Gavel

California Court of Appeals Holds Subrogating Carrier Cannot Assert Claims of Its Suspended Insured


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In Travelers Prop. Cas. Co. of Am. v. Engel Insulation, Inc., 29 Cal. App. 5th 830 (2018), the Third District Court of Appeals of California addressed whether a subrogating carrier can assert the rights of its corporate insured while the insured is suspended and thus barred from doing so itself. The court rejected the argument that Cal. Rev & Tax Code § 19719(b) (1998), which exempts subrogating carriers from the penalties for asserting the rights of a suspended corporation set forth in its own subsection (a), eliminated the prohibition against carriers bringing an action based on the subrogation rights of its suspended insured. Because Travelers’ claims were based solely on its derivative rights of subrogation and its corporate insured was suspended, the Court of Appeals affirmed the trial court’s ruling that Travelers had no right to bring its suit. The court’s holding reaffirms California case law that denies subrogating carriers any rights greater than those of their insureds. See Truck Ins. Exch. v. Superior Court, 60 Cal. App. 4th 342 (1997). Continue reading

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Construction Defect

Illinois Supreme Court Holds That the Implied Warranty of Habitability Does Not Extend to Subcontractors


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The implied warranty of habitability allows a homeowner to recover damages for latent defects that interfere with the intended use of a home. In Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, 2018 Ill. LEXIS 1244 (2018), the Supreme Court of Illinois held that buyers of new homes cannot assert claims for breach of the implied warranty of habitability against subcontractors involved in the construction of the homes because the subcontractors have no contractual relationship with the homeowners and the damages are purely economic. As the court explained, the implied warranty of habitability is a creature of contract (not tort) and, therefore, only exists when there is contractual privity between the defendants and the homeowners. Continue reading

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Construction Defect

California Court of Appeal Holds That the Right to Repair Act Prohibits Class Actions Against Manufacturers of Products Completely Manufactured Offsite


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In Kohler Co. v. Superior Court, 29 Cal. App. 5th 55 (2018), the Second District of the Court of Appeal of California considered whether the lower court properly allowed homeowners to bring class action claims under the Right to Repair Act (the Act) against a manufacturer of a plumbing fixture for alleged defects in the product. After an extensive analysis of the language of the Act, the court found that class action claims under the Act are not allowed if the product was completely manufactured offsite. Since the subject fixture was completely manufactured offsite, the Court of Appeal reversed the lower court’s decision. The court’s holding establishes that rights and remedies set forth in the Right to Repair Act are not available for class action claims alleging defects in products completely manufactured offsite. Continue reading

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Time

In Massachusetts, the Statute of Repose Applies to Consumer Protection Claims Against Building Contractors


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In Bridgwood v. A.J. Wood Construction, Inc., 105 N.E.3d 224 (Mass. 2018), the Supreme Court of Massachusetts determined that the statute of repose barred the plaintiff’s consumer protection claims commenced more than six years after the occurrence of the event that gave rise to the claims. In Bridgwood, the homeowner filed suit against the contractors who had performed renovations 15 years earlier. The homeowner asserted that concealed faulty electrical work caused a fire 11 years after the work was completed. The complaint alleged that the contractors, by violating Mass. Gen. Laws. Chapter 142A §17(10), committed an unfair and deceptive act pursuant to Mass. Gen. Laws Chapter 93A. Continue reading

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Product Recall

White-Rodgers Recalls Thermostats


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In subrogation cases where the insured’s damages were caused by a defective product, the fact that the product at issue is or was subject to a recall announced by the Consumer Product Safety Commission (CPSC) may help to establish that the product was defective when it left the manufacturer’s possession and control. On December 12, 2018, the CPSC announced the following recall related to a product that presents a fire hazard:

White-Rodgers Recalls Thermostats Due to Fire Hazard.

According to the CPSC, “[c]ontact between the thermostat wires and household line voltage can damage the thermostat, posing a fire hazard.”

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Wisconsin Court of Appeals Holds Economic Loss Doctrine Applies to Damage to Other Property If It Was a Foreseeable Result of Disappointed Contractual Expectations


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In Kmart Corp. v. Herzog Roofing, Inc., 2018 Wisc. App. Lexis 842, the Court of Appeals of Wisconsin considered whether the economic loss doctrine barred the plaintiff’s negligence claims against the defendant roofer for damages resulting from the collapse of a roof. The Court of Appeals held that, while some of the plaintiff’s property damages were unrelated to the scope of the contract, the economic loss doctrine still applied to those damages because they were a foreseeable result of the defendant’s breach of the contract. This case establishes that in Wisconsin, the economic loss doctrine bars tort claims for damage to property unrelated to the contract if those damages were a reasonably foreseeable risk of disappointed expectations of the contract. Continue reading

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“Bad Kamara/Good Karma” — Life After Hartford v. Kamara


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How the Pennsylvania Supreme Court’s Decision in Kamara Changes the Legal Landscape for Workers’ Compensation Subrogation and Successfully Moving Forward

On November 21, 2018, the Pennsylvania Supreme Court, in a 5-4 decision, reversed the Superior Court stating a right of action in Pennsylvania remains with the injured employee. Specifically, the court held that “unless the injured employee assigns her cause of action or voluntarily joins the litigation as a party plaintiff, the insurer may not enforce its statutory right to subrogation by filing an action directly against the tortfeasor.” Continue reading

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Construction Defect

Ohio Rejects the Majority Trend and Finds No Liability Coverage for a Subcontractor’s Faulty Work


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In Ohio N. Univ. v. Charles Constr. Servs., 2018 Ohio LEXIS 2375 (No. 2017-0514, October 9, 2018), the Supreme Court of Ohio was recently called upon to determine if a general contractor’s Commercial General Liability (CGL) insurance policy provided coverage for defective work completed by its subcontractor. Rejecting the majority trend, the court held that, because the subcontractor’s faulty work was not an “occurrence” caused by an accident – i.e. a fortuitous event – within the meaning of the contractor’s CGL policy, the insurer did not have to defend or indemnify the contractor with respect to the plaintiff’s claims. Continue reading

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Gavel

Florida Court of Appeals Holds Underlying Tort Case Must Resolve Before Third-Party Spoliation Action Can Be Litigated


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In Amerisure Ins. Co. v. Rodriguez, 43 Fla. L. Weekly 2225 (Fla. Dist. Ct. App., Sept. 26, 2018), the Third District Court of Appeals of Florida addressed whether a third-party spoliation claim should be litigated and tried at the same time as the plaintiff’s underlying tort case. The court held that since the third-party spoliation claim did not accrue until the underlying claim was resolved, the spoliation cause of action could not proceed until the plaintiff resolved his underlying claim. Continue reading

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