Tennessee High Court Excludes Labor Costs from Insurer’s Actual Cash Value Depreciation Calculations
May 27, 2019 —
Michael S. Levine & Geoffrey B. Fehling - Hunton Andrews KurthThe Tennessee Supreme Court has refused to construe an ambiguous definition of actual cash value to allow for deduction of labor costs as part of depreciation calculations where that subset of repair costs are not clearly addressed in the policy. Despite the split of authority nationwide, the Tennessee case presents a straightforward application of policy interpretation principles to a common valuation issue in first-party property claims.
In Lammert v. Auto-Owners (Mutual) Insurance Co., No. M2017-2546-SC-R23-CV (Tenn. Apr. 15, 2019), insureds brought a class-action lawsuit against their property insurer, Auto-Owners, alleging breach of contract. The plaintiffs each owned buildings damaged by a hail storm and had each submitted claims to Auto-Owners. Auto-Owners accepted the claims and determined that the losses would be determined on an actual cash value basis. In performing those valuations, Auto-Owners depreciated both the building materials and the labor costs associated with repairing the properties. The insureds challenged the labor cost depreciation. Auto-Owners moved to dismiss the lawsuit. In response, the insureds requested that the district court certify to the Tennessee Supreme Court whether, “[u]nder Tennessee law, may an insurer in making an actual cash value payment withhold a portion of repair labor as depreciation when the policy (1) defines actual cash value as ‘the cost to replace damaged property with new property of similar quality and features reduced by the amount of depreciation applicable to the damaged property immediately prior to the loss,’ or (2) states that ‘actual cash value includes a deduction for depreciation?”’
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Geoffrey B. Fehling, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
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How Do You Get to the Five Year Mark? Some Practical Advice
August 26, 2015 —
Christopher G. Hill – Construction Law MusingsFor this week’s Guest Post Friday here at Construction Law Musings, we would like to welcome back (again) Sean Lintow Sr. of
SLS Construction & Building Solutions . Sean has over 20 years working directly in the trenches in the construction arena. Since moving to Illinois, the focus of his business has shifted to helping builders, trade professionals& even code officials not only understand and meet the latest energy codes but how to improve their methods to accomplish it better and more affordably.
Currently he is RESNET Rater, AEE CEA (Certified Energy Auditor), ENERGY STAR partner & verifier, EPA Indoor airPLUS verifier, Level 2 Infrared Thermographer, Volunteer Energy Rater for Habitat for Humanity, and Builders Challenge Partner & Verifier. You may also want to check out his great resources on
The HTRC (Homeowners & Trades Resource Center).
I would like to thank Chris for inviting me back for my 6th musing on this great site. I would also like to give him a Belated Happy Birthday for reaching 5 years since going solo. Reaching five years is a big milestone for many businesses as most new ventures (I think it is 85% or maybe even 90%) fail during that time. Therefore, a big congrats to you Chris & here is to another five plus years.
For the most part the blame game for failure comes down to; wrong product offerings (market to saturated, not interested in, etc…), their ability to market, or poor business skills (not charging enough, realizing what they are spending, etc…) as the main point of failures. There is another group though that never seems to get much press and that is the ones that seemingly are blindsided by the dreaded “ignorance of the law” is no excuse… Not only does this effect many large companies but also many solo operations which is where I do want to focus today, especially on 4 “lesser” known issues.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
What Is the Best Way to Avoid Rezoning Disputes?
August 30, 2021 —
Collier Marsh - Construction ExecutiveConstruction companies and developers are accelerating projects in the southeast and throughout the country as the economy rebounds from the worst of the COVID-19 pandemic. Whether they are building commercial, industrial or residential projects, these developments often require rezoning to maximize an investment. But rezoning disputes can add significant delays and costs to a project and can even defeat the project altogether.
There are proactive steps construction companies can take to avoid disputes as they are working to secure rezoning approval, as well after the rezoning is complete. During the initial rezoning process, before a final municipal decision, one of the best practices is to anticipate opposition and address it head-on. As for post-approval disputes, those often come down to how carefully a company followed the local procedures and, where applicable, the local evidentiary requirements.
Reprinted courtesy of
Collier Marsh, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Marsh may be contacted at
colliermarsh@parkerpoe.com
The Risk of A Fixed Price Contract Is The Market
August 03, 2022 —
David Adelstein - Florida Construction Legal UpdatesWhen performing work on a fixed price or unit, there is risk that is being assumed on your end. One risk is the market. You are ultimately banking on the fact that the market is not going to make your fixed prices unprofitable. That’s not an unforeseeable occurrence because the market shifts and that shift can have a negative ripple effect.
In a recent case out of the Federal Circuit, U.S. Aeroteam, Inc. v. U.S., 2022 WL 243176 (Fed.Cir. 2022), this market risk played a role in a fixed price contract. Here, a contractor was hired by the federal government to produce ground support trailers. A key component of these trailers was a running gear. The contractor relied on a vendor for these running gears. Due to financial difficulties, the vendor had to raise its unit price for the running gears. Based on the increased price, the contractor elected to manufacture the running gears itself. The contractor asked the government if this was ok and the government approved the request. Once the contractor started manufacturing these running gears, it had an “awe” moment – the manufacturing costs were higher than anticipated. The contractor submitted a request for equitable adjustment which the government denied. The Contractor than sued the government raising three arguments to support its entitlement to additional costs: (1) constructive change; (2) cardinal change; and (3) commercial impracticability. The contractor lost on all arguments. It probably should have lost on all arguments.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Don’t Fall in Trap of Buying the Cheapest Insurance Policy as it May be Bad for Your Business Risks and Needs
March 25, 2024 —
David Adelstein - Florida Construction Legal UpdatesDon’t fall in the trap of buying the cheapest insurance policy. It will come and bite you in the butt big time! Consult with an insurance broker that understands construction and, importantly, your specific industry, to provide you coverage within your industry. Otherwise, you’ll be paying for a policy that may (i) not be a good policy, and (ii) may provide you minimal to no value for your industry’s RISKS and NEEDS when factoring in exclusions. When procuring insurance, think of the old adage “penny wise and pound foolish,” and don’t make decisions that fit within this adage!
The recent decision in Nautilus Ins. Co. v. Pinnacle Engineering & Development, Inc., 2024 WL 940527 (S.D. Fla. 2024) serves as an example. Here, a subcontractor was hired by a general contractor to perform underground utility work for a townhome development which consisted of 57 townhome units included in 18 detached structures. The subcontractor’s underground work was defective which caused damage to the property’s water line, sewer system, plumbing lines, pavers, etc. The general contractor was liable to the owner for this defective work. Although the general contractor was an additional insured under the subcontractor’s commercial general liability (CGL) policy, the subcontractor’s CGL carrier denied the duty to defend and initiated an insurance coverage lawsuit. Motions for summary judgment were filed.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Civil RICO Case Against Johnny Doc Is Challenging
October 20, 2016 —
Wally Zimolong – Supplemental ConditionsNews that a non-union contractor had filed a Lawsuit against IBEW Local 98 and its leader, John Dougherty, made headlines this week. While making fodder for local media, the plaintiffs must bound several legal hurdles before IBEW Local 98 and “Johnny Doc” face any threat of liability.
Background on RICO
The lawsuit was filed under a set of laws known as the Racketeer Influenced and Corrupt Organizations Act (RICO). I have written about RICO’s impact on labor unions on this blog before and predicted that recent federal court cases made RICO claims against more viable. RICO is a Nixon era set of laws that were originally passed to combat organized crime. There is both a civil and criminal component to RICO. (Interestingly, the RICO act remained relatively dormant until then U.S. Attorney Rudy Giuliani began effectively using it to prosecute the mob in the 1980’s.) Although recent decisions have made RICO claims against unions more viable, any RICO claim is still challenging. Indeed, some courts require a plaintiff in civil RICO cases to file a separate RICO case statement detailing its allegations. RICO claims are powerful. Some have called RICO claims a “thermonuclear” litigation device because the law permits the award of trebel (triple) damages and attorneys fees.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Strict Rules for Home Remodel Contracts in California
June 06, 2018 —
Daniel F. McLennon - Smith CurrieHome remodeling in California is governed by strict contracting laws intended to protect consumers. The Contractors State Licensing Board, (“CSLB”) is particularly concerned about contractors working without permits, contractors taking payment in excess of the value of the work complete–including deposits in excess of $1,000–and contractors refusing to complete projects. They are also concerned about contractors who fail to comply with the Home Improvement Contract (“HIC”) laws. At a minimum, it takes six pages of contract language for an HIC to comply with California law. Most contractors do not get it right, leaving themselves exposed to license discipline, misdemeanor criminal prosecution, and void contracts. The stakes are high, and contractors are advised to learn and comply with the HIC laws.
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Daniel F. McLennon, Smith CurrieMr. McLennon may be contacted at
dfmclennon@smithcurrie.com
Mexico City Metro Collapse Kills 24 After Neighbors’ Warnings
May 17, 2021 —
Max De Haldevang & Maya Averbuch - BloombergThe collapse of a long-troubled Mexico City metro track killed 24 people and put two of President Andres Manuel Lopez Obrador’s top allies in the line of fire Monday night, after a decade of safety concerns and probes surrounding the project.
About 79 people were injured, Mayor Claudia Sheinbaum said Tuesday. A broken beam led to the incident on the Golden Line of the metro system, she said. An international agency and the attorney general’s office will investigate.
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Max De Haldevang, Bloomberg and
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