Flooded Courtroom May be Due to Construction Defect
September 1, 2011 — CDJ Staff
The General Services Administration wouldn’t pin it on a construction defect, but a spokesperson said that a pipe that was misaligned during installation was the likely cause of a flood in the Thomas F. Eagleton US Courthouse on August 23. According to the St. Louis Dispatch, the burst pipe caused a 17-story waterfall in the courthouse, soaking ceilings and floors, and drenching the building’s contents.
The building was dedicated eleven years ago. During the nearly ten years before the building was complete, there were construction disputes and soil contamination issues.
Read the full story…
Will They Blow It Up?
March 28, 2012 — CDJ Staff
The issues concerning the Harmon Towers building in Las Vegas continue to make their way through the courts. As we noted in a previous piece, Cook County building officials stated that the building could be a hazard if Las Vegas were struck by an earthquake. The question of whether the building will continue to stand is just one of the issues in front of a judge.
MGM Resorts International argued at a March 13 hearing for permission to implode the Harmon hotel building. They claim that more than 1,700 defects have been discovered in the building and that the building is a public safety hazard. Arguing against demolition, Perini Building Company, the general contractor for the hotel, and its subcontractors are claiming that imploding the building would destroy evidence and prejudice juries in the ongoing construction defect claims. They claim that MGM Resorts wishes to abandon the building due to the economic slowdown. Perini Corp, the contractor for the project, claims that the building can be fixed. Perini claims that MGM’s position in the construction trial would be improved if the building is demolished.
After Judge Elizabeth Gonzalez heard the four days of testimony on the Harmon Towers building and whether it should be demolished, she scheduled more testimony, with two days in April and an entire week in July. Judge Gonzalez will be deciding whether the building will be torn down, imploded, or left in place.
Read the full story…
Read the full story…
Court Will Not Compel Judge to Dismiss Construction Defect Case
August 2, 2012 — CDJ Staff
The Fourteenth Court of Appeals of Texas has denied a petition for a writ of mandamus. The parties involved, Bonner Ball, Thomas Zenner, and Rallin Welch, are lmited partners of Black Diamond Builders, LLP. Black Diamond is the recipient of a lawsuit from Grier and Camille Patton, for whom Black Diamond built a home. The Pattons are alleging construction defects.
The Black Diamond partners argue that Judge Jeff Shadwick, presiding judge of the 55th District Court of Harris County, Texas should have granted their motion to dismiss. They sought to have the Fourteenth Court of Appeals compel that action.
The Black Diamond Partners claims that “the homowners failed to satisfy statutory prerequisites before filing suit, and dismissal of the suit was automatic under the applicable statues in effect at the time the Pattons noticed alleged defects in their home.”
The court noted that “a trial court will be held to have abused its discretion only if the party requesting mandamus relief establishes that the trial court could have reached but one decision.” The court did not concur with this and denied the petition for a writ of mandamus.
Read the court's decision…
Judge Rejects Extrapolation, Harmon Tower to Remain Standing
November 7, 2012 — CDJ Staff
CityCenter has filed an emergency motion asking the Nevada Supreme Court to intervene in Judge Elizabeth Gonzalez’ order that the building’s defects cannot be extrapolated from those tested. CityCenter’s structural engineering expert “evaluated 397 of the Harmon’s critical structural elements and found all but one defective,” according to the article on Vegas.Inc. Judge Gonzalez would not permit this to be extrapolated to the untested 1,072, as the locations tested were not random.
Judge Gonzalez also ruled that if CityCenter does additional testing, they may not appeal her order that ruled the extrapolation inadmissible. CityCenter argued to the Nevada Supreme Court that “the notion that CityCenter should be forced to incur additional millions of dollars in testing costs and sanctions ?Äì on the condition that it waive its right to appeal this ruling ?Äì just to be permitted to present its own damages evidence, shocks the conscience.”
Gonzalez gave the okay to CityCenter to demolish the building, but its demolition would make any further testing impossible. Under Gonzalez’ ruling, the untested structural elements cannot b assumed to be defective.
Read the full story…
Timing of Insured’s SIR Payment Has No Effect on Non-Participating Insurer’s Equitable Contribution to Co-Insurer
April 25, 2012 — Aarti Kewalramani, Gatzke Dillon & Balance LLP
In a case of first impression, the California Court of Appeal, Fourth District, Division One, examined whether a non-participating insurer can evade its defense and indemnity obligations because the insured only paid the policy’s self-insured retention ("SIR") as part of a settlement. In Axis Surplus Lines Insurance Company v. Glencoe Insurance LTD. (April 11, 2012, D058963) __ Cal.App.4th __ [2012 WL 11903203], the critical issue for the Court was whether an insurer, with full notice and continued investigation of a claim, can "hide behind the SIR requirement in its policy." The Court declined to "sanction such gamesmanship."
The dispute involved an equitable contribution claim between two insurers. Axis Surplus Insurance Company provided commercial general liability insurance to Pacifica Pointe L.P. During the same time period, Glencoe Insurance Ltd. provided an owner-controlled insurance policy (i.e., wrap policy) to Pacifica Pointe L.P. Both policies included provisions requiring co-carriers to split the defense and indemnity on equal shares. Pacifica was sued in a construction defect lawsuit, involving alleged resultant damages to condominiums it converted and sold. Pacifica tendered the claim to both Axis and Glencoe. While Axis agreed to defend Pacifica, subject to a reservation of rights, Glencoe declined to participate until Pacifica satisfied the $250,000 SIR on the policy. Glencoe continued to monitor the litigation from the sidelines.
Axis and Pacifica settled the underlying construction defect lawsuit for $1 million. Pacifica advised Glencoe of the settlement, and received Glencoe’s approval to contribute its $250,000 SIR towards the settlement. Axis contributed $750,000 towards the settlement. After the settlement, Axis sued Glencoe for declaratory relief and equitable contribution, to recover a portion of the defense and indemnity it paid. The trial court found in favor of Axis and allocated Glencoe 60% of the settlement payment. Glencoe appealed.
On appeal, the Court scrutinized whether Glencoe, as the non-participating insurer, had a legal obligation to provide a defense and indemnity to the insured, despite the timing of the SIR’s satisfaction. The Court determined that in an equitable contribution action, the participating insurer has the burden of proving merely the potential for coverage under the non-participating insurer’s policy. On this showing, the burden of proof shifts to the non-participating insurer to prove the absence of actual coverage under its policy. The Court emphasized that the timing of the SIR’s payment was inconsequential to either insurer’s burden. Because Glencoe admitted coverage existed under its policy, the Court affirmed the trial court’s decision.
As a result, the result ultimately turned on whether the non-participating carrier had full notice of the claim and cannot use the timing of the satisfaction of the SIR to shield itself from an equitable contribution claim from the participating co-carrier.
Published courtesy of Aarti Kewalramani of Gatzke Dillon & Balance LLP. Ms. Kewalramani can be contacted at akewalramani@gdandb.com.
Legislatures Shouldn’t Try to Do the Courts’ Job
March 1, 2012 — CDJ Staff
David Thamann, writing in Property Casualty 360, argues that current actions by legislatures on insurance coverage amount to “legislative interference or overreach.” He notes that under current Colorado law, “a court shall presume that the work of a construction professional that results in property damage — including damage to the work itself or other work — is an accident unless the property damage is intended and expected by the insured.” He argues that here legislators are stepping into the role of the courts. “Insureds and insurers are not always going to be pleased with a court ruling, but that is the system we have.”
Read the full story…
Going Green for Lower Permit Fees
October 23, 2012 — CDJ Staff
Clay County, Kansas is offering rebates on building permits for green homes. According to the Kansas City Star, building permits in the county are typically $2,500. The county will rebate anything from half to all of the permit fee, depending on how well the builder meets green standards. The county will monitor and inspect the process to make certain that builders adhere to their promises for green construction. The county hopes this will encourage green building by offsetting the cost.
Read the full story…
Does the New Jersey Right-To-Repair Law Omit Too Many Construction Defects?
January 6, 2012 — CDJ Staff
A post on the blog of Liberty Building Forensics Group find fault with the New Jersey Home Warranty and Builders’ Registration Act for not being stringent enough. The poster notes the coverage given under the bill. In the first year, builders are responsible to remedy faulty workmanship and materials and major structural defects. While other protections expire in the first or second year, there is a ten year coverage of major construction defects.
The blogger finds fault with the exclusion New Jersey law places on these claims, arguing that “due to the stringent definition of ‘major construction defects,” the warranty affords no coverage unless the house is practically collapsing.” The bill excludes leaks, cracks, and mold, and further limits claims if the homeowner has failed to inform the builder or insurer of defects, failure to maintain the home, and alterations made by the homeowner.
The intent of the New Jersey law is given as “requiring that newly constructed homes conform to certain construction and quality standards as well as to provide buyers of new homes with insurance-backed warranty protection in the event such standards are not met.” It’s argued in the piece that it instead serves to “strip homeowners of any meaningful means of recovery for discovered construction defects.”
Read the full story…
In Colorado, Repair Vendors Can Bring First-Party Bad Faith Actions For Amounts Owed From an Insurer
December 20, 2012 — Brady Iandiorio, Higgins, Hopkins, McLain & Roswell
With the aftermath of Sandy still being felt up and down the Eastern seaboard, the question of many victims turns to how they can rebuild their lives and homes. One of the first things many people do is call on their insurance carriers to help rebuild whatever damaged property they have. In a recent case here in Colorado, those rebuilding efforts got reaffirmed by a Court of Appeals case, Kyle W. Larson Enterprises, Inc., Roofing Experts, d/b/a The Roofing Experts v. Allstate Insurance Company, --- P.3d ----, 2012 WL 4459112 (Colo. App. September 27, 2012).
The facts of the case are pretty straightforward and could describe many repair vendors in numerous situations. Roofing Experts contracted with four homeowners insured by Allstate to repair their damaged roofs. The contracts provided that repair costs would be paid from insurance proceeds. The contracts also allowed Roofing Experts full authority to communicate with Allstate regarding all aspects of the insurance claims. Before work began, Roofing Experts met with adjusters from Allstate to discuss the four homes and the amount of each claim. After receiving approval for the claims, Roofing Experts began the repairs. During construction, Roofing Experts discovered additional repairs were necessary to maintain certain manufacturer’s warranties and to conform to applicable building codes.
Read the full story…
Reprinted courtesy of Brady Iandorio, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Iandorio can be contacted at iandiorio@hhmrlaw.com
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
Construction Defects Lead to Demolition of Seattle’s 25-story McGuire Apartments Building
March 16, 2011 — March 16, 2011 Construction Defect Journal Staff
According to a story published last Thursday in Seattle PI: " The 25-story McGuire Apartments, at Second Avenue and Wall Street, would cost more to fix than the building is worth, according to its owners. Its most serious defect involves steel cables that are corroding inside of concrete slabs because the ends weren’t properly treated with a rust-proof coating and a pocket in the edge of the concrete that wasn’t properly sealed"
The report by Aubrey Cohen outlines the demolition plans which are expected to take between 12 and 18 months, and will utilize robotic Brokk Machines. The demolition plan calls for one story at a time to be demolished, with the debris to be trucked offsite. Demolition plans aim to minimize disruption to residents and businesses in the area by Limiting work 7 a.m. to 6 p.m. on weekdays and 9 a.m. to 6 p.m. Saturdays with "impact and percussive activities" limited to 8 a.m to 5 p.m weekdays.
Read More...
Florida Construction Defect Case Settled for $3 Million
June 19, 2012 — CDJ Staff
The Runaway Beach Club Condominium Association of Kissimmee, Florida has settled its construction defect claims against the parties involved in the construction and development of the buildings. The association claimed that defective roofs and improperly installed windows had lead to leaks and associated damages. A trial date had been set, but parties involved were able to reach this settlement instead.
Read the full story…
Important Information Regarding Colorado Mechanic’s Lien Rights.
November 7, 2012 — David McLain, Colorado Construction Litigation
With payment problems in the construction economy having accelerated over the past few years, there has been a substantial increase in mechanic’s lien activity and associated litigation. The typical mechanic’s lien claimant is a material supplier, a trade subcontractor, or even a general contractor that has not been paid by the developer/owner of the construction project. The reason for filing a mechanic’s lien claim is that it offers the prospect in many cases to make the unpaid construction professional a priority creditor, with a lien on the real estate that is superior to the construction lender.
One of the primary rules governing a mechanic’s lien claim is that the creditor’s formal written “Notice of Intent to File a Mechanic’s Lien” (hereafter “Lien Notice”) must be (1) served on the owner of the property for which the work was done or the materials used, and (2) served at the same time on the general contractor who has handled the construction project. After the creditor has made service of the lien claim by USPS certified mail (using the green return receipt card for proof of service) or separate personal delivery of the notice to the property owner and general contractor, ten full days must pass (not including the date of mailing of the notices) before the lien notice is filed in the public records.
After ten days have expired following the date of mailing using certified mail, or personal delivery of the notice to the property owner and the general contractor, the lien notice can be filed to make the lien valid.
Reprinted courtesy of David M. McLain, Higgins, Hopkins, McLain & Roswell, LLC. Mr. McLain can be contacted at mclain@hhmrlaw.com
Read the full story…
Massachusetts Couple Seek to Recuse Judge in Construction Defect Case
September 30, 2011 — CDJ Staff
After seeing their $1 million jury award overturned on appeal by a judge who called the award “against the weight of evidence and likely due to misapprehension, confusion or passion,” Kathryn and Christian Culley are seeking to have him removed from the case. The Massachusetts Supreme Judicial Court has rejected their claim.
The Culleys claim that Judge Thomas R. Murtagh’s decision was influence by him membership in the Andover Country Club which is represented by the opposing counsel in their construction defect case. Justice Margot G. Botsford had denied the Culley’s request, ruling that they had other remedies available to them.
The SJC noted in their ruling that if the Culleys are alleging judicial misconduct a request must be made to the Commission on Judicial Conduct. Their lawyer plans to file a new motion for recusal with the SJC.
Read the full story…
Contractors Admit Involvement in Kickbacks
December 9, 2011 — CDJ Staff
Two New Jersey contractors have pleaded guilty to charges that they made false representations for a government contract in a case related to kickbacks for construction work done in two school districts. New Jersey is recommending that the two men, Martin Starr and Stephen Gallagher, will each pay $50,000 in penalties, serve up to a year in jail, and be unable to accept public contracts for five years.
Last month, another individual in the case, Kenneth Disko, who had been the engineer for the school district, pleaded guilty on a similar charge. In addition to a $50,000 penalty, he will be serving three to five years in prison. A fourth conspirator, Robert Berman, the former business administrator for one of the school districts, has to pay a $13,000 fine and cooperate with the investigation. He is also barred from public employment in New Jersey and has been terminated from his position.
Starr admitted to preparing fictitious quotes which appeared to be from other contractors in order that his firm would seem to be the lowest bidder. Gallagher helped in preparing the fictitious bids and also provided cash kickbacks to Disko.
Read the full story…
Allowing The Use Of a General Verdict Form in a Construction Defect Case Could Subject Your Client to Prejudgment Interest
August 16, 2012 — Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC
A recent opinion from the Colorado Court of Appeals is a cautionary tale concerning the calculation of pre-judgment interest. See Hendricks v. Allied Waste Transportation, Inc., 2012 WL 1881004 (Colo. App. 2012). The Hendricks sued Allied after one of its drivers backed into the corner of their home with an Allied garbage truck. At trial, a jury awarded the Hendricks $160,100 in damages. Although the jury was instructed on the cost of repairs, diminution in value, and non-economic damages, the parties agreed to a general verdict form that did not ask the jury to specify the types of damages awarded. Id. at *1. The Hendricks sought to amend the judgment to include prejudgment interest and costs, which the trial court granted.
Allied appealed, arguing that the trial court erred by awarding the Hendricks prejudgment interest from the date their property was damaged. Id. at *7. The Colorado Court of Appeals found no error, and affirmed.
Read the full story…5
Reprinted courtesy of Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC. Ms. Anderson can be contacted at anderson@hhmrlaw.com
Construction Jobs Expected to Rise in Post-Hurricane Rebuilding
November 7, 2012 — CDJ Staff
Businessweek reports that construction jobs and materials will see increased demand as property owners in New York and New Jersey rebuild after hurricane Sandy. Tom Jeffery, of Irvine, California-based CoreLogic, a real estate information service, noted that “a high percent of damaged properties are going to be repaired.” Experts estimate property damage to total anywhere from $7 billion to $40 billion.
It is also estimated that about 739,000 properties in the area are underwater in the way that has nothing to do with flooding, with negative equity of 25 percent or more. Many of these homeowners are likely to walk away from their mortgages.
Ken Simonson, chief economist of the Associated General Contractors of America, expects “localized spikes in construction employment throughout November and the winter.” Martin Connor, the chief financial officer of Toll Brothers, expects to see more a rise in labor costs than in materials.
Read the full story…
General Contractor/Developer May Not Rely on the Homeowner Protection Act to Avoid a Waiver of Consequential Damages in an AIA Contract
August 4, 2011 — Higgins, Hopkins, McLain & Roswell, LLC
Recently, in Caribou Ridge Homes, LLC v. Zero Energy, LLC, et al., Case No. 10CV1094, Boulder County District Court Judge Ingrid S. Bakke entered a ruling and order on the Plaintiff’s Motion for Determination of Question of Law Pursuant to C.R.C.P. 56(h) on Issue of Damages. The Order found that the Plaintiff was not a homeowner intended to be protected by the Homeowner Protection Act (the “HPA”) and thus could not pursue its claims for consequential damages against Defendant.
By way of background, on June 18, 2008, Plaintiff Caribou Ridge Homes, LLC (“Caribou”) entered into a Standard Form Agreement Between Owner and Contractor AIA Document A114-2001 (the “Contract”) with Defendant Zero Energy, LLC (“Zero Energy”). Plaintiff hired Zero Energy to serve as a general contractor for the construction of a single-family home in the Caribou Ridge subdivision in Nederland, Colorado. A provision in the contract contained a mutual waiver of consequential damages (“Waiver”).
Read the full story…
Reprinted courtesy Higgins, Hopkins, McLain & Roswell, LLC
