Claims – Owner’s Prot Prof Indemnity (OPPI)

February 25, 2019

OPPI Claim Example

A hospital owner experienced a large loss due to a structural steel design error. Due to design negligence, part of the new hospital tower was rendered unusable. The result was approximately $20,000,000 in direct damages to the building, and another $5,000,000 in consequential damages. The Owner’s architect had a policy with a $1,000,000 limit. However, most of these policy limits were exhausted in legal costs. Additionally, the structural engineer did not have a professional liability policy. The Owner did not obtain an Owners Protective Indemnity policy.…

February 25, 2019

OPPI Sits Excess of Architect’s Practice Policy

The project Owner of a large hotel project incurred $10,000,000 in additional costs due to the negligence of its retained soils engineer. The prime architect’s policy had $1,000,000 in limits. The Owners Protective Indemnity policy sat excess of the prime architect’s practice policy to cover the Owner’s $9,000,000 in loss.

February 25, 2019

OPPI Sits Excess of Engineer’s Practice Policy

A project Owner hired a structural engineer to determine structural steel needed for a mixed-use project. The engineer used the incorrect code for this project resulting in higher structural steel costs. The Owner incurred $5,000,000 in additional costs due to the negligence of the structural engineer. The Owner asserted a claim against the structural engineer for those additional costs, however the engineer’s policy only had $2,000,000 in limits. The Owners Protective Indemnity policy sat excess of the engineer’s practice policy to cover the Owner’s remaining $3,000,000 in loss.

January 11, 2019

Burlington reaches $2-million settlement with condo owners

Source: https://www.thespec.com, January 11, 2019
By: Teviah Moro

Mayor Marianne Meed Ward says agreement “brings closure to a long and difficult chapter for the residents of 2411 New St.”

The city’s insurer has settled a lawsuit with residents of a condo building in Burlington that has been beset with structural problems.

“This settlement brings closure to a long and difficult chapter for the residents of 2411 New St.,” Mayor Marianne Meed Ward said in a news release Thursday.

“I’m thankful to all parties for working together to reach a settlement, so everyone can now move forward.”

Lawyers involved in the $2-million settlement, which also includes four other defendants, are finalizing details to formally close the litigation.

The settlement, which the city says is not an “admission of liability” for any of the defendants, heads off a trial, which was scheduled to start in January.

The condo owners alleged the city had been negligent in approving the construction of the apartment building in 1965 and its conversion to condos in 1998.

Residents say they didn’t know about structural problems in the building until a damning engineering report in 2009.

The city had insisted the six-storey building was safe and rejected any responsibility for its problems after the condo corporation launched a lawsuit in 2010.

In late 2017, renovations started on the building after the city reached a settlement with the condo corporation in that lawsuit.

However, a second lawsuit, launched in 2011 by individual condo owners — that named the city, developers, a real estate firm and

The Burlington firm leading that lawsuit acknowledged there had been a settlement but declined to immediately offer comment.

April 19, 2017

Serious design, construction and maintenance defects doomed Oroville Dam, report says

Source: http://www.latimes.com, April 17, 2017
By: Ralph Vartabedian

Design flaws, construction shortcomings and maintenance errors caused the Oroville Dam spillway to break apart in February, according to an independent analysis by Robert Bea for the Center for Catastrophic Risk Management at UC Berkeley.

Bea, a co-founder of the center and retired civil engineering professor, found that in the 1960s, when the dam was being planned, designers did not call for a thick enough concrete spillway floor. Nor did they require the continuous steel reinforcement needed to keep its slabs intact during decades of service.

The design also did not require strong enough anchors into the underlying mountainside to resist movements downhill and from side to side.

The analysis is the first major assessment of what caused the massive damage that forced the evacuation of nearby Oroville and left the state with a repair bill likely to reach into the hundreds of millions of dollars.

It also sends a warning that the state’s aging fleet of dams may contain unknown defects that would threaten public safety in future wet years.

California Department of Water Resources spokeswoman Erin Mellon said the agency has not seen Bea’s analysis.…

April 18, 2017

Developer McKafka sues architect, alleging construction delays and defects at the Crimson

Source: https://therealdeal.com, April 17, 2017
By: Francisco Alvarado

An Aventura-based architecture firm allegedly left McKafka Development Group hanging, delaying construction on its 90-unit high-rise called the Crimson in Miami’s Edgewater neighborhood, according to a lawsuit.

McKafka, through its limited liability company Alpine Estates, accuses International Design Engineering and Architecture, or I.D.E.A. for short, of breaching its contract and negligence, in the lawsuit filed in Miami-Dade Circuit Court last month.

Stephane L’ecuyer, I.D.E.A.’s principal, did not return two phone messages seeking comment. McKafka principal Stephan Gietl also did not respond to The Real Deal, but his lawyer Bruce King said, “We had several discussions to get a resolution and have been unable to do so.” He declined further comment.

According to the lawsuit, McKafka hired I.D.E.A. on Feb. 8, 2013 as the architect of record and Facchina Construction of Florida as the general contractor for the Crimson. However, the architecture firm performed poorly, the lawsuit alleges. The Crimson, at 601 Northeast 27th Street, remains unfinished today.

“I.D.E.A. failed to timely coordinate with or respond to Facchina, prepared incomplete or inconsistent drawings and specifications, and failed to perform in a manner consistent with the design schedule,” the lawsuit states.

McKafka alleges that I.D.E.A. also failed to timely respond to requests for information, change order requests, or provide staff to ensure continuity of service. In addition, according to the suit, I.D.E.A. improperly designed the garage ramps that led to substantial structural changes. The company also improperly designed the temperature control system, resulting in high humidity in the condo units, the lawsuit alleges.

Other significant revisions at the Crimson included the relocation of piles and beams and the redesigning of the height of the building’s stairs and the size of an emergency generator room, McKafka alleges. As a result of the repairs and revisions, the project was delayed and Facchina charged the developer for the delays, as well as additional construction costs, according to the suit.…

October 28, 2013

Policyholders: Beware of Choice of Law Provisions

Source: Saxe Doernberger & Vita, P.C., October 2013

New York District Court Applies “No Prejudice” Rule to Late Notice Claim for Policy “Issued and Delivered” Outside the State with NY Choice of Law Provision

A New York federal district court applied the antiquated “no prejudice” rule to an insured’s late notice claim in Indian Harbor Insurance Co. v. City of San Diego, 2013 WL 5340380 (S.D.N.Y. Sept. 25, 2013). The insurance policy in question was issued in Pennsylvania, delivered to the policyholder in California, and insured risks located in California. The policy contained both New York choice of law and forum selection clauses. In holding that the insurer had no duty to indemnify, the court held that only those policies “issued and delivered” in New York are entitled to take advantage of New York’s statutory “notice-prejudice” standard, which requires that an insurer show prejudice resulting from the policyholder’s late notice in order to deny coverage on that basis. Rather, the court held that foreign insurance policies with New York choice of law provisions are subject to the draconian common law “no prejudice” standard, under which an insurer does not have to show that it was prejudiced by late notice in order to deny coverage.

The Indian Harbor case involved three underlying pollution claims made against the California State Association of Counties and the City of San Diego (collectively “the City”). For each claim, the City failed to give timely notice to the insurer after receiving the claim. The insurer disclaimed coverage and sought a declaration that it had no duty to indemnify the City due to the late notice.…

September 10, 2013

Medical Center Facility Renovation and Expansion

Single prime design delivery system for the renovation and expansion of a public medical center facility. Due to multiple conflicts between the structural, MEP and architectural drawings, and the submission of several hundred requests for information (“RFIs”) by the contractor, the project was delayed more than one year and experienced substantial budgetary overruns. Owner claim against the design team exceeded the available design professional insurance.

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September 10, 2013

Physician Office Renovation

Multiple prime design delivery system for the renovation of a physician’s private office space to accommodate MRI equipment and a “clean room” for lab analysis. Structural plans failed to account for the load presented by the MRI equipment, resulting in overstress of floor joints and deflection of walls on lower floors. “Clean Room” was not functional, as the HVAC system was undersized and generated negative air pressure. Owner claim against design team for remediation costs and lost profits due to inability to perform MRI/lab tests exceeded available design professional insurance.

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September 10, 2013

Dental School Facility Construction

Single prime design delivery system for construction of a new dental school facility associated with a University. University made claim against the architect alleging design errors relating to structural steel; Life Safety Code violations; non-insulated pipe failures;  failure to properly staff project; failure to perform contract administration duties; lost value engineering opportunities; and project delay. Total asserted value of the claim exceeded available design professional insurance.

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