Difficulty in Defending Rental Supplier’s Claim Under Credit Application
October 11, 2021 —
David Adelstein - Florida Construction Legal UpdatesIn construction, one of the easiest claims to prove from a burden of proof standpoint is that of a supplier, particularly a rental equipment supplier. Oftentimes, these claims are more in the realm of a collection claim because a rental supplier will generally be able to establish that a party opened an account with them, signed a credit application and personal guaranty, and equipment was rented and even delivered to a specific jobsite during set dates. Defending these claims is not so easy. And even if there is a defense as it relates to some amounts, there needs to be an upside challenging those amounts when factoring in the attorney’s fees, costs, and interest on the other amounts and on continuing the dispute.
An example of the difficulty in defending these claims from rental suppliers can be found in the recent case of Custom Design Expo, Inc. v. Synergy Rents, Inc., 2021 WL 4125806 (Fla. 2d DCA 2021). Here, a contractor rented equipment (e.g, forklifts) from a supplier. The equipment was rented on an open account and the contractor signed a personal guaranty. The supplier sued the contractor for about $81,000 that remained unpaid. The supplier appeared to waste no time and moved for summary judgment with an affidavit from its credit manager. The credit manager affirmed that the contractor executed a credit application for purposes of renting equipment on an open account, the application contained a personal guaranty, and the credit application formed the basis of a contract. The credit manager authenticated the credit application and affirmed that the contractor owed it about $81,000 in unpaid amounts for rental equipment that was furnished under the credit application.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Perez Broke Records … But Should He Have Settled Earlier?
February 19, 2024 —
Sofya Uvaydov & John F. Watkins - Kahana FeldIn 2021, Mark Perez’ Labor Law 240(1) lawsuit made legal news by breaking the record of the highest appellate-sustained pain and suffering award in New York history. While that record was short-lived, it still maintains its place as New York’s highest-ever pain and suffering award for a brain injury. This January 17th, the Appellate Division, First Department revisited the litigation but, this time, in a dispute between Perez and his then-lawyer, Ben Morelli and the Morelli Law Firm. Mr. Perez claims breach of contract over a 10% additional contingency fee charge related to the Perez v. Live Nation appeal and breach of fiduciary duty by his counsel in failing to convey settlement offers during the lifetime of the case. The Morelli firm counters, among other things, that the prior settlement offers – a $30 million offer during the 2019 trial and intermediate sums during the appellate stage – were still lower than the ultimate $55 million settlement. No harm, Mr. Morelli argues, and thus no foul in failing to convey the offers.
But is that so? Did Mark Perez ultimately receive more money in his $55 million settlement than from the $30 million settlement offer mid-trial? Despite the glaring $25 million difference, the surprising calculations show that Perez would have been financially better off taking the $30 million mid-trial settlement.
Reprinted courtesy of
Sofya Uvaydov, Kahana Feld and
John F. Watkins, Kahana Feld
Ms. Uvaydov may be contacted at suvaydov@kahanafeld.com
Mr. Watkins may be contacted at jwatkins@kahanafeld.com
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Can We Compel Insurers To Cover Construction Defect in General Liability Policies?
December 09, 2011 —
Douglas Reiser, Builders Council BlogRecently, I read an article on Engineering News-Record that outlines a remarkable movement by as many as four states, to mandate coverage of construction defects in contractor general liability insurance policies. Say what? Is this a reality? What will become of affordable insurance?
Commercial General Liability insurance, or CGL, is your basic liability insurance. Every contractor doing business in the State of Washington, and most likely those abroad, has this insurance. Contractors buy this insurance to protect them from unforeseen liabilities arising from their negligence - and right now it’s reasonably affordable.
Why is it so affordable in such a risk-heavy industry? Because CGL policies significantly limit the scope of their coverage. Coverage is generally afforded for damages resulting from negligence (The roofer put a hammer through the drywall contractor’s wall) or which resulted from your defective construction (the roof leaked and flooded the rest of the house). But, that coverage does not include replacement of your faulty construction (the contents of the home might be protected by your leaky roof - the leaky roof itself is not).
The debate over coverage typically stems from the definition of “occurrence,” a term used to describe the event from which coverage arises, “resulting loss,” a term used to describe the type of loss covered.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
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New York’s Highest Court Weighs in on N.Y. Labor Law
September 23, 2024 —
Bill Wilson - Construction Law ZoneN.Y. Labor Law § 241(6) requires owners and contractors to provide reasonable and adequate protection and safety to persons employed at or lawfully frequenting a construction site. If a worker is injured on a construction site and establishes a violation of a specific and applicable Industrial Code regulation, both the owner and contractor will be held vicariously liable for the worker’s injury, without regard to their fault and even in the absence of control or supervision of the worksite. The Court of Appeals of New York recently addressed the broad scope of the Labor Law in the context of slipping hazards.
In Bazdaric v. Almah Partners, LLC, 41 N.Y.3d 310 (2024), the plaintiff, an injured painter, slipped and fell on a plastic covering placed over an escalator in an area he was assigned to paint. The plaintiff claimed that the plastic covering was a foreign substance for purposes of Industrial Code 12 NYCRR 23-1.7(d) because it was not part of the escalator. Industrial Code 12 NYCRR 23-1.7(d) states:
Slipping hazards. Employers shall not suffer or permit any employee to use a floor, passageway, walkway, scaffold, platform or other elevated working surface which is in a slippery condition. Ice, snow, water, grease and any other foreign substance which may cause slippery footing shall be removed, sanded or covered to provide safe footing.
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Bill Wilson, Robinson & Cole LLPMr. Wilson may be contacted at
wwilson@rc.com
Pulte Home Corp. v. CBR Electric, Inc.
August 24, 2020 —
Michael Velladao - Lewis BrisboisIn Pulte Home Corp. v. CBR Electric, Inc., 50 Cal.App.5th 216 (June 10, 2020), the California Court of Appeal reversed the trial court’s entry of judgment in favor of six subcontractors with respect to an equitable subrogation lawsuit filed by St. Paul Mercury Insurance Company (“St. Paul”). St. Paul filed the lawsuit after defending Pulte Home Corp. (“Pulte”) against two construction defect lawsuits. The lawsuit contended that St. Paul was entitled to seek recovery of defense costs incurred on behalf of Pulte based on equitable subrogation. St. Paul relied on the indemnity clauses in each of the subcontracts, and argued that the subcontractors had breached their contracts with Pulte. As such, each subcontractor was obligated to pay an equitable share of the defense of the construction defect lawsuits relating to their work on the homes at issue in such lawsuits. The trial court ruled against St. Paul and held that the subcontractors’ failure to pay defense costs did not “cause” the homeowners’ claims, such that there was no causal connection supporting a claim for equitable subrogation. In addition, the trial court found that “equitable subrogation was an all-or-nothing claim, meaning it required a shifting of the entire amount of defense costs to the subcontractors on a joint and several basis and did not allow for an apportionment of costs among the defendant subcontractors.”
In reversing the trial court’s decision, the Court of Appeal reasoned that St. Paul stood in the shoes of Pulte and was limited to pursuing recovery from the subcontractors based on the same rights as afforded to Pulte under the subcontracts. The Court of Appeal noted that St. Paul was seeking reimbursement of defense costs from the subcontractors based on the theory that they were contractually liable for paying an equitable share of defense costs. The Court of Appeal also noted that St. Paul’s claim was not premised on the contention that the subcontractors’ failure to pay defense costs caused the homeowners’ claims. Rather, St. Paul’s claim was premised on the subcontractors’ breach of their defense duty owed to Pulte under the indemnity clauses in their subcontracts.
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Michael Velladao, Lewis BrisboisMr. Velladao may be contacted at
Michael.Velladao@lewisbrisbois.com
Insurer's Motion to Dismiss Complaint for Failure to Cover Collapse Fails
April 13, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe insurer was unsuccessful in moving to dismiss the property owner's complaint that was filed after coverage for collapse of basement walls was denied. Cyr v. CCAA Fire & Cas. Ins. Co., 2017 U.S. Dist. LEXIS 39387 (D. Conn. March 20, 2017).
The Cyrs began observing cracking patterns in the basement wall of their home. A structural engineer inspected the wall and determined that the cracks were due to a chemical reaction in the concrete that would ultimately render the walls unstable. The Cyrs made a claim with CCAA under their homeowner's policy. The insureds contended that the progressive deterioration of the concrete in the basement walls was a collapse under the policy.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Robots on Construction Sites Are Raising Legal Questions
September 18, 2023 —
Peter Sheridan - Construction ExecutiveMark Twain said that “good decisions come from experience. Experience comes from making bad decisions.” Aesop warns “be careful what you wish for….” But is there a good decision to be made now to employ robots on your next project? There is not a lot of experience to help us make that decision, and the robotic laborer that does not tire or need breaks or desire a raise or promotion looks like an option we might all wish for when planning our next project.
Are there pitfalls, traps for the unwary? Always. Spotting them is the trick. After a brief glimpse into the past for appropriate context, there are a few traps that need to be considered.
Reprinted courtesy of
Peter Sheridan, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Collapse of Breezeway Attached to Building Covered
February 24, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court found that a breezeway that collapsed during a party was covered by the commercial property policy. DENC, LLC v. Philadelphia Indem. Ins. Co., 2019 U.S. Dist. LEXIS 179083 (M.D. N.C. Oct. 15, 2019).
DENC owned an apartment complex that was insured by Philadelphia under an all-risk policy. During an early morning party, a large number of students gathered on the second-floor breezeway for a party. The students started jumping in the breezeway when a certain song started playing. The floor abruptly collapsed underneath the students.
Philadelphia sent an adjuster to inspect the breezeway a couple days later. He wrote to Philadelphia that "the sole and proximate cause of the loss is water damage occurring over an extended period of time causing the second floor breezeway to sage and the light weight concrete to crack." Shortly thereafter, the building was condemned. A structural engineer found multiple ways in which water had seeped into the breezeway's wood framing and photographed the resulting biological growth and wood decay. He concluded that the building had sustained significant long-term water intrusion which resulted in the wood framing inability to support the loads. The water intrusion was caused by the failure to properly install a water management system on the walls, a properly integrated waterproof system for the walkway slab and framing configuration, and improper venting of dryers.
DENC retained an engineer who testified that the breezeway was sagging because the concrete had broken.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
