CAMBRIDGE MASSACHUSETTS BUILDING EXPERT
DIRECTORY AND CAPABILITIES

The Hidden Dangers of Construction Defect Litigation

March 28, 2012 — David M. McLain, Colorado Construction Litigation

David M. McLain, writing at Colorado Construction Litigation, has an interesting blog post republishing his article in Common Interests magazine, the monthly periodical of the Rocky Mountain Chapter of the Community Associations Institute. In his article, he touches on a number of pitfalls in construction defect litigation, including the potential conflicts of interests facing HOAs. He also considers the problems homeowners can face, including both “strong-arm tactics” taken by attorneys to compel homeowners to join the lawsuit, or situations in which the interests of the HOA do not match those of the homeowners. He writes:



There is also a conflict of interest with individual owners who attempt to opt out of the case. This can lead to shocking strong-arm tactics on the part of plaintiffs’ attorneys. In one instance, a plaintiffs’ attorney sent a letter to an individual homeowner that stated that as a 1/58th owner of the common elements, if he refused to go along with the suit, and there was ultimately a finding in favor of the HOA which was in any way limited by his refusal to participate, he would be personally liable for 1/58th of the HOA’s total damages. In another instance, a different plaintiffs’ attorney sent a letter to a homeowner who wanted the builder to perform warranty repairs, informing the owner that if he let the builder perform any repairs, the attorney would bill the HOA according to the fee agreement entered by the HOA board (without knowledge or consent of non-board members) and that the HOA would assess the homeowner for that expense. These are just two examples of conflicts which may arise between the HOA board and individual homeowners when the HOA pursues CD cases.



Another example of a conflict which will arise as a result of CD litigation occurs post-settlement. When an HOA settles for less than 100% of the amount necessary to fund all repairs outlined by its experts, plus attorneys’ fees and litigation costs, there will obviously be a shortfall in the amount necessary to fix the development. The HOA board must then choose to impose a special assessment to cover the shortfall or to make some, but not all, of the repairs outlined by its experts. In choosing the latter, the conflict arises with respect to which homes get fixed and which do not. In this situation, the HOA board has acted as the attorney-in-fact for the individual owners by bringing claims on their behalf, and has compromised those claims without their knowledge or consent.

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Reprinted courtesy of David M. McLain of Higgins, Hopkins, McClain & Roswell, LLC. Mr. McClain can be contacted at mclain@hhmrlaw.com.

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Construction Defect Dispute Governed by Contract Disputes Act not yet Suited to being a "Suit"

June 25, 2019 — William S. Bennett - Saxe Doernberger & Vita, P.C.
The Southern District of California recently held that a series of demands for a general contractor to investigate and repair several construction defects at a U.S. Army facility did not constitute a “suit” within the meaning of the general contractor’s commercial general liability (“CGL”) policy. In Harper Construction Co., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., the U.S. Government hired Harper Construction Company (“Harper”) to construct a U.S. Army training facility for the Patriot Missile System in Fort Sill, Oklahoma. No. 18-cv-00471-BAS-NLS (S.D. Cal. Mar. 28, 2019). During the project, Harper hired Harper Mechanical Contractors (“Harper Mechanical”), an independent company, as a subcontractor “to perform demolition, grading, and other work at the Project.” After Harper completed the project, the government informed Harper of property damage at the project, “including, but not limited to, gypsum wallboard cracks and binding doors.” Harper attempted to repair the issues, but the problems continued. The issues were apparently the result of Harper Mechanical’s grading work. Subsequently, the government sent two letters requesting an investigation and asking Harper to “propose a plan to correct the issues.” As Harper undertook an investigation spanning multiple years, the government became increasingly frustrated with the delays. The government threatened to initiate “formal administrative recourse” and to demolish the project, forcing Harper to re-build from the ground up. It also sent Harper another letter requesting Harper submit a formal proposal to correct the issues. Read the court decision
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Reprinted courtesy of William S. Bennett, Saxe Doernberger & Vita, P.C.
Mr. Bennett may be contacted at wsb@sdvlaw.com

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New NEPA Rule Restores Added Infrastructure Project Scrutiny

May 10, 2022 — Pam McFarland - Engineering News-Record
The White House Council on Environmental Quality has finalized a regulation that restores basic project environmental review practices that were in place prior to changes made during the Trump administration. The rule is the first of two that will have the Biden administration’s stamp on how such reviews are done under the National Environmental Policy Act (NEPA) for major federal construction projects. Reprinted courtesy of Pam McFarland, Engineering News-Record Ms. McFarland may be contacted at mcfarlandp@enr.com Read the full story... Read the court decision
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Insurance Law Alert: Ambiguous Producer Agreement Makes Agent-Broker Status a Jury Question

September 10, 2014 — Valerie A. Moore & Christopher Kendrick - Haight Brown & Bonesteel LLP
In Douglas v. Fidelity National Ins. (No. A137645; filed 8/29/14), a California appeals court held that it was a jury question whether a retail insurance service with limited binding authority should be deemed a broker or an agent for the purpose of determining if application misrepresentations would void coverage. In Douglas, the homeowners needed insurance for a house they had used as a group home. They sought coverage from Cost-U-Less, which provided personal lines insurance from, among others, Fidelity National Insurance Company. According to the couple’s wife, she went to a Cost-U-Less office where she answered application questions from a person on the telephone, who was later identified as an employee of another company, InsZone. InsZone had a producer contract with Fidelity. In practice, InsZone would be contacted by Cost-U-Less via telephone, at which point an InsZone employee would verbally solicit information from the client, with the information being entered into a computer by the InsZone employee and then transmitted electronically to Fidelity. Reprinted courtesy of Valerie A. Moore, Haight Brown & Bonesteel LLP and Christopher Kendrick, Haight Brown & Bonesteel LLP Ms. Moore may be contacted at vmoore@hbblaw.com; Mr. Kendrick may be contacted at ckendrick@hbblaw.com Read the court decision
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New Jersey Construction Worker Sentenced for Home Repair Fraud

October 22, 2013 — CDJ STAFF
Marcin Gradziel, who formerly worked for a construction company in Camden County, New Jersey, has been sentenced to seven years in state prison for insurance fraud. Mr. Gradziel admitted to creating fraudulent property damage claims, which he did for Precision Network Solutions, which did business as Precision Builders. Mr. Gradziel and others went through neighborhoods telling residents that their roofs or siding were damaged by hail and that they could get their homes repaired at no cost. Mr. Gradziel would then return to create damage before the inspectors arrived. Another employee, Dominik Sadowski, previously plead guilty, as did Precision Builders. The firm paid out $68,720 in restitution and is now out of business. Read the court decision
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Construction Litigation Roundup: “You Have No Class(ification)”

May 13, 2024 — Daniel Lund III - Lexology
In fact, you didn’t even have a license. A federal court in Alabama was tasked with determining whether an unlicensed contractor could recover from an Alabama project owner for in excess of $1.7 million in construction infrastructure and site work performed. In fact, the contractor “did not have a valid general contractor’s license” in the state of Alabama when it “assumed work on the project from its predecessor company.” During the course of work on the project, the principals of an original contractor decided to go their separate ways, whereupon one of those principals announced that his new company would take over ongoing work. Roughly two months after the new company began working at the project, the contractor applied for a license with the Alabama Licensing Board of General Contractors – the license was issued within about 45 days. Then, some eight months later, the contractor added a “municipal and utilities” classification to its contractor license. Read the court decision
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Reprinted courtesy of Daniel Lund III, Phelps
Mr. Lund may be contacted at daniel.lund@phelps.com

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New Jersey Traffic Circle to be Eliminated after 12 Years of Discussion

February 04, 2014 — Beverley BevenFlorez-CDJ STAFF
The online publication New Jersey.com reported that on February 6th a “Pre-Construction Public Information hearing” will be held in Little Ferry, New Jersey, to discuss “the upcoming Route 46 Circle Elimination construction project.” The project includes “installation of a storm water pump station” as well as reconfiguring the circle into “a conventional four-way signalized intersection with a brand new traffic signal.” Conti Enterprises of Edison was awarded the bid “at a cost of $33,837,739,” according to New Jersey.com. The project, which has been discussed for over a decade, stalled over combining the elimination of the traffic school with rehabilitation of a bridge. Improvements include “replacing of the entire bridge deck, structural steel member replacement and strengthening, sidewalk replacement on both sides of the structure and substructure patching, crack sealing and reconstruction where needed.” The informational meeting will introduce the public to the engineer and contractor for the project. "This information session will help residents learn more about the project and what to expect as the state undertakes this work," Little Ferry Mayor Mauro Raguseo told New Jersey.com. "I wish we could fast forward to the completion of the project so we can realize the benefits without the headaches, but that's not reality. We all need to be prepared." Read the court decision
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Define the Forum and Scope of Recovery in Contract Disputes

March 02, 2020 — Phillip L. Sampson Jr. & Richard F. Whiteley - Construction Executive
Private and public companies spend billions of dollars every year on construction projects. For these projects, time is money, and incorporating the most advantageous legal terms in the construction contract can minimize the number and extent of disputes, and ultimately save money. It is important to remember that the provisions in construction contracts are negotiable. In a common scenario, the contractor and owner informally agree to the scope of a construction project and its cost. When it is time to reduce the deal to writing, the contractor and owner decide to use an AIA contract that appears to be a standard form. The document looks to be on point, and the parties simply need to fill in a few blanks with the cost and scope-specific information. Presuming that the AIA provisions are mutually protective and beneficial, the parties do not think about altering the “standard” terms. They sign the contract, and the project begins. Months later, the owner and contractor end up disputing delays on the project, entitlement to various payments, and whether certain aspects of the work are defective. At this point, the parties realize that some of the contract’s terms could have been drafted a bit more favorably—but by that time it’s too late. So remember, construction contracts are negotiable, even provisions within “standard” AIA contracts. Reprinted courtesy of Phillip L. Sampson Jr. and Richard F. Whiteley, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Mr. Sampson may be contacted at phillip.sampson@bracewell.com. Mr. Whiteley may be contacted at richard.whiteley@bracewell.com. Read the court decision
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