• Insurance Liability Ruling Helps to Close the Gap

A welcome ruling in a general liability insurance case was handed down by the South Carolina Supreme Court on March 10. The court found that faulty workmanship by a subcontractor causing property damage to a home was covered by a builder's comprehensive general liability insurance policy.

The ruling, in the case of Auto Owners Insurance Co., Inc. v. Virginia T. Newman and Trinity Construction, Inc., holds significance because insurers across the country have been denying claims of builders for construction defects arising from the work of their subcontractors. Should insurers continue to deny coverage, it could create a coverage gap that would be difficult to fill.

NAHB joined the South Carolina Home Builders Association in filing a friend of the court brief in support of Newman in the South Carolina Supreme Court. The latest decision is consistent with recent rulings by the highest courts in other states, most recently Florida , Tennessee and Texas . Those courts held that damage to a structure caused by the work of a subcontractor can constitute "property damage" caused by an "occurrence" within the meaning of the builder's comprehensive general liability insurance policy. 

For the full story view the article in NBN Online.
 

•  Wetlands Court Decisions May Hinder Development

Two favorable court decisions in wetlands cases announced last week may have a significant impact on builders and developers who are contemplating projects in areas near streams, lakes and wetlands that are subject to federal jurisdiction under the Clean Water Act. In NAHB v. U.S. Army Corps of Engineers, the U.S. District Court for the District of Columbia denied the Corps' motion to dismiss NAHB's complaint. This ruling held that NAHB has standing to challenge Permit 46 seeking to regulate non-tidal, upland drainage ditches.

Five days later, in the case of American Petroleum Institute v. Johnson,the same court declared EPA regulations defining the term "navigable waters" to be "arbitrary and capricious" under the federal Administrative Procedure Act. While this case specifically addressed regulations regarding the petroleum industry, the very same language defining navigable waters appears in separate regulations that have been adopted by the EPA and Corps of Engineers as applicable to the development industry. Efforts by Congress seeking expansion of federal permitting authority could be curtailed by this decision due to similarities in bill language under consideration and regulatory language that this court has now declared illegal.

For more information, contact Duane Desiderio, 800-368-5242 x8146.