OSHA Extends Delay of Residential Construction Fall Protection Requirements
September 13, 2012 — CDJ Staff
OSHA has announced a fourth delay in full implementation of requiring fall protection in residential construction. The requirements, which would obligate those in residential construction to use the same degree of fall protection as is used in commercial construction, were originally set to go into effect in September 2011. As part of the phasing in of the new requirements, penalties were reduced, originally until March 2012. This has now been extended until December 15, 2012.
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Construction Job Opening Rise in October
December 20, 2012 — CDJ Staff
There was a significant increase in the number of open construction jobs during October, according to a report for the National Association of Home Builders. Working from preliminary data provided by the Bureau of Labor Statistics, the NAHB said that the number of open positions reached “levels and rates last seen in 2007.” As the data is still preliminary, the NAHB noted that the conclusions should be taken with caution.
While there was a spike in job openings, the hiring of people to fill these positions hasn’t caught up with it, and there was a small decline in hires. But to return to the good news, there was also a drop in layoffs in that same period.
Through October, about 8,000 people have been hired in the construction sector. The NAHB notes that this does not correspond with the recent increases with home construction. They suggest that “it may be the case that startups in the home building and remodeling sectors are being missed by the establishment survey.” Another possibility they raise is that already-employed construction workers are simply working more hours.
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Courts Are Conflicted As To Whether "Good Faith" Settlement Determinations Can Be Reviewed Via Writ Petition Or Appeal
July 10, 2012 — Stephen A. Sunseri and Aarti Kewalramani, Gatzke Dillon & Ballance LLP
The Court of Appeal, Second District, Division Three, ruled in Oak Springs Villas Homeowners Association v. Advanced Truss Systems, Inc., et al., (June 14, 2012, B234568) __ Cal.App.4th __ [2012 WL 2149923], that a non-settling defendant cannot appeal a trial court's good faith settlement determination. Instead, a non-settling defendant may only file a petition for writ of mandate pursuant to Code of Civil Procedure section 877.6 to challenge a good faith determination. This decision comes on the heels of a 2011 ruling in Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, which found that a writ petition is not the sole means of challenging a trial court's good faith settlement determination.
In Oak Springs Villas, supra, the condominium homeowners' association sued a developer, general contractor, and various subcontractors for alleged construction deficiencies and resultant property damage. The association eventually settled with the developer, but not with a truss manufacturer. The trial court approved the developer's motion for good faith settlement determination, and the truss manufacturer immediately appealed, instead of filing a writ petition. On appeal, the developer argued the good faith determination was not an appealable order. The truss manufacturer argued Cahill applied, as well as an older case, Justus v. Atchison (1977) 19 Cal.3d 564, which allowed for appeals when no remaining issues exist as to the appealing party.
The Court of Appeal ruled in the developer's favor and declined to follow Cahill, stating the truss manufacturer should have filed a writ petition, as expressly required under Section 877.6, subdivision (e). The Court also believed Justus was inapplicable because a non-settling party should not be allowed to have two review opportunities ?Äì one after an adverse good faith ruling, and then another after the ultimate conclusion of the case.
However, the greater effect is that Cahill and Oak Springs Villas simultaneously stand in conflict and appear to be valid law. One case allows for an appeal of a good faith settlement determination, while the other requires strict adherence to the statute. The Supreme Court is likely to review the issue. In the meantime, parties challenging good faith rulings are advised to consult the statutory requirements under Section 877.6, subdivision (e).
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.
Preventing Costly Litigation Through Your Construction Contract
August 17, 2011 — Douglas Reiser, Builders Counsel
It’s Tuesday, which means it ’s the middle of your work week. Tuesday is a great time to take an hour to look over your contracts, while the crews are pushing through their scheduled work. Today’s food for thought: How do you use your contract to reduce your litigation burden?
Your contract should do many things. It should discuss the scope of work, scheduling of work, quality of work, coverage for liabilities and conditions and timeliness for payment. But often overlooked is how your contract can lend to dispute resolution.
Commonly, you will see a simple provision that covers governing law, venue for disputes and the awarding of attorneys’ fees. But you can do better. Remember, a contract is enforced to the maximum extent possible in Washington state.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
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.
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Faulty Workmanship may be an Occurrence in Indiana CGL Policies
April 7, 2011 — April 7, 2011 Beverley BevenFlorez - Construction Defect Journal
The question of whether construction defects can be an occurrence in Commercial General Liabilities (CGL) policies continues to find mixed answers. The United States District Court in Indiana denied the Plaintiff’s Motion for Summary Judgment in the case of General Casualty Insurance v. Compton Construction Co., Inc. and Mary Ann Zubak stating that faulty workmanship can be an occurrence in CGL policies.
Judge Theresa L. Springmann cited Sheehan Construction Co., et al. v. Continental Casualty Co., et al. for her decision, ”The Indiana Supreme Court reversed summary judgment, which had been granted in favor of the insurer in Sheehan, holding that faulty workmanship can constitute an ‘accident’ under a CGL policy, which means any damage would have been caused by an ‘occurrence’ triggering the insurance policy’s coverage provisions. The Indiana Supreme Court also held that, under identically-worded policy exclusion terms that are at issue in this case, defective subcontractor work could provide the basis for a claim under a CGL policy.”
As we reported on April 1st, South Carolina’s legislature is currently working on bill S-431 that would change the wording of CGL policies in their state to include construction defects. Ray Farmer, Southwest region vice president of the American Insurance Association spoke out against the bill. “CGL policies were never meant to cover faulty workmanship by the contractor,” he said. “The bill’s supplementary and erroneous liability provisions will only serve to unnecessarily impact construction costs in South Carolina.”
Read the Opinion and order...
Read the court’s ruling...
Read the American Insurance Association statement...
Hawaii Building Codes to Stay in State Control
March 1, 2012 — CDJ Staff
The Hawaii State Senate voted down Senate Bill 2692. Had it been passed, the State Building Code Council would have been abolished and building codes would have become the responsibility of county governments. The bill was opposed by the Insurance Institute for Business and Home Safety. Their director of code development, Wanda Edwards said that the bill “would have undermined key components that are essential to an effective state building code regime.”
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Seven Tips to Manage Construction Defect Risk
July 10, 2012 — CDJ Staff
Jody T. Wright looks at “seven strategies being used around the country to identify, manage and mitigate your exposures” in a piece in Business Insurance. Wright, Senior VP, Construction Department Manager for Lockton Companies in Denver, gives seven simple steps from the perspective of a insurer.
His first step is to match your project to your insurance. He suggests keeping the riskier projects separate, noting that from an insurer’s point-of-view, “any project that creates a homeowners association carries a higher potential threat of future litigation.” This leads to his second point: you need to “determine what makes your liability insurer nervous.” In other words, talk with your insurer.
His third point suggests that builders look back and see if there is a pattern of problems that have lead to payouts from your insurer. Keep your insurer happier by making sure these areas don’t continue to be problems. Nor should you look for new problems. He suggests against leading in new technologies.
Three more points deal with being careful about with whom you associate. He tells builders to negotiate their contracts, avoiding clauses that would obligate a builder to “indemnify the owner for the negligent work of others that they did not control.” Avoid subcontractors “with loss patterns that might affect your project and reputation.” Builders should identify “owners with a pattern of suing contractors” adding that risk to the cost of the job. They should also identify “the most effective attorneys and expert witnesses” and get them involved before the litigation starts.
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Residential Construction Down in San Diego
September 13, 2012 — CDJ Staff
While new home construction is on the rise in some parts of the country, San Diego has seen a fall, comparing the first seven months of 2012 with the first seven months of 2011, dropping nine percent, according to an article in the San Diego Business Journal. The news isn’t all bad, since although July residential construction dropped sharply, nonresidential construction increased thirty-six percent.
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Construction Defect Journal Marks First Anniversary
January 6, 2012 — CDJ Staff
November 2011 marked the first anniversary of the Construction Defect Journal. During the first year our staff and contributors in the insurance and legal communities have compiled several hundred articles of interest to the construction defect and claims community.
Each of these articles are maintained in the CDJ archives, and are accessible at http://www.constructiondefectjournal.com/archives.html. Each story in the archives is listed in the order it was posted to the archives. Each story in the archives opens up in its own page, so you can easily locate topics and articles of interest.
If you’re new to Construction Defect Journal, or just want peruse past articles, please take a moment to visit the CDJ Archives page. Also please feel encouraged to submit your firm’s articles or legal publications of interest to the CD community at http://www.constructiondefectjournal.com/submitStory.html.
United States District Court Confirms That Insurers Can Be Held Liable Under The CCPA.
June 19, 2012 — Chad Johnson
In D.R. Horton, Inc.-Denver v. The Travelers Indem. Co. of Am., 10-CV-02826-WJM-KMT, 2012 WL 527204 (D. Colo. Feb. 16, 2012), the court was asked to rule on Travelers’[1] motion to dismiss D.R. Horton, Inc. ?Äì Denver’s (“DRH”) claim that Travelers violated the Colorado Consumer Protection Act (“CCPA”).
In the underlying construction defect case (“CD case”), DRH, as the developer and general contractor of a construction project, tendered the defense of the CD case to certain subcontractors and to Travelers as an insurer to those subcontractors. Travelers accepted the duty to defend DRH. DRH hired counsel to defend it, and the attorney fees and costs of suit were billed to Travelers. However, for a period of over five years, Travelers failed to actually pay any portion of the defense of DRH. Finally, on October 31, 2008, Travelers offered checks for payment of only 4% of the costs and fees incurred. DRH then returned the checks to Travelers and provided Travelers with authority to support its position that the amounts in Travelers’ checks were inadequate. Thereafter, Travelers dug its heels in, and resubmitted the same checks.
DRH was then forced to file a coverage action against Travelers for declaratory judgment, breach of contract, bad faith breach of insurance contract, and deceptive trade practices under the CCPA. In its motion to dismiss DRH’s CCPA claim, Travelers’ argued that DRH failed to plead specific facts that Travelers engaged in a deceptive trade practice under C.R.S. § 6-1-105, and DRH failed to plead sufficient facts showing that Travelers’ actions significantly affect the public ?Äì a necessary element of a CCPA claim.
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Reprinted courtesy of Chad Johnson, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Johnson can be contacted at johnson@hhmrlaw.com
Allowing the Use of a General Verdict Form in a Construction Defect Case Could Subject Your Client to Prejudgment Interest
August 2, 2012 — Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC
A recent opinion from the Colorado Court of Appeals is a cautionary tale concerning the calculation of pre-judgment interest. See Hendricks v. Allied Waste Transportation, Inc., 2012 WL 1881004 (Colo. App. 2012). The Hendricks sued Allied after one of its drivers backed into the corner of their home with an Allied garbage truck. At trial, a jury awarded the Hendricks $160,100 in damages. Although the jury was instructed on the cost of repairs, diminution in value, and non-economic damages, the parties agreed to a general verdict form that did not ask the jury to specify the types of damages awarded. The Hendricks sought to amend the judgment to include prejudgment interest and costs, which the trial court granted.
Allied appealed, arguing that the trial court erred by awarding the Hendricks prejudgment interest from the date their property was damaged. Id. at *7. The Colorado Court of Appeals found no error, and affirmed.
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Reprinted courtesy of Heather Anderson, Higgins, Hopkins, McLain & Roswell, LLC. Ms. Anderson can be contacted at anderson@hhmrlaw.com
Micropiles for bad soil: a Tarheel victory
March 14, 2011 — Original article by by Melissa Brumback on March 14, 2011
Despite foundation challenges, construction is almost complete on the expansion at University of North Carolina’s Kenan stadium. The project started with a deep foundation system from design-build contractor GeoStructures. Known as the Carolina Student-Athlete Center for Excellence, the addition was built on a parcel with a knotty mix of fill soils, subsurface boulders and varying depths to rock. To achieve uniform foundation support, GeoStructures designed a Micropile system (also known as a Mini pile system) which could be drilled into the variable ground conditions.
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Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl law.com.
Product Exclusion: The Big Reason Behind The Delay of LEED 2012
July 10, 2012 — Douglas Reiser, Builders Counsel
By now, you have probably heard that the USGBC has decided to delay implementation of its previously named “LEED 2012” rating system. What you might not know is exactly why this is happening. Rest assured that the decision was not made willy nilly ?Äì LEED 2012 had many industrial groups running for the hills.
I have spent the past few weeks reading a number of articles on the backlash. LEED 2012 was intended to create a seismic shift; it was not a mere update. A strict focus on reduction of chemicals, created mass panic that a large number of material providers’ products would essentially be banned from green projects ?Äì meaning most local, state and federal projects.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Toxic Drywall Not Covered Under Homeowner’s Policy
March 28, 2012 — CDJ Staff
The Duphuys of Baton Rouge Louisiana found themselves needing to argue both sides of an issue, according to the judge in Duphuy v. USAA Casualty Insurance Company. The Duphuys alleged that the drywall in their home “emits odorous gases that cause damage to air-condition and refrigerator coils, copper tubing, electrical wiring, computer wiring, and other household items.” Additionally, they reported damage to “their home’s insulation, trimwork, floors, cabinets, carpets, and other items” which they maintained were “covered under the ‘ensuing loss’ portion of their policy.”
Their insurer declined coverage, stating that the damages were not a “direct, physical loss,” and even if they were “four different exclusions independently exclude coverage, even if such loss occurred.” The policy excludes defective building materials, latent defects, pollutants, and corrosion damage. The court noted that “ambiguities in policy exclusions are construed to afford coverage to the insured.”
The court did determine that the Duphuys were not in “a situation where the plaintiffs caused the risk for which they now seek coverage.” The judge cited an earlier case, In re Chinese Drywall, “a case with substantially similar facts and construing the same policy” and in that case, “property damage” was determined to “include the loss of use of tangible property.” The court’s conclusion was that the Duphuys “suffered a direct, physical loss triggering coverage under their policy.”
Unfortunately for the Duphuys, at this point the judge noted that while they had a “direct, physical loss,” the exclusions put them “in the tough predicament of claiming the drywall is neither defective nor its off-gassing corrosive or a pollutant, but nonetheless damage-causing.”
In the earlier Chinese Drywall case, the judge found that “faulty and defective materials” “constitutes a physical thing tainted by imperfection or impairment.” The case “found the drywall served its intended purpose as a room divider and insulator but nonetheless qualified under the exclusion, analogizing the drywall to building components containing asbestos that courts have previously determined fit under the same exclusion.” In the current case, the judge concluded that the drywall was “outside the realm of coverage under the policy.”
The court also found that it had to apply the corrosion exclusion, noting that the plaintiffs tried to evade this by stating, “simplistically and somewhat disingenuously, that the damage is not caused by corrosion but by the drywall itself.” The plaintiffs are, however, parties to another Chinese drywall case, Payton v. Knauf Gips KG, in which “they directly alleged that ‘sulfides and other noxious gases, such as those emitted from [Chinese] drywall, cause corrosion and damage to personal property.’” As the court pointed out, the Duphuys could not claim in one case that the corrosion was caused by gases emitted by the drywall and in another claim it was the drywall itself. “They hope their more ambiguous allegations will be resolved in their favor and unlock the doors to discovery.”
The court quickly noted that “the remaining damage allegations are too vague and conclusory to construe” and permitted “exploration of the latent defect and pollution exclusions.”
The judge concluded that the plaintiffs did not provide sufficient facts to establish coverage under the ensuing loss provision, stating that the “plaintiffs must allege, at the very least, how the drywall causes damage to the trimwork, carpet, etc., not simply that it does so.” Given the court’s determinations in the case, the plaintiffs’ motion was dismissed.
Read the court’s decision…
Discovery Ordered in Nevada Construction Defect Lawsuit
August 16, 2012 — CDJ Staff
Gemstone LVS was sued by the Manhattan Homeowners Association in Las Vegas, after which Chartis Specialty Insurance informed Gemstone that they “had no duty to defend or indemnify Gemstone under the Commercial Umbrella Liability Policy.” Gemstone “asserts that at the time the Policy was purchased, it was understood that Chartis would provide insurance coverage for a construction defect lawsuit” and now seeks discovery “to prove Chartis’ bad faith purpose in drafting an illusory Policy.”
The opinion notes that “the Court conducted a preliminary peek at the pending motion for partial summary judgment and finds that Chartis has not made the strong showing necessary to support the requested stay.” Further, the court notes that “when ambiguity in the language of a policy exists, the court may consider not only the language of the policy but also the ‘intent of the parties, the subject matter of the policy, and the circumstances surrounding its issuance.’” The court concludes that “this type of discovery is relevant to understanding the intent of the parties, more specifically, whether it was understood that Chartis would provide insurance coverage given the construction defect lawsuit.”
Accordingly, the court denied Chartis’ motion for stay of discovery and established a schedule for discovery, expert designations, rebuttal expert designations, and other matters related to the trial.
Read the court’s decision…
Builder to Appeal Razing of Harmon Tower
August 2, 2012 — CDJ Staff
An attorney for Tutor Perini, George Ogilvie, has said that he will appeal to the state Supreme Court to stop Clark County District Court Judge Elizabeth Gonzalez’s ruling from taking effect. She has given the go-ahead to MGM Resorts and CityCenter to implode the building. Ogilvie described the demolition as “a do-over at Perini’s expense” in protesting Gonzalez’s order. Gonzalez has said that she will instruct jurors that the demolition was an admission that the building was badly built. Ogilvie says this is “allowing MGM to bury its mistakes.”
MGM claims that it is only following the directive of county safety officials. “When Clark County demanded that CityCenter abate the potential hazard created by faulty construction at the Harmon, we determined that demolition is the surest, safest and fasted way to do so.”
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Conspirators Bilked Homeowners in Nevada Construction Defect Claims
March 28, 2012 — CDJ Staff
Courthouse News has a summary of the current lawsuit over a Nevada conspiracy to defraud homeowners by taking control of homeowner boards and then providing inadequate repairs. Homeowners in eight Las Vegas area communities are involved in the suit, which claims that the conspirators purchased units in the communities and then transferred fractional interests to others to allow them to run for HOA board elections. The suit claims that David Amesbury and his firm helped manipulate the elections.
Once homeowner boards were controlled by the conspirators, Nancy Quon, the construction defect attorney whose recent death appears to be by suicide, handled the litigation against homebuilders. She would settle out of court, engaging Silver Lining Construction to “do very minor and superficial repairs” to the homes. The remainder of the money was split by the conspirators. The suit also notes that the construction defect claims were “frivolous,” and?in addition to the negative publicity?caused the homes to lose at least 5% of their value.
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