New York Bars Developers from Selling Condos due to CD Fraud Case
October 15, 2014 —
Beverley BevenFlorez-CDJ STAFFAccording to GlobeSt, New York “Attorney General Eric T. Schneiderman has announced a settlement agreement that bars developers Joseph Scarpinito and Shiraz Sanjana—and five affiliated entities they own and operate—from offering or selling securities, including condo and coop sales, in or from New York State.”
The settlement is in “result of an investigation by the Attorney General’s real estate finance bureau into allegations of fraud by the developers of the Mirada, an eight-story Harlem condominium.” GlobeSt also stated that the agreement “provides for binding arbitration with the condo purchasers for alleged construction defects, and requires the developers to pay $500,000 in penalties and fines to New York State.”
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Texas Supreme Court: Breach of Contract Not Required to Prevail on Statutory Bad Faith Claim
June 06, 2018 —
Bethany L. Barrese - Saxe Doernberger & Vita, P.C.In USAA Texas Lloyds Company v. Menchaca, the Supreme Court of Texas clarified long-standing confusion regarding whether damages for bad faith are recoverable in the absence of a breach of contract under Texas law. The Menchaca case takes an in-depth dive into decades’ worth of Texas precedent and concludes that, under certain circumstances, an insured can recover policy benefits as damages for bad faith without finding that the insurer was in breach of contract.
The story of this case begins with Hurricane Ike in September 2008. Homeowner Gail Menchaca contacted her homeowner’s insurance company, USAA Texas Llloyds Company (“USAA”) to report that the storm had damaged her home. USAA sent an adjuster to investigate the claim, and USAA determined that although the policy covered some of the damage, no benefits would be paid under the policy because the repair estimate did not exceed the policy deductible. Five months later, at Ms. Menchaca’s request, another USAA adjuster inspected the property and reached the same conclusion.
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Bethany L. Barrese, Saxe Doernberger & Vita, P.C.Ms. Barrese may be contacted at
blb@sdvlaw.com
California Commission Recommends Switching To Fault-Based Wildfire Liability Standard for Public Utilities
June 25, 2019 —
Lawrence J. Bracken II, Sergio F. Oehninger, Paul T. Moura & Alexander D. Russo - Hunton Insurance Recovery BlogA state-appointed panel advised last week that California should change the standard for determining whether utilities are liable for wildfires. Under the current system, California’s Public Utilities Code § 2106 provides a private right of action by any person or entity that has suffered loss, damages, or injury caused by prohibited or unlawful acts of a public utility. Relying on this statute, property owners have asserted wildfire-related claims directly against allegedly culpable electric utility companies. Public utilities in California also face inverse condemnation claims arising out of wildfires. Under inverse condemnation, where private property is taken for public use and later damaged by the state or its agency, the state or agency is strictly liable to the property owner.
In an effort to reduce the financial impact on public utilities resulting from wildfires—as exemplified by Pacific Gas and Electric Co.’s recent filing for Chapter 11 protection in January—the California Commission on Catastrophic Wildfire Cost and Recovery recommended changing the current laws to reflect a fault-based standard. According to the panel, this change would reduce the risk of bankruptcy and decrease the cost of capital. The commission also recommended establishing a wildfire victims’ fund and setting up an electric utility wildfire board to handle the prevention and mitigation of utility-related wildfires.
Reprinted courtesy of Hunton Andrews Kurth attorneys
Lawrence J. Bracken II,
Sergio F. Oehninger,
Paul T. Moura and
Alexander D. Russo
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Oehninger may be contacted at soehninger@HuntonAK.com
Mr. Paul may be contacted at pmoura@HuntonAK.com
Mr. Alexander may be contacted at arusso@HuntonAK.com
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What to Look for in Subcontractor Warranty Endorsements
February 03, 2020 —
David M. McLain – Colorado Construction LitigationWith increasing frequency in the construction defect cases we defend, we are seeing commercial general liability insurance policies with “subcontractor warranty” endorsements. Also known as contractor or subcontractor special conditions, these endorsements could have severe and negative consequences for builders that do not comply with their requirements. In researching for this article, I reviewed six different endorsements used by six different carriers, all of which contained some or all of the following requirements:
- The builder must have signed subcontract agreements with its subcontractors that require subcontractors to hold harmless, i.e., defend and indemnify, the builder for “bodily injury” or “property damage” claims caused by their negligence.
- The subcontractors must maintain their own insurance with limits equal to or greater than the limits in the builder’s own policy, with limits of at least $1 million per occurrence.
- The subcontractors’ insurance must not exclude the work being performed for the builder, e.g., the excavator’s policy cannot exclude earth movement claims, the subcontractor’s policy cannot exclude residential construction.
- The subcontractors must maintain their own workers’ compensation and/or employer’s liability insurance.
- The subcontractors must provide the builder with an endorsement or a certificate of insurance indicating that the builder has been added to the subcontractors’ insurance as an additional insured.
- The subcontractors must provide the builder with an endorsement or a certificate of insurance indicating that their insurance carriers have agreed to provide waivers of subrogation in favor of the builder.
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David McLain, Higgins, Hopkins, McLain & RoswellMr. McLain may be contacted at
mclain@hhmrlaw.com
No Duty to Defend Construction Defect Claims
May 16, 2022 —
Tred R. Eyerly - Insurance Law HawaiiThe court determined the insurer had no duty to defend construction defect claims asserted against the insured. Pa. Nat'l Mut. Cas. Ins. Co. v. River City Roofing, 2022 U.S. Dist. LEXIS 38226 (E.D. Va. March 3, 2022).
Branch Builds, Inc, was the general contractor for Shock Valley View Genesis, LLC ("Genesis") in charge of constructing apartments. River City Roofing was a subcontractor for all roofing, aluminum and composition siding at the project. River City contracted and warranted its materials and work, agreed to indemnify Branch, and agreed to make Branch an additional insured under its CGL policy.
After completion of the project, Genesis reported defects in the construction. The roof, aluminum and composition siding allowed water intrusion and property damage to the apartments. Branch repaired and compensated Genesis for all damage done to the apartments. Branch then sued River City and another subcontractor and demanded judgment of $3,000,000.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Water Drainage Case Lacks Standing
March 28, 2012 —
CDJ STAFFThe Texas Court of Appeals has ruled in the case La Tierra de Simmons Familia Ltd. V. Main Event Entertainment, LP. The trial court had found for Main Event. On appeal, the court threw out some of the grounds on which the trial court had reached its decision.
The case involved two commercial lots in northwest Austin, Texas. The uphill tract (Phase III of the Anderson Arbor development) diverts its runoff onto the lower tract (the “Ballard tract”). The owners of the Ballard tract claim that “the drainage system was designed or constructed in a manner that has damaged and continues to damage the Ballard tract.”
Both tracts have undergone changes of ownership since the construction of the drainage system in 2004. At the time the drainage system was constructed, the parcel was owned by Sears Roebuck and Co. Sears later sold the property. Main Event Entertainment is the current tenant. Likewise, the Ballard tract was previously owned by the Ballard Estate which sold the property to La Tierra on an “as is” basis in 2007.
After La Tierra bought the Ballard tract, La Tierra’s engineer “witnessed and videotaped what he described as ‘flooding’ on the Ballard tract caused by storm water discharge from the Anderson Arbor drainage system during a rainfall event.” La Tierra determined that an adequate drainage system would cost about $204,000. Development plans were put on hold.
La Tierra sued Main Event and various other parties associated with the uphill tract, seeking “actual damages for (1) decrease and loss in rental income due to delay in obtaining the development permit, (2) interest on carrying costs during that time period, (3) the cost to build a water conveyance system on the Ballard tract, (4) engineering fees incurred to redesign the water conveyance system, (5) unspecified out-of-pocket real estate expenses, and (6) property devaluation occasioned by the need to construct an expensive water conveyance system.” The trial court never reached these claims, ruling instead that La Tierra lacked standing, that its claims were barred under the statute of limitations, and that there was no evidence of damage.
La Tierra appealed, arguing that “(1) the summary-judgment evidence does not conclusively establish that property damage claims accrued or were discovered prior to September 11, 2007, which is within the limitations period and was after La Tierra purchased the property; (2) even if the property was damaged before La Tierra acquired ownership of the Ballard tract, standing exists based on the assignments of interest from the Ballard Estate heirs, and the discovery rule tolls limitations until the injury was discovered on September 11, 2007; (3) limitations does not bar La Tierra's request for injunctive relief; (4) La Tierra's water code claim against Main Event and M.E.E.P. is viable based on their control over the drainage system, which makes them necessary and indispensable parties for injunctive relief; (5) La Tierra presented more than a scintilla of evidence to raise a fact issue on damages, causation, and other essential elements of its causes of action; and (6) the trial court abused its discretion when it sustained the defendants' objections to La Tierra's summary-judgment evidence.”
The appeals court concluded that La Tierra’s second claim was irrelevant to standing, as La Tierra “obtained assignments from the Ballard Estate heirs ? nearly one year after the lawsuit was initially filed.” Nor did the court accept their first point. The water system had been operating unaltered since January, 2004, with monthly maintenance and inspection to maintain its designed operation. Further, a feasibility report La Tierra received stated that “over sixteen acres drain into those ponds, and thus onto this site.” The court noted that “the underlying facts giving rise to a cause of action were known before La Tierra acquired ownership of the Ballard tract.”
The court concluded that the drainage issue is a permanent injury, but that it “accrued before La Tierra acquired an ownership interest in the property.” As La Tierra has standing, the appeals court ruled that it was improper for the trial court to rule on the issues. The appeals court dismissed the questions of whether the case was barred under the statute of limitation and also the question of whether or not La Tierra had damages.
As the issue of standing would not allow La Tierra to bring the suit, the appeals court found for the defendants, dismissing the case for this single reason, and otherwise affirming the ruling of the lower court.
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Home Numbers Remain Small While Homes Get Bigger
June 28, 2013 —
CDJ STAFFCatherine Rampell reports in the New York Times that while the number of single-family homes built in 2012 was still at the very bottom of the range, since the government starting recording this data in 1973, the medium size for these homes is at its largest ever. According to data collected by the Census Bureau, these homes also have more bedrooms and bathrooms than previously. Of all homes built in 2012, forty-one percent had four or more bedrooms and thirty percent had three or more bathrooms. Both of these were the highest percentages in those categories.
Meanwhile, the size of newly-built rental units declined in 2012. While still larger than the average rental unit built in 1999 (the earliest date given in the article), there has been little change over the last decade. During the same period, the size of sale units in multi-family buildings did show an increase.
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Warranty Reform Legislation for Condominiums – Unfair Practices used by Developers and Builders to avoid Warranty Responsibility for Construction Defects in Newly Constructed Condominiums
June 09, 2016 —
Nicholas D. Cowie – Maryland Condo Construction Defect Law BlogThis article pertains to needed condominium construction defect warranty reform legislation that the Maryland Legislature has been reluctant to enact into law. Below is an explanation of the legislation and a list of practical steps CAI members can take to support the legislation during the upcoming 2017 legislative session.
Background
The warranty reform legislation was unsuccessfully introduced during the 2016 legislative session as “Senate Bill 250” (“SB 250”) and “House Bill 1170” (“HB 1170”). Both bills were identical, one being filed in the Senate and the other in the House of Delegates.
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Nicholas D. Cowie, Cowie & Mott, P.A.Mr. Cowie may be contacted at
ndc@cowiemott.com
