• Identify all current and former employees who worked on
the subject project, including identifying their scope of work.
• Establish a main contact person for your insured, preferably
one who knows the information you will need without needing to reference documents, call other people, etc.
2. Identify the scope of work for the insured
The correspondences, contracts, subcontracts, invoices, plans,
drawings, change orders and photographs collected in the above
checklist item will be the primary documents governing the applicable scope of work for the insured. However, once the documents are obtained, look beyond the plain language of the contracts to determine the specific physical areas within the project
in which the insured worked to determine if this was beyond the
scope of work or within the confines of the agreements between
3. Identify the scope of work for other parties involved
Often overlooked when a construction defect claim comes in is
performing a detailed analysis of the scope of work for parties
that are not the insured. However, understanding the scope of
work of other parties involved in the project will enable you to
determine who was acting within their proper scope and who was
not. Doing so will help determine who may have additional liability or complete liability other than your insured, as well as who
else should be at the table to share in defense costs for the claim.
An additional tip is to request proof of a contractor’s license or
architect’s license, as well as proof of good standing as a business
to ensure that the parties were licensed to perform the work that
they ultimately undertook on the project. There may be liability
issues for other parties related to performance of work for which
they are not licensed, which opens up other avenues for filing
cross claims to reduce the liability of your insured.
4. Duty to defend and indemnify considerations
In addition to reviewing job contracts to determine factual and
scope of work issues, the contract should be scrutinized to determine if the language requires the insured to indemnify or defend
other parties on the project.
Further, the insurance policies applicable to the claim may
have terms under which the insured is named as an additional
insured on another party’s insurance policy (or vice versa). What
other policies does your insured have for the project? Do any of
them have time on the risk provisions? Do any of the policies
have indemnity or duty to defend clauses? Answering all of these
questions from the outset are important, as they affect not only
the defense of the claim, but also any resolution of the claim.
5. Issue Reservation of Rights correspondence
Initial investigation may ultimately lead to the conclusion that
there is no coverage under the policy. When initially agreeing to
accept the tender of a new claim, it is important for the adjuster
to advise the insured that such acceptance is subject to a reservation of rights to withdraw acceptance of the defense based
upon newly discovered facts that result in a change of analysis.
Considerations for retaining expert witnesses
Construction defect litigation can be rather complex and is heavily
driven by expert testimony. Thus, it is critical to have a competent
expert witness who can serve as an independent party tasked with
the role of determining whether a claimed defect can actually be
attributed to the insured. The expert must also be able to clearly
explain complex issues in a manner that can be understood.
Thus, it is important to not only identify an expert with relevant experience concerning the alleged defect at issue, but also
one who possesses specialized expertise in the matter, as courts
may exclude those experts who do not. For example, while a licensed professional engineer may offer a general opinion as to
why they observed foundational cracks in garage flooring, a geo-technical engineer will have the requisite expertise to determine
if those cracks were causally related to differential settlement as a
result of defective soil compaction during construction.
Depending on local evidentiary rules, consideration should
be given to retaining a consulting expert (as opposed to a testifying expert). A testifying expert is required to divulge opinions in accordance and compliance with expert discovery rules.
However, in some instances, a consulting expert may be able to
opine as to whether allegations have merit and allow the adjuster to evaluate liability without fear of opinions being discovered through discovery.
Alternatively, if consulting experts are treated the same as testifying experts, a thorough evaluation should be performed on
a case-by-case basis prior to deciding whether to proceed with
expert retention. An effective expert can be the difference in a
jury’s ability to agree with your theory of liability and return a
verdict in your favor.
Luis Barba ( firstname.lastname@example.org) is a partner in CMBG3’s
Southern California office. He has over 13 years litigating
construction, toxic torts, and environmental litigation matters
in California and Nevada. Anthony daFonseca (adafonseca@
cmbg3.com) is an associate attorney in CMBG3’s Boston office.
With over eight years of litigation experience, his practice
focuses on construction defect and toxic torts cases.
One of the driving forces behind
construction defect claims
are defects attributed to poor
workmanship or quality of work.