Construction Law

Stay issued in DJ action arising out of Amherst Mews case

In Transcontinental Insurance Co v. Jocama Construction Co, inc, et al, Case No. 06-CV-03358, 2007 U.S Dist. Lexis 54901, U.S. District Judge Freda Wolfson issued a stay of a declaratory judgment action filed by Transcontinental Insurance Co against Jocama Construction. Jocama was sued by the Amherst Mews Homeowner's Association for construction deficiencies in work done at the Amherst Mews Development. Those claims and many others are the subject of litigation captioned Amherst Mews Homeowner's Association, Inc v. Hills Development Co, et al, pending in the Superior Court of New Jersey, Somerset County. Jocama was a subcontractor which performed masonry work at Amherst Mews. Transcontinental had been defending under a reservation of rights. It filed the declaratory judgment action to try to get out of its obligation to defend and indemnify Jocama.

Judge Wolfson noted that Transcontinental had not filed its motion when Jocama was first named. The court felt that there was an obvious conflict allowing Transcontinental to provide a defense while also trying to get out from under its contractual obligation to defend and indemnify. The court would not allow Jocama to be prejudiced by this conflict because the conflict could have been easily addressed by the Court had it been raised at the inception of the litigation.

In evaluating the status of the Amherst Mews litigation (in which Stark & Stark is counsel for the plaintiff), the Judge noted that there was still extensive discovery to be done in the underlying case and that "there remains great potential that the scope of Transcontinental's coverage will change upon completion of over 60 depositions, including as many as those of 17 experts." Accordingly, she stayed the DJ action until the underlying action is resolved or tried.

Full post as published by Construction Litigation Law Blog on September 04, 2007 (boomark / email).