Justia Construction Law Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
Thirteen Investment Co., Inc. v. Foremost Insurance Co. Grand Rapids Michigan
Thirteen’s building suffered fire damages covered by Foremost’s policy. Thirteen retained Paramount as its public adjuster and general contractor for repairs. Paramount was “to be [Thirteen’s] agent and representative to assist in the preparation, presentation, negotiation, adjustment, and settlement” of the fire loss. Thirteen also “direct[ed] any insurance companies to include Paramount … on all payments on” the fire loss claim. Paramount negotiated the fire loss. Foremost delivered settlement checks to Paramount. The checks named Thirteen, its mortgagee, and Paramount as co-payees. Paramount endorsed the names of all co-payees, cashed the checks, and kept the proceeds. Paramount performed some repair work on the building before Thirteen sought a declaratory judgment that the insurer had breached its policy by not paying the claim.The Seventh Circuit affirmed summary judgment for Foremost. Paramount received and cashed the checks, discharging the insurer’s performance obligation under the policy. The court rejected Thirteen’s arguments that Foremost waived payment as an affirmative defense by failing to plead it in its answer; that, under controlling Illinois law, Foremost’s policy obligation was not discharged when it delivered the checks to Paramount, which cashed the checks; and that Foremost agreed to make claim payments to Thirteen in installments after Foremost had inspected repair work performed. View "Thirteen Investment Co., Inc. v. Foremost Insurance Co. Grand Rapids Michigan" on Justia Law
Accident Fund Insurance Co. v. Schultheis Insurance Agency, Inc.
Cope, injured on a Kentucky job site, filed a workers’ compensation claim. The subcontractor who hired him for the project, CMC, is based in Southern Indiana, and had an insurance policy with AFICA. Schultheis Insurance Agency procured the policy for CMC, but failed to inform AFICA that CMC did business in Kentucky. AFICA sought a declaration that its policy does not cover Cope’s claim.The district court granted AFICA summary judgment. The Seventh Circuit affirmed. The plain text of the policy is unambiguous: because CMC failed to notify AFICA until after Cope’s accident that it was working in Kentucky, AFICA is not liable for Cope’s workers’ compensation claim. The policy states : “If you have work on the effective date of this policy in any state [other than Indiana], coverage will not be afforded for that state unless we are notified within thirty days.” View "Accident Fund Insurance Co. v. Schultheis Insurance Agency, Inc." on Justia Law
United Fire & Casualty Co. v. Prate Roofing & Installations LLC
All Seasons inspected SparrowHawk's warehouse roofs and discovered hail damage. Because All Seasons did not hold an Illinois roofing license, it arranged for Prate to serve as general contractor with All Seasons as subcontractor. All Seasons was to provide materials and labor, maintain safety, and supervise the project. All Seasons purchased a commercial general liability policy and general liability extension endorsement from United, listing Prate as an “additional insured” in a “vicarious liability endorsement.” All Seasons then subcontracted with Century. Ayala, a Century employee was working on a SparrowHawk warehouse when he fell to his death.The Illinois workers’ compensation system provided limited death benefits but precluded tort remedies against his direct employer, Century. Ayala’s estate sued Prate, All Seasons, and SparrowHawk. Prate tendered the defense to United, which declined to defend and sought a declaratory judgment. All Seasons and United reached a settlement with the estate, paying the policy limits.The district court granted Prate summary judgment. The Seventh Circuit affirmed, rejecting United’s argument that because its named insured was an independent contractor, Illinois law would not impose any liability on the additional insured and there was no risk of covered liability. The duty to defend depends on the claims the plaintiff asserts, not on their prospects for success. The settlement of the underlying claims against the named insured, however, removed any possibility that the additional insured might be held vicariously liable for actions of the named insured; the duty to defend ended when that settlement was consummated. View "United Fire & Casualty Co. v. Prate Roofing & Installations LLC" on Justia Law
StarNet Insurance Co. v. Ruprecht
Deerfield. the general contractor, subcontracted with P.S. Demolition, which agreed to indemnify and hold Deerfield harmless from all claims caused in whole or in part by P.S. P.S. employees were working at the site when an unsecured capstone fell, killing one and injuring another. The Illinois Workers’ Compensation Act limited P.S.’s liability to $5,993.91 and $25,229.15. The state court held that P.S. had waived the Kotecki cap that would ordinarily apply those limits to a third party (Deerfield) suing for contribution for its pro-rata share of common liability for a workplace injury. A bankruptcy court determined that P.S. had no assets; the state court determined that P.S.’s liability was limited to its available insurance coverage. Deerfield settled with the plaintiffs for substantially more than $75,000 plus an assignment of Deerfield’s contribution claim against P.S.StarNet, P.S.’s employer liability insurer, entered into a settlement with the plaintiffs, reserving its defenses to insurance coverage. The plaintiffs dismissed their negligence claims against P.S. The workers’ compensation and employers' liability policy issued to P.S. provides that StarNet will pay damages for which P.S. is liable to indemnify third parties, excluding “liability assumed under a contract, including any agreement to waive your right to limit your liability for contribution to the amount of benefits payable under the Workers Compensation Act ... This exclusion does not apply to a warranty that your work will be done in a workmanlike manner.The Seventh Circuit affirmed a declaratory judgment that StarNet owes P.S. no coverage for the employees’ injuries beyond the amounts specified by the Illinois Workers’ Compensation Act and the Kotecki cap. The court rejected arguments that P.S.’s liability in the personal injury action arose in part from P.S.’s failure to conduct the demolition in a workmanlike manner so that the exception applies. View "StarNet Insurance Co. v. Ruprecht" on Justia Law
Dunn v. Jess
Dunn slapped Schuckman in a bar's parking lot, causing him to fall to the ground. Witnesses reported seeing Schuckman upright and apparently unharmed afterward. Hours later, Schuckman was found dead on the bar’s patio. Dunn and Crochet were charged with felony murder, battery, and theft from a corpse. Dunn’s counsel consulted with a forensic pathologist. After viewing the medical examiner’s report, the pathologist believed that Schuckman died immediately from his head injuries—suggesting that Dunn’s slap could not have caused his death. Before trial, defense counsel repeatedly, erroneously, stated that the medical examiner had concluded that Schuckman died immediately from a fatal blow and would testify to that at trial. The medical examiner’s report did not contain such conclusions and counsel never confirmed them. The prosecutor informed Dunn’s counsel that Crochet had retained experts, who were going to produce reports that bolstered Dunn’s no-causation defense. The prosecution considered the reports exculpatory. Dunn’s counsel did not ask for a continuance or attempt to view the reports. At trial, defense counsel did not call his forensic pathologist as a witness. The medical examiner testified that there was no reason to think that Schuckman would have died immediately from the fatal head injury, and it would have been possible for Schuckman to move after sustaining this injury.The Seventh Circuit upheld an order granting federal habeas relief. Dunn’s trial counsel provided ineffective assistance by failing to investigate and offer evidence to support a no-causation defense and Dunn was prejudiced by that deficient performance. View "Dunn v. Jess" on Justia Law
Scottsdale Insurance Co. v. Columbia Insurance Group, Inc
TDH’s contract to provide HVAC services at a Chicago construction site contained provisions agreeing to indemnify Rockwell, the owner. TDH provided a Certificate of Liability Insurance, identifying Columbia as the commercial general liability insurer, TDH as the insured, and Rockwell and Prairie (the manager) as additional insureds. While working at the site, TDH’s employee Guzman fell 22 feet through an unguarded opening in the second floor, sustaining serious injuries.Guzman sued Rockwell, Prairie, and others. Guzman did not sue TDH. Several defendants filed third-party complaints against TDH for contribution. Scottsdale insured Rockwell and has defended Rockwell and Prairie. Scottsdale filed suit, wanting Columbia to take over their defense.The district court declared that Columbia owes a duty to defend Prairie and Rockwell, ordered Columbia to pay Scottsdale $50,000 for defense costs through August 2019, and left the issue of indemnity for another day. The Seventh Circuit affirmed. The Columbia policy limitation that another organization would only be an additional insured with respect to liability arising out of TDH’s ongoing operations performed for that other organization does not eliminate Columbia’s duty to defend. Prairie’s and Rockwell’s liability for the fall potentially arises in part out of TDH’s then-ongoing operations performed for Prairie and Rockwell. It does not matter that the underlying suit does not name TDH. The underlying allegations do not preclude the possibility of coverage. View "Scottsdale Insurance Co. v. Columbia Insurance Group, Inc" on Justia Law
Pittman v. Madison County
After four months of pretrial detention at the Madison County jail in 2007, Pittman attempted suicide by hanging himself with a blanket. The attempt left Pittman in a vegetative state. In his suicide note, he stated that the guards were “f***ing” with him and would not give him access to “crisis [counseling].” Banovz, an inmate housed near Pittman’s cell, substantiated the claim that Pittman had made in his suicide note. In a recorded interview with a county detective, Banovz stated that in the days leading up to Pittman’s suicide attempt, Pittman had asked officers Werner and Eaton to refer him to crisis counseling; neither of them followed through with their promises. On remand, in a suit under 42 U.S.C. 1983, a jury ruled in favor of the defendants. The Seventh Circuit ruled that the district court’s exclusion of the Banovz video interview was a reversible error. After a second trial, the jury again returned a verdict for the defendants.The Seventh Circuit again remanded. One of the jury instructions erroneously directed the jury to evaluate Pittman’s Fourteenth Amendment claim according to a subjective rather than objective standard. The jury was told to consider whether the defendants “consciously failed to take reasonable measures to prevent [Pittman] from harming himself.” View "Pittman v. Madison County" on Justia Law
A&C Construction & Installation Co., WLL v. Zurich American Insurance Co.
The Miller Act, 40 U.S.C. 3131, protects subcontractors against nonpayment for work performed on federal government construction projects by requiring the prime contractor to provide a payment bond on which the subcontractor can then make a claim for payment. A&C, a subcontractor on an air base project in Qatar, claims that it was not paid approximately $8.5 million for work it performed on the project, so it filed suit against the prime contractor’s two sureties, Zurich and The Insurance Company of the State of Pennsylvania. As strict preconditions to payment, the Miller Act requires that subcontractors provide a notice of nonpayment within 90 days after the last day of work performed and then file suit within one year of the last date of work. The district court found that A&C missed both deadlines and granted the sureties summary judgment. The Seventh Circuit affirmed. Rejecting A&C’s argument that its last day of work was much later than asserted by the sureties and that it gave “too much notice,” the court strictly construed the requirement be “within 90 days.” View "A&C Construction & Installation Co., WLL v. Zurich American Insurance Co." on Justia Law
Skyrise Construction Group LLC v. Annex Construction LLC
Skyrise bid $950,000 to supply “stick building” rough frame carpentry for building housing units near the University of Wisconsin-Oshkosh. Upon receiving a letter of intent from Annex, the general contractor, to enter into a contract, Skyrise blocked the project on its calendar and declined other work. Skyrise delayed returning the actual proposed contract for two months. Amex rejected Skyrise’s subsequent proposals for a broader scope of work and a different payment plan and awarded the carpentry contract to another firm. Skyrise sued for breach of contract, promissory estoppel, negligent misrepresentation, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and violation of the Wisconsin Deceptive Trade Practices Act.The Seventh Circuit affirmed summary judgment in favor of the defendants. Although the parties signed various proposals during their negotiations, no contract formed. The undisputed, objective evidence demonstrates that both parties intended for their relationship to be governed by a detailed contract that remained under review until Skyrise ultimately rejected that contract by making material alterations. Skyrise knew or should have known, that the negotiations could fall apart before the parties entered into a binding agreement. Annex never represented to Skyrise that it had the framing subcontract. View "Skyrise Construction Group LLC v. Annex Construction LLC" on Justia Law
Lexington Insurance Co. v. Chicago Flameproof & Wood Specialties Corp.
Flameproof, a distributor of fire retardant and treated lumber (FRT lumber), maintained liability insurance through Lexington, covering liability for "property damage” that is “caused by an occurrence that takes place in the coverage territory.” “Occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” “Property damage” is “physical injury to tangible property, including all resulting loss of that property,” or loss of use of property that is not physically injured. Three lawsuits arose from Flameproof’s sale of lumber to Minnesota-based contractors. The contracts called for FRT lumber meeting the requirements of the International Building Code (IBC). The complaints alleged that Flameproof “unilaterally” decided to deliver its in-house FlameTech brand lumber, which purportedly was not IBC-compliant. After the material was installed, the owners discovered that the lumber was not IBC-certified. Flameproof “admitted” that it had shipped FlameTech lumber rather than the FRT lumber advertised on its website and ordered. The FlameTech lumber was removed and replaced, damaging the surrounding materials. The lawsuits alleged negligent misrepresentation, fraudulent misrepresentation, deceptive business practices, false advertising, consumer fraud, breach of warranties, and breach of contract. Lexington sought a ruling that it owed no duty to defend Flameproof. The Seventh Circuit affirmed summary judgment for Lexington. The underlying complaints do not allege an “occurrence”—or accident—as required to trigger Lexington’s duty to defend under the policy. View "Lexington Insurance Co. v. Chicago Flameproof & Wood Specialties Corp." on Justia Law