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    Construction Expert Witness Builders Information
    Manistee, Michigan

    Michigan Builders Right To Repair Current Law Summary:

    Current Law Summary: Article 24 of the Occupational Code dictates that a complaint against a builder must be filed with the Department of Consumer and Industry Service within 18 months of the completion, occupancy or purchase of a residence. If building official determines complaint has merit, "Notice to Respondent: sent to provide builder with opportunity to repair; additional administrative procedures follow to conclusion; Individual townships have local rules regarding properties; Example: Bloomfield has mandated that structures must meet ongoing minimum maintenance standards.


    Construction Expert Witness Contractors Licensing
    Guidelines Manistee Michigan

    Residential contractors need to be licensed. License required for plumbing and electrical trades.


    Construction Expert Witness Contractors Building Industry
    Association Directory
    Mid-Northern Michigan Home Builders Association
    Local # 2369
    PO Box 128
    Oscoda, MI 48750


    Tri-Lakes Home Builders Association
    Local # 2363
    1210 Rough Ct
    Roscommon, MI 48653
    http://www.tl-hba.org

    Mid-Eastern Michigan Home Builders Association
    Local # 2365
    3823 W Wheeler Rd
    Standish, MI 48658


    Builder & Remodelers of Greater Northwest Michigan
    Local # 2357
    PO Box 1062
    Big Rapids, MI 49307
    http://www.hbamc.com/

    Home Builders Association of Grand Traverse Area
    Local # 2338
    3040 Sunset Lane
    Traverse City, MI 49684
    http://www.hbagta.com

    Home Builders Association of Central Michigan
    Local # 2364
    2026 Independence Dr
    Mount Pleasant, MI 48858
    http://www.hbacm.com

    Home Builders Association of Midland County
    Local # 2360
    PO Box 1763 7600 Commerce Court Ste. C
    Midland, MI 48641
    http://www.hbamidlandmi.com


    Construction Expert Witness News and Information
    For Manistee Michigan

    No Coverage For Damage Caused by Chinese Drywall

    BHA Expands Construction Experts Group

    Arizona Court of Appeals Decision in $8.475 Million Construction Defect Class Action Suit

    Differing Rulings On Construction Defect Claims Leave Unanswered Questions For Builders, and Construction Practice Groups. Impact to CGL Carriers, General Contractors, Builders Remains Unclear

    Faulty Workmanship Exclusion Does Not Bar Coverage

    Destruction of Construction Defect Evidence Leads to Sanctions against Plaintiff

    Toxic Drywall Not Covered Under Homeowner’s Policy

    Architect Not Responsible for Injuries to Guests

    Follow Up on Continental Western v. Shay Construction

    General Contractor/Developer May Not Rely on the Homeowner Protection Act to Avoid a Waiver of Consequential Damages in an AIA Contract

    Harmon Hotel Construction Defect Update

    School District Marks End of Construction Project by Hiring Lawyers

    Court Strikes Down Reasonable Construction Defect Settlement

    Hovnanian Sees Second-Quarter Profit, Points to Recovery

    Former New York Governor to Head Construction Monitoring Firm

    Product Exclusion: The Big Reason Behind The Delay of LEED 2012

    Sometimes It’s Okay to Destroy Evidence

    Drug Company Provides Cure for Development Woes

    Contractor Convicted of Additional Fraud

    Coverage Exists Under Ensuing Loss Provision

    Mississippi exclusions j(5) and j(6) “that particular part”

    The Year 2010 In Review: Design And Construction Defects Litigation

    Colorado Statutes of Limitations and Repose, A First Step in Construction Defect Litigation

    Homeowners Must Comply with Arbitration over Construction Defects

    Contractor’s Coverage For Additional Insured Established by Unilateral Contract

    Arbitration Clause Not Binding on Association in Construction Defect Claim

    No Duty to Indemnify When Discovery Shows Faulty Workmanship Damages Insured’s Own Work

    Homeowner Has No Grounds to Avoid Mechanics Lien

    Tenth Circuit Finds Insurer Must Defend Unintentional Faulty Workmanship

    OSHA Extends Delay of Residential Construction Fall Protection Requirements

    Judge Okays Harmon Tower Demolition, Also Calls for More Testing

    Bad Faith and a Partial Summary Judgment in Seattle Construction Defect Case

    Court Clarifies Sequence in California’s SB800

    Ensuing Loss Found Ambiguous, Allowing Coverage

    Insurance Company Prevails in “Chinese Drywall” Case

    California insured’s duty to cooperate and insurer’s right to select defense counsel

    Claims Under Colorado Defect Action Reform Act Count as Suits

    Yellow Brass Fittings Play a Crucial Role in Baker v Castle & Cooke Homes

    After $15 Million Settlement, Association Gets $7.7 Million From Additional Subcontractor

    San Diego Construction Defect Claim Settled for $2.3 Million

    Appeals Court Upholds Decision by Referee in Trial Court for Antagan v Shea Homes

    Cleveland Condo Board Says Construction Defects Caused Leaks

    Nevada District Court Dismisses Case in Construction Defect Coverage Suit

    Mandatory Arbitration Provision Upheld in Construction Defect Case

    Granting Stay, Federal Court Reviews Construction Defect Coverage in Hawaii

    Certificate of Merit to Sue Architects or Engineers Bill Proposed

    Homebuilders Go Green in Response to Homebuyer Demand

    Texas exclusions j(5) and j(6).

    Denver Court Rules that Condo Owners Must Follow Arbitration Agreement

    Homeowners Sue Over Sinkholes, Use Cash for Other Things

    Ninety-Day Extension Denied to KB Home in Construction Defect Insurance Claim

    No Resulting Loss From Deck Collapsing Due to Rot

    Insurer Must Defend Claims for Diminution in Value of Damaged Property

    Florida Law: Defects in Infrastructure Improvements Not Covered in Home Construction Warranties

    Brown Paint Doesn’t Cover Up Construction Defects

    Texas contractual liability exclusion

    Insurer Unable to Declare its Coverage Excess In Construction Defect Case

    Condominium Exclusion Bars Coverage for Construction Defect

    Developer’s Fraudulent Statements Are His Responsibility Alone in Construction Defect Case

    No “Special Relationship” in Oregon Construction Defect Claim

    Insurer Rejects Claim on Dolphin Towers

    Statute of Repose Dependant on When Subcontractors Finished

    Ensuing Loss Provision Found Ambiguous

    Ambitious Building Plans in Boston

    Broker Not Liable for Failure to Reveal Insurer's Insolvency After Policy Issued

    Can We Compel Insurers To Cover Construction Defect in General Liability Policies?

    The Montrose Language Interpreted: How Many Policies Are Implicated By A Construction Defect That Later Causes a Flood?

    California Bill Would Notify Homeowners on Construction Defect Options

    Rihanna Finds Construction Defects Hit a Sour Note

    Nevada Assembly Sends Construction Defect Bill to Senate

    Homeowner may pursue negligence claim for construction defect, Oregon Supreme Court holds

    Florida County Suspends Impact Fees to Spur Development

    Manhattan Developer Breaks Ground on $520 Million Project

    Illinois Court Determines Insurer Must Defend Negligent Misrepresentation Claim

    Judge Rejects Extrapolation, Harmon Tower to Remain Standing

    Florida Appeals Court Rules in Favor of Homeowners Unaware of Construction Defects and Lack of Permits

    Contract Not So Clear in South Carolina Construction Defect Case

    Going Green for Lower Permit Fees

    Construction Defects Lead to Demolition

    Liability policy covers negligent construction: GA high court

    Louisiana Politicians Struggle on Construction Bills, Hospital Redevelopment

    Contractor Removed from Site for Lack of Insurance

    Continuous Trigger of Coverage Adopted for Loss Under First Party Policy

    Save A Legal Fee? Sometimes You Better Talk With Your Construction Attorney

    New Washington Law Nixes Unfair Indemnification in Construction Contracts

    In Oregon Construction Defect Claims, “Contract Is (Still) King”

    Judge Kobayashi Determines No Coverage for Construction Defect Claim

    Florida Contractor on Trial for Bribing School Official

    Statutes of Limitations May be the Colorado Contractors’ Friend

    Construction Company Head Pleads Guilty to Insurance and Tax Fraud
    Corporate Profile

    MANISTEE MICHIGAN CONSTRUCTION EXPERT WITNESS
    DIRECTORY AND CAPABILITIES

    The Manistee, Michigan Construction Expert Witness Group at BHA, leverages from the experience gained through more than 5,500 construction related expert witness designations encompassing a wide spectrum of construction related disputes. Drawing from this considerable body of experience, BHA provides construction related trial support and expert services to Manistee's most recognized construction litigation practitioners, commercial general liability carriers, owners, construction practice groups, as well as a variety of state and local government agencies.

    Construction Expert Witness News & Info
    Manistee, Michigan

    Boston Tower Project to Create 450 Jobs

    November 18, 2011 — CDJ Staff

    Continuing the development of Boston’s Theater District, Millennium Partners broke ground for the building of Hayward Place, a 15-story residential tower with street-level shops. The project is expected to take two years to complete and will employ about 450 construction workers.

    Thomas Menino, the mayor of Boston said that the “ground breaking of Hayward Place is another sign of economic growth and forward progress on the revitalization of this area.” The project will be built by Suffolk Construction. John Fish, their CEO, said they were “fortunate as a contractor to be the beneficiary of this.”

    The report in the Boston Herald notes that a few blocks away, the site of the former Filenes department store is still “an empty eyesore.” Menino joked, “anyone want to bid for it?” He promised that site would also be developed.

    Read the full story…


    Judge Kobayashi Determines No Coverage for Construction Defect Claim

    October 23, 2012 — Tred Eyerly, Insurance Law Hawaii

    Judge Kobayashi of the U.S. District Court, District of Hawaii, largely followed earlier precedent established by Judge Mollway in finding no coverage for construction defect claims. See Evanston v. Nagano, 2012 WL 3800320 (D. Hawaii Aug. 31, 2012).

    Evanston issued several liability policies to the insured contractor from 2002 and 2011. The insured entered a contract to build a residence in Honolulu. The homeowners were not happy with their home after the work was completed. They filed suit, alleging that the project was delayed and the construction was "riddled with defects." The complaint included claims for breach of contract and breach of warranties. Negligence was not alleged. Evanston defended, but under a reservation of rights.

    Evanston filed suit for a declaratory judgment and moved for summary judgment.

    Read the full story…

    Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com


    Developer’s Fraudulent Statements Are His Responsibility Alone in Construction Defect Case

    February 10, 2012 — CDJ Staff

    The Texas Court of Appeals ruled on December 21 in the case of Helm v Kingston, a construction defect case. After purchasing what was described as “an extremely well-built” two-bedroom townhouse, Mr. Kingston made complaints of construction defects. Greenway Development did not repair the defects to Kingston’s satisfaction, and he filed notice of suit. In his suit, he claimed that GDI and its president, John Helm, had committed fraud and negligent misrepresentation. Kingston claimed that Helm “fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of workmanship was atrocious.” Helms brought a counterclaim that Kingston’s suit was frivolous.

    About four years after Kingston purchased the townhome, the suit proceeded to trial. The trial court determined that Helm was not “liable in his individual capacity,” but this was reversed at appeal.

    A second trial was held ten years later on the question of whether Kingston’s unit was a townhome or an apartment. A jury found that Helm “engaged in a false, misleading or deceptive act or practice that Kingston relied on to his detriment.” Kingston was awarded $75,862.29 and an additional $95,000 in attorney fees by the jury. Helms made an unsuccessful appeal to the Appeals Court, after which Kingston was awarded an additional $10,000. Helms then made an unsuccessful appeal to the Texas Supreme Court, which lead to an additional $3,000 for Kingston. There was also a verdict of $48,770.09 in pre-judgment interest and “five percent post-judgment interest accruing from the date of the judgment until the time the judgment is paid. Helm appealed.

    In his appeal, Helm raised seven issues, which the court reorganized into five Kingston raised one issue on cross-appeal.

    Helms’ first claim was that Kingston “failed to satisfy the requirement of” Texas’s Residential Construction Liability Act and that by not filing under the RCLA, Kingston’s fraud and misrepresentation claims were preempted. Further Helms claimed that the RCLA limited Kingston’s damages. The court rejected this, as the RCLA deals with complaints made to a contractor and not only did Helm fail to “conclusively establish” his “status as a ‘contractor’ under the statutory definition,” Helm testified that he was “not a contactor” at the pre-trial hearing.

    Helms’s second claim was that Kingston’s later claim of a misconstructed firewall should be barred, claiming that Kingston “‘had knowledge of a defect in the firewall’ as early as 1997 but did not assert them until 2007.” The court rejected this because Kingston’s claim was that “Helm ‘fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of the workmanship was atrocious.’”

    Helms also challenged whether his statements that the residence was of “good quality” constituted fraud and misrepresentation under Texas’s Deceptive Trade Practices-Consumer Protection Act. The court concluded that Helm was in a position to make knowledgeable statements and further that “residential housing units are not artistic works for which quality is inherently a matter of subjective judgment.” Helm also claimed that Kingston could have avoided certain repair expenses through the “exercise of reasonable care.” Helms argued that the repairs could have been made for $6,400. The court disagreed, as these claims were cited only to invoke the DTPA, and that later petitions established additional defects.

    Helms’s next claim was that he was not allowed to designate responsible third parties. The court rejected this because there GDI represented matters concerning the residence only through Helm’s statements. The court noted that “Helm is correct that?third parties may be liable for fraud if they ‘participated in the fraudulent transactions and reaped the benefits,’” but they note that “Helm never specifically alleged that GDI or CREIC participated in Helm’s alleged fraudulent transactions.

    The final issue in the decision was about court costs, and here the court denied claims on both sides. Helm argued that the award of legal fees were excessive, as they exceeded the actual damages. The court noted that they “may not substitute our judgment for that of the jury,” and also that “the ratio between the actual damages awarded and the attorney’s fees is not a factor that determines the reasonableness of the fees.” But the court also rejected Kingston’s claim for post-judgment interest on $10,312.30 that Helm had deposited in the trial court’s registry. The court noted that the monies were to be paid out upon final judgment, but the mandate did not include any reference to interest.

    Read the court’s decision…


    Restitution Unlikely in Las Vegas Construction Defect Scam

    October 23, 2012 — CDJ Staff

    The San Francisco Chronicle reports that the money lost in the Las Vegas HOA fraud cause is probably not recoverable. Victims of the scam have asked the court for restitution, but Judge Lloyd George doubts any of the money will be found, saying “the money is not available, it would appear.”

    One Vistana board members not part of the conspiracy told reporters that the $8 million construction defect settlement never went for needed repairs. “Within six months that money was gone,” said Bruce Wallace, a retired Air Force colonel. After the construction defect account was depleted to $450,000, two board members disappeared with the funds.

    Read the full story…


    West Hollywood Building: Historic Building May Be Defective

    August 16, 2012 — CDJ Staff

    The Sunset Lanai apartment building in West Hollywood, California has its fans, it also has its detractors. Designed by Edward H. Flickett and built in 1952 by George Alexander, the building isn’t wearing its years lightly. Its owner has opposed a move by the West Hollywood Preservation Commission that the building is a “local cultural resource.” Instead, Edwin Silver, the building’s owner says the group has overstated the building’s significance. His lawyer points to “design and construction flaws,” and says the building is prone to flooding and leaks. Repairs to the building have an estimated cost of $2.3 million, according to the L.A. Times.

    The West Hollywood City Council decided to table the question of a historical designation as that might impede repairs. However, they did decide that if Silver seeks to demolish the building, they will grant the protection.

    Read the full story…


    CC&Rs Not the Place for Arbitration Agreement, Court Rules

    May 24, 2011 — CDJ Staff

    In January, the California Court of Appeals ruled that an arbitration clause inserted in a development’s CC&Rs by the developer could not be enforced. The case, Villa Vicenza Homeowners Association v. Noble Court Development, involved a case in which, according to the opinion, “following the first sale Nobel controlled the board of directors of the Association and because the initial condominium buyers noticed defects in common areas and common facilities and did not believe Nobel had provided a reserve fund sufficient to repair the defects, the condominium owners brought a derivative action on behalf of the Association against Nobel.”

    The court concluded, “The use of CC&R's as a means of providing contractual rights to parties with no interest in or responsibility for a common interest development is also problematic from the standpoint of determining what if any consideration would support such third-party agreements. By their terms the CC&R's bind all successors, even those with whom a third party such as Nobel has never had any contractual relationship and to whom Nobel has not provided any consideration.” The court determined that “the trial court did not err in denying Nobel's motion to compel arbitration.”

    Read the court’s decision


    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.”

    Read the full story…


    “Other Insurance” and Indemnity Provisions Determine Which Insurer Must Cover

    September 1, 2011 — Tred Eyerley, Insurance Law Hawaii

    A policy’s “other insurance” clause and a contractual indemnity provision were at the root for determining which of two insurers had to cover for injuries at a construction site. Valley Forge Ins. Co. v. Zurich Am. Ins. Co., 2011 U.S.Dist. LEXIS 76061 (N.D. Calif. July 14, 2011).

    Hathaway was the general contractor at a demolition and construction project. Hathaway was insured by Zurich. Reinhardt Roofing was the roofing subcontractor. Reinhardt was insured by Valley Forge under a policy which named Hathaway as an additional insured. The subcontract also required Reinhardt to indemnify Hathaway for acts or omissions arising from Reinhardt’s work unless Hathaway was solely negligent.

    Four of Reinhardt’s workers were injured when a canopy roof on which they were working collapsed. At the time of the accident, Hathaway’s on-site supervisor was inspecting a gap in the canopy roof, but did not order Reinhardt’s workers to stop working. 

    Read the full story…

    Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com


    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...


    Kansas Man Caught for Construction Scam in Virginia

    December 20, 2012 — CDJ Staff

    A Virginia court sent charges of construction fraud against a Kansas man to a grand jury. Larry Foster visited homes in Bedford County, Virginia, tested the water, and told homeowners that they needed new water filtration systems. The homeowners paid, but Mr. Foster never delivered. One homeowner who testified paid him $1,690. Another paid even more, giving $3,090 to Mr. Foster. In order to dupe his victims, Foster used the address of a chiropractor as a business address, unbeknownst to the actual business there.. He is wanted for charges in other states as well.

    Read the full story…


    Association May Not Make Claim Against Builder in Vermont Construction Defect Case

    October 23, 2012 — CDJ Staff

    The Vermont Supreme Court issued a ruling on September 28 on Long Trail House Condominium Association. The case was heard by a panel of two Supreme Court justices, Marilyn Skoglund and Brian Burgess, and three justices specially assigned for the case, Kupersmith, Davenport, and Johnson. The decision came down with a 3-2 split; Judges Kupersmith and Johnson joining in a dissent.

    In the underlying case, Stratton Corporation entered into an agreement with Engelberth Construction in which Engelberth would supply “recommendations on construction feasibility, consultation as to the selection of materials and equipment, assistance with zoning requirements and permits, and cooperation with the ‘design team’ to provide valuable engineering services.” Engelberth was not responsible to determine that the drawings and specifications were in accordance with the law and building codes, nor were they responsible “for the design team’s designs, errors, or omissions.”

    Subsequent to the agreement was a construction project which culminated in the incorporation of the Long Trail House Condominium Association. The condominium owners initiated a lawsuit over alleged defects. Stratton, Intrawest, and the association settled claims for $7,025,00 with Stratton and Intrawest both pursuing claims against Engelberth. This case is still unsettled.

    The association progressed on remediation, which cost about $1,500,00 more than was provided by the settlement, and so the association also sued Engelberth. In this case, the court granted a summary judgment to Engelberth, concluding that negligence claim was barred both “by the economic loss rule and that the absence of contractual privity was fatal to the warranty claims.”

    The court upheld both determinations of the lower court. The court noted that “the economic loss rule ‘prohibits recovery in tort for purely economic losses’” and that “in tort law, duties are imposed by law to protect the public from harm.” A negligence claim could only be supported with evidence of “some accompanying physical harm, which does not include economic loss.”

    The association made the claim that the economic loss rule applies only when there is a contractual relationship between the two parties. The court rejected this argument, citing a reference that “economic interests are protected, if at all, by contract principles, rather than tort principles.”

    Nor did the court find it persuasive that a “professional services” exception to the economic loss doctrine applied, noting that the court has rejected this notion in two prior cases. The noted that the association’s losses were purely economic, and their inability to settle those claims with Engelberth did not mean that they had not means of settling them, as they were able to settle these very claims with Stratton and Intrawest.

    The association also raised claims of an implied warranty, resting on the construction contract between Engelberth and Stratton. This was also rejected by the court, noting that Vermont “case law plainly contemplates the existence of contractual privity before a breach of implied warranty claim can be raised.” The court noted that there was neither a contract nor a sale between Engelberth and the association, and thus there were no grounds for an implied warranty. The court concluded that “the Association’s warranty remedy lies against the entity that sold it the condominium units and implicitly warranted through the sale that the units were built in a good and workmanlike manner and that they were suitable for habitation.”

    Read the court’s decision …


    Court Strikes Down Reasonable Construction Defect Settlement

    December 20, 2012 — CDJ Staff

    The Court of Appeals of Washington has struck down a construction defect settlement between a building owner and the companies she hired to repair the siding, among other repairs to bring the building up to code. Yuan Zhang hired Hawk Construction LLC to do repair work. Hawk, in turn, hired Ready Construction LLC for some aspects of the project. Hawk and Ready were both insured by Capital Specialty Insurance Corporation.

    There were several problems with Ready’s work. After removing old siding, they did not protect the building, nor did they remove all of the damaged layers. Ready covered, but did not fix, a mildew problem under the old siding. When new siding was reattached, the nails used were too short to adequately attach it.

    After paying for an inspection of the work, Zhang had Hawk and Ready begin the repairs again, but the work was abandoned without being completed. Zhang sued Hawk for breach of contract. Hawk then sued Ready, claiming that “Ready was liable to Hawk to the extent that Hawk was liable to Zhang.” Capitol retained defense for both contractors.

    Zhang settled with Hawk, in an agreement that gave her “the right to collect and/or pursue all costs and attorney fees paid by Hawk or its insurance company defending against the Zhang’s claims and pursuing claims against Ready.” Subsequently, she also settled with Ready. Both companies ceased operations.

    Zhang had the settlements reviewed by a court, which concluded that the settlements were reasonable. Capital was allowed to appeal, claiming that the settlement included costs that were Zhang’s responsibility. The appeals court did not examine the question of the reasonableness of the settlement, concluding that Capitol’s interests were relevant only to “questions of bad faith, collusion, and fraud.”

    In the case of Zhang, the court concluded that the relationship between Zhang and her former contractors was collusive. The court noted that “bad faith or collusion may exist when the evidence indicates a joint effort to create, in a non-adversarial atmosphere, a resolution beneficial to both parties, yet highly prejudicial to the insurer as intervener.” The court noted that both companies had minimal assets which were, in any case, exempted from the agreement. Further, the court found that the agreements failed to determine “what amount of the repairs related to preexisting water damage.” Zhang’s calculation of costs also included her expenses for architectural and engineering services, which the court points out, “where always Zhang’s costs to bear.”

    The court concluded that “the overall structure of the settlements is highly probative of collusion, fraud, or bad faith.” Zhang’s agreements with Hawk and Ready allowed her to collect compensation from Hawk and then collect Ready’s compensation to Hawk for their portion of the settlement, allowing Zhang to collect the monies twice. Further, she was allowed to pursue Capitol for Hawk’s attorney expenses, even though Hawk had none. “The right to recover Hawk’s fees merely set up a windfall recovery for Zhang.” The court described the agreements among Zhang, Hawk, and Ready as “precisely the type of manipulation [the law] is intended to preclude.”

    Read the court’s decision…


    Condo Owners Allege Construction Defects

    July 6, 2011 — CDJ Staff

    Last November, mold problems were discovered at the Siena Condominiums in Montclair, New Jersey, which had been described by their developers as “an enclave of luxury in an urban village setting.” The owners have filed a lawsuit against Pinnacle Companies, Kohl Parnters, and Herod Development, seeking “compensatory damages, interest, reasonable attorney’s fee and costs, and for such other, further, and different relief as the Court may deem just and proper.”

    According to the article on Baristanet.com, an engineering report commissioned by the condominium association revealed many problems, including improperly installed windows and siding. The developers commissioned two engineering reports themselves and found evidence of water pounding on the roof. Despite these reports and repeated promises, no repairs have been made.

    Read the full story…


    Flooded Courtroom May be Due to Construction Defect

    September 1, 2011 — CDJ Staff

    The General Services Administration wouldn’t pin it on a construction defect, but a spokesperson said that a pipe that was misaligned during installation was the likely cause of a flood in the Thomas F. Eagleton US Courthouse on August 23. According to the St. Louis Dispatch, the burst pipe caused a 17-story waterfall in the courthouse, soaking ceilings and floors, and drenching the building’s contents.

    The building was dedicated eleven years ago. During the nearly ten years before the building was complete, there were construction disputes and soil contamination issues.

    Read the full story…


    Lien Law Unlikely To Change — Yet

    May 26, 2011 — Melissa Brumback, Construction Law in North Carolina

    For those of you following the proposed revisions to the NC lien law that is currently at the NC House Judiciary Subcommittee B, a quick update: the proposed bill (HB 489) is unlikely to be voted on this legislative session due to its unpopularity with several constituency groups, including both the AIA-North Carolinaand the NC Home Builders Association.

    Read the full story…

    Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl-law.com.


    Brown Paint Doesn’t Cover Up Construction Defects

    April 25, 2012 — CDJ Staff

    In a decision that describes the case as illustrating “the perils that real estate brokers and their agents assume when acting as a dual listing agent to both the buyers and sellers of the same house,” the California Court of Appeals has issued a decision in William L. Lyon & Associates v. The Superior Court of Placer County. Lyon & Associates sought summary judgment to dismiss the claims of the Henleys who bought a home in a transaction where a Lyon agent represented both sides.

    The prior owners of the home, the Costas, had used a Lyon agent in purchasing their home. When they later sought to sell it, that agent “became aware of some of the house’s defects and problems.” In response, the Costas sought the help of another agent, Connie Gidal, also of Lyons & Associates. Photos taken in the presence of Ms. Gidal show defects of the paint and stucco. The Costas also took the step of painting the house dark brown. During the sale process, “rain caused many of the painted-over defects to reappear.” The Costas “purchased more dark brown paint and covered up the newly visible damage prior to inspection by the Henleys.”

    With the damage concealed, the Henleys bought the home in May 2006. The agreement with Lyons & Associates noted that “a dual agent is obligated to disclose known facts materially affecting the value or desirability of the property to both parties.” Escrow closed on May 9, 2006. The contract with the broker included a two-year limit on the time to bring legal action.

    The Henleys moved in during June 2006, and “began to discover construction defects that had been concealed by the Costas.” In addition to the painted-over stucco problems, the Henleys found that the Costas had “installed quartzite stone overlays on the backyard steps in a manner that caused water intrusion on the house’s stucco walls.”

    In May 2009, the Henleys sued the Costas, Ron McKim Construction, Lyons & Associates, and Ms. Gidal. Their complaint alleged that Lyons & Associates had committed breach of contact, negligence, fraud, breach of fiduciary duty, and negligent nondisclosure in connection with the construction defects. The Costas named Lyons in a cross complaint. Lyons moved for summary judgments on the grounds that the two-year statute of limitations had expired before the complaint and cross-complaint were filed. Both the Henleys and the Costas opposed this claim. The court denied the motion and Lyons appealed.

    The appeals court upheld the denial, noting that the both California Supreme Court decision and later action by the legislature compels real estate brokers and salespersons “to conduct a reasonably competent and diligent visual inspection of the property offered for sale.” The court noted that under California law, brokers have responsibilities to both sellers and buyers. The section of law cited by Lyons applies to seller’s agents. The court rejected the contention by Lyons that they were “cooperating brokers.” The Henleys were “not constrained by the two-year statute of limitations.”

    Lyons contended that even if California’s statute did not apply, there was a contractual limit of two years. The court also rejected this, agreeing with the Henleys that “the two-year limitation period must be extended by the discovery rule.”

    The court noted that “Lyon & Associates may not reap the benefit of a shortened contractual limitation period when its own alleged malfeasance contributed to the delay in the discovery of the buyer’s injury.” The court found that the Henleys could proceed with their breach of contract claim, because, “when a breach of contract is committed in secret, such as the intentional nondisclosure of a real estate broker regarding a previously visible construction defect, the contractual limitations period is properly held subject to the discovery rule.” The court felt that the interpretation favored by the California Association of Realtors would “halve the applicable statute of limitations period.”

    In addition to rejecting Lyon request for summary judgment on the claims made by the Henleys, the court also rejected the request of summary judgment on the claims made by the Costas, concluding that neither claim is time-barred. Costs were awarded to both the Henleys and Costas.

    Read the court’s decision…


    Texas covered versus uncovered allocation and “legally obligated to pay.”

    April 27, 2011 — April 27, 2011, by CDCoverage.com

    In Markel American Ins. Co. v. Lennar Corp., No. 14-10-00008-CV (Tex. Ct. App. April 19, 2011), insured homebuilder Lennar filed suit against its insurer Markel seeking recovery of costs incurred by Lennar to repair water damage to homes resulting from defective EIFS siding. Following a jury trial, judgment was entered in favor of Lennar and against Markel. On appeal, the intermediate appellate court reversed. Applying Texas law, the court first held that Lennar failed to satisfy its burden of allocating damages between covered and uncovered. In a prior decision, the court had held that, while the costs incurred by Lennar for the repair of the resulting water damage

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    Reprinted courtesy of CDCoverage.com


    Continuous Trigger of Coverage Adopted for Loss Under First Party Policy

    August 2, 2012 — Tred Eyerly, Insurance Law Hawaii

    The Seventh Circuit predicted that the Wisconsin Supreme Court would adopt the continuous injury trigger for first party property loss that extends over several policy periods. Miller v. Safeco Ins. Co. of Am., 2012 U.S. App. LEXIS 12940 (7th Cir. June 25, 2012).

    A home inspection report performed before the Millers purchased their home showed a soft spot on the roof. The stucco's finish color was also uneven and stained. Further, some water damage was found in the study and skylights above the kitchen sink. But the report advised that the exterior walls, chimney, grass roof, flashings, floor joists/beams and columns, garage walls and floor appeared serviceable. A roof specialist determined the soft spot was not significant and could be repaired for $1,500.

    The Millers purchased a homeowner's policy from Safeco on June 30, 2005. The policy went into effect the next day when the Millers closed on the property. But the Millers did not see the policy's terms until Safeco mailed them a copy of the policy at the end of July.

    Before receiving the policy, the Millers discovered severe inner wall water leaks and significant water infiltration on three of the home's exterior walls.

    Read the full story…

    Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com