CAMBRIDGE MASSACHUSETTS BUILDING EXPERT
DIRECTORY AND CAPABILITIES

South Carolina Legislature Redefining Occurrences to Include Construction Defects in CGL Policies

April 01, 2011 — Beverley BevenFlorez CDJ STAFF

The question of what circumstances must be in place for construction defects to be covered in a general commercial liability (CGL) policies is being raised by the courts and the legislature in South Carolina. The Insurance Journal reports that the American Insurance Association as well as the Property and Casualty Insurers Association of America are speaking out on the issue.

The problem seems to be centered on what defines an “occurrence.” CGL policies were not meant to cover faulty workmanship, according to the filing by the South Carolina Supreme Court. In January of this year, the South Carolina Supreme Court reversed the ruling in Crossmann Communities v Harleysville Mutual declaring that “Respondents cannot show the damage here was the result of an occurrence. Rather, the damage was a direct result and the natural and expected consequence of faulty workmanship; faulty workmanship did not cause an occurrence resulting in damage.” They focused their attention on the word “accident,” stating that there is a fortuity element that is not diminished.



The South Carolina legislature reacted by producing a bill that would add new language directly negating the ruling by the Supreme Court. The South Carolina bill S-431 would change the definition of an occurrence in regards to construction defects as follows: “For a liability insurance policy issued to a construction professional, an ‘occurrence’ means, at a minimum: (1) an accident; or (2) continuous or repeated exposure to substantially the same general harmful condition or substance. No additional requirement of a fortuitous event is needed to constitute an ‘occurrence.’”



S-431 is currently residing in the House Committee on Labor, Commerce and Industry.



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D.C. Decision Finding No “Direct Physical Loss” for COVID-19 Closures Is Not Without Severe Limitations

August 24, 2020 — Michael S. Levine & Michael L. Huggins - Hunton Andrews Kurth
On August 6, 2020, in Rose’s 1 LLC, et al. v. Erie Insurance Exchange, Civ. Case No. 2020 CA 002424 B, a District of Columbia trial court found in favor of an insurer on cross motions for summary judgment on the issue of whether COVID-19 closure orders constitute a “direct physical loss” under a commercial property policy. At its core, the decision ignores key arguments raised in the summary judgment briefing and is narrowly premised on certain dictionary definitions of the terms, “direct,” “physical,” and “loss.” Relying almost entirely on those definitions – each supplied by the insureds in their opening brief – the court set the stage for its ultimate conclusion by finding “direct” to mean “without intervening persons, conditions, or agencies; immediate”; and “physical” to mean “of or pertaining to matter ….” The court then apparently accepted the policy’s circular definition of “loss” as meaning “direct and accidental loss of or damage to covered property.” Importantly, however, despite recognizing the fundamental rule of insurance policy construction that the court “must interpret the contract ‘as a whole, giving reasonable, lawful, and effective meaning to all its terms, and ascertaining the meaning in light of all the circumstances surrounding the parties at the time the contract was made,’” the court apparently ignored the insureds’ argument that the term “property damage” is specifically defined in the policy to include “loss of use” without any specific reference to physical or tangible damage. Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Michael L. Huggins, Hunton Andrews Kurth Mr. Levine may be contacted at mlevine@HuntonAK.com Mr. Huggins may be contacted at mhuggins@HuntonAK.com Read the court decision
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House Panel Subpoenas VA Documents on Colorado Project

September 22, 2016 — Tom Ichniowski - Engineering News-Record
The Dept. of Veterans Affairs has received a subpoena from the House Veterans Affairs Committee, asking for more information about the VA’s long-delayed, far over-budget hospital under construction in Aurora, Colo. Read the court decision
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Reprinted courtesy of Tom Ichniowski, Engineering News-Record
Mr. Ichniowski may be contacted at ichniowskit@enr.com

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Effective July 1, 2022, Contractors Will be Liable for their Subcontractor’s Failure to Pay its Employees’ Wages and Benefits

July 25, 2022 — Edward O. Pacer & David J. Scriven-Young - Peckar & Abramson
On June 10, 2022, Illinois Governor J.B. Pritzker signed two House Bills that amend the Illinois Wage Payment & Collections Act, 820 ILCS 115 et. seq. (“Wage Act”), to provide greater protection for individuals working in the construction trades against wage theft in a defined class of projects. Pursuant to this new law, every general contractor, construction manager, or “primary contractor,” working on the projects included in the Bill’s purview will be liable for wages that have not been paid by a subcontractor or lower-tier subcontractor on any contract entered into after July 1, 2022, together with unpaid fringe benefits plus to attorneys’ fees and costs that are incurred by the employee in bringing an action under the Wage Act. These amendments to the Wage Act apply to a primary contractor engaged in “erection, construction, alteration, or repair of a building structure, or other private work.” However, there are important limitations to the amendment’s applicability. The amendment does not apply to projects under contract with state or local government, or to general contractors that are parties to a collective bargaining agreement on a project where the work is being performed. Additionally, the amendment does not apply to primary contractors who are doing work with a value of less than $20,000, or work that involves only the altering or repairing of an existing single-family dwelling or single residential unit in a multi-unit building. Reprinted courtesy of Edward O. Pacer, Peckar & Abramson and David J. Scriven-Young, Peckar & Abramson Mr. Pacer may be contacted at epacer@pecklaw.com Mr. Scriven-Young may be contacted at dscriven-young@pecklaw.com Read the court decision
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Builders Arrested after Building Collapses in India

July 01, 2014 — Beverley BevenFlorez-CDJ STAFF
Deaths from a building collapse in Chennai, India is currently at nineteen, while forty-two people have been rescued, according to the New York Times, and “40 others are feared trapped in the debris,” reported BBC News. The Chennai police arrested six people, “including the partners of the construction company, the architect and the structural engineer, and charged them with criminal negligence in connection with the building collapse there,” according to P. Subramniam, a Chaennai police officer, as quoted by the New York Times. "It appears they have not adhered to approved plans,” Tamil Nadu Chief Minister J Jayalalithaa told BBC News. “The building appears to have serious structural defects." Building collapses are frequent in India, and most are “blamed on lax safety and substandard materials,” reported BBC News. The New York Times pointed out that “municipal authorities rarely condemn buildings even when they appear to have dangerous defects.” Regardless, “even unsafe buildings attract people who want to live in them because the competition for shelter is fierce among millions of city residents.” Read the full story, New York Times... Read the full story, BBC News... Read the court decision
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Coverage for Construction Defects Barred by Business Risk Exclusions

September 01, 2011 — Tred R. Eyerly - Insurance Law Hawaii

Although the court determined there was an occurrence, coverage was excluded by the business risk exclusions.  See Cont’l W. Ins. Co. v. Shay Constr. Co., 2011 U.S. Dist. LEXIS 82839 (D. Colo. July 28, 2011).

White was the general contractor on the project. White had three subcontracts with Shay to provide framing, siding, and related work on the project. Shay was insured under a CGL policy issued by Continental Western.

Two of Shay’s subcontractors furnished materials, labor and equipment to Shay. These subcontractors filed suit in state court alleging they had not been compensated for the work and materials. White and Shay were named as defendants. White cross claimed against Shay, alleging Shay had breached its obligations under the subcontracts. Several allegations sounded in contract. Other allegations, however, contended Shay had performed defective work and had damaged the work of other trades in correcting deficiencies in its own performance.

Shay sought coverage under Continental Western’s policy. Continental Western filed suit for a declaratory judgment and moved for summary judgment.

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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com

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California Case Is a Reminder That Not All Insurance Policies Are Alike Regarding COVID-19 Losses

April 05, 2021 — Neal I. Sklar & Joshua A. Morehouse - Peckar & Abramson, P.C.
A recent case from the Central District of California reminds us that not all insurance policies are alike. Depending on the particular policy, losses from the COVID-19 outbreak could qualify as property damage and therefore could be recoverable under an all-risk insurance policy. COVID-19 has in many cases imposed significant costs on contractors, and in a host of ways. Contractors’ attempts to recover these costs from owners or insurers have at times been frustrated by contractual or policy language written after a lengthy time, during which the risk of a pandemic on the scale of COVID-19 was not as much of a concern as it is now. This has led contractors to explore new, often creative legal theories in their attempts to recover costs flowing from COVID-19. A recent Complaint filed in the Central District of California focuses on all-risk property insurance policies and the potential for contractors who have purchased such policies to classify contamination from COVID-19 as an insurable property loss. In AECOM v. Zurich Insurance Company, Case No. 2:21-cv-00237-JAK-MRW (C.D. Cal), a contractor purchased “all-risk” property insurance from Zurich. This policy covered “economic losses from all risks not expressly excluded.” According to the Complaint, the presence of COVID-19 on its properties “physically alter[ed] air, airspace, and surfaces preventing… (the contractor) from using its properties for their intended purpose and function.” Reprinted courtesy of Neal I. Sklar, Peckar & Abramson, P.C. and Joshua A. Morehouse, Peckar & Abramson, P.C. Mr. Sklar may be contacted at nsklar@pecklaw.com Mr. Morehouse may be contacted at jmorehouse@pecklaw.com Read the court decision
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Employee Screening and Testing in the Covid-19 Era: Getting Back to Work

August 10, 2020 — Aaron C. Schlesinger & Shannon D. Azzaro - Peckar & Abramson
Currently Available Workplace Protocols for Employers Employers seeking to minimize the risk of COVID-19 transmission in the workplace should consider from among the three currently available protocols: Written Questionnaires; Temperature Checks; and Viral or Diagnostic Testing. When implementing a screening or testing protocol, employers should explain the following in writing to employees: (1) the specific screening process or test utilized by the employer; (2) employee compliance expectations and any consequences for a refusal to participate; (3) how employee privacy will be protected; (4) if screening, the general benchmarks that indicate the employee has “passed” (e.g., temperature below 100.4ºF, per CDC guidelines); and (5) the outcome of an unsuccessful screen or test (e.g., being sent home from the workplace). Employers must also ensure that those administering the screening and/or testing are properly trained, and that appropriate written acknowledgements are obtained from employees consenting to the applicable protocol. Reprinted courtesy of Aaron C. Schlesinger, Peckar & Abramson and Shannon D. Azzaro, Peckar & Abramson Mr. Schlesinger may be contacted at aschlesinger@pecklaw.com Ms. Azzaro may be contacted at sazzaro@pecklaw.com Read the court decision
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