SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Insurers Get “Floored” by Court of Appeals Regarding the Presumptive Measure of Damages in Consent Judgments

May 13, 2014 — Mark Scheer and Brent Williams-Ruth – Scheer & Zehnder LLP
CASE: Miller v. Kenny, 68594-5-I, 2014 WL 1672946 (Wash. Ct. App. Apr. 28, 2014). Snapshot Synopsis: $21 million bad faith consent judgment verdict upheld. $4.15 million underlying stipulated consent judgment was the “floor,” and additional damages allowed. ISSUES: 1. Can a jury award damages for an insurer’s bad faith in excess of the amount of the stipulated covenant judgment? YES 2. Can a trial court admit evidence of insurance liability reserves in a bad faith action? YES 3. *Note: Other evidentiary and procedural issues were addressed by the court in its decision but not analyzed in this summary* FACTS: This appeal arose out of an automobile accident on August 23, 2000. Patrick Kenny was driving a 1994 Volkswagen Passat owned by one of the passengers, when he rear-ended a cement truck. The accident severely injured his three passengers: Ryan Miller, Ashley Bethards, and Cassandra Peterson. Kenny was covered for liability under the insurance policy issued to Peterson's parents by Safeco Insurance Company. Safeco defended Kenny without a reservation of rights. Reprinted courtesy of Mark Scheer, Scheer & Zehnder LLP and Brent Williams-Ruth, Scheer & Zehnder LLP Mr. Scheer may be contacted at mscheer@scheerlaw.com; Mr. Williams-Ruth may be contacted at bwilliamsruth@scheerlaw.com Read the court decision
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Texas Court Construes Breach of Contract Exclusion Narrowly in Duty-to-Defend Case

September 10, 2018 — Lorelie S. Masters & Tae Andrews - Hunton Insurance Recovery Blog
In a victory for policyholders, a recent decision from the Western District of Texas narrowly construed a common breach-of-contract exclusion and held that the insurer had a duty to defend its insured against an underlying lawsuit over construction defects. The allegations potentially supported a covered claim, as the conduct of the insured’s subcontractor could have been an independent, “but for” cause of the property damage at issue, thereby triggering the insurer’s duty to defend. In Slay, the insured – a construction company – was hired by a city to design and construct a municipal sports complex, including Little League baseball fields, a softball field, parking lots, and a swimming pool. The construction company hired a subcontractor to perform various services on the project, including paving parking lots and laying the cement for the pool. After completing the project, one of the construction company’s employees noticed cracking in the parking lot and the pool. The construction company notified the city and tried to work out a repair plan, but the city refused and eventually sued, alleging construction defects and asserting claims for breach of contract and negligence. Reprinted courtesy of Lorelie S. Masters, Hunton Andrews Kurth and Tae Andrews, Hunton Andrews Kurth Ms. Masters may be contacted at lmasters@HuntonAK.com Mr. Andrews may be contacted at tandrews@HuntonAK.com Read the court decision
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Defense for Additional Insured Not Barred By Sole Negligence Provision

August 11, 2011 — Tred R. Eyerly - Insurance Law Hawaii

A general contractor was entitled to a defense as an additional insured when the underlying complaint did not allege it was solely negligent. A-1 Roofing Co. v. Navigators Ins. Co., 2011 Ill. App. LEXIS 656 (Ill. Ct. App. June 24, 2011).



A-1 was the general contractor for a roof resurfacing job at a high school. Jack Frost Iron Works Inc. (“Frost”) was one of A-1’s subcontractors. Frost had a CGL policy with Navigators Insurance Company under which A-1 was an additional insured.



An employee of Frost’s subcontractor Midwest Sheet Metal Inc. was killed at the job site when a boom-lift he was operating flipped over. The boom-lift had been leased by another Frost subcontractor, Bakes Steel Erectors, Inc. (BSE). The deceased's estate filed suit against A-1, BSE and two other defendants.



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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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No Coverage for Collapse of Building

January 04, 2021 — Tred R. Eyerly - Insurance Law Hawaii
Damage to a building caused by the break of a water pipe was not a collapse under the policy. Naabani Twin Stars v. Travelers Cos., 2020 U.S. Dist. LEXIS 196443 (D. N. M. Oct. 22, 2020). An underground water line ruptured on plaintiffs property This caused a collapse under the adjacent parking lot, which in turn caused land beneath the building go change positions and damage the building. A geotechnical consultant concluded that a material change in the site conditions occurred as a direct result of the rupture of the water pipe in the parking lot, and that those changes directly affected the settlement of the building. Travelers denied coverage for the damage. Travelers concluded that the building settlement was the result of subsurface movement, which invoked the earth movement exclusion. Travelers inspection concluded that the building was not in a state of collapse. The policy defined collapse as "an abrupt falling down or caving in of a building or structure, or any part of a building or structure, with the result that the building, or part of the building, cannot be occupied for its intended purpose." Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Attorney-Client Privilege in the Age of Cyber Breaches

October 18, 2021 — Shaia Araghi - Newmeyer Dillion
Investigations and forensic reports relating to a cybersecurity breach may not always be protected by the attorney-client privilege or work product protection. Companies seeking such reports after a data breach must take caution to protect them from a possible waiver of privilege in the event of subsequent litigation relating to a data breach. The following recent cases highlight the potential waiver of privilege in light of the preparation of a forensic report.

1. In re Capital One Consumer Data Security Breach Litigation, 2020 WL 3470261 (E.D. Va. June 25, 2020)

• After a data breach occurred, Capital One retained a law firm that later entered into an agreement with Mandiant for various cyber-related services (including incident remediation), which required that Mandiant provide deliverables to the firm, rather than to Capitol One. In re Capital One Consumer Data Security Breach Litigation, 2020 WL 2731238, at *1 (E.D. Va. June 25, 2020). Plaintiffs sought release of the report created by Mandiant (regarding the factors leading to the breach), arguing that it was prepared for business and regulatory purposes and therefore was not privileged, while Capital One argued that the report was privileged because it was prepared in anticipation of litigation. Ibid. The Court determined that Capital One did not carry its burden of establishing that the report was protected by the attorney work-product doctrine and ordered that Capital One produce the report. Id. at *7. In its reasoning, the Court stated that the fact that there is litigation does not, by itself, provide prepared materials with work-product protection. Ibid. The work-product protection applies when a party faces a claim following an event that may result in litigation, and the work product would not have been prepared in a substantially similar form but for the prospect of that litigation. Ibid.

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Reprinted courtesy of Shaia Araghi, Newmeyer Dillion
Ms. Araghi may be contacted at shaia.araghi@ndlf.com

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Texas Law Bars Coverage under Homeowner’s Policy for Mold Damage

July 13, 2011 — Tred R. Eyerly - Insurance Law Hawaii

Although the insurer paid for some of the mold damage at the insured’s home, the Fifth Circuit eventually determined the homeowner’s policy did not cover such damage. Rooters v. State Farm Lloyds, 2011 U.S. App. LEXIS 12306 (5th Cir. June 15, 2011).



The policy excluded loss caused by hail to personal property unless the direct force of wind or hail made an opening in the roof allowing rain to enter. Further, the policy excluded loss caused by mold or other fungi.



In 1999, hail and rain caused water damage to the roof and interior of the residence. State Farm paid $19,000 to repair the roof. Another $1,800 was paid for repairs to the interior of the building. In 2002, the insured noticed black mold. State Farm issued an additional check for $4,402 for mold abatement.



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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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Chinese Telecommunications Ban to Expand to Federally Funded Contracts Effective November 12, 2020

September 21, 2020 — Lori Ann Lange & Sabah Petrov - Peckar & Abramson
In our previous alert, we discussed the Federal Government’s Ban (the “Ban”) on certain Chinese covered telecommunications and video surveillance equipment and services in federal government contracts. The ban prohibits government contractors and subcontractors from supplying to the Federal Government or using in their own internal operations certain telecommunications or video surveillance equipment or services produced by Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company, as well as their subsidiaries and affiliates. The Ban currently applies to companies contracting directly with the Federal Government. Soon, however, the Ban – at least in part – will expand to contractors and subcontractors who are awarded certain federally assisted contracts and subcontracts. On August 13, 2020, the Office of Management and Budget (“OMB”) published Final Guidance revising its grants and agreements regulations (2 CFR Part 200) to prohibit recipients and subrecipients from using loan or grant funds to purchase or obtain covered telecommunications and video surveillance equipment or services. Effective November 12, 2020, recipients and subrecipients are prohibited from obligating or expending loan or grant funds to:

1. Procure or obtain;
2. Extend or renew a contract to procure or obtain; or
3. Enter into a contract (or extend or renew a contract) to procure or obtain equipment, services, or systems that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

Reprinted courtesy of Lori Ann Lange, Peckar & Abramson and Sabah Petrov, Peckar & Abramson Ms. Lange may be contacted at llange@pecklaw.com Ms. Petrov may be contacted at spetrov@pecklaw.com Read the court decision
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NTSB Issues 'Urgent' Recommendations After Mass. Pipeline Explosions

November 28, 2018 — Tom Ichniowski – Engineering News-Record
The National Transportation Safety Board has issued urgent safety recommendations in the wake of September’s natural-gas explosions and fires in the Merrimack Valley area of Massachusetts that killed one person and resulted in at least 21 others, including two firefighters, going to the hospital. Read the court decision
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Reprinted courtesy of Tom Ichniowski, ENR
Mr. Ichniowski may be contacted at ichniowskit@enr.com

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