Indemnity Payment to Insured Satisfies SIR
March 11, 2014 —
Tred Eyerly – Insurance Law HawaiiIn response to certified questions from the Eleventh Circuit, the Florida Supreme Court found that a contractual indemnity payment to the insured satisfied the policy's SIR requirement. Intervest Constr. of Jax v. Gen. Fid. Ins. Co., 2014 Fl. LEXIS 568 (Fla. Feb. 6, 2014).
ICI Homes, Inc. a general contractor, hired Custom Cutting, Inc. to provide trim work, including installation of attic stairs in a residence ICI was building. Under the contract, Custom Cutting agreed to indemnify ICI for any damages resulting from Custom Cutting's negligence. The owner of the residence fell while using the attic stairs installed by Custom Cutting, injurying herself. The owner sued ICI, who sought indemnification from Custom Cutting.
ICI's policy with General Fidelity had a $1 million SIR. The policy also had a transfer of rights clause granting the insurer some subrogation rights.
The case was mediated. The parties agreed to a settlement of $1.6 million. Custom Cutting's insurer proposed paying $1 million to ICI to settle the indemnification claim. ICI, in turn, would pay that $1 million to the residence owner. A dispute arose over wither ICI or General Fidelity was responsible for paying the remaining $600,000.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
You Are Your Brother’s Keeper. Direct Contractors in California Now Responsible for Wage Obligations of Subcontractors
January 31, 2018 —
Garret Murai – California Construction Law BlogIf there’s one law from the 2017 Legislative Session that’s garnered a lot of attention in the construction press, it’s
AB 1701. Under AB 1701, beginning January 1, 2018, for contracts entered into on or after January 1, 2018, direct contractors may be found liable for unpaid wages, fringe or other benefit payments or contributions, including interest, but excluding penalties or liquidated damages, owed by a subcontractor of any tier to their workers. Here’s what you need to know about AB 1701.
What code section did AB 1701 amend?
AB 1701 added a a new section 218.7 to the Labor Code.
To whom does AB 1701 apply?
AB 1701 applies to direct contractors only. A direct contractor is defined as a “contractor that has a direct contractual relationship with an owner.”
On what types of projects does AB 1701 apply?
AB 1701 applies to private works projects only.
When does AB 1701 take effect?
AB 1701 took effect on January 1, 2018 and applies to all contracts entered into on or after January 1, 2018.
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Garret, Murai, Wendel, Rosen, Black, Dean, LLPMr. Murai may be contacted at
gmurai@wendel.com
#11 CDJ Topic: Cortez Blu Community Association, Inc. v. K. Hovnanian at Cortez Hill, LLC, et al.
December 30, 2015 —
Beverley BevenFlorez-CDJ STAFFScott Calkins and
Anthony Gaeta of
Collinsworth, Specht, Calkins & Giampaoli, LLP obtained a defense verdict in a breach of fiduciary duty action involving a high-rise condominium in downtown San Diego, California. The Association asked for excess of over $3 million, however, the jury returned with a 10-2 defense verdict in favor of K. Hovnanian.
“While it is now becoming ever more common for attorneys representing homeowners associations to allege a breach of fiduciary duty by the developer, there has been little actual litigation of the issues surrounding those claims which test the viability of the allegations or the defenses to them,” defense attorney Anthony Gaeta stated. “A breach of a fiduciary duty by a developer, which is demonstrated to damage the viability of an HOA either to perform regularly scheduled maintenance, or replace building components from its reserves, has the potential in economic terms to surpass the damages from purported construction defects.”
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Court Finds No Coverage for Workplace “Prank” With Nail Gun
April 04, 2022 —
Craig Rokuson - Traub Lieberman Insurance Law BlogIn the recent case of Metro. Prop. & Cas. Ins. Co. v. Burby, 2022 NY Slip Op 22070, ¶ 1 (Sup. Ct.) Justice Richard M. Platkin of the Supreme Court of Albany County, New York examined a homeowners insurance policy and determined that a duty to defend was triggered in a case seeking recovery for injuries sustained when the insured, Burby allegedly discharged a nail gun in the bathroom of a work facility at which both Burby and the underlying plaintiff worked. Burby pled guilty to assault in the third degree for recklessly causing physical injury. MetLife, Burby’s carrier, disclaimed coverage based on lack of an occurrence, the business activities exclusion and the intentional loss exclusion, which bars coverage for injuries expected or intended by the insured or injuries that are the result of the insured’s intentional and criminal acts or omissions. Justice Platkin initially reviewed the intentional loss exclusion and lack of an occurrence and found that, from a duty to defend perspective, neither provided a dispositive coverage defense. However, the court found that the broadly worded business activities exclusion, which was not the subject of MetLife’s motion and instead was the subject of a cross motion by Burby, applied to bar coverage. In doing so, the court searched the record and granted summary judgment on the issue, despite MetLife not moving for relief under the exclusion.
With respect to the expected or intended prong of the intentional loss exclusion, the court found that, even if Burby did intend to pull the trigger of the nail gun, it was not pled in the underlying complaint that the harm that resulted to the plaintiff was expected or intended. As such, the court concluded that MetLife did not prove that there was no possible factual or legal basis upon which it could be found that Burby did not reasonably expect or intend to cause injury to the plaintiff.
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Craig Rokuson, Traub LiebermanMr. Rokuson may be contacted at
crokuson@tlsslaw.com
New Jersey’s Independent Contractor Rule
January 07, 2015 —
Christopher G. Hill – Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome back Bennet Susser. Bennet is a founding member and shareholder of the New Jersey law firm, Jardim, Meisner & Susser, P.C. He has over 25 years’ experience in representing clients in all types of complex (and not so complex) litigation, including those involving construction actions. His Construction Law Practice Group has deep experience in the representation of property owners, developers, homeowners, design professionals, materials manufacturers, contractors and subcontractors in connection with construction of high-rise and other residential developments, condominium conversions of older rental properties, commercial property, mixed-use projects, and governmental buildings. Issues handled include: construction defects and deficiencies related to residential and commercial construction, including roofing defects, water intrusion, and structural life safety; construction delays; liens; hurricane recovery and rebuilding; insurance coverage disputes, including negotiation and resolution of insurance claims related to rebuilding; mold and mildew claims; and construction contracts and related documents, including loan documentation.
Construction litigation often seeks to foist the culpable conduct of contractors and subcontractors upon an owner or developer of commercial or residential real property. Sometimes, such conduct is warranted, especially when the owner/developer has a significant role in the manner in which the construction project work is to be conducted. However, there are times when the general contractor is the party calling the shots. Why should an owner/developer be charged with the conduct of other independent contractors over whom no control was exercised? Under certain circumstances, such party may be insulated from liability based on the “independent contractor rule.” Put another way, general contractors’ and subcontractors’ status as independent contractors do not impute liability to an owner/developer for their alleged wrongful conduct under the principles of respondeat superior and vicarious liability.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Florida’s Third District Court of Appeal Suggests Negligent Repairs to Real Property Are Not Subject to the Statute of Repose
June 29, 2017 —
Nicole Rodolico, Esq. - Florida Construction Law NewsFlorida’s Third District Court of Appeal (“Third District”) recently addressed the applicable statute of limitations for repairs under Section 95.11, Florida Statutes, including the issue of whether a repair constitutes an improvement to real property. In Companion Property & Casualty Group v. Built Tops Building Services, Inc., No. 3D16-2044, 2017 Fla. App. LEXIS 6584 (Fla. 3d DCA May 10, 2017) (“Companion”), the Third District ruled that the trial court erred in finding that a subrogation action arising out of an alleged defective roof repair was time-barred because the statute of limitations had run.
On February 8, 2016, Companion Property & Casualty Group (“Companion”) filed its complaint against a building services company, Built Tops Building Services, Inc. (“Built Tops”), for negligent repair of its insured’s roof. Companion alleged that the defective roof repair was performed on November 21, 2006. Companion further alleged that as a result of Built Tops’ work, the insured suffered water damage to the condominium building on February 9, 2012. Built Tops moved to dismiss the action on the basis that the applicable four-year statute of limitations had run on Companion’s claim, which Built Tops argued accrued on the date the repair was performed, November 21, 2006. The trial court granted the motion to dismiss.
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Nicole Rodolico, Cole, Scott & Kissane, P.A.Ms. Rodolico may be contacted at
nicole.rodolico@csklegal.com
Insurer's Denial of Coverage to Additional Insured Constitutes Bad Faith
May 21, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe insurer's unreasonable denial of a defense and indemnity to a lessor/additional insured was found to be in bad faith. Seaway Props. v. Fireman's Fund Ins. Co., 2014 U.S. Dist. LEXIS 55998 (W.D. Wash. April 22, 2014).
Seaway leased restaurant space to Ciao Bella Food, LLC. In January 10, 2010, the underlying plaintiff was on her way to the restaurant when she attempted to step down from a concrete platform between the building parking lot and the entrance to the restaurant. Seaway's lease gave Ciao Bella the right to use the common areas, including the parking lot, but did not grant Ciao Bella exclusive control over the common areas. The plaintiff suffered injuries and claimed both Ciao Bella and Seaway were liable.
Seaway's lease required Ciao Bella to maintain a CGL policy and to name Seaway as an additional insured. Ciao Bella did so by securing a policy with Fireman's Fund. Fireman's Fund had notice of the plaintiff's claim by November 2010. Seaway demanded in March 2012 that Fireman's Fund indemnify and defend it. In September 2012, two years after it first learned of the plaintiff's injury, Fireman's Fund denied coverage, asserting that Seaway was not an insured under the policy.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Be Mindful Accepting Payment When Amounts Owed Are In Dispute
August 29, 2022 —
Nicholas Korst - Ahlers Cressman & Sleight PLLCAfter completing work on a project, or even during a project, it is not uncommon for some portion of the contract balance and/or a claim to be in dispute. As a contractor or subcontractor, it is important to be careful what is signed (or not signed) upon receipt of any payment both during and after completion of work on a project. One of the most common documents signed related to a receipt of payment is a lien/claim release document. This can be in the form of a conditional, unconditional, progress and/or final release. The language included in the release document is critically important, especially as it pertains to disputed amounts. As a contractor or subcontractor, if there are known disputes related to amounts owing, whether it be contract balance, disputed change order(s), a delay or inefficiency claim, or any other amounts believed to be owed, it is important to include language in the lien release that expressly carves out the disputed amounts. The same should be done for disputes related to extensions of time. This allows the contractor to accept the payment and release rights for the undisputed work, but continue to reserve its right to pursue the amounts in dispute later. If disputed amounts are not carved out, those amounts may effectively be waived and the subcontractor or contractor may lose all rights to recovery.
As a subcontractor in Alaska recently learned, there are potentially other ways a contractor may waive or lose its rights to recover amounts in dispute – without even signing a waiver or release document. In Smallwood Creek, Inc. v. Build Alaska General Contracting, LLC et al., the general contractor sent the subcontractor a check described as “final payment.” The subcontractor believed it was owed more than what the general contractor had sent and refused to accept the check. Months later, the subcontractor deposited the check. The subcontractor reversed course again and attempted to repay the general contractor the amount deposited. The general contractor refused, claiming the subcontractor’s acceptance of payment constituted satisfaction of all amounts owing to the subcontractor.
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Nicholas Korst, Ahlers Cressman & Sleight PLLCMr. Korst may be contacted at
nicholas.korst@acslawyers.com
