#6 CDJ Topic: Construction Defect Legislative Developments
December 30, 2015 —
Beverley BevenFlorez-CDJ STAFFRichard H. Glucksman,
Jon A. Turigliatto, and
David A. Napper of
Chapman Glucksman Dean Roeb & Barger discussed Right to Repair developments occurring in Nevada, Arizona, Florida, and Colorado in their article, “Right to Repair Reform: Revisions and Proposals to State’s ‘Right to Repair Statutes.”
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Texas also had changes that affected construction defect claims, as covered by
David H. Fisk of
Coleman & Logan PC: “Before filing a lawsuit or initiating an arbitration proceeding pertaining to a construction defect, a condominium association in Texas with eight or more units must now comply with the newly added Section 82.119 to Chapter 82 of the Texas Property Code. This is in addition to compliance with the Texas Residential Construction Liability Act (RCLA) and any preconditions included in the condominium association’s declarations.”
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Three Reasons Late Payments Persist in the Construction Industry
December 22, 2019 —
Patrick Hogan - Construction ExecutiveConstruction professionals are all too familiar with the payment issues that plague the construction industry. Contractors, subcontractors and material suppliers often have to deal with payment delays and even nonpayment—affecting cash flow and their ability to meet expenses.
According to an Atradius study, a quarter of all B2B invoices issued in North America are overdue. The construction industry accounted for one-third of those past-due invoices, and many contractors and construction business owners do not have a positive outlook on the industry's payment issues. The same survey found 55% of U.S. firms think there will be no change in the industry’s payment practices over the coming months—one-third even expects an increase in late payments.
These findings show that managing cash flow is a significant challenge in the construction industry. Having a negative cash flow will push the company toward financial trouble, which may ultimately lead to its demise. Understanding the reasons why payment issues persist in construction will help contractors protect their business, prevent these issues from happening or at least minimize their effect on the current operations.
Reprinted courtesy of
Patrick Hogan, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Design Immunity of Public Entities: Sometimes Designs, Like Recipes, are Best Left Alone
October 21, 2015 —
Garret Murai – California Construction Law BlogApril 23, 1985 will live in infamy.
The Coca Cola Company, responding to diminishing sales as its “sweeter” rival Pepsi-Cola gained market share, announced that it was changing its “secret” recipe and introducing a new kind of Coke, referred to by the public simply as, “new Coke.”
The reaction was unexpected.
People around the world began hoarding “old Coke.” Protest groups, such as the Society for the Preservation of the Real Thing and Old Cola Drinkers of America, sprang up around the county. Angry letters addressed to “Chief Dodo” were sent to Coca-Cola’s chief executive officer. And even Fidel Castro, a longtime Coca-Cola drinker, joined the backlash calling “new Coke” a “sign of American capital decadence.”
By July it was over.
Coca-Cola announced that it would once again produce “old Coke,” and in a sign (I’m sure Fidel Castro would say) of American arrogance, announced that “old Coke” would be produced under the name “Coca-Cola Classic” alongside “new Coke” which would continue to be called “Coca-Cola” suggesting that “new Coke” would be the Coke of today as well as the future. By 1992, however, “new Coke” whose sales dwindled to 3% of market share was demoted to “Coke II” and by 2002 was discontinued entirely.
The moral of the story: Change the recipe at your own risk.
Castro v. City of Thousand Oaks
In the next case, Castro v. City of Thousand Oaks, Case No. B258649, California Court of Appeals for the Second District (August 31, 2015), the corollary might well be change the recipe design at your own risk.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Professional Liability Alert: California Appellate Courts In Conflict Regarding Statute of Limitations for Malicious Prosecution Suits Against Attorneys
April 28, 2014 —
David W. Evans & Stephen J. Squillario – Haight Brown & Bonesteel LLPIn conflict with an earlier decision by a different division within the same District, and with a prior decision of another District which followed the earlier case, Division Three of the Second Appellate District has concluded, contrary to established precedent, that the general two-year limitations period set forth in Code of Civil Procedure section 335.1 (“Section 335.1”) applies to malicious prosecution claims against attorneys, rather than the specific one-year statute of limitations for claims against attorneys codified in Code of Civil Procedure section 340.6 (“Section 340.6”).
In Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (filed April 15, 2014, Case No. B237424, consolidated with Case No. B239375), Roger Cleveland Golf Co., Inc. (“Cleveland Golf”), filed a malicious prosecution action against Krane & Smith (“the Attorneys”), who had unsuccessfully prosecuted the underlying breach of contract matter for their client against Cleveland Golf. In that action, on April 26, 2010, the trial court entered its order granting a motion for nonsuit and dismissing the complaint in favor of Cleveland Golf. On May 24, 2011, or approximately 13 months after the trial court had dismissed the underlying complaint, Cleveland Golf commenced a malicious prosecution action against the Attorneys. In the interim, the Attorneys initiated an appeal of the underlying judgment, which was eventually dismissed approximately seven months later. In response to the complaint, the Attorneys filed a special motion to strike, commonly referred to as an anti-SLAPP motion, which included the argument that the malicious prosecution claim was time-barred under the one-year limitations period of Section 340.6. The trial court granted the Attorneys’ motion based on the statute of limitations (and Cleveland Golf’s failure to demonstrate a probability of success on the merits) and dismissed the case. Cleveland Golf’s appeal followed.
Reprinted courtesy of
David W. Evans, Haight Brown & Bonesteel LLP and
Stephen J. Squillario, Haight Brown & Bonesteel LLP
Mr. Evans may be contacted at devans@hbblaw.com, Mr. Squillario may be contacted at ssquillario@hbblaw.com
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How Are You Dealing with Material Delays / Supply Chain Impacts?
June 07, 2021 —
David Adelstein - Florida Construction Legal UpdatesIn a prior article I discussed a material escalation provision in your construction contract to account for the volatility of the material price market. While including such a provision may not have been much of a forethought before, it is now!
What about concerns with the actual supply chain that impacts the availability of and the lead time of materials? How are you addressing this concern in your construction contract?
The pandemic has raised awareness to this issue as certain material availability has been impacted by the pandemic. As a result, parties in construction have tried to forecast those materials where delivery issues may occur including those materials with longer than expected lead times. But equally important is how this issue is being addressed in your construction contract including how you want to negotiate this risk in future construction contracts.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Energy Company Covered for Business Interruption Losses Caused by Fire and Resulting in Town-Ordered Shutdown
February 15, 2021 —
David G. Jordan - Saxe Doernberger & Vita, P.C.In the case of NextSun Energy Littleton, LLC v. Acadia Ins. Co., the United States District Court of Massachusetts held that once direct physical damage from a covered peril causes a covered business interruption loss, any increase in the duration of such business interruption, due to the enforcement of an ordinance or law, extends the coverage period provided for lost income. The Court further held that a policy exclusion for business interruption due to the enforcement of any ordinance or law not in force at the time of the loss only applies when the ordinance or law itself, not the enforcement action that it authorizes, was not in force at the time of the loss.
The case involved a solar panel company, NextSun Energy Littleton (NextSun), that operated solar panel arrays providing electricity to the town of Littleton, Massachusetts. Due to a fire, 88 of the solar panels were damaged, and the Town immediately issued a “red-tag” order halting all energy-generating activity pending a safety inspection. The plaintiff purchased insurance for its panels along with “Energy Generating Income” (EGI) coverage, from the defendant, Acadia Ins. Co. (Acadia). The EGI policy covered “direct physical loss or damage” to “renewable energy generating equipment” and also covered the actual loss of surplus power income incurred during the interruption period. However, it excluded interruption of energy-generating income “caused by the enforcement of any ordinance, law, or decree … not in force at the time of loss.”
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David G. Jordan, Saxe Doernberger & VitaMr. Jordan may be contacted at
DJordan@sdvlaw.com
Construction Defect Class Action Lawsuit Alleges National Cover-up of Pipe Defects
December 10, 2015 —
Beverley BevenFlorez-CDJ STAFFTwo Miami condominium associations have filed suit “concerning defective fire sprinkler systems and a national cover up over a significant life safety issue in multi-unit condominiums in Florida and across the country.”
The attorneys representing the class action lawsuit, Gonzalez, Montoya, Siegfried, Sobel, and Hale, “believe that the problem is nationwide and that monetary damages arising from the claims will exceed $1 billion,” a press release by Colson Hicks Eidson stated. “The 56-count lawsuit filed against a dozen manufacturers, suppliers and distributors seeks compensatory, incidental and consequential damages.”
According to CBS Miami, “The suit claims the companies knowingly used [a] chemical that caused cracks and leaks in pipes that affected the water pressure in sprinkler systems.”
Plaintiff attorneys claim that the cost to repair each building is estimated at between $50 to $100 million each.
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Court of Appeals Discusses the Difference Between “Claims-Made” and “Occurrence-Based” Insurance Policies
May 31, 2021 —
Garret Murai - California Construction Law BlogAs most contractors know, scope, price and time are the “big” three in any construction contract. Nearly as important, however, are the insurance provisions. Patricularly, when things go bad on a construction project. As the next case, Guastello v. AIG Specialty Insurance Company 61 Cal.App.5th 97 (2021) discusses, the difference between “claims-made” versus “occurrence-based” coverage can be extremely important.
The Guastello Case
In 2003 and 2004, subcontractor C.W. Poss Inc. built retaining walls in the Pointe Monarch housing development in Dana Point, California. Poss performed all related excavation, ground and grading work.
In 2006, Thomas Guastello purchased a home in the development, and in January 2010, a retaining wall close to his lot suffered a massive failure that causing over $700,000 in damages.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
