TLSS Partner Burks Smith and Associate Katie Keller Win Summary Judgment on Late Reported Water Seepage Case in South Florida
November 18, 2019 —
Burks A. Smith, III & Kathryn Keller - Traub LiebermanOn July 9, 2019, Traub Lieberman Straus & Shrewsberry LLP Partner, Burks A. Smith, III and Associate, Kathryn A. Keller, secured Summary Judgment on behalf of a major homeowners’ insurer in a breach of contract action in the United States District Court for the Southern District of Florida. See Lehrfield v. Liberty Mutual Fire Insurance Company, 2019 WL2994270 (S.D. Fla. 2019). The underlying claim involved a water loss at the Plaintiffs’ residence allegedly resulting in $91,147.32 worth of damage to their home. The claim was reported eight (8) months after the alleged date of loss, and during the inspection, the adjuster observed rot, decay, mold, and warping wood, prompting the carrier to deny the claim based on the Seepage Endorsement. The Plaintiffs filed a breach of contract action alleging that the insurer breached the Policy by denying the claim.
Mr. Smith and Ms. Keller argued that Plaintiffs’ Policy with the insurer imposes a duty on the Plaintiffs to comply with the Duties After Loss conditions of the Policy, including the requirement to provide prompt notice of the loss and show the damaged property. As mentioned above, the Plaintiffs provided notice of the claim eight (8) months late, and performed various repairs prior to notifying the insurer of the claim. After the close of discovery, Mr. Smith and Ms. Keller filed a Motion for Summary Judgment on behalf of the insurer based on the late reporting, and further argued that the Plaintiffs had the burden of proving direct physical loss to property within the first 13 days of the loss, given the recent decision of Hicks v. American Integrity Insurance Company of Florida, 241 So.3d 925 (Fla. 3d DCA 1018). In Florida, when an insured fails to comply with their Duties After Loss, a presumption of prejudice to the insurer arises. Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985)). In order to recover, the Plaintiffs bear the burden of overcoming the presumption, and must prove that no prejudice existed. Id. Mr. Smith and Ms. Keller’s comprehensive arguments successfully proved to the Court that the Plaintiffs’ failure to timely report the claim prejudiced the insurer by prohibiting the insurer from being able to independently validate the loss, or distinguish between multiple causes of loss. Mr. Smith and Ms. Keller further argued that Plaintiffs did not meet their burden to prove that the insurer was not prejudiced by the Plaintiffs’ failure to comply with the Duties After Loss provision of the Policy. The Motion cited numerous cases and extensive analysis supporting the insurer’s position.
Reprinted courtesy of
Burks A. Smith, III, Traub Lieberman and
Kathryn Keller, Traub Lieberman
Mr. Smith, may be contacted at bsmith@tlsslaw.com
Ms. Keller may be contacted at kkeller@tlsslaw.com
Read the court decisionRead the full story...Reprinted courtesy of
Discussion of History of Construction Defect Litigation in California
September 10, 2014 —
William M. Kaufman – Construction Lawyers BlogCalifornia literally wrote the book on construction defect litigation. Construction defects began to surface after World War II due to cheap track homes being constructed haphazardly on a large scale. Throughout the 1960s, developers began utilizing the services of subcontractors to build massive developments. Rather than having their own employees perform the work, developers began relying more heavily on the specialty subcontractors to perform quality control functions. In 1969, the California Supreme Court expanded liability for developers with respect to residential housing through the concept of strict liability for mass produced homes. Strict liability defendants in construction defect cases may include builders of mass-produced homes, building site developers, component part manufacturers, and material suppliers. Courts have noted that there is little distinction between the “mass production and sale of homes and the mass production and sale of automobiles, and the pertinent overriding policy considerations are the same.” Kriegler v. Eichler Homes, Inc. (1969) 269 Cal. App. 2d 224, 227 (1969). Accordingly, developers of mass-produced tract homes may be held strictly liable whether or not there is privity of contract. Ibid. Courts have held, however, that there is no strict liability against contractors or sub-contractors. See Ranchwood Communities v. Jim Beat Construction (1996) 57 Cal.Rptr.2d 386; La Jolla Village Homeowners’ Assn., Inc. v. Superior Court (1989) 261 Cal.Rptr. 146. Within ten years, attorneys in California were using strict liability theories to seek compensation for homeowners. The initial strict liability lawsuits in California in the 70s and 80s generally applied to condominium projects. The Construction defect “industry” began to take off in the 1980s due to the housing boom and the enforcement of strict liability claims by the courts.
Reprinted courtesy of
William M. Kaufman, Lockhart Park LP
Mr. Kaufman may be contacted at wkaufman@lockhartpark.com, and you may visit the firm's website at www.lockhartpark.com
Read the court decisionRead the full story...Reprinted courtesy of
Are COVID-19 Claims Covered by Builders Risk Insurance Policies?
May 04, 2020 —
Jason M. Adams, Gibbs Giden Locher Turner Senet & Wittbrodt LLP and Cheryl L. Kozdrey, Saxe Doernberger & Vita, P.C.If you are an attorney, insurance broker, or other professional representing developers and contractors, then your clients have likely reached out with concerns about losses related to COVID-19. One common question is whether there is potential coverage under builders risk insurance policies.
The short answer is: It depends. As with most questions pertaining to insurance coverage, the answers depend on the specific policy language and underlying facts required to trigger coverage. Builders risk policies are even more fact specific due to the lack of uniformity of base policy forms and endorsements between insurance carriers.
The first step in any analysis is to gather facts and carefully document any impending and potential damages or delays. The facts are crucial because the coverage analysis may vary depending on the specific reason the project was shut down. For example, the analysis would be different if the project was shut down as a result of an express government order, such as those in Northern California and Washington, versus the project shutting down as a result of workers testing positive for COVID-19. Properly analyzing builders risk coverage involves a granular account of the facts and damages, and can require a great deal of hair splitting with respect to specific policy language.
Regardless of the strength of the insured’s facts and damages, or the breadth of its policy language, the policyholder still likely faces an uphill battle in finding coverage for COVID-19 related claims. The unfortunate reality of most builders risk policies is that they are property policies that require some evidence of physical loss or damage to trigger coverage. Whether or not COVID-19 claims constitute property damage will be the subject of great debate and litigation over the coming months and years. The outcome will likely depend on how the insured’s jurisdiction ultimately rules on the litany of COVID-19 cases that have already been filed – specifically, how broadly each court interprets the meaning of “physical loss or damage.”
Although these key issues have yet to be clearly defined by the courts, some policies are better than others and there are specific variables that could affect the likelihood of coverage. For example, some of the more policyholder-friendly insurance programs may contain coverage extensions for delay in completion, business interruption, loss of rental income, or civil authority that may not be tied to the property damage requirement, and which would tend to support coverage for COVID-19 claims.
Even if the insured crosses the initial threshold and can demonstrate a covered claim, the following common endorsements and exclusions may require additional analysis depending on the facts.
- Virus or Pandemic Exclusions: Virus or pandemic exclusions are not as common on builders risk policies as they may be on other forms of coverage. However, they do exist and, if present, result in a significant barrier to coverage. As with the policy itself, every endorsement is different and should be analyzed in terms of the express language contained in the endorsement and the facts.
- Abandonment or Cessation of Work: Most builders risk policies include provisions that preclude coverage in the event of the abandonment of the project or a lengthy cessation of work. As a result, the insured should take steps to articulate to the carrier that the project has not been abandoned, and that there exists an intent to return as soon as possible. The insured should also maintain a record of ongoing project oversight and protection efforts taken during the period when construction operations are suspended.
- Security and Safety Requirements: Many builders risk policies contain provisions requiring the insured to maintain protective safeguards and security protocols throughout the pendency of the project. Safety fencing, lighting and security guards are common examples. The policy should be analyzed to ensure that the policyholder can meet any such requirements during a COVID-19 related shutdown. For example, can the insured continue to staff a security guard? If not, arrangements will likely need to be made with the carrier depending on the language of the policy.
- Insurable Limits: Builders risk policies are typically underwritten based upon the total completed value of the structure, including materials and labor. The insured will need to analyze the policy to consider whether increased material or labor costs as a result of COVID-19 will alter the terms of coverage, trigger any escalation clauses, or result in an increase in premium due. If increased cost projections become apparent, the insured should report these changes to the carrier immediately.
- Extensions of Coverage: The insurance industry was facing a hard market even before the COVID-19 pandemic, which resulted in higher premiums and limited coverage options. The COVID-19 pandemic has only exacerbated these issues and it may be difficult to obtain coverage extensions on projects that have been shut down. The insured should work with its risk management team (risk manager, insurance broker and lawyer) to engage the carriers to negotiate any necessary coverage extensions resulting from COVID-19 related project delays.
To summarize, builders risk coverage for COVID-19 claims is far from certain, but not impossible. Insureds should provide notice of a claim to all potentially applicable carriers in order to preserve their rights. The insured should also report increased construction cost and articulate its intent to return to the project to preserve their escalation clause and avoid arguments that they have abandoned the project. The insured should continue to document its claims and damages, and be ready to substantiate its claims and push back on any coverage denial. Throughout the entirety of this process, the insured should work with its risk management team to get out in front of any extensions it may need to complete the project. In a climate where insurance carriers are receiving an insurmountable number of claims, the insured should be prepared to fight for coverage and not simply throw up its hands in the face of a denial. Given the intense social, legislative and executive pressure to cover COVID-19 claims, there may be a tendency for the courts to find coverage in gray areas, particularly if the insured was fortunate enough to have purchased one of the broader coverage forms referenced above.
About the Authors
Jason M. Adams, Esq. (jadams@gibbsgiden.com) is a partner at Gibbs Giden representing construction professionals in the areas of Construction Law, Insurance Law and Risk Management and Business/Civil Litigation. Adams is also a licensed property and casualty insurance broker and certified Construction Risk & Insurance Specialist (CRIS). Jason represents developers, contractors, public entities, investors, lenders, REITs, design professionals, and other construction professionals at all stages of the construction process. Jason is a published author and sought-after speaker at seminars across the country regarding high level construction risk management and insurance topics. Gibbs Giden is nationally and locally recognized by U. S. News and Best Lawyers as among the “Best Law Firms” in both Construction Law and Construction Litigation. Chambers USA Directory of Leading Lawyers has consistently recognized Gibbs Giden as among California’s elite construction law firms.
Cheryl L. Kozdrey, Esq. (clk@sdvlaw.com) is an associate at Saxe Doernberger & Vita, P.C., a national insurance coverage law firm dedicated exclusively to policyholder representation and advocacy. Cheryl advises insurance brokers, risk managers, and construction industry professionals regarding optimal risk transfer strategies and insurance solutions, including key considerations for Builder’s Risk, Commercial General Liability, D&O, and Commercial Property policies. She assists clients with initial policy reviews, as well as renewals and modification(s) of existing policies to ensure coverage needs are satisfied. Cheryl also represents policyholders throughout the claims process, and in coverage dispute litigation against insurance carriers. She is currently working on some of the largest construction defect cases in the country. Cheryl is a published author and is admitted to practice in the State of California and all federal district courts within the State.
Read the court decisionRead the full story...Reprinted courtesy of
Sales of New U.S. Homes Fell in February to Five-Month Low
March 26, 2014 —
Shobhana Chandra – BloombergPurchases of new homes in the U.S. fell in February to the lowest level in five months, a sign the industry may take time to pick up after inclement weather damped demand earlier in the year.
Sales declined 3.3 percent to a 440,000 annualized pace, following a 455,000 rate in the prior month that was the strongest in a year, figures from the Commerce Department showed today in Washington. The median forecast of 77 economists surveyed by Bloomberg called for 445,000.
Unusually frigid temperatures added to restraints including rising mortgage rates, higher property values, and a lack of supply that kept prospective buyers away from the market for new and existing properties. Bigger gains in employment and consumer sentiment would help spur the recovery in homebuilding, sustaining its contribution to economic growth and boosting earnings at companies such as Lennar Corp. and KB Home.
Read the court decisionRead the full story...Reprinted courtesy of
Shobhana Chandra, BloombergMs. Chandra may be contacted at
schandra1@bloomberg.net
OSHA’s COVID-19 Emergency Temporary Standard Is in Flux
December 06, 2021 —
Megan E. Baroni & Jonathan H. Schaefer - Construction ExecutiveOn Friday, Nov. 5, 2021, Occupational Safety and Health Administration’s COVID-19 Vaccination and Testing Emergency Temporary Standard was issued, with most requirements set to go into effect on Dec. 5. The ETS applies to employers with a total of 100 or more employees company-wide. Employers covered by the ETS would be required to develop, implement and enforce a mandatory vaccination policy, subject to limited exemptions, or allow unvaccinated employees to test regularly and be subject to a mask policy, among other associated recordkeeping, reporting and training requirements.
Almost immediately, the ETS was hit with a number of legal challenges in various courts across the country. On November 6, just a day after the ETS was issued, the U.S. Circuit Court of Appeals for the Fifth Circuit issued an order staying the implementation of the ETS until further notice. The Court’s order was not a final ruling on the validity of the ETS but has halted implementation of the ETS, at least for the time being. Other legal challenges are already in process, further complicating the issue of if and when the ETS will become effective.
As of November 2021, the ETS is on hold, at least temporarily. That could change any day and the ETS could be back in effect, in whole or in part, or permanently halted. The legal challenges to the ETS are unlikely to end, or diminish, until the Supreme Court has weighed in, making for a few uncertain months ahead.
Reprinted courtesy of
Megan E. Baroni and Jonathan H. Schaefer, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Ms. Baroni may be contacted at mbaroni@rc.com
Mr. Schaefer may be contacted at jschaefer@rc.com
Read the court decisionRead the full story...Reprinted courtesy of
Regions Where Residential Construction Should Boom in 2014
January 13, 2014 —
CDJ STAFFConstruction Digital reports that five regions should see a boom in residential construction in 2014, based on research from McGraw-Hill Construction. According to the report, the rise in residential construction is likely to be as much as 26% in single-family housing, with an 11% rise expected in multi-family housing.
The regions that should benefit the most from these are Houston, Atlanta, Phoenix, Denver, and Los Angeles. Cities that want to be in on the 2014 boom are advised to “lower permit fees,” offer “construction grants and loans,” and to get the word out to contractors that the area is going to provide a favorable environment for contractors.
Read the court decisionRead the full story...Reprinted courtesy of
California Supreme Court Declines Request to Expand Exceptions to Privette Doctrine for Known Hazards
January 17, 2022 —
Garret Murai - California Construction Law BlogFirst things first. Happy New Year! Hope you had a good one.
To start things off in the new year we’ve got an employment-related case for you – Gonzalez v. Mathis, 12 Cal.5th 29 (2021) – a California Supreme Court case involving the Privette Doctrine. For those not familiar with the Privette Doctrine, the Privette Doctrine is named after the case Privette v. Superior Court, 5 Cal.4th 689 (1993), which held that project owners and higher-tiered contractors are not liable for workplace injuries sustained by employees of lower-tiered contractors. Since then, courts have carved out a few exceptions to the Privette Doctrine including the “retained control exception” (also known as the Hooker exception – that’s the name of the case not the occupation of the injured worker) whereby a “hirer,” that is, the higher-tiered party who hired the lower-tiered party whose employee is injured, can be held liable if the hirer: (1) retains control over any part of the lower-tiered party’s work; and (2) negligently exercises that control in a manner that affirmatively contributes to the worker’s injury.
Another exception is the “concealed hazard exception” (also known as the Kinsman exception) whereby a hirer can be held liable if: (1) the hirer knew, or should have known, of a concealed hazard on the property that the lower-tiered contractor did not know of and could not have reasonably discovered; and (2) the hirer railed to warn the lower-tiered contractor of that hazard.
Read the court decisionRead the full story...Reprinted courtesy of
Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Real Estate & Construction News Round-Up 04/20/22
May 02, 2022 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogConstruction defects emerge in pandemic-era buildings, investor confidence is improving in China’s real estate market, the proptech field continues to show significant signs of growth, and more.
- Investor confidence in China’s real estate market is improving, with bond trading volumes and prices rising over the last few weeks, but the market is not projected to resume its high growth rate of the past. (Weizhen Tan & Evelyn Cheng, CNBC)
- The economic shock caused by soaring mortgage rates over the past few weeks has dramatically increased mortgage payments for new homebuyers. (Lance Lambert, Fortune)
- With the metaverse economy projected to be worth between $8 and $13 trillion by 2030, blockchain technology serves as a key driver for virtual real estate sales, allowing for “true” ownership of a property. (Robert Koonin, Dan Jasnow, & Kinnon McDonald, TFL)
Read the court decisionRead the full story...Reprinted courtesy of
Pillsbury's Construction & Real Estate Law Team
