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Jonathan A. Cass is a Partner in the Commercial Litigation Group and the Chair of the Insurance Coverage and Risk Management Group at Cohen Seglias. He concentrates his practice in commercial litigation, representing individuals and businesses in a wide variety of disputes, including breach of contract matters, employment disputes involving restrictive covenants, and claims arising from tortious interference and misappropriation of trade secrets.

The Ohio Supreme Court’s October 9, 2018 decision in Ohio Northern University v. Charles Construction Services, Inc., 2018-Ohio-4057 issued a blow to general contractors attempting to obtain insurance coverage under their commercial general liability (CGL) policies for property damage caused by their subcontractor’s faulty work. The Ohio Supreme Court held that faulty work is not “accidental” or “fortuitous,” as contemplated within the policy’s definition of an “occurrence,” and found that the general contractor had no coverage under its CGL policy.

Ohio Northern University (University) sued the general contractor, Charles Construction Services, Inc. (CCS) arising out of a contract to build a luxury hotel and conference center (Project) on the University’s campus. After completion of the Project, the University discovered extensive water damage from hidden leaks and other serious structural defects that it believed were caused by the defective work of CCS and its subcontractors. In response to the University filing suit, CCS sought coverage under its CGL policy, relying on the products/completed operations (PCO) coverage available for claims involving property damage caused by the faulty work of a subcontractor.

Continue Reading Contractors Beware – Ohio Joins Minority of States in Insurance Coverage Row

[Note from the Editor: Due to an inadvertent editing error, omitted from our post entitled NJ Supreme Court Gets It Right! Consequential Damages Caused By A Subcontractor’s Defective Construction Work Is Insured was the fact that the property damage at issue occurred after the project was completed.  The insurance coverage at issue in the case was completed operations coverage included in the commercial general liability form.  The corrected article appears below.] 

Consultant presenting insurance concept and risk managementThe New Jersey Supreme Court’s August 4, 2016 decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC opened the door for general contractors to obtain insurance coverage under their commercial general liability (CGL) policies for property damage caused by their subcontractor’s defective work after the project was completed. Continue Reading NJ Supreme Court Gets it Right! Consequential Damages Caused by a Subcontractor’s Defective Construction Work is Insured

The City of Philadelphia has issued new code requirements for construction worker safety training. The new rules went into effect on October 1, 2015, and the Department of Licenses and Inspections has announced that strict enforcement will begin on April 1, 2016.

Under the new regulations, all contractors and employees (including subcontractors) performing construction or demolition work in the City of Philadelphia for which permits have been issued are now required to complete OSHA 10 safety training, or an approved equivalent. This requirement applies to all trades, as well as state-registered home improvement contractors. Workers are required to carry written proof establishing that they have completed an OSHA 10 training course while on the job site, and their employers must also maintain on-site proof of completion for each worker. This information must be furnished to the Department of Licenses and Inspections upon request. The OSHA 10 training is only required to be completed once and does not expire.

Additionally, all contractors licensed under Section 9-1004 of the Philadelphia Code must employ at least one supervisory employee who has completed OSHA 30 safety training, or an approved equivalent, within the past 5 years. Construction or demolition of major buildings requires continuous oversight by a site safety manager who has completed an OSHA 30 course. The designated site safety manager must carry an identification card or certificate of completion issued by the provider of the OSHA 30 training course.

Continue Reading Attention Philadelphia Contractors: Do You Comply with OSHA Training and Supervision Requirements?

A few weeks ago, the New Jersey Supreme Court issued a decision that could have a profound effect on members of New Jersey’s construction community.  In Town of Kearny v. Louis F. Brandt, the Court issued two major holdings: (i) under New Jersey’s Statute of Repose, an architect with construction administration responsibilities cannot be sued for defective work more than ten years after the first temporary certificate of occupancy (TCO) is issued; and (ii) if a party is dismissed because more than ten years has elapsed since its work, the jury may still consider the dismissed party’s contribution to any damages for the purpose of determining liability for the remaining parties to the litigation.

What Is a Statute of Repose and Why Does It Matter?

For those who possessed the courage to continue reading beyond that “legal mumbo jumbo,” a Statute of Repose is a law that protects design professionals and contractors from indefinite liability.  In New Jersey, the Statute of Repose bars all litigation arising out of construction defects discovered more than ten years after the performance of the work.  For instance, a structural engineer need not worry about being sued for a latent design defect that surfaces twenty years after it performed the design work.

In Town of Kearny, construction of a public safety facility started in 1994, and the Town sued the architect, soils engineer, and structural engineer for latent structural defects on April 7, 2006.  The Court decided that for professionals like the architect whose responsibilities continue through construction, the ten-year Statute of Repose begins to run when the project reaches substantial completion.  In this case, the Court decided that substantial completion occurred on April 9, 1996 when the first TCO was issued giving the owner until April 9, 2006 to sue the architect.

For the soils and structural engineers who were hired to perform more finite and limited services, the ten-year period began to run at the conclusion of their specific tasks.  Since the soils and structural engineers completed their work more than ten years before the owner filed suit, they were dismissed from the case, leaving only the architect subject to liability.

What Happens to the Architect Now That Other Potentially Responsible Parties Have Been Dismissed?

In cases with multiple defendants who may have collectively contributed to the damages plaintiff suffered, the jury is asked to determine – on a percentage basis – each party’s responsibility.  For instance, if a jury awards a verdict of one million dollars and finds two defendants each fifty percent responsible, respectively, then each defendant is liable to the plaintiff for $500,000.00.

But what happens in situations like Kearny where two of the parties who may have been responsible for the Town of Kearny’s damages were dismissed on a statutory technicality?  The Court decided that even though the soils and structural engineers are immune from judgment by way of the Statute of Repose, the jury should nonetheless consider their contribution to the Town’s damages because the purpose for the rule requiring juries to determine each party’s contribution to the damages is so that each party pays for the damages it actually caused.  In other words, if the architect is responsible for less than 100% of the town’s damages, it would not be fair for the architect to pay 100% simply because the other defendants were dismissed by way of the Statute of Repose.

The Lesson

While the discovery of latent construction defects can be outside of the owner’s control, owners should nonetheless be mindful that New Jersey’s Statute of Repose does not treat all contractors and professionals equally.  For those with limited responsibilities that began and end prior to the project’s overall completion, the clock to file a lawsuit begins ticking once the specific work is completed.  For those with construction management or administrative responsibilities, the clock begins to run when the project is substantially complete.

Without agreement among the parties as to substantial completion, Town of Kearny tells us that a court will likely utilize the issue date for the first TCO.  Owners can guard against the “ticking clock” by keeping a close watch on the various completion dates for each trade.  Meanwhile, designers and builders can ensure that the clock is ticking by being vigilant with the submission and approval of critical project documents such as certificates of substantial completion.

Jonathan A. Cass is a the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

Daniel E. Fierstein is an Associate in the Construction Group of Cohen Seglias and focuses his practice on construction law.

As most people have heard, a vacant building being demolished on the corner of 22nd and Market, in Center City Philadelphia, collapsed into a thrift store this past Wednesday morning.  The collapse resulted in 6 deaths and injuries to numerous people.  This tragedy brings to mind the risk of building collapses in general, and the fact that as buildings age worldwide, these tragedies will likely increase.

Buildings are clearly at higher risk of collapse when demolition work is being performed. However, there are also numerous factors that can cause a building’s collapse even when it is not undergoing demolition.  These factors include defective design, sub-standard and/or improperly specified materials, faulty construction, changes in subsurface conditions, failure to properly inspect the building during construction and upon completion, general deterioration to structural components caused by an owner’s failure to  maintain the building, and overloading of the building’s structure.  When a building collapses causing personal injuries or property damage, numerous parties, including the building owner, design professionals and contractors, may be held responsible for the resulting damages.

The potential claims that may be brought as a result of a building’s collapse include those for property damage, personal injury, wrongful death, worker’s compensation, and business interruption.  The property owner could also bring breach of contract and negligence claims against the responsible design professionals and contractors to the extent that faulty design or workmanship contributed to or caused the collapse.   Additionally, the Occupational Safety and Health Administration will conduct an investigation into the cause of the collapse, and could assess heavy fines and penalties against those involved where violations are found.

To reduce the risk of these types of claims, building owners and construction professionals need to take all necessary precautions to ensure that both building erection and demolition are done pursuant to all applicable codes, regulations, and industry standards, that all required permits are obtained.  Owners and contractors need to understand the significant risks that accompany any construction project, especially when demolition is involved, and take appropriate steps to make sure that adequate insurance is procured to cover the risk.

Owners also need to conduct regular maintenance and inspections of the building once construction is completed.  On active construction sites, policies and procedures should be implemented to ensure that all surrounding areas are secured, particularly during any demolition work, and that applicable engineering and OSHA standards are followed to minimize the risk of such a catastrophe occurring.

Jonathan A. Cass is Partner and the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

Lori Wisniewski Azzara is an Associate at Cohen Seglias Pallas Greenhall & Furman PC. Lori practices in the areas of construction and has experience in contract negotiation, claims for delay and inefficiency, mechanics’ liens, green building and all types of contractual disputes.

For most people, there is only one thing more excruciating than a discussion about insurance coverage: a blog post about it.  So brace yourselves dear readers.

With all kidding aside, the importance for contractors and owners to understand the ins and outs of their insurance policies, and the risk transfer mechanisms that they are using, or are being subject to, cannot be oversInsurance Policy.jpgtated.  Members of the construction industry should be generally familiar with the individual concepts of commercial general liability (“CGL”), additional insured status, and contractual indemnification, but few understand how they fit together and, worse, how their synergies can cause unintended and costly consequences.  It gets even worse when a liability policy called an Owners and Contractors Protective Liability policy (“OCP Policy”) is thrown into the mix.

In recent years, we have seen owners increasingly requesting that our contractor clients purchase an OCP Policy.  An OCP Policy is a policy that is specific to a construction project that insures the owner for personal and property damage arising out of the work of a designated contractor.  It differs from the more commonly utilized additional insured concept in that the OCP Policy only covers the owner, instead of the contractor and owner together under the contractor’s CGL policy.

Owners like it because an OCP Policy can provide broader coverage than that provided under an additional insured endorsement, and provides them with coverage limits that they do not need to share among any other parties in the event of an insured claim.  Contractors like it because an OCP Policy typically provide primary insurance coverage, which means in the event of an accident arising from the contractor’s work that leads to a claim against the owner, the OCP Policy’s limits will be tapped by the owner, rather than the contractor’s CGL policy providing coverage to the owner as an additional insured.  (This is true even if the owner has also required a contractor to name the owner as an additional insured on the contractor’s CGL Policy).

The concern and unintended consequences of which contractors must be aware arises in cases where the owner, in addition to requiring the contractor to purchase the OCP Policy, also requires the contractor, pursuant to the construction contract, to indemnify the owner for personal injury and property damage arising from the negligence of the contractors in performing its work.  In practice, if an accident occurs during construction – say an employee of a subcontractor is injured – the employee will sue both the contractor and owner.  The owner will respond by tendering its defense and seeking indemnification from the insurance carrier that issued the OCP Policy.  The contractor, in turn, tenders to its own CGL carrier, expecting that the OCP carrier will defend the owner, and its CGL carrier will defend it.

However,  what we have seen occur is that the attorney appointed to defend the owner by the OCP carrier then asserts a claim for contractual indemnification against the contractor, and demands that the contractor defend and indemnify the owner pursuant to the indemnification provision in the construction contract.  Although the contractor will typically have contractual liability coverage under its CGL policy for such an indemnification claim, the contractor’s efforts to insulate its own CGL policy from having to pay claims asserted against the owner by purchasing the OCP policy have been thwarted.  Not only did the contractor have to pay for an entirely separate OCP policy for the owner, but once coverage under the OCP Policy is triggered, the OCP carrier circles back and dumps the claim back on the contractor’s CGL policy through the construction contract’s indemnification provision.  Simply put, the contractor pays for the OCP Policy, and then faces increased CGL premiums because of the costs associated with responding to the contractual indemnification obligation.

The lesson to be learned?  It is important for contractors (and owners) to understand the interplay between an OCP Policy, additional insured status, and a contractual indemnification provision.  To the extent that an owner is demanding that a contractor purchase an OCP Policy, the contractor should attempt to negotiate the elimination of any contractual indemnification provision that requires the contractor to defend and indemnify the owner for personal injury and property damage – the very same claims covered by the OCP Policy.  In doing so, the contractor can avoid the scenario discussed above.

Jonathan A. Cass is a the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

Daniel E. Fierstein is an Associate in the Construction Group of Cohen Seglias and focuses his practice on construction law.

Flood insurance.jpgIn January, Governor Chris Christie signed an Executive Order and proposed emergency regulations to guide the rebuilding process after Superstorm Sandy in flood prone areas of New Jersey.   Before the storm, the building code and flood-proofing regulations in the state were based on flood maps adopted by the New Jersey Department of Environmental Protection (“the Department”) in the 1970’s and 1980’s.  Unfortunately, these maps underestimated the 100-year flood elevations by anywhere from one to eight feet.  The Federal Emergency Management Agency (“FEMA”) is in the process of reevaluating its flood maps for New Jersey. One of the changes, which will have a widespread effect, is the adoption of FEMA’s 100-year flow rate maps, including advisory, proposed or effective mapping. Owners and their contractors rebuilding in New Jersey will need to consider FEMA’s most recent maps (the “New Maps”), regardless of whether the map at issue is considered to be final and approved.  All of these maps are available on FEMA’s website.

The Executive Order and the emergency regulations propose the following for construction in flood-prone areas:

  • A building is substantially damaged if the cost of restoring it to its original condition would equal or exceed 50% of the market value of the structure before the storm damage occurred.
  • An individual permit for reconstruction of a home that has suffered substantial damage due to the storm may not be issued by the Department unless the lowest floor of the home is constructed or modified such that it is set at least one foot above the elevation set by the New Maps.
  • The “lowest floor of a building” only includes a space which may be used for permanent or temporary occupation and does not include a crawl space, entryway and or garage if it is used for building access, parking or storage.
  • The Department may issue an individual permit for reconstruction of a commercial building that has suffered damage due to the storm that is not set at least one foot above the elevation set by the New Map map if an architect or engineer certifies that the building will be constructed in accordance with flood-proofing requirements.
  • The regulations also permit, for the first time, that commercial buildings be “wet flood-proofed.” Wet flood-proofing allows for flood waters to move freely in a building without damaging the structural integrity of the building.
  • When a property owner plans to rebuild, a permit need not be sought from the Department as long as the “footprint” of the building is not increased by more than 300 square feet, the lowest floor of the building is built at least one foot above the elevation set by the New Map, any basement or ground floor garage is not used for habitation, and the building is not moved closer to any large body of water or into a floodway. This will save the owner the cost of a permit fee.

According to the regulations, building owners who seek to comply will qualify for assistance from FEMA to help cover the cost of the work associated with complying with the regulations.  Since the new FEMA maps will likely place more properties in flood zones than before the storm, while other properties will be placed in more severe flood zones, flood insurance premiums will rise substantially for some New Jersey property owners.  But, FEMA anticipates that property owners who chose to comply when rebuilding could see their flood insurance premiums drop by more than 200%.

Have an opinion?

The regulations were adopted via an Executive Order, but will become permanent after an abbreviated comment period from the public.  A public hearing on these proposed regulations is scheduled for Thursday, March 7, 2013 at 5:30 pm at the City of Long Branch Municipal Building, Council Chambers, 344 Broadway 2nd Floor, Long Branch, New Jersey 07740.

Jonathan A. Cass is the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

Jennifer R. Budd is an Associate at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Construction Group.

As commercial property owners and their tenants assess the damage caused by Hurricane Sandy, they need to understand their rights and obligations under leases, mortgage loan documents, and insurance policies.


As a result of storm damage, many buildings were temporarily uninhabitable or sustained such significant damage as to be uninhabitable or untenantable for the foreseeable future. The question becomes what rights and obligations do a tenant and landlord have under the terms and provisions of their lease? It should be kept in mind that these terms and provisions were negotiated and decided when the lease was executed.

First, it is necessary to understand the difference between a service interruption and casualty. A service interruption or disruption involves, for example, a loss of utility service to a property, thereby interfering with the tenant’s use of the property. A casualty involves the inability of the tenant to use or possess the property because of physical damage to the property itself.

Generally, commercial leases prepared by landlords will not provide for rent abatement or lease termination in the event the landlord fails to provide utilities or services. However, the lease should be checked because sometimes landlords will agree to abate if utilities or services are not provided for some period of time.

Commercial leases will often consider the extent of damage and the time necessary to restore or rebuild. For example, a lease may distinguish between partial and total casualty where the former means that the tenant was or is unable to use a portion of the leased space and the latter means that the entire leased space is unusable or untenantable.

The lease may provide for rent abatement in the event of a partial casualty and even the right to terminate if the premises cannot or are not restored within a certain period of time. Generally, a landlord’s lease may provide for a pro-rata abatement of at least the basic rent during the any period in which the tenant is actually dispossessed, but only to the extent of such dispossession.

If a total casualty has occurred, landlords under most commercial leases have the option, but not the obligation, to rebuild/restore the building. Tenants may or may not have the option of terminating the lease under certain circumstances such as if the landlord is unable or does not rebuild within a set period of time or if the casualty occurs toward the end of a lease term.


Both tenants and landlords need to not only understand what coverage is provided by their insurance policies, but also to provide immediate notice of any potential claims to their insurance carriers as required under the applicable policy. Additionally, it is extremely important to fully document the damages sustained so as to preserve rights under the policy, and to ensure that the claim can be properly defended if challenged by the insurer. Tenants and landlords should be talking to the insurance brokers to review and understand available coverage, and the notice provisions required under their policies.

Typically, under a commercial lease, a landlord insures the building structure and common areas and the tenant is required to purchase insurance coverage on any improvements it made to its leased space, and its personal property. Commercial property insurance is intended to cover losses from fire, theft and natural disasters. However, such policies do not cover property losses caused by flood, which are only covered by a separate flood insurance policy.

In the event that a landlord or tenant has lost business income because, for example, the landlord had to provide tenants with rent abatements, or the tenant has been unable to conduct business because the leased property is untenantable, it is important to determine whether the effected business has business interruption coverage. This type of coverage is not part of a standard property policy and is intended to reimburse the business owner for loss profits and fixed expenses incurred as a result of the interruption of the business.


To protect themselves against damage to their collateral, lenders place provisions in the loan documents specifying the insurance to be carried by the borrower and the borrower’s obligations in the event of a casualty loss. (These provisions are negotiable, to a degree, at the time of the loan.) A borrower is required to notify the lender in the event of a casualty loss of a certain magnitude. Additionally, the lender almost always is entitled to collect the proceeds of insurance, and can elect to either apply it to the loan balance or, under certain circumstances, escrow it and apply it to the cost of repairs to the collateral.

In the event of a casualty loss, it is important to understand the obligations owed the lender under the loan documents, and to ensure that the borrower complies with those obligations so as to avoid being declared in default. Additionally, in the event that significant repairs are required to the building, the borrower will want to negotiate with the lender to avoid any delays in gaining access to the insurance payments necessary to make the necessary repairs.

The Firm has extensive experience in commercial real estate and insurance coverage matters, and is available to answer any questions or respond to any issues that you may have. Questions concerning leases and mortgages issues can be directed to Marian A. Kornilowicz, Esquire, and concerning insurance coverage matters to Jonathan A. Cass, Esquire.

Marian A. Kornilowicz is the Chair of the Business Practice Group of Cohen Seglias Pallas Greenhall & Furman PC. His practice is concentrated in the representation of clients in varied business transactions and real estate matters.

Jonathan A. Cass is a the Chair of the Insurance Coverage & Risk Management Group at Cohen Seglias Pallas Greenhall & Furman, PC. He has extensive experience representing insureds and insurers in insurance coverage disputes.

As a result of two recent Pennsylvania decisions, insurance carriers are now aggressively taking the position that there is no insurance coverage under commercial general liability policies (“CGL)” for property damage claims caused by faulty workmanship.

In the recent cases, Kvaerner v. Commercial Union Insurance Co., and Millers Capital Insurance Company v. Gambone Brothers Development Co., Inc., the Courts essentially held that faulty workmanship is not an accident and, therefore, property damage claims arising from faulty workmanship are not an “occurrence” within the meaning of a CGL policy. This means that contractors are now faced with significant uninsured exposure when their allegedly faulty workmanship causes property damage to a part of the building on which they did not work.

By way of illustration, a roofer installs new roofing shingles on a home. As a result of faulty installation, the roof begins to leak, causing damage to the roof decking, which the roofer had not replaced, and interior drywall. Prior to these new cases, if the homeowner submitted a claim to the roofer’s CGL carrier, there would be coverage to pay for the resulting property damage to the decking and interior drywall, but there would not be coverage to fix the improperly installed roof. Now insurance carriers are taking the position that there is no coverage for the resulting property damage.

In response to these decisions and the demands of contractors for coverage for property damage arising from faulty workmanship, many insurance carriers that provide CGL coverage to contractors are now offering a so-called “Resultant Damage” endorsement for CGL policies. This endorsement has the effect of restoring, or partially restoring, insurance coverage for property damage arising from faulty workmanship that has been eliminated by the new rulings.

Accordingly, it is now very important that:

  • All contractors talk to their insurance agents and brokers to ensure that their CGL policies have the Resultant Damage endorsement
  • If necessary, take immediate steps to obtain the endorsement

General contractors should consider adding a requirement in their form subcontract to require that all subcontractors:

  • Obtain the Resultant Endorsement on their CGL and umbrella policies
  • Attach a copy of the endorsement to the required Certificate of Insurance