New York Appellate Court Addresses “Trigger of Coverage” for Asbestos Claims and Other Coverage Issues
November 30, 2020 —
Paul A. Briganti - Complex Insurance Coverage ReporterOn October 9, 2020, the New York Supreme Court, Appellate Division, Fourth Department, decided an appeal from a trial court’s 2018 summary judgment ruling on a number of coverage issues arising out of asbestos-related bodily injury claims against plaintiffs Carrier Corporation (Carrier) and Elliott Company (Elliott). See Carrier Corp. v. Allstate Ins. Co., No. 396 CA 18-02292, Mem. & Order (N.Y. Sup. Ct. App. Div. 4th Dep’t Oct. 9, 2020).
The Fourth Department reversed the trial court’s ruling that, under New York’s “injury in fact trigger of coverage,” injury occurs from the first date of exposure to asbestos through death or the filing of suit as a matter of law. The parties agreed that, because the policy language at issue required personal injury to take place “during the policy period,” “the applicable test in determining what event constitutes personal injury sufficient to trigger coverage is injury-in-fact, ‘which rests on when the injury, sickness, disease or disability actually began.’” Id. at 3 (quoting Cont’l Cas. Co. v. Rapid-American Corp., 609 N.E.2d 506, 511 (N.Y. 1993)). The Fourth Department concluded that, in resolving the issue, the trial court erred by relying on inapposite decisions in other cases where: (1) the parties had stipulated or otherwise not disputed that first exposure triggered coverage[1]; or (2) the issue had not been resolved on summary judgment, but rather at trial based on expert medical evidence[2]. The Fourth Department further explained that, even if plaintiffs here had met their initial burden on summary judgment by submitting admissible evidence that asbestos-related injury actually begins upon first exposure, the defendant-insurer’s opposition – which included affidavits of medical experts contradicting that evidence and averring instead that “harm occurs only when a threshold level of asbestos fiber or particle burden is reached that overtakes the body’s defense mechanisms” – raised a triable issue of fact. Id. at 4. The Fourth Department also rejected plaintiffs’ argument that the defendant-insurer was collaterally estopped on the “trigger” issue by a California appellate court’s decision in Armstrong World Industries, Inc. v. Aetna Casualty & Surety Co., 52 Cal. Rptr. 2d 690 (Cal. Ct. App. 1996). The Fourth Department reasoned that the issues litigated in the two cases were not identical because, among other things, California and New York “apply different substantive law in determining when asbestos-related injury occurs.” Carrier, Mem. & Order at 4.
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Paul A. Briganti, White and Williams LLPMr. Briganti may be contacted at
brigantip@whiteandwilliams.com
Additional Dismissals of COVID Business Interruption, Civil Authority Claims
December 29, 2020 —
Tred R. Eyerly - Insurance Law HawaiiAmong the recent decisions dismissing complaints for business interruption and civil authority coverage due to closures caused by COVID-19 are Pappy's Barber Shops, Inc. v. Farmers Group, Inc., 2020 U.S. Dist. LEXIS 166808 (S.D. Calif. Sept. 11, 2020) and Sandy Point Dental v. Cincinnati Insurance Co., 2020 U.S. Dist. LEXIS 171979 (E.D. Ill. Sept. 21, 2020). The difficulty in proving "direct physical loss" was the downfall of both cases.
In Pappy's, claims were made for business income losses insured as a result of local and state closure orders. The policy required "direct physical loss of or damage to property at the described premises." Plaintiffs argued that "direct physical loss of" did not require a tangible damage or alteration to property and that the loss of the ability to continue operating their businesses as a result of the government orders met this requirement.
The court relied upon a prior decision, 10E, LLC v. Travelers Indem. Co. of Connecticut, 2020 U.S. Dist. LEXIS 165252 (C.D. Calif. Sept. 2, 2020) [post here], where the court noted that under California law, losses from inability to use property did not amount to "direct physical loss" within the meaning of the policy.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Hawaii Federal District Rejects Another Construction Defect Claim
November 30, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe Federal District Court, District of Hawaii, continued it long line of cases finding no coverage for claims of faulty workmanship. Nautilus Ins. Co. v. Summary Judgment RMB Enters., 2020 U.S. Dist. LEXIS 200468 (D. Haw. Oct. 28, 2020).
Property owners entered a construction contract with RMB Enterprises to develop and construct residential structures and a pond. The pond walls enclosed residential spaces, providing structural foundations for the walls of the building. After completion of the project, the pond leaked into its pump room. RMB performed remedial work by injecting epoxy into cracks. Later, water from the pondleaked into the interior of a residence near a staircase. Water also leaked into the master bedroom area causing musty odor, mood growth, and increased humidity.
The owners sued RMB asserting breach of contract, breach of warranty, misrepresentation, and negligence claims. Nautilus denied coverage. The policy provided that faulty workmanship did not constitute an "occurrence." But when faulty workmanship caused property damage to property other than "your work," then such property damage would be considered caused by an occurrence.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Do Not Lose Your Mechanics Lien Right Through a Subordination Agreement
December 21, 2020 —
William L. Porter - Porter Law GroupIf you are a member of the California construction industry you might know that the right of a contractor, subcontractor or supplier to record a mechanics lien to protect the right to payment is well protected by state law. In fact, our California Constitution, article XIV, Sec. 3 specifically elevates the right to a mechanics lien to “Constitutional right”. The right to a mechanics lien is further protected by a statutory framework, including Civil Code sec. 8122 which states:
“An owner, direct contractor, or subcontractor may not, by contract or otherwise, waive, affect, or impair any other claimant’s rights under this part, whether with or without notice, and any term of a contract that purports to do so is void and unenforceable unless and until the claimant executes and delivers a waiver and release under this article.”
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Nine Haight Attorneys Selected for Best Lawyers®: Ones to Watch 2021
September 14, 2020 —
Haight Brown & Bonesteel LLPNine Haight Brown & Bonesteel LLP attorneys were selected for Best Lawyers®: Ones to Watch 2021. Congratulations to
Courtney Arbucci,
Frances Brower,
James de los Reyes,
Kyle DiNicola,
Arezoo Jamshidi,
Kristian Moriarty,
Beth Obra-White,
Casey Otis and
Kaitlin Preston!
Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. Almost 94,000 industry leading lawyers are eligible to vote (from around the world), and Best Lawyers has received over 11 million evaluations on the legal abilities of other lawyers based on their specific practice areas around the world. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honor. Corporate Counsel magazine has called Best Lawyers “the most respected referral list of attorneys in practice.”
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Haight Brown & Bonesteel LLP
Considerations in Obtaining a Mechanic’s Lien in Maryland (Don’t try this at home)
December 21, 2020 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday at Construction Law Musings I welcome Matthew Evans. Matt is the owner of Law Offices of Matthew S. Evans, III, LLC located in Annapolis, Maryland. He has practiced construction, real estate and land use law in Maryland and D.C. for thirteen years. Prior to opening his own firm in May 2011, Mr. Evans was a partner at a mid-sized firm in Anne Arundel County, Maryland. Mr. Evans lives in Historic Annapolis (only three short blocks from his office) with his wife Margaret, and three children, Matthew (5), Bo (4) and Peyton (2).
Some of the most common calls I get are from irate contractor or subcontractor clients who have not been paid demanding that I “lien the property”. Many times after calming the client down, I determine, to their dismay, that they are not entitled to a mechanic’s lien. In Maryland, the mechanic’s lien law is driven by statute, which contains specific requirements which must be met before the client is entitled to a lien.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Update – Property Owner’s Defense Goes up in Smoke in Careless Smoking Case
September 21, 2020 —
Michael J. Ciamaichelo - The Subrogation StrategistProperty owners owe a duty of reasonable care to avoid causing harm to neighboring properties. In Steamfitters Local Union No. 602 v. Erie Ins. Exch., 2020 Md. LEXIS 347 (July 27, 2020) (Steamfitters Local), a matter originally discussed in a June 2019 blog post, the Court of Appeals of Maryland affirmed that, where the property owner knows or should have known that people are habitually discarding hundreds of cigarette butts into a mulch bed along the boundary of the neighboring property, the property owner owes a duty to its neighbors to prevent the risk of fire.
As discussed in Steamfitters Local, a fire originated in a strip of mulch at property owned by the Steamfitters Local Union No. 602 (Union) and caused damage to neighboring properties. The fire occurred when an unknown person discarded a cigarette butt into the mulch. Following the fire, investigators found hundreds of cigarette butts in the mulch where the fire originated. A representative for the Union acknowledged that there were more butts in the mulch “than there should have been” and that, “[i]n the right situation,” a carelessly discarded cigarette could cause a fire. The Union, however, had no rules or signs to prohibit or regulate smoking at the property, where apprentices would often gather prior to class. The insurance companies for the damaged neighbors filed subrogation actions alleging that the Union, as the property owner, failed to use reasonable care to prevent a foreseeable fire. A jury found in favor of the subrogating insurers and the defendants appealed.
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Michael J. Ciamaichelo, White and Williams LLPMr. Ciamaichelo may be contacted at
ciamaichelom@whiteandwilliams.com
Court Addresses When Duty to Defend Ends
August 24, 2020 —
Anthony L. Miscioscia & Margo E. Meta - White and WilliamsThere are certain generally held principles regarding an insurer’s duty to defend. One of these principles is that an insurer has a duty to defend its insured if the complaint states a claim that potentially falls within the policy’s coverage. However, there is a lack of consistency regarding the point at which the insurers’ duty to defend ends. When the only potentially covered claim has been dismissed, must the insurer continue to defend?
Certain jurisdictions, such as Hawaii and Minnesota, have held that an insurer’s duty to defend continues through an appeals process, or until a final judgment has been entered, disposing of the entire case. Commerce & Industry Insurance Company v. Bank of Hawaii, 832 P.2d 733 (Haw. 1992); Meadowbrook, Inc. v. Tower Insurance Company, 559 N.W. 2d 411 (Minn. 1997).
Earlier this week, the U.S. District Court for the Eastern District of Pennsylvania took a different approach to this question in Westminster American Insurance Company v. Spruce 1530, No. 19-539, 2020 U.S. Dist. LEXIS 106534 (E.D. Pa. June 17, 2020) – holding that the trial court’s dismissal of the only potentially covered claim was sufficient to terminate Westminster’s duty to defend.
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Anthony L. Miscioscia, White and Williams and
Margo E. Meta, White and Williams
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Ms. Meta may be contacted at metam@whiteandwilliams.com
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