Avoiding Project Planning Disasters: How to Spot Problem Projects
December 13, 2021 —
James T. Dixon - Construction ExecutiveThe burden of project planning falls first and foremost upon a project owner. Owners have varying levels of sophistication, and the smart ones fill weak spots on their staff by engaging project managers, construction managers and owner’s representatives.
Typically, the owner then delegates the largest part of the project’s plan to the contractor in terms of creation and execution of a critical path method schedule during the construction phase. Before accepting that burden, a wise contractor will evaluate the project to determine if it is on a path to success or disaster. It is guaranteed that an owner’s problems will become the contractor’s problems in one way or another.
There are legendary projects that were also legendary planning failures. The iconic Sydney Opera House is one. The design competition began in 1955. After selecting the architect, the owner implemented a team that involved that architect, a structural engineer and an executive committee of inexperienced politicians. The original plan included a budget of $7 million (Australian) and a completion schedule spread over four years. That executive committee forced the project to start before designs were complete, doubled the number of theaters and then put a strangle-hold on the payment process, eventually causing the architect to quit and return to Europe with the construction drawings. The Opera House opened for its first performance in 1973—14 years late and $98 million over budget.
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James T. Dixon, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Right to Repair Reform: Revisions and Proposals to State’s “Right to Repair Statutes”
April 01, 2015 —
Richard H. Glucksman, Jon A. Turigliatto, and David A. Napper – Chapman Glucksman Dean Roeb & Barger BulletinVirtually all of the states in the country have "Right to Repair" statutes. We follow the various states legislatures to determine what trends or developments are occurring. For years, Chapman, Glucksman, Dean, Roeb, and Barger has prepared a compendium that provides the salient points of these Right to Repair statutes. In this extended BULLETIN we provide a discussion of important and very recent developments that are occurring in
Nevada,
Arizona,
Florida, and
Colorado.
In Nevada, Governor Brian Sandoval very recently signed The Homeowner Protections Act of 2015, representing a massive transformation to Nevada's Right to Repair Act in the builder's favor, including but not limited to removal of the attorney fees provision as part of claimant's damages.
In Arizona, Governor Doug Ducey signed House Bill 2578 in March 2015, amending Arizona Revised Statutes § 12-1361 et. Seq. by eliminating a homeowner’s statutory opportunity to recover attorney and expert fees and providing a builder the right to repair the alleged defects.
In Florida, Bill 87 proposes to shorten the statute of limitations, requires more detail in the Homeowner's notice of defects, and allows a builder to use a prior settlement in lieu of repair as an affirmative defense against subsequent claims.
In Colorado, lawmakers are proposing to place additional conditions in front of an HOA board before filing suit and require alternative dispute resolution for HOA Condominium Defect Claims even if the requirement no longer exists at the time the claim is brought.
NEVADA: GOVERNOR SIGNIFICANTLY MODIFIES NEVADA'S RIGHT TO REPAIR ACT WITH THE SIGNING OF ASSEMBLY BILL 125
Nevada's Right to Repair Act has been extensively modified by the signing of Assembly Bill 125 also known as the Homeowner Protections Act of 2015. The Act considerably revises Chapter 40 of the Nevada Revised Statute ("NRS") governing construction defect actions. According to Governor Brian Sandoval, the signing of the first major bill of the legislative session in Nevada "discourages frivolous litigation and strengthens Nevada's rebounding housing market."1 Among other provisions, the Homeowner's Protection Act removes a claimant's ability to recover reasonable attorney fees as part of the claimant's damages, shortens the statutes of repose, defines the duty to defend, and prohibits a claimant from filing a notice of construction defects unless the claimant has submitted a claim under the homeowner's warranty and the insurer has denied the claim. Only claims that have been denied under the homeowner's warranty may be claimed.
Additionally, the term "construction defect" is now defined as a defect "(1) which presents an unreasonable risk of injury to a person or property; or (2) which is not completed in a good and workmanlike manner and proximately causes physical damage to the resident or appurtenance."
Critically, the Act now requires that the notice of construction defects (1) state in "specific detail" rather than reasonable detail, each defect, damage, and injury to each residence or appurtenance that is subject to the notice; (2) state the exact location of each defect, damage, and injury, rather than describe in reasonable detail the location of the defect; and (3) include a statement signed by the owner of the residence or appurtenance in the notice that the owner verifies that each defect, damage and injury exists in the residence or appurtenance.
Although not every revision is set forth above, the passing of The Homeowner's Protection Act appears to be a colossal victory for builders as the majority of the revisions to NRS Chapter 40 are favorable to the builder while additional or heightened requirements have been placed upon homeowners who wish to bring a claim. The following two Right to Repair updates concern proposed bills that also seek to radically change the pre-claim construction defect landscape.
ARIZONA: BUILDERS NOW HAVE THE RIGHT TO REPAIR INSTEAD OF AN OPPORTUNITY TO REPAIR WHILE HOMEOWNERS NO LONGER HAVE A STATUTORY RIGHT TO ATTORNEY FEES AND EXPERT FEES
In March 2015, Arizona Governor Doug Ducey signed into law House Bill 2578, revising key portions of the Right to Repair pursuant to the Purchaser Dwelling Act (Arizona Revised Statute ("A.R.S.") Section 12-1361 et. seq. Important categories of the Act affected by the new law include the builder's right to repair or replace, the process of repair or replacement, dwelling actions, and homeowners' association dwelling actions. Most notably, prior to filing a construction defect suit, or a "dwelling action" as defined in A.R.S. Section 12-1361 et. seq., a homeowner must provide written notice detailing the basis of a dwelling action and must allow the builder to repair or replace the alleged construction defects.
Another significant revision includes the elimination of the prevailing homeowner's statutory right to reasonable attorney fees, witness fees and taxable costs in a dwelling action. Bill 2578 also revised the definitions of "Construction Codes," "Construction Defect," "Construction Professional," and "Material Deficiency." Homeowner Associations now must disclose additional information regarding the claim to its members and must show compliance with procedures set forth in the community documents. Clearly, Arizona's legislature is seeking to reduce the amount of frivolous construction defects suits with the elimination of a prevailing homeowner's right to reasonable attorney fees and expert fees. Moreover, the Legislature now provides builders in Arizona with the right to make repairs to alleged construction defects if they so choose.
FLORIDA: FLORIDA GENERAL CONTRACTORS SEEK AGGRESSIVE AMENDMENT TO PRE-CLAIM CONSTRUCTION DEFECT PROCESS WITH BILL 87
Florida's Right to Repair Act, Chapter 558 of the Florida Statutes, may be extensively revised in the near future. With the help of the South Florida Chapter of the Associated General Contractors of America, House of Representatives Bill 87 will be presented as an amendment to the Pre-Claim Construction Defect requirements set forth in Chapter 558.
The proposed bill is aggressive and seeks to address issues in the current statute. These deficiencies have seemingly prevented construction defect claims from being resolved without the filing of a civil suit. Notably, the statute of limitations period for a property owner to file suit for construction defects would be shortened based upon the revision of the term "completion of a building or improvement" to include issuance of a temporary certificate of occupancy. Additionally, property owners would be subject to additional requirements for issuing a notice of claim, including specific identification of locations of each alleged construction defect as well as the specific provisions of the building code, project plans, project drawings, project specifications, or other documentation, information or authority that serve as the basis of the claim for each alleged construction defect.
Perhaps most importantly, the bill provides that if a construction defect is settled by repairs offered by the contractor during the Chapter 558 claims process but the repairs fail to fully correct the defects and the owner or association then files suit because the issue was not resolved, the defendant may claim that the issue was previously resolved and the plaintiff owner may face sanctions. Even if the bill as proposed does not pass in its current form, on the heels of Nevada's Right to Repair Act overhaul, it may serve to encourage other states, including California, to take another look at their Right to Repair Act procedures.
COLORADO: UPDATE FROM CGDRB SEPTEMBER 2014 BULLETIN: COLORADO PROPOSED LEGISLATION RE: HOA CONDOMINIUM DEFECT CLAIMS
In September 2014, we provided an important discussion of potential significant tort reform legislation presented in Colorado regarding construction claims by homeowner associations for condominiums. This Bulletin serves as an update to that discussion as intense debate over legislative reform to provide condominium builders in Colorado more legal protections has heated up again.
On October 13, 2014, the city of Lakewood became the first Colorado municipality to pass a “right to repair” measure with respect to common interest communities. The Lakewood measure gives builders a right to repair construction defects before homeowner associations take legal action and requires a homeowner majority approval before legal action is taken.
On February 10, 2015, two bipartisan Senators introduced Senate Bill 177, a bill proposing changes to the prerequisites for a homeowner association to file a construction defect action under the Colorado Common Interest Ownership Act. SB 177, if passed in its current form, would require:
- That when the governing documents of a common interest community require mediation or arbitration of a construction defect claim and the requirement is later amended or removed, mediation or arbitration is still required for a construction defect claim;
- That the mediation or arbitration take place in the judicial district in which the common interest community is located;
- That the arbitrator (1) be a neutral third party; (2) make certain disclosures before being selected; and (3) be selected as specified in the community's governing documents or, if not specified, in accordance with the Uniform Arbitration Act;
- That before a construction defect claim is filed on behalf of the homeowner association: (1) the parties must submit the matter to mediation; and (2) the board must give advance notice to all unit owners, together with a disclosure of the projected costs, duration, and financial impact of the construction defect claim, and must obtain the written consent of a majority of the unit owners.
- That the disclosures required prior to the purchase and sale of property in a common interest community a notice that the community's governing documents may require binding arbitration of certain disputes.
As explained in our previous Bulletin, currently, in Colorado, homeowner association boards are only required to obtain two condominium owners’ consent to file a construction defect suit. Similar to SB 220, which proposed a number of the same requirements, SB 177 would likely have the potential effect of reducing the number of lawsuits filed against builders and decrease the treat of frivolous claims; and allow the parties an opportunity to resolve their issues short of litigation.
On March 18, 2015, the Colorado Senate Committee on Business, Labor, and Technology voted 6-2 to forward SB-177 to the full Senate with four minor amendments. The amendments provide:
- The homeowner association’s attorney can prepare the disclosures that must be presented to unit owners prior to filing a construction defect claim;
- Voting may be done by proxy;
- The parties must agree on an arbitrator. If they cannot agree, they may petition the court to appoint one. Preference will be given to the arbitrator designated in the community’s governing documents; and
- A different list of disclosure topics is required.
Also introduced this year is SB 091, a bill to shorten the Colorado’s construction defect statute of repose to a homeowner from bringing an action after three years. On March 16, 2015, the Colorado Senate Committee on State, Veterans & Military Affairs voted to pass SB 091 to the full Senate with two substantive amendments. The first amendment excludes any multifamily developments from being effected by the shortened statute of repose. The second amendment proposes the statute of repose only be shortened to five years, plus an additional year if the defect manifests in year five. Currently, in Colorado, if a homeowner does not discover a construction defect within six years of a house’s completion, the homeowner may forfeit all legal rights to seek repair. Again, SB 091 would protect builders from frivolous or untimely claims by homeowners.
We will continue to monitor development of these bills and others that may be proposed in the future. If we can provide any further information concerning these developments or you are interested in receiving our compendium of the various right repair statutes please let us know.
1 As reported by KTVN-TV in Reno, Nevada: http://www.ktvn.com/story/28163519/senate-passes-constructiondefect-bill-sends-to-governor-sandoval.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard H. Glucksman,
Jon A. Turigliatto and
David A. Napper
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
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Coverage for Construction Defects Barred by Business Risk Exclusions
September 01, 2011 —
Tred R. Eyerly - Insurance Law HawaiiAlthough the court determined there was an occurrence, coverage was excluded by the business risk exclusions. See Cont’l W. Ins. Co. v. Shay Constr. Co., 2011 U.S. Dist. LEXIS 82839 (D. Colo. July 28, 2011).
White was the general contractor on the project. White had three subcontracts with Shay to provide framing, siding, and related work on the project. Shay was insured under a CGL policy issued by Continental Western.
Two of Shay’s subcontractors furnished materials, labor and equipment to Shay. These subcontractors filed suit in state court alleging they had not been compensated for the work and materials. White and Shay were named as defendants. White cross claimed against Shay, alleging Shay had breached its obligations under the subcontracts. Several allegations sounded in contract. Other allegations, however, contended Shay had performed defective work and had damaged the work of other trades in correcting deficiencies in its own performance.
Shay sought coverage under Continental Western’s policy. Continental Western filed suit for a declaratory judgment and moved for summary judgment.
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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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U.S. District Court for Hawaii Again Determines Construction Defect Claims Do Not Arise From An Occurrence
August 27, 2013 —
CDJ STAFFIn a decision authored by Judge Leslie E. Koybayashi, the U.S. District Court for the District of Hawaii followed its prior decisions that construction defect claims were not covered because such claims do not arise from an occurrence. Nautilus Ins. Co. v. 3 Builders, Inc., 2013 U.S. Dist. LEXIS 88480 (D. Haw. June 24, 2013).
3 Builders, the insured, was sued by the Apartment Owners of Mililani Pinnacle for the faulty installation of a new roof. Pinnacle claimed the completed roofs were not properly installed.complaint alleged breach of contract, breach of the duty of good faith and fair dealing, negligence, and other causes of action.
3 Builders tendered the defense to Nautilus, who accepted the tender and defended for three years. Nautilus, however, filed a complaint for a declaratory judgment on its coverage obligations. Nautilus sought summary judgment, contending there was no coverage because all of the claims arose from the contractual relationship to perform the roof work, and a breach of contract was not the type of fortuitous event covered by a CGL policy under Hawaii law.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.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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Fifth Circuit Concludes Government’s CAA Legal Claims are Time-Barred But Injunctive-Relief Claims are Not
November 28, 2018 —
Anthony B. Cavender - Gravel2GavelIn another recent U.S. Court of Appeals for the Fifth Circuit decision, on October 1, 2018, the Fifth Circuit affirmed, in part, the District Court’s ruling that the general federal statute of limitations, 28 U.S.C. § 2462, required the dismissal of the government’s civil enforcement action in the case of U.S., et al., v. Luminant Generation Co., LLC, et al.
The Fifth Circuit agreed that the statute barred the imposition of any civil fine for the alleged unlawful construction operations regarding the modification of major emitting facilities contrary to Section 7475(a) of the Clean Air Act (CAA). But, the Fifth Circuit remanded the injunctive-relief claims to the District Court for further consideration.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Be Careful With Construction Fraud Allegations
April 06, 2016 —
Christopher G. Hill – Construction Law MusingsHere at Construction Law Musings we have discussed the intersection of contracts, construction and fraud on several occasions. We’ve even discussed how such fraud can bleed over from the civil to the criminal.
Recently, the Virginia Supreme Court weighed in again on the question of construction fraud and criminal allegations. In O’Connor v. Tice, the Court discussed a malicious prosecution action brought by a contractor against owners of a commercial building. In O’Connor, the owners and the contractor got into a disagreement over alleged damage to the roof of the owners’ building and who was responsible. In response to this disagreement, the owners contacted the local sheriff’s office, accusing the contractor of construction fraud, and then wrote a “15 day letter” to the contractor outlining the criminal consequences should he fail to pay the damages sought in the owners civil lawsuit. Subsequently, a criminal warrant was issued against the contractor based solely upon the word of the owners. This last occurred at the insistence of the owners (who did not inform the sheriff’s deputy or the Commonwealth Attorney that they’d had this conversation or that the contractor had partially performed) after they discussed the matter with the contractor’s attorney and were informed that any claim that they may have had was civil in nature.
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Christopher G. Hill, Construction Law MusingsMr. Hill may be contacted at
chrisghill@constructionlawva.com
Newmeyer & Dillion Appoints Partner Carol Zaist as General Counsel
June 22, 2016 —
Newmeyer & Dillion LLPNEWPORT BEACH, Calif. – June 21st, 2016 – Prominent business and real estate law firm
Newmeyer & Dillion LLP is pleased to announce that partner
Carol Zaist has been named the firm’s General Counsel. Zaist will report to the Managing Partner, Executive Committee and other senior level management as it relates to the firm’s governance and policy matters. Zaist’s appointment is effectively immediately.
“We are excited to have appointed Carol as the firm’s General Counsel,” said Jeff Dennis, Newmeyer & Dillion’s Managing Partner. “As we continue to expand across markets, this is another proactive measure to ensure our strategic growth and success.”
Zaist is a partner in the Newport Beach office of Newmeyer & Dillion, concentrating her practice on business litigation, real estate litigation, and probate litigation. She has significant experience advising clients in contract disputes, business and property torts, and trademark and trade secret disputes in both federal and state jurisdictions. Zaist also serves as strategic counsel, advising clients on the impact of multiple litigation matters in different jurisdictions, and integrating strategy and tasks efficiently and cohesively. She will lend this variety of experience to her new role as General Counsel for the firm.
“I am honored and thrilled to work with our managing partner and Executive Committee to assist the firm in its strategic growth and development,” said Zaist.
About Newmeyer & Dillion
For more than 30 years, Newmeyer & Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of business, employment, real estate, construction and insurance law, Newmeyer & Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer & Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949-854-7000 or visit www.ndlf.com.
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