JDi Data Introduces Mobile App for Litigation Cost Allocation
October 23, 2012 — CDJ Staff
JDi Data of Fort Lauderdale, Florida has announced that they are about to release a mobile app for their Vendor Cost Control service. Their mobile app is a web app, and so can be used by customers on the iOS, Android, or Blackberry platforms. It provides a secure link to their database with no risk of releasing proprietary information. JDi Data notes that their product will allow users to “track their full subscribed case listings,” give them “easy access to carrier allocations, payments, and outstanding balances reports,” and to “call or email case managers directly from their mobile application.
James DeRosa, the founder of JDi Data says that “pushing the boundaries of technology has enabled us to further our goal of providing credible reporting and cost allocation expertise to insured, carriers and the legal community.”
Read the full story…
Builder Cannot Receive Setoff in Construction Defect Case
July 10, 2012 — CDJ Staff
The California Court of Appeals has dismissed an appeal in a San Diego construction defect case. In Smith v. Walters Group, Christopher and Maud Smith sued The Walters Group, a real estate developer, and Galen C. Pavelko, Inc, the builder of their home. Walters had bought five lots and hired Pavelko to build houses on them, selling one of these homes to the Smiths. “After moving in, the Smiths noticed a strong and obnoxious odor permeating the house.” The Smiths sued but were ordered to arbitrate instead, pursuant to a clause in the purchase contract. The Smiths were awarded $1.5 million at arbitration.
Walters requested that the arbitration remain open to determine if Walters was entitled to a setoff for settlements from defendants not involved in the arbitration. During this time, Pavelko made a settlement with the Smiths, which the court found was in good faith. At the same time, the arbitrator “reached the opposite conclusion.” The arbitrator concluded that “only settlements made ‘in good faith before verdict or judgment’ qualified for setoff.”
Walters moved that the trial court “‘correct’ the award,” but the trial court declined to do so and confirmed the award. In the appeal, Walters raised the issue of “whether Pavelko’s settlement occurred ‘before verdict or judgment.’” The appeals court dismissed the appeal, noting that “Walters would not be entitled to a $500,000 setoff if we reversed the trial court’s order determining the Smith-Pavelko settlement was made in good faith because Pavelko’s $500,000 payment was expressly conditioned on such an order.” They add that “were we to reverse the trial court’s order, Pavelko would have no obligation to pay the Smiths the $500,000.” This would then “deprive Walters of the corresponding statutory right to a setoff.”
Read the court’s decision…
Colorado Court of Appeals Finds Damages to Non-Defective Property Arising From Defective Construction Covered Under Commercial General Liability Policy
December 20, 2012 — Heidi Gassman, Higgins, Hopkins, McLain & Roswell
The recently decided case of Colorado Pool Systems, Inc. v. Scottsdale Insurance Company (Colo. Ct. App. 10CA2638, October 25, 2012), confirms that absent specific exclusions in the policy, a commercial general liability (“CGL”) policy covers damages to non-defective property arising from a builder’s own defective workmanship.
Colorado Pool Systems, Inc. (“Colorado Pool”) was hired as a subcontractor to install a swimming pool at Founders Village Pool and Community Center (“Founders Village”) in Castle Rock, Colorado. After the concrete shell of the pool was placed, some of the rebar frame was found to be too close to the surface. Founders Village demanded that Colorado Pool remove and replace the pool, and Colorado Pool contacted its insurance carrier, Scottsdale Insurance Company (“Scottsdale”), with which Colorado Pool held a CGL policy. After inspecting the pool, Scottsdale’s claims adjuster stated that the insurance policy would cover losses associated with removing and replacing the pool.
Read the full story…
Reprinted courtesy of Heidi Gassman, Higgins, Hopkins, McLain & Roswell, LLC. Ms. Gassman can be contacted at gassman@hhmrlaw.com
Nevada Supreme Court Reverses Decision against Grader in Drainage Case
June 30, 2011 — CDJ Staff
The Nevada Supreme Court has issued an opinion in the case of Rayburn Lawn & Landscape Designers v. Plaster Development Corporation, reversing the decision of the lower court and remanding the case for a new trial.
The case originated in a construction defect suit in which Plaster Development Corporation was sued by homeowners. Plaster filed a third-party complaint against its subcontractor, Reyburn. The testimony of Reyburn’s owner was considered to be admission of liability and so the court limited the scope of Reyburn’s closing argument and did not allow the jury to determine the extent of Reyburn’s liability. Reyburn appealed.
Plaster, in their case, cited California’s Crawford v. Weather Sheild MFG, Inc. The court held the application of these standards, but noted that the “an indemnitor’s duty to defend an indemnitee is limited to those claims directly attributed to the indemnitor’s scope of work and does not include defending against claims arising from the negligence of other subcontractors and the indemnittee’s own negligence.”
On the matter of law against Reyburn, the court concluded, “Given the conflicting evidence at trial as to whether Reyburn’s work was implicated in the defective retaining walls and sidewalls, and viewing the evidence and inferences in Reyburn’s favor, we conclude that a reasonable jury could have granted relief in favor of Reyburn.” The Nevada Supreme Court conduced that the district court should not have granted Plaster’s motion for judgement.
Further, the Nevada Supreme Court found that the district court should have apportioned the fees and costs to those claims directly attributed to Reyburn’s scope of work, “if any,” and should not have assigned all attorney costs and court fees to Reyburn.
Read the court’s decision…
New Apartment Tower on the Rise in Seattle
September 13, 2012 — CDJ Staff
The Seattle Times reports that groundbreaking is planned for a forty-story tower in Seattle. The building process will take at least five years, during which time, according to the paper, there will be nearly eight thousand new apartments in Seattle. The planned tower will add another 386 units to that.
The developer, Holland Partner Group, has four other apartments buildings planned or in construction currently, which will account for more than a thousand of the units being added to the city’s apartment stock.
Read the full story…
Hilton Grand Vacations Defect Trial Delayed
October 23, 2012 — CDJ Staff
A settlement agreement between Conti Electric and Westgate Resorts has lead to a delay in starting the trial over construction defect claims and billing disputes over Hilton Grand Vacations a time share tower in Las Vegas. According to the Las Vegas Review-Journal, the dispute includes claims of $23.3 million owed to the general contractor against which the developer has placed $30 million in construction defect claims.
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 …
Background Owner of Property Cannot Be Compelled to Arbitrate Construction Defects
November 7, 2012 — CDJ Staff
In Truppi v. Pasco Engineering, John Quattro sued Property Management Contractors, Inc. over construction defects in William Truppi’s home. All parties are named in the suit. The California Court of Appeals ruled that Property Management Contractors, Inc. (PMCI) could not compel Mr. Quattro to arbitration.
The background of the case involves two houses built in Encinitas, California by PCMI: one for Mr. Truppi at 560 Neptune, and one for Mr. Quattro at 566 Neptune. Both contracts contained an arbitration provision. Mr. Quattro signed the contract for his residence and Mr. Truppi signed the other. Mr. Quattro then sued PCMI and its principal, William Gregory. Mr. Quattro claimed to be the true contracting party for the 560 Neptune residence and a third party beneficiary of the contract Mr. Truppi signed, and stated that PCMI was aware of this.
PCMI in a demurrer stated that Quattro “had only a ‘prospective beneficial interest in the property upon its eventual sale or lease.’” Mr. Quattro amended his complaint to account for the issues raised by PCMI. The court rejected PCMI’s demurrer to the amended complaint.
Finally, PCMI and Gregory asserted that Quattro was “not the real party in interest” and could not sue. PCMI continues to assert that Quattro lacks standing, but their attorney sent Quattro an e-mail stating, “While my client disputes that you are a party, and that you lack standing to assert the claim, to the extent you do so I believe you are obligated to proceed by way of arbitration.”
The court did not cover the issue of Quattro’s standing in the case, only if he could be compelled to arbitration. The court affirmed the lower court’s finding that Quattro could not be compelled to arbitrate the construction defect claim as neither he nor Gregory signed the contract in an individual capacity. Further, the court noted that PCMI and Gregory “denied the existence of an agreement between themselves and Quattro on the 560 contract,” and cannot compel arbitration on a non-existent agreement. And while non-signatories can, in some situations be compelled to arbitrate, the court found that “these cases are inapplicable because here they seek to have the alleged third party beneficiary (Quattro) compelled by a nonsignatory (Gregory).” The arbitration clause in question “expressly limited its application to persons or entities that signed the 560 contract.”
As Mr. Quattro was not a signatory to that agreement, the court found that he could not be held to its arbitration provision.
Read the court’s decision…
Builder to Appeal Razing of Harmon Tower
August 2, 2012 — CDJ Staff
An attorney for Tutor Perini, George Ogilvie, has said that he will appeal to the state Supreme Court to stop Clark County District Court Judge Elizabeth Gonzalez’s ruling from taking effect. She has given the go-ahead to MGM Resorts and CityCenter to implode the building. Ogilvie described the demolition as “a do-over at Perini’s expense” in protesting Gonzalez’s order. Gonzalez has said that she will instruct jurors that the demolition was an admission that the building was badly built. Ogilvie says this is “allowing MGM to bury its mistakes.”
MGM claims that it is only following the directive of county safety officials. “When Clark County demanded that CityCenter abate the potential hazard created by faulty construction at the Harmon, we determined that demolition is the surest, safest and fasted way to do so.”
Read the full story…
Can Negligent Contractors Shift Blame in South Carolina?
July 10, 2012 — CDJ Staff
Clay Olson looks back to a 1991 Carolina case, Nelson v. Concrete Supply Company. The court concluded in that case that “a plaintiff in South Carolina may recover only if his/her negligence does not exceed that of the defendant’s and amount of plaintiff’s recovery shall be reduced in proportion to amount of his or her negligence; if there is more than one defendant, plaintiff’s negligence shall be compared to combined negligence of all defendants.” In 2005, he reports, as part of tort reform in South Carolina, the legislature further addressed this.
He then suggests a possible outcome of this is that negligent contractors may be able to shift some of the blame (and cost of the settlement) to other defendants who may not be to blame. He offers a scenario in which a contractor is sued for construction defects and a jury has to allocate responsibility for indivisible damage. “A jury need only find the two subcontractors to have each contributed 15% of the indivisible damage.” He adds in another 15% for claims against the architect. Minor blame is given to the manufacturers, and suddenly the negligent contractor is paying less than 50% of the total settlement.
He notes that the previous system in place also had its problems, but notes that this one may not be “fair and equitable.”
Read the full story…
Coverage Exists Under Ensuing Loss Provision
July 10, 2012 — Tred Eyerly, Insurance Law Hawaii
Finding coverage under the ensuing loss provision, the Washington Supreme Court overruled a Court of Appeals decision we previously reported here. Vision One, LLC v. Philadelphia Indem. Ins. Co., 276 P.3d 300 (Wash. 2012).
Vision developed a condominium project. Before concrete was poured, a subcontractor supplied the shoring to temporarily support the poured concrete slabs. After the shoring installation was completed, concrete was poured on the first floor. When the pouring was finished, the shoring gave way. The framing, rebar and newly poured concrete came crashing down onto the the lower level parking area, where the wet concrete eventually hardened. It took several weeks to clean up the debris and repair the damage.
Vision had a builders’ risk policy with Philadelphia. The policy excluded losses caused by or resulting from deficient design or faulty workmanship. Collapse, however, was not listed as an excluded event. Further, the exclusion for faulty workmanship contained a resulting loss clause providing that "if loss or damage by a Covered Cause of Loss results, [Philadelphia] will pay for the loss or damage caused by that Covered Cause of Loss."
Philadelphia denied coverage under the faulty workmanship exclusion.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
California Supreme Court to Examine Arbitration Provisions in Several Upcoming Cases
December 9, 2011 — CDJ Staff
Glen C. Hansen, writing on Abbott & Kinderman’s Land Use Law Blog looks at several cases pending before the California Supreme Court which ask if a developer can insist on arbitration of construction defect claims, based on provision in the CC&Rs. Currently, there is a split of opinions in the California appeals courts on the issue.
Four of the cases are in California’s Fourth Appellate District. In the earliest case, Villa Milano Homeowners Association v. Il Davorge, from 2000, the court concluded that the arbitration clause was sufficient to require that construction defect claims undergo arbitration. However, the Fourth Appellate District Court concluded in three later cases that the arbitration clauses did not allow the developer to compel arbitration. In two cases, argued in 2008 and 2010, the court concluded that to do otherwise would deprive the homeowners of their right to a jury trial. In the most recent case, Villa Vicenza Homeowners Association v. Nobel Court Development, the court decided that the CC&Rs did not create contractual rights for the developer.
The Second Appellate District Court came to a similar decision in Promenade at Playa Vista Homeowners Association v. Western Pacific Housing, Inc. In their decision, the court noted that CC&Rs could be enforced by homeowners and homeowners associations, but not developers.
Read the full story…
Rihanna Finds Construction Defects Hit a Sour Note
August 2, 2012 — CDJ Staff
The pop singer Rihanna is suing the former owners of her Beverley Hills home among others in a construction defect lawsuit. She contends that Adriana and Heather Rudomin concealed defects in the home that lead to water leaks and flooding during a 2010 storm. The Beverly Hills Patch noted that the dollar amount of the singer’s suit was not specified.
The most recent court ruling denied a motion from the owners to be dismissed from the lawsuit. They remain part of it, along Landmark Design Group, LLC, which renovated the home before the sale, and Prudential California Realty which sold the home.
Read the full story…
Housing Market on Way to Recovery
October 23, 2012 — CDJ Staff
Bloomberg News reports that new home purchases neared a two-year high, with July sales being the strongest since April 2010. Economists polled by Bloomberg expected an annual pace of 380,000 sales, the current levels are at 373,000. Strongest sales gains were in the Northeast, with a 20 percent jump. The Midwest and Western regions had small gains, and the South saw a drop of 4.9 percent. As the Northeast’s home prices are highest and the South’s the lowest, the pattern of sales lead to a sharp increase in median sales price.
Meanwhile, existing stocks of homes continued to deplete, reaching a record low of 38,000 completed homes on the market. In response, builders are constructing new homes at a pace not seen since April 2010, accord to the Commerce Department.
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
Court Consolidates Cases and Fees in Soil Construction Defect Case
August 16, 2012 — CDJ Staff
The California Court of Appeals has ruled in Burrow v. JTL Development. JTL Development had appealed a judgement in a construction defect case in which JTL Development and Highland Development were found liable for damage due to homes built on unstable and improperly compacted soil. The two companies were sued by the two sets of homeowners, the Burrows and the Balls, and their cases were consolidated at trial. Each family was awarded $700,000 in damages. This judgement had also been appealed and affirmed by the appeals court. In the current case, an additional $235,800 in cost-of-proof sanctions had been awarded to the two families.
Before the trial, Dale Burrows, Charles Ball, and Laurie Ball “asked JTL and Highland to admit that they ‘approved grading plans’ for the Burrows’ and Balls’ properties; ‘had knowledge that the [properties] contained improperly compacted fill’; ‘had knowledge that the [properties were’ not properly prepared for structures’; and ‘did not provide Plaintiffs with a complete soils report’ prepared by Gorian & Associates.” These were requests 14, 19, 20, and 22. JTL and Highland denied all of these.
At trial, the Burrows and Balls proved that all these were true. JTL and Highland’s geotechnical subcontractor, Gorian & Associates, had “recommended that Highland remove and re-compact the entire tract to a depth of 25 feet.” JTL and Highland did not follow this recommendation, “in order to avoid expense.”
After judgment, the Burrows and Balls moved for $582,587.45 for “attorneys’ fees and costs incurred proving the truth of requests for admission.” JTL and Highland claimed that only Dale Burrows could recover fees, but that also the fees were not recoverable. Joe Lynch of Highland “declared that he always believed the soils under the Burrows and Balls homes were properly compacted.” The Burrows and Balls responded with six identical sets of requests for admissions and the court awarded each of them twenty-five percent of $235,800, with JTL and Highland each responsible for fifty percent.
The appeals court noted that JTL and Highland filed a timely appeal and goes on to notes the four circumstances under which a responding party does not have to pay costs and fees. The court concluded that none of these were met. Instead of waiving the request, JTL and Highland denied the request, stating “without in any manner waiving the foregoing objection, responding party denies the request for admission.”
Nor was the admission “of no substantial importance,” instead the court said that the matters were of “substantial importance,” and the “trial would have been shortened by their admission. Highland and JTL “relied on Gorian when it denied the request,” but the trial court “discredited Lynch’s assertions,” finding that “Highland knew the soil was improperly compacted.”
As all plaintiffs had identical discovery requests, the court rejected the claim that only Dale Burrows was entitled to an award.
Read the court’s decision…
Insurance Firm Defends against $22 Million Claim
June 15, 2011 — CDJ Staff
The Houston law firm of Eggleston & Briscoe successfully defended their client, Colony Insurance Company, which was being sued for $22 million over roof hail damage. The Summer Hill Village Community Association did not convince a jury that the insurance company had violated state law or breached its contract when it denied coverage for the roofs. The homeowners association contended that the roof damage was due to a hail storm in 2007. The jury agreed with experts who contended the damage was already present at that time.
Mr. Eggleston noted that “when your client is sued for a claim of $22 million, it is very satisfying to hear a jury agree that they in fact acted honorably and owed nothing.”
Read the full story…
School Sues over Botched Pool
October 23, 2012 — CDJ Staff
The Daily American reports that the Somerset Area School District has alleged that the contractor who repaired and renovated the district’s swimming pool “botched” the job. Now the school has filed a civil case in the Somerset County Court of Common Pleas. The contractor, Wilson Construction Co. would prefer the matter to be settled in binding arbitration.
The school district alleges that the surface installed by Wilson Construction cracked and bubbled due to improper installation. The manufacturer of the waterproofing system, Dryvit Systems, tested the installation and concluded it was an installation failure instead of a product defect. Dryvit told the district that the exterior walls would have be removed.
The school district paid Wilson Construction $591,081 for their work. In their lawsuit, they are seeking $594,596 to cover the cost of draining the pool and repairing it.
Read the full story…
