No-Show Contractor Can’t Hide from Construction Defect Claim
June 19, 2012 — CDJ Staff
The failure of R. J. Haas to produce documents or make himself available for deposition has worn out the patience of the US District Court in San Jose. Judge Howard Lloyd issued a ruling inProbuilders Specialty Ins. Co. v. Valley Corp. (N.D. Cal., 2012).
Probuilders issued an insurance policy covering Haas for their work on the construction of a single-family home for Ty and Karen Levine. The Levines sued Haas for “shoddy and incomplete work.” Probuilders contends that Haas “made material misrepresentations with respect to verifying that the subcontractors had insurance.” Since November 2011, Haas has been without legal counsel in this matter.
Despite Probuilder’s attempts, the court noted that “Hass any not provided any documents in response to the plaintiff’s three sets of requests for production of documents.” Haas also “has refused to make himself available for deposition.” Haas was first scheduled for deposition in September, 2011. Subsequently, Haas has rescheduled his deposition repeatedly, postponing it to January 4, then February 13, and then agreed to be deposed “before the then-scheduled March 15 mediation,” after which he said he would “be unavailable to be deposed before April.
The court noted that although Haas “hay have had legitimate reasons for wishing to continue his deposition, such as illness and his attempt to retain new counsel,” however, the court concluded that “Haas has had ample time to retain new counsel and prepare for deposition.
The court also found fault with Haas’s objections to certain terms in the Request for Admissions, among them “named,” “independent contractor,” and “work,” noting that Haas called these “vague and ambiguous.” The court called it “quibbling,” and noted that the federal courts disfavor this. Later in the decision, the court made it clear that Haas “is obligated under the Federal Rules of Civil Procedure to respond to discovery requests.” And concludes, “that he has apparently been seeking to retain new counsel for over five months does not give him license to ignore plaintiff’s discovery requests entirely.
The court granted Probuilders the option of filing a motion for sanctions. Mr. Haas did not attend or participate.
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.”
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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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Consulting Firm Indicted and Charged with Falsifying Concrete Reports
August 17, 2011 — CDJ Staff
The New York Times reports that a company paid to inspect concrete at major public works projects in New York has been charged with falsifying results. They had been hired by the city three years ago after their predecessor was found to have falsified results.
According to the Times, investigators found nothing legitimate in nearly three thousand reports. The owner and five employees of American Standard Testing and Consulting Laboratories have been indicted on twenty-nine counts, including charges under New York’s racketeering law. Prison terms could be up to twenty-five years.
Prior to the city’s contract with American Standard, the city employed a firm called Testwell. Testwell was found in 2008 to have falsified its test results.
Read the full story…
Boyfriend Pleads Guilty in Las Vegas Construction Defect Scam Suicide
November 7, 2012 — CDJ Staff
One of the odder twists of the Las Vegas construction defect scandal was the charge that Nancy Quon’s boyfriend helped her in an initial suicide attempt. Quon, implicated by not charged in the case of taking control of homeowner boards in order to profit from construction defect settlements. William Webb was alleged to have bought the drug GBH in order to allow Quon, his girlfriend, to commit suicide. Ms. Quon later overdosed on a combination of alcohol and prescription drugs.
In addition to pleading guilty to the drug charges, Webb also made a plea bargain with prosecutors in which he did not admit guilt in an insurance fraud charge, but acknowledged that prosecutors would likely be successful at obtaining a conviction. Webb will be sentenced February 7 and is expected to receive a sentence of six years imprisonment.
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Construction Defect Claim Did Not Harm Homeowner, Court Rules
September 30, 2011 — CDJ Staff
The Minnesota Court of Appeals has ruled in Creswell v. Estate of Howe, a case in which a woman bought a home and then sued the seller’s estate, both sets of real estate agents, and the homeowner’s association over construction defects. A district court ruled against her, granting summary judgment to the other parties.
After buying a townhome “as is,” Catherine Creswell claims to have shared a thought with her agent that the homeowners association was, in the words of her agent, “trying to hide something.” Later, Creswell found that a few days before her closing, the board had discussed problems with “roofs, siding and soundproofing of the townhomes.” The court noted that “it was clear from the documents that appellant [Creswell] received that the association had known about various construction defects for many years, some of which affected [her] unit.”
Creswell initially sued the estate, the man who negotiated the sale for his mother’s estate, the real estate companies and the agents involved, the homeowners association, and four board members. Later she sued for punitive damages, dropped a claim for interference with contractual relations, and dismissed her claims against the individual board members. The court dismissed all of Creswell’s claims awarding costs to those she sued.
The appeals court has affirmed the decision of lower court, noting that Creswell “did not provide us with any argument why the district court erred in dismissing her unjust-enrichment, breach of contract, or rescission claims against the various respondents.” Nor did she provide evidence to support her claims of “breach of duty, fraud, and violation of consumer protection statutes.”
The court noted that Creswell could not sue the homeowners association over the construction defects because she “failed to prove that she was damaged by the association’s nondisclosure.” The court noted that “there are no damages in this case,” as Creswell “was never assessed for any repairs, she had not paid anything out-of-pocket for repairs, and she has presented no evidence that the value of her individual unit has declined because of the alleged undisclosed construction defects.”
The court granted the other parties motion to dismiss and denied Creswell’s motion to supplement the record. Costs were awarded to the respondents.
Read the court’s decision…
Condo Owners Worried Despite Settlement
September 13, 2012 — CDJ Staff
KB Homes may have settled a construction defect claim with Willowbrook Condominium Association, but some of the owners are still concerned about the repair process. The Sarasota, Florida Herald Tribune reports that one homeowner’s living room “ends with a white tarp.” He told the paper, “We feel like we’re not even owners of our own home.” A neighbor wondered “what happens when people get displaced while their homes are gutted?”
As part of the agreement, the condominium association will be selecting a contractor to repair the problems, while the cost will be paid by KB Homes. Nevertheless, at least one owner fears for their ability to resell his home, noting that even after repairs have been made, “do you think someone’s going to come in here and buy?”
Read the full story…
Judge Rejects Extrapolation, Harmon Tower to Remain Standing
November 7, 2012 — CDJ Staff
CityCenter has filed an emergency motion asking the Nevada Supreme Court to intervene in Judge Elizabeth Gonzalez’ order that the building’s defects cannot be extrapolated from those tested. CityCenter’s structural engineering expert “evaluated 397 of the Harmon’s critical structural elements and found all but one defective,” according to the article on Vegas.Inc. Judge Gonzalez would not permit this to be extrapolated to the untested 1,072, as the locations tested were not random.
Judge Gonzalez also ruled that if CityCenter does additional testing, they may not appeal her order that ruled the extrapolation inadmissible. CityCenter argued to the Nevada Supreme Court that “the notion that CityCenter should be forced to incur additional millions of dollars in testing costs and sanctions ?Äì on the condition that it waive its right to appeal this ruling ?Äì just to be permitted to present its own damages evidence, shocks the conscience.”
Gonzalez gave the okay to CityCenter to demolish the building, but its demolition would make any further testing impossible. Under Gonzalez’ ruling, the untested structural elements cannot b assumed to be defective.
Read the full story…
Lien Claimant’s Right to Execute against Bond Upheld in Court of Appeals
February 10, 2012 — Douglas Rieser, Builders Counsel
Stonewood v. Infinity Homes is a simple construction dispute over a matter of about $9,000.00. But sometimes these tiny little disputes turn into expensive legal battles over mere procedural quivering. In Stonewood, a small subcontractor won a big victory yesterday when the Divison 1 Court of Appeals upheld its judgment against a lien release bond posted by an owner.
Infinity Homes contracted with Stonewood Design to lay tile in one of its customer’s homes. Stonewood did the work, but Infinity withheld roughly $9,000.00 of the contract sums for what it alleged were trade damages left on the tile. The two parties were unable to come to an agreement over payment and Stonewood proceeded with a lien under RCW 60.04. It then filed an action to enforce the lien against the homeowner, Infinity and its bonding company.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Defense for Additional Insured Not Barred By Sole Negligence Provision
August 11, 2011 — Tred Eyerly, Insurance Law Hawaii
A general contractor was entitled to a defense as an additional insured when the underlying complaint did not allege it was solely negligent. A-1 Roofing Co. v. Navigators Ins. Co., 2011 Ill. App. LEXIS 656 (Ill. Ct. App. June 24, 2011).
A-1 was the general contractor for a roof resurfacing job at a high school. Jack Frost Iron Works Inc. (“Frost”) was one of A-1’s subcontractors. Frost had a CGL policy with Navigators Insurance Company under which A-1 was an additional insured.
An employee of Frost’s subcontractor Midwest Sheet Metal Inc. was killed at the job site when a boom-lift he was operating flipped over. The boom-lift had been leased by another Frost subcontractor, Bakes Steel Erectors, Inc. (BSE). The deceased's estate filed suit against A-1, BSE and two other defendants.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Is Construction Heading Off the Fiscal Cliff?
December 20, 2012 — CDJ Staff
After a period of growth, the construction industry lost 20,000 jobs in November, based on the federal jobs data. Damon Scott of New Mexico Business Weekly suggests that contractors may have laid off employees in anticipation of the “fiscal cliff.” Ken Simpson, the chief economist of the National Association of Home Builders said in a press release that “it is discouraging that construction employment is still struggling after three years of expansion in the overall economy.”
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Defective Grout May Cause Trouble for Bridges
August 16, 2012 — CDJ Staff
Grout, which was used to protect the steel support cables of the Woodrow Wilson Bridge, may lead to problems instead. The Baltimore Sun reports that the Federal Highway Administration is looking at three dozen bridges in twenty-one states that were built with defective grout. The grout contains high levels of chlorides, which can lead to corrosion. The collapse of pedestrian walkway in Concord, North Carolina was attributed to chloride contamination in the grout.
The grout, SikaGrout 300PT, was advertised as "non-corrosive, does not contain chlorides," but later testing showed that it contained levels that exceeded limits by 400 percent. Throughout the country, about 16 million pounds of this were used. Sika Corp. suspended production of the grout in 2010. If repairs need to be made, it is unclear who will pay.
Read the full story…
Minnesota Starts Wide-Ranging Registration of Contractors
July 10, 2012 — CDJ Staff
Minnesota has replaced its Independent Contractor Exemption Certificate program with the Contractor Registration Pilot Project, according to an article in the Martindale-Hubble Legal Library by Michael B. Lapicola. Mr. Lapicola notes that “it will be a violation of the law to contract with or perform construction services for another person without first being registered with the Pilot Project, or to contract with or pay another person to perform construction services if the other person is not registered with the Pilot Project. There are, however, quite a few exceptions, including those who are currently registered with the earlier program. Additionally, independent contractors who do not register can avoid the fine (up to $2,000) by registering within thirty days of fines being levied. Individuals and firms that do not perform building construction or improvements are exempt from the hiring aspects of the statute.
Minnesota’s goal is to “assist state agencies to investigate employee misclassification in the building industry.” Employees of construction firms do not individually register. Rather, the intent of the of law is to stop those who would “require any individual through coercion, misrepresentation or fraudulent means to adopt independent contractor status” or to “knowingly misrepresent or misclassify an individual as an independent contractor.”
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Don MacGregor To Speak at 2011 West Coast Casualty Construction Defect Seminar
January 1, 2011 — February 08, 2011 CDJ Staff
“Challenges for Experts in Construction Defect Claims and Litigation” will be held Thursday May 13, 2011 between 1:30 and 3:00 PM at this year’s West Coast Casualty Construction Defect Seminar. Among the various topics covered will be of Right to Repair/Opportunity to Repair statutes, improper testing methodologies, new challenges where a case involves a Wrap Policy, OCIPS, CCIPS, and other owner controlled insurance programs, as well as the need for realistic testing protocols for the party the expert is retained to represent.
During the presentation Mr. MacGregor will be working in connection with a group of construction and design experts each of which have extensive experience with construction defect and claims related litigation. This particular session is expected to attract a standing-room only crowd, drawing in excess of 1700 attendees.
The West Coast Casualty Construction Defect Seminar is the largest seminar of its type. This year’s event is scheduled for will take place on May 12 and 13, 2011, at The Disneyland Hotel and Resort. For more information regarding the years event please visit http://www.westcoastcasualty.com/dyncat.cfm?catid=3322
http://www.westcoastcasualty.com/dyncat.cfm?catid=3322
Ambitious Building Plans in Boston
November 18, 2011 — CDJ Staff
Although most are unlikely to change the Boston skyline, there are several large projects on the drawing boards. The site BostInnovation covered ten of them in a recent post. Downtown Boston will be the site of several of these large projects, including three towers to be added to the Christian Science Plaza, a 404-unit residential tower in the Theater District, and perhaps the largest of these projects, a 47-story tower to be built over Copley Plaza, which will tower over the adjacent buildings. None of the planned buildings will challenge the Hancock Tower’s 60 stories.
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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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Ceiling Collapse Attributed to Construction Defect
May 19, 2011 — May 16, 2011 - CDJ Staff
WSMV, Nashville reports that the ceiling collapse in a Franklin, Tennessee Kohl’s was attributed to a construction defect by fire officials. The officials noted that the ceiling was renovated at the time. No injuries were reported.
The report notes that “inspectors were supposed to look at the renovations next week, but fire officials said that will have to be delayed until another time.”
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Preventing Costly Litigation Through Your Construction Contract
August 17, 2011 — Douglas Reiser, Builders Counsel
It’s Tuesday, which means it ’s the middle of your work week. Tuesday is a great time to take an hour to look over your contracts, while the crews are pushing through their scheduled work. Today’s food for thought: How do you use your contract to reduce your litigation burden?
Your contract should do many things. It should discuss the scope of work, scheduling of work, quality of work, coverage for liabilities and conditions and timeliness for payment. But often overlooked is how your contract can lend to dispute resolution.
Commonly, you will see a simple provision that covers governing law, venue for disputes and the awarding of attorneys’ fees. But you can do better. Remember, a contract is enforced to the maximum extent possible in Washington state.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
