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Real Estate & Construction News Roundup (09/06/23) – Nonprofit Helping Marginalized Groups, Life Sciences Taking over Office Space, and Housing Affordability Hits New Low

October 24, 2023 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
In our latest roundup, Walmart adds their own generative AI, major airlines reduce their capacity at regional airports, autoworkers prepare for a strike as negotiations continue, and more!

• A nonprofit in Philadelphia is helping connect marginalized business owners with construction projects before bids are announced to improve equity in deals. (Kristen Mosbrucker-Garza, WHYY)
• While the traditional office space market has been rocky, the life sciences market has taken over, creating more than one out of every four new projects. (Greg Cornfield, Commercial Observer)
• Along with JLL, Walmart has joined the growing list of major U.S. companies supplying their own generative AI tools to some of their employees. (Lindsey Wilkinson, Construction Dive)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Mediating is Eye Opening

September 17, 2015 — Christopher G. Hill – Construction Law Musings
As anyone that reads this construction law blog on any sort of regular basis knows, I am a big advocate for mediation in most cases (construction or otherwise). I took this truly to heard about four years ago when I decided to go through the training and mentorship to become a certified mediator here in Virginia. This training led to many opportunities to act as a mediator in the General District Courts here in Virginia and has recently given me the great privilege of helping parties that were not court referred resolve their disputes. I’ve discussed this first category of mediations at other times here at Musings, but it is the second category that has opened my eyes lately. The non-court referred mediations are those where the parties actively seek out the assistance of a mediator because they, like me, know that more often than not the control and ability to come to some form of negotiated solution (not to mention short circuiting the litigation process in a way that saves money) is a better way to go than to go through the expensive (though as a construction attorney I acknowledge sometimes necessary) process of litigation. Read the court decision
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Reprinted courtesy of Christopher G. Hill, Law Office of Christopher G. Hill, PC
Mr. Hill may be contacted at chrisghill@constructionlawva.com

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Illinois Supreme Court Limits Reach of Implied Warranty Claims Against Contractors

April 10, 2019 — Thomas Cronin - Gordon & Rees Construction Law Blog
In a recent decision, the Illinois Supreme Court held that a purchaser of a newly constructed home could not assert a claim for breach of the implied warranty of habitability against a subcontractor where the subcontractor had no contractual relationship with the purchaser. Sienna Court Condo. Ass’n v. Champion Aluminum Corp., 2018 IL 122022, ¶ 1. The decision overruled Minton v. The Richards Group of Chicago, which held that a purchaser who “has no recourse to the builder-vendor and has sustained loss due to the faulty and latent defect in their new home caused by the subcontractor” could assert a claim of a breach of the warranty of habitability against the subcontractor. 116 Ill. App. 3d 852, 855 (1983). In Sienna Court Condo. Ass’n, the plaintiff alleged that the condo building had several latent defects which made individual units and common areas unfit for habitation. 2008 IL 122022 at ¶ 3. The Court rejected the plaintiff’s argument that privity should not be a factor in determining whether a claim for a breach of the warranty of habitability can be asserted. Id. at ¶ 19. The Court also rejected the plaintiff’s argument that claims for a breach warranty of habitability should not be governed by contract law but should instead be governed by tort law analogous to application of strict liability. Id. The Court reasoned that the economic loss rule, as articulated in Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 91 (1982), refuted the plaintiff’s argument that the implied warranty of habitability should be covered by tort law. 2008 IL 122022 at ¶ 20. Under the economic loss rule, a plaintiff “cannot recover for solely economic loss under the tort theories of strict liability, negligence, and innocent misrepresentation.” National Tank Co., 91 Ill. 2d at 91. The Court explained that the rule prevented plaintiffs from turning a contractual claim into a tort claim. 2008 IL 122022 at ¶ 21. The Court further noted that contractual privity is required for a claim of economic loss, and an economic loss claim is not limited to strict liability claims. Id. Because the plaintiff’s claim was solely for an economic loss, it was a contractual claim in nature; therefore, the Court concluded that “the implied warranty of habitability cannot be characterized as a tort.” Id. at ¶ 22. Read the court decision
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Reprinted courtesy of Thomas Cronin, Gordon & Rees Scully Mansukhani
Mr. Cronin may be contacted at tcronin@grsm.com

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Understand and Define Key Substantive Contract Provisions

March 23, 2020 — Phillip L. Sampson Jr. & Richard F. Whiteley, Construction Executive
The following contract provisions should be clearly understood before undertaking any construction project commences. Force Majeure Often referred to as an “Act of God,” a force majeure is an event, typically beyond the parties’ control, that prevents performance under a contract. To determine if a contractor need a force majeure clause in its contract, it should ask whether there may be instances where events beyond the contractor’s control could impact its contractual performance? If so, it will want this clause. Courts currently treat force majeure as an issue of contractual interpretation, focusing on the express language in the contract. Consequently, the scope and applicability of a force majeure clause depends on the contract’s terms. Using broad language in a force majeure clause may help protect against unforeseen events. But to the extent possible, parties should describe with particularity the circumstances intended to constitute a force majeure. The law relating to force majeure also fairly consistently provides that parties cannot avoid contractual obligations because performance has become economically burdensome. Courts have refused to apply force majeure clauses where an event only affects profitability. Recent attempts to categorize tariffs on construction materials as a force majeure have failed. Unless a tariff or tax is specifically listed as a force majeure event, it is unlikely to constitute a force majeure because it only affects profitability. Reprinted courtesy of Phillip L. Sampson Jr. & Richard F. Whiteley, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Delaware Supreme Court Won’t Halt Building

June 28, 2013 — CDJ STAFF
The Delaware Supreme Court has rejected arguments made by Dewey Beach homeowners over the construction of a new building. The Supreme Court agreed with the Chancery Court which had dismissed the complaint as it was filed more than 60 days after exception to the zoning rules had been voted on. A builder had been granted leave to build higher than thirty-five feet in exchange for public space, public restrooms, and other amenities for the public. Read the court decision
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Beam Cracks Cause Closure of San Francisco’s New $2B Transit Center

October 09, 2018 — David Suggs – Bert L. Howe & Associates, Inc.
After two billion dollars and two decades, San Francisco’s newest transportation hub opened on August 11th of this year only to be closed a month later, on September 25th, after a cracked beam was discovered, according to The Real Deal. Later, workers found an additional, though smaller, crack in another beam parallel to the first. The Real Deal described the crack in the first beam: “The Transbay Joint Powers Authority (TJPA) – which built and now operates the center – said the tear was 2.5 feet long and 4.5 inches deep on a 60-foot beam that holds a 5.4-acre rooftop park above a bus deck.” Steel supports are now being installed to reduce the pressure on the beams. While officials have not discovered the cause of the problem, The Real Deal reported several possibilities, including “fabrication problems, installation error, too much weight, or an issue in the initial design.” Read the court decision
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California Court Invokes Equity to Stretch Anti-Subrogation Rule Principles

June 18, 2019 — Gus Sara & William L. Doerler - The Subrogation Strategist
In Western Heritage Ins. Co. v. Frances Todd, Inc. 2019 Cal. App. Lexis 299, the Court of Appeals of California, First Appellate District, addressed whether a commercial condominium association’s carrier could subrogate against the tenants (aka lessees) of one of its member unit owners. After examining the condominium association’s declarations, as well as the lease terms between the owner and the lessees, the court held that the association’s carrier could not subrogate against the lessees because they were implied co-insureds on the policy. To reach its decision, the court explained that an insurer steps into the shoes of its insured, not the party with whom it is in privity. Although the first-party property portion of the association’s insurance policy did not, as required by the association’s declarations, have the owner listed as an additional named insured, the court held that it would be inequitable to treat the association as the sole insured for purposes of determining Western Heritage’s right to bring a subrogation action. In Western Heritage, William R. de Carion d/b/a Surfwood Properties (de Carion or Lessor), owned a commercial unit within a multi-unit commercial building. The building was managed by the East Shore Commercial Condominiums Owners’ Association (the Association). As a unit owner, de Carion was a member of the Association. The Association’s Declarations of Codes, Covenants and Restrictions (CC&Rs) required the Association to procure fire insurance for the commercial units by adding the unit owners as additional named insureds. The CC&Rs also prohibited owners and their “tenants” from procuring their own fire insurance policies for the premises. In 2013, de Carion leased his commercial space to Frances Todd, Inc. d/b/a The Wooden Duck, Eric Todd Gellerman and Amy Frances Feber (Lessees). Reprinted courtesy of Gus Sara, White and Williams LLP and William L. Doerler, White and Williams LLP Mr. Sara may be contacted at sarag@whiteandwilliams.com Mr. Doerler may be contacted at doerlerw@whiteandwilliams.com Read the court decision
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Foreman in Fatal NYC Trench Collapse Gets Jail Sentence

December 21, 2016 — Mary B. Powers – Engineering News-Record
Wilmer Cueva, a construction foreman for Queens, N.Y.-based excavation subcontractor Sky Materials, was sentenced on Dec. 15 to up to three years in prison for causing the death of 22-year-old worker Carlos Moncayo, and endangering other workers at a lower Manhattan retail project site. Manhattan District Attorney Cyrus Vance said the workers were in an unprotected 13-ft trench that collapsed in 2015. Read the court decision
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Reprinted courtesy of Mary B. Powers, Engineering News-Record
ENR may be contacted at ENR.com@bnpmedia.com

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