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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:


    Construction Expert Witness Contractors Licensing
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    Commercial and Residential Contractors License Required.


    Construction Expert Witness Contractors Building Industry
    Association Directory
    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
    Local # 0532
    44404 16th St W Suite 107
    Lancaster, CA 93535



    Construction Expert Witness News and Information
    For Anaheim California

    Homeowners Must Comply with Arbitration over Construction Defects

    BUILD Act Inching Closer To Reality

    Florida Appeals Court Rules in Favor of Homeowners Unaware of Construction Defects and Lack of Permits

    Building Boom Leads to Construction Defect Cases

    Consumer Protection Act Whacks Seattle Roofing Contractor

    New Buildings in California Soon Must Be Greener

    Texas res judicata and co-insurer defense costs contribution

    California Lawyer Gives How-To on Pursuing a Construction Defect Claim

    Can Negligent Contractors Shift Blame in South Carolina?

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

    General Contractor/Developer May Not Rely on the Homeowner Protection Act to Avoid a Waiver of Consequential Damages in an AIA Contract

    2011 Worst Year Ever for Home Sales

    Lockton Expands Construction and Design Team

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

    Court Sends Construction Defect Case from Kansas to Missouri

    Anti-Assignment Provision Unenforceable in Kentucky

    Negligent Construction an Occurrence Says Ninth Circuit

    Insurer’s Discovery Requests Ruled to be Overbroad in Construction Defect Suit

    Eighth Circuit Remands to Determine Applicability of Collapse Exclusion

    Policyholder Fails to Build Adequate Record to Support Bad Faith Claim

    Nevada Court Adopts Efficient Proximate Cause Doctrine

    Arizona Court of Appeals Decision in $8.475 Million Construction Defect Class Action Suit

    Excess Carrier Successfully Appeals Primary Insurer’s Summary Judgment Award

    Appropriation Bill Cuts Military Construction Spending

    Fourteen More Guilty Pleas in Las Vegas Construction Defect Scam

    Louisiana Politicians Struggle on Construction Bills, Hospital Redevelopment

    Former Zurich Executive to Head Willis North America Construction Insurance Group

    Amerisure Case to be Heard by Texas Supreme Court

    Judge Concludes Drywall Manufacturer Sold in Florida

    Continuous Trigger of Coverage Adopted for Loss Under First Party Policy

    Construction Firm Sues City and Engineers over Reservoir Project

    Bar to Raise on Green Standard

    Construction on the Rise in Washington Town

    Good and Bad News on Construction Employment

    New Washington Law Nixes Unfair Indemnification in Construction Contracts

    Construction Defect Lawsuit Stayed by SB800

    Construction Defect Not Occurrences, Says Hawaii Court

    Texas Law Bars Coverage under Homeowner’s Policy for Mold Damage

    Insurer Unable to Declare its Coverage Excess In Construction Defect Case

    After Katrina Came Homes that Could Withstand Isaac

    Construction Defects Leave Animal Shelter Unusable

    School Sues over Botched Pool

    Know the Minnesota Statute of Limitations for Construction Defect Claims

    Another Guilty Plea in Las Vegas HOA Scandal

    Ohio “property damage” caused by an “occurrence.”

    Safe Harbors- not just for Sailors anymore (or, why advance planning can prevent claims of defective plans & specs) (law note)

    Williams v. Athletic Field: Hugely Important Lien Case Argued Before Supreme Court

    Wine without Cheese? (Why a construction contract needs an order of precedence clause)(Law Note)

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

    Arizona Homeowners Must Give Notice of Construction Defect Claims

    Homeowners Sue Over Sinkholes, Use Cash for Other Things

    $5 Million Construction Defect Lawsuit over Oregon Townhomes

    South Carolina Contractors Regain General Liability Coverage

    Federal Court Denies Summary Judgment in Leaky Condo Conversion

    The King of Construction Defect Scams

    Restitution Unlikely in Las Vegas Construction Defect Scam

    Nebraska Man Sentenced for Insurance Fraud in Construction Projects

    Supreme Court of New York Denies Motion in all but One Cause of Action in Kikirov v. 355 Realty Assoc., et al.

    Recent Case Brings Clarity and Questions to Statute of Repose Application

    Federal District Court Continues to Find Construction Defects do Not Arise From An Occurrence

    Congress Addresses Homebuilding Credit Crunch

    Ensuing Loss Provision Does Not Salvage Coverage

    Insurer Settles on Construction Defect Claim

    Destruction of Construction Defect Evidence Leads to Sanctions against Plaintiff

    No Coverage for Construction Defects Under Alabama Law

    Insurance Firm Defends against $22 Million Claim

    Another Las Vegas Tower at the Center of Construction Defect Claims

    Insurer Not Liable for Construction Defect Revealed by Woodpecker

    Insurer Has Duty to Defend Despite Construction Defects

    Construction Suit Ends with Just an Apology

    Water Damage Covered Under Efficient Proximate Cause Doctrine

    Local Government Waives Construction Fees to Spur Jobs

    Limiting Plaintiffs’ Claims to a Cause of Action for Violation of SB-800

    Godfather Charged with Insurance Fraud

    South Carolina Law Clarifies Statue of Repose

    Changes to Arkansas Construction and Home Repair Laws

    Follow Up on Continental Western v. Shay Construction

    Is There a Conflict of Interest When a CD Defense Attorney Becomes Coverage Counsel Post-Litigation?

    No Coverage Under Ensuing Loss Provision

    Construction Defect Litigation at San Diego’s Alicante Condominiums?

    Arizona Contractor Designs Water-Repellant Cabinets

    Tennessee Court: Window Openings Too Small, Judgment Too Large

    Contractor Sues License Board

    A Performance-Based Energy Code in Seattle: Will It Save Existing Buildings?

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

    Federal Judge Dismisses Insurance Coverage Lawsuit In Construction Defect Case

    Mark Van Wonterghem To Serve as Senior Forensic Consultant in the Sacramento Offices of Bert L. Howe & Associates, Inc.

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

    Firm Sued For Construction Defects in Parking Garage

    Gilroy Homeowners Sue over Leaky Homes
    Corporate Profile

    ANAHEIM CALIFORNIA CONSTRUCTION EXPERT WITNESS
    DIRECTORY AND CAPABILITIES

    The Anaheim, California Construction Expert Witness Group is comprised from a number of credentialed construction professionals possessing extensive trial support experience relevant to construction defect and claims matters. Leveraging from this considerable body of experience, BHA provides construction related trial support and expert services to the nation's most recognized construction litigation practitioners, Fortune 500 builders, commercial general liability carriers, owners, construction practice groups, and a variety of state and local government agencies.

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    Anaheim, California

    Broker Not Liable for Failure to Reveal Insurer's Insolvency After Policy Issued

    March 28, 2012 — Tred Eyerly, Insurance Law Hawaii

    Faced with an issue of first impression in California, the Court of Appeals held that a broker was not liable for failing to reveal the insurer's insolvency occurring after issuance of the policy. Pacific Rim Mechanical Contractors, Inc. v. Aon Risk Ins. Serv. West, Inc., 2012 Cal. App. LEXIS 232 (Cal. Ct. App. Feb. 28, 2012).

    The developer for a construction project in downtown San Diego retained Aon as its broker to secure coverage. Aon procured a general liability policy for the project with Legion Indemnity Company. Legion was solvent when it issued the policy.

    The developer hired Pacific Rim (“PacRim”) as one of several subcontractors on the project. The parties entered into a contract in which the developer agreed to provide PacRim with liability insurance through an Owner Controlled Insurance Program (“OCIP”). Aon was not a party to the contract and PacRim was never its client. PacRim, however, enrolled in the OCIP by contacting Aon and providing all necessary paperwork.

    Read the full story…

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


    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…


    A Performance-Based Energy Code in Seattle: Will It Save Existing Buildings?

    August 11, 2011 — Douglas Reiser, Builders Counsel

    The City of Seattle has one of the most stringent energy codes in the nation. Based upon the Washington State Energy Code (which has been embroiled in litigation over its high standards), the code demands a lot from commercial developers. But, does it prevent developers from saving Seattle?s classic and old buildings? Perhaps.

    The general compliance procedure requires buildings to be examined during the permitting process. This means that buildings are examined before they begin operating. The procedure is not malleable and is applicable to all buildings, old and new, big and small.

    The downside of this procedure is that it eliminates awarding compliance to those buildings exhibiting a number of passive features, such as siting, thermal mass, and renewable energy production. This problem has prevented a number of interesting and architecturally pleasing existing building retrofits from getting off the ground. The cost of complying with the current system can be 20% more, and it might prevent builders from preserving a building?s historical integrity.

    Read the full story…

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

    SB800 Cases Approach the Courts

    July 10, 2012 — CDJ Staff

    California’s Right to Repair Law turns ten this year and cases under the statute are finally coming to trial, as John V. O’Meara of Bremer Whyte Brown & O’Meara writes for the Martindale-Hubble Legal Library. Mr. O’Meara notes that SB800 eliminated “the traditional definitions of construction defect,” replacing them with “functionality standards.” He argues that these standards are not uniform: “some standards require damage and others do not.” He also wonders what terms like “significant cracks,” “intended water” and “materially comply” mean in a court.

    Mr. O’Meara states that “defendants in construction defect cases have a right to know the standards that apply to a case, the definitions that will be presented to the jury, and the burden of proof that attaches.”

    Read the full story…


    Williams v. Athletic Field: Hugely Important Lien Case Argued Before Supreme Court

    June 17, 2011 — Douglas Reiser, Builders Counsel

    Well, it finally made it. The most important Washington lien case of recent memory was argued in front of the Washington Supreme Court on Tuesday, June 14, 2011. So, what should we all expect?

    As I was reading through my RSS feeds this afternoon ? I was stopped dead in my tracks. Williams v . Athletic Field, the Division II case that has been a frequent topic here on Builders Counsel, has finally been argued before the Supreme Court. All of you who have been anxiously awaiting this day, you can check out the Supreme Court submissions by following this link.

    The Williams case has been the center of attention for construction lawyers and construction organizations over the past year. Some have called for complete lien law reform, others have tried to patch a hole in the law. Now, we can expect a ruling from the highest court in the state. That ruling will have a major impact on whether the Legislature feels compelled to change lien law.

    Read the full story…

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


    Couple Sues Attorney over Construction Defect Case, Loses

    June 10, 2011 — CDJ Staff

    The California Court of Appeals has ruled against a couple who sued their lawyer, after they were unhappy with the results of a construction defect case. Craig and Jeanne Petrik sued Mahaffey and Associates for legal malpractice and breach of contract. Their lawyer, Douglas L. Mahaffey, had settled their case for $400,000. The Petricks claimed Mahaffey did not have the authority make an offer to compromise.

    In the original case, Mahaffey held back the $400,000 awarded in the settlement until he and the Petricks came to terms on how much of that was owed to Mahaffey. The lower court concluded that the Petricks were due $146,323,18. The jury did not agree with the Petrik’s claim that conditions had been met in which Mahaffey would not be charging them costs.

    Judges O’Leary and Ikola wrote the opinion, with the third judge on the panel, Judge Bedworth offering a dissent only on their view of the cost waiver clause.

    Read the court’s opinion


    Fourteen More Guilty Pleas in Las Vegas Construction Defect Scam

    June 19, 2012 — CDJ Staff

    The ongoing case over claims that a group fixed homeowner board elections in order to supply the conspirators with a stream of construction defect cases and repairs has lead to fourteen guilty pleas. The judge recently issued charges against fifteen of the accused; one defendant did not join in the group as he was recovering from pneumonia. The prosecutors have asked the judge to delay sentencing, as the investigation is continuing. Prosecutors note that another dozen people may be indicted.

    Along with an earlier group who plead guilty, this brings the total number of guilty pleas in the case to twenty-five. All have promised to cooperate with authorities.

    The case has also involved four deaths, although authorities have not suspected foul play in the deaths. Nancy Quon, one of the four, was the construction defect attorney suspected to be at the center of the conspiracy.

    Read the full story…


    Appeals Court Reverses Summary Judgment over Defective Archway Construction

    February 10, 2012 — CDJ Staff

    A judge has ruled that a plaintiff can go forward with her suit that she was injured by a defective archway during a birthday party. A three-judge panel of the California Court of Appeals issued this ruling on January 23, 2012, in the case of Trujillo v. Cosio.

    Ms. Trujillo attended a birthday party at the home of Maria Cosio and Joel Verduzco. A piñata was hung between a tree and a brick archway. Ms. Trujillo went to get candy that had fallen from the piñata, during which the archway fell on her hand. Subsequent examination of the archway showed that it had not been “properly anchored to the supporting pillars to protect the arch from falling.”

    Ms. Cosio and Mr. Verduzco argued that they could not have been aware of the defective nature of the archway’s construction, as it had been built at the request of the prior property owner. The structure was constructed without building permits. Mark Burns, a civil engineer testifying for the plaintiff, said that “a reasonable property owner would have thoroughly tested the archway to ensure it was capable of withstanding such horizontal forces before allowing children to enter into the area.” Mr. Burns noted that twenty rope pulls would have been sufficient to demonstrate the structure’s instability.

    The trial court rejected Mr. Burn’s statements, finding that the respondents did not have any knowledge of the defect and that a visual inspection should have sufficed. The court noted that this a triable issue, whether visual inspection suffices, or whether the property owners should have done as Mr. Burns suggested and yank a rope twenty times. The court noted that “although a jury may ultimately disagree with Burn’s opinion, it was supported by sufficient foundation and was not speculative.”

    The opinion was written by Judge Flier, with Judges Rubin and Grimes concurring.

    Read the court’s decison…


    Court Grants Summary Judgment to Insurer in HVAC Defect Case

    August 4, 2011 — CDJ Staff

    The US District Court in Colorado has determined in the case of RK Mechanical, Inc. v. Travelers Property Casualty Company of America that Travelers did not breach its insurance contract when it refused to cover RK Mechanical.

    RK Mechanical performed an HVAC installation for a residential project for which J.E. Dunn Rocky Mountain was the general contractor. As part of the work, RK “installed approximately one hundred seventy-one CPVC flanges, which were manufactured by Charlotte Pipe and Foundry Company.” Two of these flanges failed in June, 2009 leading to water damage. RK replaced the cracked flanges and engaged in water remediation. “Travelers paid Dunn and RK for the costs associated with the water damage associated with the Flange Failure.” The court notes that Travelers did not pay for the cracked flanges, however.

    Subsequently, RK examined the remaining flanges, finding many cracked ones. These were replaced with new ones. Later, all the Charlotte flanges were replaced with ones from another manufacturer. RK applied for coverage.

    All sides brought in their experts: “Microbac Laboratories, Inc. prepared a report on behalf of RK concluding that the Flange Failure was due, in part, to an assembly or workmanship defect in addition to manufacturing defects in the flanges. Higgins & Associates prepared a report on behalf of Travelers concluding that the flanges failed due to improper installation. Plastic Failure Labs prepared a report on behalf of the flange manufacturer concluding that the flanges failed due to improper installation by RK.”

    At this point, Travelers denied coverage. RK sued alleging that the coverage for flange failure and water damage implicitly includes mitigation costs. The court rejected this claim, noting it would do so even if Travelers had paid for the replacement of the first two flanges. Nor did the court find that replacement of the faulty flanges is not "a covered cause of loss." RK also argued that as it was required to mitigate, Travelers was obligated to cover costs. However, the court found that “the mitigation costs expended by RK were not incurred in an effort to avoid damages from a potential breach of contract by Travelers.” The court additionally noted that despite RK’s claims, the Colorado courts have not found a common law duty to mitigate. Finally, the court found that the exclusions in the policy were not in violation of public policy.

    Read the court’s decision…


    Court Sends Construction Defect Case from Kansas to Missouri

    August 2, 2012 — CDJ Staff

    The United State Court of Appeals for the Tenth Circuit has ruled in Mid-Continent Casualty Company v. The Village at Deer Creek Homeowners Association. The prior case was heard by the United States District Court for the District of Kansas. In this appeal, Mid-Continent sought a declaratory judgement. The Village at Deer Creek Homeowners Association moved to dismiss, and the district court had granted this, giving jurisdiction to the Missouri state courts.

    The homeowners association had sued Greater Midwest Builders, Ltd., who had constructed the subdivision, in the Kansas state courts. The suit ended with a verdict against Greater Midwest for more than $7 million. The association and other plaintiffs in that case filed for equitable garnishment against State Auto, Mid-Continent, and Greater Midwest. State Auto removed the garnishment action to federal court in Missouri. Mid-Continent moved to sever the actions against it and transfer the case to the District of Kansas.

    Subsequently, the plaintiffs filed a notice of voluntary dismissal in the Western District of Missouri. A second garnishment action followed in which Mid-Continent was named as an additional plaintiff. State Auto again removed to the Western District of Missouri, while Mid-Continent moved to sever and transfer to the District of Kansas. The Kansas court granted the association’s motion to dismiss.

    In the appeal, Mid-Continent sought a declaratory judgment. This was denied by the appeals court. The district court “concluded that the Missouri courts were better situated to provide complete relief to all parties involved in the coverage dispute.” The appeals court affirmed the association’s movement to dismiss. Mid-Continent’s motion was denied as moot.

    Read the court's decision…


    Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit

    September 9, 2011 — CDJ Staff

    The Alabama Court of Civil Appeals has upheld a summary judgment in the case of Franklin v. Mitchell. Walter Mitchell, doing business as Southern Classic Construction built a new home for the Franklins. The Franklins moved into the home in October 2001. In April 2006 they discovered sagging floors in both the bathroom and kitchen. They contacted Mitchell who suggested the flooring might be defective. The Franklins spent eight months attempting to contact the flooring manufacturer.

    In March 2007, the Franklins had the home inspected. The sagging was determined to be due to a loss of strength in the decking because of condensation from the air conditioning system. Air returns were not properly sealed and drawing moisture into the structure. There was mold on the decking and floor joints.

    When Mitchell was contacted by the Franklins, he told them his one-year warranty had expired but had the HVAC subcontractor, Southern Mechanical Heating & Air (owned by Mitchell’s father, Jim Mitchell), look at the situation. SMHA replaced and braced subfloors. Later, they entered the crawl space to tape ducts, seal the air return, and insulate the air vent housing. The Franklins were not satisfied with the repairs, as not all the ducts were taped, nor were the air vent housings insulated.

    Franklin complained to Walter Mitchell who again cited his one-year warranty. Jim Mitchell said he would not report complaints to his insurer, stating that the repairs were unnecessary, that the work had been done correctly in the first place, and it was only done at the request of Walter Mitchell.

    In February 2009, the Franklins sued Walker Mitchell. Mitchell denied the claims, citing in part the statute of limitations. Mitchell also filed complaints against three subcontractors, including his father’s firm. Mitchell received a summary judgment as the case started after Alabama’s six-year statute of limitations.

    The appeals court rejected the Franklin’s argument that the claim of damage did not start until they were aware it was due to a construction defect. The court noted that as Walter Mitchell was licensed as a “residential home builder, the statute the Franklins cite did not apply, as it concerns architects, engineers, and licensed general contactors.”

    Nor did they feel that Mitchells’ claim that his warranty had expired were sufficient to override the statute of limitations, quoting an earlier case, “Vague assurances do not amount to an affirmative inducement to delay filing suit.” Their claim of subsequent negligent repairs was rejected because Mitchell did not direct the specific actions taken by his father’s firm.

    Read the court’s decision…


    No Resulting Loss From Deck Collapsing Due to Rot

    July 10, 2012 — Tred Eyerly, Insurance Law Hawwaii

    The Washington Supreme Court reversed the Court of Appeals’ decision that the ensuing loss provision provided coverage for a deck that collapsed due to rot and decay. Sprague v. Safeco Ins. Co. of Am., 2012 Wash. LEXIS 375 (Wash. May 17, 2012). Our prior post on the Court of Appeals’ decision is here.

    The Sprague’s home had a deck supported by six "fin walls." The fin walls were encased in a foam and stucco coating. Twenty years after they purchased the home, it was discovered that the fin walls were in an advanced state of decay. Engineers discovered that construction defects caused the supports to rot. The deck was in danger of imminent collapse.

    Safeco denied coverage. The all-risk policy did not exclude collapse, but did exclude coverage for losses causes by mold, wet or dry rot.

    Read the full story…

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


    Contractor’s Home Not Covered for Construction Defects

    September 13, 2012 — CDJ Staff

    The US District Court in Seattle has rejected most of the claims made by a Des Moines man over insurance coverage for water damage to his home. Judge John C. Coughenour granted summary judgment to Liberty Northwest in Ayar v. Liberty Northwest Insurance Corporation.

    Sayad Ayar was the general contractor for the construction of his house. As a homeowner held a $1.5 million insurance policy from Liberty Northwest (LNW) that excluded “faulty, inadequate, or defective construction.”

    In 2008, less than three years after his house was constructed, Mr. Ayar filed a claim after water leaked through his living room ceiling. LNW hired an engineering firm to investigate the damage. The engineering firm, CASE Forensics, concluded that the water intrusion was due to “the failure to install an adequate and continuous waterproof membrane, flashing, and drainage system within the balcony at the time of construction.” Ayar’s expert attributed the leakage to “damage done to the weather deck waterproofing during a storm event with high winds,” which would be covered under the policy. CASE Forensics reviewed these conclusions and rejected them. LNW denied coverage.

    Further problems lead to further investigations, and in each case, LNW attributed the problems to construction defects. During this process, LNW “authorized Ayar to cut into the ceiling’s drywall in order to assist in determining the source of the water intrusion.” Mr. Ayar moved his family to a rental home. He requested that LNW cover the rental and other other costs.

    LNW’s adjuster concluded that no coverage was available, but recommended paying Mr. Ayar $19,648.68 to reinstall drywall and repair the hole in the ceiling. The insurance company paid $2,000 to cover the cost of cutting into the ceiling. The also claimed the amount of drywall he removed was “excessive” and would not cover his relocation as “his home had been livable and because the loss was not covered.”

    Ayar made four claims to the court in support of the argument that LNW misrepresented “pertinent facts or insurance policy provisions.” The court rejected three of these, noting that as all water damage was excluded, LNW’s citation of other sources of water intrusion was not a misrepresentation. “LNW did not rely on this provision as the reason for denying coverage.” Nor was LNW’s reference to “fungi, wet or dry rot” a misrepresentation. As for their reference to construction defects, it “was clearly appropriate given that the construction defect exclusion was the principal basis or denying the claim.” However, the court found that regarding the removal of drywall, “a triable issue of the facts exists.”

    Ayar also claimed that LNW did not conduct a reasonable investigation, but the court found no evidence to support this conclusion. “This is not a case where the insurer failed to investigate or did so only half-heartedly.” Although the thoroughness of the investigation could not questioned, the court concluded that its timing could. Ayar claimed that LNW engaged in unreasonable delays. LNW counters that the delays were due to “Ayar’s own obstructive behavior and failure to cooperate with LNW’s investigation.”

    The court dismissed all of Ayar’s claims, with the exception of whether LNW should have informed him that they would not pay for drywall repair unless there was damage, and whether LNW’s investigation failed to conclude its investigation within a thirty-day time line.

    Read the court’s decision…


    Battle of “Other Insurance” Clauses

    March 23, 2011 — Tred R. Eyerly - Insurance Law Hawaii - March 23, 2011

    The New York Court of Appeals considered the impact of competing “other insurance” provisions located in both a CGL policy and a D&O policy. See Fieldston Property Owners Assoc., Inc. v. Hermitage Ins. Co., Inv., 2011 N.Y. LEXIS 254 (N.Y. Feb. 24, 2011).

    In the underlying case, Fieldston’s officers were charged with making false statements and fraudulent claims with respect to a customer's right to access its property from adjacent streets. Suit was eventually filed against Fieldston and its officers, alleging several causes of action including injurious falsehood. Damages were sought.

    Fieldston’s CGL policy was issued by Hermitage. The “other insurance” provision stated, “If other valid and collectible insurance is available to the insured for a loss we cover . . . our obligations are limited,” but also stated it would share with all other insurance as a primary policy.

    Read the full story...

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


    In Colorado, Primary Insurers are Necessary Parties in Declaratory Judgment Actions

    December 9, 2011 — Heather M. Anderson, Colorado Construction Litigation

    The United States District Court for the District of Colorado recently ruled that primary insurers are necessary parties, under Fed. R. Civ. P. 19, in a declaratory judgment action being pursued by an excess carrier. See Insurance Co. of State of Pennsylvania v. LNC Communities II, LLC, 2011 WL 5548955 (D. Colo. 2011). Federal Rule of Civil Procedure 19 is almost identical to Colorado Rule of Civil Procedure 19 and pertains to the joinder of persons needed for “just adjudication.” The Insurance Co. of the State of Pennsylvania (“ICSOP”) sought a declaratory judgment that it did not have a duty to defend or indemnify the defendants (collectively referred to as “Lennar Companies”) with regard to the underlying lawsuit brought by The Falls at Legend Trail Owners Association, Inc. (the “HOA”). Id. at *2. In its lawsuit, the HOA alleged Lennar Companies were liable for construction defects at The Falls at Legend Trail residential development.

    Lennar Companies held two primary insurance policies, one issued by OneBeacon Insurance Company f/k/a General Accident Insurance Company (“General Accident”) and the other issued by American Safety Risk Retention Group, Inc. (“American Safety”). Lennar Companies also carried excess policies issued by ICSOP and Ohio Casualty Insurance Company (“Ohio Casualty”).

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    Reprinted courtesy of Heather M. Anderson of Higgins, Hopkins, McClain & Roswell, LLP. Ms Anderson can be contacted at anderson@hhmrlaw.com


    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.

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    United States District Court Confirms That Insurers Can Be Held Liable Under The CCPA.

    June 19, 2012 — Chad Johnson

    In D.R. Horton, Inc.-Denver v. The Travelers Indem. Co. of Am., 10-CV-02826-WJM-KMT, 2012 WL 527204 (D. Colo. Feb. 16, 2012), the court was asked to rule on Travelers’[1] motion to dismiss D.R. Horton, Inc. ?Äì Denver’s (“DRH”) claim that Travelers violated the Colorado Consumer Protection Act (“CCPA”).

    In the underlying construction defect case (“CD case”), DRH, as the developer and general contractor of a construction project, tendered the defense of the CD case to certain subcontractors and to Travelers as an insurer to those subcontractors. Travelers accepted the duty to defend DRH. DRH hired counsel to defend it, and the attorney fees and costs of suit were billed to Travelers. However, for a period of over five years, Travelers failed to actually pay any portion of the defense of DRH. Finally, on October 31, 2008, Travelers offered checks for payment of only 4% of the costs and fees incurred. DRH then returned the checks to Travelers and provided Travelers with authority to support its position that the amounts in Travelers’ checks were inadequate. Thereafter, Travelers dug its heels in, and resubmitted the same checks.

    DRH was then forced to file a coverage action against Travelers for declaratory judgment, breach of contract, bad faith breach of insurance contract, and deceptive trade practices under the CCPA. In its motion to dismiss DRH’s CCPA claim, Travelers’ argued that DRH failed to plead specific facts that Travelers engaged in a deceptive trade practice under C.R.S. § 6-1-105, and DRH failed to plead sufficient facts showing that Travelers’ actions significantly affect the public ?Äì a necessary element of a CCPA claim.

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


    Construction Worker Dies after Building Collapse

    November 18, 2011 — CDJ Staff

    A Bronx construction worker died when the pillars gave way in the basement where he was working. The two-story commercial building collapsed, burying Mr. Kebbeh under about six feet of rubble. The New York Times reports that firefighters dug him out with their bare hands. Mr. Kebbeh was taken to Jacobi Medical Center where he died. Two other construction workers escaped unharmed.

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