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    California Builders Right To Repair Current Law Summary:

    Current Law Summary: SB800 (codified as Civil Code §§895, et seq) is the most far-reaching, complex law regulating construction defect litigation, right to repair, warranty obligations and maintenance requirements transference in the country. In essence, to afford protection against frivolous lawsuits, builders shall do all the following:A homeowner is obligated to follow all reasonable maintenance obligations and schedules communicated in writing to the homeowner by the builder and product manufacturers, as well as commonly accepted maintenance practices. A failure by a homeowner to follow these obligations, schedules, and practices may subject the homeowner to the affirmative defenses.A builder, under the principles of comparative fault pertaining to affirmative defenses, may be excused, in whole or in part, from any obligation, damage, loss, or liability if the builder can demonstrate any of the following affirmative defenses in response to a claimed violation:


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    Commercial and Residential Contractors License Required.


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    Building Industry Association Southern California - Desert Chapter
    Local # 0532
    77570 Springfield Ln Ste E
    Palm Desert, CA 92211
    http://www.desertchapter.com

    Building Industry Association Southern California - Riverside County Chapter
    Local # 0532
    3891 11th St Ste 312
    Riverside, CA 92501


    Building Industry Association Southern California
    Local # 0532
    17744 Sky Park Circle Suite 170
    Irvine, CA 92614
    http://www.biasc.org

    Building Industry Association Southern California - Orange County Chapter
    Local # 0532
    17744 Skypark Cir Ste 170
    Irvine, CA 92614
    http://www.biaoc.com

    Building Industry Association Southern California - Baldy View Chapter
    Local # 0532
    8711 Monroe Ct Ste B
    Rancho Cucamonga, CA 91730
    http://www.biabuild.com

    Building Industry Association Southern California - LA/Ventura Chapter
    Local # 0532
    28460 Ave Stanford Ste 240
    Santa Clarita, CA 91355


    Building Industry Association Southern California - Building Industry Association of S Ca Antelope Valley
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    Lancaster, CA 93535



    Construction Expert Witness News and Information
    For Anaheim California

    Homeowner Loses Suit against Architect and Contractor of Resold Home

    “Other Insurance” and Indemnity Provisions Determine Which Insurer Must Cover

    New Web Site Tracks Settled Construction Defect Claims

    Construction Suit Ends with Just an Apology

    Tennessee Court: Window Openings Too Small, Judgment Too Large

    Exclusions Bar Coverage for Damage Caused by Chinese Drywall

    Statute of Repose Dependant on When Subcontractors Finished

    Connecticut Gets Medieval All Over Construction Defects

    Save a Legal Fee: Prevent Costly Lawsuits With Claim Limitation Clauses

    Construction Defects Lead to Demolition

    Insurance Firm Under No Duty to Defend in Hawaii Construction Defect Case

    BHA Expands Construction Experts Group

    Texas exclusions j(5) and j(6).

    No-Show Contractor Can’t Hide from Construction Defect Claim

    Firm Sued For Construction Defects in Parking Garage

    Building Boom Leads to Construction Defect Cases

    Time to Repair Nevada’s Construction Defect Laws?

    There Is No Non-Delegable Duty on the Part of Residential Builders in Colorado

    Court Clarifies Sequence in California’s SB800

    A Downside of Associational Standing - HOA's Claims Against Subcontractors Barred by Statute of Limitations

    Construction Defect Notice in the Mailbox? Respond Appropriately

    Nevada Supreme Court Reverses Decision against Grader in Drainage Case

    Construction Defects and Contractor-Owners

    Construction Defects Are Occurrences, Says Georgia Supreme Court

    Ambitious Building Plans in Boston

    Remodels Replace Construction in Redding

    Insurer Beware: Failure to Defend Ends with Hefty Verdict

    The Flood Insurance Reform Act May be Extended to 2016

    Dust Infiltration Due to Construction Defect Excluded from Policy

    Boston Tower Project to Create 450 Jobs

    Steps to Defending against Construction Defect Lawsuits

    Insurer Must Defend Claims for Diminution in Value of Damaged Property

    Death of Construction Defect Lawyer Ruled a Suicide

    Construction Defects as Occurrences, Better Decided in Law than in Courts

    Increased Expenditure on Injuries for New York City School Construction

    OSHA Cites Construction Firm for Safety Violations

    Insurer Has Duty to Defend Despite Construction Defects

    Home Builder Doesn’t See Long Impact from Hurricane

    New Jersey Court Rules on Statue of Repose Case

    Construction Jobs Expected to Rise in Post-Hurricane Rebuilding

    Anti-Assignment Provision Unenforceable in Kentucky

    No Choice between Homeowner Protection and Bankrupt Developers?

    Local Government Waives Construction Fees to Spur Jobs

    Virginia Homebuilding Slumps After Last Year’s Gain

    Construction Defects Lead to Demolition of Seattle’s 25-story McGuire Apartments Building

    Arizona Homeowners Must Give Notice of Construction Defect Claims

    New Washington Law Nixes Unfair Indemnification in Construction Contracts

    Changes to Arkansas Construction and Home Repair Laws

    Safer Schools Rendered Unsafe Due to Construction Defects

    Colorado “property damage” caused by an “occurrence” and exclusions j(5) and j(6) “that particular part”

    Court Sends Construction Defect Case from Kansas to Missouri

    Arizona Court of Appeals Rules Issues Were Not Covered in Construction Defect Suit

    Know the Minnesota Statute of Limitations for Construction Defect Claims

    Statutes of Limitations May be the Colorado Contractors’ Friend

    Background Owner of Property Cannot Be Compelled to Arbitrate Construction Defects

    Construction Delayed by Discovery of Bones

    School District Marks End of Construction Project by Hiring Lawyers

    $5 Million Construction Defect Lawsuit over Oregon Townhomes

    Continuous Trigger of Coverage Adopted for Loss Under First Party Policy

    Insurer’s Motion for Summary Judgment Based on Earth Movement Exclusion Denied

    No “Special Relationship” in Oregon Construction Defect Claim

    Damron Agreement Questioned in Colorado Casualty Insurance v Safety Control Company, et al.

    Construction Defect Exception Does Not Lift Bar in Payment Dispute

    Good and Bad News on Construction Employment

    San Diego Construction Defect Claim Settled for $2.3 Million

    Water Damage Covered Under Efficient Proximate Cause Doctrine

    Court Requires Adherence to “Good Faith and Fair Dealing” in Construction Defect Coverage

    New Households Moving to Apartments

    Florida trigger

    Ensuing Loss Provision Does Not Salvage Coverage

    West Hollywood Building: Historic Building May Be Defective

    Ensuing Loss Provision Does Not Salvage Coverage

    Ohio Adopts Energy-Efficient Building Code

    Discovery Ordered in Nevada Construction Defect Lawsuit

    Construction Law Client Alert: California Is One Step Closer to Prohibiting Type I Indemnity Agreements In Private Commercial Projects

    Ensuing Loss Found Ambiguous, Allowing Coverage

    Fourteen More Guilty Pleas in Las Vegas Construction Defect Scam

    Product Exclusion: The Big Reason Behind The Delay of LEED 2012

    Insurer Not Liable for Construction Defect Revealed by Woodpecker

    Alabama “occurrence” and subcontractor work exception to the “your completed work” exclusion

    Construction Defect Journal Seeks Article Submissions Regarding SB800 and Other Builders Right to Repair Laws

    David McLain to Speak at the CDLA 2012 Annual Conference

    Construction Defect Not an Occurrence in Ohio

    Residential Construction: Shrinking Now, Growing Later?

    Alaska Supreme Court Dismisses Claims of Uncooperative Pro Se Litigant in Defect Case

    Coverage Rejected Under Owned Property and Alienated Property Exclusions

    Excess Carrier Successfully Appeals Primary Insurer’s Summary Judgment Award

    Oregon agreement to procure insurance, anti-indemnity statute, and self-insured retention

    Builder Waits too Long to Dispute Contract in Construction Defect Claim

    Coverage Exists Under Ensuing Loss Provision
    Corporate Profile

    ANAHEIM CALIFORNIA CONSTRUCTION EXPERT WITNESS
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    The Anaheim, California Construction Expert Witness Group at BHA, leverages from the experience gained through more than 5,500 construction related expert witness designations encompassing a wide spectrum of construction related disputes. Leveraging from this considerable body of experience, BHA provides construction related trial support and expert services to Anaheim's most recognized construction litigation practitioners, commercial general liability carriers, owners, construction practice groups, as well as a variety of state and local government agencies.

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    Construction Expert Witness News & Info
    Anaheim, California

    MGM Seeks to Demolish Harmon Towers

    September 1, 2011 — CJD Staff

    Citing public safety concerns and the cost of repair, MGM Resorts International is seeking to demolish the unfinished hotel tower. The company has a few hurdles to go through before they start laying the charges to implode the structure. Any plans would have to be approved by not only Clark County officials, but also the district court has an order blocking any activity during litigation between MGM and the general contractor on the project, Perini Building Company.

    Architectural Record reports that MGM states it would take “approximately 18 months to conduct test and come up with an approved, permitted design to fix the Harmon.” MGM feels that repairs would then take another two to three years. Perini contends that they could “provide stamped drawings detailing all necessary repairs within three months.” They attribute MGM’s desire to demolish the building as “buyer’s remorse.”

    Read the full story…


    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…


    Nevada Senate Rejects Construction Defect Bill

    June 7, 2011 — CDJ Staff

    The Las Vegas Sun reports that Assembly Bill 401, the construction defect bill, lost in a vote of 9 to 12. The measure extended the time for construction defect suits to be filed, awarded legal costs only to successful plaintiffs, and set a definition of construction defects. Two Democrats joined the Republicans in the Senate in defeating the bill.

    Read the full story…


    One to Watch: Case Takes on Economic Loss Rule and Professional Duties

    June 28, 2011 — Douglas Reiser, Builders Counsel

    According to the Supreme Court of Washington Blog, The Supreme Court heard oral argument in Jackowski v. Hawkins Poe on Thursday, June 16, 2011. The court’s synopsis of the case can be found on the Washington State Court website.

    In short, two home purchasers brought a lawsuit against the home’s sellers, the sellers’ agent and the purchasers’ own agent, alleging claims of fraud, fraudulent concealment, negligent misrepresentation and breach of common law and statutory duties. The trial court dismissed the buyers’ claims on the basis of the economic loss doctrine and Division II reversed, opining that the ELR does not apply to professional duties. The Supreme Court will now look at applying the Independent Duty Doctrine established last year, and whether professional duties (those of the real estate agents) should be reviewed under a different light.

    Read the full story…

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


    Florida trigger

    August 4, 2011 — CDCoverage.com

    In Mid-Continent Casualty Co. v. Siena Home Corp., No. 5:08-CV-385-Oc-10GJK (M.D. Fla. July 8, 2011), insured residential real estate developer Siena was sued by homeowners seeking damages for moisture penetration property damage resulting from exterior wall construction defects. Siena’s CGL insurer Mid-Continent filed suit seeking a declaratory judgment of no duty to defend or indemnify in part on the basis that the alleged “property damage” did not manifest during the Mid-Continent policy period.

    Read the full story…

    Reprinted courtesy of CDCoverage.com


    HOA Has No Claim to Extend Statute of Limitations in Construction Defect Case

    October 28, 2011 — CDJ Staff

    The California Court of Appeals ruled on September 20, 2011 in the case of Arundel Homeowners Association v. Arundel Green Partners, a construction defect case involving a condominium conversion in San Francisco. Eight years after the Notice of Completion was filed, the homeowners association filed a lawsuit alleging a number of construction defects, including “defective cabinets, waterproofing membranes, wall-cladding, plumbing, electrical wiring, roofing (including slope, drainage and flashings), fire-rated ceilings, and chimney flues.” Three years of settlement negotiations followed.

    Negotiations ended in the eleventh year with the homeowners association filing a lawsuit. Arundel Green argued that the suit should be thrown out as California’s ten-year statute of limitations had passed. The court granted judgment to Arundel Green.

    The homeowners then filed for a new trial and to amend its complaint, arguing that the statute of limitations should not apply due to the doctrine of equitable estoppel as Arundel Green’s actions had lead them to believe the issues could be solved without a lawsuit. “The HOA claimed that it was not until after the statute of limitations ran that the HOA realized Arundel Green would not keep its promises; and after this realization, the HOA promptly brought its lawsuit.” The trial court denied the homeowners association’s motions, which the homeowners association appealed.

    In reviewing the case, the Appeals Court compared Arundel to an earlier California Supreme Court case, Lantzy. (The homeowners also cited Lantzy as the basis of their appeal.) In Lantzy, the California Supreme Court set up a four-part test as to whether estoppel could be applied. The court applied these tests and found, as was the case in Lantzy, that there were no grounds for estoppel.

    In Arundel, the court noted that “there are simply no allegations that Arundel Green made any affirmative statement or promise that would lull the HOA into a reasonable belief that its claims would be resolved without filing a lawsuit.” The court also cited Lesko v. Superior Court which included a recommendation that the plaintiffs “send a stipulation?Ķextending time.” This did not happen and the court upheld the dismissal.

    Read the court’s decision…


    Badly Constructed Masonry Walls Not an Occurrence in Arkansas Law

    May 10, 2012 — CDJ Staff

    The US District Court for Maryland has granted a summary judgment in the case Konover Construction Corp. v. ATC Associates to Massachusetts Bay Insurance Company and denied a request for dismissal from ACT. Konover (KBE) was contracted by Wal-Mart to build a Wal-Mart store and a Sam’s Club in Port Covington, Maryland. Superus, Inc. was hired by KBE to build the masonry walls. Superus purchased a policy from Massachusetts Bay Insurance which named KBE as an additional insured. Wal-Mart hired ATC Associates to independently test and inspect the concrete structural steel, and masonry.

    After the building was in use, a large crack appeared which was attributed a latent construction defect. Other cracks were discovered. Upon investigation, it was discovered that there were “voids or foam in the concrete block surrounding the reinforcing steel that should have been filled with grout,” and in some cases, “reinforcing steel was missing or not installed in accordance with the specifications.” KBE paid for the repair and remediation and Wal-Mart assigned all rights and interests against ATC to KBE.

    KBE filed suit against ATC. ATC called for dismissal on the grounds that Wal-Mart had no claims as the problems had been remediated. Wal-Mart then provided KBE with additional agreements to give them enforceable rights against ATC and Superus. KBE filed a fourteen claims against ATC, Superus, and Massachusetts Bay. In the current case, Massachusetts Bay sought summary judgment and ATC sought dismissal of all claims against it.

    Massachusetts Bay claims that they need not indemnify Superus, as “there is no evidence adequate to establish that Superus’ defective work caused any collateral and/or resulting damage that was not subject to an Impaired Property exclusion, and that, in any event, no damage occurred during the policy period.”

    As Wal-Mart is headquarted in Arkansas, certain contracts were under Arkansas law. Under the Arkansas courts, “defective workmanship, standing alone and resulting in damages only to the work product itself, is not an ‘occurrence.’” The court determined that collateral or resultant damage would be covered. The court found that “it is clear under Arkansas law, and the parties appear to agree, that Massachusetts Bay is not obligated to indemnify KBE for any repairs to the masonry walls themselves, including any cracks or gaps in the walls.” The court also found that “there is no evidence adequate to prove that any allegedly resultant property damage was caused by Superus’ faulty construction of the walls.” The court also noted that “if the building code violation and structural integrity problem were ‘property damage,’ insurance coverage would be barred by the Impaired Property Exclusion.” Based on these findings, the court concluded that Massachusetts Bay is entitled to summary judgment.

    While the court dismissed the case against Massachusetts Bay, the court declined ATC’s motion to dismiss. The court noted that ACT’s alleged negligence in conducting inspections “created only a risk of economic loss for KBE.” Although hired by Wal-Mart, ATC “transmitted its daily testing and inspection reports of the Wal-Mart and Sam’s Club projects directly to KBE.” The court found that “KBE has made a plausible claim.”

    ATC also claimed that KBE contributed to the negligence due to the negligence of its subcontractor. The court concluded that it was plausible that “ATC will not be able to carry its burden of proving KBE was contributorily negligent.” The court was less sanguine about KBE’s fraud claim, but though it “may not now appear likely to have merit, it is above the ‘plausibility’ line.”

    In conclusion, KBE may not continue its case against Massachusetts Bay. However, the judge allowed the other proceedings to continue.

    Read the court’s decision…


    Defense for Additional Insured Not Barred By Sole Negligence Provision

    August 11, 2011 — Tred Eyerly, Insurance Law Hawaii

    A general contractor was entitled to a defense as an additional insured when the underlying complaint did not allege it was solely negligent. A-1 Roofing Co. v. Navigators Ins. Co., 2011 Ill. App. LEXIS 656 (Ill. Ct. App. June 24, 2011).

    A-1 was the general contractor for a roof resurfacing job at a high school. Jack Frost Iron Works Inc. (“Frost”) was one of A-1’s subcontractors. Frost had a CGL policy with Navigators Insurance Company under which A-1 was an additional insured.

    An employee of Frost’s subcontractor Midwest Sheet Metal Inc. was killed at the job site when a boom-lift he was operating flipped over. The boom-lift had been leased by another Frost subcontractor, Bakes Steel Erectors, Inc. (BSE). The deceased's estate filed suit against A-1, BSE and two other defendants.

    Read the full story…

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


    Condo Owners Worried Despite Settlement

    September 13, 2012 — CDJ Staff

    KB Homes may have settled a construction defect claim with Willowbrook Condominium Association, but some of the owners are still concerned about the repair process. The Sarasota, Florida Herald Tribune reports that one homeowner’s living room “ends with a white tarp.” He told the paper, “We feel like we’re not even owners of our own home.” A neighbor wondered “what happens when people get displaced while their homes are gutted?”

    As part of the agreement, the condominium association will be selecting a contractor to repair the problems, while the cost will be paid by KB Homes. Nevertheless, at least one owner fears for their ability to resell his home, noting that even after repairs have been made, “do you think someone’s going to come in here and buy?”

    Read the full story…


    Statutes of Limitations May be the Colorado Contractors’ Friend

    April 18, 2011 — April 18, 2011 Beverley BevenFlorez - Construction Defect Journal

    Albert Wolf, a principal in Wolf Slatkin & Madison P. C., has written an interesting article on statutes of limitations in construction defect claims in Colorado. While Wolf states that in most cases, “construction defect claims against construction industry participants (contractors, subcontractors, architects, engineers, etc.) requires that suits be started within two years after construction defects have been or should have been—in the exercise of reasonable diligence (care)—discovered,” if a project used the AIA General Conditions (AIA Document A2010) before the 2007 edition, the “statutes of limitations begin to run (accrue) at either substantial completion or breach by the contractor (installation of defective work), depending on the circumstances.”

    “That’s a huge difference,” Wolf writes in his article. “For example, if the structural defect caused by faulty foundation work is not discovered or discoverable until walls begin to exhibit cracking more than two years after the building is completed, the owner’s claim against the contractor may be barred if the AIA provision is applied.”

    Read the full story...


    Construction on the Rise in Denver

    September 13, 2012 — CDJ Staff

    In another sign of a recovery in the housing industry, the Denver Business Journal reports that the pace of new home construction has accelerated in the Denver area. According to the article, in the first seven months of 2012, forty-eight percent more permits were issued than in the first seven months of 2011. In July, 2012, there were sixty-six percent more permits than a year previously. For the Denver metropolitan area, July was the sixteenth consecutive month in which permits were up from a year previously.

    Read the full story…


    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


    Colorado Statutes of Limitations and Repose, A First Step in Construction Defect Litigation

    December 20, 2012 — CDJ Staff

    Grund Dagner, a law firm operating in Denver and Boulder, Colorado notes on their blog that when defending a construction defect claim, one of their first steps is to determine if the claims are affected by the statutes of limitations or repose, and that they “have had much success raising these defenses with the court before trial.”

    Colorado has a two-year statute of limitations, starting from when the homeowner discovers the defect. Further, Colorado’s statute of repose precludes lawsuits beginning “more than six years after the substantial completion of the improvement to the real property.”

    Grund Dagner notes that they “recently obtained dismissal of claims related to eight of 22 buildings in a condominium project, where the homeowners in those building observed the defects more than two years before the HOA initiated its claims against our client.”

    Read the full story…


    Arbitration Clause Not Binding on Association in Construction Defect Claim

    June 19, 2012 — CDJ Staff

    Determining that a community’s CC&Rs do not form an agreement to arbitrate, the California Court of Appeals has reversed the decision of the Superior Court inVerano Condo. Homeowners the Ass’n v. La Cima Dev., LLC (Cal. App., 2012). La Cima purchased an apartment complex in December 2004, which they converted into condominiums. In the process, La Cima created the CC&Rs, under which the Verano Condominium Homeowners Association came into being. One section of the CC&Rs included arbitration clauses. Additionally, the purchase agreements for individual condominium units also contained arbitration clauses. Subsequently, the owners became aware of construction defect both in units and in the common areas. The Association sued La Cima both in its own interest and on behalf of its members. La Cima moved to compel arbitration, which was denied by the trial court. La Cima appealed.

    The court concluded that “CC&Rs are insufficient to form an agreement to arbitrate between La Cima and the Association.” The court noted that “no evidence exists to show the Association consented to the terms of the CC&Rs, either explicitly or implicitly.”

    The court agreed with La Cima that the arbitration agreement applied to those owners who had purchased their units directly from La Cima. Moreover, as the conversion to condominiums involved interstate commerce, in part because a Delaware company was selling condominiums located in California, the court held that the Federal Arbitration Act (FAA) applied, and as such “even a state constitutional standard, such as the the jury waiver provision requirements of the California Constitution, cannot be used to circumvent the FAA in the face of an otherwise valid arbitration agreement.”

    However, the court also held that there was “no agreement in the CC&Rs between La Cima and owners who did not purchase units directly from La Cima,” adding that “no meeting of the minds between La Cima and these later purchasers and their successors occurred.” The court did not believe that “the Legislature intended that CC&Rs would be used to provide continuing and irrevocable contractual development or role as a representative of the owners of the development.”

    The purpose of the CC&Rs, according to the court are to “protect owners from one another and permit enforcement of its terms by the Association.” The court stated that “La Cima relinquished its interests in the land by selling its property and may not assert any rights under the CC&Rs following the transfer of its ownership interest.

    In its conclusion, the court determined that claims must be organized in three classes. The claims the association made against La Cima for defects in the common area “are not subject to any valid agreement to arbitrate.” The second category are those owners who did not purchase their units directly from La Cima. Here, also, the court found that the units “are similarly not subject to a valid arbitration agreement.”

    The third category, however, was “owners who purchased units directly from La Cima.” The court held that these arbitration agreements were valid, and if the claims were to be taken up by the association, the association could only submit these claims to arbitration. The lower court was instructed to separate these claims, as here La Cima’s motion could be granted.

    Read the court’s decision…


    Tennessee Court: Window Openings Too Small, Judgment Too Large

    November 18, 2011 — CDJ Staff

    The Tennessee Court of Appeals has issued a ruling in the case of Dayton v. Ackerman, upholding the decision of the lower court, even as they found that the award was incorrectly computed. The Daytons purchased a house that had been designed and built by the Ackermans, who operated a construction business. The court noted that the warranty with the house promised that “for a period of 60 days, the following items will be free of defects in materials or workmanship: doors (including hardware); windows; electric switches; receptacles; and fixtures; caulking around exterior openings; pluming fixtures; and cabinet work.”

    Soon, the Daytons began to experience problems with the house. Many were addressed by the Ackermans, but the Daytons continued to have problems with the windows. Neither side could specify a firm date when the Ackermans were contacted by the Daytons about the window problems. The Ackermans maintained that more than two years passed before the Daytons complained about the windows. The lower court found the Daytons more credible in this.

    Initially, the Daytons included the window manufacturer in their suit, but after preliminary investigations, the Daytons dropped Martin Doors from their suit. Martin Doors concluded that the windows were improperly installed, many of them “jammed into openings that were too small for them.”

    After the Daytons dismissed Martin Doors, the Ackermans sought to file a third party complaint against them. This was denied by the court, as too much time had elapsed. The Ackermans also noted that not all of the window installations were defective, however, the courts found that the Daytons ought not to have mismatched windows.

    Unfortunately for the Daytons, the window repair was done incorrectly and the windows were now too small for the openings. The firm that did the repair discounted the windows and Daytons concealed the problem with plantation shutters, totalling $400 less than the original lowest estimate. However, the appeals court noted that it was here that the trial court made their computation error. Correcting this, the appeals court assessed the Ackermans $12,016.20 instead of $13,016.20.

    Finally, the Ackerman’s expert was excluded as he had changed his testimony between deposition and trial. The trial reviewed the expert’s testimony and had it been admissible, it would not have changed the ruling.

    Read the court’s decision…


    Construction Defects Are Occurrences, Says South Carolina High Court

    December 20, 2012 — CDJ Staff

    The South Carolina Supreme Court has left the legislature’s new, expanded definition of “occurrence” in place, declining to declare it unconstitutional. South Carolina included faulty workmanship as an occurrence in response to a Supreme Court decision, which the court later reversed. One of the parties in that earlier decision, Harleysville Insurance, challenged the new law, claiming that the legislature didn’t have the power to pass a law to overturn a court ruling. The court did not concur.

    However, the court did determine that the law was not retroactive and covered only claims filed after the law became effective in May 2011. The Chief Justice of South Carolina noted that “insurance coverage for construction liability lacks clarity, particularly with respect to whether construction defects constitute ‘occurrences’ under construction general insurance policies.”

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    Destruction of Construction Defect Evidence Leads to Sanctions against Plaintiff

    July 10, 2012 — CDJ Staff

    Stating that the plaintiff’s actions have left the defendants in a situation where they “cannot properly defend the action,” a judge in the US District Court of New York has sanctioned the plaintiffs in Aktas v. JMC Dev. Co.

    The plaintiffs hired JMC Development and Stephen Jung, an architect, to renovate their vacation home in Adirnodack, New York. As work progressed, “due to disagreements regarding the completion date and payments for the project, the relationship began to deteriorate.” The plaintiffs hired George Villar as an owner’s representative who “testified that he deemed the workmanship to be ‘poor.’”

    Subsequently, the locks where changed on the home, preventing JMC from performing any additional work, after which drywall was removed, which Villar stated was so that “the engineer come and look at the framing.” Subsequently, Villar sent a letter to JMC stating that the work was “performed in an inadequate, negligent and un-professional manner.” Villar informed JMC that they were not to visit the property. Subsequently, the plaintiffs hired another firm. “Plaintiffs testified that the materials were ‘carted away’ and ‘thrown out.’”

    The plaintiffs filed a suit against JMC and others. JMC filed a motion requesting that the plaintiffs be sanctioned for their spoliation of evidence. The court noted that “the plaintiffs recognized that litigation was imminent,” and that they “had a duty to preserve the evidence. As all of JMC’s work was destroyed, there is no evidence of whether or not the work was defective. The court concluded that it will “issue an adverse inference charge that permits the jury to infer that the missing evidence was favorable to the defendants.”

    In conclusion, the court granted in part the spoliation sanctions. They granted JMC a summary judgment dismissing the plaintiffs’ claims of fraud.

    Read the court’s decision…


    Insurance for Defective Construction Now in Third Edition

    November 7, 2012 — CDJ Staff

    Available both in print and online, the International Risk Management Institute, Inc has brought out a third edition of Insurance for Defective Construction. The work is written by Patrick J. Wielinski of Cokinos, Bosien & Young, a Dallas-Fort Worth law firm. Mr. Wielinski practice focuses on insurance coverage. Insurance for Defective Construction is described as “a must read for anyone who buys, sell, or underwrites construction insurance or who becomes involved in construction claims.”

    Read the full story…