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Failure with paper torn around it

A CA appeals court held that a developer’s failure to allege the amounts of damages sought in its cross-complaint rendered default judgments against a subcontractor void and unenforceable against the subcontractor’s insurers.

Developer’s Failure to Plead Amount of Damages in Cross-Complaint Fatal to Direct Action Against Subcontractor’s Insurers Based on Default Judgment

Monday, January 21, 2019 — Christopher Kendrick & Valerie A. Moore - Haight Brown & Bonesteel LLP

In Yu v. Liberty Surplus Ins. Corp. (No. G054522, filed 12/11/18), a California appeals court held that a developer’s failure to allege the amounts of damages sought in its cross-complaint rendered default judgments against a subcontractor void and, therefore, unenforceable against the subcontractor’s insurers in a direct action under Insurance Code section 11580(b)(2).

Yu, the owner, hired ATMI to develop a hotel. ATMI subcontracted with Fitch to perform stucco and paint work. Yu sued ATMI for construction defects and the developer cross-complained against its subcontractors, including Fitch, for breach of contract; warranty; indemnity, etc. Yu’s operative complaint prayed for damages “in an amount not less than $10,000,000, according to proof.” ATMI’s cross-complaint stated that it incorporated the allegations of Yu’s complaint “for identification and informational purposes only,” but “does not admit the truth of any allegations contained therein.” The cross-complaint also prayed for damages with respect to the various causes of action “in an amount according to proof.”

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


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Question mark maze

Washington Supreme Court decides whether insurer is bound by contradictory certificate of insurance or not.

Certified Question Asks Washington Supreme Court Whether Insurer is Bound by Contradictory Certificate of Insurance

Monday, January 21, 2019 — Tred R. Eyerly - Insurance Law Hawaii

The Ninth Circuit certified a question to the Washington Supreme Court as follows:

Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party's status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?

T-Mobile USA Inc. v. Selective Ins. Co lf Am., 2018 U.S. App. LEXIS 31863 (9th Cir. Nov. 9, 2018).

In 2010, T-Mobile entered into a Field Services Agreement (FSA) with Innovative Engineering, Inc. under which Innovative would provide services in connection with the construction of rooftop cellular antennae towers in New York City. The FSA required Innovative to maintain general liability insurance naming T-Mobile as an additional insured, and required that Innovative provide T-Mobile with certificates of insurance documenting the coverage. Innovative obtained coverage from Selective Insurance Company of America.

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

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

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Person in chemical suit

Paul Briganti of White and Williams discusses the notable Carrier decision.

New York State Trial Court Addresses “Trigger of Coverage” for Asbestos Claims and Other Coverage Issues

Monday, January 21, 2019 — Paul Briganti - White and Williams

On November 21, 2018, the New York Supreme Court, Onondaga County, issued a summary-judgment ruling on a number of coverage issues arising from asbestos-related bodily injury claims against plaintiffs Carrier Corporation (Carrier) and Elliott Company (Elliott). See Carrier Corp., et al. v. Travelers Indem. Co., et al., Index No. 2005-EG-7032 (N.Y. Sup. Ct. Nov. 21, 2018).

First, the court held that under New York’s “injury in fact trigger of coverage,” injury occurs from the first date of exposure to asbestos through death or the filing of suit. The court primarily relied on: (1) New York federal court decisions and the Delaware Supreme Court’s decision in In re Viking Pump, Inc., 148 A.3d 633 (Del. 2016) holding that injury continues from first exposure through death or the assertion of a claim; and (2) medical and scientific evidence that the plaintiffs had submitted in support of their motion. The court specifically declined to follow Continental Cas. v. Wausau, 60 A.D.3d 128 (1st Dep’t 2008) (Keasbey), in which the New York Appellate Division found a question of fact whether injury occurs from exposure to asbestos through manifestation and that summary judgment was therefore inappropriate. The Carrier court stated that Keasbey was distinguishable because it “involved operations coverage, a non-product claim, and thus the [Keasbey] Court required a more stringent proof of injury in fact than is necessary here, in a products case.” Carrier, op. at 8. The Carrier court was also dismissive of affidavits offered by the defendant-insurer’s medical experts, finding that the affidavits did not create an issue of fact. See Op. at 2-9.

Reprinted courtesy of Paul Briganti, White and Williams

Mr. Briganti may be contacted at brigantip@whiteandwilliams.com

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Contractors See Bright 2019, But Finding Workers Is Still Tough

January 21, 2019 — Tom Ichniowski - Engineering News-Record

Construction contractors are upbeat about their businesses’ outlook for 2019 and expect to increase staffing, but they remain worried about recruiting enough workers to meet their needs, a new industry survey says.

Mr. Ichniowski may be contacted at kormanr@enr.com

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Labor Costs Not Excluded From Depreciation When Determining Actual Cash Value

January 21, 2019 — Tred R. Eyerly - Insurance Law Hawaii

The court dismissed a class action suit against State Farm which sought to establish that a calculation of actual cash value (ACV) in a homeowners policy could not depreciate the cost of labor. Cranfield v. State Farm Fire & Cas. Co., 2018 U.S. Dist. LEXIS 199618 (N.D. Ohio Nov. 26, 2018)

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

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Better Indoor Environments with Real-Time IoT Data

January 21, 2019 — Aarni Heiskanen - AEC Business

Homes and other properties contain an increasing number of IoT sensors and smart devices that provide data relating to their environment. Cozify wanted to demonstrate how that data could be used to create comfortable indoor conditions for people, and save money while doing so.

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

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Insurance in the Construction Industry

January 21, 2019 — Beverley BevenFlorez - CDJ STAFF

Insurance for Construction Claims impacts all demographics, all organizations, and all businesses whether public or private. Understanding the present state of the insurance industry is important not only for insurance professionals, but for anyone who owns property, conducts business, or operates in a public setting. This program will give you the tools you need to understand the evolving Construction Insurance Industry, from Case Law Updates to current complex issues such as Duty to Defend, Duty to Settle, Coverage for Continuing Damage, Additional Insured Endorsements, and OCIPs, CCIPs, WRAPs and Non-Traditional Insurance.

March 12th-13th, 2019
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Coal

For one contractor, 2018, wasn’t such a good year.

Naughty or Nice. Contractor Receives Two Lumps of Coal in Administrative Dispute

Monday, January 21, 2019 — Garret Murai - California Construction Law Blog

So, how were your holidays? Hopefully you were good and didn’t receive a lump of coal from Santa. For one contractor, 2018, wasn’t such a good year. And as its name, Black Diamond, suggests, it did indeed receive a black diamond from the courts. Actually, two of them.

Contractors’ State License Board v. Superior Court (Black Diamond No. 1)

In Contractors’ State License Board v. Superior Court, Court of Appeals for the First District, Case No. 1154476 (October 11, 2018), the Contractors State License Board (“CSLB”) brought disciplinary proceedings against Black Diamond Electric, Inc. (“Black Diamond”), a C-10 Electrical Contractor, for violating: (1) Labor Code section 108.2, which requires individuals performing work as electricians to be certified; and (2) Labor Code section 108.4, which permits uncertified persons seeking on-the-job experience to perform electrical work so long as they are under the direct supervision of a certified electrician.

Reprinted courtesy of Garret Murai, Wendel Rosen

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

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Gavel illustration

Christopher Kendrick and Valerie A. Moore analyze the case Mechling v. Asbestos Defendants.

Inability to Confirm Coverage Supports Setting Aside Insured’s Default Judgment on Grounds of Extrinsic Mistake

Monday, January 21, 2019 — Christopher Kendrick & Valerie A. Moore - Haight Brown & Bonesteel LLP

In Mechling v. Asbestos Defendants (No. A150132, filed 12/11/18), a California appeals court affirmed the trial court’s grant of an insurer’s motion to set aside default judgments entered against its defunct insured pursuant to the trial court’s inherent, equitable power to set aside defaults on the ground of extrinsic mistake, thereby allowing the insurer to intervene and defend its own interests in the case.

In Mechling, Fireman’s Fund insured Associated Insulation of California, which was named as a defendant in asbestos litigation filed in 2009. Associated had ceased operating in 1974, but was somehow successfully served with the complaint and defaulted, leading to default judgments of several million dollars. Notice of the judgments was served on Associated but not Fireman’s Fund.

Reprinted courtesy of Christopher Kendrick, Haight Brown & Bonesteel LLP and Valerie A. Moore, Haight Brown & Bonesteel LLP
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
Ms. Moore may be contacted at vmoore@hbblaw.com


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Judges behind bench illustration

The New York court’s decision raises questions about how claims adjusters are to effectively manage new claims to prevent a default judgment being entered against the insured.

New York Appellate Court Holds Insurer’s Failure to Defend Does Not Constitute a “Reasonable Excuse” Required to Overturn Judgment

Monday, January 21, 2019 — Timothy Carroll & Anthony Miscioscia - White and Williams

A recent opinion by the New York Supreme Court, Appellate Division (Second Department) highlights the potential risks for an insurer leaving an insured unrepresented while the insurer pursues other parties or insurers who may be primarily responsible for defending the insured. In refusing to overturn a default judgment entered against an insured while its insurer knew that a complaint had been filed but refused to defend, the New York court’s decision raises questions about how claims adjusters are to effectively manage new claims to prevent a default judgment being entered against the insured, while at the same time ensuring that the appropriate party or insurance company handles the insured’s defense.

In Kaung Hea Lee v. 354 Management Inc., 2018 N.Y. App. Div. LEXIS 7749 (N.Y. App. Div. Nov. 14, 2018) (354 Management) the underlying plaintiffs obtained a default judgment against the defendant insured due to its failure to answer the plaintiffs’ complaint. The plaintiffs then moved to determine the extent of damages to which they were entitled by virtue of the default judgment. The defendant opposed that motion, relying on an affidavit from a senior liability claims adjuster employed by the defendant’s insurer. “In the affidavit, the claim adjuster stated that she did not assign an attorney to answer the complaint because the codefendant . . . was contractually obligated to defend and indemnify the defendant [insured], and she had been attempting to have either [the codefendant] or its insurer provide an attorney” for the defendant. However, it was determined that the claims adjuster knew about the plaintiffs’ complaint two weeks after the plaintiffs served it on the defendant and months before the plaintiffs moved for default judgment. Despite this knowledge, the defendant’s insurer did not provide a defense or, apparently, obtain an extension of time to respond to the complaint, which led to the default judgment.

Reprinted courtesy of Timothy Carroll, White and Williams and Anthony Miscioscia, White and Williams
Mr. Carroll may be contacted at carrollt@whiteandwilliams.com
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com


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Hand holding a home

Tred Eyerly practices law in Honolulu, Hawaii, and focuses on insurance coverage issues.

Eighth Circuit Affirms Judgment for Bad Faith after Insured's Home Destroyed by Fire

Monday, January 21, 2019 — Tred R. Eyerly - Insurance Law Hawaii

The Eighth Circuit affirmed the district court's judgment that the insurer acted in bad faith when it denied the insured's claim based upon misrepresentations in the application after destruction of his house by fire. Hayes v. Metropolitan Pro. and Cas. Ins. Co., 2018 U.S. App. LEXIS 31813 (8th Cir. Nov. 9, 2018).

Hayes' home was insured by Met under a homeowner's policy. Hayes used the detached garage as part of a home base for his plumbing business. He also rented out the second and third levels of the residence to a tenant and her two children. When Hayes applied for the policy in 2007, Met argues he indicated on the application that the premises were not used to conduct business, and were not used as rental property.

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

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

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Hourglass and the word Time

Don’t sit on your rights and be sure that you are counting from the right date.

Be Careful with Continuous Breach and Statute of Limitations

Monday, January 21, 2019 — Christopher G. Hill - Construction Law Musings

If you are a construction attorney like me (or anyone that takes cases to court), you deal with statutes of limitation on a daily basis. These statutes seem pretty simple. A party has “X” amount of time in which to file its lawsuit after accural of the cause of action. In a breach of contract suit, the accrual is the date of breach. Easy, right? Wrong, at least in some circumstances.

Take for example, the case of Fluor Fed. Sols., LLC v. PAE Applied Techs., LLC out of the 4th Circuit Court of Appeals. In this unpublished opinion the Court looked at “continuous breach” versus “series of separate breaches.” The basic facts are that in 2000 Flour entered into a contract with PAE whereby PAE requested and claims to have received consent from Flour to a 2.3% administrative cost cap on Flour’s work on an Air Force contract. Flour claimed that it did not agree to this cap. In 2002, Flour begain billing PAE for its costs plus the 2.3% administrative markup and billed in this fashion for the first full year. However, in subsequent years and for the next 11 years, Flour billed PAE at a higher markup rate than the 2.3%. PAE disputed the increased markup and paid Flour at the 2.3% rate. Flour periodically protested but made no move to court until it filed suit in March of 2016. After a bench trial, the district court found that Flour had agreed to the cap and found for PAE.

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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Race track

Just like there are ways of minimizing your risk of car accidents, there are also ways to minimize your risk of a lawsuit.

How Your Disgruntled Client Can Turn Into Your Very Own Car Crash! (and How to Avoid It) (Law Tips)

Monday, January 21, 2019 — Melissa Dewey Brumback - Construction Law in North Carolina

Over the summer, I was involved in a car crash. It was *not* my fault– heck, I wasn’t even driving but riding shotgun. But it wasn’t my husband’s fault either. A guy pulling out of a parking lot was watching the traffic coming up the road, but failed to see our car sitting in the same intersection waiting to turn into the same parking lot. He ran right into us.

It may not look like much, but the panels were so damaged it cost almost $9k in damages, over a month of car rental fees, and a LOT of aggravation on our part. The guy who hit us was very nice, apologized, and was concerned if we were injured. His insurance company ultimately paid for all of the damage. However– it wasn’t he who suddenly got a new part time job– that was me. I had to spend lots of time with police, insurance representatives, auto body mechanics, rental car places, you name it. If you’ve ever been in an accident, you know the headache involved. In fact, I have had 2 other accidents over the years (again, neither of which were my fault– I think I’m just a beacon for bad drivers?). One of those accidents was a 4 car accident– a driver hit my car, pushing it into the car ahead, which went into the car ahead of that. In that accident, my car was actually totaled. Fun times!

How is this relevant to your life as an architect or engineer? If you stay in the game (that is, the design field) long enough, chances are, you will, at some point, end up dealing with disgruntled clients. One of those clients may even file a lawsuit against you. Or, for that matter, you may end up getting sued by another party involved in your construction projects– one that you don’t even have a contract with.

Reprinted courtesy of Melissa Dewey Brumback, Ragsdale Liggett PLLC

Ms. Brumback may be contacted at mbrumback@rl-law.com

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Using a Machine Learning to Find Sewer Defects

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Contractor working

In the long run, keeping homeowners happy is well worth the cost, especially if you keep in mind these additional considerations.

Two Things to Consider Before Making Warranty Repairs

Monday, January 21, 2019 — David McLain - Colorado Construction Litigation Blog

In my last article, “What a construction defect ‘win’ looks like for a builder,” I made the point that builders should go to great lengths to work with homeowners to resolve legitimate problems through the entire statute of repose, in order to prevent the homeowners from involving attorneys. Again, happy homeowners do not call attorneys and do not bring construction defect claims. In this article, I want to address the ramifications of this strategy that builders should consider.

First, builders must be aware that any repairs performed will likely start anew the statutes of limitation and repose for the repairs. Second, builders should inform and involve their insurers in this process so as to avoid running afoul of their carriers’ “voluntary payments” clauses. In the long run, keeping homeowners happy is well worth the cost, especially if you keep in mind these additional considerations.

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

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

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Courthouse building exterior

One need not be an expert to give an opinion on the value or demonization in value.

Court Addresses Damages Under Homeowners Insurance Policy

Monday, January 21, 2019 — David R. Cook, Jr. - Autry, Hall, & Cook, LLP

During a storm, a tree landed on a homeowners house causing damage to the home’s foundation. Homeowners filed a claim on their homeowners insurance policy to recover the resulting damages. After homeowners and insurance company could not come to an agreement on value of the loss, homeowners filed a lawsuit.

Homeowners presented the testimony of a contractor as an expert witness regarding the damage and the resulting loss of value. Contractor testified that the home value was reduced in half as a direct result of the damage to the home’s foundation. Insurance company sought to exclude the contractor’s testimony, arguing he was not qualified as an expert and did not apply appropriate methodology to reach his opinions.

Reprinted courtesy of David R. Cook, Jr., Autry, Hall, & Cook, LLP

Mr. Cook may be contacted at cook@ahclaw.com

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Hand holding contract with person in front of computer in background

When can something look like a contract but still not be a contract?

When is a Contract not a Contract?

Monday, January 21, 2019 — Christopher G. Hill - Construction Law Musings

As I’ve stated numerous times here at Musings, in Virginia the contract is king. The courts of Virginia will read a contract as written and where there is a contract (read as foreshadowing), the courts will assume the parties knew what they were doing and enforce it by its terms. However, there has to be a contract in the first place.

When can something look like a contract but still not be a contract? When there isn’t mutual assent according to the case of Knox Energy, LLC v. Gasco Drilling, Inc. In the Knox case, along with a ruling on discovery abuse that is a topic of other blogs, considered a jury instruction on mutual assent given by the district court in a case where Knox contended that it inadvertently sent an unexecuted drilling contract form to Gasco and then inadvertently executed it when Gasco returned it. While this would not normally cause this series of events to be a non-contract, Knox also contended that Gasco knew that Knox had no intention to enter into the drilling contract and that Gasco jumped at the deal.

Reprinted courtesy of The Law Office of Christopher G. Hill

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

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Person signing document

What if there is no specificity in the waiver of consequential damages provision?

Contractual Waiver of Consequential Damages

Monday, January 21, 2019 — David Adelstein - Florida Construction Legal Updates

Contractual waivers of consequential damages are important, whether they are mutual or one-sided. I believe in specificity in that the types of consequential damages that are waived should be detailed in the waiver of consequential damages provision. Standard form construction agreements provide a good template of the types of consequential damages that the parties are agreeing to waive.

But, what if there is no specificity in the waiver of consequential damages provision? What if the provision just states that the parties mutually agree to waive consequential damages or that one party waives consequential-type damages against the other party? Let me tell you what would happen. The plaintiff will argue that the damages it seeks are general damages and are NOT waived by the waiver of consequential damages provision. The defendant, on the other hand, will argue that the damages are consequential in nature and, therefore, contractually waived. FOR THIS REASON, PARTIES NEED TO APPRECIATE WHAT DAMAGES ARE BEING WAIVED OR LIMITED, AND POTENTIALLY THOSE DAMAGES NOT BEING WAIVED OR LIMITED, WHEN AGREEING TO A WAIVER OF CONSEQUENTIAL DAMAGES PROVISION!

Reprinted courtesy of David Adelstein, Kirwin Norris

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

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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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