No Choice between Homeowner Protection and Bankrupt Developers?
February 10, 2012 — CDJ Staff
Donna DiMaggio Berger, writing in the Sun Sentinel argues those may be the only current choices in Florida. A recent court case, Lakeview Reserve HOA v. Maronda Homes has caused a swift response from the legislators. Ms. Berger notes that the construction defect bill, HB 1013, “would take away a homeowner’s rights to pursue a developer for defects to the driveways, roads, sidewalks, utilities, drainage areas and other so-called ‘off-site’ improvements.” The alternative? She notes that applying the Maronda decision would “bankrupt developers who don’t build defect-free roads and sidewalks.”
Read the full story…
Counterpoint: Washington Supreme Court to Rule on Resulting Losses in Insurance Disputes
September 1, 2011 — Douglas Reiser, Builders Counsel
This is the fourth installment of posts on Vision One v. Philadelphia Indemnity, a Washington Supreme Court case touching on Washington construction and insurance law. After Williams v. Athletic Field got so much coverage, I wished that I had provided a forum for argument on Builders Counsel. While we await that opinion from the Supreme Court, I decided to let a few good writers have at Vision One here on the blog. Last week, attorney Chris Carr weighed in. Today, insurance expert David Thayer returns to give his final impression. David provided an initial peak at the case earlier this year. Thanks to both Chris and David for contributing to the debate.
In August 2011 the Washington Supreme Court will rule on a pair of joined cases that involve critical insurance coverage issues. The outcome of the ruling will impact a large swath of policyholders in Washington State including builders, developers, and homeowners to name a few.
The cases are Vision One vs. Philadelphia Indemnity Insurance and Sprague vs. Safeco. The Vision one case comes from Division Two of the Appellate Court which overturned a lower court decision in favor the plaintiff, Vision One. Division Two decided that the collapse of a concrete pour during the course of construction did not constitute a resulting loss due to faulty workmanship. They further went on to redefine efficient proximate cause in a way that is harmful to policyholders by broadening rather than narrowing the meaning of exclusionary language in Philadelphia’s Builders Risk Policy.
Read the full story…
Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Was Jury Right in Negligent Construction Case?
September 30, 2011 — CDJ Staff
Yes, said the South Carolina Court of Appeals in Pope v. Heritage Communities, Inc. Heritage Communities developed Riverwalk, a community in South Carolina. During the earlier trial, HCI “conceded that construction defects existed at Riverwalk, and repairs needed to be made.” The trial court found that the construction was negligent, awarding the property owners association $4.25 million in actual damages and $250,000 in punitive damages, with the class of owners awarded $250,000 in actual damages and $750,000 in punitive damages. HCI appealed on nine issues. All were rejected by the appeals court.
The court rejected HCI’s claim that the judge’s instruction to the jury suggested to the jury that “the court had already determined that Appellants were willful, wanton, and reckless.” But here, the appeals court found “no reversible error.”
The general contractor for Riverwalk was BuildStar. Off-site management and sale were managed by Heritage Riverwalk, Inc., which also owned title to the property. Both these companies were owned by Heritage Communities, Inc. During the trial, an HCI employee testified that “the three corporations shared the same officers, directors, office, and telephone number.” The trial court found that the three entities were amalgamated. This was upheld by the appeals court.
Nor did the appeals agree with the HCI that the trial court had improperly certified a class. The owners were seen as properly constituting a class. Further, the court held that the property owners’ losses were properly included by the trial court. HCI objected at trial to the inclusion of evidence of subsequent remedial measures, however, as they did not object that it was inadmissible, the issue could not be addressed at appeal.
HCI argued on appeal that the trial court should not have allowed evidence of defects at other HCI developments. The appeals court noted that “the construction defects at the other HCI developments were substantially similar to those experienced by Riverwalk.”
The court additionally found that the negligence claims, the estimated damages (since full damage could not be determined until all defective wood was removed), and the award of punitive damages were all properly applied.
Read the court’s decision…
Oregon agreement to procure insurance, anti-indemnity statute, and self-insured retention
March 5, 2011 — By
CDCoverage.com, March 5, 2011
In Continental Casualty Ins. Co. v. Zurich American Ins. Co., No. 09-35484 (9th Cir. Oct. 28, 2010), general contractor TCR was sued by an employee of subcontractor Safeway for bodily injuries suffered while working on the project. In the subcontract, Safeway agreed to procure primary insurance providing coverage for TCR for liability arising out of Safeway’s negligence. Safeway’s CGL policy included a self-insured retention that had to be satisfied before the insurer had a duty to defend. TCR filed suit against Safeway alleging that
Read the full story... Reprinted courtesy of CDCoverage.com
Judge Okays Harmon Tower Demolition, Also Calls for More Testing
August 2, 2012 — CDJ Staff
Vegas.Inc reports that Clark County District Court Judge Elizabeth Gonzalez has permitted the demolition the tower, which MGM Resorts has claimed is a safety hazard. Perini Building Co. claims that the building does not need to be demolished. CityCenter claims that repairing the building would take nearly a year longer than a demolition and cost about $200 million. Further, CityCenter assumes that the building’s reputation would cost it another $30 million.
Subsequently, Judge Gonzalez ruled that the pattern of destructive testing would not support a claim that there were an estimated 1,400 defective items in the building. An attorney for CityCenter, Steve Morris, has suggested that they may seek more testing, impossible to do once the building is demolished. CityCenter issued a statement that “nearly every time CityCenter has chipped away concrete to review structural work at the Harmon, we have found defects.” They describe the building as “unusable.”
Tutor Perini contends that it “remains confident that it will prevail when the issues of safety, reparability and responsibility for the issues facing the Harmon tower are considered.
Read the full story…
Allowing The Use Of a General Verdict Form in a Construction Defect Case Could Subject Your Client to Prejudgment Interest
August 16, 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. Id. at *1. 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.
Read the full story…5
Reprinted courtesy of Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC. Ms. Anderson can be contacted at anderson@hhmrlaw.com
Statute of Repose Dependant on When Subcontractors Finished
July 10, 2012 — CDJ Staff
Scott C. Sandberg of Snell and Wilmer writes a post on the JDSupra site about the Colorado Court of Appeals decision in Shaw Construction v. United Builder Services. Sanberg notes that when the general contractor was sued by an HOA, the contractor turned around and sued its subcontractors. The contractor made three claims. They claimed that “improvement” referred to the whole project, that “substantial completion” was reached when the architect certified completion, and that the statute of repose was tolled by the HOA’s service of a Construction Defect Action Reform Act notice.
The subcontractors claimed that “improvement” only referred to their specific work, which reached “substantial completion” when they finished, despite work to be done by other later, and the HOA’s notice to the contractor did not affect the subcontractors. The Colorado court agreed with the subcontractors.
Sandberg notes that some of the contractor’s were not addressed by the court, noting that “the court did not decide whether an improvement triggering the statute of repose can be determined on a trade-by-trade basis,” and that “the court did not decide whether substantial completion occurs when a certificate of occupancy is issued or when the architect certifies completion.”
Read the full story…
Nevada Budget Remains at Impasse over Construction Defect Law
June 1, 2011 — CDJ Staff
Negotiations for the Nevada state budget have stalled over proposals to amend the state’s construction defect laws. Assembly Republicans had offered changes to the law to make it friendlier to contractors; however, after a state Supreme Court ruling that the state could not move a local government entity’s funds into state coffers, pressure has increased on the governor to lift the expiration dates of taxes approved in 2009.
The Reno Gazette-Journal quotes John Madole, a construction industry lobbyist, “We agree with them that you have to address the issue of the attorney fees, and for all practical purposes, they are automatically awarded when anybody brings any kind of suit.”
Speaker of the Assembly, John Oceguera, a Democrat, has proposed a bill that “makes it absolutely crystal clear that the only time you get attorney's fees is if you're the prevailing party.”
Read the full story…
Eleventh Circuit Asks Georgia Supreme Court if Construction Defects Are Caused by an "Occurrence"
December 20, 2012 — Tred Eyerly, Insurance Law Hawaii
The Eleventh Circuit certified a question to the Georgia Supreme Court, asking whether property damage can constitute an "occurrence" under a CGL policy where its effects are not felt on "other property." HDI-Gerling Am. Ins. Co. v. Morrison Homes, Inc., 2012 U.S. App. Ct. LEXIS 23813 (11th Cir. Nov. 19, 2012).
The general contractor, Taylor Morrison Services, Inc., was covered by a CGL policy issued by Gerling. The policy excluded "expected or intended injury," contractual liability," and business risk exclusions. Morrison was sued by homeowners in a class action suit. Morrison had allegedly omitted four inches of gravel required beneath the base of the concrete foundations by the Uniform Building Code. Thereafter, the houses sustained water intrusion, cracks in the floors and driveways, and warped and buckling flooring.
Gerling defended, but sued Morrison for a declaratory judgment.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Negligent Misrepresentation in Sale of Building Altered without Permits
September 30, 2011 — CDJ Staff
The Supreme Court of New Hampshire has ruled in the case Wyle v. Lees. The Leeses owned a two-unit apartment building in North Conway, New Hampshire. They hired a contractor to add a third, larger apartment, including a two-car garage. The Leeses and their contractor submitted a building permit application. They were informed that site plan review was required. After receiving approval on the site plan, construction started. At no point did they obtain a building permit and the construction was never inspected. The Leeses subsequently added more space to the unit, reducing parking spaces below the minimum required. Again, they did not obtain a building permit.
In 2007, three years after all these changes were complete, the Leeses sold their building to Mr. Wyle. To the question “are you aware of any modifications or repairs made without the necessary permits?” they answered “no.” About six weeks after closing, Wyle “received a letter from the town code enforcement officer regarding the legality of the removal of a garage door from the new unit.” A subsequent inspection revealed “numerous building and life safety code violations.”
Mr. Wyle brought a claim against the Leeses for negligent misrepresentation. The defendants filed a motion “seeking to preclude economic loss damages.” At a two-day bench trial, Mr. Wyle won. The Leeses appealed.
The appeals court found that “the defendants negligently misrepresented that the premises were licensed for immediate occupancy and that the defendants had obtained all necessary permits,” and thus upheld the lower court’s finding of negligent misrepresentation. The appeals court also rejected the Leeses’ argument that damages must be apportioned on all parties, including “the plaintiff himself, the plaintiff’s building inspector, and the defendant’s contractor,” finding a lack of “adequate evidence.”
The Leeses further argued that they were unaware that modifications and repairs were accomplished without the required permits. The appeals court noted that “the trial court found that both the conditional approval and final approval for the site plan stated that a building permit and a certificate of occupancy were required prior to any use.” The court concluded that the Leeses “knew or should have known of the falsity of their representation.”
The appeals affirmed the findings of the trial court.
Read the court’s decision…
The Flood Insurance Reform Act May be Extended to 2016
April 7, 2011 — April 7, 2011 Beverley BevenFlorez - Construction Defect Journal
The Flood Insurance Reform Act of 2011 (H. R. 1309) has been referred to the House Committee on Financial Services—the first step in the legislative process. The bill, if passed, would extend the program to September 30, 2016. It is currently slated to be terminated September 30 of this year. The bill also contains changes to premium rates, mapping protocols, and privatization initiatives.
H. R. 1309 has garnered the support of several Insurance organizations. Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), sent a letter of support to the Chair and Ranking member of the House Financial Services Subcommittee. “AIA has advocated for a long term reauthorization of the NFIP to protect consumers and help increase stability for real estate transactions and policyholders,” Pusey said. “AIA believes the five-year extension contained in HR 1309, will provide certainty in the flood program thereby increasing consumer and business confidence in the NFIP.”
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC) spoke out in support of the bill. “For the NFIP to survive, the prices for flood insurance must reflect the actual costs of flood risk for a property,” Grande said. “HR 1309 will provide that transparency. In addition, the Technical Mapping Advisory Council will give communities a voice in the flood mapping process, fostering a better understanding of what flood maps represent and how they are made.”
Read H. R. 1309...
Read the American Insurance Association statement...
Read the NAMIC Press Release...
Court Voids Settlement Agreement in Construction Defect Case
September 1, 2011 — CDJ Staff
A U.S. District Court Judge in Florida has ruled in favor of a company that sought to void a settlement agreement. The case, Water v. HDR Engineering, involved claims of construction defects at Florida’s C.W. Bill Young Regional Reservoir. The Tampa Bay Water Authority attributed these to both HDR Engineering’s design and Bernard Construction Company which had built the embankment. Bernard Construction filed a complaint against their subcontractor, McDonald.
Tampa Bay Water settled with Bernard Construction and McDonald, in an agreement that set a minimum and maximum settlement, but also would “prohibit Barnard and McDonald from presenting any evidence on several claims and positions of TBW, to require Barnard to call certain witnesses at trial, to preclude Barnard and McDonald from calling other witnesses, and to restrict the filing of trial and post-trial motions.” HDR Engineering moved to void the agreement as collusive.
The judge that the agreement¬? contained “133 paragraphs of ‘Agreed Facts’ that the parties stipulated would survive any order declaring the Settlement Agreement void or unenforceable.” He characterized these as stipulating “that Barnard neither caused nor contributed to TBW’s damages.” HDR motioned that a summary judgment be given to Barnard Engineering.
The court found that “the evidence identified by TBW is patently insufficient to survive summary judgment.” Further, TBW’s expert initially held Barnard responsible for “lenses, pockets, streaks and layers within the embankment,” but then later withdrew this assigning the responsibility to HDR. Further, the court notes that, “TBW’s arguments that lenses, pockets, streaks, and layers in the soil wedge caused or contributed to its damages and that Barnard is liable for those damages have been foreclosed by the Agreed Facts.”
As TBW failed to provide sufficient evidence to withstand summary judgment, the court granted summary judgment, mooted the claim against McDonald, and terminated the agreement between TBW and the other parties.
Read the court’s decision…
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?”
Read the full story…
Plaintiffs In Construction Defect Cases to Recover For Emotional Damages?
March 16, 2011 — March 16, 2011 - Construction Defect Journal Staff
A recent post to the Markusson, Green, Jarvis Blog reports on an important appeals decision which promises to impact construction defect litigation in Colorado.
The post provides analysis on the recovery of inconvenience damages. The focus of the piece is centered on Hildebrand v. New Vista Homes II, LLC, 08CA2645, 2010 WL 4492356 (Colo. Ct. App. Nov. 10, 2010), wherein it was held that " the plain language of Construction Defect Action Reform Act permits recovery of damages for inconvenience, and that the trial court did not err by allowing inconvenience damages to go to the jury".
According to the MGJ Blog "The Hildebrand decision is important because it provides Construction Defect Plaintiffs with a foothold for collecting emotional damages. While several questions of law remain as to who or under exactly what circumstances a Plaintiff may recover these types of damages, the Hildebrand case has clearly set forth that emotional damages may be considered as part of actual damages pursuant to CDARA."
Read Full Story...
Home Sales Still Low, But Enough to Spur Homebuilders
August 16, 2012 — CDJ Staff
Although new home sales are still fifty percent below the average over the last forty years, the housing rebound has sent stock of homebuilders up 53 percent this year, during the same period, the S&P 500 rose only 12 percent. The San Francisco Chronicle reports that from 2005 through 2011, homebuilder stocks trailed the S&P 500.
The growth isn’t limited to homebuilders alone. Building suppliers are also seeing a growth in sales, with profits for companies that make gypsum wallboard, cabinetry, plumbing products, and other items used in home building.
Homebuilders have also been able to raise prices. Standard Pacific Corp of Irvine, California has raised prices and cut incentives. Nevertheless, the buyers still come. PulteGroup and D.R. Horton are also raising prices.
Read the full story…
Texas contractual liability exclusion
May 18, 2011 — May 18, 2011 - CDCoverage.com
In Ewing Construction Co., Inc. v. Amerisure Ins. Co., No. C-10-256 (S.D. Tex. April 28, 2011), insured Ewing was the general contractor for an athletic facility constructed for a school district. The school district sued Ewing alleging defective construction of the project. The underlying complaint included contract and negligence causes of action, and sought damages for the repair of the damages and loss of the use of the project. The complaint did not allege damage to any property other than the project itself. Ewing tendered its defense to its CGL insurer Amerisure. Amerisure denied a defense and Ewing filed suit against Amerisure. The federal district trial court entered summary judgment for Amerisure. Applying Texas law, the court held that all of the damages fell within the “contractual liability†exclusion precluding any duty to defend or indemnify.
Read the full story…
Reprinted courtesy of CDCoverage.com
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.
Read the full story…
Water Damage Covered Under Efficient Proximate Cause Doctrine
August 2, 2012 — Tred Eyerly, Insurance Law Hawaii
A U.S. District Court in Washington found coverage in what it described as a text book study of the efficient proximate cause rule. Hiller v. Allstate Pro. & Cas. Ins. Co., 2012 U.S. Dist. LEXIS 84862 (E.D. Wash. June 19, 2012).
The Hillers purchased a newly constructed home in December 2006. They also purchased an all-risk homeowner's policy from Allstate.
In July 2010, the Hillers discovered that the carpet in the basement of the residence was saturated with water. Allstate was immediately notified. Hiller began an investigation to attempt to determine the source of the water. He poured water into a downspout drain at the northwest corner of the residence. This caused water to leak into the northwest corner of the home's basement.
An area was excavated around the northwest downspout drain. The end of the drain pipe was partially blocked by rocks and had been wrapped with fabric landscaping material. Further, a “T” pipe installed at the foot of the drain was directing water toward the house's concrete foundation. Hiller notified Allstate that the problems with the drain was due to construction defects and the system was designed to fail.
Allstate denied the claim. Based upon Hiller's information, coverage was excluded under the policy's surface water, subsurface water, inherent vice, and latent defect exclusions.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
