Williams v. Athletic Field: Hugely Important Lien Case Argued Before Supreme Court
June 17, 2011 — Douglas Reiser, Builders Counsel
Well, it finally made it. The most important Washington lien case of recent memory was argued in front of the Washington Supreme Court on Tuesday, June 14, 2011. So, what should we all expect?
As I was reading through my RSS feeds this afternoon ? I was stopped dead in my tracks. Williams v . Athletic Field, the Division II case that has been a frequent topic here on Builders Counsel, has finally been argued before the Supreme Court. All of you who have been anxiously awaiting this day, you can check out the Supreme Court submissions by following this link.
The Williams case has been the center of attention for construction lawyers and construction organizations over the past year. Some have called for complete lien law reform, others have tried to patch a hole in the law. Now, we can expect a ruling from the highest court in the state. That ruling will have a major impact on whether the Legislature feels compelled to change lien law.
Read the full story…
Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Construction Defect Not an Occurrence in Ohio
November 7, 2012 — CDJ Staff
The Ohio Supreme Court has concluded that claims of defective construction or workmanship are not an occurrence under a general liability policy. The court looked at appellate decisions and concluded that CGL policies are not intended to insure against risks under the control and management of the insured. These risks should instead be mitigated with performance bonds.
The question was raised in the case Westfield Ins. Co. v. Custom Agri Systems, Inc. The Sixth District Court of Ohio concluded it was an “open question under Ohio law whether a CGL policy covers defective construction claims.” Westfield filed a motion, granted by the Sixth Circuit, to certify the question to the state Supreme Court. The Sixth Court additionally found that the contractual liability exclusion barred coverage in the case, issues a summary judgment to Westfield.
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Loose Bolts Led to Sagging Roof in Construction Defect Claim
February 10, 2012 — CDJ Staff
Though the sagging roof is neither leaking nor a safety hazard, the town of Waynesville, North Carolina is suing the builder of its new fire station, as reported in the Smoky Mountain News. The engineers who examined the roof found a substantial number of loose bolts in the roof trusses. Additionally, the trusses themselves have become bent.
Tom Galloway, Waynesville’s Town Manager said “it needs to be remedied and fixed.” He said that the builder, Construction Logic, “never indicated a willingness to fix the roof.” The town is seeking the cost of repair, which Galloway estimated could be $400,000, and an additional $30,000 in damages. The suit states that Construction Logic failed to follow the plan specifications for the roof.
Read the full story…
Construction Defect Not a RICO Case, Says Court
August 4, 2011 — CDJ Staff
The US District Court of North Carolina has rejected an attempt by a homeowner to restart her construction defect claim by turning it into a RICO lawsuit. Linda Sharp, the plaintiff in the case of Sharp v. Town of Kitty Hawk, attempted to amend a claim under the Racketeer Influenced and Corrupt Organizations Act (RICO) and argued that her case belonged in the federal courts.
Ms. Sharp sued in November, 2010 claiming construction defects. She sued in federal court, although the court noted that as she and most of the defendants are citizens of North Carolina, the state court would have been the appropriate jurisdiction. Further, the court noted that one federal claim Sharp made was dismissed with prejudice, leaving only the state law claims. These the court dismissed without prejudice, declining to exercise jurisdiction over North Carolina law.
After the dismissal, Ms. Sharp attempted to amend her complaint after the deadline. To do so, according to the court, she would be required to obtain consent from defendants or leave of the court. She did neither.
In his opinion, Judge W. Earl Britt rejected her motion for leave to amend. He also granted the defendants’ motion to dismiss. The clerk was directed to close the case.
Read the court’s decision…
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…
School District Marks End of Construction Project by Hiring Lawyers
June 19, 2012 — CDJ Staff
A school district in northeastern Pennsylvania has retained legal services as they approach the end of a construction project. The Mid Valley School Board cited concerns about the project’s budget, but Randy Parry, Superintendent of Mid Valley schools referenced “possible litigation at the end of the project.” Mr. Parry told the Scranton Times Tribune that construction delays could be a reason for litigation.
In addition to approving an additional $20,000 for legal representation, the board also approved $21,579 for additional project costs.
Read the full story…
Condominium Exclusion Bars Coverage for Construction Defect
August 17, 2011 — Tred Eyerley, Insurance Law Hawaii
Coverage was denied under the policy’s condominium exclusion in California Traditions, Inc. v. Claremont Liability Ins. Co.,2011 Cal. App.LEXIS912 (Cal. Ct. App., ordered published July 11, 2011).
California Traditions was the developer and general contractor for a housing development. California Traditions subcontracted with Ja-Con to perform the rough framing work for 30 residential units. The project had 146 separate residences that were freestanding with no shared walls, roof, halls, or plumbing or electrical lines. To allow a higher density development, the project was developed, marketed and sold as condominiums.
The purchaser of one of the units filed a complaint against California Traditions alleging property damage from the defective construction. California Traditions cross-complained against Ja-Con.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Insurer’s Discovery Requests Ruled to be Overbroad in Construction Defect Suit
October 28, 2011 — CDJ Staff
The US District Court has ruled in the case of D.R. Horton Los Angeles Holding Co. Inc. v. American Safety Indemnity, Co. D.R. Horton was involved in a real estate development project. Its subcontractor, Ebensteiner Co., was insured by ASIC and named D.R. Horton as an additional insured and third-party beneficiary. D.R. Horton, in response to legal complaints and cross-complaints, filed for coverage from ASIC under the Ebensteiner policy. This was refused by ASIC. ASIC claimed that “there is no potential coverage for Ebensteiner as a Named Insurer and/or D.R. Horton as an Additional Insured.” They stated that “the requirements for coverage are not satisfied.”
The case same to trial with the deadline for discovery set at March 1, 2011. ASIC stated they were seeking the developer’s “job file” for the Canyon Gate project. D.R. Horton claimed that ASIC’s discovery request was overbroad and that it would be “unduly burdensome for it to produce all documents responsive to the overbroad requests.”
D.R. Horton did agree to produce several categories of documents, which included:
“(1) final building inspection sign-offs for the homes that are the subject of the underlying litigation;(2) an updated homeowner matrix for the underlying actions; (3) the concrete subcontractor files; (4) the daily field logs for D.R. Horton’s on-site employee during Ebensteiner’s work; (5) documents relating to concrete work, including documents for concrete suppliers; (6) documents relating to compacting testing; (7) documents relating to grading; and (8) D.R. Horton’s request for proposal for grading”
The court found that the requests from ASIC were overbroad, noting that the language of the ASIC Request for Production of Documents (RFP) 3-5 would include “subcontractor files for plumbing, electric, flooring, etc. - none of these being at issue in the case.” The court denied the ASIC’s motion to compel further documents.
The court also found fault with ASIC’s RFPs 6 and 7. Here, D.R. Horton claimed the language was written so broadly it would require the production of sales information and, again, subcontractors not relevant to the case.
Further, the court found that RFPs 8, 10, 11, and 13 were also overbroad. RFP 8 covered all subcontractors. D.R. Horton replied that they had earlier complied with the documents covered in RFPs 10 and 11. The court concurred. RFP 13 was denied as it went beyond the scope of admissible evidence, even including attorney-client communication.
The court denied all of ASIC’s attempts to compel further discovery.
Read the court’s decision…
Changes to Arkansas Construction and Home Repair Laws
September 30, 2011 — CDJ Staff
A new law, set to take effect in 2012, lowers the ceiling on when work must be done by a licensed contractor. Through the end of the year, projects costing $20,000 or more had to be done by an Arkansas licensed contractor. As of January 1, 2012, that new limit will be $2,000.
This will apply to all single-family residences and according to Lovely County Citizen, covers “construction, alteration, renovation, repair, modification, improvement, removal, demotion, or addition to a pre-existing structure.” Residential building contractors will be required to have workers compensation insurance, as will home improvement contactors if they take jobs worth more than $20,000.
Morris Dillow, a building inspector in Holiday Island, said, “It will get these scammers out of here who are ripping people off.” He cited the example of a contractor who after getting paid for roof repairs and painting, left the job unfinished.
Read the full story…
Window Manufacturer Weathers Recession by Diversifying
October 28, 2011 — CDJ Staff
American Openings, a Tuscon-based window manufacturer, has responded to the loss of its sales of windows for new home construction by moving into new markets. The Arizona Daily Star reports that American Openings used to see providing windows for new homes as half their business. Now, Tom Regina, the founder and president says “single family is just dead.”
Their products are insulated windows, designed to comply with Energy Star standards. Without new homes being built, now the company is focusing on homeowners and building owners looking for more energy efficient windows. As the windows have two or three panes and special coatings, homeowners using them are eligible for tax credits.
One of their newer products combines their energy-saving coatings with “break resistant” glass. The article notes that the windows repel “all but the most determined burglars.” However, the company is still awaiting special equipment to cut the glass.
Read the full story...
Colorado “property damage” caused by an “occurrence” and exclusions j(5) and j(6) “that particular part”
August 11, 2011 — CDCoverage.com
In Continental Western Ins. Co. v. Shay Construction, Inc., No. 10-cv-02126 (D. Col. July 28. 2011), general contractor Milender White subcontracted with insured Shay for framing work.  Shay in turn subcontracted some of its work to others. When Shay?s subcontractors filed suit against Shay and Milender White seeking payment for their work, Milender White cross-claimed against Shay for breach of contract alleging that,Milender White notified Shay during construction that some of Shay?s work was defective and that when Shay repaired its defective work, it damaged work performed by others. Shay’s CGL insurer Continental Western filed suit against Milender White and Shay seeking a judicial declaration of no coverage. The federal district trial court granted Continental Western?s motion for summary judgment.
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Reprinted courtesy of CDCoverage.com
Good Signs for Housing Market in 2013
December 20, 2012 — CDJ Staff
Dan Green, a loan officer at Waterstone Mortgage, is optimistic about the construction market in 2013. He notes that the rise in building permit, housing starts, and housing completions are all good signs. Mortgage rates are still low, making these new homes attractive to buyers.
Read the full story…
Texas “your work” exclusion
January 6, 2012 — CDCoverage.com
In American Home Assurance Co. v. Cat Tech, L.L.C., No. 10-20499 (5th Cir. Oct. 5, 2011), claimant Ergon hired insured Cat Tech to perform service on a reactor at Ergon’s refinery. During a start-up of the reactor after Cat Tech had completed its work, the reactor suffered damage. Cat Tech performed additional service and repairs. However, again upon start-up of the reactor, it suffered additional damage. Ergon hired another contractor to repair the reactor. Ergon initiated arbitration proceedings against Cat Tech. Cat Tech’s CGL insurer American Home defended Cat Tech against the Ergon arbitration under a reservation of rights.
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Reprinted courtesy of CDCoverage.com
Consumer Protection Act Whacks Seattle Roofing Contractor
July 21, 2011 — Douglas Reiser, Builders Council
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.
Read the full story…
Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Developer’s Fraudulent Statements Are His Responsibility Alone in Construction Defect Case
February 10, 2012 — CDJ Staff
The Texas Court of Appeals ruled on December 21 in the case of Helm v Kingston, a construction defect case. After purchasing what was described as “an extremely well-built” two-bedroom townhouse, Mr. Kingston made complaints of construction defects. Greenway Development did not repair the defects to Kingston’s satisfaction, and he filed notice of suit. In his suit, he claimed that GDI and its president, John Helm, had committed fraud and negligent misrepresentation. Kingston claimed that Helm “fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of workmanship was atrocious.” Helms brought a counterclaim that Kingston’s suit was frivolous.
About four years after Kingston purchased the townhome, the suit proceeded to trial. The trial court determined that Helm was not “liable in his individual capacity,” but this was reversed at appeal.
A second trial was held ten years later on the question of whether Kingston’s unit was a townhome or an apartment. A jury found that Helm “engaged in a false, misleading or deceptive act or practice that Kingston relied on to his detriment.” Kingston was awarded $75,862.29 and an additional $95,000 in attorney fees by the jury. Helms made an unsuccessful appeal to the Appeals Court, after which Kingston was awarded an additional $10,000. Helms then made an unsuccessful appeal to the Texas Supreme Court, which lead to an additional $3,000 for Kingston. There was also a verdict of $48,770.09 in pre-judgment interest and “five percent post-judgment interest accruing from the date of the judgment until the time the judgment is paid. Helm appealed.
In his appeal, Helm raised seven issues, which the court reorganized into five Kingston raised one issue on cross-appeal.
Helms’ first claim was that Kingston “failed to satisfy the requirement of” Texas’s Residential Construction Liability Act and that by not filing under the RCLA, Kingston’s fraud and misrepresentation claims were preempted. Further Helms claimed that the RCLA limited Kingston’s damages. The court rejected this, as the RCLA deals with complaints made to a contractor and not only did Helm fail to “conclusively establish” his “status as a ‘contractor’ under the statutory definition,” Helm testified that he was “not a contactor” at the pre-trial hearing.
Helms’s second claim was that Kingston’s later claim of a misconstructed firewall should be barred, claiming that Kingston “‘had knowledge of a defect in the firewall’ as early as 1997 but did not assert them until 2007.” The court rejected this because Kingston’s claim was that “Helm ‘fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of the workmanship was atrocious.’”
Helms also challenged whether his statements that the residence was of “good quality” constituted fraud and misrepresentation under Texas’s Deceptive Trade Practices-Consumer Protection Act. The court concluded that Helm was in a position to make knowledgeable statements and further that “residential housing units are not artistic works for which quality is inherently a matter of subjective judgment.” Helm also claimed that Kingston could have avoided certain repair expenses through the “exercise of reasonable care.” Helms argued that the repairs could have been made for $6,400. The court disagreed, as these claims were cited only to invoke the DTPA, and that later petitions established additional defects.
Helms’s next claim was that he was not allowed to designate responsible third parties. The court rejected this because there GDI represented matters concerning the residence only through Helm’s statements. The court noted that “Helm is correct that?third parties may be liable for fraud if they ‘participated in the fraudulent transactions and reaped the benefits,’” but they note that “Helm never specifically alleged that GDI or CREIC participated in Helm’s alleged fraudulent transactions.
The final issue in the decision was about court costs, and here the court denied claims on both sides. Helm argued that the award of legal fees were excessive, as they exceeded the actual damages. The court noted that they “may not substitute our judgment for that of the jury,” and also that “the ratio between the actual damages awarded and the attorney’s fees is not a factor that determines the reasonableness of the fees.” But the court also rejected Kingston’s claim for post-judgment interest on $10,312.30 that Helm had deposited in the trial court’s registry. The court noted that the monies were to be paid out upon final judgment, but the mandate did not include any reference to interest.
Read the court’s decision…
Construction Defect Journal Seeks Article Submissions Regarding SB800 and Other Builders Right to Repair Laws
October 28, 2011 — CDJ Staff
As we approach the tenth anniversary of the passage and signing of SB800, California’s right-to-repair law, we’d like to hear your reactions to the law, your experiences with it, and your thoughts on it and right-to-repair laws in other states.
We invite you to submit articles either reacting to SB800 or on other matters relevant to construction defect and claims issues. You can promote your firm’s capabilities and get valuable exposure through the publication of your articles. Construction Defect Journal is widely read by our highly targeted audience of decision makers, construction attorneys, builders, owners, and claims professionals.
Articles may contain relevant images, your firm’s name, and links to your corporate website or third parties and can be submitted through e-mail to submitstory@constructiondefectjournal.com. Please remember to include your contact information if you would like it to be published with your content. If you are submitting photos or PDF documents with your article, please send them as e-mail attachments. Items submitted are assumed to be cleared for publishing upon receipt by CDJ.
Normally articles are published in full, although we reserve the right to edit content for space purposes. All articles submitted are considered for publication. For additional questions please contact editor@constructiondefectjournal.com.
Cabinetmaker Exceeds Expectations as Conditions Improve
October 23, 2012 — CDJ Staff
American Woodmark, the manufacturer of several national brands of cabinets and vanities, saw greater than anticipated earnings in its most recent quarter. Their revenue was $148.3 million, an increase of 13% over the same quarter a year prior. They saw a 40% increase in sales. As a result, their per-share earnings were 7 cents, instead of the projected loss of 3 cents per share. Forbes reports that the share price for American Woodmark has been rising in August 2012.
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Florida Law: Defects in Infrastructure Improvements Not Covered in Home Construction Warranties
July 10, 2012 — CDJ Staff
In April 2012, Governor Rick Scott signed into law House Bill 1013, despite lobbying from homeowner and condominium associations among others. The law was in response to a case in which the court had found that implied warranties covered external subdivision improvements. Prior to the court decision, these were not thought to be covered.
According to an article in the Martindale-Hubble Legal Library, under the new law, road and drainage improvements will not be included implied warranty of a new home. The law took effect on July 1.
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