Hovnanian Sees Second-Quarter Profit, Points to Recovery
June 19, 2012 — CDJ Staff
Hovnanian Enterprises has shown a profit in the second quarter, which the company attributes to recovery in the homebuilding industry. Apart from a sales promotion in 2007, the company sold more homes per community in April than it has in any other month since 2006. Ara K. Hovnanian said that “the sales improvements we have experienced are fairly wide-based in terms of geography, price points and buyer profiles.”
The quarter’s profit was $1.8 million. In the year prior, Hovnanian faced losses of $72.7 million. The Wall Street Journal’s Marketwatch reported that Hovnanian’s stock price recently went up 19%.
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Construction Spending Dropped in July
September 13, 2012 — CDJ Staff
Bloomberg News reports that after four months of gains in construction spending, July saw a drop of 0.9 percent, wiping out June’s gain of 0.4 percent. Despite the overall decline in spending, there was an increase of 1.5 percent in expenditure on building new single-family homes and 2.8 percent on multifamily residential construction.
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Webinar on Insurance Disputes in Construction Defects
July 10, 2012 — CDJ Staff
Seth Lamden, of the firm Neal Gerber Eisenberg will be presenting a webinar on “Insurance Coverage Disputes in Construction Defects” on July 17, 2012 at 1 p.m. EDT. Mr. Lamden’s presentation will focus on “handling both the construction and insurance components of construction defect claims.” He will be discussing recent case law and new insurance products. The presentation will present information on evaluating various types of insurance policies, explaining common issues, contract requirement, and the economic loss doctrine. Mr. Lamden will advise attendees on how to avoid getting into a construction defect case. He will conclude his presentation with a brief question-and-answer session.
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Construction Defects: 2010 in Review
July 10, 2012 — CDJ Staff
Candace Matson, Harold Hammersmith, and Helen Lauderdale, all of Sheppard Mullin, recently looked at design and construction defect litigation in 2010. They look at three California construction law cases. In one prominent case, the developer’s claims were barred under California law. However, the court did allow a claim for breach of the duty to defend.
In a second case, the California Supreme Court ruled that a duty to defend is separate from a duty to indemnify. A developer sought to include its engineering subcontractor in a suit. The subcontractor unsuccessfully argued that it had no duty to defend as the homeowners had not sued it.
The third case involved a lawyer who had represented a homeowner accused a libel against a construction firm and then later represented one of the subcontractors the firm had employed. The California Court of appeals concluded that there was no conflict of interest and so the contractor could not disqualify the subcontractor’s lawyer.
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Who Is To Blame For Defective — And Still LEED Certified — Courthouse Square?
September 1, 2011 — Douglas Reiser, Builders Counsel
Remember Courthouse Square? I sure do. We have talked about the closed and evacuated LEED certified building a couple of times here on Builders Counsel. Well, it’s back in the news. This time building professionals are pointing fingers — but there is some talk about a fix. Still, its LEED certification remains.
If you read my past articles about Courthouse Square, you can get caught up on this mess. The short of it is that Salem, Oregon had the five-story government building and bus mall completed in 2000 for $34 Million. It was awarded LEED certification during the USGBC’s infancy. Last year, it became public that the building had significantly defective concrete and design. The Salem-Keizer Transit District worked with the City of Salem to shut the building down, and it has not been occupied since.
Last fall, Courthouse Square failed thorough forensic testing leading to a lengthy bout with a number of insurers. The contractors and designers had been hauled into court, but the Transit District was able to settle with the architect and contractors. The only remaining party involved in the lawsuit appears to be the engineering firm, Century West Engineering. Most expert reports have pinned the responsibility for the poor design and materials on Century West’s shoulders.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Local Government Waives Construction Fees to Spur Jobs
June 19, 2012 — CDJ Staff
Warren Township in New Jersey has waived building and electrical permit fees, up to $5,000, for businesses that create at least five new jobs. The fee reductions are available for construction in areas zones under various designations. Buildings that have received a zoning variance are not eligible. The Echoes-Sentinel notes that other towns in Somerset County, New Jersey have adopted similar ordinances.
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Reference to "Man Made" Movement of Earth Corrects Ambiguity
December 20, 2012 — Tred Eyerly, Insurance Law Hawaii
In Pioneer Tower Owners Assn. v. State Farm Fire & Cas. Co., 12 NY3d 302 (2009), the New York Court of Appeals found an "earth movement" exclusion was ambiguous when applied to an excavation. The court now considered whether a similar exclusion, expressly made applicable to "man made" movement of earth, eliminated the ambiguity when loss was created by excavation. Bentoria Holdings, Inc. v. Travelers Indem. Co., 2012 N.Y. LEXIS 3087 (N.Y. Oct. 25, 2012).
Plaintiff's building suffered cracks due to an excavation being conducted on the lot next door. A claim was submitted to Travelers, plaintiff's insurer. Travelers rejected the claim, relying on the earth movement exclusion.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Insurer Settles on Construction Defect Claim
July 10, 2012 — CDJ Staff
Law360 reports that Arch Specialty Insurance Company has settled over claims that it wrongly denied coverage in a construction defect claim. The court dismissed Arch with prejudice. Terms of the settlement were not disclosed and the attorneys made not comment to Law360.
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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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State Audit Questions College Construction Spending in LA
August 17, 2011 — CDJ Staff
A state audit of the Los Angeles Community College District found many problems with their construction spending. Their report, as described in the Los Angeles Times, found construction money spent for other purposes, such as promotional photography and public relation tours, $28.3 million spent on projects that were later cancelled, and oversight committees that provided no oversight.
Earlier this year, the LA Times ran a series of articles detailing problems with the Los Angles Community College District’s construction program. The LA Times reported that the State Controller’s audit reached many of the same conclusions.
The Community College District disputed the findings.
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Federal Court Denies Summary Judgment in Leaky Condo Conversion
August 4, 2011 — CDJ Staff
In the US District Court for Illinois, Judge William Hibber has rejected the request for summary judgment sought by the developers of a condominium building in the case of Nautilus Ins. Co. v. 1735 W. Diversey, LLC (the insureds). The insureds renovated a building at 1735 W. Diversey, Chicago, converting it into condominiums. After the project was completed and all units sold, and a condominium association form, one of the owners found that unit suffered leaks during rainstorms. The condo board hired a firm, CRI, to investigate the cause of the leakage. CRI found “water infiltration through the exterior brick masonry walls, build-up of efflorescence on the interior surfaces of the masonry, and periodic spalling of portions of the brick masonry.”
The redevelopment firm had purchased coverage from Nautilus. “Shortly after the Board filed its first complaint, the Insureds tendered the mater to Nautilus and requested that it indemnify and defend them from the Board's underlying claims. Nautilus, however, rejected the Insureds’ tender and denied coverage under both insurance policies.” Nautilus stated that the water leakage did not constitute an occurrence under the policies. The court cited these policies in which an occurrence is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The Illinois courts have determined that construction defects are not accidents.
The court concluded that the insured did not bring forth claims within the coverage of the policies and denied the motion for summary judgment.
Read the court’s decision…
Arizona Supreme Court Confirms Eight-Year Limit on Construction Defect Lawsuits
July 18, 2011 — CDJ Staff
Acting on the case of Albano v. Shea Homes Ltd. Partnership, the Arizona Supreme Court has ruled that Arizona’s eight-year statute of repose applies. The case was referred to the court by the Ninth Circuit Court of Appeals which had asked for a clarification of Arizona law. The case focused on three questions:
1. Does the filing of a motion for class certification in an Arizona court toll the statute of limitations for individuals, who are included within the class, to file individual causes of action involving the same defendants and the same subject matter? 2. If so, does this class-action tolling doctrine apply to statutes of repose, and more specifically, to the statute of repose for construction defects set forth in Arizona Revised Statutes ("A.R.S.") § 12-552? 3. If the doctrine applies to statutes of repose, and specifically § 12-552, may a court weigh the equities of the case in determining whether, and to what extent, an action is tolled?
The litigation at hand has a lengthy history, starting with a case referred to as “Hoffman” in 2003. The Albano plaintiffs were not able to join in Hoffman, and they filed their own lawsuit in 2006. An additional lawsuit was filed by the Albano plaintiffs in 2007. The courts decided that the Albano plaintiffs’ lawsuit was untimely.
The Arizona Supreme Court concluded that the statute of repose was the appropriate standard for this case. They noted that “the eight-year statute of repose period began to run on November 6, 1997, the date of the Town of Gilbert’s final inspection. Albano II was filed on November 5, 2007.”
The court found that the plaintiffs had waited too long for start their suit. As a result, they found it unnecessary to answer the first or third questions. Justice A. John Pelander of the Arizona Supreme Court wrote the opinion, dated June 30, 2011.
Read the court’s decision…
Hawaii State Senate Requires CGL Carriers to Submit Premium Information To State Legislature
March 20, 2011 — March 20, 2011 Construction Defect Journal Staff
In light of the decision in Hawaii’s Intermediate Court of Appeals in Group Builders, Inc.,v. Admiral Insurance Company, 231 P.3d 67(2010), Hawaii’s state senate is requesting that "every domestic and foreign insurance company that has ever issued commercial general liability policies in the State is requested to submit information to the Legislature on the total premiums received for their commercial general liability policies during the past ten years"
Read Full Text of Hawaii State Senate Resolution
Foundation Arbitration Doesn’t Preclude Suing Over Cracks
March 28, 2012 — CDJ Staff
The Louisiana Court of Appeals has reversed the decision of a lower court, allowing a construction defect case to go through. In Greer v. Town Construction Company, the Greers hired Town Construction to build a home in Baton Rouge. The business relationship went sour, with disputes over “costs, change orders, workmanship, and timeliness issues.”
Town Construction filed an arbitration claim for the unpaid contract balance. In the counterclaim, the Greers made claims of mold and mildew problems, and wall cracks that they attributed to a “structural defect in the foundation.” In arbitration, Town Construction was awarded the full contract balance plus extra costs and interest, while the Greers were awarded for their structural claims.
Three years later, the Greers found additional cracks and filed a suit against Town Construction. Town Construction argued that the Greer’s lawsuit should be dismissed, as the claims had already been through the arbitration process. The district court agreed with Town Construction and dismissed the suit.
The appeals court noted that the Greers would have no ground for a suit if the arbitration was a “valid and final judgment,” and went on to note that there was no evidence in the trial record that the arbitration met this qualification. The court noted that although it was clear that both parties had agreed to the decisions of the arbiter, under Louisiana law, arbitration is not final until it has been “rendered by a court with jurisdiction over subject mater and over parties.”
The court remanded the case to the lower court, noting that “the district court is obligated to first determine whether a valid arbitration award is in existence and had been confirmed before considering the merits of the exception. The court noted that their decision “should not be read to express any opinion as to the merits of the claims or as to the propriety of damages sought in the Greer’s lawsuit.”
Read the court’s decision…
California Construction Bill Dies in Committee
July 21, 2011 — CDJ Staff
AB 20, which its sponsor, Linda Halderman (R-Fresno), stated would discourage class action lawsuits against builders and protect jobs in the construction industry, has died in committee. Although the Business Journal reported in June that Haldeman was promoting the bill during a talk in her district and the bill is still on her web site, the California Assembly reports that the bill failed in committee on March 15, 2011. It is possible that the bill could be reconsidered, but the Assembly Committee on Judiciary sees the bill as responding to issues quieted by SB 800 which gives builders the right to repair alleged defects before any suit can be filed.
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Ghost Employees Steal Jobs from Legit Construction Firms
September 13, 2012 — CDJ Staff
Firms that skirt labor laws for construction workers can undercut firms that are obeying those laws. In a piece in Raleigh, North Carolina’s News & Observer, Doug Burton, a commercial masonry contractor summed it up: “my competitors are cheating.” The article describes the low-bidding firms “called their workers independent contractors ? or treated them like ghosts, paid under the table and never acknowledged.” The cost to the state is “unpaid medical bills for injured workers, uncollected business and personal taxes, and payments not made to a depleted state unemployment reserve.”
One firm examined in the article, Martin’s Bricklaying, employs mostly immigrant Mexican laborers, many of whom are in the country illegally. One employee told the News & Observer, “we don’t complain.”
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Construction Defect Notice in the Mailbox? Respond Appropriately
August 4, 2011 — Douglas Reiser, Builders Counsel
Recently, I have seen a rash of ignored construction defect notices. What is a construction defect notice? It’s a statutorily required notice, sent from a homeowner to a contractor, listing a number of defects found at their property. If you get one, don’t ignore it.
The Revised Code of Washington includes a number of provisions intended for residential construction disputes. Among them is the “Notice to Customer” requirement in RCW 18.27.114, which can preempt a contractor’s lien rights, and the “Notice of Construction Defects” found in RCW 64.50.020.
The Notice of Construction Defects is a standard notice mandated by RCW 64.50, a chapter in the Revised Code of Washington, intended to provide a pre-litigation resolution process for contractors and consumers. The chapter applies only to those losses “caused by a defect in the construction of a residence or in the substantial remodel of a residence.”(See “Action” RCW 64.50.010).
Unfortunately, many contractors will simply ignore these notices or tell the homeowner to make a warranty claim. But, the notice actually provides a contractor with a forty-five (45) day window to alleviate the dispute.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Condo Owners Allege Construction Defects
July 6, 2011 — CDJ Staff
Last November, mold problems were discovered at the Siena Condominiums in Montclair, New Jersey, which had been described by their developers as “an enclave of luxury in an urban village setting.” The owners have filed a lawsuit against Pinnacle Companies, Kohl Parnters, and Herod Development, seeking “compensatory damages, interest, reasonable attorney’s fee and costs, and for such other, further, and different relief as the Court may deem just and proper.”
According to the article on Baristanet.com, an engineering report commissioned by the condominium association revealed many problems, including improperly installed windows and siding. The developers commissioned two engineering reports themselves and found evidence of water pounding on the roof. Despite these reports and repeated promises, no repairs have been made.
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