A Construction Stitch in Time
October 28, 2015 —
Christopher G. Hill – Construction Law MusingsIt’s a cliche for a reason that “A Stitch in Time Saves Nine.” Why? Because it is almost always cheaper and more efficient in the long run to get something right the first time than to fix it later. This old adage is true in life, and particularly true in the world of construction.
Whether it’s measuring twice before making your bid, checking with your subcontractors and suppliers to be sure they haven’t missed anything when giving you a price, or yes (and you knew this was coming), being sure that your contracts are written as they should be and cover the bases. To use another construction related analogy, these types of basic practices create a great foundation for your construction project(s) that will (hopefully) see you through to a successful and profitable construction project.
Aside from the last of my examples, how can adding a knowledgeable construction attorney help with laying this foundation? We construction lawyers spend our days either dealing with problems that have occurred (not ideal), anticipating risks that could occur (better, though can lead to a relatively cynical world view), and advising clients before the fact of the potential risks and how to best avoid them (best). Speaking from experience, I would much rather spend my time keeping my construction clients making money and avoiding the pitfalls of the “Murphy’s Law” governed world of construction than spend time with them in court.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Insurer Must Pay Portions of Arbitration Award Related to Faulty Workmanship
October 21, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe court determined that portions of an arbitration award against the insured contractor based upon faulty workmanship were covered by the policy. Wallace v. Nautilus Ins. Co., 2019 U.S. Dist. LEXIS 122219 (D. N. H. July 23, 2010).
Plaintiffs, owners of adjoining homes, hired McPhail Roofing, LLC to replace the roofs of their houses. After installation, the plaintiffs found several problems with their roofs and withheld roughly a third of the agreed-upon contract price from final payments due to McPhail. A roofing consultant found evidence of water leaking through both roofs during rainstorms. Improper installation of the shakes on the roofs allowed rain to seep through to the roof decks (the plywood underneath the roofs) and eventually into the houses. The only way to cure the installation defects was to remove and replace the roofs entirely.
Plaintiffs and McPhail went to arbitration. Plaintiffs sought compensation for the damage caused by the leaking and for the replacement costs of the roofs. McPhail sought the remaining payment under the contracts. Nautilus defended McPhail under this CGL policy.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Gillotti v. Stewart (2017) 2017 WL 1488711 Rejects Liberty Mutual, Holding Once Again that the Right to Repair Act is the Exclusive Remedy for Construction Defect Claims
June 05, 2017 —
Richard H. Glucksman, Esq. & Chelsea L. Zwart, Esq. - Chapman Glucksman Dean Roeb & Barger BulletinBackground
In Gillotti v. Stewart (April 26, 2017) 2017 WL 1488711, which was ordered to be published on May 18, 2017, the defendant grading subcontractor added soil over tree roots to level the driveway on the plaintiff homeowner’s sloped lot. The homeowner sued the grading subcontractor under the California Right to Repair Act (Civil Code §§ 895, et seq.) claiming that the subcontractor’s work damaged the trees.
After the jury found the subcontractor was not negligent, the trial court entered judgment in favor of the subcontractor. The homeowner appealed, arguing that the trial court improperly construed the Right to Repair Act as barring a common law negligence theory against the subcontractor and erred in failing to follow Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98. The Third District Court of Appeal disagreed and affirmed the trial court’s judgment in favor of the subcontractor.
Impact
This is the second time the Third District Court of Appeal has held that Liberty Mutual (discussed below) was wrongly decided and held that the Right to Repair Act is the exclusive remedy for construction defect claims. The decision follows its holding in Elliott Homes, Inc. v. Superior Court (Hicks) (2016) 6 Cal.App.5th 333, in which the Court of Appeal held that the Right to Repair Act’s pre-litigation procedures apply when homeowners plead construction defect claims based on common law causes of action, as opposed to violations of the building standards set forth in the Right to Repair Act. Elliott is currently on hold at the California Supreme Court, pending the decision in McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132, wherein Liberty Mutual was rejected for the first time by the Fifth District. CGDRB continues to follow developments regarding the much anticipated McMillin decision closely, as well as all related matters.
Discussion
The Right to Repair Act makes contractors and subcontractors not involved in home sales liable for construction defects only if the homeowner proves they negligently cause the violation in whole or part (Civil Code §§ 911(b), 936). As such, the trial court in Gillotti instructed the jury on negligence with respect to the grading subcontractor. The jury found that while the construction did violate some of the Right to Repair’s building standards alleged by the homeowner, the subcontractor was not negligent in anyway. After the jury verdict, the trial court found in favor of the grading subcontractor.
The homeowner moved for a judgment notwithstanding the verdict or a new trial on the grounds that the trial court improperly barred a common law negligence theory against the grading subcontractor. The trial court denied the motions on the grounds that “[t]he Right to Repair Act specifically provides that no other causes of action are allowed. See Civil Code § 943.” The trial court specifically noted that its decision conflicted with Liberty Mutual, in which the Fourth District Court of Appeal held that the Right to Repair Act does not eliminate common law rights and remedies where actual damage has occurred, stating that Liberty Mutual was wrongly decided and that the Liberty Mutual court was naïve in its assumptions regarding the legislative history of the Right to Repair Act.
In Gillotti, the Third District Court of Appeal stated that the Liberty Mutual court failed to analyze the language of Civil Code § 896, which “clearly and unequivocally expresses the legislative intent that the Act apply to all action seeking recovery of damages arising out of, or related to deficiencies in, residential construction, except as specifically set forth in the Act. The Act does not specifically except actions arising from actual damages. To the contrary, it authorizes recovery of damages, e.g., for ‘the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards....’ ([Civil Code] § 944).”
The Court also disagreed with Liberty Mutual’s view that because Civil Code §§ 931 and 943 acknowledge exceptions to the Right to Repair Act’s statutory remedies, the Act does not preclude common law claims for damages due to defects identified in the Act. The Court stated: “Neither list of exceptions, in section 943 or in section 931, includes common law causes of action such as negligence. If the Legislature had intended to make such a wide-ranging exception to the restrictive language of the first sentence of section 943, we would have expected it to do so expressly.”
Additionally, the Court of Appeal rejected the argument that Civil Code § 897 preserves a common law negligence claims for violation of standards not listed in Civil Code § 986. It explained that the section of Civil Code § 897, which provides, “The standards set forth in this chapter are intended to address every function or component of a structure,” expresses the legislative intent that the Right to Repair Act be all-encompassing. Anything inadvertently omitted is actionable under the Act if it causes damage. Any exceptions to the Act are made expressly through Civil Code §§ 931 and 934. The Court concluded in no uncertain terms that the Right to Repair Act precludes common law claims in cases for damages covered by the Act.
The homeowner further argued that she was not precluded from bringing a common law claim because a tree is not a “structure,” and therefore the alleged tree damage did not fall within the realm of the Right to Repair. The Court of Appeal also rejected this argument, holding that while the tree damage itself was not expressly covered, the act of adding soil to make the driveway level (which caused the damage) implicated the standards covered by the Right to Repair Act. The Court explained that since under the Act a “structure” includes “improvement located upon a lot or within a common area” (Civil Code § 895(a)), as the driveway was an improvement upon the lot, the claim was within the purview of the Right to Repair Act. As the soil, a component of the driveway, caused damage (to the trees), it was actionable under the Act.
Reprinted courtesy of
Richard H. Glucksman, Chapman Glucksman Dean Roeb & Barger and
Chelsea L. Zwart, Chapman Glucksman Dean Roeb & Barger
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Ms. Zwart may be contacted at czwart@cgdrblaw.com
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Additional Insured Not Entitled to Reimbursement of Defense Costs Paid by Other Insurers
October 21, 2015 —
Tred R. Eyerly – Insurance Law HawaiiCon Edison ("Con Ed") was unsuccessful in arguing for defense costs that had already been paid by other insurers. Consol. Edison Co. of N.Y. v. Lexington Ins. Co., 2015 U.S. Dist. LEXIS 121573 (S.D. N.Y. Sept. 9, 2015).
Team, Inc. was under contract with Con Ed to provide repairs to the steam system running below the streets of New York City. The contract required Team to indemnify Con Ed for all claims resulting from personal injury or property damage connected to Team's work. Team also obtained a CGL policy naming Con Ed as an additional insured. The policy was to provide primary coverage. Any insured was responsible for the first $250,000 of costs for investigation and/or defense.
On July 1, 2007, a steam distribution main, on which Team had finished working, ruptured, creating a huge crater and sending steam and debris, including asbestos insulation, into the surrounding area. The rupture caused substantial damage to nearby buildings, vehicles and underground infrastructure. It also caused personal injury, including two individuals in a tow truck that fell into the crater and a woman who suffered a fatal heart attack while running from the explosion.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Public Works Bid Protests – Who Is Responsible? Who Is Responsive?
December 14, 2020 —
Eric Divine - Porter Law GroupMost Public Works Solicitations Are Low Bid
The process for awarding public works projects in California is controlled by the Public Contract Code. Generally, regardless of whether the public agency is the State, a county, a city or a local district, the project is awarded to the contractor who is “responsible” and submits the least expensive “responsive” bid. This is generally known as a “low bid” contract. In the context of public works, the terms responsible and responsive have very important meanings. As a result, State and local governments have gotten into very expensive trouble for not following the law. So, to understand how to best present a bid protest on a low bid solicitation, you, as a contractor should have a good understanding of the meaning of these terms.
Note: There are other methods of contracting for public works that are not low bid, which are typically called “best value” contracts because the procurement process considers factors other than just price. These methods are typically used for large projects because the added complexity and expense of the procurement process only makes sense when the project is itself complex and expensive.
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Eric Divine, Porter Law GroupMr. Divine may be contacted at
edivine@porterlaw.com
AIA Releases State-Specific Waiver and Release Forms
September 05, 2022 —
Garret Murai - California Construction Law BlogThe American Institute of Architects (AIA) has released a new series of state-specific waiver and release forms including forms for California. The new
California-specific forms are:
- G901CA-2022 – California Conditional Waiver and Release on Progress Payment
- G902CA-2022 – California Unconditional Waiver and Release on Progress Payment
- G903CA-2022 – California Conditional Waiver and Release on Final Payment
- G904CA-2022 – California Unconditional Waiver and Release on Final Payment
California is one of twelve states – including Arizona, Florida, Georgia, Massachusetts, Michigan, Mississippi, Missouri, Nevada, Texas, Utah and Wyoming – which regulate waiver and release forms on construction projects. California’s waiver and release statute, which is codified at Civil Code section 8120 et seq., sets forth specific language which should be used in waivers and releases. While the exact language set forth under California’s waiver and release statutes does not need to be used, the statute provides that the language must be “in substantially” the same form, and most people follow the statutory language exactly.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
What You Need to Know About Notices of Completion, Cessation and Non-Responsibility
June 30, 2016 —
Garret Murai – California Construction Law BlogWe talk a lot about contractors on the California Construction Law Blog.
Owners?
Not so much.
So this one’s for you.
Why are Notices of Completion, Cessation and Non-Responsibility Important to Owners?
California recognizes three types of statutory notices on construction projects available to owners:
- Notices of completion;
- Notices of cessation; and
- Notices of non-responsibility.
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com
Chairman of the Senate Committee on Banking, Housing and Urban Affairs Calls for CFPB Investigation into Tenant Screening Businesses
December 13, 2021 — Brian H. Montgomery - Gravel2Gavel Construction & Real Estate Law Blog
Senator Sherrod Brown (D-OH), Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, has written to newly confirmed Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra, asking him to review companies in the tenant screening industry for possible Fair Credit Reporting Act violations and other violations of U.S. laws. The CFPB, for its part, has already published a bulletin alerting Consumer Reporting Agencies (CRAs) and other furnishers of consumer information that, as federal, state and local pandemic-related housing protections expire, the Bureau will be giving greater enforcement focus to these businesses’ compliance with accuracy and dispute obligations under the Fair Credit Reporting Act (FCRA) and Regulation V. While it is still unclear whether Director Chopra will direct the Bureau to investigate specific businesses flagged by Chairman Brown, the tenant screening industry will likely face increased scrutiny in the coming months, which may impact their service offerings and cause interruptions for landlords relying on these businesses and services.
There are approximately 2,000 tenant screening companies across the United States. These companies are used by landlords to better identify and perform background checks on prospective tenants. These reports typically provide a prospective tenant’s rental and eviction histories, credit score, debt-to-income ratio, and outstanding credit obligations, among other financial metrics. The reports also usually include a criminal background check, including searches of sex offender registries and other public records searches. Many tenant screening companies then use this information to provide an estimate of the risk that each tenant presents, calculated through proprietary algorithmic formulas. These reports are usually available to landlords at a cost ranging from approximately $5 to $55 per report, usually passed through to the prospective tenant through application fees. Read the court decision
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Reprinted courtesy of Brian H. Montgomery, Pillsbury
Mr. Montgomery may be contacted at brian.montgomery@pillsburylaw.com
