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The insureds were sued by homeowners in two separate suits alleging defects in the construction of their homes.

Carrier Has Duty to Defend Claim for Active Malfunction of Product

Monday, October 19, 2020 — Tred R. Eyerly - Insurance Law Hawaii

Rejecting that the underlying claim was based solely on faulty workmanship, the Third Circuit held the insurer had a duty to defend allegations of a malfunctioning product. Nautilus Ins. Co. v. 200 Christina Street Partners LLC, 2020 U.S. App. LEXIS 22118 (3d Cir. July 16, 2020).

The insureds were sued by homeowners in two separate suits alleging defects in the construction of their homes. Nautilus defended under a reservation of rights. Nautilus filed suit in District Court and moved for judgment on the pleadings. The District Court denied the motion, finding Nautilus had a duty to defend because the underlying claims sufficiently alleged product--related tort clams that could fall within the scope of coverage under the relevant policies.

The Third Circuit affirmed. There was a distinction between a claim of faulty workmanship, for which the insurer did not have a duty to defend, and a claim of "active malfunction" of a product, for which an insurer did have such a duty. An active malfunction was sufficiently fortuitous as to constitute an "occurrence."

Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert

Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Insurance notebook file

An insurer’s obligations under its insurance policy are not the same as an idemnitee’s obligations under an indemnity provision.

Insurance Policies and Indemnity Provisions Are Not the Same

Monday, October 19, 2020 — Garret Murai - California Construction Law Blog

Just because you own a pair of Air Jordans doesn’t make you Michael Jordan. In the next case, Carter v. Pulte Home Corporation, Case No. A154757 (July 23, 2020), the 1st District Court of Appeal denied an insurance carrier’s equitable subrogation claim explaining that an insurer’s obligations under its insurance policy are not the same as an idemnitee’s obligations under an indemnity provision. Or, as aptly put by the Court of Appeal, while a “subrogated insurer is said to ‘stand in the shoes’ of its insured, because it has no greater rights than the insured. Here . . . [the insurer] is seeking to stand in a different, more advantageous set of shoes.”

Carter v. Pulte Home Corporation

Pulte Home Corporation was sued for construction defects by 38 homeowners in two housing developments. Various subcontractors had worked on the projects, but under their subcontracts, each subcontractor agreed to indemnify Pulte from and against “all liability, claims, judgments, suits, or demands for damages to persons or property arising out of, resulting from, or relating to Contractor’s performance of work under the Agreement (‘Claims’) unless such Claims have been specifically determined by the trier of fact to be the sole negligence of Pulte . . . ”

Reprinted courtesy of Garret Murai, Nomos LLP

Mr. Murai may be contacted at gmurai@nomosllp.com

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Lawyer talking to judge illustration

A party is not entitled to a spoliation sanction without proof that the alleged spoliation was beyond accident or mere negligence.

Eastern District of Pennsylvania Clarifies Standard for Imposing Spoliation Sanctions

Monday, October 19, 2020 — Kean Maynard - The Subrogation Strategist

Courts are faced with the difficult task of drawing a line to determine when the failure to preserve evidence becomes culpable enough to permit a judicial remedy. In State Farm Fire & Cas. Co. v. Cohen, No. 19-1947, 2020 U.S. Dist. LEXIS 163681, the United States District Court for the Eastern District of Pennsylvania (District Court) made clear that a party is not entitled to a spoliation sanction without proof that the alleged spoliation was beyond accident or mere negligence. The District Court emphasized that when evidence goes missing or is destroyed, the party seeking a spoliation sanction must show that the alleged spoliation was intentional and that the alleged spoliator acted in “bad faith” before adverse inferences will be provided.

In Cohen, Joshua Cohen (Cohen) rented a residential property to Lugretta Bryant (Bryant). Bryant’s property suffered damages as a result of a kitchen fire. Bryant’s insurer, proceeding as subrogee, hired a fire investigator to determine the cause and origin of the fire. Based on eyewitness testimony and examination of the burn patterns, the fire investigator concluded that the fire started at the General Electric (GE) microwave located in the kitchen. The investigator advised all parties to preserve the microwave so that a joint examination could take place with the property owner and GE present. In the following weeks, the tenant returned to the property to collect belongings and perform some cleaning in anticipation of repairs beginning. Importantly, the tenant claimed the microwave was preserved during these cleaning efforts and remained at the site as instructed. However, in the fall of 2017, one of Cohen’s workers discovered that the microwave was missing and its whereabouts remain unknown.

Reprinted courtesy of Kean Maynard, White and Williams

Mr. Maynard may be contacted at maynardk@whiteandwilliams.com

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Innovative Strategies for LEED Certification in Green Building

October 19, 2020 — Ruben Mejia - Construction Executive

The trend toward sustainable construction is changing the way projects are designed and built. The demand for green buildings continues to rise driven by increasing concerns over global warming, tighter environmental regulations and a growing focus on occupant health. In response to this demand, the construction sector is embracing green practices including delivering LEED-certified commercial projects.

LEED, a third-party certification program sponsored by the U.S. Green Building Council, has verified the sustainability of thousands of buildings. Last year the program announced it had surpassed 100,000 registered and certified global LEED commercial projects and noted that the organization certifies more than 2.6 million square feet of space each day. And, according to data from Statista, the number of LEED registrations has steadily increased since the certification program’s implementation in 1993 with registrations in the United States alone reaching approximately 69,066 in 2019.

Reprinted courtesy of Ruben Mejia, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

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New York Appellate Court Confirms Insurers Must Advance Defense Costs Under D&O Policies

October 19, 2020 — Sergio F. Oehninger, Geoffrey B. Fehling & Meagan R. Cyrus - Hunton Insurance Recovery Blog

A New York appeals court recently granted partial summary judgment in favor of the insureds, finding that excess directors and officers insurers, Westchester Fire Insurance Co., Aspen American Insurance Co. and RSUI Indemnity Co., must advance the defense costs for former executives of the insured entity. The decision is the most recent victory for policyholders in connection with D&O insurance claims asserted in the wake of alleged securities violations and accounting fraud at related real estate investment firms, which have resulted in millions of insurance recoveries for the company and its officers and directors (as previously reported here and here).

Reprinted courtesy of Sergio F. Oehninger, Hunton Andrews Kurth, Geoffrey B. Fehling, Hunton Andrews Kurth and Meagan R. Cyrus, Hunton Andrews Kurth
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Fehling may be contacted at gfehling@HuntonAK.com
Ms. Cyrus may be contacted at mcyrus@HuntonAK.com

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New Home Construction in Canada Hits Its Highest Since 2007

October 19, 2020 — Theophilos Argitis - Bloomberg

Construction on new homes surged to the highest level in more than a decade as Canada’s housing market continues to defy expectations of a slowdown.

Housing starts surged to 262,396 units in August on an annualized basis, up 6.9% from an already elevated 245,425 units a month earlier, Canada Mortgage and Housing Corp. said Wednesday in Ottawa. The highest monthly total since September 2007 was powered by new construction in Toronto and Vancouver, particularly multiple units like condos.

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NAHB 2021 Builders’ Show Goes Virtual

October 19, 2020 — Beverley BevenFlorez – CDJ Staff

The 8th annual Design & Construction Week featuring NAHB’s International Builders’ Show (IBS) and National Kitchen & Bath Association (NKBA) will take place virtually this February. Previously scheduled to take place in Orlando, Florida, the “new all-virtual DCW 2021 will still take place the week of Feb. 8 with extended programming.” NAHB Chairman Chuck Fowke stated, ““We have plenty of great virtual educational programs, innovative products, services and workshops on tap, and we are very excited about the 2021 show. It’s an opportunity to set a precedent for the industry by producing a dynamic virtual trade show, and we look forward to a very successful Design & Construction Week.” In 2022, the Design & Construction Week will be an in-person event in Orlando.

February 9th-11th, 2021
Virtual Event

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Drone flying over bridge

Drone footage from local news outlets indicates that one barge reportedly carrying a crane took down a full-span of the three-mile structure.

Skanska Will Work With Florida on Barge-Caused Damage to Pensacola Bay Bridge

Monday, October 19, 2020 — Jim Parsons - Engineering News-Record

Florida Dept. of Transportation investigators continue to assess damage to the Pensacola Bay Bridge, which sustained multiple impacts from two construction barges unmoored by Hurricane Sally’s storm-driven waves on Sept. 15.

Reprinted courtesy of Jim Parsons, Engineering News-Record

ENR may be contacted at ENR.com@bnpmedia.com

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Oil refinery depicting pollution and toxic environment

An insurer wasn't obligated to pay damages associated with a hydrochloric acid spill based on a pollution exclusion in the policy.

Up in Smoke - 5th Circuit Finds No Coverage for Hydrochloric Acid Spill Based on Pollution Exclusion

Monday, October 19, 2020 — Kerianne E. Kane & David G. Jordan - Saxe Doernberger & Vita

The Fifth Circuit Court of Appeals recently held that an insurer was not obligated to pay damages associated with a hydrochloric acid spill based on a pollution exclusion in the policy.

In Burroughs Diesel, Inc. v. Travelers Indemnity Co. of America,1 a trucking company sued its property insurer, Travelers Indemnity Company of America (“Travelers”) when it refused to pay a claim for a storage tank leak which resulted in over 5,000 gallons of hydrochloric acid entering the property and causing significant damage to buildings, vehicles, tools, and equipment. The acid was initially dispensed in liquid form, but quickly became a cloud that engulfed the property. Travelers denied coverage for the claim based on the pollution exclusion because “acids” fell within the policy’s definition of “pollutants.”

The trucking company sued Travelers in the United States District Court for the Southern District of Mississippi, alleging breach of contract and breach of good faith and fair dealing for refusing to pay the claim. The trucking company argued that coverage was warranted because there is an exception to the pollution exclusion if “the discharge, dispersal, seepage, migration, release or escape is itself caused by any of the ‘specified causes of loss,’” and the hydrochloric acid cloud was a form of “smoke,” which is a specified cause of loss covered by the policy. The District Court entered summary judgment in favor of Travelers, finding that the trucking company failed to demonstrate that an exception to the pollution exclusion applied. The trucking company appealed to the Fifth Circuit Court of Appeals.

Reprinted courtesy of Kerianne E. Kane, Saxe Doernberger & Vita and David G. Jordan, Saxe Doernberger & Vita
Ms. Kane may be contacted at kek@sdvlaw.com
Mr. Jordan may be contacted at dgj@sdvlaw.com


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Can a statutory bad faith action still be triggered if the insurer invokes the appraisal process per the insurance policy BEFORE the insured files its CRN?

First-Party Statutory Bad Faith – 60 Days to Cure Means 60 Days to Cure

Monday, October 19, 2020 — David Adelstein - Florida Construction Legal Updates

In a first party bad-faith lawsuit, such as a bad faith claim against an insured’s property insurer, there are three requirements that must be met before the bad faith lawsuit is filed: “‘(1) determination of the insurer’s liability for coverage; (2) determination of the extent of the insured’s damages; and (3) the required notice must be filed under section 624.155(3)(a).’” Fortune v. First Protective Ins. Co., 45 Fla. L. Weekly D2092a (Fla. 2d DCA 2020) (citation omitted).

The third requirement is for the insured to file a Civil Remedy Notice (known as a “CRN”) as a condition precedent to filing a statutory bad faith lawsuit giving the insurer 60 days’ notice of the bad faith violation and to cure the violation, i.e., pay the claim if the violation is payment.

A very common bad faith payment violation is the assertion that the insurer did NOT attempt “in good faith to settle claims when, under the circumstances, it could and should have done so, had it acted fairly and honestly towards its insured and with due regard for his or her interests.” Fla. Stat. s. 624.155(1)(b)(1).

Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.

Mr. Adelstein may be contacted at dma@kirwinnorris.com

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Senior couple looking at hurricane damage

Three crucial steps to ensure that you protect your property and business and maximize insurance proceeds should your property fall in the path of this storm.

As Laura Wreaks Havoc Along The Gulf, Is Your Insurance Ready to Respond?

Monday, October 19, 2020 — Walter J. Andrews, Michael S. Levine, Andrea DeField & Meagan R. Cyrus - Hunton Insurance Recovery Blog

As Texas and Louisiana brace for Hurricane Laura to make landfall, policyholders in the affected regions should be making last minute preparations to ensure their properties are covered in the storm’s wake.

Hurricane Laura is expected to make landfall as a Category 4 storm tonight, or early Thursday morning between Houston, Texas and Lake Charles, Louisiana. With wind speeds reaching over 120 mph, Laura has the potential for catastrophic damage to life and property and long-term disruption of normal business operations. The following three steps are crucial to ensuring that you protect your property and business and maximize insurance proceeds should your property fall in the path of this storm:

  1. Locate a copy of your policy.
    Having your policy on hand prior to a loss will aid in starting your claim as soon as possible, as it may be more difficult to get in touch with your broker following a storm where thousands of claims are taking place simultaneously.

Reprinted courtesy of Walter J. Andrews, Hunton Andrews Kurth, Michael S. Levine, Hunton Andrews Kurth, Andrea DeField, Hunton Andrews Kurth and Meagan R. Cyrus, Hunton Andrews Kurth

Mr. Andrews may be contacted at wandrews@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. DeField may be contacted at adefield@HuntonAK.com
Ms. Cyrus may be contacted at mcyrus@HuntonAK.com


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Construction worker on site

Yard Works LLC v. GroundDown Constructors LLC highlights a distinction between payment bond claims and mechanic’s lien claims.

Dump Site Provider Has Valid Little Miller Act Claim

Monday, October 19, 2020 — Christopher G. Hill - Construction Law Musings

You may have thought that a Virginia “Little Miller Act” bond claim, like a mechanic’s lien, could only be brought by those that provide materials and labor incorporated into the construction project. If you did, you aren’t alone.

In fact, Safeco Insurance Co. of America, a surety, made exactly the above argument in Yard Works LLC v. GroundDown Constructors LLC. In that case, a debris hauling company failed to pay Yard Works, the company that provided the dumping site for the debris. Yard Works sued pursuant to the Little Miller Act to get paid. In response, the surety sought to have the claim against the payment bond dismissed and argued that because Yard Works did not actually improve the property or provide improvements and that Yard Works only passively provided a dump site, Yard Works could not claim under the payment bond.

Reprinted courtesy of The Law Office of Christopher G. Hill

Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Storm in rural setting

Preliminary estimates for insured losses from storm surge, flooding, and winds range from $8 to $12 billion for residential and commercial properties.

Hurricane Laura: Implications for Insurers in Louisiana

Monday, October 19, 2020 — Jennifer Michel & Tabitha Durbin - Lewis Brisbois

Just two days before the 15th Anniversary of Hurricane Katrina, Category 4 Hurricane Laura made landfall near Cameron, Louisiana. Although the “unsurvivable” 20-foot storm surge, which had been predicted ahead of the storm, thankfully was significantly less, the impact of Laura on the Southwest Coast of Louisiana and Southeast Coast of Texas and its neighboring parishes and counties, most notably Cameron Parish, was quite severe. Lake Charles, Louisiana suffered widespread flooding and sustained catastrophic wind damage. Although the storm moved quickly, it retained its strength longer than expected such that even areas well inland sustained considerable damage. Preliminary estimates for insured losses from storm surge, flooding, and winds range from $8 to $12 billion for residential and commercial properties. Insurers providing residential or commercial property insurance in Louisiana should keep the following statutory claims handling requirements in mind.

Louisiana Statutory Provisions

Under Louisiana law, an insurer is expected to comply with certain statutory requirements in investigating and handling claims submitted by its insureds and third-party claimants. The majority of these requirements, and the consequences of their violation, are codified by La. R.S. 22:1892, which governs the payment and adjustment of claims, and La. R.S. 22:1973, which delineates an insurer’s duty of good faith. Together, the statutes impose three requirements on insurers: timely initiation of loss adjustment, timely payment of claims, and a duty of good faith and fairness in the adjustment and payment of said claims.

Reprinted courtesy of Jennifer Michel, Lewis Brisbois and Tabitha Durbin, Lewis Brisbois

Ms. Michel may be contacted at Jenny.Michel@lewisbrisbois.com
Ms. Durbin may be contacted at Tabitha.Durbin@lewisbrisbois.com


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Fires Continue to Scorch Thousands of Acres out West | ABC News

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Best Practice Puzzle Piece

Mr. McLain has over 22 years of experience and is well known for his work in the defense of the construction industry.

David McLain Recognized Among the 2021 Edition of The Best Lawyers in America© for Construction Law

Monday, October 19, 2020 — David M. McLain – Colorado Construction Litigation

David McLain is a founding member of Higgins, Hopkins, McLain & Roswell. Mr. McLain has over 22 years of experience and is well known for his work in the defense of the construction industry, particularly in the area of construction defect litigation. He is a member of the Executive Committee of the CLM Claims College - School of Construction, which is the premier course for insurance, industry, and legal professionals. Law Week Colorado recently named Mr. McLain as the 2019 People’s Choice for Best Construction Defects Lawyer for Defendants.

HHMR is highly regarded for its expertise in construction law and the litigation of construction-related claims, including the defense of large and complex construction defect matters. Our attorneys provide exceptional service to individuals, business owners, Fortune 500 companies, and the insurance industry. The firm is experienced in providing legal support throughout trials and alternative dispute resolution such as mediations and arbitrations.

Reprinted courtesy of David McLain, Higgins, Hopkins, McLain & Roswell

Mr. McLain may be contacted at mclain@hhmrlaw.com

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Red x next to Incorrect

Attorney Lindsey Torp discusses Cathleen Robin v. Al Crowell.

Statute of Limitations Bars Lender’s Subsequent Action to Quiet Title Against Junior Lienholder Mistakenly Omitted from Initial Judicial Foreclosure Action

Monday, October 19, 2020 — Lyndsey Torp - Snell & Wilmer Real Estate Litigation Blog

A recently issued opinion by the Court of Appeal, Fifth Appellate District tells a cautionary tale regarding a lender’s failure to name a junior lienholder in its initial judicial foreclosure action.

In Cathleen Robin v. Al Crowell, — Cal.Rptr.3d —-, 2020 WL 5951506, plaintiffs sued defendant, a junior lienholder, for quiet title, having failed to name him in the initial judicial foreclosure action. Defendant raised the statute of limitations defense, but the trial court found in favor of plaintiffs. The court of appeal reversed, holding that the 60-year statute of limitations which the trial court applied only applied to a nonjudicial trustee’s sale, and the trial court could not exercise the trustee’s power of sale after the expiration of the statute of limitations on a judicial action to foreclose.

In 2006, plaintiffs loaned Steve and Marta Weinstein (the “Weinsteins”) $450,000, secured by a deed of trust on one parcel of the Weinstein’s property. In 2007, the Weinsteins and defendant Al Crowell (“Crowell”) recorded a second deed of trust on the property, securing a promissory note executed by the Weinsteins in 2004.

Reprinted courtesy of Lyndsey Torp, Snell & Wilmer

Ms. Torp may be contacted at ltorp@swlaw.com

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Businessman signing document

Contractors industry-wide need to consider how COVID-19 will impact their contractual obligations.

Construction Contracts Need Amending Post COVID-19 Shutdowns

Monday, October 19, 2020 — Richard P. Higgins - Construction Executive

No one could have expected the coronavirus pandemic in the beginning of 2020. True, there were rumblings about a sickness in China that was highly contagious and infecting many people. Death tolls began rising as the world watched in disbelieve. After all, this is 2020. This is not supposed to happen. We should have been able to control the spread of the virus, but we could not. COVID-19 quickly spread throughout the world causing havoc and economic despair.

While some sectors of the construction industry are not as impacted as others, contractors industry-wide need to consider how COVID-19 will impact their contractual obligations. Depending on what happens and what the government decides to do to stop the spread of the coronavirus, project delays, supply chain distributions, lost productivity and work stoppages may continue for months. All of this will impact the contracts that contractors have with owners. Contractors may not be able to preform according to the terms of the contract through no fault of their own. Owners may no longer qualify for the financing needed to pay for the project.

FORCE MAJEURE

According to Investopedia, “force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations.”

Reprinted courtesy of Richard P. Higgins, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.


Mr. Higgins may be contacted at Richard.Higgins@MCC-CPAs.com

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Finger on digital hologram

David Weir-McCall of Epic Games discusses the role VR plays in the modern AEC ecosystem.

Managing Narrative, Capturing Context, and Building Together: Talking VR and AEC with David Weir-McCall

Monday, October 19, 2020 — Aarni Heiskanen - AEC Business

We sat down with David Weir-McCall of Epic Games to discuss the role VR plays in the modern AEC ecosystem. Our conversation covered the power of merging digital innovation with human insight, the importance of accessible data visualization, and the role that the Unreal platform plays across a range of sectors every day.

Can you tell us a little bit about your career to date and what drove you to merge architectural design with tech dev?

Sure – I initially studied architecture and. after graduation, was looking at what I wanted to work on. What really interested me was big, complex, and large-scale projects because of the degree of challenge. So, I ended up heading out to the Middle East for seven and a half years and worked in a variety of multidisciplinary firms.

Reprinted courtesy of Aarni Heiskanen, AEC Business

Mr. Heiskanen may be contacted at aec-business@aepartners.fi

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Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

Builders Standard of Care Expert Witness and Consulting General Contractor area area area

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