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    California Builders Right To Repair Current Law Summary:

    Current Law Summary: SB800 (codified as Civil Code §§895, et seq) is the most far-reaching, complex law regulating construction defect litigation, right to repair, warranty obligations and maintenance requirements transference in the country. In essence, to afford protection against frivolous lawsuits, builders shall do all the following:A homeowner is obligated to follow all reasonable maintenance obligations and schedules communicated in writing to the homeowner by the builder and product manufacturers, as well as commonly accepted maintenance practices. A failure by a homeowner to follow these obligations, schedules, and practices may subject the homeowner to the affirmative defenses.A builder, under the principles of comparative fault pertaining to affirmative defenses, may be excused, in whole or in part, from any obligation, damage, loss, or liability if the builder can demonstrate any of the following affirmative defenses in response to a claimed violation:


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    Building Industry Association Southern California - Desert Chapter
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    Palm Desert, CA 92211
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    Building Industry Association Southern California - Riverside County Chapter
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    3891 11th St Ste 312
    Riverside, CA 92501


    Building Industry Association Southern California
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    Irvine, CA 92614
    http://www.biasc.org

    Building Industry Association Southern California - Orange County Chapter
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    Building Industry Association Southern California - Baldy View Chapter
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    http://www.biabuild.com

    Building Industry Association Southern California - LA/Ventura Chapter
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    Construction Expert Witness News and Information
    For Anaheim California

    Failure to Meet Code Case Remanded to Lower Court for Attorney Fees

    Park District Sues over Leaky Roof

    Ohio Adopts Energy-Efficient Building Code

    Colorado statutory “property damage” caused by an “occurrence”

    Another Guilty Plea In Nevada Construction Defect Fraud Case

    Faulty Workmanship Exclusion Does Not Bar Coverage

    Nevada Budget Remains at Impasse over Construction Defect Law

    Senate Committee Approves Military Construction Funds

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

    Construction Defect Litigation at San Diego’s Alicante Condominiums?

    Ensuing Loss Provision Does Not Salvage Coverage

    Washington Court of Appeals Upholds Standard of Repose in Fruit Warehouse Case

    Condominium Communities Must Complete Construction Defect Repairs, Says FHA

    Construction Defect Case Not Over, Despite Summary Judgment

    Tacoma Construction Site Uncovers Gravestones

    Homebuilders Go Green in Response to Homebuyer Demand

    Death of Construction Defect Lawyer Ruled a Suicide

    Damage During Roof Repairs Account for Three Occurrences

    Dust Infiltration Due to Construction Defect Excluded from Policy

    Eleventh Circuit Asks Georgia Supreme Court if Construction Defects Are Caused by an "Occurrence"

    Faulty Workmanship may be an Occurrence in Indiana CGL Policies

    Supreme Court of New York Denies Motion in all but One Cause of Action in Kikirov v. 355 Realty Assoc., et al.

    Water Damage Covered Under Efficient Proximate Cause Doctrine

    Celebrities Lose Case in Construction Defect Arbitration

    Construction Defect Claim Did Not Harm Homeowner, Court Rules

    Building Boom Leads to Construction Defect Cases

    Know the Minnesota Statute of Limitations for Construction Defect Claims

    California insured’s duty to cooperate and insurer’s right to select defense counsel

    Australian Group Seeks Stronger Codes to Combat Dangerous Defects

    Contract Not So Clear in South Carolina Construction Defect Case

    No “Special Relationship” in Oregon Construction Defect Claim

    Tucson Officials to Discuss Construction Defect Claim

    Allowing The Use Of a General Verdict Form in a Construction Defect Case Could Subject Your Client to Prejudgment Interest

    No Resulting Loss From Deck Collapsing Due to Rot

    Insurer Not Liable for Construction Defect Revealed by Woodpecker

    Condo Buyers Seek to Void Sale over Construction Defect Lawsuit

    Hovnanian Sees Second-Quarter Profit, Points to Recovery

    Defective Drains Covered Despite Water Intrusion Exclusion

    Faulty Workmanship Causing Damage to Other Property Covered as Construction Defect

    Mobile Home Owners Not a Class in Drainage Lawsuit

    Judge Concludes Drywall Manufacturer Sold in Florida

    New Safety Standards Issued by ASSE and ANSI

    Colorado Statutes of Limitations and Repose, A First Step in Construction Defect Litigation

    Illinois Court Determines Insurer Must Defend Property Damage Caused by Faulty Workmanship

    Contractor Manslaughter? Safety Shortcuts Are Not Worth It

    Water District Denied New Trial in Construction Defect Claim

    West Hollywood Building: Historic Building May Be Defective

    Tampa Condo Owners Allege Defects

    Court Rules on a Long List of Motions in Illinois National Insurance Co v Nordic PCL

    Arizona Homeowners Must Give Notice of Construction Defect Claims

    Pier Fire Started by Welders

    In Oregon Construction Defect Claims, “Contract Is (Still) King”

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

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

    Court Voids Settlement Agreement in Construction Defect Case

    Eighth Circuit Remands to Determine Applicability of Collapse Exclusion

    Court finds subcontractor responsible for defending claim

    Liability policy covers negligent construction: GA high court

    Insurance Company Prevails in “Chinese Drywall” Case

    Statute of Repose Dependant on When Subcontractors Finished

    Texas Court of Appeals Conditionally Grant Petition for Writ of Mandamus to Anderson

    Florida “get to” costs do not constitute damages because of “property damage”

    Construction Workers Face Dangers on the Job

    Late Filing Contractor Barred from Involving Subcontractors in Construction Defect Claim

    Construction Case Alert: Appellate Court Confirms Engineer’s Duty to Defend Developer Arises Upon Tender of Indemnity Claim

    Construction Defect Destroys Home, Forty Years Later

    Another Guilty Plea in Las Vegas HOA Scandal

    A Performance-Based Energy Code in Seattle: Will It Save Existing Buildings?

    Partial Settlement in DeKalb Construction Management Case

    Seller Cannot Compel Arbitration for Its Role in Construction Defect Case<

    Ohio subcontractor work exception to the “your work” exclusion

    Fourteen More Guilty Pleas in Las Vegas Construction Defect Scam

    Insurer Must Defend Claims for Diminution in Value of Damaged Property

    Preventing Costly Litigation Through Your Construction Contract

    School District Marks End of Construction Project by Hiring Lawyers

    Contractors Admit Involvement in Kickbacks

    Construction on the Rise in Denver

    District Court Awards Summary Judgment to Insurance Firm in Framing Case

    Continuous Trigger of Coverage Adopted for Loss Under First Party Policy

    Defective Shingle Claims Valid Despite Bankruptcy

    Wisconsin “property damage” caused by an “occurrence.”

    Nevada Senate Rejects Construction Defect Bill

    General Contractors Must Plan to Limit Liability for Subcontractor Injury

    Florida Property Bill Passes Economic Affairs Committee with Amendments

    Seven Tips to Manage Construction Defect Risk

    Save A Legal Fee? Sometimes You Better Talk With Your Construction Attorney

    Construction Law Client Alert: California Is One Step Closer to Prohibiting Type I Indemnity Agreements In Private Commercial Projects

    Insurers Reacting to Massachusetts Tornadoes

    Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit

    A Call to Washington: Online Permitting Saves Money and the Environment
    Corporate Profile

    ANAHEIM CALIFORNIA CONSTRUCTION EXPERT WITNESS
    DIRECTORY AND CAPABILITIES

    The Anaheim, California Construction Expert Witness Group at BHA, leverages from the experience gained through more than 5,500 construction related expert witness designations encompassing a wide spectrum of construction related disputes. Drawing from this considerable body of experience, BHA provides construction related trial support and expert services to Anaheim's most recognized construction litigation practitioners, commercial general liability carriers, owners, construction practice groups, as well as a variety of state and local government agencies.

    Construction Expert Witness News & Info
    Anaheim, California

    Homeowner may pursue negligence claim for construction defect, Oregon Supreme Court holds

    March 1, 2011 — Original Story by Lori Bauman, Ater Wynne LLP, Northwest Business Litigation Blog

    In Abraham v. T. Henry, Oregon’s court of appeals held that a Oregon’s court of appeals holds that a homeowner may sue builder for common law negligence absent a contractual provision that forecloses such a claim. Plaintiff homeowners hired defendant contractors to build a house. When plaintiffs discovered defects in the construction years later, they sued for negligence.

    The Court of Appeals held that the parties’ contractual relationship did not prevent a negligence claim, and that plaintiffs were entitled to pursue a negligence per se claim based on a violation of the Oregon Building Code.

    The Supreme Court affirmed, but on a somewhat different basis. First, according to the Court, a construction defect claim concerns damage to property — and not mere economic losses — and thus is not barred by the economic loss doctrine. Second, the existence

    Read Full Story...


    Window Manufacturer Weathers Recession by Diversifying

    October 28, 2011 — CDJ Staff

    American Openings, a Tuscon-based window manufacturer, has responded to the loss of its sales of windows for new home construction by moving into new markets. The Arizona Daily Star reports that American Openings used to see providing windows for new homes as half their business. Now, Tom Regina, the founder and president says “single family is just dead.”

    Their products are insulated windows, designed to comply with Energy Star standards. Without new homes being built, now the company is focusing on homeowners and building owners looking for more energy efficient windows. As the windows have two or three panes and special coatings, homeowners using them are eligible for tax credits.

    One of their newer products combines their energy-saving coatings with “break resistant” glass. The article notes that the windows repel “all but the most determined burglars.” However, the company is still awaiting special equipment to cut the glass.

    Read the full story...


    The Hidden Dangers of Construction Defect Litigation

    March 28, 2012 — David M. McLain, Colorado Construction Litigation

    David M. McLain, writing at Colorado Construction Litigation, has an interesting blog post republishing his article in Common Interests magazine, the monthly periodical of the Rocky Mountain Chapter of the Community Associations Institute. In his article, he touches on a number of pitfalls in construction defect litigation, including the potential conflicts of interests facing HOAs. He also considers the problems homeowners can face, including both “strong-arm tactics” taken by attorneys to compel homeowners to join the lawsuit, or situations in which the interests of the HOA do not match those of the homeowners. He writes:

    There is also a conflict of interest with individual owners who attempt to opt out of the case. This can lead to shocking strong-arm tactics on the part of plaintiffs’ attorneys. In one instance, a plaintiffs’ attorney sent a letter to an individual homeowner that stated that as a 1/58th owner of the common elements, if he refused to go along with the suit, and there was ultimately a finding in favor of the HOA which was in any way limited by his refusal to participate, he would be personally liable for 1/58th of the HOA’s total damages. In another instance, a different plaintiffs’ attorney sent a letter to a homeowner who wanted the builder to perform warranty repairs, informing the owner that if he let the builder perform any repairs, the attorney would bill the HOA according to the fee agreement entered by the HOA board (without knowledge or consent of non-board members) and that the HOA would assess the homeowner for that expense. These are just two examples of conflicts which may arise between the HOA board and individual homeowners when the HOA pursues CD cases.

    Another example of a conflict which will arise as a result of CD litigation occurs post-settlement. When an HOA settles for less than 100% of the amount necessary to fund all repairs outlined by its experts, plus attorneys’ fees and litigation costs, there will obviously be a shortfall in the amount necessary to fix the development. The HOA board must then choose to impose a special assessment to cover the shortfall or to make some, but not all, of the repairs outlined by its experts. In choosing the latter, the conflict arises with respect to which homes get fixed and which do not. In this situation, the HOA board has acted as the attorney-in-fact for the individual owners by bringing claims on their behalf, and has compromised those claims without their knowledge or consent.

    Read the full story…

    Reprinted courtesy of David M. McLain of Higgins, Hopkins, McClain & Roswell, LLC. Mr. McClain can be contacted at mclain@hhmrlaw.com.


    Bad Faith and a Partial Summary Judgment in Seattle Construction Defect Case

    February 10, 2012 — CDJ Staff

    The US District Court of Washington has issued a ruling in the case of Ledcor Industries v. Virginia Surety Company, Inc. Ledcor was the builder of a mixed-use real estate project in Seattle called the Adelaide Project. Ledcor purchased an insurance policy from Virginia Surety covering the project. After the completion of the project, Ledcor received complaints of construction defects from the homeowners, which they forwarded to Virginia Surety.

    Virginia Surety denied coverage on several grounds. Absent any lawsuit, Virginia claimed that there was “not yet any duty to defend or indemnify.” Further, as the policy commenced ten days after work on the project was substantially completed, Virginia cited a provision in the policy that excluded coverage for damage that occurred before the policy began. As problems included water intrusion, Virginia noted an exclusion for fungal damage. Finally, Virginia noted that it was not clear whether damage was due to Ledcor’s own actions.

    The homeowners sued over the construction defects. Ledcor settled these suits before trial. In this, they were defended by, and settlements were paid by American Home, another of Ledcor’s insurers. Ledcor claims that Virginia Surety acted in bad faith by denying coverage and by its failure to investigate the ongoing nature of the work at the project.

    The judge determined that Virginia Surety acted in bad faith when it invoked the fungus exclusion. Virginia noted that fungal damage “‘would have been’ referenced in the list of construction defects,” however, the HOAs claimed only “water stains” and “water damage,” and made no mention of mold or fungus. The court found that Virginia Surety “was not entitled to deny coverage simply because it may have suspected that mold or fungus damage existed.” The court noted that further proceedings would be needed to determine what portion of the settlement Virginia is obligated to pay.

    The court found that there were matters of fact to be determined on the further issues in the case. The judge wrote that although Virginia acted in bad faith in invoking the fungus exclusion, it still had to be determined if they were in breach of contract by failing to defend Ledcor. Ledcor still needs to show that the damages claimed by the HOA were due to work actually covered by Virginia Surety.

    Ledcor made an additional claim that Virginia Surety violated Washington’s laws concerning the insurance industry. Here, the court noted that the improper exclusion for fungus issues “constitutes a per se unfair trade practice.” Six other claims were made under this law. The court found that Virginia Surety did not misrepresent “pertinent facts or insurance policy provisions.” It also issued its denial letter promptly, satisfying the fifth provision. However, Virginia Surety did violate the second provision, in that it failed “to acknowledge and act reasonably promptly upon communications with respect to claims.” Two other issues could not be determined.

    Judge Martinez’s decision granted a summary judgment to Ledcor on the issue of bad faith. An additional summary judgment was granted that Virginia Surety violated Washington’s Insurance Fair Conduct Act. Judge Martinez did not grant summary judgment on any of the other issues Ledcor raised.

    Read the court’s decision…


    Colorado Court of Appeals Rejects Retroactive Application of C.R.S. § 13-20-808.

    April 25, 2012 — Chad W. Johnson, Higgins, Hopkins, McClain & Roswell, LLC

    In TCD, Inc. v. American Family Mutual Insurance Company, TCD appealed the district court’s summary judgment ruling in favor of American Family. TCD, Inc. v. American Family Mutual Insurance Company Colo. App. No. 11CA1046 (April 12, 2012). TCD was the general contractor on a project to construct a building for Frisco General Gateway Center, LLC (“Gateway”). TCD subcontracted with a roofer named Petra Roofing and Remodeling Company (“Petra”) to performing the roofing work for the building. The subcontract required Petra to defend and indemnify TCD and to name TCD as an additional insured under its CGL policy. American Family issued a CGL policy to Petra that named TCD as an additional insured from 2006-2007.

    TCD filed suit against Gateway seeking payment for its work at the project. Gateway counterclaimed against TCD for breach of contract, negligence, and violation of the CCPA. TCD demanded that American Family defend it from the counterclaims pursuant to Petra’s policies. American Family denied coverage and a separate coverage suit ensued. At the trial court level, the court entered summary judgment for American Family because the counterclaims of Gateway did not trigger the duty to defend or indemnify TCD as an additional insured.

    On appeal, TCD argued that: 1) the counterclaims raise a genuine issue of material fact regarding American Family’s duty to defend; 2) the court should hear evidence beyond the four corners of the complaint; and, 3) the court should apply C.R.S. § 13-20-808 retroactively.

    Read the full story…

    Reprinted courtesy of Chad W. Johnson of Higgins, Hopkins, McClain & Roswell, LLC. Mr. Johnson can be contacted at johnson@hhmrlaw.com.


    Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit

    September 9, 2011 — CDJ Staff

    The Alabama Court of Civil Appeals has upheld a summary judgment in the case of Franklin v. Mitchell. Walter Mitchell, doing business as Southern Classic Construction built a new home for the Franklins. The Franklins moved into the home in October 2001. In April 2006 they discovered sagging floors in both the bathroom and kitchen. They contacted Mitchell who suggested the flooring might be defective. The Franklins spent eight months attempting to contact the flooring manufacturer.

    In March 2007, the Franklins had the home inspected. The sagging was determined to be due to a loss of strength in the decking because of condensation from the air conditioning system. Air returns were not properly sealed and drawing moisture into the structure. There was mold on the decking and floor joints.

    When Mitchell was contacted by the Franklins, he told them his one-year warranty had expired but had the HVAC subcontractor, Southern Mechanical Heating & Air (owned by Mitchell’s father, Jim Mitchell), look at the situation. SMHA replaced and braced subfloors. Later, they entered the crawl space to tape ducts, seal the air return, and insulate the air vent housing. The Franklins were not satisfied with the repairs, as not all the ducts were taped, nor were the air vent housings insulated.

    Franklin complained to Walter Mitchell who again cited his one-year warranty. Jim Mitchell said he would not report complaints to his insurer, stating that the repairs were unnecessary, that the work had been done correctly in the first place, and it was only done at the request of Walter Mitchell.

    In February 2009, the Franklins sued Walker Mitchell. Mitchell denied the claims, citing in part the statute of limitations. Mitchell also filed complaints against three subcontractors, including his father’s firm. Mitchell received a summary judgment as the case started after Alabama’s six-year statute of limitations.

    The appeals court rejected the Franklin’s argument that the claim of damage did not start until they were aware it was due to a construction defect. The court noted that as Walter Mitchell was licensed as a “residential home builder, the statute the Franklins cite did not apply, as it concerns architects, engineers, and licensed general contactors.”

    Nor did they feel that Mitchells’ claim that his warranty had expired were sufficient to override the statute of limitations, quoting an earlier case, “Vague assurances do not amount to an affirmative inducement to delay filing suit.” Their claim of subsequent negligent repairs was rejected because Mitchell did not direct the specific actions taken by his father’s firm.

    Read the court’s decision…


    Homeowner Loses Suit against Architect and Contractor of Resold Home

    June 14, 2011 — CDJ Staff

    The California Court of Appeals in the case of Kizor v. Architects ruled that Mr. Kizor could not make construction defect claims against the architect and contractor of his home, as the defects had caused significant damage to the former owners, and it was they, not Kizor, who could have asserted those claims.

    The background of the case was that John and Miranda Redig hired BRU Architects to design a home. During construction in 2000, they wrote to the roofing supplier complaining about leaks. The leaks were caulked, but the roof continued leaking during rains. The Redigs sold their house to Kizor in 2002, with an addendum to the sale contract protecting themselves from liability for further problems with the roof. “Seller has no responsibility for the condition of the roof and stucco and buyer absolves seller of any liability in connection therewith.”

    In 2006, Kizor sued the architects, contractor, and subcontractor. The defendants moved for summary judgment which was granted. Kizor appealed, and in this current court case, appeal was denied.

    Read the court’s decision


    Australian Developer Denies Building Problems Due to Construction Defects

    June 15, 2011 — CDJ Staff

    The Sunland Group, the developer, is objecting to claims that it is responsible for corrosion damage in a residential building in Gold Coast, Australia, as reported in the Courier & Mail. Residents of Q1, the world’s tallest residential tower, are suing the developer, claiming that defects and corrosion “compromise the long-term durability and appearance of” the six-year-old building.

    The developer has not only denied that there are defects in the building, but has also stated that the construction contract “did not warrant that the construction would be defects-free.” Sunland claimed that corrosion was due to the homeowners association having “failed to carry out the maintenance requirements.”

    Repair of the building is expected to cost millions of dollars. Sunland denies that it should pay any of that.

    Read the full story…


    New OSHA Fall Rules to Start Early in Minnesota

    June 14, 2011 — CDJ Staff

    Minnesota has elected to implement the new OSHA rules concerning fall prevention in residential construction on June 20, well before OSHA’s September 15 deadline. Brian Johnson, reporting in Finance and Commerce, quotes Pam Perri, the executive vice president of the Builders Association of Minnesota, “this is the worst time to implement a new rule.” Ms. Perri notes “In Minnesota, education time for the residential construction industry is between November and March 1, not in the middle of the construction season.”

    Mike Swanson of Rottlund Homes estimated that the new regulations would add between $200 to $500 to the cost of a house and that he felt the current safety regulations were adequate. OSHA officials are quoted that there continues “to be a high number of fall-related deaths in construction.”

    Read the fully story…


    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.


    Anti-Concurrent Causation Clause Bars Coverage for Landslide and Water Leak

    June 19, 2012 — Tred Eyerly, Insurance Law Hawaii

    The insured unsuccessfully attempted to get around the policy’s anti-concurrent causation clause by arguing a covered cause of loss was a contributing factor. See Stor/Gard, Inc. v. Strathmore Ins. Co., 2012 U.S. Dist. LEXIS 63217 (D. Mass. May 4, 2012).

    A building at the insured’s storage facility was damaged when heavy rain caused a mass of soil to slide down a slope, causing soil and a retaining wall to fall on the building. The accident caused a partial collapse of the building. The insurer hired two soil engineers, each of whom concluded that a landslide caused the accident. The reports also noted, however, that a leak from the property’s drainage system resulted in a very small percentage of water infiltrating the ground.

    The insurer denied coverage based upon an exclusion for landslides.

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

    Read the full story…


    US Courts in Nevada Busy with Yellow Brass

    August 2, 2012 — CDJ Staff

    Judge Robert C. Jones, the chief judge of the United States District Court of Nevada, and Judge Peggy A. Leen, a magistrate judge with the same court, have issued orders in cases involving allegations of high-zinc yellow brass plumbing components. Judge Jones issued orders on Waterfall Homeowners Association v. Viega, Inc. and Greystone Nevada, LLC v. Anthem Highlands Community Association on July 9, 2012. Judge Leen issued orders on Southern Terrace Homeowners Association v. Viega, Inc. on July 10, and The Seasons Homeowners Association, Inc. v. Richmond American Homes of Nevada, Inc. on July 19.

    Chief Judge Jones held an omnibus hearing on Waterfall v. Viega on June 12. During that hearing “Chief Judge Jones had already agreed that the claims against the product manufacturers should be be severed from the majority of the other claims and that discovery should proceed on different tracks.” Judge Leen ordered that the Southern Terrace claims be referred to Chief Judge Jones to determine if it should be consolidated with other yellow brass cases.

    Chief Judge Jones’s decision in Greystone Nevada rests on issues of whether the affected homeowners had signed arbitration agreements. The judge found that the “Defendant’s claims that the seven homeowners they have identified are subsequent purchasers who need not arbitrate with Greystone is definitively refuted by the evidence.”

    Judge Leen cites the Greystone decision in her ruling on Seasons Homeowners Association v. Richmond American Homes of Nevada. Richmond seeks to compel individual arbitration, stating that “the arbitration clause used singular rather than plural terms, and therefore, class arbitration was foreclosed.” Judge Leen determined that “under Nevada law, a homeowners association has statutory authority to represent homeowners associations in these types of actions. She did, however, accept Richmond’s argument that they could compel arbitration.

    The Waterfall order involves an attempt by two homeowners associations to seek a class action against seventeen defendants, the first twelve of whom are described as “the Viega Defendants” and “the Uponor Defendants.” Chief Judge Jones notes that “many of these Defendants have been sued in identical class actions by the same law firms, but with different named defendants.” The homeowner association seek to “represent their own 998 members directly but also wish to represent up to 10,000 homeowner associations representing up to 250,000 similarly situated homeowner members throughout the Las Vega area via this class action.”

    The judge has denied the Viega Defendants’ attempt to deny class certification, noting that the plaintiffs “argue that they intend to argue for class certification under Rule 23(b)(3). He also denied the motions by the two groups of the Viega Defendants. The U.S. Viega Defendants sought to be dismissed from the case for a variety of reasons. The judge noted of the claim that the plaintiffs had no injury of fact and are not alleging actual damage is contradicted by the allegations of actual damage made by the plaintiffs. ”They have alleged that the parts are defective and have already begun to corrode in at least a few sample circumstances, even if they have not yet failed.” To the argument that there re not particular claims made against defendants, the judge notes, “it is clear from the Complaint which Defendants are alleged to have manufactured and sold which brands of allegedly defective products, and which Defendants are alleged to have installed them.”

    The German Viega firms also sought to be dismissed from the suit, noting that “they have no property, employees, accounts, advertisements, etc. in Nevada and have not sold any products in Nevada.” However, the judge notes that “at least Waterfall, and perhaps Red Bluff, was still under construction when Viega, Inc. became the sole shareholder of Vanguard Industries, Inc.”

    Finally, both of Chief Judge Jones’s rulings cite a related case in the U.S. District Court for the District of Minnesota involving a class action settlement for those with F1807 systems. He notes in both these cases that “Plaintiffs disclaimed any claims based upon F1807 components.”

    Read the courts' decisions…

    Waterfall Homeowners Association v. Viega, Inc.

    Greystone Nevada, LLC v. Anthem Highlands Community Association

    Southern Terrace Homeowners Association v. Viega, Inc.

    The Seasons Homeowners Association, Inc. v. Richmond American Homes of Nevada, Inc.


    OSHA Extends Temporary Fall Protection Rules

    March 1, 2012 — CDJ Staff

    OSHA announced that its current rules on fall protection for residential construction will remain in place until September 15, 2012. The current measures became effective in June 2011. Under the new rules, falls must be prevented by fall protection measures unless the measures can be shown to be unfeasible or even hazardous.

    Under the extension of the temporary enforcement measures, contractors who ask for compliance assistance with OSHA are given top priority and penalties can be reduced. OSHA has conducted more than 1,000 outreach sessions on the new rules.

    Read the full story…


    Coverage for Construction Defects Barred by Business Risk Exclusions

    September 1, 2011 — Tred Eyerley, Insurance Law Hawaii

    Although the court determined there was an occurrence, coverage was excluded by the business risk exclusions.  See Cont’l W. Ins. Co. v. Shay Constr. Co., 2011 U.S. Dist. LEXIS 82839 (D. Colo. July 28, 2011).

    White was the general contractor on the project. White had three subcontracts with Shay to provide framing, siding, and related work on the project. Shay was insured under a CGL policy issued by Continental Western.

    Two of Shay’s subcontractors furnished materials, labor and equipment to Shay. These subcontractors filed suit in state court alleging they had not been compensated for the work and materials. White and Shay were named as defendants. White cross claimed against Shay, alleging Shay had breached its obligations under the subcontracts. Several allegations sounded in contract. Other allegations, however, contended Shay had performed defective work and had damaged the work of other trades in correcting deficiencies in its own performance.

    Shay sought coverage under Continental Western’s policy. Continental Western filed suit for a declaratory judgment and moved for summary judgment.

    Read the full story…

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


    California Supreme Court Finds Associations Bound by Member Arbitration Clauses

    September 13, 2012 — CDJ Staff

    In a decision with great implications for construction defect suits in California, the California Supreme Court has ruled in Pinnacle Museum Tower Association v. Pinnacle Market Development that arbitration clauses binding on the members of the association are also binding on the association itself. They concluded this, even though “the association did not exist as an entity independent of the developer when the declaration was drafted and recorded.” The opinion, written by Justice Baxter, was joined by four additional justices, with two separate concurrences and a dissenting opinion by Justice Kennard.

    The Pinnacle homeowners sought to bring suit over construction defect claims. In response, the developer filed a motion to compel arbitration. The association argued that the arbitration clause signed by its individual members was not binding on it. The Appeals Court invalidated the arbitration agreement “finding it marked by slight substantive unconscionability and high degree of procedural unconscionability. The Appeals Court determined that “for all intents and purposes, Pinnacle was the only party to the ‘agreement,’ and there was no independent homeowners association when Pinnacle recorded the CC&R’s.” However, the California Supreme Court said that this was “not persuasive in light of the statutory and contract principles in play.”

    The opinion notes that “the Project CC&R’s provides that Pinnacle and, by accepting a deed to any portion of the Project property, the Association and each individual condominium owner agree to submit any construction dispute to binding arbitration in accordance with the FAA.” The Court noted that “settled principles of condominium law establish that an owners association, like its constituent members, must act in conformity with the terms of a recorded declaration,” which, as the Court notes, includes the CC&Rs.

    After finding that the terms were binding on the Association, the Court then questioned whether the terms were “unenforceable as unconscionable,” noting that “the party resisting arbitration bears the burden of proving unconscionability.” But the Court found that “the arbitration provisions of article XVIII are not substantively unconscionable.” Additionally, they found “no support for the Association’s claims of unfairness and absence of mutuality.”

    Read the court’s decision…


    Judge Kobayashi Determines No Coverage for Construction Defect Claim

    October 23, 2012 — Tred Eyerly, Insurance Law Hawaii

    Judge Kobayashi of the U.S. District Court, District of Hawaii, largely followed earlier precedent established by Judge Mollway in finding no coverage for construction defect claims. See Evanston v. Nagano, 2012 WL 3800320 (D. Hawaii Aug. 31, 2012).

    Evanston issued several liability policies to the insured contractor from 2002 and 2011. The insured entered a contract to build a residence in Honolulu. The homeowners were not happy with their home after the work was completed. They filed suit, alleging that the project was delayed and the construction was "riddled with defects." The complaint included claims for breach of contract and breach of warranties. Negligence was not alleged. Evanston defended, but under a reservation of rights.

    Evanston filed suit for a declaratory judgment and moved for summary judgment.

    Read the full story…

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


    Hilton Grand Vacations Defect Trial Delayed

    October 23, 2012 — CDJ Staff

    A settlement agreement between Conti Electric and Westgate Resorts has lead to a delay in starting the trial over construction defect claims and billing disputes over Hilton Grand Vacations a time share tower in Las Vegas. According to the Las Vegas Review-Journal, the dispute includes claims of $23.3 million owed to the general contractor against which the developer has placed $30 million in construction defect claims.

    Read the full story…


    Construction Defect Journal Seeks Article Submissions Regarding SB800 and Other Builders Right to Repair Laws

    October 28, 2011 — CDJ Staff

    As we approach the tenth anniversary of the passage and signing of SB800, California’s right-to-repair law, we’d like to hear your reactions to the law, your experiences with it, and your thoughts on it and right-to-repair laws in other states.

    We invite you to submit articles either reacting to SB800 or on other matters relevant to construction defect and claims issues. You can promote your firm’s capabilities and get valuable exposure through the publication of your articles. Construction Defect Journal is widely read by our highly targeted audience of decision makers, construction attorneys, builders, owners, and claims professionals.

    Articles may contain relevant images, your firm’s name, and links to your corporate website or third parties and can be submitted through e-mail to submitstory@constructiondefectjournal.com. Please remember to include your contact information if you would like it to be published with your content. If you are submitting photos or PDF documents with your article, please send them as e-mail attachments. Items submitted are assumed to be cleared for publishing upon receipt by CDJ.

    Normally articles are published in full, although we reserve the right to edit content for space purposes. All articles submitted are considered for publication. For additional questions please contact editor@constructiondefectjournal.com.