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    Ely, Iowa

    Iowa Builders Right To Repair Current Law Summary:

    Current Law Summary: Case law precedent


    Construction Expert Witness Contractors Licensing
    Guidelines Ely Iowa

    Licensing for plumbers and electricians is done at the local level. No state license for general contracting, however, all businesses must register with the state.


    Construction Expert Witness Contractors Building Industry
    Association Directory
    Home Builders Association of Ames
    Local # 1607
    PO Box 864
    Ames, IA 50010
    http://www.ameshomebuilders.com

    Home Builders Association of Gr Cedar Rapids Area
    Local # 1621
    350 Miller Rd Ste1
    Hiawatha, IA 52233
    http://www.crhba.org

    Home Builders Association of Gr Des Moines
    Local # 1649
    6751 Corporate Drive
    Johnston, IA 50131
    http://www.desmoineshomebuilders.com

    Home Builders Association of Iowa City
    Local # 1663
    PO Box 3396
    Iowa City, IA 52244
    http://www.iowacityhomes.com

    Home Builders Association of Iowa
    Local # 1600
    3072 104th Street
    Urbandale, IA 50322
    http://www.hbaiowa.org

    Home Builders Association of Quad Cities
    Local # 1635
    3528 Jersey Ridge Rd
    Davenport, IA 52807
    http://www.qchba.com

    Fort Dodge Chapter of National Associated Home Builders
    Local # 1656
    110 S 21st St
    Fort Dodge, IA 50501



    Construction Expert Witness News and Information
    For Ely Iowa

    Godfather Charged with Insurance Fraud

    Construction Workers Unearth Bones

    Defective Drains Covered Despite Water Intrusion Exclusion

    In Colorado, Repair Vendors Can Bring First-Party Bad Faith Actions For Amounts Owed From an Insurer

    Coverage Rejected Under Owned Property and Alienated Property Exclusions

    “Other Insurance” and Indemnity Provisions Determine Which Insurer Must Cover

    Damron Agreement Questioned in Colorado Casualty Insurance v Safety Control Company, et al.

    General Contractors Must Plan to Limit Liability for Subcontractor Injury

    Builder to Appeal Razing of Harmon Tower

    South Carolina Legislature Redefining Occurrences to Include Construction Defects in CGL Policies

    Oregon agreement to procure insurance, anti-indemnity statute, and self-insured retention

    Rihanna Finds Construction Defects Hit a Sour Note

    Contractual Liability Exclusion Bars Coverage

    Recent Case Brings Clarity and Questions to Statute of Repose Application

    New Households Moving to Apartments

    Webinar on Insurance Disputes in Construction Defects

    Texas Construction Firm Files for Bankruptcy

    Time to Repair Nevada’s Construction Defect Laws?

    Contractor Liable for Soils Settlement in Construction Defect Suit

    Insurance Company Prevails in “Chinese Drywall” Case

    Granting Stay, Federal Court Reviews Construction Defect Coverage in Hawaii

    Construction Defects Not Occurrences under Ohio Law

    Construction Defects Leave Animal Shelter Unusable

    Builder Waits too Long to Dispute Contract in Construction Defect Claim

    Insurance Firm Defends against $22 Million Claim

    Ohio Court Finds No Coverage for Construction Defect Claims

    Washington Court Limits Lien Rights of Construction Managers

    New Construction Laws, New Forms in California

    Remodels Replace Construction in Redding

    Colorado Court of Appeals holds that insurance companies owe duty of prompt and effective communication to claimants and repair subcontractors

    When Does a Claim Against an Insurance Carrier for Failing to Defend Accrue?

    Houses Can Still Make Cents: Illinois’ Implied Warranty of Habitability

    Congress Addresses Homebuilding Credit Crunch

    Pictorial Construction Terminology Dictionary — A Quick and Helpful Reference

    Homeowners Must Comply with Arbitration over Construction Defects

    A Performance-Based Energy Code in Seattle: Will It Save Existing Buildings?

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

    Contractor Burns Down Home, Insurer Refuses Coverage

    Ohio Adopts Energy-Efficient Building Code

    History of Defects Leads to Punitive Damages for Bankrupt Developer

    Construction Defect Notice in the Mailbox? Respond Appropriately

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

    OSHA Cites Construction Firm for Safety Violations

    Retaining Wall Contractor Not Responsible for Building Damage

    Court Rejects Anti-SLAPP Motion in Construction Defect Suit

    Demand for Urban Living Leads to Austin Building Boom

    OSHA Extends Temporary Fall Protection Rules

    One World Trade Center Due to Be America’s Tallest and World’s Priciest

    School District Settles Construction Lawsuit

    San Diego Construction Defect Claim Settled for $2.3 Million

    No Resulting Loss From Deck Collapsing Due to Rot

    Judge Rejects Extrapolation, Harmon Tower to Remain Standing

    Texas Court of Appeals Conditionally Grant Petition for Writ of Mandamus to Anderson

    Cleveland Condo Board Says Construction Defects Caused Leaks

    Construction Defects and Contractor-Owners

    Certificate of Merit to Sue Architects or Engineers Bill Proposed

    Home Sales Still Low, But Enough to Spur Homebuilders

    Nevada Construction Defect Lawyers Dead in Possible Suicides

    After $15 Million Settlement, Association Gets $7.7 Million From Additional Subcontractor

    Georgia Law: “An Occurrence Can Arise Where Faulty Workmanship Causes Unforeseen or Unexpected Damage to Other Property”

    Pier Fire Started by Welders

    Window Manufacturer Weathers Recession by Diversifying

    Official Tried to Influence Judge against Shortchanged Subcontractor

    Ensuing Losses From Faulty Workmanship Must be Covered

    Will They Blow It Up?

    Federal District Court Continues to Find Construction Defects do Not Arise From An Occurrence

    $5 Million Construction Defect Lawsuit over Oregon Townhomes

    Court Requires Adherence to “Good Faith and Fair Dealing” in Construction Defect Coverage

    Celebrities Lose Case in Construction Defect Arbitration

    Insurer Not Liable for Construction Defect Revealed by Woodpecker

    Environment Decision May Expand Construction Defect Claims

    Ensuing Loss Provision Does Not Salvage Coverage

    US Courts in Nevada Busy with Yellow Brass

    Building Boom Leads to Construction Defect Cases

    Pennsylvania Court Extends Construction Defect Protections to Subsequent Buyers

    Statute of Repose Dependant on When Subcontractors Finished

    The Montrose Language Interpreted: How Many Policies Are Implicated By A Construction Defect That Later Causes a Flood?

    Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit

    Virginia Chinese Drywall “property damage” caused by an “occurrence” and number of “occurrences”

    School District Marks End of Construction Project by Hiring Lawyers

    Businesspeople to Nevada: Revoke the Construction Defect Laws

    Water District Denied New Trial in Construction Defect Claim

    Eighth Circuit Remands to Determine Applicability of Collapse Exclusion

    Geometrically Defined Drainage Cavities in EIFS as a Guard Against Defects

    Contractors with Ties to Trustees Reaped Benefits from LA Community College Modernization Program

    Unit Owners Have No Standing to Sue under Condominium Association’s Policy

    The Ever-Growing Thicket Of California Civil Code Section 2782

    BHA Expands Construction Experts Group

    Condo Owners Allege Construction Defects

    Hilton Grand Vacations Defect Trial Delayed
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    ELY IOWA CONSTRUCTION EXPERT WITNESS
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    Leveraging from more than 5500 construction defect and claims related expert witness designations, the Ely, Iowa Construction Expert Witness Group provides a wide range of trial support and consulting services to Ely'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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    Construction Expert Witness News & Info
    Ely, Iowa

    Seven Former North San Diego County Landfills are Leaking Contaminants

    April 7, 2011 — April 7, 2011 Beverley BevenFlorez - Construction Defect Journal

    Deborah Sullivan Brennan of the North County Times reported that seven former dumps in San Diego are leaking contaminants into the surrounding groundwater. John R. Odermatt, a senior engineering geologist for the California Regional Water Quality Control Board s San Diego region, told the North County Times, “the risk to most county residents is very small or negligible, while local water supplies located in more rural areas may be at a somewhat elevated but unquantified level of risk.”

    This issue is causing heavy scrutiny of a new proposed landfill in Gregory Canyon. The landfill would be located on 308 acres of undeveloped land near Pala, alongside the San Luis Rey River. The group “Save Gregory Canyon” has been speaking out against the landfill, stating that “the project threatens major detrimental impacts to both surface and groundwater, as well as a potential compromise of the two major San Diego Water Authority pipelines nearby.” Richard Felago, a Gregory Canyon Ltd. Consultant, told the North County Times that the 8-foot-thick liner, composed of layers of gravel and synthetic material, would not leak.

    The appeal hearing is being rescheduled later this month after one of the three panelists recused himself due to having a competing interest in the property, according to the article by Gary Warth in the North County Times.

    Read the full story (link 1)...
    Read the full story (link 2)...


    Contractor Burns Down Home, Insurer Refuses Coverage

    May 10, 2012 — CDJ Staff

    InsuranceStep reports that a Connecticut insurance company has rejected a claim over a fire in a remodeling project that killed five people. Utica First Insurance states that the coverage was invalid as the insured, Tiberias Construction, had misrepresented information about the company and the work performed in applying for insurance. During a remodel, the contractor allegedly placed fireplace ashes near trash. The trash ignited, leading to the house fire.

    Read the full story…


    Unlicensed Contractors Nabbed in Sting Operation

    September 9, 2011 — CDJ Staff

    The California State License Board charged sixteen people in the Fresno area with accepting contracting jobs without licenses. The Statewide Investigative Fraud Team of the CSLB set up a sting operation at a home in Clovis, California seeking bids on tree service, painting, and general contracting services. Those who bid for jobs at more than $500 are required under California law to be licensed. Unlicensed contractors can only work on jobs with a cost to the homeowner of less than $500 and must inform the homeowner that they are not licensed.

    In addition to citing contractors for not possessing appropriate licenses, the CSLB also cited contractors for failure to carry workers compensation insurance and illegal advertising. Further, California law limits down payments to the lesser of ten percent or $1,000. Two contractors were cited for requesting excessive down payments.

    One contractor, an unlicensed tree service contractor, had been cited previously in a sting operation. He failed to show up for his court date.

    Read the full story…


    Ambitious Building Plans in Boston

    November 18, 2011 — CDJ Staff

    Although most are unlikely to change the Boston skyline, there are several large projects on the drawing boards. The site BostInnovation covered ten of them in a recent post. Downtown Boston will be the site of several of these large projects, including three towers to be added to the Christian Science Plaza, a 404-unit residential tower in the Theater District, and perhaps the largest of these projects, a 47-story tower to be built over Copley Plaza, which will tower over the adjacent buildings. None of the planned buildings will challenge the Hancock Tower’s 60 stories.

    Read the full story…


    Insurers Reacting to Massachusetts Tornadoes

    August 11, 2011 — CDJ Staff

    The Patriot-Ledger reports that insurers could pay out as much as $200 million to cover homes damaged or destroyed in the tornadoes that hit central and southern Massachusetts in June, 2011. Joseph Murphy, Commissioner of the State Division of Insurance didn?t foresee problems with insurers covering these claims. “At this point, there doesn’t seem to be any one company overexposed in that area,” he told the Patriot-Ledger.

    Insurance executives did not think the tornadoes would cause them to raise rates. Steve Chevalier, CEO of NLC Companies, said, “it’s a major event for those impacted by it, but it’s not close to a financial hit to us.”

    One insurer noted that the winter weather generated more claims; however the cumulative value of those claims was $15 million.

    Read the full story…


    Couple Sues Attorney over Construction Defect Case, Loses

    June 10, 2011 — CDJ Staff

    The California Court of Appeals has ruled against a couple who sued their lawyer, after they were unhappy with the results of a construction defect case. Craig and Jeanne Petrik sued Mahaffey and Associates for legal malpractice and breach of contract. Their lawyer, Douglas L. Mahaffey, had settled their case for $400,000. The Petricks claimed Mahaffey did not have the authority make an offer to compromise.

    In the original case, Mahaffey held back the $400,000 awarded in the settlement until he and the Petricks came to terms on how much of that was owed to Mahaffey. The lower court concluded that the Petricks were due $146,323,18. The jury did not agree with the Petrik’s claim that conditions had been met in which Mahaffey would not be charging them costs.

    Judges O’Leary and Ikola wrote the opinion, with the third judge on the panel, Judge Bedworth offering a dissent only on their view of the cost waiver clause.

    Read the court’s opinion


    San Diego Construction Defect Claim Settled for $2.3 Million

    July 10, 2012 — CDJ Staff

    The Nauman Law firm has settled the lawsuit by the Latitude Owners Association against CS-Crossroads and others, as reported in the Sacramento Bee from a press release by the firm. The owners at Latitude, a condominium community in San Diego, found that hillside crawl spaces were not property waterproofed, leading to rotting plywood, water intrusion, and pipe leaks. There were additional problems with retrofitted windows and repairs of outside decks. The case was filed in San Diego Superior Court, but settled after multiple mediations.

    Read the full story…


    Lawsuit over Construction Defects Not a Federal Case

    August 16, 2012 — CDJ Staff

    The United State District Court in California has dismissed the claims of a contractor against the United States government, on the grounds that it was not within the subject matter jurisdiction of the court. The origins of the case are in a related construction defect claim. The current plaintiff, Performance Contracting, Inc., did the lath and plaster work for a building for the Department of Veterans Affairs. After the building was completed, the Veterans Affairs complained to the general contractor, Wynema, Inc., of water intrusion problems.

    Wyema and Performance conducted testing and the water intrusion was found to be due to “a variety of design defects and omissions, including: 1) omission of proper window flashing; 2) inadequate waterproof membrane around the windows; 3) inadequate T-molding around the windows; 4) lack of a window sill pan for the windows; 5) lack of any backing in the window framing; 6) lack of any backing for the stucco expansion joints and seams; and 7) failure to require that a performance mock-up of the window assembly and adjacent areas be built and water tested.” Wyema filed a construction defect action against Performance and other subcontractors.

    In the current case, Performance claims that Veteran Affairs was negligent, that it “breached its duty to Plaintiff when it provided deficient plants and specifications” and “failed to properly oversee construction and inspect Project work.” The court determined that it could not hear this case, noting that “Federal Courts are presumptively without jurisdiction over civil actions.”

    Performance raised its claims under the Federal Tort Claims Act. The judge was not persuaded by this claim, noting that the FTCA does not apply to purported breach of the General Contract. The FTCA waives the government’s sovereign immunity in cases of “injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of an employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.”

    Performance was unable to pursue its claims in the Court of Federal Claims as there was no contract between Performance and the government. However, the court noted that Performance’s inability to file suit in the Court of Federal Claims does not open up a path to the District Court. “Litigants are not guaranteed a forum in which to sue the United States.” The court further noted that “if this Court were to accept Plaintiff’s logic, non-parties to contracts, but not parties, would be free to pursue contract claims in the fora of their choosing.”

    Read the court’s decision…


    Ohio Court of Appeals Affirms Judgment in Landis v. Fannin Builders

    April 20, 2011 — April 20, 2011 Beverley BevenFlorez - Construction Defect Journal

    The Ohio Court of Appeals affirmed the judgment in Landis v. William Fannin Builders. Landis contracted Fannin Builders to build their home. The case involved staining problems on the T1-11 siding chosen by the plaintiffs.

    After a year and a half of discussion on how to resolve the problem of uneven staining on the siding, Landis filed suit “against Fannin Builders, alleging claims for breach of contract, breach of the express limited warranty, and violation of the Ohio Consumer Sales Practices Act (“OCSPA”). Fannin Builders, in turn, filed a third-party complaint against 84 Lumber, alleging claims for breach of contract and indemnification. With the trial court’s leave, Fannin Builders also later amended its answer to add a counterclaim against appellees for breach of contract and unjust enrichment. In the counterclaim, Fannin Builders alleged that appellees still owed it $3,908.98 for the construction of appellees’ home.”

    “In its decision, the trial court found in appellees’ favor on their breach of contract claim and against appellees on their claims for breach of the express limited warranty and violation of the OCSPA. Additionally, the trial court found in Fannin Builders’ favor on its counterclaim for breach of contract and against Fannin Builders on its third-party claims for breach of contract and indemnity. The trial court determined that appellees’ damages amounted to $66,906.24, and after setting off the $3,908.98 that appellees owed Fannin Builders under the construction contract, the trial court awarded appellees $62,997.26. The trial court reduced its decision to judgment on May 18, 2010.”

    Fannin Builders appealed this judgment and assigned the following errors:

    [1.] The Trial Court Erred as a Matter of Law by Concluding that Appellant Breached its Contract with Appellees when it provided a Semi-Transparent Oil-Based Stain that Simply did not Meet their Approval.

    [a.] The Contract does not Contain a Satisfaction Clause.

    [b.] Even if the Court Implies a Satisfaction Clause, the Court Should Apply an Objective Standard.

    [2.] The Trial Court Erred as a Matter of Law by Failing to Consider Appellant’s Right to Cure.

    [3.] The Trial Court committed Reversible Error by not Assessing Damages Using “Diminished Value Standard,” and by Creating a Remedy that Constitutes Economic Waste.

    [4.] The Trial Court Erred as a Matter of Law by Concluding that Appellant is Barred from Seeking Indemnification When 84 [Lumber] Never Fulfilled its Obligations Pursuant to the Settlement Agreement Entered on August 2, 2005.

    In response to the first assigned error, the Court of Appeals stated: “Because the failure to provide siding of a uniform color, not appellees’ displeasure, breached the contract, we reject Fannin Builders’ contention that the trial court implied a satisfaction clause into the contract and found a breach of that clause. Accordingly, we overrule Fannin Builders’ first assignment of error.”

    The Court of Appeals overruled the second assignment of error and provided the following reasoning: “Although Fannin Builders depends upon a term of the limited warranty for its right to cure, the trial court concluded that no breach of the limited warranty occurred. Fannin Builders breached the duty of workmanlike conduct implicit in the construction contract, not the limited warranty requiring it to satisfy the BIA’s Quality Standards. Consequently, the limited warranty does not apply to this case, and thus, it does not prevent appellees’ recovery of damages.”

    The Appeals Court found “the trial court’s award of damages” was “both reasonable and supported by competent, credible evidence,” and therefore concluded “that the trial court did not err in setting appellees’ damages at $62,997.26.” The Fannin Builders third assignment of error was overruled.

    The fourth and final assignment of error was also overruled by the Court of Appeals. “While Fannin Builders correctly asserts that 84 Lumber never installed the replacement siding, it ignores the fact that it ordered 84 Lumber to remove the replacement siding from appellees’ property. Thus, Fannin Builders precluded 84 Lumber from completely performing under the August 2, 2005 letter agreement. […] Consequently, Fannin Builders cannot now claim that the letter agreement is unenforceable or that it is entitled to indemnification from 84 Lumber. Because Fannin Builders assumed all liability for the defective siding in the letter agreement, it is responsible for appellees’ damages.”

    James A. Zitesman, Columbus, Ohio Business Attorney, compared the case to Jones v. Centex (Ohio App. 2010), which had a different verdict:

    “The common thread is the implied warranty of good workmanship. In the Jones case, the Court found that the buyers had in fact waived all implied warranties, including the implied warranty of good workmanship. In the contract between Jones and Centex, the builder stated that it “…would not sell the property to Purchasers without this waiver.” Probably should have been a sign to the buyers.

    In the Landis case, the Court stated, “Contracts for the future construction of a residence include a duty, implied by law, that the builder must perform its work in a workmanlike manner.” The Court gave significant weight to the concept of the implied warranty of good workmanship. The builder relied upon the BIA Warranty which limits builders’ liability and exposure to legal issues. The trial court concluded there was no breach of the limited warranty, rather the builder “breached the duty of workmanlike conduct implicit in the construction contract, not the limited warranty requiring it to satisfy the BIAs Quality Standards.”

    The Supreme Court of Ohio has accepted the Jones v. Centex Homes case for review.

    Read the full story...


    Instant Hotel Tower, But Is It Safe?

    March 28, 2012 — CDJ Staff

    Broad Sustainable Building has leapfrogged in China’s construction boom by building a thirty-story hotel in just fifteen days in the city of Changsha. According to an article in the Los Angeles Times, most of the building was prefabricated, but most prefabricated buildings require a longer time for assembly. Broad claimed that it cut no corners on safety. However, Zhang Li, a Beijing architect, told the Times that “incredible speed also means incredible risk.”

    At the completion date, the interior was still partially finished. Some rooms were furnished, while others weren’t quite so ready. The hotel will be used to house clients who are visiting Broad and some of its employees.

    Broad called their process “the most profound innovation in human history” and predicted that soon a third of new buildings worldwide would be constructed this way. The company anticipates using the same process to build taller buildings, with hopes of eventually constructing a 150-story building.

    China is currently undergoing a building boom which Zhang attributed to a desire to catch up to the developed world. As a result of this boom, he noted that building inspections are often skipped in China to speed up building.

    Read the full story…


    Safe Harbors- not just for Sailors anymore (or, why advance planning can prevent claims of defective plans & specs) (law note)

    August 17, 2011 — Melissa Brumback

    Have you ever considered a “Safe Harbor Provision” for your Owner-Architect or Owner-Engineer contract? Maybe it is time that you do.

    As you are (probably too well) aware, on every construction project there are changes. Some of these are due to the owner’s change of heart, value engineering concerns, contractor failures, and material substitutions. Some may be because of a design error, omission, or drawing conflict. It happens.

    A “Safe Harbor Provision” is a provision that establishes an acceptable percentage of increased construction costs (that is, a percentage of the project’s contingency). The idea is that if the construction changes attributable to the designer is within this percentage, no claim will be made by the Owner for design defects.

    Read the full story…

    Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl-law.com.


    State Audit Questions College Construction Spending in LA

    August 17, 2011 — CDJ Staff

    A state audit of the Los Angeles Community College District found many problems with their construction spending. Their report, as described in the Los Angeles Times, found construction money spent for other purposes, such as promotional photography and public relation tours, $28.3 million spent on projects that were later cancelled, and oversight committees that provided no oversight.

    Earlier this year, the LA Times ran a series of articles detailing problems with the Los Angles Community College District’s construction program. The LA Times reported that the State Controller’s audit reached many of the same conclusions.

    The Community College District disputed the findings.

    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.


    Arizona Contractor Designs Water-Repellant Cabinets

    September 9, 2011 — CDJ Staff

    Dubbing his product “Baltic Duck,” a Mesa, Arizona building contractor is offering household cabinets made with specially treated water-repellent plywood instead of the usual particle board. Pete Celano calls his product Baltic Duck because the plywood is made in the Baltic region of Eastern Europe. To further protect the cabinets from moisture, a silicone-based sealant is applied to the corners and edges.

    Celano’s cabinets use standard decorative fronts. The design of the cabinets allows spilled liquids to drain away without encountering the decorative wood.

    Read the full story…


    Mortar Insufficient to Insure Summary Judgment in Construction Defect Case

    January 6, 2012 — CDJ Staff

    The US District Court of Nevada issued a summary judgment in the case of R&O Construction Company V. Rox Pro International Group, Ltd. on December 19, 2011. The case involved the installation of stone veneer at a Home Depot location (Home Depot was not involved in the case). R&O’s subcontractor, New Creation Masonry, purchased the stone veneer from Arizona Stone. Judge Larry Hicks noted that “the stone veneer failed and R&O was forced to make substantial structural repairs to the Home Depot store.”

    Rox Pro asked the court for a summary judgment, which the court granted only in part. The court looked at two issues in the case, whether the installation instructions constituted a breach of implied warranty of merchantability, and whether there was a breach of an implied warranty of fitness for a particular purpose.

    Judge Hicks found that there was a breach of implied warranty of merchantability. The instructions drafted by Real Stone and distributed by Arizona Stone were not sufficient for affixing the supplied stones, according to R&O’s expert, a claim the plaintiffs dispute. “Because there is an issue of material fact concerning the installation guidelines, the court shall deny Arizona Stone’s motion for a summary judgment on this issue.”

    On the other hand, the judge did not find that the instructions had any bearing as to whether R&O bought the stone, since the stone was selected by the shopping center developer. This issue was, in the view of the judge, appropriately dismissed.

    Read the court’s decision…


    A Call to Washington: Online Permitting Saves Money and the Environment

    October 28, 2011 — Douglas Reiser, Builders Counsel

    Here’s some good news for Oregon contractors:  Electronic Permitting is here. That’s right, no more standing in line with folders full of printed submittals and waiting all day for your permit. The click of a few buttons and you are in business. Great news, right? Unfortunately, Oregon isn’t sharing that celebration with Washington. So I say - why not?

    Last week, the State of Oregon released its new ePermitting online interface. The website allows contractors, owners and even local building departments to create an account, submit building plans and procure permits. With your account, you can track the progress of submissions, print documents and get posting information.

    The state ran a limited test version in the City of Florence since 2009, working out the kinks. Perhaps the most impressive result of the new system is that Oregon tackled the task of coagulating a local process into one central location.

    Read the full story...

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


    History of Defects Leads to Punitive Damages for Bankrupt Developer

    March 1, 2012 — CDJ Staff

    The South Carolina Court of Appeals has ruled that evidence of construction defects at a developer’s other projects were admissible in a construction defect lawsuit. They issued their ruling on Magnolia North Property Owners’ Association v. Heritage Communities, Inc. on February 15, 2012.

    Magnolia North is a condominium complex in South Carolina. The initial builder, Heritage Communities, had not completed construction when they filed for bankruptcy protection under Chapter 11. The remaining four buildings were completed by another contractor. The Property Owners’ Association subsequently sued Heritage Communities, Inc. (HCI) alleging defects. The POA also sued Heritage Magnolia North, and the general contractor, BuildStar.

    The trial court ruled that all three entities were in fact one. On appeal, the defendants claimed that the trial court improperly amalgamated the defendants. The appeals court noted, however, that “all these corporations share officers, directors, office space, and a phone number with HCI.” Until Heritage Communities turned over control of the POA to the actual homeowners, all of the POA’s officers were officers of HCI. The appeals court concluded that “the trial court’s ruling that Appellants’ entities were amalgamated is supported by the law and the evidence.”

    Heritage also claimed that the trial court should not have allowed the plaintiffs to produce evidence of construction defects at other Heritage properties. Heritage argued that the evidence was a violation of the South Carolina Rules of Evidence. The court cited a South Carolina Supreme Court case which made an exception for “facts showing the other acts were substantially similar to the event at issue.” The court noted that the defects introduced by the plaintiffs were “virtually identical across all developments.” This included identical use of the same products from project to project. Further, these were used to demonstrate that “HCI was aware of water issues in the other projects as early as 1998, before construction on Magnolia North had begun.”

    The trial case ended with a directed verdict. Heritage charged that the jury should have determined whether the alleged defects existed. The appeals court noted that there was “overwhelming evidence” that Heritage failed “to meet the industry standard of care.” Heritage did not dispute the existence of the damages during the trial, they “merely contested the extent.”

    Further, Heritage claimed in its appeal that the case should have been rejected due to the three-year statute of limitations. They note that the first meeting of the POA was on March 8, 2000, yet the suit was not filed until May 28, 2003, just over three years. The court noted that here the statute of limitation must be tolled, as Heritage controlled the POA until September 9, 2002. The owner-controlled POA filed suit “approximately eight months after assuming control.”

    The court also applied equitable estoppel to the statute of limitations. During the time in which Heritage controlled the board, Heritage “assured the unit owners the construction defects would be repaired, and, as a result, the owners were justified in relying on those assurances.” Since “a reasonable owner could have believed that it would be counter-productive to file suit,” the court found that also prevented Heritage from invoking the statute of limitations. In the end, the appeals court concluded that the even apart from equitable tolling and equitable estoppel, the statute of limitations could not have started until the unit owners took control of the board in September, 2002.

    Heritage also contested the jury’s awarding of damages, asserting that “the POA failed to establish its damages as to any of its claims.” Noting that damages are determined “with reasonable certainty or accuracy,” and that “proof with mathematical certainty of the amount of loss or damage is not required,” the appeals court found a “sufficiently reasonable basis of computation of damages to support the trial court’s submission of damages to the jury.” Heritage also claimed that the POA did not show that the damage existed at the time of the transfer of control. The court rejected this claim as well.

    Finally, Heritage argued that punitive damages were improperly applied for two reasons: that “the award of punitive damages has no deterrent effect because Appellants went out of business prior to the commencement of the litigation” and that Heritages has “no ability to pay punitive damages.” The punitive damages were upheld, as the relevant earlier decision includes “defendant’s degree of culpability,” “defendants awareness or concealment,” “existence of similar past conduct,” and “likelihood of deterring the defendant or others from similar conduct.”

    The appeals court rejected all of the claims made by Heritage, fully upholding the decision of the trial court.

    Read the court’s decision…


    Former New York Governor to Head Construction Monitoring Firm

    September 13, 2012 — CDJ Staff

    David Paterson, who succeeded Eliot Spitzer as Governor of New York, has started a new venture after leaving the Governor’s office in construction integrity monitoring. WNYC reports that Paterson will be the majority owner of Icon Compliance Services, LLC, which will both conduct investigations and work with law enforcement officials. Paterson says that in government projects “often concessions are made for political reasons in the public sector and then you never really get a product that you paid for.”

    Paterson will be working with a former vice president of Bovis Construction, Brian Aryai, who is also a former U.S. Treasury Agent. Aryai said that “it is astounding that some of the fraud that has come to the surface in the recent past,” and describes it as “almost laughable they were not detected.” Aryai tipped federal prosecutors that Bovis had been over billing on projects for at least a decade.

    Read the full story…