Connecticut Crumbling Concrete Cases Not Covered Under "Collapse" Provision in Homeowner's Policy
July 01, 2019 —
Kerianne E. Kane - Saxe Doernberger & Vita, P.C.What do you do when your house falls out from underneath you? Over the last few years, homeowners in northeastern Connecticut have been suing their insurers for denying coverage for claims based on deteriorating foundations in their homes. The lawsuits, which have come to be known as the “crumbling concrete cases,” stem from the use of faulty concrete to pour foundations of approximately 35,000 homes built during the 1980s and 1990s. In order to save their homes, thousands of homeowners have been left with no other choice but to lift their homes off the crumbling foundations, tear out the defective concrete and replace it. The process typically costs between $150,000 to $350,000 per home, and homeowner’s insurers are refusing to cover the costs. As a result, dozens of lawsuits have been filed by Connecticut homeowners in both state and federal court.
Of those cases, three related lawsuits against Allstate Insurance Company were the first to make it to the federal appellate level.1 The Second Circuit Court of Appeals was tasked with deciding one common issue: whether the “collapse” provision in the Allstate homeowner’s policy affords coverage for gradually deteriorating basement walls that remain standing.
The Allstate policies at issue were “all-risk” policies, meaning they covered “sudden and accidental direct physical losses” to residential properties. While “collapse” losses were generally excluded, the policies did provide coverage for a limited class of “sudden and accidental” collapses, including those caused by “hidden decay,” and/or “defective methods or materials used in construction, repair or renovations.” Covered collapses did not include instances of “settling, cracking, shrinking, bulging or expansion.”
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Kerianne E. Kane, Saxe Doernberger & Vita, P.C.Ms. Kane may be contacted at
kek@sdvlaw.com
Appellate Court reverses district court’s finding of alter ego in Sedgwick Properties Development Corporation v. Christopher Hinds (2019WL2865935)
August 13, 2019 —
Frank Ingham - Colorado Construction LitigationDivision V of the Colorado Court of Appeals addressed, for the first time, corporate veil-piercing in the context of a single-member, single-purpose LLC that is managed under a contract by another company. On July 3, 2019, the Court of Appeals reversed the order of the Honorable Ross B. Buchannan, Denver District Court Judge (17CA2102), who held that Plaintiff/Appellee Christopher Hinds satisfied the elements required to pierce the corporate veil of Sedgwick Properties Development Corporation (“Sedgwick”).
Background
Defendant 1950 Logan, LLC (“1950 Logan”) was the developer of a building located at 1950 Logan Street, in Denver, called The Tower on the Park (“Project”), which contained 141 individually owned condominium units. The Project was completed in 2006. 1950 Logan was a single-purpose entity created for the construction of the Project, which is a common practice in the construction industry. After the units were sold in 2006, the LLC wrapped up operations.
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Frank Ingham, Higgins, Hopkins, McLain & Roswell, LLCMr. Ingham may be contacted at
ingham@hhmrlaw.com
What Makes a Great Lawyer?
February 06, 2019 —
Danielle Carter - Bremer Whyte Brown & O'Meara LLPGood lawyers have mastered and understand the analytical and communication skills taught in law school, but great lawyers build upon this foundation by continuing to develop traits and skills for success. Here are five tips to help good lawyers enhance client outcomes and excel within their profession.
Be Objective
Lawyers cannot be effective advocates unless they are first willing to perceive and analyze problems from all angles. Lawyers must discern strong claims from weak; urgent concerns from long-term; and large issues from small. A lawyer who adopts the tone of an emotionally-charged client risks alienating the court and jury.
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Danielle Carter, Bremer Whyte Brown & O'Meara LLPMs. Carter may be contacted at
info@bremerwhyte.com
Before Celebrating the Market Rebound, Builders Need to Read the Fine Print: New Changes in Construction Law Coming Out of the Recession
November 26, 2014 —
Alan H. Packer - Newmeyer & Dillion, LLPAs the homebuilding market continues to improve, many builders find themselves maneuvering familiar roads. That said, important new realities have taken hold since the market collapse. Navigating these changes requires extra thought for practical and legal reasons.
Using Old Designs “Off the Shelf”?
The adoption of the California Building Standards Code in 2010, with an updated schedule to go into effect January 1, may complicate the use of older designs. In addition, some builders are contemplating building on pads constructed five or more years ago, temporarily shelved until market conditions improved. Because of changes in both the applicable Code and due to possible changes in the underlying soils and drainage, these projects require additional scrutiny before starting construction.
Mechanic’s Lien Law Changes
Not too long ago, the California Legislature recently overhauled the entire mechanic’s lien law system in California. New forms, new statutory references, new rules and deadlines are all applicable to projects under construction now. Make sure your documents are up to date, as the use of older forms (particularly for liens, progress payments, and final payments) could create legal problems in the future.
Indemnity Law Changes
Since 2006, California lawmakers have passed four rounds of legislation aimed at limiting indemnity provisions in construction contracts. The laws are aimed at two aspects of indemnity law: “Type 1” indemnity provisions, and liability for the costs of defending a claim.
Type 1 Indemnity. California law previously permitted a builder to obtain “Type 1” indemnity from its subcontractors for all claims. Under a Type 1 provision, if a claim arose out of the trade’s work, the trade was fully responsible to defend and indemnify the builder – even if other trades or the Builder were partially at fault. Some cases even allowed, typically in a commercial context, the builder to obtain Type 1 indemnity even if the trade was not negligent, as long as the claim involved its work.
Defense Obligation. In 2008, California’s highest court issued an opinion in Crawford v. Weather Shield, evaluating an indemnity provision requiring trade (a window supplier/manufacturer) to defend the builder in claims involving allegations of damages arising out of the trade’s work. Because the trade had contractually agreed to defend the builder, the Court held it responsible for the builder’s defense costs -- even though, ultimately, the trade was found
not liable for the actual damages claimed.
Recent legislation after Crawford has dramatically shifted how indemnity provisions will be enforced. Builders may no longer obtain Type 1 indemnity for residential construction defect claims covered by SB800; instead, indemnity is limited to the extent a claim arises out of the trade’s work. Even more recent legislation applied these changes to claims arising out of commercial construction projects. The recent legislation allows the trades “options” on how to defend the builder, with an eye toward requiring that they pay only a “reasonably allocated” portion for the builder’s defense costs.
Smart builders are refining their contract documents to take into account these new limitations on indemnity provisions.
Insurance Market Changes
Due to uncertainties in subcontractor insurance and other factors, many builders have also converted their liability insurance from a “bring your own” model to “wrap-up” insurance, where the builder’s policy also covers their trades. Builders should carefully examine their subcontracts in light of this change as well.
Trade Partner Changes
On a practical level, many trade partners, particularly in the residential sector, have gone out of business or moved on to greener pastures. Builders need to find and negotiate contracts with new trade partners on the fly, and educate them on the builders’ procedures for payment and construction.
SB800 documentation
A decade ago, most builders updated their purchase documents and subcontracts for California’s “Right to Repair Law” (also known as SB800), which set forth functionality standards for construction defects in residential housing, and procedures for resolving claims prior to litigation. Builders ramping up to meet market demand should examine how they implemented SB800 changes in contract documents. Issues to consider:
- Whether to opt out of -- or back into -- statutory procedures.
- Whether to include arbitration or judicial reference provisions to control where claims are litigated after the SB800 process.
- Re-training personnel to preserve SB800 rights, including sign-offs on purchase documentation and recordation of key documents.
- Recent Court of Appeal decisions have complicated the SB800 landscape, potentially opening the door to “common law” tort claims in at least subrogation contexts. Strategic planning at the document stage may be a good way to mitigate this risk as the cases wind their way through the judicial process.
The continuing surge in building activity is a welcome sign for builders who have weathered the storm. Before taking too many steps, builders should consult with counsel, their designers, and their insurance advisors to take into account the new realities of this recovering housing market.
About the Author
Alan H. Packer is a partner in the expanding Walnut Creek, CA, office of the law firm of
Newmeyer & Dillion LLP whose specialties include real estate, insurance, and construction litigation. To reach Alan, call 925.988.3200 or email him at alan.packer@ndlf.com.
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Include Materials Price Escalation Clauses in Construction Clauses
December 26, 2022 —
Robert Alfert Jr. - Construction ExecutiveThe construction sector has been in a bull market for an unprecedented period of time. With the novel impacts from the coronavirus—and all the associated side effects, such as government moratoria, shipping delays and materials availability—we are now in a market of extreme volatility in pricing, inflation and increasing capital finance rates. And yet the construction sector continues to plow forward despite uncertainty, producing critical infrastructure, and much necessary housing, among other projects. The signs are that this trend will continue at least through Q1 of 2023, and likely beyond that, especially when you factor into the equation the many billions of dollars being placed into the market through the Bipartisan Infrastructure Law.
It is not surprising, therefore, that the number one issue in construction contracts in 2022 is how parties handle inflation and materials cost escalations in existing contracts and in the negotiations for new contracts. There is no other issue more heavily negotiated, often disputed and hotly debated in the construction sector today.
Reprinted courtesy of
Robert Alfert Jr., Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Alfert may be contacted at
robert.alfert@nelsonmullins.com
Is Ohio’s Buckeye Lake Dam Safe?
March 12, 2015 —
Beverley BevenFlorez-CDJ STAFFAccording to Columbus Business First, a report by the U.S. Army Corps of Engineers that “assessed the structural integrity of the Buckeye Lake Dam [located in Ohio] and found serious problems that present significant risks to the public.”
Problems arose, allegedly, from “construction of homes [and] pools and patios that have been built into the earthen embankment.” The U.S. Army Corps of Engineers report stated (according to Columbus Business First) “there was a potential for an eight-foot wave of water, mud and debris that would inundate an area as far as Hebron, more than two miles away.”
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Know What’s Under Ground and Make Smarter Planning Decisions
July 29, 2019 —
Aarni Heiskanen - AEC BusinessA Finnish experimentation project developed a framework for classifying ground conditions for building and infrastructure construction. It will help anticipate the future cost of foundation laying during the early stages of city planning.
The ground conditions of an area can have a substantial effect on the costs and the environmental impacts of constructing buildings and infrastructure. At early stage, urban designers don’t typically have enough data to make smart decisions about zoning in that respect as obtaining that data is time-consuming and hence also costly.
Consequently, an experimentation project called MAKU-digi: Making the costs of land use visible devised a method for automating the analysis of ground conditions. I had the pleasure of interviewing Juha Liukas, Lead Advisor at Sitowise, and Hilkka Kallio, Geologist at Geological Survey of Finland (GTK), about the project.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
The Economic Loss Rule: From Where Does the Duty Arise?
January 24, 2022 —
Taylor Hite - Colorado Construction LitigationWhen entering a contract under Colorado law or attempting to enforce your rights when the other party breaches a contract, it is important to know and understand what rights you have and what claims you can bring or defenses you may have. One important consideration is Colorado’s version of the economic loss rule. The Colorado Supreme Court has issued several opinions clarifying the scope of the economic loss rule since it adopted the rule in 2000. The purpose of the economic loss rule is to maintain the boundary between contract law and tort law.
In Colorado, the economic loss rule provides that a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for the breach without an independent duty of care under tort law. In most instances the economic loss rule will not bar intentional tort claims. The question becomes: from where does the duty arise? Is there an independent duty in tort law? Did the duty arise solely from the contract?
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Taylor Hite, Higgins, Hopkins, McLain & Roswell, LLCMs. Hite may be contacted at
Hite@hhmrlaw.com
