ANAHEIM CALIFORNIA CONSTRUCTION EXPERT WITNESS
DIRECTORY AND CAPABILITIES

Vegas Hi-Rise Not Earthquake Safe

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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Late Filing Contractor Barred from Involving Subcontractors in Construction Defect Claim

The Colorado Court of Appeals looked at that state’s Construction Defect Action Reform Act in determining if a general contractor could add subcontractors as third-party defendants to a construction defect lawsuit. Shaw Construction, LLC was the general contraction of the Roslyn Court condominium complex, and was sued by the homeowners’ association in a construction defect case. United Builder Services was the drywall subcontractor on the project. MB Roofing had installed roofs, gutters, and downspouts. The certificate of occupancy for the last building was issued on March 10, 2004. The project architect certified completion of all known remaining architectural items in June, 2004.

The HOA filed a claim against the developers of the property on January, 21, 2009. A week later, the HOA amended its complaint to add Shaw, the general contractor. Shaw did not file its answer and third-party complaint until March 29, 2010, sending its notice of claim under the CDARA on March 30.

The subcontractors claimed that the six-year statute of limitations had ended twenty days prior. Shaw claimed that the statute of limitations ran until six years after the architect’s certification, or that the HOA’s suit had tolled all claims.

The trial court granted summary judgment to the subcontractors, determining that “substantial completion occurs ‘when an improvement to real property achieves a degree of completion at which the owner can conveniently utilize the improvement of the purpose it was intended.’”

The appeals court noted that “Shaw correctly points out that the CDARA does not define ‘substantial completion.’” The court argued that Shaw’s interpretation went against the history and intent of the measure. “Historically, a construction professional who received a complaint responded by ‘cross-nam[ing] or add[ing] everybody and anybody who had a part to play in the construction chain.’” The court concluded that the intent of the act was to prevent unnamed subcontractors from being tolled.

The court further rejected Shaw’s reliance on the date of the architect’s certification as the time of “substantial completion,” instead agreeing with the trial court that “the architect’s letter on which Shaw relies certified total completion.”

The appeals court upheld the trial court’s determination that the statute of limitation began to run no later than March 10, 2004 and that Shaw’s complaint of March 29, 2010 was therefore barred. The summary judgment was upheld.

Read the court’s decision…

Another Guilty Plea In Nevada Construction Defect Fraud Case

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.

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Construction Delayed by Discovery of Bones

Work stopped on a $7 million construction project in Oak Harbor, Washington, after three sets of Native American remains were found. The Washington State Department of Archaeology and Historic Preservation had suggested that the project employ an archaeologist. City, state, and tribal officials are determining what will happen next. The Seattle Times reports that Jim Slowik, Oak Harbor’s mayor, has asked for a review of why no archaeologist was part of the project.

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Construction Defect Case Not Over, Despite Summary Judgment

The Supreme Court of Oregon has concluded in an en banc decision that a motion to reconsider a summary judgment is not a motion for a new trial. In coming to their conclusion the court overturned an earlier Oregon Supreme Court case, Carter v. U.S. National Bank. Although the decision does not bear on construction defects, the underlying case did. Due to the decision, these claims can now be evaluated in a trial.

The case, Association of Unit Owners of Timbercrest Condominiums v. Warren, came about after an apartment complex was converted into condominium units. The developers hired Big Al’s Construction for some of the remodeling work. The condominium association later sued the developer and the contractor over claims of construction defects. The defendants filed a motion for summary judgment, which the court granted.

But that wasn’t the end of things. The plaintiff soon filed a “motion to reconsider,” noting that the summary judgment seemed to be in conflict with both law and other recent rulings, and additionally, the grounds for the decision were not in the order. The judge then notified the parties that the court had “pulled the trigger too quickly” and had seven questions for the parties to answer.

The court dismissed all claims against the defendants. The defendants filed their responses, objecting that that “‘there is no such thing’ as a motion for reconsideration.” Further, while “the rules do allow for post-judgment review of pre-judgment rulings through a motion for a new trial,” the plaintiffs had not filed for a new trial. But did they need one? They did file an appeal.

The judge in the case admitted that there was no such thing as a motion to reconsider, and felt bad about prematurely signing the judgment. The case was sent to the Court of Appeals to determine if the motion to reconsider was a request for a new trial. The Court of Appeals concurred.

In reviewing the decision, the Oregon Supreme Court concluded that there were a maximum of three questions to address. Was the motion for reconsideration a motion for a new trial? If so, was the later notice of appeal premature? And if so, was the plaintiff required to file a new appeal? The court determined that the answer to the first question was no.

Prior decisions pointed to the conclusion “that a motion for reconsideration of a summary judgment amounts to a motion for a new trial,” but here the court concluded that “our prior cases erred,” and turned to the summary judgment rule for clarification. The court noted that “the rule contemplates that summary judgment and trial are separate and distinct events.” With this conclusion, the Oregon Supreme Court remanded the case to the Court of Appeals for further proceedings.

Read the court’s decision…

Demand for Urban Living Leads to Austin Building Boom

The New York Times reports that Austin is undergoing a building boom as a high-tech firms, including Facebook and Google, have moved into the downtown area. With them, comes a need for more apartment buildings and more retail space. Mike Kennedy, the president and chief executive of an Austin real estate firm, told the Times “the office space was here, the housing came, and retail is arriving last to the scene.” Currently, two large projects that will add about 500 apartment units is underway, including a 222-unit, 18-story building, and another that will contain 277 units. Apartment occupancy in Austin is at ninety-seven percent.

Developers also have hotels and more office space planned. The area has about 6,000 hotel rooms with an additional 2,000 planned, but events in Austin can bring in more people than the city’s 30,000 hotel rooms can accommodate. Office space is eighty-eight percent occupied, and a lack of office space could cause firms to look elsewhere.

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Colorado Court of Appeals holds that insurance companies owe duty of prompt and effective communication to claimants and repair subcontractors

In Dunn v. American Family Insurance, 09CA2173, 2010 WL 4791948 (Colo. App. Nov. 24, 2010), the Dunns reported a claim to American Family on their homeowners insurance policy after sewer and water backup caused sewage to flood their basement. American Family gave the Dunns contact information for a contractor (ICA) to remediate the flooding. However, ICA was unsuccessful and sewage began to infiltrate the Dunns’ HVAC system. Subsequently, black mold was detected in the HVAC system, the Dunns suffered health and respiratory problems, and they soon after vacated the home. The Dunns hired and fired two more contractors for unsatisfactory work throughout the winter before hiring a fourth to finish the job. Because the home remained vacant and unheated throughout the winter, the water pipes ruptured. The mold spread throughout the entire home and all of the contents needed to be replaced, which amounted to a claim of $340,000 on the policy.

American Family agreed to pay the full $340,000. However, the Dunns brought suit claiming that American Family breached the implied duty of good faith and fair dealing by: 1) failing to screen ICA for expertise; 2) failing to screen ICA for liability insurance coverage; 3) failing to monitor ICA’s work; 4) failing to advise them that flooding can cause further damage, including freezing pipes and mold; and, 5) failing to adequately and promptly communicate with them and remediation subcontractors in the course of investigating and handling their claim.The trial court found no duty owed by American Family beyond adjustment and timely payment of claims. Because American Family paid timely and in full, they dismissed all of the Dunns’ claims. However, the Court of Appeals reversed in part.

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Reprinted courtesy of Chad Johnson, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Johnson can be contacted at johnson@hhmrlaw.com

Insurer Not Liable for Construction Defect Revealed by Woodpecker

The Eighth Circuit Court of Appeals has ruled that an insurance provision that excluded construction defects must stand in Friedberg v. Chubb, granting a summary judgment to the insurance firm.

The Friedbergs discovered extensive water damage to their home after a woodpecker drilled a hole in a vertical support. They sought insurance coverage under their Chubb “Masterpiece” policy. The decision quotes the policy as covering “all risk of physical loss” “unless stated otherwise or an exclusion applies.” These exclusions included “gradual or sudden loss,” “structural movement,” and “faulty planning, construction or maintenance,” but the policy covered “ensuing covered loss unless another exclusion applies.”

Chubb’s expert determined that the Friedbergs’ home had defective construction, and “attributed the damage to the beams and walls below the beam to a failure to install control joints.” After Chubb denied coverage, the Friedbergs sued, although the court ruled that “even under the Friedbergs’ theory, the water damage was a loss caused by faulty construction and therefore excluded under the policy.”

On appeal, the Friedbergs argued that “the loss resulted from the combination of both faulty construction and the presence of water” and that Minnesota’s “concurrent causation” doctrine must apply, which according to the decision, “when a loss results from both a covered peril and an excluded peril, coverage exists unless the excluded peril is the ‘overriding cause’ of the loss.” The court rejected this reasoning, noting that “once the house was plagued with faulty construction, it was a foreseeable and natural consequence that water would enter.”

The Friedbergs also contended that “the damage caused by the intrusion of water into their home is an ‘ensuing covered loss’ for which they are due coverage.” The court also rejected this claim, noting that Minnesota law excludes defective construction from the ensuing loss provision. The court said that “the Friedbergs’ reading of their ensuing-loss clause, by contrast, would dramatically limit their policy’s faulty-construction exclusion, because almost ‘any loss cause by’ faulty construction could also be characterized as an ensuing loss under an all-risk policy.”

Read the court’ decision…

Ensuing Losses From Faulty Workmanship Must be Covered

Coverage for damages resulting from faulty workmanship in the construction of an apartment complex was at issue in The Bartram, LLC v. Landmark Am. Ins. Co., 2012 U.S. Dist. LEXIS 44535 (N.D. Fla. March 30, 2012).

The owner of the apartments, Bartram, had primary coverage and three layers of excess coverage. Each contract excluded loss from faulty workmanship. The policies provided, however, "if loss or damage by a Covered Cause of Loss results, we will pay for that resulting loss or damage."

Bartram contended water intrusion occurred because of faulty workmanship, which caused damage to the buildings’ exterior and interior finishes, wood sheathing, framing, balcony systems, drywall ceilings and stucco walls. This damage was separate from the work needed to simply fix the faulty workmanship. Therefore, Bartram argued, the ensuing losses that resulted from the water intrusion was covered.

The insurer argued the ensuing loss exception was not applicable if the ensuing loss was directly related to the original excluded loss.

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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com

Arizona Homeowners Must Give Notice of Construction Defect Claims

Chris Combs of the Combs Law Group notes that “the new home construction industry is recovering” and that some of the buyers of these homes “will have claims for construction defects.” But not so quick on filing that claim.

Under Arizona law, as Mr. Combs notes the law “requires that, at least 90 days before filing any lawsuit, the buyer furnish notice by certified mail to the homebuilder specifying in detail the construction defect.” Only if there is no agreement over proposed repair can the homeowner file a lawsuit.

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Lien Law Unlikely To Change — Yet

For those of you following the proposed revisions to the NC lien law that is currently at the NC House Judiciary Subcommittee B, a quick update: the proposed bill (HB 489) is unlikely to be voted on this legislative session due to its unpopularity with several constituency groups, including both the AIA-North Carolinaand the NC Home Builders Association.

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Reprinted courtesy of Melissa Brumback of Ragsdale Liggett PLLC. Ms. Brumback can be contacted at mbrumback@rl-law.com.

Insurance Company Must Show that Lead Came from Building Materials

The Fourth Circuit Court of Appeals for Louisiana has reversed the summary judgment of a lower court in the case of Widder v. Louisiana Citizens Property Insurance Company. Judge Roland L. Belsome wrote the opinion for the panel of three judges. Ms. Widder discovered that her home and its content were contaminated by lead. She applied to her insurer, Louisiana Citizens Property Insurance, which denied her claim.

In response to Ms. Widder’s suit, LCPIC applied for a summary judgment on the grounds that there was no physical loss and that the policy did not cover defective material, latents defects, and pollution damage.

The appeals court found that the lead contamination of Widder’s home did meet the standards of a direct physical loss, citing a recent Chinese Drywall case. There, it was found, “when a home has been rendered unusable or uninhabitable, physical damage is not necessary.”

The lower court addressed only one of LCPIC’s exclusions, addressing only the exclusion on basis of “faulty, inadequate or defective material.” The appeals court noted that the evidence offered at trial does not show that the building materials were the source of the lead. This provided the appeals court with a matter of fact to remand to the lower court.

Read the court’s decision…

Construction Upturn in Silicon Valley

Work resumed after nearly three years on an office tower in Santa Clara, according to the San Jose Mercury News. Work had stalled on the building due to the economy, but now the developer is planning a second five-story building on the site. Other dormant projects in the area are also getting restarted. Santa Clara County saw the addition of 1,800 construction jobs in June.

A spokesperson for the Operating Engineers Local 3 in Alameda told the paper, “two years ago we had five thousand folks on the out-of-work list. It’s now down to about 1,700.”

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Construction Defect Claim Did Not Harm Homeowner, Court Rules

The Minnesota Court of Appeals has ruled in Creswell v. Estate of Howe, a case in which a woman bought a home and then sued the seller’s estate, both sets of real estate agents, and the homeowner’s association over construction defects. A district court ruled against her, granting summary judgment to the other parties.

After buying a townhome “as is,” Catherine Creswell claims to have shared a thought with her agent that the homeowners association was, in the words of her agent, “trying to hide something.” Later, Creswell found that a few days before her closing, the board had discussed problems with “roofs, siding and soundproofing of the townhomes.” The court noted that “it was clear from the documents that appellant [Creswell] received that the association had known about various construction defects for many years, some of which affected [her] unit.”

Creswell initially sued the estate, the man who negotiated the sale for his mother’s estate, the real estate companies and the agents involved, the homeowners association, and four board members. Later she sued for punitive damages, dropped a claim for interference with contractual relations, and dismissed her claims against the individual board members. The court dismissed all of Creswell’s claims awarding costs to those she sued.

The appeals court has affirmed the decision of lower court, noting that Creswell “did not provide us with any argument why the district court erred in dismissing her unjust-enrichment, breach of contract, or rescission claims against the various respondents.” Nor did she provide evidence to support her claims of “breach of duty, fraud, and violation of consumer protection statutes.”

The court noted that Creswell could not sue the homeowners association over the construction defects because she “failed to prove that she was damaged by the association’s nondisclosure.” The court noted that “there are no damages in this case,” as Creswell “was never assessed for any repairs, she had not paid anything out-of-pocket for repairs, and she has presented no evidence that the value of her individual unit has declined because of the alleged undisclosed construction defects.”

The court granted the other parties motion to dismiss and denied Creswell’s motion to supplement the record. Costs were awarded to the respondents.

Read the court’s decision…

Recent Case Brings Clarity and Questions to Statute of Repose Application

I have often chatted about the Washington Statute of Repose on this blog. The Statute of Repose prevents construction claims, for the most part, from being raised 6 years from the date of substantial completion or termination. Well, a recent Court of Appeals case dove deep into the specific determinative factors that tell us when to start the clock. It certainly raises questions about how long we really have to file suit.

The Statute of Repose has been a frequent topic here, so I will simply direct you to my prior post for further information on how this law works. A recent post was published about a lawsuit that might raise some questions about when and how the clock begins to roll, and claim periods begin to diminish.

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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com

Windows and Lawsuits Fly at W Hotel

An Austin, Texas lawyer has filed a lawsuit against Starwood Hotels and Resorts, the operator of the W Hotel Austin, after two people were struck by glass which fell from the hotel’s balconies. YNN in Austin reports that the hotel has been closed indefinitely as construction workers removed panels. An additional three panels fell before work started. Randy Howry, the lawyer representing the injured parties, notes that in May glass falling from the W Hotel in Atlanta killed one woman and injured another. “Seventeen days pass and we put them on notice, our clients have put them on notice, yet nothing has been done an only after the glass fell yesterday did they do something about it,” YNN quotes Howry.

The hotel released a statement that they will be replacing all of the balcony glass to ensure safety for their guests and the general public. They relocated all hotel guests and coordinated with Austin officials to close adjacent sidewalks and roads. The statement identifies the firms involved with the design and construction of the balconies.

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Building Inspector Jailed for Taking Bribes

The LA Times reports that Raoul Germain, a city Los Angeles building inspector has been sentenced to 21 months in prison after pleading guilty to taking bribes. Germain was caught as part of an FBI sting operation in which he approved work in exchange for thousands of dollars in bribes. The Times notes that that in some cases, Germain never visited the construction sites. Germain was offered a chance to cooperate with investigators. His lawyer, Steve Cron asked the Times, “What do you think happens to someone who cooperates?”

In addition to Germain, another city inspector has pleaded guilty to taking bribes and two more employees of the Department of Building and Safety have been fired in connection with the investigation.

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Harmon Hotel Construction Defect Update

Coverage of the ongoing litigation concerning the Harmon Hotel continues to proliferate. Architectural Record and a number of other news outlets continue to provide additional details and coverage of the matter. Chief among the conditions alleged are improperly installed reinforcing steel inside link beams on 15 floors. MGM Claims that the conditions amount to hundreds of millions of dollars in damages, while Perini (the builder) indicated in a July 12th statement that the buildings problems are related to the design, and the they are “fixable.”

There is significant speculation that MGM Resorts International isn’t interested in repairing the hotel due to a glut of hotel rooms attendant to the troubled economy. In a statement Tuesday Perini reportedly stated that “Repairing and opening the Harmon would only create a greater glut of unused hotel rooms for MGM,” “If market conditions were better and MGM found that demand existed for the Harmon hotel rooms, MGM would not be claiming that the Harmon is unstable.”

MGM asserts that Perini failed to ”properly construct” the project. Clark County’s Department of Development Services has reportedly asked MGM to provide a plan to fix the project by August 15th.

The Harmon is part of the $8.5 billion CityCenter project that opened in the fourth quarter of 2009 and is jointly owned by MGM Resorts and Dubai World.

Prior reports indicated that the owner (MGM) had considered razing the entire project. The future of the project remains uncertain.