Gilbert’s Plan for Downtown Detroit Has No Room for Jail
October 08, 2014 —
Chris Christoff – BloombergBillionaire Dan Gilbert envisions a vibrant and shiny downtown Detroit, where he owns a casino and about 60 buildings. His urban Eden doesn’t include a jail with 2,000 criminals.
Gilbert is resisting county officials’ plans to restart construction on a half-finished jail mired in cost overruns, criminal investigations and debt. The project, which the Wayne County Commission may revive tomorrow, would replace a complex on land that Gilbert, the 52-year-old founder and chairman of Detroit-based Quicken Loans Inc., offered to buy for $50 million to build a hotel, housing and stores.
The dispute over the jail, which has sat unfinished for 16 months, pits one of Detroit’s most prominent boosters against a county government over how to reinvigorate the city’s heart. Gilbert, whose company is the nation’s largest online retail mortgage lender, has invested $1.3 billion there, betting on the former auto-manufacturing capital’s resurgence after decades of decline that pushed it into a record $18 billion municipal bankruptcy.
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Chris Christoff, BloombergMr. Christoff may be contacted at
cchristoff@bloomberg.net
Renters Trading Size for Frills Fuel U.S. Apartment Boom
July 16, 2014 —
Prashant Gopal – BloombergKatie Graham is living large. Just in a small apartment.
She moved into the new ParkCentral tower in Nashville, Tennessee, for its gym, rooftop deck with heated pool, and the bars and restaurants in the neighborhood below. She didn’t mind the size of the 562-square-foot (52-square-meter) studio.
“I just wanted to be in a good area and wanted good amenities, so I wasn’t looking for something huge,” said Graham, 25, who relocated from her hometown in Jackson, Tennessee, two hours away. “I’m by myself and don’t need all that. The bigger the area, the more furniture you have to buy.”
Young professionals are paying top-market rents to live in new upscale apartment towers sprouting in Nashville and other downtowns across the country. They’re sacrificing living space for a prime urban location and extras such as cooking classes, dog-wash stations and poolside Wi-Fi. Developers, in the biggest U.S. apartment-construction boom in almost a decade, are shrinking the size of units so they can command luxury rates without narrowing the pool of potential tenants.
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Prashant Gopal, BloombergMr. Gopal may be contacted at
pgopal2@bloomberg.net
Grupo Mexico Spill Sparks Public Scrutiny of $150 Million Mop-Up
September 17, 2014 —
Nacha Cattan – BloombergMexico is sending federal officials to Sonora state to oversee Grupo Mexico SAB (GMEXICOB)’s $150 million cleanup of a copper mine spill that the government says contaminated the water supplies of at least 24,000 people.
The special commission of environmental and agriculture ministry officials will monitor the company’s pledge to clean Mexico’s worst mining spill, which occurred Aug. 6 in the northern state that borders Arizona.
Grupo Mexico said last week it would create a $150 million trust after its Buenavista del Cobre operation dumped 11 million gallons of copper sulfate solution into two Sonora rivers. Industrias Bachoco SAB de CV and Ford Motor Co. (F) operate plants in Hermosillo, south of the contaminated waterways.
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Nacha Cattan, BloombergMs. Cattan may be contacted at
ncattan@bloomberg.net
You Can Now Build a Multi-Million Dollar Home via Your iPad
January 07, 2015 —
Sara Pepitone – BloombergThere are apps for real estate sales, apps for paint color, apps for arranging furniture, and apps for making the best use of natural light. But until now, there was no app for that most fundamental process of homesteading: creating a new one from scratch. In the coming weeks Al Hamra Real Estate Development will unveil its all-inclusive Home Builder app.
All you need is an iPad and five million UAE Dirham ($1.36 million), to start. Swipe and spend has never been so elite.
Designed by A++ Architecture Design and Communication, Home Builder starts with property acquisition and ends with finishes and furnishings. Well, to be precise, it ends with a form sent to a sales person to calculate a price to purchase. This means less time and fewer people and permits in your way, plus a more gratifying (literal) hands-on experience in the process.
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Sara Pepitone, Bloomberg
Alleged Defective Water Pump Leads to 900K in Damages
January 13, 2014 —
CDJ STAFFA lawsuit filed by Liberty Mutual on behalf of their client, Turner Construction, alleges that defects in the installation of a water pump lead to $900,000 in costs for a building in New Jersey. They are seeking compensation from Triangle Plumbing. Law360 quotes the complaint, which states “as a result of Triangle’s failure to provide a complete, functional plumbing system at the property as required by the subcontract agreement, Triangle has breached the specific scope of work provision of the subcontract agreement.”
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Green Buildings Could Lead to Liabilities
March 28, 2012 —
CDJ STAFFAttempts to build “green,” reducing energy costs and increasing the use of sustainable building materials, may lead to more lawsuits, according to a report issued by the British Columbia Construction Association. The report warned those who were going to build green look into the implications. The report looked at the result of green building practices and requirements adopted in the United States.
The report warns that “the use of novel, less harmful building material or new construction techniques may give rise to liability due to: contractor inexperience with installation; lack of long-term evaluation of green materials; lack of understanding of how new building materials may impact existing traditional building systems; or warranties provided unintentionally about the durability or effectiveness of unproven materials or techniques.”
Manley McLachlan, president of the BCAA noted that they are aware of “legal action around the performance of the buildings,” noting that while fast-growing trees help toward LEED certification, their wood is more prone to mold. He also felt that low-VOC paints needed more testing to prove their durability as exterior finishes.
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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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Insurer Not Entitled to Summary Judgment on Construction Defect, Bad Faith Claims
October 07, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe federal district court denied the insurer's motion for summary judgment seeking to establish there was no coverage for construction defect claims and for bad faith. Country Mut. Ins. Co. v. AAA Constr. LLC, 2019 U.S. Dist. LEXIS 115935 (W.D. Okla. July 12, 2019).
Jeffrey and Tammy Shaver entered two contracts with AAA Construction for the construction of a garage and of a barn on their property. After construction was completed, the Shavers sued AAA Construction for building the garage over two high-pressure gas pipelines and the utility easements associated with them. They alleged AAA Construction was negligent for constructing over a working utility line. AAA Construction's insurer, Country Mutual Insurance Company (CMIC) denied coverage because the alleged faulty workmanship of AAA Construction did not constitute an "occurrence" under the policy.
CMIC sued AAA Construction for a declaratory judgment that it had no duty to defend or indemnify. CMIC moved for summary judgment.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
