Zurich Seeks to Assert Unprecedented Control over Defense Counsel

Posted
By and

Zurich has updated its "Litigation Management Guidelines" to give the insurer an unprecedented level of control over defense counsel's activities. The new Guidelines adopt the Recommended Case Handling Guidelines for Insurers created by The Defense Research Institute, and also append an extensive Addendum covering business policies, expense and professional fee payment, and other administrative points.

The Guidelines purport to impose a sweeping waiver of attorney-client privilege and work product protection, even though the law in most states imposes significant limitations on an insurer's access to privileged or protected information developed by defense counsel - especially where the insured is entitled to so-called Cumis or independent counsel as a result of conflicts of interest with its insurer. Zurich's Guidelines mandate almost complete and constant transparency in case development and strategy, stating "counsel should provide a significant development report to immediately communicate important case developments to the claims professional, such as settlement overtures by other parties, codefendant strategies or developments, new information obtained through discovery, etc." The Addendum also requires counsel to "enunciate the impact of the information being conveyed," specifically on "case strategy, evaluation, posture, and resolution opportunities." Zurich essentially attempts to coerce insureds to waive the attorney-client privilege and work product protection by expressly stating that Zurich reserves the right to review defense counsel's files and will not pay for defense activities for which Zurich is not given access to "full" explanation and documentation.

CONTINUE READING

Ohio Supreme Court Announces Rule for Pay-if-Paid Provisions

Posted
By

Last month, in its decision in Transtar Electric, Inc. v. A.E.M. Electrical Services, Corp., Slip Opinion No. 2014-Ohio-3095, the Ohio Supreme Court ruled that the inclusion of term "condition precedent" in a contractual payment provision was an explicit statement of the parties' intent to transfer the risk of the project owner's non-payment from the general contractor to the subcontractor. This decision is significant for Ohio, a state that enforces the validity of pay-if-paid provisions, unlike other states that have found them void as against public policy.

Transtar involved a contract between a general contractor and an electrical subcontractor for the construction of a pool at a Holiday Inn. The subcontractor fully performed its work under the subcontract, but the general contractor failed to pay the last three of the subcontractor's invoices because the owner had not paid the general contractor for the work reflected in those invoices. The subcontractor filed suit alleging both breach of contract and unjust enrichment, and both sides moved for summary judgment. While the general contractor did not dispute the facts asserted by the subcontractor, it argued that, under the contract, it did not have to pay the subcontractor until it received payment from the owner. The trial court agreed with the general contractor, but the appeals court reversed, stating that the contract's payment provision was not sufficient to shift the risk of non-payment by the owner to the subcontractor. The Ohio Supreme Court then reinstated the judgment of the trial court.

CONTINUE READING

Significant 5th Circuit Ruling On Preenforcement Clean Water Act Review Under US v. Sackett, Holding Corps of Engineers' Judicial Determination Not A Final Agency Action

Posted
By

In the case of Belle Company, L.L.C., et al., v. U.S. Army Corps of Engineers, decided July 30, 2014, the US Court of Appeals for the Fifth Circuit affirmed the lower court's decision to dismiss a lawsuit challenging the Corps issuance of a wetlands jurisdictional determination (JD) on several grounds.

The New Orleans District Office issued a JD that Belle's property, intended to be used as a solid waste landfill, contained wetlands subject to the Corps' Clean Water Act § 404 permitting jurisdiction. Belle argued that this determination reflected an illegal change in administrative policy, and the Corps' administrative appeals process deprived Bell of its liberty and property interests without due process of law. In the main, however, Belle argued that the precedent established by the US Supreme Court in Sackett v. EPA, 132 S. Ct. 1367 (2012), required the courts to revisit the issue of final agency action for purposes of the judicial review of agency actions. The Sackett case involved an EPA compliance order under the CWA involving consequences that were so serious and final as to warrant pre-enforcement judicial review.

The Fifth Circuit, applying the Sackett decision to the consequences of a Corps' JD, determined that while the JD represented the consummation of the Corps' decision-making process as to the question of its jurisdiction under the CWA, it was still "nonfinal and nonreviewable" because it did not, in itself, adversely affect the complainant--it was only a threshold determination. Therefore, it was not a final agency action subject to judicial review at this time. The Fifth Circuit noted that the issuance of a notice of violation by EPA under the Clean Air Act was recently held by a panel of the Fifth Circuit not to be a final agency action in Luminant Generation Co., L.L.C. v. EPA, ___ F.3d ___, Nos. 12-60694, 13-60538, 2014 WL 3037692, at *3 (5th Cir. 2014). It concluded that to hold otherwise in this case would undermine the current complicated and sophisticated system used by the Corps by which property owners can ascertain their rights and obligations before they are subject to any enforcement action under the CWA.

The Fifth Circuit also turned aside Belle's constitutional due process challenge filed under 28 U.S.C. § 1331 because a waiver of sovereign immunity had not been established, and a challenge to the Corps' use of a new policy regarding the regulatory status of prior converted cropland. Belle argued in this instance that the new policy was formulated by the Jacksonville, Florida office of the Corps without APA-required notice and comment, but the Fifth Circuit noted there was no evidence in the record that the New Orleans office relied on this policy--and the applicable statute of limitations had expired.

CA: Public Works Contractors Online Application System

Posted
By

Recently enacted law establishes a new public works program to replace the Compliance Monitoring Unit and Labor Compliance Program requirements for bond-funded and other public works projects. Effective July 1, 2014, the California Department of Industrial Relations' (DIR) program covers all bond-funded and public works projects in the state rather than just selected processes. Public works refers to construction, alteration, demolition, installation, or repair work (including maintenance) done under contract and paid by public funds. It does not include those done by a public agency with its own employees. With minor exceptions, all workers employed on public works projects must be paid the prevailing wage determined by the Director of the DIR according to the type of work and location, and the prevailing wage rates are usually based on rates specified in collective bargaining agreements.

CONTINUE READING

CSLB: California 2014 Legislative Bills That Could Impact Contractors

Posted
By

The California Contractors State License Board (CSLB) monitors legislation that it is sponsoring as well as bills that may have an impact on the construction industry. In its Summer 2014 Newsletter, the CSLB identifies a handful of bills that it is watching.

CONTINUE READING

Minnesota Minimum Wage Increase ~ August 1, 2014, 2015, 2016 and Beyond

Posted
By

A Minnesota bill contemplating minimum wage increases (Minnesota H.F. 2091) was signed into law on April 14, 2014, and is effective August 1. It contemplates minimum wage increases commencing on August 1 and continuing thereafter.

CONTINUE READING

CSLB Enforcement Division Reinforcing HVAC Scam Zero-Tolerance Policy

Posted
By

In the California Contractors State License Board's (CSLB) Summer 2014 Message from the Board Chair, the CSLB's new Board Chair David Dias voices his concern about the increasing number of consumer complaints alleging predatory practices by C-20 Warm-Air Heating, Ventilating and Air-Conditioning (HVAC) contractors. Reportedly, vulnerable consumers are being taken advantage of after calling an HVAC contractor for simple repairs or routine maintenance. He confirms that the CSLB is "taking steps to warn and weed out this element," efforts which have included hosting a conference in San Jose in May that brought together industry officials, regulators, and C-20 contractors to discuss HVAC installation-related issues. He further confirmed that the CSLB's Enforcement Division "will be reinforcing its HVAC scam zero-tolerance policy through targeted undercover sting operations."

CONTINUE READING

7th Circuit Rejects Substantive Due Process Challenge to Wisconsin Supreme Court Special Tort Liability Doctrine

Posted
By

In an unusual case, the US Court of Appeals for the Seventh Circuit held, in Gibson v. American Cyanamid Co., et al., that the Wisconsin Supreme Court's "risk contribution theory" would apply to the manufacturers of lead pigments that were added to commercial paint products until their use was banned in 1978 by the Consumer Product Safety Commission.

CONTINUE READING

California Supreme Court provides a Beacon of hope for condominium association claims against design professionals

Posted
By

In an opinion filed July 3, 2014, the California Supreme Court provided some clarification to California law concerning an architect's liability to foreseeable third-party purchasers of residential units for design errors and omissions. In Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP (July 3, 2014) ____Cal.4th ____; 2014 WL 2988058, Cal. July 03, 204 (NO. S208173), the Court held that a principal architect (defined by the Court as an architect who in providing professional design services is not subordinate to other design professionals) of a residential project owes a duty of care to future homeowners.

CONTINUE READING

Demolition For Sacramento Kings New Arena Scheduled To Commence By Month End

Posted
By

UPDATE: Sacramento Business Journal, Demolition for future downtown arena begins Friday (Jul. 30, 2014)

Recently it has been confirmed that demolition for the new Kings' arena is scheduled to commence in late July 2014. The demolition effort will include 3 square blocks of Downtown Plaza. Downtown Sac.jpgBy late December, the construction site is expected to include a temporary, 30-foot-deep canyon where the mall shops once stood. Although barriers will surround much of the worksite, it has been reported that viewing areas will be set up on two sides of the mall, allowing onlookers to catch a glimpse of the demolition and construction efforts.

CONTINUE READING

New EEOC Developments Expand Employers' Pregnancy Accommodation Obligations

Posted
By Pillsbury Winthrop Shaw Pittman

Today, Pillsbury attorneys Julia Judish and Teresa Lewi published their advisory titled New EEOC Developments Expand Employers' Pregnancy Accommodation Obligations. The Advisory discusses the Equal Employment Opportunity Commission's recent overhaul of its guidance on pregnancy discrimination issues--broadening anti-discrimination coverage and cautioning employers on their obligation to provide reasonable accommodations to employees with pregnancy-related conditions.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Julia Judish or Teresa Lewi, the authors of this blog.

Texas Court Upholds Arbitration Award in Bitterly-Disputed South Texas Oil and Gas Contamination Dispute

Posted
By

The First Court of Appeals, sitting in Houston, has affirmed the decision of an arbitration panel which had ruled in favor of the claims for personal injury and property damages resulting from Forest Oil Corporation's oil and gas exploration and production activities on the McAllen Ranch in South Texas. The ranch comprises over 27,000 acres, and its value, unimpaired by environmental contamination, is more than $65 million.

CONTINUE READING

Texas Court of Appeals rules that courts have no jurisdiction over agency's refusal to promulgate new rules, and sidesteps discussion on the public trust doctrine

Posted
By

The Austin Court of Appeals issued an interesting ruling on whether the courts in Texas have the power to review an agency's refusal to engage in rulemaking. In Texas Commission on Environmental Quality v. Bonser-Latin, et al., the Court of Appeals agreed with TCEQ that the lower court had no jurisdiction over a complaint that the TCEQ unlawfully refused to promulgate new Greenhouse Gas rules.

CONTINUE READING

Operative August 28: Revised Missouri Public Prompt Payment Act

Posted
By

On June 20, 2014, Missouri Governor signed into law Senate Bill 529. The Act revises and expands the scope of the Missouri Public Prompt Payment Act and the law relating to public works projects. The revised provisions are operative August 28, 2014. Of note, under existing law, all public works contracts made by a political subdivision for a public works project must provide for prompt payment to the contractor. Under the revised Act, these contracts must also provide for prompt payment of any professional engineer, architect, landscape architect, or land surveyor.

CONTINUE READING

New Federal Advisory Act Ruling: Court Finds Advisory Committee Report "Suspect and Untrustworthy"

Posted
By

Judge Richard J. Leon of the US District Court for the District of Columbia has ruled that a federal advisory committee appointed by the FDA to issue a report consistent with the agency's new authority over the sale of tobacco products was illegally constituted. Three of the voting committee members had conflicts of interest in that they received compensation from companies manufacturing tobacco cessation products, and that they were also frequent expert witnesses in tobacco litigation. The conflicts were so significant that the court held that the committee's "Menthol Report" was "suspect and untrustworthy", and barred its use.

The case is Lorillard, Inc. v. US Food and Drug Administration, decided July 21, 2014.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Anthony Cavender, the author of this blog.