SEATTLE WASHINGTON BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Be a Good Neighbor: Techniques to Mitigate the Risk of Claims from Adjacent Landowners

December 07, 2020 — Joshua Levy, Josh Neudorfer & Madeleine Bailey - Construction Executive
In May 2020, a real estate developer performing excavation work in New York was sued by a neighboring property owner for property damage. A court overturned an injunction preventing the developer from continuing excavation work after reviewing a preconstruction assessment that showed the damage to the neighboring property was preexisting—not caused by the excavation (see Feldman v. 3588 Nostrand Ave. LLC as an example) A preconstruction assessment is one of the most important tools in the arsenal of a developer protecting itself from neighbors bringing claims for property damage. Part two of this series will review the benefits of risk mitigation tools recommended for developers such as postconstruction assessments and monitoring during construction. Preconstruction Assessment Overview A preconstruction assessment is a review of a property adjacent to a site where demolition and/or construction activities are to take place. The goal of the assessment is to establish baseline conditions by conducting an inspection of buildings and infrastructure, including identification of existing damage to improvements, so that causation of any alleged damages can be more easily determined. Reprinted courtesy of Joshua Levy, Josh Neudorfer & Madeleine Bailey, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Mr. Levy may be contacted at joshua.levy@huschblackwell.com Mr. Neudorfer may be contacted at jneudorfer@thesigmagroup.com Read the court decision
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Renovation Contractors: Be Careful How You Disclose Your Projects

December 09, 2011 — Derek J. Lindenschmidt, Colorado Construction Litigation

In Palu and Beyer v. Toney, 2011 WL 2560249 (Bankr. D. Colo.), the United States Bankruptcy Court for the District of Colorado determined that a Colorado District Court order granting summary judgment in favor of plaintiff home buyers was binding on the Bankruptcy Court in the defendant contractor’s bankruptcy proceeding based on issue preclusion.

Pertinent to this column is the subject matter of the summary judgment motion: Colorado’s Seller’s Property Disclosure (Form LC-18-5-04). In the underlying state court action, the plaintiff home buyers filed a motion for summary judgment contending that the defendant contractor represented to them, through the Seller’s Property Disclosure, that there were no present or past conditions involving moisture or water problems, roof problems or leaks, skylight problems, or gutter downspout problems.

In granting plaintiffs’ motion, the state court determined that the defendant contractor made these representations on her Seller’s Property Disclosure despite witnessing water leaking from the skylight onto the floor and being aware of repairs to the roof, skylight, and interior drywall prior to the sale of the property.

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Reprinted courtesy of Derek J. Lindenschmidt of Higgins, Hopkins, McClain & Roswell, LLP. Mr. Lindenschmidt can be contacted at lindenschmidt@hhmrlaw.com

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Illinois Favors Finding Construction Defects as an Occurrence

September 23, 2019 — Ashley L. Cooper - SDV Insights
A recent Illinois Appellate Court’s decision in, Acuity Ins. Co. v. 950 West Huron Condominium Owners Association, 2019 IL App (1st) 180743 (2019), strengthens Illinois’ precedent favoring construction defects as an occurrence under a Commercial General Liability (“CGL”) insurance policy. Acuity also broadens an insurance carrier’s obligation to defend its insured against construction defect allegations. In Acuity, the court determined whether claims for construction defect filed against a subcontractor, triggered a duty to defend under a CGL policy. To make its determination, the court focused on the subcontractor’s scope of work. The court notes that a subcontractor normally contracts for a discrete scope of work on a project. Unlike a general contractor, who has control over or contractual obligations for all aspects of the project, a subcontractor does not have those board responsibilities. The court explained that “[f]rom the eyes of the subcontractor, the ‘project’ is limited to the scope of its own work, and the precise nature of any damage that might occur to something outside of that scope is as unknown or unforeseeable as damage to something entirely outside of the construction project.” Accordingly, the court in Acuity held that when a complaint alleges that a subcontractor’s negligence caused damage to a part of the construction project outside of the subcontractor’s scope of work, the allegations are enough to trigger the insurer’s duty to defend the subcontractor under a CGL policy. The court’s decision in Acuity relied on a similar Illinois Appellate Court decision, Milwaukee Mut. Ins. Co. v. J.P. Larsen, Inc., 956 N.E.2d 524 (Ill. App. 2011). In Larsen, the court reached a similar conclusion where a third-party complaint by a general contractor against a subcontractor alleged that the subcontractor’s improper window caulking caused water intrusion and property damage to other parts of the building. The court in Larsen held that because the complaint alleged not only construction defects, but also damage to other property outside the subcontractor’s scope of work, the insurer had a duty to defend the subcontractor. Read the court decision
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Reprinted courtesy of Ashley L. Cooper, Saxe Doernberger & Vita, P.C.
Ms. Cooper may be contacted at alc@sdvlaw.com

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Liquidated Damages: A Dangerous Afterthought

January 15, 2019 — Trevor B. Potter - Construction Executive
Owners and contractors frequently treat liquidated damages provisions as an afterthought, but they deserve to be treated as a key deal term. If a contractor breaches a contract by failing to complete the work in a timely manner, the remedy is typically an agreed upon amount or rate of liquidated damages. Liquidated damages provisions seldom get more than a cursory, “back of the napkin” analysis, or worse, parties will simply plug in a number. This practice is dangerous because liquidated damages typically represent the owner’s sole remedy for delay and, more importantly, they are subject to attack and possible invalidation if certain legal standards are not met. The parties to a construction contract should never agree to an amount of liquidated damages without first attempting to forecast and calculate actual, potential damages. Reprinted courtesy of Trevor B. Potter, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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New York Court Holds Radioactive Materials Exclusion Precludes E&O Coverage for Negligent Phase I Report

October 30, 2018 — Brian Margolies - TLSS Insurance Law Blog
In its recent decision in Merritt Environmental Consulting Corp. v. Great Divide Ins. Co., 2018 U.S. Dist. LEXIS 175527 (E.D.N.Y. Oct. 10, 2018), the United States District Court for the Eastern District of New York had occasion to consider the application of a radioactive materials exclusion in a professional liability policy. Great Divide’s insured, Merritt Environmental, was hired as an environmental consultant by a bank in connection with a mortgage refinance of a property located in Westchester County, New York. Merritt’s responsibility was to prepare a Phase I environmental report concerning the property, which the bank ultimately relied on in agreeing to the refinance. It was later claimed, however, that Merritt’s report failed to document the full extent of the property’s radium and uranium contamination resulting from its use in the Manhattan Project. Merritt was named in two separate lawsuits as a result of its allegedly faulty report, including one by the bank alleging that Merritt negligently prepared its report. Read the court decision
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Reprinted courtesy of Brian Margolies, Traub Lieberman Straus & Shrewsberry LLP
Mr. Margolies may be contacted at bmargolies@tlsslaw.com

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Wage Theft Investigations and Citations in the Construction Industry

October 11, 2017 — Evelin Y. Bailey - California Construction Law Blog
This month we share some cautionary tales for employers in the construction industry. During the past several months the California Labor Commissioner has cited or filed suit against several construction companies. In one investigation, a general contractor was held equally responsible for wages owed by a subcontractor to its employees. The lesson learned from these stories is that now more than ever it is important to have in place proper wage and hour practices and to conduct periodic audits of those practices, including those of your lower tiered contractors, preferably by experienced legal counsel. Read the court decision
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Reprinted courtesy of Evelin Y. Bailey, California Construction Law Blog

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Federal District Court Addresses Material Misrepresentation in First Party Property Damage Claim

August 26, 2024 — James M. Eastham - Traub Lieberman
In Pittsfield Dev. LLC v. Travelers Indem. Co., 2024 U.S. Dist. LEXIS 117530 (N.D. Ill. July 3, 2024), the United States District Court for the Northern District of Illinois addressed an alleged material misrepresentation by an insured during the course of the adjustment of a water loss claim at an insured property. Subsequent to a pipe burst event which caused damage to a number of the floors in the insured building, the insured submitted a claim to Travelers and also submitted, with the assistance of a retained public adjuster, a damage estimate of the damages at the property. Included within the estimate submitted by the insured was a line item for "Lead Paint & Asbestos Removal" with a corresponding dollar amount of $1,140,000. It was this line item which formed the basis of Travelers' claim of misrepresentation. At his deposition, the public adjuster testified that the $1,140,000 figure was an oral estimate received over the phone from an asbestos remediation company. Travelers disputed the testimony and contended that no such estimate was ever provided. For support, Travelers pointed to deposition testimony from a remediation company employee that while rough estimates were occasionally given verbally, the largest over the phone estimate she could recall was in the $20,000-$25,000 range. It was also disputed that the company would ever provide an oral quote of that magnitude sight unseen, especially since the largest project the remediation company had ever completed was less than $250,000. Read the court decision
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Reprinted courtesy of James M. Eastham, Traub Lieberman
Mr. Eastham may be contacted at jeastham@tlsslaw.com

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How Technology Reduces the Risk of Façade Defects

March 20, 2023 — Ori Aphek - Construction Executive
The shell of the building is an onlooker’s first impression and crafts the architectural aesthetic, but it also plays a crucial role in enabling energy efficiency and protecting against the elements. Because façades are in direct contact with the elements, issues with water intrusion are the most common problem and the costliest to remedy, with anywhere from 30% to 70% of lawsuits related to water intrusion, half of it through the façade. Additionally, improperly installed façades pose significant safety risks because unsecured parts can fall and hit people below. All these factors contribute to the façade being one of the most complex and costly aspects of a building to construct and inspect, making up 205 of the total project cost. Installing these systems correctly the first time is the most effective way to mitigate these threats. Teams should utilize data-informed technology that ensures plan adherence, reducing risk and avoiding errors during installation. The Challenges of Façade Installation Façade installation and subsequent inspection are inherently challenging, particularly for high-rise buildings. When performing post-installation verification manually, inspectors must review every element, joint by joint, window by window, stone by stone and brick by brick, which can take months to complete. Inspections of the entire building system are limited by this process, as inspectors can only access one portion of the building façade at a time and often have to inspect from indoors, on balconies or at the ground level, which doesn’t paint a complete picture. As a result, teams typically only perform spot checks on the façade and are rarely inspected to their fullest. This leaves many installation errors and defects, which serve as ticking bombs for future water intrusion or safety hazards. Reprinted courtesy of Ori Aphek, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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