Archive for the ‘Blog’ Category

One of the key reasons for builders to maintain liability insurance is to cover the cost of hiring defense counsel and paying litigation costs in the event of a construction defect lawsuit. If a builder loses a lawsuit, it will typically be responsible for paying the plaintiff’s litigation costs. Today, the Colorado Court of Appeals clarified that the “supplementary payments” section of a standard Commercial General Liability (CGL) insurance policy covers such costs, even if the carrier has reserved the right to dispute whether it has a duty to indemnify the actual damages awarded.

This may seem counter-intuitive, insofar as a carrier may end up paying costs even if it does not cover the underlying loss, but the court’s decision is consistent with the plain language of the CGL form that most carriers use. Furthermore, while the court focused on the plain contract language without regard to public policy concerns, the decision may be seen to recognize the role that insurance defense counsel plays in the costs of litigation. If an insurance defense firm eschews offers of settlement and engages in aggressive discovery, for example, it may increase the insured’s chances of winning while also increasing the risk that the insured will face a larger cost bill at the end of the case. In such a scenario, it is fair and equitable to require the carrier to pay costs, regardless of any determination of coverage.

The opinion in Mt. Hawley Insurance Co. v. Casson Duncan Construction, Inc., 2016COA164, is available on the court’s website.

New Jersey courts sign “death knell” for 1979 Weedo decision

Monday, March 2, 2015 @ 04:03 PM
Author: Jesse Witt

A new blog post from Kilpatrick Townsend & Stockton discusses two recent decisions limiting the holding of Weedo v. Stone-E-Brick, Inc., 405 A.2d 788 (N.J. 1979), a New Jersey case that has generated decades of commentary and debate, in my own writing as well as that of many others (at least 1880 citations, according to the blog).

Weedo interpreted a 1973 insurance policy form. Although its holding was not particularly remarkable on its face, many courts would later apply Weedo as precedent in disputes arising under newer policies that had been written to expand coverage for property damage arising from a contractor’s defective work. It is well time that the case be retired and no longer cited as precedent.

Update: In August 2016, the Supreme Court of New Jersey affirmed one of the decisions discussed above, effectively driving the final nail in the Weedo coffin. The court relied in part on Colorado’s seminal Greystone decision to hold that the term “occurrence” in standard CGL policies encompasses unanticipated damage to nondefective property resulting from a subcontractor’s poor workmanship. Cypress Point Condo. Ass’n v. Adria Towers, L.L.C., ___ A.3d ___, 2016WL4131662 (N.J. Aug. 4, 2016).

Insuring the risk of construction defects

Wednesday, May 22, 2013 @ 01:05 PM
Author: Jesse Witt

This month, the Denver University Law Review published a new article on construction insurance by Jesse Witt and Marci Achenbach of The Witt Law Firm. Entitled “Insuring the Risk of Construction Defects in Colorado: The Tenth Circuit’s Greystone Decision,” the article reviews the evolution of liability insurance policies in the construction industry and examines how such policies have been interpreted in Colorado. The article explains how the insurance industry intended to provide builders with a means of insuring against the risk that their subcontractors would produce defective work, and it considers what construction defects can arise from an “occurrence” under standard policy language. It concludes with an analysis of the Tenth Circuit’s decision in Greystone Construction, Inc. v. National Fire & Marine Insurance Co. and recent applications of this holding in state court.

Mr Witt and Ms Achenbach hope that their article will be prove to be a valuable resource for lawyers and other professionals who desire a better understanding of construction insurance. The article appeared in the Law Review’s spring edition as part of its annual survey of significant decisions from the United States Court of Appeals for the Tenth Circuit.

Click here to read the full text.