Louisiana Politicians Struggle on Construction Bills, Hospital Redevelopment
June 16, 2011 — CDJ Staff
Louisiana politicians are still working on a compromise in the state’s construction budget, as reported in the Times-Picayune. Rob Marrianneax, the chair of the Senate Revenue and Fiscal Affairs Committee, removed a $45 million request from Governor Bobby Jindal and added $4 million for projects that Jindal vetoed last year.
Two senators have formed competing plans to fund redevelopment construction for New Orleans’s Methodist Hospital. Mitch Landrieu, the mayor of New Orleans, hoped for $30 million dollars in state bonds. Senator Cynthia Willard-Lewis proposed an amendment that would supply $1.6 million, while Senator J.P. Morrell has an amendment that would supply $4 million.
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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.
Read the full story…
Georgia Law: “An Occurrence Can Arise Where Faulty Workmanship Causes Unforeseen or Unexpected Damage to Other Property”
March 5, 2011 — By
CDCoverage.com, March 5, 2011
In American Empire Surplus Lines Ins. Co. v. Hathaway Development Co., Inc., No. S10G0521 (Ga. March 7, 2011), insured plumbing subcontractor Whisnant was sued by general contractor Hathaway seeking damages for costs incurred by Hathaway in repairing damage to property other than Whisnant’s plumbing work resulting from Whisnant’s negligently performed plumbing work on three separate projects. On one project, Whisnant installed a pipe smaller
Read the full story... Reprinted courtesy of CDCoverage.com
Appeals Court Upholds Decision by Referee in Trial Court for Antagan v Shea Homes
May 10, 2012 — CDJ Staff
In the case Antangan v. Shea Homes Ltd. Partnership (Cal. App., 2012), Plaintiffs appealed “an order vacating a judgment and entering a modified judgment in their construction defect action against defendants Shea Homes, Inc. and Shea Homes Limited Partnership,” while the Defendant, Shea Homes Limited Partnership (Shea Homes) appealed “an order of the judicial referee denying its motion to strike and tax costs.”
On the Antagon issue, the appeals court concluded that “the trial court did not err by vacating and modifying its judgment so that the cost of referee’s fees would be equally divided by the parties and consistent with a prior stipulation they filed in court.”
On the Shea Homes issue, the appeals court concluded: “1) the judicial referee did not err by ruling that plaintiffs’ offers to compromise (§ 998) were validly served on Shea Homes’ counsel, 2) the offers substantially complied with statutory requirements, 3) the offers were not required to be apportioned, and 4) the referee’s award of $5,000 as costs for a person assisting plaintiffs’ counsel was not an abuse of discretion.” The appeals court affirmed the judgment.
Here is a brief history of the trial case: “Plaintiffs Chito Antangan, Jimmy Alcova and other homeowners brought an action against defendants Shea Homes, Inc. and Shea Homes Limited Partnership for damages alleging that the properties they purchased from these ‘developer defendants’ were defective. Plaintiffs claimed numerous construction defects required them ‘to incur expenses’ for ‘restoration and repairs’ and the value of their homes had been diminished.”
In response, Shea Homes filed a motion for an order to appoint a judicial referee. The motion was granted and it was ruled that “a referee would ‘try all issues’ and ‘report a statement of decision to this court.’”
On May 10, 2010 the judicial referee (Thompson) “awarded plaintiffs damages and various costs, and ruled that ‘Shea Homes shall bear all of the Referee’s fees.’” The latter ruling would become a matter for contention later on.
In July of 2010, the plaintiffs “sought, among other things, $54,409.90 for expert fees, and $14,812.50 for the services of Melissa Fox for ‘exhibit preparation & trial presentation.’ Shea Homes filed a motion to strike and/or tax costs claiming: 1) Fox was a paralegal, 2) plaintiffs were not entitled to attorney’s fees, and 3) the fees for Fox’s services were an indirect and improper method to obtain attorney’s fees. The referee disagreed and awarded $5,000 for Fox’s services. The referee also ruled that plaintiffs had properly served valid offers to compromise (§ 998) on Shea Homes’ counsel in 2009. He said those offers to defendants in the case at that time did not have to be apportioned.”
“Antangan contends the trial court erred when it vacated and modified its original judgment, which ordered Shea Homes to pay all the referee’s fees. We disagree.”
Antagon contended that the trial court erred when it vacated and modified its original judgment regarding Shea Homes paying the referee’s fees. The appeals court disagreed: “A trial court has inherent authority to vacate or correct a judgment that is void on its face, incorrect, or entered by mistake. (§ 473; Rochin v. Pat Johnson Manufacturing Co. (1998),67 Cal.App.4th 1228; Olivera
Read the court’s decision…
Bar to Raise on Green Standard
November 7, 2012 — CDJ Staff
Next June, members of the U.S. Green Building Council will be voting on changes to the LEED green building standard. “The bar is getting raised,” said Navad Malin of BuildingGreen, a consulting and publishing firm, in an article in USA Today. Under the proposed guidelines, builders would have to project energy and water use for five years as part of the certification process. However, if the occupants aren’t as green as the builders anticipated, the buildings will not lose their certification.
The new rules will include higher energy standards, award points for avoiding potentially hazardous materials, and even determine what kind of plumbing items can be used.
Read the full story…
Five Years of Great Legal Blogging at Insurance Law Hawaii
December 9, 2011 — CDJ Staff
Our congratulations to Tred Eyerly who has been blogging at Insurance Law Hawaii for five years now. Over the years, he has posted more than five hundred posts and has provided us all with fascinating insights into the laws on insurance coverage. He describes his blog as “a commentary on insurance coverage issues in Hawaii and beyond.” We are grateful that the “beyond” has just in the last few weeks included Colorado, Illinois, Washington, Minnesota, and Rhode Island (about as far from the island of Hawaii as you can get).
You can read his blog at Insurance Law Hawaii.
Plaintiff Not Entitled to Further Damages over Defective Decking
August 2, 2012 — CDJ Staff
The Court of Appeal of the State of California, Third Appellate District has rejected an appeal from the successful plaintiff of a construction defect case in Evilsizor v. Calaveras Lumber Company. John Evilsizor hired Scott Hunton to remove and replace the deck at the rear of his home. Subsequently, the deck, which had been constructed with a product called SmartDeck, a product of the subsequently bankrupt US Plastic Lumber, exhibited problems. Hunton made some repairs. Calaveras Lumber offered replacement decking if Evilsizor would pay the difference in price. Mr. Evilsizor hired another contractor to replace the decking and then sued for lost use and compensation for the amount he paid the second contractor. Replacing the deck a second time cost Mr. Evilsizor $113,065.44.
During the trial, the defendant conceded that the planking was defective. It has been recalled by the manufacturer. Additionally, the jury heard testimony from a construction and building codes consultant, Lonne Haughton, however the trial court found that Mr. Haughton did not have sufficient expertise in wood-plastic composite materials. Further, Haughton had been a California contractor for only three years, and though he claimed a college degree, this was “‘a distance learning diploma’ that required no in-class work.” The appeals court upheld the decision that Mr. Haughton was not qualified to testify as an expert about wood-plastic materials.
The court also upheld the trial court’s exclusion of two pieces of evidence. One was a list of SmartDeck sales. However, the witness asked about it was not able “to testify who prepared it or confirm that it had been prepared by a Cascade employee.” Further, “the fact defendant bought and sold SmartDeck was not disputed.” The other was an e-mail in which US Plastics said they had “some bad product in the field.” This e-mail went to Westmark & Associates, and the plaintiff did not establish that it was ever sent to the defendant.
Though the defense has suggested an award of $18,000 plus loss-of-use damages for one year and an additional $4,000 if the jury believed that leftover material from the front deck was used in the rear. As the plaintiff requested $100 per month of loss of use, this would have totaled $34,000. The jury awarded the cost of the decking, $6,275,82. The court cites earlier decision that the amount of the award is “a question of fact to be determined by the jury.”
In conclusion, Mr. Evilsizor was not only unable to receive a larger award, but the court ruled that he must pay the defendant’s cost on appeal.
Read the court's decision…
Harmon Hotel Construction Defect Update
July 18, 2011 — CDJ Staff
Coverage of the ongoing litigation concerning the Harmon Hotel continues to proliferate. Architectural Record and a number of other news outlets continue to provide additional details and coverage of the matter. Chief among the conditions alleged are improperly installed reinforcing steel inside link beams on 15 floors. MGM Claims that the conditions amount to hundreds of millions of dollars in damages, while Perini (the builder) indicated in a July 12th statement that the buildings problems are related to the design, and the they are “fixable.”
There is significant speculation that MGM Resorts International isn’t interested in repairing the hotel due to a glut of hotel rooms attendant to the troubled economy. In a statement Tuesday Perini reportedly stated that “Repairing and opening the Harmon would only create a greater glut of unused hotel rooms for MGM,” “If market conditions were better and MGM found that demand existed for the Harmon hotel rooms, MGM would not be claiming that the Harmon is unstable.”
MGM asserts that Perini failed to ”properly construct” the project. Clark County’s Department of Development Services has reportedly asked MGM to provide a plan to fix the project by August 15th.
The Harmon is part of the $8.5 billion CityCenter project that opened in the fourth quarter of 2009 and is jointly owned by MGM Resorts and Dubai World.
Prior reports indicated that the owner (MGM) had considered razing the entire project. The future of the project remains uncertain.
Exclusion Bars Coverage for Mold, Fungus
October 23, 2012 — Tred Eyerly, Insurance Law Hawaii
The court considered whether rain damage to a house was barred by the policy's mold exclusion. Stewart v. State Farm Fire & Cas. Co., 2012 U.S. Dist LEXIS 127804 (D. S.D. Sept. 7, 2012).
The insureds hired DJ Construction to build a new home. Before construction was completed, it was discovered that DJ Construction and some of its subcontractors had failed to protect the partially constructed house from the elements, which allowed melting snow and rain to intrude into the house. Soon after this discovery, DJ Construction abandoned the project. The house remained incomplete and uninhabitable.
The insureds sued DJ Construction.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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.
Read the full story…
Green Buildings Could Lead to Liabilities
March 28, 2012 — CDJ Staff
Attempts to build “green,” reducing energy costs and increasing the use of sustainable building materials, may lead to more lawsuits, according to a report issued by the British Columbia Construction Association. The report warned those who were going to build green look into the implications. The report looked at the result of green building practices and requirements adopted in the United States.
The report warns that “the use of novel, less harmful building material or new construction techniques may give rise to liability due to: contractor inexperience with installation; lack of long-term evaluation of green materials; lack of understanding of how new building materials may impact existing traditional building systems; or warranties provided unintentionally about the durability or effectiveness of unproven materials or techniques.”
Manley McLachlan, president of the BCAA noted that they are aware of “legal action around the performance of the buildings,” noting that while fast-growing trees help toward LEED certification, their wood is more prone to mold. He also felt that low-VOC paints needed more testing to prove their durability as exterior finishes.
Read the full story…
Foundation Arbitration Doesn’t Preclude Suing Over Cracks
March 28, 2012 — CDJ Staff
The Louisiana Court of Appeals has reversed the decision of a lower court, allowing a construction defect case to go through. In Greer v. Town Construction Company, the Greers hired Town Construction to build a home in Baton Rouge. The business relationship went sour, with disputes over “costs, change orders, workmanship, and timeliness issues.”
Town Construction filed an arbitration claim for the unpaid contract balance. In the counterclaim, the Greers made claims of mold and mildew problems, and wall cracks that they attributed to a “structural defect in the foundation.” In arbitration, Town Construction was awarded the full contract balance plus extra costs and interest, while the Greers were awarded for their structural claims.
Three years later, the Greers found additional cracks and filed a suit against Town Construction. Town Construction argued that the Greer’s lawsuit should be dismissed, as the claims had already been through the arbitration process. The district court agreed with Town Construction and dismissed the suit.
The appeals court noted that the Greers would have no ground for a suit if the arbitration was a “valid and final judgment,” and went on to note that there was no evidence in the trial record that the arbitration met this qualification. The court noted that although it was clear that both parties had agreed to the decisions of the arbiter, under Louisiana law, arbitration is not final until it has been “rendered by a court with jurisdiction over subject mater and over parties.”
The court remanded the case to the lower court, noting that “the district court is obligated to first determine whether a valid arbitration award is in existence and had been confirmed before considering the merits of the exception. The court noted that their decision “should not be read to express any opinion as to the merits of the claims or as to the propriety of damages sought in the Greer’s lawsuit.”
Read the court’s decision…
Florida: No Implied Warranties for Neighborhood Improvements
July 10, 2012 — CDJ Staff
A new law in Florida ends suits from homeowners associations from suing over damages from off-site improvements on the basis of implied warranties. Rob Samouch, writing for the Naples Daily News quotes House Biill 1013: “There is no cause of action in law or equity available to a purchaser of a home or to a homeowners’ association based upon the doctrine or theory of implied warranty of fitness and merchantability or habitability for damages to off-site improvements." The off-site improvements are defined as: "The street, road, driveway, sidewalk, drainage, utilities, or any other improvement or structure that is not located on or under the lot on which a new home is constructed.”
Mr. Samouch notes that “there are no statutory warrant rights in homeowner associations of fitness and merchantability or habitability like there is for condominium associations.” He predicts that the Florida legislature will have to address this issue “once new homeowners start screaming and yelling to them about their shoddy infrastructure for which they have no legal remedy.”
The bill took effect on July 1, 2012 and applies to “all cases accruing before, pending on, or filed after July 1, 2012.”
Read the full story…
Surveyors Statute Trumps Construction Defect Claim in Tennessee
June 19, 2012 — CDJ Staff
The Tennessee Court of Appeals has issued an opinion in the case of Dale v. B&J Enters. (Tenn. App., 2012), affirming the ruling of the Chancery Court for Knox County. The homeowners purchased properties in Knoxville, Tennessee in 2007 and 2008. Subsequently, according to the complaint, they found “significant sink holes and depressions throughout the subdivision.” The plaintiffs determined that a previous developer in 2004 had been aware of the sink holes. The Knox County Metropolitan Planning Commission, upon giving approval, made requirements that included that sink holes, even if they were filled, had to be designated on the site plans. The developer did not indicate these locations on the final plans. The plaintiffs made claims of “failure to disclose, misrepresentation, misrepresentation by concealment, and violation of the Tennessee Consumer Protection Act.” They filed their suit in June 2009.
The defendants in the initial case, argued that they did not create the final plat, the site plan indicating the features and lot lines. This had been the work of the previous developer. In September, 2009, the plaintiffs amended their complaint to include the previous developer and its engineering firm. The engineering firm disavowed any responsibility. The developer noted that the surveyor, Benchmark Associates, had “failed to properly include the sink holes and/or depressions on the final plat.” In June, 2010, the plaintiffs added Benchmark.
Benchmark argued that the plaintiffs’ claims should be dismissed, as Tennessee has a four-year statute of limitations on claims against surveyors. The final plat was recorded on May 19, 2006, and the plaintiff filed their claims against Benchmark on June 16, 2010, slightly less than a month over four years. The plaintiffs argued that “the real issue [was] the tortious misrepresentation by Benchmark.” The Chancery Court found for Benchmark.
On appeal, the plaintiffs raised three issues. They argued that the trial court applied the wrong section of the law, and should have applied the section applying to construction and not surveyors. They also argued that the timeliness of the claim should be based on when the defects were discovered. The also raised the question of whether the laws concerning surveyors bar claims for misrepresentation. The appeals court upheld the decision of the Chancery Court.
For the plaintiff’s first claim, although the statute addressing deficiencies in construction mentions surveying, an earlier court ruling found that the legislature had removed a reference to surveyors in one part of the statute, but failed to do so in the second part. The earlier court had concluded that the “obvious intent of the legislature was to place all limits on actions against surveyors into the new statute.” As the applicable statute states that “any such action not instituted within this four (4) year period shall be forever barred,” the court held that the plaintiffs’ claims must be time barred. Further, as the intent of the legislature was determined to “place all limits on actions against surveyors into one statute,” the court felt that it could not apply the Consumer Protection Act.
Read the court’s decision…
Another Las Vegas Tower at the Center of Construction Defect Claims
November 7, 2012 — CDJ Staff
Accusations are coming from both sides over construction defects at a Las Vegas tower, only this time, it’s not the Harmon Towers, it’s Hilton Grand Vacations, which is part of the Planet Hollywood Resort. The project was originally dubbed PH Towers Westgate, and it was developed by Westgate Resorts, which is suing the contractor, Tutor-Saliba for $10 million over late completion and construction defects.
Among the defects Westgate is claiming are cracked floor tiles in the valet lobby and cracks and delamination of the pool deck. Tutor-Saliba argues that the failure of the valet lobby floor is due to Westgate specifying only 1/16th inch-wide grouting, instead of the specified ¬º inch, and Westgate’s refusal to allow expansion joints on the pool deck has lead to problems there. Westgate’s attorney, Robert Schumacher, attributes the problems to “shoddy construction practices.”
According to the article in the Las Vegas Review Journal, plans were only 60 percent complete when construction began, leading to “thousands of change orders.” Despite not meeting an August completion deadline, Tutor-Saliba is claiming it is owed a $1.5 million bonus nevertheless.
Read the full story…
California Appeals Court Remands Fine in Late Completion Case
November 18, 2011 — CDJ Staff
The California Court of Appeals in Stanislaus County has reversed the decision of the lower court in Greg Opinski Construction Inc. v. City of Oakdale. The earlier court had awarded the city of judgment of $54,000 for late completion, $3,266 for repair of construction defects and interest, and $97,775 in attorneys’ fees. The late completion of the project was due to actions by the City of Oakdale, however, the court rejected Opinski’s argument that the California Supreme Court decision in Kiewit did not allow this, as his contract with the city established a procedure for claiming extensions.
The appeals court noted that the Kiewit decision has been “criticized as an unwarranted interference in the power of contracting parties to shift the risk of delays caused by one party onto the other party by forcing the second party to give the first notice of any intention to claim an extension of time based on delays caused by first.” They cited Sweet, a professor at Boalt Hall, UC Berkeley’s law school, that Kiewit “gutted” the “provision that conditions the contractor’s right to claim an extension of time for delays beyond his control.”
Further changes in California law in response to the Kiewit decision lead to the current situation which the court characterized as “if the contractor wished to claim it needed an extension of time because of delays caused by the city, the contractor was required to obtain a written change order by mutual consent or submit a claim in writing requesting a formal decision by the engineer.”
Opinski also argued that the lower court misinterpreted the contract. The Appeals court replied that “Opinski is mistaken.” He cited parts of the contract regarding the increase of time, but the court rejected these, noting that “an inability to agree is not the same as an express rejection.”
The court also rejects Opinski’s appeal that “the evidence the project was complete earlier than September 30, 2005, is weightier than the evidence to the contrary,” which they describe as “not a winning appellate argument.” The court points out that the role of an appeals court is not to reweigh the evidence, but to determine “whether the record contains substantial evidence in support of the judgment.”
The court did side with Opinski on one question of the escrow account. They rejected most of his arguments, repeating the line “Opinski is mistaken” several times. They decided that he was mistaken on the timing of the setoff decision and on whether the city was the prevailing party. However, the appeals court did find that Opinski was not liable for interest on the judgment.
The appeals court rejected the awarding of prejudgment interest to the city as the funds from which the judgment was drawn was held in an escrow account. The court noted that the city had access to the funds and could “access the funds when it determined that Opinski had breached the contract.” The appeals court noted that the judgment exhausted the escrow balance and remanded the case to the lower court to determine the amount own to Opinski.
Read the court’s decision…
Architectural Firm Disputes Claim of Fault
May 27, 2011 — CDJ Staff
Lake-Flato Architects has disputed the arbitration panel’s conclusion that problems with the home of Tom Hanks and Rita Wilson were due to design flaws. The firm settled with the couple for $900,000, however the Idaho Mountain Express reports that David Lake said, “the settlement in the case in no way represents that Lake Flato was responsible for faulty design.” The Express reported that “the arbitrators found that problems at the home were attributable to design errors that did not take into account the cold winter climate of the Sun Valley area.”
Read the full story…
Construction Defect Notice in the Mailbox? Respond Appropriately
August 4, 2011 — Douglas Reiser, Builders Counsel
Recently, I have seen a rash of ignored construction defect notices. What is a construction defect notice? It’s a statutorily required notice, sent from a homeowner to a contractor, listing a number of defects found at their property. If you get one, don’t ignore it.
The Revised Code of Washington includes a number of provisions intended for residential construction disputes. Among them is the “Notice to Customer” requirement in RCW 18.27.114, which can preempt a contractor’s lien rights, and the “Notice of Construction Defects” found in RCW 64.50.020.
The Notice of Construction Defects is a standard notice mandated by RCW 64.50, a chapter in the Revised Code of Washington, intended to provide a pre-litigation resolution process for contractors and consumers. The chapter applies only to those losses “caused by a defect in the construction of a residence or in the substantial remodel of a residence.”(See “Action” RCW 64.50.010).
Unfortunately, many contractors will simply ignore these notices or tell the homeowner to make a warranty claim. But, the notice actually provides a contractor with a forty-five (45) day window to alleviate the dispute.
Read the full story…
Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
