New Jersey Supreme Court Hears Insurers’ Bid to Overturn a $400M Decision
January 25, 2021 —
Lawrence J. Bracken II, Michael S. Levine & Daniel Hentschel - Hunton Andrews KurthNew Jersey’s highest court heard arguments Monday in the appeal of a ruling that the New Jersey Transit Corp.’s (“NJ Transit”) insurers are required to insure $400 million of water damage loss caused by Hurricane Sandy.
The matter stems from an insurance claim NJ Transit made after the super storm rocked the East Coast in 2012. NJ Transit claimed over $400 million in losses as a result of damage to its tracks, bridges, tunnels and power stations. In response, its tower of property insurers took the position that a $100 million flood sublimit applied to limit NJ Transit’s recovery under its insurance tower, not the policy’s $400 million overall limits.NJ Transit filed a coverage action in state court. The trial court granted summary judgment to NJ Transit, holding that NJ Transit was entitled to full coverage of $400 million under the tower’s named windstorm coverage. The insurers appealed, again arguing that the flood sublimit applied to the claim.
Reprinted courtesy of
Lawrence J. Bracken II, Hunton Andrews Kurth,
Michael S. Levine, Hunton Andrews Kurth and
Daniel Hentschel, Hunton Andrews Kurth
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com
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Federal Court Enforces “Limits” and “Most We Will Pay” Clauses in Additional Insured Endorsement
September 13, 2021 —
Craig Rokuson - Traub Lieberman Insurance Law BlogIn the recent case of Zurich Am. Ins. Co. v. XL Ins. Am., Inc., 20-CV-4614 (LJL), 2021 WL 3617218 (S.D.N.Y. Aug. 16, 2021), the United States District Court for the Southern District of New York—in deciding a motion for consideration—had occasion to review the 2013 ISO changes to the additional insured endorsement, and held that coverage under a policy providing additional insured coverage was limited to the $1,000,000 required by contract, and not the $2,500,000 limit to the policy.
In Zurich, Zurich and its named insured D.A. Collins sought the full limits of the primary policy issued by XL to the D.A. Collins’ subcontractor, HBI, which are $2,5000 per occurrence and in the aggregate, for an underlying personal injury lawsuit. XL also issued an excess policy in the amount of $5,000,000 to HBI.
The contract between D.A. Collins and HBI required HBI to obtain commercial liability coverage “in an amount of $1,000,000 per occurrence and $2,000,000 in the aggregate. It further provides that the “required limits for the umbrella excess coverage shall be sufficient to provide a total of $5,000,000 per occurrence/aggregate.”
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Craig Rokuson, Traub LiebermanMr. Rokuson may be contacted at
crokuson@tlsslaw.com
Do Engineers Owe a Duty to Third Parties?
June 10, 2015 —
Craig Martin – Construction Contractor AdvisorA Texas Court of Appeals, in USA Walnut Creek, DST v. Terracon Consultants, Inc., recently ruled that an engineer owed a duty to the buyer of an apartment complex, even though the engineer had no contractual relationship with the buyer. This is an expansion of the duty professionals owe on construction projects and could signal a change in the law.
In the case, Walnut Creek purchased a three year old apartment complex. A few years after taking possession, Walnut Creek noticed problems with the apartments, including cracking foundations, walls, breaking windows, and out of square door frames. Walnut Creek sued the developer and general contractor, alleging construction defects. The developer claimed that the engineer, Terracon, was at fault and Walnut Creek added Terracon to the lawsuit, asserting that Terracon was negligent in performing engineering services during construction. Terracon asked the court to dismiss the claim, arguing that it did not owe a duty to Walnut Creek. Walnut Creek in turn argued that engineers do owe a duty to subsequent owners. The trial court dismissed the case against the engineer and Walnut Creek appealed.
The appellate court reversed the trial court, finding that the engineer did owe a duty to subsequent purchasers. The court seemed persuaded by the allegations that the engineer actually created the construction defects which were the basis for the litigation.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Haight Ranked in 2018 U.S. News - Best Lawyers "Best Law Firms" List
November 02, 2017 —
Haight Brown & Bonesteel LLPHaight Brown & Bonesteel LLP is listed in the 2018 U.S. News – Best Lawyers "Best Law Firms" list with five metro rankings in the following areas:
Los Angeles
- Tier 1 in Insurance Law
- Tier 1 in Personal Injury Litigation - Defendants
- Tier 1 in Product Liability Litigation - Defendants
- Tier 2 in Personal Injury Litigation - Plaintiffs
- Tier 2 in Product Liability Litigation - Plaintiffs
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Rachel Reynolds Selected as Prime Member of ADTA
April 05, 2021 —
Rachel Tallon Reynolds - Lewis BrisboisSeattle Partner Rachel Tallon Reynolds was recently selected as a prime member of the Association of Defense Trial Attorneys (ADTA), an exclusive designation bestowed upon only one lawyer per one million population for each city, town, or municipality.
The ADTA is a select group of diverse and experienced civil defense trial attorneys whose mission is to improve their practices through collegial relationships, educational programs, and business referral opportunities, while maintaining the highest standards of professionalism and ethics. ADTA members possess the highest skill level of civil defense trial attorneys.
Moreover, because ADTA invites only one defense trial attorney to be its prime member per one million in population for each city, town, or municipality across the United States, the District of Columbia, Puerto Rico, Canada, France and The United Kingdom of Great Britain, as well as Northern Ireland and the Republic of Ireland, a prime membership represents the high regard in which that defense trial attorney is held by his or her peers in the defense trial bar of their city and state or province.
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Rachel Tallon Reynolds, Lewis BrisboisMs. Reynolds may be contacted at
Rachel.Reynolds@lewisbrisbois.com
Savannah Homeowners Win Sizable Judgment in Mold Case against HVAC Contractor
August 10, 2017 —
David R. Cook Jr. - Autry, Hanrahan, Hall & Cook, LLPTwo Savannah homeowners filed a complaint against a local air conditioning contractor and its insurer, asserting claims of professional negligence and fraud. The couple alleged that in March 2009, the contractor replaced the duct system of their home’s air conditioning unit. The following June, the couple discovered mold growth on the vent covers. They hired an independent contractor who upon inspection concluded that the duct system, which contained holes, gaps, loose connections and insufficient mastic, had been defectively installed in violation of the applicable city ordinances, resulting in excessive moisture and mold contamination throughout the residence. The homeowners alleged that they grew ill with respiratory problems as a result and were subsequently forced to vacate the residence and abandon their personal belongings. Their complaint sought to recover repair costs, moving costs, expenses associated with rental property, costs of living, costs related to the replacement of personal property, medical expenses, punitive damages, attorney’s fees, and costs of litigation.
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David R. Cook, Autry, Hanrahan, Hall & Cook, LLPMr. Cook may be contacted at
cook@ahclaw.com
Before Celebrating the Market Rebound, Builders Need to Read the Fine Print: New Changes in Construction Law Coming Out of the Recession
November 26, 2014 —
Alan H. Packer - Newmeyer & Dillion, LLPAs the homebuilding market continues to improve, many builders find themselves maneuvering familiar roads. That said, important new realities have taken hold since the market collapse. Navigating these changes requires extra thought for practical and legal reasons.
Using Old Designs “Off the Shelf”?
The adoption of the California Building Standards Code in 2010, with an updated schedule to go into effect January 1, may complicate the use of older designs. In addition, some builders are contemplating building on pads constructed five or more years ago, temporarily shelved until market conditions improved. Because of changes in both the applicable Code and due to possible changes in the underlying soils and drainage, these projects require additional scrutiny before starting construction.
Mechanic’s Lien Law Changes
Not too long ago, the California Legislature recently overhauled the entire mechanic’s lien law system in California. New forms, new statutory references, new rules and deadlines are all applicable to projects under construction now. Make sure your documents are up to date, as the use of older forms (particularly for liens, progress payments, and final payments) could create legal problems in the future.
Indemnity Law Changes
Since 2006, California lawmakers have passed four rounds of legislation aimed at limiting indemnity provisions in construction contracts. The laws are aimed at two aspects of indemnity law: “Type 1” indemnity provisions, and liability for the costs of defending a claim.
Type 1 Indemnity. California law previously permitted a builder to obtain “Type 1” indemnity from its subcontractors for all claims. Under a Type 1 provision, if a claim arose out of the trade’s work, the trade was fully responsible to defend and indemnify the builder – even if other trades or the Builder were partially at fault. Some cases even allowed, typically in a commercial context, the builder to obtain Type 1 indemnity even if the trade was not negligent, as long as the claim involved its work.
Defense Obligation. In 2008, California’s highest court issued an opinion in Crawford v. Weather Shield, evaluating an indemnity provision requiring trade (a window supplier/manufacturer) to defend the builder in claims involving allegations of damages arising out of the trade’s work. Because the trade had contractually agreed to defend the builder, the Court held it responsible for the builder’s defense costs -- even though, ultimately, the trade was found
not liable for the actual damages claimed.
Recent legislation after Crawford has dramatically shifted how indemnity provisions will be enforced. Builders may no longer obtain Type 1 indemnity for residential construction defect claims covered by SB800; instead, indemnity is limited to the extent a claim arises out of the trade’s work. Even more recent legislation applied these changes to claims arising out of commercial construction projects. The recent legislation allows the trades “options” on how to defend the builder, with an eye toward requiring that they pay only a “reasonably allocated” portion for the builder’s defense costs.
Smart builders are refining their contract documents to take into account these new limitations on indemnity provisions.
Insurance Market Changes
Due to uncertainties in subcontractor insurance and other factors, many builders have also converted their liability insurance from a “bring your own” model to “wrap-up” insurance, where the builder’s policy also covers their trades. Builders should carefully examine their subcontracts in light of this change as well.
Trade Partner Changes
On a practical level, many trade partners, particularly in the residential sector, have gone out of business or moved on to greener pastures. Builders need to find and negotiate contracts with new trade partners on the fly, and educate them on the builders’ procedures for payment and construction.
SB800 documentation
A decade ago, most builders updated their purchase documents and subcontracts for California’s “Right to Repair Law” (also known as SB800), which set forth functionality standards for construction defects in residential housing, and procedures for resolving claims prior to litigation. Builders ramping up to meet market demand should examine how they implemented SB800 changes in contract documents. Issues to consider:
- Whether to opt out of -- or back into -- statutory procedures.
- Whether to include arbitration or judicial reference provisions to control where claims are litigated after the SB800 process.
- Re-training personnel to preserve SB800 rights, including sign-offs on purchase documentation and recordation of key documents.
- Recent Court of Appeal decisions have complicated the SB800 landscape, potentially opening the door to “common law” tort claims in at least subrogation contexts. Strategic planning at the document stage may be a good way to mitigate this risk as the cases wind their way through the judicial process.
The continuing surge in building activity is a welcome sign for builders who have weathered the storm. Before taking too many steps, builders should consult with counsel, their designers, and their insurance advisors to take into account the new realities of this recovering housing market.
About the Author
Alan H. Packer is a partner in the expanding Walnut Creek, CA, office of the law firm of
Newmeyer & Dillion LLP whose specialties include real estate, insurance, and construction litigation. To reach Alan, call 925.988.3200 or email him at alan.packer@ndlf.com.
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Subcontractors Have Remedies, Even if “Pay-if-Paid” Provisions are Enforced
February 19, 2019 —
John P. Ahlers - Ahlers Cressman & Sleight PLLCIn a recent case in Kentucky[1], a sub-tier subcontractor sued the general contractor and owner for failure to pay for extra work. At the trial, the court held the subcontractor was entitled to recover under the theories of implied contracts and unjust enrichment, even though the subcontract contained a “pay-if-paid” clause. All parties appealed. In particular, the general contractor asserted that the pay-if-paid provision in the subcontract precluded recovery by the subcontractor. The issue was petitioned to the Supreme Court of Kentucky.
The question to be resolved by the Supreme Court of Kentucky was whether a pay-if-paid provision was enforceable as between a general contractor and subcontractor, and if so, whether the subcontractor could nevertheless pursue the owner directly for payment notwithstanding a lack of privity between the owner and subcontractor.
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John P. Ahlers, Ahlers Cressman & Sleight PLLCMr. Ahlers may be contacted at
john.ahlers@acslawyers.com
