Orange County Home Builder Dead at 93
April 25, 2012 — CDJ Staff
Randall E. Presley was a homebuilder in Southern California for more than thirty years, acting as head of Presley Development Company from 1956 until selling the firm to Lyon Homes in 1987. The two companies merged in 1991 as the Presley Cos. Mr. Presley saw the need in the 1950s to provide people in Southern California with low- to medium-priced quality homes.
His firm built more than 160 communities and was among the ten largest homebuilding firms in the country, expanding beyond California. Mr. Presley was 93 when he succumbed to pneumonia. He is survived by a wife, three children, seven grandchildren, and 11 great-grandchildren.
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High School Gym Closed by Construction Defects
October 28, 2011 — CDJ Staff
The high school gym in Lake Oswego, Oregon has been shut down because testing has revealed that the construction defects have lead to deterioration of the structural integrity of the roof. The school district noted that there was a chance of collapse if there were a “significant seismic event or heavy rain and winds and snow.” The school district has been in a lawsuit with the builders since 2008, which was recently settled for $600,000.
The school board is still determining whether the original contractor will be asked to correct the defect or if they will bid the job out.
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After Breaching its Duty to Defend, Insurer Must Indemnify
August 11, 2011 — Tred Eyerly, Insurance Law Hawaii
In a brief decision analyzing Oregon law, the Ninth Circuit determined that once an insurer breaches its duty to defend, it must indemnify. See Desrosiers v. Hudson Speciality Ins. Co., 2011 U.S. App. LEXIS 12591 (9th CIr. June 21, 2011).
The victim secured a judgment against the insured after he was beaten by another patron outside the insured's bar. Hudson Speciality Insurance refused to defend the insured, claiming the injury arose from an assault and battery, which excluded coverage.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
San Diego Construction Defect Claim Settled for $2.3 Million
July 10, 2012 — CDJ Staff
The Nauman Law firm has settled the lawsuit by the Latitude Owners Association against CS-Crossroads and others, as reported in the Sacramento Bee from a press release by the firm. The owners at Latitude, a condominium community in San Diego, found that hillside crawl spaces were not property waterproofed, leading to rotting plywood, water intrusion, and pipe leaks. There were additional problems with retrofitted windows and repairs of outside decks. The case was filed in San Diego Superior Court, but settled after multiple mediations.
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Coverage Rejected Under Owned Property and Alienated Property Exclusions
June 6, 2011 —
Tred R. Eyerly,
Insurance Law HawaiiThe insured’s request for a defense when sued in a construction defect action was denied under the owned property exclusion and the alienated property exclusion in1777 Lafayette Partners v. Golden Gate Ins. Co., 2011 U.S. Dist. LEXIS 48562 (N.D. Cal. April 29, 2011).
In 1999, Lafayette Partners purchased an abandoned walnut processing factory to convert into living and working units. The property was developed into a rental property from 2000-2001, and thereafter rented. In May 2003, Lafayette Partners entered into a sales agreement with Wolff Enterprises LLC. The sale closed in February 2005. Wolff then converted the rental units into condominiums.
In December 2007, the Walnut Factory Owners Association sued Wolff for construction defects. In Lafayette Partners was added to the suit in 2009. The suit alleged a variety of defective conditions, including the roofs, exteriors, windows, electrical , plumbing, and mechanical components and systems.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Contractual Liability Exclusion Bars Coverage
August 2, 2012 — Tred Eyerly, Insurance Law Hawaii
The Fifth Circuit Court of Appeals considered whether coverage existed for a defectively built tennis court in light of a contractual liability exclusion. Ewing Construction Company, Inc. v. Amerisure Ins. Co., 2012 U.S. App. LEXIS 12154 (5th Cir. June 15, 2012).
Ewing Construction Company entered a contract with the School District to construct tennis courts at a school. After completion, the School District complained that the courts were cracking and flaking, rendering them unfit for playing tennis. The School District filed suit, seeking damages for defective construction. It alleged that Ewing breached its contract and performed negligently.
Ewing tendered the underlying lawsuit to Amerisure. Amerisure denied coverage and Ewing filed suit.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
Windows and Lawsuits Fly at W Hotel
July 5, 2011 — CDJ Staff
An Austin, Texas lawyer has filed a lawsuit against Starwood Hotels and Resorts, the operator of the W Hotel Austin, after two people were struck by glass which fell from the hotel’s balconies. YNN in Austin reports that the hotel has been closed indefinitely as construction workers removed panels. An additional three panels fell before work started. Randy Howry, the lawyer representing the injured parties, notes that in May glass falling from the W Hotel in Atlanta killed one woman and injured another. “Seventeen days pass and we put them on notice, our clients have put them on notice, yet nothing has been done an only after the glass fell yesterday did they do something about it,” YNN quotes Howry.
The hotel released a statement that they will be replacing all of the balcony glass to ensure safety for their guests and the general public. They relocated all hotel guests and coordinated with Austin officials to close adjacent sidewalks and roads. The statement identifies the firms involved with the design and construction of the balconies.
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Crane Dangles and So Do Insurance Questions
November 7, 2012 — CDJ Staff
Hurricane Sandy sent a construction crane dangling from the top of One57, a condo construction project in New York City. In response to the risk, the nearby Parker Meridian and other nearby buildings were evacuated until the crane could be stabilized. Businessweek reports that One57 involves “a tangle of companies,” including the developer, Extell Development and the contractor, Lend Lease Construction. Pinnacle Industries was responsible for providing and operating the crane.
The insurance claims are yet to be made, but they will likely include the costs of evacuating nearby buildings and to cover any damage to the building itself. David DeLaRue, a vice president in construction practice at Willis Group Holdings said there would be two questions: “Did our insured do anything to cause that loss? Does this policy cover it?”
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Local Government Waives Construction Fees to Spur Jobs
June 19, 2012 — CDJ Staff
Warren Township in New Jersey has waived building and electrical permit fees, up to $5,000, for businesses that create at least five new jobs. The fee reductions are available for construction in areas zones under various designations. Buildings that have received a zoning variance are not eligible. The Echoes-Sentinel notes that other towns in Somerset County, New Jersey have adopted similar ordinances.
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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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Save A Legal Fee? Sometimes You Better Talk With Your Construction Attorney
May 10, 2012 — Douglas Reiser, Builders Counsel
I love writing this column, because I think it’s refreshing for contractors to hear that they don’t always need an attorney. Today’s post is the “Un-Save a Legal Fee” because I want to point out a specific illustration of when you definitely need your attorney. Using a construction contract template can be fine, but you always need to consider its application to each project ? or it could bite you in the rear.
Seattle attorney Paul Cressman published a prime depiction of bad contract management, last week. A Florida appellate court struck down a general contractor’s “pay if paid” clause when it became ambiguous because of some incorporated language from its prime contract. Specifically, a clause in the prime contract required the general contractor to pay all subcontractors before receiving payment from the owner, while the general contractor’s “pay if paid” clause required its subcontractors to wait for payment until it arrived from the owner.
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Driver’s Death May Be Due to Construction Defect
August 16, 2012 — CDJ Staff
A man driving a rental truck collided with a parking ramp at the Mall of America in Bloomington, Minnesota, leading to his death when the ramp broke and crushed the cab of the truck. One expert said that the ramp should have been built to withstand the impact. Tim Galarnyk told Fox News that the building feature didn’t’ even bear weight, describing it as “a cosmetic facial panel.” Nevertheless, in a contest with a truck he said the ramp portion should “peel it like a tin can before it takes the concrete element down.”
The Mall of American is not commenting on the accident.
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A Downside of Associational Standing - HOA's Claims Against Subcontractors Barred by Statute of Limitations
March 28, 2012 — Bret Cogdill, Colorado Construction Litigation
In multi-family construction defect litigation in Colorado, homeowners associations rely on associational standing to pursue claims affecting more than two units and to bring claims covering an entire development. This practice broadens an association’s case beyond what individual, aggrieved owners would otherwise bring on their own against a developer or builder-vendor. However, reliance on associational standing to combine homeowners’ defect claims into a single lawsuit has its drawbacks to homeowners.
A recent order in the case Villa Mirage Condominium Owners’ Association, Inc., v. Stetson 162, LLC, et al., in El Paso County District Court, presents an example. There, the HOA unsuccessfully sought a determination from the court that its claims against subcontractors were not barred by the statute of limitations. To do so, the HOAs attempted to apply the Colorado Common Interest Ownership Act (“CCIOA”), which governs the creation and operation of HOAs, and a statute intended to apply to persons under a legal disability.
Under CCIOA, during the period of “declarant control” the developer may appoint members to the association’s executive board until sufficient homeowners have moved into the development and taken seats on the board.
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Reprinted courtesy of Bret Cogdill of Higgins, Hopkins, McClain & Roswell, LLC. Mr. Cogdill can be contacted at cogdill@hhmrlaw.com.
Negligent Misrepresentation in Sale of Building Altered without Permits
September 30, 2011 — CDJ Staff
The Supreme Court of New Hampshire has ruled in the case Wyle v. Lees. The Leeses owned a two-unit apartment building in North Conway, New Hampshire. They hired a contractor to add a third, larger apartment, including a two-car garage. The Leeses and their contractor submitted a building permit application. They were informed that site plan review was required. After receiving approval on the site plan, construction started. At no point did they obtain a building permit and the construction was never inspected. The Leeses subsequently added more space to the unit, reducing parking spaces below the minimum required. Again, they did not obtain a building permit.
In 2007, three years after all these changes were complete, the Leeses sold their building to Mr. Wyle. To the question “are you aware of any modifications or repairs made without the necessary permits?” they answered “no.” About six weeks after closing, Wyle “received a letter from the town code enforcement officer regarding the legality of the removal of a garage door from the new unit.” A subsequent inspection revealed “numerous building and life safety code violations.”
Mr. Wyle brought a claim against the Leeses for negligent misrepresentation. The defendants filed a motion “seeking to preclude economic loss damages.” At a two-day bench trial, Mr. Wyle won. The Leeses appealed.
The appeals court found that “the defendants negligently misrepresented that the premises were licensed for immediate occupancy and that the defendants had obtained all necessary permits,” and thus upheld the lower court’s finding of negligent misrepresentation. The appeals court also rejected the Leeses’ argument that damages must be apportioned on all parties, including “the plaintiff himself, the plaintiff’s building inspector, and the defendant’s contractor,” finding a lack of “adequate evidence.”
The Leeses further argued that they were unaware that modifications and repairs were accomplished without the required permits. The appeals court noted that “the trial court found that both the conditional approval and final approval for the site plan stated that a building permit and a certificate of occupancy were required prior to any use.” The court concluded that the Leeses “knew or should have known of the falsity of their representation.”
The appeals affirmed the findings of the trial court.
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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. Sullivan’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
El Paso Increases Surety Bond Requirement on Contractors
April 25, 2011 — April 25, 2011 Beverley BevenFlorez - Construction Defect Journal
The city of El Paso has recently increased surety bonds required of contractors from $10,000 to $50,000, according to the El Paso Times. Proponents of the increase believe it was necessary to protect homeowners from fly-by-night builders, while opponents argue that the increase will have an adverse effect on an industry in that is already suffering due to the economic slowdown.
Arguments for and against the increase have been flooding the blogosphere with their views. Christian Dorobantescu on the Small Business Entrepreneur Blog claims that “only about 15% of the city’s 2,500 contractors had been able to secure a higher bond to remain eligible for work after the new requirements were announced.” However, insurance companies have a different take. “From a surety broker standpoint, most contractors will be able qualify for the bond; some will just have to pay higher premium rates to obtain it,” a recent post on the Surety1 blog argues.
While the increased bond may help homeowners deal with construction defect claims, it is not clear what effect it will have on builders in El Paso.
Read more from the El Paso Times…
Read more from the Small Business Entrepreneur Blog…
Read more from the Surety1 Blog…
Michigan Supreme Court Concludes No Statute of Repose on Breach of Contract
July 19, 2011 — CDJ Staff
Judge Marilyn Kelly of the Michigan Supreme Court has remanded the case of Miller-Davis Co. v. Ahrens Constr. Inc. (Mich., 2011) to the Court of Appeals, after determining that the court had improperly applied the statute of repose. She reversed their judgment, pending a new trial.
Ahrens Construction was a subcontractor, hired by Miller-Davis to build and install a natatorium room at a YMCA camp in Kalamazoo, Michigan. After its installation, the YMCA discovered a severe condensation problem, causing moisture to “rain” from the roof. The architect, testifying for Miller-Davis, alleged that the problems were due to improper installation by Ahrens. Ahrens claimed that the condensation problem was due to a design error.
When the roof was removed and reconstructed, the moisture problem ended. Ahrens argued that the alleged defects were caused by the removal. Further, in trial Ahrens raised the issue of the statute of repose. The court found in favor of Miller-Davis and did not address the statute of repose.
The Court of Appeals reversed the trial court, determining that the statute of repose had barred the suit. This rendered the other issues moot.
The Michigan Supreme concluded that the issue at hand was “a suit for breach of contract,” and that the Michigan statute of repose is limited to tort actions. They remanded the case to the Court of Appeals to address the issues that had been mooted by the application of the statute of repose.
Read the court’s decision…
Construction Firm Sues City and Engineers over Reservoir Project
October 28, 2011 — CDJ Staff
The city of Fremont, Ohio and Arcadis have been sued by Trucco Construction. Trucco had been hired by the city to build a reservoir designed by Arcadis, the News-Messenger reports. Peter Welin, attorney for Trucco, said that he found “startling evidence of the company’s negligence” when he deposed Arcadis engineers. “This project could never be built the way they bid it.”
Their suit alleges that Arcadis and the city were aware that the site was not conducive to construction and also that Arcadis failed to be a neutral party in discussions between Trucco and the city regarding compensation.
Sam Wamper, an attorney for Fremont, said he was going to file a motion which would include “quite an interesting story,” but declined to elaborate.
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