Building Inspector Jailed for Taking Bribes
September 30, 2011 — CDJ Staff
The LA Times reports that Raoul Germain, a city Los Angeles building inspector has been sentenced to 21 months in prison after pleading guilty to taking bribes. Germain was caught as part of an FBI sting operation in which he approved work in exchange for thousands of dollars in bribes. The Times notes that that in some cases, Germain never visited the construction sites. Germain was offered a chance to cooperate with investigators. His lawyer, Steve Cron asked the Times, “What do you think happens to someone who cooperates?”
In addition to Germain, another city inspector has pleaded guilty to taking bribes and two more employees of the Department of Building and Safety have been fired in connection with the investigation.
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Differing Rulings On Construction Defect Claims Leave Unanswered Questions For Builders, and Construction Practice Groups. Impact to CGL Carriers, General Contractors, Builders Remains Unclear
March 7, 2011 — March 7, 2011 Construction Defect Journal Staff
In the past year a number of state and federal courts have rendered a number of conflicting decisions that promise to alter or perhaps shift entirely the paradigm, of how builders manage risk.
According to a report today by Dave Lenckus in Property Casualty 360 “Nine state and federal courts and one state legislature over the past year have addressed whether a construction defect a defective product or faulty workmanship is fortuitous and therefore an occurrence under the commercial general liability insurance policy. Four jurisdictions determined it is; three said no; two ruled that a construction defect that causes consequential damage to property other than the work product is an occurrence; and one federal court contributed its conflicting case law that has developed in Oregon since its high court ruled in 2000 that a construction defect is not an occurrence”.
The article strongly suggests that in the absence of a clear consensus over what the recent rulings mean for builders and contractors coverage disputes will intensify and continue to proliferate.
Doing this on a state-by-state basis has caused a lot of confusion among buyers and sellers, said Jeffrey A. Segall, a Tampa-based senior vice president and the Florida Construction Practice leader at Willis of Florida, a unit of Willis Group Holdings.
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Construction Employment Rises in Half of the States
December 9, 2011 — CDJ Staff
The Labor Department has noted that half the states and the District of Columbia saw increases in construction employment during the month of October. During the same month, twenty-three states lost construction jobs.
The biggest gains were in North Dakota, Oklahoma, DC, Texas, and California. The biggest losses were in Georgia, New Mexico, Wisconsin, and Florida. There was no change for Alabama.
The chief executive officer of the Association of General Contractors of America, Stephen E. Sandherr, called for more infrastructure development. “Allowing water, transportation and energy networks to deteriorate will hurt construction employment and force taxpayers to spend more later, to fix broken infrastructure.”
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Ohio Court Finds No Coverage for Construction Defect Claims
March 28, 2012 — Tred Eyerly, Construction Law Hawaii
Charles and Valerie Myers hired Perry Miller to build their home. Myers v. United Ohio Ins. Co., 2012 Ohio App. LEXIS 287 (Ohio Ct. App. Jan. 26, 2012). After completion of the home, Miller was again hired to construct an addition which included a full basement, staircases, bathroom, bedroom, hallway and garage.
After the addition was completed, one of the basement walls began to crack and bow. Miller began to make repairs, but eventually stopped working on the project. Other contractors were hired to make repairs, but further problems developed. A second basement wall began to bow and crack, allowing water into the basement. The wall eventually had to be replaced. Subsequently, the roof over the addition began to leak in five or six places before the drywall could be painted. The leaks caused water stains on the drywall and caused it to separate and tear. It was discovered the roof needed to be replaced.
The Myers sued Miller and his insurer, United Ohio Insurance Company. The trial court ruled that the policy did not provide coverage for faulty workmanship, but did provide coverage for consequential damages caused by repeated exposure to the elements. United Ohio conceded liability in the amount of $2,000 to repair water damage to the drywall. United Ohio was also found liable for $51,576, which included $31,000 to repair the roof and ceiling and $18,576 to replace the basement wall.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Construction Defect Litigation at San Diego’s Alicante Condominiums?
March 25, 2011 — Alicante HOA Website
According to recent posts in the Alicante HOA website, construction experts and legal counsel have been retained. The HOA board has been informed that testing of a variety of the building’s components are underway or will begin in the near future.
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Harsh New Time Limits on Construction Defect Claims
April 26, 2011 — April 26, 2011 by Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of
Sullan2, Sandgrund, Smith & Perczak, P.C. in the
HindemanSanchez blogA recent Colorado Supreme Court decision, Smith v. Executive Custom Homes, Inc., 230 P.3d 1186 (Colo. 2010), considerably shortens the time limit for bringing many construction defect lawsuits. Homeowners and homeowner associations risk losing the right to seek reimbursement from builders, developers and other construction professionals unless they carefully and quickly act upon discovery of evidence of any potential construction defect.
The Statute of Limitations for Construction Defect Claims
Colorado’s construction defect statute of limitations limits the time for homeowners and homeowners associations to bring lawsuits for construction defects against “construction professionals,” including developers, general contractors, builders, engineers, architects, other design professionals, inspectors and subcontractors. The statute requires homeowners and associations to file suit within two years “after the claim for relief arises.” A claim for relief “arises” when a homeowner or association discovers or reasonably should have discovered the physical manifestation of a construction defect.
The two-year time limitation applies to each construction defect separately, and will begin to run upon the appearance of a “manifestation” of a construction defect (which may include, for example, a condition as simple as a roof leak or drywall cracks), even if the homeowner or association does not know the cause of the apparent problem.
The Smith Opinion and its Effect on the Statute of Limitations
In Smith v. Executive Custom Homes, Inc., the plaintiff homeowner, Mrs. Smith, slipped on ice that had accumulated on her sidewalk because of a leaking gutter and suffered injury. When she first noticed the leak, she reported it to her property manager, who reported it to the builder. The builder attempted to repair the gutter, unbeknownst to Mrs. Smith, and she did not notice further problems until approximately one year after she first observed the leak, when she fell and suffered serious injury. She sued the builder within two years of her injury, but nearly three years after she first learned of the leak.
The Colorado Supreme Court dismissed Mrs. Smith’s claims as untimely and held that under the construction defect statute of limitations, the two-year period for suing for injuries due to construction defects begins when the homeowner first observes the physical manifestation of the defect, even if the resulting injury has not yet occurred. The court acknowledged that this ruling could result in “unfair results,” especially if a serious and unforeseeable injury occurs more than two years after the first time the homeowner noticed the problem, and as a result the victim is unable to seek redress from those responsible for the defect.
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Reprinted courtesy of Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of Sullan2, Sandgrund, Smith & Perczak, P.C., and they can be contacted through their web site.
Guilty Pleas Draw Renewed Interest In Nevada’s Construction Defect Laws
December 9, 2011 — CDJ Staff
A report this week by David McGrath Schwarz of the Las Vegas Sun suggests that Nevada’s construction defect laws will be a point of much contention in upcoming legislative sessions. The report cites renewed interest in the state’s construction defect laws due to ongoing federal investigations of construction defect attorney Nancy Quon and construction company owner Leon Benzer. Guilty pleas have been entered by at least ten individuals including an attorney, property managers, straw purchasers, and former HOA board members.
The article suggests that Nevada’s Chapter 40 laws are easily manipulated to the detriment of Nevada’s homebuilding industry. Construction industry lobbyists have tried unsuccessfully to change the laws in past legislative sessions.
The Sun’s article speculates that the building industry might be able to gain legislative concessions due to the volume of guilty pleas and what it refers to as examples of Chapter 40 abuses. ”With federal authorities collecting guilty pleas, the construction industry has prime examples of the system being abused, and how lucrative it can be for attorneys.”
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Liability policy covers negligent construction: GA high court
October 31, 2010 — Original article by
Michael Bradford in Business Insurance
ATLANTA—Negligent construction that results in damage to surrounding property constitutes an occurrence under a commercial general liability policy, the Georgia Supreme Court has ruled.
In a 6-1 opinion Monday in
American Empire Surplus Lines Insurance Co. Inc. vs. Hathaway Development Co. Inc., the Georgia high court upheld a lower court ruling that the general contractor’s claim for damage caused by a subcontractor’s faulty plumbing work was covered.
The ruling on construction defects is the latest in number of such cases across the United States
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Reprinted courtesy of Michael Bradford of Business Insurance.
Contractor Convicted of Additional Fraud
November 18, 2011 — CDJ Staff
A Pennsylvania contractor in prison for fraud has been convicted with insurance fraud. The York Daily Record reports that Steven D. Gebhart was already in jail for fraud for about $350,000 for work he either failed to finish or even start or by using substandard materials and practices when he was convicted of insurance fraud. Gebbert’s offices were destroyed in a fire that was later determined to be arson. He was not charged with this, but instead for overestimating his losses to the insurance company. Sentencing for the fraud charge will be on December 21.
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Crane Dangles and So Do Insurance Questions
November 7, 2012 — CDJ Staff
Hurricane Sandy sent a construction crane dangling from the top of One57, a condo construction project in New York City. In response to the risk, the nearby Parker Meridian and other nearby buildings were evacuated until the crane could be stabilized. Businessweek reports that One57 involves “a tangle of companies,” including the developer, Extell Development and the contractor, Lend Lease Construction. Pinnacle Industries was responsible for providing and operating the crane.
The insurance claims are yet to be made, but they will likely include the costs of evacuating nearby buildings and to cover any damage to the building itself. David DeLaRue, a vice president in construction practice at Willis Group Holdings said there would be two questions: “Did our insured do anything to cause that loss? Does this policy cover it?”
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Construction Suit Ends with Just an Apology
February 10, 2012 — CDJ Staff
After suing a contractor for failing to complete the remodeling of their home, an Orange County couple has settled for an apology. Douglas J. Pettibone represented the contractor, who had lost his business after a broken neck, multiple surgeries, and an addiction to pain medicine. Mr. Pettibone represented his client pro bone. The case was settled in arbitration by JAMS.
Mr. Pettibone noted that his client gave “a heartfelt and very moving apology.” The remodeling was completed by another contractor, two years after Thorp Construction stopped work on the project. After the apology, the case was dismissed.
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Remodels Replace Construction in Redding
September 9, 2011 — CDJ Staff
The Record Searchlight reports that while new construction is down in Redding, California, residential and commercial remodel permits are up 17 percent. By August 2010, there had been 63 housing and commercial business starts in Redding, while this year has seen only 15.
One such remodel, that of Parkview Market, will cost about $201,000. Safeway is planning on two $80,000 remodels of its grocery stores in Redding. In all, the 150 building permits for remodels are worth a total of $2.8 million.
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No Third-Quarter Gain for Construction
November 18, 2011 — CDJ Staff
The Associated Builders and Contractors released their analysis of construction work under contract and found that there was no increase in construction backlog from the second quarter of 2011. There was still improvement, however, over 2010, as the third quarter backlog is 16.3 percent higher than that of a year ago.
The current backlog is 8.1 months, which according to Anirban Basu, the chief economist of the ABC, “is consistent with flat construction spending.” He noted that less than 8 months indicated a decline.
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Construction Demand Unsteady, Gains in Some Regions
June 29, 2011 — CDJ Staff
The Associated General Contractors of America reported Tuesday, June 28 that construction employment increased in 120 of the 337 metropolitan areas surveyed between May 2010 and May 2011.
‘While construction employment has stopped plunging, any sign of a recovery remains spotty at best,” said Ken Simonson, the association’s chief economist. ‘The close to even split between areas adding and losing jobs is a reminder that for every market doing well, there is another market that is still hurting.”
The largest number of jobs created was in the Dallas, Texas region, with 5,600 new jobs, a five percent increase. The northern Massachusetts/southern New Hampshire region near Haverhill saw the greatest percentage increase, although that twenty-two percent increase represents only 800 new jobs. The Chicago, Illiinois area added 4,600 jobs, a four percent increase.
Other regions were not so lucky. The Atlanta, Georgia area saw a loss of 7,400 jobs, an eight percent loss. Las Vegas also lost 7,400 jobs, which there represented a sixteen percent decline. The New York City area lost 6,700 jobs, a six percent reduction. The Riverside, California area lost 5,300 jobs, a nine percent loss.
Stephen E. Sandherr, the association’s chief executive officer, blamed a combination of regulation and budget squeezes. "Some in Washington never met a regulation they didn’t like and others never found a penny they didn’t want to pinch. Together that makes for a bad way to boost employment and a great way to stifle the private sector and neglect critical economic infrastructure.”
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Park District Sues over Leaky Roof
August 2, 2012 — CDJ Staff
The Glen Ellyn Park District has filed suit against multiple firms over the leaks in the Ackerman Sports and Fitness Center. The district alleges at least twenty leaks can be found throughout the facility. In order to prevent further damage, they have put in a system of “buckets, tarps and flexible piping.”
According to the Chicago Daily Herald, the park district has most recently added the project construction manager, the building designer, and insurer that issued a performance bond on the builder. T.A. Bowman Constructors, the builder of the project, sued the park district. They were first name in the district’s countersuit.
The park district isn’t waiting for the outcome of the suit to repair the roof. Instead, they are using existing funds to pay for roof repairs.
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Tenth Circuit Finds Insurer Must Defend Unintentional Faulty Workmanship
December 9, 2011 — Tred R. Eyerly, Insurance Law Hawaii
Applying Colorado law, the Tenth Circuit found a duty to defend construction defect claims where the faulty workmanship was unintentional. Greystone Const. Inc. v. National Fire & Marine Ins. Co., 2011 U.S. App. LEXIS 22053 (10th Cir. Nov. 1, 2011). A prior post [here] discussed the Tenth Circuit’s certified question to the Colorado Supreme Court in this matter, a request that was rejected by the Colorado court.
In two underlying cases, Greystone was sued by the homeowner for damage caused to the foundation by soil expansion. In both cases, the actual construction was performed by subcontractors. Further, in neither case was the damage intended or anticipated. Nevertheless, National Union refused to defend, contending property damage resulting from faulty construction was not an occurrence.
Relying on a Colorado Court of Appeals case, General Security Indemn. Co. of Arizona v. Mountain States Mut. Cas. Co., 205 P.3d 529 (Colo. App. 2009), the district court granted summary judgment to National Union.
On appeal, the Tenth Circuit first considered whether Colorado legislation enacted to overturn General Security could be applied retroactively. The statute, section 13-20-808, provided courts "shall presume that the work of a construction professional that results in property damage, including damage to the work itself or other work, is an accident unless the property damage is intended and expected by the insured."
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Allowing the Use of a General Verdict Form in a Construction Defect Case Could Subject Your Client to Prejudgment Interest
August 2, 2012 — Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC
A recent opinion from the Colorado Court of Appeals is a cautionary tale concerning the calculation of pre-judgment interest. See Hendricks v. Allied Waste Transportation, Inc., 2012 WL 1881004 (Colo. App. 2012). The Hendricks sued Allied after one of its drivers backed into the corner of their home with an Allied garbage truck. At trial, a jury awarded the Hendricks $160,100 in damages. Although the jury was instructed on the cost of repairs, diminution in value, and non-economic damages, the parties agreed to a general verdict form that did not ask the jury to specify the types of damages awarded. The Hendricks sought to amend the judgment to include prejudgment interest and costs, which the trial court granted.
Allied appealed, arguing that the trial court erred by awarding the Hendricks prejudgment interest from the date their property was damaged. Id. at *7. The Colorado Court of Appeals found no error, and affirmed.
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Reprinted courtesy of Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC. Ms. Anderson can be contacted at anderson@hhmrlaw.com
Seven Former North San Diego County Landfills are Leaking Contaminants
April 7, 2011 — April 7, 2011 Beverley BevenFlorez - Construction Defect Journal
Deborah Sullivan Brennan of the North County Times reported that seven former dumps in San Diego are leaking contaminants into the surrounding groundwater. John R. Odermatt, a senior engineering geologist for the California Regional Water Quality Control Board s San Diego region, told the North County Times, “the risk to most county residents is very small or negligible, while local water supplies located in more rural areas may be at a somewhat elevated but unquantified level of risk.”
This issue is causing heavy scrutiny of a new proposed landfill in Gregory Canyon. The landfill would be located on 308 acres of undeveloped land near Pala, alongside the San Luis Rey River. The group “Save Gregory Canyon” has been speaking out against the landfill, stating that “the project threatens major detrimental impacts to both surface and groundwater, as well as a potential compromise of the two major San Diego Water Authority pipelines nearby.” Richard Felago, a Gregory Canyon Ltd. Consultant, told the North County Times that the 8-foot-thick liner, composed of layers of gravel and synthetic material, would not leak.
The appeal hearing is being rescheduled later this month after one of the three panelists recused himself due to having a competing interest in the property, according to the article by Gary Warth in the North County Times.
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