New Safety Standards Issued by ASSE and ANSI
March 28, 2012 — Melissa Dewey Brumback, Construction Law North Carolina
The American National Standards Institute (ANSI) and the American Society of Safety Engineers (ASSE) have recently announced their approval of two new safety standards to enhance construction site safety.
The two new standards, which are set to take effect during June 2012, are the ANSI/ASSE A10.1-2011 Pre-Project and Pre-Task Safety and Health Planning for Construction and Demolition Operations, and the ANSI/ASSE A10.26-2011 Emergency Procedures for Construction and Demolition Sites.
The new A10.1-2011 standard was designed to assist construction owners, contractors, and designers by ensuring that safety and health planning were standard parts of their pre-construction planning. It is also intended to help owners of construction sites to establish a process for evaluating constructor candidates with regard to their safety and health performance planning.
The A10.26 standard applies to emergency situations, including fires, collapses, and hazardous spills. The standard deals with emergency rescue, evacuation, and transportation of injured workers, and also plans for coordinating with emergency medical facilities ahead of potential disasters.
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Reprinted courtesy of Melissa Dewey Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl-law.com.
Mandatory Arbitration Provision Upheld in Construction Defect Case
May 18, 2011 — May 18, 2011 Beverley BevenFlorez - Construction Defect Journal
The Superior Court of New Jersey reversed the decision in Frumer v. National Home Insurance Company (NHIC) and the Home Buyers Warranty Corporation (HBW), stating that the mandatory arbitration provision within the Frumer’s home warranty policy was binding.
The Frumers alleged that the construction defects were discovered immediately after moving into their million dollar home. After failing to achieve any results from dealing with the builder, they turned to their home warranty. There was some dispute over claims, and a settlement offer was rejected by the Frumers. The Frumers elected to commence litigation rather than utilize the binding arbitration.
The NHIC and the HBW filed a motion to compel arbitration, however, the motion judge denied the motion: “…the Warranty leaves open the option for [plaintiffs] to commence litigation, which [plaintiffs have] done in this case. The clause also states that ‘the filing of a claim against this limited Warranty shall constitute the election of remedy and shall bar the Homeowner from all other remedies.’ However, the provision does not state that the filing of a claim elects arbitration as the exclusive remedy, and any ambiguity in the language must be inferred against the drafter.”
The NHIC and the HBW appealed the decision. The Superior Court reversed the decision: “Where, such as here, the homeowner files a claim against the warranty for workmanship/systems defects, the warranty clearly and unequivocally establishes binding arbitration as the exclusive remedy. There is, however, no election of remedies for a dispute involving a major structural defect claim. The warranty clearly and unequivocally establishes binding arbitration as the exclusive remedy.”
Charles Curley of Halberstadt Curley in Conshohocken, Pa., the local counsel for National Home and Home Buyers, told the New Jersey Law Journal that “the ruling reaffirms New Jersey’s commitment to enforcing arbitration agreements and requiring people to go to mandatory arbitration when the contracts call for it.”
“At this point, their hope is that the warranty company will do what it's supposed to do — repair covered defects,” Eric McCullough, the Frumer’s lawyer said to the New Jersey Law Journal.
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Safe Harbors- not just for Sailors anymore (or, why advance planning can prevent claims of defective plans & specs) (law note)
August 17, 2011 — Melissa Brumback
Have you ever considered a “Safe Harbor Provision” for your Owner-Architect or Owner-Engineer contract? Maybe it is time that you do.
As you are (probably too well) aware, on every construction project there are changes. Some of these are due to the owner’s change of heart, value engineering concerns, contractor failures, and material substitutions. Some may be because of a design error, omission, or drawing conflict. It happens.
A “Safe Harbor Provision” is a provision that establishes an acceptable percentage of increased construction costs (that is, a percentage of the project’s contingency). The idea is that if the construction changes attributable to the designer is within this percentage, no claim will be made by the Owner for design defects.
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Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl-law.com.
Another Guilty Plea in Las Vegas HOA Scandal
December 20, 2012 — CDJ Staff
A twenty-eighth person has plead guilty in the ongoing Las Vegas HOA scandal. Dax Louderman, who had been a construction company manager had acknowledged that he stole more than $495,000 from his former employers, Alpha 1 Construction and the Stone Canyon Homeowners Association, and further that he did not report this improper income on his tax returns. He has agreed to work with prosecutors and to pay $134,860 to the IRS. His actual sentencing will happen on June 24.
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Negligent Construction an Occurrence Says Ninth Circuit
June 30, 2011 — CDJ Staff
One June 27, the US Court of Appeals has rejected an appeal from Mid-Continent Casualty Company. Mid-Continent had appealed a summary judgment granted to Titan Construction Company.
Titan Construction had built condominiums for the Williamsburg Condominium Association, which later filed a construction defect lawsuit against Titan and other defendants. Titan settled with the developer, Kennydale, assigning its rights against Mid-Continent to Kennydale. Mid-Continent filed suit, claiming that “it had no obligation to indemnify or defend Titan, Kennydale, or various other defendants.” The district court found in favor of Mid-Continent, granting a summary judgment, concluding that Titan’s insurance covered “occurrences,” and none had taken place.
On appeal, the court found that the negligent construction of the condominiums constituted an “occurrence” The case was remanded and the district court this time found in favor of Titan, “concluding that Mid-Continent failed to raise a triable issue as to the applicability of the remaining policy exclusions.
The Ninth Circuit Court of Appeals has now affirmed that decision and Titan’s summary judgment stands.
Read the court’s decision…
Ceiling Collapse Attributed to Construction Defect
May 19, 2011 — May 16, 2011 - CDJ Staff
WSMV, Nashville reports that the ceiling collapse in a Franklin, Tennessee Kohl’s was attributed to a construction defect by fire officials. The officials noted that the ceiling was renovated at the time. No injuries were reported.
The report notes that “inspectors were supposed to look at the renovations next week, but fire officials said that will have to be delayed until another time.”
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Construction Case Alert: Appellate Court Confirms Engineer’s Duty to Defend Developer Arises Upon Tender of Indemnity Claim
January 27, 2010 — By
Steven M. Cvitanovic,
Haight Brown & Bonesteel, LLP, January 27, 2010
In the recent case of UDC-Universal Development, L.P. v. CH2M Hill, 2010 Cal.App.LEXIS 47 (filed January 15, 2010), the Sixth District Court of Appeal provided a stunning illustration of the far-reaching effects of the California Supreme Court’s holding in Crawford v. Weather Shield Manufacturing Inc. (2008) 44 Cal.4th 541. In Crawford, the Court held the duty to defend under an indemnity agreement arose upon the mere tender of defense of a claim covered by the indemnity.
In the UDC case, CH2M Hill provided engineering and environmental planning services to developer UDC on a project that ultimately wound up in a construction defect lawsuit by the homeowners association ( HOA ). UDC tendered its defense to CH2M Hill, the tender was rejected, and UDC filed a cross-complaint for negligence, breach of contract and indemnity against CH2M Hill and others. After the HOA’s construction defect claims were settled, UDC proceeded to trial against CH2M Hill. The jury found in favor of CH2M Hill on the claims for negligence and breach of contract. At the request of the parties prior to trial, the trial court ruled on the application of the indemnity agreement in light of Crawford and, in so doing, found that the defense obligation arose upon the tender and that CH2M Hill breached that duty despite the jury finding in favor of CH2M Hill.
The Court of Appeal affirmed, noting that the defense obligation arose as soon as the defense was tendered and did not depend on the outcome of the litigation, and that the HOA’s general description of the defects along with an allegation that Doe engineers were negligent triggered the duty to defend.
Although this case did not expand the crushing impact of Crawford’s holding, it is
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Coverage Exists Under Ensuing Loss Provision
July 10, 2012 — Tred Eyerly, Insurance Law Hawaii
Finding coverage under the ensuing loss provision, the Washington Supreme Court overruled a Court of Appeals decision we previously reported here. Vision One, LLC v. Philadelphia Indem. Ins. Co., 276 P.3d 300 (Wash. 2012).
Vision developed a condominium project. Before concrete was poured, a subcontractor supplied the shoring to temporarily support the poured concrete slabs. After the shoring installation was completed, concrete was poured on the first floor. When the pouring was finished, the shoring gave way. The framing, rebar and newly poured concrete came crashing down onto the the lower level parking area, where the wet concrete eventually hardened. It took several weeks to clean up the debris and repair the damage.
Vision had a builders’ risk policy with Philadelphia. The policy excluded losses caused by or resulting from deficient design or faulty workmanship. Collapse, however, was not listed as an excluded event. Further, the exclusion for faulty workmanship contained a resulting loss clause providing that "if loss or damage by a Covered Cause of Loss results, [Philadelphia] will pay for the loss or damage caused by that Covered Cause of Loss."
Philadelphia denied coverage under the faulty workmanship exclusion.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Federal Judge Dismisses Insurance Coverage Lawsuit In Construction Defect Case
December 9, 2011 — CDJ Staff
A federal judge dismissed a coverage lawsuit brought by Mid Continent Casualty Company against its insured, Greater Midwest Builders Ltd.
Plaintiff brought this declaratory judgment action in response to a suit filed in Johnson County District Court, seeking a judicial determination that it had no coverage obligation for claims asserted against its insured. This case was stayed until the state court action entered judgment against the insured. The prevailing parties then commenced a garnishment action against the plaintiff, and another insurance company, in state court in Missouri. The court was asked whether it should lift the stay and proceed with the case, or decline jurisdiction in favor of resolution in the Missouri state court.
The court granted the motion to dismiss holding that proceeding with the case would lead to protracted, piecemeal litigation, while deferring to the Missouri state court would decide all the claims involved in the dispute.
Read the court’s decision…
Mobile Home Owners Not a Class in Drainage Lawsuit
March 1, 2012 — CDJ Staff
Comparing it to a “complex construction defect action,” the California Court of Appeals for Orange County has rejected the claims of a group of mobile home owners that they should be certified as a class in their lawsuit against Huntington Shorecliffs Mobilehome Park. The Appeals court sustained the judgment of the lower court. The court issued a decision in the case of Criswell v. MMR Family LLC on January 17, 2012.
The claims made by the group were that the owners and operators of the mobile home park had known of an “on-going and potentially worsening shallow groundwater condition on the property” and had “exacerbated the problem by changing ‘the configuration and drainage related to the hillside that abuts’ the park.” The homeowners claimed that the class should consist of “any past or current homeowner during the same time frame” who had experienced “the accumulation of mold, fungus, and/or other toxins,” “property damage to his/her mobilehome and/or other property resulting from drainage problems, water seepage, water accumulation, moisture build-up, mold, fungus, and/or other toxins,” emotional distress related to drainage problems or mold, and finally health problems “resulting from exposure to drainage problems, water seepage, water accumulation, moisture build-up, mold, fungus, and/or other toxins, in or around one’s home, lot, or common areas of the park.”
The lower court concluded that while the limits of the class were identifiable, they failed to constitute a class in other ways. First, the people affected were small enough in number that they could be brought together. They “are not so numerous that it would be impracticable to bring them all before the Court.”
The court noted that while many of the homeowners would have issues in common, they did not find “a well-defined community of interest among the class members.” The Appeals Court wrote that “the individual issues affecting each mobile home and homeowner will predominate over the common issue of the presence of standing or pooling water in and around the park.” The court noted that each home would be affected differently by water and “the ‘accumulation of mold, fungus, and/or other toxins.’”
While the court conceded that there would be common issues, such as the “defendants’ alleged concealment of excess moisture conditions and their allegedly negligent roadwork and landscaping,” they noted that “these common issues would be swamped by the swarm of individual determinations of property damage, emotional distress, and personal injury.” The Appeals Court cited an earlier case that ruled against certification “if a class action ‘will splinter into individual trials.’” The court affirmed the judgment of the lower court that they could not proceed as a class.
Read the court’s decision…
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.
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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.
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Construction Defect Not Occurrences, Says Hawaii Court
July 10, 2012 — CDJ Staff
Some insurers in Hawaii have made it clear that they will be covering construction defects, despite a court ruling concluding that defects are not occurrences, under Hawaii law. The case, heard by Hawaii’s Intermediate Court of Appeals found that “breach-of-contract claims based on allegations of shoddy performance are not covered under CGL policies and that tort-based claims derivative of such breach of contract claims also are not covered.”
Writing in Business Insider, Michael Bradford notes that the case, Group Builders Inc. and Tradewind Insurance Co. Ltd. vs. Admiral Insurance Co., involved improperly installed insulation at the Hilton Hawaiian Village’s Kalia Tower. Hilton was forced to close 21 floors due to extensive mold in guest rooms. Although the court did recognize this property damage, they did not feel it triggered insurance coverage, noting that if disputes over the quality of work were covered, CGL policies would become professional liability policies or performance bonds.
One critic of the decision, Warren C. Perkins, the risk manager at Boh Bros. Construction of New Orleans, noted that under the decision, “it doesn’t matter what the policy says and there is no need to investigate the policy wording.”
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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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Texas “Loser Pays” Law May Benefit Construction Insurers
June 7, 2011 — CDJ Staff
Under a new law, Texas HB 274, the Texas Supreme Court will be making rules for motions to dismiss and to expedite suits of less than $100,000. The law also contains two “loser pays” provisions. If a lawsuit is found dismissed for having “no basis in fact or law,” the losing side must pay attorney costs. The other provision caps award of attorney fees if plaintiffs reject settlement offers. Texas Lawyer quotes Houston attorney Mike Gallagher as saying this will affect “the practice of everyone who handles significant lawsuits.”
Gregory Marcum, whose practice includes construction defect litigation, plans to contact insurance companies, as the new law may save them money. “It will definitely be a factor in the defense strategy for handling a case.” He notes that “any insurance carrier would want that done.”
Marcum notes that the offer-of-settlement rules only apply when cases go to trial. “Almost all cases settle.”
Read HB 274
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New Buildings in California Soon Must Be Greener
June 19, 2012 — CDJ Staff
The California Energy Commission has approved new energy efficiency standards for new homes and commercial buildings. The 2013 Building Energy Efficiency Standards are set to go into effect on January 1, 2014, and will require 30% more energy efficiency for non-residential construction and 25% more for homes. The standards do not affect hospitals, nursing homes, or prisons.
Buildings covered under the standard will have to have roofs that ready for the installation of solar panels. Additionally, non-residential buildings will require high-performance windows, advanced lighting controls, and cool-roof technologies. Residential requirements include insulated hot-water pipes, whole house fans, and more efficient windows.
The new standards are expected to add 3,500 new building industry jobs. One thing these construction workers won’t be building are power plants, since over the next thirty years, the standards are expected to save as much as six power plants.
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Vegas Hi-Rise Not Earthquake Safe
July 12, 2011 — CDJ Staff
If an earthquake hit Las Vegas, the Harmon Tower would not withstand it. A report from Weidlinger Associates told MGM Resorts that “in a code-level earthquake, using either the permitted or current code specified loads, it is likely that critical structural members in the tower will fail and become incapable of supporting gravity loads, leading to a partial or complete collapse of the tower.” The inspection came at the request of county officials, according to the article in Forbes.
According to Ronald Lynn, directory of the building division in the county’s development services division, “these deficiencies, in their current state, make the building uninhabitable.” The county is concerned about risks to adjacent buildings.
MGM Resorts is currently in litigation, separate from the stability issues, with Perini Corp., the builders of Harmon Tower.
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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
