No Coverage For Damage Caused by Chinese Drywall
October 28, 2011 — Tred Eyerley, Insurance Law Hawaii
The pollution exclusion barred coverage for alleged property damage and bodily injury in Evanston Ins. Co. v. Harbor Walk Dev., LLC, No. 2:10cv312 (E.D. Va. Sept. 9, 2011).
Homeowners sued the insured, Harbor Walk, in three lawsuits, alleging the Chinese drywall installed in their homes emitted sulfides and other noxious gases. This caused corrosion and damage to the air-conditioning and ventilation units, refrigeration coils, copper tubing, faucets, metal surfaces, electrical appliances and other personal items. The homeowners also alleged the compounds emitted by the drywall caused bodily injury, such as allergic reactions, headaches, etc.
Harbor Walk’s insurer, Evanston, filed for a declaratory judgment that the pollution exclusion precluded coverage.
Read the full story...
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Delaware “occurrence” and exclusions j(5) and j(6)
June 10, 2011 — CDCoverage.com
In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects. Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property
Read the full story…
Reprinted courtesy of CDCoverage.com
Contractors with Ties to Trustees Reaped Benefits from LA Community College Modernization Program
March 3, 2011 — Original reporting by Gale Holland, Michael Finnegan and Doug Smith, Los Angeles Times
In the latest installment of the “Billions To Spend” series of investigative reports focused on construction defects, management, and cost issues relevant to LACC’s Community College Modernization Projects, the LA Times examines the costs associated with the various layers of construction management and benefits that accrued to contractors with ties to LACC trustees.
The reporting by the Times is seemingly critical of the project’s utilization of “body shops” an industry term for companies that function as employers of record. The article segment published today cites a number of circumstances wherein their utilization appears to have escalated costs substantially.
“To gauge the cost of the staffing system, The Times reviewed thousands of pages of financial records from April 2007, when URS began managing the program, to July 2010. Reporters identified two dozen contractors serving as conduits for pay and benefits for employees they did not supervise.
At least 230 people were employed in this manner, at a total cost of about $40 million, the records show.
Approximately $18 million of the total was paid to the employees, according to the Times analysis. The remaining $22 million went to profit and overhead for contractors, the records indicate.
For employees on its own payroll, the district says that medical and other benefits increase compensation costs 40% above base salaries. So if the district had employed its construction staff directly, the total cost for the period studied would have been $25 million instead of $40 million, a savings of $15 million, The Times calculated.”
Read Full Story...
Construction Law: Unexpected, Fascinating, Bizarre
April 25, 2012 — CDJ Staff
Guy Randles offers an amusing set of odd construction law cases in the Daily Journal of Commerce, which he describes as “the unexpected, the fascinating and even the bizarre.” He noted that in one case “a whistleblower claimed he was terminated for reporting to the owner that the contractor’s painters had not applied the required coating thickness.” The whistleblower was the project manager and “was responsible for ensuring the proper coating thickness.”
A less amusing case was that of an architect who was arrested for manslaughter. Gerard Baker “told investigators that the considered the fireplaces to be merely decorative.” Randles notes that “the mansion’s fireplaces were built of wood framing and lined with combustible drywall.” Further, a “gas fireplace even vented into the house’s interior.” Building officials called the house “a death trap.” According to the LA police chief this may be the only case in which building defects lead to a manslaughter charge.
Read the full story…
Harmon Towers Case to Last into 2014
December 20, 2012 — CDJ Staff
Don’t expect a fast resolution to the Harmon Tower case in Las Vegas. The latest schedule sets trial for the construction defect claims in January 2014. Previously, these claims were going to be heard during the trial set to start in June 2013. Now the June trial will be over payment issues only.
Don’t expect the building to come down soon either. While CityCenter claims the building could come down in an earthquake, Judge Elizabeth Gonzalez had determined that as the structural testing was not random; its results cannot be extrapolated through the entire structure. As a result, CityCenter has elected to do more testing, holding off on demolishing the building. They are appealing Gonzalez’s order to the Nevada Supreme Court.
Read the full story…
Home Repair Firms Sued for Fraud
September 30, 2011 — CDJ Staff
The Illinois Attorney General has filed a lawsuit in Cook County Circuit Court alleging that two connected firms took money from homeowners and then failed to perform the contracted work. One of the three defendants, Chris Bidigare, was an owner of agent of both Fairway Construction and Maintenance Services, LLC, and Rock Construction Management, LLC.
In once case, according to the article on the OakPark Patch, one homeowner provided a $111,000 down payment, only to have the company cancel the job and refuse to return the money. One homeowner was told by Fairway that she should contact their insurance provider. The insurance provider told her that Fairway’s insurance had been cancelled due to non-payment.
The suit seeks to bar the three defendants from working in home repair in Illinois.
Read the full story…
Official Tried to Influence Judge against Shortchanged Subcontractor
February 10, 2012 — CDJ Staff
A contractor testified in the trial of former Cuyahoga County Commissioner Jimmy Dimora. According to Fox 8 in Cleveland, Ohio, Sean Newman, the president of Letter Perfect testified that his company was a subcontractor on the reconstruction of the locker rooms at the Cleveland Browns Stadium. Newman said his company was paid only $400,000 of their $650,000 bid. When Letter Perfect sued the contractor, D.A.S. Construction, Dimora called the judge to influence her to rule in favor of D.A.S.
The judge in the earlier case, Bridgett McCafferty, has been found guilty of lying to the FBI during their investigation and is serving a 14-month prison sentence.
Read the full story…
Florida “get to” costs do not constitute damages because of “property damage”
August 11, 2011 — CDCoverage.com
In Palm Beach Grading, Inc. v. Nautilus Ins. Co., No. 10-12821 (11th Cir. July 14, 2011), claimant general contractor Palm Beach Grading (?PBG?) subcontracted with insured A-1 for construction of a sewer line for the project.  A-1 abandoned its work and PBG hired another subcontractor to complete construction of the sewer line.  The new subcontractor discovered that A-1?s work was defective requiring repair and replacement of portions of the sewer line which also required the destruction and replacement of surrounding work.
Read the full story…
Reprinted courtesy of CDCoverage.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...
Nevada Assembly Bill Proposes Changes to Construction Defect Litigation
April 14, 2011 — April 14, 2011 Beverley BevenFlorez - Construction Defect Journal
Assemblyman John Oceguera has written a bill that would redefine the term Construction Defect, set statutory limitations, and force the prevailing party to pay for attorney’s fees. Assembly Bill 401 has been referred to the Committee on Judiciary.
Currently, the law in Nevada states that “a defect in the design, construction, manufacture, repair or landscaping of a new residence, of an alteration of or addition to an existing residence, or of an appurtenance, which is done in violation of law, including in violation of local codes or ordinances, is a constructional defect.” However, AB401 “provides that there is a rebuttable presumption that workmanship which exceeds the standards set forth in the applicable law, including any applicable local codes or ordinances, is not a constructional defect.”
The Nevada courts may award attorney fees to the prevailing party today. However, AB401 mandates that attorney fees must be awarded, and the exact award is to be determined by the Court. “(1) The court shall award to the prevailing party reasonable attorney’s fees, which must be an element of costs and awarded as costs; and (2) the amount of any attorney’s fees awarded must be determined by and approved by the court.”
AB401 also sets a three year statutory limit “for an action for damages for certain deficiencies, injury or wrongful death caused by a defect in construction if the defect is a result of willful misconduct or was fraudulently concealed.”
This Nevada bill is in the early stages of development.
Read the full story...
Oregon agreement to procure insurance, anti-indemnity statute, and self-insured retention
March 5, 2011 — By
CDCoverage.com, March 5, 2011
In Continental Casualty Ins. Co. v. Zurich American Ins. Co., No. 09-35484 (9th Cir. Oct. 28, 2010), general contractor TCR was sued by an employee of subcontractor Safeway for bodily injuries suffered while working on the project. In the subcontract, Safeway agreed to procure primary insurance providing coverage for TCR for liability arising out of Safeway’s negligence. Safeway’s CGL policy included a self-insured retention that had to be satisfied before the insurer had a duty to defend. TCR filed suit against Safeway alleging that
Read the full story... Reprinted courtesy of CDCoverage.com
Plaintiffs In Construction Defect Cases to Recover For Emotional Damages?
March 16, 2011 — March 16, 2011 - Construction Defect Journal Staff
A recent post to the Markusson, Green, Jarvis Blog reports on an important appeals decision which promises to impact construction defect litigation in Colorado.
The post provides analysis on the recovery of inconvenience damages. The focus of the piece is centered on Hildebrand v. New Vista Homes II, LLC, 08CA2645, 2010 WL 4492356 (Colo. Ct. App. Nov. 10, 2010), wherein it was held that " the plain language of Construction Defect Action Reform Act permits recovery of damages for inconvenience, and that the trial court did not err by allowing inconvenience damages to go to the jury".
According to the MGJ Blog "The Hildebrand decision is important because it provides Construction Defect Plaintiffs with a foothold for collecting emotional damages. While several questions of law remain as to who or under exactly what circumstances a Plaintiff may recover these types of damages, the Hildebrand case has clearly set forth that emotional damages may be considered as part of actual damages pursuant to CDARA."
Read Full Story...
Good and Bad News on Construction Employment
February 10, 2012 — CDJ Staff
The construction industry hit a two-year high in January, with 21,000 jobs added that month. The mild winter is assumed to have helped. According to the General Contractors of America, the construction industry currently employs about 5.57 million people. This is a 21 percent gain over January 2010. Ken Simonson, the chief economist of GCA, noted that “the unemployment rate in construction is still double that of the overall economy.” He said it was not currently clear if “the recent job growth reflects a sustained pickup or merely acceleration of homebuilding and highway projects that normally halt when the ground freezes in December and January.”
Stephen Sandherr, the chief executive officer of the GCA, said that the federal government had to make infrastructure funding a top priority. “Without adequate long-term funding for infrastructure, competitive tax rates and fewer costly regulatory hurdles, the construction industry may lose some of the jobs it gained in the last year.”
Read the full story…
School District Settles Construction Lawsuit
November 7, 2012 — CDJ Staff
The Franklin County, Pennsylvania Public Opinion reports that an area school is coming to an end with its construction lawsuit. The school district was sued by its contractors for a combined $1.4 million, which the school district withheld when the project was not completed on schedule. Lobar Inc. claimed that the district additionally owed interest and should pay attorney fees. The school claimed that only $1.15 million was due under the contract. Under the settlement, they will be paying $1.136 million.
Read the full story…
Louisiana Politicians Struggle on Construction Bills, Hospital Redevelopment
June 16, 2011 — CDJ Staff
Louisiana politicians are still working on a compromise in the state’s construction budget, as reported in the Times-Picayune. Rob Marrianneax, the chair of the Senate Revenue and Fiscal Affairs Committee, removed a $45 million request from Governor Bobby Jindal and added $4 million for projects that Jindal vetoed last year.
Two senators have formed competing plans to fund redevelopment construction for New Orleans’s Methodist Hospital. Mitch Landrieu, the mayor of New Orleans, hoped for $30 million dollars in state bonds. Senator Cynthia Willard-Lewis proposed an amendment that would supply $1.6 million, while Senator J.P. Morrell has an amendment that would supply $4 million.
Read the full story…
Arizona Court of Appeals Rules Issues Were Not Covered in Construction Defect Suit
December 9, 2011 — CDJ Staff
The Arizona Court of Appeals has ruled in the case of Peters v. Marque Homes. In this case, Walter Peters provided the land and funding for Marque Homes to build a luxury residence in Glendale, Arizona. By the terms of the “Joint Venture Agreement,” Peters provided the land and funding, while Marque would not charge Peters for overhead, profits, or supervision fees. The agreement specified that profits would be divided equally.
Two years later, Marque sued Peters claiming he had breached his obligations by refusing several offers for the home. Peters replied that Marque had “failed to complete the home so it is habitable to prospective purchasers.” Peters stated he had “retained an expert inspector who had identified numerous defects.” The court appointed a Special Commissioner to list the home for sale. Peters purchased the home with two stipulations ordered by the court. At this point, the earlier case was dismissed with prejudice.
Peters then sued Marque “asserting express and implied warranty claims arising out of alleged construction defects in the home.” Marque claimed that Peters’s claims were “precluded by the prior joint venture dispute.” The court granted Marque’s motion.
The appeals court reversed the lower court’s decision, determining that Peters’s claims were not precluded by the agreement. Although there had been a prior case between the two parties, warranty issues did not form a part of that case. “Peters never raised these allegations nor presented this evidence in support of any warranty claim.”
The court also noted that the “parties never agreed to preclude future warranty claims.” Marque and Peters “agreed in the stipulated sale order that ‘the sale of the property to a third party shall be “as is” with a 10-year structural warranty.’” The court noted that the agreement said nothing about one of the parties buying the house.
The appeals court left open a claim by Marque that there are no implied or express warranties available to Peters. They asked the Superior Court to address this.
Read the court’s decision…
Florida trigger
August 4, 2011 — CDCoverage.com
In Mid-Continent Casualty Co. v. Siena Home Corp., No. 5:08-CV-385-Oc-10GJK (M.D. Fla. July 8, 2011), insured residential real estate developer Siena was sued by homeowners seeking damages for moisture penetration property damage resulting from exterior wall construction defects. Siena’s CGL insurer Mid-Continent filed suit seeking a declaratory judgment of no duty to defend or indemnify in part on the basis that the alleged “property damage” did not manifest during the Mid-Continent policy period.
Read the full story…
Reprinted courtesy of CDCoverage.com
Ensuing Losses From Faulty Workmanship Must be Covered
May 10, 2012 — Tred Eyerly, Insurance Law Hawaii
Coverage for damages resulting from faulty workmanship in the construction of an apartment complex was at issue in The Bartram, LLC v. Landmark Am. Ins. Co., 2012 U.S. Dist. LEXIS 44535 (N.D. Fla. March 30, 2012).
The owner of the apartments, Bartram, had primary coverage and three layers of excess coverage. Each contract excluded loss from faulty workmanship. The policies provided, however, "if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage."
Bartram contended water intrusion occurred because of faulty workmanship, which caused damage to the buildings’ exterior and interior finishes, wood sheathing, framing, balcony systems, drywall ceilings and stucco walls. This damage was separate from the work needed to simply fix the faulty workmanship. Therefore, Bartram argued, the ensuing losses that resulted from the water intrusion was covered.
The insurer argued the ensuing loss exception was not applicable if the ensuing loss was directly related to the original excluded loss.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
