Landmark San Diego Hotel Settles Defects Suit for $6.4 Million
March 04, 2011 —
Beverley BevenFlorezCDJ STAFFAfter five years of legal battles, the condo owners of the El Cortez Hotel building in downtown San Diego settled for $6.4 million, as reported by The San Diego Union-Tribune on March 28, 2011. The Homeowners Association will net just over $3 million from the settlement.
The litigation may have had an adverse effect on the value of the condos within the El Cortez Hotel building. According to an article by Kelly Bennett of Voice of San Diego, “Many condos in the building originally sold for more than $600,000. Currently, the three units on the market are asking for just more than $200,000, the U-T said.”
Andrew Berman, the owners’ attorney, told The San Diego Union-Tribune that the five years of litigation included six lawsuits, 200 depositions, and multiple construction tests.
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Arizona Supreme Court Clarifies Area Variance Standard; Property Owners May Obtain an Area Variance When Special Circumstances Existed at Purchase
October 19, 2017 —
Nick Wood, Adam Lang, Noel Griemsmann, & Brianna Long – Snell & Wilmer Real Estate Litigation BlogIn Pawn 1st v. City of Phoenix, the Arizona Supreme Court rejected a Court of Appeals rule that would have unduly restrained alienation of property in Arizona. The Court of Appeals found that the City of Phoenix Board of Adjustment acted beyond its authority when it granted an area variance to a pawn shop where the special circumstances causing a need for the variance existed before the pawn shop purchased the property. Under Arizona law, boards of adjustment cannot grant an area variance where the special circumstances requiring the variance are self-imposed. The Court of Appeals adopted a rule that knowledge of special circumstances at the time of purchase made the special circumstances self-imposed, foreclosing the purchaser’s ability to obtain a variance. This rule would have severely restricted property purchasers’ ability to obtain area variances in Arizona and by extension likely strained property transactions.
The underlying case involved a pawn shop that was proposed in southeast Phoenix. After the property purchaser obtained approval for a required use permit (for a pawn shop) and a variance (for a 500 foot residential setback) from the City of Phoenix Board of Adjustment, a competing pawn shop filed a special action arguing that the variance was a use variance, not an area variance, beyond the board of adjustment’s authority.
Reprinted courtesy of Snell & Wilmer attorneys
Nick Wood,
Adam Lang,
Noel Griemsmann and
Brianna Long
Mr. Wood may be contacted at nwood@swlaw.com
Mr. Lang may be contacted at alang@swlaw.com
Mr. Noel may be contacted at ngriemsmann@swlaw.com
Ms. Brianna may be contacted at bllong@swlaw.com
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Coverage for Faulty Workmanship Denied
September 07, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe court found that the insurer had no duty to defend claims against the insured for faulty workmanship. HT Services, LLC v. Western Heritage Ins. Co., 2020 U.S. Dist. LEXIS 123664 (D. Colo. July 10, 2020).
Western Heritage Insurance Company issued three concurrent general liability policies to HT Services, LLC. The policies insured two properties owned by HT in Colorado Springs, its offices and vacant land. HT eventually developed a residential community on the vacant land. In January 2016, the homeowners' association filed suit against HT for negligent design and construction of a retaining wall at the project.
HT requested Western to defend and indemnify against the suit. Western denied coverage and HT sued. HT asserted that Western had a duty to defend and asserted claims for declaratory relief, breach of contract and bad faith. HT moved for partial summary judgment on its claims for declaratory relief, seeking a determination of its rights under the policies. Western moved for summary judgment on all of HT's claims.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Endorsement Excludes Replacement of Undamaged Property with Matching Materials
August 20, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe court approved the insurer's endorsement which stated the insured would not pay for undamaged property in order to match damaged property. Noonan v. Am. Family Mut. Ins. Co., 2019 U.S. App. LEXIS 15545 (May 24, 2019).
After hail and wind damaged part of the roof in the insureds' home, American Family inspected the roof and determined that it had suffered $12,000 in damage. The insureds disputed this amount and demanded an appraisal to provide a binding estimate of the amount of loss. American Family asked the appraisers to divide their estimate into two categories - one for replacing damaged shingles and another for replacing undamaged shingles that would not match those needed to replace the damaged ones. The appraisers did not do so. They instead found that replacing the entire roof would cost $141,000 and noted there was a matching issue because alternative products did not match the current shingles on the roof.
Of the $141,000 needed to replace the entire roof, American Family estimated that $87,232.98 was due to the costs of matching. The insureds sued. The district court remanded the case to the appraisers to clarify the award by differentiating the costs attributable to the actual roof damage from those attributable to shingle matching. The appraisers clarified the award and reported that actual damages were $66,619, meaning that $74,381 was attributable to matching. American Family then paid the actual damages, less the deductible, but refused to pay the rest.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Illinois Supreme Court Holds that Constructions Defects May Constitute “Property Damage” Caused By An “Occurrence” Under Standard CGL Policy, Overruling Prior Appellate Court Precedent
January 08, 2024 —
Jason Taylor - Traub Lieberman Insurance Law BlogOn November 30, 2023, the Illinois Supreme Court issued an opinion that overturned precedent in Illinois regarding whether faulty workmanship that only caused damage to the insured’s own work constituted “property damage” caused by an “occurrence” under Illinois law. In Acuity v. M/I Homes of Chicago, LLC, 2023 IL 129087, the Illinois Supreme Court considered whether Acuity, a mutual insurance company, had a duty to defend its additional insured, M/I Homes of Chicago, LLC (M/I Homes), under a subcontractor’s commercial general liability (CGL) policy in connection with an underlying lawsuit brought by a townhome owners’ association for breach of contract and breach of an implied warranty of habitability. The Cook County Circuit Court granted summary judgment in favor of Acuity finding no duty to defend because the underlying complaint did not allege “property damage” caused by an “occurrence” under the initial grant of coverage of the insurance policy. The appellate court reversed and remanded, finding that Acuity owed M/I Homes a duty to defend. The Illinois Supreme Court affirmed, in part, holding construction defects to the general contractor’s own work may constitute “property damage” caused by an “occurrence” under the standard CGL Policy. This is significant as it overrules prior Illinois precedent finding that repair or replacement of the insured’s defective work does not satisfy the initial grant of coverage of a CGL Policy.
By way of background, the underlying litigation stems from alleged construction defects in a residential townhome development in the village of Hanover Park, Illinois. The townhome owners’ association, through its board of directors (the Association) subsequently filed an action on behalf of the townhome owners for breach of contract and breach of the implied warranty of habitability against M/I Homes as the general contractor and successor developer/seller of the townhomes. The Association alleged that M/I Homes’ subcontractors caused construction defects by using defective materials, conducting faulty workmanship, and failing to comply with applicable building codes. As a result, “[t]he [d]efects caused physical injury to the [t]ownhomes (i.e. altered the exterior’s appearance, shape, color or other material dimension) after construction of the [t]ownhome[ ] was completed from repeated exposure to substantially the same general conditions.” The defects included “leakage and/or uncontrolled water and/or moisture in locations in the buildings where it was not intended or expected.” The Association alleged that the “[d]efects have caused substantial damage to the [t]ownhomes and damage to other property.”
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Jason Taylor, Traub LiebermanMr. Taylor may be contacted at
jtaylor@tlsslaw.com
Avoid the Headache – Submit the Sworn Proof of Loss to Property Insurer
September 28, 2020 —
David Adelstein - Florida Construction Legal UpdatesProperty insurance policies (first party insurance policies) contain post-loss obligations that an insured must (and should) comply with otherwise they risk forfeiting insurance coverage. One post-loss obligation is the insurer’s right to request the insured to submit a sworn proof of loss. Not complying with a post-loss obligation such as submitting a sworn proof of loss can lead to unnecessary headaches for the insured. Most of the times the headache can be avoided. Even with a sworn proof of loss, there is a way to disclaim the finality of damages and amounts included by couching information as estimates or by affirming that the final and complete loss is still unknown while you work with an adjuster to quantify the loss. The point is, ignoring the obligation altogether will result in a headache that you will have to deal with down the road because the property insurer will use it against you and is a headache that is easily avoidable. And, it will result in an added burden to you, as the insured, to demonstrate the failure to comply did not actually cause any prejudice to the insurer.
By way of example, in Prem v. Universal Property & Casualty Ins. Co., 45 Fla. L. Weekly D2044a (Fla. 3d DCA 2020), the insured notified their property insurer of a plumbing leak in the bathroom. The insurer requested for the insured to submit a sworn proof of loss per the terms of the insured’s property insurance policy. The insurer follow-up with its request for a sworn proof of loss on a few occasions. None was provided and the insured filed a lawsuit without ever furnishing a sworn proof of loss. The insurer moved for summary judgment due the insured’s failure to comply with the post-loss obligations, specifically by not submitting a sworn proof of loss, and the trial court granted the insurer’s motion. Even at the time of the summary judgment hearing, the insured still did not submit a sworn proof of loss.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
U.S. Firm Helps Thais to Pump Water From Cave to Save Boys
August 14, 2018 —
Dan Murtaugh - BloombergLike much of the world, Patrick Decker has been engrossed in the saga of 12 boys and their soccer coach who became trapped in a flooded cave in Thailand. Unlike most, Decker is in a position to do something about it.
As chief executive officer of Xylem Inc., one of the world’s top water technology firms, Decker spent much of last week reaching out to Thai officials and mobilizing his company of 17,000 employees to help. Decker said he sent four engineers to the cave site, and they assisted rescuers by boosting pumping power 40 percent. Thai Navy SEALs and international cave diving experts extracted eight boys over Sunday and Monday.
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Dan Murtaugh, Bloomberg
South Carolina Couple Must Arbitrate Construction Defect Claim
June 28, 2013 —
CDJ STAFFThe South Carolina Court of Appeals has rejected a claim by Sun City property owners that they were not bound by the arbitration clause in their purchase agreement. Roger and Mary Jo Carlson brought the claim against Del Webb Communities and Pulte Homes. About 140 homeowners are alleging problems in the community. According to the court, the Carlsons will have to go through arbitration with the companies over the alleged stucco defects to their home.
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