Brown Paint Doesn’t Cover Up Construction Defects
April 25, 2012 —
CDJ STAFFIn a decision that describes the case as illustrating “the perils that real estate brokers and their agents assume when acting as a dual listing agent to both the buyers and sellers of the same house,” the California Court of Appeals has issued a decision in William L. Lyon & Associates v. The Superior Court of Placer County. Lyon & Associates sought summary judgment to dismiss the claims of the Henleys who bought a home in a transaction where a Lyon agent represented both sides.
The prior owners of the home, the Costas, had used a Lyon agent in purchasing their home. When they later sought to sell it, that agent “became aware of some of the house’s defects and problems.” In response, the Costas sought the help of another agent, Connie Gidal, also of Lyons & Associates. Photos taken in the presence of Ms. Gidal show defects of the paint and stucco. The Costas also took the step of painting the house dark brown. During the sale process, “rain caused many of the painted-over defects to reappear.” The Costas “purchased more dark brown paint and covered up the newly visible damage prior to inspection by the Henleys.”
With the damage concealed, the Henleys bought the home in May 2006. The agreement with Lyons & Associates noted that “a dual agent is obligated to disclose known facts materially affecting the value or desirability of the property to both parties.” Escrow closed on May 9, 2006. The contract with the broker included a two-year limit on the time to bring legal action.
The Henleys moved in during June 2006, and “began to discover construction defects that had been concealed by the Costas.” In addition to the painted-over stucco problems, the Henleys found that the Costas had “installed quartzite stone overlays on the backyard steps in a manner that caused water intrusion on the house’s stucco walls.”
In May 2009, the Henleys sued the Costas, Ron McKim Construction, Lyons & Associates, and Ms. Gidal. Their complaint alleged that Lyons & Associates had committed breach of contact, negligence, fraud, breach of fiduciary duty, and negligent nondisclosure in connection with the construction defects. The Costas named Lyons in a cross complaint. Lyons moved for summary judgments on the grounds that the two-year statute of limitations had expired before the complaint and cross-complaint were filed. Both the Henleys and the Costas opposed this claim. The court denied the motion and Lyons appealed.
The appeals court upheld the denial, noting that the both California Supreme Court decision and later action by the legislature compels real estate brokers and salespersons “to conduct a reasonably competent and diligent visual inspection of the property offered for sale.” The court noted that under California law, brokers have responsibilities to both sellers and buyers. The section of law cited by Lyons applies to seller’s agents. The court rejected the contention by Lyons that they were “cooperating brokers.” The Henleys were “not constrained by the two-year statute of limitations.”
Lyons contended that even if California’s statute did not apply, there was a contractual limit of two years. The court also rejected this, agreeing with the Henleys that “the two-year limitation period must be extended by the discovery rule.”
The court noted that “Lyon & Associates may not reap the benefit of a shortened contractual limitation period when its own alleged malfeasance contributed to the delay in the discovery of the buyer’s injury.” The court found that the Henleys could proceed with their breach of contract claim, because, “when a breach of contract is committed in secret, such as the intentional nondisclosure of a real estate broker regarding a previously visible construction defect, the contractual limitations period is properly held subject to the discovery rule.” The court felt that the interpretation favored by the California Association of Realtors would “halve the applicable statute of limitations period.”
In addition to rejecting Lyon request for summary judgment on the claims made by the Henleys, the court also rejected the request of summary judgment on the claims made by the Costas, concluding that neither claim is time-barred. Costs were awarded to both the Henleys and Costas.
Read the court’s decision…
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Why Is California Rebuilding in Fire Country? Because You’re Paying for It
March 14, 2018 —
Christopher Flavelle – BloombergAfter last year’s calamity, officials are making the same decisions that put homeowners at risk in the first place.
At the rugged eastern edge of Sonoma County, where new homes have been creeping into the wilderness for decades, Derek Webb barely managed to save his ranch-style resort from the raging fire that swept through the area last October. He spent all night fighting the flames, using shovels and rakes to push the fire back from his property. He was even ready to dive into his pool and breathe through a garden hose if he had to. His neighbors weren’t so daring—or lucky.
On a recent Sunday, Webb wandered through the burnt remains of the ranch next to his. He’s trying to buy the land to build another resort. This doesn’t mean he thinks the area won’t burn again. In fact, he’s sure it will. But he doubts that will deter anyone from rebuilding, least of all him. “Everybody knows that people want to live here,” he says. “Five years from now, you probably won’t even know there was a fire.”
As climate change creates warmer, drier conditions, which increase the risk of fire, California has a chance to rethink how it deals with the problem. Instead, after the state’s worst fire season on record, policymakers appear set to make the same decisions that put homeowners at risk in the first place. Driven by the demands of displaced residents, a housing shortage, and a thriving economy, local officials are issuing permits to rebuild without updating building codes. They’re even exempting residents from zoning rules so they can build bigger homes.
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Christopher Flavelle, Bloomberg
ASCE Releases First-of-its-Kind Sustainable Infrastructure Standard
October 24, 2023 —
American Society of Civil EngineersRESTON, VA — The
American Society of Civil Engineers (ASCE) today released a first-of-its-kind standard, ASCE/COS 73-23: Standard Practice for Sustainable Infrastructure, which provides guidance for infrastructure owners to develop and implement sustainable solutions through a project's entire life cycle. It is a non-mandatory, performance-based standard designed for civil infrastructure ranging from transportation projects to water systems to the energy grid, developed over a period of five years involving a multitude of diverse stakeholders.
ASCE President Maria Lehman noted, "This is a transformational standard that for the first time will establish consensus guidance on how infrastructure owners should address sustainability in their projects. As of early September, there have been 23 confirmed weather/climate disaster events in the U.S. with losses exceeding $1 billion. That's almost one every week and a half. Sustainability and resilience are more important than ever. Infrastructure owners and designers have a responsibility to develop and implement practices that promote sustainability and long-term reliability of infrastructure projects, while also being cost-effective and collaborative with community stakeholders."
The standard complements existing ASCE standards and tools like the Envision rating system.
A discussion and examination of the ASCE/COS 73-23 standard will be held at the
ASCE INSPIRE 2023 Conference in Arlington, Virginia from November 16th-18th. Print copies of the standard will also be available for purchase at the conference.
Click here to register for the event and learn more about sustainable and resilient innovations in the civil engineering space.
To purchase the standard, visit
the link here.
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visit www.asce.org or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.
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Fundamental Fairness Trumps Contract Language
September 24, 2014 —
Craig Martin – Construction Contractor AdvisorThe Texas Supreme Court recently ruled that a “no-damages-for-delay” clause would not be enforced where the delay was caused by the owner. The court’s ruling flies squarely in the face of the contract language that attempted to insulate the owner from any delay claims, even those it caused.
In the case of Zachary Construction v. Port of Houston underlying contract, proposed by the Port of Houston, was heavy handed, to say the least. The contract provided:
“[Contractor] shall receive no financial compensation for delay or hindrance to the Work. In no event shall the Port Authority be liable to [Contractor] … for any damages arising out of or associated with any delay or hindrance to the Work, regardless of the source of the delay or hindrance, including events of Force Majeure, AND EVEN IF SUCH DELAY OR HINDRANCE RESULTS FROM, ARISES OUT OF OR IS DUE IN WHOLE OR IN PART, TO THE NEGLIGENCE, BREACH OF CONTRACT OR OTHER FAULT OF THE PORT AUTHORITY. [Contractor’s] sole remedy in any such case shall be an extension of time.”
Wow, that’s some one-sided language. If the contract was enforced, the contractor could not get any damages for delay, even those damages caused by the active interference of the Port of Houston.
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Craig Martin, Lamson, Dugan and Murray, LLPMr. Martin may be contacted at
cmartin@ldmlaw.com
Texas Supreme Court Authorizes Exception to the "Eight-Corners" Rule
February 28, 2022 —
Jared De Jong, Nathan A. Cazier & Scott S. Thomas - Payne & FearsFor decades, an insurer’s duty to defend under Texas law was determined exclusively by reviewing the insurance contract and the allegations of the complaint under the “eight-corners rule.” All of this changed last week when, in a long-awaited decision, the Texas Supreme Court ruled that courts may consider extrinsic evidence to determine the existence of coverage in certain limited situations. Monroe Guar. Ins. Co. v. BITCO Gen. Ins. Corp., No. 21-0232, 2022 WL 413940 (Tex. Feb. 11, 2022).
In Monroe, a drilling contractor was sued for damages arising out of the allegedly botched drilling of an irrigation well. The underlying lawsuit alleged that negligent drilling caused damage to surrounding farmland. However, the complaint did not allege when the damage occurred. The contractor’s insurers, BITCO General Insurance Corporation (“Bitco”) and Monroe Guarantee Insurance Company (“Monroe”) disputed whether Monroe owed a duty to defend. Although Bitco agreed to provide a defense, Monroe refused, arguing that the property damage happened before its policy period. Bitco sued Monroe for contribution. In the trial court, the insurers stipulated that a drill bit became stuck before Monroe’s policy incepted, a fact that would have supported Monroe’s “prior damage” defense. On summary judgment, though, the trial court ruled this stipulated fact could not be considered under Texas’ eight-corners rule. Monroe appealed, and the Fifth Circuit, which had previously endorsed an exception to the eight-corners rule under Northfield Insurance Co. v. Loving Home Care, Inc., 363 F.3d 523, 531 (5th Cir. 2004), certified the question to the Texas Supreme Court.
Reprinted courtesy of
Jared De Jong, Payne & Fears,
Nathan A. Cazier, Payne & Fears and
Scott S. Thomas, Payne & Fears
Mr. Jong may be contacted at jdj@paynefears.com
Mr. Cazier may be contacted at nac@paynefears.com
Mr. Thomas may be contacted at sst@paynefears.com
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More Broad-Based Expansion for Construction Industry Expected in 2015
January 07, 2015 —
Garret Murai - California Construction Law BlogIt’s a short week for most of us this week.
Christmas is over and New Year’s is approaching.
So, what will 2015 bring us?
According Dodge Data & Analytics’s 2015 Dodge Construction Outlook: Continuing expansion of the construction sector, but one that is more broad-based than in recent years.
“The economic environment going forward carries several positives that will help to further lift total construction starts,” said Robert Murray, Chief Economist and Vice President at Dodge Data & Analytics. “Financing for construction projects is becoming more available, reflecting some easing of bank lending standards, a greater focus on real estate development by the investment community, and more construction bond measures getting passed. While federal funding for construction programs is still constrained, states are now picking up some of the slack. Interest rates for the near term should stay low, and market fundamentals (occupancies and rents) for commercial building and multifamily housing continue to strengthen.”
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Value in Recording Lien within Effective Notice of Commencement
August 03, 2020 —
David Adelstein - Florida Construction Legal UpdatesConstruction lien priority is no joke! This is why a lienor wants to record its construction lien within an effective notice of commencement. A lien recorded within an effective notice of commencement relates back in time from a priority standpoint to the date the notice of commencement was recorded. A lienor that records a lien wants to ensure its lien is superior, and not inferior, to other encumbrances. An inferior lien or encumbrance may not provide much value if there is not sufficient equity in the property. Plus, an inferior lien or encumbrance can be foreclosed.
An example of the importance of lien priority can be found in the recent decision of Edward Taylor Corp. v. Mortgage Electronic Registration Systems, Inc., 45 Fla.L.Weekly D1447b (Fla. 2d DCA 2020). In this case, a contractor recorded a notice of commencement for an owner. While an owner is required to sign the notice of commencement that the contractor usually records, in this case, the owner did not sign the notice of commencement. Shortly after, the owner’s lender recorded a mortgage and then had the owner sign a notice of commencement and this notice of commencement was also recorded. When there is a construction lender, the lender always wants to make sure its mortgage is recorded first—before any notice of commencement—for purposes of priority and has the responsibility to ensure the notice of commencement is recorded. Here, the lender apparently did not realize the contractor had already recorded a notice of commencement at the time it recorded its mortgage.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Exception to Watercraft Exclusion Does Not Apply
September 24, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe court determined that an additional insured was not entitled to coverage despite an exception to the watercraft exclusion. Holden v. U.S. United Ocean Serv., LLC, 2014 U.S. App. LEXIS 15954 (5th Cir. Aug. 19, 2014).
United entered a contract with Buck Kreihs Company, Inc. under which Buck Kreihs would perform ship-repair work for United. Under the contract, Buck Kreihs would indemnify United for all liabilities arising out of the work or services performed by Buck Kreihs for United. The contract further provided that Buck Kreihs was to procure general liability coverage and name United as an additional insured. Buck Kreihs did so under a policy issued by St. Paul.
Holden, an employee of Buck Kreihs, was injured while preparing to remove a gangway that led from a dock at Buck Kreihs's facility to a barge owned by United. Holden sued United, which tendered to St. Paul as an additional insured. St. Paul denied coverage under the policy's watercraft exclusion. Holden and United settled. United pursued its third party suit against St. Paul. The district court granted summary judgment to St. Paul.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
