Housing Prices Up through Most of Country
December 20, 2012 — CDJ Staff
Home prices in October were up more than six percent compared with prices in October 2011. The LA Times noted that some of the strongest gains were in California and Arizona. The Phoenix metropolitan area saw a 24.5% rise in home prices. In California, Riverside and Los Angeles were just above the national average, at 7.3% and 6.4%, contributing to the state’s overall nine percent increase.
The news wasn’t good throughout the entire country, as five states did not see any price increases. Mark Fleming, the chief economist at CoreLogic, a research firm in Irvine, California said that “the housing recovery that started earlier in 2012 continues to gain momentum.
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Court Rejects Anti-SLAPP Motion in Construction Defect Suit
September 1, 2011 — CJD Staff
The California Court of Appeals has upheld the denial of an anti-SLAPP motion in Claredon American Insurance Company v. Bishop, Barry, Howe, Haney & Ryder. This case was triggered by a water intrusion problem at a condominium complex, the Terraces at Emerystation, built and sold by Wareham Development Corporation. The insurer, Claredon, retained Risk Enterprise Management as the third party claims administrator. REM retained the law firm Bishop, Barry, Howe, Haney & Ryder. The construction defect case was settled in 2007 and the condo owners moved back by early 2008.
Due to issues with the claims settlement, Claredon filed against REM for “professional negligence, indemnity, apportionment and contribution,” with a cross-complaint that the cross-defendants negligently defended the developer, Wareham.
In response, the cross-defendants filed a motion to strike the cross-complaint under the anti-SLAPP statute. The trial court denied this motion and now this has been upheld by the appeals court.
The court noted that “The fundamental thrust of the cross-complaint is not protected litigation-related speech and petitioning activity undertaken on another’s behalf in a judicial proceeding.”
Read the court’s decision…
Construction Defect Not Occurrences, Says Hawaii Court
July 10, 2012 — CDJ Staff
Some insurers in Hawaii have made it clear that they will be covering construction defects, despite a court ruling concluding that defects are not occurrences, under Hawaii law. The case, heard by Hawaii’s Intermediate Court of Appeals found that “breach-of-contract claims based on allegations of shoddy performance are not covered under CGL policies and that tort-based claims derivative of such breach of contract claims also are not covered.”
Writing in Business Insider, Michael Bradford notes that the case, Group Builders Inc. and Tradewind Insurance Co. Ltd. vs. Admiral Insurance Co., involved improperly installed insulation at the Hilton Hawaiian Village’s Kalia Tower. Hilton was forced to close 21 floors due to extensive mold in guest rooms. Although the court did recognize this property damage, they did not feel it triggered insurance coverage, noting that if disputes over the quality of work were covered, CGL policies would become professional liability policies or performance bonds.
One critic of the decision, Warren C. Perkins, the risk manager at Boh Bros. Construction of New Orleans, noted that under the decision, “it doesn’t matter what the policy says and there is no need to investigate the policy wording.”
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Florida Contractor on Trial for Bribing School Official
October 28, 2011 — CDJ Staff
Lloyd Whann, an executive in M. M. Parrish Construction, a Gainesville, Florida firm, is going to trial over claims that he bribed a school district official with more than $50,000 in gifts. The trial has been pushed to March of 2012, in order for his defense to review documents.
Bob Williams, the former school official, plead guilty to conspiracy to commit bribery. He agreed to testify against Whann and M.M. Parrish Construction.
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Builder Cannot Receive Setoff in Construction Defect Case
July 10, 2012 — CDJ Staff
The California Court of Appeals has dismissed an appeal in a San Diego construction defect case. In Smith v. Walters Group, Christopher and Maud Smith sued The Walters Group, a real estate developer, and Galen C. Pavelko, Inc, the builder of their home. Walters had bought five lots and hired Pavelko to build houses on them, selling one of these homes to the Smiths. “After moving in, the Smiths noticed a strong and obnoxious odor permeating the house.” The Smiths sued but were ordered to arbitrate instead, pursuant to a clause in the purchase contract. The Smiths were awarded $1.5 million at arbitration.
Walters requested that the arbitration remain open to determine if Walters was entitled to a setoff for settlements from defendants not involved in the arbitration. During this time, Pavelko made a settlement with the Smiths, which the court found was in good faith. At the same time, the arbitrator “reached the opposite conclusion.” The arbitrator concluded that “only settlements made ‘in good faith before verdict or judgment’ qualified for setoff.”
Walters moved that the trial court “‘correct’ the award,” but the trial court declined to do so and confirmed the award. In the appeal, Walters raised the issue of “whether Pavelko’s settlement occurred ‘before verdict or judgment.’” The appeals court dismissed the appeal, noting that “Walters would not be entitled to a $500,000 setoff if we reversed the trial court’s order determining the Smith-Pavelko settlement was made in good faith because Pavelko’s $500,000 payment was expressly conditioned on such an order.” They add that “were we to reverse the trial court’s order, Pavelko would have no obligation to pay the Smiths the $500,000.” This would then “deprive Walters of the corresponding statutory right to a setoff.”
Read the court’s decision…
An Upward Trend in Commercial Construction?
March 28, 2012 — Melissa Dewey Brumback, Construction Law North Carolina
Year-end economic indicators demonstrate that private commercial construction may be increasing in 2012, primarily as demand grows for new projects built in the United States.
According to an article in Businessweek, the Architecture Billings Index held at 52 in December, indicating a modest expansion in the market. The American Institute of Architects said that the commercial and industrial component of the number climbed to 54.1 in December, the highest in 10 months.
The monthly survey of U.S.-based architecture firms is one of the main indicators of nonresidential construction, and these numbers suggest that modest improvement may be on the horizon.
The information is confirmed by data from the Census Bureau that shows that spending on lodging, office, commercial and manufacturing buildings grew 8.2 percent in November to $9.2 billion from a year ago. These types of commercial and industrial projects are historically canaries in the mine and are usually the first part of the industry to improve as the economy expands.
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Reprinted courtesy of Melissa Dewey Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl-law.com.
Construction Defect Lawsuits? There’s an App for That
July 10, 2012 — CDJ Staff
The website ebeeky.com reviews Picture It Settled, an app designed to help people engaged in lawsuits figure out where settlement strategies would be most successful. First available for Android and then iOS, the app is now available for Blackberry. One user of the application wrote that “anyone who has set through a construction defect mediation can immediately grasp the value of this app.
The app tracks the negotiation process, allowing users to see a history of bids and counteroffers. It also models the negotiation process in order to predict the ultimate cost of settlement. These numbers are based on past similar negotiations that the user has entered.
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Court Rules on a Long List of Motions in Illinois National Insurance Co v Nordic PCL
May 10, 2012 — CDJ Staff
The case Illinois National Insurance Co. v Nordic PCL, et al. “involves a dispute about whether insurance benefits are available to a general contractor who built structures that allegedly have construction defects. Plaintiffs Illinois National Insurance Company (‘Illinois National’) and National Union Fire Insurance Company of Pittsburgh, PA (‘National Union’) (collectively, the ‘Insurers’), commenced this action for declaratory relief against Defendant Nordic PCL Construction, Inc., f/k/a Nordic Construction, Ltd. ("Nordic"), on August 23, 2011.”
The court was asked to rule on a long list of motions: “Counterclaim Defendants’ Request for Judicial Notice in Support of Their (1) Motion to Dismiss the Counterclaim and (2) Motion to Strike Portions of the Counterclaim, ECF No. 16 (‘Request for Judicial Notice’); Counterclaim Defendants’ Motion to Dismiss Counterclaim Filed October 24, 2011, ECF No. 14 (‘Motion to Dismiss Counterclaim’); Counterclaim Defendants’ Motion to Strike Portions of the Counterclaim Filed October 24, 2011, ECF No. 15 (‘Motion to Strike’); Third-Party Defendant Marsh USA, Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 33 (‘Marsh’s Motion To Dismiss Or Stay’); Defendant and Third-Party Plaintiff Nordic PCL Construction, Inc., f/k/a Nordic Construction Ltd.’s Substantive Joinder to Third-Party Defendant Marsh USA Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 36 (‘Nordic’s Joinder’); and Third-Party Defendant Marsh USA, Inc.’s Motion for Judgment on the Pleadings on Counts V and VI of Defendant/Third-Party Plaintiff Nordic PCL Construction, Inc.’s Third-Party Complaint, ECF No. 29 (‘Marsh’s Motion for Judgment on the Pleadings’).”
In result, the court reached the following decisions: “The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice to the extent it covers matters relevant to these motions; GRANTS IN PART the Insurers’ Motion to Dismiss Counterclaim, but gives Nordic leave to amend the Counterclaim in certain respects; DENIES the Insurers’ Motion to Strike; DENIES Marsh’s Motion To Dismiss Or Stay and Nordic’s Joinder; and GRANTS Marsh’s Motion for Judgment on the Pleadings.”
The court provides a bit of background on the case: “This action arises out of alleged construction defects involving two projects on which Nordic acted as the general contractor. Nordic is a defendant in a pending state court action with respect to one of the projects and says it spent more than $400,000 on repairs with respect to the other project. Nordic tendered the defense of the pending state court action to the Insurers and sought reimbursement of the cost of repairs already performed. The Insurers responded by filing this action to determine their rights under the insurance policies issued to Nordic.”
Furthermore, the court presented a brief procedural history: “The Insurers commenced this declaratory action in this court on August 23, 2011. The Complaint asserts two claims, one seeking a declaration that the Insurers have no duty to provide a defense or indemnification regarding the Safeway Action, the other seeking such a declaration regarding the Moanalua Claims. Along with its Answer, Nordic filed a Counterclaim against the Insurers. The Counterclaim asserts breach of contract, breach of the covenant of good faith and fair dealing, misrepresentations and omissions of material fact, and bad faith, and seeks declaratory relief against the Insurers.”
The procedural history continues: “Nordic also filed a Third-Party Complaint against Marsh, the broker that had procured the Policies from the Insurers for Nordic. Nordic alleges that it reasonably believed that the Policies would provide completed operations insurance coverage for the types of construction defects alleged in the Safeway Action and Moanalua Claims. The Third-Party Complaint asserts breach of contract, negligence, promissory estoppel, breach of fiduciary duties, implied indemnity, and contribution and equitable subrogation.”
In conclusion, “The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice. With regard to the Insurers’ Motion to Dismiss Counterclaim, the court GRANTS the motion as to Count I (breach of contract), Count II (duty of good faith and fair dealing), Count III (fraudulent and negligent misrepresentation), the portion of Count IV (bad faith) premised on fraud, and Count IV (declaratory relief). The court DENIES the motion as to Count IV (bad faith) that is not premised on fraud. Except with respect to the "occurrence" issue, which the court disposes of here on the merits, and Count V, which concerns only a form of relief, Nordic is given leave to amend its Counterclaim within three weeks of the date of this order. The court DENIES the Insurers’ Motion to Strike, DENIES Marsh’s Motion to Dismiss or Stay and Nordic’s Joinder, and GRANTS Marsh’s Motion for Judgment on the Pleadings with respect to Counts V and VI of the Third-Party Complaint.”
Read the court’s decision…
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.
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Changes To Indemnification Statute Are Here! Say Hello To Defense Duties
June 19, 2012 — Douglas Reiser, Builders Counsel
A months back, I discussed the passage of SHB 1559. The law changes the existing statutory indemnification regulation to include the costs of defense and to rid contracts of unfair indemnification for someone else’s sole negligence. The law went into effect last week!
Check back to my recent article on the changes set forth in the new law. The amendments to RCW 4.24.115 will broaden the existing law and clarify what types of indemnification are unenforceable. In short, an “up the chain” contractor (such as a general contractor) cannot expect to pass 100% of the defense and indemnification obligations downward if it is partially liable.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
JDi Data Introduces Mobile App for Litigation Cost Allocation
October 23, 2012 — CDJ Staff
JDi Data of Fort Lauderdale, Florida has announced that they are about to release a mobile app for their Vendor Cost Control service. Their mobile app is a web app, and so can be used by customers on the iOS, Android, or Blackberry platforms. It provides a secure link to their database with no risk of releasing proprietary information. JDi Data notes that their product will allow users to “track their full subscribed case listings,” give them “easy access to carrier allocations, payments, and outstanding balances reports,” and to “call or email case managers directly from their mobile application.
James DeRosa, the founder of JDi Data says that “pushing the boundaries of technology has enabled us to further our goal of providing credible reporting and cost allocation expertise to insured, carriers and the legal community.”
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Amerisure Case to be Heard by Texas Supreme Court
August 16, 2012 — CDJ Staff
The Fifth Circuit Court of Appeals has withdrawn its decision in Ewing Construction Company Inc. v. Amerisure Insurance Company, according to Insurance Developments. The Fifth Circuit had concluded that “a contractor’s obligation to perform its contact in a workmanlike manner constituted an ‘assumption of liability.’” Two questions have now been certified to the Texas Supreme Court. The dissent in the case argued the majority had misread Texas Supreme Court precedent. The court will now have the opportunity to clarify this matter.
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West Coast Casualty Promises Exciting Line Up at the Nineteenth Annual Conference
March 28, 2012 — CDJ Staff
West Coast Casualty has announced the lineup for the annual WCC Construction Defect Seminar. This year’s seminar will be the nineteenth anniversary, and it will be held on May 17th and 18th, 2012 in Anaheim, California. They are the largest construction defect event in the world and this year’s seminar will again bring the top people in the field to address many of the current issues and where the construction defect community will be going in the future.
The event, anticipated to be even larger than prior years, will have numerous panels and presentations on the current state of construction defect litigation. Among the topics that will be presented are “Arbitrate? Let’s See You Make Me!” “Defending Construction Defect Failure Mechanisms?An Expert’s Perspective,” and “Current Trends in Effectively Handling SB800 Cases.”
Speakers at the event will include judges, lawyers, and representatives of the insurance industry. One event, “Meet Your Judges, A Candid Discussion on Construction Defect Claims and Litigation from the Bench?” will include judges from five states, including the Honorable Nancy M. Saitta, Chief Justice of the Nevada Supreme Court, the Honorable Clifton Newman of the South Carolina Circuit Court, and the Honorable Rex Heeseman of the Los Angeles County Superior Court.
Daniel A. Berman, Esq. and Stephen Henning, Esq. will be talking on the topic of “Social Networking Sites: Strategies, Ethical Pitfalls, and Practice Pointers for Litigating and Winning Your Construction Defect Case.” Mr. Berman is a Founding and Managing Partner of Wood, Smith, Henning & Berman LLP. He has been named a Southern California Super Lawyer for eight consecutive years. Mr. Henning is a Founding Partner of Wood, Smith, Henning & Berman, LLP and Fellow of the Litigation Counsel of America. Mr. Henning will also be one of the presenters on the panel “Important Court Decisions Impacting Construction Defect Claims.”
The panel “Why Do We Need to Know Certain Things and How Decisions Are Made” will be presented by important figures in the construction claims industry, including Phyllis Modlin, Todd Schweitzer, Teresa D. Wolcott, and Lee Wright. Ms. Modlin is a Construction Defect Claims Supervisor responsible for nationwide claims for Markel Corporation. Mr. Schweitzer is an Assistant Vice President of Major Case for Construction Defect and Professional Liability Claims Services at Zurich North America. Ms. Wolcott is the National Product Manager for Construction Defect Claims within the Construction Claims Organization at Travelers Insurance. Mr. Wright is an Assistant Vice President and Senior Claims Consultant for XL Specialty Insurance.
The event will also include a Science and Technology Fair in which exhibitors will be presenting technological problem solving and decision making as they relate to resolving ongoing construction and post construction-defect related issues while reducing costs for all those involved in claims and litigation. The fair is dedicated to these novel applications of science and technology that benefit the construction defect community but are not yet commonly available. This will be the third time the Construction Defect Seminar will include a Science and Technology Fair.
Sessions at the event are approved for MCLE credit in Arizona, California, Colorado, Illinois, Maine, Minnesota, New York, Ohio, and Pennsylvania. MCLE credits vary by state; attendees can obtain up to 10.25 hours of credit in Arizona, California, Maine, and New York. Applications for several other states are still pending. Additionally, the event is also worth continuing education credits with the Florida Department of Insurance and for Registered Professional Adjusters. West Coast Casualty has applications pending for adjuster continuing education in an additional thirty-six states.
West Coast Casualty recommends this event for anyone involved in construction or construction defect claims, whether they are a claims adjuster, a member of a homeowner board, a judge, a property manager, a construction claims attorney, a general contractor, or anyone else with an interest in this area. The event typically has more than 1,600 attendees. Those interested can register online.
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Ensuing Loss Found Ambiguous, Allowing Coverage
August 16, 2012 — Tred Eyerly, Insurance Law Hawaii
The court determined the ensuing loss provision was ambiguous and found coverage for the home owners in Platek v. Town of Hamburg, 2012 N.Y. App. Div. LEXIS 5371 (N.Y. App. Div. July 6, 2012).
The burst of a water main caused water damage to the insureds' basement. Allstate disclaimed coverage under exclusion 4 for losses caused by "[w]ater . . . on or below the surface of the ground, regardless of its source . . . [,] includ[ing] water . . . which exerts pressure on or flows, seeps or leaks through any part of the residence premises."
Another policy provision covered "sudden and accidental direct physical loss caused by fire, explosion or theft resulting from item []. . . 4 . . . ." Plaintiffs argued that this exception applied because their claimed loss was caused by an "explosion" of the water main.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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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Construction Defect Litigation at San Diego’s Alicante Condominiums?
March 25, 2011 — Alicante HOA Website
According to recent posts in the Alicante HOA website, construction experts and legal counsel have been retained. The HOA board has been informed that testing of a variety of the building’s components are underway or will begin in the near future.
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Destruction of Construction Defect Evidence Leads to Sanctions against Plaintiff
July 10, 2012 — CDJ Staff
Stating that the plaintiff’s actions have left the defendants in a situation where they “cannot properly defend the action,” a judge in the US District Court of New York has sanctioned the plaintiffs in Aktas v. JMC Dev. Co.
The plaintiffs hired JMC Development and Stephen Jung, an architect, to renovate their vacation home in Adirnodack, New York. As work progressed, “due to disagreements regarding the completion date and payments for the project, the relationship began to deteriorate.” The plaintiffs hired George Villar as an owner’s representative who “testified that he deemed the workmanship to be ‘poor.’”
Subsequently, the locks where changed on the home, preventing JMC from performing any additional work, after which drywall was removed, which Villar stated was so that “the engineer come and look at the framing.” Subsequently, Villar sent a letter to JMC stating that the work was “performed in an inadequate, negligent and un-professional manner.” Villar informed JMC that they were not to visit the property. Subsequently, the plaintiffs hired another firm. “Plaintiffs testified that the materials were ‘carted away’ and ‘thrown out.’”
The plaintiffs filed a suit against JMC and others. JMC filed a motion requesting that the plaintiffs be sanctioned for their spoliation of evidence. The court noted that “the plaintiffs recognized that litigation was imminent,” and that they “had a duty to preserve the evidence. As all of JMC’s work was destroyed, there is no evidence of whether or not the work was defective. The court concluded that it will “issue an adverse inference charge that permits the jury to infer that the missing evidence was favorable to the defendants.”
In conclusion, the court granted in part the spoliation sanctions. They granted JMC a summary judgment dismissing the plaintiffs’ claims of fraud.
Read the court’s decision…
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
