Justia Construction Law Opinion Summaries

Dorothy Smith sued her homeowner's insurance carrier, Mississippi Farm Bureau Casualty Insurance Company (“Farm Bureau”), after Farm Bureau denied her claim based on the earth-movement exclusion in the policy. Smith filed suit against her home builder, Larry Brown, d/b/a Brown’s Construction Company, and Farm Bureau after learning that her home’s foundation was defective. Smith filed a claim for the repair of the foundation. Farm Bureau filed a motion for summary judgment, which was denied by the trial court. Farm Bureau then filed a petition for interlocutory appeal by permission, which the Mississippi Supreme Court granted. The Supreme Court found the trial court erred in denying Farm Bureau’s motion for summary judgment: the earth-movement exclusion was unambiguous and excluded coverage for the property damage suffered by Smith. View "Mississippi Farm Bureau Casualty Insurance Company v. Smith" on Justia Law

At issue in this appeal were commercial general liability policy exclusions that barred coverage for damage to “that particular part” of the property on which an insured is performing operations, or which must be repaired or replaced due to the insured’s incorrect work. The Tenth Circuit concluded the phrase “that particular part” was susceptible to more than one reasonable construction: it could refer to the distinct component upon which an insured works or to all parts ultimately impacted by that work. The Court surmised the contract had to then be interpreted consistent with the mutual intent of the parties, with the ambiguity resolved most favorably to the insured and against the insurance carrier. The Court adopted the narrower interpretation of the phrase “that particular part,” under which the exclusion extends only to the distinct components upon which work was performed. This conclusion was contrary to the district court's interpretation, and therefore reversed and remanded for further proceedings. View "MTI v. Employers Insurance Co." on Justia Law

The Supreme Court answered a certified question from the Unitde States District Court by holding that Ohio Rev. Code 4123.35(O) is not unconstitutional as applied to the tort claims of an enrolled subcontractor’s employee who is injured while working on a self-insured construction project and whose injury is compensable under Ohio’s workers’ compensation laws.Daniel Stolz was injured while working as a concrete finisher for Jostin Construction. Jostin was a subcontractor of Messer Construction Company, the general contractor for the project. Under section 4123.35(O), Messer provided workers’ compensation coverage on the project for employees of subcontractors like Jostin that chose to enroll in Messer’s self-insurance plan. Stolz eventually sued Messer and several subcontractors for negligence. Messer and three enrolled subcontractors argued that they were immune from liability under section 4123.35(O). The Supreme Court concluded that the statute provides immunity to both general contractors and enrolled subcontractors from tort claims brought by employees of other enrolled subcontractors. Stolz later amended his complaint to allege that section 4123.35(O) is unconstitutional. The enrolled subcontractors petitioned the district court to certify a question of state law to the Supreme Court. The Supreme Court answered that section 4123.35(O) does not violate the Ohio Constitution’s right-to-remedy, right-to-jury, or equal-protection provisions. View "Stolz v. J & B Steel Erectors, Inc." on Justia Law

The Second Circuit affirmed the district court's summary judgment dismissal of all claims in the Second Amended Complaint against defendants in an action stemming from construction projects with the U.S. Army Corps of Engineers. The court held that MES's claims failed to articulate any support for its accusations that Safeco breached its contractual obligations or engaged in bad faith or tortious conduct. The court noted that the claim that Safeco acted inappropriately by attending the cure meetings was particularly frivolous. In this case, MES failed to identify any good faith basis, in law or on the basis of the agreements at issue, for its assertion that Safeco had no right to take steps to meet its obligations under the surety bonds. The court sua sponte awarded Safeco double costs. View "M.E.S., Inc. v. Safeco Insurance Co. of America" on Justia Law

Plaintiffs Travelers Property Casualty Company of America, the Travelers Indemnity Company of Connecticut, and St. Paul Fire and Marine Insurance Company (collectively, Travelers) filed this action against certain subcontractors to recover attorneys’ fees and costs Travelers incurred in defending developers Westlake Villas, LLC and Meer Capital Partners, LLC (collectively, Westlake) in a prior construction defect action. Travelers' claims were based on alleged subrogation to the rights of its additional insured, Westlake. The Westlake entities were suspended corporations under Revenue and Taxation Code section 23301, and could not assert these claims on their own behalf. Defendant Engel Insulation, Inc. moved for judgment on the pleadings on the basis that Travelers was also barred under this statute from prosecuting these claims. On appeal, Travelers contended the trial court erred in granting Engel’s motion without leave to amend. The Court of Appeal disagreed: an insurer could not file its own action to assert claims solely as a subrogee of a suspended corporation. View "Travelers Property Casualty Co. of Amer. v. Engel Insulation, Inc." on Justia Law

At issue was whether a general contractor’s commercial general liability (CGL) policy that is nearly identical to the one considered in Westfield Insurance Co. v. Custom Agri Systems, Inc., 979 N.E.2d 269 (Ohio 2012), covers claims for property damage caused by a subcontractor’s faulty work.The Supreme Court resolved the issue by applying the holding of Custom Agri which provides that property damage caused by a subcontractor’s faulty work is not an “occurrence” under a CGL policy because it cannot be deemed fortuitous. The Court then reversed the judgment of the court of appeals, which reversed the trial court’s conclusion that the insurer in this case had no duty to defend the CGL policy owner, a general contractor. The Supreme Court held that the insurer was not required to defend the insured against suit by the property owner or indemnify the insured against any damage caused by the insured’s contractor. View "Ohio Northern University v. Charles Construction Services, Inc." on Justia Law

At issue in this case was whether Aspen Insurance (UK) Ltd. And Lloyd’s Syndicate 2003 (collectively, “Aspen”) had to reimburse Black & Veatch Corporation (“B&V”) for costs B&V incurred due to damaged equipment a subcontractor made for power plants in Ohio and Indiana. The district court held Aspen did not have to pay B&V’s claim under its commercial general liability (“CGL”) insurance policy because B&V’s expenses arose from property damages that were not covered “occurrences” under the Policy. Because the only damages involved here were to B&V’s own work product arising from its subcontractor’s faulty workmanship, the court concluded that the Policy did not provide coverage and granted Aspen’s motion for partial summary judgment. B&V appealed. The Tenth Circuit found that the Policy contained a choice-of-law clause, making the Policy subject to New York law. The Court also found a trend among state supreme courts that supported the contention that construction defects could constitute “occurrences” under CGL policies, and that contractors have coverage for the unexpected damage caused by defective workmanship done by subcontractors. The Tenth Circuit predicted the New York Court of Appeals would decide that the damages here constituted an “occurrence” under the Policy, and as such, vacated the district court’s summary judgment decision and remand for further proceedings. View "Black & Veatch Corp. v. Aspen Insurance" on Justia Law

The underlying action was initiated by homeowners from two residential developments in Rocklin against appellants Centex Homes and Centex Real Estate Corporation (Centex) for alleged defects to their homes. Centex and cross-defendant and respondent St. Paul Fire and Marine Insurance Company (St. Paul) have a history of insurance coverage disputes. St. Paul was an insurer for subcontractor Ad Land Venture (Ad Land), and agreed to defend Centex as an additional insured subject to a reservation of rights. Centex filed a cross-complaint against its subcontractors and St. Paul that sought, as the seventh cause of action, a declaration that Centex was entitled to independent counsel under Civil Code section 28601 because St. Paul’s reservation of rights created significant conflicts of interest. Centex appealed after the trial court granted St. Paul’s motion for summary adjudication of Centex’s seventh cause of action. Centex argued any possible or potential conflict was legally sufficient to require St. Paul to provide independent counsel. The Court of Appeal disagreed. Alternatively, Centex contended independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. The Court of Appeal concluded that because Centex failed to establish a triable issue of material fact regarding these assertions, the Court affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

McMillin Management Services, L.P. and Imperial Valley Residential Valley Residential Builders, L.P. (collectively "McMillin") filed suit against numerous insurance companies, including respondents Lexington Insurance Company (Lexington) and Financial Pacific Insurance Company (Financial Pacific). McMillin alleged that it had acted as a developer and general contractor of a residential development project in Brawley and hired various subcontractors to help construct the Project. As relevant here, McMillin alleged that Lexington and Financial Pacific breached their respective duties to defend McMillin in a construction defect action (underlying action) brought by homeowners within the Project. McMillin alleged that Lexington and Financial Pacific each owed a duty to defend McMillin in the underlying action pursuant to various comprehensive general liability (CGL) insurance policies issued to the subcontractors that named McMillin as an additional insured. The trial court granted Lexington's motion for summary judgment, reasoning, that there was no possibility for coverage for McMillin as an additional insured under the policies "[b]ecause there were no homeowners in existence until after the subcontractors' work was complete[ ] . . . ." On appeal, McMillin contended that the fact that the homeowners did not own homes in the Project at the time the subcontractors completed their work did not establish that its liability did not arise out of the subcontractors' ongoing operations. The trial court granted Financial Pacific's motion for summary judgment, finding McMillin did not establish homeowners in the underlying action had sought potentially covered damages arising out of the subcontractors' drywall installation. The Court of Appeal reversed as to Lexington, and affirmed as to Financial Pacific. View "McMillin Management Services v. Financial Pacific Ins. Co." on Justia Law

This case arose out of an insurance dispute between a general contractor, its subcontractor, and the subcontractor’s general liability carrier over water damage to a construction site caused by heavy rains. The United States Department of Veterans Affairs (VA) hired Kadena Pacific, Inc. as the general contractor to oversee construction of a building in Menlo Park. Kadena hired Global Modular, Inc. to build, deliver, and install the 53 modular units that would comprise the building. Because Kadena had hired a different subcontractor to install the roofing, Global agreed to deliver the units covered only by a roof deck substrate. Kadena originally scheduled delivery in the summer months, but delivery was delayed until October and November. Despite Global’s efforts to protect the units by covering them with plastic tarps, the interiors suffered water damage from October through January. In February, Kadena and Global mutually agreed to terminate their contract and Kadena oversaw the remediation of the water-damaged interiors and completion of the project. Global sued Kadena for failure to pay and Kadena countersued, alleging Global had breached the contract in various ways, including by failing to repair the water-damaged interiors. Before trial, the parties entered a partial settlement. Global paid Kadena $321,975 to release all of Kadena’s claims arising from the VA project except for claims covered by Global’s insurance policy with North American Capacity Insurance Company (NAC), and Global received $153,025 to dismiss its failure-to-pay claims. At trial, Kadena presented evidence on the scope and cost of its water remediation and argued Global was contractually responsible for the damage. The jury agreed and awarded Kadena slightly over $1 million. In a separate suit brought by NAC, Kadena and NAC filed competing motions for summary judgment on the issue of whether NAC’s policy required it to indemnify Global for the jury’s damage award. The trial court ruled in favor of Kadena, finding the damage award covered under NAC’s policy as a matter of law. The court also ruled that the award must be offset by the $321,975 Global paid in settlement and that Global was liable to Kadena for $360,000 in attorney fees. The Court of Appeal concluded the trial court properly determined NAC’s policy covered the water damages and Kadena was entitled to fees. However, the Court reversed the offset order because Global’s settlement payment did not compensate Kadena for the costs of its water remediation; the parties agreed to reserve that issue for litigation. View "Global Modular v. Kadena Pacific, Inc." on Justia Law