insurance – Construction Law Musings- Richmond, VA

Chinese Drywall Remediation Redux

Originally posted 2012-02-10 14:56:07.

Earlier here at Musings, I opined that sometimes the old saw about no good deed goes unpunished applies to construction. The subject of that post was litigation in the Eastern District of Virginia federal court between a contractor who reached an informal settlement with certain homeowners relating to Chinese drywall damages. On March 24, 2010, the Virginia court dismissed a counterclaim by the builder seeking to have the insurer pay its remediation costs with leave for the builder to amend its counterclaim. In the earlier opinion, the Court cited a lack of factual support for any litigation or threatened litigation that would show that the builder was under a legal obligation to pay damages in a way that would put it under the insuring agreement.

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.

Image via stock.xchng.

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

Is Your Defective Construction Claim Covered?

Originally posted 2014-06-06 09:00:33.

For this week’s Guest Post Friday here at Construction Law Musings, we welcome a friend and sometime co-presenter Craig Martin. Craig (@craigmartin_jd) is a partner in the law firm of Lamson Dugan and Murray, LLP in Omaha, Nebraska. He has a background and experience in all aspects of construction law. As part of his practice he counsels contractors, subcontractors, developers, owners, materials suppliers and design professionals in various construction disputes. He also successfully represents them in both State and Federal courts. Craig’s business goal is to provide cost-effective and distinguished counsel to the construction industry. Craig also authors the Construction Contractor Advisor blog.

This last year was the year for the courts to decide whether a defective construction claim was covered by your Commercial General Liability (CGL) Policy. While you might typically think that the answer to the question lies in the policy itself, a number of recent court cases reveal that it may also depend on the state in which a claim is litigated. As explained below, a number of state courts have entered opinions that interpret CGL policies and have come to very different conclusions.

When is Defective Construction covered? Continue reading Is Your Defective Construction Claim Covered?

Monitor Yourself to Avoid Construction Risk

Originally posted 2014-11-24 08:00:53.

Shasta Dam under construction, California; edi... — Image via Wikipedia

As I looked through my weekly piles of mail, an article in Constructor Magazine caught my attention. The article was in the insurance commentary section of the magazine and is entitled “Avoiding Common Causes of Contractor Failure.” While this article is written from an insurance perspective, many of the same principles that are found in the article apply from a legal perspective as well.

Essentially, the article breaks down into two main points: stick with what you know and don’t squeeze yourself to death. Both of these are great points and got me thinking about them from my perspective as a construction attorney here in Virginia. I agree with the author in almost every way.

Continue reading Monitor Yourself to Avoid Construction Risk

Want Coverage for Construction Related Damage? You Need an Occurrence

Originally posted 2013-02-25 09:00:18.

St Nicholas Insurance Company Advertisement (Photo credit: Wikipedia)

In reading the title to this post, you are likely thinking “Duh, of course you do, if nothing “occurs” then there is nothing to cover!” (or something to that effect). While this seems an obvious conclusion, we’re talking the world of law, construction and insurance coverage where nothing is easy and very little if anything is obvious.

Continue reading Want Coverage for Construction Related Damage? You Need an Occurrence

Green Building, Litigation and Risk

Originally posted 2010-12-03 09:00:25.

Green Building is all the rage. From the latest version of LEED, LEED 3.0, to discussions of “LEEDigation.”

Every level of government wants in on the latest in sustainability. Musings discussed this trend in prior posts relating to Virginia and “green” building and Virginia Business Magazine chimed in as well. This trend is laudable, however, like any new technological or social change, risk follows.

We have new technology being used for the first time, and old technology being used in new ways. Insurance companies are dealing with a new standard of care and a level of risk created by longer time horizons on expectations relating to energy efficiency. Governments are looking for ways to legally enforce their mandates of LEED or other green certification. Contractors also have a particular level of risk that they did not face before.

Of course, this gives attorneys more work to do, and you the need to give them that work. Recently, newspapers have picked up on the potential for litigation based upon the new wave of green building and new mandates relating to sustainability. Hopefully, you will see this trend coming and prepare for it through and early consultation with a knowledgeable attorney. Your contracts, actions, and insurance will all need to be reviewed in order to assure that you are properly prepared for the next wave of innovation.

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