PLDF SEPTEMBER 2017 ANNUAL CONVENTION LEGAL UPDATES

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Christina Stevens
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1 PLDF SEPTEMBER 2017 ANNUAL CONVENTION LEGAL UPDATES Presented by: Geoffrey A. Bryce Bryce Downey & Lenkov LLC 200 N. LaSalle Street, Suite 200 Chicago, Illinois T: (312) gbr

2 IMPLIED WARRANTY CLAIMS BY HOMEOWNERS AGAINST DESIGN PROFESSIONALS A home owner could not make a claim for Breach of implied warranty of habitability against a design professional who only supplied materials and plans but did not participate in construction. Paukovitz v. Imperial Homes, Inc., 271 Ill.App.3d 1037, 208 Ill.Dec. 417, 649 N.E.2d 473 (1995) (c) 2017 Bryce Downey & Lenkov LLC 2

3 IMPLIED WARRANTY CLAIMS BY HOMEOWNERS AGAINST DESIGN PROFESSIONALS A designer could not be sued who did no construction work but only supplied the shell materials and the plans which the builder then used to construct the residence. Bd. of Managers of Park Point at Wheeling Condo. Ass'n v. Park Point at Wheeling, LLC, 2015 IL App (1st) , 48 N.E.3d 1250, reh'g denied (Jan. 14, 2016), appeal denied, 48 N.E.3d 1091 (Ill. 2016) Architects argue that they are not subject to the warranty because architects do not construct structures but rather perform design services pursuant to contracts. (c) 2017 Bryce Downey & Lenkov LLC 3

4 IMPLIED WARRANTY CLAIMS BY HOMEOWNERS AGAINST DESIGN PROFESSIONALS Sienna Court Condominium Ass'n v. Champion Aluminum Corp., a N.Y. Corp., 2017 IL App (1st) Court dismissed plaintiff s warranty claims against an architect, two engineering firms, and material suppliers who did not participate in the construction of the condominium complex). (c) 2017 Bryce Downey & Lenkov LLC 4

5 IMPLIED WARRANTY CLAIMS BY HOMEOWNERS AGAINST DESIGN PROFESSIONALS The common theme across these cases is that the designer/architect/supplier do not participate in the actual construction of the residence. (c) 2017 Bryce Downey & Lenkov LLC 5

6 AIA A101 STANDARD FORM OF AGREEMENT BET WEEN OWNER AND CONTRACTOR EXHIBIT A New Attachment to the AIA Family of Documents. AIA A Exhibit A Substantially changes the Insurance and Bonds portion of the AIA A-201. Many new insurance requirements. Some highlights. (c) 2017 Bryce Downey & Lenkov LLC 6

7 EXHIBIT A - OWNERS PROPERTY A of Exhibit A is not the same as in 2007 AIA A201 General Conditions. Major differences: Under the 2007 version: Owner s property insurance must be effective until final payment to the Contractor or until there is no insurable interest. Under the 2017 version: Owner s property insurance must be effective until substantial completion or as otherwise agreed. (c) 2017 Bryce Downey & Lenkov LLC 7

8 EXHIBIT A - OWNERS PROPERTY Exhibit A increases the coverage of the All risk policy requires coverage for fire, theft, vandalism,malicious mischief, collapse, earthquake, flood, windstorm, 2017 Exhibit A A adds explosion, and collapse. But the biggest change is that the 2017 version requires coverage for errors, omissions or deficiencies in construction methods, design, specifications, workmanship or materials. (c) 2017 Bryce Downey & Lenkov LLC 8

9 EXHIBIT A - CONTRACTOR S LIABILITY 2017 Exhibit A expands the requirements for additional insured coverage. Primary and non-contributory to any of the Owner s general liability insurance. Apply to both ongoing and completed operations. To the extent commercially available, the additional insured coverage shall be no less than that provided by (ISO) forms CG , CG , and, with respect to the Architect and the Architect s consultants, CG (c) 2017 Bryce Downey & Lenkov LLC 9

10 EXHIBIT A - CONTRACTOR S LIABILITY Architects and consultants not covered under typical CGL policy. Professional liability exclusion Endorsement. CG Adds back some coverage otherwise excluded. (c) 2017 Bryce Downey & Lenkov LLC 10

11 EXHIBIT A - CONTRACTOR S LIABILITY 5. Claims or loss excluded under a prior work endorsement or other similar exclusionary language. A. What does this mean? CGL policies do not cover expected or intended injuries. B. Many states have known loss or loss in progress defenses. C. Requirement not met. Strike language or re-draft. (c) 2017 Bryce Downey & Lenkov LLC 11

12 EXHIBIT A - CONTRACTOR S LIABILITY 6. Claims or loss due to physical damage under a prior injury endorsement or similar exclusionary language. A. What does this mean? CGL policies do not cover expected or intended injuries. B. Many states have known loss or loss in progress defenses. C. Requirement not met. Strike language or re-draft. (c) 2017 Bryce Downey & Lenkov LLC 12

13 EXHIBIT A - CONTRACTOR S LIABILITY Exhibit A excess insurance A states that the excess policy shall not require the exhaustion of the underlying limits only through the actual payment by the underlying insurers. (c) 2017 Bryce Downey & Lenkov LLC 13

14 EXHIBIT A - CONTRACTOR S LIABILITY A. Typical excess policy language: 1. Insuring Agreement a. We will pay on behalf of the insured the ultimate net loss in excess of the retained limit because of bodily injury or property damage to which this insurance applies. If our policy applies, we will have the right and duty to defend the insured against any suit seeking those damage when underlying insurance have been exhausted by actual payment of judgments, settlements, costs or expenses. When we have no duty to defend, we will have the right to defend, or to participate in the defense of, the insured against any suit seeking damages to which this insurance may apply. However, we will have no duty to defend the insured against any suit seeking damages for bodily injury or property damage to which this insurance does not apply. At our discretion, we may investigate any occurrence that may involve this insurance and settle any resultant claim or suit. (c) 2017 Bryce Downey & Lenkov LLC 14

AIA Document A101 TM 2017 Exhibit A

AIA Document A101 TM 2017 Exhibit A Insurance and Bonds This Insurance and Bonds Exhibit is part of the Agreement, between the Owner and the Contractor, dated the day of in the year (In words, indicate