Ireland Said to Plan Home Loans Limits to Prevent Bubble
October 01, 2014 —
Joe Brennan – BloombergIreland’s central bank plans to impose limits for the first time on how much banks can lend home buyers as real estate values soar again in the home of western Europe’s worst property collapse, two people with knowledge of the matter said.
The regulator is preparing to publish a consultation paper on its proposals within weeks, said one of the people, who asked not to be named, as the matter is private. Banks and lobby groups will have a chance to comment on the plans, which center on introducing loan-to-value and loan-to-income restrictions. A spokesman for the central bank in Dublin declined to comment.
Irish homes prices are surging even as banks grapple with the aftermath of mortgage crisis that forced the government to bail out most of the nation’s lenders. A quarter of the country’s owner-occupier home loans are in arrears or had their terms eased. Loans granted during the boom for more than 85 percent of the property value were most likely to default in the wake of the crash, central bank economists said today.
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Joe Brennan, BloombergMr. Brennan may be contacted at
jbrennan29@bloomberg.net
North Carolina Appeals Court Threatens Long-Term Express Warranties
April 09, 2014 —
Beverley BevenFlorez-CDJ STAFFJonathan Massell of the firm Nexsen Pruet explained how a “recent holding by the North Carolina Court of Appeals is threatening to render many long-term express warranties ineffective,” in the online publication Lexology.
In Christie v. Hartley Construction, Inc., “the court held that the six-year North Carolina statute of repose for improvements to real property trumps the bargained-for duration terms of an express warranty.” In the Christie case, this meant that even though the homeowners had a twenty year warranty, because of the statute of repose, the warranty effectively expired after six years.
Massell stated to “be mindful of jurisdiction.” If the express warranty is in a state other than North Carolina, it’s possible that the claim could be filed in that state instead of North Carolina. For instance, according to Massell, South Carolina’s “statue of repose does not expire until eight years after the date of substantial completion for an improvement to real property.” Furthermore, “long-term warranties are not trumped by the South Carolina statute of repose.”
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Certificates of Merit: Is Your Texas Certificate Sufficient?
January 22, 2024 —
Gus Sara - The Subrogation StrategistIn Eric L. Davis Eng’g, Inc. v. Hegemeyer, No. 14-22-00657-CV, 2023 Tex. App. LEXIS 8899, the Court of Appeals of Texas (Court of Appeals) considered whether the plaintiffs’ certificate of merit, in support of their professional malpractice claim against the defendant engineers, adequately set forth the experience and qualifications of the expert who submitted the certificate. The defendants filed a motion to dismiss, alleging that the certificate of merit was inadequate because it failed to establish that the expert practiced in the same specific areas as the defendants in relation to the work at issue. The lower court denied the defendants’ motion. The Court of Appeals affirmed the lower court’s decision, finding that there was sufficient information for the lower court to have reasonably found that the plaintiffs’ expert practiced in the same area as the defendants.
In Hegemeyer, the plaintiffs sued Eric L. Davis Engineering, Inc. (Davis) and Kenneth L. Douglass (Douglass), alleging improper design of their home’s foundation. The plaintiffs retained Davis to design and engineer the home and Douglass prepared the plans for the home. The plans called for the installation of post-tension cables in the home’s foundation. The plaintiffs alleged that the foundation design was improper and brought professional malpractice claims against Davis and Douglass.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Limiting Plaintiffs’ Claims to a Cause of Action for Violation of SB-800
November 18, 2011 —
Samir R. Patel, Esq., Lorber, Greenfield, & Polito, LLPThere has been a fair share of publicity about the SB-800 amendments to the Civil Code (Civil Code section 896, et seq.) that codified construction defect litigation in 2002. Most of the publicity is geared toward the pre-litigation standards allowing a builder the right to repair before litigation is commenced by a homeowner. Less focus and attention has been given to the fact that violation of the SB-800 performance standards is being used by plaintiff’s counsel as an additional tool in the plaintiff’s pleading tool box against builders. Closer scrutiny to SB-800 reveals that those provisions should in fact act as a limitation to the pleading tools available to plaintiffs and an additional tool for builders in the defense of cases governed by SB-800.
The typical construction defect complaint contains the boiler plate versions of numerous causes of action. These causes of action include Strict Liability, Negligence, Negligence Per Se, Breach of Contract, Breach of Contract – Third-Party Beneficiary, Breach of Express Warranties, Breach of Implied Warranties, among others. The wide array of causes of action leave a defendant “pinned to the wall” because they require a complex defense on a multitude of contract and tort related causes of action. Furthermore, the statutes of limitations as to these claims widely differ depending upon if the particular defect is considered latent or patent. The truth of the matter remains, no matter what the circumstances, if a construction defect matter ultimately goes to trial, it is inevitable that plaintiffs will obtain a judgment on at least one of these causes of action.
On its own, the Strict Liability cause of action can be a thorn in a defendant’s side. A builder is obviously placing a product into the stream of commerce and strict liability is a tough standard to defend against, particularly when it concerns intricate homes comprised of multiple components that originally sold for hundreds of thousands of dollars. A Negligence cause of action can also be difficult to defend because the duty of care for a builder is what a “reasonable” builder would have done under the circumstances. An interpretation of this duty of care can easily sway a jury that will almost always consist of sympathetic homeowners. A Negligence Per Se cause of action can also leave a defendant vulnerable to accusations that a builder violated the Uniform Building Code or a multitude of other obscure municipal construction-related code provisions during the construction of the home. Lastly, the Breach of Contract cause of action leaves a builder relying on dense and intricate purchase and sale agreements with dozens of addenda which leave the skeptical jurors turned off by what they view as one-side, boilerplate provisions. Ultimately, when a matter is about to go to trial, the complexity of these complaints can benefit a plaintiff and increase a plaintiff’s bargaining power against a defendant who is attempting to avoid a potentially large judgment.
Enter the SB-800 statutes. The SB-800 statutes apply to all homes sold after January 1, 2003. Civil Code section 938 specifically states that “[t]his title applies only to new residential units where the purchase agreements with the buyer was signed by the seller on or after January 1, 2003.” (Civil Code §, 938.) As time progresses, more residential construction defect cases will exclusively fall under the purview of SB-800. Slowly but surely more SB-800 governed litigation is being filed, and its exclusive application is looming on the horizon.
On its surface, this “right to repair” regime has left builders with a lot to be desired despite the fact that it is supposed to allow the builder the opportunity to cure any deficiencies in their product before litigation can be filed by potential plaintiffs. However, the application of the time line for repair has shown to be impractical for anything but the most minor problems involving only small numbers of residential units. Moreover, the fact that the fruits of the builder’s investigation into the claimed defects in the pre-litigation context can freely be used as evidence against it in litigation makes builders proceed with trepidation in responding with a repair. For these reasons, more SB-800 litigation can be expected to result due to the shortcomings of the pre-litigation procedures, and savvy defense counsel should anticipate the issues to be dealt with in presenting the defense of such cases at trial.
This fact should not necessarily be met with fear or disdain. Within the SB-800 statutes, the legislature made it clear that they were creating a new cause of action for construction defect claims, but it further made it clear that this cause of action is a plaintiff’s exclusive remedy. The legislature giveth, but at the same time, the legislature taketh away. Throughout numerous provisions within the SB-800 statutes, the Civil Code states that claims for construction defects as to residential construction are exclusively governed by the Civil Code, and that the Civil Code governs any and all litigation arising under breaches of these provisions. Civil Code section 896 specifically states:
In any action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction … the claimant’s claims or causes of action shall be limited to violation of, the following standards, except as specifically set forth in this title. (Civil Code §, 896.)
Civil Code section 896 then provides approximately fifty-plus standards by which a construction defect claim is assessed under that provision. Civil Code section 896 covers everything from plumbing to windows, and from foundations to decks, and in several instances expressly dictates statutes of limitations as to specific areas of construction that severely truncate the 10-year latent damage limitations period. As for any construction deficiencies that are not enumerated within Civil Code section 896, Civil Code section 897 explicitly defines the intent of the standards and provides a method to assess deficiencies that are not addressed in Civil Code section 896. Civil Code section 897 states:
Intent of Standards
The standards set forth in this chapter are intended to address every function or component of a structure. To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage. (Civil Code §, 897.)
Therefore, Civil Code section 897 acts as a catch-all by which defects that are not covered within Civil Code section 896 can be evaluated on a damage standard mirroring the Aas case (damages must be present and actual). The result of sections 896 and 897 being read in combination is a comprehensive, all-inclusive set of performance standards by which any defect raised by Plaintiffs can be evaluated and resolved under a single SB-800 based cause of action.
Civil Code section 943 makes clear that a cause of action for violation of SB-800 performance standards is a plaintiff’s sole remedy for a residential construction defect action. Specifically, Civil Code section 943 states:
Except as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under 944 is allowed. In addition to the rights under this title, this title does not apply to any action by a claimant to enforce a contract or express contractual provision, or any action for fraud, personal injury, or violation of a statute. (Civil Code §, 943.)
Civil Code section 944 provides the method for computing damages within a construction defect action, as follows:
If a claim for damages is made under this title, the homeowner is only entitled to damages for the reasonable value of repairing any violation of the standards set forth in this title, [and] the reasonable cost of repairing any damages caused by the repair efforts… . (Civil Code §, 944.)
A cursory review of these statutes yields the conclusion that the legislature was attempting to create an exclusive cause of action that trumps all other causes of action where SB-800 applies. The remedy available to plaintiffs is limited to that allowed by the Civil Code. As noted above, “[n]o other cause of action for a claim covered by this title…is allowed.” (Civil Code §, 943.) Therefore, Civil Code sections 896, 897, 943, and 944 specifically prohibit the contract-based and tort-based causes of action typically pled by plaintiffs.
Plaintiff’s counsel has seized upon the language of section 943 to advance the argument that SB-800 still allows a plaintiff to advance typical contract and tort based causes of action. On the surface, this argument may seem compelling, but a minimum of scrutiny of the express language of section 943 dispels this notion. Section 943 says that it provides rights “[i]n addition” to those under the SB-800 Civil Code provisions. Clearly, the language in section 943 is intended to expressly underscore the fact that a plaintiff is not precluded from seeking relief in addition to that allowed under SB-800 for damages not arising from a breach of the SB-800 standards or for damages in addition to those recoverable under Section 944. This language does not provide an unfettered license to bring a Strict Liability, Negligence or other cause of action against a builder where SB-800 applies.
In fact, this language only keeps the door open for plaintiffs to pursue such causes of action not arising from a breach of the SB-800 standards should there be such supporting allegations. For example, if a plaintiff alleges that a builder breached an “express contractual provision” related to the timing of the completion of the home and close of escrow, and the contract specifies damages in this regard, a plaintiff may have a viable separate cause of action for Breach of Contract for recovery of those damages precisely because that is not an issue expressly dealt with in SB-800 in the performance standards under sections 896 and 897, or in the damage recovery terms under 944. As it stands, the vast majority of complaints are seeking redress for violation of the same primary right; that is, defects specifically outlined in Section 896 and 897 or which result in damages as stated in Section 944.
So, how does a builder defend against a complaint that contains multiple causes of action regarding construction defects for a home sold after January 1, 2003? There are numerous ways to approach this. First and foremost, these superfluous and improper causes of action can be attacked by demurrer seeking dismissal of all causes of action other than the cause of action alleging violation of SB-800. If the the time period within which to file a demurrer has passed already, a motion for judgment on the pleadings can be utilized to attack the improper causes of action in the same way as a demurrer can be used for this purpose.
The limitation to a demurrer or motion for judgment on the pleadings is that the judge is restricted to viewing only the four corners of the pleading when making a ruling. It is typical for plaintiffs’ counsel to cleverly (or one might even say, disingenuously) leave the complaint purposely vague to avoid a successful defense attack on the pleadings by not including the original date the residence was sold. In that instance, a motion for summary adjudication can be used to attack a plaintiff’s complaint. By simply providing evidence that the homes were originally sold after January 1, 2003, the improper causes of action should be subject to dismissal by summary adjudication. If the plaintiff is a subsequent purchaser, the builder still has recourse to enforce the pleading limitations under SB-800. Civil Code section 945 states that “[t]he provisions, standards, rights, and obligations set forth in this title are binding upon all original purchasers and their successors-in-interest.” (Civil Code §, 945.)
Attacking a plaintiff’s complaint to eliminate multiple causes of action can have numerous benefits. The practical result is that a plaintiff will only have one viable cause of action. The advantage is that the SB-800 performance standards include the defined performance standards and shortened statutes of limitations periods with regard to specific issues. Furthermore, as to defects which are not specifically provided for in Civil Code section 896, Civil Code section 897 requires a proof of actual damages. Therefore, a plaintiff must provide evidence of current damages and not simply conditions that may potentially cause damage in the future.
The Appellate Courts have yet to directly address and interpret these SB-800 provisions. The time for that is undoubtedly drawing near. For now, however, plaintiffs will have to find ways to accurately plead construction defect claims within the confines of one cause of action for breach of the performance standards enumerated within the Civil Code.
Printed courtesy of Lorber, Greenfield & Polito, LLP. Mr. Patel can be contacted at spatel@lorberlaw.com and Mr. Verbick at tverbick@lorberlaw.com.
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Fall 2024 Legislative Update:
October 28, 2024 —
Joshua Lane - Ahlers Cressman & Sleight PLLCReview of (a) RCW 60.30.010-020, (b) RCW 49.17.530, (c) RCW 19.95.020, (d) RCW 39.116.005, et seq., (e) RCW 36.70B.080, and (f) RCW 39.12.010 and .13
While much of the focus on the recent legislative updates has been on RCW 39.04.360, a number of other legislative changes may also have significant impacts on Washington’s construction industry. Six of these changes are summarized below.
A. RCW 60.30.010 and .020 (SSB 6108) – Concerning Retainage on Private Construction, Effective June 6, 2024
Last year, ESSB 5528 imposed restrictions and obligations related to retainage and timing of final payment on private (non-public works) projects. It capped retainage at 5%, required prompt payment on final payments, and required owners to accept a retainage bond on private construction projects, excluding single-family residential construction less than 12 units.
This year, SSB 6108 adds suppliers to the statutes (RCW 60.30.010 and 0.020) pertaining to retainage on private construction projects.
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Joshua Lane, Ahlers Cressman & Sleight PLLCMr. Lane may be contacted at
joshua.lane@acslawyers.com
Home Repair Firms Sued for Fraud
September 30, 2011 —
CDJ STAFFThe Illinois Attorney General has filed a lawsuit in Cook County Circuit Court alleging that two connected firms took money from homeowners and then failed to perform the contracted work. One of the three defendants, Chris Bidigare, was an owner of agent of both Fairway Construction and Maintenance Services, LLC, and Rock Construction Management, LLC.
In once case, according to the article on the OakPark Patch, one homeowner provided a $111,000 down payment, only to have the company cancel the job and refuse to return the money. One homeowner was told by Fairway that she should contact their insurance provider. The insurance provider told her that Fairway’s insurance had been cancelled due to non-payment.
The suit seeks to bar the three defendants from working in home repair in Illinois.
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COVID-19 Damages and Time Recovery: Contract Checklist and Analysis
April 27, 2020 —
Patrick J. Greene, Jr. - Peckar & AbramsonThis Alert explores the contract provisions and related rights that are likely to govern time and compensation adjustments for COVID-19 impacts. As parties begin analyzing such rights, this is intended to serve as a useful guide and checklist.
Analysis of relevant contract provisions should start with careful consideration of the specific impacts that have been experienced and the causes of those impacts. The nature of the impact (delay, extra work, disruption, etc.) and the causes of such impacts (owner direction, government order, etc.) will generally govern the analysis and resulting course of action. Listing or creating a matrix of impacts and their causes may be an effective working tool.
Essentially, there are five primary impacts that will likely require critical analysis under the relevant contract provisions, and notably, more than one impact may be present:
a) complete or partial suspension of work,
b) additional work or requirements,
c) added cost,
d) delay, and
e) disruption.
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Patrick J. Greene, Jr., Peckar & AbramsonMr. Greene may be contacted at
pgreene@pecklaw.com
Hunton Insurance Recovery Partner Michael Levine Quoted on Why Courts Must Consider the Science of COVID-19
March 15, 2021 —
Latosha M. Ellis & Matt Revis - Hunton Insurance Recovery BlogOne year into the COVID-19 pandemic, courts have issued hundreds of rulings in COVID-19 business interruption lawsuits, many favoring insurers. Yet those pro-insurer rulings are not based on evidence, much less expert opinion evidence. For insurers, ignorance is bliss.
Despite early numbers in federal courts favoring insurers (state court decisions actually favor policyholders), the year ahead holds promise for policyholders. Fundamental science is the key. Indeed, as researchers continue to broaden their knowledge about COVID-19, it has become increasingly clear that scientific evidence supports coverage for policyholders’ claims.
Reprinted courtesy of
Latosha M. Ellis, Hunton Andrews Kurth and
Matt Revis, Hunton Andrews Kurth
Ms. Ellis may be contacted at lellis@HuntonAK.com
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