Last month’s Oregon Supreme Court decision in Ransom v. Radiology Specialists of the Northwest, 363 Or 552 (2018) will likely have far-reaching impacts on how discovery is conducted in construction defect cases in Oregon. Ransom involved a plaintiff’s claim for alleged medical negligence case against two of the plaintiff’s former radiologists for alleged failure to properly read her imaging scans, which the plaintiff further alleged led to misdiagnosing her cancer as Stage II instead of Stage IV. Id. at 555-56. At issue on appeal was whether the plaintiff’s attorney could seek an answer from the radiologists about their current interpretation of the imaging scans for the plaintiff. Id. During the deposition the radiologists both testified that they did not have an independent memory of interpreting certain scans back at the time they reviewed such scans. Id. When the plaintiff’s attorney thereafter asked the radiologists to review those same scans during their deposition and answer questions about certain markings identified on the scan, defense counsel objected and instructed the radiologists not to answer on the grounds the questions impermissibly sought expert testimony and/or called for information protected by attorney-client privilege. Id. A trial court later concurred with the defense’s objection and prohibited the radiologists from answering the questions about the present-day interpretations of the scans. Id. at 557. On a writ of mandamus filed by the plaintiff, the Oregon Supreme Court reversed the trial court’s decision. Id. at 572-73.

After reviewing the history surrounding Oregon’s prohibition on expert discovery as discussed in two prior cases, Stevens v. Czerniak, 336 Or 393 (2004) and Gwin v. Lynn, 344 Or 65 (2008), the Supreme Court held that “under ORCP 36B, a participating expert can be asked any questions relevant to his or her direct involvement in the events at issue.” Ransom, 363 Or at 567. The Court further found that because the questions did not ask the radiologists to provide information regarding the content of any attorney-client privileged communications, evidentiary rules on attorney-client privilege did not apply. Id. at 572.

Continue Reading Recent Oregon Supreme Court Case Involving Medical Negligence May Have Far-Reaching Impact On Discovery In Construction and Design Defect Cases

Construction defects plague many buildings in Florida, leading to lawsuits against developers and contractors. Seasoned developers have tried placing limits on their liability in a variety of ways, including inserting provisions in associations’ governing documents to limit associations’ and owners’ ability to bring a lawsuit against the developer. While developers have been creative in coming up with ways to limit liability exposure, this article focuses on what developers may not include in the governing documents that govern homeowner and condominium associations.

Governing Documents

To form a condominium or homeowners association, among other things, one must record a declaration in the respective county public records. Fla. Stat. § 718.104. “The declaration of condominium, which is the condominium’s ‘constitution,’ creates the condominium and ‘strictly governs the relationships among the condominium unit owners and the condominium association.’” Neuman, 861 So.2d at 496–97 (quoting Woodside Vill. Condo. Ass’n v. Jahren, 806 So.2d 452, 456 (Fla.2002)). The same applies to declarations for a homeowners association.

These declarations are binding documents and contain covenants, conditions, and restrictions for the community. Such covenants, conditions, and restrictions pertain to a range of topics including, but not limited to, whether pets are allowed; where to store garbage cans; regulation of TV antennas; and the operation of home businesses. The developer drafts these declarations and, while ambiguities are construed against the drafters,[1] developers are still given wide latitude in drafting declarations. Further, restrictions which may be found in a declaration of condominium are clothed with a very strong presumption of validity when challenged. See, e.g., Grove Isle Ass’n, Inc. v. Grove Isle Assocs., LLLP, 137 So. 3d 1081, 1091 (Fla. Dist. Ct. App. 2014) (citing Woodside Vill. Condo. Ass’n, 806 So.2d at 457).

Continue Reading Effectiveness of Suit Limitations in Community Associations’ Governing Documents

Fortunately for Utah policyholders, a recent District of Utah decision has continued the trend toward liberalizing Commercial General Liability (“CGL”) coverage in Utah. In The Cincinnati Ins. Co. v. Spectrum Devel. Corp, the District of Utah held that defective construction can be an “occurrence” so as to trigger coverage under a CGL policy.

CGL policies generally cover amounts that an insured “becomes legally obligated to pay as damages because of property damage” caused by an “occurrence.” The standard definition of “occurrence” is “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Utah courts have had considerable difficulty determining whether defective construction is an “accident.”

The previous rule in Utah was that conduct, and the result of conduct, is not accidental if it is deliberate or intentional, even if the result was neither deliberate nor intentional. Until recently, Utah courts borrowed the reasoning of the Washington Court of Appeals, which put it this way:

 [A]n accident is never present when a deliberate act is performed, unless some additional, unexpected, independent, and unforeseen happening occurs which produces or brings about the result[.]

Safeco Ins. Co. of Am. v. Dotts, 38 Wash.App. 382, 685 P.2d 632, 633-34 (1984).

Two previous Utah cases, Rosenberg and Geary, illustrate the above rule. In Geary, the Utah Court of Appeals held that bodily injury resulting from a shotgun blast was not accidental because the shooter deliberately pulled the trigger, whether or not he had any intention to harm the victim. See State Farm Fire & Cas. Co. v. Geary, 869 P.2d 952, 955-6 (Utah Ct. App. 1994).  Similarly, in Rosenberg, bodily injury resulting from a cherry bomb was not accidental because the bomb was deliberately and intentionally thrown. See Fire Ins. Exchange v. Rosenberg, 930 P.2d 1202, 1205 (Utah Ct. App. 1997). Continue Reading Across the Spectrum: Utah’s Recent Move Toward a Proper Interpretation of “Occurrence” In Commercial General Liability Policies

The Oregon Supreme Court recently decided a case with serious implications to the liability of LLCs and their members. Taking note of the case, Cortez v. Nacco Material Handling Group will enable aggrieved homeowners and their attorneys to practice more effective construction defect litigation.

The plaintiff, Antonio Cortez, worked for a lumber mill organized as an LLC. He was badly injured when a forklift struck him during a stroll across company premises. Cortez received worker’s compensation benefits and then opted to go up the chain, suing the LLC’s owner and sole member manager, a company called Swanson Group, Inc.

Cortez’s principal allegations were twofold, only one of which is addressed here. He argued that Swanson was liable in negligence and under Oregon’s Employer Liability Law for failing to take safety precautions to protect employees. The trial court offered a cold reception, entering summary judgment in favor of Swanson. The court of appeals reversed and affirmed the trial court, each in part.

Not to be deterred, Cortez appealed again, and the Oregon Supreme Court stepped in to finally resolve the question. Continue Reading Recent Oregon Supreme Court Case Suggests ‘Limited Liability’ Of LLCs Not So Limited

Recently, a federal district court in Florida held that the Chapter 558 process is not a “suit” under a commercial general liability policy and the insurer had no obligation to defend the insured during this process. Under Chapter 558 of the Florida Statutes, before a lawsuit can be commenced concerning construction defects, the claimant must provide notice of the claim to the contractor and provide the contractor with an opportunity to resolve the claim (often referred to as the “558 process”).

This process can be expensive as it may require the hiring of counsel and experts and entail property inspections. Normally, a contractor will send the 558 Notice to its insurer and request the insurer hire counsel to protect the contractor’s interests. In most cases, the insurers will abide. Unfortunately for one contractor, its insurer denied to do so.

In Altman Contractors, Inc. v. Crum & Forster Specialty Insurance Company, Altman Contractors, Inc. (“Altman”) was served with a Chapter 558 Notice of Claim regarding the construction of a high-rise residential condominium. Altman forward the Notice to its insurer, Crum & Forster, and demanded that Crum & Forster defend and indemnify Altman during the process. Crum & Forster denied that it had a duty to defend Altman because the matter was not in “suit.” Altman filed suit against Crum & Forster for breach of contract as well as for a declaration determining whether Crum & Forster owed Altman a duty to defend the 558 process. Both Altman and Crum & Forster filed motions for summary judgment on these issues. Continue Reading Federal Court in Florida Finds Insurer Has No Duty to Defend Insured During Chapter 558 Process

On July 22, 2015, the Court of Appeals reaffirmed its prior decision in Alfieri v. Solomon, 263 Or App 494 (2014), petition for review granted, 356 Or 516 (2014) that confidential communications made during and/or in furtherance of a mediation proceeding are protected and shall not be admitted into evidence in any subsequent adjudicatory proceeding under ORS 36.22. Yoshida’s Inc. v. Dunn Carney Allen Higgins & Tongue LLP, 272 Or App 436 (2015). ORS 36.22 states in pertinent part: Continue Reading Protecting Against Disclosure of Prior Settlement Agreements at Trial

Can three days make a difference when filing a construction defect lawsuit? Absolutely! In Cypress Fairway Condominium v. Bergeron Construction Co. Inc., three days was the difference between the claim being time barred and timely filed.

Under Section 95.11(3)(c), Florida Statutes, an action founded on the design, planning, construction, or an improvement to real property must be commenced within ten years after the latest of four specific events: actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract. Continue Reading Florida Appellate Court Revives $15 Million Construction Claim

On April 7, 2015, a federal appellate court issued a critical opinion on insurance coverage for construction-defect cases. In Carithers v. Mid-Continent Casualty Company, the Eleventh Circuit held that (1) the duty to defend is triggered unless there is certainty (factual and legal) that no coverage exists; (2) there is coverage under a contractor’s commercial general liability policy for property damage caused by one subcontractor’s work to another subcontractors work; and (3) “rip and tear” costs are covered “property damage.” Continue Reading Eleventh Circuit Provides Critical Path to Defense and Indemnity

With the sanctity of any time-honored tradition, insurers resist discovery of their claim file with the ritualistic incantation that it is protected from discovery because it was prepared in anticipation of litigation, and therefore qualifies as work product.  To support this argument, oftentimes insurers outsource the adjustment of the claim (a normal business activity) to outside attorneys, and then refuse to provide the attorney’s file, or communications with the insurer and the attorney, on the basis that those documents are protected by the attorney-client privilege. Courts across the county have been increasingly dismissive of these arguments, holding that an insurer cannot cloak its claim file with privilege simply by paying a lawyer to do what is otherwise an everyday claim handling activity for the insurer.  Oregon finally has a chance to weigh in on this issue and level the playing field for insureds.  Read more on The Policyholder Report blog.

After having successfully recovered, borrowed, or assessed funds for the repair of damaged buildings, an owner, property manager, or homeowners association (I’ll use the term “Owner” in this piece for brevity) must shift gears, and determine how most wisely to spend those funds.  The Owner may not have experience with significant construction projects, and likely must rely on outside expertise for management of reconstruction.

  1. Continuation with Forensic Consultants

If the Owner engaged a forensic analyst to study the damage, continuing a relationship with that analyst through the construction project usually makes sense. The analyst can be hired to continue assistance in a number of capacities: convert its recommended repairs to formal construction drawings, review and administer construction through completion, or provide peer review and comment on the work of others. The Owner should confirm with the analyst up front whether it has that capacity and expertise to perform these functions, and meet with the personnel at the firm who would be assigned such duties. Continue Reading Management of Reconstruction Projects—Tips for Owners and Associations