Illinois Supreme Court Finds Construction Defect Claim Triggers Initial Grant of Coverage
February 26, 2024 —
Tred R. Eyerly - Insurance Law HawaiiThe Illinois Supreme Court found that the underlying allegations addressing construction defects were sufficient to establish "property damage" caused by an "occurrence."Acuity v. M/I Homes of Chicago, LLC, 2023 Ill. LEXIS 1019 (Ill. Nov. 30, 2023).
M/I Homes was the general contractor for a residential townhome development. The Owners' Association sued for breach of conract and breach of the implied warranty of habitability against M/I Homes. The complaint alleged that M/I Homes' subcontractors caused construction defects by using defective materials, conducting faulty workmanship and failing to comply with applicable building codes. The defects included leakage and uncontrolled water with moisture in locations in the buildings where it was not intended or expected. The Association further alleged that M/I Homes did not intend to cause the construction defects nor did it expect or intend the resulting property damage, such as damage to other building materials. The complaint further alleged that M/I Homes did not perform any of the construction work and that the subconractors performed all the work on its behalf.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
SEC Proposes Rule Requiring Public Firms to Report Climate Risks
April 11, 2022 —
Debra K. Rubin - Engineering News-RecordThe U.S. Securities and Exchange Commission issued a proposal March 21—both anticipated and feared—that would require publicly-traded companies to standardize disclosure for the first time of climate-related business risks such as those related to severe weather and decarbonization. Exchange-listed firms would also have to report greenhouse gas emissions, their own and in the supply chain, creating a major reporting mandate. The rules also apply to firms listed on overseas exchanges that operate in the U.S.
Reprinted courtesy of
Debra K. Rubin, Engineering News-Record
Ms. Rubin may be contacted at rubind@enr.com
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Chairman of the Senate Committee on Banking, Housing and Urban Affairs Calls for CFPB Investigation into Tenant Screening Businesses
December 13, 2021 —
Brian H. Montgomery - Gravel2Gavel Construction & Real Estate Law BlogSenator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, has written to
newly confirmed Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, asking him to review companies in the tenant screening industry for possible Fair Credit Reporting Act violations and other violations of U.S. laws. The CFPB, for its part, has already published a bulletin alerting Consumer Reporting Agencies (CRAs) and other furnishers of consumer information that, as federal, state and local pandemic-related housing protections expire, the Bureau will be giving greater enforcement focus to these businesses’ compliance with accuracy and dispute obligations under the Fair Credit Reporting Act (FCRA) and Regulation V. While it is still unclear whether Director Chopra will direct the Bureau to investigate specific businesses flagged by Chairman Brown, the tenant screening industry will likely face increased scrutiny in the coming months, which may impact their service offerings and cause interruptions for landlords relying on these businesses and services.
There are approximately 2,000 tenant screening companies across the United States. These companies are used by landlords to better identify and perform background checks on prospective tenants. These reports typically provide a prospective tenant’s rental and eviction histories, credit score, debt-to-income ratio, and outstanding credit obligations, among other financial metrics. The reports also usually include a criminal background check, including searches of sex offender registries and other public records searches. Many tenant screening companies then use this information to provide an estimate of the risk that each tenant presents, calculated through proprietary algorithmic formulas. These reports are usually available to landlords at a cost ranging from approximately $5 to $55 per report, usually passed through to the prospective tenant through application fees.
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Brian H. Montgomery, PillsburyMr. Montgomery may be contacted at
brian.montgomery@pillsburylaw.com
Occurrence Found, Business Risk Exclusions Do Not Bar Coverage for Construction Defects
May 13, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe court determined that the supplier of cement for the construction of pools had coverage for alleged construction defects in the finished pools. Harleysville Worcester Ins. Co. v. Paramount Concrete, Inc., 2014 U.S. Dist. LEXIS 43889 (D. Conn. March 31, 2014).
R.I. Pools sued Paramount, a manufacturer and supplier of shotcrete, after cracking appeared in nineteen pools built by R.I. Pools using Paramount's shotcrete. The jury awarded R.I. Pools compensatory damages of $2,760,000.
Paramount's insurer, Harleysville, defended under a reservation of rights. After the verdict, Harleysville filed for a declaratory judgment that there was no coverage under the CGL policy. Paramount filed for partial summary judgment.
Harleysville first argued there was no occurrence. The policy's definition of occurrence included the phrase, "continuous exposure." This broadened the term "occurrence" beyond the word accident to include a situation where damage occurred over a period of time, rather than suddenly or instantaneously.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Forum Selection Provisions Are Not to Be Overlooked…Even On Federal Projects
September 16, 2024 —
David Adelstein - Florida Construction Legal UpdatesForum selection provisions are NOT to be overlooked. Ever. Treat them seriously. Even on federal projects where there is a Miller Act payment bond. Consider forum selection provisions on the front end when negotiating your contract.
In a recent opinion, U.S. f/u/b/o Timberline Construction Group, LLC vs. Aptim Federal Services, LLC, 2024 WL 3597164 (M.D.Fla. 2024), a joint venture prime contractor was hired by the federal government to build a temporary housing site. The joint venture prime contractor obtained a Miller Act payment bond. The joint venture then entered into a subcontract with one of its joint venture members and the member-subcontractor then engaged a sub-subcontractor. The sub-subcontractor claimed it was owed $3.5 Million and sued the member-subcontractor, as well as the prime contractor’s Miller Act payment bond, in the Middle District of Florida. The member-subcontractor and the Miller Act payment bond sureties moved to transfer venue to the Middle District of Louisiana pursuant to a forum selection clause in the contract between the sub-subcontractor and the member-subcontractor. The contract provided that the exclusive venue would be a United States District Court located in Louisiana.
Forum selection provisions are analyzed in federal court under 28 U.S.C. 1404(a): “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” U.S. f/u/b/o Timberline, supra at *2. A forum selection provision is presumptively valid and given controlling weight. Id. (quotations and citations omitted).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Ohio Court Finds No Coverage for Construction Defect Claims
March 28, 2012 —
Tred R. Eyerly - Insurance Law HawaiiCharles and Valerie Myers hired Perry Miller to build their home. Myers v. United Ohio Ins. Co., 2012 Ohio App. LEXIS 287 (Ohio Ct. App. Jan. 26, 2012). After completion of the home, Miller was again hired to construct an addition which included a full basement, staircases, bathroom, bedroom, hallway and garage.
After the addition was completed, one of the basement walls began to crack and bow. Miller began to make repairs, but eventually stopped working on the project. Other contractors were hired to make repairs, but further problems developed. A second basement wall began to bow and crack, allowing water into the basement. The wall eventually had to be replaced. Subsequently, the roof over the addition began to leak in five or six places before the drywall could be painted. The leaks caused water stains on the drywall and caused it to separate and tear. It was discovered the roof needed to be replaced.
The Myers sued Miller and his insurer, United Ohio Insurance Company. The trial court ruled that the policy did not provide coverage for faulty workmanship, but did provide coverage for consequential damages caused by repeated exposure to the elements. United Ohio conceded liability in the amount of $2,000 to repair water damage to the drywall. United Ohio was also found liable for $51,576, which included $31,000 to repair the roof and ceiling and $18,576 to replace the basement wall.
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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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Trucks looking for Defects Create Social Media Frenzy
July 23, 2014 —
Beverley BevenFlorez-CDJ STAFFAccording to Willits News, slow-moving trucks with cameras attached rolled through Fort Briggs, attracting attention from homeowners in the community. People began mentioning the trucks on social media sites, with questions regarding what the cameras on the trucks were recording.
Osmose Utilities General Manager, Jason Milligan, told Willits News that the trucks were “surveying overhead power poles and lines for PG&E.”
"We're not looking for anything but what's overhead," Mulligan said, according to Willits News. "We find defects or issues with construction ... 20 or 30 feet off the ground, which are safety issues. We don't scan anything down towards people's homes."
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Traub Lieberman Partner Eric D. Suben Obtains Federal Second Circuit Affirmance of Summary Judgment in Insurer’s Favor
April 10, 2023 —
Eric D. Suben - Traub LiebermanIn the underlying action, a property owner hosting a motorcycle rally was sued after a motorcycle collided with an auto near the entrance to the premises, injuring the cyclists. The cyclists sued the property owner, among others, alleging failure to supervising traffic on the adjoining roadway. The property owner tendered the claim under its CGL policy, which was endorsed with an “absolute auto exclusion,” precluding coverage for claims “arising out of or resulting from the ownership, maintenance, use or entrustment to others of any…auto.” The CGL insurer disclaimed coverage based on the endorsement.
In the ensuing coverage litigation, Traub Lieberman represented the insurer, and moved for summary judgment arguing that the “absolute auto exclusion” was dispositive of coverage on the facts alleged, citing case law from New York state courts enforcing similar exclusions to preclude coverage for multi-vehicle accidents. The insured argued in opposition that the outcome should be controlled by Essex Insurance Company v. Grande Stone Quarry, LLC, 82 A.D.3d 1326, 918 N.Y.S.2d 238 (3rd Dep’t 2011), in which the court declined to apply such exclusion in the case of a single-vehicle accident caused by a dangerous condition of the insured’s premises. The federal district judge disagreed with the insured’s argument in this regard, granting Traub Lieberman’s motion for summary judgment in favor of the insurer.
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Eric D. Suben, Traub LiebermanMr. Suben may be contacted at
esuben@tlsslaw.com
