Monthly Archives: November 2014

3 Mistakes that Mold Remediation Contractors Make

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PR Newsroom | November 20, 2014

When dealing with mold remediation there are certain steps that need to be taken in order to prevent the spreading of mold to other areas of the home or not removing it fully. All of this can occur if the mold remediation contractor makes a mistake.

Mold remediation is a task undertaken by people who are looking to improve their health at home. There are many different companies that provided this as an “additional” service that they offer in conjunction with their other services.  In many cases these companies do not have the proper certifications nor training to handle mold remediation in a proper and thorough manner. There are three mistakes that these untrained companies make and the public has a right to know what they are doing wrong. A frequently asked mold removal question is what steps can an uncertified [companies] do to make the situation worse. One of the first missteps that these companies do, is that they do not put up containment.

The containment part of the mold remediation process is absolutely critical in the success of removing the mold from the property. If there is no containment the mold particles that are being removed can release spores that will more than likely spread throughout the property. Also, if there is containment setup it needs to be done properly, otherwise the mold particles can still spread throughout the property. Another critical factor that many of these company make is not solving the problem of the cause of the mold.

Many types of mold are caused by dampness, moisture collecting or a host of other factors. Without these problems being solved the mold will more likely return to the trouble spot area. When a contractor comes out to the site they should ask the property owner, what is causing the problem, is it a broken, pipe, a leaky, or other areas of the property. Without this information the contractor is not effectively solving the problem because if the moisture issue is not solved that area of the property will more likely have mold return to that same area. Another critical piece that is needed for mold remediation is the equipment.

Mold remediation is controlled demolition in the area of concern. This would require the removal of flooring materials, walls, and insulation to remediate the mold. Many times companies just remove the visible surface mold in the area of concern. Generally in order to remove the mold fully from the area the mold needs to be removed completed removed two feet around the area of concern.

All of this factors in when dealing with mold remediation contractors failing to follow the proper precautions. An IICRC mold remediation company is trained in resolving these problems before they start. Remember when looking at contractors you can look at their customer testimonials and see how well receptive they are. Remember these three mistakes when choosing your mold remediation contractor.

via 3 Mistakes that Mold Remediation Contractors Make | SYS-CON MEDIA.

Can an Insurance Company Refuse to Provide a Copy of the Report Used to Deny Your Claim?

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Brandee Bower | Property Insurance Coverage Law Blog | November 18, 2014

This is a question I was asked recently so I thought I would answer it here. In this case, the insured made a claim for hail damage done to the roof. The insurance company investigated the claim and hired an Engineer to inspect the property. The Engineer drafted a report and provided it to the insurance company. Based on that report, the insurance company denied the claim. When the insured and his public adjuster asked for a copy of the report, the insurance company would not produce it, saying it is privileged “work product.” So what is “work product?”

‘The work product doctrine protects materials prepared in anticipation of litigation. It does not protect materials prepared in the ‘ordinary course of business.’ Western Nat’l Bank v. Employers Ins. of Wausau, 109 F.R.D. 55, 57 (D.Colo.1985). The Colorado Supreme Court has declared that the general standard to be applied when deciding whether something was prepared in anticipation of litigation is ‘whether, in light of the nature of the document and the factual situation in the particular case, the party resisting discovery demonstrates that the document was prepared or obtained in contemplation of specific litigation.’ Hawkins v. District Court, 638 P.2d 1372, 1379 (Colo.1982).”1

The general rule in Colorado is that insurance adjusters’ investigative reports are prepared in the ordinary course of business and, therefore, are discoverable.2 If the insurance company refuses to produce a document, it has the burden to prove that when it was prepared or obtained there was a substantial probability of imminent litigation over the claim, or a lawsuit had already been filed.3

In Texas, “a party may withhold a privileged communication to or from a lawyer or a lawyer’s representative,” or a “privileged document of a lawyer or lawyer’s representative” created or made from the point in time when a party consults the lawyer with an eye toward obtaining the lawyer’s services for the specific claim or suit in which the discovery is requested.4 Sometimes, even the work of an attorney is not privileged and must be produced.5 Farmers insurance hired an attorney to take an examination under oath of its insureds after their home was destroyed by fire. The fire investigator reported that no accidental ignition source could be identified, so the insurance company denied the claim. A suit was filed and the insureds sought to depose the attorney who took the EUO. The court found that until the date that suit was filed the attorney had acted as an investigator, not an attorney. Further, the court found that a reasonable person would not anticipate litigation based upon the fire investigator’s conclusion. The trigger date for anticipation of a lawsuit was the date the suit was filed, not the date the claim was denied.

1 Weitzman v. Blazing Pedals, Inc., 151 F.R.D. 125 (D. Colo. 1993).

2 Western Nat’l Bank, 109 F.R.D. at 57; American Bankers Ins. Co. v. Colorado Flying Academy, 97 F.R.D. 515, 517 (D.Colo.1983); Hawkins, 638 P.2d at 1377.

3 Hawkins, 638 P.2d at 1379.

4 TEX.R. CIV. P. 193.3(c).

5 In re Texas Farmers Insurance Exchange, 990 S.W.2d 337 (Tex.App. 1999).

via Can an Insurance Company Refuse to Provide a Copy of the Report Used to Deny Your Claim? : Property Insurance Coverage Law Blog.

Missouri Court Finds That “Ineffective” Reservation Of Rights Letters May Support Bad Faith Recovery Even In The Absence Of Coverage

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Carolyn a. Woodson | Jones Day | November 17, 2014

All too often, instead of sending reservation of rights letters that unambiguously inform the insured of the insurer’s coverage position, insurers send longwinded, generic letters with a cursory discussion of the claim’s facts, minimal (if any) coverage analysis, extensive policy quotations, and boilerplate reservation language.  When presented with this type of ambiguous and vague insurer “reservation of rights,” many courts conclude that the insurer fails to properly preserve some or all of its coverage defenses.  See, e.g., Royal Ins. Co. v. Process Design Assocs., Inc., 582 N.E.2d 1234, 1240, 1242 (Ill. App. Ct. 1991) (“[b]ased on the equivocal nature of Royal’s [reservation of rights] letter, we find that Royal did not reserve all its rights and defenses, particularly its professional liability defense”).  See also Hoover v. Maxum Indem. Co., 730 S.E.2d 413 (Ga. 2012) (reservation of rights was invalid because it failed to “unambiguously inform [the insured] that [the insurer] intended to pursue a defense based on untimely notice of the claim”).  Recently, a Missouri Court of Appeals found that an insurer’s “ineffective” reservation of rights estopped the insurer from using a court’s finding of no coverage to avoid a bad faith judgment.

In Advantage Bldgs. & Exteriors, Inc. v. Mid-Continent Cas. Co., the Missouri Court of Appeals affirmed the lower court’s bad faith judgment against an insurer on the basis that, among other things, the insurer failed to provide a “proper and effective” reservation of rights letter.  Case No. WD76880, 2014 Mo. App. LEXIS 975, at *13-15 (Mo. Ct. App. Sept. 2, 2014).  In that case, the insured, Advantage, was sued in a construction defect case and tendered the claim to its insurer, Mid-Continent, which had sold it primary and umbrella CGL policies.  Mid-Continent sent letters to Advantage asserting that it was reserving its rights and that it would “promptly” inform Advantage of its coverage analysis.  Mid-Continent, however, failed to inform Advantage of its internal conclusion that there was no coverage and subsequently ignored Advantage’s demands for coverage.  Advantage was ultimately found liable in the underlying construction defect case.  In the coverage litigation, the trial court confirmed that Advantage’s claim was not covered but nonetheless returned a bad faith judgment against Mid-Continent.  Mid-Continent appealed.

On appeal, Mid-Continent claimed that there was no basis for the bad faith judgment because it defended Advantage under a reservation of rights while investigating a claim that the court ultimately determined was not covered.  The Missouri Court of Appeals disagreed.  Mid-Continent’s “reservation of rights” letters “did not constitute an effective reservation of rights.”  The letters “only vaguely informed the insured” of Mid-Continent’s investigation, coverage analysis and reservation of rights.  Also, while the letters “generally discussed the nature of the underlying lawsuit and set forth various provisions of Advantage’s general liability policy[,]” they did not “clearly and unambiguously explain[] how those provisions were relevant to Advantage’s position or how they potentially related to coverage issues.”  Mid-Continent also failed to promptly advise Advantage of its coverage analysis after concluding there was no coverage.  The court explained,

Defending an action with knowledge of non-coverage under a policy of liability insurance without a proper and effective reservation of rights in place will preclude the insurer from later denying liability due to non-coverage.  [cites]  Here, Mid-Continent’s purported “reservation of rights” notification was not timely or clear, nor did it fully and unambiguously inform the insured of the insurance company’s position as to coverage.  Thus, regardless of the court’s January 2012 declaratory judgment ruling that the policy language did not explicitly cover the claims …, because Mid-Continent failed to effect a proper reservation of rights, it was prohibited from asserting only limited coverage for the claim.  Therefore, Mid-Continent was estopped to deny coverage for the claim to the extent of its policy limits.  Consequently, the circuit court did not err in submitting the bad faith claim to the jury despite its declaratory judgment to the effect that the policy language did not expressly provide coverage.

Id. (emphasis in the original).  Therefore, the bad faith judgment against Mid-Continent was affirmed.

The Advantage Bldgs. & Exteriors, Inc. v. Mid-Continent Cas. Co. case is a significant win for policyholders in supporting the principal that a bad faith judgment can be rendered even if the claim itself is found to not be covered.

via Missouri Court Finds That “Ineffective” Reservation Of Rights Letters May Support Bad Faith Recovery Even In The Absence Of Coverage – Insurance – United States.

6th Circuit: Manufactured Homes are not “Consumer Products” under Magnuson-Moss Warranty Act

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Anthony Osborn | The Dispute Resolver | November 13, 2014

In Bennett v. CMH Homes, the plaintiffs’ purchased a 2,180 square foot manufactured home from CMH Homes after their prior residence was destroyed by fire. As part of the agreement, CMH was required to deliver and install the home. In addition, CMH warranted the home would be installed “in accordance with applicable governmental requirements.”

Shortly after they moved into the manufactured home, the plaintiffs began noticing defects which led them to believe the home was not level. CMH assured the plaintiffs it would repair and level the home, but CMH’s repair efforts were unsuccessful. As a result, the plaintiffs filed suit in Tennessee federal court, asserting various claims which included a breach of warranty claim under the Magnuson-Moss Warranty Act (“WMWA”), a federal statute regulating the sale of consumer products which applies to warranties for “tangible personal property.”

After a bench trial, the District Court found CMH had breached the contract and its warranties by failing to properly install and level the residence. On appeal, however, the Sixth Circuit held that a manufactured home is not a “consumer product” and was, therefore, not intended to be regulated by the Magnuson-Moss Warranty Act. As the Sixth Circuit reasoned, a manufactured home is not designed to be moved once constructed and placed on land, and is not an expendable product or an item which is meant to be replaced periodically. Thus, the Court of Appeals found it more akin to a house than “tangible personal property” which might otherwise qualify as a “consumer product” subject to protection under the Magnuson-Moss Warranty Act.

One of the Circuit’s Judges delivered a dissenting opinion. Do you agree with the majority or dissent? A copy of the decision can be found at http://www.ca6.uscourts.gov/opinions.pdf/14a0272p-06.pdf.

via The Dispute Resolver: 6th Circuit: Manufactured Homes are not “Consumer Products” under Magnuson-Moss Warranty Act.