Northern California Record

Thursday, January 23, 2020

Appeals court rules in defective-flooring case

By Dee Thompson | Jan 20, 2017

Law money 02

SACRAMENTO — A California appeals court recently sided with an insurer in a case involving Best Buy store contractors and flooring.

In late December, the court decided that in the case of Navigators Specialty Ins. Co. v. Moorefield Const., the insurer was not obligated to pay monetary penalties, since Best Buy store contractors knowingly installed flooring over a defective slab that emitted too much vapor.

According to the decision, Moorefield Construction began work on a new Best Buy store in Visalia, California, in partnership with D.B.O. Development, between 2002 and 2004. During the course of construction, Moorefield realized that the concrete slab the store was built on didn’t comply with code in regard to vapor emissions. The company nevertheless installed floor tiles on top of the slab, completing the construction in 2003. Early on, the floor began to fail and the issues continued for six years. JSL Properties LLC, which had bought the building in 2004, wanted reimbursement for repair costs and sued Moorefield. Cross-claims were filed. The building was sold to another owner during that time.

Eventually, the repair costs were $377,404. In 2010, litigation started. Payment was sought from Moorefield, which in turn sought payment from Navigators Specialty Insurance Company, which had insured Moorefield under a commercial general liability policy. A settlement was reached between the parties for $1.31 million. Navigators paid out most of that, up to its policy limits of $1 million. Moorefield paid out $150,000 and the remaining amount was covered by Best Buy and the subcontractors.

Navigators filed suit under a declaration of rights and duties, asking the court to clarify if it needed to pay out the claim, since the failure of the floor didn’t come about because of an accident. Navigators won that lawsuit because the court found there was no coverage. Moorefield Construction was then obligated to pay Navigators back the money. However, the court found that under the supplementary payments provision that Navigators had to pay Moorefield. Moorefield Construction appealed that ruling.

The court found that “Navigators had no duty to indemnify Moorefield under the Policies. In all other respects, the judgment is reversed and the matter is remanded for a new trial limited to the issue identified in this opinion. In the interest of justice, no party shall recover costs on appeal.”

The amount was limited to $1 million and didn’t include attorney’s fees or the costs of filing suit. With the reversal of the trial-court judgment, the matter was ordered to a new trial, according to the opinion filing.

Valerie A. Moore, a partner with the firm of Haight Brown and Bonesteel LLP, said she feels the owner chose not to fix the emissions issue for monetary reasons.

“They got the agreement of the owner of the store to go ahead and do it [put down the flooring despite the code issues] but of course the original owner got out scot-free because they sold,” she told The Northern California Record. “It was the subsequent owner who sued, and who had a right to sue.”

“To me, the fact that they got the approval of the owner of the building Best Buy, I’m sure, was just a lessee — to go ahead and do it anyway, that means they knowingly agreed to this process despite the failure under the specifications,” she said.

Moore doesn't think the contractor who put down the floor should have been held liable.

“I bet they got out as well because they were reticent to do it, to the point where they said we’ve got to have a release for doing it,” she said. “We’re not going to be responsible for failures under any warranties because you’re doing this against specifications.”

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