Texas Federal Court Delivers Another Big Win for Policyholders on CGL Coverage for Construction-Defect Claims and “Rip-and-Tear” Damages
March 14, 2022 —
Blake A. Dillion, Jared De Jong & Scott S. Thomas - Payne & FearsInsurers regularly argue that commercial general liability (“CGL”) policies are not performance bonds and therefore there is no coverage for claims seeking damages for defective or faulty workmanship. Insurers also argue there is no coverage for so-called “tear-out” or “rip-and-tear” damages, where fixing property damage requires replacing defective work that has not itself been damaged. Fortunately, in a newly decided case, a Texas federal district court rejected both arguments by an insurer. Amerisure Mutual Insurance Company v. McMillin Texas Homes, LLC, No. SA-20-CV-01332-XR, 2022 WL 686727 (W.D. Tex. Mar. 8, 2022).
As with most construction-defect claims, this case involved homeowner claims against a residential developer, McMillin Texas Homes (“McMillin”). After the homes were completed, homeowners complained about defects in the artificial stucco exterior finish and filed suit. McMillin tendered to its insurer, Amerisure Mutual Insurance Company (“Amerisure”). Amerisure then sued McMillin for declaratory relief, arguing that it had no duty to defend or indemnify the homeowner claims. McMillin filed a counterclaim alleging Amerisure breached its policies by refusing to defend or indemnify McMillin.
Reprinted courtesy of
Blake A. Dillion, Payne & Fears,
Jared De Jong, Payne & Fears and
Scott S. Thomas, Payne & Fears
Mr. Dillion may be contacted at bad@paynefears.com
Mr. De Jong may be contacted at jdj@paynefears.com
Mr. Thomas may be contacted at sst@paynefears.com
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Arbitration Clause Found Ambiguous in Construction Defect Case
October 28, 2011 —
CDJ STAFFThe California Court of Appeals ruled on September 28 in the case of Burch v. Premier Homes. Ms. Burch bought a home after negotiating various addendums to the contract. The contract was a standard California Association of Realtors contract to which both the buyer and seller made additions. At issue in this case was paragraph 17 of the contract which included that “Buyer and Seller agree that any dispute or claim in Law or equity arising between them out of this Agreement or resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration.”
The seller/defendant’s Addendum 2 “included provisions relating to the arbitration of disputes that may arise.” Ms. Burch’s realtor, Lisa Morrin, told Burch that “she had never seen a proposed contractual provision that would require a home buyer to agree to arbitrate with a builder over construction defects.” Ms. Burch told Morrin that she did not want to buy the property if she would have to give up her rights under California law.
As part of Addendum 2, the buyer had to buy a warranty from the Home Buyers Warranty Corporation. The sale was held up for a while, as Ms. Burch waited for a copy of the warranty. When she received it, she took further exception to Addendum 2. Scott Warren of Premier Homes said he could not sell the property without Addendum 2. Ms. Burch told her realtor that despite the claims made by Mr. Warren that this was for her benefit, she felt it was more to the benefit of Premier Homes. Don Aberbrook of HBW agreed to the clause, contained in the final sentence of Addendum 2, being struck.
Subsequent to buying the home, Burch submitted a claim concerning construction defects. HBW denied the claim and Burch began an action against the defendants. Premier filed a motion to compel arbitration which Burch opposed.
The trial court ruled that the striking out of the arbitration clause at the end of Addendum 2 “created a conflict with respect to the parties’ intent as to the scope of arbitration.” The trial court found that “the parties’ intention was to preserve Burch’s right to make state law claims including her right to a jury trial for any non-warranty claims against the builder.”
The appeals court in their ruling looked at the standard of review and concluded that the purchase agreement was ambiguous and that extrinsic evidence was required to resolve that ambiguity. As the contract contained contradictory provisions as to whether or not arbitration was required, it was necessary for the trial court to examine these claims. The appeals court found that the evidence supported the conclusions of the trial court.
Finally, the appeals court found that “there was no valid agreement to arbitrate disputes.” The court noted that arbitration can only happen by mutual consent and “it is clear that Burch did not enter into an agreement to arbitrate any construction defect disputes she might have.”
Read the court’s decision…
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Drastic Rebuild Resurrects Graves' Landmark Portland Building
September 14, 2020 —
Nadine M. Post - Engineering News-RecordFifteen minutes into a 105-minute job interview for the $195-million overhaul of the long-troubled Portland Public Service Building in Oregon’s largest city, owner’s rep Mike Day threw a curve ball to the unwitting design-build team of Howard S. Wright Construction Co. and architect DLR Group. Already hard at work solving Day’s first faux crisis scenario—a budget buster that threatened the viability of the makeover of the notoriously dysfunctional landmark—they had to regroup.
Reprinted courtesy of
Nadine M. Post, Engineering News-Record
Ms. Post may be contacted at postn@enr.com
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Attorney's Erroneous Conclusion that Limitations Period Had Not Expired Was Not Grounds For Relief Under C.C.P. § 473(b)
February 27, 2019 —
David W. Evans & Stephen J. SquillarioIn Jackson v. Kaiser Foundation Hospitals, Inc. (2/8/19 No. A150833), the First District Court of Appeal affirmed the trial court’s denial of a motion for relief from a voluntary dismissal, without prejudice, filed by the plaintiff based on the erroneous conclusion of an attorney who she had consulted (but who had not yet appeared as counsel in her case) that the applicable statute of limitations had not yet expired. In reality, the limitations period had expired on the same date plaintiff had filed her complaint in propria persona. The plaintiff later retained the attorney on a limited basis to present the motion for relief pursuant to Code of Civil Procedure § 473(b) based on the attorney’s affidavit of fault. Therein, the attorney testified that he had advised the plaintiff to dismiss her action voluntarily based on a misinterpretation of the applicable limitations period, which the attorney characterized as having been based on his “mistake, inadvertence, surprise, or neglect.”
Section 473 provides two distinct provisions for relief from default or dismissal – one is discretionary, while the other is mandatory. Discretionary relief is available in the case of an attorney’s mistake, inadvertence, surprise, or excusable neglect. In contrast, mandatory relief is available where the resulting dismissal was caused by an attorney’s mistake, whether or not excusable. In denying the plaintiff’s motion, the trial court reasoned that the plaintiff could not rely upon Section 473(b) because (1) the attorney did not represent the plaintiff at the time and (2) this provision did not apply to the voluntary dismissal of an action without prejudice.
Reprinted courtesy of
David W. Evans, Haight Brown & Bonesteel LLP and
Stephen J. Squillario, Haight Brown & Bonesteel LLP
Mr. Evans may be contacted at devans@hbblaw.com
Mr. Squillario may be contacted at ssquillario@hbblaw.com
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Amendments to California Insurance Code to Require Enhanced Claims Handling Requirements for Claims Arising Out Of Catastrophic Events
September 04, 2019 —
Jon A. Turigliatto, Esq. & Ravi R. Mehta, Esq. – Chapman Glucksman Dean Roeb & Barger BulletinSenator Bill Dodd, who represents Napa County and surrounding areas in the California Senate, has recently introduced Senate Bill 240, known colloquially as The Insurance Adjuster Act of 2019. S.B. 240 would amend the California Insurance Code to streamline and organize claim processing, particularly during a state of emergency / catastrophic events. The proposal is in response to a series of devastating wildfires which ravaged the Sonoma County and Napa Valley wine country during the 2017 fire season (Atlas, Tubbs, and Nun fires). Many of Senator Dodd’s constituents reported difficulty in navigating the claim process due to multiple claim professionals handling a single claim, many of whom were outside of California, and many of whose capabilities were challenged.
S.B. 240 would direct the Department of Insurance to issue annual notices setting forth legal developments as they relate to property insurance policies, including best practices for evaluating damage caused by an emergency, and requires out-of-state claims professionals to certify, under penalty of perjury, that they have read these notices along with claim adjusting literature also prepared by the Department of Insurance.
S.B. 240 would also require insurers to designate a primary point of contact for their customers during a state of emergency until the claim is closed or litigation is initiated. While the proposed legislation would not prohibit multiple claims professionals handling a single claim, it would provide for training standards issued by the Department of Insurance on how best to handle claims in a state of emergency.
Further, S.B. 240 would require claims professionals who are not licensed in California (1) to be supervised by a licensed California claims professional, and (2) to read and understand the annual emergency claim adjusting literature issued by the Department of Insurance within 15 calendar days of beginning adjusting of claims in California.
The bill passed the Senate by unanimous vote and is pending in the Assembly. The bill is also supported by Insurance Commissioner Ricardo Lara. Accordingly, the bill is expected to pass the Legislature. Once enacted, S.B. 240 would significantly elevate claim adjusting requirements related to emergencies, such as natural disasters, by placing greater oversight in the Department of Insurance, and greater responsibility on claims professional within and outside of California. How pragmatic these requirements are and what practical impact they will have on the industry are developments which we will follow and provide further commentary as this bill makes its way through the California legislature and into the California Insurance Code.
Reprinted courtesy of
Jon A.Turigliatto, Chapman Glucksman Dean Roeb & Barger and
Ravi R. Mehta, Chapman Glucksman Dean Roeb & Barger
Mr. A.Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Mehta may be contacted at rmehta@cgdrblaw.com
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The Privacy Shield Is Gone: How Do I Now Move Data from the EU to the US
February 08, 2021 —
Heather Whitehead - Newmeyer DillionFollowing the decision of the Court of Justice of the European Union (EU) in case C-311/18 Data Protection Commissioner v. Facebook Ireland Limited and Maximillian Schrems (known as “Schrems II”), companies in the United States can no longer rely on the Privacy Shield, the framework developed by the US Department of Commerce, and the European Commission and Swiss Administration to promote transatlantic commerce while protecting personal data.
Schrems II Invalidated the Privacy Shield and Creates Uncertainty
Schrems II concluded that the EU-U.S. Privacy Shield Framework is no longer a valid mechanism to comply with EU data protection requirements when transferring personal data from the EU to the United States. Further, in a subsequent decision, the Swiss Federal Data Protection and Information Commissioner concluded that the data protection of the Privacy Shield does not provide an adequate level of protection for data transfer from Switzerland to the US pursuant to their Federal Act on Data Protection.
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Heather Whitehead, Newmeyer DillionMs. Whitehead may be contacted at
heather.whitehead@ndlf.com
ASCE Releases First-of-its-Kind Sustainable Infrastructure Standard
October 24, 2023 —
American Society of Civil EngineersRESTON, VA — The
American Society of Civil Engineers (ASCE) today released a first-of-its-kind standard, ASCE/COS 73-23: Standard Practice for Sustainable Infrastructure, which provides guidance for infrastructure owners to develop and implement sustainable solutions through a project's entire life cycle. It is a non-mandatory, performance-based standard designed for civil infrastructure ranging from transportation projects to water systems to the energy grid, developed over a period of five years involving a multitude of diverse stakeholders.
ASCE President Maria Lehman noted, "This is a transformational standard that for the first time will establish consensus guidance on how infrastructure owners should address sustainability in their projects. As of early September, there have been 23 confirmed weather/climate disaster events in the U.S. with losses exceeding $1 billion. That's almost one every week and a half. Sustainability and resilience are more important than ever. Infrastructure owners and designers have a responsibility to develop and implement practices that promote sustainability and long-term reliability of infrastructure projects, while also being cost-effective and collaborative with community stakeholders."
The standard complements existing ASCE standards and tools like the Envision rating system.
A discussion and examination of the ASCE/COS 73-23 standard will be held at the
ASCE INSPIRE 2023 Conference in Arlington, Virginia from November 16th-18th. Print copies of the standard will also be available for purchase at the conference.
Click here to register for the event and learn more about sustainable and resilient innovations in the civil engineering space.
To purchase the standard, visit
the link here.
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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Everyone Wins When a Foreclosure Sale Generates Excess Proceeds
August 07, 2018 —
Ben Reeves - Snell & Wilmer Real Estate Litigation BlogIntroduction
When a foreclosure sale generates more money than needed to pay off the lien, the excess proceeds usually go first to creditors in the order of their priority, and second to the owner after creditors are paid in full. So, in truth, not everyone wins when a foreclosure sale brings in too much money. Amusingly, in Steinmetz v. Everyone Wins, the court awarded excess sale proceeds to….you guessed it…Everyone Wins, despite the owner’s argument that Arizona’s anti-deficiency statutes barred it from recovering anything.
In addition to supplying a clever title for this post, Steinmetz v. Everyone Wins provides an important analysis of how Arizona’s anti-deficiency statutes, homeowner’s assessment lien statutes, and foreclosure statutes apply when determining who “wins” when it comes to excess sale proceeds.
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Ben Reeves, Snell & WilmerMr. Reeves may be contacted at
breeves@swlaw.com
