Seattle Washington Building Expert Directory

Insurer Not Entitled to Summary Judgment on Construction Defect, Bad Faith Claims

October 07, 2019 — Tred R. Eyerly - Insurance Law Hawaii
The federal district court denied the insurer's motion for summary judgment seeking to establish there was no coverage for construction defect claims and for bad faith. Country Mut. Ins. Co. v. AAA Constr. LLC, 2019 U.S. Dist. LEXIS 115935 (W.D. Okla. July 12, 2019). Jeffrey and Tammy Shaver entered two contracts with AAA Construction for the construction of a garage and of a barn on their property. After construction was completed, the Shavers sued AAA Construction for building the garage over two high-pressure gas pipelines and the utility easements associated with them. They alleged AAA Construction was negligent for constructing over a working utility line. AAA Construction's insurer, Country Mutual Insurance Company (CMIC) denied coverage because the alleged faulty workmanship of AAA Construction did not constitute an "occurrence" under the policy. CMIC sued AAA Construction for a declaratory judgment that it had no duty to defend or indemnify. CMIC moved for summary judgment. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

Does the Miller Act Trump Subcontract Dispute Provisions?

May 16, 2018 — Christopher M. Horton - Smith Currie
All general contractors performing public building or public works contracts with the federal government must be familiar with the Miller Act. It is a requirement for doing business with the federal government. Pursuant to the Miller Act, a general contractor entering into a public building or public works contract with the federal government must furnish a payment bond in an amount equal to the contract price, unless the contracting officer determines that it is impractical to obtain a bond in that amount and specifies an alternative bond amount. Miller Act payment bonds guarantee payment to certain subcontractors and suppliers supplying labor and materials to contractors or subcontractors engaged in the construction. As a result, subcontractors have an avenue of relief should they not get paid for work done on the project. Specifically, subcontractors have a right to bring an action against the surety within 90-days after the date on which the person did or performed the last labor or furnished or supplied the last of material for which the claim is made. Any such action must be brought no later than one year after the date on which the person did or performed the last labor or furnished or supplied the last of material. 40 United States Code § 3133. Read the court decision
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Reprinted courtesy of Christopher M. Horton, Smith Currie
Mr. Horton may be contacted at cmhorton@smithcurrie.com

Mind The Appeal Or: A Lesson From Auto-Owners Insurance Co. V. Bolt Factory Lofts Owners Association, Inc. On Timing Insurance Bad Faith And Declaratory Judgment Insurance Claims Following A Nunn-Agreement

August 06, 2019 — Jean Meyer - Colorado Construction Litigation
On May 30, 2019, Judge Richard Brooke Jackson of the United States District Court for the District of Colorado offered an insightful lesson to the parties in Auto-Owners Insurance Co. v. Bolt Factory Lofts Owners Association, Inc.[1] on the importance of ripeness in declaratory judgment insurance actions and bad faith counterclaims. The case arrived in front of Judge Jackson based on the following fact pattern. A homeowner association (Bolt Factory Lofts Owners Association, Inc.) (“Association”) brought construction defect claims against a variety of prime contractors and those contractors subsequently brought third-party construction defect claims against subcontractors. One of the prime contractors assigned their claims against a subcontractor by the name Sierra Glass Co., Inc. (“Sierra”) to the Association and all the other claims between all the parties settled. On the eve of trial involving only the Association’s assigned claims against Sierra, the Association made a settlement demand on Sierra for $1.9 million. Sierra asked its insurance carrier, Auto-Owners Insurance, Co. (“AOIC”), which had been defending Sierra under a reservation of rights letter, to settle the case for that amount, but AOIC refused. This prompted Sierra to enter into a “Nunn-Agreement” with the Association whereby the case would proceed to trial, Sierra would refrain from offering a defense at trial, the Association would not pursue any recovery against Sierra for the judgment, and Sierra would assign any insurance bad faith claims it may have had against AOIC to the Association. (“Nunn-Agreement”) Read the court decision
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Reprinted courtesy of Jean Meyer, Higgins, Hopkins, McLain & Roswell, LLC
Mr. Meyer may be contacted at meyer@hhmrlaw.com

When “Substantially Similar” Means “Fundamentally Identical”: Delaware Court Enforces Related Claim Provision to Deny D&O Coverage for Securities Class Action

August 10, 2021 — Geoffrey B. Fehling, Lawrence J. Bracken II & Lorelie S. Masters - Hunton Andrews Kurth
A company faces two class action lawsuits—filed by different plaintiffs, complaining of different allegedly wrongful conduct, asserting different causes of action subject to different burdens of proof, and seeking different relief based on different time periods for the alleged harm. Those facts suggest the suits are not “fundamentally identical,” but that is what a Delaware Superior Court recently concluded in barring coverage for a policyholder seeking to recover for a suit the court deemed “related” to an earlier lawsuit first made outside the policy’s coverage period. First Solar Inc. v. National Union Fire Ins. Co. of Pittsburgh, Pa., No. N20C-10-156 MMJ CCLD (Del. Super. Ct. June 23, 2021). The decision, which is not on all fours with some of the authority upon which it relies, underscores the inherent unpredictability of “related” claim disputes and need for careful analysis of the policy language against the factual and legal bases of the underlying claims. Underlying Shareholder Class Actions and D&O Claims Shareholders of solar panel manufacturer First Solar sued the company and its directors and officers in a class action lawsuit (the “Smilovits Action”) for the class period April 2008 to February 2012. The Smilovits Action asserted federal securities violations arising from First Solar’s alleged misrepresentations about the company’s business strategies, product design, financial strength, and ability to offer solar electricity at comparable rates to conventional energy producers (i.e., achieving “grid parity”), artificially inflated stock price, insider trading, manipulation of solar power metrics, and violations of GAAP accounting standards. First Solar submitted a claim to its D&O insurer, National Union, which provided coverage for the Smilovits Action and exhausted the policy. Reprinted courtesy of Geoffrey B. Fehling, Hunton Andrews Kurth, Lawrence J. Bracken II, Hunton Andrews Kurth and Lorelie S. Masters, Hunton Andrews Kurth Mr. Fehling may be contacted at gfehling@HuntonAK.com Mr. Bracken may be contacted at lbracken@HuntonAK.com Ms. Masters may be contacted at lmasters@HuntonAK.com Read the court decision
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Coverage Rejected Under Owned Property and Alienated Property Exclusions

June 06, 2011 — Tred R. Eyerly

The 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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Insurance Law Alert: Incorporation of Defective Work Does Not Result in Covered Property Damage in California Construction Claims

June 18, 2014 — Valerie A. Moore and Chris Kendrick - Haight Brown & Bonesteel LLP
In Regional Steel Corp. v. Liberty Surplus Ins. (No. B245961, filed 5/16/14, ord. pub. 6/13/14), a California appeals court held that the insured's use of the wrong steel seismic reinforcement hooks in construction of a mixed-use building was not an occurrence, and did not result in covered property damage. Regional Steel was the structural steel subcontractor on a 14-story mixed-use project in North Hollywood, California. Regional supplied plans which were approved by the developer and its structural engineers for installation of steel reinforcements, including seismic reinforcement hooks, to be encased in concrete. During construction, City inspectors determined that the plans called for the wrong hooks, necessitating repairs to finished portions of the work and delays in further construction. This ultimately resulted in a lawsuit between the developer, Regional Steel, the concrete subcontractor, the structural engineer and a quality assurance inspector. The project was insured under a wrap policy issued to the developer, with Regional named as an additional insured. The court rejected an argument that the wrap endorsement fundamentally changed the insurance, and the issue boiled down to whether incorporation of the wrong hooks, the damage caused by tearing out concrete to replace the hooks, or the resulting loss of use, triggered coverage. Liberty asserted that no damage to property was alleged and the purely economic losses caused by the need to reopen the poured concrete to correct the tie hook problem did not constitute "property damage" within the meaning of the policy. Liberty further posited that the tie hook problem did not constitute an “occurrence” within the meaning of the policy because the alleged damage was not caused by an accident. Reprinted courtesy of Valerie A. Moore, Haight Brown & Bonesteel LLP and Chris Kendrick, Haight Brown & Bonesteel LLP Read the court decision
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Beyond the Disneyland Resort: Museums

May 03, 2018 — Beverley BevenFlorez-CDJ STAFF
North Orange County has a variety of interesting museums from intimate to extravagant to peruse. Bowers Museum, located in Santa Ana, has several special exhibitions on display around WCC Seminar: Endurance: The Antarctic Legacy Of Sir Ernest Shackleton And Frank Hurley, American Visionary: John F. Kennedy’s Life And Times, Gemstone Carvings: The Masterworks Of Harold Van Pelt, And First Americans: Tribal Art From North America. Muzeo, a Museum and Cultural Center located in Anaheim, will be showcasing the Trash Artist Challenge Expo & Exhibition from May 12th -27th, and also has on permanent display Anaheim: A Walk through Local History. Star Wars and Disney fans will want to make their way to the Hilbert Museum of California Art. In the city of Orange, this museum is located at Chapman University. Two of their many exhibitions include Magical Visions: The Enchanted Worlds Of Eyvind Earle (Disney’s Sleeping Beauty designer) and A New Hope: The Star Wars Art of Robert Bailey. Learn about American history at the Richard Nixon Library, located in nearby Yorba Linda. Read the court decision
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Steven L. Heisdorffer Joins Higgins, Hopkins, McLain & Roswell

March 27, 2019 — Steve Heisdorffer - Colorado Construction Litigation
Higgins, Hopkins, McLain & Roswell is pleased to announce that Steve Heisdorffer has joined the firm as Special Counsel. Steve joins the firm after having been a partner at Godin & Baity, LLC for the last twenty-five years. Mr. Heisdorffer represents construction professionals in construction defect disputes and advises them regarding risk mitigation and transfer. Mr. Heisdorffer is an experienced trial lawyer that has tried commercial disputes and construction defect cases in arbitration forums and courts over the last 28 years. In addition, he has successfully represented large and small companies in commercial disputes, including computer software performance and intellectual property disputes, taking several to trial. Steve has also acted as a counselor to technology companies. Steve has expertise drafting and negotiating development agreements, distributor agreements, license agreements, and service agreements for his technology clients. Mr. Heisdorffer graduated with high honors from both the University of Northern Iowa and University of Iowa, College of Law and is an AV ® Preeminent™ Peer Review Rated attorney by Martindale-Hubbell and has presented to a variety of trade groups including technology, construction, and insurance industries. Read the court decision
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Reprinted courtesy of Steve Heisdorffer, Higgins, Hopkins, McLain & Roswell
Mr. Heisdorffer may be contacted at heisdorffer@hhmrlaw.com

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