Construction Law News Blog

Showing 15 posts in Risk Management / Insurance.

Federal Court Upholds Pay if Pay Clause as Valid Defense Available to Principal and Surety

In a decision filed on January 13, 2011, a Federal District Court in Indiana granted a Motion for Summary Judgment upholding a defense asserted by a surety and its principal based upon a pay-if-pay clause. The case cited with approval two prior cases deciding in New Jersey and West Virginia upholding similar clauses and defenses by the surety. Read More ›

Bond Form Makes a Difference in Ability of Owner to Obtain Benefits of Bond

The recent case of St. Paul Fire & Marine Ins. Co. v. VDE Corporation, 603 F.3d 119 (1st Cir. 2010) points to the importance of selecting an appropriate bond form and adhering to the terms of the bond. Read More ›

Indiana Supreme Court finds that General Contractor’s CGL Policy may Cover Damages to the Project Itself Caused by a Subcontractor’s Faulty Work

Construction contractors rely heavily on insurance policies to help minimize and allocate the risks of damages caused by their work. A commercial generally liability (CGL) policy is among the standard policies obtained by contractors and typically is intended to cover the contractor’s liability for bodily injury or property damage to persons or property other than the construction project itself. For example, a CGL policy would be expected to cover a contractor’s liability to a passerby that was injured by the contractor while walking by the project. But in Sheehan Const. Co., Inc. v. Continental Cas. Co., 935 N.E.2d 160 (Ind. 2010), the Indiana Supreme Court addressed whether a standard CGL policy covers a general contractor’s liability to an owner for the faulty workmanship of a subcontractor. Read More ›

Economic Loss Doctrine Alive and Well in Indiana

The construction industry extensively relies upon the use of written contracts to establish duties and to allocate risk. When defects occur on a project, a party's ability to recover is governed by the existence of its contractual relationships, as well as the type of damages it seeks to collect. In Indiana, where the aggrieved party’s losses are solely economic in nature, it may look to recover only from those with whom it has contracted. Indianapolis-Marion County Public Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722 (Ind. 2010). Read More ›

A New Indiana House Bill...

A new Indiana House Bill would require all new buildings constructed by local governments and schools to meet green building standards. House Bill 1063 recently passed the Indiana House by a 51-47 vote and will move on to the Senate. The bill would require all buildings erected by local governments to achieve a "silver" rating on the U.S Green Building Council's LEED standards. The Indianapolis Star reported that proponents of the bill argue that this bill could be implemented with no additional costs, but would save the taxpayers 40 percent on energy of the life of the building. But opponents of the bill disagree, arguing that if there is no additional cost, there should be no need to require the green standards. "Why isn't this happening on its own? Why do we need to mandate the standards?" asked Rep. Sean Eberhardt, R-Shelbyville. "If it's the same cost, why don't we just let the natural progression of things take hold and let it happen on its own?" Read More ›

Northern District of Ohio Finds Supplier of Crushed Stone Backfill Not To Be a "Subcontractor" Within the Meaning of an Insurance Policy

In Mosser Construction, Inc. v. The Travelers Indemnity Company, 2009 Westlaw 3426484 (N.D. Ohio), October 26, 2009, the district court determined that a supplier of crushed stone backfill to a general contractor was not a “subcontractor” within the meaning of an insurance policy, but was rather a “material supplier,” and as a result the general contractor was not entitled to defense or indemnification from the insurance company. Read More ›

New Requirements Emphasized Concerning Indiana Rule 5 Construction Plans

Construction plans which once met the requirements of Rule 5 may now be deficient in light of increased attention by state regulators to requirements that construction plans identify possible pollutants and their sources. In 1992, the Indiana Water Pollution Control Board passed the original version of Rule 5, which imposed requirements for storm water discharges from construction activities. See 327 Indiana Administrative Code 15-5-1. At that time, the Rule’s primary focus was on sediment and erosion control. The Indiana Department of Environmental Management and Indiana Department of Natural Resources now emphasize additional requirements that the preparers of construction plans identify possible pollutants and their sources, in addition to continuing to require vigilant efforts to minimize erosion, sediment loss and discharge of possible pollutants. Read More ›

Liability of a Property Owner or General Contractor for the Injuries of a Subcontractor’s Employee

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. Read More ›

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

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. Read More ›

CGL Policy Does Not Cover General Contractor's Risk of Negligent Work by its Subcontractors

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"). Read More ›

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Attorney Spotlight

C. Michael Shull, III focuses his practice on construction law and litigation. Michael's client representations range from casinos and ENR Top 400 contractors to design firms and subcontractors.

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