Homebuilding Still on the Rise
December 20, 2012 — CDJ Staff
The National Association of Home Builders reports that spending on private homes was up three percent in October 2012, bringing it to a four-year high. This was part of a trend in which fourteen of the last fifteen months have seen increases in spending on residential construction. Likewise, multifamily residences have seen thirteen months of increased spending, putting it 82% higher than its low, two years ago. ¬?In addition to new homes, remodeling is also up, reaching its highest point in five years.
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Irene May Benefit Construction Industry
September 1, 2011 — CDJ Staff
Noting that while it wasn’t the $15 billion disaster some predicted, Hurricane Irene still caused quite a bit of damage on its path up the Eastern Seaboard. Martha White, reporting for MSNBC cites Kinetc Analysis Corp. with an estimate of $7 billion in damage. Carl Van Horn, a professor of public policy at Rutgers University expected an initial decline in construction jobs, due to projects delayed due to the storm’s arrival, but he said, “a few weeks later, employment picks up as people rebuild.”
Kinetic says that one unknown is how much of the damage is insured. They expect only $3 billion of damage will be covered by insurance. This would likely put a drag on consumer spending, as homeowners would have to dig into their own pockets to pay for repairs, according to Karl Smith, associate professor of economics and government at the University of North Carolina at Chapel Hill.
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Tennessee Court: Window Openings Too Small, Judgment Too Large
November 18, 2011 — CDJ Staff
The Tennessee Court of Appeals has issued a ruling in the case of Dayton v. Ackerman, upholding the decision of the lower court, even as they found that the award was incorrectly computed. The Daytons purchased a house that had been designed and built by the Ackermans, who operated a construction business. The court noted that the warranty with the house promised that “for a period of 60 days, the following items will be free of defects in materials or workmanship: doors (including hardware); windows; electric switches; receptacles; and fixtures; caulking around exterior openings; pluming fixtures; and cabinet work.”
Soon, the Daytons began to experience problems with the house. Many were addressed by the Ackermans, but the Daytons continued to have problems with the windows. Neither side could specify a firm date when the Ackermans were contacted by the Daytons about the window problems. The Ackermans maintained that more than two years passed before the Daytons complained about the windows. The lower court found the Daytons more credible in this.
Initially, the Daytons included the window manufacturer in their suit, but after preliminary investigations, the Daytons dropped Martin Doors from their suit. Martin Doors concluded that the windows were improperly installed, many of them “jammed into openings that were too small for them.”
After the Daytons dismissed Martin Doors, the Ackermans sought to file a third party complaint against them. This was denied by the court, as too much time had elapsed. The Ackermans also noted that not all of the window installations were defective, however, the courts found that the Daytons ought not to have mismatched windows.
Unfortunately for the Daytons, the window repair was done incorrectly and the windows were now too small for the openings. The firm that did the repair discounted the windows and Daytons concealed the problem with plantation shutters, totalling $400 less than the original lowest estimate. However, the appeals court noted that it was here that the trial court made their computation error. Correcting this, the appeals court assessed the Ackermans $12,016.20 instead of $13,016.20.
Finally, the Ackerman’s expert was excluded as he had changed his testimony between deposition and trial. The trial reviewed the expert’s testimony and had it been admissible, it would not have changed the ruling.
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A Loud Boom, But No Serious Injuries in World Trade Center Accident
March 1, 2012 — CDJ Staff
The Wall Street Journal reports that nearly twenty tons of steel fell forty stories at the World Trade Center site on February 16. One person was checked by medical personnel. One person who works in the Financial District said it was “almost like thunder.” Frank Pensabene, one of the ironworkers on the site said that after “loud boom,” “all hell broke loose.” The steel beams and cables fell onto a flatbed truck, which was not occupied at the time.
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Ninety-Day Extension Denied to KB Home in Construction Defect Insurance Claim
July 10, 2012 — CDJ Staff
A magistrate judge has denied a request by KB Home Nevada to extend the time for service an additional ninety days. KB claims that St. Paul Fire & Marine Insurance Company has failed to defend them in a construction defect claim. However, the judge did grant KB an additional twenty days to effectuate service, noting that the request for additional time may be renewed.
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Australian Group Seeks Stronger Codes to Combat Dangerous Defects
October 23, 2012 — CDJ Staff
The Owners Corporation Network, a group that represents condominium owners in Australia, has raised concerns about building defects in high-rise building that can lead to safety problems. The group prepared a statement which would strengthen the rights of owners, but the government official, Fair Trading Minister Anthony Roberts, declined to sign it. A spokesperson for the group cited a fatal fire at a Sydney high rise, noting that “there had been issues of certification which has been a concern of the Owners Corporation Network.” The Australian Broadcasting Network reports that the government will be reviewing the laws concerning high-rise apartment buildings.
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Construction Employment Rises in Half of the States
December 9, 2011 — CDJ Staff
The Labor Department has noted that half the states and the District of Columbia saw increases in construction employment during the month of October. During the same month, twenty-three states lost construction jobs.
The biggest gains were in North Dakota, Oklahoma, DC, Texas, and California. The biggest losses were in Georgia, New Mexico, Wisconsin, and Florida. There was no change for Alabama.
The chief executive officer of the Association of General Contractors of America, Stephen E. Sandherr, called for more infrastructure development. “Allowing water, transportation and energy networks to deteriorate will hurt construction employment and force taxpayers to spend more later, to fix broken infrastructure.”
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Seven Former North San Diego County Landfills are Leaking Contaminants
April 7, 2011 — April 7, 2011 Beverley BevenFlorez - Construction Defect Journal
Deborah Sullivan Brennan of the North County Times reported that seven former dumps in San Diego are leaking contaminants into the surrounding groundwater. John R. Odermatt, a senior engineering geologist for the California Regional Water Quality Control Board s San Diego region, told the North County Times, “the risk to most county residents is very small or negligible, while local water supplies located in more rural areas may be at a somewhat elevated but unquantified level of risk.”
This issue is causing heavy scrutiny of a new proposed landfill in Gregory Canyon. The landfill would be located on 308 acres of undeveloped land near Pala, alongside the San Luis Rey River. The group “Save Gregory Canyon” has been speaking out against the landfill, stating that “the project threatens major detrimental impacts to both surface and groundwater, as well as a potential compromise of the two major San Diego Water Authority pipelines nearby.” Richard Felago, a Gregory Canyon Ltd. Consultant, told the North County Times that the 8-foot-thick liner, composed of layers of gravel and synthetic material, would not leak.
The appeal hearing is being rescheduled later this month after one of the three panelists recused himself due to having a competing interest in the property, according to the article by Gary Warth in the North County Times.
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California Appeals Court Remands Fine in Late Completion Case
November 18, 2011 — CDJ Staff
The California Court of Appeals in Stanislaus County has reversed the decision of the lower court in Greg Opinski Construction Inc. v. City of Oakdale. The earlier court had awarded the city of judgment of $54,000 for late completion, $3,266 for repair of construction defects and interest, and $97,775 in attorneys’ fees. The late completion of the project was due to actions by the City of Oakdale, however, the court rejected Opinski’s argument that the California Supreme Court decision in Kiewit did not allow this, as his contract with the city established a procedure for claiming extensions.
The appeals court noted that the Kiewit decision has been “criticized as an unwarranted interference in the power of contracting parties to shift the risk of delays caused by one party onto the other party by forcing the second party to give the first notice of any intention to claim an extension of time based on delays caused by first.” They cited Sweet, a professor at Boalt Hall, UC Berkeley’s law school, that Kiewit “gutted” the “provision that conditions the contractor’s right to claim an extension of time for delays beyond his control.”
Further changes in California law in response to the Kiewit decision lead to the current situation which the court characterized as “if the contractor wished to claim it needed an extension of time because of delays caused by the city, the contractor was required to obtain a written change order by mutual consent or submit a claim in writing requesting a formal decision by the engineer.”
Opinski also argued that the lower court misinterpreted the contract. The Appeals court replied that “Opinski is mistaken.” He cited parts of the contract regarding the increase of time, but the court rejected these, noting that “an inability to agree is not the same as an express rejection.”
The court also rejects Opinski’s appeal that “the evidence the project was complete earlier than September 30, 2005, is weightier than the evidence to the contrary,” which they describe as “not a winning appellate argument.” The court points out that the role of an appeals court is not to reweigh the evidence, but to determine “whether the record contains substantial evidence in support of the judgment.”
The court did side with Opinski on one question of the escrow account. They rejected most of his arguments, repeating the line “Opinski is mistaken” several times. They decided that he was mistaken on the timing of the setoff decision and on whether the city was the prevailing party. However, the appeals court did find that Opinski was not liable for interest on the judgment.
The appeals court rejected the awarding of prejudgment interest to the city as the funds from which the judgment was drawn was held in an escrow account. The court noted that the city had access to the funds and could “access the funds when it determined that Opinski had breached the contract.” The appeals court noted that the judgment exhausted the escrow balance and remanded the case to the lower court to determine the amount own to Opinski.
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2011 Worst Year Ever for Home Sales
September 9, 2011 — CDJ Staff
So few new single-family homes have sold in 2011 that expectations are that this will be the worst year for new homes sales since the Commerce Department started tracking this in 1963. The Harford Courant notes that previously builders created a new supply to which was added homes under foreclosure.
Ed Leamer, economist and director of UCLA’s Anderson Forecast, says that recovery would be driven by two sectors, manufacturing and construction. “It doesn’t look like there is going to be a big recovery in manufacturing,” he says. “It is going to have to come in housing.”
The soft housing market, however, is leading to a loss of construction jobs, as reported by the Associated General Contractors of America. As a result, stock prices for the twelve largest publicly-traded home builders have declined 22.7 percent in a market that has declined 4.2 percent overall.
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Pictorial Construction Terminology Dictionary — A Quick and Helpful Reference
July 10, 2012 — CDJ Staff
Does it seem like contractors speak their own language? Construction defect professionals can be hampered by not knowing the terminology. The Bert L. Howe & Associates, Inc. web site has a handy Pictorial Construction Terminology Dictionary in which more than a thousand terms are not only defined, but illustrated with pictures that give a visual component to each definition.
Whether you’re wondering what a balustrade is, or you need to identify a joist girder, or hundreds of other terms, the Pictorial Construction Terminology Dictionary is there to help you. It can be found at http://www.berthowe.com/bhapedia.php.
New Construction Laws, New Forms in California
July 10, 2012 — CDJ Staff
New construction laws came into effect in California on July 1. Writing for the Martindale-Hubble Legal Library, Glenn Mau, J. Michael McGuire, and John Tonsing, all of Archer Norris, discuss these changes. They note that the most important part of the changes to California construction law is that “all mechanics liens, stop notices and bond claims recorded after July 1, 2012 must use the new standardized forms and follow the new definitions, notice prerequisites and statutory release form language.”
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General Contractor/Developer May Not Rely on the Homeowner Protection Act to Avoid a Waiver of Consequential Damages in an AIA Contract
August 4, 2011 — Higgins, Hopkins, McLain & Roswell, LLC
Recently, in Caribou Ridge Homes, LLC v. Zero Energy, LLC, et al., Case No. 10CV1094, Boulder County District Court Judge Ingrid S. Bakke entered a ruling and order on the Plaintiff’s Motion for Determination of Question of Law Pursuant to C.R.C.P. 56(h) on Issue of Damages. The Order found that the Plaintiff was not a homeowner intended to be protected by the Homeowner Protection Act (the “HPA”) and thus could not pursue its claims for consequential damages against Defendant.
By way of background, on June 18, 2008, Plaintiff Caribou Ridge Homes, LLC (“Caribou”) entered into a Standard Form Agreement Between Owner and Contractor AIA Document A114-2001 (the “Contract”) with Defendant Zero Energy, LLC (“Zero Energy”). Plaintiff hired Zero Energy to serve as a general contractor for the construction of a single-family home in the Caribou Ridge subdivision in Nederland, Colorado. A provision in the contract contained a mutual waiver of consequential damages (“Waiver”).
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Reprinted courtesy Higgins, Hopkins, McLain & Roswell, LLC
Insurer’s Motion for Summary Judgment Based on Earth Movement Exclusion Denied
October 28, 2011 — Tred Eyerley, Insurance Law Hawaii
After carefully dissecting the earth movement exclusion, the court denied the insurer’s motion for summary judgment. High Street Lofts Condominium Assoc., Inc. v. Am. Family Mut. Ins. Co., 2011 U.S. Dist. LEXIS 109043 (D. Colo. Sept. 26, 2011).
The City of Boulder performed road repair work near High Street’s property, some of which involved the use of a vibrating compactor to compact and set the roadbed. High Street noticed damage to its building, such as cracks in walls, sloping of floors and separations of porches from the building itself. High Street contacted the City of Boulder, who forwarded the complaint to its contractor, Concrete Express, Inc.
High Street also filed a claim with its business insurer, American Family, who denied the claim. American Family relied on an opinion letter by High Street’s engineer. The letter indicated that the damage was the result of "soil consolidation/settlement," in response to the construction activities. Based on this letter American Family concluded the claim was excluded under the policy’s earth movement exclusion.
High Street sued American Family, who moved for summary judgment.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Texas Law Bars Coverage under Homeowner’s Policy for Mold Damage
July 13, 2011 — Tred R. Eyerly, Insurance Law Hawaii
Although the insurer paid for some of the mold damage at the insured’s home, the Fifth Circuit eventually determined the homeowner’s policy did not cover such damage. Rooters v. State Farm Lloyds, 2011 U.S. App. LEXIS 12306 (5th Cir. June 15, 2011).
The policy excluded loss caused by hail to personal property unless the direct force of wind or hail made an opening in the roof allowing rain to enter. Further, the policy excluded loss caused by mold or other fungi.
In 1999, hail and rain caused water damage to the roof and interior of the residence. State Farm paid $19,000 to repair the roof. Another $1,800 was paid for repairs to the interior of the building. In 2002, the insured noticed black mold. State Farm issued an additional check for $4,402 for mold abatement.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Renovation Contractors: Be Careful How You Disclose Your Projects
December 9, 2011 — Derek J. Lindenschmidt, Colorado Construction Litigation
In Palu and Beyer v. Toney, 2011 WL 2560249 (Bankr. D. Colo.), the United States Bankruptcy Court for the District of Colorado determined that a Colorado District Court order granting summary judgment in favor of plaintiff home buyers was binding on the Bankruptcy Court in the defendant contractor’s bankruptcy proceeding based on issue preclusion.
Pertinent to this column is the subject matter of the summary judgment motion: Colorado’s Seller’s Property Disclosure (Form LC-18-5-04). In the underlying state court action, the plaintiff home buyers filed a motion for summary judgment contending that the defendant contractor represented to them, through the Seller’s Property Disclosure, that there were no present or past conditions involving moisture or water problems, roof problems or leaks, skylight problems, or gutter downspout problems.
In granting plaintiffs’ motion, the state court determined that the defendant contractor made these representations on her Seller’s Property Disclosure despite witnessing water leaking from the skylight onto the floor and being aware of repairs to the roof, skylight, and interior drywall prior to the sale of the property.
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Reprinted courtesy of Derek J. Lindenschmidt of Higgins, Hopkins, McClain & Roswell, LLP. Mr. Lindenschmidt can be contacted at lindenschmidt@hhmrlaw.com
Ohio Court Finds No Coverage for Construction Defect Claims
March 1, 2012 — Tred Eyerly, Insurance Law Hawaii
Charles and Valerie Myers hired Perry Miller to build their home. Myers v. United Ohio Ins. Co., 2012 Ohio App. LEXIS 287 (Ohio Ct. App. Jan. 26, 2012). After completion of the home, Miller was again hired to construct an addition which included a full basement, staircases, bathroom, bedroom, hallway and garage.
After the addition was completed, one of the basement walls began to crack and bow. Miller began to make repairs, but eventually stopped working on the project. Other contractors were hired to make repairs, but further problems developed. A second basement wall began to bow and crack, allowing water into the basement. The wall eventually had to be replaced. Subsequently, the roof over the addition began to leak in five or six places before the drywall could be painted. The leaks caused water stains on the drywall and cause it to separate and tear. It was discovered the roof needed to be replaced.
The Myers sued Miller and his insurer, United Ohio Insurance Company. The trial court ruled that the policy did not provide coverage for faulty workmanship, but did provide coverage for consequential damages caused by repeated exposure to the elements. United Ohio conceded liability in the amount of $2,000 to repair water damage to the drywall. United Ohio was also found liable for $51,576, which included $31,000 to repair the roof and ceiling and $18,576 to replace the basement wall.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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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