Insurance Client Alert: Denial of Summary Judgment Does Not Automatically Establish Duty to Defend
January 28, 2015 —
Valerie A. Moore and Christopher Kendrick – Haight Brown & Bonesteel LLPIn McMillin Companies v. American Safety Indemnity (No. D063586, filed 1/20/15), a California appeals court ruled that an insurer's loss of a summary judgment motion on the duty to defend does not necessarily establish that a duty to defend existed.
McMillin was the general contractor for a series of residential construction projects, sued in a construction defect action brought by 117 homeowners. McMillin tendered its defense to its subcontractors' insurers, including American Safety (ASIC), claiming status as an additional insured (AI). ASIC denied the tender.
McMillin sued ASIC and other insurers alleging breach of contract and bad faith for the failure to defend McMillin as an additional insured. Eventually, all of the other insurers settled, leaving ASIC as the sole defendant. ASIC moved for summary judgment, but the trial court denied the motion, ruling that ASIC had failed to carry its burden of disproving coverage under a blanket additional insured endorsement in the policy.
Reprinted courtesy of
Valerie A. Moore, Haight Brown & Bonesteel LLP and
Christopher Kendrick, Haight Brown & Bonesteel LLP
Ms. Moore may be contacted at vmoore@hbblaw.com, Mr. Kendrick may be contacted at ckendrick@hbblaw.com
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Court Rules on a Long List of Motions in Illinois National Insurance Co v Nordic PCL
May 10, 2012 —
CDJ STAFFThe case Illinois National Insurance Co. v Nordic PCL, et al. “involves a dispute about whether insurance benefits are available to a general contractor who built structures that allegedly have construction defects. Plaintiffs Illinois National Insurance Company (‘Illinois National’) and National Union Fire Insurance Company of Pittsburgh, PA (‘National Union’) (collectively, the ‘Insurers’), commenced this action for declaratory relief against Defendant Nordic PCL Construction, Inc., f/k/a Nordic Construction, Ltd. ("Nordic"), on August 23, 2011.”
The court was asked to rule on a long list of motions: “Counterclaim Defendants’ Request for Judicial Notice in Support of Their (1) Motion to Dismiss the Counterclaim and (2) Motion to Strike Portions of the Counterclaim, ECF No. 16 (‘Request for Judicial Notice’); Counterclaim Defendants’ Motion to Dismiss Counterclaim Filed October 24, 2011, ECF No. 14 (‘Motion to Dismiss Counterclaim’); Counterclaim Defendants’ Motion to Strike Portions of the Counterclaim Filed October 24, 2011, ECF No. 15 (‘Motion to Strike’); Third-Party Defendant Marsh USA, Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 33 (‘Marsh’s Motion To Dismiss Or Stay’); Defendant and Third-Party Plaintiff Nordic PCL Construction, Inc., f/k/a Nordic Construction Ltd.’s Substantive Joinder to Third-Party Defendant Marsh USA Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 36 (‘Nordic’s Joinder’); and Third-Party Defendant Marsh USA, Inc.’s Motion for Judgment on the Pleadings on Counts V and VI of Defendant/Third-Party Plaintiff Nordic PCL Construction, Inc.’s Third-Party Complaint, ECF No. 29 (‘Marsh’s Motion for Judgment on the Pleadings’).”
In result, the court reached the following decisions: “The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice to the extent it covers matters relevant to these motions; GRANTS IN PART the Insurers’ Motion to Dismiss Counterclaim, but gives Nordic leave to amend the Counterclaim in certain respects; DENIES the Insurers’ Motion to Strike; DENIES Marsh’s Motion To Dismiss Or Stay and Nordic’s Joinder; and GRANTS Marsh’s Motion for Judgment on the Pleadings.”
The court provides a bit of background on the case: “This action arises out of alleged construction defects involving two projects on which Nordic acted as the general contractor. Nordic is a defendant in a pending state court action with respect to one of the projects and says it spent more than $400,000 on repairs with respect to the other project. Nordic tendered the defense of the pending state court action to the Insurers and sought reimbursement of the cost of repairs already performed. The Insurers responded by filing this action to determine their rights under the insurance policies issued to Nordic.”
Furthermore, the court presented a brief procedural history: “The Insurers commenced this declaratory action in this court on August 23, 2011. The Complaint asserts two claims, one seeking a declaration that the Insurers have no duty to provide a defense or indemnification regarding the Safeway Action, the other seeking such a declaration regarding the Moanalua Claims. Along with its Answer, Nordic filed a Counterclaim against the Insurers. The Counterclaim asserts breach of contract, breach of the covenant of good faith and fair dealing, misrepresentations and omissions of material fact, and bad faith, and seeks declaratory relief against the Insurers.”
The procedural history continues: “Nordic also filed a Third-Party Complaint against Marsh, the broker that had procured the Policies from the Insurers for Nordic. Nordic alleges that it reasonably believed that the Policies would provide completed operations insurance coverage for the types of construction defects alleged in the Safeway Action and Moanalua Claims. The Third-Party Complaint asserts breach of contract, negligence, promissory estoppel, breach of fiduciary duties, implied indemnity, and contribution and equitable subrogation.”
In conclusion, “The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice. With regard to the Insurers’ Motion to Dismiss Counterclaim, the court GRANTS the motion as to Count I (breach of contract), Count II (duty of good faith and fair dealing), Count III (fraudulent and negligent misrepresentation), the portion of Count IV (bad faith) premised on fraud, and Count IV (declaratory relief). The court DENIES the motion as to Count IV (bad faith) that is not premised on fraud. Except with respect to the "occurrence" issue, which the court disposes of here on the merits, and Count V, which concerns only a form of relief, Nordic is given leave to amend its Counterclaim within three weeks of the date of this order. The court DENIES the Insurers’ Motion to Strike, DENIES Marsh’s Motion to Dismiss or Stay and Nordic’s Joinder, and GRANTS Marsh’s Motion for Judgment on the Pleadings with respect to Counts V and VI of the Third-Party Complaint.”
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Construction Contract Clauses That May or May Not Have Your Vote – Part 3
November 23, 2016 —
Garret Murai – California Construction Law BlogScope, time and cost provisions may be the most important clauses in your construction contract but they’re not the only ones which can impact your bottom line. The third in a multi-part series, here are some other important construction contract clauses that may determine whether you come out a winner.
Provision: Supervisory Personnel, Employees, and Authority to Bind Provisions
- Typical Provision: ”At all times during performance of the Work, Subcontractor shall have at the job site a competent supervisor approved by Owner. Subcontractor’s supervisor shall be deemed a representative of Subcontractor and all communications given to Subcontractor’s supervisor shall be as binding as if such communications were given to Subcontractor. Should Contractor object to Subcontractor’s supervisor’s presence at the job site, or the presence at the job site, or the presence at the job site of any other employee or agent of Subcontractor or any employee or agent of Subcontractor of Subcontractor, Subcontractor shall cause such persons to be replaced immediately as directed by Contractor.”
- What it Means: Higher-tiered parties have a legitimate interest in ensuring that only competent individuals are allowed to perform work on a project and in ensuring that there are peaceable relations at a job site. Higher-tiered parties also have an interest in ensuring that directives and agreements made and reached in the field are followed. However, it is unreasonable for higher-tiered party or to require that such personnel be able to bind that lower-tiered party to agreements best decided by others.
- What You Can Do: Lower-tiered parties should seek to include language which provides that only “reasonable” changes to personnel are allowed and, as necessary, limit by category or issue the types of items on-site personnel can bind the lower-tiered party to.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Texas Federal Court Delivers Another Big Win for Policyholders on CGL Coverage for Construction-Defect Claims and “Rip-and-Tear” Damages
March 14, 2022 —
Blake A. Dillion, Jared De Jong & Scott S. Thomas - Payne & FearsInsurers regularly argue that commercial general liability (“CGL”) policies are not performance bonds and therefore there is no coverage for claims seeking damages for defective or faulty workmanship. Insurers also argue there is no coverage for so-called “tear-out” or “rip-and-tear” damages, where fixing property damage requires replacing defective work that has not itself been damaged. Fortunately, in a newly decided case, a Texas federal district court rejected both arguments by an insurer. Amerisure Mutual Insurance Company v. McMillin Texas Homes, LLC, No. SA-20-CV-01332-XR, 2022 WL 686727 (W.D. Tex. Mar. 8, 2022).
As with most construction-defect claims, this case involved homeowner claims against a residential developer, McMillin Texas Homes (“McMillin”). After the homes were completed, homeowners complained about defects in the artificial stucco exterior finish and filed suit. McMillin tendered to its insurer, Amerisure Mutual Insurance Company (“Amerisure”). Amerisure then sued McMillin for declaratory relief, arguing that it had no duty to defend or indemnify the homeowner claims. McMillin filed a counterclaim alleging Amerisure breached its policies by refusing to defend or indemnify McMillin.
Reprinted courtesy of
Blake A. Dillion, Payne & Fears,
Jared De Jong, Payne & Fears and
Scott S. Thomas, Payne & Fears
Mr. Dillion may be contacted at bad@paynefears.com
Mr. De Jong may be contacted at jdj@paynefears.com
Mr. Thomas may be contacted at sst@paynefears.com
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Insurer Motion to Intervene in Underlying Case Denied
August 10, 2021 —
Tred R. Eyerly - Insurance Law HawaiiThe Colorado Supreme Court determined that the insurer defending under a reservation of rights could not intervene in the underlying case after the insured assigned its rights to any bad faith claim against the insurer. Auto-Owners Ins. Co. v. Bolt Factory Lofts Owners Ass'n, Inc., 2021 Colo. LEXIS 365 (Colo. May 24, 2021).
Bolt Factory initiated a construction defects lawsuit against various contractors. Several defendants filed third-party complaints against subcontractors, including Sierra Glass Company. Auto-Owners agreed to defend its insured, Sierra Glass, under a reservation of rights. Auto-Owners declined to settle with Bolt Factory for $1.9 million, within policy limits. Sierra Glass then retains independent counsel and entered into a settlement with Bolt Factory. The settlement allowed Sierra Glass to assign its bad faith claims to Bolt Factory in exchange for the right to pursue the insurer for payment of the excess judgment rather than Sierra Glass. Instead of entering into a stipulated judgment, Bolt Factory and Sierra Glass proceeded to an abbreviated trial.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Hurricane Claim Cannot Survive Anti-Concurrent Causation Clause
May 15, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe court upheld the insurer's denial of coverage for hurricane damage caused by storm surge. Heritage Motorcoach Resort & Marina Condominium Association, Inc v. Axis Ins. Co., 2023 U.S. Dist. LEXIS 58931 (S.D. Ala. April 4, 2023).
Heritage operated a resort with a marina, dock and clubhouse. Hurricane Sally caused damage to the property. Heritage submitted a claim to its insurer, Axis. Axis investigated the claim. One investigator reported that the marina structures sustained damage caused by storm tide forces, wave action and debris impact. He opined that the marina structures did not sustain wind damage. When deposed, he testified that there was a combination of vessels and wave action causing damage to the marina. A second investigator found that the storm drove boats and other debris into the marina area causing much of the damage.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Echoes of Shutdown in Delay of Key Building Metric
November 27, 2013 —
CDJ STAFFAmong the important measures of the U.S. economy are housing starts and completions. The data on these are collected by the U.S. Census Bureau, which is itself part of the Commerce Department. Due to the October government shutdown, the Census Bureau was unable to complete timely collection of housing starts, among other data collected by the bureau.
Estimates of housing permits issued during September and October will be released on November 26. However, the data on housing starts and completions will be delayed until December 18. This report will include September through November.
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15 Wilke Fleury Lawyers Recognized in 2020 Northern California Super Lawyers and Rising Stars Lists
August 17, 2020 —
Wilke Fleury LLPWilke Fleury is proud to announce that 15 of our astounding attorneys were featured in the Annual List of Top Attorneys in the 2020 Northern California Super Lawyers magazine.
Super Lawyers rates attorneys in each state using a patented selection process; they also publish a yearly magazine issue that regularly produces award-winning features on selected attorneys.
Wilke Fleury LLP
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