West Coast Casualty Promises Exciting Line Up at the Nineteenth Annual Conference
March 28, 2012 — CDJ Staff
West Coast Casualty has announced the lineup for the annual WCC Construction Defect Seminar. This year’s seminar will be the nineteenth anniversary, and it will be held on May 17th and 18th, 2012 in Anaheim, California. They are the largest construction defect event in the world and this year’s seminar will again bring the top people in the field to address many of the current issues and where the construction defect community will be going in the future.
The event, anticipated to be even larger than prior years, will have numerous panels and presentations on the current state of construction defect litigation. Among the topics that will be presented are “Arbitrate? Let’s See You Make Me!” “Defending Construction Defect Failure Mechanisms?An Expert’s Perspective,” and “Current Trends in Effectively Handling SB800 Cases.”
Speakers at the event will include judges, lawyers, and representatives of the insurance industry. One event, “Meet Your Judges, A Candid Discussion on Construction Defect Claims and Litigation from the Bench?” will include judges from five states, including the Honorable Nancy M. Saitta, Chief Justice of the Nevada Supreme Court, the Honorable Clifton Newman of the South Carolina Circuit Court, and the Honorable Rex Heeseman of the Los Angeles County Superior Court.
Daniel A. Berman, Esq. and Stephen Henning, Esq. will be talking on the topic of “Social Networking Sites: Strategies, Ethical Pitfalls, and Practice Pointers for Litigating and Winning Your Construction Defect Case.” Mr. Berman is a Founding and Managing Partner of Wood, Smith, Henning & Berman LLP. He has been named a Southern California Super Lawyer for eight consecutive years. Mr. Henning is a Founding Partner of Wood, Smith, Henning & Berman, LLP and Fellow of the Litigation Counsel of America. Mr. Henning will also be one of the presenters on the panel “Important Court Decisions Impacting Construction Defect Claims.”
The panel “Why Do We Need to Know Certain Things and How Decisions Are Made” will be presented by important figures in the construction claims industry, including Phyllis Modlin, Todd Schweitzer, Teresa D. Wolcott, and Lee Wright. Ms. Modlin is a Construction Defect Claims Supervisor responsible for nationwide claims for Markel Corporation. Mr. Schweitzer is an Assistant Vice President of Major Case for Construction Defect and Professional Liability Claims Services at Zurich North America. Ms. Wolcott is the National Product Manager for Construction Defect Claims within the Construction Claims Organization at Travelers Insurance. Mr. Wright is an Assistant Vice President and Senior Claims Consultant for XL Specialty Insurance.
The event will also include a Science and Technology Fair in which exhibitors will be presenting technological problem solving and decision making as they relate to resolving ongoing construction and post construction-defect related issues while reducing costs for all those involved in claims and litigation. The fair is dedicated to these novel applications of science and technology that benefit the construction defect community but are not yet commonly available. This will be the third time the Construction Defect Seminar will include a Science and Technology Fair.
Sessions at the event are approved for MCLE credit in Arizona, California, Colorado, Illinois, Maine, Minnesota, New York, Ohio, and Pennsylvania. MCLE credits vary by state; attendees can obtain up to 10.25 hours of credit in Arizona, California, Maine, and New York. Applications for several other states are still pending. Additionally, the event is also worth continuing education credits with the Florida Department of Insurance and for Registered Professional Adjusters. West Coast Casualty has applications pending for adjuster continuing education in an additional thirty-six states.
West Coast Casualty recommends this event for anyone involved in construction or construction defect claims, whether they are a claims adjuster, a member of a homeowner board, a judge, a property manager, a construction claims attorney, a general contractor, or anyone else with an interest in this area. The event typically has more than 1,600 attendees. Those interested can register online.
Read the full story…
The Complete and Accepted Work Doctrine and Construction Defects
August 16, 2012 — CDJ Staff
Matthew C. Bouchard of Lewis & Roberts PLLC, writes how North Carolina is “bucking the trend” on the “complete and accepted work doctrine.” As he notes, in most states “a contractor can be found liable for personal injuries suffered by third parties from accidents occurring after the contractor’s work is completed and accepted.” But one exception is North Carolina.
He gives the example of a case, Lamb v. D.S. Duggins Welding, Inc., in which a site superintendent was “injured by the alleged negligence of the project’s steel deck installer, a sub-subcontractor in the contractual chain” “after the sub-sub’s work had been completed and accepted.” The trial court held that the “completed and accepted work doctrine” ended the subcontractor’s liability. The case noted that “employees of the general contractor had modified the installation of the perimeter safety cable in question after the sub-sub had demobilized from the site.”
Mr. Bouchard notes that “once a project is accepted and turned over, the contractor typically loses control over maintenance of the new facility.” However, he notes that “where the contractor’s work constitutes negligence ?Ķ the doctrine may not apply.” Nor does it end breach of contract claims. It only covers third parties.
Read the full story…
Virginia Homebuilding Slumps After Last Year’s Gain
June 19, 2012 — CDJ Staff
As of May, only 61 residential construction permits have been issues in Roanoke County, Virginia, leaving officials doubtful that this year will meet last year’s mark of 179 permits. Residential construction was at its highest in the county in 2004. The worst year since then was 2009, when the county issued 143 permits. The county is in the western end of the state, near the border with West Virginia, and far from the D.C. metropolitan area.
Arnold Covey, the Director of Community Development for the county said that “it may be until 2014 before we really see a difference. The article by WDBJ7.com notes that a “key part” of the county budget comes from real estate.
Read the full story…
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
In Oregon Construction Defect Claims, “Contract Is (Still) King”
April 25, 2012 — CDJ Staff
Writing in Oregon’s Daily Journal of Commerce, David Anderson looks at the aftermath of the case Abraham v. T. Henry Construction, Inc. In that case, Anderson notes that “the homeowners hired a contractor to build their house, and subsequently discovered extensive water damage” “after expiration of the time to sue for breach of contract.” The homeowners claimed negligence. Oregon’s Supreme Court concluded that “homeowners only had to prove that the contractor negligently caused reasonably foreseeable harm to the homeowner’s property.”
Anderson views this decision as leading to two risks for contractors. “First, contractors can be held liable in tort for breaching building code standards; second, they can be held liable for violating the often-difficult-to-define ‘reasonable care’ standard.” But here, “contract can be king.” The Oregon Supreme Court noted that the contractor “could have avoided exposure to the general ‘reasonable care’ standard by more carefully defining its obligations in the original construction contract.”
He notes that contractors who fail to define their obligations or use generic definitions “may be exposing themselves to a more vague scope of liability.”
Read the full story…
Arbitration Clause Found Ambiguous in Construction Defect Case
October 28, 2011 — CDJ Staff
The California Court of Appeals ruled on September 28 in the case of Burch v. Premier Homes. Ms. Burch bought a home after negotiating various addendums to the contract. The contract was a standard California Association of Realtors contract to which both the buyer and seller made additions. At issue in this case was paragraph 17 of the contract which included that “Buyer and Seller agree that any dispute or claim in Law or equity arising between them out of this Agreement or resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration.”
The seller/defendant’s Addendum 2 “included provisions relating to the arbitration of disputes that may arise.” Ms. Burch’s realtor, Lisa Morrin, told Burch that “she had never seen a proposed contractual provision that would require a home buyer to agree to arbitrate with a builder over construction defects.” Ms. Burch told Morrin that she did not want to buy the property if she would have to give up her rights under California law.
As part of Addendum 2, the buyer had to buy a warranty from the Home Buyers Warranty Corporation. The sale was held up for a while, as Ms. Burch waited for a copy of the warranty. When she received it, she took further exception to Addendum 2. Scott Warren of Premier Homes said he could not sell the property without Addendum 2. Ms. Burch told her realtor that despite the claims made by Mr. Warren that this was for her benefit, she felt it was more to the benefit of Premier Homes. Don Aberbrook of HBW agreed to the clause, contained in the final sentence of Addendum 2, being struck.
Subsequent to buying the home, Burch submitted a claim concerning construction defects. HBW denied the claim and Burch began an action against the defendants. Premier filed a motion to compel arbitration which Burch opposed.
The trial court ruled that the striking out of the arbitration clause at the end of Addendum 2 “created a conflict with respect to the parties’ intent as to the scope of arbitration.” The trial court found that “the parties’ intention was to preserve Burch’s right to make state law claims including her right to a jury trial for any non-warranty claims against the builder.”
The appeals court in their ruling looked at the standard of review and concluded that the purchase agreement was ambiguous and that extrinsic evidence was required to resolve that ambiguity. As the contract contained contradictory provisions as to whether or not arbitration was required, it was necessary for the trial court to examine these claims. The appeals court found that the evidence supported the conclusions of the trial court.
Finally, the appeals court found that “there was no valid agreement to arbitrate disputes.” The court noted that arbitration can only happen by mutual consent and “it is clear that Burch did not enter into an agreement to arbitrate any construction defect disputes she might have.”
Read the court’s decision…
Nevada Assembly Sends Construction Defect Bill to Senate
June 6, 2011 — CDJ Staff
In a 26 to 16 vote, the Nevada Assembly has passed Assembly Bill 401, which extends the time limit for legal action over home construction defects. According to the Las Vegas Sun, Assembly member Marcus Conklin, Democrat of Las Vegas, said the bill was about “keeping the consumer whole.” However, Ira Hansen, Republican of Sparks, told the sun that suits are happening before contractors can make repairs. The bill would allow attorney fees even if repairs are made.
Read the full story…
Federal Judge Dismisses Insurance Coverage Lawsuit In Construction Defect Case
December 9, 2011 — CDJ Staff
A federal judge dismissed a coverage lawsuit brought by Mid Continent Casualty Company against its insured, Greater Midwest Builders Ltd.
Plaintiff brought this declaratory judgment action in response to a suit filed in Johnson County District Court, seeking a judicial determination that it had no coverage obligation for claims asserted against its insured. This case was stayed until the state court action entered judgment against the insured. The prevailing parties then commenced a garnishment action against the plaintiff, and another insurance company, in state court in Missouri. The court was asked whether it should lift the stay and proceed with the case, or decline jurisdiction in favor of resolution in the Missouri state court.
The court granted the motion to dismiss holding that proceeding with the case would lead to protracted, piecemeal litigation, while deferring to the Missouri state court would decide all the claims involved in the dispute.
Read the court’s decision…
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...
Construction on the Rise in Denver
September 13, 2012 — CDJ Staff
In another sign of a recovery in the housing industry, the Denver Business Journal reports that the pace of new home construction has accelerated in the Denver area. According to the article, in the first seven months of 2012, forty-eight percent more permits were issued than in the first seven months of 2011. In July, 2012, there were sixty-six percent more permits than a year previously. For the Denver metropolitan area, July was the sixteenth consecutive month in which permits were up from a year previously.
Read the full story…
Construction Defects in Home a Breach of Contract
September 9, 2011 — CDJ Staff
The Supreme Court of North Dakota has ruled in Leno v. K & L Homes, affirming the verdict of the lower court. K & L Homes argued that district court had erred in several ways, including by refusing to instruct the jury on comparative fault, denying a request for inspection, and not allowing a defendant to testify on his observations during jury viewing.
The Lenos purchased a home constructed by K & L Homes, after which they alleged they found cracks, unevenness, and shifting, which they attributed to improper construction. They claimed negligence on the part of K & L Homes. K & L Homes responded that the Lenos were responsible for damage to the home. The Lenos dropped their negligence claim, arguing breach of contract and implied warranties.
Before the trial, after the discovery period had passed, K & L Homes requested to inspect the home. This was rejected by the court. Kelly Moldenhauer, the owner of K & L Homes sought to testify about his observations during the jury’s viewing of the house. The court denied this too. The jury found that K & L was in breach of contract and awarded damages to the Lenos.
The North Dakota Supreme Court noted that K & L Homes gave “warranties that the home had been built according to local building codes and laws, and that the house was fit for its particular purpose as a residence.” The court found that a defective home breached this warranty. Further, the home violated an implied warranty of fitness.
The district court had denied K & L’s request to inspect the home, as the discovery period had ended and it would not give the Lenos time to do further discovery of their own. At the time of the request, there was only twenty-two days before the trial. The Supreme Court ruled that this was not an abuse of discretion of the part of the district court.
The Lenos had requested that Moldenhauer’s testimony not be permitted, as it would “have the same effect as if the court had granted K & L Homes’ pretrial request for inspection.” K & L Homes agreed to this in court, replying, “okay.”
The decision affirms the judgment of the district court and the damages awarded to the Lenos by the jury.
Read the court’s decision…
District Court Awards Summary Judgment to Insurance Firm in Framing Case
August 4, 2011 — CDJ Staff
In the case of Continental Western Insurance Company v. Shay Construction Inc., Judge Walker Miller has granted a summary judgment against Shay Construction and their co-defendant, Milender White Construction Company.
Shay was the framing subcontractor for Milender White on what the court described as “a major construction project in Grand County, Colorado.” Two of Shay’s subcontractors, Wood Source Inc. and Chase Lumber Company furnished materials, labor, and equipment to Shay. They subsequently sued for nonpayment and sought to enforce mechanic’s liens, naming both Shay and Milender as defendants. Milender White alleged that Shay had “breached its obligation under its subcontracts with Milender White.”
Shay’s insurance provider, Continental Western, stated that its coverage did not include “the dispute between Shay, its subcontractors, particularly the cross claims asserted by Milender White.” Shay then sued Continental Western, alleging breach of contract and statutory bad faith.
The court, however, has found with Continental Western and has granted them a summary judgment. They found “no genuine issue as to any material fact.” The judge did not side with Continental Western on their interpretation of the phrase “those sums that the insured becomes legally obligated to pay as damages.” The court found that the Colorado courts have not limited this to tort actions only. However, as Milender’s cross claim included claims of faulty workmanship on the part of Shay, Judge Miller found for Continental.
Read the court’s decision…
Pipes May Be Defective, But Owners Lack Standing
September 13, 2012 — CDJ Staff
The United States District Court in Minnesota has determined that Steven and Cecilia Thundander cannot make a class-action claim against Uponor, Inc. over the plumbing in their home, as they do not have Article III standing. In this situation, the alleged defect is that Uponor made fraudulent claims that the pipes met National Sanitation Foundation (NSF) standards for use in potable water systems. Uponor submitted samples of other pipes, and their substitution was discovered when the NSF made an inspection of the manufacturing facility. The court noted that “the Thunanders contend that Uponor failed to inform homeowners, plumbers and consumers that it had been selling pipe that failed to meet NSF toxicity requirements at the time of sale and installation.”
The Court noted that the Thunanders have not tested their piping to determine if they “demonstrate toxicity or lack of compliance with the NSF 61 standards,” noting also that the Complaint seeks to require Uponor to instruct the plaintiffs on “how to test the piping and water to determine the level of risk.” Lacking testing, the Court could not find that the Thundanders have defective pipes. The Court found that the “Plaintiffs have failed to adequately plead an injury in fact sufficient to confer standing as to their product liability claims.”
The Court also concluded that it could not determine if the Plaintiff’s warranty actions could not be applied, as they “have failed to allege a plausible defect.” Even in the presence of a defect, the Court noted that more than eight years had passed before the filing of the suit, when the warranties under both Indiana and Minnesota law have a four-year statute of limitations. The Court also rejected the Thunanders tort claims, once again because “Plaintiffs have not tested their pipes,” noting that “a tort requires the existence of an injury.”
In conclusion, Judge Nelson rejected the entirety of the complaint, granting the motions to dismiss by the defendants. However, despite the problems with the Thunanders’ claims, she found that they were not “patently frivolous or groundless.” Therefore, she denied attorney fees requested by one of the defendants.
Read the court’s decision…
Know the Minnesota Statute of Limitations for Construction Defect Claims
July 10, 2012 — CDJ Staff
Writing on the Benson Kerrane Storz Nelson web site, Alex Nelson gives an overview of the Minnesota laws covering statutes of limitation and repose. He notes that frequently when his firm declines to take a construction defect case its’ over a missed statute of limitation. He describes the time periods as both “short” and “ambigious.” The briefest limit is that a homeowner “has only 6 months within which to give written notice of the defect to the builder once the defect has manifested itself.” Any legal action must commence within two years of the same point.
The Minnesota statutes also have a six-year limitation, which starts for a single home at transfer of title to the first purchaser or when the purchaser takes possession, whichever happens first. For a condo, it is the last of “completion of the common element,” first unit sale or “Termination of Declarant control.” Fraud or misrepresentation also has a six-year limit, while negligence claims are limited to within the first two years “after the manifestation of the defect.”
The statues of repose also provide limits to filing construction defect lawsuits. Mr. Nelson points out that the longest are for negligence, fraud, and “major construction defects,” all of which have a ten-year limit. On the other hand, claims against general workmanship and materials must be made in the first year.
Read the full story…
OSHA Extends Delay of Residential Construction Fall Protection Requirements
September 13, 2012 — CDJ Staff
OSHA has announced a fourth delay in full implementation of requiring fall protection in residential construction. The requirements, which would obligate those in residential construction to use the same degree of fall protection as is used in commercial construction, were originally set to go into effect in September 2011. As part of the phasing in of the new requirements, penalties were reduced, originally until March 2012. This has now been extended until December 15, 2012.
Read the full story…
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…
Fourteen More Guilty Pleas in Las Vegas Construction Defect Scam
June 19, 2012 — CDJ Staff
The ongoing case over claims that a group fixed homeowner board elections in order to supply the conspirators with a stream of construction defect cases and repairs has lead to fourteen guilty pleas. The judge recently issued charges against fifteen of the accused; one defendant did not join in the group as he was recovering from pneumonia. The prosecutors have asked the judge to delay sentencing, as the investigation is continuing. Prosecutors note that another dozen people may be indicted.
Along with an earlier group who plead guilty, this brings the total number of guilty pleas in the case to twenty-five. All have promised to cooperate with authorities.
The case has also involved four deaths, although authorities have not suspected foul play in the deaths. Nancy Quon, one of the four, was the construction defect attorney suspected to be at the center of the conspiracy.
Read the full story…
Homeowners Not Compelled to Arbitration in Construction Defect Lawsuit
January 6, 2012 — CDJ Staff
A California appeals court has ruled that developers cannot enforce CC&Rs in a case where a developer cited an arbitration clause it had inserted into the CC&R. The homeowners are alleging construction defect and wished to sue the developer who claimed a right to this under the CC&Rs.
The Marina del Rey Argonaut reports that particular appeal dealt only with whether the developer could compel arbitration. The underlying construction defect issues will subsequently have to be determined at trial.
The attorney for the homeowners’ association, Dan Clifford, noted that “arbitration has to be agreed to by both parties.” The covenant was drafted by the developer and in addition to requiring arbitration, it had a clause that it could not be amended without the consent of the developers. The court ruled that CC&Rs “can be enforced only by the homeowners association, the owner of a condominium or both.”
Read the full story…
