Duty to Defend Broadly Applies to Entire Action; Insured Need Not Apportion Defense Costs, Says Maryland Appeals Court
January 27, 2020 —
Michael S. Levine & Kevin V. Small - Hunton Insurance Recovery BlogIn a recent decision, the Maryland Court of Special Appeals reiterated that the duty to defend broadly requires a liability insurer to defend an entire lawsuit against its insured, even where only some of the allegations are potentially covered. The court further held that the insured has no obligation to apportion defense costs among multiple implicated policies. The decision, Selective Way Insurance Company v. Nationwide Property and Casualty Insurance Company, et al., can be found here.
The coverage litigation arose out of a construction defect case against a general contractor. The general contractor tendered the action to its insurer, Nationwide, which, in turn, filed a declaratory judgment action against the various insurers of construction project subcontractors that had named the general contractor as an additional insured. Ultimately, the court granted a summary judgment motion declaring that all of the subcontractors’ insurers had a duty to defend the general contractor “because the allegations in the underlying lawsuit raised claims that potentially arose from the [s]ubcontractors’ work at the [construction site].” All of the subcontractors’ insurers settled with Nationwide except for one, Selective Way; and the parties proceeded to a jury trial on various issues. The jury found for Nationwide on all issues. Selective Way appealed.
Selective Way argued on appeal that even if some of the allegations were covered under its policy, it had no obligation to defend the general contractor because its insureds, the subcontractors, could not have been responsible for all of the losses given the nature of their work. Further, Selective Way contended that if it was responsible for defending the general contractor, it was not responsible for the entire defense, and the general contractor was responsible for apportioning the costs among the various subcontractors. The panel disagreed on both points.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Kevin V. Small, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Small may be contacted at ksmall@HuntonAK.com
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How Long is Your Construction Warranty?
February 26, 2015 —
Craig Martin – Construction Contractor AdvisorThe Nebraska Court of Appeals threw a wrench into the calculation of your warranty earlier this year in Adams v. Manchester Park, LLC and Southfork Homes, Inc. In that case, the court found that the statute of limitations for a warranty claim started running after the homebuilder’s warranty expired. So, the four year breach of warranty statute of limitations did not begin until after the one year homebuilder warranty expired.
In this case, the homeowner purchased a home from Southfork in September, 2007. The purchase agreement provided for a one-year New Home Limited Warranty which covered material defects in workmanship and materials. The homeowner noticed cracks in the drywall and problems with windows within 6 months of the purchase. The builder told the homeowner to keep track of all the problems and they would be fixed at the yearend walk through.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Third Circuit Affirms Use of Eminent Domain by Natural Gas Pipeline
November 28, 2018 —
Anthony B. Cavender - Gravel2GavelOn October 30, the U.S. Court of Appeals for the Third Circuit decided the case of Transcontinental Gas Pipe Line Co., LLC v. Permanent Easements for 2.14 Acres, et al. , affirming the District Court’s grant of a preliminary injunction to Transcontinental Gas Pipe Line Company, LLC (Transcontinental). This case involves the construction of the “Atlantic Sunrise Expansion Project,” a natural gas pipeline that runs through Pennsylvania, Maryland, Virginia, North Carolina and South Carolina.
Under the Natural Gas Act (NGA), pipeline companies can exercise powers of eminent domain when they are acting in the public interest. The Third Circuit cautions that this is a “standard” eminent domain power, and not a “quick take” that is permitted under another statute.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Workers on Big California Bridge Tackle Oil Wells, Seismic Issues
February 02, 2017 —
Aileen Cho - BloombergSurrounded by workers, Nik Pecci, project safety manager with PMCM Consulting Engineers for the $1.5-billion Gerald Desmond Bridge replacement project—which is revitalizing a 50-year-old link in Long Beach—gestured in several directions: “I’ve got all these [port] tenants here, I’ve got a massive bridge over here. I have to build this thing intertwined with one of the busiest ports in the world. I constantly have commuters, cargo trucks and trailers and trains.”
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Aileen Cho, ENRMs. Cho may be contacted at
choa@enr.com
COVID-19 Is Not Direct Physical Loss Or Damage
April 13, 2020 —
Joseph Blyskal, Dennis Brown & Michelle Bernard - Gordon & Rees Insurance Coverage Law BlogIs a cash register that is not being used damaged property? When you need to wash a table, a chair, or a section of flooring with readily available cleaning products to make them safe and useable, are you repairing damaged property? Is a spilled cup of coffee waiting to be wiped up actual damage to the premises? If your customers stay home to help stop the spread of a virus, has there been a physical loss inside your shuttered store or restaurant?
The insuring agreements typically found in commercial property insurance policies require “direct physical loss of or damage to” covered property as the triggering event. Without establishing direct physical loss or damage a policyholder cannot meet its burden to trigger coverage for a purely economic loss of business income resulting from shuttering its business due to concerns over exposure to—or even the actual presence of—COVID-19. Despite this well-understood policy language, it is already beyond question that insurers will confront creative—albeit strained—arguments from policyholder firms attempting to trigger coverage for pure economic loss. The scope of the human and economic tragedy we all face will be matched by the scope of the effort to force the financial harm onto insurance companies.
The plaintiffs in what appears to be the first-filed case seeking a declaratory judgment in the context of first-party insurance coverage rely on the assertion that “contamination of the insured premises by the Coronavirus would be a direct physical loss needing remediation to clean the surfaces” of its establishment, a New Orleans restaurant, to trigger coverage for business interruption.[1] See Cajun Conti, LLC, et. al. v. Certain Underwriters at Lloyd’s, London, et. al. Civil District Court for the Parish of Orleans, State of Louisiana. The complaint alleges that the property is insured under an “all risk policy” defining “covered causes of loss” as “direct physical loss.” The plaintiffs rely on the alleged presence of the virus on “the surface of objects” in certain conditions and the need to clean those surfaces. They go so far as to claim that “[a]ny effort by [the insurer] to deny the reality that the virus causes physical damage and loss would constitute a false and potentially fraudulent misrepresentation. . . .”
Reprinted courtesy of Gordon & Rees attorneys
Joseph Blyskal,
Dennis Brown and
Michelle Bernard
Mr. Blyskal may be contacted at tblatchley@grsm.com
Mr. Brown may be contacted at dbrown@grsm.com
Ms. Bernard may be contacted at mbernard@grsm.com
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Three Construction Workers Injured at Former GM Plant
March 26, 2014 —
Beverley BevenFlorez-CDJ STAFFIn Linden, New Jersey, three construction workers were injured “when they were apparently struck by steel girders while working at the former General Motors site” police told NJ.com.
Mayor Richard Gerbounka stated that the “[s]ix struts that would support the deck or ceiling of a warehouse collapsed.” He also mentioned that the city “has been trying to redevelop the former General Motors site for years, but has run into several obstacles, including lawsuits from nearby businesses opposed to retail construction.”
Several construction vehicles were “nearly buried under” debris and “[a]t least one I-beam girder and several decking struts—all metal—remain across several heavy construction vehicles,” NJ.com reported. The owner of the vehicles stated “he was told that workers were standing around the vehicles preparing to start their day when high winds knocked down at least one I-beam and several metal decking struts.”
In another article published late afternoon on March 26th, NJ.com reported that “high winds” were the cause of the accident. “The federal Occupational Safety and Health Administration is investigating the accident and all work at the site has been suspended pending the investigation,” according to the article. “Officials said OSHA inspectors had been at the scene once before, but declined to give details because of a continuing investigation.”
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Proposed Legislation for Losses from COVID-19 and Limitations on the Retroactive Impairment of Contracts
July 27, 2020 —
Shaia Araghi - Newmeyer DillionThe COVID-19 pandemic has caused most businesses to temporarily close and, as a result, sustain significant losses. Various states are contemplating the passage of legislation to require carriers to cover claims arising from COVID-19, but case law regarding the constitutionality of such legislation is conflicting. Depending on the facts surrounding retroactive legislation, states may be able to pass an enforceable law leading to coverage.
Pennsylvania’s Proposed Legislation for Business Interruption Losses
Pennsylvania is one of many states that has proposed legislation to override language in business interruption policies and require coverage from insurance carriers. Pennsylvania House Bill 2372 proposes that any insurance policy that covers loss or property damage, including loss of use and business interruption, must cover the policyholder’s losses from the COVID-19 pandemic.1 It applies to insureds with fewer than 100 employees.2 To enhance its chances to pass constitutional challenges, the House Bill also provides for potential relief and reimbursement through the state’s commissioner.3 Pennsylvania Senate Bill 1127 is broader than House Bill 2372 and most bills proposed in other states and would require indemnification for nearly all insureds.4 The Senate Bill makes important legislative findings and notes that insurance is a regulated industry.5 It essentially provides that an insurance policy insuring against a loss relating to property damage, including business interruption, shall be construed to cover loss or property damage due to COVID-19 or due to a civil authority order resulting from COVID-19.1 The proposed bill redefines “property damage” to include: (1) the presence of a person positively identified as having been infected with COVID-19; (2) the presence of at least one person positively identified as having been infected with COVID-19 in the same municipality where the property is located; or (3) the presence of COVID-19 having otherwise been detected in Pennsylvania.
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Shaia Araghi, Newmeyer DillionMs. Araghi may be contacted at
shaia.araghi@ndlf.com
Federal District Court Addresses Material Misrepresentation in First Party Property Damage Claim
August 26, 2024 —
James M. Eastham - Traub LiebermanIn Pittsfield Dev. LLC v. Travelers Indem. Co., 2024 U.S. Dist. LEXIS 117530 (N.D. Ill. July 3, 2024), the United States District Court for the Northern District of Illinois addressed an alleged material misrepresentation by an insured during the course of the adjustment of a water loss claim at an insured property. Subsequent to a pipe burst event which caused damage to a number of the floors in the insured building, the insured submitted a claim to Travelers and also submitted, with the assistance of a retained public adjuster, a damage estimate of the damages at the property. Included within the estimate submitted by the insured was a line item for "Lead Paint & Asbestos Removal" with a corresponding dollar amount of $1,140,000. It was this line item which formed the basis of Travelers' claim of misrepresentation.
At his deposition, the public adjuster testified that the $1,140,000 figure was an oral estimate received over the phone from an asbestos remediation company. Travelers disputed the testimony and contended that no such estimate was ever provided. For support, Travelers pointed to deposition testimony from a remediation company employee that while rough estimates were occasionally given verbally, the largest over the phone estimate she could recall was in the $20,000-$25,000 range. It was also disputed that the company would ever provide an oral quote of that magnitude sight unseen, especially since the largest project the remediation company had ever completed was less than $250,000.
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James M. Eastham, Traub LiebermanMr. Eastham may be contacted at
jeastham@tlsslaw.com
