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Construction
9 min read
Areas of Expertise :
Construction Defect, Civil Engineering, Drainage, Geotechnical Engineering, Property Damage
Published Date:
Last Modified Date:
Jurisdiction:
Federal. Ninth Circuit
Pinnacle Pines Community Association v. Lexington Insurance Company et al. arose from construction defect claims involving a 60-unit duplex community in Flagstaff, Arizona, built and sold by Empire Residential Construction, L.P. and Empire Residential Sales, L.P. between 2006 and 2008. After construction ended, the association pursued claims tied to drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, cracked and uneven walkways, and icy driveways caused by improper drainage. Empire entered bankruptcy, and Pinnacle Pines obtained relief from the automatic stay along with an assignment of coverage rights. The construction defect dispute later went through arbitration, resulting in a $1,371,220.33 award that included compensatory damages, attorneys’ fees, expert witness fees, and arbitration costs.
The federal coverage case focused on whether Everest National Insurance Company and Chartis Specialty Insurance Company were required to pay the arbitration award under excess and umbrella insurance policies issued to Empire or connected to the Pinnacle Pines project. The civil engineering context was tied to site conditions described in the case record, including drainage problems, driveway defects, cracking and uneven walkways, roads, sidewalks, and a preliminary forensic geotechnical investigation. The court addressed policy language, self-insured retention, occurrence timing, products-completed operations issues, exclusions, and whether coverage applied to the claimed property damage. In the May 9, 2014 order, the court granted summary judgment for Everest and Chartis, denied Pinnacle Pines’ summary judgment motions, denied the motion to strike as moot, and terminated the action.
Empire Residential Construction, L.P. and Empire Residential Sales, L.P. began construction of the Pinnacle Pines development, described in the case record as a 60-unit community in Flagstaff. The project later became the subject of construction defect claims involving common areas and individual units. The later coverage dispute centered on whether claimed property damage fell within the applicable insurance policies.
The Empire entities stopped performing work and filed for bankruptcy protection on or about April 2008. After construction ceased, reported problems included drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, cracked and uneven walkways, and icy driveways tied to improper drainage. Those site-condition allegations provided the civil engineering context, including driveways, sidewalks, roads, drainage, and a preliminary forensic geotechnical investigation referenced later in the coverage record.
Pinnacle Pines obtained relief from the bankruptcy stay to pursue claims against Empire for alleged improper and defective construction. The association served a notice of claim on or about February 17, 2010, under the Pinnacle Pines governing documents. The bankruptcy court also approved an assignment of Empire’s coverage rights to Pinnacle Pines for insurance claims arising from the construction defect dispute.
Pinnacle Pines and the Empire entities submitted the construction defect dispute to binding arbitration. On May 17, 2012, the arbitrator awarded Pinnacle Pines $1,371,220.33, including $920,521 in compensatory damages, $276,156.30 in attorneys’ fees, $165,000 in expert witness fees, and $9,543.03 in costs. The award became the amount Pinnacle Pines later sought to collect through insurance coverage claims.
The Coconino County Superior Court confirmed the arbitration award in a final judgment entered in favor of Pinnacle Pines against the Empire entities on September 11, 2012. Although the May 9, 2014 federal summary judgment order refers to September 11, 2013, the March 12, 2013 order and the case chronology support September 11, 2012 as the accurate judgment date.
Pinnacle Pines filed the federal action in the U.S. District Court for the District of Arizona. The case sought coverage for the arbitration judgment under policies tied to the Pinnacle Pines project and Empire’s work. The legal issues included standing, declaratory relief, policy exclusions, self-insured retention, policy periods, and whether the alleged property damage triggered coverage.
The court denied Chartis Specialty Insurance Company’s motion to dismiss. Chartis had argued that Pinnacle Pines lacked standing to bring a direct coverage action and that the policy did not cover the property damage claims underlying the judgment. The court allowed the case to proceed beyond the pleading stage, leaving key coverage issues for later litigation.
The court granted Chartis’s motion to strike plaintiff’s experts. Stanley Feldman was withdrawn as an expert witness, while David Deatheredge and Scott Dinslage were limited to fact-witness roles and were not permitted to give Rule 702 opinions. Joseph L. Oliva was also precluded from offering legal-opinion testimony about insurance policy interpretation, which the court treated as a question of law.
The court granted summary judgment for Everest National Insurance Company and Chartis Specialty Insurance Company and denied Pinnacle Pines’ summary judgment motions. For Everest, the court found that Pinnacle Pines had not produced evidence showing that the alleged property damage arose from work performed during the relevant policy period, including work tied to units, common areas, driveways, sidewalks, and roads. The court also noted that Plaintiff’s rebuttal expert report was largely an opinion about insurance-carrier exposure for property damage and did not provide evidence showing when work was performed on the defective units, so the court did not need to decide the motion to strike that report. For Chartis, the court ruled that the retained limit and policy exclusions barred recovery. The final order denied the remaining motion to strike as moot, directed termination of the action, and ended the federal coverage case in favor of Everest and Chartis, leaving the $1,371,220.33 arbitration award against Empire intact but not collectible from those insurers.
Court:
United States District Court for the District of Arizona
Case Name:
Pinnacle Pines Community Association v. Lexington Insurance Company et al.
Construction Damages
Construction Engineering
Construction Inspections
Defects
Grading
Insurance Claims
Insurance Coverage
Mold Remediation
Paving
Water Intrusion
Pinnacle Pines Community Association v. Lexington Insurance Company et al. arose from construction defect claims involving a 60-unit duplex community in Flagstaff, Arizona, built and sold by Empire Residential Construction, L.P. and Empire Residential Sales, L.P. between 2006 and 2008. After construction ended, the association pursued claims tied to drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, cracked and uneven walkways, and icy driveways caused by improper drainage. Empire entered bankruptcy, and Pinnacle Pines obtained relief from the automatic stay along with an assignment of coverage rights. The construction defect dispute later went through arbitration, resulting in a $1,371,220.33 award that included compensatory damages, attorneys’ fees, expert witness fees, and arbitration costs.
The federal coverage case focused on whether Everest National Insurance Company and Chartis Specialty Insurance Company were required to pay the arbitration award under excess and umbrella insurance policies issued to Empire or connected to the Pinnacle Pines project. The civil engineering context was tied to site conditions described in the case record, including drainage problems, driveway defects, cracking and uneven walkways, roads, sidewalks, and a preliminary forensic geotechnical investigation. The court addressed policy language, self-insured retention, occurrence timing, products-completed operations issues, exclusions, and whether coverage applied to the claimed property damage. In the May 9, 2014 order, the court granted summary judgment for Everest and Chartis, denied Pinnacle Pines’ summary judgment motions, denied the motion to strike as moot, and terminated the action.
Empire Residential Construction, L.P. and Empire Residential Sales, L.P. began construction of the Pinnacle Pines development, described in the case record as a 60-unit community in Flagstaff. The project later became the subject of construction defect claims involving common areas and individual units. The later coverage dispute centered on whether claimed property damage fell within the applicable insurance policies.
The Empire entities stopped performing work and filed for bankruptcy protection on or about April 2008. After construction ceased, reported problems included drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, cracked and uneven walkways, and icy driveways tied to improper drainage. Those site-condition allegations provided the civil engineering context, including driveways, sidewalks, roads, drainage, and a preliminary forensic geotechnical investigation referenced later in the coverage record.
Pinnacle Pines obtained relief from the bankruptcy stay to pursue claims against Empire for alleged improper and defective construction. The association served a notice of claim on or about February 17, 2010, under the Pinnacle Pines governing documents. The bankruptcy court also approved an assignment of Empire’s coverage rights to Pinnacle Pines for insurance claims arising from the construction defect dispute.
Pinnacle Pines and the Empire entities submitted the construction defect dispute to binding arbitration. On May 17, 2012, the arbitrator awarded Pinnacle Pines $1,371,220.33, including $920,521 in compensatory damages, $276,156.30 in attorneys’ fees, $165,000 in expert witness fees, and $9,543.03 in costs. The award became the amount Pinnacle Pines later sought to collect through insurance coverage claims.
The Coconino County Superior Court confirmed the arbitration award in a final judgment entered in favor of Pinnacle Pines against the Empire entities on September 11, 2012. Although the May 9, 2014 federal summary judgment order refers to September 11, 2013, the March 12, 2013 order and the case chronology support September 11, 2012 as the accurate judgment date.
Pinnacle Pines filed the federal action in the U.S. District Court for the District of Arizona. The case sought coverage for the arbitration judgment under policies tied to the Pinnacle Pines project and Empire’s work. The legal issues included standing, declaratory relief, policy exclusions, self-insured retention, policy periods, and whether the alleged property damage triggered coverage.
The court denied Chartis Specialty Insurance Company’s motion to dismiss. Chartis had argued that Pinnacle Pines lacked standing to bring a direct coverage action and that the policy did not cover the property damage claims underlying the judgment. The court allowed the case to proceed beyond the pleading stage, leaving key coverage issues for later litigation.
The court granted Chartis’s motion to strike plaintiff’s experts. Stanley Feldman was withdrawn as an expert witness, while David Deatheredge and Scott Dinslage were limited to fact-witness roles and were not permitted to give Rule 702 opinions. Joseph L. Oliva was also precluded from offering legal-opinion testimony about insurance policy interpretation, which the court treated as a question of law.
The court granted summary judgment for Everest National Insurance Company and Chartis Specialty Insurance Company and denied Pinnacle Pines’ summary judgment motions. For Everest, the court found that Pinnacle Pines had not produced evidence showing that the alleged property damage arose from work performed during the relevant policy period, including work tied to units, common areas, driveways, sidewalks, and roads. The court also noted that Plaintiff’s rebuttal expert report was largely an opinion about insurance-carrier exposure for property damage and did not provide evidence showing when work was performed on the defective units, so the court did not need to decide the motion to strike that report. For Chartis, the court ruled that the retained limit and policy exclusions barred recovery. The final order denied the remaining motion to strike as moot, directed termination of the action, and ended the federal coverage case in favor of Everest and Chartis, leaving the $1,371,220.33 arbitration award against Empire intact but not collectible from those insurers.
Insurance Coverage Expert Witness (Plaintiff)
Joseph L. Oliva was identified in the court’s order as Plaintiff’s insurance coverage expert. The court reviewed his report, which addressed insurance policy interpretation, the court’s earlier motion-to-dismiss ruling, policy defenses, exclusions, coverage owed, bad-faith assertions, and attorneys’ fees. The court ruled that his opinions addressed legal issues reserved for the court, granted Chartis’s motion to exclude his opinions, and precluded him from testifying at trial.
Rebuttal Expert Witness (Plaintiff)
The summary judgment order refers to a Plaintiff rebuttal expert report and states that Chartis moved to strike the report, with Everest joining the motion. The court did not need to decide that motion because the report was largely an opinion about the exposure of Empire’s insurance carriers for property damage and did not provide evidence showing when work was performed on the allegedly defective units.
Civil Engineering Expert Witness
A civil engineering expert is often engaged in construction defect disputes involving site conditions such as drainage, driveways, walkways, roads, sidewalks, and related property damage. In these cases, the expert may review design documents, construction records, inspection findings, site conditions, and repair scopes to assess whether claimed defects are tied to drainage, grading, paving, or other site-work issues.
Property Damage Expert Witness
A property damage expert is often engaged in disputes involving insurance claims, construction defects, water intrusion, and damage assessment. In a case involving drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, uneven walkways, roads, sidewalks, and improper drainage, this type of expert may assess the claimed damage, repair scope, causation, and cost-related documentation.
Tie Property Damage to the Policy Period With Specific Evidence
Coverage arguments in construction defect disputes often depend on when the alleged property damage occurred and what work caused it. In Pinnacle Pines, the court found that the record did not show that the claimed damage arose from work performed during Everest’s relevant policy period, including work tied to units, common areas, driveways, sidewalks, and roads. Attorneys handling similar civil engineering defect claims should connect site-condition evidence to policy timing with care.
Treat Self-Insured Retention as a Coverage Barrier, Not a Minor Detail
The case shows how a self-insured retention can affect recovery, especially when the insured has entered bankruptcy. The court analyzed whether the retained amount had to be satisfied before coverage obligations applied and rejected arguments that would bypass policy language. Attorneys should evaluate retained limits early, especially before pursuing excess or umbrella insurers.
Keep Expert Opinions Within Permitted Boundaries
The court precluded Joseph L. Oliva from offering opinions that interpreted insurance policies, rejected defenses, found bad faith, or addressed attorneys’ fees because those issues belonged to the court. David Deatheredge and Scott Dinslage were limited to fact-witness roles and were not permitted to offer Rule 702 opinions in the federal coverage case. This makes expert disclosure and opinion scope a key issue in coverage litigation tied to construction defect claims.
Separate Construction Defect Facts From Insurance Coverage Proof
The underlying defect allegations included drainage issues, driveway defects, cracked and uneven walkways, roads, sidewalks, and property damage tied to improper drainage. Those facts helped explain the construction dispute, but the federal case turned on insurance coverage requirements rather than whether the development had defects. Attorneys should build a record that bridges the civil engineering facts with policy terms, exclusions, retained limits, and occurrence timing.
Do Not Assume an Arbitration Award Guarantees Insurance Recovery
Pinnacle Pines obtained a $1,371,220.33 arbitration award against Empire, but the federal court still entered judgment for Everest and Chartis. The final result shows that an award against the insured does not automatically establish coverage against excess or umbrella carriers. Attorneys should treat post-award collection from insurers as a separate legal path requiring policy-specific proof.
Pinnacle Pines Community Association v. Lexington Insurance Company et al. ended as an insurance coverage ruling after a construction defect dispute involving a 60-unit Flagstaff development, Empire’s bankruptcy, an assigned coverage claim, and a $1,371,220.33 arbitration award against Empire. The defect allegations involved drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, uneven walkways, roads, sidewalks, and icy driveways tied to improper drainage, giving the case a clear civil engineering context. In the federal action, the court focused on policy language, self-insured retention, occurrence timing, exclusions, and whether Pinnacle Pines could collect the arbitration award from Everest and Chartis. The court granted summary judgment for the insurers, denied Pinnacle Pines’ summary judgment motions, denied the remaining motion to strike as moot, and terminated the action, leaving the arbitration award against Empire in place but not recoverable from those insurers.
What was the Pinnacle Pines case about?
Pinnacle Pines Community Association pursued insurance coverage after construction defect claims involving a 60-unit Flagstaff development built and sold by Empire. The reported defects included drainage issues, driveway defects, roof, deck, and door leaks, wood rot, uneven walkways, and icy driveways tied to improper drainage.
How much was the arbitration award against Empire?
The arbitration award was $1,371,220.33. It included $920,521 in compensatory damages, $276,156.30 in attorneys’ fees, $165,000 in expert witness fees, and $9,543.03 in arbitration costs.
Why did Pinnacle Pines sue the insurers after arbitration?
Empire had entered bankruptcy, and Pinnacle Pines obtained an assignment of Empire’s coverage rights for claims arising from the construction defect dispute. Pinnacle Pines then sought to collect the arbitration judgment from Everest National Insurance Company and Chartis Specialty Insurance Company.
Why did the court rule for Everest?
The court found that Pinnacle Pines did not provide enough evidence showing that the alleged property damage arose from work performed during the relevant Everest policy period. The ruling addressed claimed damage involving units, common areas, driveways, sidewalks, and roads.
Why did the court rule for Chartis?
The court ruled that Chartis was not required to pay the arbitration award because of the retained limit and policy exclusions. The court concluded that the policy terms barred Pinnacle Pines’ recovery from Chartis.
What was the final result of the federal coverage case?
On May 9, 2014, the court granted summary judgment for Everest and Chartis, denied Pinnacle Pines’ summary judgment motions, denied the remaining motion to strike as moot, and terminated the action. The arbitration award against Empire remained in place, but Pinnacle Pines could not collect it from those insurers.
Insurance Coverage Expert Witness (Plaintiff)
Joseph L. Oliva was identified in the court’s order as Plaintiff’s insurance coverage expert. The court reviewed his report, which addressed insurance policy interpretation, the court’s earlier motion-to-dismiss ruling, policy defenses, exclusions, coverage owed, bad-faith assertions, and attorneys’ fees. The court ruled that his opinions addressed legal issues reserved for the court, granted Chartis’s motion to exclude his opinions, and precluded him from testifying at trial.
Rebuttal Expert Witness (Plaintiff)
The summary judgment order refers to a Plaintiff rebuttal expert report and states that Chartis moved to strike the report, with Everest joining the motion. The court did not need to decide that motion because the report was largely an opinion about the exposure of Empire’s insurance carriers for property damage and did not provide evidence showing when work was performed on the allegedly defective units.
Civil Engineering Expert Witness
A civil engineering expert is often engaged in construction defect disputes involving site conditions such as drainage, driveways, walkways, roads, sidewalks, and related property damage. In these cases, the expert may review design documents, construction records, inspection findings, site conditions, and repair scopes to assess whether claimed defects are tied to drainage, grading, paving, or other site-work issues.
Property Damage Expert Witness
A property damage expert is often engaged in disputes involving insurance claims, construction defects, water intrusion, and damage assessment. In a case involving drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, uneven walkways, roads, sidewalks, and improper drainage, this type of expert may assess the claimed damage, repair scope, causation, and cost-related documentation.
Tie Property Damage to the Policy Period With Specific Evidence
Coverage arguments in construction defect disputes often depend on when the alleged property damage occurred and what work caused it. In Pinnacle Pines, the court found that the record did not show that the claimed damage arose from work performed during Everest’s relevant policy period, including work tied to units, common areas, driveways, sidewalks, and roads. Attorneys handling similar civil engineering defect claims should connect site-condition evidence to policy timing with care.
Treat Self-Insured Retention as a Coverage Barrier, Not a Minor Detail
The case shows how a self-insured retention can affect recovery, especially when the insured has entered bankruptcy. The court analyzed whether the retained amount had to be satisfied before coverage obligations applied and rejected arguments that would bypass policy language. Attorneys should evaluate retained limits early, especially before pursuing excess or umbrella insurers.
Keep Expert Opinions Within Permitted Boundaries
The court precluded Joseph L. Oliva from offering opinions that interpreted insurance policies, rejected defenses, found bad faith, or addressed attorneys’ fees because those issues belonged to the court. David Deatheredge and Scott Dinslage were limited to fact-witness roles and were not permitted to offer Rule 702 opinions in the federal coverage case. This makes expert disclosure and opinion scope a key issue in coverage litigation tied to construction defect claims.
Separate Construction Defect Facts From Insurance Coverage Proof
The underlying defect allegations included drainage issues, driveway defects, cracked and uneven walkways, roads, sidewalks, and property damage tied to improper drainage. Those facts helped explain the construction dispute, but the federal case turned on insurance coverage requirements rather than whether the development had defects. Attorneys should build a record that bridges the civil engineering facts with policy terms, exclusions, retained limits, and occurrence timing.
Do Not Assume an Arbitration Award Guarantees Insurance Recovery
Pinnacle Pines obtained a $1,371,220.33 arbitration award against Empire, but the federal court still entered judgment for Everest and Chartis. The final result shows that an award against the insured does not automatically establish coverage against excess or umbrella carriers. Attorneys should treat post-award collection from insurers as a separate legal path requiring policy-specific proof.
Pinnacle Pines Community Association v. Lexington Insurance Company et al. ended as an insurance coverage ruling after a construction defect dispute involving a 60-unit Flagstaff development, Empire’s bankruptcy, an assigned coverage claim, and a $1,371,220.33 arbitration award against Empire. The defect allegations involved drainage issues, driveway defects, roof, deck, and door leaks, mold and mildew damage, wood rot, uneven walkways, roads, sidewalks, and icy driveways tied to improper drainage, giving the case a clear civil engineering context. In the federal action, the court focused on policy language, self-insured retention, occurrence timing, exclusions, and whether Pinnacle Pines could collect the arbitration award from Everest and Chartis. The court granted summary judgment for the insurers, denied Pinnacle Pines’ summary judgment motions, denied the remaining motion to strike as moot, and terminated the action, leaving the arbitration award against Empire in place but not recoverable from those insurers.
What was the Pinnacle Pines case about?
Pinnacle Pines Community Association pursued insurance coverage after construction defect claims involving a 60-unit Flagstaff development built and sold by Empire. The reported defects included drainage issues, driveway defects, roof, deck, and door leaks, wood rot, uneven walkways, and icy driveways tied to improper drainage.
How much was the arbitration award against Empire?
The arbitration award was $1,371,220.33. It included $920,521 in compensatory damages, $276,156.30 in attorneys’ fees, $165,000 in expert witness fees, and $9,543.03 in arbitration costs.
Why did Pinnacle Pines sue the insurers after arbitration?
Empire had entered bankruptcy, and Pinnacle Pines obtained an assignment of Empire’s coverage rights for claims arising from the construction defect dispute. Pinnacle Pines then sought to collect the arbitration judgment from Everest National Insurance Company and Chartis Specialty Insurance Company.
Why did the court rule for Everest?
The court found that Pinnacle Pines did not provide enough evidence showing that the alleged property damage arose from work performed during the relevant Everest policy period. The ruling addressed claimed damage involving units, common areas, driveways, sidewalks, and roads.
Why did the court rule for Chartis?
The court ruled that Chartis was not required to pay the arbitration award because of the retained limit and policy exclusions. The court concluded that the policy terms barred Pinnacle Pines’ recovery from Chartis.
What was the final result of the federal coverage case?
On May 9, 2014, the court granted summary judgment for Everest and Chartis, denied Pinnacle Pines’ summary judgment motions, denied the remaining motion to strike as moot, and terminated the action. The arbitration award against Empire remained in place, but Pinnacle Pines could not collect it from those insurers.
Construction Damages
Construction Engineering
Construction Inspections
Defects
Grading
Insurance Claims
Insurance Coverage
Mold Remediation
Paving
Water Intrusion
Geotechnical Engineering, +4
Construction
Industrial Hygiene, +7
Construction