OHIO DECISION PARTS WAYS WITH THE NORM AS TO CONSTRUCTION DEFECT COVERAGE FOR GENERAL CONTRACTORS

On October 9, 2018, the Ohio Supreme Court issued an important decision in Ohio N. Univ. v. Charles Constr. Servc., Inc., Slip Opinion 2018-Ohio-4057.  Departing from the national majority view, the Ohio Supreme Court held that a general contractor’s commercial general liability policy does not cover claims for property damage caused by a subcontractor’s faulty work. Specifically, the Court reasoned that faulty work is not accidental or “fortuitous,” as contemplated within the policy’s definition of an “occurrence” triggering coverage.”

This topic has been hotly debated in South Carolina after the Crossman decision. Following Crossman, a South Carolina statute was enacted. The statute stated that the definition of “occurrence” in general liability policies includes property damage “resulting from faulty workmanship, exclusive of the faulty workmanship itself.” See S.C. Code § 38-61-70 (2011). The South Carolina Supreme Court has ruled that this statute may only be applied to general liability insurance contracts executed on or after the effective date of the statute – May 17, 2011. Any retroactive application is unconstitutional. See Harleysville Mut. Ins. Co. v. State, 401 S.C. 15 (2012).

Notice of Furnishing and Remote Claimants

A “remote” claimant can be defined as one contributing labor or materials to a construction project who does not have a direct contract with the general contractor.   This is typically a sub of a sub or a material supplier who sells to a subcontractor.   The key is the provider must not be in privvity with the GC or owner.   

In order to protect remote rights, a provider should “raise its hand” by sending notice to the general contractor by Certified Mail, Return Receipt Requested (see S.C. Code Ann. § 29-5-20). This should be done at the beginning of the project and on subsequent occasions assuming more materials or services are provided.   

Formal requirements are found in the statute.

When the Plans & the Code Don’t Mix, Can a Sub Sue a Design Professional for Negligence?

Great article by Matthew Brouchard, Esq. on the rights of a subcontractor to sue design professionals for inadequate plans

N.C. Construction Law, Policy & News

Talk about being stuck between a rock and a hard place.

You’re an electrical sub who notices during your performance that installing certain light fixtures per plans would run afoul of the manufacturer’s instructions and violate the building code.  You bring the issue to the attention of your general contractor, who submits an RFI.  The architect’s response directs you to proceed per plans.  The system later malfunctions, and you incur significant cost researching the problem, ultimately concluding that the installation method directed by the architect is the culprit.  The architect refuses to pay your costs for researching the issue.

Might you have a claim for negligence against the architect?

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