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History of Defects Leads to Punitive Damages for Bankrupt Developer

March 01, 2012 — CDJ STAFF

The South Carolina Court of Appeals has ruled that evidence of construction defects at a developer’s other projects were admissible in a construction defect lawsuit. They issued their ruling on Magnolia North Property Owners’ Association v. Heritage Communities, Inc. on February 15, 2012.

Magnolia North is a condominium complex in South Carolina. The initial builder, Heritage Communities, had not completed construction when they filed for bankruptcy protection under Chapter 11. The remaining four buildings were completed by another contractor. The Property Owners’ Association subsequently sued Heritage Communities, Inc. (HCI) alleging defects. The POA also sued Heritage Magnolia North, and the general contractor, BuildStar.

The trial court ruled that all three entities were in fact one. On appeal, the defendants claimed that the trial court improperly amalgamated the defendants. The appeals court noted, however, that “all these corporations share officers, directors, office space, and a phone number with HCI.” Until Heritage Communities turned over control of the POA to the actual homeowners, all of the POA’s officers were officers of HCI. The appeals court concluded that “the trial court’s ruling that Appellants’ entities were amalgamated is supported by the law and the evidence.”

Heritage also claimed that the trial court should not have allowed the plaintiffs to produce evidence of construction defects at other Heritage properties. Heritage argued that the evidence was a violation of the South Carolina Rules of Evidence. The court cited a South Carolina Supreme Court case which made an exception for “facts showing the other acts were substantially similar to the event at issue.” The court noted that the defects introduced by the plaintiffs were “virtually identical across all developments.” This included identical use of the same products from project to project. Further, these were used to demonstrate that “HCI was aware of water issues in the other projects as early as 1998, before construction on Magnolia North had begun.”

The trial case ended with a directed verdict. Heritage charged that the jury should have determined whether the alleged defects existed. The appeals court noted that there was “overwhelming evidence” that Heritage failed “to meet the industry standard of care.” Heritage did not dispute the existence of the damages during the trial, they “merely contested the extent.”

Further, Heritage claimed in its appeal that the case should have been rejected due to the three-year statute of limitations. They note that the first meeting of the POA was on March 8, 2000, yet the suit was not filed until May 28, 2003, just over three years. The court noted that here the statute of limitation must be tolled, as Heritage controlled the POA until September 9, 2002. The owner-controlled POA filed suit “approximately eight months after assuming control.”

The court also applied equitable estoppel to the statute of limitations. During the time in which Heritage controlled the board, Heritage “assured the unit owners the construction defects would be repaired, and, as a result, the owners were justified in relying on those assurances.” Since “a reasonable owner could have believed that it would be counter-productive to file suit,” the court found that also prevented Heritage from invoking the statute of limitations. In the end, the appeals court concluded that the even apart from equitable tolling and equitable estoppel, the statute of limitations could not have started until the unit owners took control of the board in September, 2002.

Heritage also contested the jury’s awarding of damages, asserting that “the POA failed to establish its damages as to any of its claims.” Noting that damages are determined “with reasonable certainty or accuracy,” and that “proof with mathematical certainty of the amount of loss or damage is not required,” the appeals court found a “sufficiently reasonable basis of computation of damages to support the trial court’s submission of damages to the jury.” Heritage also claimed that the POA did not show that the damage existed at the time of the transfer of control. The court rejected this claim as well.

Finally, Heritage argued that punitive damages were improperly applied for two reasons: that “the award of punitive damages has no deterrent effect because Appellants went out of business prior to the commencement of the litigation” and that Heritages has “no ability to pay punitive damages.” The punitive damages were upheld, as the relevant earlier decision includes “defendant’s degree of culpability,” “defendants awareness or concealment,” “existence of similar past conduct,” and “likelihood of deterring the defendant or others from similar conduct.”

The appeals court rejected all of the claims made by Heritage, fully upholding the decision of the trial court.

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Illinois Earns C- on its 2022 Infrastructure Report Card while Making Strides on Roads and Transit

May 02, 2022 — American Society of Civil Engineers
Chicago, Ill. – The Illinois Section of the American Society of Civil Engineers (ASCE) today revealed its 2022 Infrastructure Report Card, giving the state an overall grade of C-. Illinois' civil engineers studied eleven infrastructure categories. Of those eleven, six categories are in mediocre condition, and five categories are in poor condition. The committee representing more than 2,700 civil engineers across Illinois collected and analyzed data and based its grades on eight criteria, including condition, funding, public safety and resilience. As a major hub for our nation's infrastructure, Illinois has taken considerable steps to improving its transportation and infrastructure networks and several major categories showed improvements – notably transit and roads. To view the report card and all eleven categories evaluated, visit https://infrastructurereportcard.org/state-item/Illinois/. ABOUT THE ILLINOIS SECTION OF THE AMERICAN SOCIETY OF CIVIL ENGINEERS Civil engineering experts in their respective fields from the Illinois Section of ASCE, with assistance from the Central Illinois Section, Quad Cities Section, and the St. Louis Section, prepared The Report Card for Illinois' Infrastructure. The Report Card is created to educate and advise our elected officials and citizens on the condition of our State's infrastructure using sound engineering evaluation criteria and to provide recommendations on how to raise the grade. Since 1915, the Illinois Section has represented Civil Engineers in America's engineering hub and the organization recently celebrated its Centennial Anniversary. ASCE provides a platform for our members to mentor, learn and teach, which enables us to serve as stewards of infrastructure in our state, nation and throughout the world. Read the court decision
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Leaning San Francisco Tower Seen Sinking From Space

November 30, 2016 — The Associated Press (Jocelyn Gecker) – Bloomberg
San Francisco (AP) -- Engineers in San Francisco have tunneled underground to try and understand the sinking of the 58-story Millennium Tower. Now comes an analysis from space. The European Space Agency has released detailed data from satellite imagery that shows the skyscraper in San Francisco's financial district is continuing to sink at a steady rate — and perhaps faster than previously known. The luxury high-rise that opened its doors in 2009 has been dubbed the Leaning Tower of San Francisco. It has sunk about 16 inches into landfill and is tilting several inches to the northwest. A dispute over the building's construction in the seismically active city has spurred numerous lawsuits involving the developer, the city and owners of its multimillion dollar apartments. Engineers have estimated the building is sinking at a rate of about 1-inch per year. The Sentinel-1 twin satellites show almost double that rate based on data collected from April 2015 to September 2016. Read the court decision
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Building Safety Month Just Around the Corner

May 07, 2015 — Beverley BevenFlorez-CDJ STAFF
For every week in May, the International Code Council (ICC) will spotlight a specific area of building safety. The theme this year is “Resisient Communities Start with Building Codes.” ICC’s first week focus is “Don’t Get Burned – Build to Code,” and the second week the focus changes to “Bounce Back Faster from Disaster – Build to Code.” Next, the ICC will present “Water Safe, Water Smart – Build to Code,” and conclude with “$save Energy – Build to Code.” Read the court decision
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A Court-Side Seat: A Poultry Defense, a Houston Highway and a CERCLA Consent Decree that Won’t Budge

March 22, 2021 — Anthony B. Cavender - Gravel2Gavel
February saw the usual array of significant environmental decisions and federal regulatory notices. THE FEDERAL COURTS U.S. Court of Appeals for the District of Columbia Luminant Generation v. EPA The court will be grappling with a difficult venue case governed by the Clean Air Act (42 USC Section 7607(b)). In 2013, the U.S. Court of Appeals for the Fifth Circuit decided the case of Luminant Generation v. EPA (714 F. 3d 841), in which the court upheld the affirmative defenses that were made part of the Texas State Implementation Plan (SIP) and which applied to certain unpermitted emissions from regulated sources during periods of startup, shutdown or malfunction. These defenses were challenged in the Fifth Circuit and were rejected. On the national stage, EPA has been involved in litigation over these affirmative defenses and recently excluded from a “SIP Call” the Texas program, which was carved out. This EPA decision is being challenged in the DC Circuit (see Case number 20-1115),with the State of Texas arguing as an intervenor that any issues involving Texas belong in the Fifth Circuit, and not in the DC Circuit because the Act allows regional issues to be decided in the regional federal courts. Read the court decision
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Reprinted courtesy of Anthony B. Cavender, Pillsbury
Mr. Cavender may be contacted at anthony.cavender@pillsburylaw.com

Scott Saylin Expands Employment Litigation and Insurance Litigation Team at Payne & Fears

September 23, 2024 — Payne & Fears LLP
Scott Saylin has joined Payne & Fears LLP as a Law Clerk in the firm’s Employment Litigation Group and Insurance Litigation Group. Before his time at Payne & Fears, Scott served as a law clerk for Cascadia Healthcare in Boise, Idaho. “We are pleased to welcome Scott Saylin back to the firm. He was with us as a summer associate before completing his final year of law school at George Washington University,” said Amy Patton, the group’s co-chair. “Scott has fantastic potential to develop into an excellent litigator and will be an asset to our team.” Get to Know Scott What activities do you enjoy outside of work? Pickle ball, long walks, beach trips, cooking, watching the Lakers games, and playing the guitar & piano. Read the court decision
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Pushing the Edge: Crews Carve Dam Out of Remote Turkish Mountains

July 04, 2023 — Pam McFarland - Engineering News-Record
Rugged Construction | Part Two of an ENR Series On a cold, gray day in late March, the mountains on the drive to the Yusufeli hydroelectric dam project site in northeastern Turkey seem ominous. With the highest of these rising more than 3,000 meters above sea level—some of them snow-capped—the jagged rock formations look stark and imposing, the type only a trained professional should attempt to cross. Reprinted courtesy of Pam McFarland, Engineering News-Record Ms. McFarland may be contacted at mcfarlandp@enr.com Read the full story... Read the court decision
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BKV Barnett, LLC v. Electric Drilling Technologies, LLC: Analyzing the Impact of Colorado’s Anti-Indemnification Statute

December 23, 2024 — David M. McLain – Colorado Construction Litigation Blog
In the recent case of BKV Barnett, LLC v. Electric Drilling Technologies, LLC, the United States District Court for the District of Colorado dealt with significant legal issues concerning indemnification and insurance obligations in construction agreements. The ruling, handed down on September 26, 2024, serves as a crucial reminder of the limitations imposed by Colorado’s Anti-Indemnification Statute, C.R.S. § 13-21-111.5, and its implications for contracts in the construction industry. This case arose from a Master Service Contract (“MSC”) between BKV Barnett, LLC (“BKV”) and Electric Drilling Technologies, LLC (“EDT”), in which EDT provided electrical services and equipment to an oil and gas lease wellsite in Texas. Following a lightning strike in early 2022 that damaged electrical infrastructure at the site, EDT dispatched Turn Key Utility Construction to repair the damage. During the repair work, an arc flash occurred, causing significant injuries to one of Turn Key’s employees, Matthew Lara, leading to a personal injury lawsuit filed by Lara in Dallas County, Texas. BKV sought indemnification, defense, and additional insured status from EDT under the terms of their MSC, which EDT contested. Read the court decision
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Reprinted courtesy of David McLain, Higgins, Hopkins, McLain & Roswell
Mr. McLain may be contacted at mclain@hhmrlaw.com

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