Interpreting Insurance Coverage and Exclusions: When Sudden means Sudden and EIFS means Faulty
June 15, 2020 —
Ben Volpe - Colorado Construction Litigation BlogEIFS, or Exterior Insulation and Finish System, is an integrated exterior insulation and synthetic stucco system, praised for its energy efficiency.[1] However, EIFS has come to be well known in the construction defect world as placing homes at risk due to a lack of a built-in moisture management system. Before long, insurance companies recognized the risk and began explicitly excluding coverage for EIFS-related damage. However, EIFS exclusions have not always been so clearly set forth in some policies, causing insurance coverage litigation.
Recently, a Greenwood Village couple, Mark and Susan Mock, lost this fight.
Built in 1994, the Mocks’ home was constructed with an EIFS system. The Mocks carried a homeowner’s insurance policy through Allstate, which covered “sudden and accidental loss” to property, but excluded coverage for “planning, construction or maintenance” issues. Such “planning, construction or maintenance” exclusions included “faulty, inadequate or defective designs.”
A few months after a hailstorm, the Mocks discovered moisture-related damage to their home’s EIFS system. They reported the damage to Allstate, but Allstate would not cover it, reasoning that the damage to the EIFS system was excluded as a design and/or construction failure, and thus not covered as a “sudden and accidental” loss. The experts who evaluated the damage concluded it was the result of inherent flaws in the EIFS systems common in the 1994 timeframe, which involved long term moisture intrusion behind the cladding and no means for the water to escape.
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Benjamin Volpe, Higgins, Hopkins, McLain & Roswell, LLCMr. Volpe may be contacted at
volpe@hhmrlaw.com
Toll Brothers Surges on May Gain in Deposits for New Homes
June 01, 2020 —
Prashant Gopal - BloombergToll Brothers Inc. shares surged after the company posted profit that beat estimates and said deposits on new homes were up in recent weeks, a potential sign of optimism for the luxury housing market.
The homebuilder, which focuses on higher-end customers, has struggled during the pandemic. It reported orders for the second quarter that missed estimates and said the key metric had plunged starting March 16, when much of the economy shut down.
But investors shrugged off those results, focusing instead on a 13% year-over-year gain this month in deposits, which the company called a “leading indicator of current market demand.”
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Prashant Gopal, Bloomberg
Last, but NOT Least: Why You Should Take a Closer Look at Your Next Indemnification Clause
March 09, 2020 —
Aimee Cook Oleson - Construction & Infrastructure Law BlogIndemnification clauses appear in nearly every agreement, but they are often overlooked as mere boilerplate provisions after the parties have painstakingly negotiated all of the other terms. It is not uncommon for parties to simply re-use the indemnity language from a prior agreement without considering whether it is a good fit for their current project. This can be a big mistake that may lead to ambiguities and uncertainties if a dispute arises down the road. A standard or canned indemnification clause might work to undo all of the effort that has gone into properly allocating risk. These clauses often contain language such as “notwithstanding anything to the contrary herein,” or the like, which can alter and override other provisions in the agreement.
Indemnification clauses are arguably the most important part of an agreement when an accident or dispute arises on a project. Therefore, they deserve an extra look before finalizing an agreement. Here are a few issues to keep in mind when reviewing your next indemnification clause:
- Have you included all necessary parties?
- Any party who could face potential liability should be included as an indemnified party. This often includes entities and persons related to the contracting parties, not just the parties themselves.
- A well drafted indemnity clause will ensure that all parties are liable for the result of their own work and negligence and that of any party that they have hired to work on a project. This includes employees, agents, subcontractors, or any other similar party.
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Aimee Cook Oleson, Sheppard MullinMs. Oleson may be contacted at
AOleson@sheppardmullin.com
Federal Arbitration Act Preempts Pennsylvania Payment Act
June 15, 2020 —
Wally Zimolong - Supplemental ConditionsI am back. It feels like an entirety since I last posted. But a hellacious trial schedule got me off the blogosphere for some time. Plus, there was nothing to write about.
But I am back with a bang thanks to a decision from the Eastern District of Pennsylvania concerning the interplay of a forum selection clause appearing in an arbitration clause in a construction contract and the Pennsylvania Contractor and Subcontractor Payment Act. In Bauguess Electrical Services, Inc. v. Hospitality Builders, Inc., the federal court (Judge Joyner) ruled that the federal arbitration act preempted the Payment Act’s prohibition on forum selection clauses and held that an arbitration must proceed in South Dakota even though the construction project were the work was performed was located in Pennsylvania.
The Payment Act applies to all commercial construction projects performed in Pennsylvania. As some you might know, Section 514 of the Payment Act, 73 P.S. 514, prohibits choice of law and forum selection clauses. It states “[m]aking a contract subject to the laws of another state or requiring that any litigation, arbitration or other dispute resolution process on the contract occur in another state, shall be unenforceable.” Therefore, if a construction contract is for a project located in Pennsylvania, Pennsylvania law must apply and all disputes must be adjudicated in Pennsylvania.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Savera Sandhu Joins Newmeyer Dillion As Partner
March 23, 2020 —
Newmeyer DillionProminent business and real estate law firm Newmeyer Dillion is pleased to announce that
Savera Sandhu has joined the firm's Las Vegas office as a partner. Sandhu's addition formalizes Newmeyer Dillion's
Healthcare practice group, which will draw on the firm's existing strengths and service offerings in the healthcare industry.
"Newmeyer Dillion has been delivering services within the healthcare industry for many years, offering our premier legal services across a large range of sectors," said Office Managing Partner Nathan Owens. "We are excited to welcome Savera to our team, and believe her experience will help us to more broadly service the healthcare industry as we continue to work closely with companies in the Western region."
The firm's Healthcare practice will comprise attorneys from the firm's business, litigation, employment law and real estate practice groups, who have extensive experience advising the healthcare industry in the areas of state and federal regulatory compliance, general business matters, medical malpractice and litigation defense. Newmeyer Dillion offers a range of key legal services to healthcare clients including entrepreneurs, technology companies, physicians, dentists and other healthcare professionals, suppliers, medical device manufacturers, hospitals, physician groups, out-patient and long-term care facilities.
In addition to health care, Sandhu expands the firm's capabilities to service clients in the transportation, finance, entertainment and construction industries.
For over a decade, Sandhu has worked intimately with the healthcare industry as their legal advocate, offering solution-oriented approaches to the business side of healthcare. As a partner with the firm, Sandhu counsels a wide range of corporate and healthcare clients on business and litigation matters throughout the state and nationwide. Embracing the firm's commitment to propel businesses forward, she combines a deep knowledge of commercial litigation with finely-honed experience as a trusted legal advisor to Fortune 100 companies. She also brings a broad perspective to her work with healthcare clients, based on her exceptional knowledge of corporate law, healthcare litigation, and state and federal regulatory matters.
Sandhu believes that her effectiveness as legal counsel is enhanced by her strong commitment to both her profession and to the communities where she lives and works. Dedicated to the tenets of diversity and inclusion rooted in the firm's culture, she has held leadership roles as a long-time member of the Southern Nevada Association of Women Attorneys (SNAWA) and the South Asian Bar Association.
Sandhu received her B.A. from the University of Washington and her J.D. from Seattle University School of Law.
About Newmeyer Dillion
For 35 years, Newmeyer Dillion has delivered creative and outstanding legal solutions and trial results that achieve client objectives in diverse industries. With over 70 attorneys working as a cohesive team to represent clients in all aspects of business, employment, real estate, environmental/land use, privacy & data security and insurance law, Newmeyer Dillion delivers holistic and integrated legal services tailored to propel each client's success and bottom line. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California and Nevada, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949.854.7000 or visit www.newmeyerdillion.com.
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Is It Time to Get Rid of Retainage?
June 15, 2020 —
David K. Taylor - Construction ExecutiveMany debate the pros, cons and claims of retainage—when one party to a construction contract withholds a percentage (typically 5%-10%) from an otherwise approved contractor pay application, and which typically is not paid until a project is substantially complete. If an owner withholds retainage from a prime contractor, typically the contractor will in turn withhold retainage from its subcontractors.
While retainage has been part of the construction industry for decades, its concept, use (and abuse) have been under more discussion during the past 10 years.
Based on heavy lobbying from primary subcontractor groups, state legislatures have passed laws to regulate retainage in commercial projects. Lenders have become more careful about loans and are frequently involved in retainage discussions. Bonded projects are subject to criticism when a surety does not step in and, like the mythical insurance company, write a check.
Reprinted courtesy of
David K. Taylor, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Taylor may be contacted at
dtaylor@bradley.com
Partner Vik Nagpal is Recognized as a Top Lawyer of 2020
June 29, 2020 —
Bremer Whyte Brown & O'Meara LLPPlease join us in congratulating San Diego Partner
Vik Nagpal for being recognized as a Top Lawyer of 2020 by San Diego Magazine! San Diego Magazine works with Martindale-Hubbell to choose top lawyers who have reached the highest level of ethical standards and professional excellence. Vik Nagpal was evaluated and given the highest ratings by the colleagues using a peer reviewed
Vik Nagpal is the managing partner of Bremer Whyte Brown & O’Meara LLP’s San Diego offices, as well as directing the firm’s business development.
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Bremer Whyte Brown & O'Meara LLP
Appreciate The Risks You Are Assuming In Your Contract
February 10, 2020 —
David Adelstein - Florida Construction Legal UpdatesAPPRECIATE THE RISKS YOU ARE ASSUMING IN YOUR CONTRACT. Otherwise, those risks will come back and bite you in the butt. This language is not capitalized for naught. Regardless of the type of contract you are entering into, there are risks you will be assuming. You need to appreciate those risks because there may be insurance you can obtain to cover that risk.
For instance, exculpatory provisions (or get-out-of-jail provisions) in contracts are enforceable if they are unambiguous. “Such provisions are deemed to be unambiguous and enforceable when the language unequivocally demonstrates a clear and understandable intention for the defendant to be relieved from liability such that an ordinary and knowledgeable person will know what he or she is contracting away.” Pillay v. Public Storage, Inc., 44 Fla.L.Weekly D2744c (Fla. 4th DCA 2019).
An example of an exculpatory provision can be found in the public storage rental contract found in Pillay that read:
(1) ALL PERSONAL PROPERTY IS STORED BY OCCUPANT AT OCCUPANT’S SOLE RISK.
(2) Owner and Owner’s agents . . . will not be responsible for, and Tenant releases Owner and Owner’s agents from any responsibility for, any loss, liability, claim, expense, damage to property . . . including without limitation any Loss arising from the active or passive acts, omission or negligence of Owner or Owner’s agents.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
