Settlement in Construction Defect Case Provides $57,600 Payment for Defense Costs to the Firm’s General Contractor Client

December 2011

Overview

Wendy Lin Suh of Gray•Duffy’s Encino office secured a settlement on behalf of a general contractor which required the firm’s client to pay no money into a global settlement fund and provided for the recovery of its defense costs in the amount of $57,600.

Discussion

Pearlman v. Berkshire Summit Development Group, LLC

In a case involving a single-family home, the plaintiffs sued the general contractor, Pinnacle Construction (“Pinnacle”), claiming a variety of construction defects. Representing Pinnacle, Gray•Duffy tendered those claims to the various subcontractors and their carriers. None of the additional insured carriers agreed to participate in Pinnacle’s defense. As such, and pursuant to established indemnity agreements contained in the subcontractor agreements, Gray•Duffy filed a cross-complaint on behalf of Pinnacle against the subcontractors.

Pursuant to those same indemnity agreements, Gray•Duffy issued settlement demands, which included a component for the recovery of Pinnacle’s defense costs. The plaintiff’s initial demand was $466,495. After two mediations, the case was globally settled whereby Pinnacle contributed no monies to the settlement fund. The case ultimately settled for $147,600, with $90,000 going to the plaintiffs and $57,600 going to Pinnacle for reimbursement of its defense costs.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.