DANSVILLE MICHIGAN CONSTRUCTION EXPERT WITNESS
DIRECTORY AND CAPABILITIES

Virginia Homebuilding Slumps After Last Year’s Gain

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…

Defective Drains Covered Despite Water Intrusion Exclusion

The US District Court in Washington State has granted a summary judgment in Hiller v. Allstate Prop. & Cas. Ins. Co. The Hillers bought a new home in Wenatchee, Washington and insured it with an “all risk” policy from Allstate. Subsequently, Mr. Hiller discovered that the carpet in the basement was saturated with water. Hiller notified Allstate who requested that he determine the source of the water intrusion. Hiller poured water into a downspout drain and found this caused water to leak into the home’s basement.

Further investigation with the homes original excavation contractor revealed that “the end of the drain pipe was partially blocked by rocks and had been wrapped with fabric landscaping material.” Additionally, “a ‘T’ pipe installed at the foot of the drain was directing water toward the house’s concrete foundation.” Allstate denied the claim “under the policy’s surface water, subsurface water, inherent vice, and latent defect exlusions.” After the denial, Hiller “discovered that the foundation had not been treated with waterproof sealant and that several concrete form pins were still in place.”

The court noted that “there is no genuine dispute about the cause of the claimed loss.” This left the court concluding that “the only relevant question for the purposes of the instant cross-motions for summary judgment is whether a loss caused by defective construction is covered under the Hillers’ ‘all risk’ insurance policy.” Under Washington’s “efficient proximate cause” rule, “where an insured risk itself sets into operation a chain of causation in which the last step may have en an excepted risk, the excepted risk will not defeat recovery.” The court found that a loss caused by defective construction is in fact covered under the policy, noting that “the policy does not contain an exclusion for defective construction.”

The court concluded that the defective drain was not an inherent vice, as it “cannot properly be characterized as defects ‘inherent [in the] nature of the commodity which will cause it to deteriorate with a lapse of time.” Nor was it a latent defect, “one that could not have been discovered by inspection.” The court concluded that “both of the construction defects at issue could have been discovered by a reasonable inspection.”

With these facts determined, the court found for the Hillers.

Read the court»s decision…

Construction Defect Claim Did Not Harm Homeowner, Court Rules

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…

Pier Fire Started by Welders

Welders working on Pier 29 in San Francisco were preparing the building for the America’s Cup sailing race. Instead, they accidentally caused $2.4 million in damages. Mindy Talmadge, a fire department spokesperson, attributed the fire to crews welding a latter to a wall. According to Talmadge, a spark entered a crack in the concrete wall and “the wood on the building underneath was really dry.” It took firefighters more than two hours to extinguish the blaze.

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California Supreme Court to Examine Arbitration Provisions in Several Upcoming Cases

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.

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Consumer Protection Act Whacks Seattle Roofing Contractor

It’s been over 1 year since we last visited the CertainTeed Corp. v. Seattle Roof Brokers lawsuit. After my original post, the contractor, James Garcia, appeared at Builders Counsel in a comment to defend himself. It appears that 1 year later, the court decided to side with CertainTeed and award them significant attorneys’ fees. Ready for the whole story? Its a pricey one.

Back in July 2010, good friend Mike Atkins (Seattle Trademark Attorney) authored a post about a Seattle roofing contractor who had been sued for false advertising on his website. The lawsuit was raised by CertainTeed, a roofing material producer, whose products were the target of a Seattle contractor’s ire. Seattle Roof Brokers, owned by James Garcia, published content on its website, remarking that CertainTeed products have a history of “premature failure” and that they “will fail?.resale inspection after 15-20 years.”

CertainTeed filed its action to obtain an injunction and damages under the Consumer Protection Act.

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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com

Home Repair Firms Sued for Fraud

The Illinois Attorney General has filed a lawsuit in Cook County Circuit Court alleging that two connected firms took money from homeowners and then failed to perform the contracted work. One of the three defendants, Chris Bidigare, was an owner of agent of both Fairway Construction and Maintenance Services, LLC, and Rock Construction Management, LLC.

In once case, according to the article on the OakPark Patch, one homeowner provided a $111,000 down payment, only to have the company cancel the job and refuse to return the money. One homeowner was told by Fairway that she should contact their insurance provider. The insurance provider told her that Fairway’s insurance had been cancelled due to non-payment.

The suit seeks to bar the three defendants from working in home repair in Illinois.

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State Farm Too Quick To Deny Coverage, Court Rules

On July 13, 2011, Judge Sarah S. Vance of the US District Court issued a rule in the case of Travelers Cas. & Surety Co. of Am. v. Univ. Facilities, Inc. (E.D. La., 2011). In this case, Stanley Smith Drywall was contracted by Capstone Building Corporation to “perform undisclosed work at the facility believed to involve the installation of drywall.” The project involved the design and construction of student residences for the Southeastern Louisiana University in Hammond, Louisiana. In May, 2009, University Facilities, Inc. (UFI) sued Capstone Development Corporation and Capstone On-Campus Management.

State Farm insured Stanley Smith Drywall and they sought a declaration that they have no duty: “(1) to insure Stanley Smith or CBC, or (2) to defend or indemnify any party against UFI's claims in the pending arbitration.” State Farm contends “(1) there is no "occurrence" to trigger coverage under the policy; (2) only breach of contract claims are asserted; (3) there is no property damage alleged; and (4) various coverage limitations and exclusions apply to prevent coverage.’

The court concluded that “whether State Farm has a duty to defend in the arbitration must be determined by considering the claims asserted in the arbitration.” However, the arbitration claims were not made part of the record. There, “, the Court cannot determine as a matter of law State Farm's duty to defend on the present record.” The same was true of State Farm’s duty to indemnify. “Stanley Smith and CBC assert that State Farm's motion for summary judgment was filed before any discovery was conducted in the arbitration proceeding or in this case. The Court finds that State Farm has failed to develop the record sufficiently to establish that there is no genuine issue of material fact as to its duty to indemnify Stanley Smith or CBC in the arbitration.’

The court denied State Farm’s motion for a summary judgment on its duty to defend and indemnify.

Read the court’s decision…

Colorado Senate Bill 12-181: 2012’s Version of a Prompt Pay Bill

A potentially important legislative bill has been introduced in waning days of the 2012 legislative session, which would change many of the commercial practices that prevail in the construction industry. Senate Bill 12-181 applies to all building and construction contracts and would prohibit any contract provision that requires a contractor, subcontractor, or supplier to waive their lien in advance of payment. It also would ban any “choice of law” provisions that make a Colorado-based construction contract subject to enforcement only in another state, or under the laws of another state.

The bill also seeks to change many existing commercial practices between contractors, subcontractors, and suppliers. It is presently unclear whether the bill allows parties to contract around these payment procedure provisions, or whether these requirements are simply “gap filling” provisions that pertain if there are no written contract terms specified on these issues. The proposed statute would mandate payment to subcontractors and material suppliers due within seven days in the absence of a dispute about the work or materials being billed. After this seven day period, the bill would require the payment of interest at the rate of 1.5% monthly (18% annually). In any later suit for payment, the creditor would also be able to collect reasonable attorneys’ fees. Additionally, non-payment to a subcontractor or supplier who is later found to be entitled to prompt payment would excuse the subcontractor or supplier, and its surety bond provider, from any further performance under the contract.

It is presently unclear whether the bill allows parties to contract around these payment procedure provisions. However, it is clear that the bill provides some leeway for change orders, as long as there is (1) negotiation in good faith between the parties concerning the changed scope of work, and (2) a 50% payment of a subcontractor’s costs by the changing party within 30 days of the change order work being done. Additionally, the bill provides for retainage, but in an amount of no more than 5%.

The bill is presently set for hearing before the Colorado Senate Committee on Business, Labor, and Technology Committee on May 2, 2012 at 1:30 p.m.

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Reprinted courtesy of W. Berkeley Mann, Jr. of Higgins, Hopkins, McLain & Roswell, LLC. Mr. Mann can be contacted at mann@hhmrlaw.com.

West Hollywood Building: Historic Building May Be Defective

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…

Insurer Not Liable for Construction Defect Revealed by Woodpecker

The Eighth Circuit Court of Appeals has ruled that an insurance provision that excluded construction defects must stand in Friedberg v. Chubb, granting a summary judgment to the insurance firm.

The Friedbergs discovered extensive water damage to their home after a woodpecker drilled a hole in a vertical support. They sought insurance coverage under their Chubb “Masterpiece” policy. The decision quotes the policy as covering “all risk of physical loss” “unless stated otherwise or an exclusion applies.” These exclusions included “gradual or sudden loss,” “structural movement,” and “faulty planning, construction or maintenance,” but the policy covered “ensuing covered loss unless another exclusion applies.”

Chubb’s expert determined that the Friedbergs’ home had defective construction, and “attributed the damage to the beams and walls below the beam to a failure to install control joints.” After Chubb denied coverage, the Friedbergs sued, although the court ruled that “even under the Friedbergs’ theory, the water damage was a loss caused by faulty construction and therefore excluded under the policy.”

On appeal, the Friedbergs argued that “the loss resulted from the combination of both faulty construction and the presence of water” and that Minnesota’s “concurrent causation” doctrine must apply, which according to the decision, “when a loss results from both a covered peril and an excluded peril, coverage exists unless the excluded peril is the ‘overriding cause’ of the loss.” The court rejected this reasoning, noting that “once the house was plagued with faulty construction, it was a foreseeable and natural consequence that water would enter.”

The Friedbergs also contended that “the damage caused by the intrusion of water into their home is an ‘ensuing covered loss’ for which they are due coverage.” The court also rejected this claim, noting that Minnesota law excludes defective construction from the ensuing loss provision. The court said that “the Friedbergs’ reading of their ensuing-loss clause, by contrast, would dramatically limit their policy’s faulty-construction exclusion, because almost ‘any loss cause by’ faulty construction could also be characterized as an ensuing loss under an all-risk policy.”

Read the court’ decision…

South Carolina Contractors Regain General Liability Coverage

PR Newswire reports that the Carolinas Associated General Contractors (CAGC) have successfully persuaded the South Carolina legislature to pass a bill restoring commercial general liability (CGL) coverage. Governor Nikki Hartley signed the legislation on May 17.

A South Carolina Supreme Court decision given on January 7, 2011, had ended commercial general liability coverage in the state. Senate Bill 431 addressed this decision, restoring the ability of home builders to obtain CGL coverage.

PR Newswire quotes South Carolina homebuilder, Allen Amsler: “We have seen a lot of legislation with substantial impact to our business over the years. However, I would place this in the same level of importance with the original tort reform legislation. The effects of the Supreme Court’s ruling could have been catastrophic to our industry in South Carolina had it not been for this bill. Thanks to all those in the House, Senate and the Governor’s office who assisted us.”

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Arizona Homeowners Must Give Notice of Construction Defect Claims

Chris Combs of the Combs Law Group notes that “the new home construction industry is recovering” and that some of the buyers of these homes “will have claims for construction defects.” But not so quick on filing that claim.

Under Arizona law, as Mr. Combs notes the law “requires that, at least 90 days before filing any lawsuit, the buyer furnish notice by certified mail to the homebuilder specifying in detail the construction defect.” Only if there is no agreement over proposed repair can the homeowner file a lawsuit.

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

By now, you have probably heard that the USGBC has decided to delay implementation of its previously named “LEED 2012” rating system. What you might not know is exactly why this is happening. Rest assured that the decision was not made willy nilly ?Äì LEED 2012 had many industrial groups running for the hills.

I have spent the past few weeks reading a number of articles on the backlash. LEED 2012 was intended to create a seismic shift; it was not a mere update. A strict focus on reduction of chemicals, created mass panic that a large number of material providers’ products would essentially be banned from green projects ?Äì meaning most local, state and federal projects.

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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com

Negligent Misrepresentation in Sale of Building Altered without Permits

The Supreme Court of New Hampshire has ruled in the case Wyle v. Lees. The Leeses owned a two-unit apartment building in North Conway, New Hampshire. They hired a contractor to add a third, larger apartment, including a two-car garage. The Leeses and their contractor submitted a building permit application. They were informed that site plan review was required. After receiving approval on the site plan, construction started. At no point did they obtain a building permit and the construction was never inspected. The Leeses subsequently added more space to the unit, reducing parking spaces below the minimum required. Again, they did not obtain a building permit.

In 2007, three years after all these changes were complete, the Leeses sold their building to Mr. Wyle. To the question “are you aware of any modifications or repairs made without the necessary permits?” they answered “no.” About six weeks after closing, Wyle “received a letter from the town code enforcement officer regarding the legality of the removal of a garage door from the new unit.” A subsequent inspection revealed “numerous building and life safety code violations.”

Mr. Wyle brought a claim against the Leeses for negligent misrepresentation. The defendants filed a motion “seeking to preclude economic loss damages.” At a two-day bench trial, Mr. Wyle won. The Leeses appealed.

The appeals court found that “the defendants negligently misrepresented that the premises were licensed for immediate occupancy and that the defendants had obtained all necessary permits,” and thus upheld the lower court’s finding of negligent misrepresentation. The appeals court also rejected the Leeses’ argument that damages must be apportioned on all parties, including “the plaintiff himself, the plaintiff’s building inspector, and the defendant’s contractor,” finding a lack of “adequate evidence.”

The Leeses further argued that they were unaware that modifications and repairs were accomplished without the required permits. The appeals court noted that “the trial court found that both the conditional approval and final approval for the site plan stated that a building permit and a certificate of occupancy were required prior to any use.” The court concluded that the Leeses “knew or should have known of the falsity of their representation.”

The appeals affirmed the findings of the trial court.

Read the court’s decision…

Retaining Wall Contractor Not Responsible for Building Damage

The Court of Appeals of Indiana ruled on July 8 in the case of Rollander Enterprises, Inc. v. H.C. Nutting Co. Judge Baily wrote the opinion affirming the decision of the trial court.

The case involved an unfinished condominium complex, the Slopes of Greendale, in Greendale, Indiana. Rollander is a real estate development company incorporated in Ohio. One of the issues in the case was whether the case should be settled in the Indiana courts or be tried in Ohio. The project was owned by a special purpose entity limited liability corporation incorporated in Indiana.

Rollander hired Nutting to determine the geological composition of the site. Nutting’s report described the site as “a medium plastic clay containing pieces of shale and limestone.” The court summarized this as corresponding with “slope instability and landslides.” Rollander then hired Nutting to design the retaining walls, which were constructed by Scherziner Drilling.

After cracking was discovered on State Route 1, the walls were discovered to be inadequate. More dirt was brought in and a system of tie-backs was designed to anchor the walls. Not only were the tie-backs unsightly, local officials would not approve the complex for occupancy. Further, the failure of the wall below one building lead to damage of that building.

The court concluded that since almost all events occurred in Indiana, they rejected Rollander’s contention that the case should be tried in Ohio. Further, the court notes “the last event making Nutting potentially liable on both claims was an injury that occurred in Indiana and consequently, under the lex loci delicti analysis, Indiana law applies.”

Nor did the court find that Nutting was responsible for the damage to the rest of the project, citing an Indiana Supreme Court ruling, that “there is no liability in tort to the owner of a major construction project for pure economic loss caused unintentionally by contractors, subcontractors, engineers, design professionals, or others engaged in the project with whom the project owner, whether or not technically in privity of contract, is connected through a network or chain of contracts.”

The court concluded:

Because Rollander was in contractual privity with Nutting, and Indy was connected to Nutting through a chain of contracts and no exception applies, the economic loss rule precludes their recovery in tort. Damage to Building B was not damage to "other property," and the negligent misrepresentation exception to the economic loss rule is inapplicable on these facts. The trial court therefore did not abuse its discretion by entering judgment on the evidence in favor of Nutting on the Appellants' negligence and negligent misrepresentation claims.

Read the court’s decision…

Rihanna Finds Construction Defects Hit a Sour Note

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…

Construction Defect Case Not Over, Despite Summary Judgment

The Supreme Court of Oregon has concluded in an en banc decision that a motion to reconsider a summary judgment is not a motion for a new trial. In coming to their conclusion the court overturned an earlier Oregon Supreme Court case, Carter v. U.S. National Bank. Although the decision does not bear on construction defects, the underlying case did. Due to the decision, these claims can now be evaluated in a trial.

The case, Association of Unit Owners of Timbercrest Condominiums v. Warren, came about after an apartment complex was converted into condominium units. The developers hired Big Al’s Construction for some of the remodeling work. The condominium association later sued the developer and the contractor over claims of construction defects. The defendants filed a motion for summary judgment, which the court granted.

But that wasn’t the end of things. The plaintiff soon filed a “motion to reconsider,” noting that the summary judgment seemed to be in conflict with both law and other recent rulings, and additionally, the grounds for the decision were not in the order. The judge then notified the parties that the court had “pulled the trigger too quickly” and had seven questions for the parties to answer.

The court dismissed all claims against the defendants. The defendants filed their responses, objecting that that “‘there is no such thing’ as a motion for reconsideration.” Further, while “the rules do allow for post-judgment review of pre-judgment rulings through a motion for a new trial,” the plaintiffs had not filed for a new trial. But did they need one? They did file an appeal.

The judge in the case admitted that there was no such thing as a motion to reconsider, and felt bad about prematurely signing the judgment. The case was sent to the Court of Appeals to determine if the motion to reconsider was a request for a new trial. The Court of Appeals concurred.

In reviewing the decision, the Oregon Supreme Court concluded that there were a maximum of three questions to address. Was the motion for reconsideration a motion for a new trial? If so, was the later notice of appeal premature? And if so, was the plaintiff required to file a new appeal? The court determined that the answer to the first question was no.

Prior decisions pointed to the conclusion “that a motion for reconsideration of a summary judgment amounts to a motion for a new trial,” but here the court concluded that “our prior cases erred,” and turned to the summary judgment rule for clarification. The court noted that “the rule contemplates that summary judgment and trial are separate and distinct events.” With this conclusion, the Oregon Supreme Court remanded the case to the Court of Appeals for further proceedings.

Read the court’s decision…