Gavel illustration

No Duty to Defend HOA and Property Manager Under Policy Liability and D&O Coverage Parts For Lawsuits Which Failed to Allege Damages and Did Not Include Property Manager as an Additional Insured

Auburn Woods Homeowners Association v. State Farm General Insurance Company

Monday, January 11, 2021 — Michael Velladao - Lewis Brisbois

In Auburn Woods HOA v. State Farm Gen. Ins. Co., 56 Cal.App.5th 717 (October 28,2020) (certified for partial publication), the California Third District Court of Appeal affirmed the trial court’s entry of judgment in favor of State Farm General Insurance Company (“State Farm”) regarding a lawsuit for breach of contract and bad faith brought by Auburn Woods Homeowners Association (“HOA”) and property manager, Frei Real Estate Services (“FRES”) against State Farm and the HOA’s broker, Frank Lewis. The parties’ dispute arose out of the tender of two different lawsuits filed against the HOA and FRES by Marva Beadle (“Beadle”). The first lawsuit was filed by Beadle as the owner of a condominium unit against the HOA and FRES for declaratory relief, injunctive relief, and an accounting related to amounts allegedly owed by Beadle to the HOA as association fees. The second lawsuit filed by Beadle was for the purpose of setting aside a foreclosure sale, cancelling the trustee’s deed and quieting title, and for an accounting and injunctive relief against an unlawful detainer action filed by Sutter Group, LP against Beadle. The complaint filed in the second lawsuit alleged that Allied Trustee Services caused Beadle’s property to be sold at auction and that Sutter Capital Group, LP purchased the unit and obtained a trustee’s deed upon sale. Beadle claimed the assessments against her were improper and the trustee’s deed upon sale was wrongfully executed. Beadle sought an order restoring possession of her unit and damages.

The HOA and FRES tendered both lawsuits to State Farm. As respects the first lawsuit, State Farm denied coverage of the lawsuit based on the absence of alleged “damages” covered by the policy issued to the HOA affording liability and directors and officers (“D&O”) coverages. State Farm agreed to defend the HOA under the D&O coverage in the second lawsuit. However, State Farm denied coverage of FRES in both lawsuits as it did not qualify as an insured under the State Farm policy issued to the HOA. Subsequently, the HOA and FRES filed an action against State Farm arguing that a duty to defend was triggered under its policy for the first lawsuit and a duty to defend FRES was also owed under the D&O policy for the second lawsuit. After a bench trial, the trial court entered summary judgment in favor of State Farm based on the failure of the first lawsuit to allege damages covered by the State Farm policy under the liability and D&O coverages afforded by the policy. As respects the second lawsuit, the trial court held that FRES did not qualify as an insured and State Farm did not act in bad faith by refusing to pay the HOA’s alleged defense costs in the second lawsuit before it agreed to defend the HOA against such lawsuit.

Reprinted courtesy of Michael Velladao, Lewis Brisbois

Mr. Velladao may be contacted at Michael.Velladao@lewisbrisbois.com

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Roof ventilation

Here’s what it takes to upgrade HVAC systems — and how to know if particular indoor spaces have done it.

What Makes Building Ventilation Good Enough to Withstand a Pandemic?

Monday, January 11, 2021 — Linda Poon - Bloomberg

In October, students at the University of Illinois, Urbana-Champaign, held an intimate jazz concert at a bar downtown, with an audience of about 20 peers and faculty members — all of whom held digital passes indicating they’d recently tested negative for Covid-19. Two jazz ensembles performed, sometimes with masks and coverings for their instruments, and other times without.

Behind the scenes, mechanical engineering professor Ty Newell tinkered with the airflow, turning the exhaust and recirculation fans on and off at different points during the night. His students monitored for changes in the air quality, using a special instrument to measure the concentrations of carbon dioxide and fine particulate matter, both key to determining if a building is well ventilated.

The experiment sought to highlight the significance of proper ventilation, something that Newell said hadn’t been paid enough attention, until now. As evidence suggesting Covid-19 can spread through aerosol transmission continues to mount, health experts are focused less on sanitizing surfaces and more on improving indoor air quality. In December, the U.S. Centers for Disease Control and Prevention finally put out its ventilation recommendations to combat Covid-19, based on standards set by ASHRAE, or the American Society of Heating, Refrigerating and Air-Conditioning Engineers.

Reprinted courtesy of Linda Poon, Bloomberg

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Ten with dart in the middle of zero

As the courts nationwide struggled with the insurance coverage implications of COVID-19 related business loss, other significant coverage decisions were overshadowed.

Top 10 Insurance Cases of 2020

Monday, January 11, 2021 — Grace V. Hebbel, Andrew G. Heckler & Jeffrey J. Vita - Saxe Doernberger & Vita P.C.

COVID-19 business interruption coverage litigation may have stolen the show in 2020, but those cases should not eclipse other important insurance coverage cases decided throughout this past year. As the courts nationwide struggled with the insurance coverage implications of COVID-19 related business loss, other significant coverage decisions were overshadowed. Read on to learn about how computer glitches, biometric privacy, and a falling wheelbarrow have all played a role in\ shaping some of the most interesting and influential insurance coverage decisions of 2020, as well as get a sneak peek at the key coverage decisions looming in 2021. Enjoy!

1. Nash Street, LLC v. Main Street America Assurance Company,
No. 20389, 2020 WL 5415325 (Conn. 2020)

Do exclusions k(5) and k(6) absolve an insurer of its duty to defend its insured for allegations of faulty workmanship?

Reprinted courtesy of Grace V. Hebbel, Saxe Doernberger & Vita P.C., Andrew G. Heckler, Saxe Doernberger & Vita P.C. and Jeffrey J. Vita, Saxe Doernberger & Vita P.C.

Ms. Hebbel may be contacted at GHebbel@sdvlaw.com
Mr. Heckler may be contacted at AHeckler@sdvlaw.com
Mr. Vita may be contacted at JVita@sdvlaw.com

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California Poised For Growth Despite Pandemic Impacts, Regulations

January 11, 2021 — Erica Berardi - Engineering News-Record

Despite California’s strict government interventions in response to the COVID-19 pandemic, the state’s economy is poised for post-pandemic growth at a faster rate than the rest of the U.S, says a new report from the University of California-Los Angeles Anderson School of Management.

Ms. Berardi may be contacted at BerardiE@enr.com


Federal Court Provides Soothing Comfort for Spa’s COVID-19 Business Income Claim

January 11, 2021 — Michael S. Levine & Meagan R. Cyrus - Hunton Insurance Recovery Blog

On December 9, 2020, in Elegant Massage, LLC v. State Farm Mut. Auto. Ins. Co., No 2:20-cv-00265-RAJ-LRL (E.D.V.A. Dec. 9, 2020) , a Virginia federal court refused to dismiss a majority of the policyholder’s breach of contract claim and its request for bad faith damages, declaratory judgment and class certification, all stemming from the insurers’ denial of coverage for COVID-19 related business income losses. The policyholder, a spa, purchased an all-risk property insurance policy with coverage for, among other things, loss of business income and extra expense. The spa, a non-essential business, closed on March 16, 2020 as a result of state orders requiring all non-essential businesses to close due to the COVID-19 pandemic. It did not reopen until May 15. Once re-opened, however, the policyholder was required to implement operational controls and precautions to ensure the safety of the public and its employees. Following its closure, the policyholder sought coverage under its all-risk insurance policy. The insurer denied coverage for the claim, contending first that losses due to the COVID-19 pandemic and subsequent closure orders did not constitute “property damage” within the meaning of the policy and, second, even if the losses were because of “property damage,” the claim implicated various exclusions to coverage. The policyholder then initiated suit against its insurers.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth and Meagan R. Cyrus, Hunton Andrews Kurth

Mr. Levine may be contacted at mlevine@HuntonAK.com
Ms. Cyrus may be contacted at mcyrus@HuntonAK.com


U.S. Homebuilder Confidence Eases From Record, Remains Robust

January 11, 2021 — Henry Ren - Bloomberg

U.S. homebuilder confidence eased slightly in December to the second-best level on record following the prior month’s peak, signaling that low mortgage rates are still giving the industry a major boost.

A gauge of builder sentiment slipped to 86 from November’s reading of 90 that was the highest in records back to 1985, according to the National Association of Home Builders/Wells Fargo Housing Market Index released Wednesday. The figure was below the median forecast of 88 in Bloomberg’s survey of economists.


Suzanne Mulvihill on Panel for ALFA International’s Virtual Seminar on Commercial Lease Disputes on February 17, 2021

January 11, 2021 — Suzanne A. Mulvihill - Haight Brown & Bonesteel

Partner Suzanne Mulvihill is a panelist during ALFA International’s Virtual Regional Seminar on Commercial Lease Disputes. The webinar is being presented by the Business Litigation Practice Group on February 17, 2021.

Topics include:

  • Interactive discussion of how courts treat commercial lease disputes in the era of COVID-19;
  • Lease disputes arising because of COVID-19; and
  • Lease drafting and negotiation best practices to avoid and/or mitigate potential disputes

February 17th, 2021
Virtual Event

Ms. Mulvihill may be contacted at smulvihill@hbblaw.com

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We have opportunities to mitigate the deleterious effects of COVID-19 and reduce the possibility of large-scale disputes down the road.

Commentary: How to Limit COVID-19 Related Legal Claims

Monday, January 11, 2021 — Joshua Lindsay, Crowell & Moring & Meagan Bachman, Crowell & Moring - ENR

We are 10 months into the global pandemic. Given the magnitude of additional costs and upended expectations and risk-allocation, we foresee a wave of disputes coming soon. Whether it is large or small depends heavily on how well project team members handle the COVID-19 project impacts now.

Reprinted courtesy of Joshua Lindsay, Crowell & Moring (ENR) and Meagan Bachman, Crowell & Moring (ENR)

Ms. Bachman may be contacted at mbachman@crowell.com
Mr. Lindsay may be contacted at joshlindsay@crowell.com

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Businessman standing in front of fork with downtown in distance

Will the IECC find a palatable path for all parties, or will it make a decision that causes significant repercussions, some of which would only be understood through the lens of history?

The Uncertain Future of the IECC

Monday, January 11, 2021 — Christopher G. Hill - Construction Law Musings

For this week’s Guest Post Friday, I welcome an old friend and past Guest Post Friday contributor, Mike Collignon. Mike is the Co-Founder and Executive Director of the Green Builder® Coalition. He engages in national and state-level advocacy and publishes regular content for Green Builder® Media. Mike is also the Chair of the WERS Development Group and has served as the moderator or host for Green Builder® Media’s Impact Series webinars from 2012–present.

The following is an op-ed based on the author’s attendance at public meetings and conversations with inside sources.

“I think that you will all agree that we are living in most interesting times.” – Joseph Chamberlain, 1898

2020 was a historic year, both for reasons we currently comprehend and for reasons we may only understand in retrospect. Depending on how an upcoming ICC Board decision goes, it may prove to be the year the IECC met its demise.

Reprinted courtesy of The Law Office of Christopher G. Hill

Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Law book open on desk in front of bookshelf

Terminating a contract for default is the harshest recourse that can be taken under a contract.

Burden Supporting Termination for Default

Monday, January 11, 2021 — David Adelstein - Florida Construction Legal Updates

Terminating a contractor for default is a “‘drastic sanction’ and ‘should be imposed (or sustained) only for good grounds and on solid evidence.’” Cherokee General Corp. v. U.S., 150 Fed.Cl. 270, 278 (Fed.Cl. 2020) (citation omitted). This is true with any termination for default because terminating a contract for default is the harshest recourse that can be taken under a contract. It is a caused-based termination. For this reason, the party terminating a contract for default needs to be in a position to carry its burden supporting the evidentiary basis in exercising the default-based (or caused-based) termination. Stated differently, the party terminating a contract for default needs to justify the reasonableness in terminating the contract for default.

A party looking to terminate a contract for default should smartly work with counsel to best position its justification in exercising the termination for default. Likewise, a contractor terminated for default should immediately work with counsel to best position the unreasonableness or the lack of justification for the default-based termination.

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

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

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Time word by hourglass

Attorney Christopher G. Hill analyzes Appalachian Power Co. v. Wagman Heavy Civil, Inc.

Time is of the Essence, Even When the Contract Doesn’t Say So

Monday, January 11, 2021 — Christopher G. Hill - Construction Law Musings

Welcome to 2021! As often happens here at Construction Law Musings, the year starts with a few posts on notable construction law cases that dropped in the past year or so. Not only does this review hopefully help you keep up, but helps me keep up with the latest developments (one of the reasons why I keep blogging).

The first of these cases is Appalachian Power Co. v. Wagman Heavy Civil, Inc. out of the Western District of Virginia federal court. In this case, Wagman Heavy Civil, Inc. (“Wagman”) and the Virginia Department of Transportation (“VDOT”) contracted for the design and construction of a highway interchange project (the “Project”). Wagman and the Appalachian Power Company (“APCO”) entered into a written contract (the “Written Contract”) for APCO to remove and relocate its utility structures (the “Work”) in order to facilitate construction for the Project.

Reprinted courtesy of The Law Office of Christopher G. Hill

Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Businessman with hands on face as if worried

"North America’s Building Trades Unions call on President Trump to immediately step down and transfer power per the Constitution and the Presidential Succession Act of 1947,” NABTU President Sean McGarvey said.

Industry Groups Decry Jan. 6 Riot; DOT Chief Chao Steps Down in Protest

Monday, January 11, 2021 — Aileen Cho & Pam Radtke Russell - Engineering News-Record

Industry and business groups and labor unions universally denounced the actions of rioters who broke into the U.S. Capitol on Jan. 6, with statements going as far as calling for President Donald Trump to step down but others taking a more measured response.

Reprinted courtesy of Aileen Cho, Engineering News-Record and Pam Radtke Russell, Engineering News-Record

Ms. Cho may be contacted at choa@enr.com
Ms. Russell may be contacted at Russellp@bnpmedia.com

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Judge sitting behind bench (illustration)

In Glassman, the plaintiff, as executor of his deceased wife’s estate, sued a restaurant and property owner of the site where his wife fell and fractured her ankle.

No Trial Credit in NJ Appellate Decision for Non-Settling Successive Tortfeasors – Must Demonstrate Proof of Initial Tortfeasor Negligence and Proximate Cause

Monday, January 11, 2021 — Kevin C. Cottone, Robert Wright, & Monica Doss - White and Williams LLP

Where an initial tortfeasor settles in a successive negligence case, the non-settling tortfeasors do not get a credit at trial, says the New Jersey Appellate Division. The court held in Glassman v. Friedel [1], that non-settling successive tortfeasors are not entitled to a pro tanto credit after the initial tortfeasor settles and its negligence is undetermined. Rather, successive tortfeasors have the burden at trial to demonstrate that (1) the initial tortfeasor was negligent, and (2) the initial tortfeasor’s negligence was the proximate cause of the second event.

In Glassman, the plaintiff, as executor of his deceased wife’s estate, sued a restaurant and property owner of the site where his wife fell and fractured her ankle. Afterwards, the plaintiff added defendants including the doctors and the medical center that cared for his wife after she fractured her ankle. The plaintiff alleged that they had been negligent during his wife’s surgery, which led to postoperative complications and injuries to his wife’s leg, ultimately resulting in a fatal pulmonary embolism.

Reprinted courtesy of Kevin C. Cottone, White and Williams LLP, Robert Wright, White and Williams LLP and Monica Doss, White and Williams LLP

Mr. Cottone may be contacted at cottonek@whiteandwilliams.com
Mr. Wright may be contacted at wrightr@whiteandwilliams.com
Ms. Doss may be contacted at dossm@whiteandwilliams.com

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The U.S. Doesn’t Have Enough Construction Workers — and That’s a Problem for Everyone | NBCLX

Door with key in lock

Attorney Tred R. Eyerly discusses Travelers Pro. Cas. Co. of Am. v. 100 Renaissance, LLC.

Insurer's In-House Counsel's Involvement in Coverage Decision Opens Door to Discovery

Monday, January 11, 2021 — Tred R. Eyerly - Insurance Law Hawaii

The Mississippi Supreme Court held that the insurer must produce written communications from and make available for deposition the in-house counsel who orchestrated the denial of coverage. Travelers Pro. Cas. Co. of Am. v. 100 Renaissance, LLC, 2020 Miss. LEXIS 409 (Miss. Oct. 29, 2020).

An unidentified driver struck a flagpole owned by the insured Renaissance, causing $2,134 in damages. Renaissance filed a claim with Travelers for uninsured-motorist coverage. The Travelers' claims handler, Charlene Duncan, determined there was no coverage because the flagpole was not a covered auto. Before corresponding with the insured, Duncan sought legal advice from Travelers' in-house counsel, Jim Harris.

Renaissance sued Travelers for coverage and bad faith. Renaissance then took Duncan's deposition and asked that she explain both the denial letter and the reasons Travelers denied the claim. Duncan repeatedly said she did not know the basis of the denial and that she had consulted with Harris.

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

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

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Beware Under Construction Black and Yellow Stripes

The perils of hiring an unlicensed contractor, acting as an unlicensed contractor or even working for an unlicensed contractor as an employee.

The Dangers of an Unlicensed Contractor from Every Angle

Monday, January 11, 2021 — William L. Porter - Porter Law Group

The State of California requires that contractors in the building trades be licensed. Individuals and business entities obtain their contractors licenses by demonstrating to the California Contractors State License Board that they have the requisite knowledge, skill, and experience to be licensed. The CSLB issues licenses to those meeting requirements. As a construction attorney of longstanding tenure, I have witnessed the impact of unlicensed building contractors from every point of view. If you are considering hiring an unlicensed contractor, acting as an unlicensed contractor or even working for an unlicensed contractor as an employee, please consider the following perils:

To the Owner Considering Hiring an Unlicensed Contractor:

On the positive side for owners considering hiring an unlicensed contractor, the general rule in California is that an owner can escape the obligation to pay an unlicensed contractor for work performed and materials supplied because unlicensed contractors are prohibited from bringing legal actions against owners for payment. The law even goes so far as to allow the Owner to bring a legal action against the unlicensed Contractor for reimbursement of anything the owner paid to the unlicensed contractor. This is done through a “disgorgement” action (see, Business and Professions Code 7031. See also, the following article: Disgorgement Article). Despite this, there are a great many negative potential consequences to be considered by any owner who might consider hiring an unlicensed contractor. Among them are the following:

  1. If you are considering not paying your unlicensed contractor because Business and Professions Code 7031 allows it, please consider that unlicensed contractors, who have clearly demonstrated a disinclination to follow legal obligations in the first place, may resort to “less than socially acceptable” means of exacting retribution against those who do not pay them or who demand the return of money paid through a disgorgement action I am sorry to say this. Let us leave it at that.
Reprinted courtesy of William L. Porter, Porter Law Group

Mr. Porter may be contacted at bporter@porterlaw.com

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Medical staff walking through corridors

A testing, tracing and treatment initiative targets tens of thousands of workers across city.

Boston Construction Bands With Health Care to Fight COVID-19

Monday, January 11, 2021 — Scott Van Voorhis - Engineering News-Record

Trade union leaders, construction executives and international health care experts are teaming up in Boston o stop the spread of COVID-19 in the city’s booming construction sector. The coalition unveiled a program called Construction Stops COVID on Dec. 22. The testing, tracing and treatment initiative targets tens of thousands of hard-hatted workers toiling on construction sites across the city.

Reprinted courtesy of Scott Van Voorhis, Engineering News-Record

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

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Grand central terminal

Musk’s Boring Co. wants to lay miles of tunnels underneath Las Vegas.

Elon Musk’s Proposed Vegas Strip Transit System Advanced by City Council Vote

Monday, January 11, 2021 — Sarah McBride - Bloomberg

Elon Musk’s tunneling company Boring Co. is already building a transit system for Las Vegas convention-goers. Now, he wants to build one for the rest of the city.

On Wednesday, the Las Vegas City Council voted unanimously to advance plans to dramatically expand Musk’s Loop project from a convention center transit system to a citywide network that would include hotels and, one day, potentially even the airport.

The proposed expansion brings the tunnel-based transportation system as far north as Ogden Avenue, near attractions such as the Downtown Container Park and classic casinos like the Golden Nugget. Proposed stops en route include the Arts District and the Stratosphere tower, the spaceship-like landmark that is part of a hotel. The precise location of stations will be determined later in the process, according to documents submitted to the council.

Reprinted courtesy of Sarah McBride, Bloomberg
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