Ambitious Building Plans in Boston
November 18, 2011 — CDJ Staff
Although most are unlikely to change the Boston skyline, there are several large projects on the drawing boards. The site BostInnovation covered ten of them in a recent post. Downtown Boston will be the site of several of these large projects, including three towers to be added to the Christian Science Plaza, a 404-unit residential tower in the Theater District, and perhaps the largest of these projects, a 47-story tower to be built over Copley Plaza, which will tower over the adjacent buildings. None of the planned buildings will challenge the Hancock Tower’s 60 stories.
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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.
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There Is No Non-Delegable Duty on the Part of Residential Builders in Colorado
August 16, 2012 — Brady Iandiorio, Higgins, Hopkins, McLain & Roswell, LLC
Recently, in the Arapahoe District Court, the Honorable Michael Spear, issued an order holding that builders do not owe a non-delegable duty to homeowners. In Marx and Corken v. Alpert Custom Homes, Inc., et al., Judge Spear’s order came in response to plaintiffs’ motion for determination of question of law seeking a finding that the defendants owed a non-delegable duty to the plaintiffs and thus, to strike defendants’ designation of nonparties at fault. After being fully briefed, Judge Spear, found that such a non-delegable duty does not exist.
The case arises from the construction of a single-family residence in Aurora, Colorado. Through the construction and interaction with Alpert Custom Homes, Inc. and Scott and Sally Alpert, the defendants, Paul Marx and Kay Corken, the plaintiffs claimed they suffered various damages and losses, and brought claims for breach of contract-warranty, breach of contract, violation of the Colorado Consumer Protection Act, breaches of the implied covenant of good faith, promissory estoppel, willful breach of contract, and quantum meruit. During litigation, the defendants filed a designation of nonparties at fault, which named several parties which were at fault for the alleged construction defects at issue in the case.
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Reprinted courtesy of Brady Iandiorio, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Iandiorio can be contacted at iandiorio@hhmrlaw.com
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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Michigan Supreme Court Concludes No Statute of Repose on Breach of Contract
July 19, 2011 — CDJ Staff
Judge Marilyn Kelly of the Michigan Supreme Court has remanded the case of Miller-Davis Co. v. Ahrens Constr. Inc. (Mich., 2011) to the Court of Appeals, after determining that the court had improperly applied the statute of repose. She reversed their judgment, pending a new trial.
Ahrens Construction was a subcontractor, hired by Miller-Davis to build and install a natatorium room at a YMCA camp in Kalamazoo, Michigan. After its installation, the YMCA discovered a severe condensation problem, causing moisture to “rain” from the roof. The architect, testifying for Miller-Davis, alleged that the problems were due to improper installation by Ahrens. Ahrens claimed that the condensation problem was due to a design error.
When the roof was removed and reconstructed, the moisture problem ended. Ahrens argued that the alleged defects were caused by the removal. Further, in trial Ahrens raised the issue of the statute of repose. The court found in favor of Miller-Davis and did not address the statute of repose.
The Court of Appeals reversed the trial court, determining that the statute of repose had barred the suit. This rendered the other issues moot.
The Michigan Supreme concluded that the issue at hand was “a suit for breach of contract,” and that the Michigan statute of repose is limited to tort actions. They remanded the case to the Court of Appeals to address the issues that had been mooted by the application of the statute of repose.
Read the court’s decision…
Construction Worker Dies after Building Collapse
November 18, 2011 — CDJ Staff
A Bronx construction worker died when the pillars gave way in the basement where he was working. The two-story commercial building collapsed, burying Mr. Kebbeh under about six feet of rubble. The New York Times reports that firefighters dug him out with their bare hands. Mr. Kebbeh was taken to Jacobi Medical Center where he died. Two other construction workers escaped unharmed.
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Construction Company Head Pleads Guilty to Insurance and Tax Fraud
December 20, 2012 — CDJ Staff
The former head of Orients Construction Company and of Melrose Construciton Company, Herlindo Garcia-Merlos, has entered a guilty plea to charges that the gave false informoation to his insurer, New Jersey Manufacturers Insurance Group, for more than three years in order to lower his workers compensation payments. Mr. Garcia-Merlos was able to underpay by more than $315,000 as a result of this deception.
Mr. Garcia-Merlos additionally failed to file tax returns for his companies and underreported his wages on his own tax returns. The State of New Jersey is seeking an eight-year prison term and restitution of more than $400,000.
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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…
Badly Constructed Masonry Walls Not an Occurrence in Arkansas Law
May 10, 2012 — CDJ Staff
The US District Court for Maryland has granted a summary judgment in the case Konover Construction Corp. v. ATC Associates to Massachusetts Bay Insurance Company and denied a request for dismissal from ACT. Konover (KBE) was contracted by Wal-Mart to build a Wal-Mart store and a Sam’s Club in Port Covington, Maryland. Superus, Inc. was hired by KBE to build the masonry walls. Superus purchased a policy from Massachusetts Bay Insurance which named KBE as an additional insured. Wal-Mart hired ATC Associates to independently test and inspect the concrete structural steel, and masonry.
After the building was in use, a large crack appeared which was attributed a latent construction defect. Other cracks were discovered. Upon investigation, it was discovered that there were “voids or foam in the concrete block surrounding the reinforcing steel that should have been filled with grout,” and in some cases, “reinforcing steel was missing or not installed in accordance with the specifications.” KBE paid for the repair and remediation and Wal-Mart assigned all rights and interests against ATC to KBE.
KBE filed suit against ATC. ATC called for dismissal on the grounds that Wal-Mart had no claims as the problems had been remediated. Wal-Mart then provided KBE with additional agreements to give them enforceable rights against ATC and Superus. KBE filed a fourteen claims against ATC, Superus, and Massachusetts Bay. In the current case, Massachusetts Bay sought summary judgment and ATC sought dismissal of all claims against it.
Massachusetts Bay claims that they need not indemnify Superus, as “there is no evidence adequate to establish that Superus’ defective work caused any collateral and/or resulting damage that was not subject to an Impaired Property exclusion, and that, in any event, no damage occurred during the policy period.”
As Wal-Mart is headquarted in Arkansas, certain contracts were under Arkansas law. Under the Arkansas courts, “defective workmanship, standing alone and resulting in damages only to the work product itself, is not an ‘occurrence.’” The court determined that collateral or resultant damage would be covered. The court found that “it is clear under Arkansas law, and the parties appear to agree, that Massachusetts Bay is not obligated to indemnify KBE for any repairs to the masonry walls themselves, including any cracks or gaps in the walls.” The court also found that “there is no evidence adequate to prove that any allegedly resultant property damage was caused by Superus’ faulty construction of the walls.” The court also noted that “if the building code violation and structural integrity problem were ‘property damage,’ insurance coverage would be barred by the Impaired Property Exclusion.” Based on these findings, the court concluded that Massachusetts Bay is entitled to summary judgment.
While the court dismissed the case against Massachusetts Bay, the court declined ATC’s motion to dismiss. The court noted that ACT’s alleged negligence in conducting inspections “created only a risk of economic loss for KBE.” Although hired by Wal-Mart, ATC “transmitted its daily testing and inspection reports of the Wal-Mart and Sam’s Club projects directly to KBE.” The court found that “KBE has made a plausible claim.”
ATC also claimed that KBE contributed to the negligence due to the negligence of its subcontractor. The court concluded that it was plausible that “ATC will not be able to carry its burden of proving KBE was contributorily negligent.” The court was less sanguine about KBE’s fraud claim, but though it “may not now appear likely to have merit, it is above the ‘plausibility’ line.”
In conclusion, KBE may not continue its case against Massachusetts Bay. However, the judge allowed the other proceedings to continue.
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.
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Reprinted courtesy of CDCoverage.com
Construction Firm Charged for Creating “Hail” Damage
June 19, 2012 — CDJ Staff
A Burlington County, Pennsylvania judge has sentenced a firm and its employee for insurance fraud. In the scam, representatives of Precision Builders visited homes after hailstorms and advised homeowners that they could get new roofs and sidings covered by insurance. Many of the homeowners noted that they had not noticed any hail damage.
After homeowners filed claims, employees of Precision Builders would visit the homes and damage the roofs and sidings consistent with the adjusters’ reports.
One employee of Precision Builders, Dominik Sadowski, has pleaded guilty to third-degree insurance fraud. He has been sentenced to four years probation and 100 hours of community service. Another defendant, Marcin Gradziel, is alleged to have visited and damaged properties. He has plead not guilty.
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The King of Construction Defect Scams
June 19, 2012 — CDJ Staff
Echoing Businessweek, the Las Vegas Sun agrees that the Nevada HOA scandal is the “king of all Vegas real estate scams,” and says that the Nevada legislatures should take action. The Sun notes that the case involves only 12 out of 2,356 HOAs in Southern Nevada.
To date, 25 people have plead guilty in the case. At the center were an attorney and contractor who allegedly referred work to each other. To enable this, they assembled a wider conspiracy of people who enriched by the process. In the words of the Sun, those involved “upended the concept of a ‘common interest’ community.”
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Insurer Rejects Claim on Dolphin Towers
July 22, 2011 — CDJ Staff
A year after residents were forced to leave Dolphin Towers in Sarasota, Florida because of concrete problems, some residents are defaulting on their obligations, abandoning their units. In June, the building’s insurer, Great American, rejected a claim, arguing that the building’s problems were due to latent defects, not covered under the policy. Repair estimates, previously put at $8.2 million, have now risen to $11.5 million. If homeowners cover this cost, it would require an assessment of about $100,000 for each unit.
About thirty owners are in arrears on dues and fees. Charlotte Ryan, the president of the Dolphin Tower board, wrote to owners, that “the board will have no choice but to lien your property and pursue foreclosure if you do nothing to bring your delinquencies up to date.” However, as homeowners default, the funding for repairs is imperiled. The board has already spent more than $500,000 on shoring up the building and hiring consultants. Their lawyers, on the other hand, are working on a contingency basis.
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Environment Decision May Expand Construction Defect Claims
August 16, 2012 — CDJ Staff
Could a California Supreme Court decision on environmental claims have an effect on construction defect cases? Jonathan B. Sokol, a lawyer at Greenberg Glusker argues just that in a post on his firm’s blog. He notes that the California Supreme Court has held that “the ‘all sums” method of allocation applies in California” and that “an insurer cannot limit its liability to just the amount of loss that occurred in its particular policy period.” While his focus is on environmental cases, he says that “the decision could also potentially expand the scope of coverage for construction defect claims and other claims involving continuous and progressive property damage and bodily injury.
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Hospital Construction Firm Settles Defect Claim for $1.1 Million
September 13, 2012 — CDJ Staff
Law360 reports that Bovis Lend Lease has settled claims of $10 million in damages for $1.1 million. Bovis was building three annexes to a hospital in Oklahoma. The hospital alleged that a faulty moisture barrier system lead to damage throughout the hospital.
Bovis is a division of the Lend Lease Group, a multinational construction firm based Sydney, Australia.
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Flooded Courtroom May be Due to Construction Defect
September 1, 2011 — CDJ Staff
The General Services Administration wouldn’t pin it on a construction defect, but a spokesperson said that a pipe that was misaligned during installation was the likely cause of a flood in the Thomas F. Eagleton US Courthouse on August 23. According to the St. Louis Dispatch, the burst pipe caused a 17-story waterfall in the courthouse, soaking ceilings and floors, and drenching the building’s contents.
The building was dedicated eleven years ago. During the nearly ten years before the building was complete, there were construction disputes and soil contamination issues.
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Ohio subcontractor work exception to the “your work” exclusion
August 11, 2011 — CDCoverage.com
In Mosser Construction, Inc. v. Travelers Indem. Co., No. 09-4449 (6th Cir. July 14, 2011)(unpublished), claimant project owner Port Clinton contracted with insured general contractor Mosser for the construction of a building. Following completion, Port Clinton sued Mosser for breach of contract seeking damages because of physical injury to the project occurring after completion resulting from defective backfill material that settled improperly.
Mosser’s CGL insurer Travelers denied a defense and Mosser filed suit against Travelers seeking a declaratory judgment. Mosser and Travelers filed cross-motions for summary judgment on the issue of whether the supplier of the backfill material?Gerken?qualified as a subcontractor for purposes of the subcontractor work exception to the “your work” exclusion—exclusion l.—for property damage to or arising out of Mosser’s completed work.  Mosser had purchased the backfill material from Gerken pursuant to a purchase order specifying that Gerken was to supply Mosser with an industry standard grade of backfill for use in the Port Clinton project.
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Reprinted courtesy of CDCoverage.com
El Paso Increases Surety Bond Requirement on Contractors
April 25, 2011 — April 25, 2011 Beverley BevenFlorez - Construction Defect Journal
The city of El Paso has recently increased surety bonds required of contractors from $10,000 to $50,000, according to the El Paso Times. Proponents of the increase believe it was necessary to protect homeowners from fly-by-night builders, while opponents argue that the increase will have an adverse effect on an industry in that is already suffering due to the economic slowdown.
Arguments for and against the increase have been flooding the blogosphere with their views. Christian Dorobantescu on the Small Business Entrepreneur Blog claims that “only about 15% of the city’s 2,500 contractors had been able to secure a higher bond to remain eligible for work after the new requirements were announced.” However, insurance companies have a different take. “From a surety broker standpoint, most contractors will be able qualify for the bond; some will just have to pay higher premium rates to obtain it,” a recent post on the Surety1 blog argues.
While the increased bond may help homeowners deal with construction defect claims, it is not clear what effect it will have on builders in El Paso.
Read more from the El Paso Times…
Read more from the Small Business Entrepreneur Blog…
Read more from the Surety1 Blog…
