Certificates as Evidence of Additional Insured Coverage Are All the Rage, But You Deserve Better
August 30, 2021 —
Joseph L. Cohen, W. Mason & Sean Milani-nia - ConsensusDocsConsider the following scenario: the construction project is ready to proceed. The deal is done. The agreements have all been carefully crafted, with detailed provisions on insurance dedicated to reducing risk. Those provisions require the downstream trade contractors to furnish certificates of insurance listing the owner and prime contractor as additional insureds on the downstream contractor’s policies of insurance. A provision in the prime contract further requires the prime contractor to provide the owner with a certificate of insurance showing the owner as an additional insured on the prime contractor’s policies. At the ceremonial ground-breaking and right before work commences, the downstream contractors deliver their insurance certificates to the prime contractor and the prime contractor delivers its certificate plus the downstream certificates to the owner. From there, each insurance certificate will begin its final destination to the project file (either electronic or physical) where, with any luck, it will serve the regular stint before being discarded after the project’s successful conclusion. Otherwise, it will be retrieved under much stress and heavy scrutiny. The acceptance of insurance certificates is often viewed as standard industry practice, but should it be?
The answer is a resounding “no.” There are many form development and construction agreements in circulation that deem insurance certificates to be acceptable evidence of insurance. But, a certificate of insurance should not be relied upon because it does not mean that insurance has been placed. You deserve real evidence that the requisite additional insured coverage is in place (in the form of a policy endorsement), and here is why.
Reprinted courtesy of
Joseph L. Cohen, Fox Rothschild,
W. Mason, Fox Rothschild and
Sean Milani-nia, Fox Rothschild
Mr. Cohen may be contacted at jlcohen@foxrothschild.com
Mr. Mason may be contacted at wmason@foxrothschild.com
Mr. Milani-nia may be contacted at smilani@foxrothschild.com
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Changes to Judicial Selection in Mexico Create a New Case for Contractual ADR Provisions
November 25, 2024 —
Juan Pablo Sandoval - The Dispute ResolverThe Mexican Congress recently discussed and approved a Constitutional Amendment called the “Judiciary Amendment” which was ironically published in the Official Gazette on September 15, 2024, the day before Mexican Independence Day.
With this Judiciary Amendment, the Mexican Congress determined that Federal Judges, Federal Magisters and the Ministers of the Supreme Court will now be elected through direct and popular election. Before the Judiciary Amendment, Federal Judges and Magisters used to have a judicial career; many of them started as law clerks and were promoted step by step until becoming Judge or Magister.
Ministers of the Supreme Court were appointed by the Senate through an election of three candidates designated by the President.
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Juan Pablo Sandoval, COMAD, S.C.Mr. Sandoval may be contacted at
jpsandoval@comad.com.mx
Insurers Subrogating in Arkansas Must Expend Energy to Prove That Their Insureds Have Been Made Whole
August 06, 2019 —
Michael J. Ciamaichelo - The Subrogation StrategistArkansas employs the “made whole” doctrine, which requires an insured to be fully compensated for damages (i.e., to be “made whole”) before the insurer is entitled to recover in subrogation.[1] As the Riley court established, an insurer cannot unilaterally determine that its insured has been made whole (in order to establish a right of subrogation). Rather, in Arkansas, an insurer must establish that the insured has been made whole in one of two ways. First, the insurer and insured can reach an agreement that the insured has been made whole. Second, if the insurer and insured disagree on the issue, the insurer can ask a court to make a legal determination that the insured has been made whole.[2] If an insured has been made whole, the insurer is the real party in interest and must file the subrogation action in its own name.[3] However, when both the insured and an insurer have claims against the same tortfeasor (i.e., when there are both uninsured damages and subrogation damages), the insured is the real party in interest.[4]
In EMC Ins. Cos. v. Entergy Ark., Inc., 2019 U.S. App. LEXIS 14251 (8th Cir. May 14, 2019), EMC Insurance Companies (EMC) filed a subrogation action in the District Court for the Western District of Arkansas alleging that its insureds’ home was damaged by a fire caused by an electric company’s equipment. EMC never obtained an agreement from the insureds or a judicial determination that its insureds had been made whole. In addition, EMC did not allege in the complaint that its insureds had been made whole and did not present any evidence or testimony at trial that its insureds had been made whole. After EMC presented its case-in-chief, the District Court ruled that EMC lacked standing to pursue its subrogation claim because “EMC failed to obtain a legal determination that its insureds had been made whole . . . prior to initiating this subrogation action.” Thus, the District Court granted Entergy Ark., Inc.’s motion for judgment as a matter of law and EMC appealed the decision.
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Michael J. Ciamaichelo, White and Williams LLPMr. Ciamaichelo may be contacted at
ciamaichelom@whiteandwilliams.com
Fifth Circuit Reverses Summary Judgment Award to Insurer on Hurricane Damage Claim
December 18, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe Fifth Circuit reversed the district court's grant of summary judgment to the insurer on a property damage claim arising from Hurricane Harvey. Advanced Indicator and Manufacturing, Inc. v. Acadia Ins. Co., 50 F.4th 469 (2022).
After Hurricane Harvey struck southern Texas in 2017, Advanced submitted a claim to Acadia for damage to its building that it claimed was caused by the hurricane's winds. Acadia sent an adjuster, Nick Warren, as well as an engineer, Jason Watson. Watson determined that pre-existing conditions - including ongoing leaks from deterioration and poor workmanship - caused the damage, rather than winds from Hurricane Harvey. Warren adopted these conclusions in his recommendations to Acadia. Acadia denied Advanced's claim based on these reports.
Advanced sued Acadia, alleging breach of contract and bad faith. Advanced filed a motion to remand to state court which was denied. Acadia moved for summary judgment arguing that it did not breach the policy and that Advanced could not segregate any damages caused by hurricane from pre-existing damage. The district court granted Acadia's motion, finding that Acadia's denial of Advanced's claim was based on "extensive consideration of the evidence." Further, Advanced failed to carry its burden of showing that covered and non-covered damages could be segregated as required by Texas's concurrent causation doctrine. Finally, the bad faith claim was dismissed because there was no breach of contract.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Insurer's Motion for Summary Judgment on Business Interruption Claim Denied
September 12, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe insurer's motion to cap a potential business interruption claim after the insured failed to provide documentation was denied. Lake Charles Instruments Inc. v. Scottsdale Ins. Co., 2022 U.S. Dist. LEXIS 116802 (W.D. La. July 2, 2022).
Plaintiff operated a business that was damaged during Hurricane Laura on August 27, 2020, and subsequently by Hurricane Delta on October 9, 2020. Plaintiff had a commercial property policy issued by Scottsdale that provided business income coverage of up to $500,000.
After Hurricane Laura, plaintiff submitted a claim. Plaintiff requested an advance. Scottsdale paid $50,000 on the business interruption (BI) claim while reserving rights to require full compliance with the policy, including submission of appropriate documentation. Scottsdale continued to request documentation, but none was received. Plaintiff also failed to provide documentation for its BI claim after Hurricane Delta. When documentation was finally provided, Scottsdale disputed that the documentation showed a BI claim that exceeded policy limits. Scottsdale determined the BI claim was below the policy limits.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Timely Written Notice to Insurer and Cooperating with Insurer
June 21, 2017 —
David Adelstein - Florida Construction Legal UpdatesI harp on notifying a liability insurer in writing once a claim is asserted against you. As soon as possible. I harp on this because as an insured you want to remove any doubt or argument that the insurer was prejudiced due to a lack of timely notice.
In a recent opinion, Zurich American Insurance Co. v. European Tile and Floors, Inc., 2017 WL 2427172 (M.D.Fla. 2017), the insurer moved for summary judgment in a coverage action arguing that its insured failed to provide it timely written notice. Specifically, the insurer argued that the insured violated the clause in the liability policy that states:
2. Duties in the Event of Occurrence, Offense, Claim or Suit
b. If a claim is made or “suit” is brought against any insured, you must:
- Immediately record the specifics of the claim or “suit” and the date received; and
- Notify us as soon as practicable.
You must see to it that we receive written notice of the claim or “suit” as soon as practicable.
c. You and any other insured must:
- Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or “suit”;
- Authorize us to obtain records and other information;
- Cooperate with us in the investigation, settlement or defense of the claim or “suit”; and
- Assist us, upon our request, in the enforcement of any right against any person or organization which may be liable to the insured because of injury or damage to which this insurance may also apply.
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David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
Dadelstein@gmail.com
Brazil Congress Chiefs Deny Wrongdoing in Petrobras Scandal
March 12, 2015 —
Raymond Colitt, Anna Edgerton and Sabrina Valle – Bloomberg(Bloomberg) -- Brazil’s congressional heads denied involvement in the country’s largest corruption scandal after being named among dozens of politicians for investigation.
Renan Calheiros and Eduardo Cunha, the heads of the Senate and lower house respectively, and Rio de Janeiro Senator Lindbergh Farias all rejected allegations of graft in the kickback scheme dubbed Carwash. Farias told the Folha de Sao Paulo newspaper in an interview published Sunday that while he may have acted improperly, his actions weren’t illegal. The senator said he took a 2 million real-donation ($650,000) from Andrade Gutierrez SA, a Rio-based construction company.
Reprinted courtesy of Bloomberg reporters
Raymond Colitt,
Anna Edgerton and
Sabrina Valle
Mr. Colitt may be contacted at rcolitt@bloomberg.net
Ms. Edgerton may be contacted at aedgerton@bloomberg.net
Ms. Valle may be contacted at svalle@bloomberg.net
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Idaho District Court Affirms Its Role as the Gatekeeper of Expert Testimony
March 15, 2021 —
Melissa Kenney - The Subrogation SpecialistMany subrogation claims involving fire losses rely heavily on expert testimony. Expert testimony is admissible under Federal Rule of Evidence 702 if it is both relevant and reliable. In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), whose standard has been incorporated into Federal Rule of Evidence 702, the Supreme Court instructed federal trial courts to act as a “gatekeeper” of expert testimony, giving them the power to exclude expert testimony that is not supported by sufficient evidence. In Maria Fernanda Elosu and Robert Luis Brace v. Middlefork Ranch Incorporated, Civil Case No. 1:19-cv-00267-DCN, 2021 U.S. Dist. LEXIS 14449 (D. Idaho Jan. 22, 2021) (Brace), the United States District Court for the District of Idaho exercised its gatekeeper role when it granted in part and denied in part the defendant’s motion to exclude expert testimony pursuant to Daubert and Federal Rule of Evidence 702.
Brace, involved a fire at a vacation cabin in McCall, Idaho. The cabin, owned by Maria Elosu (Elosu) and Robert Brace (Brace and collectively with Elosu, Plaintiffs) was part of a homeowner’s association called Middlefork Ranch, Incorporated (MFR). The cabin had a “wrap around” deck with a propane-fired refrigerator on the north side. On the day before the fire, Brace stained the deck using an oil-based stain. That night, Elosu smoked cigarettes on the deck. The next morning, Plaintiffs used rags to clean up excess oil from the deck and an MFR employee changed the propane on the refrigerator and relit the pilot light. At 4:00 p.m., a fire started in or around the cabin while no one was home. The fire was discovered by a group of contractors who testified that the fire was isolated to the east side of the cabin when they first arrived. Importantly, one witness testified that there was no fire and no flames around the propane-fired refrigerator. The fire destroyed the cabin and the contents within.
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Melissa Kenney, White and Williams LLPMs. Kenney may be contacted at
kenneyme@whiteandwilliams.com
