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DIRECTORY AND CAPABILITIES

NJ Court Reaffirms Rule Against Coverage for Faulty Workmanship Claims and Finds Fraud Claims Inherently Intentional

September 20, 2021 — Anthony L. Miscioscia & Frank J. Perch, III - White and Williams LLP
Awarding summary judgment to an insurer under both liability and directors & officers (D&O) coverage parts, a New Jersey trial court reaffirmed the principle that claims of defective workmanship without resulting “property damage” are not covered under a general liability policy, and further dismissed claims for fraud and breach of fiduciary duty, finding that such claims were inherently intentional and do not state a covered “occurrence.” In Velez v. AR Management Company, et al., 2021 N.J. Super. Unpub. LEXIS 1675 (Law Div. Bergen Co. Aug. 10, 2021), owners of a condominium unit rebuilt after a fire sued the condominium association, several association board members, the association’s property management company and the general contractor for the reconstruction work. The owners’ suit alleged faulty workmanship and incomplete repairs. In addition, the owners asserted fraud and breach of fiduciary duty claims against the management company, alleging conflicts of interest and self-dealing between the management company and the general contractor, which had common ownership. In a third-party complaint, the management company sought coverage from the condo association’s liability and D&O insurer. The court dismissed the D&O coverage claim, noting that the management company was not a director or officer or otherwise entitled to insured status for the D&O coverage part. Reprinted courtesy of Anthony L. Miscioscia, White and Williams LLP and Frank J. Perch, III, White and Williams LLP Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com Mr. Perch may be contacted at perchf@whiteandwilliams.com Read the court decision
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Second Circuit Brings Clarity To Scope of “Joint Employer” Theory in Discrimination Cases

May 02, 2022 — Kevin J. O’Connor, Aaron C. Schlesinger & Lauren R. Davis - ConsensusDocs
The “joint employer” doctrine has been used with increasing frequency by the plaintiffs’ bar to broaden the scope of target defendants in discrimination cases beyond those who would be traditionally regarded as the employer. This is true even in the construction industry, which has seen a rise in cases where general contractors (“GC”) or construction managers (“CM”) are being targeted when discrimination is alleged on a construction project, even when the GC or CM is far removed from the underlying events and had no control over the employees in question. Examples of this phenomenon are where a claim of harassment or discrimination originates in the lower tier ranks of subcontractors, or even where there is a claim involving an independent contractor on a project and a discrimination lawsuit ensues. Until now, the Courts in the federal circuit which includes New York City (the Second Circuit) have been left to decipher a patchwork of case law to ascertain the scope and extent of joint employer liability in discrimination cases. In a move that is certainly welcomed by contractors, the Second Circuit Court of Appeals in Felder v. United States Tennis Association, et al., 19-1094, recently issued a comprehensive decision which provides a helpful summary of what must be pled and proven to broaden liability under the joint employer theory in discrimination cases. Felder provides a roadmap for risk mitigation by contractors looking to limit such claims in the future or to meet them head on when they do arise. Reprinted courtesy of Kevin J. O’Connor, Peckar & Abramson (ConsensusDocs), Aaron C. Schlesinger, Peckar & Abramson (ConsensusDocs) and Lauren R. Davis, Peckar & Abramson (ConsensusDocs) Mr. O'Connor may be contacted at koconnor@pecklaw.com Mr. Schlesinger may be contacted at aschlesinger@pecklaw.com Ms. Davis may be contacted at ldavis@pecklaw.com Read the court decision
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Delaware “occurrence” and exclusions j(5) and j(6)

June 10, 2011 — CDCoverage.com

In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects. Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property

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With No Evidence of COVID-19 Being Present, DC Trial Court Finds No Claim for Business Interruption

September 28, 2020 — Tred R. Eyerly - Insurance Law Hawaii
A D.C. Superior Court rejected a business interruption claim due to closures related to the COVID-19 pandemic. Rose's 1, LLC v. Erie Ins. Exchange, Civil Case No 2020 CA 002424 B (Order dated Aug. 8, 2020). The decision is here. Plaintiffs owned a number of restaurants in the District of Coiumbia. Plaintiffs had commercial property coverage in a policy issued by Erie. The policy provided coverage for loss of income sustained due to interruption of business resulting directly from "loss or damage" to the insured property. DC Mayor Bowser issued a series of orders in March 2020 which closed all non-essential businesses, including plaintiffs' restaurants. Plaintiffs filed claims with Erie. When coverage was denied, plaintiffs filed suit. Both sides moved for summary judgment. The dispute centered on whether the closure of the restaurants due to the mayor's orders constituted a "direct physical loss" under the policy. Plaintiffs argued that the loss of use of the restaurants was "direct" because the closures were the direct result of the mayor's orders without intervening action. The court reasoned, however, that the orders were governmental edicts that commanded individuals and businesses to take certain actions. Standing alone and absent intervening actions by individuals and businesses, the orders did not effect any direct changes to the properties. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Insurance Coverage for COVID-19? Two N.J. Courts Allow Litigation to Proceed

March 06, 2022 — Bethany L. Barrese - Saxe Doernberger & Vita, P.C.
Courts across the nation have struggled to determine whether insurance policies that provide coverage for “direct physical loss or damage” insure losses stemming from COVID-19. Many courts have been applying an overly stringent pleading standard, inappropriately granting insurers’ motions to dismiss as a result of the insureds’ purported failure to allege that COVID-19 caused damages covered by their policies or because certain exclusions supposedly barred coverage. However, two New Jersey state courts recently decided these issues in favor of the insureds in well-reasoned opinions that give proper deference to procedural pleading standards and substantive insurance coverage law. A. COVID-19 causes “direct physical loss or damage” In AC Ocean Walk, LLC v. American Guarantee and Liability Ins. Co., the New Jersey Superior Court held that physical alteration to an insured’s property is not a prerequisite to coverage for losses due to COVID-19. The insured, Ocean Casino, sued multiple insurers for COVID-19 losses, alleging that the virus caused Ocean Casino to shut down and suffer a loss of use of its property. Looking at the language of the policies, the court explained that each policy’s insuring agreement substantially read the same:

“This policy insures against direct physical loss of, or damage caused by, a covered cause of loss to covered property, at an insured location [the casino] … subject to the terms, conditions, and exclusions stated in this policy.”

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Reprinted courtesy of Bethany L. Barrese, Saxe Doernberger & Vita, P.C.
Ms. Barrese may be contacted at BBarrese@sdvlaw.com

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Wendel Rosen Construction Attorneys Recognized by Super Lawyers

July 30, 2018 — Garret Murai - California Construction Law Blog
Wendel Rosen Construction Practice Group Co-Chairs, Garret Murai and Quinlan Tom, have been selected for inclusion as 2018 Northern California Super Lawyers in the area of Construction Litigation. Murai and Tom are among 26 other attorneys at the firm who were selected as either 2018 Northern California Super Lawyers or Rising Stars by Thompson Reuters. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel, Rosen, Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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Insureds Survive Summary Judgment on Coverage for Hurricane Loss

June 19, 2023 — Tred R. Eyerly - Insurance Law Hawaii
The magistrate judge recommended that the insurer's motion for summary judgment be denied, finding a material issue of fact regard the cause of loss after Hurricanes Laura and Delta. Armstrong v. Amguard Ins Co., 2023 U.S. Dist. LEXIS 76869 (E.D. Texas, April 14, 2023). The policy excluded damage caused by wear and tear, differential foundation movement, as-built deficiencies, manual damage, and pre-existing conditions. Texas applied the doctrine of concurrence causes, meaning if damages were due to both covered and non-covered causes of loss, the insureds had to segregate the damage caused by covered causes of loss from the damage caused by non-covered causes of loss. Coverage was denied and the insureds filed suit. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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NTSB Faults Maintenance, Inspection Oversight for Fern Hollow Bridge Collapse

March 19, 2024 — Jim Parsons - Engineering News-Record
The City of Pittsburgh’s failure to act for more than a decade on repeated maintenance and repair recommendations regarding the Fern Hollow Bridge was the probable cause for the structure’s dramatic 2022 collapse, the National Transportation Safety Board (NTSB) said at its Feb. 21, 2024, meeting. The city is the owner of the bridge. Reprinted courtesy of Jim Parsons, Engineering News-Record ENR may be contacted at enr@enr.com Read the full story... Read the court decision
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