The Burden of Betterment
February 23, 2017 —
Ryan M. Charlson, Esq. - Florida Construction Law NewsThe concept of betterment has long been used by defendants in cases involving defective design or construction to limit the damages awarded to a plaintiff.[1] The theory behind betterment is that: “if in [the] course of making repairs [an] owner adopts a more expensive design, recovery should be limited to what would have been the reasonable cost of repair according to original design.”[2] Betterment is often raised as an affirmative defense, requiring a defendant to prove that the plaintiff has received a good or service that is superior to that for which the plaintiff originally contracted. A recent South Florida case seems, at first blush, to suggest the burden of establishing the value of betterments may fall to the plaintiff, although a closer reading indicates the decision is likely to have limited applicability.
In Magnum Construction Management Corp. v. The City of Miami Beach, the Third District Court of Appeal was asked to review the damages award to the City for construction defects associated with the redesign and improvement of a park.[3] The completed project contained landscaping deficiencies, along with other “minor defects” in the playground’s construction.[4] After a unilateral audit, and without providing the contractor its contractually required opportunity to cure the defects, the City “removed, redesigned, and replaced the playground in its entirety.”[5] It did so despite no recommendation by the City’s own expert to perform such work.[6] During the bench trial, the “only measure of damages provided by the City was the costs associated with the planning, permitting, and construction of a park that is fundamentally different from the one it contracted with [the contractor] to build.”[7]
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Ryan M. Charlson, Cole, Scott & Kissane, P.A.Mr. Charlson may be contacted at
ryan.charlson@csklegal.com
Before Celebrating the Market Rebound, Builders Need to Read the Fine Print: New Changes in Construction Law Coming Out of the Recession
November 26, 2014 —
Alan H. Packer - Newmeyer & Dillion, LLPAs the homebuilding market continues to improve, many builders find themselves maneuvering familiar roads. That said, important new realities have taken hold since the market collapse. Navigating these changes requires extra thought for practical and legal reasons.
Using Old Designs “Off the Shelf”?
The adoption of the California Building Standards Code in 2010, with an updated schedule to go into effect January 1, may complicate the use of older designs. In addition, some builders are contemplating building on pads constructed five or more years ago, temporarily shelved until market conditions improved. Because of changes in both the applicable Code and due to possible changes in the underlying soils and drainage, these projects require additional scrutiny before starting construction.
Mechanic’s Lien Law Changes
Not too long ago, the California Legislature recently overhauled the entire mechanic’s lien law system in California. New forms, new statutory references, new rules and deadlines are all applicable to projects under construction now. Make sure your documents are up to date, as the use of older forms (particularly for liens, progress payments, and final payments) could create legal problems in the future.
Indemnity Law Changes
Since 2006, California lawmakers have passed four rounds of legislation aimed at limiting indemnity provisions in construction contracts. The laws are aimed at two aspects of indemnity law: “Type 1” indemnity provisions, and liability for the costs of defending a claim.
Type 1 Indemnity. California law previously permitted a builder to obtain “Type 1” indemnity from its subcontractors for all claims. Under a Type 1 provision, if a claim arose out of the trade’s work, the trade was fully responsible to defend and indemnify the builder – even if other trades or the Builder were partially at fault. Some cases even allowed, typically in a commercial context, the builder to obtain Type 1 indemnity even if the trade was not negligent, as long as the claim involved its work.
Defense Obligation. In 2008, California’s highest court issued an opinion in Crawford v. Weather Shield, evaluating an indemnity provision requiring trade (a window supplier/manufacturer) to defend the builder in claims involving allegations of damages arising out of the trade’s work. Because the trade had contractually agreed to defend the builder, the Court held it responsible for the builder’s defense costs -- even though, ultimately, the trade was found
not liable for the actual damages claimed.
Recent legislation after Crawford has dramatically shifted how indemnity provisions will be enforced. Builders may no longer obtain Type 1 indemnity for residential construction defect claims covered by SB800; instead, indemnity is limited to the extent a claim arises out of the trade’s work. Even more recent legislation applied these changes to claims arising out of commercial construction projects. The recent legislation allows the trades “options” on how to defend the builder, with an eye toward requiring that they pay only a “reasonably allocated” portion for the builder’s defense costs.
Smart builders are refining their contract documents to take into account these new limitations on indemnity provisions.
Insurance Market Changes
Due to uncertainties in subcontractor insurance and other factors, many builders have also converted their liability insurance from a “bring your own” model to “wrap-up” insurance, where the builder’s policy also covers their trades. Builders should carefully examine their subcontracts in light of this change as well.
Trade Partner Changes
On a practical level, many trade partners, particularly in the residential sector, have gone out of business or moved on to greener pastures. Builders need to find and negotiate contracts with new trade partners on the fly, and educate them on the builders’ procedures for payment and construction.
SB800 documentation
A decade ago, most builders updated their purchase documents and subcontracts for California’s “Right to Repair Law” (also known as SB800), which set forth functionality standards for construction defects in residential housing, and procedures for resolving claims prior to litigation. Builders ramping up to meet market demand should examine how they implemented SB800 changes in contract documents. Issues to consider:
- Whether to opt out of -- or back into -- statutory procedures.
- Whether to include arbitration or judicial reference provisions to control where claims are litigated after the SB800 process.
- Re-training personnel to preserve SB800 rights, including sign-offs on purchase documentation and recordation of key documents.
- Recent Court of Appeal decisions have complicated the SB800 landscape, potentially opening the door to “common law” tort claims in at least subrogation contexts. Strategic planning at the document stage may be a good way to mitigate this risk as the cases wind their way through the judicial process.
The continuing surge in building activity is a welcome sign for builders who have weathered the storm. Before taking too many steps, builders should consult with counsel, their designers, and their insurance advisors to take into account the new realities of this recovering housing market.
About the Author
Alan H. Packer is a partner in the expanding Walnut Creek, CA, office of the law firm of
Newmeyer & Dillion LLP whose specialties include real estate, insurance, and construction litigation. To reach Alan, call 925.988.3200 or email him at alan.packer@ndlf.com.
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Homebuilding Continues to Recover in San Antonio Area
December 04, 2013 —
CDJ STAFFThere was a slowing in the third quarter, but home builders expect that 2013 will see more than 9,000 home starts in the San Antonio area. And even though the third quarter was slow, it was still about 3% above the same quarter in 2012.
And the new homes are more expensive. Jack Inselmann, a senior vice president at MetroStudy noted that “in 2011, 40 percent of housing activity was under $175,000. And here we are two years later and 31 percent is under $175,000.” He worries that people looking for homes will go to the resale market, instead of buying a new home.
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Designer of World’s Tallest Building Wants to Turn Skyscrapers Into Batteries
July 31, 2024 —
Will Wade - BloombergThe architecture firm that designed the world’s tallest building is considering ways to build skyscrapers that can store energy using gravity.
Skidmore, Owings & Merrill LLP has developed a series of prototype designs that use electric motors to elevate massive blocks, creating potential energy that can be converted into electricity when the blocks are lowered. The designs are based on technology developed by partner Energy Vault Holdings Inc. as an alternative to lithium-ion batteries and other types of chemical cells. They are seeking developer partners interested in offsetting greenhouse gas pollution from buildings, which the United Nations estimates are responsible for almost 40% of global emissions.
The concept is similar to widely used pumped hydroelectric plants. Energy Vault completed its first major project this month near Shanghai, a stand-alone storage system that can supply as much as 25 megawatts of power for four hours. Other companies are testing new types of gravity storage systems, including ones using abandoned oil wells and mines.
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Will Wade, Bloomberg
Chambers USA 2023 Recognizes Six Partners and Three Practices at Lewis Brisbois
June 19, 2023 —
Lewis Brisbois NewsroomNew York, N.Y. (June 6, 2023) – Six Lewis Brisbois partners and three Lewis Brisbois practices were recently ranked by Chambers in its 2023 USA rankings list.
Kansas City & Wichita Managing Partner Alan L. Rupe and Phoenix Managing Partner Carl F. Mariano were both ranked Band 1 for “Labor & Employment – Kansas” and “Insurance – Arizona,” respectively. Phoenix Partner Gina M. Bartoszek was ranked Band 2 for “Insurance – Arizona.” Washington, D.C. Managing Partner Jane C. Luxton and Minneapolis Partner Tina A. Syring were both ranked Band 4 for “Environment – District of Columbia” and “Labor & Employment – Minnesota,” respectively. Additionally, Washington, D.C. & Fort Lauderdale Partner J. Mario Fontes, Jr. was ranked Band 5 for “Corporate/M&A & Private Equity – Florida: South.”
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Lewis Brisbois
Eleventh Circuit Set to Hear Challenge to Florida Law Barring Foreign Citizens From Buying Real Property
April 22, 2024 —
Michael Gnesin - Lewis BrisboisFort Lauderdale, Fla. (April 2, 2024) - This month, the U.S. Court of Appeals for the Eleventh Circuit will hear a challenge to a recently-enacted Florida law, Senate Bill 264, which restricts foreign ownership or investment in Florida real property from specific countries and imposes a near ban on property purchases by Chinese, Russian and other foreign nationals.
On July 1, 2023,
Senate Bill 264 [codified under Fla. Stat. Ann. §§ 692.201 to 692.205] took effect. The bill, titled “Interests of Foreign Countries,” prohibits Chinese nationals and nationals from other countries, including Russia, from buying real property unless they are American citizens or permanent residents.
Prior to the new law's effective date, on May 22, 2023, four Chinese citizens who hold nonimmigrant visas and reside in Florida, along with a Florida-based real estate firm,
sued the state of Florida in federal district court, alleging that the new law is unconstitutional and discriminatory, and that it violates the Fair Housing Act [Shen v. Simpson, Case No. 4:23-cv-208].
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Michael Gnesin, Lewis BrisboisMr. Gnesin may be contacted at
Michael.Gnesin@lewisbrisbois.com
The Contract Disputes Act: What Every Federal Government Contractor Should Know
February 07, 2018 —
Sarah K. Carpenter – Smith Currie BlogClaims on construction projects are unpleasant, but sometimes unavoidable. Contract with the federal government and you are by statute and by contract required to resolve any and all disputes under the Contract Disputes Act. So what is the Contract Disputes Act? This article sets forth basic information all federal government contractors should know when faced with the necessity of making or defending a claim on a federal project.
What Is the Contract Disputes Act?
The Contract Disputes Act of 1978 (CDA or Act) was enacted by Congress to implement a comprehensive statutory scheme for the resolution of government contract claims. The CDA provides a framework for asserting and handling claims by either the government or a contractor. All disputes under the CDA must be submitted to either the U.S Court of Federal Claims or to an administrative board of contract appeals. The vast majority of board cases are handled by either the Armed Services Board of Contract Appeals or the Civilian Board of Contract Appeals. The ASBCA is generally responsible for deciding appeals from decisions of contracting officers in the Department of Defense, the Department of the Army, the Department of the Navy, NASA, and when specified, the CIA. The CBCA hears disputes from all other executive agencies except the United States Postal Service (USPS), the Postal Rate Commission, and the Tennessee Valley Authority.
The USPS is served by the Postal Service BCA. In addition, the Government Accountability Office Contract Appeals Board handles contract disputes arising in the legislative branch, and the Office of Dispute Resolution for Acquisition handles contract disputes and bid protests arising out of Federal Aviation Administration procurements.
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Sarah K. Carpenter, Smith Currie
Update: Supreme Court Issues Opinion in West Virginia v. EPA
August 03, 2022 —
Anne Idsal Austin, Shelby L. Dyl & Sheila McCafferty Harvey - PillsburyTakeaways
- The Supreme Court sided with a coalition of states and coal mining companies constraining EPA’s ability to regulate CO2 emissions from power plants.
- The Supreme Court’s deployment of the “major questions doctrine” could have far-reaching implications for agencies’ authority to take actions that are politically and economically significant.
- The Court also announced a broad interpretation of standing, finding that the challengers could bring their suit notwithstanding EPA’s announced nonenforcement of the Clean Power Plan and intent to engage in a rulemaking to replace it.
Introduction
On June 30, 2022, the Supreme Court issued its opinion in West Virginia v. EPA, invalidating the 2015 Obama-era Clean Power Plan (CPP). Chief Justice John Roberts delivered the opinion of the court, holding that Section 111(d) of the Clean Air Act does not authorize EPA to devise emissions caps based on “generation shifting”—the approach EPA took in the CPP wherein power plants would be required to transition from higher-emitting (e.g., coal) to lower-emitting (e.g., natural-gas) to then even lower-emitting (e.g., wind and solar) electricity production.
The Court’s holding that the case was justiciable despite the Biden administration’s stated intent to repeal the Clean Power Plan and engage in a new rulemaking, as well as its deployment of the “major questions doctrine,” is likely to have far-reaching implications for legal challenges to all administrative agency actions.
Reprinted courtesy of
Anne Idsal Austin, Pillsbury,
Shelby L. Dyl, Pillsbury and
Sheila McCafferty Harvey, Pillsbury
Ms. Austin may be contacted at anne.austin@pillsburylaw.com
Ms. Dyl may be contacted at shelby.dyl@pillsburylaw.com
Ms. Harvey may be contacted at sheila.harvey@pillsburylaw.com
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