Legislatures Shouldn’t Try to Do the Courts’ Job
March 1, 2012 — CDJ Staff
David Thamann, writing in Property Casualty 360, argues that current actions by legislatures on insurance coverage amount to “legislative interference or overreach.” He notes that under current Colorado law, “a court shall presume that the work of a construction professional that results in property damage — including damage to the work itself or other work — is an accident unless the property damage is intended and expected by the insured.” He argues that here legislators are stepping into the role of the courts. “Insureds and insurers are not always going to be pleased with a court ruling, but that is the system we have.”
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Lockton Expands Construction and Design Team
July 19, 2011 — CDJ Staff
Lockton Companies, LLC, the largest privately held independent insurance broker, has announced that it is expanding its construction and design team with the hiring of Karen Erger and Tom Miller.
Ms. Erger will provide professional liability practice management, loss prevention, contract and complex claims management consulting services to Lockton's architectural, engineering and construction clients in her role as Vice President, Director of Practice Management. Her background includes construction litigation at a leading construction law firm, professional liability claims defense and claims consulting for major professional liability underwriters.
Miller joins Lockton as a Senior Vice President within the Design and Construction Unit. His role will be dedicated to serving the needs of engineering, architecture and construction firms performing services around the globe. He has spent more than 15 years concentrating on professional liability for design professionals and contractors in multiple roles. He previously managed the professional liability underwriting of one of the largest construction insurers and has developed numerous manuscript insurance products as well as focused on strategic planning to enhance business unit opportunities.
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Senate Committee Approves Military Construction Funds
June 29, 2011 — CDJ Staff
With a decrease in funding, as compared to the House bill, the Military Construction and Veteran’s Affairs subcommittee of the Senate moved on a $72 billion construction bill. The House version had approved an additional half billion dollars in funding. Senator Tim Johnson, Democrat of South Carolina, said that he expected easy reconciliation with the House version. The Senate bill will move to the full Senate Appropriations Committee on June 30.
The bill, S 1255, includes funding for construction and remodeling of military housing, as well as construction and remodeling of base facilities.
Read the full story… Read S1255
Landmark San Diego Hotel Settles Defects Suit for $6.4 Million
March 4, 2011 — April 4, 2011 Beverley BevenFlorez - Construction Defect Journal
After five years of legal battles, the condo owners of the El Cortez Hotel building in downtown San Diego settled for $6.4 million, as reported by The San Diego Union-Tribune on March 28, 2011. The Homeowners Association will net just over $3 million from the settlement.
The litigation may have had an adverse effect on the value of the condos within the El Cortez Hotel building. According to an article by Kelly Bennett of Voice of San Diego, “Many condos in the building originally sold for more than $600,000. Currently, the three units on the market are asking for just more than $200,000, the U-T said.”
Andrew Berman, the owners’ attorney, told The San Diego Union-Tribune that the five years of litigation included six lawsuits, 200 depositions, and multiple construction tests.
Read the full story... (San Diego Union Tribune)
Read the full story... (Voice of San Diego)
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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More Charges in Las Vegas HOA Construction Defect Scam
May 10, 2012 — CDJ Staff
VegasInc.com reports that U.S. District Judge James Mahan has unsealed fourteen more criminal cases in the ongoing Las Vegas HOA corruption probe. One of the fourteen is Lisa Kim, whose Platinum Community Services managed communities in which Nancy Quon and Leon Benzer were involved.
Two attorneys were also named. Brian Jones had previously been named in civil litigation as working to rig HOA elections in favor of the straw buyers. Jeanne Winkler had done legal work for one of the communities and for the developer before her disbarment.
Eight of the names released were of alleged straw buyers. These individuals are said to have bought fractional shares of homes so they could stand for election on the HOA boards. One of the individuals named, Arnold Meyers, had sued the Jasmine Homeowners Association, claiming that their HOA elections were tainted. Myers claimed that homeowners received postcards stating that he did not own his condo. His suit was dropped after two homeowners claimed that their names had been forged on Meyer’s affidavits.
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$5 Million Construction Defect Lawsuit over Oregon Townhomes
January 6, 2012 — CDJ Staff
A homeowners’ association in Lake Oswego, Oregon has filed a $5 million lawsuit against the developers of the luxury townhomes. The homeowners of Sunset Crossing are suing Centurion Homes and Aspen Townhomes over claims that construction defects have lead to water intrusion and structural damages. The townhomes were built in 2005.
Andy Burns, the lawyer for Phillip and Patricia Gentelmann, the owners of both Centurion Homes and Aspen Townhomes, said the Gentelmanns were “taking these allegations very seriously.” The suit says that the construction violated state and local building codes and that the firms did not repair damage caused by water intrusion.
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Court Grants Summary Judgment to Insurer in HVAC Defect Case
August 4, 2011 — CDJ Staff
The US District Court in Colorado has determined in the case of RK Mechanical, Inc. v. Travelers Property Casualty Company of America that Travelers did not breach its insurance contract when it refused to cover RK Mechanical.
RK Mechanical performed an HVAC installation for a residential project for which J.E. Dunn Rocky Mountain was the general contractor. As part of the work, RK “installed approximately one hundred seventy-one CPVC flanges, which were manufactured by Charlotte Pipe and Foundry Company.” Two of these flanges failed in June, 2009 leading to water damage. RK replaced the cracked flanges and engaged in water remediation. “Travelers paid Dunn and RK for the costs associated with the water damage associated with the Flange Failure.” The court notes that Travelers did not pay for the cracked flanges, however.
Subsequently, RK examined the remaining flanges, finding many cracked ones. These were replaced with new ones. Later, all the Charlotte flanges were replaced with ones from another manufacturer. RK applied for coverage.
All sides brought in their experts: “Microbac Laboratories, Inc. prepared a report on behalf of RK concluding that the Flange Failure was due, in part, to an assembly or workmanship defect in addition to manufacturing defects in the flanges. Higgins & Associates prepared a report on behalf of Travelers concluding that the flanges failed due to improper installation. Plastic Failure Labs prepared a report on behalf of the flange manufacturer concluding that the flanges failed due to improper installation by RK.”
At this point, Travelers denied coverage. RK sued alleging that the coverage for flange failure and water damage implicitly includes mitigation costs. The court rejected this claim, noting it would do so even if Travelers had paid for the replacement of the first two flanges. Nor did the court find that replacement of the faulty flanges is not "a covered cause of loss." RK also argued that as it was required to mitigate, Travelers was obligated to cover costs. However, the court found that “the mitigation costs expended by RK were not incurred in an effort to avoid damages from a potential breach of contract by Travelers.” The court additionally noted that despite RK’s claims, the Colorado courts have not found a common law duty to mitigate. Finally, the court found that the exclusions in the policy were not in violation of public policy.
Read the court’s decision…
No Coverage for Negligent Misrepresentation without Allegations of “Bodily Injury” or “Property Damage”
February 10, 2012 — Tred Eyerly, Insurance Law Hawaii
Jeff City Industries was the general contractor for a sewer system improvement project in Branson, Missouri. Bituminous Cas. Corp. v. United HRB Gen. Contractors, Inc., 2011 U.S. Dist. LEXIS 145666 (W.D. Mo. Dec. 19, 2011). Branson sued Jeff City, alleging breach of the construction contract for the project. The claims included improperly bedded sewer piping, improper aligning portions of trenching for the sewer piping, improper service line connections to the sewer piping, etc.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Ambitious Building Plans in Boston
November 18, 2011 — CDJ Staff
Although most are unlikely to change the Boston skyline, there are several large projects on the drawing boards. The site BostInnovation covered ten of them in a recent post. Downtown Boston will be the site of several of these large projects, including three towers to be added to the Christian Science Plaza, a 404-unit residential tower in the Theater District, and perhaps the largest of these projects, a 47-story tower to be built over Copley Plaza, which will tower over the adjacent buildings. None of the planned buildings will challenge the Hancock Tower’s 60 stories.
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South Carolina Contractors Regain General Liability Coverage
May 20, 2011 — CDJ Staff
PR Newswire reports that the Carolinas Associated General Contractors (CAGC) have successfully persuaded the South Carolina legislature to pass a bill restoring commercial general liability (CGL) coverage. Governor Nikki Hartley signed the legislation on May 17.
A South Carolina Supreme Court decision given on January 7, 2011, had ended commercial general liability coverage in the state. Senate Bill 431 addressed this decision, restoring the ability of home builders to obtain CGL coverage.
PR Newswire quotes South Carolina homebuilder, Allen Amsler: “We have seen a lot of legislation with substantial impact to our business over the years. However, I would place this in the same level of importance with the original tort reform legislation. The effects of the Supreme Court’s ruling could have been catastrophic to our industry in South Carolina had it not been for this bill. Thanks to all those in the House, Senate and the Governor’s office who assisted us.”
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Businesspeople to Nevada: Revoke the Construction Defect Laws
March 1, 2012 — CDJ Staff
The Nevada chapter of the National Federation of Independent Businesses has said that Nevada’s construction defect and minimum wage laws are hampering job growth. The organization conducted a survey, and although only about two percent of the members responded, they passed the opinions of the group on to Governor Brian Sandoval. Sandoval has said, according to the report by Fox News Reno, that he wants the state to be more business friendly. He supports reforms to Nevada’s construction defect laws, saying that he’d “like to see some reform” on the issue of mandatory attorney’s fees.
Randi Thompson, the spokesperson for the Nevada chapter of the National Federation of Independent Businesses, said that members of her organization would like to see current Nevada construction defect law revoked. She described current law as “driven towards lawyers and not toward protecting consumers.”
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Micropiles for bad soil: a Tarheel victory
March 14, 2011 — Original article by by Melissa Brumback on March 14, 2011
Despite foundation challenges, construction is almost complete on the expansion at University of North Carolina’s Kenan stadium. The project started with a deep foundation system from design-build contractor GeoStructures. Known as the Carolina Student-Athlete Center for Excellence, the addition was built on a parcel with a knotty mix of fill soils, subsurface boulders and varying depths to rock. To achieve uniform foundation support, GeoStructures designed a Micropile system (also known as a Mini pile system) which could be drilled into the variable ground conditions.
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Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl law.com.
Save A Legal Fee? Sometimes You Better Talk With Your Construction Attorney
May 10, 2012 — Douglas Reiser, Builders Counsel
I love writing this column, because I think it’s refreshing for contractors to hear that they don’t always need an attorney. Today’s post is the “Un-Save a Legal Fee” because I want to point out a specific illustration of when you definitely need your attorney. Using a construction contract template can be fine, but you always need to consider its application to each project ? or it could bite you in the rear.
Seattle attorney Paul Cressman published a prime depiction of bad contract management, last week. A Florida appellate court struck down a general contractor’s “pay if paid” clause when it became ambiguous because of some incorporated language from its prime contract. Specifically, a clause in the prime contract required the general contractor to pay all subcontractors before receiving payment from the owner, while the general contractor’s “pay if paid” clause required its subcontractors to wait for payment until it arrived from the owner.
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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.
More Charges in Las Vegas HOA Scandal
September 13, 2012 — CDJ Staff
The indictments continue in the Las Vegas HOA scandal. A lawyer for the Justice Department told the judge in the case that “we expect several indictments before the end of the year.” According to the Las Vegas Review Journal, “a dozen or more” additional people will be charged in the conspiracy.
The judge in the case, Senior U.S. District Judge Lloyd George, told prosecutors that he wanted to address the issue of compensation for homeowners. Currently, defendants have agreed to pay $1.5 million to compensate homeowners associations and banks. Vistana homeowners have claimed that the conspirators got the bulk of a $19 million construction defect settlement.
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Boyfriend Pleads Guilty in Las Vegas Construction Defect Scam Suicide
November 7, 2012 — CDJ Staff
One of the odder twists of the Las Vegas construction defect scandal was the charge that Nancy Quon’s boyfriend helped her in an initial suicide attempt. Quon, implicated by not charged in the case of taking control of homeowner boards in order to profit from construction defect settlements. William Webb was alleged to have bought the drug GBH in order to allow Quon, his girlfriend, to commit suicide. Ms. Quon later overdosed on a combination of alcohol and prescription drugs.
In addition to pleading guilty to the drug charges, Webb also made a plea bargain with prosecutors in which he did not admit guilt in an insurance fraud charge, but acknowledged that prosecutors would likely be successful at obtaining a conviction. Webb will be sentenced February 7 and is expected to receive a sentence of six years imprisonment.
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Ensuing Loss Provision Found Ambiguous
April 25, 2012 — Tred Eyerly, Construction Law Hawaii
After the insurer denied coverage in a homeowner’s policy for construction defects under various exclusions, the court found the ensuing loss provision was ambiguous.Kesling v. Am. Family Mut. Ins. Co., 2012 U.S. Dist. LEXIS 38857 (D. Colo. March 22, 2012).
After purchasing a home from the sellers, the insureds noticed problems with the deck of the home. Massive cracking appeared, causing lifting and leaking on the deck and water running through the exterior foundation wall into the home. There was also damage to the roof and crawlspace.
The insureds had a homeowner’s policy with American Family, which covered accidental direct physical loss to property described in the policy unless the loss was excluded. They requested coverage for "conditions, defects and damages." American Family denied coverage because wear and tear, as well as damage to foundations, floors and roofs were excluded. The policy did provide coverage, however, for "any resulting loss to property described . . . above, not excluded or excepted in this policy.
When coverage was denied, the insureds sued American Family.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
