Lease-Leaseback Battle Continues as First District Court of Appeals Sides with Contractor and School District
August 17, 2017 —
Garret Murai - California Construction Law BlogEarlier, we wrote about Davis v. Fresno United School District (2015) 237 Cal.App.4th 261, a Fifth District California Court of Appeals decision that sent shock waves through the school construction industry and raised questions regarding the use of California’s lease-leaseback method of project delivery (Education Code sections 17400 et seq.).
California’s lease-leaseback method of project delivery provides an alternative project delivery method for public school districts than the usual design-bid-build method of project delivery. Under the lease-leaseback method of project delivery, a school district leases its property to a developer, who in turn builds a school facility on the property and leases it back to the school district. One of the benefits of the lease-leaseback method of project delivery is that school districts do not need to come up with construction funds to build school facilities since they pay for the construction over time through their lease payments to the developer. Critics, however, argue that because lease-leaseback projects do not need to be competitively bid, they are ripe for cronyism between developers and school districts.
In Davis, a taxpayer successfully brought suit against the Fresno Unified School District challenging the propriety of a lease-leaseback project because the entirety of the District’s “lease payments” occurred while the project was being constructed and thus, successfully argued the taxpayer, there was no “true” lease of a facility since it was under construction.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
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Narrow Promissory Estoppel Exception to Create Insurance Coverage
August 07, 2022 —
David Adelstein - Florida Construction Legal UpdatesThere is an affirmative claim known as promissory estoppel. (Whereas equitable estoppel is used an affirmative defense, promissory estoppel is used as an affirmative claim.)
To prove promissory estoppel, a plaintiff must plead and prove the following three elements: “(1) a representation as to a material fact that is contrary to a later-asserted position; (2) a reasonable reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel caused by the representation and reliance thereon.” Romo v. Amedex Ins. Co., 930 So.2d 643, 650 (Fla. 3d DCA 2006) (citation and quotation omitted). Stated differently: “A party will be estopped from denying liability under the principle of promissory estoppel when the party makes ‘[a] promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance…[and] injustice can be avoided only by enforcement of the promise.’” Criterion Leasing Group v. Gulf Coast Plastering & Drywall, 582 So.2d 799, 800 (Fla. 1st DCA 1991).
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dma@kirwinnorris.com
Bar Against Forum Selection Clauses in Construction Contracts Extended to Design Professionals
October 28, 2015 —
Garret Murai – California Construction Law BlogIt’s a tactic as old as war itself.
You can often gain a strategic advantage by selecting the location of battle.
The same is true in litigation.
But as the next case illustrates, when it comes to disputes between contractors (and design professionals), it isn’t always the combatants who dictate where the battle will be fought.
Vita Planning and Landscape Architecture, Inc. v. HKS Architects, Inc.
In Vita Planning and Landscape Architecture, Inc. v. HKS Architects, Inc., Case No. A141010, California Court of Appeals for the First District (September 25, 2015), Texas architecture firm HKS Architects, Inc. (“HKS”) was hired to provide architectural services. HKS’ design service agreement included a Texas forum selection clause which provided:
As a condition precedent to the institution of any action [or] lawsuit all disputes shall be submitted to mediation” and “[a]ll claim , disputes, and other matters in question between the parties arising out of or related to the Agreement . . . be resolved by the . . . courts in . . . Texas.”
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com
Construction Defect Claim Did Not Harm Homeowner, Court Rules
September 30, 2011 — CDJ STAFF
The Minnesota Court of Appeals has ruled in Creswell v. Estate of Howe, a case in which a woman bought a home and then sued the seller’s estate, both sets of real estate agents, and the homeowner’s association over construction defects. A district court ruled against her, granting summary judgment to the other parties.
After buying a townhome “as is,” Catherine Creswell claims to have shared a thought with her agent that the homeowners association was, in the words of her agent, “trying to hide something.” Later, Creswell found that a few days before her closing, the board had discussed problems with “roofs, siding and soundproofing of the townhomes.” The court noted that “it was clear from the documents that appellant [Creswell] received that the association had known about various construction defects for many years, some of which affected [her] unit.”
Creswell initially sued the estate, the man who negotiated the sale for his mother’s estate, the real estate companies and the agents involved, the homeowners association, and four board members. Later she sued for punitive damages, dropped a claim for interference with contractual relations, and dismissed her claims against the individual board members. The court dismissed all of Creswell’s claims awarding costs to those she sued.
The appeals court has affirmed the decision of lower court, noting that Creswell “did not provide us with any argument why the district court erred in dismissing her unjust-enrichment, breach of contract, or rescission claims against the various respondents.” Nor did she provide evidence to support her claims of “breach of duty, fraud, and violation of consumer protection statutes.”
The court noted that Creswell could not sue the homeowners association over the construction defects because she “failed to prove that she was damaged by the association’s nondisclosure.” The court noted that “there are no damages in this case,” as Creswell “was never assessed for any repairs, she had not paid anything out-of-pocket for repairs, and she has presented no evidence that the value of her individual unit has declined because of the alleged undisclosed construction defects.”
The court granted the other parties motion to dismiss and denied Creswell’s motion to supplement the record. Costs were awarded to the respondents.
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Supreme Court of Washington State Upholds SFAA Position on Spearin Doctrine
September 13, 2021 — Peter Roth – The Surety & Fidelity Association of America
September 9, 2021 (WASHINGTON, DC) – The Surety & Fidelity Association of America (SFAA) commends the decision of The Supreme Court of The State of Washington to reverse the lower court ruling in the case of Lake Hills Investments, LLC vs. Rushforth Construction Co. As argued by SFAA, the Supreme Court found the contractor should not be responsible for damage caused by the defective design provided by the owner even where the contractor was responsible for certain defective work. In addition, the contractor is not completely barred from asserting this defense if the defects were caused by a combination of deficient performance by the contractor and deficient design, and proportional liability should be determined.
The SFAA, along with the National Electrical Contractors Association Puget Sound Chapter (NECA), Mechanical Contractors Association of Western Washington (MCAWW) and SMACNA-Western Washington (SMACNA), issued an Amici Curiae in support of Petitioner AP Rushforth Construction Co., Inc. d/b/a AP Rushforth, and Adolfson & Peterson, Inc.’s (collectively “AP”) Petition for Discretionary Review. In the brief they argued the Court should grant the Petition because the decision by the lower court is contrary to precedent of limiting a contractor’s liability when the owner’s defective plans and specifications caused the defective work, and upsets settled expectations of allocation of risk and liability between contractors, owners and architects (among others) on construction projects. This allocation of risk and the principle of limiting the contractor’s liability for defective work based on defective plans and specifications is long settled doctrine in Washington State and throughout the country, a doctrine based on the US Supreme Court’s landmark decision in U.S. vs. Spearin more than 100 years ago.
The Surety & Fidelity Association of America (SFAA) is a trade association of more than 425 insurance companies that write 98 percent of surety and fidelity bonds in the U.S. SFAA is licensed as a rating or advisory organization in all states and it has been designated by state insurance departments as a statistical agent for the reporting of fidelity and surety experience. www.surety.org
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Reprinted courtesy of Peter Roth, SFAA
Mr. Roth may be contacted at proth@surety.org
Certified Question Asks Washington Supreme Court Whether Insurer is Bound by Contradictory Certificate of Insurance
January 21, 2019 — Tred R. Eyerly - Insurance Law Hawaii
The Ninth Circuit certified a question to the Washington Supreme Court as follows:
Under Washington law, is an insurer bound by representations made by its authorized agent in a certificate of insurance with respect to a party's status as an additional insured under a policy issued by the insurer, when the certificate includes language disclaiming its authority and ability to expand coverage?
T-Mobile USA Inc. v. Selective Ins. Co lf Am., 2018 U.S. App. LEXIS 31863 (9th Cir. Nov. 9, 2018).
In 2010, T-Mobile entered into a Field Services Agreement (FSA) with Innovative Engineering, Inc. under which Innovative would provide services in connection with the construction of rooftop cellular antennae towers in New York City. The FSA required Innovative to maintain general liability insurance naming T-Mobile as an additional insured, and required that Innovative provide T-Mobile with certificates of insurance documenting the coverage. Innovative obtained coverage from Selective Insurance Company of America. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com
Judgment Proof: Reducing Litigation Exposure with Litigation Risk Insurance
March 04, 2024 — Latosha M. Ellis & Charlotte Leszinske - Hunton Insurance Recovery Blog
It is not just your imagination: verdicts are getting bigger. So-called “nuclear verdicts” have increased in size and frequency over the past decade, particularly after the COVID-19 pandemic. Litigation risk insurance is a little known, but highly effective, option meant to compliment traditional insurance products and provide additional protection for policyholders nervous about litigation exposure.
Unfortunately, it is difficult to predict the exposure presented by any particular case. Between 2020 and 2022, the median verdict increased 95%—from $21.5 million to $41.1 million. In 2022, a jury handed down a verdict worth $7.3 billion for injury to a single plaintiff. Even if an injury or loss is minor, juries have shown that they are willing to penalize corporate defendants with punitive damages that significantly exceed the award of compensatory damages. With such uncertainty and millions (if not billions) at stake, companies can reduce risk with litigation risk insurance.
Three key types of litigation risk insurance include: (1) punitive wrap insurance, (2) adverse judgment insurance, and (3) judgment preservation insurance.
Reprinted courtesy of Latosha M. Ellis, Hunton Andrews Kurth and Charlotte Leszinske, Hunton Andrews Kurth
Ms. Ellis may be contacted at lellis@HuntonAK.com
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Contractor May Be Barred Until Construction Lawsuit Settled
November 06, 2013 — CDJ STAFF
In July, Pamar Enterprises was constructing a water main in Bad Axe, Michigan and an error on their part sent water and sewage into homes. This was similar to what happened when they constructed a water main in 2007 in Lyon Township. Now Michigan Representative Terry Brown wants the state to stop awarding contracts to Pamar until the lawsuits are resolved. “I’ve asked [the Michigan Department of Transportation] not to have any more contracts with Pamar,” said Mr. Brown.
Mr. Brown is also seeking that the state withholds payments to Pamar. “I was assured that they would not be getting any more payments until the situation was satisfactorily resolved.”
In the 2007 case, Pamar won in Oakland County Circuit Court, but the Michigan Court of Appeals, found that Pamar failed in its “duty to exercise reasonable care when it entered onto an altered private property.”
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