The Hunton Policyholder’s Guide to Artificial Intelligence: SEC’s Recent AI-Washing Claims Present D&O Risks, Potential Coverage Challenges
July 08, 2024 —
Geoffrey B. Fehling, Michael S. Levine & Alex D. Pappas - Hunton Insurance Recovery BlogWe have previewed in prior posts the ways artificial intelligence is rapidly changing the way business operate, including the many ways AI has influenced the insurance market, creating both opportunities and risks for policyholders. We later highlighted, based on a recent securities lawsuit, how corporate management may be at risk for the alleged use or misuse of AI and how companies should evaluate their directors and officers (D&O) and management liability policies to ensure that they are prepared to respond to and mitigate AI-driven risks, including claims alleging that a company or its officers and directors made misrepresentations about AI.
That potential risk now has regulatory teeth, as the US Securities and Exchange Commission recently charged the founder of an AI hiring startup with fraud based on claims about using AI to help clients find diverse and underrepresented candidates to fulfill diversity, equity, and inclusion hiring goals.
Reprinted courtesy of
Geoffrey B. Fehling, Hunton Andrews Kurth,
Michael S. Levine, Hunton Andrews Kurth and
Alex D. Pappas, Hunton Andrews Kurth
Mr. Fehling may be contacted at gfehling@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Pappas may be contacted at apappas@HuntonAK.com
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COVID-19 Case Remanded for Failure to Meet Amount in Controversy
September 14, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court remanded to state court a loss of rent claim because the amount in controversy requirement was not met. Geragos & Geragos Fine Arts Bldg., LLC v. Travelers Indemn. Co., 2020 U.S Dist. LEXIS 127427 (C.D. Cal. July 20, 2020).
Geragos suffered loss of rental income due to the COVID-19 tenant relief measures implemented in Los Angeles. The tenant relief orders would remain in effect for the duration of the emergency period, the end date of which was not presently set.
Geragos submitted a claim for loss of rental income to Travelers. When the claim was denied, Geragos sued in state court. Travelers removed to federal district court. Geragos moved to remand the case back to state court for lack of subject matter jurisdiction.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
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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When Can a General Contractor’s Knowledge be Imputed to a Developer?
August 06, 2014 —
Zach McLeroy – Colorado Construction LitigationThe Colorado Court of Appeals recently handed down an opinion clarifying when the knowledge of a general contractor can be imputed to a developer. In the case of Jehly v. Brown, 327 P.3d (Colo. App. 2013), the Court of Appeals held that a developer cannot be held liable for fraudulent concealment when the developer has no actual knowledge of the fact or facts allegedly being concealed even if the general contractor had knowledge.
In this case, Brown, the developer, owned real property in Teller County and hired a general contractor to build a single-family house. Sometime before or during the construction, the general contractor became aware that part of the home site was located in a designated floodplain. Although the general contractor was aware that part of the home site was located in a floodplain, he continued to build the home without informing Brown of the floodplain designation.
Once the home was complete, Brown sold the property to the Jehlys. Brown completed a Seller’s Property Disclosure Form regarding the condition of the house and property, but failed to identify that the home site was located in a governmentally designated floodplain.
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Zack McLeroy, Higgins, Hopkins, McLain & Roswell, LLCMr. McLeroy may be contacted at
McLeroy@hhmrlaw.com
The Heat Is On
June 13, 2022 —
Christopher Durso - Construction ExecutiveEvery year, NASA and the National Oceanic and Atmospheric Administration (NOAA) team up to assess global temperatures and climate trends. (Yes, that NASA. A big part of the space agency’s mission is focused on Earth science, with the goal of better understanding the planet’s interconnected systems.) The two groups released their findings for 2021 this past January, with several predictably alarming highlights:
- 2021 was the sixth-warmest year on record, with the average global surface temperature about 1.5°F over the 20th-century baseline periods that the agencies use for comparison and nearly 2°F higher than in the late-19th century.
- The surface temperature in the Northern Hemisphere was also the sixth-highest on record, at nearly 2°F over baseline, with the land temperature exceeding the baseline by 2.8°F.
- Extreme climate events included an above-average Atlantic hurricane season, with 21 storms, and a severe heat wave in the northwestern United States and western Canada in June during which Canada recorded its highest temperature ever, at 121°F.
Reprinted courtesy of
Christopher Durso, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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BE PROACTIVE: Steps to Preserve and Enhance Your Insurance Rights In Light of the Recent Natural Disasters
October 19, 2017 —
Jacquelyn M. Mohr – Newmeyer & Dillion LLPOur hearts go out to those families and businesses who have suffered losses due to the recent fires, hurricanes, and other natural disasters. We hope that everyone in Sonoma, Napa, Orange County, and nationwide affected by these tragic events is somewhere safe. As someone who lost a house in a fire growing up and now is an attorney who helps both residential and business policyholders, there are a few pieces of wisdom I’d like to pass along to help prepare for the worst:
1) MAINTAIN DUPLICATES OF CRITICAL DOCUMENTS OFFSITE OR ONLINE
After the fire, you’re going to need your insurance policies and other critical documents. While it’s usually possible to request copies, this can take weeks, which will hold up your claims process. We are fortunate enough to have the technology for cloud-based storage of key documents – like your insurance policy, insurance broker contact information, tax returns, life insurance policies, will, business plan, inventories, etc. – oftentimes for free. Maintaining these records onsite during your daily life and business operations is important, but so is taking the time and trouble to make sure you have a back-up offsite. It’s easy to do, and so much easier than trying to recreate it after the fact.
2) MAKE A RECORD OF YOUR PROPERTY AND POSSESSIONS
If you are lucky enough to still be in your home or business property, I strongly recommend that you take a video of your property and possessions to keep for your records. A digital inventory with receipts would be great – but a video log will also be very helpful later.
- For your home: This includes the furniture, artwork, appliances, jewelry, electronics, collectibles, landscaping and custom features of the inside and outside of your house.
- For your business: This includes your furniture and artwork, your inventory and your electronics.
Look into offsite back-ups of your important electronic data – whether documents, e-mails, insurance policies, inventory logs, accounting data, client correspondence, or pictures of your kids or grandkids.
Why A Record Is Important in the Insurance Claims Process
Though I hope no one has to deal with this, a video record will make it much easier in the event of a tragedy to deal with insurance claims for two reasons:
- It is evidence to submit to the insurance company to show exactly what your property was like before disaster struck.
- For your home, you likely have a homeowner's insurance policy that covers your “3 bedroom, 2 bath, 2000 square foot home built in 1962,” but your insurer won’t know the quality of what is actually inside. It will be up to you to prove you had a brand new Viking stovetop, rather than a 20-year old Kitchenaid; custom built-in cabinets rather than Ikea furniture. (On this note, if you ever do any remodeling, be sure to tell your broker to make sure it's covered by your policy!)
- For your business, your policy will similarly be generic, and the insurer will similarly insist on evidence of your business inventory, sales orders, equipment, artwork, etc. in the event of a loss.
- A video record will also help to jog your memory to create itemized inventories to submit to the insurance company. Creating an inventory of everything lost after a casualty can be the most difficult and emotional part of the rebuilding process. I encourage you to do anything you can do now to lessen the stress later. After a traumatic loss, it’s impossible to remember everything, so most people never collect their full insurance benefits. United Policyholders, an amazing non-profit resource for policyholders, has a great app and other online tools to help create your inventory. You can find the app and other helpful information at http://www.uphelp.org/
3) CHECK YOUR POLICY
Even if you have not been personally affected by the recent disasters, these tragedies are an excellent reminder to check to make sure you are fully covered.
- Make sure you understand what is covered under your policy, and get confirmation that you are covered for a total loss. Talk with your broker to make sure your policy limits make sense, including those for separate structures, personal property, and additional living expenses, which are usually a percentage of your dwelling coverage limit.
- Check to make sure your personal property limits would cover your possessions– if you have a lot of artwork, jewelry, antiques, and other valuables, the standard limits might not be enough for you.
- Consider this question: Does your additional living expense/business interruption coverage (aka the amount your insurance company will pay while your home or business property is being rebuilt) provide enough for your needs? Even if your limits/coverage made sense when you purchased the policy, things may have changed.
You can usually increase your other coverage limits with a quick email to your insurance broker, often with very little impact on your annual premium.
4) DON’T BE AFRAID TO ASK FOR HELP
As simple as it sounds, don’t be afraid to ask for help. No one expects you to be an expert on this, and pretending you don’t need assistance can cost you thousands of dollars in insurance benefits in the future. So be sure to take advantage of the resources out there so that you are fully prepared to handle whatever disaster nature sends your way.
For any additional questions, and for help navigating the insurance claims process after a disaster, please do not hesitate to reach out.
Jacquelyn Mohr is an associate in the Walnut Creek office of Newmeyer & Dillion, focusing in business litigation, insurance coverage, securities fraud and construction disputes. Jacquelyn can be reached at Jacquelyn.Mohr@ndlf.com or 925.988.3200.
About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.
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Reprinted courtesy of Jacquelyn M. Mohr, Newmeyer & Dillion LLP
Ms. Mohr may be contacted at Jacquelyn.mohr@ndlf.com
Supreme Court of Canada Broadly Interprets Exception to Faulty Workmanship Exclusion
November 10, 2016 — C. Lily Schurra – Saxe Doernberger & Vita P.C.
In a recent policyholder-friendly decision, the Supreme Court of Canada found coverage under an exception to the faulty workmanship exclusion in an all-risk policy. The decision provided the insureds with millions to cover the cost of replacing the faulty work. Read the court decision
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Reprinted courtesy of C. Lily Schurra, Saxe Doernberger & Vita P.C.
Ms. Schurra may be reached at cls@sdvlaw.com
Colorado’s Abbreviated Legislative Session Offers Builders a Reprieve
October 26, 2020 — David M. McLain – Colorado Construction Litigation
Would you believe me if I told you that this year could have been worse for builders? Had COVID-19 not hit, the Colorado Legislature may have passed bills that would have had a severely negative impact on the home building industry. In response to the COVID-19 pandemic, the Legislature temporarily adjourned in mid-March, 67 days into the 120-day legislative session. After a two-month recess, the Legislature returned for approximately one month to pass critical bills including the state budget, the school finance act and what to do with the money from the federal CARES Act. Of the bills on the calendar when the Legislature temporarily adjourned, legislators focused on those that were “fast, free, and friendly,” and let the others fall by the wayside.
Bills that died included SB 20-138, which would have extended Colorado’s statute of repose for construction defect claims from six plus two years to 10 plus two years. The bill also contained a number of accrual and tolling provisions, which would have made it harder for builders to convince tribunals that claims were untimely. This bill died on the Senate floor, for lack of support. We will see whether plaintiffs’ attorneys will revive this effort next year.
SB 20-093, while not an outright ban on arbitration or a legislative overturning of the Vallagio decision, would have made it harder to administer and more difficult to get cases into arbitration. The bill died under the “fast, free, and friendly” test, i.e., it faced too much opposition. I expect to see this bill again next year, in some form. Read the court decision
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Reprinted courtesy of David McLain, Higgins, Hopkins, McLain & Roswell
Mr. McLain may be contacted at mclain@hhmrlaw.com
