Homeowner may pursue negligence claim for construction defect, Oregon Supreme Court holds
March 1, 2011 — Original Story by Lori Bauman, Ater Wynne LLP,
Northwest Business Litigation BlogIn Abraham v. T. Henry, Oregon’s court of appeals held that a Oregon’s court of appeals holds that a homeowner may sue builder for common law negligence absent a contractual provision that forecloses such a claim. Plaintiff homeowners hired defendant contractors to build a house. When plaintiffs discovered defects in the construction years later, they sued for negligence.
The Court of Appeals held that the parties’ contractual relationship did not prevent a negligence claim, and that plaintiffs were entitled to pursue a negligence per se claim based on a violation of the Oregon Building Code.
The Supreme Court affirmed, but on a somewhat different basis. First, according to the Court, a construction defect claim concerns damage to property — and not mere economic losses — and thus is not barred by the economic loss doctrine. Second, the existence
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California Bill Would Notify Homeowners on Construction Defect Options
October 23, 2012 — CDJ Staff
The California Building Industry Association supported Assembly Bill 1892, but its goals of informing homeowners of their rights under SB800 have been accomplished through the administrative process. The Department of Consumer Affairs has now posted text on its web site noting that “prior to pursuing legal action or responding to a construction defect solicitation, you must first contact your home builder.” The text goes on to note that “if the homebuilder fails to follow any of the procedures, the homeowner is entitled to proceed with the filing of an action.”
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There is No Non-Delegable Duty on the Part of Residential Builders in Colorado
August 2, 2012 — Brady Iandiorio, Higgins, Hopkins, McLain & Roswell, LLC
Recently, in the Arapahoe District Court, the Honorable Michael Spear, issued an order holding that builders do not owe a non-delegable duty to homeowners. In Marx and Corken v. Alpert Custom Homes, Inc., et al., Judge Spear’s order came in response to plaintiffs’ motion for determination of question of law seeking a finding that the defendants owed a non-delegable duty to the plaintiffs and thus, to strike defendants’ designation of nonparties at fault. After being fully briefed, Judge Spear, found that such a non-delegable duty does not exist.
The case arises from the construction of a single-family residence in Aurora, Colorado. Through the construction and interaction with Alpert Custom Homes, Inc. and Scott and Sally Alpert, the defendants, Paul Marx and Kay Corken, the plaintiffs claimed they suffered various damages and losses, and brought claims for breach of contract-warranty, breach of contract, violation of the Colorado Consumer Protection Act, breaches of the implied covenant of good faith, promissory estoppel, willful breach of contract, and quantum meruit. During litigation, the defendants filed a designation of nonparties at fault, which named several parties which were at fault for the alleged construction defects at issue in the case. The pertinent nonparties named were subcontractors of defendant Alpert Custom Homes, Inc. during the construction of the residence.
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Reprinted courtesy of Brady Iandiorio, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Iandiorio can be contacted at iandiorio@hhmrlaw.com
HOA Has No Claim to Extend Statute of Limitations in Construction Defect Case
October 28, 2011 — CDJ Staff
The California Court of Appeals ruled on September 20, 2011 in the case of Arundel Homeowners Association v. Arundel Green Partners, a construction defect case involving a condominium conversion in San Francisco. Eight years after the Notice of Completion was filed, the homeowners association filed a lawsuit alleging a number of construction defects, including “defective cabinets, waterproofing membranes, wall-cladding, plumbing, electrical wiring, roofing (including slope, drainage and flashings), fire-rated ceilings, and chimney flues.” Three years of settlement negotiations followed.
Negotiations ended in the eleventh year with the homeowners association filing a lawsuit. Arundel Green argued that the suit should be thrown out as California’s ten-year statute of limitations had passed. The court granted judgment to Arundel Green.
The homeowners then filed for a new trial and to amend its complaint, arguing that the statute of limitations should not apply due to the doctrine of equitable estoppel as Arundel Green’s actions had lead them to believe the issues could be solved without a lawsuit. “The HOA claimed that it was not until after the statute of limitations ran that the HOA realized Arundel Green would not keep its promises; and after this realization, the HOA promptly brought its lawsuit.” The trial court denied the homeowners association’s motions, which the homeowners association appealed.
In reviewing the case, the Appeals Court compared Arundel to an earlier California Supreme Court case, Lantzy. (The homeowners also cited Lantzy as the basis of their appeal.) In Lantzy, the California Supreme Court set up a four-part test as to whether estoppel could be applied. The court applied these tests and found, as was the case in Lantzy, that there were no grounds for estoppel.
In Arundel, the court noted that “there are simply no allegations that Arundel Green made any affirmative statement or promise that would lull the HOA into a reasonable belief that its claims would be resolved without filing a lawsuit.” The court also cited Lesko v. Superior Court which included a recommendation that the plaintiffs “send a stipulation?Ķextending time.” This did not happen and the court upheld the dismissal.
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Nevada Bill Aims to Reduce Legal Fees For Construction Defect Practitioners
March 21, 2011 — March 21, 2011 Construction Defect Journal Staff
Assemblyman Ira Hansen and twelve additional members of Nevada’s Assembly are sponsoring Assembly Bill 285. AB 285 Revises provisions governing an award of attorney’s fees in causes of action for constructional defects. Existing law generally provides that a claimant may recover reasonable attorney’s fees as part of the claimant’s damages in a cause of action for constructional defects. (NRS 40.655)
This bill removes this provision and instead authorizes a court to award reasonable attorney’s fees to a prevailing party involved in such a cause of action if an independent basis for the award exists pursuant to existing law which authorizes a court to award attorney’s fees in certain circumstances, or Rule 68 of the Nevada Rules of Civil Procedure, which provides for the payment of reasonable attorney’s fees by an offeree who rejects an offer and subsequently fails to obtain a more favorable judgment.
In an AP report published in Business Week it is suggested that the target objective of legislators centers on what it refers to as Nevada’s "Rampant construction defect lawsuits".
According to Business Week "The suits bring in hundreds of millions of dollars for lawyers and have put construction companies out of business. Hansen says fewer construction firms mean higher prices for Nevada consumers."
Click Here To Read Full Text and Revisions of Assembly Bill 285
Death of Construction Defect Lawyer Ruled a Suicide
June 19, 2012 — CDJ Staff
The Clark County Coroner’s Office has concluded that Nancy Quon, the construction defect attorney implicated in the wide-ranging HOA scandal, died by her own hand. The cause of death was a combination of anti-anxiety and insomnia medication mixed with alcohol. Quon survived an earlier incident in which she took GHB and her apartment was set on fire. Quon denied that it was a suicide attempt.
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Counterpoint: Washington Supreme Court to Rule on Resulting Losses in Insurance Disputes
September 1, 2011 — Douglas Reiser, Builders Counsel
This is the fourth installment of posts on Vision One v. Philadelphia Indemnity, a Washington Supreme Court case touching on Washington construction and insurance law. After Williams v. Athletic Field got so much coverage, I wished that I had provided a forum for argument on Builders Counsel. While we await that opinion from the Supreme Court, I decided to let a few good writers have at Vision One here on the blog. Last week, attorney Chris Carr weighed in. Today, insurance expert David Thayer returns to give his final impression. David provided an initial peak at the case earlier this year. Thanks to both Chris and David for contributing to the debate.
In August 2011 the Washington Supreme Court will rule on a pair of joined cases that involve critical insurance coverage issues. The outcome of the ruling will impact a large swath of policyholders in Washington State including builders, developers, and homeowners to name a few.
The cases are Vision One vs. Philadelphia Indemnity Insurance and Sprague vs. Safeco. The Vision one case comes from Division Two of the Appellate Court which overturned a lower court decision in favor the plaintiff, Vision One. Division Two decided that the collapse of a concrete pour during the course of construction did not constitute a resulting loss due to faulty workmanship. They further went on to redefine efficient proximate cause in a way that is harmful to policyholders by broadening rather than narrowing the meaning of exclusionary language in Philadelphia’s Builders Risk Policy.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Renovation Contractors: Be Careful How You Disclose Your Projects
December 9, 2011 — Derek J. Lindenschmidt, Colorado Construction Litigation
In Palu and Beyer v. Toney, 2011 WL 2560249 (Bankr. D. Colo.), the United States Bankruptcy Court for the District of Colorado determined that a Colorado District Court order granting summary judgment in favor of plaintiff home buyers was binding on the Bankruptcy Court in the defendant contractor’s bankruptcy proceeding based on issue preclusion.
Pertinent to this column is the subject matter of the summary judgment motion: Colorado’s Seller’s Property Disclosure (Form LC-18-5-04). In the underlying state court action, the plaintiff home buyers filed a motion for summary judgment contending that the defendant contractor represented to them, through the Seller’s Property Disclosure, that there were no present or past conditions involving moisture or water problems, roof problems or leaks, skylight problems, or gutter downspout problems.
In granting plaintiffs’ motion, the state court determined that the defendant contractor made these representations on her Seller’s Property Disclosure despite witnessing water leaking from the skylight onto the floor and being aware of repairs to the roof, skylight, and interior drywall prior to the sale of the property.
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Reprinted courtesy of Derek J. Lindenschmidt of Higgins, Hopkins, McClain & Roswell, LLP. Mr. Lindenschmidt can be contacted at lindenschmidt@hhmrlaw.com
Home Builder Doesn’t See Long Impact from Hurricane
November 7, 2012 — CDJ Staff
No one needs to tell Toll Brothers about the impact of Hurricane Sandy. The Wall Street Journal reports that the home building company lost power as a result of the storm. Martin Connor, the company’s CFO, told the Journal that he did not expect the hurricane to have a big effect on sales. Luckily for the company, many of its large projects are either sufficiently completed to provide shelter or too early in the process to be affected by the storm. “This type of weather event has limited impact on the market. It may move settlements later, and may defer people a weekend or two until they go out shopping. But it doesn’t have a long impact.”
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Court Will Not Compel Judge to Dismiss Construction Defect Case
August 2, 2012 — CDJ Staff
The Fourteenth Court of Appeals of Texas has denied a petition for a writ of mandamus. The parties involved, Bonner Ball, Thomas Zenner, and Rallin Welch, are lmited partners of Black Diamond Builders, LLP. Black Diamond is the recipient of a lawsuit from Grier and Camille Patton, for whom Black Diamond built a home. The Pattons are alleging construction defects.
The Black Diamond partners argue that Judge Jeff Shadwick, presiding judge of the 55th District Court of Harris County, Texas should have granted their motion to dismiss. They sought to have the Fourteenth Court of Appeals compel that action.
The Black Diamond Partners claims that “the homowners failed to satisfy statutory prerequisites before filing suit, and dismissal of the suit was automatic under the applicable statues in effect at the time the Pattons noticed alleged defects in their home.”
The court noted that “a trial court will be held to have abused its discretion only if the party requesting mandamus relief establishes that the trial court could have reached but one decision.” The court did not concur with this and denied the petition for a writ of mandamus.
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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.
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Alabama “occurrence” and subcontractor work exception to the “your completed work” exclusion
November 18, 2011 — CDCoverage.com
In Town & Country Property, LLC v. Amerisure Ins. Co., No. 1100009 (Ala. Oct. 21, 2010), property owner Town & Country contracted with insured general contractor Jones-Williams for the construction of a car dealership. All of the construction work was performed by Jones-Williams subcontractors. After completion, Town & Country sued Jones-Williams for defective construction. Jones-Williams’ CGL insurer Amerisure defended. The case was tried and a judgment was entered against Jones-Williams in favor of Town & Country. After Amerisure denied any obligation to pay the judgment, Town & Country sued Amerisure in a statutory direct action.
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Reprinted courtesy of CDCoverage.com.
Construction Defects Are Occurrences, Says Georgia Supreme Court
July 10, 2012 — CDJ Staff
Michael Bradford writes about the implications of a March decision of the Georgia Supreme Court in which the court found that “negligent construction resulting in damage to surrounding property constitutes an occurrence under a commercial general liability policy. The contractor in the case, American Empire Surplus Lines Insurance Co. Inc. vs. Hathaway Development Co. Inc, argued that a damage caused by a plumbing subcontractor’s work was covered. American Empire was the insurer for the plumbing subcontractor.
Bradford notes that this follows similar decisions in other courts. The George court ruled that “an occurrence can arise where faulty workmanship causes unforeseen or unexpected damage to other property.”
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Certificate of Merit to Sue Architects or Engineers Bill Proposed
May 3, 2011 — May 3, 2011 Beverley BevenFlorez - Construction Defect Journal
North Carolina may become the twelfth state to require a Certificate of Merit to sue an architect or engineer. If North Carolina Senate Bill 435 (SB435) passes, then plaintiffs when filing a complaint will need to also attach an affidavit of a third-party licensed professional engineer or architect stating that the case has merit.
SB435 is a short two pages in its current form. The bill states that the “third-party licensed professional engineer or licensed architect shall (i) be competent to testify and hold the same professional license and practice in the same area of practice as the defendant design professional and (ii) offer testimony based upon knowledge, skill, experience, education, training, and practice. The affidavit shall specifically state for each theory of recovery for which damages are sought, the negligence, if any, or other action, error, or omission of the design professional in providing the professional service, including any error or omission in providing advice, judgment, opinion, or a similar professional skill claimed to exist and the factual basis for each such claim. The third-party licensed professional engineer or licensed architect shall be licensed in this State and actively engaged in the practice of engineering or architecture respectively.”
A few of the amendments allude to disciplining design professionals who certify civil actions that are without merit. The bill has been referred to the Committee on Judiciary I.
While North Carolina is considering enacting a Certificate of Merit law, eleven other states already require one, including Arizona, California, Colorado, Georgia, Maryland, Minnesota, New Jersey, Oregon, Pennsylvania, South Carolina, and Texas. Christopher D. Montez, a partner with Thomas, Feldman & Wilshusen, LLP, has written a useful summary for each state’s certificate of merit scheme.
Read the text of SB435
Track the progress of SB435
Read more from Christopher D. Montez’s article on Thomas, Feldman & Wilshusen, LLP site
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.”
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No Coverage For Damage Caused by Chinese Drywall
October 28, 2011 — Tred Eyerley, Insurance Law Hawaii
The pollution exclusion barred coverage for alleged property damage and bodily injury in Evanston Ins. Co. v. Harbor Walk Dev., LLC, No. 2:10cv312 (E.D. Va. Sept. 9, 2011).
Homeowners sued the insured, Harbor Walk, in three lawsuits, alleging the Chinese drywall installed in their homes emitted sulfides and other noxious gases. This caused corrosion and damage to the air-conditioning and ventilation units, refrigeration coils, copper tubing, faucets, metal surfaces, electrical appliances and other personal items. The homeowners also alleged the compounds emitted by the drywall caused bodily injury, such as allergic reactions, headaches, etc.
Harbor Walk’s insurer, Evanston, filed for a declaratory judgment that the pollution exclusion precluded coverage.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Safer Schools Rendered Unsafe Due to Construction Defects
February 10, 2012 — CJD Staff
Built on a program for safer school buildings, schools in Neenan County, Colorado have been shown to have mild-to-moderate structural problems, rendering some of them unsafe. The Denver Post reports that a third-party review of schools built by the Neenan Company has shown structural issues in all fifteen school buildings.
One school, Meeker Elementary, has been closed as it could collapse under high winds or during an earthquake. Sargent Junior-Senior High School is in use, but there are plans to evacuate the buildings if winds exceed 25 mile per hour. Two schools have roofs that are unable to bear expected loads of snow during the winter.
The Neenan Company says that the school buildings are not up to their standards and is working with the school districts to repair the buildings. Repairs are expected to be complete by August.
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School Sues over Botched Pool
October 23, 2012 — CDJ Staff
The Daily American reports that the Somerset Area School District has alleged that the contractor who repaired and renovated the district’s swimming pool “botched” the job. Now the school has filed a civil case in the Somerset County Court of Common Pleas. The contractor, Wilson Construction Co. would prefer the matter to be settled in binding arbitration.
The school district alleges that the surface installed by Wilson Construction cracked and bubbled due to improper installation. The manufacturer of the waterproofing system, Dryvit Systems, tested the installation and concluded it was an installation failure instead of a product defect. Dryvit told the district that the exterior walls would have be removed.
The school district paid Wilson Construction $591,081 for their work. In their lawsuit, they are seeking $594,596 to cover the cost of draining the pool and repairing it.
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