Originally posted 2012-02-10 14:56:07.
Well, the builder did just that and added certain language to the amended counterclaim that, this time, survived dismissal. In Dragas II, Judge Smith cited certain amendments, among them the factual allegation that the settlement was in response to four lawsuits by owners. Judge Smith determined that this allegation of threatened litigation was enough to survive a motion to dismiss. Judge Smith then went on to consider other defenses of the insurers, including the “voluntary payments” provision of the policy, and rejected those arguments as well.
I highly recommend this opinion and Judge Smith’s prior opinion to any lawyer or contractor who is faced with the situation of trying to be reimbursed by an insurance company for its pro-active stance toward remediation of potential defects. These two opinions outline the pleading requirements in stark contrast because of the differing results (though Judge Smith is careful to point out that she makes no ruling on the ability of Dragas to prove its factual allegations).
In sum, while the prior Dragas opinion seems to work against the “good Samaritan” who seeks to act proactively, this latest opinion seems to remove contractors from the Gordian knot (hat tip to Tim Hughes (@vaconstruction)) of either fixing a problem and potentially losing coverage, or waiting to get sued. Of course, a careful reading of these opinions and the advice of a Virginia construction attorney prior to taking action will go a long way toward determining if your circumstances are such that the proactive approach is the legally sound one.
UPDATE: For more good analysis on this case, check out my friend Tim Hughes’ discussion from his blog.
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Thanks for the shout-out Chris! Great points as always, and a very interesting and important case to follow.
Any time Tim. Great thoughts deserve a shout out.
Chinese Drywall Remediation Redux: Thanks for the shout-out