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You just get what you pay for



Insurance is a risk transfer unit. Building contracts also function as risk transfer devices as they include compensation agreements and requirements for additional insurance certificates in favor of the owner and the general contractor.

In Kaiserkane, Inc. of North American Roofing Services, Inc. Judicial Judgment No. 1: 15-cv-00189-MR-DLH, United States District Court of the Western North Carolina Asheville Division ( March 20, 2019) USDC was requested to address the requirement of a third party.

BACKGROUND

Placer KaiserKane, Inc. ("KaiserKane") is a general contractor providing construction management and construction / building services for a wide range of projects. In 2007 or 2008, the KaiserKane was elected by the Federal Bureau of Prisons (BOP) to act as a general contractor for a project to replace the roofs of three buildings at the Federal Correctional Institution Fort Dix (FCI Fort Dix), located in Burlington County, New Jersey.

After being elected by BOP as the main contractor for the FCI Fort Dix project, KaiserKane entered into a subcontracting agreement with the defendant North American Roofing Services, Inc. ("NARS"). In addition to the roof replacement work, the FCI Fort Dix project also involved the removal of asbestos materials. Asbestos removal and reduction work was performed by Briggs Contracting Services, Inc. ("Briggs") under a separate agreement between NARS and Briggs. The work of the FCI Fort Dix project lasted about thirteen months and was completed in October 2009.

In 201

0, Hitham Abuhouran ("Abuhouran") sued KaiserKane, NARS, Briggs and others accused in New Jersey State Court. KaiserKane, NARS, Briggs and the other named defendants replied to Abuhouran's state court complaint, denying Abuhouran's allegations to them and arguing cross-language against each other.

In short, Kaiserkan requested that he be injured, rights under their replacement parties, a confirmatory injunction requiring NARS to fulfill its alleged contractual obligations to defend and replace KaiserKane and costs.

DISCUSSION

Indemnity

Section 5.2 of the parties' subcontracting stipulates that NARS agreed on compensation KaiserKane during the situations specified in the contract. The allegations made in the Abuhouran trials fall entirely within the scope of Article 5, Section 5.2 of the subcontract, and thus KaiserKane is entitled to compensation in respect of the Abuhouran trial for any allegations or costs incurred as a result of Kaiserkan's derivative liability. for any damage "caused … by any negligent act or omission" from NARS or Briggs.

Abuhouran disputes are now closed. The indictment was dismissed with prejudice, and without any determination of responsibility, directly or otherwise, against any party. Therefore, there was no possibility to conclude that KaiserKane is derivatively responsible for any negligent act or omission from NARS or Briggs. While the parties' subcontracting entitles them to compensation, this compensation does not exclude the losses claimed by KaiserKane in this case.

However, KaiserKane claimed that it is entitled to compensation for its lawyer's fees and costs incurred in defending itself against this trial.

Primary and secondary responsibilities between the defendant exist only when

  • they are jointly and severally responsible for the plaintiff. and either
  • has been passively neglected but is subjected to responsibility by the second or its active neglect or a one has made the act which caused the damage, but the other is therefore responsible for the neglect of the former. 19659017] In order for public utility compensation to be applicable, there must therefore be an underlying injury that leads to injured parties and the party seeking compensation must have incurred or diverting responsibility for the tortical behavior from which compensation is sought.

    Here is KaiserKane not subjected to any responsibility at all. Given the dismissal of the Abuhouran measure with prejudice, there is no loss for which Kaiserkan would be entitled to compensation. Consequently, NARS is entitled to legal assessment with respect to Kaiserkane's claim for compensation, and this claim is therefore rejected.

    Breach of contract

    KaiserKane claimed that NARS breached the subcontract by not indicating Kaiserkan as an additional insured on NARS's overall general policy ("CGL").

    Section 5.1 of the subcontract required NARS at its own expense to acquire various types of insurance, including CGL insurance, before commencing work on the Fort Dix project. It also required the NARS list KaiserKane, Inc. to be additionally insured, and provide an insurance certificate for someone (other than the listed CGL) under the contract documents.

    The clear language of this provision requires NARS to name KaiserKane as an additional insured (and insure insurance) only "for any other insurance" obtained by NARS. Therefore, this provision did not oblige NARS to designate KaiserKane as an additional insured under its CGL policy, since the CGL coverage was already explicitly required in Section 5.1 of the subcontract. Under the terms of the contract, the KaiserKane had the opportunity to rely on NARS's operator with regard to the adequacy of the defense and solvency to pay any judgment or to hire their own lawyers – at their own expense.

    The Court concludes that NARS is entitled to a legal assessment of this claim. Consequently, Kaiserkane's breach of the contract application is rejected.

    This summed up and complicated case only occurred because those responsible for overwriting risk transfer agreements and insurance needs failed to write the terms in the language they secretly refer to. Courts will only read a contract, as it is written, not as the parties wished if there was no perception that the contractual conditions were met by fraud, distortion or concealment of material facts. Since the parties were all professionals in the contracting business, the contract was read as it was written and KaiserKane needs a new risk manager and lawyer before entering another construction contract.


    © 2019 – Barry Zalma

    This article and all of the blog posts on this site, digest and summarize cases published by the courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, condensed to facilitate reading and convey the author's views in each individual case.

    Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance management, bad faith assurance, and insurance fraud nearly equal for insurers and policyholders. He also serves as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance cover and law firm and more than 50 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

    Mr. Zalma is the first recipient of the first annual liability magazine / ACE Legend Award.

    Over the past 51 years, Barry Zalma has put his life on insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims to become insurance managers.

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