CLM National: February 2020

A New Jersey executive order will require builders to consider climate-change impacts, Michigan files suit against manufacturers over PFAS contamination, and, in New York, a new law will ban the sale of products containing 1,4-dioxane.

Washington

Limitation Clause Only Precludes Breach-of-Contract Claim

In W. Beach Condo. v. Commonwealth Ins. Co. of Am., the Court of Appeals found that the one-year suit limitation clause precludes breach-of-contract claims, but not extra-contractual claims under the Insurance Fair Conduct Act (IFCA) and Consumer Protection Act (CPA), including recovery of policy benefits as damages. The condominium, West Beach, retained an expert to assess its building envelope, and the expert provided its findings on Sept. 8, 2015. But West Beach did not submit its claim for insurance coverage until Sept. 26, 2016. Since the suit was not filed within one year, the suit limitations applied to the breach of contract action. But, regarding the trial court’s dismissal of the IFCA and CPA claims, the Court of Appeals said, “Because West Beach has an independent statutory claim for failure to provide coverage and because the coverage obligation was not extinguished by the suit limitation clause, the trial court erred in concluding that Commonwealth’s denial of coverage was reasonable as a matter of law.”—From CLM Member Jillian M. Henderson

Michigan

State Files PFAS Lawsuit Against Manufacturers

Michigan has filed a lawsuit against 17 defendants, including 3M and DuPont, for PFAS contamination in the state. It alleges that the defendants deliberately concealed the dangers of PFAS and used PFAS and PFAS-containing materials in a way they knew would contaminate natural resources and expose residents to harm. According to the complaint, filed in Washtenaw County Circuit Court, the state seeks compensatory damages for PFAS contamination of natural resources and property, including costs for investigating, monitoring, and remediating PFAS contamination. The Associated Press reports responses from DuPont and 3M. DuPont says it will “vigorously defend its record of safety, health and environmental stewardship,” while noting its use of PFAS is “extremely small.” 3M says it disagrees with the lawsuit’s allegations, stating, “We acted responsibly in connection with products containing PFAS and will vigorously defend our record of environmental stewardship.”—From Managing Editor Phil Gusman

Texas

Texas Supreme Court to Evaluate Extrinsic Evidence

The 5th Circuit certified a question to the Texas Supreme Court about the use of extrinsic evidence in determining the insurer’s duty to defend. In State Farm Lloyds v. Richards, et al, the insureds’ grandson was killed in an ATV accident while under their temporary care. The child’s parents sued and the insureds sought a defense under their homeowners policy. State Farm defended under a reservation of rights, but sought a declaration that there was no duty to defend or indemnify based on two policy exclusions. The district court found the extrinsic evidence satisfied both exclusions. The Texas Supreme Court hinted in prior cases that extrinsic evidence could be relied upon in narrow circumstances as an exception to the eight-corners rule, but the court had never adopted the rule. Therefore, the 5th Circuit asked whether the policy-language exception to the eight-corners rule was a permissible exception under Texas law.—From CLM Member Robert Hellner

Florida

A “Hellhole” No More?

The American Tort Reform Association’s (ATRA) 2019-2020 “Judicial Hellholes” report leaves Florida off of its top-10 list after the state had previously ranked second in 2018-2019, and first in 2017-2018. Noting the improvements over the past year, ATRA specifically cited HB 7065, the state’s recent assignment of benefits legislation; and SB 862, which overturned a Florida Supreme Court decision imposing vicarious liability on companies that lease construction equipment, as positive steps. In addition, ATRA mentioned the appointment of three new justices to the Florida Supreme Court by Gov. Ron DeSantis. “This new court is deferential to legislative efforts to stop lawsuit abuse and poised to correct the course set by the prior activist court,” ATRA’s report says. It adds, though, that further improvements to the legal landscape are still needed, specifically changes to the state’s no-fault system, and actions to curb inflated awards for medical expenses.—From Managing Editor Phil Gusman

New Jersey

Builders Must Account for Climate Change

New Jersey will become the first state that requires builders to take into account the impact of climate change, including rising sea levels, in order to secure government approvals for projects. This move is believed to be the broadest and most specific attempt to leverage land-use rules to control where and what developers can build, and to limit the volume of emissions. Enacted through executive order, New Jersey will require the state Department of Environmental Protection to begin the process of drafting new regulations to be adopted by January 2022. This development is considered part of a widening effort by states to use regulations to address the deleterious effects of climate conditions ranging from sea levels, wildfires, and other climate change-related events.—From CLM Members Steve Henning and Kelly Waters

New York

Law Bans Products Containing 1,4-Dioxane

Gov. Andrew Cuomo approved legislation that will eliminate the sale of products containing the chemical 1,4-dioxane in New York. The ban, scheduled to take effect on Jan. 1, 2022, has a broad reach and includes many household cleaning products, some cosmetics, and personal-care products containing the soon-to-be-banned chemical. The U.S. Environmental Protection Agency has classified 1,4-dioxane as a likely carcinogen, and it has been associated with liver and kidney damage found widely on Long Island. The chemical has been a top concern of drinking water providers because it is not removed through conventional treatment methods. Industry lobbyists opposing the legislation warned that the new law could result in popular brands being pulled off store shelves, which will result in higher prices for consumers. Industry representatives also argue the new law is unnecessary because the level of 1,4-dioxane is already low, and that contamination in groundwater comes from past industrial practices rather than their products.—From CLM Member Larry Mason