Alabama Federal Magistrate Recommends Dismissal of Construction Defect Declaratory Judgment Action Due to Expanded Duty to Defend Standard
May 31, 2021 —
Anthony L. Miscioscia & Margo Meta - White and WilliamsWhile the starting point for assessing an insurer’s duty to defend requires comparing the allegations contained within a complaint to the language contained within the insured’s policy, the majority of states require an insurer to do more. In Alabama, a failure of the underlying complaint to allege damages falling within the policy’s terms is not necessarily fatal to coverage – if there are facts provable by admissible evidence to place the loss within coverage.
The U.S. District Court for the Southern District of Alabama recently examined Alabama’s broadened duty to defend standard in Frankenmuth Mutual Insurance Company v. Gates Builders, No. 20-00596, 2021 U.S. Dist. LEXIS 83645 (S.D. Ala. Apr. 29, 2021). In Frankenmuth, the magistrate judge was tasked with determining whether the court should abstain from hearing an insurer’s declaratory judgment coverage action pending the resolution of the underlying state court action.
The underlying state court action arose out of an allegedly defective construction project. Frankenmuth’s insured, Gates Builders, was hired to perform exterior and structural rehabilitation work at the Resort Conference Center Condominium (the Condominium) in Gulf Shores, Alabama. The project began in July 2014 and concluded in June 2015. In 2019, Gates Builders was informed that the Condominium’s decks were sagging. Gates Builders shored up the decks and provided the Condominium with a quote for the cost of repairs. In July 2020, the Condominium’s Association filed suit, alleging that the work performed in 2014 and 2015 was faulty and had caused damage to the Condominium.
Reprinted courtesy of
Anthony L. Miscioscia, White and Williams and
Margo Meta, White and Williams
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Ms. Meta may be contacted at metam@whiteandwilliams.com
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California Court of Appeal Provides Clarity On What Triggers Supplemental Analysis Under California Environmental Quality Act
July 20, 2020 —
Kelly Alhadeff-Black & Alexander N. Knaub - Lewis BrisboisIn a recent ruling, California’s Sixth District Court of Appeal clarified the need for supplemental environmental analysis under the California Environmental Quality Act (CEQA). Willow Glen Trestle Conservancy v. City of San Jose (6th Dist., May 18, 2020). Specifically, the court held that seeking additional discretionary approvals, such as regulatory permits, does not constitute a “new discretionary approval for the project” under the California Public Resources Code Section 21166 and the California Code of Regulations, title 14, section 15162 (the CEQA Guidelines).
In 2014, the City of San Jose approved a project that included the demolition and replacement of a wooden railroad bridge known as the Willow Glen Trestle (the Project). CEQA review for the Project was conducted via mitigated negative declaration (MND). The Project was quickly challenged by a local group called Friends of the Willow Glen Trestle, alleging that the City should have prepared an Environmental Impact Report based on the allegation that the Willow Glen Trestle constituted an historic resource for CEQA purposes. Ultimately, the City prevailed in that litigation (See Friends of the Willow Glen Trestle v. City of San Jose, et al. (6th Dist., 2016), which remanded the case to the trial court for further review consistent with the Court of Appeal’s verdict) with the court eventually finding that the City correctly analyzed and answered the question of historic resource classification and significance in reference to the Willow Glen Trestle.
Reprinted courtesy of
Kelly Alhadeff-Black, Lewis Brisbois and
Alexander N. Knaub, Lewis Brisbois
Ms. Alhadeff-Black may be contacted at Kelly.Black@lewisbrisbois.com
Mr. Knaub may be contacted at Alexander.Knaub@lewisbrisbois.com
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Increase in Single-Family New Home Sales Year-Over-Year in January
February 26, 2015 —
Beverley BevenFlorez-CDJ STAFFBuilder magazine reported, “Sales of new single-family houses in January 2015 were at a seasonally adjusted annual rate of 481,000, according to estimates released today by the U.S. Census Bureau. This is 0.2% (±22.2%)* below the revised December rate of 482,000, but is 5.3% (±22.1%)* above the January 2014 estimate of 457,000.”
According to Metrostudy (as reported by Builder), builders seem to be getting ready for increased production this year: “An excellent leading indicator for housing starts is the number of lots reaching development (ready for the builder to start building). Our in-field research shows that lot development has doubled in the last two to three years in many markets.”
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Not Pandemic-Proof: The Ongoing Impact of COVID-19 on the Commercial Construction Industry
December 06, 2021 —
George B. Green Jr. - Construction ExecutiveThe impact of COVID-19 has been felt in nearly every industry and arena across the country, with the exception of construction—or so that is the general perception. Perceptions are often wrong though, and this one is no different. The truth is that the construction industry has been hit just as hard, if not harder, than every other industry.
As the COVID-19 pandemic struck in the spring of 2020, construction projects plowed forward full steam ahead. Roadwork seemed to increase and developers continued to systematically acquire property and initiate large-scale projects. Perhaps it was these observations that led many to the conclusion that construction was pandemic-proof as the rest of society attempted to cobble together something that vaguely resembled a normal business year. But the construction industry has endured many challenges over the last 18 months, and unfortunately, the challenges do not appear to be evaporating anytime soon.
The industry has been primarily affected in the areas of scheduling, manpower and permitting, which has ultimately affected pricing. The entire way jobs are scheduled has been turned upside down. The supply chain issues that many have experienced for everyday household items have hit the construction industry as well.
Reprinted courtesy of
George B. Green Jr., Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Green may be contacted at
ggreen@wwhgd.com
Prior Occurrence Exclusion Bars Coverage for Construction Defects
April 11, 2022 —
Tred R. Eyerly - Insurance Law HawaiiWhile the insured's faulty work constituted an occurrence under Florida law, a prior occurrence exclusion barred coverage. Pro-Tech Caulking & Waterproofing v. TIG Ins. Co., 2022 U.S. Dist. LEXIS 12319 (S.D. Fla. Jan. 19, 2022).
Pro-Tech was a waterproofing subcontractor for construction of a oceanfront condominium building and was responsible for the installation of waterproofing systems on the Project. Pro-Tech entered into a separate contract with the developer, BRE Point Parcel, LLC to install a traffic coating on the garage floors.
BRE sued the general contractor, Pro-Tech and others for construction defects. The underlying action alleged that Pro-Tech, among other things, failed to wrap the filter fabric to protect the weep holes, improperly installed sealants between the stucco and the underside of the horizontal tile at the balcony slab edge, and failed to properly install traffic coating in one garage. The underlying complaint did not state exactly when the "property damage" resulting from Pro-Tech's alleged defective work occurred.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Construction Defect Claim Did Not Harm Homeowner, Court Rules
September 30, 2011 —
CDJ STAFFThe Minnesota Court of Appeals has ruled in Creswell v. Estate of Howe, a case in which a woman bought a home and then sued the seller’s estate, both sets of real estate agents, and the homeowner’s association over construction defects. A district court ruled against her, granting summary judgment to the other parties.
After buying a townhome “as is,” Catherine Creswell claims to have shared a thought with her agent that the homeowners association was, in the words of her agent, “trying to hide something.” Later, Creswell found that a few days before her closing, the board had discussed problems with “roofs, siding and soundproofing of the townhomes.” The court noted that “it was clear from the documents that appellant [Creswell] received that the association had known about various construction defects for many years, some of which affected [her] unit.”
Creswell initially sued the estate, the man who negotiated the sale for his mother’s estate, the real estate companies and the agents involved, the homeowners association, and four board members. Later she sued for punitive damages, dropped a claim for interference with contractual relations, and dismissed her claims against the individual board members. The court dismissed all of Creswell’s claims awarding costs to those she sued.
The appeals court has affirmed the decision of lower court, noting that Creswell “did not provide us with any argument why the district court erred in dismissing her unjust-enrichment, breach of contract, or rescission claims against the various respondents.” Nor did she provide evidence to support her claims of “breach of duty, fraud, and violation of consumer protection statutes.”
The court noted that Creswell could not sue the homeowners association over the construction defects because she “failed to prove that she was damaged by the association’s nondisclosure.” The court noted that “there are no damages in this case,” as Creswell “was never assessed for any repairs, she had not paid anything out-of-pocket for repairs, and she has presented no evidence that the value of her individual unit has declined because of the alleged undisclosed construction defects.”
The court granted the other parties motion to dismiss and denied Creswell’s motion to supplement the record. Costs were awarded to the respondents.
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Coverage Rejected Under Owned Property and Alienated Property Exclusions
June 06, 2011 —
Tred R. EyerlyThe insured’s request for a defense when sued in a construction defect action was denied under the owned property exclusion and the alienated property exclusion in1777 Lafayette Partners v. Golden Gate Ins. Co., 2011 U.S. Dist. LEXIS 48562 (N.D. Cal. April 29, 2011).
In 1999, Lafayette Partners purchased an abandoned walnut processing factory to convert into living and working units. The property was developed into a rental property from 2000-2001, and thereafter rented. In May 2003, Lafayette Partners entered into a sales agreement with Wolff Enterprises LLC. The sale closed in February 2005. Wolff then converted the rental units into condominiums.
In December 2007, the Walnut Factory Owners Association sued Wolff for construction defects. In Lafayette Partners was added to the suit in 2009. The suit alleged a variety of defective conditions, including the roofs, exteriors, windows, electrical , plumbing, and mechanical components and systems.
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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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Jury Awards Aluminum Company 35 Million in Time Element Losses
September 23, 2019 —
Michael S. Levine & Daniel Hentschel - Hunton Insurance Recovery BlogOn July 3, 2019, a Delaware jury determined that fourteen property insurers for Noranda Aluminum Holding Corp., an aluminum producer that filed for bankruptcy and ceased operations three years ago, owe Noranda over $35 million in time element losses that Noranda sustained as a result of two separate catastrophic incidents that occurred at its aluminum facility in 2015 and 2016.
In August 2015, an aluminum explosion occurred at Noranda’s facility, resulting in substantial property damage and bodily injuries. Though the insurers paid for Noranda’s property damage claim, the insurers only covered $5.64 million of Noranda’s $22 million time element claim. In January 2016, the same facility sustained significant damage as a result of equipment failure. The insurers again paid for Noranda’s property damage claim arising from the equipment failure but declined to pay any of its $22.8 million time element claim.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews & Kurth and
Daniel Hentschel, Hunton Andrews & Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com
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