Most construction loans contemplate multiple advances or disbursements of funds at various stages of the construction project. The construction loan agreement will set forth the conditions that the borrower must satisfy to receive each advance of funds. Given that a construction loan concerns an active construction project, there is a risk that a lender could lose its lien priority in an advance (secured by the insured mortgage) to a mechanic’s lien. This post addresses how a title insurance policy and endorsements can insure against such a risk. Continue reading
On January 31, the U.S. Court of Appeals for the Eighth Circuit held that, under the terms of a commercial general liability insurance policy, natural gas condensate, a valuable commercial product, once released, is a pollutant that triggers the policy’s “pollutant exclusion.” The case is Hiland Partners GP Holdings, LLC, et al., v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA. The Eighth Circuit confirmed that the District Court did not err by concluding that National Union Fire Insurance Company of Pittsburgh, PA (National Union) did not have a duty to defend or indemnify Hiland Partners GP Holdings, LLC, Hiland Partners, LP, and Hiland Operating, LLC (collectively, Hiland) because the allegations in B&B Heavy Haul, LLC’s (B&B) employee Lenny Chapman’s complaint fell within the policy’s pollution exclusion and the exception to the exclusion did not apply because Hiland failed to offer evidence that it reported the pollution to National Union within 21 days of discovering it.
The Florida Supreme Court recently issued a widely reported decision, Sebo v. American Home Assurance Co., which applied the concurrent cause doctrine in ruling that an all-risk homeowner’s insurance policy provides coverage when damage is the result of multiple events—so long as at least one of them is a covered peril. Plaintiff John Sebo purchased a home, which he insured under an all-risk homeowner’s policy written by American Home. As an “all-risk” policy, it provided coverage for damage to property caused by all perils, except those it explicitly excluded. Design defects and faulty construction were among the excluded perils. Within less than two months of buying the house, Mr. Sebo discovered major leaks during rainstorms, which were later found to be the result of design defects and faulty construction. Hurricane Wilma then caused even more damage. When Mr. Sebo sought coverage for damage from the water intrusion, American Home denied most of the claim on the grounds that it was caused by design defects and faulty construction—which were excluded perils. But the Florida Supreme Court found coverage.
Our colleague Allen Brandt recently posted an interesting blog on Pillsbury’s Policyholder Pulse titled Subrogation Waivers and the Perils of Litigation: Wavering on a Precipice. In it, Allen discusses the perils of using standard subrogation waivers in your insurance policies, and cautions against the use of standard waivers (which can have unintended consequences).
Recently, our colleagues Tamara Bruno, Colin Kemp, Peter Gillon, Vince Morgan and Joseph Jean published an alert titled Hurricane Matthew Requires Immediate Action to Maximize Insurance Recovery to help you weather any storm.
Photo: U.S. Department of Agriculture – A MH-60 helicopter from the U.S. Coast Guard (USCG) Aviation Training Center Mobile, AL conducted a fly over of the Charleston, South Carolina area that was affected by Hurricane Matthew, on Friday, October 8, 2016. The Coast Guard is committed to the safety of the community, environment, and responders. USCG photo by Petty Officer 3rd Class Alexandria Preston – Creative Commons
Check out my latest blog for Pillsbury’s Policyholder Pulse titled A Subcontractor’s Defective Work Is an Occurrence: Weedo Wobbles … and Falls Down. It discusses a recent ruling in New Jersey, Cypress Point Condominium Assoc., Inc. v. Adria Towers, L.L.C., on the issue of whether damage caused by a subcontractor’s faulty workmanship constitutes “property damage” and an “occurrence” under a property developer’s commercial general liability insurance policy.
Additional Source: Weedo v. Stone-E-Brick, Inc.
Pillsbury’s Policyholder Pulse Law blog recently posted an interesting blog, Use Contractor’s Pollution Liability Insurance to Clean Up Potential Gaps in Your CGL Coverage by Ashley E. Cowgill, on the importance of contractors having the right liability coverage in place in the event that a flash flood or other natural disaster causes damage that is classified by the insurer as a pollution event.
Photo: Erich Ferdinand, Deluge, Taken Nov. 29, 2012 – Creative Commons
According to the Ninth Circuit Court of Appeals, in Ash Grove Cement Co. v. Liberty Mutual Ins. Co., an unpublished opinion applying Oregon law, an insurer’s duty to defend begins with a “104(e) letter” from the EPA and continues for the duration of the regulatory process. In A “Suit” by Any Other Name: Ninth Circuit Rules CERCLA 104(e) Letter Triggers Duty to Defend, Pillsbury attorney Alex Lathrop discusses the Ash Grove ruling.
In New York High Court Gives the Bronx Cheer to Insurers’ Pro Rata Allocation and Exhaustion Arguments, Pillsbury attorney Benjamin D. Tievsky discusses New York State Court of Appeals’ decision in In re Viking Pump, Inc. The Court of Appeals accepted two certified questions from the Delaware Supreme Court. As noted by Ben, “in a New York minute,” the Court of Appeals has “leveled the playing field by endorsing the ‘all sums’ and ‘vertical exhaustion’ approach to allocation advocated by a policyholder, at least as to policies containing ‘non-cumulation’ and ‘prior insurance’ provisions.” This ruling will be of interest to those who have encountered in New York barriers to insurance coverage where multiple policies over multiple policy terms are implicated, including, but not limited to, coverage for environmental or asbestos liabilities.
UPDATE: When Attorneys General Attack II
In When Attorneys General Attack, Pillsbury attorneys Sheila McCafferty Harvey, Joseph Jean, Carolina Fornos and Benjamin Tievsky discuss the New York State Office of the Attorney General’s and other jurisdictions’ power to aggressively scrutinize energy companies’ public statements on the subject of climate change. In the alert, they provide strategies for managing and obtaining insurance coverage for these investigations.