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    Illinois Builders Right To Repair Current Law Summary:

    Current Law Summary: HB4873 Pending: The Notice and Opportunity to Repair Act provides that a construction professional shall be liable to a homeowner for damages caused by the acts or omissions of the professional and his or her agents, employees, or subcontractors. This bill requires the service of notice to the professional of the complained-of defect in the construction by the homeowner prior to commencement of a lawsuit. Allows the professional to make an offer of repair or settlement and to rescind this offer if the claimant fails to respond within 30 days.


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    Home Builders Association of the Greater Rockford Area
    Local # 1465
    631 N Longwood St Suite 102
    Rockford, IL 61107
    http://www.hbarockford.com

    Home Builders Association of Greater Chicago
    Local # 1425
    5999 S. New Wilke Rd Ste 104
    Rolling Meadows, IL 60008
    http://www.hbagc.com

    Home Builders Association of Greater Fox Valley
    Local # 1431
    PO Box 1146
    Saint Charles, IL 60174
    http://www.buildfoxvalley.com

    Northern Illinois Home Builders Association Inc
    Local # 1434
    3695 Darlene Ct Ste 102
    Aurora, IL 60504
    http://www.nihba.com

    SouthWest Suburban Home Builders Association
    Local # 1432
    10767 W 163rd Pl
    Orland Park, IL 60467
    http://www.sshba.com

    Home Builders Association of Kankakee
    Local # 1445
    221 S Schuyler Ave Ste B
    Kankakee, IL 60901
    http://www.hbakankakee.com/

    Home Builders Association of Greater Peoria
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    East Peoria, IL 61611
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    Construction Expert Witness News and Information
    For Chicago Illinois

    District Court’s Ruling Affirmed in TCD v American Family Mutual Insurance Co.

    Safer Schools Rendered Unsafe Due to Construction Defects

    Construction Defect Journal Marks First Anniversary

    Homebuilding on the Rise in Nation’s Capitol

    Insurer’s Discovery Requests Ruled to be Overbroad in Construction Defect Suit

    Unfinished Building Projects Litter Miami

    Condominium Exclusion Bars Coverage for Construction Defect

    Irene May Benefit Construction Industry

    Construction Employment Rises in Half of the States

    Park District Sues over Leaky Roof

    Surveyors Statute Trumps Construction Defect Claim in Tennessee

    Contractor’s Home Not Covered for Construction Defects

    Judge Concludes Drywall Manufacturer Sold in Florida

    California insured’s duty to cooperate and insurer’s right to select defense counsel

    Construction Defect Not Occurrences, Says Hawaii Court

    Excess Carrier Successfully Appeals Primary Insurer’s Summary Judgment Award

    Construction Defects Are Occurrences, Says Georgia Supreme Court

    Local Government Waives Construction Fees to Spur Jobs

    Ohio subcontractor work exception to the “your work” exclusion

    Going Green for Lower Permit Fees

    Coverage Rejected Under Owned Property and Alienated Property Exclusions

    Court Orders House to be Demolished or Relocated

    Former Zurich Executive to Head Willis North America Construction Insurance Group

    Developer’s Fraudulent Statements Are His Responsibility Alone in Construction Defect Case

    Residential Construction Down in San Diego

    Are Construction Defects Covered by Your General Liability Policy?

    Battle of “Other Insurance” Clauses

    Hovnanian Increases Construction Defect Reserves for 2012

    Construction Workers Unearth Bones

    In Oregon Construction Defect Claims, “Contract Is (Still) King”

    Fourteen More Guilty Pleas in Las Vegas Construction Defect Scam

    Late Filing Contractor Barred from Involving Subcontractors in Construction Defect Claim

    Construction Demand Unsteady, Gains in Some Regions

    Eleventh Circuit Asks Georgia Supreme Court if Construction Defects Are Caused by an "Occurrence"

    Harmon Towers Case to Last into 2014

    Architectural Firm Disputes Claim of Fault

    Ensuing Loss Provision Does Not Salvage Coverage

    California Appeals Court Remands Fine in Late Completion Case

    Court Consolidates Cases and Fees in Soil Construction Defect Case

    Demand for Urban Living Leads to Austin Building Boom

    2011 Worst Year Ever for Home Sales

    Des Moines Home Builders Building for Habitat for Humanity

    Yellow Brass Fittings Play a Crucial Role in Baker v Castle & Cooke Homes

    Florida Chinese drywall, pollution exclusion, “your work” exclusion, and “sistership” exclusion.

    Condo Owners Allege Construction Defects

    Record-Setting Construction in Fargo

    Tacoma Construction Site Uncovers Gravestones

    South Carolina Contractors Regain General Liability Coverage

    Contractor Sues Supplier over Defective Products

    Don MacGregor To Speak at 2011 West Coast Casualty Construction Defect Seminar

    Washington Court Limits Lien Rights of Construction Managers

    Construction Defects Lead to Demolition of Seattle’s 25-story McGuire Apartments Building

    No Choice between Homeowner Protection and Bankrupt Developers?

    Federal District Court Predicts Florida Will Adopt Injury In Fact Trigger

    Webinar on Insurance Disputes in Construction Defects

    In Re Golba: The Knaubs v. Golba and Rollison, Debtors

    Insurer Has Duty to Defend in Water Intrusion Case

    Negligent Construction an Occurrence Says Ninth Circuit

    Construction Law Alert: A Specialty License May Not Be Required If Work Covered By Another License

    Kentucky Court Upholds Arbitration Award, Denies Appeal

    One Colorado Court Allows Negligence Claim by General Contractor Against Subcontractor

    After Construction Defect Case, Repairs to Austin Building

    Know the Minnesota Statute of Limitations for Construction Defect Claims

    Construction Defects and Contractor-Owners

    Negligent Misrepresentation in Sale of Building Altered without Permits

    Mobile Home Owners Not a Class in Drainage Lawsuit

    Policyholder Fails to Build Adequate Record to Support Bad Faith Claim

    School Sues over Botched Pool

    Colorado “property damage” caused by an “occurrence” and exclusions j(5) and j(6) “that particular part”

    Instant Hotel Tower, But Is It Safe?

    History of Defects Leads to Punitive Damages for Bankrupt Developer

    Contractor Manslaughter? Safety Shortcuts Are Not Worth It

    Limitations of Liability in Subcontractors’ Contracts May Not Be Enforceable in Colorado to Limit Claims by Construction Professionals.

    Lien Claimant’s Right to Execute against Bond Upheld in Court of Appeals

    High School Gym Closed by Construction Defects

    Destruction of Construction Defect Evidence Leads to Sanctions against Plaintiff

    Can Negligent Contractors Shift Blame in South Carolina?

    Florida “get to” costs do not constitute damages because of “property damage”

    Anti-Assignment Provision Unenforceable in Kentucky

    Harmon Towers Duty to Defend Question Must Wait, Says Court

    Is Construction Heading Off the Fiscal Cliff?

    Homeowners Must Comply with Arbitration over Construction Defects

    Boston Tower Project to Create 450 Jobs

    Another Colorado District Court Refuses to Apply HB 10-1394 Retroactively

    Federal Judge Dismisses Insurance Coverage Lawsuit In Construction Defect Case

    Another Las Vegas Tower at the Center of Construction Defect Claims

    No Coverage Under Ensuing Loss Provision

    Insurer Must Defend Claims for Diminution in Value of Damaged Property

    California Supreme Court Finds Associations Bound by Member Arbitration Clauses

    Tennessee Court: Window Openings Too Small, Judgment Too Large
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    CHICAGO ILLINOIS CONSTRUCTION EXPERT WITNESS
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    Leveraging from more than 5500 construction defect and claims related expert witness designations, the Chicago, Illinois Construction Expert Witness Group provides a wide range of trial support and consulting services to Chicago's most acknowledged construction practice groups, CGL carriers, builders, owners, and public agencies. Drawing from a diverse pool of construction and design professionals, BHA is able to simultaneously analyze complex claims from the perspective of design, engineering, cost, or standard of care.

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    Chicago, Illinois

    Construction Defect Journal Marks First Anniversary

    January 6, 2012 — CDJ Staff

    November 2011 marked the first anniversary of the Construction Defect Journal. During the first year our staff and contributors in the insurance and legal communities have compiled several hundred articles of interest to the construction defect and claims community.

    Each of these articles are maintained in the CDJ archives, and are accessible at http://www.constructiondefectjournal.com/archives.html. Each story in the archives is listed in the order it was posted to the archives. Each story in the archives opens up in its own page, so you can easily locate topics and articles of interest.

    If you’re new to Construction Defect Journal, or just want peruse past articles, please take a moment to visit the CDJ Archives page. Also please feel encouraged to submit your firm’s articles or legal publications of interest to the CD community at http://www.constructiondefectjournal.com/submitStory.html.


    Harmon Tower Construction Defects Update: Who’s To Blame?

    August 17, 2011 — CDJ Staff

    Reporting on the site VegasInc.com, Liz Benton notes that “nobody wants to take the fall for what happened at Harmon.” Work on the Harmon hotel building in Las Vegas’s CityCenter stopped in 2008 after 26 of the planned 49 stories were completed. Lorence Slutzky, a construction law professor at John Marshall Law School and a partner with the Chicago firm Robbins Schwartz Nicholas Lifton & Taylor told Benton that while inspectors and others are complicit, “the real responsibility rests with Perini, which has an obligation to comply with the plan specifications.” Perini’s claim is that they were given faulty design drawings. MGM disputes this.

    Perini has offered to repair the building defects, however MGM has released a statement that they have “zero confidence or trust that Perini can and will properly fix a building it has so badly constructed thus far.” One MGM spokesperson likened these requests from Perini to “the director of ‘Ishar’ demanding a sequel.” “Ishtar,’ cost Columbia Pictures $55 million dollars and earned only $4.2 million in its initial run. Perini claims that MGM halted work because of the economy.

    Read the full story…


    Statute of Limitations Upheld in Construction Defect Case

    September 30, 2011 — CDJ Staff

    The Missouri Court of Appeals has ruled in Ball v. Friese Construction Co., finding that Mr. Ball’s claims were barred by the statute of limitations.

    Mr. Ball hired Friese Construction Company to build a single-family home. The sale was completed on March 29, 2001. That December, Mr. Ball complained of cracks in the basement floor. SCI Engineering, n engineering firm, hired by Friese, determined that the home’s footing had settled and recommended that Mr. Ball hire a structural engineer to determine if the footings were properly designed and sized. In September 2002, the structural engineer, Strain Engineering, determined that the cracks were due to slab movement, caused in part by water beneath the slab, recommending measures to move water away from the foundation. In 2005, Mr. Ball sent Friese correspondence “detailing issues he was having with the home, including problems with the basement slab, chimney structure, drywall tape, and doors.” All of these were attributed to the foundation problems. In 2006, Friese stated that the slab movement was due to Ball’s failure to maintain the storm water drains.

    In 2009, Ball received a report from GeoTest “stating the house was resting on highly plastic clay soils.” He sued Friese in May, 2010. Friese was granted a summary judgment dismissing the suit, as the Missouri has a five-year statute of limitations. Ball appealed on the grounds that the extent of the damage could not be determined until after the third expert report. The appeals court rejected this claim, noting that a reasonable person would have concluded that after the conclusion of SCI and Strain Engineering that “injury and substantial damages may have occurred.”

    The court concluded that as there were not “continuing wrongs causing new and distinct damages,” he should have filed his lawsuit after the first two expert reports, not waiting seven years for a third expert to opine.

    Read the court’s decision…


    California Supreme Court Binds Homeowner Associations To Arbitration Provisions In CC&Rs

    September 13, 2012 — Stephen A. Sunseri and Aarti Kewalramani, Gatzke Dillon & Ballance LLP (http://www.gdandb.com).

    The California Supreme Court ruled in Pinnacle Museum Tower Assn. v. Pinnacle Market Development (August 16, 2012, S186149) __ Cal.4th __ [2012 WL 3516134], that arbitration provisions within the covenants, conditions, and restrictions (“CC&Rs”) for condominium projects are enforceable against their homeowner associations. The ruling — two years in the making — was based on legislative history of laws governing common interest developments, and decades of decisional authority involving contracts and arbitration provisions.

    In Pinnacle, a homeowners association sued a condominium builder for construction defects and resultant property damage to the common areas, and to the separate property interests held by the individual members. The builder moved to compel arbitration, based on a provision contained in the CC&Rs which required resolution of all construction disputes through binding arbitration. The association argued it could not be compelled to arbitrate these claims because it was not a party to the agreement to arbitrate, asserting “the Association did not bargain with [the builder] over the terms of the Project CC&R's or participate in their drafting.”

    The Supreme Court rejected the association's argument on the grounds that the builder-authored CC&Rs complied with the Davis-Stirling Act (“the Act”) (Civil Code §1350, et seq.) ? the law that governs all common interest developments in California. Under the Act, builders and sellers of common interest residential units are required to provide a copy of the CC&Rs to all purchasers, as well as copies of the Department of Real Estate's public report, which informs purchasers of their rights and remedies as members of the association, and encourages each prospective purchaser to review the terms carefully before entering into any agreement. Further, the Act states all CC&Rs are enforceable, unless unreasonable, and inure to the benefit of and bind all owners in the development. (Civ. Code, §1354, subd. (a).) The Court found each owner who purchased a condominium in the project either expressly consented to the terms and provisions of the CC&Rs or was deemed to have consented to the terms at the time of purchase.

    The Court also did not find the arbitration provision to be unconscionable. The Court indicated the provision was drafted and recorded in accordance with the Act, which allowed each prospective purchaser to make an informed decision prior buying a condominium unit. The provision also limited arbitration to construction defect disputes. The Court did not find any evidence the provision “shocked the conscience” or was “oppressive” in any way.

    Pinnacle settles a decades-long conflict over whether arbitration provisions in CC&Rs for condominium projects are enforceable against homeowner associations and their members. It remains unclear, however, whether Pinnacle’s rationale will be applied to cases involving homeowner associations for single-family residences (as opposed to condominiums), assuming those CC&Rs have similar arbitration requirements. Regardless, the result of Pinnacle is clear, if arbitration provisions contained in condominium CC&Rs meet the fairness and unconscionability tests set out by the Court, more condominium construction defect cases brought by homeowner associations will be resolved through the arbitration process.

    Read the court’s decision…

    Printed courtesy of Stephen A. Sunseri and Aarti Kewalramani, Gatzke Dillon & Ballance LLP. Mr. Sunseri can be contacted at ssunseri@gdandb.com and Ms. Kewalramani can be contacted at akewalramani@gdandb.com.


    South Carolina Contractors Regain General Liability Coverage

    May 20, 2011 — CDJ Staff

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

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

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

    Read the full story…


    United States District Court Confirms That Insurers Can Be Held Liable Under The CCPA.

    June 19, 2012 — Chad Johnson

    In D.R. Horton, Inc.-Denver v. The Travelers Indem. Co. of Am., 10-CV-02826-WJM-KMT, 2012 WL 527204 (D. Colo. Feb. 16, 2012), the court was asked to rule on Travelers’[1] motion to dismiss D.R. Horton, Inc. ?Äì Denver’s (“DRH”) claim that Travelers violated the Colorado Consumer Protection Act (“CCPA”).

    In the underlying construction defect case (“CD case”), DRH, as the developer and general contractor of a construction project, tendered the defense of the CD case to certain subcontractors and to Travelers as an insurer to those subcontractors. Travelers accepted the duty to defend DRH. DRH hired counsel to defend it, and the attorney fees and costs of suit were billed to Travelers. However, for a period of over five years, Travelers failed to actually pay any portion of the defense of DRH. Finally, on October 31, 2008, Travelers offered checks for payment of only 4% of the costs and fees incurred. DRH then returned the checks to Travelers and provided Travelers with authority to support its position that the amounts in Travelers’ checks were inadequate. Thereafter, Travelers dug its heels in, and resubmitted the same checks.

    DRH was then forced to file a coverage action against Travelers for declaratory judgment, breach of contract, bad faith breach of insurance contract, and deceptive trade practices under the CCPA. In its motion to dismiss DRH’s CCPA claim, Travelers’ argued that DRH failed to plead specific facts that Travelers engaged in a deceptive trade practice under C.R.S. § 6-1-105, and DRH failed to plead sufficient facts showing that Travelers’ actions significantly affect the public ?Äì a necessary element of a CCPA claim.

    Read the full story…

    Reprinted courtesy of Chad Johnson, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Johnson can be contacted at johnson@hhmrlaw.com


    The King of Construction Defect Scams

    June 19, 2012 — CDJ Staff

    Echoing Businessweek, the Las Vegas Sun agrees that the Nevada HOA scandal is the “king of all Vegas real estate scams,” and says that the Nevada legislatures should take action. The Sun notes that the case involves only 12 out of 2,356 HOAs in Southern Nevada.

    To date, 25 people have plead guilty in the case. At the center were an attorney and contractor who allegedly referred work to each other. To enable this, they assembled a wider conspiracy of people who enriched by the process. In the words of the Sun, those involved “upended the concept of a ‘common interest’ community.”

    Read the full story…


    Hawaii State Senate Requires CGL Carriers to Submit Premium Information To State Legislature

    March 20, 2011 — March 20, 2011 Construction Defect Journal Staff

    In light of the decision in Hawaii’s Intermediate Court of Appeals in Group Builders, Inc.,v. Admiral Insurance Company, 231 P.3d 67(2010), Hawaii’s state senate is requesting that "every domestic and foreign insurance company that has ever issued commercial general liability policies in the State is requested to submit information to the Legislature on the total premiums received for their commercial general liability policies during the past ten years"

    Read Full Text of Hawaii State Senate Resolution


    Arbitration Clause Not Binding on Association in Construction Defect Claim

    June 19, 2012 — CDJ Staff

    Determining that a community’s CC&Rs do not form an agreement to arbitrate, the California Court of Appeals has reversed the decision of the Superior Court inVerano Condo. Homeowners the Ass’n v. La Cima Dev., LLC (Cal. App., 2012). La Cima purchased an apartment complex in December 2004, which they converted into condominiums. In the process, La Cima created the CC&Rs, under which the Verano Condominium Homeowners Association came into being. One section of the CC&Rs included arbitration clauses. Additionally, the purchase agreements for individual condominium units also contained arbitration clauses. Subsequently, the owners became aware of construction defect both in units and in the common areas. The Association sued La Cima both in its own interest and on behalf of its members. La Cima moved to compel arbitration, which was denied by the trial court. La Cima appealed.

    The court concluded that “CC&Rs are insufficient to form an agreement to arbitrate between La Cima and the Association.” The court noted that “no evidence exists to show the Association consented to the terms of the CC&Rs, either explicitly or implicitly.”

    The court agreed with La Cima that the arbitration agreement applied to those owners who had purchased their units directly from La Cima. Moreover, as the conversion to condominiums involved interstate commerce, in part because a Delaware company was selling condominiums located in California, the court held that the Federal Arbitration Act (FAA) applied, and as such “even a state constitutional standard, such as the the jury waiver provision requirements of the California Constitution, cannot be used to circumvent the FAA in the face of an otherwise valid arbitration agreement.”

    However, the court also held that there was “no agreement in the CC&Rs between La Cima and owners who did not purchase units directly from La Cima,” adding that “no meeting of the minds between La Cima and these later purchasers and their successors occurred.” The court did not believe that “the Legislature intended that CC&Rs would be used to provide continuing and irrevocable contractual development or role as a representative of the owners of the development.”

    The purpose of the CC&Rs, according to the court are to “protect owners from one another and permit enforcement of its terms by the Association.” The court stated that “La Cima relinquished its interests in the land by selling its property and may not assert any rights under the CC&Rs following the transfer of its ownership interest.

    In its conclusion, the court determined that claims must be organized in three classes. The claims the association made against La Cima for defects in the common area “are not subject to any valid agreement to arbitrate.” The second category are those owners who did not purchase their units directly from La Cima. Here, also, the court found that the units “are similarly not subject to a valid arbitration agreement.”

    The third category, however, was “owners who purchased units directly from La Cima.” The court held that these arbitration agreements were valid, and if the claims were to be taken up by the association, the association could only submit these claims to arbitration. The lower court was instructed to separate these claims, as here La Cima’s motion could be granted.

    Read the court’s decision…


    Time to Repair Nevada’s Construction Defect Laws?

    February 10, 2012 — CDJ Staff

    The Builders Magazine writes that during the previous session of the Nevada legislature, reforms sought by the building industry were stopped by the Speaker of the Nevada Assembly. The new session brings a new speaker and new hope for construction defect reform in Nevada.

    Pat Hickey, a member of the Assembly and a small business owner told The Builders Magazine that “we need to apply pressure on the legislators to fix the law.” He also recommended that people “go to Governor Sandoval and ask for his help.” Builders seeks legislation that will include right to repair and it should “define construction defect in such a way that it allows for a fair process.”

    Read the full story…


    No Coverage Under Ensuing Loss Provision

    September 9, 2011 — Tred Eyerley, Construction Law Hawaii

    The cost of removing and replacing cracked flanges to prevent future leakage was not covered as an ensuing loss under a builder’s risk policy in RK Mechanical, Inc. v. Travelers Prop. Casualty Co. of Am., 2011 U.S. Dist. LEXIS 83958 (D. Colo. Aug. 1, 2011).

    The insured, RK Mechanical Inc., was a subcontractor hired to install plumbing for a residential construction project. RK was an additional insured on the general contractor’s policy with Travelers. RK installed approximately 170 CPVC flanges on the project. Subsequently, two of the flanges cracked, allowing water to overflow and causing water damage to the project. Travelers was notified of the flange failure and resulting water damage.

    RK subsequently removed and replaced the two cracked flanges and began water remediation. Travelers paid for the cost of the water damage due to the cracked flanges.

    RK then examined all of the flanges installed in the project and discovered many were cracked and/or showed signs of potential failure. RK removed and replaced the cracked flanges. RK tendered a claim and demand for indemnity to Travelers for these repair costs. Travelers denied the claim. RK then sued for breach of contract and declaratory relief. The parties filed cross motions for summary judgment.

    Read the full story…

    Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com


    No-Show Contractor Can’t Hide from Construction Defect Claim

    June 19, 2012 — CDJ Staff

    The failure of R. J. Haas to produce documents or make himself available for deposition has worn out the patience of the US District Court in San Jose. Judge Howard Lloyd issued a ruling inProbuilders Specialty Ins. Co. v. Valley Corp. (N.D. Cal., 2012).

    Probuilders issued an insurance policy covering Haas for their work on the construction of a single-family home for Ty and Karen Levine. The Levines sued Haas for “shoddy and incomplete work.” Probuilders contends that Haas “made material misrepresentations with respect to verifying that the subcontractors had insurance.” Since November 2011, Haas has been without legal counsel in this matter.

    Despite Probuilder’s attempts, the court noted that “Hass any not provided any documents in response to the plaintiff’s three sets of requests for production of documents.” Haas also “has refused to make himself available for deposition.” Haas was first scheduled for deposition in September, 2011. Subsequently, Haas has rescheduled his deposition repeatedly, postponing it to January 4, then February 13, and then agreed to be deposed “before the then-scheduled March 15 mediation,” after which he said he would “be unavailable to be deposed before April.

    The court noted that although Haas “hay have had legitimate reasons for wishing to continue his deposition, such as illness and his attempt to retain new counsel,” however, the court concluded that “Haas has had ample time to retain new counsel and prepare for deposition.

    The court also found fault with Haas’s objections to certain terms in the Request for Admissions, among them “named,” “independent contractor,” and “work,” noting that Haas called these “vague and ambiguous.” The court called it “quibbling,” and noted that the federal courts disfavor this. Later in the decision, the court made it clear that Haas “is obligated under the Federal Rules of Civil Procedure to respond to discovery requests.” And concludes, “that he has apparently been seeking to retain new counsel for over five months does not give him license to ignore plaintiff’s discovery requests entirely.

    The court granted Probuilders the option of filing a motion for sanctions. Mr. Haas did not attend or participate.

    Read the court’s decision…


    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…


    Housing Market on Way to Recovery

    October 23, 2012 — CDJ Staff

    Bloomberg News reports that new home purchases neared a two-year high, with July sales being the strongest since April 2010. Economists polled by Bloomberg expected an annual pace of 380,000 sales, the current levels are at 373,000. Strongest sales gains were in the Northeast, with a 20 percent jump. The Midwest and Western regions had small gains, and the South saw a drop of 4.9 percent. As the Northeast’s home prices are highest and the South’s the lowest, the pattern of sales lead to a sharp increase in median sales price.

    Meanwhile, existing stocks of homes continued to deplete, reaching a record low of 38,000 completed homes on the market. In response, builders are constructing new homes at a pace not seen since April 2010, accord to the Commerce Department.

    Read the full story…


    Insurance Policy Provides No Coverage For Slab Collapse in Vision One

    August 17, 2011 — Douglas Reiser, Builders Counsel

    This post will examine whether Division Two of the Washington Court of Appeals properly reversed and remanded several lower court decisions in the case of Vision One LLC v. Philadelphia Indemnity Insurance. In short, and from the perspective of an appellate attorney, the court of appeals got the decision right. Given the rules of contract interpretation and causation in tort claims, there was really no other way the court could have ruled. I understand that from a contractor’s perspective and insurance perspective, the decision seems odd. But from a purely legal standpoint, the decision is well-reasoned and well-supported. Let me explain.

    Background

    First, here are the facts in a nutshell. Vision One is a construction company that undertook to construct a condo complex in Tacoma. Vision then contracted with D&D Concrete to pour a concrete slab for a section of the foundation. To shore the concrete slab, D&D further contracted Berg Equipment to provide necessary equipment to stabilize the structure. Well, something down the line went wrong. The shoring failed and the slab collapsed, causing a great deal of damage.

    Read the full story…

    Read the court’s decision…

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


    State Farm Too Quick To Deny Coverage, Court Rules

    July 22, 2011 — CDJ Staff

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

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

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

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

    Read the court’s decision…


    In Re Golba: The Knaubs v. Golba and Rollison, Debtors

    June 19, 2012 — Brady Iandiorio

    Now comes another cautionary tale for builders and developers, especially those using single purpose business entities to handle individual construction projects. The United States Bankruptcy Court in Denver, Colorado, through the Honorable Michael Romero, provided an order regarding plaintiffs’ problems with a home they purchased from an entity controlled or represented by defendants. Plaintiffs, Kelvin and Holly Knaub (the “Knaubs”) filed adversary proceedings against debtor Robert Golba in his bankruptcy proceeding and against debtor Greg Rollison in his separate bankruptcy proceeding. The adversary proceedings were partially consolidated to proceed in parallel but not substantively.

    The Knaubs purchased a home from Gemm Homes (“Gemm”) in May 2003. Problems stemming from the foundation caused the Knaubs to seek an explanation and ultimately a solution from Gemm and then from Avalon Homes (“Avalon”), which the Knaubs claim is just a continuation of Gemm. Through their complaint, the Knaubs seek relief for 1) damages caused by fraudulent representations and false pretenses under 11 U.S.C. § 523(a)(2)(A), based on Golba’s misrepresentation that Gemm and Rollison were not involved in Avalon; 2) damages caused by actual fraud under § 523(a)(2)(A), based on Golba’s and Rollison’s alleged conspiracy fraudulently to convey the assets of Gemm to the Avalon entities; and 3) damages caused by breach of fiduciary duty under § 523(a)(4), alleging Gemm was an insolvent company which owed a fiduciary duty to its creditors, and alleging Golba participated in transferring Gemm’s assets to Avalon for no consideration. In the Golba action, the third claim for relief was dismissed.

    The facts of the case are important and somewhat convoluted. In an effort to make the cases clear, the evidence, allegations, and facts will be laid out in detail below. The Knaubs’ house was purchased from Gemm and soon after both Gemm and Rollison had an engineering company perform an analysis which discovered the foundation was not laid on stable ground.

    Read the full story…

    Reprinted courtesy of Brady Iandiorio, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Iandiorio can be contacted at iandiorio@hhmrlaw.com


    Mark Van Wonterghem To Serve as Senior Forensic Consultant in the Sacramento Offices of Bert L. Howe & Associates, Inc.

    March 1, 2012 — CDJ Staff

    Sacramento, CA — Bert L. Howe and Associates, Inc., is pleased to announce that Mark Van Wonterghem - General Contractor, has joined the firm as Senior Forensic Consultant. Mark will be responsible for leading the firm’s expansion in the newly formed Sacramento headquarters.

    His focus will continue to be working with construction practice groups and claims professionals in the Sacramento and Bay Area markets. He will utilize the resources of the Construction Experts Group at Bert L. Howe & Associates in furthering the litigation support needs attendant to the firm’s Northern California clientele.

    Mr. Van Wonterghem possesses extensive consulting and testimony experience. Through 32 years of experience in the construction industry he leverages extensive practical experience with multiple trades including concrete foundations, walls and flatwork, structural wood and steel framing, finish carpentry, drywall, lath & plaster/stucco, window & door installations, deck coating systems, metal and membrane flashings and above/below grade waterproofing. This trade experience encompasses both the commercial and residential construction sectors and has been vital in his ability to provide concise explanation of construction industry standards, as well as trade-specific standards of care.

    Mr. Van Wonterghem has broad experience with all types of building construction ranging from concrete and steel commercial construction to high-end custom residential construction.

    In connection with the Construction Experts Group at BHA, Mr. Van Wonterghem provides construction consulting and litigation support services to a wide variety of recognized construction claims professionals, owners, and publicly traded builders.

    The firm’s Sacramento offices are located at the Gateway Oaks III office complex, 2520 Venture Oaks Way, Suite 435, Sacramento, CA 95833. Mr. Van Wonterghem can be reached via e mail at mvanwonterghem@berthowe.com or at (800) 783-1822.