Seattle Condos, Close to Waterfront, Construction Defects Included
February 11, 2013 —
CDJ STAFFThere's a cluster of eight condominium projects in Seattle, some within easy walking distance of each other, that are either in construction defect lawsuits, arbitration, or mediation. Jeff Reynolds, contributing a Seattle PI.com reader blog, notes that as Seattle condo projects have neared the end of the four-year warranty period, condo boards are being targeted by attorneys. Reynolds writes that "once [the attorneys] are hired by the associations, they retain specialists that test for any and all construction defects with the building envelope."
The problem that Reynolds sees is that that "major lending institutions stay away from condos with lawsuits." And so homeowners dealing with construction defects have apartments they can't sell to anyone who might want to use financing. This tightens Seattle's already limited inventory, leading to both frustrated sellers and frustrated buyers.
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Bill Proposes First-Ever Federal Workforce Housing Tax Credit for Middle-Class Housing
March 04, 2024 —
Emily K. Bias & Brittany Griffith - Gravel2Gavel Construction & Real Estate Law BlogLegislation was recently introduced to the U.S. Senate and House of Representatives proposing the creation of the first-ever Workforce Housing Tax Credit (WHTC) for middle-income housing developments.
Similar to the existing Low-Income Housing Tax Credit (LIHTC), the WHTC would provide additional federal income tax credits to housing development projects for tenants making between 60% and 100% of Area Median Income (AMI). The allocation of WHTC would be based on a competitive bid process and awarded to developments over a 15-year credit period (as opposed to a 10-year credit period for LIHTC). Developments receiving allocations of WHTC will be subject to affordability requirements during the 15-year credit period and subsequent extended use period of at least 15 years.
Reprinted courtesy of
Emily K. Bias, Pillsbury and
Brittany Griffith, Pillsbury
Ms. Bias may be contacted at emily.bias@pillsburylaw.com
Ms. Griffith may be contacted at brittany.griffith@pillsburylaw.com
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Toll Brothers Faces Construction Defect Lawsuit in New Jersey
October 10, 2013 —
CDJ STAFFToll Brothers is facing a construction defect lawsuit from homeowners in West Windsor, New Jersey. The homebuilding company had a lengthy battle with the town over its intention to build the community they named the Estates at Princeton Junction, now its residents are alleging defects in the construction of their homes and the common infrastructure. The community is close to Princeton University, parts of which are also in West Windsor.
Toll Brothers states that they are “working very closely with the HOA Board to investigate the claims that have been alleged in the lawsuit.” Andrea Marushack, the spokesperson for Toll Brothers would not elaborate due to the lawsuit. Among the allegations are claims that the townhomes in the development are prone to water intrusion. The complaint also claims that there were defects in the construction of sidewalks, roads, and other common features.
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Beth Cook Expands Insurance Litigation Team at Payne & Fears
September 30, 2024 —
Beth A. Cook - Payne & FearsBeth Cook has joined Payne & Fears LLP as Counsel in the firm’s Insurance Litigation Group. With 18 years of legal experience, Beth brings a wealth of knowledge to her practice, focusing on insurance coverage and litigation.
“We are excited to welcome Beth to P&F! She brings a great deal of experience to our Insurance Litigation Group as we continue to grow the practice group,” said Sarah Odia, the group’s co-chair. “We look forward to working with Beth and welcome her fresh perspectives.”
Get to Know Beth
What activities do you enjoy outside of work?
Travel, sporting events, movies, craft breweries, and wineries.
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Beth A. Cook, Payne & FearsMs. Cook may be contacted at
bac@paynefears.com
First-Party Statutory Bad Faith – 60 Days to Cure Means 60 Days to Cure
October 19, 2020 —
David Adelstein - Florida Construction Legal UpdatesIn a first party bad-faith lawsuit, such as a bad faith claim against an insured’s property insurer, there are three requirements that must be met before the bad faith lawsuit is filed: “‘(1) determination of the insurer’s liability for coverage; (2) determination of the extent of the insured’s damages; and (3) the required notice must be filed under section 624.155(3)(a).’” Fortune v. First Protective Ins. Co., 45 Fla. L. Weekly D2092a (Fla. 2d DCA 2020) (citation omitted).
The third requirement is for the insured to file a Civil Remedy Notice (known as a “CRN”) as a condition precedent to filing a statutory bad faith lawsuit giving the insurer 60 days’ notice of the bad faith violation and to cure the violation, i.e., pay the claim if the violation is payment.
A very common bad faith payment violation is the assertion that the insurer did NOT attempt “in good faith to settle claims when, under the circumstances, it could and should have done so, had it acted fairly and honestly towards its insured and with due regard for his or her interests.” Fla. Stat. s. 624.155(1)(b)(1).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Georgia Supreme Court Determines Damage to "Other Property" Not Necessary for Finding Occurrence
July 31, 2013 —
Tred Eyerly, Insurance Law HawaiiThe Georgia Supreme Court has determined that an "occurrence" may arise under a CGL policy even if "other property" is not damaged. Taylor Morrison Servs. v. HDI-Gerling Am. Ins. Co., 2013 Ga. LEXIS 618 (Ga. July 12, 2013).
Taylor Morrison, the insured, was a homebuilder. It was sued in a class action by more than 400 homeowners in California alleging that the concrete foundations of their homes were improperly constructed. This led to water intrusion, cracks in the floors and driveways, and warped and buckled flooring.
At first, HDI-Gerling defended under a reservation of rights. Subsequently, however, HDI-Gerling sued Taylor Morrison in federal district court in Georgia, seeking a declaratory judgment that there was no coverage. The district court granted summary judgment to HDI-Gerling after determining that there was no "occurrence" when the only "property damage" alleged was damage to work of the insured. Georgia law was applied to the dispute.
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Tred EyerlyTred Eyerly can be contacted at
te@hawaiilawyer.com
AB 1701 Has Passed – Developers and General Contractors Are Now Required to Double Pay for Labor Due to Their Subcontractors’ Failure to Pay
October 19, 2017 —
Clayton T. Tanaka – Newmeyer & Dillion LLPOn September 13, 2017, the California State Legislators passed a bill that would make developers and general contractors responsible for subcontractors who fail to pay their employees even though they already paid the subcontractors for the work. Assembly Bill 1701 (AB 1701), sponsored by unions who represent carpenters and other building trades, would require general contractors to “assume, and [be] liable for . . . unpaid wage, fringe or other benefit payment or contribution, including interest owed,” which subcontractors owe their employees. Despite vehement opposition from the California Building Industry Association and the Associated General Contractors of California, this bill has been submitted to the Governor and is expected to be signed into law.
NEW REQUIREMENTS
Once signed, this bill would impose the following requirements under Labor Code section 218.7:
- Applies to All Private Works Contracts That Are Entered Starting January 1, 2018.
For private works contracts entered on or after January 1, 2018, a “direct contractor” (i.e., prime contractor or contractor who has direct contractual relationship with an owner) must assume and be liable for any debt which its subcontractor or a lower tier subcontractor incurs “for [a] wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner.” (Lab. Code, § 218.7, subds. (a)(1) and (e).)
- The Labor Commissioner and Joint Labor-Management Cooperation Committees May Bring Action to Recover Unpaid Wages on Behalf of Wage Claimants.
The California Labor Commissioner and joint Labor-Management Cooperation Committees established under the federal Labor Management Cooperation Act of 1978 (29 U.S.C. § 175a) (typically comprised of labor unions and management) may bring a civil action against the direct contractor for unpaid wages owed to a wage claimant. (Lab. Code, § 218.7, subds. (b)(1) and (3).) The Labor Commissioner may also bring its claims through administrative hearings (Labor Code section 98) or by citations (Labor Code section 1197.1). (Lab. Code, § 218.7, subd. (b)(1).)
- Third Parties That Are Owed Fringe or Other Benefit Payments or Contribution on Behalf of Wage Claimants (Labor Unions) May Bring Action.
Third parties who are owed fringe or other benefit payments or contributions on a wage claimant’s behalf (e.g., labor unions) may bring a civil action against the direct contractor for such unpaid benefit payments or contributions. (Lab. Code, § 218.7, subd. (b)(2).)
- It Does Not Confer Wage Claimants With Any Right to Sue Direct Contractors.
AB 1701 gives the Labor Commissioner, Labor-Management Cooperation Committees and the unions standing to bring an action against the direct contractor, but it does not confer any private right of action by the wage claimants against the direct contractor.
- Labor-Management Cooperation Committees and Labor Unions Shall Recover as Prevailing Plaintiffs Their Attorneys’ Fees and Costs, Including Expert Fees.
For actions brought by Labor-Management Cooperation Committees or labor unions, “[t]he court shall award a prevailing plaintiff in such an action its reasonable attorney’s fees and costs, including expert witness fees.” (Lab. Code, § 218.7, subds. (b)(2)-(3).)
- Direct Contractor’s Property May Be Attached to Pay for Judgment.
AB 1701 authorizes the attachment of direct contractor’s property to pay for any judgment that is entered pursuant to this section. (Lab. Code, § 218.7, subd. (c).)
- One-Year Statute of Limitation to Bring Action under This Section.
Actions brought pursuant to this section must be filed within one year of the earliest of: (1) recordation of a notice of completion of the direct contract; (2) recordation of a notice of cessation of the work covered by direct contract; or (3) actual completion of work covered by direct contract. (Lab. Code, § 218.7, subd. (d).)
- Rights to Receive Payroll Records and Project Award Information from Subcontractors and to Withdraw All Payments Owed for Their Failure to Comply.
Upon the direct contractor’s request, subcontractors and lower tier subcontractors must provide payroll records and project award information. (Lab. Code, § 218.7, subds. (f)(1)-(2).) Direct contractor may withhold as “disputed” all sums owed if a subcontractor does not timely provide the requested records and information without specifying what is untimely and such failure to comply does not excuse direct contractor from any liability under this section. (Lab. Code, § 218.7, subds. (f)( 3) and (i).)
- Rights to Receive Payroll Records and Project Award Information from Subcontractors and to Withdraw All Payments Owed for Their Failure to Comply.
Upon the direct contractor’s request, subcontractors and lower tier subcontractors must provide payroll records and project award information. (Lab. Code, § 218.7, subds. (f)(1)-(2).) Direct contractor may withhold as “disputed” all sums owed if a subcontractor does not timely provide the requested records and information without specifying what is untimely and such failure to comply does not excuse direct contractor from any liability under this section. (Lab. Code, § 218.7, subds. (f)( 3) and (i).)
- Further Legislative Efforts on Subdivision (h) Are Expected in 2018.
Subdivision (h), which states that “[t]he obligations and remedies provided in this section shall be in addition to any obligations and remedies otherwise provided by law . . .” (emphasis added) is potentially misleading since the author and sponsor of the bill have indicated that the bill is not intended to punish direct contractors with liquidated damages or penalties. As such, further legislative efforts on subdivision (h) are expected in 2018.
ADDITIONAL CONSIDERATIONS
While workers should be paid for the work they perform, AB 1701 would place undue burden on general contractors to monitor their subcontractors’ payroll, confirm that all wages and benefits are paid timely and withhold disputed payments from non-compliant subcontractors. General contractors would also need to caution against the chain reaction that could result from such withholding, including work stoppage, increased change order requests, and an overall increase in construction costs. Finally, general contractors would need to brace themselves for at least a year after project completion against any union or a Labor-Management Cooperation Committee actions armed with a prevailing party’s right to recover attorneys’ fees and expert fees, for previously unidentified subcontractor or sub-subcontractor workers.
STRATEGIES DEVELOPERS AND GENERAL CONTRACTORS SHOULD LOOK FOR
In anticipation of AB 1701 being signed into law and its potentially harsh effects, developers and general contractors are advised to consult their attorneys for a review and revision of their existing contracts, to develop plans for accessing and monitoring subcontractor payroll records, and to consider strategies for mitigating claims that may be brought against them, as follows:
- Execute all pending agreements
before January 1, 2018 to avoid the effects of AB 1701;
- Include an audit provision
requiring subcontractors and sub-subcontractors to provide payroll records (at minimum, information set forth in Labor Code section 226) and project award information, regularly and/or upon request, with specific deadlines for such production, as subdivision (f) does not specify what is untimely;
- Include defense and indemnity provisions
that would require subcontractors to defend and indemnify the general contractor for claims that are brought pursuant to this section arising from labor performed by employees for subcontractors and sub-subcontractors, and require subcontractors to include a similar provision in their own contracts with sub-subcontractors that would require lower tier subcontractors to also defend and indemnify the general contractor for claims arising from their respective employees’ work;
- Require subcontractors to provide a payment bond and/or a letter of credit
to satisfy claims that are made against the general contractor under this section;
- Require personal guarantees
from owners, partners or key subcontractor personnel;
- Include withholding and back-charge provisions
that would allow general contractors to withhold or charge back the subcontractors for disputed amounts, for claims brought against them, and for failure to comply with the audit, bond, and guarantee requirements.
- Consider implementing a system to confirm evidence of payments,
such as signed acknowledgment of payment by each subcontractor and sub-subcontractor employees and by third parties entitled to recover fringe and other benefit payments or contribution, possibly working with electronic billing software providers to implement such system.
Clay Tanaka is a partner in the Newport Beach office of Newmeyer & Dillion, focusing on construction, real estate, business and insurance disputes in both California and Nevada. As a licensed civil engineer, Clay has significant experience in design and construction of all types of construction projects, which he has effectively utilized in his litigation, trial and arbitration practice to obtain great results for his clients. For questions related to AB1701, please contact Clay Tanaka (clay.tanaka@ndlf.com) or Newport Beach Partner Mark Himmelstein (mark.himmelstein@ndlf.com).
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Clayton T. Tanaka, Newmeyer & Dillion LLPMr. Tanaka may be contacted at
clay.tanaka@ndlf.com
California Contractors: New CSLB Procedure Requires Non-California Corporations to Associate All Officers with Their Contractor’s License
April 19, 2021 —
Amy Pierce, Mark Oertel & John Lubitz - Lewis BrisboisAs of July 1, 2020, “[e]very person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record,” and they must match those officers listed on California Secretary of State’s (SOS) records. (Cal. Bus. & Prof. Code § 7065 (b)(1)). This is a deviation from the Contractors State License Board’s (CSLB) past practice of requiring foreign corporations to associate as personnel of record only their president, in contrast to requiring domestic corporations to associate their president, secretary, and treasurer.
Beware that the CSLB may discover that the licensee’s personnel of record are incomplete or incorrect when reviewing a license renewal application, because it will compare the SOS’s records to the license renewal application. A license renewal application requires the licensee to list its qualifier and personnel of record. If the SOS and CSLB records do not match, this could delay approval of the license renewal application until the missing personnel are added and fingerprinted.
Reprinted courtesy of
Amy Pierce, Lewis Brisbois,
Mark Oertel, Lewis Brisbois and
John Lubitz, Lewis Brisbois
Ms. Pierce may be contacted at Amy.Pierce@lewisbrisbois.com
Mr. Oertel may be contacted at Mark.Oertel@lewisbrisbois.com
Mr. Lubitz may be contacted at John.Lubitz@lewisbrisbois.com
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