Gut Feeling Does Not Disqualify Expert Opinion
July 6, 2011 — CDJ Staff
The New Jersey Supreme Court issued a ruling in June on the case of Nevins v. Toll in which they reversed an earlier decision and remanded the case to a lower court for retrial. At issue in the case was the testimony of the plaintiff’s expert, J. Anthony Dowling. In depositions, Mr. Dowling said that his estimates for repair were based on a “gut feeling.” Dowling said he had “very little” experience in cost estimates for single-family homes. The defendants sought to bar Dowling’s testimony which was granted by the judge. Without an expert, Ms. Nevin’s case was dismissed.
Describing Dowling’s report as “far from a model of how an expert’s opinion in a construction case should be presented,” the court noted that Dowling is not a professional expert witness. However, the court did note that Dowling is a professional cost estimator. Despite Mr. Dowling using his “gut feeling” to construct his estimate, the New Jersey Supreme Court felt that whether his estimate is convincing is “a question for the jury.”
Read the court’s opinion…
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…
Changes To Indemnification Statute Are Here! Say Hello To Defense Duties
June 19, 2012 — Douglas Reiser, Builders Counsel
A months back, I discussed the passage of SHB 1559. The law changes the existing statutory indemnification regulation to include the costs of defense and to rid contracts of unfair indemnification for someone else’s sole negligence. The law went into effect last week!
Check back to my recent article on the changes set forth in the new law. The amendments to RCW 4.24.115 will broaden the existing law and clarify what types of indemnification are unenforceable. In short, an “up the chain” contractor (such as a general contractor) cannot expect to pass 100% of the defense and indemnification obligations downward if it is partially liable.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Colorado Court of Appeals Finds Damages to Non-Defective Property Arising From Defective Construction Covered Under Commercial General Liability Policy
December 20, 2012 — Heidi Gassman, Higgins, Hopkins, McLain & Roswell
The recently decided case of Colorado Pool Systems, Inc. v. Scottsdale Insurance Company (Colo. Ct. App. 10CA2638, October 25, 2012), confirms that absent specific exclusions in the policy, a commercial general liability (“CGL”) policy covers damages to non-defective property arising from a builder’s own defective workmanship.
Colorado Pool Systems, Inc. (“Colorado Pool”) was hired as a subcontractor to install a swimming pool at Founders Village Pool and Community Center (“Founders Village”) in Castle Rock, Colorado. After the concrete shell of the pool was placed, some of the rebar frame was found to be too close to the surface. Founders Village demanded that Colorado Pool remove and replace the pool, and Colorado Pool contacted its insurance carrier, Scottsdale Insurance Company (“Scottsdale”), with which Colorado Pool held a CGL policy. After inspecting the pool, Scottsdale’s claims adjuster stated that the insurance policy would cover losses associated with removing and replacing the pool.
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Reprinted courtesy of Heidi Gassman, Higgins, Hopkins, McLain & Roswell, LLC. Ms. Gassman can be contacted at gassman@hhmrlaw.com
Drug Company Provides Cure for Development Woes
November 18, 2011 — CDJ Staff
Vertex Pharmaceuticals is poised to become the holder of Boston’s biggest commercial lease, paying $72.5 million for 1.1 million square feet on Boston’s waterfront. Vertex’s new buildings are still under construction, but the plans have spurred other development in the Fan Pier area, according to the New York Times. The Times quotes Mary A. Burke, a senior economist at the Federal Reserve Bank of Boston that the Vertex project gives “a big push” to the “momentum for economic growth.”
The Fallon Company is building Vertex’s new laboratory and office space. They are separately planning to build a high-rise with 150 luxury condominium units. According to Joseph Fallon, the chief executive and president of the Fallon Company, there is already a waiting list of 50 buyers for the condominiums.
Across the street from the Vertex site, a group including Morgan Stanley and Boston Global Investors is planning a 23-block mixed use project that would include 1.2 million square feet of retail space. Additionally, the New England Development and the Hanover Group is building a 356-unit apartment building at the adjacent Pier 4.
Read the full story…
Another Guilty Plea In Nevada Construction Defect Fraud Case
April 25, 2012 — CDJ Staff
The eleventh defendant has entered a guilty plea in the ongoing federal investigation of construction defect fraud in the Las Vegas area. Mahin Quintero plead guilty to producing a false authentication feature, a misdemeanor. Ms. Quintero’s part in the scheme was to falsely authenticate signatures on loan documents for straw buyers. Ms. Quintero stated in court that she had been ordered to destroy her notary book three years ago. According to her plea bargain, the straw buyers did not appear in front of her when she notarized their signatures. As part of the scheme, the straw buyers would take control of homeowners associates, sending construction defect complaints and repairs to favored firms.
Read the full story…
Construction Defects and Contractor-Owners
July 10, 2012 — CDJ Staff
On the expert advice site Avvo.com, a user asks if he can be sued for construction defects by the new owner of a building for which he served as general contractor and then owned for four years. He had construction insurance, but does not think he had construction defect insurance.
A lawyer responding to his question says that “you could be sued.” In the event of a suit, “you would have to bring claims against all of your subcontractors.”
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Colorado “property damage” caused by an “occurrence” and exclusions j(5) and j(6) “that particular part”
August 11, 2011 — CDCoverage.com
In Continental Western Ins. Co. v. Shay Construction, Inc., No. 10-cv-02126 (D. Col. July 28. 2011), general contractor Milender White subcontracted with insured Shay for framing work.  Shay in turn subcontracted some of its work to others. When Shay?s subcontractors filed suit against Shay and Milender White seeking payment for their work, Milender White cross-claimed against Shay for breach of contract alleging that,Milender White notified Shay during construction that some of Shay?s work was defective and that when Shay repaired its defective work, it damaged work performed by others. Shay’s CGL insurer Continental Western filed suit against Milender White and Shay seeking a judicial declaration of no coverage. The federal district trial court granted Continental Western?s motion for summary judgment.
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Reprinted courtesy of CDCoverage.com
Washington Supreme Court Sides with Lien Claimants in Williams v. Athletic Field
September 30, 2011 — Douglas Reiser, Builders Counsel
The Washington Supreme Court issued their opinion today on Williams v. Athletic Field, perhaps the most talked about construction law case in the past few years. I have discussed this case exhaustively here on Builders Counsel. Today we have a resolution.
In an unanimous opinion issued today, the high court sided with lien filers who followed a sample form provided in RCW 60.04.091. Additionally, the court found that a lien company - and presumably other persons - could sign the lien for the lien claimant, as an agent, without invalidating the lien.
Read the full story…
Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
Court Rules on a Long List of Motions in Illinois National Insurance Co v Nordic PCL
May 10, 2012 — CDJ Staff
The case Illinois National Insurance Co. v Nordic PCL, et al. “involves a dispute about whether insurance benefits are available to a general contractor who built structures that allegedly have construction defects. Plaintiffs Illinois National Insurance Company (‘Illinois National’) and National Union Fire Insurance Company of Pittsburgh, PA (‘National Union’) (collectively, the ‘Insurers’), commenced this action for declaratory relief against Defendant Nordic PCL Construction, Inc., f/k/a Nordic Construction, Ltd. ("Nordic"), on August 23, 2011.”
The court was asked to rule on a long list of motions: “Counterclaim Defendants’ Request for Judicial Notice in Support of Their (1) Motion to Dismiss the Counterclaim and (2) Motion to Strike Portions of the Counterclaim, ECF No. 16 (‘Request for Judicial Notice’); Counterclaim Defendants’ Motion to Dismiss Counterclaim Filed October 24, 2011, ECF No. 14 (‘Motion to Dismiss Counterclaim’); Counterclaim Defendants’ Motion to Strike Portions of the Counterclaim Filed October 24, 2011, ECF No. 15 (‘Motion to Strike’); Third-Party Defendant Marsh USA, Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 33 (‘Marsh’s Motion To Dismiss Or Stay’); Defendant and Third-Party Plaintiff Nordic PCL Construction, Inc., f/k/a Nordic Construction Ltd.’s Substantive Joinder to Third-Party Defendant Marsh USA Inc.’s Motion to Dismiss or, in the Alternative, Stay Proceedings in Favor of Pending State Action, ECF No. 36 (‘Nordic’s Joinder’); and Third-Party Defendant Marsh USA, Inc.’s Motion for Judgment on the Pleadings on Counts V and VI of Defendant/Third-Party Plaintiff Nordic PCL Construction, Inc.’s Third-Party Complaint, ECF No. 29 (‘Marsh’s Motion for Judgment on the Pleadings’).”
In result, the court reached the following decisions: “The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice to the extent it covers matters relevant to these motions; GRANTS IN PART the Insurers’ Motion to Dismiss Counterclaim, but gives Nordic leave to amend the Counterclaim in certain respects; DENIES the Insurers’ Motion to Strike; DENIES Marsh’s Motion To Dismiss Or Stay and Nordic’s Joinder; and GRANTS Marsh’s Motion for Judgment on the Pleadings.”
The court provides a bit of background on the case: “This action arises out of alleged construction defects involving two projects on which Nordic acted as the general contractor. Nordic is a defendant in a pending state court action with respect to one of the projects and says it spent more than $400,000 on repairs with respect to the other project. Nordic tendered the defense of the pending state court action to the Insurers and sought reimbursement of the cost of repairs already performed. The Insurers responded by filing this action to determine their rights under the insurance policies issued to Nordic.”
Furthermore, the court presented a brief procedural history: “The Insurers commenced this declaratory action in this court on August 23, 2011. The Complaint asserts two claims, one seeking a declaration that the Insurers have no duty to provide a defense or indemnification regarding the Safeway Action, the other seeking such a declaration regarding the Moanalua Claims. Along with its Answer, Nordic filed a Counterclaim against the Insurers. The Counterclaim asserts breach of contract, breach of the covenant of good faith and fair dealing, misrepresentations and omissions of material fact, and bad faith, and seeks declaratory relief against the Insurers.”
The procedural history continues: “Nordic also filed a Third-Party Complaint against Marsh, the broker that had procured the Policies from the Insurers for Nordic. Nordic alleges that it reasonably believed that the Policies would provide completed operations insurance coverage for the types of construction defects alleged in the Safeway Action and Moanalua Claims. The Third-Party Complaint asserts breach of contract, negligence, promissory estoppel, breach of fiduciary duties, implied indemnity, and contribution and equitable subrogation.”
In conclusion, “The court GRANTS IN RELEVANT PART the Insurers’ Request for Judicial Notice. With regard to the Insurers’ Motion to Dismiss Counterclaim, the court GRANTS the motion as to Count I (breach of contract), Count II (duty of good faith and fair dealing), Count III (fraudulent and negligent misrepresentation), the portion of Count IV (bad faith) premised on fraud, and Count IV (declaratory relief). The court DENIES the motion as to Count IV (bad faith) that is not premised on fraud. Except with respect to the "occurrence" issue, which the court disposes of here on the merits, and Count V, which concerns only a form of relief, Nordic is given leave to amend its Counterclaim within three weeks of the date of this order. The court DENIES the Insurers’ Motion to Strike, DENIES Marsh’s Motion to Dismiss or Stay and Nordic’s Joinder, and GRANTS Marsh’s Motion for Judgment on the Pleadings with respect to Counts V and VI of the Third-Party Complaint.”
Read the court’s decision…
Appropriation Bill Cuts Military Construction Spending
June 15, 2011 — CDJ Staff
The Hill reports that HR 2055, the Military Construction, Veterans Affairs (VA) and Related Agencies bill, has passed with only five votes in opposition. The bill cuts the budget for military construction spending by $2.6 billion due to anticipated base closures.
The bill includes $186 million for family housing construction by the Army, $100 million for family housing construction by the Navy and Marines, and $84 million for family construction by the Air Force, with an additional $50 million allocated for the DOD outside the military branches. By the act, these funds will remain available until September 30, 2016.
Read the full story…
Read HR 2055
Illinois Court Determines Insurer Must Defend Property Damage Caused by Faulty Workmanship
July 11, 2011 — Tred R. Eyerly, Insurance Law Hawaii
The Illinois Court of Appeals determined the insurer must defend allegations of property damage arising from faulty workmanship. Milwaukee Mut. Ins. Co. v. J.P. Larsen, Inc., 2011 Ill. App. Unpub. LEXIS 1443 (Ill. Ct. App. June, 20, 2011).
Larsen was a subcontractor for Weather-Tite in a condominium building. Weather-Tite installed windows on the project and hired Larsen to apply sealant to the windows. The windows subsequently leaked and caused water damage within the complex.
The homeowner’s association sued Weather-Tite for breach of express and implied warranties. Weather-Tite filed a third-party complaint against Larsen, seeking contribution and alleging that Larsen was in breach of contract by failing to add Weather-Tite as an additional insured under Larsen’s CGL policy.
Both Weather-Tite and Larsen tendered to Larsen’s insurer. Both tenders were denied because the insurer contended the complaints alleged only construction defects, and not “property damage” or an “occurrence” within the terms of the policy.
The insurer filed suit for a declaratory judgment. The trial court granted the insurer’s motion as to Weather-Tite, but granted Larsen’s cross-motion 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
Another Colorado District Court Refuses to Apply HB 10-1394 Retroactively
October 28, 2011 — David M. McLain, Colorado Construction Litigation
In Martinez v. Mike Wells Construction Company, 09CV227, Teller County District Court Judge Edward S. Colt refused to apply C.R.S. § 13-20-808 retroactively to provide coverage for the underlying construction defect allegations. According to the recitation of facts in Judge Colt’s March 2011 order, Martinez contracted with Mike Wells Construction to serve as the general contractor for the construction of a home. At that time, Mike Wells Construction was insured through ProBuilders Specialty Insurance Company, RRG. Disputes arose between Martinez and Mike Wells Construction, resulting in Martinez ordering it off of the project in mid-November 2007 and terminating its right to work there by letter dated November 28, 2007.
Mike Wells, the owner of the corporation, subsequently died. Martinez sued Mike Wells Construction in July 2009 for breach of contract and various claims relating to alleged defecting workmanship. Martinez provided notice of the suit to the special administrator of the probate estate. No answer having been filed, the court entered a default judgment against Mike Wells Construction and Martinez sought to garnish Mike Wells Construction’s ProBuilders insurance policy.
Read the full story...
Reprinted courtesy of Higgins, Hopkins, McLain & Roswell, LLC. Mr. McClain can be contacted at mclain@hhmrlaw.com
Mortar Insufficient to Insure Summary Judgment in Construction Defect Case
January 6, 2012 — CDJ Staff
The US District Court of Nevada issued a summary judgment in the case of R&O Construction Company V. Rox Pro International Group, Ltd. on December 19, 2011. The case involved the installation of stone veneer at a Home Depot location (Home Depot was not involved in the case). R&O’s subcontractor, New Creation Masonry, purchased the stone veneer from Arizona Stone. Judge Larry Hicks noted that “the stone veneer failed and R&O was forced to make substantial structural repairs to the Home Depot store.”
Rox Pro asked the court for a summary judgment, which the court granted only in part. The court looked at two issues in the case, whether the installation instructions constituted a breach of implied warranty of merchantability, and whether there was a breach of an implied warranty of fitness for a particular purpose.
Judge Hicks found that there was a breach of implied warranty of merchantability. The instructions drafted by Real Stone and distributed by Arizona Stone were not sufficient for affixing the supplied stones, according to R&O’s expert, a claim the plaintiffs dispute. “Because there is an issue of material fact concerning the installation guidelines, the court shall deny Arizona Stone’s motion for a summary judgment on this issue.”
On the other hand, the judge did not find that the instructions had any bearing as to whether R&O bought the stone, since the stone was selected by the shopping center developer. This issue was, in the view of the judge, appropriately dismissed.
Read the court’s decision…
No Resulting Loss From Deck Collapsing Due to Rot
July 10, 2012 — Tred Eyerly, Insurance Law Hawwaii
The Washington Supreme Court reversed the Court of Appeals’ decision that the ensuing loss provision provided coverage for a deck that collapsed due to rot and decay. Sprague v. Safeco Ins. Co. of Am., 2012 Wash. LEXIS 375 (Wash. May 17, 2012). Our prior post on the Court of Appeals’ decision is here.
The Sprague’s home had a deck supported by six "fin walls." The fin walls were encased in a foam and stucco coating. Twenty years after they purchased the home, it was discovered that the fin walls were in an advanced state of decay. Engineers discovered that construction defects caused the supports to rot. The deck was in danger of imminent collapse.
Safeco denied coverage. The all-risk policy did not exclude collapse, but did exclude coverage for losses causes by mold, wet or dry rot.
Read the full story…
Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Subcontractor Not Liable for Defending Contractor in Construction Defect Case
February 10, 2012 — CDJ Staff
The California Court of Appeals has ruled on January 9, 2012 in Hensel Phelps Construction Company v. Urata & Sons Cement, upholding the judgment of the lower court.
Hensel Phelps was the general contractor for a high-rise in Sacramento. They were sued by the owners of the building after problems were discovered in the concrete slabs of the building’s parking garage. Instead of welded steel wire mesh, the slabs had been constructed with fiber mesh. Hensel Phelps filed a cross-complaint against Urata Cement, the subcontractor that had performed the cement work. Urata refused to defend Hensel Phelps. The owners’ case was subsequently dismissed due to the statute of limitations.
Although the original case was over, Hensel Phelps continued in their claims against Urata. “Urata argued that a handwritten interlineation required Hensel Phelps to prove Urata was at fault for the injury alleged in the building owners’ complaint before Urata was obliged to defend Hensel Phelps in that action.”
The lower court concluded that Urata would have been obligated to defend Hensel Phelps if the owners’ lawsuit had alleged that the damage was due to the subcontractor’s work or if evidence at trial established this. The lower court found neither of these true. Instead, the use of the fiber mesh was a design issue and “that decision was outside the scope of the subcontractor’s work.”
During the trial, Hensel Phelps conceded that Urata was not at fault. The appeals court could find no reading of the contract that would cause Urata to be obligated to defend Hensel Phelps, calling Hensel Phelps’s reading of the contact as “grammatically infeasible.”
Judges Nicholson, Raye, and Butz upheld the decision of the lower court and awarded costs on appeal to Urata.
Read the court’s decision…
Contractor Sues License Board
June 30, 2011 — CDJ Staff
Judge Kendall J. Newman of the US District Court handed down a decision on June 24 on the case of Kent v California Department of Consumer Affairs. Mr. Kent, appearing as his own counsel, had brought the suit against the California Department of Consumer Affairs and the Contractors State Licensing Board after he was arrested in a sting operation and, as the plaintiff put it, “was absurdly arrested and uncooperatively detained for a time longer than necessary or allowed by law under the false pretense of contracting with out a license.” Mr. Kent’s alleged that Rick Lopez, one of the defendants, formed him to read allow from the California Business and Professions Code. He said he was later handcuffed and placed in an uncomfortable chair, “enduring physical pain and emotional agony.”
Although Kent was given a Notice to Appear, he alleged that a further defendant, Stuart Rind, “closed the plaintiff’s case marked citation A7773 without giving written notice to anyone.” As a result, the Placer County District Attorney’s Office had no record of his Notice to Appear.
Kent alleged that subsequently his firm was essentially shut down for two years and that he was prevented from “legally contracting or selling services for any other contractor or qualifying for any other licensed capacity governed by the CSLB.” After this, the CSLB suspended the license for his firm, DSI Construction. He was assessed a $1,500 fine, after which he claims he sent a letter to the CSLB demanding money damages. The judge noted that the letter was not included in the plaintiff’s Ninth Amended Complaint.
Judge Kendall recommended that the plaintiff’s Complaints be dismissed, although he did allow that sixth, and perhaps the eighth and ninth, could be amended with a tenth amended complaint.
Read the court’s decision…
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.
Read the full story...
Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl law.com.
