July 2013 – Construction Law

New York Court holds that Indian Sovereign Immunity does not Extend to For-Profit Corporation

Jul 23 2013

Sue/perior Concrete & Paving, Inc. v. Lewiston Golf Course Corp., — N.Y.S.2d—, 2013 WL 2674470 (N.Y. App. Div. June 14, 2013)

In Sue/perior Concrete, the Appellate Division, Fourth Department, clarifies how closely a corporation must be tied to an Indian tribe to be entitled to tribal sovereign immunity.

Defendant, Lewiston Golf Course Corporation, was an Indian tribe-affiliated entity formed under the laws of the Seneca Nation of Indians. Lewiston hired the plaintiffs, Sue/perior Concrete & Paving, Inc. to construct a golf course that would increase revenue for an adjoining casino. The casino was owned by Lewiston’s parent company, Seneca Niagara Falls Gaming Corporation. Seneca Niagara Falls Gaming Corporation was in turn owned by another corporation, which itself was in turn owned by the Seneca Nation. Thus, the Seneca Nation was Lewiston’s ultimate owner, but the Nation was three steps removed from construction of the golf course. The construction project took over a year longer than estimated, and upon completion Sue/perior sued Lewiston for $4.1 million for extra work performed as well as delay-related damages. Lewiston moved to dismiss on the grounds that they were entitled to the Seneca Nation’s sovereign immunity.

West Virginia’s High Court Holds Defective Workmanship Causing Bodily Injury or Property Damage Does Constitute an “Occurrence” Under Standard CGL Policy

Jul 12 2013

By: Robert F. Pawlowski & Matthew S. Sachs, K&L Gates, Newark

West Virginia has joined the majority of states recognizing coverage for bodily injury and property damage claims arising out of defective workmanship. Influenced by the growing number of states allowing for such coverage, the Supreme Court of Appeals of West Virginia rejected prior rulings and recently held that defective workmanship causing bodily injury or property damage constitutes an “occurrence” under a policy of commercial general liability (“CGL”) insurance. Cherrington v. Erie Insurance Prop. & Cas. Co., Case No. 12-0036, 2013 WL 3156003 (W.Va. June 18, 2013) (“Cherrington”). In so holding, the Cherrington Court expressly overruled three of its prior decisions, decided between 1999 and 2005, holding that CGL policies do not cover defective workmanship claims.

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Connecticut Supreme Court Determines Damage Caused by Unintended Faulty Work Constitutes Property Damage Resulting from an “Occurrence” Under Standard Commercial General Liability Policy

Jul 01 2013

By: Frederic J. Giordano & Ashley L. Turner, K&L Gates, Newark

Jurisdictions are split over whether defective construction can give rise to an occurrence under commercial general liability insurance policies. Some jurisdictions have held that faulty workmanship cannot constitute the basis for an occurrence because it is not the type of risk intended to be insured by commercial general liability policies or lacks the fortuity necessary to be considered an accident. In contrast, other jurisdictions have held that faulty workmanship may constitute the basis for an occurrence because it is unintended. The Connecticut Supreme Court joined those courts holding that faulty workmanship may give rise to an occurrence in the recent decision Capstone Building Corp. v. American Motorists Ins. Co., SC 18886, 2013 WL 2396276 (Conn. June 11, 2013) (“Capstone”).

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Archive:July 2013