More Money Down Adds to U.S. First-Time Buyer Blues: Economy
August 20, 2014 —
Michelle Jamrisko and Alexis Leondis – BloombergThe challenges facing prospective buyers of the least expensive homes in the U.S. are getting harder to overcome.
Already beset by stagnant wages, growing student debt and competition from investors who are snapping up listings, those looking to purchase moderately priced houses must also provide more cash up front. The median down payment for the cheapest 25 percent of properties sold in 2013 was $9,480 compared with $6,037 in 2007, the last year of the previous economic expansion, according to data from 25 of the largest metro areas compiled by brokerage firm Redfin Corp.
The higher bar is a symptom of still-tight credit that is crowding out first-time buyers even as interest rates remain near historical lows. Younger adults, who would normally be making initial forays into real estate, are among those most affected, weakening the foundations of the housing market and limiting its contribution to economic growth.
Ms. Jamrisko may be contacted at mjamrisko@bloomberg.net; Ms. Leondis may be contacted at aleondis@bloomberg.net
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Michelle Jamrisko and Alexis Leondis, Bloomberg
Neighbors Fight to Halt Construction after Asbestos found on Property
October 15, 2014 —
Beverley BevenFlorez-CDJ STAFFSI Live reported that residents spoke out at the Staten Island, New York community board meeting to try to halt “construction taking place at former Mount Manresa Jesuit Retreat House property in Fort Wadsworth.” Barbara Sanchez, secretary of the Committee to Save Mount Manresa, stated that halting the construction is urgent now that asbestos has been discovered on the property.
"We want a full stop-work order ... Everything being done around those buildings is being blown into our homes,” Sanchez said in the meeting, according to SI Live. “So I want testing for ... everything touched by the asbestos -- and our homes, before the work continues at Mount Manresa!"
Jeanna Massimi, a resident of Fort Wadsworth, stated that people in the community are already dealing with health problems due to the construction work: “A lot of people where I live [are having] X-rays and are being tested for asbestos exposure. They can't have their bedroom windows open anymore. The dust is like soot -- it's thick. It's everywhere in the home. People are coughing, wheezing and hoarse. You end up feeling lethargic.”
Mike Gilsenan, assistant deputy commissioner at the Department of Environmental Protection, said it was “highly unlikely any dust or fibers migrated off that site. That is the best I can tell you.” But SI Live reported that he added “that the process is ‘not foolproof.’”
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Parking Reform Takes Off on the West Coast
January 23, 2023 —
Allan Van Vliet - Gravel2Gavel Construction & Real Estate Law BlogStarting January 1, 2023, real estate developers in Oregon and California will no longer be required to build off-street parking facilities for certain projects located near public transit. Both states enacted new rules during the course of 2022 which are effective as of the beginning of 2023, and which seek to reduce the costs of building at least some new projects in major population centers.
In California, A.B. 2097 was signed by Governor Gavin Newsom in September, and prohibits city governments throughout the state (including in charter cities) from enforcing any local land use provisions which would require the developer to build parking spaces as part of their project if the project is located within one half-mile of a major public transit stop. The law applies to both residential and commercial projects. Cities can continue mandating parking for individual projects if they find that doing so is important to support the development of affordable housing—this exception was added to allay concerns that the bill would undermine “density bonus” programs which have become an important tool for the promotion of new affordable housing development around the state.
In Oregon, following a 2020 executive order by Governor Kate Brown, the state Land Conservation and Development Commission (the body responsible for land use and planning regulation in Oregon) embarked on a two-year rulemaking process which culminated in July of 2022 with the approval of a set of “Climate Friendly and Equitable Communities Rules.” Like the California legislation, these rules (in part) limit the ability of Oregon’s most populous cities to enforce parking minimums for new development projects. Unlike the California law, the Oregon rules encourage cities simply to repeal their parking mandates entirely. Cities subject the new rules which choose not to repeal their parking mandates in full must, as an alternative, adopt new local policies to reduce the amount of land dedicated to parking in certain geographies or in connection with certain uses.
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Allan Van Vliet, PillsburyMr. Van Vliet may be contacted at
allan.vanvliet@pillsburylaw.com
24th Annual West Coast Casualty Construction Defect Seminar A Success
June 05, 2017 —
Margaret Graham - CDJ STAFFThe 24th Annual West Coast Casualty Construction Defect seminar was once again, a huge success . On May 18-19, 2017 attendees from the legal, insurance, builder, contractor, subcontractor and numerous other industries came from across the United States and several foreign countries to the 24th Annual West Coast Casualty Construction Defect Seminar.
Caryn Siebert, Vice President and Chief Claims Officer of The Knight Insurance Group was awarded The Jerrold S. Oliver Award of Excellence. This award recognizes a person who has contributed to the betterment of the construction defect community. For more information on the Oliver Award of Excellence, please visit: http://www.westcoastcasualty.com/seminar/ollie-award-voting/
Bert L. Howe & Associates, Inc.’s golf challenge raised $2,225.00 for the National Coalition for Homeless Veterans and $1,900 for Final Salute.
The grand total for all charitable contributions raised this year at the seminar was $45,300.00.
For more information on the National Coalition for Homeless Vets, please visit: http://nchv.org/
To learn more about how Final Salute provides homeless women Veterans with safe and suitable housing, please visit: http://www.finalsaluteinc.org/
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After Breaching its Duty to Defend, Insurer Must Indemnify
August 11, 2011 —
Tred R. Eyerly - Insurance Law HawaiiIn a brief decision analyzing Oregon law, the Ninth Circuit determined that once an insurer breaches its duty to defend, it must indemnify. See Desrosiers v. Hudson Speciality Ins. Co., 2011 U.S. App. LEXIS 12591 (9th CIr. June 21, 2011).
The victim secured a judgment against the insured after he was beaten by another patron outside the insured's bar. Hudson Speciality Insurance refused to defend the insured, claiming the injury arose from an assault and battery, which excluded coverage.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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Federal Judge Refuses to Limit Coverage and Moves Forward with Policyholder’s Claims Against Insurer and Broker
December 07, 2020 —
Michael S. Levine & Casey L. Coffey - Hunton Insurance Recovery BlogOn November 10, 2020, a New York federal judge dismissed an insurer’s counterclaims seeking to cap its exposure under a $15 million sublimit and an order estopping the policyholder from pursuing any additional amounts.
In February 2017, Plaintiff Pilkington North America, Inc. (Pilkington), suffered between $60 and $100 million in damage from a tornado that struck its glass manufacturing factory in Illinois. Pilkington sought coverage for its loss under a commercial property and business interruption policy issued by Defendant Mitsui Sumitomo Insurance Company (MSI). Pilkington also claimed its insurance broker, Aon Risk Services Central, Inc. (Aon), is liable for faulty advice provided while brokering the policy. Aon’s negligence allegedly gave way to MSI’s fraudulent revision of the insurance policy, which caused the losses from the tornado to not be fully compensable.
Pilkington’s fraud and faulty brokering claims stem from MSI’s revision of an endorsement contained in the policy. The revision changed the wording of a windstorm sublimit. Allegedly, Aon was informed by MSI of the changes and failed to inform Pilkington that the revision would substantially reduce coverage for windstorms, including tornados.
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Michael S. Levine, Hunton Andrews KurthMr. Levine may be contacted at
mlevine@HuntonAK.com
Revisiting the CMO; Are We Overusing the Mediation Privilege?
November 19, 2021 —
Michael T. Kennedy Jr. - BERDING|WEILOne of the most common features in construction defect cases is the Case Management Order (“CMO”) or Pre-Trial Order (“PTO”) to govern pre-trial and mediation procedures. CMOs and PTOs arose in the days when the HOA would sue the developer, the developer would cross-complaint against the subcontractors, and each defendant and cross-defendant might have 2 or 3 insurance carriers defending, each of whom may retain their own panel counsel. In a large case there may have been 20 parties and 30 defense attorneys. In order to avoid the cost and chaos of all of those parties propounding their own discovery, and in order to prepare these cases for mediation well before trial and the associated costs, it became standard practice in California to include provisions in the CMO to stay all discovery until just before trial.
Plaintiff would provide a Defect List or Statement of Claims and the parties experts would meet and exchange information as part of the mediation process. All of the information exchanged would be subject to mediation privileges and inadmissible at trial. The benefit of this practice was that the parties (and carriers) would avoid the cost of formal discovery and allow the experts to discuss compromised scopes of repair to help settle the case while being able to take a more aggressive position at trial. The disadvantages are that each party uses its privileged initial expert reports to stake out negotiating positions more extreme than what they would put on at trial, with each side losing credibility with the other in assessing the value of the case, and for those cases that did not settle, the parties would be faced with having to do all of the depositions and discovery in the last 60 days, or delaying trial, or both.
Over the last 10 or 15 years with the advent of wrap-up insurance policies, these cases now usually involve 2 sides instead of 20; only the HOA and the developer remain in the case. However, old habits die hard, and the standard CMO/PTO hasn’t evolved with other aspects of these cases. The practice of staying all discovery and exchanging information only under mediation privileges remains, and as a result insurance carriers don’t receive the admissible evidence that they need to determine coverage and evaluate the real settlement value of the case until just before trial. On the plaintiff’s side, if most of the experts’ work is done under the guise of mediation privilege, those costs may not be recoverable. Outside the context of mediation, costs incurred in investigation of the defects and preparation of a scope and cost of repair are recoverable.
This reflexive claim of mediation privilege over all information exchanged during the case has outlived its usefulness. The CMO can and should remain to regulate formal discovery and to help the parties prepare for mediation, but regulated discovery should be opened early in the case. In California, the SB800 process already provides for the exchange of admissible information during the prelitigation right to repair process. Continuing that exchange during the early litigation allows the parties to continue to prepare for mediation, but waiving privileges had advantages for both sides.
A senior claims manager once commented that Plaintiff’s mediation-protected Statement of Claims “might as well be a stack of blank paper” for all of its usefulness to the carrier in assessing the value of the case. If the Plaintiff and it expects are free to inflate their claims early in the case without having to worry about every supporting those claims in front of a jury, they have little or no credibility. And if those claims are inflated or not “real,” not only can the carrier not properly assess the verdict range and settlement value of the case, but it may also be hampered in making a coverage determination. Simply put, if the exchange of real information through formal discovery is put off until just before trial, the defense cannot be ready to settle until then. Worse, the cost of defense goes through the roof in the last 60 days before trial as the lawyers’ scramble to take all of the depositions and to all of the other work that had been stayed for the previous year or two.
The Plaintiff is faced with the same question of credibility of defense experts where they are free to take a “low ball” negotiating position without having to support that position through cross-examination in front of the jury. Just as the carrier behind the defense attorney needs the Plaintiff’s “real” evidence to assess the claim, so does the HIOA Board of Directors behind the Plaintiff’s counsel. Additionally, in California as in most states, the cost of experts’ preparation for mediation may not be recoverable as costs or damages, but investigation of the defects and preparation of the scope and cost of repair is recoverable.
The biggest challenge is resolving construction defect claims for both sides is how to resolve these cases quickly while keeping costs under control. Practices that worked 20 years ago are no longer applicable with changes in insurance, and in light of some of the bad habits that arise when all of the information exchanged was confidential.
The CMO/PTO process can still be useful to regulate the discovery and mediation schedule given the volume of documents and other information to be exchanged but exchanging “real” information in a form that may come into evidence at trial should foster earlier resolution, resulting in cost savings for the parties. The CMO can provide for the parties to respond to controlled discovery, and the exchange of expert reports and potentially depositions can and should be done earlier in the case, well before the eve of trial. The parties can then assess the true value of each case and prepare for more substantive mediation without waiting until they are on the figurative courthouse steps.
Construction defect cases have a pattern, and it is tempting for busy lawyers to just put each case through the same algorithms that they have used for years. However, these cases have evolved and those of us handling these cases need to reevaluate our approach to these cases. Taking aggressive negotiating positions that no longer have any credibility with the other side has become counterproductive, and the exchange of real evidence earlier in the case would better serve our clients and carriers.
BERDING|WEIL is the largest and most experienced construction defect and common interest development law firm in California. For more information, please visit https://www.berding-weil.com
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Michael T. Kennedy Jr., BERDING|WEILMr. Kennedy may be contacted at
mkennedy@berdingweil.com
What Contractors Can Do to Address Rising Material Costs
August 23, 2021 —
Garret Murai - California Construction Law BlogFrom lumber to used cars to pastrami sandwiches, prices are rising. This past month, at a town hall meeting in Cincinnati, Ohio, President Biden acknowledged that inflation was increasing, responding to a question from a restaurant owner about labor shortages, “I think your business and the tourist business is really going to be in a bind for a little while.”
Although construction companies typically don’t work in the same small margins that restaurants do, labor shortages and material price increases have nevertheless impacted the construction industry. According to a recent report by Cumming, the cost of construction materials from lumber to steel to gypsum have gone up over the last 12 months, in some cases nearly double:
For contractors entering into construction contracts and those performing work under existing contracts, the increasing cost of materials and shortage of labor creates challenges, some of which can be addressed through contractual provisions and the framework of those contracts.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
