Publications Archives

Additional Insurance Coverage

By J. Christopher Bennington

In an effort to spread the cost of construction defect litigation, many carriers for general contractors and subcontractors have begun requiring their named insureds to obtain "additional insured" coverage from the named insureds' subcontractors. For example, the policy issued to a general contractor may demand that the general require his or her electrician, plumber and other subcontractors to have the general named as an additional insured on each of the policies issued to those subcontractors. In this way, there are likely to be several policies covering the general contractor against any given claim, which can dramatically reduce the exposure for the general contractor's own liability carrier.

Contractor Not Liable for Independent Contractor's Safety Failures

By Brendan J. Coughlin

Early November 2005, at San Francisco International Airport, mechanic Anthony Verdun pulled his injured arm from the moving parts of a baggage conveyor belt. The conveyor had no shields or cover, in alleged violation of Cal-OSHA regulations. Verdun was required to be in a tight, cramped space with little light to perform an inspection on the conveyor while it was in operation.

Short Sales and Deficiency Judgments

As declining residential property values are starting to stabilize, mortgage lenders are approving more Short Sales as an alternative to foreclosure. A homeowner may elect to pursue a Short Sale when the fair market value of the property is less then the amount of the loan, and the owner cannot cover the mortgage payments. Some homes are encumbered with two or more loans. All lien holders must approve before a Short Sale can occur. If the loans are generated with different lending agencies, then the Real Estate Agent must contend with different business practices when assisting with the Short Sale application. For example, lenders have different procedures regarding Short Sale applications. Some lenders require submittals of offers. Often the Seller must disclose his financial records and explain his financial hardship. Financial information must be accurate and honest. Otherwise, the Seller and his Agent could be liable to the lender for fraud.

The Purchase Agreement Arbitration Provision Does Not Limit the Court's Authority

The standard form residential purchase agreement published by the California Association of Realtors ("CAR"), was updated in October 2002. The Purchase Agreement adopted The Federal Arbitration Act ("FAA") procedural provisions. Until recently, parties have interpreted this provision to mean that the trial court has no authority to stay or deny arbitration under the California Arbitration Act because the Agreement adopted the Federal rules.

California Mechanic's Lien Law Amendments

The California Legislature recently amended California Civil Code Sections 3084 and 3146 relating to mechanic's liens. In particular, Assembly Bill ("AB") 457 requires additional notices in order to preserve a lien claimant's rights to enforce a mechanic's lien. The amendments to Sections 3084 and 3146 will become operative on January 1, 2011.

A Closer Look at Senate Bill 349: Proposed Amendments to NRS Chapter 40

Nevada construction defect claims are governed by Nevada Revised Statutes ("NRS") 40.600 - 40.695, which is commonly referred to as "Chapter 40." Chapter 40 first became law in 1995. The original stated goal of Chapter 40 was to provide a pre-litigation process to allow construction defect claims the opportunity to settle without incurring the costs associated with litigation. However, since its inception, the Chapter 40 pre-litigation process has faced harsh criticism due in large part to its ineffectiveness to settle construction defect claims in a cost effective manner. During the 2003 legislative session the statute was significantly modified. The 2003 amendments gave contractors "the right to repair" allegedly defective work prior to allowing a homeowner claimant to institute litigation proceedings. Currently, there is considerable debate among those involved in the construction industry, consumer advocates and Nevada lawmakers regarding the need for additional amendments to Chapter 40. During the 2009 legislative session, the Senate Judicial Committee proposed Senate Bill ("SB") 349. This controversial bill seeks to amend three sections of Chapter 40 as set forth below.

"Per Home" SIRs or Deductibles in Multi-Home Construction Defect Lawsuits

A recent Court of Appeals decision refused to interpret a $25,000 per claim (Self Insured Retention) as applying to each home in a multi-home construction defect lawsuit because the policy language did not unambiguously inform the insured that the SIR would be applied on a per-home basis. Clarendon American Insurance Company v. North American Capacity Insurance Company (2010) 186 Cal.App.4th 556.

Real Estate Recovery Fund: Another Source for Recovery

Whether it's a shopping center, office building or a house, some real estate brokers and agents have regrettably resorted to fraud in order to make a sale and earn a quick commission. In one example, a broker, in order to complete a difficult sale, told the buyer of a house that the roof was new, and therefore the buyer did not have to worry about leaks. This misrepresentation was made despite the seller telling the broker that the roof was several years old and had leaked before. After the buyer moved in, the roof leaked and caused significant damage to the buyer's belongings. After the buyer obtained a $20,000 judgment for fraud against the broker, the buyer could not collect anything since the broker had no assets. The broker's insurance company denied coverage since the judgment was based on fraud.

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