Justia Construction Law Opinion Summaries

Advent was the general contractor for the Aspen Village project in Milpitas. Advent subcontracted with Pacific, which subcontracted with Johnson. Advent was covered by a Landmark insurance policy and a Topa excess insurance policy. Johnson was covered by National Union primary and excess policies. Kielty, a Johnson employee, fell down an unguarded stairway shaft at the site and sustained serious injuries. Kielty sued Advent, which tendered its defense to its insurers and to National Union. National Union accepted under a reservation of rights. Kielty settled for $10 million. Various insurers, including Topa and National Union (under its primary policy), contributed to the settlement. National Union did not provide coverage under its excess policy. Advent sought a declaration that it was an “additional insured” under that excess policy. Topa intervened, seeking equitable contribution from National Union, and equitable subrogation. Advent dismissed its complaint with prejudice. Summary judgment was entered against Topa, for National Union. The court of appeal affirmed. While Topa’s policy was vague, National Union’s excess policy states that coverage will not apply until “the total applicable limits of Scheduled Underlying Insurance have been exhausted by the payment of Loss to which this policy applies and any applicable, Other Insurance have been exhausted by the payment of Loss.” View "Advent, Inc. v. National Union Fire Insurance Co. of Pittsburgh" on Justia Law

The State of Michigan contracted with E.L. Bailey to construct a prison kitchen. After delays, the parties sued each other for breach of contract. Bailey had obtained surety bonds from Great American Insurance Company (GAIC) and had agreed to assign GAIC the right to settle claims related to the project if Bailey allegedly breached the contract. Exercising that right, GAIC negotiated with the state without Bailey’s knowledge, then obtained a declaratory judgment recognizing its right to settle. The Sixth Circuit affirmed, rejecting, for insufficient evidence, a claim that GAIC settled Bailey’s claims against the state in bad faith. Although “there can be bad faith without actual dishonesty or fraud,” when “the insurer is motivated by selfish purpose or by a desire to protect its own interests at the expense of its insured’s interest,” “offers of compromise” or “honest errors of judgment are not sufficient to establish bad faith.” There was no evidence that GAIC’s settlement of Bailey’s claims was undertaken with selfish purpose at Bailey’s expense. GAIC and Bailey shared an interest in securing the highest settlement possible from the state. Even if GAIC misunderstood Michigan law, leading it to miscalculate its liability and accept a lower settlement, “honest errors of judgment are not sufficient to establish bad faith.” View "Great American Insurance Co. v. E.L. Bailey & Co." on Justia Law

In 2014, Lend Lease, the construction manager of the Chicago River Point Tower Project, hired Cives as a subcontractor. Cives hired Midwest Steel. Midwest had, years before, hired AES to supply Midwest with additional workers, who were co‐employed by Midwest and AES. Lend Lease entered into a “contractor-controlled insurance program” with Starr Liability with a $500,000 deductible. All subcontractors were to join in the policy. AES had, several years earlier, obtained workers’ compensation for its workers from TIC, so that injured AES‐Midwest workers could obtain workers’ compensation from either Starr (or Lend Lease under the deductible) or TIC. Four ironworkers, jointly employed by Midwest and AES and performing work for Midwest were injured on the job and sought workers’ compensation. The claims exceeded $500,000, so Lend Lease had to pay its full deductible. Starr paid the remaining claims. Lend Lease filed suit against TIC, AES’s insurer, and AES, seeking reimbursement of the $500,000. The district court dismissed. The Seventh Circuit affirmed. Lend Lease made a deal with Starr and is bound by it. The court rejected an argument that AES has been unjustly enriched; AES was not obligated to purchase an insurance policy that would cover Lend Lease's deductible. View "Lend Lease (US) Construction, Inc. v. Administrative Employer Services, Inc." on Justia Law

Rizvi and his company, Prime Builders, performed repair work for Alikhan, whose house was damaged in a fire. When the work was completed in 2009, Alikhan paid Rizvi only part of what he owed. Rizvi sued for breach of contract in federal court, invoking diversity jurisdiction under 28 U.S.C. 1332. (Rizvi and Prime are Illinois citizens. Alikhan is a citizen of Texas.) When Alikhan failed to appear, plaintiffs obtained a default judgment, then served a citation to discover assets on Allstate under an Illinois statute that governs supplementary proceedings to assist in collecting on a judgment. Allstate responded that Alikhan had no accounts of any sort with Allstate, had no claims pending with Allstate, and was not owed any insurance payments by Allstate. Plaintiffs then asked the court to order Allstate to remit “outstanding insurance proceeds of $110,926.58” and to impose sanctions, arguing that Allstate had participated in negotiating the repair contract and had made a partial payment to Alikhan in 2008. The court ultimately dismissed the supplemental action. The Seventh Circuit affirmed. Allstate is a citizen of Illinois, the supplemental proceeding against Allstate was sufficiently independent of the underlying case as to require its own basis for subject matter jurisdiction. View "Rizvi v. Allstate Corp." on Justia Law

This dispute arose from the construction of Cypress Point, a luxury condominium complex in Hoboken. Co-defendants Adria Towers, LLC, Metro Homes, LLC, and Commerce Construction Management, LLC (collectively, the developer) served as the project's developer and general contractor, and subcontractors carried out most of the work. During construction, the developer obtained four CGL policies from Evanston Insurance Company, covering a four-year period, and three from Crum & Forster Specialty Insurance Company, covering a subsequent three-year period (collectively, the policies). In this appeal, issue before the Supreme Court was whether rain water damage caused by a subcontractor's faulty workmanship constituted property damage and an occurrence under the developer's commercial general liability (CGL) insurance policy. In a published decision, the Appellate Division reversed, holding that, under the plain language of the CGL policies, the unintended and unexpected consequential damages caused by the subcontractors faulty workmanship constituted property damage and an occurrence. The Supreme Court agreed and affirmed, finding that the consequential damages caused by the subcontractors faulty workmanship constituted property damage, and the event resulting in that damage water from rain flowing into the interior of the property due to the subcontractors faulty workmanship was an occurrence under the plain language of the CGL policies at issue here. View "CypressPoint Condominium Association, Inc. v. Adria Towers, L.L.C., et al." on Justia Law

Travelers Property Casualty Company of America (Travelers) petitioned for review of a court of appeals judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon Corporation. Stresscon, a subcontracting concrete company, filed suit against Travelers, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a serious construction accident in July 2007, which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Although there was much dispute over the factual and legal import of Travelers’ reservation of rights and other of its communications with both Stresscon and Mortenson concerning Mortenson’s claim, there was no dispute that by December 31, 2008, Travelers had not paid the damages asserted by Mortenson. The appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorato Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court found that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence in Colorado, and because the Court declined to extend notice-prejudice reasoning in Friedland to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers, the judgment of the court of appeals was reversed. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

This matter stemmed from a public works project for the construction of a gymnasium in Terrytown. JaRoy Construction Inc. served as the general contractor, and pursuant to statute, furnished a surety bond to Jefferson Parish. Ohio Casualty Insurance Company was the surety. JaRoy entered into a written subcontract with Pierce Foundations, Inc. to provide and install pilings for the project. Once finished, Pierce alleged JaRoy failed to pay certain funds due under the subcontract. Pierce sued both JaRoy and Ohio Casualty Insurance, alleging they were jointly and severally liable to Pierce. JaRoy filed for bankruptcy, leaving only Ohio Casualty Insurance as party to the suit. When the project was substantially completed, the Jefferson Parish government filed a notice of acceptance of work with the Jefferson Parish mortgage records office. This occurred over a year after Pierce amended its lawsuit to add Ohio Casualty as a defendant. Pierce never filed a sworn statement of claim in the mortgage records. Ohio Casualty filed a motion for summary judgment, contending that Pierce was required to comply with statutory notice and recordation, and because it failed to do so within 45 days of Jefferson Parish’s acceptance of the project, Pierce could not recover from Ohio Casualty. Pierce argued that the statute did not affect its right to proceed in contract. After a bench trial, the trial court rendered judgment in favor of Pierce for sums owed under the contract plus judicial interest from the date of the original judgment. Ohio Casualty appealed, arguing that the trial court erred in not dismissing Pierce's claims. The court of appeal reversed and ruled in Ohio Casualty's favor. The Supreme Court, however, disagreed and affirmed the trial court judgment. View "Pierce Foundations, Inc. v. JaRoy Construction, Inc." on Justia Law

In 2007, the Sonoma County project’s owner sued Hearn, the general contractor, Second Generation, the roofer, and other subcontractors for design and construction defects. Hearn cross-complained against Second Generation and others. In 2009, Hearn assigned its interests under its subcontracts to two insurers, North American and RSUI. Hearn then settled with the owner and all but two subcontractors, one of which was Second Generation. Hearn filed an amended cross-complaint, purportedly in the name of the insurers, against those subcontractors, adding breach of a contractual obligation to obtain insurance and seeking equitable contribution for Hearn’s defense costs premised on a breach of that duty. In 2013, the court dismissed the cross-complaint against Second Generation on procedural grounds, awarded $30,256.79 in costs and granted prevailing party attorney fees of $179,119. Second Generation moved to amend the orders to name North American as a judgment debtor owing the amounts awarded against Hearn. The trial court denied the motion, stating: Hearn remains the only proper party and that the subcontractor’s exclusive remedy was to pursue a separate action against Hearn’s insurers. The court of appeal reversed, finding that, after the assignment, Hearn was “out of this case.” View "Hearn Pac. Corp. v. Second Generation Roofing, Inc." on Justia Law

Stresscon Corporation, a subcontracting concrete company, filed suit against Travelers Property Casualty Company of America, alleging, among other things, that Travelers acted in bad faith, unreasonably delaying or denying its claim for covered insurance benefits; and Stresscon sought awards of two times the covered benefits along with fees and costs, as prescribed by statute. Stresscon’s claims for relief arose from a 2007 serious construction accident which was caused by a crane operator employed by a company that was itself a subcontractor of Stresscon. Stresscon’s general contractor, Mortenson, sought damages from Stresscon, asserting Stresson’s contractual liability for the resulting construction delays, and Stresscon in turn sought indemnification from Travelers. Travelers petitioned for review of the court of appeals’ judgment affirming the district court’s denial of its motion for directed verdict in a lawsuit brought by its insured, Stresscon. Much as the district court had done, the appellate court rejected Travelers’ contention that the no-voluntary-payments clause of their insurance contract relieved it of any obligation to indemnify Stresscon for payments Stresscon had made without its consent. Instead, the court of appeals found that the Colorado Supreme Court's opinion in "Friedland v. Travelers Indemnity Co.," (105 P.3d 639 (2005)) had effectively overruled the Court's prior “no voluntary payments” jurisprudence to the contrary and given Stresscon a similar opportunity. The Supreme Court reversed, finding that its adoption of a notice-prejudice rule in "Friedland" did not overrule any existing “no voluntary payments” jurisprudence. The Court declined to extend a notice-prejudice reasoning to Stresscon’s voluntary payments, made in the face of the no-voluntary-payments clause of its insurance contract with Travelers. View "Travelers Prop. Cas. Co. v. Stresscon Co." on Justia Law

Jerry and Karen Slack hired Jeffrey Fisher and his construction company, Fisher Builders, to build a remodeled home. During the project, the deck collapsed, and the Slacks’ construction permit was revoked. The Slacks filed a negligence action against Fisher and his company. Fisher had a commercial general liability insurance policy with Employers Mutual Casualty Company (EMC). EMC filed a declaratory action alleging that there was no coverage and that it had no duty to defend or indemnify any party in the negligence action. Fisher and Fisher Builders ultimately settled with the Slacks and assigned their rights under the EMC insurance policy to the Slacks. The district court granted summary judgment in favor of EMC, ruling that Fisher’s conduct was clearly intentional and did not fit within the meaning of “occurrence” under the policy, regardless of whether Fisher intended the consequences. The Supreme Court reversed, holding that the district court (1) erred by concluding that, in the context of general liability insurance, the term “occurrence,” defined by the policy as “an accident,” categorically precludes coverage for any intentional conduct on the part of the insured with unintended results; and (2) erred when it granted summary judgment in favor of EMC, as issues of material fact precluded summary judgment. Remanded. View "Employers Mut. Cas. Co. v. Slack" on Justia Law