Oregon Supreme Court Confirms Broad Duty to Defend
November 21, 2017 —
Theresa A. Guertin - Saxe Doernberger & Vita, P.C. BlogOriginally published by CDJ on January 13, 2017
The Supreme Court of Oregon issued a decision at the end of last year which perfectly illustrates the lengths to which a court may go to grant a contractor’s claim for defense from its insurer in a construction defect suit. In West Hills Development Co. v. Chartis Claims, Inc.,1 the Court held that a subcontractor’s insurer had a duty to defend a general contractor as an additional insured because the allegations of a homeowner’s association’s complaint could be interpreted to fall within the ambit of coverage provided under the policy—despite the fact that the policy only provided ongoing operations coverage, and despite the fact that the subcontractor was never mentioned in the complaint. The decision is favorable to policyholders but also provides an important lesson: that contractors may avoid additional insured disputes if those contractors have solid contractual insurance requirements for both ongoing and completed operations risks.
Read the court decisionRead the full story...Reprinted courtesy of
Theresa A. Guertin, Saxe Doernberger & Vita, P.C.Ms. Guertin may be contacted at
tag@sdvlaw.com
Newark Trial Team Secures Affirmance of ‘No Cause’ Verdict for Nationwide Housing Manager & Developer
January 07, 2025 —
Lewis Brisbois NewsroomNewark, N.J. (December 30, 2024) - Newark Partner Afsha Noran and Managing Partner Colin Hackett recently obtained a ruling by a New Jersey Appellate Division panel affirming a unanimous "no cause" defense verdict obtained on behalf of a nationwide housing developer and manager.
In this case, the plaintiff and her two minor children brought suit against the firm's client. They appealed a unanimous no-cause jury verdict rendered in May 2023 that found the defendants not liable for mold exposure in their apartment. The plaintiffs argued that several trial errors, including improper jury instructions, a confusing verdict sheet, and prejudicial remarks by defense counsel led to an unjust result. However, the appellate court affirmed the trial court's decision, concluding that there was no miscarriage of justice and that the trial court properly exercised its discretion in handling the case.
Read the court decisionRead the full story...Reprinted courtesy of
Lewis Brisbois
Underpowered AC Not a Construction Defect
November 07, 2012 —
CDJ STAFFAfter buying a home in Louisiana, Mike Gines determined that the home’s air conditioning unit was insufficient to maintain an appropriate temperature. He contacted the home builder, D.R. Horton, Inc., which worked with the air conditioning installer, Reliant Heating & Air Conditioning, in order to repair the system. When the problems persisted, Gines filed a class action petition against Horton and Reliant in state court. Horton and Reliant moved the case to the federal courts, whereupon Gines asserted the defendants were in violation of the Louisiana New Home Warranty Act (NHWA). Horton stated that the claim under the NHWA was invalid, because Gines had not alleged actual physical damage to his home.
The district court granted Horton’s motion to dismiss. Gines sought a reversal from the Fifth Circuit Court of Appeals and sought to have two questions of state law addressed by the Louisiana Supreme Court.
The district court ruled that the NHWA was the “sole remedy under Louisiana law for a purchaser of a new home with construction defects. Gines argued that court erred in this, but also conceded that this was the conclusion of the Louisiana Supreme Court.
Further, Gines argued that a provision in the NHWA that allows the inclusion of construction defects that do not cause damage was satisfied by paragraph 6 of the contract. The court noted that Gines did not attach a copy of the contract to either the original or amended complaint, and so the court does not need to address these claims. However, the court cautioned that if a copy had been included, they still would have rejected the claim, as “the cited language does not indicate a waiver of the physical damage requirement.” They also note that “paragraph 13 of the contract shows that Gines was aware to the absence of any such waiver in the contract.”
The court concludes that “the moral of this story is that in order to avoid the harsh result that has obtained here, the buyer of a newly constructed home in Louisiana should seek to obtain in the contract of sale an express waiver of the actual damage requirement of the NHWA.” The appeals court affirmed the decision of the circuit court and denied the application to certify questions to the Louisiana Supreme Court.
Read the court decisionRead the full story...Reprinted courtesy of
Top 10 Insurance Cases of 2024
January 21, 2025 —
Jeffrey J. Vita & Michelle A. Grieco - Saxe Doernberger & Vita, P.C.Federal and state courts tackled a myriad of interesting insurance-related issues this past year. The U.S. Supreme Court also surprisingly addressed coverage issues in 2024, in not one—but two—decisions. It is rare for the Supreme Court to confront insurance coverage issues which usually involve matters of state law. The highest court’s assessment of the nuances of insurance to resolve maritime choice of law issues and interpret an insurer’s role in bankruptcy proceedings is indicative of the significant role that insurance coverage plays in resolving commercial disputes.
Additionally, 2024 included a pivotal opinion from the 5th Circuit, which welcomed the principle that negligent construction can constitute “property damage” under a CGL policy if it causes a harmful change to the property. Elsewhere in the country, the Hawaii Supreme Court ruled that reckless conduct can qualify as an “accident” under a CGL policy’s definition of “occurrence”; however, the court simultaneously ruled that greenhouse gases fall within the scope of “pollutants” under the policy’s pollution exclusion. Cyber coverage decisions were also prominent, and the 5th Circuit chimed in with an interesting decision interpreting the scope of coverage afforded under a “system failure” provision. These decisions represent a mere sampling of the multitude of insurance issues courts nationwide have grappled with in 2024.
Reprinted courtesy of
Jeffrey J. Vita, Saxe Doernberger & Vita, P.C. and
Michelle A. Grieco, Saxe Doernberger & Vita, P.C.
Mr. Vita may be contacted at JVita@sdvlaw.com
Ms. Grieco may be contacted at MGrieco@sdvlaw.com
Read the court decisionRead the full story...Reprinted courtesy of
Business Interruption Insurance Coverage Act of 2020: Yet Another Reason to Promptly Notify Insurers of COVID-19 Losses
May 25, 2020 —
James Hultz - Newmeyer DillionBusiness interruption coverage stemming from the COVID-19 pandemic is a matter of intense debate. The number of policyholder lawsuits continues to rise sharply and an increasing number of state legislatures are considering laws to specifically address such coverage.
Now, additional proposed legislation at the federal level could completely and definitively resolve the debate in favor of coverage for policyholders.
The Business Interruption Insurance Coverage Act of 2020
On April 14, Congress introduced the Business Interruption Insurance Coverage Act of 2020 (the “Act”) which, if passed, would require insurance companies to cover business interruption losses due to “viral pandemics, forced closures of businesses, mandatory evacuations, and public safety power shut-offs.” The bill further states:
Any exclusion in a contract for business interruption insurance that is in force on the date of the enactment of this Act shall be void to the extent that it excludes losses specified . . . .
The draft legislation also specifies that it preempts state approval of any contrary exclusion and renders such approval “void to the extent that it excludes losses specified.”
Read the court decisionRead the full story...Reprinted courtesy of
James Hultz, Newmeyer DillionMr. Hultz may be contacted at
james.hultz@ndlf.com
Construction Is Holding Back the Economy
February 28, 2018 —
Noah Smith - BloombergChanges in contracts and rules could make the sector a lot more efficient.
The question of whether to
prioritize jobs or economic efficiency is always difficult. Nowhere is this more of a dilemma than in the construction industry.
In a world of rapid technological disruption, construction is a rock of solidity to which many blue-collar workers can cling. The industry still employs about 7 million workers in the U.S.
The job doesn’t change that much from decade to decade. It’s a big broad occupation, unlike social-media marketing or other new niche jobs, so it allows working-class people to minimize the time and effort they spend building for a career. And workers get trained on the job, without years of college.
What’s more, construction workers are
mostly male. To the degree this is a result of sexism, that’s bad. But it also means that the construction industry employs lots of men, at a time when they haven’t been doing so well in the jobs department.
Read the court decisionRead the full story...Reprinted courtesy of
Noah Smith, Bloomberg
Subcontractors Have a Duty to Clarify Ambiguities in Bid Documents
August 19, 2015 —
Craig Martin – Construction Contractor AdvisorSeveral months ago, I wrote about an escalator subcontractor that sued a general contractor, demanding payment for work completed based on approved shop drawings. The trial court agreed with the subcontractor, but the general contractor appealed. Ten months later, the Court of Appeals reversed, finding that the subcontractor had a duty to bring to the general contractor’s attention major discrepancies or errors they detect in the bid documents.
“The subcontractor failed to disclose ambiguities in the plans and must suffer the peril.”
Construction Difficulties
The subcontractor installed 32 inch escalators throughout the project, but the plans called for 40 inch escalators. The general contractor and subcontractor could not reach agreement on how the dispute should be resolved. The subcontractor sued the general to get paid for replacing the escalators and the general sued to subcontractor for concessions it had to pay to the owner.
Read the court decisionRead the full story...Reprinted courtesy of
Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
California Clarifies Its Inverse Condemnation Standard
December 30, 2019 —
Gus Sara - The Subrogation StrategistIn City of Oroville v. Superior Court, 446 P.3d 304 (Cal. 2019), the Supreme Court of California considered whether the City of Oroville (City) was liable to a dental practice for inverse condemnation damages associated with a sewer backup. The court held that in order to establish inverse condemnation against a public entity, a property owner must show that an inherent risk in the public improvement was a substantial cause of the damage. Since the dental practice did not have a code-required backwater valve — which would have prevented or minimized this loss — the court found that the city was not liable because the sewage system was not a substantial cause of the loss. This case establishes that a claim for inverse condemnation requires a showing of a substantial causal connection between the public improvement and the property damage. It also suggests that comparative negligence can be a defense to inverse condemnation claims.
In December 2009, a dental practice, WGS Dental Complex (WGS), located in the City, incurred significant water damage as a result of untreated sewage from the City’s sewer main backing up into WGS’ building. WGS submitted a claim to its insurance carrier, The Dentists Insurance Company (TDIC) and, in addition, sued the City for its uninsured losses, alleging inverse condemnation and nuisance. TDIC joined the litigation, alleging negligence, nuisance, trespass and inverse condemnation. Under California law, when a government entity fails to recognize that an action or circumstance essentially amounts to a taking for public use, a property owner can pursue an inverse condemnation action for compensation. The City filed a cross-complaint against WGS for failing to install a code-required backwater valve on their lateral sewer line, which would have prevented or minimized the backup.
The City filed a motion for summary judgment, which the trial court denied. WGS then sought a judicial determination on the issue of inverse condemnation. The City presented evidence that the sewage system was designed in accordance with industry standards, and that WGS failed to comply with the City’s plumbing code by failing to install a backwater valve on its private sewer lateral. The trial court found the City liable for inverse condemnation because the blockage that caused the backup originated in the City’s sewer line. The court held that the blockage was an inherent risk of sewer operation. The Court of Appeals affirmed the decision, holding that the City would have had to prove that the WGS’s lack of a backwater valve was the sole cause of the loss in order to absolve itself of liability.
Read the court decisionRead the full story...Reprinted courtesy of
Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
