Construction Defects Lead to Demolition
May 26, 2011 —
CDJ STAFFTen years after it was built, demolition of Seattle’s McGuire Building has begun, as Jeanne Lang Jones reports in the Puget Sound Business Journal. Construction defects had rendered the 25-story apartment building uninhabitable. The major problem was corroded steel cabling. According to the report, “the building’s owners reached an undisclosed settlement last year with St. Louis-based contractor McCarthy Building Companies.”
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California’s Labor Enforcement Task Force Continues to Set Fire to the Underground Economy
February 16, 2016 —
Evelin Y. Bailey – California Construction Law BlogIf you’re a fan of the Hunger Games trilogy, either the books or the movies, you’re likely familiar with “The Hob,” the black market in District 12 where people buy and sell banned items. It’s where bow-wielding protagonist Katniss Everdeen and her childhood friend Gale Hawthorne sell their poached game and where, in the movie but not the book (what can we say, we’re fans), Katniss obtains the “mockingjay” pin which she is later associated with. While The Hob is largely ignored by soldiers of the totalitarian “Capitol,” in the third book Catching Fire, the Hob is reduced to a pile of rubbish and ash by the Capital as an example to punish the insurrectionists led by Katniss.
The Labor Enforcement Task Force (LETF), a joint task force composed of several of California’s agencies including the Contractors State License Board, Department of Industrial Relations and Employment Development Department is also setting fire, at least figuratively, to California’s underground economy. See our earlier post Joint Labor Task Force Targets Underground Economy for further background on LETF.
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Evelin Y. Bailey, Wendel Rosen Black & Dean LLPMs. Bailey may be contacted at
ebailey@wendel.com
Surety Bond Producers Keep Eye Out For Illegal Waivers
July 01, 2019 —
Richard Korman - Engineering News-RecordThe surety bond industry regularly reminds state and local governments, politely, that public works in all states must involve surety bonds.
That’s the law. And the National Association of Surety Bond Producers, the bond brokers and agents trade group, has been letting state and local officials know, in writing.
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Richard Korman, ENRMr. Korman may be contacted at
kormanr@enr.com
Design and Construction Defects Not a Breach of Contract
February 14, 2013 —
CDJ STAFFThe California Court of Appeals tossed out a breach of contract award in Altman v. John Mourier Construction. The decision, which was issued on January 10, 2013, sent the construction defect case back to a lower court to calculate damages based on the conclusions of the appeals court.
The case involved both design issues and construction issues. According to the plaintiffs’ expert, the design plans did not make the buildings sufficiently stiff to resist the wind, and that the framing was improperly constructed, further weakening the structures, and leading to the stucco cracking. Additionally, it was alleged that the roofs were improperly installed, leading to water intrusion. The contractor’s expert “agreed the roofs needed repair, but disputed what needed to be done to repair the roofs and the cost.”
The jury rejected the plaintiffs’ claims of product liability and breach of warranty, but found in their favor on the claims of breach of contract and negligence. The plaintiffs were awarded differing amounts based on the jury’s conclusions about their particular properties.
Both sides sought new trials. JMC, the contractor, claimed that the jury’s verdicts were “inconsistent in that the relieved JMC of liability for strict products liability and breach of warranty, but found JMC liable for breach of contract and negligence.” The plaintiffs “opposed the setoff motion on the ground that the jury heard evidence only of damages not covered by the settlements.” Both motions were denied. After this, the plaintiffs sought and received investigative costs as damages. JMC appealed this amended judgment.
The appeals court rejected JMC’s claims that evidence was improperly excluded. JMC sought to introduce evidence concerning errors made by the stucco subcontractor. Earlier in the trial, JMC had insisted that the plaintiffs not be allowed to present evidence concerning the stucco, as that had been separately settled. When they wished to introduce it themselves, they noted that the settlement only precluded the plaintiffs from introducing stucco evidence, but the trial court did not find this persuasive, and the appeals court upheld the actions of the trial court. Nor did the appeals court find grounds for reversal based on claims that the jury saw excluded evidence, as JMC did not establish that the evidence went into the jury room. Further, this did not reach, according to the court, a “miscarriage of justice.”
The court rejected two more of JMC’s arguments, concluding that the negligence award did not violate the economic loss rule. The court also noted that JMC failed to prove its contention that the plaintiffs were awarded damages for items that were covered in settlements with the subcontractors.
The appeals court did accept JMC’s argument that the award for breach of contract was not supported by evidence. As the ruling notes, “plaintiffs did not submit the contracts into evidence or justify their absence; nor did plaintiffs provide any evidence regarding contract terms allegedly breached.”
The court also did not allow the plaintiffs to claim the full amount of the investigative costs. Noting that the trial court had rational grounds for its decision, the appeals court noted that “the jury rejected most of the damages claimed by plaintiffs, and the trial court found that more than $86,000 of the costs itemized in plaintiffs’ invoices ‘appear questionable’ as ‘investigation’ costs/damages and appeared to the trial court to be litigation costs nonrecoverable under section 1033.5.”
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Alabama Supreme Court States Faulty Workmanship can be an Occurrence
July 16, 2014 —
Beverley BevenFlorez-CDJ STAFFCarl A. Salisbury of Kilpatrick Townsend & Stockton LLP in his Lexology article, stated that “it is now official and final: Alabama is no longer one of the outlier jurisdictions on the issue of coverage for faulty workmanship.”
In the case Owners v. Jim Carr Homebuilders, in September 2013 the Alabama Supreme Court had “sided with insurers in holding that construction defects can never be accidental and, therefore, can never be covered by Commercial General Liability insurance.” However, in March “the Court withdrew that decision and reversed course,” holding “that faulty workmanship can, in fact, constitute a covered ‘occurrence,’ which CGL policies define as ‘an accident, including continuous or repeated exposure to the same generally harmful conditions.’”
“This is obviously good news for construction contractors that do work in the state of Alabama,” Salisbury stated. “It is also good news for policyholders in general as it continues the strong trend among state high courts that have been finding in favor of coverage in this important area of insurance law.”
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A Tort, By Any Other Name, is Just a Tort: Massachusetts Court Bars Contract Claims That Sound in Negligence
March 20, 2023 —
Gus Sara - The Subrogation StrategistIn University of Massachusetts Building Authority v. Adams Plumbing & Heating, Inc., 2023 Mass. App. Unpub. LEXIS 28, 102 Mass. App. Ct. 1107, the Appeals Court of Massachusetts (Appeals Court) considered whether the lower court properly held that the plaintiff’s breach of contract and indemnification claims were time-barred by the statute of repose because they sounded in tort. The Appeals Court held that while the six-year statute of repose only applies to tort claims, they can also bar claims for breach of contract and indemnification if they sound in tort. The Appeals Court affirmed the lower court’s ruling, finding that the plaintiff’s breach of contract and indemnification claims were just negligence claims disguised as non-tort claims.
In 2013 and 2014, the University of Massachusetts (UMass) retained various contractors to renovate the dining hall for one of its campus buildings, which included the installation of new ductwork for the kitchen’s exhaust system. The dining hall opened for service in September 2014. In the Spring of 2018, it was discovered that the ductwork for the kitchen had collapsed. Further investigation revealed other deficiencies with the exhaust system. On December 1, 2020, UMass filed a lawsuit against various contractors, asserting negligence, breach of contract, and indemnification. The breach of contract claims alleged breach of express warranties.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Competitive Bidding Statute: When it Applies and When it Does Not
April 15, 2024 —
Mason Fletcher - Ahlers Cressman & Sleight PLLCThe University of Washington (UW), a public university, aimed to secure a real estate developer for a new building on its campus. The proposal involved an 80-year ground lease (the “Lease”), and developers submitted bids. The selected developer would demolish an existing building, construct a new one, own it during the Lease at its own cost, and UW would lease back a portion, with ownership reverting to UW at the Lease’s end. Alexandria Real Equities, Inc. (ARE) was a finalist but ultimately was not selected, and the Lease was awarded to Wexford Science and Technology, LLC (Wexford). As a result, ARE filed suit against UW asserting three claims: 1) UW lacked authority to execute the Lease, 2) UW didn’t follow required competitive bidding procedures, and 3) UW’s developer selection process was arbitrary and capricious. None of these claims were successful and ARE appealed.
Division II of the Washington Court of Appeals affirmed in Alexandria Real Estate Equities Inc. v. Univ. of Wash., __ Wn. App. __, 539 P.3d 54 (2023), a published decision. The Court concluded, based on the facts in that case, that because construction was not publicly funded, UW did not have to follow competitive bidding requirements that were laid out in a statute relevant to state universities. Still, the Court applied the “bright-line cutoff point” that prohibits disappointed bidders from challenging an award once a contract has been executed. See Dick Enterprises, Inc. v. Metro. King County, 83 Wn. App. 566, 572, 922 P.2d 184 (1996).
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Mason Fletcher, Ahlers Cressman & Sleight PLLCMr. Fletcher may be contacted at
mason.fletcher@acslawyers.com
Fire Consultants Cannot Base Opinions on Speculation
May 20, 2019 —
Christopher Konzelmann - The Subrogation StrategistLarsen v. 401 Main St. Inc., 302 Neb. 454 (2019), involved a fire originating in the basement of the Quart House Pub (Pub) in Plattsmouth, Nebraska that spread to and damaged Plattsmouth Chiropractic Center, Inc., a neighboring business. Fire investigators could not enter the building because the structure was unsafe and demolished. The chiropractic center nevertheless sued the Pub alleging that its failure to maintain and replace basement mechanical equipment caused ignition.
To prove its claim, the plaintiff retained a mechanical engineer who reviewed documents and concluded that the fire “originated from a failure of one of the items of mechanical equipment located in the area of the [basement] boiler.” Importantly, however, the consultant could not determine the root cause of the fire, could not eliminate the possibility that the fire originated in a compressor, and could not rule out the building’s electrical service as the ignition source because it was outside his area of expertise. The consultant nevertheless found that the fire most likely would not have occurred if the Pub had regularly serviced and replaced the equipment when needed.
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Christopher Konzelmann, White and Williams LLPMr. Konzelmann may be contacted at
konzelmannc@whiteandwilliams.com