Gut Feeling Does Not Disqualify Expert Opinion
July 6, 2011 — CDJ Staff
The New Jersey Supreme Court issued a ruling in June on the case of Nevins v. Toll in which they reversed an earlier decision and remanded the case to a lower court for retrial. At issue in the case was the testimony of the plaintiff’s expert, J. Anthony Dowling. In depositions, Mr. Dowling said that his estimates for repair were based on a “gut feeling.” Dowling said he had “very little” experience in cost estimates for single-family homes. The defendants sought to bar Dowling’s testimony which was granted by the judge. Without an expert, Ms. Nevin’s case was dismissed.
Describing Dowling’s report as “far from a model of how an expert’s opinion in a construction case should be presented,” the court noted that Dowling is not a professional expert witness. However, the court did note that Dowling is a professional cost estimator. Despite Mr. Dowling using his “gut feeling” to construct his estimate, the New Jersey Supreme Court felt that whether his estimate is convincing is “a question for the jury.”
Read the court’s opinion…
Texas “Loser Pays” Law May Benefit Construction Insurers
June 7, 2011 — CDJ Staff
Under a new law, Texas HB 274, the Texas Supreme Court will be making rules for motions to dismiss and to expedite suits of less than $100,000. The law also contains two “loser pays” provisions. If a lawsuit is found dismissed for having “no basis in fact or law,” the losing side must pay attorney costs. The other provision caps award of attorney fees if plaintiffs reject settlement offers. Texas Lawyer quotes Houston attorney Mike Gallagher as saying this will affect “the practice of everyone who handles significant lawsuits.”
Gregory Marcum, whose practice includes construction defect litigation, plans to contact insurance companies, as the new law may save them money. “It will definitely be a factor in the defense strategy for handling a case.” He notes that “any insurance carrier would want that done.”
Marcum notes that the offer-of-settlement rules only apply when cases go to trial. “Almost all cases settle.”
Read HB 274
Read the full story…
Policing Those Subcontractors: It Might Take Extra Effort To Be An Additional Insured
June 14, 2011 — Douglas Reiser, Builders Council Blog
I just came across a case that I think truly paints the insurance dilemma for contractors. Thanks to this recent Illinois case, I don’t have to make up any factual scenarios—so kudos to Attorney Robert Boylan for posting it.
In reading over my RSS feeds this weekend, I noticed a great writeup on long-time blogger Josh Glazov’s Construction Law Today. Attorney Robert Boylan’s post describes a recent Illinois case where a general contractor was denied its additional insured status on a second-tier subcontractor’s insurance. The reason for the denial: the general contractor failed to procure an agreement in writing with the second-tier subcontractor, requiring it to be listed as an additional insured.
Read the full story…
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...
California Bill Would Notify Homeowners on Construction Defect Options
October 23, 2012 — CDJ Staff
The California Building Industry Association supported Assembly Bill 1892, but its goals of informing homeowners of their rights under SB800 have been accomplished through the administrative process. The Department of Consumer Affairs has now posted text on its web site noting that “prior to pursuing legal action or responding to a construction defect solicitation, you must first contact your home builder.” The text goes on to note that “if the homebuilder fails to follow any of the procedures, the homeowner is entitled to proceed with the filing of an action.”
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…
Contractor Underpaid Workers, Pocketed the Difference
February 10, 2012 — CDJ Staff
Property Casualty 360 reports that the owner of a construction company in California’s Bay Area has been arraigned in San Francisco Superior Court. The fifty-seven felony counts include charges of payroll theft and insurance fraud.
San Francisco District Attorney, George Gascon is quoted as saying that Doherty’s actions “hurts the honest businesses that were unable to successfully compete for these projects which the defendant was able to underbid and win as a result of this scheme.”
Frances Ann Doherty, owner of Doherty Painting & Construction has been charged with submitting false documentation as to what wages she paid her workers. It is alleged that over three years she pocketed $600,000. Additionally, she is charged with underpaying her insurer by more than $100,000 by submitting to them the fake payroll information.
Read the full story…
Architect Not Liable for Balcony’s Collapse
September 13, 2012 — CDJ Staff
The Texas Supreme Court declined to hear an appeal from a woman who was partially paralyzed due to the collapse of a balcony. She had sued the architect of her friends’ home, but the Texas Third Circuit Court of Appeals had reversed a jury ruling against the architect, Sinclair Black. Black’s firm, Black + Vernooy, had designed the home and had supervised “administration of the construction contract.” Despite a contractual obligation to “endeavor to guard the owner against defects and deficiencies,” the balcony builder had not followed the architect’s specifications, including in the construction of the balcony.
While the jury found Black liable for ten percent of the blame, Black argued that he could not be held liable for the contractor’s negligence, nor did he have any duty to third parties.
Read the full story…
New Apartment Tower on the Rise in Seattle
September 13, 2012 — CDJ Staff
The Seattle Times reports that groundbreaking is planned for a forty-story tower in Seattle. The building process will take at least five years, during which time, according to the paper, there will be nearly eight thousand new apartments in Seattle. The planned tower will add another 386 units to that.
The developer, Holland Partner Group, has four other apartments buildings planned or in construction currently, which will account for more than a thousand of the units being added to the city’s apartment stock.
Read the full story…
Insurer Beware: Failure to Defend Ends with Hefty Verdict
June 1, 2011 — Douglas Reiser in the Builders Counsel Blog
Served with a lawsuit that you turned over to your insurer? Insurer refusing to defend you? Well, find some hope in this news. Washington’s IFCA has the claws to ensure that insurers perform their duties.
Contractors heavily rely on the defense provisions of their Commercial General Liability (CGL) policies. In construction, a legal dispute can easily rear its head when you least expect it. Luckily, Washington registered contractors are required to maintain CGL insurance. That insurance often provides contractors with adequate legal defense in the event that they are sued.
But, what if your insurer turns down the defense request? They might be staring at massive damages. A current Reiser Legal client, Australia Unlimited, Inc., recently won a large verdict against Hartford Insurance, after the insurer unreasonably denied their claim. The firm who represented Australia Unlimited Inc. in that case, Hackett Beecher and Hart, were successful in procuring a $5.43 Million verdict
Read the full story…
Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Guilty Pleas Draw Renewed Interest In Nevada’s Construction Defect Laws
December 9, 2011 — CDJ Staff
A report this week by David McGrath Schwarz of the Las Vegas Sun suggests that Nevada’s construction defect laws will be a point of much contention in upcoming legislative sessions. The report cites renewed interest in the state’s construction defect laws due to ongoing federal investigations of construction defect attorney Nancy Quon and construction company owner Leon Benzer. Guilty pleas have been entered by at least ten individuals including an attorney, property managers, straw purchasers, and former HOA board members.
The article suggests that Nevada’s Chapter 40 laws are easily manipulated to the detriment of Nevada’s homebuilding industry. Construction industry lobbyists have tried unsuccessfully to change the laws in past legislative sessions.
The Sun’s article speculates that the building industry might be able to gain legislative concessions due to the volume of guilty pleas and what it refers to as examples of Chapter 40 abuses. ”With federal authorities collecting guilty pleas, the construction industry has prime examples of the system being abused, and how lucrative it can be for attorneys.”
Read the full story…
Ensuing Loss Provision Found Ambiguous
April 25, 2012 — Tred Eyerly, Construction Law Hawaii
After the insurer denied coverage in a homeowner’s policy for construction defects under various exclusions, the court found the ensuing loss provision was ambiguous.Kesling v. Am. Family Mut. Ins. Co., 2012 U.S. Dist. LEXIS 38857 (D. Colo. March 22, 2012).
After purchasing a home from the sellers, the insureds noticed problems with the deck of the home. Massive cracking appeared, causing lifting and leaking on the deck and water running through the exterior foundation wall into the home. There was also damage to the roof and crawlspace.
The insureds had a homeowner’s policy with American Family, which covered accidental direct physical loss to property described in the policy unless the loss was excluded. They requested coverage for "conditions, defects and damages." American Family denied coverage because wear and tear, as well as damage to foundations, floors and roofs were excluded. The policy did provide coverage, however, for "any resulting loss to property described . . . above, not excluded or excepted in this policy.
When coverage was denied, the insureds sued American Family.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Congress Addresses Homebuilding Credit Crunch
May 20, 2011 — CDJ Staff
The National Association of Home Builders (NAHB) reports that Representatives Gary Miller (CA), Brad Miller (NC) and twenty-nine cosponsors have put forth a bill with bipartisan support to “address the severe credit crunch for acquisition, development, and construction (AD&C) financing.” They report in addition to more than 1.4 million construction workers who have been “idled since 2006,” the housing slump has cost 3 million jobs and $145 million in wages.
NAHB reports that they worked closely with lawmakers on the bill. The association had members meet with legislators both in D.C. and in their home districts. They state that HR 1755 would help homebuilders “find the credit they need to move forward with new or existing projects.”
The bill would allow lenders to use the value upon completion when assessing loan collateral and ban the use of foreclosed or distressed sale properties in assessing values of projects. The would bill would also lessen restrictions by banking regulators, which the lead sponsors said “have hindered federal and state chartered banks and thrifts’ ability to make and maintain loans to qualified small home builders that have viable projects.”
The NAHB is urging members of Congress to cosponsor the bill and is urging the Senate to introduce a companion bill.
Read the full story…
Read HR 1755
Mississippi exclusions j(5) and j(6) “that particular part”
June 7, 2011 — CDCoverage.com
In Lafayete Ins. Co. v. Peerboom, No. 3:10cv336 (S.D. Miss. June 2, 2011), claimant homeowner Peerboom hired insured contractor Absolute to raise Peerboom’s house two feet to avoid future flooding. While Absolute was raising the house, it fell, resulting in physical injury to the home. Peerboom sued Absolute for negligence, breach of contract, and fraud, seeking damages for the destruction of the home. Absolute’s CGL insurer Lafayette defended under a reservation of rights and filed a declaratory judgment action.
Read the full story…
Reprinted courtesy of CDCoverage.com
Differing Rulings On Construction Defect Claims Leave Unanswered Questions For Builders, and Construction Practice Groups. Impact to CGL Carriers, General Contractors, Builders Remains Unclear
March 7, 2011 — March 7, 2011 Construction Defect Journal Staff
In the past year a number of state and federal courts have rendered a number of conflicting decisions that promise to alter or perhaps shift entirely the paradigm, of how builders manage risk.
According to a report today by Dave Lenckus in Property Casualty 360 “Nine state and federal courts and one state legislature over the past year have addressed whether a construction defect a defective product or faulty workmanship is fortuitous and therefore an occurrence under the commercial general liability insurance policy. Four jurisdictions determined it is; three said no; two ruled that a construction defect that causes consequential damage to property other than the work product is an occurrence; and one federal court contributed its conflicting case law that has developed in Oregon since its high court ruled in 2000 that a construction defect is not an occurrence”.
The article strongly suggests that in the absence of a clear consensus over what the recent rulings mean for builders and contractors coverage disputes will intensify and continue to proliferate.
Doing this on a state-by-state basis has caused a lot of confusion among buyers and sellers, said Jeffrey A. Segall, a Tampa-based senior vice president and the Florida Construction Practice leader at Willis of Florida, a unit of Willis Group Holdings.
Read 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
Judge Okays Harmon Tower Demolition, Also Calls for More Testing
August 2, 2012 — CDJ Staff
Vegas.Inc reports that Clark County District Court Judge Elizabeth Gonzalez has permitted the demolition the tower, which MGM Resorts has claimed is a safety hazard. Perini Building Co. claims that the building does not need to be demolished. CityCenter claims that repairing the building would take nearly a year longer than a demolition and cost about $200 million. Further, CityCenter assumes that the building’s reputation would cost it another $30 million.
Subsequently, Judge Gonzalez ruled that the pattern of destructive testing would not support a claim that there were an estimated 1,400 defective items in the building. An attorney for CityCenter, Steve Morris, has suggested that they may seek more testing, impossible to do once the building is demolished. CityCenter issued a statement that “nearly every time CityCenter has chipped away concrete to review structural work at the Harmon, we have found defects.” They describe the building as “unusable.”
Tutor Perini contends that it “remains confident that it will prevail when the issues of safety, reparability and responsibility for the issues facing the Harmon tower are considered.
Read the full story…
Florida Contractor on Trial for Bribing School Official
October 28, 2011 — CDJ Staff
Lloyd Whann, an executive in M. M. Parrish Construction, a Gainesville, Florida firm, is going to trial over claims that he bribed a school district official with more than $50,000 in gifts. The trial has been pushed to March of 2012, in order for his defense to review documents.
Bob Williams, the former school official, plead guilty to conspiracy to commit bribery. He agreed to testify against Whann and M.M. Parrish Construction.
Read the full story...
