Hawaii Supreme Court Says Aloha to Insurers Trying to Recoup Defense Costs From Policyholders
January 02, 2024 —
Lara Degenhart Cassidy & Yosef Itkin - Hunton Insurance Recovery BlogThe Hawaii Supreme Court emphatically rejected insurer efforts to seek reimbursement of defense costs absent a provision in the policy providing for such reimbursement in St. Paul Fire & Marine Insurance Company v. Bodell Construction Company, No. SCCQ-22-0000658, 2023 WL 7517083, (Haw. Nov. 14, 2023). The state high court’s well-reasoned decision rests on bedrock law regarding insurance policy construction and application, follows the nationwide trend of courts compelling insurers to satisfy their contractual obligations in full, and should carry great weight as other jurisdictions continue to debate the same issue.
In Bodell, the Hawaii Supreme Court joined the swelling ranks of courts recognizing that an insurer may not use a reservation of rights to create the extra-contractual “right” to recoup already paid defense costs for a claim on which the insurer ultimately owes no coverage. See, e.g., Am. & Foreign Ins. Co. v. Jerry’s Sport Ctr., Inc., 2 A.3d 526 (Pa. 2010). Other jurisdictions, such as California, will permit an insurer to seek reimbursement from a policyholder for defense costs incurred in defending claims later determined to be uncovered. See Buss v. Superior Court, 16 Cal.4th 35 (1997) (holding insurers have a right to reimbursement of defense costs incurred for noncovered claims).
Reprinted courtesy of
Lara Degenhart Cassidy, Hunton Andrews Kurth and
Yosef Itkin, Hunton Andrews Kurth
Ms. Cassidy may be contacted at lcassidy@HuntonAK.com
Mr. Itkin may be contacted at yitkin@HuntonAK.com
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A Brief Primer on Perfecting Your Mechanics Lien When the Property Owner Files Bankruptcy
January 22, 2024 —
William L. Porter - Porter Law GroupOverview of the Mechanics Lien Law
This is a brief description of steps to be taken when the Owner of property on which you have recorded a mechanics lien files bankruptcy.
The California mechanics lien is a powerful tool for contractors, subcontractors and materials suppliers to secure payment of unpaid construction debts. A contractor, subcontractor or materials supplier is allowed to record a mechanics lien on real property, based on the value added to the property by the claimant during the construction process.
The recorded mechanics lien provides the claimant with legal right to force the sale of the improved real property and thereby obtain the funds necessary to pay the delinquent debt. Under the usual procedure, the first step is the recording of the mechanics lien with County Recorder’s office in the County where the property is located. A lawsuit to foreclose on the lien must then be filed in the County Superior Court of that County, within ninety (90) days after the mechanics lien is recorded. The goal of the lawsuit is to obtain a judgment for foreclosure on the mechanics lien in order to force a sale of the property. The net proceeds of the sale will be used to pay the unpaid construction debt secured by the recorded mechanics lien, assuming sale proceeds exceed the amount of senior liens and encumbrances.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Hawaii Supreme Court Bars Insurers from Billing Policyholders for Uncovered Defense Costs
April 23, 2024 —
Amanda C. Stefanatos - Saxe Doernberger & Vita, P.C.Across the country, there is a split in authority as to whether an insurance company should be allowed to recoup defense costs where it is ultimately determined that the carrier has no duty to defend under the policy and the policy is silent as to such reimbursement. The Hawaii Supreme Court is the latest to enter the fray to address this very question, ruling in favor of policyholders in the recent case of
St. Paul Fire & Marine Insurance Company v. Bodell Construction Company.
Facts of the Case and Procedural History
The Bodell case arose in response to a pair of certified questions from the US District Court for Hawaii to the Hawaii Supreme Court. The case involved a group of primary and excess insurers that sold liability policies to Bodell Construction and sought reimbursement of defense costs that the insurers had paid to defend a construction defect claim against Bodell. In the Underlying Action, the District Court ultimately ruled that the claims against Bodell Construction were not covered under the policies. Because the claims were not covered, the insurers demanded reimbursement of the defense fees from Bodell . Having determined there was no Hawaii state law on this issue, and in light of conflicting decisions in the district courts, the US District Court for Hawaii requested guidance from the Hawaii Supreme Court.
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Amanda C. Stefanatos, Saxe Doernberger & Vita, P.C.Ms. Stefanatos may be contacted at
AStefanatos@sdvlaw.com
The National Labor Relations Board Joint Employer Standard is Vacated by the Eastern District of Texas
April 22, 2024 —
Andrew G. Vicknair - The Dispute ResolverMany employment laws use the concept of joint employer to make more than one business entity responsible for complying with employment law obligations towards employees who to varying degrees work for, or under the direction of entities who are not technically the employees primary employer. Nowhere is that issue more prevalent than in contractor subcontractor relationships. Over the years the National Labor Relations Board (NLRB) has developed various tests for determining joint employer status. Unless a business entity is an employer of individuals, the NLRB has no jurisdiction over a dispute between the workers and a business entity for whom they work.
It is important for contractors to understand the importance of being an employer and the obligations that flow from such status. Likewise, it is also important to understand when a contractor may be classified as a “joint employer” over certain individuals. Depending on the specific laws involved, such a finding of joint-employer status can happen under the “joint employer doctrine” which often exists in subcontractor and temporary employment arrangements. The “joint-employer doctrine” may render a contractor responsible for another company’s employment liabilities.
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Andrew G. Vicknair, D'Arcy Vicknair, LLCMr. Vicknair may be contacted at
agv@darcyvicknair.com
Beyond the Statute: How the Colorado Court Upheld Modified Accrual in Construction Contracts
November 13, 2023 —
Hal Baker - Colorado Construction Litigation BlogIn a case of first impression, the First Division of the Colorado Court of Appeals recently reviewed whether parties may contractually alter the accrual time established by Colorado’s statute of limitations for construction defect actions, C.R.S. § 13-80-104, in South Conejos Sch. Dist. RE-10 v. Wold Architects, Inc., 2023 COA 85 (2023), decided on September 21, 2023. The Court held that sophisticated parties may contractually alter the accrual time standards, enlarging the accrual time as was the issue in this case. Notably, the Court’s decision was made in the context of commercial construction, not residential.
The issue in South Conejos Sch. Dist. RE-10 arose from the construction of a school in Antonito, Colorado. Prior to construction, the South Conejos School District RE-10 (the “School District”) and Wold Architects, Inc. (“Wold”) entered a contract that provided:
Unless a longer period is provided by law, any action against [Wold] brought to recover damages for deficiency in the design, planning, supervision, inspection, construction or observation of construction or for injury to person or property shall be brought within two years after the claim for relief arises and is discovered by [the District]; … “Discovered” as used herein means detection and knowledge by [the District] of the defect in the improvement that ultimately causes the injury, when such defect is of a substantial or significant nature.
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Hal Baker, Higgins, Hopkins, McLain & Roswell, LLCMr. Baker may be contacted at
baker@hhmrlaw.com
Risky Business: Contractual Versus Equitable Rights of Subrogation
December 16, 2023 —
Kyle Rice - The Subrogation StrategistIn Zurich Am. Ins. Co. v. Infrastructure Eng’g. Inc., 2023 Ill. App. LEXIS 383, the insurer, Zurich American Insurance Company (Insurer) proceeded as subrogee of Community College District No. 508 d/b/a City Colleges of Chicago and CMO, a Joint Venture. The Appellate Court of Illinois, First District (Appellate Court) addressed whether Insurer – who issued a builder’s risk policy to insure a building during construction – could subrogate on behalf of the building owner, City Colleges of Chicago (City Colleges), who was part of the joint venture and an additional named insured, but who had not been directly paid for the underlying loss. The Appellate Court determined that the policy language established that the carrier was contractually permitted to subrogate on behalf of all additional named insureds on the policy, including the building owner.
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Kyle Rice, White and WilliamsMr. Rice may be contacted at
ricek@whiteandwilliams.com
Real Estate & Construction News Roundup (10/18/23) – Zillow’s New Pilot Program, Production Begins at Solar Panel Plant in Georgia, and More Diversity on Contracts for Buffalo Bills Stadium
November 27, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, Netflix announces plans to open brick-and-mortar locations, NYU develops a way to examine buildings using drones, robots and AI, distressed U.S. commercial real estate hits a 10-year high, and more!
Read the full story...Reprinted courtesy of
Pillsbury's Construction & Real Estate Law Team
What Will the 2024 Construction Economy Look Like?
January 02, 2024 —
Grace Calengor - Construction ExecutiveCE just wrapped its "2024 Economic Update and Forecast" webinar, which revealed some interesting insights for 2023 and projections for next year. Anirban Basu, chief economist for ABC and CEO of Sage Policy Group, began his presentation by stating auspiciously: “The economy has been much stronger along more dimensions than I expected.”
Polling: good news for the supply chain
Not only did Basu's own research reveal strong construction growth in a majority of sectors, a decent number of construction job openings and wage increases, as well as supply-chain improvement and a stagnating federal rate—but webinar attendees who answered Basu's polling questions felt similarly.
Reprinted courtesy of
Grace Calengor, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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