Governmental Action Exclusion Bars Claim for Damage to Insured's Building
November 27, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe lower court's decision finding no coverage based upon the governmental action exclusion was affirmed by the Appellate Court of Illinois. McCann Plumbing, Heating & Cooling v. Pekin Ins. Co., 2023 Ill.App. LEXIS 300 (Ill. App. Ct. Aug. 23, 2023).
McCann purchased a building to use for its heating, ventilation, and air conditioning business. The building was surrounded by two unihhabited properties which often flooded. The city determined that a building on the adjacent property had to be demolished. In the course of destruction, the McCann's building was damaged, leaving a portion of their building open to the elements.
McCann sought coverage from Pekin for damage incurred in the demolition. The policy provided coverage for "direct physical loss of or damage to" the covered property. Pekin denied coverage under the policy's governmental action exclusion, which provided,
We will not pay for loss or damage caused directly or indirectly by any of the following:
. . .
c. Governmental Action
Seizure or destruction of property by order of governmental authority . . .
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Meet the Forum's ADR Neutrals: LESLIE KING O'NEAL
January 29, 2024 —
Marissa L. Downs - The Dispute ResolverCompany: JAMS
Office Location: Orlando, FL
Email: lkoneal1117@gmail.com
Website: https://www.jamsadr.com/oneal/
Law School: University of Florida, J.D. (1977)
Types of ADR services offered: Mediation, arbitration, neutral evaluation
Geographic area served: Nationwide
Q: Describe the path you took to becoming an ADR neutral.
A: Florida was one of the first states to allow judges to send civil cases to mediation. When I was an advocate, nearly all my cases went to mediation at least once—sometimes more than once! I became a firm believer in the value of mediation and other ADR methods. I became a Florida certified circuit court mediator in 2021 and I joined JAMS in 2022, after retiring as in-house counsel with Brasfield & Gorrie, a large commercial general contractor. I am also an adjunct professor at Pepperdine Law School, teaching arbitration theory and practice in its master of dispute resolution and master of laws programs.
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Marissa L. Downs, Laurie & Brennan, LLPMs. Downs may be contacted at
mdowns@lauriebrennan.com
Top Developments March 2024
April 22, 2024 —
Complex Insurance Coverage ReporterCLAIMS-MADE COVERAGE
Zurich Am. Ins. Co. v. Syngenta Crop Prot. LLC, 2024 Del. LEXIS 68 (Del. Feb. 26, 2024)
Delaware Supreme Court concludes that a letter from a lawyer informing an insured of possible lawsuits without identifying potential plaintiffs or demanding payment is not a “claim for damages” within the meaning of claims-made CGL and umbrella liability policies. Citing case law from Delaware and other jurisdictions, it reasoned that, in the ordinary sense, a “claim for damages” (which the policies did not define) is “a demand or request for monetary relief by or on behalf of an identifiable claimant.” According to the court, the letter in question did not meet this definition because it did not identify any claimants “except in the vaguest terms” or request monetary relief on any claimant’s behalf, but rather communicated only a threat of future litigation. As a result, the letter was not a claim made before the policy periods at issue.
POLLUTION EXCLUSION
Wesco Ins. Co. v. Brad Ingram Constr., 2024 U.S. App. LEXIS 1488 (9th Cir. Jan. 23, 2024)
A divided Ninth Circuit panel, applying California law, holds that a pollution exclusion* in a CGL policy does not preclude a duty to defend an underlying suit alleging physical injury from exposure to “clouds of toxic dust” deposited in the environment by a wildfire and released during clean up efforts. Citing MacKinnon v. Truck Ins. Exch., 73 P.3d 1205 (Cal. 2003), the majority explained that determining whether a “pollution event” (i.e., “environmental pollution”) resulting in excluded injury has occurred involves consideration of “the character of the injurious substance” and whether the exposure resulted from a “mechanism specified in the policy.” It concluded that a potential for coverage (and, therefore, a defense obligation) existed because, although wildfire debris may be considered a “pollutant” in certain circumstances, the mechanism alleged in the underlying complaint – “expos[ure] . . . to clouds of toxic dust during the loading and unloading of [the underlying plaintiff’s] truck” – did not clearly constitute an “event commonly thought of as pollution.”
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White and Williams LLP
Navigating Threshold Arbitration Issues in Construction Contracts
April 29, 2024 —
Daniel D. McMillan and TJ Auner - The Dispute ResolverIncluding an arbitration clause in your construction contract may not mean that your dispute will be confined to arbitration. Instead, parties often find themselves in court litigating threshold issues related to the existence and/or enforceability of an arbitration clause. Common issues include whether the underlying contract containing the arbitration clause is valid, whether the dispute falls within the scope of the clause, whether the parties complied with contractual prerequisites to arbitration, whether issues related to arbitrability are decided by the court or arbitrator, and whether one of the parties has waived their right to arbitrate. This blog post highlights two recent construction cases addressing threshold issues that a party seeking to enforce—or oppose enforcing—an arbitration clause might face.
Seifert v. United Built Homes, LLC: Delegating Issues of Arbitrability to the Arbitrator
In Seifert, an owner sued a homebuilder in Texas federal court for breach of contract and sought damages and declaratory relief. No. 3:22-CV-1360-E, 2023 WL 4826206 (N.D. Tex. July 27, 2023). The builder moved to compel arbitration. The owner opposed and argued that: (1) there was no agreement to arbitrate because the underlying contract was null and void, and (2) its claim for declaratory relief fell outside the scope of the arbitration clause. The court did not address the merits of either argument. Instead, it determined that these were issues for the arbitrator to decide.
Reprinted courtesy of
Daniel D. McMillan, Jones Day and
TJ Auner, Jones Day
Mr. McMillan may be contacted at ddmcmillan@jonesday.com
Mr. Auner may be contacted at tauner@jonesday.com
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Round and Round: Inside the Las Vegas Sphere
December 16, 2023 —
Grace Calengor - Construction ExecutiveHow does the typical contractor approach building something taller than the Statue of Liberty, wider than a football field and with the most square footage of LED lighting in the world? Perhaps it’s enough to say that Sphere Entertainment Company is not your average contractor—and Sphere in Las Vegas is not your average construction project.
With a budget of approximately $2.3 billion, Sphere is a massive entertainment venue constructed mainly of steel and concrete. How different is that from the typical Vegas high-rise, casino or hotel? When you account for the structure’s sheer size, uncommon shape and intertwining technologies—very.
Reprinted courtesy of
Grace Calengor, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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6 Ways to Reduce Fire Safety Hazards in BESS
January 02, 2024 —
The Hartford Staff - The Hartford InsightsRenewable energy sources, such as solar and wind, are projected to generate 44% of all power in the U.S. by 2050, which is increasing the need for battery energy storage systems (BESS).1
BESS are electrochemical devices that collect energy from a power grid, power plant or renewable source, hold it, and then discharge that energy later to provide electricity on demand.
“A BESS does not itself create or produce energy, it is a storage system. The energy is produced by other means, including different types of renewable sources. Think of a cellphone – you charge it overnight and then it runs throughout the day off that battery power,” says Stacie Prescott, head of energy for middle and large commercial at The Hartford.
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The Hartford Staff, The Hartford Insights
The Future of Construction Work with Mark Ehrlich
February 19, 2024 —
Aarni Heiskanen - AEC BusinessIn this episode of the AEC Business
podcast, I had the pleasure of speaking with Mark Ehrlich, a veteran of the construction industry from the USA and the author of “The Way We Build: Restoring Dignity to Construction Work.” Our conversation delved into the evolving landscape of construction work and the challenges faced by construction workers today.
Mark shared his extensive background, starting as a carpenter and rising through the ranks to become the head of a 25,000-member union organization. His experience spans decades, and he has authored three books and numerous articles on labor issues.
The historical labor shifts
We discussed the historical shift from a predominantly unionized construction workforce to the current bifurcated system in the US, where union strongholds in the north contrast sharply with the non-union, lower-wage environments in the south and other regions. Mark highlighted the issues of wage theft, declining safety standards, and the exploitation of undocumented workers.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
No Coverage for Construction Defect Claim Only Impacting Insured's Work
January 08, 2024 —
Tred R. Eyerly - Insurance Law HawaiiIn a coverage dispute between two insurers over a claim for damages caused by faulty workmanship, the court found there was no right to equitable contribution or indemnity. Travelers Prop. Cas. Co. of Am. v. Mallcraft, Inc., 2023 Cal. Super. LEXIS 67568 (Cal. Super. Ct. Sept. 15, 2023).
Mallcraft was the general contractor for a building project and was sued for construction defects. Travelers was an additional insured under a policy issued to a subcontractor, KitCor. Travelers defended Mallcraft in an arbitration. Travelers sought equitable contribution and equitable indemnity from Hartford, Mallcraft's insurer.
Mallcraft and Travelers stiulated to a judgment agianst Mallcraft for all costs Travelers incurred in the arbitration. Travelers' insured, KitCor, was not implicated in the construction defect claims against Mallcraft. The judgment set forth findings, including the fact that the underlying plaintiff never made any claim that KitCor perfomred work on the project or casued property damage.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com