Not a Lexis Advance subscriber? Try it out for free.
LexisNexis® CLE On-Demand features premium content from partners like American Law Institute Continuing Legal Education and Pozner & Dodd. Choose from a broad listing of topics suited for law firms, corporate legal departments, and government entities. Individual courses and subscriptions available.
Incidents are common place on construction sites. Unfortunately, sometimes things happen that damage the work or cause injury. Typically there is insurance coverage that covers these incidents, but a recent Federal Court decision highlights the pitfalls to the insured taking unilateral action to resolve associated claims, if the insured intends to pursue a related claim against the insurance carrier.That case is the Fourth Circuit Court of Appeals decision decided on December 16, 2013, Case No. 12-2415 in Perini/Thompkins Joint Venture v. ACE American Insurance Company [version available to lexis.com subscribers]. The JV was the construction manager for that project. The owner had purchased Owner Controlled Insurance through ACE. The JV was an additional insured under that policy.During construction a 2,400 ton glass atrium was damage. The JV incurred significant related monetary losses for the damages, and also the related time impacts. Related project litigation ensued between the JV and the owner, that eventually resulted in a settlement of the JV's claims. The JV did not notify ACE of that lawsuit or the settlement until after the settlement.Six months after the settlement, and nearly two years after the collapse, the JV send a demand letter to ACE advising that to the extent the JV's builder's risk carrier did not pay the JV's collapse related claim then the JV expected ACE to pay. That letter was the first formal written demand to ACE by the JV. Eventually the JV sued ACE and ACE moved to dismiss on the grounds the JV settled the underlying claim without prior notice to ACE.Applying MD law, but at its basic level merely interpreting the insurance contract as written, the Fourth Circuit held the JV waived any coverage claims against ACE by settling its underlying claim with the owner without first notifying ACE, and that ACE had not intentionally relinquished its rights under that contract by any of its related acts or omissions.While facts and policy language will differ, the basic premise of this case stands as a warning to those who are contemplating a contractual settlement of claims when those same claims might also have associated insurance claims. Bottom line, ignore insurance policies and insurers at one's peril.
These articles are meant to bring awareness to these topics and are not intended to be used as legal advice.
View more from Vandeventer Black LLP
For more information about LexisNexis products and solutions, connect with us through our corporate site