ANAHEIM CALIFORNIA CONSTRUCTION EXPERT WITNESS
DIRECTORY AND CAPABILITIES

Changes To Indemnification Statute Are Here! Say Hello To Defense Duties

A months back, I discussed the passage of SHB 1559. The law changes the existing statutory indemnification regulation to include the costs of defense and to rid contracts of unfair indemnification for someone else’s sole negligence. The law went into effect last week!

Check back to my recent article on the changes set forth in the new law. The amendments to RCW 4.24.115 will broaden the existing law and clarify what types of indemnification are unenforceable. In short, an “up the chain” contractor (such as a general contractor) cannot expect to pass 100% of the defense and indemnification obligations downward if it is partially liable.

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

Ceiling Collapse Attributed to Construction Defect

WSMV, Nashville reports that the ceiling collapse in a Franklin, Tennessee Kohl’s was attributed to a construction defect by fire officials. The officials noted that the ceiling was renovated at the time. No injuries were reported.

The report notes that “inspectors were supposed to look at the renovations next week, but fire officials said that will have to be delayed until another time.”

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

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

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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Insurance Firm Defends against $22 Million Claim

The Houston law firm of Eggleston & Briscoe successfully defended their client, Colony Insurance Company, which was being sued for $22 million over roof hail damage. The Summer Hill Village Community Association did not convince a jury that the insurance company had violated state law or breached its contract when it denied coverage for the roofs. The homeowners association contended that the roof damage was due to a hail storm in 2007. The jury agreed with experts who contended the damage was already present at that time.

Mr. Eggleston noted that “when your client is sued for a claim of $22 million, it is very satisfying to hear a jury agree that they in fact acted honorably and owed nothing.”

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

Recently, in the Arapahoe District Court, the Honorable Michael Spear, issued an order holding that builders do not owe a non-delegable duty to homeowners. In Marx and Corken v. Alpert Custom Homes, Inc., et al., Judge Spear’s order came in response to plaintiffs’ motion for determination of question of law seeking a finding that the defendants owed a non-delegable duty to the plaintiffs and thus, to strike defendants’ designation of nonparties at fault. After being fully briefed, Judge Spear, found that such a non-delegable duty does not exist.

The case arises from the construction of a single-family residence in Aurora, Colorado. Through the construction and interaction with Alpert Custom Homes, Inc. and Scott and Sally Alpert, the defendants, Paul Marx and Kay Corken, the plaintiffs claimed they suffered various damages and losses, and brought claims for breach of contract-warranty, breach of contract, violation of the Colorado Consumer Protection Act, breaches of the implied covenant of good faith, promissory estoppel, willful breach of contract, and quantum meruit. During litigation, the defendants filed a designation of nonparties at fault, which named several parties which were at fault for the alleged construction defects at issue in the case. The pertinent nonparties named were subcontractors of defendant Alpert Custom Homes, Inc. during the construction of the residence.

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Reprinted courtesy of Brady Iandiorio, Higgins, Hopkins, McLain & Roswell, LLC. Mr. Iandiorio can be contacted at iandiorio@hhmrlaw.com

Exact Dates Not Needed for Construction Defect Insurance Claim

The Texas Court of Appeals reversed the decision of the trial court in Vines-Herrin Custom Homes v Great American Lloyds Insurance Company on December 21, 2011. Vines-Herrin Custom Homes built a single-family home in Plano, Texas in 1999. They obtained a commercial general liability policy from Great American, later purchasing coverage from Mid-Continent, which the decision describes as “a sister company of Great American.”

While the home was under construction, Emil G. Cerullo sought to purchase it. At the time, it was under contract to another buyer. Two months later, Vines-Herrin told Cerullo that the deal had “fell through.” Cerullo bought the house with modifications from the original plan. Upon moving in, Cerullo began having water intrusion and other problems. “Cerullo noticed water gathering on window sills and damage to the sheetrock and baseboard.” Additional problems followed, including cracks, leaks, “and in early 2002, the ceiling and roof began to sag.”

Cerullo sued Vines-Herrin, claiming negligent construction. Vines-Herrin filed a claim seeking defense and indemnification under the insurance policies. Coverage was denied and Vines-Herrin filed suit to require coverage and also bringing claims for “breach of the duty of good faith and fair dealing, breach of contract, and DTPA and insurance code violations.”

In May, 2006 Vines-Herrin stated that it had no more defense funds and went into arbitration with Cerullo. The underlying construction defect action was settled for about $2.5 million. As part of the settlement, “Cerullo became the rightful owner of all remaining claims, rights, and causes of action against” Vines-Herrin’s insurers. He then joined the coverage lawsuit.

The non-jury trial was held under the controlling law of the time which “imposed a duty to defend only if the property damage manifested or became apparent during the policy period.” The court concluded in Cerullo’s favor. During the post-judgment motions, the Texas Supreme Court rejected the manifestation rule. Under this ruling, the trial court set aside its judgment and found in favor of the insurance companies. The trial court noted that although “the Residence was covered by an uninterrupted period of insurance (which began before the Residence was constructed) and that the damages to the Residence manifested during the uninterrupted period of insurance coverage,” “Mr. Cerullo failed to allege the date when actual physical damage to the property occurred.”

The first claim by Cerullo and Vines-Herrin was that the “Final Judgment” occurred in October 2004, and that all proceedings thereafter were void. The court rejected this as the “final judgment” is not “final for the purposes of an appeal unless it actually disposes of every pending claim and party or unless it clearly and unequivocally states that it finally disposes of all claims and all parties.” Despite the use of the word “final,” the trial court’s decision did not do this.

The second issue was the application of the Texas Supreme Court case Don’s Building Supply Inc. v. OneBeacon Insurance. In this case, framing rot due to defective stucco was not discovered until after the end of the policy period. The Supreme Court noted that “the key date is when injury happens, not when someone happens on it.”

The appeals court found that the trial court misapplied the Don’s Building Supply decision. Rather than an exact date, “so long as that damage occurred within the policy period, coverage was provided.” The appeals court noted that “Cerullo alleged the house was constructed in 1999 and he purchased it in May 2000.” “By April of 2001, Cerullo noticed that the windowsills in the study were showing signs of leakage and water damage.” As the court put it, “the petitions then alleged a litany of defects.”

The court noted that coverage by Great American was in effect from November 9, 1999 to November 9, 2000. In May of 2000, the house suffered “substantial flooding from a rainstorm that caused damage.” This was during the policy period. “As a matter of law, actual damages must occur no later than when they manifest.”

The court concluded that as damage manifested during the period of coverage, so must have the damage. The court ruled that “contrary to the trial court’s determination otherwise, the evidence showed Great American’s duty to indemnify was triggered, and expert testimony establishing the exact date of injury was not required to trigger the duty.”

Read the court’s decision…

Insurers Reacting to Massachusetts Tornadoes

The Patriot-Ledger reports that insurers could pay out as much as $200 million to cover homes damaged or destroyed in the tornadoes that hit central and southern Massachusetts in June, 2011. Joseph Murphy, Commissioner of the State Division of Insurance didn?t foresee problems with insurers covering these claims. “At this point, there doesn’t seem to be any one company overexposed in that area,” he told the Patriot-Ledger.

Insurance executives did not think the tornadoes would cause them to raise rates. Steve Chevalier, CEO of NLC Companies, said, “it’s a major event for those impacted by it, but it’s not close to a financial hit to us.”

One insurer noted that the winter weather generated more claims; however the cumulative value of those claims was $15 million.

Read the full story…

Insurer Has Duty to Defend Despite Construction Defects

In a case the judge attributed to “shoddy masonry work,” the US District Court of Illinois has rendered a decision in AMCO Insurance Company v. Northern Heritage Builders. Northern Heritage built a home in Chicago for Michael McGrath (who joined Northern Heritage as a defendant). According to the decision, “seven months after he moved into the house, McGrath noticed water coming in the house and warped millwork.” This was attributed to porous block, installed by the mason with Northern Heritage’s knowledge.

McGrath sued National Heritage for both the damage to his house and its contents. The court rejected his claim for the contents. For the damages to his house, he was awarded $601,570.50 in damages. He also sued his homeowner’s insurance carrier for damages not covered in his suit against National Heritage. There he was awarded $1,130,680.16.

AMCO informed National Heritage that it had neither duty to defend nor duty to indemnify. The judge considered whether AMCO had a duty to defend. Under Illinois law, “damage to a construction project resulting from construction defects is not an ‘accident’ or ‘occurrence’ because it represents the natural and ordinary consequence of faulty construction.” However, it is noted that while if the defects lead only to damage to the project itself, there is no occurrence, “if the building owner asserts damages to other property besides the construction itself, there is an ‘occurrence’ and ‘property damage.’” The judge further noted that were construction defects an occurrence, “shoddy work” would be rewarded by double pay, once by the homeowner and a second time by the insurer. Judge Kendall concluded that as McGrath had alleged damage to the contents of his house, AMCO had a duty to defend National Heritage.

She then looked at the issue of whether AMCO had a duty to indemnify. Should they pay the $601,570.50? Judge Kendall noted that “the duty to indemnify is narrower than the duty to defend.” The key point here was that once McGrath’s insurance carrier covered him for the damage to the contents of his house, “AMCO’s duty to defend ended.” Once McGrath “only sought damages for the natural consequences of faulty workmanship” there was no occurrence, hence nothing for AMCO to cover.

Judge Kendall granted a summary dismissal of AMCO’s claim that they had no duty to defend while upholding their claim that they had no duty to indemnify.

Read the court’s decision…

Underpowered AC Not a Construction Defect

After buying a home in Louisiana, Mike Gines determined that the home’s air conditioning unit was insufficient to maintain an appropriate temperature. He contacted the home builder, D.R. Horton, Inc., which worked with the air conditioning installer, Reliant Heating & Air Conditioning, in order to repair the system. When the problems persisted, Gines filed a class action petition against Horton and Reliant in state court. Horton and Reliant moved the case to the federal courts, whereupon Gines asserted the defendants were in violation of the Louisiana New Home Warranty Act (NHWA). Horton stated that the claim under the NHWA was invalid, because Gines had not alleged actual physical damage to his home.

The district court granted Horton’s motion to dismiss. Gines sought a reversal from the Fifth Circuit Court of Appeals and sought to have two questions of state law addressed by the Louisiana Supreme Court.

The district court ruled that the NHWA was the “sole remedy under Louisiana law for a purchaser of a new home with construction defects. Gines argued that court erred in this, but also conceded that this was the conclusion of the Louisiana Supreme Court.

Further, Gines argued that a provision in the NHWA that allows the inclusion of construction defects that do not cause damage was satisfied by paragraph 6 of the contract. The court noted that Gines did not attach a copy of the contract to either the original or amended complaint, and so the court does not need to address these claims. However, the court cautioned that if a copy had been included, they still would have rejected the claim, as “the cited language does not indicate a waiver of the physical damage requirement.” They also note that “paragraph 13 of the contract shows that Gines was aware to the absence of any such waiver in the contract.”

The court concludes that “the moral of this story is that in order to avoid the harsh result that has obtained here, the buyer of a newly constructed home in Louisiana should seek to obtain in the contract of sale an express waiver of the actual damage requirement of the NHWA.” The appeals court affirmed the decision of the circuit court and denied the application to certify questions to the Louisiana Supreme Court.

Read the court’s decision…

MGM Seeks to Demolish Harmon Towers

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.”

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Flooded Courtroom May be Due to Construction Defect

The General Services Administration wouldn’t pin it on a construction defect, but a spokesperson said that a pipe that was misaligned during installation was the likely cause of a flood in the Thomas F. Eagleton US Courthouse on August 23. According to the St. Louis Dispatch, the burst pipe caused a 17-story waterfall in the courthouse, soaking ceilings and floors, and drenching the building’s contents.

The building was dedicated eleven years ago. During the nearly ten years before the building was complete, there were construction disputes and soil contamination issues.

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Couple Sues Attorney over Construction Defect Case, Loses

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

Contractor Burns Down Home, Insurer Refuses Coverage

InsuranceStep reports that a Connecticut insurance company has rejected a claim over a fire in a remodeling project that killed five people. Utica First Insurance states that the coverage was invalid as the insured, Tiberias Construction, had misrepresented information about the company and the work performed in applying for insurance. During a remodel, the contractor allegedly placed fireplace ashes near trash. The trash ignited, leading to the house fire.

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Minnesota Starts Wide-Ranging Registration of Contractors

Minnesota has replaced its Independent Contractor Exemption Certificate program with the Contractor Registration Pilot Project, according to an article in the Martindale-Hubble Legal Library by Michael B. Lapicola. Mr. Lapicola notes that “it will be a violation of the law to contract with or perform construction services for another person without first being registered with the Pilot Project, or to contract with or pay another person to perform construction services if the other person is not registered with the Pilot Project. There are, however, quite a few exceptions, including those who are currently registered with the earlier program. Additionally, independent contractors who do not register can avoid the fine (up to $2,000) by registering within thirty days of fines being levied. Individuals and firms that do not perform building construction or improvements are exempt from the hiring aspects of the statute.

Minnesota’s goal is to “assist state agencies to investigate employee misclassification in the building industry.” Employees of construction firms do not individually register. Rather, the intent of the of law is to stop those who would “require any individual through coercion, misrepresentation or fraudulent means to adopt independent contractor status” or to “knowingly misrepresent or misclassify an individual as an independent contractor.”

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Texas Court of Appeals Conditionally Grant Petition for Writ of Mandamus to Anderson

The Texas Court of Appeals conditionally grant mandamus relief to Anderson Construction Company and Ronnie Anderson (collectively “Anderson”)… from the trial court in a construction defect lawsuit filed by Brent L. Mainwaring and Tatayana Mainwaring. See Tex. Prop. Code Ann. 27.001-.007 (West 2000 & Supp. 2010). Relators contend the trial court abused its discretion by compelling discovery while the case was abated by operation of law.

The Court of Appeals opinion describes what led up to the proceedings: “The Mainwarings’ original petition identified certain defects in their Anderson-constructed home. Those defects concerned the roof trusses and framing, air conditioning, mortar and masonry, exterior doors and windows, and weep holes. With respect to the five areas of defects identified in their original petition, the Mainwarings gave Anderson the statutorily required notice on January 13, 2010. After implementing agreed extensions, Anderson made an offer of settlement for the defects the Mainwarings identified in their notice. Almost eight months later, the Mainwarings filed an amended petition adding defects they had not included in their original petition and notice. The additional defects the Mainwarings included in their amended petition had not been addressed by Anderson’s offer of settlement.”

Following these events, Anderson claimed the Mainwarings did not respond in writing to their settlement offer. “Anderson filed a verified plea in abatement on December 2, 2010. In the trial court, Anderson claimed that the Mainwarings failed to respond in writing to Anderson’s settlement offer, as required by Section 27.004(b) of the RCLA. See Tex. Prop. Code Ann. 27.004(b)(1). The Mainwarings moved to compel discovery responses from Anderson. The Mainwarings alleged that they rejected Anderson’s settlement offer, and that if their response was insufficient, they contend that Anderson’s offer was rejected by operation of law on the twenty-fifth day after the Mainwarings received it. See Tex. Prop. Code Ann. 27.004(i). The Mainwarings’ motion to compel was not supported by affidavit. See Tex. Prop. Code Ann. 27.004(d)(2). On January 13, 2011, Anderson filed a verified supplemental plea in abatement. Anderson alleged that the Mainwarings failed to provide written notice concerning the newly alleged defects and complained the Mainwarings were attempting to circumvent the inspection and resolution procedure of the RCLA. Over Anderson’s objection that the lawsuit had been abated, the trial court granted the Mainwarings’ motion to compel discovery.”

After listening to both sides, the Court of Appeals offered this reasoning for their opinion: “The parties do not dispute that Anderson inspected the property before the Mainwarings alleged the existence of additional defects in their amended pleading, nor do the Mainwarings claim that Anderson has been given an opportunity to inspect the additional defects the Mainwarings identified in their amended pleadings. We conclude the trial court did not have the discretion to deny or lift the abatement until the Mainwarings established their compliance with the statute. In other words, the Mainwarings are required to provide Anderson a reasonable opportunity to inspect the additional defects identified by their amended pleading, which will allow Anderson the opportunity to cure or settle with respect to the newly identified defects.”

The Court of Appeals spoke directly on the issue of mandamus relief: “The Mainwarings contend that mandamus relief is not available because the trial court’s ruling does not prevent Anderson from making settlement offers during the discovery process. ‘An appellate remedy is “adequate” when any benefits to mandamus review are outweighed by the detriments.’ In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004). The failure to abate a case is typically not subject to mandamus. See In re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d 193, 196 (Tex. 2002) (citing Abor v. Black, 695 S.W.2d 564, 567 (Tex. 1985)). In this case, however, the case was abated by operation of law. By ignoring the statutory abatement, the trial court interfered with the statutory procedure for developing and resolving construction defect claims. See In re Kimball Hill Homes Tex., Inc., 969 S.W.2d 522, 525 (Tex. App. Houston [14th Dist.] 1998, orig. proceeding) (An appeal provides an inadequate remedy for the trial court’s failure to observe automatic abatement pursuant to the RCLA.). The benefits of mandamus review are not outweighed by the detriments of mandamus review in this case.“

In conclusion, “The trial court had no discretion to compel discovery while the case was abated, and Anderson, who has been compelled to respond to discovery during a period the case was under an automatic abatement, has no adequate remedy on appeal. Accordingly, we conditionally grant the petition for writ of mandamus. The writ will issue only if the trial court fails to vacate its order of February 3, 2011, and fails to refrain from proceeding with the case until a motion to reinstate is filed that establishes compliance with the notice and inspection requirements of the Residential Construction Liability Act.”

Read the trial court’s decision…

Developer’s Fraudulent Statements Are His Responsibility Alone in Construction Defect Case

The Texas Court of Appeals ruled on December 21 in the case of Helm v Kingston, a construction defect case. After purchasing what was described as “an extremely well-built” two-bedroom townhouse, Mr. Kingston made complaints of construction defects. Greenway Development did not repair the defects to Kingston’s satisfaction, and he filed notice of suit. In his suit, he claimed that GDI and its president, John Helm, had committed fraud and negligent misrepresentation. Kingston claimed that Helm “fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of workmanship was atrocious.” Helms brought a counterclaim that Kingston’s suit was frivolous.

About four years after Kingston purchased the townhome, the suit proceeded to trial. The trial court determined that Helm was not “liable in his individual capacity,” but this was reversed at appeal.

A second trial was held ten years later on the question of whether Kingston’s unit was a townhome or an apartment. A jury found that Helm “engaged in a false, misleading or deceptive act or practice that Kingston relied on to his detriment.” Kingston was awarded $75,862.29 and an additional $95,000 in attorney fees by the jury. Helms made an unsuccessful appeal to the Appeals Court, after which Kingston was awarded an additional $10,000. Helms then made an unsuccessful appeal to the Texas Supreme Court, which lead to an additional $3,000 for Kingston. There was also a verdict of $48,770.09 in pre-judgment interest and “five percent post-judgment interest accruing from the date of the judgment until the time the judgment is paid. Helm appealed.

In his appeal, Helm raised seven issues, which the court reorganized into five Kingston raised one issue on cross-appeal.

Helms’ first claim was that Kingston “failed to satisfy the requirement of” Texas’s Residential Construction Liability Act and that by not filing under the RCLA, Kingston’s fraud and misrepresentation claims were preempted. Further Helms claimed that the RCLA limited Kingston’s damages. The court rejected this, as the RCLA deals with complaints made to a contractor and not only did Helm fail to “conclusively establish” his “status as a ‘contractor’ under the statutory definition,” Helm testified that he was “not a contactor” at the pre-trial hearing.

Helms’s second claim was that Kingston’s later claim of a misconstructed firewall should be barred, claiming that Kingston “‘had knowledge of a defect in the firewall’ as early as 1997 but did not assert them until 2007.” The court rejected this because Kingston’s claim was that “Helm ‘fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of the workmanship was atrocious.’”

Helms also challenged whether his statements that the residence was of “good quality” constituted fraud and misrepresentation under Texas’s Deceptive Trade Practices-Consumer Protection Act. The court concluded that Helm was in a position to make knowledgeable statements and further that “residential housing units are not artistic works for which quality is inherently a matter of subjective judgment.” Helm also claimed that Kingston could have avoided certain repair expenses through the “exercise of reasonable care.” Helms argued that the repairs could have been made for $6,400. The court disagreed, as these claims were cited only to invoke the DTPA, and that later petitions established additional defects.

Helms’s next claim was that he was not allowed to designate responsible third parties. The court rejected this because there GDI represented matters concerning the residence only through Helm’s statements. The court noted that “Helm is correct that?third parties may be liable for fraud if they ‘participated in the fraudulent transactions and reaped the benefits,’” but they note that “Helm never specifically alleged that GDI or CREIC participated in Helm’s alleged fraudulent transactions.

The final issue in the decision was about court costs, and here the court denied claims on both sides. Helm argued that the award of legal fees were excessive, as they exceeded the actual damages. The court noted that they “may not substitute our judgment for that of the jury,” and also that “the ratio between the actual damages awarded and the attorney’s fees is not a factor that determines the reasonableness of the fees.” But the court also rejected Kingston’s claim for post-judgment interest on $10,312.30 that Helm had deposited in the trial court’s registry. The court noted that the monies were to be paid out upon final judgment, but the mandate did not include any reference to interest.

Read the court’s decision…

Seven Tips to Manage Construction Defect Risk

Jody T. Wright looks at “seven strategies being used around the country to identify, manage and mitigate your exposures” in a piece in Business Insurance. Wright, Senior VP, Construction Department Manager for Lockton Companies in Denver, gives seven simple steps from the perspective of a insurer.

His first step is to match your project to your insurance. He suggests keeping the riskier projects separate, noting that from an insurer’s point-of-view, “any project that creates a homeowners association carries a higher potential threat of future litigation.” This leads to his second point: you need to “determine what makes your liability insurer nervous.” In other words, talk with your insurer.

His third point suggests that builders look back and see if there is a pattern of problems that have lead to payouts from your insurer. Keep your insurer happier by making sure these areas don’t continue to be problems. Nor should you look for new problems. He suggests against leading in new technologies.

Three more points deal with being careful about with whom you associate. He tells builders to negotiate their contracts, avoiding clauses that would obligate a builder to “indemnify the owner for the negligent work of others that they did not control.” Avoid subcontractors “with loss patterns that might affect your project and reputation.” Builders should identify “owners with a pattern of suing contractors” adding that risk to the cost of the job. They should also identify “the most effective attorneys and expert witnesses” and get them involved before the litigation starts.

Read the full story…