New Recommendations for Healthy and Safe Housing Conditions
May 19, 2014 —
Beverley BevenFlorez-CDJ STAFFThe National Center for Healthy Housing (NCHH) and the American Public Health Association (APHA) jointly “released the National Healthy Housing Standard, which provides recommendations for the maintenance and condition of occupied dwellings,” reported Big Builder.
According to Big Builder, “The standard's provisions aim to fill gaps where there are no property maintenance policies and to complement the International Property Maintenance Code and other federal, state, and local policies in place regarding the upkeep of existing homes.”
Some of the recommendations included room access to daylight, no or low-VOC building materials, and water management.
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Arizona Court of Appeals Decision in $8.475 Million Construction Defect Class Action Suit
May 09, 2011 —
CDJ STAFFIn the case of Leflet v. Fire (Ariz. App., 2011), which involved an $8.475 million settlement in a construction defect class action suit, the question put forth to the Appeals court was “whether an insured and an insurer can join in a Morris agreement that avoids the primary insurer’s obligation to pay policy limits and passes liability in excess of those limits on to other insurers.” The Appeals court provided several reasons for their decision to affirm the validity of the settlement agreement as to the Non-Participatory Insurers (NPIs) and to vacate and remand the attorney fee awards.
First, the Appeals court stated, “The settlement agreement is not a compliant Morris agreement and provides no basis for claims against the NPIs.” They conclude, “Appellants attempt to avoid the doctrinal underpinnings of Morris by arguing that ‘the cooperation clause did not prohibit Hancock from assigning its rights to anyone, including Appellants.’ This narrow reading of the cooperation clause ignores the fact that Hancock did not merely assign its rights — it assigned its rights after stipulating to an $8.475 million judgment that neither it nor its Direct Insurers could ever be liable to pay. Neither Morris nor any other case defines such conduct as actual ‘cooperation’—rather, Morris simply defines limited circumstances in which an insured is relieved of its duty to cooperate. Because Morris agreements are fraught with risk of abuse, a settlement that mimics Morris in form but does not find support in the legal and economic realities that gave rise to that decision is both unenforceable and offensive to the policy’s cooperation clause.”
The Appeals court further concluded that “even if the agreement had qualified under Morris, plaintiffs did not provide the required notice to the NPIs.” The court continued, “Because an insurer who defends under a reservation of rights is always aware of the possibility of a Morris agreement, the mere threat of Morris in the course of settlement negotiations does not constitute sufficient notice. Instead, the insurer must be made aware that it may waive its reservation of rights and provide an unqualified defense, or defend solely on coverage and reasonableness grounds against the judgment resulting from the Morris agreement. The NPIs were not given the protections of this choice before the agreement was entered, and therefore can face no liability for the resulting stipulated judgment.”
Next, the Appeals court declared that “the trial court abused its discretion in awarding attorney’s fees under A.R.S § 12-341.” The Appeals court reasoned, “In this case, the NPIs prevailed in their attack on the settlement. But the litigation did not test the merits of their coverage defenses or the reasonableness of the settlement amount. And Plaintiffs never sued the NPIs, either in their own right or as the assignees of Hancock. Rather, the NPIs intervened to test the conceptual validity of the settlement agreement (to which they were not parties) before such an action could commence. In these circumstances, though it might be appropriate to offset a fee award against some future recovery by the Plaintiff Leflet v. Fire (Ariz. App., 2011) class, the purposes of A.R.S. § 12-341.01 would not be served by an award of fees against them jointly and severally. We therefore conclude that the trial court abused its discretion in awarding fees against Plaintiffs ‘jointly and severally.’”
The Appeals court made the following conclusion: “we affirm the judgment of the trial court concerning the validity of the settlement agreement as to the NPIs. We vacate and remand the award of attorney’s fees. In our discretion, we decline to award the NPIs the attorney’s fees they have requested on appeal pursuant to A.R.S. § 12-341.01(A).”
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PulteGroup Fires Exec Accused of Defamation By Founder’s Heir
January 17, 2023 —
Patrick Clark - BloombergPulteGroup Inc. fired a senior executive for violating the company’s code of conduct two days after the grandson of the homebuilder’s founder sued the executive for alleged defamation.
The company, which is the third-largest US homebuilder, said in a statement Friday that it had terminated Brandon Jones after the results of an independent investigation. Jones had been slated to assume the role of chief operating officer in January.
Bill Pulte, 34, filed a lawsuit on Wednesday in Palm Beach County, Florida, alleging that Jones had used anonymous Twitter accounts to smear members of the Pulte family. The lawsuit accused the executive of impersonating a business journalist and making a false claim that Pulte manipulated his grandfather.
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Patrick Clark, Bloomberg
Arizona Purchaser Dwelling Actions Are Subject to a New Construction
September 04, 2019 —
William L. Doerler - The Subrogation StrategistArizona recently amended its Purchaser Dwelling Action statute to, among other things, involve all contractors in the process, establish the parties’ burdens of proof, add an attorney fees provision, establish procedural requirements and limit a subcontractor’s indemnity exposure. The governor signed the bill—2019 Ariz. SB 1271—on April 10, 2019, and the changes go into effect and apply, retroactively “to from and after June 30, 2019.” The following discussion details some of the changes to the law.
Notice to Contractors and Proportional Liability
Under the revised law, a “Seller” who receives notice of a Purchaser Dwelling Action (PDA) from a residential dwelling purchaser pursuant to A.R.S. § 12-1363* has to promptly forward the notice to all construction professionals—i.e. architects, contractors, subcontractors, etc., as defined in A.R.S. § 12-1361(5)—that the Seller reasonably believes are responsible for an alleged construction defect. A.R.S. § 12-1363(A). Sellers can deliver the notice by electronic means. Once construction professionals are placed on notice, they have the same right to inspect, test and repair the property as the Seller originally placed on notice. A.R.S. § 12-1362(B), (C).
To the extent that the matter ultimately goes to suit, A.R.S. § 12-1632(D) dictates that, subject to Arizona Rules of Court, construction professionals “shall be joined as third-party defendants.” To establish liability, the purchaser has the burden of proving the existence of a construction defect and the amount of damages. Thereafter, the trier of fact determines each defendant’s or third-party defendant’s relative degree of fault and allocates the pro rata share of liability to each based on their relative degree of fault. However, the seller, not the purchaser, has the burden of proving the pro rata share of liability for any third-party defendant. A.R.S. § 12-1632(D).
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William L. Doerler, White and Williams LLPMr. Doerler may be contacted at
doerlerw@whiteandwilliams.com
Florida's New Pre-Suit Notification Requirement: Retroactive or Prospective Application?
February 05, 2024 —
Holly A. Rice - Saxe Doernberger & Vita, P.C.Florida’s newly formed Sixth District Court of Appeal (“Sixth DCA”) recently certified conflict with Florida’s Fourth District Court of Appeal on the issue of retroactive application of the pre-suit notice requirement contained in Florida Statute §627.70152.1 Earlier this year, the Fourth District Court of Appeal (“Fourth DCA”) held that the pre-suit notice provision applies retroactively, meaning, it applies to all suits filed after July 1, 2021, regardless when the insurance policy was issued.2 The Sixth DCA, in
Hughes v. Universal Property & Casualty Insurance Company,3 directly rejected the Fourth DCA’s interpretation and instead found a retroactive application of the pre-suit notice to be unconstitutional under Florida law. Prior to the Fourth DCA’s ruling, most trial courts had found no retroactive application for the pre-suit notice provision.4
In August 2021, shortly after Florida Statutes Section 627.70152 went into effect on July 1, 2021, Rebecca Hughes (“Hughes”) sued Universal Property & Casualty Insurance Company (“Universal Property”) for breach of contract after Universal Property denied her insurance claim. Hughes did not file a pre-suit notice under Section 627.70152. Universal Property moved to dismiss based on Hughes’ failure to file the pre-suit notice, arguing that the pre-suit notice requirement applies to all lawsuits filed after July 1, 2021, even if the claimant’s insurance policy was issued before the statute’s effective date. The trial court agreed with Universal Property and dismissed the lawsuit.
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Holly A. Rice, Saxe Doernberger & Vita, P.C.Ms. Rice may be contacted at
HRice@sdvlaw.com
Court of Appeals Upholds Default Judgment: Serves as Reminder to Respond to Lawsuits in a Timely Manner
October 02, 2023 —
Anna Basnaw - Ahlers Cressman & Sleight PLLCIn
Cyrus Way Partners, LLC. (“Cyrus”) v. Cadman, Inc. (“Cadman”), the primary issue on appeal was whether the trial court erred in denying Cadman’s motion to vacate the default judgment under Civil Rules 55 and 60. A default judgment is a legal ruling that can be entered in favor of the plaintiff when the defendant fails to respond to a lawsuit. If that happens, the court may resolve the lawsuit without hearing from the other side. In Washington, a party typically has 20 days to appear in a suit before being at risk for default judgment. If a default judgment is entered for the plaintiff, the defendant can move to vacate the default judgment, meaning the defendant hopes the court will set aside the default judgment as if it never happened. In this case, Cadman, the defendant, presents several ultimately unsuccessful arguments for why the default judgment in favor of Cyrus, the plaintiff, should be vacated.
Cyrus and Orca Beverage Inc. (“Orca”) are under common ownership. In 2018, Cyrus began a project to build a warehouse for Orca, which included the construction of a large concrete slab. Cadman was hired to supply the concrete. Cyrus hired Olympic Concrete Finishing Inc. (“Olympic”) to finish the concrete. On April 1, 2018, Cadman poured the concrete, and Olympic finished the slab. The next day, Cyrus noticed several problems with the slab, which experts hired by both Cyrus and Cadman opined were caused by an abnormally high air content in the concrete.
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Ahlers Cressman & Sleight PLLC
Harmon Towers Duty to Defend Question Must Wait, Says Court
March 01, 2012 —
CDJ STAFFThe Harmon Towers project in Las Vegas was eventually halted short of the planned forty-seven stories after “it was determined that there was substantial defective construction, including defective installation of reinforcing steel throughout the Harmon.” The American Home Insurance Company and Lexington Insurance Company put forth a claim that they had no duty to defend Perini Construction, the builder of the defective Harmon Towers. Further, American Home seeks to recover the monies American reimbursed Perini. The United States District Court of Nevada ruled in the case of American Home Assurance Co. v. Perini Building on February 3, 2012.
The two insurance companies covered Perini and its subcontractors, Century Steel, Pacific Coast Steel, and Ceco Concrete Construction. Century Steel was the initial subcontractor for the reinforcing steel; they were later acquired by Pacific Coast Steel. In this current case, Perini Construction is the sole defendant.
Perini sought a dismissal of these claims, arguing that without the subcontractors joined to the case, “the Court cannot afford complete relief among existing parties.” The court rejected this claim, noting that the court can determine the duties of the insurance companies to Perini, which the court described as “separate and distinct from those of the subcontractors.” The subcontractors “have not claimed an interest in the subject matter of the action.” The court concluded that it could determine whether Perini was entitled or not to coverage without affecting the subcontractors. The court rejected Perini’s claim.
Perini also asked the court to abstain from the case, arguing that it was better heard in a state court. The court noted that several considerations cover whether a case is heard in state or federal courts. The court noted that if the case weighed heavily on state law, the state courts would be the obvious location. Further, if there were a parallel action in the state courts, “there is a presumption that the whole suit should be heard in state courts.” This is, however, no parallel state suit, although the court noted that Perini has “threatened” to do so.
However, the issue of who is to blame for the problems at Harmon Towers has not been resolved. The court concluded that until the “underlying action” was concluded, it was premature to consider the issues raised in this case while the earlier lawsuit was still in progress. The court denied Perini’s motion to dismiss the case. Given that the outcome of the earlier construction defect case may lead to further litigation in state court, the District Court granted Perini’s motion to abstain, but staying their judgment until the construction defect case is resolved.
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Federal Court in New York Court Dismisses Civil Authority Claim for COVID-19 Coverage
October 11, 2021 —
Eric D. Suben - Traub LiebermanCourts nationwide have been grappling with coverage for business interruption claims arising from closures occasioned by the COVID-19 pandemic, with mixed results by jurisdiction. A recent decision on the issue from the federal Southern District of New York sheds light on New York law regarding this pressing issue.
In Elite Union Installations, LLC v. National Fire Insurance Company of Pittsburgh, PA, 2021 WL 4155016 (Sept. 13, 2021), directives issued by governmental authorities required the insured construction company to shut its doors, leading to a layoff of some employees while others continued to work from home. The insured made a claim under its commercial property coverage for damage to its premises, which it claimed were rendered “uninhabitable” and required repair in the form of alterations to comply with social distancing requirements. In the ensuing coverage litigation, National Union moved to dismiss the complaint alleging covered first-party property damage defined in the policy as “direct physical loss of or damage to property.”
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Eric D. Suben, Traub LiebermanMr. Suben may be contacted at
esuben@tlsslaw.com
