The Montrose Language Interpreted: How Many Policies Are Implicated By A Construction Defect That Later Causes a Flood?
March 17, 2011 —
Shaun McParland BaldwinThe Court of Appeals of Indiana recently addressed the “Montrose” language added to the CGL ISO form in 2001 in the context of a construction defect claim where a fractured storm drain caused significant flooding a year after the drain was damaged. The insuring agreement requires that “bodily injury or “property damage” be caused by an occurrence and that the “bodily injury or “property damage” occur during the policy period. The Montrose language adds that the insurance applies only if, prior to the policy period, no insured knew that the “bodily injury or “property damage” had occurred in whole or in part. Significantly, it also states that any “bodily injury” or “property damage” which occurs during the policy period and was not, prior to the policy period known to have occurred, includes a continuation, change or resumption of that “bodily injury” or “property damage” after the end of the policy period.
In Grange Mutual Cas. Co. v. West Bend Mut. Ins. Co., No. 29D04-0706-PL-1112 (Ct. App. IN March 15, 2011), http://www.ai.org/judiciary/opinions/pdf/03151109ehf.pdf, Sullivan was the General Contractor for a school construction project. Its subcontractor, McCurdy, installed the storm drain pipes. One of the storm pipes was fractured in 2005 while McCurdy was doing its installation work. More than a year later, the school experienced significant water damage due to flooding. It was later discovered that the flooding was due to the fractured storm drain. Sullivanrsquo;s insurer paid $146,403 for the water damage. That insurer brought a subrogation claim against McCurdy and its two insurers: West Bend and Grange. West Bend had issued CGL coverage to McCurdy while the construction was ongoing, including the date in which the storm pipe was fractured. Grange issued CGL coverage to McCurdy at the time of the flooding. Those two carriers jointly settled the subrogation claim and then litigated which insurer actually owed coverage for the loss. Significantly, the loss that was paid included only damages from the flooding, not any damages for the cost of repairing the pipe.
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Reprinted courtesy of Shaun McParland Baldwin of Tressler LLP. Ms Baldwin can be contacted at sbaldwin@tresslerllp.com
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Don’t Fall in Trap of Buying the Cheapest Insurance Policy as it May be Bad for Your Business Risks and Needs
March 25, 2024 —
David Adelstein - Florida Construction Legal UpdatesDon’t fall in the trap of buying the cheapest insurance policy. It will come and bite you in the butt big time! Consult with an insurance broker that understands construction and, importantly, your specific industry, to provide you coverage within your industry. Otherwise, you’ll be paying for a policy that may (i) not be a good policy, and (ii) may provide you minimal to no value for your industry’s RISKS and NEEDS when factoring in exclusions. When procuring insurance, think of the old adage “penny wise and pound foolish,” and don’t make decisions that fit within this adage!
The recent decision in Nautilus Ins. Co. v. Pinnacle Engineering & Development, Inc., 2024 WL 940527 (S.D. Fla. 2024) serves as an example. Here, a subcontractor was hired by a general contractor to perform underground utility work for a townhome development which consisted of 57 townhome units included in 18 detached structures. The subcontractor’s underground work was defective which caused damage to the property’s water line, sewer system, plumbing lines, pavers, etc. The general contractor was liable to the owner for this defective work. Although the general contractor was an additional insured under the subcontractor’s commercial general liability (CGL) policy, the subcontractor’s CGL carrier denied the duty to defend and initiated an insurance coverage lawsuit. Motions for summary judgment were filed.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Fifth Circuit -- Damage to Property Beyond Insured’s Product/Work Not Precluded By ‘Your Product/Your Work Exclusion’
January 24, 2022 —
Anthony L. Miscioscia & Marianne Bradley - White and Williams LLPOn January 11, 2022, the United States Court of Appeals for the Fifth Circuit issued its decision in Siplast, Incorporated v. Employers Mutual Casualty Company, 2022 U.S. App. LEXIS 795 (5th Cir. Jan. 11, 2022), finding that an insurer had a duty to defend its insured in a construction defect case where the underlying complaint alleged damage to property beyond the product and work of the insured.
Siplast, Inc. (Siplast) had contracted with the Archdiocese of New York (the Archdiocese) to install a roof membrane system at a high school in the Bronx, New York. Id. at *1. As part of the contract, Siplast guaranteed that the roof membrane system would remain in a watertight condition for at least twenty years. Id. at *2. If it did not, Siplast would repair the roof membrane system at its own expense. Id.
Several years after the installation, the Archdiocese observed water damage in the ceiling tiles at the high school. Id. The Archdiocese contacted Siplast, who attempted to repair the damage and prevent further leaks; however, leaks and resultant damage continued to occur. Id. Siplast subsequently refused to make any more improvements to the roof. Id.
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Anthony L. Miscioscia, White and Williams LLP and
Marianne Bradley, White and Williams LLP
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Ms. Bradley may be contacted at bradleym@whiteandwilliams.com
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Environmental and Regulatory Law Update: New Federal and State Rulings
April 19, 2022 —
Anthony B. Cavender - Gravel2GavelThe first quarter of 2022 has yielded a number of decisions, reversals and agency adjustments worth note.
FEDERAL CIRCUIT
U.S. Court of Appeals for the D.C. Circuit – Food & Water Watch v. Federal Energy Regulatory Commission
On March 11, 2022, the court decided the FERC case. On December 19, 2019, the Commission issued a Certificate to Tennessee Gas Pipeline and determined that a “modest expansion” and upgrade of the existing 11,000-mile natural gas pipeline would have no significant environmental impact. However, one of the Commissioners filed a partial dissent, arguing that the Commission’s treatment of the climate change impacts was inadequate. A petition for review was filed, and now the court has decided that the Commission erred in not accounting for the indirect effects of the expansion, namely the downstream emissions of greenhouse gas generated by the pipeline’s delivery of the gas to its customers. Consequently, NEPA’s requirement that a rigorous environmental assessment be made before the authorization was granted was violated. However, the court decided against vacating the Commission’s orders, which would have had a “disruptive effect” on the project which is, or soon will be, operational.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Crossrail Audit Blames Busted Budget and Schedule on Mismanagement
August 13, 2019 —
Peter Reina - Engineering News-RecordIn a new report on London’s Crossrail, the U.K. National Audit Office says the beleaguered transportation project is around two years late and nearly 20% over budget because of poor management. The NAO, charged by Parliament with monitoring public spending, pointed to ill-conceived “aspirational” plans that proved to be unfit for the technologically challenging and vast program when things went wrong.
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Peter Reina, ENR
Illinois Supreme Court Holds That the Implied Warranty of Habitability Does Not Extend to Subcontractors
March 04, 2019 —
Michael J. Ciamaichelo - The Subrogation StrategistThe implied warranty of habitability allows a homeowner to recover damages for latent defects that interfere with the intended use of a home. In Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, 2018 Ill. LEXIS 1244 (2018), the Supreme Court of Illinois held that buyers of new homes cannot assert claims for breach of the implied warranty of habitability against subcontractors involved in the construction of the homes because the subcontractors have no contractual relationship with the homeowners and the damages are purely economic. As the court explained, the implied warranty of habitability is a creature of contract (not tort) and, therefore, only exists when there is contractual privity between the defendants and the homeowners.
In Sienna, a group of condominium unit owners alleged that their new homes contained latent construction defects and asserted claims against the various parties involved in the construction and sale of the homes, including claims against the defendant subcontractors for breach of the implied warranty of habitability. The plaintiffs contracted with the property developer to purchase the homes, but the plaintiffs had no contractual relationship with the subcontractors involved in the construction of the homes. The Sienna court, overturning the decisions of the trial court and the appellate court, granted the subcontractors’ joint motion to dismiss the plaintiff’s claims for the implied warranty of habitability because the plaintiffs had no contractual relationship with the subcontractors and the damages were purely economic.
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Michael J. Ciamaichelo, White and Williams LLPMr. Ciamaichelo may be contacted at
ciamaichelom@whiteandwilliams.com
Arbitration and Mediation: What’s the Difference? What to Expect.
September 09, 2019 —
Brittany Rupley Haefele - Porter Law GroupMediation
Mediation is a process in which a neutral person or persons facilitate communication between the disputants to assist them in reaching a mutually acceptable settlement agreement. During this process, a neutral third party, with no decision-making power, intervenes in the dispute to help the litigants voluntarily reach their own agreement. Through a series of discussions, statements and private caucuses between the parties and the mediator, the process lets both parties negotiate and agree to a resolution with which everyone can abide. It is an excellent method of bringing a dispute to a conclusion without the further uncertainty and expense of litigation.
Arbitration
Arbitration, in addition to mediation, is one of the most common methods of alternative dispute resolution (“ADR”), whereby the parties bring a dispute before a disinterested third party who is typically selected by both parties. An arbitrator hears evidence presented by the parties, makes legal rulings, determines facts and makes an arbitration award. Arbitration awards may be entered as judgments in accordance with the agreement of the parties or, where there is no agreement, in accordance with California statutes. Arbitrations can be binding or non-binding, as agreed by the parties in writing. In most cases, the arbitrator’s decision is binding and final.
When is it Appropriate to Engage in Mediation and/or Arbitration?
Mediation can be held at any time, before or during a lawsuit. It is a voluntary process, where both sides simply agree to go to mediation in an effort to get the case settled. Sometimes, it is a contractually required process for the parties to complete prior to going to litigation or arbitration. Typically, in this situation, if a party ignores this requirement and fails to participate in a contractually mandated mediation, they will lose their rights to recover attorneys’ fees and costs – even if they ultimately prevail. Other times, mediation is strongly encouraged by the judge if a lawsuit has already been filed, and some would even say, ordered by the court (though it is typically not called “mediation” but something very similar like a “Dispute Resolution Conference” or “Mandatory Settlement Conference”).
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Brittany Rupley Haefele, Porter Law GroupMs. Haefele may be contacted at
bhaefele@porterlaw.com
Dealing with Abandoned Property After Foreclosure
April 10, 2019 —
Bremer Whyte Brown & O'Meara LLPCalifornia landlords must follow very specific steps before disposing of property that is clearly abandoned, left on real estate which has been the subject of court proceedings such as eviction or foreclosure, or otherwise left behind. Following the statutory procedures relating to abandoned property protects landlords from potential liability for an improper “conversion.”
Former tenants/owners and others “reasonably believed” to be owners of the apparently abandoned personal property must be given proper written notice of the right to reclaim the abandoned property. The tenant is presumed to be the owner of any “records” remaining on the property. The California Code of Civil Procedure provides a template for such notice. The notice to be provided to former tenants/owners must be in “substantially” the same form provided in the California Code of Civil Procedure and must contain the following information:
- A description of the abandoned property in a manner reasonably adequate to permit the owner of the property to identify it;
- The location where the tenant can claim the property;
- The time frame that the tenant has to claim the property. The date specified in the notice shall be a date not less than fifteen (15) days after the notice is personally delivered or, if mailed, not less than eighteen (18) days after the notice is deposited in the mail;
- A statement that reasonable storage costs will be charged to the tenant/owner and the tenant/owner must pay those costs before claiming the property; and
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