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    Construction Expert Witness Builders Information
    Soudan, Minnesota

    Minnesota Builders Right To Repair Current Law Summary:

    Current Law Summary: Statutory warranties for one-year, two-year and ten-year periods limits types of construction defects actionable under warranty law; This statute (Chapter 327A) limits liability and excludes normal wear and tear, normal shrinkage caused by drying of the dwelling, loss due to insufficient ventilation, loss or damage from negligence, improper maintenance, or alteration to dwelling, loss or damage from failure to maintain or failure to mitigate


    Construction Expert Witness Contractors Licensing
    Guidelines Soudan Minnesota

    Residential contractors need to be licensed. If you work in two or more trades, certain trades will require a license. Call the state for details.


    Construction Expert Witness Contractors Building Industry
    Association Directory
    Headwaters Builders Association
    Local # 2480
    PO Box 402
    Bemidji, MN 56619
    http://www.headwatersbuilders.org

    Northern MN Builders Association
    Local # 2417
    802 S Pokegama Ave Ste A
    Grand Rapids, MN 55744
    http://www.nmbuilders.com

    Lake Region Builders Association
    Local # 2470
    1114 Hwy. 59 South Ste 2
    Detroit Lakes, MN 56501
    http://www.lakeregionbuilders.com

    Arrowhead Builders Association
    Local # 2415
    5255 Maple Grove Road
    HERMANTOWN, MN 55811
    http://www.abamn.org

    Home Builders Association of Mid-Minnesota
    Local # 2450
    17068 Commercial Park Road
    Brainerd, MN 56401
    http://www.midmnba.org

    Vikingland Builders Assoc
    Local # 2495
    509 22ND AVE E Ste 200
    Alexandria, MN 56308
    http://www.vikinglandbuilders.com

    Central Minnesota Builders Association
    Local # 2410
    1124 W Saint Germain St
    Saint Cloud, MN 56301
    http://www.cmbaonline.org


    Construction Expert Witness News and Information
    For Soudan Minnesota

    The Colorado Court of Appeals Rules that a Statutory Notice of Claim Triggers an Insurer’s Duty to Defend.

    Ninety-Day Extension Denied to KB Home in Construction Defect Insurance Claim

    Coverage for Construction Defects Barred by Business Risk Exclusions

    Defense for Additional Insured Not Barred By Sole Negligence Provision

    Home Repair Firms Sued for Fraud

    Arizona Court of Appeals Rules Issues Were Not Covered in Construction Defect Suit

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

    Construction Defects Lead to Demolition

    Construction Workers Face Dangers on the Job

    Dust Infiltration Due to Construction Defect Excluded from Policy

    Australian Developer Denies Building Problems Due to Construction Defects

    Safer Schools Rendered Unsafe Due to Construction Defects

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

    Good and Bad News on Construction Employment

    LEED Certified Courthouse Square Negotiating With Insurers, Mulling Over Demolition

    Bound by Group Builders, Federal District Court Finds No Occurrence

    Workers Hurt in Casino Floor Collapse

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

    General Contractor/Developer May Not Rely on the Homeowner Protection Act to Avoid a Waiver of Consequential Damages in an AIA Contract

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

    Architectural Firm Disputes Claim of Fault

    Read Her Lips: “No New Buildings”

    Changes To Indemnification Statute Are Here! Say Hello To Defense Duties

    Ohio Adopts Energy-Efficient Building Code

    Is There a Conflict of Interest When a CD Defense Attorney Becomes Coverage Counsel Post-Litigation?

    Nevada Budget Remains at Impasse over Construction Defect Law

    MGM Seeks to Demolish Harmon Towers

    Michigan Supreme Court Concludes No Statute of Repose on Breach of Contract

    Boston’s Tunnel Project Plagued by Water

    Southern California Lost $8 Billion in Construction Wages

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

    Homebuilding on the Rise in Nation’s Capitol

    Injured Construction Worker Settles for Five Hundred Thousand

    Construction Defects in Home a Breach of Contract

    Contractor’s Home Not Covered for Construction Defects

    Nevada Senate Rejects Construction Defect Bill

    Contractor Removed from Site for Lack of Insurance

    Construction Delayed by Discovery of Bones

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

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

    An Upward Trend in Commercial Construction?

    Sometimes It’s Okay to Destroy Evidence

    School District Marks End of Construction Project by Hiring Lawyers

    Delaware “occurrence” and exclusions j(5) and j(6)

    Faulty Workmanship Exclusion Does Not Bar Coverage

    Mississippi exclusions j(5) and j(6) “that particular part”

    Massachusetts Couple Seek to Recuse Judge in Construction Defect Case

    Building Boom Leads to Construction Defect Cases

    Good Signs for Housing Market in 2013

    No “Special Relationship” in Oregon Construction Defect Claim

    West Hollywood Building: Historic Building May Be Defective

    Partial Settlement in DeKalb Construction Management Case

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

    “Details Matter” is the Foundation in a Texas Construction Defect Suit

    Contractor Manslaughter? Safety Shortcuts Are Not Worth It

    Insurer Not Liable for Construction Defect Revealed by Woodpecker

    Ghost Employees Steal Jobs from Legit Construction Firms

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

    Death of Construction Defect Lawyer Ruled a Suicide

    California Supreme Court to Examine Arbitration Provisions in Several Upcoming Cases

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

    Texas “Loser Pays” Law May Benefit Construction Insurers

    California Appeals Court Remands Fine in Late Completion Case

    Homebuilding Still on the Rise

    Texas Construction Firm Files for Bankruptcy

    There is No Non-Delegable Duty on the Part of Residential Builders in Colorado

    Condo Buyers Seek to Void Sale over Construction Defect Lawsuit

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

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

    Insurer Rejects Claim on Dolphin Towers

    Texas Law Bars Coverage under Homeowner’s Policy for Mold Damage

    Certificate of Merit to Sue Architects or Engineers Bill Proposed

    Broker Not Liable for Failure to Reveal Insurer's Insolvency After Policy Issued

    Florida: No Implied Warranties for Neighborhood Improvements

    Construction Demand Unsteady, Gains in Some Regions

    District Court Awards Summary Judgment to Insurance Firm in Framing Case

    Court Strikes Down Reasonable Construction Defect Settlement

    Damage During Roof Repairs Account for Three Occurrences

    Insurer Settles on Construction Defect Claim

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

    Eighth Circuit Remands to Determine Applicability of Collapse Exclusion

    Pipes May Be Defective, But Owners Lack Standing

    Ohio Court Finds No Coverage for Construction Defect Claims

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

    Supreme Court of Oregon Affirms Decision in Abraham v. T. Henry Construction, et al.

    Virginia Homebuilding Slumps After Last Year’s Gain

    Amerisure Case to be Heard by Texas Supreme Court

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

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

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

    SOUDAN MINNESOTA CONSTRUCTION EXPERT WITNESS
    DIRECTORY AND CAPABILITIES

    Leveraging from more than 5500 construction defect and claims related expert witness designations, the Soudan, Minnesota Construction Expert Witness Group provides a wide range of trial support and consulting services to Soudan'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.









    Construction Expert Witness News & Info
    Soudan, Minnesota

    SB800 Cases Approach the Courts

    July 10, 2012 — CDJ Staff

    California’s Right to Repair Law turns ten this year and cases under the statute are finally coming to trial, as John V. O’Meara of Bremer Whyte Brown & O’Meara writes for the Martindale-Hubble Legal Library. Mr. O’Meara notes that SB800 eliminated “the traditional definitions of construction defect,” replacing them with “functionality standards.” He argues that these standards are not uniform: “some standards require damage and others do not.” He also wonders what terms like “significant cracks,” “intended water” and “materially comply” mean in a court.

    Mr. O’Meara states that “defendants in construction defect cases have a right to know the standards that apply to a case, the definitions that will be presented to the jury, and the burden of proof that attaches.”

    Read the full story…


    More Charges in Las Vegas HOA Construction Defect Scam

    May 10, 2012 — CDJ Staff

    VegasInc.com reports that U.S. District Judge James Mahan has unsealed fourteen more criminal cases in the ongoing Las Vegas HOA corruption probe. One of the fourteen is Lisa Kim, whose Platinum Community Services managed communities in which Nancy Quon and Leon Benzer were involved.

    Two attorneys were also named. Brian Jones had previously been named in civil litigation as working to rig HOA elections in favor of the straw buyers. Jeanne Winkler had done legal work for one of the communities and for the developer before her disbarment.

    Eight of the names released were of alleged straw buyers. These individuals are said to have bought fractional shares of homes so they could stand for election on the HOA boards. One of the individuals named, Arnold Meyers, had sued the Jasmine Homeowners Association, claiming that their HOA elections were tainted. Myers claimed that homeowners received postcards stating that he did not own his condo. His suit was dropped after two homeowners claimed that their names had been forged on Meyer’s affidavits.

    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…


    BUILD Act Inching Closer To Reality

    July 8, 2011 — Douglas Reiser, Builders Counsel

    A select group of Senators have launched a marketing campaign for the BUILD Act. If this is the first you are hearing about the BUILD Act, do not fret. The Act still has a long way to go, but if successful it would bring a national infrastructure bank.

    I have been fascinated with the concept of a national infrastructure bank for quite some time. The idea has been around since the Clinton years ? and perhaps beyond. The Act’s purpose is to create a national bank (American Infrastructure Financing Authority) to provide loans and loan guarantees to encourage private investment in upgrading America’s infrastructure. For a number of years, we have seen similar legislation float around Congress. But, none of those initiatives have gained as much traction as BUILD.

    Read the full story…

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


    Water District Denied New Trial in Construction Defect Claim

    August 16, 2012 — CDJ Staff

    The United District Court in Tampa, Florida has rejected the motion by Tampa Bay Water for a new trial in their claims that HDR Engineering negligently designed the C.W. Bill Young Regional Reservoir. The claims went to a jury trial, at the end of nineteen days, the jury deliberated for four hours, finding for HDR Engineering. In rejecting Tampa Bay’s motion, the judge noted that “on close examination, TBW’s contentions have little to do with the factual determinations of the jury, which evidently concluded that TBW did not meet its burden of proof, an unsurprising conclusion, considering HDR’s evidence and the weaknesses in TBW’s evidence.”

    The court cited an earlier decision that “a new trial may be granted where the jury’s ‘verdict is against the great, not merely the greater weight of the evidence.’” However, the court found that the jury’s verdict “was well supported by the evidence” and that “TBW’s case showed signs of weakness at virtually every turn.” TBW’s expert “changed his opinion late in the case concerning the culpability of the contractor.” As a result, “Brumund’s change in opinions effectively bolstered HDR’s faulty construction defense.”

    TBW also raised claims a pre-trial order prevented it “from introducing evidence that HDR did not fulfill its contractual quality control responsibilities” and that evidentiary rulings prevented “TBW from introducing evidence concerning quality control.” However, TBW dismissed its claims over quality control, then “attempted no less than three times during ?Ķ testimony to introduce evidence of the purpose of the quality control requirement and quality control assurance.”

    TBW also contended “that it was precluded from introducing evidence that HDR’s inspectors never reported that the protective layer exceeded three feet after inspecting the work as part of HDR’s quality control duties.” The court noted that “TBW asked these very questions of HDR’s Engineer of Record.” The court also found that testimony regarding photographs of the construction was properly excluded as TBW never entered the photos into evidence.

    TBW had made an argument for a jury view. Prior the trial “after discussion, and to their credit, the parties agreed to a jointly-prepared helicopter ‘flyover’ video.” The court noted that “the size and physical characteristics of the reservoir were adequately and effectively depicted in the video.” The hazards the jury did not, then, have to encounter included the narrow, unpaved rim of the reservoir, snakes, and alligators.

    Read the court’s decision…



    Arbitrator May Use Own Discretion in Consolidating Construction Defect Cases

    September 1, 2011 — CJD Staff

    The Mississippi Court of Appeals has ruled in the case of Harry Baker Smith Architects II, PLLC v. Sea Breeze I, LLC. Sea Breeze contracted with Harry Baker Smith Architects II, PLLC (HBSA) to design a condominium complex, which would be built by Roy Anderson Corporation. All parties agreed to arbitration.

    Subsequently, Sea Breeze alleged defects and sought arbitration against the architectural firm and started a separate arbitration proceeding against the contractor. The special arbitrator appointed by the American Arbitrators Association determined that it would be proper to consolidate the two actions “since they arose from a common question of fact or law.” HBSA filed in chancery court seeking injunctive relief and a reversal of the decision. Sea Breeze and Roy Anderson filed a motion to compel the consolidated arbitration.

    The court noted that the special arbitrator “established that the contract between Sea Breeze and Roy Anderson expressly allowed for consolidation of the two cases.” Further, the arbitrator “concluded that HBSA expressly agreed to consolidation by written consent through its 2008 letter, through which it insisted upon Roy Anderson’s involvement ‘in any mediation and/or arbitration.’”

    The court concluded that the chancery court “did not have the power to fulfill HBSA’s request.” The court affirmed the chancery court’s judgment.

    Read the court’s decision…


    Harsh New Time Limits on Construction Defect Claims

    April 26, 2011 — April 26, 2011 by Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of Sullan2, Sandgrund, Smith & Perczak, P.C. in the HindemanSanchez blog

    A recent Colorado Supreme Court decision, Smith v. Executive Custom Homes, Inc., 230 P.3d 1186 (Colo. 2010), considerably shortens the time limit for bringing many construction defect lawsuits. Homeowners and homeowner associations risk losing the right to seek reimbursement from builders, developers and other construction professionals unless they carefully and quickly act upon discovery of evidence of any potential construction defect.

    The Statute of Limitations for Construction Defect Claims
    Colorado’s construction defect statute of limitations limits the time for homeowners and homeowners associations to bring lawsuits for construction defects against “construction professionals,” including developers, general contractors, builders, engineers, architects, other design professionals, inspectors and subcontractors. The statute requires homeowners and associations to file suit within two years “after the claim for relief arises.” A claim for relief “arises” when a homeowner or association discovers or reasonably should have discovered the physical manifestation of a construction defect.

    The two-year time limitation applies to each construction defect separately, and will begin to run upon the appearance of a “manifestation” of a construction defect (which may include, for example, a condition as simple as a roof leak or drywall cracks), even if the homeowner or association does not know the cause of the apparent problem.

    The Smith Opinion and its Effect on the Statute of Limitations
    In Smith v. Executive Custom Homes, Inc., the plaintiff homeowner, Mrs. Smith, slipped on ice that had accumulated on her sidewalk because of a leaking gutter and suffered injury. When she first noticed the leak, she reported it to her property manager, who reported it to the builder. The builder attempted to repair the gutter, unbeknownst to Mrs. Smith, and she did not notice further problems until approximately one year after she first observed the leak, when she fell and suffered serious injury. She sued the builder within two years of her injury, but nearly three years after she first learned of the leak.

    The Colorado Supreme Court dismissed Mrs. Smith’s claims as untimely and held that under the construction defect statute of limitations, the two-year period for suing for injuries due to construction defects begins when the homeowner first observes the physical manifestation of the defect, even if the resulting injury has not yet occurred. The court acknowledged that this ruling could result in “unfair results,” especially if a serious and unforeseeable injury occurs more than two years after the first time the homeowner noticed the problem, and as a result the victim is unable to seek redress from those responsible for the defect.

    Read the full story…

    Reprinted courtesy of Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of Sullan2, Sandgrund, Smith & Perczak, P.C., and they can be contacted through their web site.


    Largest Per Unit Settlement Ever in California Construction Defect Case?

    October 28, 2011 — CDJ Staff

    BusinessWire reports that the Chelsea Court Homeowners Association has settled their construction defect case for $5.4 million. That works out to $169,000 per unit, which BusinessWire describes as “California’s largest per-unit recovery known to be on record to date.”

    Most of the money in the settlement is coming from insurance companies for the builder and thirteen subcontractors. Issues included roof and window leaks, deck failures, and unsafe walkways.

    Read the full story...


    Connecticut Gets Medieval All Over Construction Defects

    February 10, 2012 — CDJ Staff

    The Hartford Courant reports that Connecticut is trying a very old tactic in a construction defect suit. The law library building at the University of Connecticut suffered from leaks which have now been repaired. The state waited twelve years after was complete to file lawsuit, despite that Connecticut has a six-year statute of limitations on construction defect claims. Connecticut claims that the statute of limitations does apply to the state.

    The state is arguing that a legal principle from the thirteenth century allows it to go along with its suit. As befits a medieval part of common law, the principle is called “nullum tempus occurrit regi,” or “time does not run against the king.” In 1874, the American Law Register said that nullum tempus occurrit reipublicae “has been adopted in every one of the United States” and “is now firmly established law.”

    In the case of Connecticut, Connecticut Solicitor General Gregory D’Auria said that “the statute of limitations does not apply to the state.” He also noted that “the state did not ‘wait’ to file the lawsuit. The lawsuit was filed only after all other options and remedies were exhausted.”

    Connecticut also argued that “nullus tempus occurrit regi” applied in another construction defect case at the York Correctional Institution. The judge in that case ruled in December 2008 to let the case proceed. But in the library case, Judge William T. Cremins ruled in February 2009 that the statute of limitations should apply to the state as well. Both cases have been appealed, with the library case moving more quickly toward the Connecticut Supreme Court.

    Read the full story…


    Loss Caused by Seepage of Water Not Covered

    July 10, 2012 — Tred Eyerly, Insurance Law Hawaii

    The anti-concurrent clause in a homeowner’s policy barred coverage for damage caused by hidden seepage. Boazova v. Safety Ins. Co., 2012 Mass. LEXIS 462 (Mass. May 29, 2012).

    The insured had a concrete patio built along the rear wall of her house at a grade higher than the home’s foundation. Years later, severe deterioration was discovered in the floor joists, wall studs and other parts of the home. The insured held a homeowner’s policy with Safety. An inspector hired by Safety determined the deterioration was caused by the placement of the concrete patio slab adjacent to the wall of the house, allowing water to seep onto the top of the foundation.

    Safety denied coverage because the damage was caused by a combination of surface water, deterioration, settling and improper construction of the concrete patio.

    Read the full story…

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


    Record-Setting Construction in Fargo

    November 7, 2012 — CDJ Staff

    Prairie Business reports that Fargo is experiencing the most new construction it has ever seen, totaling $434 million in value, which exceeds the previous high in 2006 of $428 million. Many of the construction starts are for single family homes, although there is also an increase in construction of apartments and townhomes.

    The Home Builders Association of Fargo-Moorhead also noted that there was also a large of remodeling projects. Terry Becker, the president of the HBA, said that “remodeling is just huge right now.”

    Read the full story…


    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.


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

    May 10, 2012 — CDJ Staff

    Coverage for construction defects continues to be hotly contested in Hawaii state and federal courts. In a recent decision, Judge Mollway felt bound to follow the Ninth Circuit’s decision in Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir. 2004), where the court found construction defect claims arise from breach of contract, not from an occurrence. Judge Mollway’s most recent decision on the issue is Illinois Nat. Ins. Co. v. Nordic PCL Constr., Inc., 2012 U.S. Dist. LEXIS 58464 (D. Haw. April 26, 2012).

    Nordic constructed a grocery store for Safeway. In addition to the grocery store, Nordic built a 165-space rooftop parking deck, retail shops and related improvements. After opening for business in 2007, Safeway experienced significant leaks. Safeway demanded that Nordic repair the parking deck. Nordic sent the demand letter to the insurer, who agreed to appoint counsel subject to a reservation of rights.

    Safeway filed suit against Nordic in state court alleging, among other things, breach of contract and negligence. The insurer provided Nordic with a defense, but Nordic hired independent counsel.

    The insurer filed for declaratory relief in federal district court.

    Read the full story…


    Arizona Court of Appeals Decision in $8.475 Million Construction Defect Class Action Suit

    May 9, 2011 — May 9, 2011 Beverley BevenFlorez - Construction Defect Journal

    In the case of Leflet v. Fire (Ariz. App., 2011), which involved an $8.475 million settlement in a construction defect class action suit, the question put forth to the Appeals court was “whether an insured and an insurer can join in a Morris agreement that avoids the primary insurer’s obligation to pay policy limits and passes liability in excess of those limits on to other insurers.” The Appeals court provided several reasons for their decision to affirm the validity of the settlement agreement as to the Non-Participatory Insurers (NPIs) and to vacate and remand the attorney fee awards.

    First, the Appeals court stated, “The settlement agreement is not a compliant Morris agreement and provides no basis for claims against the NPIs.” They conclude, “Appellants attempt to avoid the doctrinal underpinnings of Morris by arguing that ‘the cooperation clause did not prohibit Hancock from assigning its rights to anyone, including Appellants.’ This narrow reading of the cooperation clause ignores the fact that Hancock did not merely assign its rights — it assigned its rights after stipulating to an $8.475 million judgment that neither it nor its Direct Insurers could ever be liable to pay. Neither Morris nor any other case defines such conduct as actual ‘cooperation’—rather, Morris simply defines limited circumstances in which an insured is relieved of its duty to cooperate. Because Morris agreements are fraught with risk of abuse, a settlement that mimics Morris in form but does not find support in the legal and economic realities that gave rise to that decision is both unenforceable and offensive to the policy’s cooperation clause.”

    The Appeals court further concluded that “even if the agreement had qualified under Morris, plaintiffs did not provide the required notice to the NPIs.” The court continued, “Because an insurer who defends under a reservation of rights is always aware of the possibility of a Morris agreement, the mere threat of Morris in the course of settlement negotiations does not constitute sufficient notice. Instead, the insurer must be made aware that it may waive its reservation of rights and provide an unqualified defense, or defend solely on coverage and reasonableness grounds against the judgment resulting from the Morris agreement. The NPIs were not given the protections of this choice before the agreement was entered, and therefore can face no liability for the resulting stipulated judgment.”

    Next, the Appeals court declared that “the trial court abused its discretion in awarding attorney’s fees under A.R.S § 12-341.” The Appeals court reasoned, “In this case, the NPIs prevailed in their attack on the settlement. But the litigation did not test the merits of their coverage defenses or the reasonableness of the settlement amount. And Plaintiffs never sued the NPIs, either in their own right or as the assignees of Hancock. Rather, the NPIs intervened to test the conceptual validity of the settlement agreement (to which they were not parties) before such an action could commence. In these circumstances, though it might be appropriate to offset a fee award against some future recovery by the Plaintiff Leflet v. Fire (Ariz. App., 2011) class, the purposes of A.R.S. § 12-341.01 would not be served by an award of fees against them jointly and severally. We therefore conclude that the trial court abused its discretion in awarding fees against Plaintiffs ‘jointly and severally.’”

    The Appeals court made the following conclusion: “we affirm the judgment of the trial court concerning the validity of the settlement agreement as to the NPIs. We vacate and remand the award of attorney’s fees. In our discretion, we decline to award the NPIs the attorney’s fees they have requested on appeal pursuant to A.R.S. § 12-341.01(A).”

    Read the court’s decision…


    Builder Cannot Receive Setoff in Construction Defect Case

    July 10, 2012 — CDJ Staff

    The California Court of Appeals has dismissed an appeal in a San Diego construction defect case. In Smith v. Walters Group, Christopher and Maud Smith sued The Walters Group, a real estate developer, and Galen C. Pavelko, Inc, the builder of their home. Walters had bought five lots and hired Pavelko to build houses on them, selling one of these homes to the Smiths. “After moving in, the Smiths noticed a strong and obnoxious odor permeating the house.” The Smiths sued but were ordered to arbitrate instead, pursuant to a clause in the purchase contract. The Smiths were awarded $1.5 million at arbitration.

    Walters requested that the arbitration remain open to determine if Walters was entitled to a setoff for settlements from defendants not involved in the arbitration. During this time, Pavelko made a settlement with the Smiths, which the court found was in good faith. At the same time, the arbitrator “reached the opposite conclusion.” The arbitrator concluded that “only settlements made ‘in good faith before verdict or judgment’ qualified for setoff.”

    Walters moved that the trial court “‘correct’ the award,” but the trial court declined to do so and confirmed the award. In the appeal, Walters raised the issue of “whether Pavelko’s settlement occurred ‘before verdict or judgment.’” The appeals court dismissed the appeal, noting that “Walters would not be entitled to a $500,000 setoff if we reversed the trial court’s order determining the Smith-Pavelko settlement was made in good faith because Pavelko’s $500,000 payment was expressly conditioned on such an order.” They add that “were we to reverse the trial court’s order, Pavelko would have no obligation to pay the Smiths the $500,000.” This would then “deprive Walters of the corresponding statutory right to a setoff.”

    Read the court’s decision…


    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.

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    Cleveland Condo Board Says Construction Defects Caused Leaks

    March 1, 2012 — CDJ Staff

    A Cleveland condo association has sued the developer of their building, claiming that construction defects resulted in water intrusion. The K&D Group, which still owns forty units in the 160-unit building, claim that it’s a maintenance issue that they’d like to see fixed, but it’s their responsibility as the developer. Doug Price, CEO of K&D calls it a “frivolous lawsuit.” He blames a “hostile board” and told The Plain Dealer “there’s simple maintenance that they refuse to do.”

    An outside company evaluated Stonebridge Towers. According to the condo board’s lawyer, Laura Hauser, the building design and construction are to blame for the water intrusion. Hauser said that the board’s “goal through this litigation is to find a resolution for the association, the building and the owners.”

    David Kaman, a Cleveland attorney not involved in the lawsuit, told the Plain Dealer that construction litigation in the Cleveland area had fallen off from 2007, but he sees it on the rise, which he attributes to cost-cutting on recently finished projects. “If an owner moves in and two years later the wallpaper needs to be replaced because the wall is leaking, that’s a construction defect.”

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    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”).

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    Reprinted courtesy Higgins, Hopkins, McLain & Roswell, LLC