Changes to Pennsylvania Mechanic’s Lien Code
November 05, 2014 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome Jim Fullerton. Jim is the President of the law firm of
Fullerton & Knowles, P.C., which has attorneys licensed in Virginia, Maryland, Pennsylvania, and the District of Columbia, is a Martindale Hubbell Peer Rated Lawyer AV® Preeminent.™ The firm represents owners, lenders, design professionals, suppliers, subcontractors, general contractors and other members of the real estate and construction industries, filing mechanic’s liens, surety bond and other construction claims across all of the states in the Mid Atlantic region. He also represents creditors in bankruptcy issues nationwide, particularly defense of bankruptcy preference claims; advises owners and lenders in real estate lending and acquisition transactions; on all real estate and construction law issues; contract formation and disputes.
The firm’s Construction Law Survival Manual is well known and widely used by participants in the construction process. The 550 page manual provides valuable information about construction contract litigation, mechanic’s liens, payment bond claims, bankruptcy and credit management and contains over 30 commonly used contract forms. All of this information and recent construction law issues are constantly updated on the firm’s website.
There are two changes to the Pennsylvania Mechanic’s Lien Code that became effective September 2014. First, residential properties built by an owner for their own residence will now have a defense of payment to subcontractor mechanic’s liens. This protects homeowners from mechanic’s liens if they have paid their general contractors in full. Second, construction loan open end mortgages will have priority over mechanic’s liens, as long as at least sixty per cent (60%) of the loan proceeds are used for construction costs. This change was pushed by Pennsylvania lenders in response to a recent court case.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
In Review: SCOTUS Environmental and Administrative Decisions in the 2020 Term
August 10, 2021 —
Anthony B. Cavender - Gravel2GavelSeveral decisions of interest were issued in the 2020 term, which stretched from October 2020 until early July 2021. This review will concentrate on environmental and administrative law cases.
Texas v. New Mexico
On December 14, 2020, the Court issued its ruling in an Original Action. Water is precious in the Pecos River Valley, and the distribution of water is governed by the Pecos River Compact. Here, Texas complained that New Mexico illegally was seeking delivery credits for evaporated water credits but the Court agreed that New Mexico was entitled to these credits under the provisions of the River Master’s Manual.
Florida v. Georgia
On April 1, 2021, in another waters right ruling on an Original Action filed in the Supreme Court, the Court rejected Florida’s claims that Georgia’s use of interstate waters harmed Florida’s businesses. Florida had to satisfy a heavy burden of proof, which it failed to do.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
South Carolina Supreme Court Requires Transparency by Rejecting an Insurer’s “Cut-and-Paste” Reservation of Rights
February 16, 2017 —
Theresa A. Guertin & H. Scott Williams - Saxe Doernberger & Vita, P.C.In a decision rendered on January 11, 2017, the Supreme Court of South Carolina reminded policyholders that they are entitled to an explanation of any and all grounds upon which their insurer may be contesting coverage in a reservation of rights letter. Specifically, in Harleysville Group Insurance v. Heritage Communities, Inc. et al., 1 the court found that an insurer’s reservation of rights, which included a verbatim recitation of numerous policy provisions that the court identified as the “cut-and-paste” method, was insufficient to reserve its rights to contest coverage.
In 2003, Heritage Communities, Inc. (“Heritage”), a parent company of several corporate entities engaged in developing and constructing condominium complexes from 1997 to 2000, was sued by multiple property owners’ associations. The lawsuits sought actual and punitive damages against Heritage as a result of alleged construction defects, including building code violations, structural deficiencies, and significant water intrusion. During the period of construction, Heritage was insured by Harleysville Group Insurance (“Harleysville”) under several primary and excess general liability insurance policies.
Reprinted courtesy of
Theresa A. Guertin, Saxe Doernberger & Vita, P.C. and
H. Scott Williams, Saxe Doernberger & Vita, P.C.
Ms. Guertin may be contacted at tag@sdvlaw.com
Mr. Williams may be contacted at hsw@sdvlaw.com
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Homebuilding Design Goes 3D
June 17, 2015 —
Beverley BevenFlorez-CDJ STAFFThe Houston Business Journal reported that some home builders are using new computer visualization technology to create 3D representations of home designs. Autodesk Revit not only helps the buyer visualize the home, but it also catches architectural design mistakes and can help homebuilders quantify all of the building materials necessary for a particular model.
Mollie Silver, a senior designer with On Point Custom Homes, uses Autodesk Revit. “It changes the game for our clients, because this gives them a really good idea of what their home will look like in real life,” Silver told the Houston Business Journal. “If you give them floor plans, it just doesn’t give them the same idea.”
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What if the "Your Work" Exclusion is Inapplicable? ISO Classification and Construction Defect Claims.
February 14, 2023 —
David Humphreys - Carson Law Group, PLLCThis article was first published by the National Association of Home Builders (NAHB) on their NAHBNow blog
One of the risks faced by a residential builder is that, following completion of construction, the homeowner may assert a claim against the builder for damage to the home caused by an alleged construction defect. One of the ways a builder manages the risk of such construction defect claims is by purchasing commercial general liability (“CGL”) insurance.
A builder’s CGL policy covers those sums the builder is legally obligated to pay as damages because of bodily injury or property damage caused by an “occurrence,” that is, damage that is accidental rather than being expected or intended by the builder, so long as the claim does not fall within any of the policy’s several “exclusions” from coverage.
When faced with a construction defect lawsuit, our builder clients are often surprised—and dismayed—when their CGL insurer denies coverage and refuses to defend the builder. However, builders shouldn’t take their insurer’s denial of coverage at face value. This article discusses a new argument we recently discovered that has been a game-changer for our builder clients who were denied coverage in construction defect cases.
Whether coverage exists always depends on the specific language of the particular CGL policy, and courts generally construe exclusions against insurers. This allows experienced coverage attorneys to, at times, successfully challenge declinations of coverage and, at a minimum, convince insurers to pay for the builder’s defense.
A typical CGL policy provides products-completed operations coverage, which is sought by businesses that face potential liability arising out of the products that they have sold or operations that they have completed. Products-completed operations coverage allows builders to obtain many years of coverage for a completed project. Over the years, insurers have added to their policies modifications and exclusions that limit their exposure for claims that fall under that coverage.
Exclusion (l) or the “your work” exclusion, will often exclude coverage for a latent defect claim against the builder. A standard “your work” exclusion provides:
This insurance does not apply to: . . . “[p]roperty damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard.”
This “your work” and similar exclusions are designed to limit coverage for business risks that are within the contractor’s own control; e.g., a claim that the contractor caused damage to the contractor’s own work. These exclusions apply both to ongoing and completed projects, which can leave a builder unprotected from lawsuits for years after a project is completed.
However, builders who are classified on the declarations page with Code 91580 Contractors— Executive Supervisors or Executive Superintendents, may not be subject to the “your work” exclusion. 91580 is a common classification assigned to builders during insurance underwriting. This classification falls into what is referred to as “dagger class” or “plus sign class,” which indicates that Products and/or Completed Operations coverage is
included as part of and not separate from the Premises/Operations coverage (emphasis added).
It has been noted that dagger” and “plus sign” classifications create confusion because of the seeming contradiction between policy wording and coverage rules.* The CGL policy seems to expressly exclude products and/or completed operations losses for “dagger” or “plus sign” classes. In the definitions section we find the following:
“Products-completed operations hazard”: . . .b. Does not Include “bodily Injury” or “property damage” arising out of:. . . (3) Products or operations for which the classification, listed In the Declarations or in a policy schedule, states that products- completed operations are subject to the General Aggregate Limit.”
This apparent exclusionary language, however, must be read in conjunction with the Insurance Services Office’s (ISO) Rule 25.F.1.:
Rule 25. CLASSIFICATIONS
F. Symbols
1. Plus Sign
A plus sign when shown in the Premium Base column under General Liability insurance in the Classification Table - means that coverage for Products and/or Completed Operations is included in the Premises/Operations coverage at no additional premium charge. When this situation applies, the classification described in the policy schedule or Declarations must state that:
“Products-completed operations are subject to the General Aggregate Limit” to provide Products and/or Completed Operations coverage(s).
When read together then, the exclusionary wording in the policy definition removes any product or operation loss subject to the “dagger” or “plus sign” classification from the definition of Products Completed Operations Hazard. Under the dagger or plus sign classification of Rule 25, coverage for products and/or operations is included in the premises operations coverage. Consequently, a loss can no longer be defined as a product completed loss, and as a result it is no longer subject to the “your work” exclusion.
Recall that the standard “your work” exclusion quoted above excludes coverage for “property damage” to “your work” “arising out of it or any part of it
and included in the “products-completed operations hazard”.” Here, we emphasize “and” because the “your work” exclusion applies only to property damage that is also included in the “products-completed operations hazard.” Since property damage claims arising under “plus sign” classifications are expressly excluded from the “products-completed operations hazard” (they are included in the premises/operations coverage) the “your work” exclusion simply does not apply. This means that, if your CGL insurer denies your construction defect claim based on the “your work” exclusion, do what the title of this article suggests: Check your ISO classification! If 91580 “Executive Supervisors or Executive Superintendents” is listed on your Declarations page, you may be in luck.
This new ISO classification-based coverage argument will likely also apply to other exclusions and endorsements that CGL insurers routinely rely on in denying coverage in construction defect cases. We recently successfully challenged a coverage denial based on the following “prior work” exclusionary endorsement:
”This insurance does not apply to ‘your products’ or ‘your work’ completed prior to” a certain date listed in the endorsement. . .
“Specifically, this insurance does not apply to. . . “property damage”. . . included in the ‘products-completed operations hazard’ and arising out of. . . ‘your work’ performed by or on behalf of you prior to the date shown above.”
Again, this endorsement incorporates the “products-completed operations hazard,” which allowed us to successfully argue that the exclusion was inapplicable to a builder classified as a 91580 “Executive Supervisor or Executive Superintendent.”
To our knowledge, this new ISO classification-based coverage argument has not yet been addressed by a court. Our recent successes with it have concluded with favorable settlements for our clients. Accordingly, for now, the ISO classification-based argument is a powerful new tool to challenge denials of coverage in construction defect cases where the builder is classified under 91580 “Executive Supervisors or Executive Superintendents.”
David Humphreys is a Partner at Carson Law Group, PLLC, and has been representing construction contractors, subcontractors, and owners for more than two decades in Mississippi and throughout the Southeast.
*See “Dagger” or Plus Symbol Classes: What They Mean, Chris Boggs - Virtual University | “Dagger” or Plus Symbol Classes: What They Mean) (independentagent.com)
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Coverage for Named Windstorm Removed by Insured, Terminating Such Coverage
August 15, 2022 —
Tred R. Eyerly - Insurance Law HawaiiOver a series of policies, the insured had no coverage for named windstorms when it was removed from the policies in return for a reduced premium. Shiloh Christian Ctr. v. Aspen Sec. Ins. Co. 2022 U.S. Dist. LEXIS 100959 (M. D. Fla. May 9, 2022).
Plaintiff had coverage from Aspen from 2014 through at least 2018 under several year-long policies, each of which renewed the prior year's policy. The premium for the 2014-2015 Policy was $50,000. In May 2015, plaintiff asked what the premium would be without hurricane coverage. He was informed this would reduce the premium to $32,000. The insured asked for the change in coverage to eliminate named windstorm coverage and a return premium was issued to the insured for $16,545.
The 2016-2017 policy was issued for a premium of $22,500. The policy indicated it was a renewal of the prior policy. The revised quote made clear that the policy would exclude coverage for "Named Windstorm."
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Richest NJ Neighborhood Fights Plan for Low-Cost Homes on Toxic Dump
May 28, 2024 —
Nacha Cattan - BloombergJosh Bauers has long had his sights set on the town dump in Millburn.
Bauers wants to put 75 affordable apartments on the site where piles of Styrofoam and food scraps lie in heaps.
But that’s a bridge too far for many residents of New Jersey’s richest ZIP code, Short Hills, where multimillion dollar Tudor and colonial-style mansions are perched atop grassy hillocks less than an hour’s commute from Manhattan.
Many in the community, favored by finance types and lawyers, are up in arms over the development’s potential effect on the environment and its highly-rated schools. But the years-long fight to put affordable housing in the town has become about far more than that, and has raised accusations over inequality and race.
Millburn Township, whose largest community is Short Hills, may be forced to build on the dump after a state court ruled last month that it will decide where the development will go. The town had agreed to build on the polluted site three years ago, only to backtrack.
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Nacha Cattan, Bloomberg
No Additional Insured Coverage Under Umbrella Policy
March 12, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe additional insured was not covered under a property policy for an injury occurring after work was completed. Lewark v. Davis Door Servs., 2014 Wash. App. LEXIS 341 (Wash. Ct. App. Feb. 10, 2014).
Public Storage, Inc. hired Davis Door Service Inc. to perform work at its facilities. The master agreement required Davis Door to maintain a CGL policy that insured Public Storage "during the entire progress of the work." Davis Door secured a CGL policy with American Economy. It also took out an umbrella liability policy with American States.
After Davis Door completed work on a door, Terrie Lewark injury her back opening the door. She sued Public Storage and Davis Door. Lewar and Public Storage settled. Public Storage assigned to Lewark its rights under the umbrella policy with American States. Lewark then sued Davis Door and American States. The trial court found that Public Storage was not an additional insured under the American States umbrella policy.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
