Partner Jonathan R. Harwood Obtained Summary Judgment in a Coverage Action Arising out of a Claim for Personal Injury
December 22, 2019 —
Jonathan R. Harwood - Traub Lieberman PerspectivesOn August 16, 2019, Traub Lieberman partner obtained summary judgment in a declaratory judgment action involving a claim for coverage for a personal injury action involving injuries suffered on a construction site. The plaintiff in the underlying action was performing excavation in a basement of a building in Manhattan so the owner could install a pool. During the course of the excavation plaintiff fell 13 feet from a plank, into the excavated pit, suffering serious injuries. Traub Lieberman’s client issued a CGL policy to the building owner and the insured sought coverage for the suit under that policy. The insurer denied coverage based on an endorsement to the policy that stated the insured could only contract directly with a specified general contractor. The plaintiff was an employee of a subcontractor and the insurer believed the insured had contracted directly with that unapproved subcontractor. The insured denied it had done, contending the subcontractor had been hired by the general contractor identified in the endorsement.
Reprinted courtesy of
Jonathan R. Harwood, Traub Lieberman
Mr. Harwood may be contacted at jharwood@tlsslaw.com
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Hawaii Supreme Court Finds Excess Can Sue Primary for Equitable Subrogation
July 30, 2015 —
Tred R. Eyerly – Insurance Law HawaiiIn responding to a certified question from the U.S. Distric Court, the Hawaii Supreme Court determined that an excess carrier can sue the primary carrier for failure to settle a claim in bad faith within primary limits. St. Paul Fire & Marine Ins. Co. v. Libery Mut. Ins. Co., 2015 Haw. LEXIS 142 (Haw. June 29, 2015).
St. Paul, the excess carrier, and Liberty Mutual, the primary carrier, issued polices to Pleasant Travel Service, Inc. The primary policy covered up to $1 million.
Pleasant Travel was sued for damages resulting from an accidental death. St. Paul alleged that Liberty Mutual rejected multiple pretrial settlement offers within the $1 million primary policy limit. A trial resulted in a verdict of $4.1 million against Pleasant Travel. The action settled for a confidential amount in excess of the Liberty Mutual policy limit. St. Paul paid the amount in excess.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Caterpillar Said to Be Focus of Senate Overseas Tax Probe
March 26, 2014 —
Richard Rubin and Jesse Drucker - BloombergA U.S. Senate investigative panel is examining Caterpillar Inc. (CAT) and whether the company improperly avoided U.S. taxes by moving profits outside the country, said three people familiar with the inquiry.
The Senate’s Permanent Subcommittee on Investigations will hold a hearing in early April, said two of the people. They spoke on condition of anonymity before an official announcement.
Rachel Potts, a spokeswoman for Caterpillar, declined to comment. Two staff members for the subcommittee declined to comment.
In 2009, Daniel Schlicksup, an employee who had worked on tax strategy, alleged in a lawsuit in federal court that Caterpillar used a “Swiss structure” to shift profits to offshore companies and avoid more than $2 billion in U.S. taxes. He also alleged that Caterpillar used a “Bermuda structure” involving shell companies to return profits to the U.S. without paying required taxes.
Mr. Rubin may be contacted at rrubin12@bloomberg.net; Mr. Drucker may be contacted at jdrucker4@bloomberg.net
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Richard Rubin and Jesse Drucker, Bloomberg
Judgment for Insurer Reversed Due to Failure to Establish Depreciation
August 01, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe trial court erred in placing the burden on the policyholder to establish depreciation in determining the actual cash value of the loss. SFR Serv., LLC v. Tower Hill Prime Ins. Co., 2023 Fla. App. LEXIS 3570 (Fla. Ct. App. May 26, 2023).
The insureds' roof was damaged by Hurricane Irma. They submitted their claim to their insurer, Tower Hill. The cost of repair was assessed at $7,726.94, below the amount of the deductible. Therefore, there was no recovery under the policy. The insureds assigned their claim to SFR Services, LLC, their roofing contractor. SFR submitted a claim to Tower Hill for $162,083.84. Tower Hill refused to pay and SFR sued.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
New York's Highest Court Says Asbestos Causation Requires Evidence Of Sufficient Exposure To Sustain Liability
May 10, 2022 —
Rafael Vergara & Jhonattan N. Gonzalez - White and WilliamsOn April 26, 2022, the New York Court of Appeals described that in toxic tort cases a plaintiff can only establish liability-creating causation for an adverse health effect with “expert testimony based on generally accepted methodologies.” See
Francis Nemeth v. Brenntag North America (N.Y. Apr. 26, 2022). The suit involved alleged asbestos exposure from talc.
The plaintiff alleged liability for talc contaminated with asbestos that was ultimately used in a commercial talcum powder, Desert Flower, which the decedent applied daily from 1960 to 1971. At trial, the plaintiff proffered two expert witnesses, a geologist, Sean Fitzgerald, who testified about the “glove box test” and a doctor of internal medicine, Dr. Jacqueline Moline. Fitzgerald’s glove box test consisted of agitating a sample of Desert Flower in a Plexiglas chamber. Fitzgerald concluded that the asbestos fibers in the sample of Desert Flower were “significantly releasable” and that the decedent was exposed to thousands to trillions of fibers through repeated use. Dr. Moline concluded Desert Flower was “a substantial contributing factor” to the decedent’s peritoneal mesothelioma. The jury returned a verdict in the plaintiff’s favor.
Reprinted courtesy of
Rafael Vergara, White and Williams and
Jhonattan N. Gonzalez, White and Williams
Mr. Vergara may be contacted at vergarar@whiteandwilliams.com
Mr. Gonzalez may be contacted at gonzalezj@whiteandwilliams.com
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Significant Victory for the Building Industry: Liberty Mutual is Rejected Once Again, This Time by the Third Appellate District in Holding SB800 is the Exclusive Remedy
December 15, 2016 —
Richard H. Glucksman & Ravi R. Mehta – Chapman Glucksman Dean Roeb & Barger Bulletin I. Elliott Homes, Inc. v. Superior Court (Certified for Publication, Cal. Ct. App. Dec. 2, 2016
The California Court of Appeal for the Third Appellate District recently elaborated on the scope of the Right to Repair Act, commonly known as SB-800 (“Act”). In
Elliott Homes, Inc. v. Superior Court of Sacramento County (Kevin Hicks, et al.) (certified for publication, Cal. Ct. App. Dec. 2, 2016), the Court considered whether the Act (and specifically the Act’s pre-litigation procedure) applies, when homeowners plead construction defect claims based only on common law causes of action, as opposed to violations of the building standards set forth in the Act (
Civil Code §896). The Court answered this question affirmatively.
The homeowners of seventeen (17) single-family homes filed a Complaint against the builder of their homes, Elliott Homes, Inc. (“Elliott”), alleging common law causes of action for construction defects. Elliott filed a motion to stay the litigation on the ground that the homeowners failed to comply with the pre-litigation procedure set forth in the Act. The trial court denied the motion, agreeing with the homeowners that this pre-litigation procedure did not apply because the homeowners had not alleged a statutory violation of the Act. Elliott appealed. The Court of Appeal purely considered the question of whether the Act, including its pre-litigation procedure, applies when a homeowner pleads construction defect claims based on common law causes of action, and not on statutory violations of the Act’s building standards.
To answer this question, the Court analyzed a recent case decided by the Court of Appeal for the Fourth Appellate District:
Liberty Mutual Ins. Co. v. Brookfield Crystal Cove, LLC (2013) 219 Cal.App.4th 98. In this subrogation case, a builder’s insurer asserted common law causes of action (but not statutory building standard violations) alleging construction defects against the builder to recover amounts paid to the homeowner after a sprinkler system failure caused extensive damage to the subject property. The trial court sustained the builder’s demurrer to the Complaint on the ground that it was time-barred under the Act. The Court of Appeal reversed the trial court’s order, holding that common law construction defect claims arising from actual damages are not covered by the Act because “the Act does not provide the exclusive remedy in cases where actual damage has occurred.” (
Liberty Mutual, 219 Cal.App.4th 98, 109).
The
Elliott Court declined to follow
Liberty Mutual, finding that that Court failed to properly analyze the language of the Act. The
Elliott Court analyzed both the statutory scheme and the legislative history of the Act to arrive at the conclusion that common law causes of action for construction defects do indeed fall within the purview of the Act.
According to the
Elliott Court, the Act “broadly applies to
any action seeking recovery of damages arising out of, or related to deficiencies in…residential construction and in such an action, a homeowner’s claims or causes of action shall be limited to violation of the standards set forth in the Act, except as specified.” Further, the Act expressly provides that “no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed.”
Civil Code §943(a). In turn,
Civil Code §944 allows for a recovery for the cost of repairing a building standard violation, or for the cost of repairing any damage caused by such a violation, among other things.
The limited exceptions to the Act’s applicability concern the enforcement of a contract, or any action for fraud, personal injury, or violation of a statute. Civil Code §943(a). Additionally, the Act does not apply to condominium conversions. Civil Code §896.
The Elliott Court explains that apart from these exceptions, the Legislature intended the Act to apply to all construction defect claims (regardless of damage) relating to the construction of residential properties whose sales contracts are signed after January 1, 2003. There is no exception in the Act, express or implied, for common law causes of action.
Next, the Court turns to the Act’s legislative history to buttress this conclusion. This history makes clear that the Act is a legislative response to the California Supreme Court’s holding in
Aas v. Superior Court (2000) 24 Cal.4th 627, that construction defects in residential properties are only actionable in tort when actual property damage manifests. Senate Judiciary Committee hearings indicate that the Act was the product of protracted negotiations between varying interested parties, including construction industry trade groups and consumer protection groups. The Legislature intended (1) to promulgate building standards, violations of which would be actionable, even without damage, and (2) to allow homeowners to recover for actual damage caused by construction defects not covered by the building standards. In other words, the Act was intended to provide homeowners redress regardless of whether damage had manifested.
Therefore, the Court concluded that common law causes of action for construction defects, regardless of damage, are subject to the pre-litigation procedure set forth in the Act. The Court issued a writ of mandate directing the trial court to vacate its earlier order, and to enter a new order granting Elliott’s motion to stay the litigation until the homeowners (and Elliott) have satisfied the pre-litigation procedure of the Act.
II. McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132
Similar to the Third Appellate District Court’s ruling in
Elliott, the Fifth Appellate District Court also rejected the holding of
Liberty Mutual in a matter now pending before the California Supreme Court:
McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132 (review granted and opinion superseded sub nom.
Albany v. Superior Court 360 P.3d 1022). Also similar to
Elliott, in
McMillin a group of homeowners filed common law construction defect claims against the builder of their homes. The builder,
McMillin, moved to stay the litigation pending compliance with the Act’s pre-litigation procedure. The trial court denied the motion, holding that the Act does not apply because the homeowners have not asserted statutory building standard violations contained within the Act.
In reasoning substantially similar to that of
Elliott, the
McMillin Court rejected Liberty Mutual’s holding that the Act is not the exclusive remedy for pursuing construction defect claims, with or without damage. Thus, the
McMillin Court issued a writ of mandate to vacate the trial court’s earlier order and to enter a new order granting McMillin’s motion to stay.
On November 24, 2015, the California Supreme Court granted the homeowners’ petition for review. In August of 2016, briefing was completed and the matter is now awaiting the scheduling of arguments. CGDRB will continue to closely monitor the pending appeal of this matter to the California Supreme Court, as well as all related developments.
Reprinted courtesy of
Richard H. Glucksman, Chapman Glucksman Dean Roeb & Barger and
Ravi R. Mehta, Chapman Glucksman Dean Roeb & Barger
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Mehta may be contacted at rmehta@cgdrblaw.com
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Collapse of Breezeway Attached to Building Covered
February 24, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court found that a breezeway that collapsed during a party was covered by the commercial property policy. DENC, LLC v. Philadelphia Indem. Ins. Co., 2019 U.S. Dist. LEXIS 179083 (M.D. N.C. Oct. 15, 2019).
DENC owned an apartment complex that was insured by Philadelphia under an all-risk policy. During an early morning party, a large number of students gathered on the second-floor breezeway for a party. The students started jumping in the breezeway when a certain song started playing. The floor abruptly collapsed underneath the students.
Philadelphia sent an adjuster to inspect the breezeway a couple days later. He wrote to Philadelphia that "the sole and proximate cause of the loss is water damage occurring over an extended period of time causing the second floor breezeway to sage and the light weight concrete to crack." Shortly thereafter, the building was condemned. A structural engineer found multiple ways in which water had seeped into the breezeway's wood framing and photographed the resulting biological growth and wood decay. He concluded that the building had sustained significant long-term water intrusion which resulted in the wood framing inability to support the loads. The water intrusion was caused by the failure to properly install a water management system on the walls, a properly integrated waterproof system for the walkway slab and framing configuration, and improper venting of dryers.
DENC retained an engineer who testified that the breezeway was sagging because the concrete had broken.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Colorado’s Federal District Court Finds Carriers Have Joint and Several Defense Duties
July 31, 2013 —
Tred Eyerly, Insurance Law HawaiiAn issue that has plagued builders in Colorado construction defect litigation is the difficulty of getting additional insured carriers to fully participate in the builder’s defense, oftentimes leaving the builder to fund its own defense during the course of the litigation.
Many additional insurers offer a variety of positions regarding why they will not pay for fees and costs during the course of a lawsuit. Some insurers argue that, until after trial, it is impossible to determine its proper share of the defense, and therefore cannot make any payments until the liability is determined as to all of the potentially contributing policies. (This is often referred to as the “defense follows indemnity” approach.) Others may make an opening contribution to defense fees and costs, but fall silent as fees and costs accumulate. In such an event, the builder may be forced to fund all or part of its own defense, while the uncooperative additional insured carrier waits for the end of the lawsuit or is faced with other legal action before it makes other contributions.
Recent orders in two, currently ongoing, U.S. District Court cases provide clarity on the duty to defend in Colorado, holding that multiple insurers’ duty to defend is joint and several. The insured does not have to go without a defense while the various insurers argue amongst themselves as to which insurer pays what share.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
