Exclusions Bar Coverage for Damage Caused by Chinese Drywall
July 05, 2011 —
Tred R. EyerlyThe insured homeowners were unsuccessful in arguing around the policy's exclusions when seeking coverage for damage caused by Chinese drywall. Ross v. C. Adams. Constr. & Design, L.L.C., 2011 La. App. LEXIS 769 (La. Ct. App. June 14, 2011).
Before the insureds purchased and moved into their home, it was renovated. After moving in, the insures discovered foreign gypsum drywall, or Chinese drywall. The insureds submitted a claim to Louisiana Citizens Property Insurance Company. In an investigation, the insurer confirmed the presence of Chinese drywall and damage to the metal surfaces caused by corrosion. Louisiana Citizens refused coverage and the insureds sued. The trial court denied the insured's motion for summary judgment and granted summary judgment to Louisiana Citizens.
The court of appeal affirmed. Initially, the court determined the insureds sustained a direct physical loss. The inherent qualities of the Chinese drywall created a physical loss to the home and required that the drywall be removed and replaced.
Four exclusions, however, barred coverage. First, damages due to faulty or defective materials were excluded from coverage. The Chinese drywall emitted high levels of sulfuric gas which caused the damage to the insured's plumbing, electrical wiring and metal components.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Read the court decisionRead the full story...Reprinted courtesy of
Mediating Contract Claims and Disputes at the ASBCA
December 20, 2021 —
Brian Waagner - Construction ExecutiveThe Contract Disputes Act establishes the formal process for resolving nearly all claims and disputes that arise under federal government contracts. It is the source of the requirement that contractors certify claims in excess of $100,000, the contracting officer’s final decision and the deadlines for bringing a dispute to the court of federal claims or an agency board of contract appeals.
It is also the source of the federal government’s authority to use mediation and other forms of alternative dispute resolution. Here are six key factors contractors should know about mediating contract claims and disputes at the Armed Services Board of Contract Appeals (ASBCA).
1. The Parties Control the Parameters of ADR Proceedings
Many commercial contracts and court rules require mediation of every dispute. There is no settlement meeting, mediation or any other type of mandatory ADR proceedings in cases brought to the ASBCA. The parties control the process, and they may adopt any approach to ADR that they believe will be effective. Mediation is nevertheless voluntary. Without the agreement of both parties, it won’t happen.
Reprinted courtesy of
Brian Waagner, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Read the court decisionRead the full story...Reprinted courtesy of
EO or Uh-Oh: Biden’s Executive Order Requiring Project Labor Agreements on Federal Construction Projects
March 14, 2022 —
Nicole Stone, Jones Walker LLP - ConsensusDocsOn February 4, 2022, President Biden issued Executive Order (“EO”) 14063[1]. The EO requires that a Project Labor Agreement (“PLA”) be in place for any federal “large-scale construction projects” estimated at $35 million or more. To compete for or perform projects subject to the PLA requirement contractors must agree to be subject to the applicable PLA. For federal projects under $35 million or projects receiving federal financial assistance are not required by the EO to have PLA, but federal agencies will have discretion to require PLAs. The EO will not go into effect until after implementing regulations are finalized, probably after the beginning of June 2022.
Requiring PLAs on federal construction projects is a substantial shift from even the Obama Administration’s policy in favor of PLAs. Biden’s PLA EO will have an impact on federal contractors and likely industry repercussions beyond federal procurement. Only time and experience will tell whether those impacts will all be positive as the Biden Administration insists or will drive up construction costs and give unions more leverage than they have in the market as the critics insist.
Read the court decisionRead the full story...Reprinted courtesy of
Nicole Stone, Jones Walker LLP (ConsensusDocs)Ms. Stone may be contacted at
nstone@joneswalker.com
Harmon Towers Duty to Defend Question Must Wait, Says Court
March 01, 2012 —
CDJ STAFFThe Harmon Towers project in Las Vegas was eventually halted short of the planned forty-seven stories after “it was determined that there was substantial defective construction, including defective installation of reinforcing steel throughout the Harmon.” The American Home Insurance Company and Lexington Insurance Company put forth a claim that they had no duty to defend Perini Construction, the builder of the defective Harmon Towers. Further, American Home seeks to recover the monies American reimbursed Perini. The United States District Court of Nevada ruled in the case of American Home Assurance Co. v. Perini Building on February 3, 2012.
The two insurance companies covered Perini and its subcontractors, Century Steel, Pacific Coast Steel, and Ceco Concrete Construction. Century Steel was the initial subcontractor for the reinforcing steel; they were later acquired by Pacific Coast Steel. In this current case, Perini Construction is the sole defendant.
Perini sought a dismissal of these claims, arguing that without the subcontractors joined to the case, “the Court cannot afford complete relief among existing parties.” The court rejected this claim, noting that the court can determine the duties of the insurance companies to Perini, which the court described as “separate and distinct from those of the subcontractors.” The subcontractors “have not claimed an interest in the subject matter of the action.” The court concluded that it could determine whether Perini was entitled or not to coverage without affecting the subcontractors. The court rejected Perini’s claim.
Perini also asked the court to abstain from the case, arguing that it was better heard in a state court. The court noted that several considerations cover whether a case is heard in state or federal courts. The court noted that if the case weighed heavily on state law, the state courts would be the obvious location. Further, if there were a parallel action in the state courts, “there is a presumption that the whole suit should be heard in state courts.” This is, however, no parallel state suit, although the court noted that Perini has “threatened” to do so.
However, the issue of who is to blame for the problems at Harmon Towers has not been resolved. The court concluded that until the “underlying action” was concluded, it was premature to consider the issues raised in this case while the earlier lawsuit was still in progress. The court denied Perini’s motion to dismiss the case. Given that the outcome of the earlier construction defect case may lead to further litigation in state court, the District Court granted Perini’s motion to abstain, but staying their judgment until the construction defect case is resolved.
Read the court’s decision…
Read the court decisionRead the full story...Reprinted courtesy of
No Hiring Surge by Homebuilders Says Industry Group
February 14, 2013 —
CDJ STAFFLooking at data from the Bureau of Labor Statistics, the National Association of Home Builders found that while hiring levels in construction remain strong, there hasn’t been a surge in hiring in this particular sector. December found 92,000 open construction position, with the NAHB noting that home builders are still concerned about finding qualified workers.
While there has not been surge in hiring, home building is on the increase. The NAHB says that “this could be due to increased hours for existing workers,” which would not be “a sustainable situation.”
Read the court decisionRead the full story...Reprinted courtesy of
Ways of Evaluating Property Damage Claims in Various Contexts
February 18, 2020 —
Bremer Whyte Brown & O'Meara LLPPotential damages in a lawsuit may come in many forms depending on the facts of the case. Common damages include medical expenses, loss of earnings, property loss, physical pain, and mental suffering. Of the many damages Plaintiffs may claim, one of the most prevalent and recognizable is property damage. This article briefly discusses these types of damages which fall under two major categories – Real Property and Personal Property.
Broadly speaking, “real property” means land, and “personal property” refers to all other objects or rights that may be owned. Ballentine’s Law Dictionary defines “real property” as: “Such things as are permanent, fixed, and immovable; lands, tenements, and hereditaments of all kinds, which are not annexed to the person or cannot be moved from the place in which they subsist. . . .” (Ballentine’s Law Dict. (3d ed. 2010).) “Personal property” is defined as: “Money, goods, and movable chattels . . . . All objects and rights which are capable of ownership
except freehold estates in land, and incorporeal hereditaments issuing thereout, or exercisable within the same.” (Id. (emphasis added).)
Real Property
Real property may be damaged or “harmed” through trespass, permanent nuisance, or other tortious conduct. The general rule is that Plaintiffs may recover the lesser of the two following losses: (1) the decrease in the real property’s fair market value; or (2) the cost to repair the damage and restore the real property to its pre-trespass condition plus the value of any lost use. (Kelly v. CB&I Constructors, Inc.) However, an exception to this general rule may be made if a Plaintiff has a personal reason to restore the real property to its former condition, sometimes called the “personal reason” exception. In such cases, a Plaintiff may recover the restoration costs even if the costs are greater than the decrease in the real property’s value, though the restoration cost must still be “reasonable” in light of the value of the real property before the injury and the actual damage sustained.
Read the court decisionRead the full story...Reprinted courtesy of
Bremer Whyte Brown & O'Meara LLP
Release Language Extended To Successor Entity But Only Covered “Known” Claims
August 06, 2019 —
David Adelstein - Florida Construction Legal UpdatesA recent case contains valuable analysis that has impact on whether a “successor” entity will be bound by a settlement agreement it was not a direct party to. This case contains arguments for contractors that can be raised in a number of different contexts if it is sued by a successor or related entity.
The same case discusses the difference between releasing a party for “known” claims without releasing the same party for “unknown” claims. This is an important distinction because unknown claims refer to latent defects so a release that only releases a party for known claims is not releasing that party for latent defects.
In MBlock Investors, LLC v. Bovis Lend Lease, Inc., 44 Fla. L. Weekly D1432d (Fla. 3d DCA 2019), an owner hired a contractor to construct a project. At completion, the owner transferred the project to an affiliated entity (collectively, the “Owner”). The contractor sued the Owner for unpaid work, the Owner claimed construction defects with the work, and a settlement was entered into that released the contractor for KNOWN claims. Thereafter, the Owner defaulted on the construction loan and agreed to convey the property through a deed in lieu of foreclosure to an entity created by the lender (the “Lender Entity”).
Read the court decisionRead the full story...Reprinted courtesy of
David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Insured’s Bad Faith Insurance Claim Evaporates Before its Eyes
August 03, 2020 —
Garret Murai - California Construction Law BlogSometimes it’s right there before your eyes. Then, poof, it’s gone. This was the experience of one insured, who brought a bad faith insurance denial claim against his insurer thinking that the facts were in his favor, only to discover they were not.
The 501 E .51st Street Case
The Water Main Break and AGI’s Report
The owner of a 10-unit apartment building built in 1963, 501 East 51st Street, Long Beach-10 LLC (just rolls off the tongue doesn’t it?), filed a bad faith action against its insurer Kookmin Best Insurance Co., Ltd., after it denied 501 East’s insurance tender following a water main break that caused the building’s foundation to subside.
The water main break occurred sometimes between December 31, 2015 and January 2, 2016 next to the southwest side of the building. 501 East tendered its insurance claim to Kookmin on March 8, 2016, and in April 2016, presented a report prepared by American Geotechnical, Inc. (“AGI”) concerning damage to the building. According to the report prepared by AGI, AGI conducted a “limited geotechnical investigation” to “evaluate site conditions relating to the reported building distress following a waterline breach near the south end of the building.” The scope of AGI’s investigation was limited to “observation, photo documentation of the site conditions, [and[ floor-level survey of the interior of the first level units.” AGI’s investigation did not involve any subsurface investigation or soil testing.
Read the court decisionRead the full story...Reprinted courtesy of
Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
