Safer Schools Rendered Unsafe Due to Construction Defects
February 10, 2012 — CJD Staff
Built on a program for safer school buildings, schools in Neenan County, Colorado have been shown to have mild-to-moderate structural problems, rendering some of them unsafe. The Denver Post reports that a third-party review of schools built by the Neenan Company has shown structural issues in all fifteen school buildings.
One school, Meeker Elementary, has been closed as it could collapse under high winds or during an earthquake. Sargent Junior-Senior High School is in use, but there are plans to evacuate the buildings if winds exceed 25 mile per hour. Two schools have roofs that are unable to bear expected loads of snow during the winter.
The Neenan Company says that the school buildings are not up to their standards and is working with the school districts to repair the buildings. Repairs are expected to be complete by August.
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Home Repair Firms Sued for Fraud
September 30, 2011 — CDJ Staff
The Illinois Attorney General has filed a lawsuit in Cook County Circuit Court alleging that two connected firms took money from homeowners and then failed to perform the contracted work. One of the three defendants, Chris Bidigare, was an owner of agent of both Fairway Construction and Maintenance Services, LLC, and Rock Construction Management, LLC.
In once case, according to the article on the OakPark Patch, one homeowner provided a $111,000 down payment, only to have the company cancel the job and refuse to return the money. One homeowner was told by Fairway that she should contact their insurance provider. The insurance provider told her that Fairway’s insurance had been cancelled due to non-payment.
The suit seeks to bar the three defendants from working in home repair in Illinois.
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New OSHA Fall Rules to Start Early in Minnesota
June 14, 2011 — CDJ Staff
Minnesota has elected to implement the new OSHA rules concerning fall prevention in residential construction on June 20, well before OSHA’s September 15 deadline. Brian Johnson, reporting in Finance and Commerce, quotes Pam Perri, the executive vice president of the Builders Association of Minnesota, “this is the worst time to implement a new rule.” Ms. Perri notes “In Minnesota, education time for the residential construction industry is between November and March 1, not in the middle of the construction season.”
Mike Swanson of Rottlund Homes estimated that the new regulations would add between $200 to $500 to the cost of a house and that he felt the current safety regulations were adequate. OSHA officials are quoted that there continues “to be a high number of fall-related deaths in construction.”
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The Montrose Language Interpreted: How Many Policies Are Implicated By A Construction Defect That Later Causes a Flood?
March 17, 2011 — By Shaun McParland Baldwin, March 17, 2011
The Court of Appeals of Indiana recently addressed the “Montrose” language added to the CGL ISO form in 2001 in the context of a construction defect claim where a fractured storm drain caused significant flooding a year after the drain was damaged. The insuring agreement requires that “bodily injury or “property damage” be caused by an occurrence and that the “bodily injury or “property damage” occur during the policy period. The Montrose language adds that the insurance applies only if, prior to the policy period, no insured knew that the “bodily injury or “property damage” had occurred in whole or in part. Significantly, it also states that any “bodily injury” or “property damage” which occurs during the policy period and was not, prior to the policy period known to have occurred, includes a continuation, change or resumption of that “bodily injury” or “property damage” after the end of the policy period.
In Grange Mutual Cas. Co. v. West Bend Mut. Ins. Co., No. 29D04-0706-PL-1112 (Ct. App. IN March 15, 2011), http://www.ai.org/judiciary/opinions/pdf/03151109ehf.pdf, Sullivan was the General Contractor for a school construction project. Its subcontractor, McCurdy, installed the storm drain pipes. One of the storm pipes was fractured in 2005 while McCurdy was doing its installation work. More than a year later, the school experienced significant water damage due to flooding. It was later discovered that the flooding was due to the fractured storm drain. Sullivanrsquo;s insurer paid $146,403 for the water damage. That insurer brought a subrogation claim against McCurdy and its two insurers: West Bend and Grange. West Bend had issued CGL coverage to McCurdy while the construction was ongoing, including the date in which the storm pipe was fractured. Grange issued CGL coverage to McCurdy at the time of the flooding. Those two carriers jointly settled the subrogation claim and then litigated which insurer actually owed coverage for the loss. Significantly, the loss that was paid included only damages from the flooding, not any damages for the cost of repairing the pipe.
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Reprinted courtesy of Shaun McParland Baldwin of Tressler LLP. Ms Baldwin can be contacted at sbaldwin@tresslerllp.com
Damage During Roof Repairs Account for Three Occurrences
August 2, 2012 — Tred Eyerly, Insurance Law Hawaii
Southgate Gardens Condominium had buildings damaged by Hurricane Wilma in 2005. See Mid-Continent Cas. Co. v. Basedeo, 2012 U.S. App. LEXIS 11864 (11th Cir. June 12, 2012). First State Development Corporation was hired by Southgate to do repairs.
On November 1, 2005, First State completed tarping on the buildings. Thereafter, on November 11, 2005, First State contracted with Southgate to remove and replace the roofs of the Southgate Buildings.
The tarps placed by First State were inadequate and allowed water to enter the unit of Wayne Basdeo and cause damage. Further, when it attached the tarps, First State caused holes to be made in the roofs of buildings, leading to additional damage. First State also left open the mansards (a type of roof which has two slopes on all all sides, but with the lower slope steeper that the upper one). Finally, the peeled-back condition of the roofing allowed rain to enter.
Basdeo filed a claim with Mid-Continent.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Construction Law Client Alert: Hirer Beware - When Exercising Control Over a Job Site’s Safety Conditions, You May be Held Directly Liable for an Independent Contractor’s Injury
April 6, 2011 — April 6, 2011 - By Mark VonderHaar and Yvette Davis in the Haight Brown & Bonesteel Blog
On February 24, 2011, the California Court of Appeal held in Jeffrey Tverberg, et al v. Fillner Construction, Inc. that the imposition of direct liability on a hirer turns on whether the hirer exercised retained control of worksite safety in such a manner that affirmatively contributed to the independent contractor’s injury. Twice, Tverberg, an independent contractor hired by a general contractor's subcontractor, asked the general contractor to make the job site safe by covering up open holes created by another unrelated subcontractor while Tverberg was working at the site. After Tverberg was injured at the site by falling in a hole, he sued both the general contractor and the subcontractor which had hired him.
The Court of Appeal reasoned that when the general contractor instructed another subcontractor to create a condition that was potentially dangerous (i.e., creating open and uncovered bollard holes), and simultaneously required Tverberg to perform unrelated work near the open holes, the general contractor s conduct may have constituted a negligent exercise of its retained control which affirmatively contributed to Tverberg’s injury. The Court also reasoned that the general contractor affirmatively assumed responsibility for the safety of the workers near the holes by only requiring stakes and safety ribbon, and negligently discharged that responsibility which resulted in injury.
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Reprinted courtesy of Mark VonderHaar and Yvette Davis of Haight Brown & Bonesteel. Mr. VonderHaar can be contacted at mvonderhaar@hbblaw.com and Ms. Davis at ydavis@hbblaw.com.
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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Insurer’s Motion for Summary Judgment Based on Earth Movement Exclusion Denied
October 28, 2011 — Tred Eyerley, Insurance Law Hawaii
After carefully dissecting the earth movement exclusion, the court denied the insurer’s motion for summary judgment. High Street Lofts Condominium Assoc., Inc. v. Am. Family Mut. Ins. Co., 2011 U.S. Dist. LEXIS 109043 (D. Colo. Sept. 26, 2011).
The City of Boulder performed road repair work near High Street’s property, some of which involved the use of a vibrating compactor to compact and set the roadbed. High Street noticed damage to its building, such as cracks in walls, sloping of floors and separations of porches from the building itself. High Street contacted the City of Boulder, who forwarded the complaint to its contractor, Concrete Express, Inc.
High Street also filed a claim with its business insurer, American Family, who denied the claim. American Family relied on an opinion letter by High Street’s engineer. The letter indicated that the damage was the result of "soil consolidation/settlement," in response to the construction activities. Based on this letter American Family concluded the claim was excluded under the policy’s earth movement exclusion.
High Street sued American Family, who moved for summary judgment.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Tenth Circuit Finds Insurer Must Defend Unintentional Faulty Workmanship
December 9, 2011 — Tred R. Eyerly, Insurance Law Hawaii
Applying Colorado law, the Tenth Circuit found a duty to defend construction defect claims where the faulty workmanship was unintentional. Greystone Const. Inc. v. National Fire & Marine Ins. Co., 2011 U.S. App. LEXIS 22053 (10th Cir. Nov. 1, 2011). A prior post [here] discussed the Tenth Circuit’s certified question to the Colorado Supreme Court in this matter, a request that was rejected by the Colorado court.
In two underlying cases, Greystone was sued by the homeowner for damage caused to the foundation by soil expansion. In both cases, the actual construction was performed by subcontractors. Further, in neither case was the damage intended or anticipated. Nevertheless, National Union refused to defend, contending property damage resulting from faulty construction was not an occurrence.
Relying on a Colorado Court of Appeals case, General Security Indemn. Co. of Arizona v. Mountain States Mut. Cas. Co., 205 P.3d 529 (Colo. App. 2009), the district court granted summary judgment to National Union.
On appeal, the Tenth Circuit first considered whether Colorado legislation enacted to overturn General Security could be applied retroactively. The statute, section 13-20-808, provided courts "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."
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Delaware “occurrence” and exclusions j(5) and j(6)
June 10, 2011 — CDCoverage.com
In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects. Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property
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Reprinted courtesy of CDCoverage.com
No Third-Quarter Gain for Construction
November 18, 2011 — CDJ Staff
The Associated Builders and Contractors released their analysis of construction work under contract and found that there was no increase in construction backlog from the second quarter of 2011. There was still improvement, however, over 2010, as the third quarter backlog is 16.3 percent higher than that of a year ago.
The current backlog is 8.1 months, which according to Anirban Basu, the chief economist of the ABC, “is consistent with flat construction spending.” He noted that less than 8 months indicated a decline.
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No Coverage For Construction Defects When Complaint Alleges Contractual Damages
September 1, 2011 — Tred Eyerley, Insurance Law Hawaii
The underlying plaintiff’s allegations contended the contractor was in breach of contract for construction defects caused in building her home. Accordingly, the court found no coverage.See Nat’l Builders and Contractors Ins. Co. v. Slocum, 2011 U.S. Dist. LEXIS 81694 (S.D. Miss. July 26, 2011).
Slocum Construction LLC sold a home it built to Laura Peterson. Subsequently, Peterson filed suit, alleging a breach of the contract and seeking rescission and cancellation of the contract. Peterson further alleged at least thirty-three specific defects in the construction of the house.
Slocum tendered to its insurer, National Builders and Contractors Insurance Company (NBCI). NBCI filed suit for a declaratory judgment.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Preparing for Trial on a Cause of Action for Violation of Civil Code section 895, et seq.
May 10, 2012 — Samir R. Patel, Esq., Lorber, Greenfield, & Polito, LLP
In 2002, the California Legislature enacted the Right to Repair Act (hereinafter “SB-800”), as codified in Title VII of the Civil Code. As set forth in Civil Code section 895, et seq., SB-800 established a set of standards for residential construction, and provides a statutory protocol to address alleged violations of those standards. SB-800 applies to all new single family homes sold after January 1, 2003, and it created its own cause of action governed completely by its own terms, in that in order to state a cause of action under SB-800, a plaintiff may only allege a violation of the Act. (Civ. Code, § 938.) Under Civil Code sections 896, 897, 943, and 944, the Legislature made it clear that it intended to create a single cause of action for construction defects in homes that fall under the purview of SB-800. By passing SB-800, the Legislature eliminated multiple and often redundant or conflicting causes of action, burdens of proof, statutes of limitations, and types of damages that were common in construction defect actions prior to the enactment of the same.
Civil Code section 895, et seq. has significantly changed the landscape of construction defect lawsuits. Yet, for years, the only attention given to the statutes focused solely on the codified pre-litigation process that requires plaintiffs and builders to meet and confer regarding defects and attempt a process to repair the alleged defects before litigation is pursued. A major impediment to the implementation of the pre-litigation procedures has often been that the statutes specifically state that the information obtained during the pre-litigation process is admissible at trial. Hence, through use of the pre-litigation process, plaintiffs’ counsel can engage in a builder funded fishing expedition and later use the information obtained to advance their litigation goals. As such, many builders have chosen to opt out of codified pre-litigation process altogether, an option which the builder can elect within their Purchase and Sale Agreements.
Recently, counsel for builders throughout California have turned their attention to the “exclusive remedy” aspect of SB-800 by seeking, often successfully, to limit plaintiffs to a single cause of action for violation of SB-800. Civil Code section 943 makes clear that a cause of action for violation of SB-800 performance standards is a plaintiff’s sole remedy for a residential construction defect action. Civil Code section 943 states:
Except as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under 944 is allowed. (Civ. Code, § 943.) Â
The question remains: what is the benefit of requiring plaintiffs to trim down their complaint and eliminate their tried and true common law causes of action, and requiring them to pursue only a single cause of action for violation of SB800?
The construction standards enumerated within SB-800 include fifty-plus functionality standards. On their face, any benefit to pursuing a construction defect action under a single cause of action for violation of SB-800 initially appears trivial at best, in light of the fact that a jury may be very confused with the complexity of the functionality standards set forth within the Civil Code. Nevertheless, Title VII of the Civil Code actually contains numerous provisions that builders can utilize to their benefit throughout the process of construction defect litigation, including during preparation for trial.
First and foremost, counsel for builders can assert numerous affirmative defenses that will be beneficial if the matter proceeds to trial. These affirmative defenses, as codified in Civil Code section 945.5, include mitigation, in whole or in part, for damages caused by: an unforeseen act of nature; a homeowner’s failure to allow reasonable and timely access for inspections and repair under the pre-litigation procedures; the homeowner’s failure to follow the builder’s recommendations and commonly accepted homeowner maintenance obligations; ordinary wear and tear; misuse; abuse; or neglect. Builders should include these affirmative defenses within their responsive pleadings and as trial approaches, prepare appropriate motions in limine and request special jury instructions regarding the same. As frustrated builders and their attorneys are well aware, many construction defect suits result from a homeowner’s failure to properly maintain their property in a manner that is consistent with normal maintenance procedures and guidelines. Furthermore, within the ten year statute of limitations for most defects, ordinary wear and tear is often attributable to numerous deficiencies alleged by plaintiffs. The affirmative defense for a homeowner’s failure to allow inspections and repairs is also vital, as plaintiffs’ counsel may encourage a homeowner to forego the repair and seek monetary damages, allowing plaintiffs’ counsel to ultimately obtain their share of attorney’s fees. Therefore, the SB-800 statutes provide the builder with recourse and distinctive mitigation defenses that were previously and confusingly mixed into tort and contract related defenses. These affirmative defenses can also be utilized by counsel during the cross-examination of plaintiff homeowners and expert witnesses. Defense counsel should fully grasp these defenses and utilize them as defense themes throughout litigation.
As a plaintiff is limited to a single cause of action for violation of SB-800, if defense counsel has failed to properly eliminate excessive tort and contract causes of action prior to trial, a motion for summary adjudication, or at the very least, a motion for judgment on the pleadings should be brought to limit the introduction of evidence outside of a single cause of action for violation of SB-800. Practical judges are always looking for ways to streamline and expedite trials, and they are currently ruling that SB-800 is the exclusive remedy available to plaintiffs. In fact, plaintiffs’ firms in SB-800 matters are now voluntarily limiting their complaints to this one cause of action.
Special jury instructions can also be crafted to limit a jury’s computation of damages pursuant to Civil Codesection 944, which provides the method for computing damages within a construction defect action, as follows:
If a claim for damages is made under this title, the homeowner is only entitled to damages for the reasonable value of repairing any violation of the standards set forth in this title, the reasonable cost of repairing any damages caused by the repair efforts, the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards, the reasonable cost of removing and replacing any improper repair by the builder, reasonable relocation and storage expenses, lost business income if the home was used as a principal place of a business licensed to be operated from the home, reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute. (Civ. Code, § 944.) [Emphasis added.]
Civil Code section 944 specifically prohibits recovery for damages outside the scope of its explicit language as it states “the homeowner is only entitled to ... damages for the reasonable value of repairing any violation of the standards set forth in this title....” [Emphasis added.] The statute ultimately provides a “reasonableness” standard for the computation of damages that did not exist when computing damages on traditional common law tort and contract claims. Therefore, defense counsel should prepare special jury instructions to limit evidence of damages introduced at trial to the reasonable value of repairing any violation of the standards, and to exclude any evidence of damages beyond the reasonableness standard. Defense counsel should seize the opportunity to utilize the theme of “reasonableness” when attacking plaintiffs’ allegations and plaintiffs’ proposed repair methodology throughout the discovery process and at trial.
Defense counsel may also prepare a motion in limine or special jury instruction regarding the limitation of evidence regarding defects that did not cause resultant damage. Civil Code section 897 states:
Intent of Standards
The standards set forth in this chapter are intended to address every function or component of a structure. To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage. (Civ. Code, § 897.) [Emphasis added.]
Defense counsel can argue that the introduction of any evidence supporting a claim for construction-related deficiencies that are not enumerated within Civil Code section 896, or for deficiencies where no damage has occurred is prohibited and must be excluded at trial. This requirement of resultant damages is familiar as the general rule was previously established in Aas v. Superior Court (2000) 24 Cal.4th 627, in which the California Supreme Court held that there is no tort recovery for construction defects that have not actually caused property damage. The legislature effectively codified this rule within Civil Code section 897.
A motion in limine can also be crafted to limit expert testimony to the standards enumerated in Civil Code section 896, and to deficiencies that caused damage pursuant to Civil Code 897. The motion in limine can be based upon Civil Code section 943 and the fact that claims for defects in homes which were sold after January 1, 2003 may only be pursued under a single cause of action for violation of SB-800. As such, expert testimony should be controlled by the standards set forth in Civil Code section 896. Furthermore, throughout a construction defect matter, defense counsel should ensure that their experts are well versed with the standards and that they can provide testimony that utilizes the same. Defense counsel’s knowledge of the standards will also be helpful during the cross-examination of plaintiffs’ expert witnesses.
If, despite the efforts of defense counsel, the complaint still has numerous causes of action, or if only some homes fall under the purview of SB-800 while others do not, defense counsel can utilize a motion to bifurcate trial. The motion’s basis is that a cause of action for violation of SB-800 will require the introduction of evidence regarding the violations of the fifty-plus standards, and the tort and contract-based claims would also require the introduction of a wide range of evidence to prove each cause of action. For example, in order to prove the tort causes of action, plaintiffs must prove elements such as: duty, breach, proximate and actual causation, and that the builder placed the homes into the stream of commerce. (See Richards v. Stanley (1954) 43 Cal.2d 60, 63; Kriegler v. Eichler Homes, Inc. (1969) 269 Cal.App.2d 224, 227.) On the contract causes of action, plaintiffs must prove the existence of a valid written contract for the sale of the home, including proof regarding the existence of basic contractual elements such as offer, acceptance, and consideration. (Civ. Code, § 1624 subd. (a); Roth v. Malson (1997) 67 Cal.App.4th 552, 557.) Defense counsel can argue that exposing the jury to elements that may or may not be applicable to all of the homes in the action will complicate and confuse the jury. Thus, concurrently exposing the jury to the SB-800 claims and the non-SB-800 claims will necessitate undue consumption of time, and create the substantial danger of undue prejudice of confusing the issues or misleading the jury.
One of the most important and relevant features of the SB-800 statutes is that they include shortened statutes of limitation as to certain enumerated defects. The codified statutes of limitations apply from the date of “close of escrow,” and are much more definitive than statutes of limitations regarding tort and contract claims. Therefore, they can be utilized within a motion for summary adjudication in cases where only one or a few defects are alleged. For example, under Civil Code section 896, et seq., there is a five year limitation on paint (Civ. Code, § 896, subd. (g)(1)); a four year limitation on plumbing fixtures (Civ. Code, § 896, subd. (e)); a three year limitation on landscaping (Civ. Code § 896, subd. (g)(12)); and a one year limitation on irrigation systems and drainage (Civ. Code, § 896, subd. (g)(7)). The non-SB-800 claims are subject to a four year statute of limitation for patent defects and a ten year statute of limitation for latent defects. (See Code of Civ. Proc., §§ 337.1, 337.15.) The contrast between the statute of limitations for the SB-800 claims and non-SB-800 claims can complicate a matter at trial, further establishing the necessity to limit plaintiffs to a single cause of action for violation of SB-800. Hence, defense counsel should also utilize a motion to bifurcate the statute of limitations issues from the issue of liability if a question of fact exists. If successful on the motion to bifurcate, plaintiff’s counsel will be barred from the introducing evidence at trial regarding a defect where the statute of limitations has run.
Defense counsel should also seek to simplify the construction standards for the jury. Ultimately, by drafting jury instructions and a special verdict form that is easy to navigate, counsel can promote an easy interpretation of the standards enumerated within the Civil Code. The best route for drafting a special verdict form is to draft it as a check-list, similar to a traditional real estate walk-through check-list. By incorporating the shortened statutes of limitations into the special verdict form, defense counsel can effectively frame the case for the jury. The special verdict form should also allow the jury to easily eliminate any claim for damages that is mitigated, in whole or in part, through the codified affirmative defenses. Defense counsel should also consider drafting a trial brief that effectively and simplistically provides the trial court judge with an understanding of the specific defects before the court, and simultaneously notes which Civil Code standards are implicated and the scope of the same. If the trial judge is not well versed in construction defect litigation, defense counsel should be all the more careful in breaking down the parameters and limitations codified within SB-800 for the court.
The strategies outlined within this article are only a few tactics that can be utilized to defend a construction defect suit. Depending on the defect allegations within any particular case, defense counsel should become intimately familiar with Title VII of the Civil Code and use all aspects of the same to their advantage. If not, plaintiffs’ counsel will have the advantage during “court-house step” settlement discussions and at trial.
Printed courtesy of Samir R. Patel, Esq. of Lorber, Greenfield, & Polito, LLP. Mr. Patel can be contacted at spatel@lorberlaw.com.
Southern California Lost $8 Billion in Construction Wages
August 17, 2011 — CDJ Staff
Los Angeles and Orange Counties are first on a list no area wants to be on. According to the Sacramento Bee, reporting on data from the U.S. Bureau of Economic Analysis, LA and Orange Counties saw an $8 billion drop in construction wages in 2010, as compared to 2006. In 2006, the region saw payrolls of $26.8 billion, but in 2010, that was reduced to $18.5 billion.
This was not the largest percentage change. Of the metropolitan areas with the largest declines in construction earnings, Las Vegas saw a $3.6 billion drop, however that represented half of their 2006 totals of $7.2 billion. Conversely, a $3.3 billion drop in the New York area represented only 10% of what had been $33.8 billion in payroll in 2006.
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Although Property Damage Arises From An Occurrence, Coverage Barred By Business Risk Exclusions
July 8, 2011 — Tred R. Eyerly, Insurance Law Hawaii
The homeowners hired the insured to raise the structure of their home twenty-four inches above the flood zone. Lafayette Ins. Co. v. Peerboom, 2011 U.S. Dist. LEXIS 58985 (S.D. Miss. June 2, 2011). When the insured’s crew returned from lunch one day, they found the house had fallen from hydraulic jacks being used to raise the structure a few inches at a time. There was substantial damage to the entire structure.
The homeowners sued, asserting several claims, including negligence and breach of contract. The complaint alleged the homeowners entered a contract with the insured to raise their structure while maintaining its integrity. However, the insured failed to use proper equipment, which caused the house to fall and be completely destroyed.
The insured tendered the claim to its insurer, Lafayette Insurance Company. Lafayette defended under a reservation of rights and filed suit for a declaratory judgment. Lafayette’s subsequent motion for summary judgment contended there was no “occurrence” alleged in the underlying complaint and, even if there was, the business risk exclusions barred coverage.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Webinar on Insurance Disputes in Construction Defects
July 10, 2012 — CDJ Staff
Seth Lamden, of the firm Neal Gerber Eisenberg will be presenting a webinar on “Insurance Coverage Disputes in Construction Defects” on July 17, 2012 at 1 p.m. EDT. Mr. Lamden’s presentation will focus on “handling both the construction and insurance components of construction defect claims.” He will be discussing recent case law and new insurance products. The presentation will present information on evaluating various types of insurance policies, explaining common issues, contract requirement, and the economic loss doctrine. Mr. Lamden will advise attendees on how to avoid getting into a construction defect case. He will conclude his presentation with a brief question-and-answer session.
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Demand for Urban Living Leads to Austin Building Boom
August 16, 2012 — CDJ Staff
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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Another Las Vegas Tower at the Center of Construction Defect Claims
November 7, 2012 — CDJ Staff
Accusations are coming from both sides over construction defects at a Las Vegas tower, only this time, it’s not the Harmon Towers, it’s Hilton Grand Vacations, which is part of the Planet Hollywood Resort. The project was originally dubbed PH Towers Westgate, and it was developed by Westgate Resorts, which is suing the contractor, Tutor-Saliba for $10 million over late completion and construction defects.
Among the defects Westgate is claiming are cracked floor tiles in the valet lobby and cracks and delamination of the pool deck. Tutor-Saliba argues that the failure of the valet lobby floor is due to Westgate specifying only 1/16th inch-wide grouting, instead of the specified ¬º inch, and Westgate’s refusal to allow expansion joints on the pool deck has lead to problems there. Westgate’s attorney, Robert Schumacher, attributes the problems to “shoddy construction practices.”
According to the article in the Las Vegas Review Journal, plans were only 60 percent complete when construction began, leading to “thousands of change orders.” Despite not meeting an August completion deadline, Tutor-Saliba is claiming it is owed a $1.5 million bonus nevertheless.
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