New York Labor Laws and Action Over Exclusions
February 01, 2021 —
Theresa A. Guertin & Ashley McWilliams - Saxe Doernberger & Vita, P.C.One of the most important methods for shifting risk in the construction context is insurance coverage. Upstream parties such as owner/developers and general contractors typically require that their downstream subcontractors who perform work on their properties or projects bring specific insurance to the table. These insurance requirements have a twofold purpose: protect the upstream parties, through additional insured coverage, from liabilities caused by the subcontractor; and protect the downstream parties by ensuring that they have adequate insurance for their own potential liabilities.
In New York, subcontractor insurance coverage can have some surprising terms which frustrate risk transfer. Numerous policies contain “Action Over” exclusions, which bar coverage for one of the most significant exposures faced by owner-developers and general contractors: bodily injury lawsuits brought by subcontractor employees. It is critical that upstream parties understand the unique impact of New York’s labor laws on the insurance market and be prepared to identify and request removal of Action Over exclusions on subcontractor insurance policies.
Reprinted courtesy of
Theresa A. Guertin, Saxe Doernberger & Vita, P.C. and
Ashley McWilliams, Saxe Doernberger & Vita, P.C.
Ms. Guertin may be contacted at TGuertin@sdvlaw.com
Ms. McWilliams may be contacted at AMcWilliams@sdvlaw.com
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A Court-Side Seat: Appeals and Agency Developments at the Close of 2020
December 29, 2020 —
Anthony B. Cavender - Gravel2GavelTHE FEDERAL APPELLATE COURTS
The U.S. Court of Appeals
On November 23, 2020, the court, in a 2-to-1 vote, rejected the plaintiff’s request for an emergency injunction pending appeal in the case of Manzanita Band of Kumeyaay Nation, et al. v. Wolf. The majority held the requirement for such relief did not meet the requirements set forth in Winter v. NRDC, 555 US 7 (2008). Here, the plaintiffs allege that that the government’s construction of a border wall violates several environmental laws that were illegally waived by the Secretary of the Interior. Judge Millett dissented in part because the plaintiffs demonstrated a likelihood of success on the merits. She pointed to the argument that the authority of the Secretary—or Acting Secretary—to take these actions has been successfully challenged in several federal district courts. An expedited pleading schedule was established by the court.
The U.S. Court of Appeals for the Fourth Circuit
On November 17, 2020, in Ergon-West ,Inc. v. EPA, the court again reversed the EPA’s decision denying regulatory relief to a small refinery seeking a waiver of the renewable fuels mandate of the Clean Air Act. Ergon is a small refinery and requested relief in the basis of the economic harm that compliance would entail. In 2018, the court ruled in Ergon’s favor and remanded the case back to the agency. After relief was again denied, the court held that “Ergon has come forward with sufficient evidence undermining one aspect” of the agency’s latest decision, and the ruling was returned to EPA for additional analysis. It appears that a complicated process has become even more complicated.
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Anthony B. Cavender, PillsburyMr. Eyerly may be contacted at
te@hawaiilawyer.com
The Right to Repair Act (Civ.C §895 et seq.) Applies and is the Exclusive Remedy for a Homeowner Alleging Construction Defects
February 07, 2018 —
Craig Wallace – Smith Currie McMillin Albany LLC v. Superior Court (01.18.18) ____ Cal.4th _____ (2018 WL 456728)
The California Supreme Court confirmed that the Right to Repair Act (CA Civil Code § 895, et seq. and often referred to by its legislative nomenclature as “SB800”) applies broadly to any action by a residential owner seeking recovery of damages for construction defects, regardless of whether such defects caused property damages or only economic losses. This includes the right in the Act of the builder to attempt repairs prior to the owner filing a lawsuit.
Background
Homeowners sued builder for construction defects. Included in their causes of action was a cause of action for violation of the Right To Repair Act. The Act requires that before filing litigation, a homeowner must give the builder notice and engage in a nonadversarial prelitigation process which gives the builder a right to repair the defects. The builder asked the court to stay the homeowners’ action so the prelitigaiton process could be undertaken. Rather than give the builder the repair right, the homeowners dismissed the particular cause of action from their case, leaving only other so-called common law and warranty causes of action. The common law claims sought recovery for property damage caused by the defects. The builder nonetheless asked to the Court to stay the action so it could exercise its right to repair.
The trial court, relying on
Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, denied builder’s request to stay the action. The
Liberty Mutual Court concluded that certain common law construction defect claims fell outside the purview of the Act. Builder appealed. The Court of Appeal disagreed with
Liberty Mutual, so did not follow it, granted the builder’s request for a stay, and directed that the homeowners afford the builder the right to repair the claimed defects as provided under the Act.
The California Supreme Court affirmed, disapproving
Liberty Mutual and the subsequent cases relying on it.
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Craig Wallace, Smith CurrieMr. Wallace may be contacted at
swwallace@smithcurrie.com
Damages or Injury “Likely to Occur” or “Imminent” May No Longer Trigger Insurance Coverage
January 05, 2017 —
Masaki J. Yamada – Ahlers & Cressman PLLCWashington Courts allow an insurer to determine its duty to defend an insured against a lawsuit based only on the face of the complaint and the limitations of the insurance policy. This is otherwise known as the “eight corners” rule (four corners of the complaint plus the four corners of the policy). In other words, the insurance company is not permitted to rely on facts extrinsic to the complaint in order to deny its duty to defend an insured. See Truck Ins. Exch. v. VanPort Homes, Inc., 147 Wn.2d 751, 763 (2002). The laws in Washington provide greater protection to the insured over the insurer when it comes to the insurer’s duty to defend. The duty to defend a claim is triggered if a claim could “conceivably” be covered under the policy. See Woo v. Fireman’s Insurance, 161 Wn.2d 43 (2007). If there is any ambiguity in a policy with regard to coverage, the ambiguity is interpreted in favor of the insured.
As a result, contractors in Washington regularly tender claims or potential claims to their insurers even when damage has not occurred but will occur in the imminent future. Especially in the context of construction defect cases, a contractor will tender such a claim to its insurer to trigger the broad duty of the insurer to provide a defense. We also regularly recommend this to our contractor clients. For example, if a building owner serves a contractor with a claim that the construction and installation of a window system will imminently cause leaks and corrosion, we would recommend that the contractor tender the claim to its commercial general liability insurer. Washington courts have found a duty to defend when there are allegations in the complaint that covered damages will occur in the imminent future.
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Masaki J. Yamada, Ahlers & Cressman PLLCMr. Yamada may be contacted at
myamada@ac-lawyers.com
Additional Insurance Coverage Determined for General Contractor
January 07, 2015 —
Tred R. Eyerly- Insurance Law HawaiiA series of communications requiring the subcontractor to provide additional insured coverage for the contractor were sufficient to fit within the policy's provision identifying additional insureds. KB Home Tucson, Inc. v. The Charter Oak Fire Ins. Co., 2014 Ariz. App. LEXIS 228 (Ariz. Ct. App. Nov. 25, 2014).
KB, the general contractor, hired CRG Construction Co., Inc. in 1999 to perform work at a residential subdivision in Tucson. Charter Oak provided liability coverage for CRG, including additional insured coverage for any person or entity that CRG was obligated to cover under written contract or agreement.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Revisiting OSHA’s Controlling Employer Policy
December 21, 2017 —
Wally Zimolong - Zimolong LLCThe United States Court of Appeals for the 5th Circuit has been asked to review OSHA’s twenty year old “controlling employer” policy. As many contractors are surprised to learn, under OSHA’s controlling employer policy, you can be given an OSHA citation even when your own employee is not exposed to the alleged hazard.
A. The Controlling Employer Policy
OSHA’s current controlling employer policy has been effective since 1999. That policy applies to multi-employer worksites, which means virtually all construction sites. Under the policy, OSHA can cite the creating, exposing, correcting, or controlling employer. A creating employer is one who creates the hazard to which workers are exposed. The exposing employer is one who permits his employees to be exposed to the hazard, whether it created the hazard or not. The correcting employer is one who is responsible with correcting known hazards. Finally, the controlling employer is one “who has general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them.” Most general contractors and CM’s are controlling employers.
Under OSHA’s policy, a contractor’s OSHA safety obligations hinges on whether it is a creating, exposing, correcting, or controlling employer. The creating, exposing, and correcting contractors obligations are fairly straightforward. However, the controlling contractors obligations are more nuisanced.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
City of Aspen v. Burlingame Ranch II Condominium Owners Association: Clarifying the Application of the Colorado Governmental Immunity Act
June 17, 2024 —
David McLain - Higgins, Hopkins, McLain & Roswell, LLCOn June 17, 2024, the Colorado Supreme Court delivered a significant opinion in the case of City of Aspen v. Burlingame Ranch II Condominium Owners Association (Case No. 22SC293). This decision provides crucial guidance on the interplay between the Colorado Governmental Immunity Act (“CGIA”) and the economic loss rule in the context of construction defect claims.
Background of the Case
The case arose from a construction defect dispute between the City of Aspen, which served as the developer and declarant for the affordable housing condominiums at issue, and the Burlingame Ranch II Condominium Owners Association, the HOA created by Aspen to manage the association after the period of declarant control. The Association alleged that Aspen breached various warranties related to the construction of affordable housing units, leading to structural deficiencies. Aspen argued that the CGIA barred these claims because they could lie in tort.
The Lower Court’s Decision
The district court initially agreed with Aspen, holding that the Association’s claims sounded in tort and were therefore barred by the CGIA. The court relied on the principle that governmental immunity protects public entities from liability for claims that ‘lie in tort or could lie in tort,’ as established by the CGIA.
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David McLain, Higgins, Hopkins, McLain & RoswellMr. McLain may be contacted at
mclain@hhmrlaw.com
Insurer's Motion to Dismiss Complaint for Failure to Cover Collapse Fails
April 13, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe insurer was unsuccessful in moving to dismiss the property owner's complaint that was filed after coverage for collapse of basement walls was denied. Cyr v. CCAA Fire & Cas. Ins. Co., 2017 U.S. Dist. LEXIS 39387 (D. Conn. March 20, 2017).
The Cyrs began observing cracking patterns in the basement wall of their home. A structural engineer inspected the wall and determined that the cracks were due to a chemical reaction in the concrete that would ultimately render the walls unstable. The Cyrs made a claim with CCAA under their homeowner's policy. The insureds contended that the progressive deterioration of the concrete in the basement walls was a collapse under the policy.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
