Limiting Liability for Design Professionals in Construction Defect Claims

Authors: Cassidy E. Chivers and  Robert J. Romero

Construction defect litigation claims against design professionals continue to increase, mirroring the growth of construction defect litigation nationwide. Design professionals, including architects and engineers, are often caught at the center of any given dispute because their plans and design decisions are typically the starting point for the construction project. Moreover, the recent trend is to sue, either by direct action or cross-complaint, all subcontractors involved (even tangentially) with the work that gave rise to the alleged defect because the exact cause of property damage is difficult to pinpoint. Often, causation issues cannot be fully developed until expert options are disclosed. Even then, the parties' experts' opinions often conflict. As a result, successful summary judgment motions and other pre-trial victories are challenging. This article discusses this dilemma from a design professional's perspective, and how, through careful contract negotiation and drafting, liability can be minimized, if not eliminated.  Click here to read more...

Insurance Agents or Brokers: If You Are Sued, These Are the Top 10 Questions Your Attorney Will Ask You
Also, Top 10 Tips to Avoid Attorneys Altogether
Part One in a Two-Part Series

“...if there has been a continuing relationship between the customer and the insurance agent or broker, jurors, using their collective intelligence and common sense, expect the agent or broker to take a more proactive role in providing the necessary insurance.” As the number of pending lawsuits against insurance brokers and agents continue to rise, so, too, does the importance of understanding the dynamics of such litigation and even better how you might avoid a suit entirely. Attorneys who defend insurance professionals often hear statements from their clients, such as: They never asked for that type of insurance;” or “They never told me about that exposure;” or, “They specifically told me they did not want to spend more than a certain amount of money.” Yet when the “insured” is faced with an uninsured exposure, very often what was never actually said suddenly morphs into: “Of course my broker knew what I wanted. In fact, I specifically said as much.” With the extent of your relationship with the customer scrutinized, and what was said versus what was assumed fiercely debated at trial, it is to your advantage to know in advance what will happen before you get there. The first in a two-part series, this article will provide suggestions for preparing for trial and practical tips that might help you avoid it altogether. Click here to read more...

Recent Rulings: Case Summaries and Conclusions

• Insurance: Calculating Attorneys’ Fees
  Cassim v. Allstate Ins. Co. (2004) 33 Cal.4th 780(California).
• Legal Malpractice: Third Party Complaints
  Dennis v. Brown (2005) 2005 WL 767297 (Montana).
• Insurance Brokers: Scope of Professional Services
  PMI Mortgage Ins. Co. v. American International Specialty Lines Ins. Co. (9^th Cir. 2005) 394 F.3d 761 (amended on March 10,   2005) (California).
• Insurance Brokers: Liability for Employee’s Error
  Callea v. Hartford Ins. Co. of Connecticut (2005) 2005 WL 273547, 2005 N.Y.   Slip. Op. 00871 (New   York).
• Escrow Agents: Standing to Challenge Non-Judicial Foreclosure Proceeding
  Royal Thrift & Loan Co. v. County Escrow, Inc. (2004) 123 Cal.App.4th 24 (California).
• Accountants: Tort Claims Against an Accounting Firm Alleging Intentional Fraudulent Conduct Do Not Merge into an Accounting Malpractice Claim
  Rosenbach v. Diversified Group Inc., 2006 WL 1310656 (N.Y. Sup. May 10, 2006)
• Insurance Agents: Damages Awarded from an Insurance Agency’s Alleged Failure to Timely Secure Coverage
  Hagen Insurance, Inc. v. Roller, 2006 WL 147593 (Alabama)
• Insurance Brokers: Measure of Damages Against Broker Limited to the Liability Limits of the Policy He Agreed to Procure
  J. Smith Lanier & Co. v. Se. Forge, Inc., 280 Ga.508, 630 S.E.2d 404 (2006)
• Real Estate: Appraisers and Insurance Agents Insurance Agent Not Negligent for Failing to Question a Low Appraisal
  AMH Appraisal Consultants, Inc. v. Argov Gavish Partnership, 919 So.2d 580 (Fla. 4th DCA 2006)
• Insurance Agents and Brokers: Broker Not Liable for Failing to Notify Insured of Imminent Policy Cancellation
  GlobalNetFinancial.com Inc. v. Frank Crystal & Co., Inc. and AI Credit Corp., (2006) 449 F.3d 377 (New York)
• Accountants: Starting Point of the Two-Year Statute of Limitations
  MC Baldwin Financial Co. v. DiMaggio Rosario & Veraja, et al., 364 IllApp. 3d 6, 845 N.E. 2d 22 (Ill. Ct. App. 2006)

This newsletter has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.