| Liability of a Property Owner or General Contractor for the Injuries of a Subcontractor’s Employee |
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5/20/2009 Link
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We are often asked whether an owner or a general contractor can be held liable for injuries sustained by an employee of a subcontractor, when the subcontractor coordinated all of the means and methods of its own work. Submitted by Scott Brown.
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| Indiana Supreme Court rules that insurers are not obligated to pay any defense costs incurred by the insured prior to giving the insurer notice of the claim. |
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5/19/2009 Link
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The Indiana Supreme Court recently announced in Dreaded v. St. Paul Guardian Ins. Co., No. 49S02-0805-CV-244 at 8 (Ind. April 28, 2009) that an insurer's duty to defend is not triggered until the insured complies with the notice provision of the insurance policy, and accordingly, the insurer has no obligation to pay costs incurred before the date the insured gives notice of the claim. Submitted by Michael A. Rogers.
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| Taming the Dragon |
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5/19/2009 Link
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In the area of surety law, one case that has garnered significant controversy is Dragon Construction, Inc. v. Parkway Bank & Trust, 678 N.E.2d 55 (Ill. App. Ct. 1997). Although an Illinois case, Dragon has been cited in the First, Second, Fourth, Sixth, Seventh, Tenth, and D.C. Circuits, as well as in the Court of Appeals of Florida, Illinois, Michigan, and Puerto Rico. In light of such an assortment of cases drawing off of Dragon, both in distinguishing and following the case, it is worth taking a moment to consider the cumulative effect. Framed at the extremes, the dispute in Dragon is whether courts will err to avoid transforming sureties into commercial guarantors or to avoid discharging sureties for hyper-technicalities. Submitted by Eric Foerg.
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| SEARCH TWICE, FORECLOSE ONCE |
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5/19/2009 Link
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The old adage of "measure twice, cut once" can be appropriately adapted to lien foreclosure actions. Failing to identify all lienholders, including those considered to be junior lienholders, and naming them as parties to a foreclosure action can be costly. A bank recently learned this valuable lesson. In Deutsche Bank National Trust Co. v. Mark Dill Plumbing Co., 903 N.E.2d 166 (Ind.Ct.App. 2009), the bank foreclosed on its mortgage without adding three junior judgment lienholders to the foreclosure action. After the bank purchased the property at a Sheriff’s sale, it learned of the junior lienholders. In order to quiet title on the property, the bank filed an action to remove the judgment liens belonging to the junior lienholders. The junior lienholders requested that the bank's equity of redemption be foreclosed and another Sheriff's sale be held to satisfy the amounts owed to them. Submitted by Dan King.
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| Failure of Contractor to Provide Disclosure Goes Over Like a Lead Balloon |
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5/11/2009 Link
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When performing remodeling and renovation projects contractors, are faced with a number of challenges. Problems with owners, subcontractors, material providers, architects and designers frequently present the lion’s share of issues on a project. Given the scope of problems that can arise on a project, it is easy for contractors to become so focused on issues like the ones identified above, that they fail to stay current on the laws, rules and regulations governing the work they perform. Often, the result is that the contractor is cited by a government or regulatory agency and fined for its failure to comply with a law the contractor knew nothing about. Submitted by Matt Voors.
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| Mandatory Transition to 2007 AIA Contract Documents Set for May 31, 2009 |
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5/11/2009 Link
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The widely used construction industry contracts and forms produced by the American Institute of Architects (AIA) underwent major revisions with the release of the 2007 contract documents. The AIA documents are revised approximately once every 10 years, and the 2007 revisions relate to more than 40 revised, updated, or new documents including some new Owner/Architect agreements (B101, B102, B103, B104) and the traditional Owner/Contractor/Subcontractor agreements (A101, A102, A103, A107, A201, A401). Notwithstanding these updates, there are still many AIA contract documents which pre-date 2007 and can continue to be used (A101/CMa-1992, B141-1997, etc.). Submitted by Kevin Malof.
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| Indiana Court Allows Reformation of Development Contract Where Party Covertly Changed Provision In Later Draft of Proposed Contract |
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5/8/2009 Link
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An Indiana court recently found that a contract related to the construction of a sanitary sewer system was subject to reformation where the drafter of a revised version of the agreement inserted a material revision to the draft agreement without notifying the other party of the change. In Carr Development Group, LLC v. Town of N. Webster, 899 N.E.2d 12 (Ind. Ct. App. 2008), a developer had approached the Town of North Webster to discuss construction of a sanitary sewer system to serve the developer's own real estate. Carr Development wanted to connect the sewer system into the North Webster sewer system. North Webster indicated it would only consider the request if any agreement did not require North Webster to contribute any funds to the construction of the sewer system and did not require North Webster to waive any fees which it would be entitled to receive from the sewer system. In March 2004, Carr Development presented an agreement to North Webster that was never executed. Submitted by Dean R. Brackenridge.
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| CGL Policy Does Not Cover General Contractor's Risk of Negligent Work by its Subcontractors |
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5/5/2009 Link
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The 7th Circuit Court of Appeals recently issued its opinion in Westfield Insurance Co. v. Sheehan Construction Co., Inc. and held that the "your work" exclusion in the general contractor's ("Sheehan") Commercial General Liability Policy ("CGL") included the work of Sheehan's subcontractors and consequently barred coverage for claims arising out of the remediation of that defective work. In Westfield, numerous homeowners discovered moisture infiltration problems in their homes. They filed suit against Sheehan who then brought third-party claims against its subcontractors. Ultimately, the defective work was traced to one of the subcontractors. Sheehan settled the claims for $2.8 million and sought indemnification from its CGL carrier ("Westfield"). Submitted by Brian Falcon.
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