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DIRECTORY AND CAPABILITIES

Suit Limitation Provisions in New York

January 28, 2025 — Bill Wilson - Construction Law Zone
New York law generally enforces a contractual suit limitation that specifies a “reasonable” period of time (usually shorter than the applicable statute of limitations) within which an action must be commenced. The contractual suit limitation needs to be fair and reasonable, given the circumstances of each particular case. The New York Court of Appeals recently examined this precedent in the context of an insurance policy enforcing an insurance contract’s two-year suit limitation period in Farage v. Associated Insurance Management Corp., 2024 N.Y. Slip Op. 05875 (Nov. 26, 2024). In Farage, a Staten Island multi-unit apartment building was damaged in a fire. The plaintiff owner filed its full repair claim for damages with its insurer six years after the fire and four years after the expiration of the contractual limitation period. The insurer denied the claim. The plaintiff filed suit for breach of contract and breach of the covenant of good faith fair dealing. The insurer moved to dismiss the action based on the two-year limitation provision in the insurance contract. Read the court decision
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Reprinted courtesy of Bill Wilson, Robinson & Cole LLP
Mr. Wilson may be contacted at wwilson@rc.com

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Wisconsin Supreme Court Holds that Subrogation Waiver Does Not Violate Statute Prohibiting Limitation on Tort Liability in Construction Contracts

October 21, 2019 — Gus Sara - The Subrogation Strategist
In Rural Mut. Ins. Co. v. Lester Bldgs., LLC 2019 WI 70, 2019 Wisc. LEXIS 272, the Supreme Court of Wisconsin considered whether a subrogation waiver clause in a construction contract between the defendant and the plaintiff’s insured violated Wisconsin statute § 895.447, which prohibits limitations of tort liability in construction contracts. The Supreme Court affirmed the lower court’s decision that the waiver clause did not violate the statute because it merely shifted the responsibility for the payment of damages to the defendant’s insurance company. The waiver clause did not limit or eliminate the defendant’s tort liability. This case establishes that while § 895.447 prohibits construction contracts from limiting tort liability, a subrogation waiver clause that merely shifts responsibility for the payment of damages from a tortfeasor to an insurer does not violate the statute and, thus, is enforceable. In Rural Mutual, the plaintiff’s insured, Jim Herman, Inc. (Herman), entered into a contract with Lester Buildings, LLC (Lester) to design and construct a barn on Herman’s property. The contract included a provision that stated the following: Both parties waive all rights against each other and any of their respective contractors, subcontractors and suppliers of any tier and any design professional engaged with respect to the Project, for recovery of any damages caused by casualty of other perils to the extent covered by property insurance applicable to the Work or the Project, except such rights as they have to the proceeds of such property insurance and to the extent necessary to recover amounts relating to deductibles of self-insured retentions applicable to insured losses. . . . This waiver of subrogation shall be effective notwithstanding allegations of fault, negligence, or indemnity obligation of any party seeking the benefit or production [sic] of such waiver. 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

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Traub Lieberman Attorneys Win Motion for Judgment on the Pleadings In Favor of Insurer

June 26, 2023 — Jeremy S. Macklin & Danielle K. Kegley - Traub Lieberman
Traub Lieberman Partner Jeremy Macklin and Associate Danielle Kegley obtained judgment on the pleadings in favor of Admiral Insurance Company (“Admiral”), in a matter brought before the Chancery Division of the Circuit Court of Cook County, Illinois. In the underlying case, an injured employee sued various companies, and their agents, for injuries he sustained on a construction project. The insureds, one of the defendant companies and its employee, sought coverage for the underlying lawsuit under a professional liability policy issued to that company by Admiral. The policy at issue provided coverage for the company and its employees, for negligent acts or omissions committed in the rendering of “professional services,” defined as services “involving specialized training and skill while in the pursuit of” mechanical and process engineering. After initially defending the insureds, Admiral filed a declaratory judgment action asking the Court to declare that the company has no duty to defend or indemnify the insureds in the underlying lawsuit and to allow Admiral to immediately withdraw its defense of the insureds. Admiral argued there is no coverage under the professional liability policy, as the underlying lawsuit does not contain allegations that the underlying plaintiff’s injuries arose from the rendering of or failure to render “professional services.” The insureds argued that since they were hired as mechanical and process engineers for the project, that any lawsuits against them must necessarily arise from their “professional services.” Further, the insureds asked the Court to disregard the express allegations in the underlying lawsuit concerning their role on the project as a general contractor. Reprinted courtesy of Jeremy S. Macklin, Traub Lieberman and Danielle K. Kegley, Traub Lieberman Mr. Macklin may be contacted at jmacklin@tlsslaw.com Ms. Kegley may be contacted at dkegley@tlsslaw.com Read the court decision
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Business Risk Exclusions Bar Coverage for Construction Defect Claims

June 28, 2013 — Tred Eyerly
The federal district court assumed there was "property damage" caused by an "occurrence," but found the business risk exclusions barred coverage for construction defect claims. Hubbell v. Carney Bros. Constr., 2013 U.S. Dist. LEXIS 68331 (D. Colo. May 13, 2013). The plaintiffs entered a construction contract with the insured general contractor to build a home. After the project was one-third completed, plaintiffs terminated the contract. Experts hired by plaintiffs found a failure to properly site the residence, as the house was constructed 48 feet from the intended location; violations of county height restrictions; failure to follow building plans, which were themselves deficient; and an improperly poured foundation. The experts estimated that the costs of repairing the property to be between $1.3 and $1.5 million, and that the cost of demolishing the structure and rebuilding it would be between $1.1 and $1.3 million. After plaintiff filed suit, a stipulated judgment of $1.952 million was entered. Read the court decision
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Reprinted courtesy of Tred Eyerly
Tred Eyerly can be contacted at te@hawaiilawyer.com

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Hotel Claims Construction Defect Could Have Caused Collapse

December 30, 2013 — CDJ STAFF
The owners of the Crowne Plaza New Orleans Airport, in Kenner, Louisiana, have filed a lawsuit claiming that a defective beam installed during renovations put the building at risk of collapse, reports The Louisiana Record. The hotel was sold to its current owners, 2929 Williams Blvd, LLC, in 2006, and the renovations began after Hurricane Katrina in 2007. The renovations converted an indoor pool area into a ballroom. The renovations were finished in 2008, but hotel staff noticed the walls and ceiling of the ballroom were sagging by September 2011. A structural engineer determined that a main beam had failed, risking collapse of the entire building. The hotel owners set upon repairing the structure and now seek reimbursement. 2929 Williams Blvd., LLC is suing Trimark Constructors LLC, Kyle Associates LLC, and Avengo Baily & Associates, Inc. for an unspecified amount of damages. Read the court decision
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Reprinted courtesy of

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Recent Florida Legislative Changes Shorten Both Statute of Limitation ("SOL") and Statute of Repose ("SOR") for Construction Defect Claims

March 19, 2024 — Holly A. Rice - Saxe Doernberger & Vita, P.C.
The Florida Legislature and Governor DeSantis passed Senate Bill 360, effective April 13, 2023, which imposes significant changes to Florida’s statute of limitation (“SOL”) and statute of repose (“SOR”) periods prescribed in Florida Statute § 95.11. In short, the SOL and SOR periods will commence earlier and run earlier, which in effect shortens the time to bring a construction defect claim on both ends of the timeline.1 These changes will have positive impacts for general contractors who may save on insurance premiums with shorter completed operations tails. In other words, the timeframe within which contractors are at risk of being sued for construction-related errors is significantly reduced under the new version of the statute. Owners and developers, on the other hand, may feel that the increased pressure of uncovered construction defects necessitates the filing of lawsuits sooner than they might have otherwise filed. Collectively, all parties involved will certainly have to consider when and how to place their carriers on notice of claims or potential claims and, coupled with Florida’s sweeping changes to fee shifting statutes, insured parties may see more coverage denials which, in turn, could lead to more coverage actions.2 Read the court decision
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Reprinted courtesy of Holly A. Rice, Saxe Doernberger & Vita, P.C.
Ms. Rice may be contacted at HRice@sdvlaw.com

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The “Program Accessibility” Exception for Public Entities Under the ADA

September 10, 2014 — Garret Murai – California Construction Law Blog
Public owners, as well as private owners and tenants of commercial and retail properties, are at risk of lawsuits brought under the Americans with Disabilities Act of 1990 (“ADA”) and related state law alleging that their facilities are not accessible by those with disabilities. A common misperception among private owners and tenants is that facilities constructed before the ADA went into effect in 1992 are exempt or “grandfathered” from the ADA’s requirements. Not so. At least generally. If, however, you are a public entity, there is such an exception. Lucky you. Under the ADA, public facilities constructed prior to January 26, 1992 need not be “accessible to and usable by individuals with disabilities” so long as a public entity’s “service[s], program[s] and activit[ies], when viewed in [their] entirety, [are] readily accessible to and usable by individuals with disabilities.” Known as “program accessibility,” the exception has left many public entities scratching their heads as to what they can and must do. Read the court decision
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Reprinted courtesy of Garret Murai, Kronick Moskovitz Tiedemann & Girard
Mr. Murai may be contacted at gmurai@kmtg.com

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Reconciling Prompt Payments and Withholding of Retention Payments

March 30, 2016 — Eric J. Rollins, Esq. – Newmeyer & Dillion, LLP
It is common in California for the owners of a project to make monthly payments to a contractor for work as it is completed, but withhold a certain percentage as a guarantee of future satisfactory performance. Contractors almost always pass these withholdings on to their subcontractors. Unsurprisingly, disputes can arise regarding when the withheld retentions must be paid. Civil Code section 8814, subdivision (a), states that a direct contractor must pay each subcontractor its share of a retention payment within ten days after receiving all or part of a retention payment. However, an exception exists -- a direct contractor may withhold from the retention paid to a subcontractor an amount not in excess of 150 percent of the estimated value of the disputed amount, whenever a “good faith dispute exists between the direct contractor and a subcontractor.” (See Cal. Civ. Code, § 8814, subd. (c).) The problem with the statute is that it offers no help in defining a “good faith dispute,” and the California courts have historically not provided much guidance either. Can a “good faith dispute” be any dispute between the contracting parties, e.g., a dispute regarding change orders, mismanagement, etc.? Or must the dispute relate specifically to the retention? Unfortunately for California litigants, the answer may depend on the appellate district in which the parties find themselves. Read the court decision
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Reprinted courtesy of Eric J. Rollins, Esq., Newmeyer & Dillion, LLP
Mr. Rollins may be contacted at eric.rollins@ndlf.com

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