Construction Defects Lead to Demolition of Seattle’s 25-story McGuire Apartments Building
March 16, 2011 — March 16, 2011 Construction Defect Journal Staff
According to a story published last Thursday in Seattle PI: " The 25-story McGuire Apartments, at Second Avenue and Wall Street, would cost more to fix than the building is worth, according to its owners. Its most serious defect involves steel cables that are corroding inside of concrete slabs because the ends weren’t properly treated with a rust-proof coating and a pocket in the edge of the concrete that wasn’t properly sealed"
The report by Aubrey Cohen outlines the demolition plans which are expected to take between 12 and 18 months, and will utilize robotic Brokk Machines. The demolition plan calls for one story at a time to be demolished, with the debris to be trucked offsite. Demolition plans aim to minimize disruption to residents and businesses in the area by Limiting work 7 a.m. to 6 p.m. on weekdays and 9 a.m. to 6 p.m. Saturdays with "impact and percussive activities" limited to 8 a.m to 5 p.m weekdays.
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Ghost Employees Steal Jobs from Legit Construction Firms
September 13, 2012 — CDJ Staff
Firms that skirt labor laws for construction workers can undercut firms that are obeying those laws. In a piece in Raleigh, North Carolina’s News & Observer, Doug Burton, a commercial masonry contractor summed it up: “my competitors are cheating.” The article describes the low-bidding firms “called their workers independent contractors ? or treated them like ghosts, paid under the table and never acknowledged.” The cost to the state is “unpaid medical bills for injured workers, uncollected business and personal taxes, and payments not made to a depleted state unemployment reserve.”
One firm examined in the article, Martin’s Bricklaying, employs mostly immigrant Mexican laborers, many of whom are in the country illegally. One employee told the News & Observer, “we don’t complain.”
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Legislatures Shouldn’t Try to Do the Courts’ Job
March 1, 2012 — CDJ Staff
David Thamann, writing in Property Casualty 360, argues that current actions by legislatures on insurance coverage amount to “legislative interference or overreach.” He notes that under current Colorado law, “a court shall presume that the work of a construction professional that results in property damage — including damage to the work itself or other work — is an accident unless the property damage is intended and expected by the insured.” He argues that here legislators are stepping into the role of the courts. “Insureds and insurers are not always going to be pleased with a court ruling, but that is the system we have.”
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Webinar on Insurance Disputes in Construction Defects
July 10, 2012 — CDJ Staff
Seth Lamden, of the firm Neal Gerber Eisenberg will be presenting a webinar on “Insurance Coverage Disputes in Construction Defects” on July 17, 2012 at 1 p.m. EDT. Mr. Lamden’s presentation will focus on “handling both the construction and insurance components of construction defect claims.” He will be discussing recent case law and new insurance products. The presentation will present information on evaluating various types of insurance policies, explaining common issues, contract requirement, and the economic loss doctrine. Mr. Lamden will advise attendees on how to avoid getting into a construction defect case. He will conclude his presentation with a brief question-and-answer session.
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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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Builder to Appeal Razing of Harmon Tower
August 2, 2012 — CDJ Staff
An attorney for Tutor Perini, George Ogilvie, has said that he will appeal to the state Supreme Court to stop Clark County District Court Judge Elizabeth Gonzalez’s ruling from taking effect. She has given the go-ahead to MGM Resorts and CityCenter to implode the building. Ogilvie described the demolition as “a do-over at Perini’s expense” in protesting Gonzalez’s order. Gonzalez has said that she will instruct jurors that the demolition was an admission that the building was badly built. Ogilvie says this is “allowing MGM to bury its mistakes.”
MGM claims that it is only following the directive of county safety officials. “When Clark County demanded that CityCenter abate the potential hazard created by faulty construction at the Harmon, we determined that demolition is the surest, safest and fasted way to do so.”
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Hospital Construction Firm Settles Defect Claim for $1.1 Million
September 13, 2012 — CDJ Staff
Law360 reports that Bovis Lend Lease has settled claims of $10 million in damages for $1.1 million. Bovis was building three annexes to a hospital in Oklahoma. The hospital alleged that a faulty moisture barrier system lead to damage throughout the hospital.
Bovis is a division of the Lend Lease Group, a multinational construction firm based Sydney, Australia.
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A Loud Boom, But No Serious Injuries in World Trade Center Accident
March 1, 2012 — CDJ Staff
The Wall Street Journal reports that nearly twenty tons of steel fell forty stories at the World Trade Center site on February 16. One person was checked by medical personnel. One person who works in the Financial District said it was “almost like thunder.” Frank Pensabene, one of the ironworkers on the site said that after “loud boom,” “all hell broke loose.” The steel beams and cables fell onto a flatbed truck, which was not occupied at the time.
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Rihanna Finds Construction Defects Hit a Sour Note
August 2, 2012 — CDJ Staff
The pop singer Rihanna is suing the former owners of her Beverley Hills home among others in a construction defect lawsuit. She contends that Adriana and Heather Rudomin concealed defects in the home that lead to water leaks and flooding during a 2010 storm. The Beverly Hills Patch noted that the dollar amount of the singer’s suit was not specified.
The most recent court ruling denied a motion from the owners to be dismissed from the lawsuit. They remain part of it, along Landmark Design Group, LLC, which renovated the home before the sale, and Prudential California Realty which sold the home.
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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.
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Delaware “occurrence” and exclusions j(5) and j(6)
June 10, 2011 — CDCoverage.com
In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects. Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property
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Reprinted courtesy of CDCoverage.com
Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit
September 9, 2011 — CDJ Staff
The Alabama Court of Civil Appeals has upheld a summary judgment in the case of Franklin v. Mitchell. Walter Mitchell, doing business as Southern Classic Construction built a new home for the Franklins. The Franklins moved into the home in October 2001. In April 2006 they discovered sagging floors in both the bathroom and kitchen. They contacted Mitchell who suggested the flooring might be defective. The Franklins spent eight months attempting to contact the flooring manufacturer.
In March 2007, the Franklins had the home inspected. The sagging was determined to be due to a loss of strength in the decking because of condensation from the air conditioning system. Air returns were not properly sealed and drawing moisture into the structure. There was mold on the decking and floor joints.
When Mitchell was contacted by the Franklins, he told them his one-year warranty had expired but had the HVAC subcontractor, Southern Mechanical Heating & Air (owned by Mitchell’s father, Jim Mitchell), look at the situation. SMHA replaced and braced subfloors. Later, they entered the crawl space to tape ducts, seal the air return, and insulate the air vent housing. The Franklins were not satisfied with the repairs, as not all the ducts were taped, nor were the air vent housings insulated.
Franklin complained to Walter Mitchell who again cited his one-year warranty. Jim Mitchell said he would not report complaints to his insurer, stating that the repairs were unnecessary, that the work had been done correctly in the first place, and it was only done at the request of Walter Mitchell.
In February 2009, the Franklins sued Walker Mitchell. Mitchell denied the claims, citing in part the statute of limitations. Mitchell also filed complaints against three subcontractors, including his father’s firm. Mitchell received a summary judgment as the case started after Alabama’s six-year statute of limitations.
The appeals court rejected the Franklin’s argument that the claim of damage did not start until they were aware it was due to a construction defect. The court noted that as Walter Mitchell was licensed as a “residential home builder, the statute the Franklins cite did not apply, as it concerns architects, engineers, and licensed general contactors.”
Nor did they feel that Mitchells’ claim that his warranty had expired were sufficient to override the statute of limitations, quoting an earlier case, “Vague assurances do not amount to an affirmative inducement to delay filing suit.” Their claim of subsequent negligent repairs was rejected because Mitchell did not direct the specific actions taken by his father’s firm.
Read the court’s decision…
Architect Not Liable for Balcony’s Collapse
September 13, 2012 — CDJ Staff
The Texas Supreme Court declined to hear an appeal from a woman who was partially paralyzed due to the collapse of a balcony. She had sued the architect of her friends’ home, but the Texas Third Circuit Court of Appeals had reversed a jury ruling against the architect, Sinclair Black. Black’s firm, Black + Vernooy, had designed the home and had supervised “administration of the construction contract.” Despite a contractual obligation to “endeavor to guard the owner against defects and deficiencies,” the balcony builder had not followed the architect’s specifications, including in the construction of the balcony.
While the jury found Black liable for ten percent of the blame, Black argued that he could not be held liable for the contractor’s negligence, nor did he have any duty to third parties.
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Insurer Able to Refuse Coverage for Failed Retaining Wall
October 28, 2011 — CDJ Staff
The Eleventh District of the US Court of Appeals has ruled in the case of Nix v. State Farm Fire & Casualty Company. In this case, the Nixes filed a claim after a portion of the retaining wall in their home collapsed and their basement flooded. State Farm denied the claim “on the ground that the policy excluded coverage for collapses caused by defects in construction and for damage caused by groundwater.”
The court reviewed the Nixes’ policy and found that State Farm’s statement did specifically exclude both of these items. In reviewing the lower court’s ruling, the appeals court noted that State Farm’s expert witness, Mark Voll, determined that the retaining wall “lacked reinforcing steel, as required by a local building code, and could not withstand the pressure created by groundwater that had accumulated during a heavy rainfall.” Additionally, a french drain had been covered with clay soil and so had failed to disperse the groundwater.
The Nixes argued that the flooding was due to a main line water pipe, but their opinions were those of Terry Nix and the contractor who made temporary repairs to the wall. “Those opinions were not admissible as lay testimony. Neither Nix nor the contractor witnessed the wall collapse or had personal knowledge about the construction of the Nixes’ home.”
The lower court granted a summary judgment to State Farm which has been upheld by the appeals court.
Read the court’s decision…
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
California Posts Nation’s Largest Gain in Construction Jobs
March 28, 2012 — CDJ Staff
California added about 8,900 construction jobs in January, 2012, as compared to December, 2011, leading the nation in the number of added construction jobs. Thirty-four other states also saw added construction jobs. A year prior, only twenty-eight states added construction jobs. The Associated General Contractors of America analyzed the monthly report from the Labor Department. Ken Simonson, the chief economist for the Associated General Contractors of America noted that “the gains this January partly reflect very mild weather this winter and exceptionally cold and snowy conditions a year before.”
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Congress Addresses Homebuilding Credit Crunch
May 20, 2011 — CDJ Staff
The National Association of Home Builders (NAHB) reports that Representatives Gary Miller (CA), Brad Miller (NC) and twenty-nine cosponsors have put forth a bill with bipartisan support to “address the severe credit crunch for acquisition, development, and construction (AD&C) financing.” They report in addition to more than 1.4 million construction workers who have been “idled since 2006,” the housing slump has cost 3 million jobs and $145 million in wages.
NAHB reports that they worked closely with lawmakers on the bill. The association had members meet with legislators both in D.C. and in their home districts. They state that HR 1755 would help homebuilders “find the credit they need to move forward with new or existing projects.”
The bill would allow lenders to use the value upon completion when assessing loan collateral and ban the use of foreclosed or distressed sale properties in assessing values of projects. The would bill would also lessen restrictions by banking regulators, which the lead sponsors said “have hindered federal and state chartered banks and thrifts’ ability to make and maintain loans to qualified small home builders that have viable projects.”
The NAHB is urging members of Congress to cosponsor the bill and is urging the Senate to introduce a companion bill.
Read the full story…
Read HR 1755
Harsh New Time Limits on Construction Defect Claims
April 26, 2011 — April 26, 2011 by Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of
Sullan2, Sandgrund, Smith & Perczak, P.C. in the
HindemanSanchez blogA recent Colorado Supreme Court decision, Smith v. Executive Custom Homes, Inc., 230 P.3d 1186 (Colo. 2010), considerably shortens the time limit for bringing many construction defect lawsuits. Homeowners and homeowner associations risk losing the right to seek reimbursement from builders, developers and other construction professionals unless they carefully and quickly act upon discovery of evidence of any potential construction defect.
The Statute of Limitations for Construction Defect Claims
Colorado’s construction defect statute of limitations limits the time for homeowners and homeowners associations to bring lawsuits for construction defects against “construction professionals,” including developers, general contractors, builders, engineers, architects, other design professionals, inspectors and subcontractors. The statute requires homeowners and associations to file suit within two years “after the claim for relief arises.” A claim for relief “arises” when a homeowner or association discovers or reasonably should have discovered the physical manifestation of a construction defect.
The two-year time limitation applies to each construction defect separately, and will begin to run upon the appearance of a “manifestation” of a construction defect (which may include, for example, a condition as simple as a roof leak or drywall cracks), even if the homeowner or association does not know the cause of the apparent problem.
The Smith Opinion and its Effect on the Statute of Limitations
In Smith v. Executive Custom Homes, Inc., the plaintiff homeowner, Mrs. Smith, slipped on ice that had accumulated on her sidewalk because of a leaking gutter and suffered injury. When she first noticed the leak, she reported it to her property manager, who reported it to the builder. The builder attempted to repair the gutter, unbeknownst to Mrs. Smith, and she did not notice further problems until approximately one year after she first observed the leak, when she fell and suffered serious injury. She sued the builder within two years of her injury, but nearly three years after she first learned of the leak.
The Colorado Supreme Court dismissed Mrs. Smith’s claims as untimely and held that under the construction defect statute of limitations, the two-year period for suing for injuries due to construction defects begins when the homeowner first observes the physical manifestation of the defect, even if the resulting injury has not yet occurred. The court acknowledged that this ruling could result in “unfair results,” especially if a serious and unforeseeable injury occurs more than two years after the first time the homeowner noticed the problem, and as a result the victim is unable to seek redress from those responsible for the defect.
Read the full story…
Reprinted courtesy of Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of Sullan2, Sandgrund, Smith & Perczak, P.C., and they can be contacted through their web site.
