” of Ivan Frias, who fell to his death from the 15th floor of a New York City construction site in 2022.
Reprinted courtesy of
Johanna Knapschaefer, Engineering News-Record
Ms. Knapschaefer may be contacted at knapj@enr.com
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Additional Insured Not Entitled to Coverage for Named Insured's Defective Work
September 02, 2024 —
Tred R. Eyerly - Insurance Law HawaiiThe Court of Appeals for the Seventh Circuit determined there was no duty to defend or to indemnify the additional insured for the named insured's defective work. St. Paul Guardian Ins. Co., et al. v. Walsh Construction Co., 99 F. 4th 1035 (7th Cir. 2024).
The City of Chicago contracted with Walsh Construction Company to manage the construction of a canopy and curtain wall system at O'Hare International Airport. Walsh entered into a contract with Carlo Steel Corporation, which in turn subcontracted with LB Steel, LLC to fabricate and install steel columns to support the wall and canopy. LB Steel listed Walsh as an additional insured in its commercial general liability policies. LB Steel's insurers were St. Paul, Travelers, and Charter Oak Fire Insurance Company.
Several years into the project, the City discovered cracks in the welds of the steel columns and sued Walsh. Walsh, in turn, sued LB Steel under its subcontract. Walsh also asked LB Steel's insurers to defend it in the City's lawsuit, but they refused to do so. Walsh eventually secured a judgment against LB Steel, but LB Steel declared bankruptcy. Walsh then sued LB Steel's insurers to recover the costs of defending against the City's lawsuit and indemnification for any resulting losses.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
A Homeowner’s Subsequent Action is Barred as a Matter of Law by way of a Prior “Right to Repair Act” Claim Resolved by Cash Settlement for Waiver of all Known or Unknown Claims
February 26, 2015 —
Richard H. Glucksman, Esq., Jon A. Turigliatto, Esq., and David A. Napper, Esq. – Chapman Glucksman Dean Roeb & Barger BulletinDavid Belasco v. Gary Loren Wells et al. (2015) B254525
OVERVIEW
In a decision published on February 17, 2015, the Second District Court of Appeal made clear that settlement agreements containing waivers of unknown claims in connection with a construction of a property, absent fraud or misrepresentation, will be upheld. In brief, the homeowner plaintiff had made a claim against the builder pursuant to California Code of Civil Procedure Section 896 (“Right to Repair”) and settled for a cash payment and obtained a Release of all Claims including for all known and unknown claims. The court held that homeowner’s subsequent construction defect claim was barred pursuant to the terms and conditions of the earlier release.
DISCUSSION
Plaintiff and Appellant, David Belasco ("Belasco"), purchased a newly construction home in Manhattan Beach from builder Gary Loren Wells ("Wells"). Two years after purchasing the property, Belasco filed a Complaint for construction defects, which eventually resulted in settlement between the parties. The settlement agreement included a California Civil Code Section 1524 waiver of all known or unknown claims with the word "claims" defined in part as “any and all known and unknown construction defects." Six years later in 2012, Belasco filed a Complaint alleging a claim, amongst others, that the defective and leaky roof breached the statutory warranty on new construction under California Civil Code section 896 ("Right to Repair Act").
Relying on San Diego Hospice v. County of San Diego (1995) 31 Cal.App.4th 1048, Wells and Wells' surety, American Contractors Indemnity Company (collectively "Wells"), filed a motion for summary judgment contending that the 2012 action was barred by the settlement of Belasco’s prior Complaint against Wells for construction defects to his home. When the trial court ruled in favor of Wells, Belasco appealed. Belasco, a patent attorney, made the following contentions:(1) the general release and section 1542 wavier in the settlement agreement for patent construction defects is not a "reasonable release" of a subsequent claim for latent construction defects within the meaning of section 929 and the “Right to Repair” Act; (2) a reasonable release can only apply to a "particular violation" and not to a latest defect under the language of section945.5, subdivision (f), and the settlement was too vague to be valid because it does not reference a "particular violation;" (3) section 932 of the California Civil Code specifically authorizes an action on "[s]subsequently discovered claims of unmet standards;" (4) public policy prohibits use of a general release and section 1542 waiver to bar a subsequent claim for latent residential construction defects; and (5) a genuine issue of material fact exists concerning Belasco's fraud and negligence claims that would have voided the settlement pursuant to section 1668.
Pursuant to the "Right to Repair Act" Section 929 subsection (a), a builder can make a cash offer in lieu of a repair and the homeowner is free to accept or reject such offer. Section 929subsection (b) goes on to state that
"[t]he builder may obtain a reasonable release in exchange for the cash payment. The builder may negotiate the terms and conditions of any reasonable release in terms of scope and consideration in conjunction with a cash payment under this chapter."
The Second District Court of Appeal ruled that the prior cash settlement, with a release and section 1524 wavier, was a "reasonable release" under the language of California Civil Code Section 929.
On multiple occasions, the Court noted that Belasco is an attorney and was represented by an attorney during the negotiation of the settlement agreement. By executing the agreement with express language regarding what claims were to be release, Belasco released Wells of "any and all claims" due to "any and all known and unknown construction defects." The Court reasoned that because Belasco is an attorney in his own right, he should have understood the import of the Section 1542 waiver and had the opportunity to reject or revise the settlement agreement prior to binding himself to it. The Court further found that the agreement "could not have been more clear" regarding the waiver of all unknown and known construction defect claims and therefore was not vague. Belasco's additional contentions were found to be without merit because Belasco availed himself of the statutory remedy of a cash settlement in lieu of repairs and voluntarily entered into a negotiated settlement agreement. Lastly, Belasco failed to present any evidence regarding his misrepresentation claim.
When a homeowner files a "Right to Repair Act" claim, often it seems that only two options exist: either repair the alleged defects or go to court. However, Belasco is a reminder to builders that the "Right to Repair Act" does offer an avenue for settlement. The Second District Court of Appeal presented a clear, unqualified opinion regarding the validity and enforceability of settlement agreements releasing all known or unknown construction defects in a single family home case. The Court will hold parties to the settlements they agree to. This is especially so when one of the parties is an attorney and provides deposition testimony expressly acknowledging that he understood the scope of the agreement. Attorneys for builders should always include a waiver of all known and unknown claims, which pursuant to Belasco and San Diego Hospice, will ensure that any future claims at the property will be effectively barred by the terms of the settlement agreement.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard H. Glucksman,
Jon A. Turigliatto and
David A. Napper
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
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Best U.S. Home Sales Since 2007 Show Momentum in Housing Market
August 26, 2015 —
Sho Chandra – BloombergAmerica’s housing market has been heating up this summer.
Purchases of previously owned homes unexpectedly rose in July for a third straight month to reach the highest level since February 2007, figures from the National Association of Realtors showed Thursday. The gain was driven by stronger sales of single-family houses even as the share of first-time buyers shrank.
A limited number of available properties is keeping prices elevated, giving homeowners the financial flexibility to trade up as their housing equity improves. The data and a recent report showing the strongest rate of residential construction since 2007 are consistent with the Federal Reserve’s view that the industry is making progress.
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Sho Chandra, Bloomberg
D.C. Decision Finding No “Direct Physical Loss” for COVID-19 Closures Is Not Without Severe Limitations
August 24, 2020 —
Michael S. Levine & Michael L. Huggins - Hunton Andrews KurthOn August 6, 2020, in Rose’s 1 LLC, et al. v. Erie Insurance Exchange, Civ. Case No. 2020 CA 002424 B, a District of Columbia trial court found in favor of an insurer on cross motions for summary judgment on the issue of whether COVID-19 closure orders constitute a “direct physical loss” under a commercial property policy.
At its core, the decision ignores key arguments raised in the summary judgment briefing and is narrowly premised on certain dictionary definitions of the terms, “direct,” “physical,” and “loss.” Relying almost entirely on those definitions – each supplied by the insureds in their opening brief – the court set the stage for its ultimate conclusion by finding “direct” to mean “without intervening persons, conditions, or agencies; immediate”; and “physical” to mean “of or pertaining to matter ….” The court then apparently accepted the policy’s circular definition of “loss” as meaning “direct and accidental loss of or damage to covered property.” Importantly, however, despite recognizing the fundamental rule of insurance policy construction that the court “must interpret the contract ‘as a whole, giving reasonable, lawful, and effective meaning to all its terms, and ascertaining the meaning in light of all the circumstances surrounding the parties at the time the contract was made,’” the court apparently ignored the insureds’ argument that the term “property damage” is specifically defined in the policy to include “loss of use” without any specific reference to physical or tangible damage.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Michael L. Huggins, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Huggins may be contacted at mhuggins@HuntonAK.com
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