Don't Count On a Housing Slowdown to Improve Affordability
June 13, 2022 —
Conor Sen - BloombergAs mortgage rates continue to rise, all eyes are fixed on the housing market for signs of a potential slowdown. But any slowdown that does materialize won't affect the industry equally because it isn't going to be about fundamental problems with the housing market. Rather, it will be the result of the Federal Reserve intentionally increasing borrowing costs to cool off inflation.
The Fed's efforts are happening in the context of a supply-constrained market where homebuilders have been struggling to complete as many homes as they would like. Any negative impact of rising mortgage rates would be felt disproportionately where affordability problems already are the worst — high-cost coastal markets — and then in materials for the early part of the construction cycle, such as lumber.
Understanding the nature of the housing challenge is important so that you aren’t tempted to compare the situation with past downturns. For now, at least, there is no broad industry downturn as we’ve seen before in oil and gas or the technology sector that would lead to the housing market suffering in places like Houston or the San Francisco Bay Area. Homeowners haven't taken on too much debt, and there's no inventory glut — quite the opposite, in fact — that would lead to a broad-based downturn.
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Conor Sen, Bloomberg
Federal Court Predicts Coverage In Nevada for Damage Caused by Faulty Workmanship
April 03, 2013 —
Tred Eyerly - Insurance Law HawaiiMethodically analyzing the damage claims, the federal district court largely denied the insurers' motions for summary judgment for coverage of construction defect claims. Big-D Constr. Corp. v. Take It for Granite Too, 2013 U.S.Dist. LEXIS 8377 (D. Nev. Jan. 22, 2013).
Big-D was the general contractor for a remodeling project of International Gaming Technologies' (IGT) building. Big-D subcontracted with Take it for Granite Too (TIFGT) to install various tiling and stonework on the interior and exterior of the building.
After TIFGT began its stonework, a stone tile fill from an exterior wall. Over the next several months and after completion of TIFGT's work, two additional stones fell from exterior walls. IGT directed Big-D to replace TIFGT's stonework on the walls. Big-D notified TIFGT and requested that it make immediate repairs. TIFGT did not respond and eventually went out of business.
Experts opined that the cause of the stones falling was efflorescence between the tile and the wall. Efflorescence occurred when the stone started to deteriorate, spall, and become soft. It was caused by water entering through an open joint and getting behind the stone tile.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
Failure to Meet Code Case Remanded to Lower Court for Attorney Fees
May 24, 2011 —
CDJ STAFFJudge Patricia J. Cottrell, ruling on the case Roger Wilkes, et al. v. Shaw Enterprises, LLC, in the Tennessee Court of Appeals, upheld the trial court’s conclusion that “the builder constructed the house in accordance with good building practices even though it was not in strict conformance with the building code.” However, Judge Cottrell directed the lower court to “award to Appellants reasonable attorneys' fees and costs incurred in their first appeal, as determined by the trial court.”
Judge Cottrell cited in her opinion the contract which specified that the house would be constructed “in accordance with good building practices.” However, after the Wilkes discovered water leakage, the inspections revealed that “that Shaw had not installed through-wall flashing and weep holes when the house was built.” The trial court concluded that:
“Separate and apart from the flashing and weep holes, the trial court concluded the Wilkeses were entitled to recover damages for the other defects they proved based on the cost of repair estimates introduced during the first and second trials, which the court adjusted for credibility reasons. Thus, the trial court recalculated the amount the Wilkeses were entitled to recover and concluded they were entitled to $17,721 for the value of repairs for defects in violation of good business practices, and an additional 15%, or $2,658.15, for management, overhead, and profit of a licensed contractor. This resulted in a judgment in the amount of $20,370.15. The trial court awarded the Wilkeses attorneys” fees through the Page 9 first trial in the amount of $5,094.78 and discretionary costs in the amount of $1,500. The total judgment following the second trial totaled $26,973.93.”
In this second appeal, Judge Cottrell concluded, that “the trial court thus did not have the authority to decide the Wilkeses were not entitled to their attorneys” fees and costs incurred in the first appeal.”
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Background Owner of Property Cannot Be Compelled to Arbitrate Construction Defects
November 07, 2012 —
CDJ STAFFIn Truppi v. Pasco Engineering, John Quattro sued Property Management Contractors, Inc. over construction defects in William Truppi’s home. All parties are named in the suit. The California Court of Appeals ruled that Property Management Contractors, Inc. (PMCI) could not compel Mr. Quattro to arbitration.
The background of the case involves two houses built in Encinitas, California by PCMI: one for Mr. Truppi at 560 Neptune, and one for Mr. Quattro at 566 Neptune. Both contracts contained an arbitration provision. Mr. Quattro signed the contract for his residence and Mr. Truppi signed the other. Mr. Quattro then sued PCMI and its principal, William Gregory. Mr. Quattro claimed to be the true contracting party for the 560 Neptune residence and a third party beneficiary of the contract Mr. Truppi signed, and stated that PCMI was aware of this.
PCMI in a demurrer stated that Quattro “had only a ‘prospective beneficial interest in the property upon its eventual sale or lease.’” Mr. Quattro amended his complaint to account for the issues raised by PCMI. The court rejected PCMI’s demurrer to the amended complaint.
Finally, PCMI and Gregory asserted that Quattro was “not the real party in interest” and could not sue. PCMI continues to assert that Quattro lacks standing, but their attorney sent Quattro an e-mail stating, “While my client disputes that you are a party, and that you lack standing to assert the claim, to the extent you do so I believe you are obligated to proceed by way of arbitration.”
The court did not cover the issue of Quattro’s standing in the case, only if he could be compelled to arbitration. The court affirmed the lower court’s finding that Quattro could not be compelled to arbitrate the construction defect claim as neither he nor Gregory signed the contract in an individual capacity. Further, the court noted that PCMI and Gregory “denied the existence of an agreement between themselves and Quattro on the 560 contract,” and cannot compel arbitration on a non-existent agreement. And while non-signatories can, in some situations be compelled to arbitrate, the court found that “these cases are inapplicable because here they seek to have the alleged third party beneficiary (Quattro) compelled by a nonsignatory (Gregory).” The arbitration clause in question “expressly limited its application to persons or entities that signed the 560 contract.”
As Mr. Quattro was not a signatory to that agreement, the court found that he could not be held to its arbitration provision.
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Florida Decides Against Adopting Daubert
January 28, 2019 —
Rahul Gogineni - The Subrogation StrategistIn Delisle v. Crane Co., 2018 Fla. LEXIS 1883, 43 Fla. L. Weekly S 459, the Supreme Court of Florida reaffirmed that the appropriate test for admissibility of an expert opinion about new or novel scientific evidence is the “Frye” test, not the “Daubert” test.
As result of developing mesothelioma, Richard Delisle sued sixteen defendants, including Crane Company (Crane) and R.J. Reynolds, claiming that each exposed him to asbestos, which is a leading cause of mesothelioma. At trial, Crane and R.J. Reynolds sought to preclude the expert opinions of Mr. Delisle’s causation experts. The trial denied the motions and the jury awarded Mr. Delisle $8 million.
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Rahul Gogineni, White and WilliamsMr. Gogineni may be contacted at
goginenir@whiteandwilliams.com
Tejon Ranch Co. Announces Settlement of Litigation Related to the Tejon Ranch Conservation and Land Use Agreement
December 05, 2022 —
Tejon Ranch Co.TEJON RANCH, Calif., Nov. 30, 2022 (GLOBE NEWSWIRE) -- Tejon Ranch Co. is pleased to announce the resolution of a legal dispute involving the Tejon Ranch Conservancy and the signatories to the 2008 Tejon Ranch Conservation and Land Use Agreement (Agreement), namely, Audubon California, Endangered Habitats League, Natural Resources Defense Council, Planning and Conservation League, and the Sierra Club. The dispute stemmed from the signatories' participation in the Antelope Valley Regional Conservation Strategy (AVRCIS), which was subsequently used by the Center for Biological Diversity (CBD) and the California Native Plant Society (CNPS) to oppose Tejon Ranch Co.'s Centennial development.
The 2008 Tejon Ranch Conservation and Land Use Agreement has been widely hailed as a historic conservation achievement in preserving one of California's great natural and working landscapes. Tejon Ranch Co.'s agreement to conserve 90 percent of its landholdings pursuant to the Agreement is a monumental contribution to conservation in California. Tejon Ranch Co. continues to be a leader in balancing the stewardship of the ranch as a natural treasure for California and achieving economic opportunities for its shareholders. The Company demonstrated that leadership with the actions it took to enforce the terms of the Agreement, which led to this legal dispute.
As part of a settlement agreement, the Conservancy and the signatories dismissed with prejudice the lawsuit they filed. They also acknowledge that the AVRCIS does not contain the "best available scientific data" regarding Tejon Ranch Co.'s landholdings, and further, that they will not use, or support the use of, the AVRCIS or any other similar endeavors, to challenge Tejon Ranch Co.'s development projects and/or any Ranch uses consistent with the Agreement.
In turn, Tejon Ranch Co. released from escrow 50% of the advance payments it withheld under the terms of the Agreement. The remaining funds will be released over a three-year period as matching funds to monies raised by the Conservancy as well as others who participate in Conservancy capital raising programs, after which the remaining funds with be released to the Conservancy to further its mission. These funds are the final fulfilment of Tejon Ranch Co.'s full funding obligations under the Agreement, totaling $11,760,000 over the past 14 years, again demonstrating Tejon Ranch Co.'s commitment to fulfilling the implementation of the 2008 Tejon Ranch Conservation and Land Use Agreement.
All parties are glad to put this dispute behind them and move forward in a cooperative manner to achieve the goals envisioned in the historic 2008 Agreement.
About Tejon Ranch Co.
Tejon Ranch Co. (NYSE: TRC) is a diversified real estate development and agribusiness company, whose principal asset is its 270,000-acre land holding located approximately 60 miles north of Los Angeles and 30 miles south of Bakersfield. More information about Tejon Ranch Co. can be found on the Company's website at www.tejonranch.com.
Forward Looking Statements
This press release contains forward-looking statements, including without limitation statements regarding commitments of the parties under the settlement agreement and the achievement of certain goals related to Tejon Ranch Co.'s landholdings. These forward-looking statements are not a guarantee of future results, performance, or achievements, are subject to assumptions and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance, or achievements to differ materially from those implied by such forward-looking statements. These risks, uncertainties and important factors include, but are not limited to, the ability and willingness of the parties to the Settlement Agreement to take the actions (or refrain from taking the actions) specified in the Settlement Agreement, and the risks described in the section entitled "Risk Factors" in our annual and quarterly reports filed with the SEC.
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Disruption: When Did It Start and Where Will It End?
June 25, 2019 —
Brian Gallagher - Construction ExecutiveIf change is the only constant—as was famously observed by a Greek philosopher circa 500 B.C.—then why single out some changes as “disruption”?
Disruption is about more than just technology; it’s about more, even, than the rapid rollout and development of technology in the past couple of decades. The word disruption refers to processes or products that are fundamentally different from what is currently in use and that render unforeseen, large-scale changes. Early discussions of disruption (the term was coined by Harvard Business School professor Clayton M. Christensen in a 1995 Harvard Business Review article) compared incremental change in existing systems, which are usually supported by established corporations, to innovations that start out as something completely fresh, limited in their appeal and flawed in initial iterations.
The construction industry was—and still is—late to adopt most technologies and late in experiencing overall disruption. It also lags behind other industries when it comes to efficiency and productivity. McKinsey reported that construction is one of the “least digitized industries in the world,” despite employing approximately 7% of the world’s working-age population and representing one of the world economy’s largest sectors. Disruption is likely to be fast approaching now, even for the construction industry. But its delay may confer the benefit of allowing construction companies to learn from other industries’ mistakes.
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Brian Gallagher, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Construction-Industry Clients Need Well-Reasoned and Clear Policies on Recording Zoom and Teams Meetings
June 19, 2023 —
Stu Richeson - The Dispute ResolverThe use of Zoom, Microsoft Teams, and similar communication platforms has become increasingly common in the construction industry. While these platforms can greatly facilitate communication between project participants, they potentially create a source of ESI – electronically stored information – that must be understood and considered by the businesses using those systems.
Businesses using Zoom, Microsoft Teams, and similar platforms should have policies in place to address whether and why to record video conferences, how long to preserve any recorded meetings, and retention policies for instant messaging systems. The failure to adopt appropriate policies could prove quite costly in any future litigation or criminal investigation.
Federal Rule of Civil Procedure 37(e) sets out the duty to preserve ESI and provides significant penalties for failing to do so once litigation is anticipated. It is important to note: there is generally no obligation to create ESI, such as recording Zoom or Teams meetings. At the same time, if the ESI is created but litigation is not anticipated, businesses are generally free to establish their own retention policy for that ESI. However, once litigation is anticipated, potential litigants have the obligation to preserve the ESI and, in connection therewith, to conduct a reasonable search for relevant information (to ensure its proper preservation).
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Stu Richeson, PhelpsMr. Richeson may be contacted at
stuart.richeson@phelps.com
