Illinois Law Bars Coverage for Construction Defects in Insured's Work
September 24, 2014 —
Tred R. Eyerly – Insurance Law HawaiiApplying Illinois law, the Seventh Circuit determined there was no coverage for faulty workmanship causing property damage to the insured's project. Nautilus Ins. Co. v. Board of Directors of Regal Lofts Condominium Ass'n, 2014 U.S. App. LEXIS 16250 (7th Cir. Aug. 21, 2014).
The developer converted a vacant building into a condominium. The construction was completed in 2000. The Condominium Board took control of the condo association on July 27, 2000. As early as May 2000, one homeowner was aware of water damage problems in the building. Other complaints surfaced. An investigation found that the exterior brick masonry walls were not fully waterproofed, which caused leaks. The investigation further showed that deteriorated conditions had likely developed over many years, even prior to the condominium conversion, but the present water penetration was caused by the inadequate restoration of the walls to a water-tight condition.
The underlying action was filed against the developer for failure to properly construct the exterior walls. The developer's carrier, Nautilus, denied coverage. In an amended complaint, the Board added a count of negligence. Again, Nautilus denied coverage. The Board's second amended complaint alleged that the developer's negligence had caused damage to personal property within the building, in addition to the interior of the building and the building itself. For the third time, Nautilus denied coverage and filed for declaratory relief.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Equitable Lien Designed to Prevent Unjust Enrichment
November 09, 2020 —
David Adelstein - Florida Construction Legal UpdatesThere are instances where a party does not have construction lien rights but, nevertheless, feels the need to pursue an equitable lien against the real property.
No different than a construction lien, an action to enforce an equitable lien has a one-year limitations period if it arises from the “furnishing of labor, services, or material for the improvement of real property.” Fla. Stat. s. 95.11(5)(b). In other words, an equitable lien–not nearly as powerful as a construction lien because a construction lien is recorded in the official public records whereas an equitable lien is not–is tied to an analogous one-year limitations period for those liening for construction improvements. (Notably, if the equitable lien arises outside of the construction improvement context, the one-year statute of limitations would not apply. See Gabriji, LLC v. Hollywood East, LLC, 45 Fla. L. Weekly D2251a (Fla. 4th DCA 2020) (one-year statute of limitations period does not apply to all equitable liens such as those that do not arise from furnishing labor, services, or material for the improvement of real property)).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Construction Case Alert: Appellate Court Confirms Engineer’s Duty to Defend Developer Arises Upon Tender of Indemnity Claim
January 27, 2010 —
Steven M. CvitanovicIn the recent case of UDC-Universal Development, L.P. v. CH2M Hill, 2010 Cal.App.LEXIS 47 (filed January 15, 2010), the Sixth District Court of Appeal provided a stunning illustration of the far-reaching effects of the California Supreme Court’s holding in Crawford v. Weather Shield Manufacturing Inc. (2008) 44 Cal.4th 541. In Crawford, the Court held the duty to defend under an indemnity agreement arose upon the mere tender of defense of a claim covered by the indemnity.
In the UDC case, CH2M Hill provided engineering and environmental planning services to developer UDC on a project that ultimately wound up in a construction defect lawsuit by the homeowners association ( HOA ). UDC tendered its defense to CH2M Hill, the tender was rejected, and UDC filed a cross-complaint for negligence, breach of contract and indemnity against CH2M Hill and others. After the HOA’s construction defect claims were settled, UDC proceeded to trial against CH2M Hill. The jury found in favor of CH2M Hill on the claims for negligence and breach of contract. At the request of the parties prior to trial, the trial court ruled on the application of the indemnity agreement in light of Crawford and, in so doing, found that the defense obligation arose upon the tender and that CH2M Hill breached that duty despite the jury finding in favor of CH2M Hill.
The Court of Appeal affirmed, noting that the defense obligation arose as soon as the defense was tendered and did not depend on the outcome of the litigation, and that the HOA’s general description of the defects along with an allegation that Doe engineers were negligent triggered the duty to defend.
Although this case did not expand the crushing impact of Crawford’s holding, it is
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Performing Work with a Suspended CSLB License Costs Big: Subcontractor Faces $18,000,000 Disgorgement
September 17, 2015 —
Steven M. Cvitanovic & David A. Harris – Haight Brown & Bonesteel LLPIn what could lead to a draconian result, the Court of Appeal for the First Appellate District held that a contractor who performs work without a valid license can be required to disgorge all payments received, even if the contractor perfectly performed its work. The case, Judicial Council of California v. Jacobs Facilities, Inc. (Ct. of Appeal, 1st App. Dis., Div. One, A140890, A141393), involved an $18,000,000 contract between Jacobs Facilities, Inc. (“Jacobs Facilities”) and the Judicial Council of California (“Judicial Council”). In April 2006, Jacobs Facilities, a wholly owned subsidiary of Jacobs Engineering Group, Inc. (“Jacobs Engineering”) entered into a three year contract with the Judicial Counsel to maintain 121 courthouses and other judicial branch buildings throughout Southern California (the “Contract”). Jacobs Facilities contracted to provide maintenance and oversight services, while retaining subcontractors to perform the actual maintenance and repair work.
In December 2006, as part of a corporate reorganization, Jacobs Engineering started winding up Jacobs Facilities and transferred its employees to Jacobs Engineering and then subsequently to another wholly owned subsidiary called Jacobs Project Management Co. (“Jacobs Management”). The work that was performed by Jacobs Facilities was taken over by Jacobs Management. As part of the windup, Jacobs Facilities’ Contractor’s State License Board license was allowed to lapse and the license expired by operation of law in November 2008. Although Jacobs Management was now performing the work, it was not added as a party to the contract. Although it appears Judicial Council was aware of the corporate changes, it was not until November 2009 that the parties assigned the contract to Jacobs Management.
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Steven M. Cvitanovic, Haight Brown & Bonesteel LLP and
David A. Harris, Haight Brown & Bonesteel LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com
Mr. Harris may be contacted at dharris@hbblaw.com
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Insureds' Experts Insufficient to Survive Insurer's Motion for Summary Judgment
October 17, 2023 —
Tred R. Eyerly - Insurance Law HawaiiThe magistrate recommended that insurer's motion for summary judgment be granted due to the insureds' expert's inability to present genuine issues of material fact. Walker v. Century Sur. Co., 2023 U.S. Dist. LEXIS 142408 (E.D. Texas July 17, 2023).
The insureds' property sustained damage from Hurricane Laura. Colonial Claims inspected the property for Century and reported that a portion of the roof was damaged by the hurricane. Century paid insureds $2,212,34. Van Fisher, an engineer with Envista Forensics, then inspected the interior of the property on Century's behalf. Fisher reported that there was some covered interior damage caused by a leak from a storm-created opening in the roof. However, Fisher further reported that there was other interior damage caused by existing water leaks not attributed to the hurricane and thus not covered by the policy. Century then paid the insureds an additional $485.05 based on Fisher's inspection.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Norristown, PA to Stop Paying Repair Costs for Defect-Ridden Condo
February 10, 2014 —
Beverley BevenFlorez-CDJ STAFFThe city of Norristown, Pennsylvania has already paid “$3.4 million for construction repairs and legal expenses” for the 26-unit condominium on 770 Sandy Street, according to The Times Herald. Therefore city officials recently declared that “they will no longer pay the $40,000 annual cost for maintenance, electricity and repairs” for the building.
“At some point, the folks that own it have to step up and take responsibility for it,” Norristown Council President William Caldwell told The Times Herald. “No later than February 28, the municipality will cease to provide or pay for maintenance of 770 Sandy Street.”
Previously, Norristown had received court orders to repair the building, after numerous construction defects turned up including “missing firestops in numerous walls, missing grout and steel rebar in block-wall, emergency stair towers, faulty electrical wiring and no provision for firestopping in the first-floor garage ceiling.” City officials “were faulted by Montgomery County Common Pleas Court judges for not properly inspecting the construction.”
Charles Madracchia, past Customers Bank attorney and current Homeowner attorney, is “continuing active litigation in both federal and state court.”
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Implementation of CA Building Energy Efficiency Standards Delayed
February 25, 2014 —
Beverley BevenFlorez-CDJ STAFFIn his California Construction Law blog, Garret Murai published the recent Industry Bulletin released by the California Contractors State License Board (CSLB) regarding the delayed implementation of the California Building Energy Standards. CSLB has delayed implementation from January 1st, 2014 to July 1, 2014 due to “unanticipated delays in developing complete performance compliance software for 2013 Public Domain Residential and Nonresidential California Building Energy Code Compliance guidelines, necessitating the CEC action to change the effective date of energy related provisions.”
The Industry Bulletin summarized changes regarding various codes including 2013 California Energy Code, Part 6; 2013 California Administrative Code, Chapter 10, Part 1; and, 2013 CALGreen, Part 11. According to the bulletin, as reported by the California Construction Law blog, “Contractors are encouraged to contact their local building enforcement agencies for assistance and/or clarification.”
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AFL-CIO Joins in $10 Billion Infrastructure Plan
June 30, 2011 —
CDJ STAFFThe AFL-CIO has announced plans to generate up to $10 billion in funding for infrastructure development, training construction workers, and making buildings more energy efficient, pledging $20 million to retrofit buildings. Bloomberg News reports that union officials made the announcement in Chicago at the Clinton Global Initiative, releasing a statement from Richard Trumka, president of the union, “we, at the AFL-CIO, believe that together, with our partners in business and government, we can profitably invest significant resources to make America more competitive and energy efficient.” A foot injury prevented Mr. Trumka from attending the event.
The statement also quoted Mark Ayers, president of the Building and Construction Trades Department of the AFL-CIO, “the time is now to become intensely focused on the creation of jobs.”
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