Fifth Circuit Holds Insurer Owes Duty to Defend Latent Condition Claim That Caused Fire Damage to Property Years After Construction Work
October 05, 2020 —
Jeremy S. Macklin - Traub Lieberman Insurance Law BlogMost general liability policies only provide coverage for “property damage” that occurs during the policy period. Thus, when analyzing coverage for a construction defect claim, it is important to ascertain the date on which damage occurred. Of course, the plaintiffs’ bar crafts pleadings to be purposefully vague as to the date (or period) of damage to property. A recent Fifth Circuit decision applying Texas law addresses this coverage issue in the context of allegations of a condition created by an insured during the policy period that caused damage after the policy expired.
In Gonzalez v. Mid-Continent Cas. Co., 969 F.3d 554 (5th Cir. 2020), Gilbert Gonzales (the insured) was a siding contractor. In 2013, the underlying plaintiff hired Gonzales to install new siding on his house. In 2016, the underlying plaintiff’s house was damaged in a fire. The underlying plaintiff sued Gilbert in Texas state court alleging that when Gonzalez installed the siding in 2013, he hammered nails through electrical wiring and created a dangerous condition that caused a fire three years later in 2016.
At the time Gilbert performed construction work, he was insured by Mid-Continent Casualty Company. Mid-Continent disclaimed coverage to Gonzales on the basis that the complaint unequivocally alleged that property was damaged in 2016 and there were no allegations that property damage occurred prior to 2016 or was continuing in nature.
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Jeremy S. Macklin, Traub LiebermanMr. Macklin may be contacted at
jmacklin@tlsslaw.com
Homebuilder Predictions for Tallahassee
October 10, 2013 —
CDJ STAFFThe cost of putting up a new home in Tallahassee has risen, but Joe Manausa thinks that builders might be putting up homes that will cost more than home buyers are able to pay. He notes that permits and sales are up, but numbers are still well below those in 2006.
Mr. Manusa thinks that Tallahassee could face “a need (demand) for homes priced below $300,000, but a glut of supply for those priced above $300,000.” He says that home builders “need to target construction opportunities below that price point.”
He notes that average price of new construction is $272,000, but resales are going for $161,000, which puts quite a premium on a new home.
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Contingent Business Interruption Claim Denied
April 08, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe insured's claim for contingent business interruption ("CBI") coverage was denied in Millennium Inorganic Chemicals Ltd. v. Nat. Union Fire Ins. Co. of Pittsburgh Pa., 2014 U.S. App. LEXIS 3096 (4th Cir. Feb. 20, 2014).
Millenium processed titanium dioxide, a compound used for its white pigmentation, at its plant in Western Australia. Millennium purchased natural gas to process the titanium dioxide from Alinta Sales Pty Ltd., a natural gas supplier. Alinta purchased gas from Apache Corporation. Once Apache processed the natural gas, it was injected into a pipeline. The gas from Apache's facility was commingled with that obtained from other producers, resulting in a mix of gas in a single pipeline.
Alinta had sole ownership of the gas once it entered the pipeline. Under Alinta's contract with Millennium, title to the gas passed to Millenium only at the time of delivery, i.e., when the gas left the pipeline and was delivered to Millennium's facility through a separate delivery line. Millennium had no contract or business relationship with Apache, and the contract it had with Alinta made no reference to Apache.
An explosion occurred at Apache's facility causing its natural gas production to cease. As a result, Millennium's gas supply was curtailed, and it was force to shut down its operations for a number of months.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Legislative Update – The CSLB’s Study Under SB465
March 22, 2018 —
John Castro - Construction Law BlogFollowing the tragic Berkeley balcony collapse in 2015, the Legislature enacted California Senate Bill 465 which commissioned the Contractors State License Board (“CSLB” or “Board”) to perform a study regarding the efficacy of having contractors report settlements to the Board. In December 2017 the CSLB released their findings in a report. The ultimate conclusion of the report is to recommend to the Legislature that the ability of the CSLB to protect the public “would be enhanced by regulations requiring licensees to report judgments, arbitration awards, or settlement payments of construction defect claims for rental residential units.” Senator Jerry Hill authored SB465, and his office is presently now drafting legislation on settlement reporting based in part on this study.
The most troubling concern about the study is transparency. The report references nine exhibits, all of which have been withheld from publication under purposes of confidentiality. Therefore, much of the CSLB’s study must be taken at face value because much of the data they rely on to formulate their conclusions cannot be independently verified.
One of the factors that the CSLB undertook in its study was to determine criteria for when a settlement was “nuisance value,” and therefore less important for reporting purposes. The CSLB acknowledged there was no industry-wide definition for “nuisance value,” whether it be in the insurance industry, construction industry, or otherwise. Insurer survey respondents reached a general consensus on
aspects of what can constitute a “nuisance value” settlement, including the amount of the settlement and the size of the case. However, the response rate to the insurer survey was only 3.3 percent. In general, the concern with using settlement amount and size of the case as indicative factors is the fact that a large settlement size, for instance, may still constitute a “nuisance value” settlement. One example would be a large settlement figure in a case involving hundreds of homes in multiple subdivisions.
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John Castro, Gordon Rees Scully Mansukhani LLPMr. Castro may be contacted at
jcastro@grsm.com
Chicago Debt Document Says $8.5B O'Hare Revamp May Be Delayed
October 26, 2020 —
Jeff Yoders - Engineering News-RecordThe $8.5-billion revamp of O'Hare International Airport may have to be delayed because of COVID-19 related economic impacts, according to documents included in paperwork to refinance existing airport debt. The city forcefully disagreed with that summation, however, and says the project will move forward and is not endangered.
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Jeff Yoders, Engineering News-Record
Mr. Yoders may be contacted at yodersj@enr.com
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Under Colorado House Bill 17-1279, HOA Boards Now Must Get Members’ Informed Consent Before Bringing A Construction Defect Action
April 11, 2018 —
Luke Mecklenburg – Snell & Wilmer Real Estate Litigation Blog Last year, I wrote
a post calling attention to stalled efforts in the Colorado legislature to pass meaningful construction defect reform. Shortly thereafter, the legislature got it done in the form of House Bill 17-1279. This bill creates an important pre-litigation notice-and-approval process whenever an HOA initiates a construction defect action in its own name or on behalf of two or more of its members.
Before May 2017, the pre-litigation requirements that an HOA had to fulfill before bringing a construction defect claim under the Colorado Construction Defect Action Reform Act (“CDARA”) were generally minor. For example, while many declarations required majority approval from the community prior to initiation of claims, in practice, what the industry was seeing is that some HOAs were making it so that only a majority of the HOA Board had to approve bringing the claim, rather than the majority of interested unit owners. It was also common that, even where the majority of owners were involved, they were often voting in favor of filing a lawsuit or arbitration without fully understanding the risks and costs. This practice presented a risk to developers—it is easier to get approval from a small group than from a larger group, and it is easier to get approval when the voting owners do not fully appreciate the risks and costs inherent in filing a claim.
Colorado House Bill 17-1279, which was signed into law by Governor Hickenlooper in May 2017 and is codified at C.R.S. § 38-33.3-303.5, lessens these risks by amending the Colorado Common Interest Ownership Act (“CCIOA”) to add certain pre-litigation requirements. Section 38-33.3-303.5 applies any time an HOA institutes a construction defect action its own name on behalf of itself or two or more unit owners on matters affecting the common interest community. C.R.S. §§ 38-33.3-302(1)(d), -303.5(1)(a).
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Luke Mecklenburg, Snell & WilmerMr. Mecklenburg may be contacted at
lmecklenburg@swlaw.com
Delaware Court Holds No Coverage for Faulty Workmanship
May 07, 2015 —
Tred R. Eyerly – Insurance Law HawaiiA Delaware trial court found that the carrier properly denied coverage to a contractor who allegedly caused property damage due to faulty workmanship. Westfield Ins. Co., Inc. v. Miranda & Hardt Contracting and Building Serv., L.L.C., 2015 Del. Super. LEXIS 160 (Del. Super. Ct. March 30, 2015).
In 2004 and 2005, Miranda built a home pursuant to a contract with Fenwick Ventures, LLC. The homeowners purchased the home from Fenwick in 2006. In 2012, the homeowners contacted Fenwick to complain about defects in the home's construction. In 2014, the homeowners filed a complaint against Fenwick and Miranda.
The lawsuit alleged that during the construction of the home, Miranda used inadequate building materials, improperly installed building materials, violated building codes, and fraudulently represented that the home was properly constructed.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Residential Interior Decorator Was Entitled to Lien and Was Not Engaging in Unlicensed Contracting
August 04, 2021 —
David Adelstein - Florida Construction Legal UpdatesResidential construction disputes can sometimes take nasty turns. This is not attributed to one specific reason, but a variety of factors. Sometimes, there are not sophisticated contracts (or contracts at all). Sometimes, relationships and roles get blurred. Sometimes, parties try to skirt licensure requirements. Sometimes, a party is just unreasonable as to their expectations. And, sometimes, a party tries to leverage a construction lien to get what they want. In all disputes, a party would certainly be best suited to work with construction counsel that has experience navigating construction disputes.
An example of a construction dispute that took a nasty turn involving an interior decorator is SG 2901, LLC v. Complimenti, Inc., 2021 WL 2672295 (Fla. 3d DCA 2021). In this case, a condominium unit owner wanted to renovate his apartment. He hired an interior decorator to assist. As his renovation plans became more expansive, the interior decorator told him he would need to hire a licensed contractor and architect. The interior decorator arranged a meeting with those professionals and, at that meeting, they were hired by the owner and told to deal directly with the interior decorator, almost in an owner’s representative capacity since the owner traveled a lot. The interior decorator e-mailed the owner about status and requested certain authorizations, as one would expect an owner’s representative to do. At the completion of the renovation job, the owner did not pay the interior decorator because he was unhappy with certain renovations. The interior decorator recorded a construction lien and sued the owner which included a lien foreclosure claim. There was no discussion of the contracts in this case because, presumably, contracts were based on proposals, were bare-boned, or were oral.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com