Judy Greenwald: Professional liability risks grow with green construction

Challenges facing risk managers and insurers in developing errors and omissions coverage for “green” construction projects are similar to but also different than standard construction risks.

The difference generally is found in new technology and materials, which are untested and often experimental, and can lead to unfounded expectations, observers say.

Despite recent attention on the subject, “green building sustainable design has been around for decades,” said Paul Ablan, Minnetonka, Minn.-based senior vp and managing director of professional liability at OneBeacon Professional Insurance, a unit of Hamilton, Bermuda-based OneBeacon Insurance Group Ltd.

Professionals long have sought to operate more efficiently and economically while taking the environment into account, but it is only in the past several years that sustainable design has gained more governmental and public focus, Mr. Ablan said.

Read more at: http://www.expertwitnessinconstruction.com/httpdocs/news-Green_Construction_Liability_Risks.php

Property Damage Exclusion Precludes Duty to Defend (Wiley Rein, LLP)

The United States District Court for the District of Colorado has held that an insurer did not owe a duty to defend under a Non-Profit Executive Protection and Employment Practices Liability Insurance (D&O) policy issued to a condominium association (the Association) because the claims in the underlying breach of contract suit fell under the policy’s property damage exclusion. Beauvallon Condominium Assoc., Inc. v. Granite State Ins. Co., 2011 WL 2565474 (D. Colo. June 29, 2011).

After the retailers began to complain about problems with common elements, including drainage from the roof and interior leakage from overhead plumbing defects, the owner of the retail spaces filed suit against the Association, demanding repair of the common elements.

Read more at http://www.expertwitnessinconstruction.com/httpdocs/news-Property_Damage_Exclusion.php

Court Reviews Defendant's Failure to Pay a Contractor the Balance of a Settlement Agreement

REGENCY CONSTRUCTION, LTD, INC. ET AL. v. KATHY LESLIE ET AL. (Tenn. Ct. App. July 19, 2011)

This dispute arises from an agreement to construct a duplex in a residential area. The issue in dispute pertains to the cost of change orders that were not reduced to writing as the construction contract required. To resolve the dispute amicably, the parties entered into an agreement titled "Settlement of Disputed Amount." The defendant paid part of the agreed amount timely but failed to pay the balance of $23,000. This action followed. The trial court ruled in favor of the contractor for the balance owed pursuant to the agreement and applied an offset in favor of the defendant in the amount of $5,220.55. Defendant appealed. We affirm.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/regencyconstruction_071911.pdf

Court Reviews an Administrative Agency's Affirmation of a Workplace Violation Citation

SWIFT ROOFING, INC. v. STATE OF TENNESSEE, COMMISSIONER OF LABOR AND WORKFORCE DEVELOPMENT (Tenn. Ct. App. July 14, 2011)

This appeal arises from a petition seeking judicial review of an administrative agency order, which affirmed citations for workplace safety violations. The Chancery Court affirmed the citations.

After reviewing the appellate record, we conclude that the administrative agency did not provide the required findings of fact, conclusions of law, and reasons for its decision. Consequently, judicial review is not possible based on the record before this Court. Therefore, we vacate the order of the Chancery Court and remand for further proceedings consistent with this opinion.

Full opinion is available here:
http://www.tba2.org/tba_files/TCA/2011/swiftroofing_071411.pdf

Court Reviews a Recission of Contract Case Against Builders of a Home

HOSIE JOHNSON ET AL. v. NICK DATTILO ET AL. (Tenn. Ct. App. July 15, 2011)

The purchasers of a lot and newly constructed residence filed this action against the builders, seeking damages and rescission of the construction and sale agreement. The plaintiffs allege the defendants breached the agreement by failing to construct the home in accordance with "good building practices," and breached the implied warranty of workmanship. They also allege that statements made by the foreman during construction, concerning the condition of the property, amount to a violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. section 47-18-104(b)(7), as well as common law negligent and fraudulent misrepresentation. The trial court granted the defendant's motion for a directed verdict on all claims. Finding plaintiffs failed to provide evidence of key elements in each of their claims, we affirm.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/johnsonh_071511.pdf

Earl K. Messer: Insurance coverage for construction defects

Contractor liability insurance coverage in construction defect cases is a matter that is hotly litigated. On the one hand, coverage often exists when a defect causes harm to a third party’s property. On the other hand, if the only harm is to the insured contractor’s defective work itself, there is usually no coverage. In between lies controversy. A key area of dispute is where defective work on one part of a construction project causes harm to another part of the same project, a common occurrence. Courts are split on whether coverage exists under such circumstances, although the trend appears to be in favor of coverage.

Read the full story here: http://www.expertwitnessinconstruction.com/httpdocs/news-Construction_Defect_Insurance_Coverage.php