Lien Claimant’s Right to Execute against Bond Upheld in Court of Appeals
February 10, 2012 —
Douglas Reiser, Builders Council BlogStonewood v. Infinity Homes is a simple construction dispute over a matter of about $9,000.00. But sometimes these tiny little disputes turn into expensive legal battles over mere procedural quivering. In Stonewood, a small subcontractor won a big victory yesterday when the Divison 1 Court of Appeals upheld its judgment against a lien release bond posted by an owner.
Infinity Homes contracted with Stonewood Design to lay tile in one of its customer’s homes. Stonewood did the work, but Infinity withheld roughly $9,000.00 of the contract sums for what it alleged were trade damages left on the tile. The two parties were unable to come to an agreement over payment and Stonewood proceeded with a lien under RCW 60.04. It then filed an action to enforce the lien against the homeowner, Infinity and its bonding company.
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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com
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Velazquez Framing, LLC v. Cascadia Homes, Inc. (Take 2) – Pre-lien Notice for Labor Unambiguously Not Required
May 13, 2024 —
Travis Colburn - Ahlers Cressman & SleightPre-lien Notice for Labor Unambiguously Not Required.
In January 2024, almost a year after Division 2 of the Washington Court of Appeals decided Velazquez Framing, LLC v. Cascadia Homes, Inc.,1 the Washington Supreme Court, sitting en banc, reversed and remanded the matter for further proceedings.2
The relevant background facts are that Cascadia Homes, Inc. (“Cascadia”), was a general contractor and also owned the property that was the subject matter of the underlying dispute. Cascadia wished to construct a new home on the property. Cascadia hired High End Construction, LLC (“High End”) – a framing subcontractor – to provide framing for the new home. High End, in turn, hired Velazquez Framing, LLC (“Velazquez”). Velazquez did not provide Cascadia – the owner – with notice of its statutory right to claim a lien.
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Travis Colburn, Ahlers Cressman & SleightMr. Colburn may be contacted at
travis.colburn@acslawyers.com
Florida Self-Insured Retention Satisfaction and Made Whole Doctrine
March 11, 2014 —
Scott Patterson – CD CoverageIntervest Construction of Jax, Inc. v. General Fidelity Insurance Co., * So.2d * (Fla. 2014), the issue was whether the insured general contractor could satisfy the SIR in its CGL policy with funds it received from the insurer of a subcontractor in settlement of the general contractor’s contractual indemnity claim against that subcontractor. ICI was the general contractor for a residence sold to Ferrin. Several years after completion, Ferrin suffered injuries in a fall while using attic stairs installed by ICI’s subcontractor Custom Cutting. Ferrin sued ICI but not Custom Cutting. ICI was insured by General Fidelity with a $1M SIR. ICI sought contractual indemnity from Custom Cutting. The Ferrin suit was ultimately settled for $1.6M. Custom Cutting’s CGL insurer paid $1M to ICI to resolve ICI’s contractual indemnity claim. Using the $1M paid on behalf of Custom Cutting and $300K of its own funds, ICI paid $1.3M to Ferrin. General Fidelity paid the remaining $300K with an agreement with ICI that each was entitled to seek reimbursement of $300K from the other. ICI filed suit in Florida state court. General Fidelity removed to federal court. The Eleventh Circuit certified the relevant questions to the Supreme Court of Florida.
The Florida Supreme Court first held that the General Fidelity SIR allowed ICI to satisfy the SIR through indemnification payments received from a third party. While the SIR provision stated that it must be satisfied by the insured, it did not include any language proscribing the source of the funds used by the insured to satisfy the SIR. The court distinguished other decisions where the SIR endorsement expressly stated that payments by others, including other insurers, could not satisfy the SIR. The court also relied on the fact that ICI “hedged its retained risk” by paying for its entitlement to contractual indemnification from its subcontractor years prior to purchasing the General Fidelity policy.
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Scott Patterson, CD Coverage
The Legal 500 U.S. 2024 Guide Names Peckar & Abramson a Top Tier Firm in Construction Law and Recognizes Nine Attorneys
July 15, 2024 —
Peckar & Abramson, P.C.Peckar & Abramson, P.C. (P&A) is pleased to announce
The Legal 500 United States has once again ranked P&A as a Tier One firm in construction law. The publication also recognized nine P&A construction lawyers in its directory for their contributions in the United States:
P&A is proud to be recognized each year by several legal ratings services, including our Tier 1 ratings by Chambers both nationally and in a number of jurisdictions around the country. Steven M. Charney commented, “Receiving this prestigious recognition by Legal 500 signifies the exceptional caliber of our team, their unwavering commitment to delivering unparalleled legal solutions, and their ability to navigate complex challenges. We are dedicated to providing our clients with the highest level of service and are proud to be recognized as leaders in the field of construction law.”
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Peckar & Abramson, P.C.
Newmeyer Dillion Named 2020 Best Law Firm in Multiple Practice Areas by U.S. News-Best Lawyers
November 24, 2019 —
Newmeyer DillionProminent business and real estate law firm Newmeyer Dillion is pleased to announce that U.S. News-Best Lawyers® has recognized the firm in its 2020 "Best Law Firms" rankings, with six of its practice areas earning the highest ranking possible - Tier 1 in the Orange County Metro area. The practices recognized include Commercial Litigation, Construction Law, Insurance Law, Litigation - Construction, Litigation - Real Estate and Real Estate Law.
Firms included in the 2020 "Best Law Firms" list have been recognized by their clients and peers for their professional excellence. Firms achieving a Tier 1 ranking have consistently demonstrated a unique combination of quality law practice and breadth of legal expertise.
“We are grateful that the firm’s clients and our peers again recognize our personalized approach to legal service. We strive to provide creative solutions that propel our clients’ businesses forward,” said Managing Partner Paul Tetzloff.
To be eligible for the “Best Law Firms” ranking, a firm must have at least one attorney recognized in the current edition of The Best Lawyers in America for a specific practice area. Best Lawyers recognizes the top 4 percent of practicing attorneys in the U.S., selected through exhaustive peer-review surveys in which leading lawyers confidentially evaluate their professional peers.
ABOUT NEWMEYER DILLION
For 35 years, Newmeyer Dillion has delivered creative and outstanding legal solutions and trial results for a wide array of clients. With over 70 attorneys practicing in all aspects of corporate, privacy & data security, employment, real estate, construction, insurance law and trial work, Newmeyer Dillion delivers legal services tailored to meet each client’s needs. Headquartered in Newport Beach, California, with offices in Walnut Creek, California and Las Vegas, Nevada, Newmeyer Dillion attorneys are recognized by The Best Lawyers in America©, and Super Lawyers as top tier and some of the best lawyers in California, and have been given Martindale-Hubbell Peer Review's AV Preeminent® highest rating. For additional information, call 949.854.7000 or visit www.newmeyerdillion.com
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Toward Increased Citizen Engagement in Urban Planning
November 14, 2018 —
Aarni Heiskanen - AEC BusinessDigitalization creates new opportunities for citizen engagement in urban planning. I gave a short presentation on the topic at the Digitalization in Urban Planning event in Helsinki.
The event was organized by CHAOS Architects, a tech company. Its AI cloud platform allows citizens to share ideas about their city and co-create it with their community. The platform contains engagement-driven applications and third-party APIs that process business intelligence for better interaction and decision-making.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Were Condos a Bad Idea?
June 13, 2022 —
Tyler P. Berding - Berding & Weil LLPIntroduction
Condominiums are a nice idea, but their execution has been less than perfect. Long before the fatal Berkeley, California balcony failure in 2015 or the 2021 Champlain Towers South collapse that killed 98 people in Surfside, Florida, we suspected that all was not right with the basic condo concept. Years ago, there were already signs this "cooperative" housing model was anything but. Whether due to owner apathy, internal disputes, or failure to fund future repairs, sustaining these projects for the long-term has been difficult, leaving their future in doubt. Can this be fixed, or is the concept inherently flawed?
Every enterprise has an organizational "model" to run the business. For-profit corporations obtain revenue from the sale of products or services. The revenue of non-profit condominium corporations are the assessments paid by the owners of the individual units. While these assessments are “mandatory” in the sense they must be paid, they are also “voluntary” since the amount is left to the board of directors to determine. Condos are cheaper to buy, but the sales price may not reflect the real cost of ownership. They are "cooperative" because costs and space are shared, but internal disputes and funding shortfalls operate to shorten the life of these buildings in ways few owners understand.
Internal Disputes
Why is condominium life frequently not “cooperative?” Disputes. Disputes between condominium owners and their associations; among board members; and between individual owners and their neighbors. There are arguments over the right to put a flag on the balcony. There are arguments over swimming pool hours. The right to paint their front door some color other than everyone else's. The right to be free of noise, smoke, or view-blocking plants. And sometimes, the claimed right not to pay assessments needed to maintain the project—all notwithstanding the governing documents to the contrary. The right to use one's property as the owner sees fit is a concept imported from the single-family home experience but not replicated in condominiums where common ownership requires rules to avoid chaos.
But a condominium association's most important concern should not be the color of someone's front door or when they can swim but sustaining the building and keeping owners safe. Maybe we care someone has painted their front door bright green, but should that concern have priority over finding rot that may cause a balcony to collapse with someone on it? Resolving conflicts and enforcing the governing documents have a reasonable success rate. Still, the effort required to do that often distracts the board from more critical issues—damage that can sink the ship. Directors can waste a lot of time re-arranging the deck chairs on the Titanic when, if they look closely, the iceberg is coming.
Maintenance Lacks Priority
Why can't we enforce the rules and do what’s necessary to sustain the building and keep occupants safe? Unfortunately, juggling both behavioral and sustainability issues has proven difficult for many volunteer boards of directors. Rule disputes are always in their face, crowding their agenda, while the damage that could lead to structural failure often remains unknown. Also, enforcing—or resisting—rules can involve a clash of egos that keep those matters front and center. Or, and I suspect this is a primary culprit, the cost of adequate inspections, maintenance, and repair is so high that boards cannot overcome owner resistance to that expense.
While boards and management must sustain the project and protect people, raising the funds to do that is another matter. Directors must leap hurdles to increase regular assessments. Imposing large, unexpected, special assessments for major repairs can be political suicide. Unfortunately, few owners realize how deadly serious proper maintenance is until there is a Berkeley or a Surfside, and everyone is stunned by the loss of life and property. While those are extreme cases of faulty construction, inadequate maintenance, natural causes, or all the above, they will not be the last. We know that because experts have seen precursors to those same conditions in other projects.
Our concern for sustainability arises from examining newer projects during construction defect litigation when forensic experts open walls to inspect waterproofing and structural components. It also comes from helping our clients with the re-construction of older buildings and dealing with many years or decades of neglect for which little or no reserves have been allocated.
The economic impact of repairing long-term damage is huge. Rot lying hidden within walls slowly damages the structural framing. Moisture seeping into balcony supports weakens them sometimes to the point of collapse. The cost to repair this damage is frequently out of reach of most condominium associations. In newer projects, when experts find problems early, claims are possible. The Berkeley balcony failure occurred in an eight-year-old building[1], and there was recourse available from the builder. But with older projects, it is often difficult to hold anyone responsible other than the owners themselves.
Is The Condo Model Flawed?
Suppose this is true—and our experience representing condominium projects for over forty years tells us it is—then we are not dealing only with the inexperience of some volunteer directors but rather with a flawed organization model. Board members want to succeed but are constrained by an income stream that depends almost entirely on the will of the individual owners—essentially voluntary funding.
Under most state laws, funding for condominium operations and maintenance is not mandatory[2], and relies instead on the willingness of the directors to assess owners for whatever is needed, and on the willingness of owners to accept the board’s decisions. When a board of directors can set assessments at whatever level is politically comfortable, without adequate consideration, or even knowledge, of long-term maintenance needs, systemic underfunding can result[3]. What the members want are the lowest assessments possible, and directors often accede to those demands. When these factors conspire to underfund maintenance, they will drastically shorten the service life of a building. They also make it potentially unsafe.
Commercial buildings incentivize their owners for good maintenance with increased rents and market value. That incentive is not relevant to a condominium owner because the accumulating deficit is rarely understood at the time of sale and not reflected in the unit’s sales price. With a single-family home, deferred maintenance is more easily identified and is reflected in the purchase price. But condo home inspections are usually confined to the interior of a unit, and do not assess the overall condition of the entire building or project or review any deficit in the funding needed to attend to deficiencies. Thus, market value is not affected by reality.
In most states that require that reserves be maintained for future maintenance and repairs, the statutes require nothing other than cursory surface inspections. Damage beneath the skin of a building is not investigated, and no reserves are recommended for what is not known. California recently enacted legislation that will require condominium associations inspect specific elevated structures for safety, including intrusive testing where indicated. But no other state requires this level of inspection, and few even require a reserve study to determine how much money to save for the obvious problems, never mind those no one knows about[4].
This situation leads to unfair consequences for those owners who find themselves unlucky enough to own a unit when the damage and deficits are finally realized. Damage discovered, say, in year 35 didn’t just happen in year 35. That deterioration likely began earlier in the building's life and lay hidden for decades. It is costly to repair when it finally becomes obvious or dangerous. No prior owner, those who owned and sold their units years ago, will pay any part of the cost of the eventual rehabilitation of that building due to past lack of adequate inspections and years of artificially low assessments. Instead, the present owners will be handed the entire tab for the shortfall from several decades of deferred maintenance or hidden damage—the last people standing when the music stops.
Can this trend be reversed? As condominium buildings age and deterioration continues, the funding deficit increases dramatically. But to reverse that trend and reduce the deficit, someone must know it exists and be willing to address it. That requires more robust inspections early in the building's life and potentially higher assessments to stay even with any decay.
Conclusion
It would not be wrong to blame this on the failure of the basic condominium model. Volunteers rarely have sufficient training or expertise to oversee complex infrastructure maintenance, especially without mandatory funding to pay for it. The model also does not insist that board members have a talent for resolving conflicts. While condominium boards can leverage fines or legal action to enforce the rules, that lacks finesse and can create greater antagonism—a distraction from the more critical job of raising funds to inspect and maintain the building.
Unit owner-managed, voluntarily funded, multi-million-dollar condominium projects were probably a bad idea from the beginning. But sadly, it is way too late to reverse course on the millions of such projects built in the past sixty years. Many are already reaching the end of their service lives, with no plan to deal with that. Robust inspection standards on new and existing projects and enforceable minimum funding for maintenance and repairs should be considered by state legislatures. But whatever the approach, the present system is not staying even with the deterioration of many buildings, and that is just not safe anymore.
- The collapse of the balcony in Berkeley occurred on an apartment building. But the construction of that building is similar or identical to the construction of most multi-story wood-frame condominiums.
- Boards of directors are empowered by statute or contract to assess members for operation and maintenance costs. However, there are few statutes that set minimum funding or otherwise require boards to exercise that authority.
- Even in states that require reserve studies, the physical inspections are inadequate to uncover some of the costliest damage. California’s reserve study statute—Civil Code Section 5550—only requires inspection of those components that are visible and accessible, leaving damage within walls and other structural components undiscovered and funding for the eventual repairs, unaddressed.
- In May 2022, in response to the Champlain Towers South collapse, Florida enacted mandatory structural inspections for buildings 30 years and older, repeating every 10 years thereafter. The law also includes mandatory reserve funding for structural components.
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Tyler P. Berding, Berding & Weil LLPMr. Berding may be contacted at
tberding@berdingweil.com
As Natural Gas Expands in Gulf, Residents Fear Rising Damage
July 11, 2022 —
The Associated Press (Cathy Bussewitz & Martha Irvine) - BloombergLake Charles, Louisiana (AP) -- The front lawn of Lydia Larce’s home is strewn with debris: Remnants of cabinets and chunks of pink shower marble lie between dumpsters. She lives in a FEMA trailer out back, her home in shambles more than a year after Hurricane Laura tore through Lake Charles.
Larce, like many in Southwest Louisiana, has what she calls “storm PTSD.” Tornado warnings trigger anxiety. She fidgets and struggles to sleep.
"The fear and the unknown — it has me on an edge,” Larce said. “I’m scared.”
A string of devastating hurricanes has torn through this region in recent years. Nationally, too, there have been more Category 4 and 5 hurricane landfalls in the past five years than in the previous 50 years combined. Larce and her neighbors know they are on the front lines of climate change.
Her region is now the epicenter of a trend that she fears will make those disasters even more destructive.
Developers plan to build a series of liquefied natural gas export facilities across Southwest Louisiana, already the heart of the industry. Even in a state with a heavy industrial base, these facilities are among the largest emitters of greenhouse gases in Louisiana.
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