Defense Victory in Breach of Fiduciary Action
February 26, 2015 —
Beverley BevenFlorez-CDJ STAFFEarlier this month, Scott Calkins and Anthony Gaeta of Collinsworth, Specht, Calkins & Giampaoli, LLP obtained a defense verdict in a breach of fiduciary duty action involving a high-rise condominium in downtown San Diego, California. The Association asked for excess of over $3 million, however, the jury returned with a 10-2 defense verdict in favor of K. Hovnanian.
Cortez Blu Community Association, Inc. v. K. Hovnanian at Cortez Hill, LLC, et al. initially involved construction defect claims against the developer, K. Hovnanian, and the general contractor, Turner Construction, as well as a claim of breach of fiduciary duty. However, the construction defect claims settled prior to trial leaving only the breach of fiduciary claim.
“While it is now becoming ever more common for attorneys representing homeowners associations to allege a breach of fiduciary duty by the developer, there has been little actual litigation of the issues surrounding those claims which test the viability of the allegations or the defenses to them,” defense attorney Anthony Gaeta stated. “A breach of a fiduciary duty by a developer, which is demonstrated to damage the viability of an HOA either to perform regularly scheduled maintenance, or replace building components from its reserves, has the potential in economic terms to surpass the damages from purported construction defects.
The Plaintiff argued that K. Hovnanian breached its fiduciary duty to the Association by failing to set adequate reserves within the initial Department of Real Estate budget (“DRE”) for painting, caulking, and power washing the exterior of the building, referencing Raven’s Cove Townhomes, Inc. v. Knuppe Development Co., Inc. (1981) 114 Cal. App. 3d 783. In response, K. Hovnanian stated that in part, the initial reserves as set forth in the DRE budget were adequate, good faith estimates and, therefore, there was no liability for breach of fiduciary duty.
“Our case was exclusively concerned with the duties of the developer when forming the initial HOA, preliminary budgets, and reserves,” Gaeta said. “We litigated the duties and responsibilities of the initial board and whether a developer may rely on reports prepared by third-parties during the formation of a common interest development. The jury found our client’s actions and reliance on third-parties was reasonable and, thus, no breach of fiduciary duty occurred.”
Collinsworth, Specht, Calkins & Giampaoli is a general civil litigation firm representing clients throughout California and Arizona. You may learn more about the firm at www.cslawoffices.com
Read the court decisionRead the full story...Reprinted courtesy of
Georgia Court of Appeals Upholds Denial of Coverage Because Insurance Broker Lacked Agency to Accept Premium Payment
December 07, 2020 —
Lawrence J. Bracken II, Michael S. Levine & Rachel E. Hudgins - Hunton Insurance Recovery BlogIn American Reliable Insurance Company v. Lancaster, the Georgia Court of Appeals reversed the denial of a property insurer’s summary judgment motion concerning the insurer’s denial of a fire loss claim. The basis of the denial was that the policyholders had failed to pay the policy premium. The policyholders, Charlie and Wanda Lancaster, claimed that they had paid their policy premiums for several years to their insurance agent, Macie Yawn. In October 2014, American Reliable mailed a renewal notice to the Lancasters notifying them that premium payments had to be made directly to the insurer. After it did not receive payment from the Lancasters, American Reliable sent them a cancellation notice in December 2014, again notifying them that payments be made directly to the insurer. The Lancasters denied having received either notice from American Reliable, but the record included a receipt for certificate of mailing.
After the Lancaster’s home burned down in 2015, American Reliable denied coverage on the grounds that the policy had been cancelled for nonpayment of premium. In the subsequent coverage action, the trial court denied American Reliable’s motion for summary judgment, ruling that a factual issue existed as to the actual and apparent agency of the insurance agent, Yawn. On appeal, the Court of Appeals found that the trial court erred in deciding that there was a factual issue concerning Yawn’s agency. Specifically, the Court of Appeals ruled that the record showed American Reliable had terminated Yawn’s agency to accept policy premiums, and that the Lancaster’s received notice of that termination in the renewal and cancellation notices. In addition to determining that Yawn was not an actual agent, the Court held that Yawn did not have apparent agency, because the notices sent to the Lancasters stated that the premium payment was to be paid to American Reliable, not to the agent.
Reprinted courtesy of
Lawrence J. Bracken II, Hunton Andrews Kurth,
Michael S. Levine, Hunton Andrews Kurth and
Rachel E. Hudgins, Hunton Andrews Kurth
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Hudgins may be contacted at rhudgins@HuntonAK.com
Read the court decisionRead the full story...Reprinted courtesy of
Nevada Provides Independant Counsel When Conflict Arises Between Insurer and Insured
December 02, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe Nevada Supreme Court, responding to certified questions, determined that an insurer must provide independent counsel for its insured when a conflict of interest arises between the insurer and insured. State Farm Mut. Auto. Ins. Co. v. Hansen, 2015 Nev. LEXIS 86 (Nev. Sept. 24, 2015).
The insured struck the vehicle of another driver, Hansen. Hansen sued the insured alleging both negligence and various intentional torts. State Farm agreed to defend under a reservation of rights. The reservation of rights letter reserved the right to deny coverage for liabiltiy resulting from intentional acts and punitive damages.
Read the court decisionRead the full story...Reprinted courtesy of
Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Mutual Or Concurrent Delay Caused By Subcontractors
March 23, 2020 —
David Adelstein - Florida Construction Legal UpdatesHow are delay damages treated when two subcontractors cause a mutual or concurrent delay to the project?
Assume multiple subcontractors concurrently contributed to an impact to the critical path resulting in a delay to the project. The delay caused the prime contractor to: (1) be assessed liquidated damages from the owner and (2) incur extended general conditions. The prime contractor will be looking to the subcontractors for reimbursement for any liquidated damages it is assessed along with its extended general conditions costs.
There is really no great case that addresses this point when two (or more) subcontractors mutually or concurrently delay the project. It is also not uncommon, and frankly expected, that a subcontractor will point the finger at another subcontractor for the cause of the delay or that another subcontractor was concurrently delaying the project.
The prime contractor should absolutely, without any exception, undertake efforts with a scheduling consultant to allocate the delay caused by subcontractors. Taking an approach that joint and several liability applies between multiple subcontractors and/or not trying to apportion delay because the subcontractors concurrently delayed the critical path at the same time is probably not the best approach. The prime contractor should have an expert render an opinion as to the allocation of the delay period amongst responsible subcontractors that delayed the critical path. Not doing so, in my opinion, is a mistake.
Read the court decisionRead the full story...Reprinted courtesy of
David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Critical Updates in Builders Risk Claim Recovery: Staying Ahead of the "Satisfactory State" Argument and Getting the Most Out of LEG 3
December 11, 2023 —
Gregory D. Podolak & Cheryl L. Kozdrey - Saxe Doernberger & Vita, P.C.Builders risk claims routinely involve complicated and aggressive debate about the interplay between covered physical loss and uncovered faulty work. However, denials on this front have recently experienced a noticeable uptick in frequency, creativity, and aggressiveness. The insurer arguments concentrate in two key areas with a common theme – that any damage associated with a construction defect is not covered:
- Defective construction does not qualify as a “physical” loss to trigger the insuring agreement; and
- Any natural results of defective construction are excluded as faulty workmanship, even with favorable LEG 3 or similar language.
Neither of these arguments should impede access to coverage in the majority of scenarios. To ensure as much, it is incumbent on the savvy policyholder to understand the insurer tactics, be prepared to spot them early, and have thoughtful counter positions at the ready to address them decisively.
Reprinted courtesy of
Gregory D. Podolak, Saxe Doernberger & Vita, P.C. and
Cheryl L. Kozdrey, Saxe Doernberger & Vita, P.C.
Mr. Podolak may be contacted at GPodolak@sdvlaw.com
Ms. Kozdrey may be contacted at CKozdrey@sdvlaw.com
Read the court decisionRead the full story...Reprinted courtesy of
Where Mechanic’s Liens and Contracts Collide
July 02, 2018 —
Christopher G. Hill - Construction Law MusingsToday at Construction Law Musings, we’re back to a discussion of mechanic’s liens.
This past week, the Loudoun County Circuit Court here in Virginia had an opportunity to discuss the interaction between mechanic’s liens, contracts and the law of fixtures. In TWP Enters. v Dressel, the Court considered a provision of a contract between the TWP Enterprises, a supplier of materials to the construction project, and the builder for the defendant. The provision between the supplier and builder essentially stated that until such time as TWP’s materials were paid for in full, TWP kept title to them (check out the case link above for the full text of the provision).
Needless to say, the builder did not pay and TWP filed a mechanic’s lien then sued to enforce that lien. The owners demurred to the complaint and asked the Court to dismiss the claim on several grounds, among them that the contractual provision described above precluded the enforcement of the lien because TWP retained title to the materials despite the fact that they had been incorporated into the structure of the building and were therefore part of the realty.
Read the court decisionRead the full story...Reprinted courtesy of
Christopher G. Hill, The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
County Elects Not to Sue Over Construction Defect Claims
June 18, 2014 —
Beverley BevenFlorez-CDJ STAFFEven though repairs are expected to cost four million, the New Hanover County Board of Commissioners announced that they will not be pursuing litigation against Clancy and Theys Construction Company for their alleged construction defects of their work on the W. Allen Cobb Judicial Annex in North Carolina, according to Star News Online.
“The board stated that taxpayer money would be better spent on the repairs than on a lengthy court case,” reported Star News Online. “But as a result of the faulty work, the board removed the company from its list of prequalified bidders and stated that it would not be eligible to work on other county construction projects.”
Read the court decisionRead the full story...Reprinted courtesy of
Columbus, Ohio’s Tallest Building to be Inspected for Construction Defects
July 16, 2014 —
Beverley BevenFlorez-CDJ STAFFFox 28 news reported that “[t]he state of Ohio is going to spend more than $166,000 to inspect…the 40-year-old Rhodes Tower” in Columbus.
"They're going to look at the exterior of the building - [at] sealants between the joints, the condition of the panels, the window systems, how they're draining, how they're operating, and how they're sealed," Ned Thiell, of Ohio Facilities Construction Commission, told ABC 6/FOX 28 news.
A study completed last year declared there were “’deficiencies’ on the building’s stone covering” and there were “panels with severe fracture defects” that “will need to be replaced with new stone panels.”
Read the court decisionRead the full story...Reprinted courtesy of