Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Stites & Harbison Law Firm : Green Building & LEED Litigation

I previously blogged about the historic flooding in Nashville in May, including insurance flood claims,  building permits for repairs, and statute of limitations on mold claims. I also recently blogged about the leadership lessons from the flood recovery by Colin Reed, the CEO for Gaylord Entertainment. 

It seems that there is a trend of newsworthy items involving the flood damage at Opryland, including recent news that Opry Mills just sued its insurers for more than $150 million in flood coverage.  As reported in the Nashville Post, the owner of Opry Mills Mall filed a lawsuit against its property insurers yesterday afternoon, alleging that the insurance companies wrongfully refused to honor a majority of the $200 million in flood insurance policies.  The complaint, available here, alleges that the insurance coverage denial could delay work to repair damage from the historic flooding.

The complaint filed by Greg Cashion provides an outline of the types of causes of action involved in a major property loss such as the flooding at Opry Mills. These include:

• Breach of contract.  This claim is for the insurance companies' failure to provide coverage within the terms of the insurance policies.  At dispute will be the applicability and meaning of the insurance policy terms, exclusions, and exceptions.  Notably, this lawsuit will involve the issue of whether the mall is part of a "high hazard flood zone" for which a certain $50 million limitation applies. The lawsuit alleges that the mall is not listed in such a zone.
• Estoppel.  This claim alleges that the insurance companies issued certificates of insurance to Opry Mills for full coverage and with "no mention" of any limitation of liability.  Under these circumstances, the complaint alleges, the insurance companies are estopped from relying on any limitation of liability clause.
• Declaratory Judgment.  This claim seeks a determination from the court that the policy coverage is valid and that there is no limitation of liability of $50 million.  The importance of declaratory relief, particularly in this instance, is to get a judicial determination as soon as possible so that funds will be available to complete the construction repairs.  
• Negligence.  There is a claim based upon the alleged negligent actions of the broker and agent of the insurers.  According to the complaint: (1) the broker/agent had a duty to Opry Mills to perform its services in a professional manner; (2) the broker/agent had a duty to correctly represent the coverages; and (3) the broker/agent breached that duty, which has caused in whole or in part the losses alleged. 
• Consumer Projection Act.  Finally, the complaint contains a statutory claim for violation of Tennessee's Consumer Protection Act for deceptive practices or practices declared unlawful for insurers.  If proven, this claim provides recovery for additional damages and attorney's fees.

As noted in the Nashville Post article, the lawsuit may drive the construction efforts.  According to Opry Mills president Gregg Goodman, "work will cease, delaying the mall’s reopening pending its success in this suit."

 Image: Ritab38315 on Flickr

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Short answer: Yes.

While most of the best practices that I talk about here involve commercial developments, today's post applies both to residential and commercial projects.  It's been two weeks since the historic flooding in Nashville and there is a lot of cleaning up and repair to be done.  On Friday, I received an alert from Davidson County's Department of Building Codes, which contained guidelines for permits related to the repair of flood damaged homes and buildings (pdf).  Here are a few important things to remember, whether the project involves commercial or residential:

• You need a building permit prior to making repairs on flood damages homes and buildings.  While you do not need a permit for clean-up or demolition, a permit is required prior to installation of any drywall, electrical, or HVAC systems.
• The property owner or tenant can pull the permit for repairs up to $25,000.  If the repair costs more than that, the permit must be obtained by a licensed contractor.
• Use extreme caution with restarting of any electrical systems or units.  Again, it is recommended that you have a licensed mechanical contractor inspect and test these systems before using them.

One final recommendation, as related to residential home repairs, is to make sure that your repair contractor is properly licensed through the Department of Commerce and Insurance.  The State has also put together a guide for finding and selecting a licensed contractors (pdf), which recommends the following: (1) get multiple bids from at least 3 contractors; (2) hire only a licensed contractors; (3) get a written contract; (4) get the contractor's proof of insurance; and (5) set up a payment plan and do not pay more than 1/3 deposit.

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