Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit
September 09, 2011 —
CDJ STAFFThe Alabama Court of Civil Appeals has upheld a summary judgment in the case of Franklin v. Mitchell. Walter Mitchell, doing business as Southern Classic Construction built a new home for the Franklins. The Franklins moved into the home in October 2001. In April 2006 they discovered sagging floors in both the bathroom and kitchen. They contacted Mitchell who suggested the flooring might be defective. The Franklins spent eight months attempting to contact the flooring manufacturer.
In March 2007, the Franklins had the home inspected. The sagging was determined to be due to a loss of strength in the decking because of condensation from the air conditioning system. Air returns were not properly sealed and drawing moisture into the structure. There was mold on the decking and floor joints.
When Mitchell was contacted by the Franklins, he told them his one-year warranty had expired but had the HVAC subcontractor, Southern Mechanical Heating & Air (owned by Mitchell’s father, Jim Mitchell), look at the situation. SMHA replaced and braced subfloors. Later, they entered the crawl space to tape ducts, seal the air return, and insulate the air vent housing. The Franklins were not satisfied with the repairs, as not all the ducts were taped, nor were the air vent housings insulated.
Franklin complained to Walter Mitchell who again cited his one-year warranty. Jim Mitchell said he would not report complaints to his insurer, stating that the repairs were unnecessary, that the work had been done correctly in the first place, and it was only done at the request of Walter Mitchell.
In February 2009, the Franklins sued Walker Mitchell. Mitchell denied the claims, citing in part the statute of limitations. Mitchell also filed complaints against three subcontractors, including his father’s firm. Mitchell received a summary judgment as the case started after Alabama’s six-year statute of limitations.
The appeals court rejected the Franklin’s argument that the claim of damage did not start until they were aware it was due to a construction defect. The court noted that as Walter Mitchell was licensed as a “residential home builder, the statute the Franklins cite did not apply, as it concerns architects, engineers, and licensed general contactors.”
Nor did they feel that Mitchells’ claim that his warranty had expired were sufficient to override the statute of limitations, quoting an earlier case, “Vague assurances do not amount to an affirmative inducement to delay filing suit.” Their claim of subsequent negligent repairs was rejected because Mitchell did not direct the specific actions taken by his father’s firm.
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Denial of Coverage for Bulge in Wall Upheld
November 26, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe insurer properly denied coverage for a bulge in a warehouse wall that the insured claimed was caused by Hurricane Ike. Russell v. Scottsdale Ins. Co., 2014 U.S. Dist. LEXIS 143882 (S.D. Tex. Sept. 30, 2014).
Hurricane Ike displaced metal roof coverings on the insured's warehouse, causing interior water damage to several rooms. Scottsdale eventually paid $84,820.36 for the loss of the roof, less the deductible. The parties disagreed on whether a horizontal bulge on the north wall of the warehouse was also caused by the hurricane. The bulging portion of the wall was not cracked, but cracks were seen around the corners and windows. The insured admitted to an engineer retained by Scottsdale that the cracks in the exterior walls had been filled with caulking on several occasions prior to Hurricane Ike.
Scottsdale denied coverage for the damage to the north wall under exclusions for soil sinking, rising, or shifting and for damage from faulty, inadequate or defective design, construction, and repair.The insured later sent a demand for $800,000 for the damage to the wall. A suit was eventually filed by the insured.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Godfather Charged with Insurance Fraud
July 01, 2011 —
CDJ STAFFTexas-based Godfather Construction is a recipient of a fraud suit from the Cook County state attorney’s office. The firm incorporated in Illinois in April 2010, moving there to do business after storms damaged homes in the Chicago suburbs, according to a report in the Chicago Tribune. The state attorney alleges that Godfather brought unlicensed out-of-state workers and the work they performed was “incomplete or shoddy.” Godfather is claimed to have received about $60,000 from Illinois homeowners. The prosecutors are seeking restitution for Godfather’s clients and seek to forbid the firm from doing business in Illinois.
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TLSS Partner Burks Smith and Associate Katie Keller Win Summary Judgment on Late Reported Water Seepage Case in South Florida
November 18, 2019 —
Burks A. Smith, III & Kathryn Keller - Traub LiebermanOn July 9, 2019, Traub Lieberman Straus & Shrewsberry LLP Partner, Burks A. Smith, III and Associate, Kathryn A. Keller, secured Summary Judgment on behalf of a major homeowners’ insurer in a breach of contract action in the United States District Court for the Southern District of Florida. See Lehrfield v. Liberty Mutual Fire Insurance Company, 2019 WL2994270 (S.D. Fla. 2019). The underlying claim involved a water loss at the Plaintiffs’ residence allegedly resulting in $91,147.32 worth of damage to their home. The claim was reported eight (8) months after the alleged date of loss, and during the inspection, the adjuster observed rot, decay, mold, and warping wood, prompting the carrier to deny the claim based on the Seepage Endorsement. The Plaintiffs filed a breach of contract action alleging that the insurer breached the Policy by denying the claim.
Mr. Smith and Ms. Keller argued that Plaintiffs’ Policy with the insurer imposes a duty on the Plaintiffs to comply with the Duties After Loss conditions of the Policy, including the requirement to provide prompt notice of the loss and show the damaged property. As mentioned above, the Plaintiffs provided notice of the claim eight (8) months late, and performed various repairs prior to notifying the insurer of the claim. After the close of discovery, Mr. Smith and Ms. Keller filed a Motion for Summary Judgment on behalf of the insurer based on the late reporting, and further argued that the Plaintiffs had the burden of proving direct physical loss to property within the first 13 days of the loss, given the recent decision of Hicks v. American Integrity Insurance Company of Florida, 241 So.3d 925 (Fla. 3d DCA 1018). In Florida, when an insured fails to comply with their Duties After Loss, a presumption of prejudice to the insurer arises. Bankers Ins. Co. v. Macias, 475 So. 2d 1216, 1218 (Fla. 1985)). In order to recover, the Plaintiffs bear the burden of overcoming the presumption, and must prove that no prejudice existed. Id. Mr. Smith and Ms. Keller’s comprehensive arguments successfully proved to the Court that the Plaintiffs’ failure to timely report the claim prejudiced the insurer by prohibiting the insurer from being able to independently validate the loss, or distinguish between multiple causes of loss. Mr. Smith and Ms. Keller further argued that Plaintiffs did not meet their burden to prove that the insurer was not prejudiced by the Plaintiffs’ failure to comply with the Duties After Loss provision of the Policy. The Motion cited numerous cases and extensive analysis supporting the insurer’s position.
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Burks A. Smith, III, Traub Lieberman and
Kathryn Keller, Traub Lieberman
Mr. Smith, may be contacted at bsmith@tlsslaw.com
Ms. Keller may be contacted at kkeller@tlsslaw.com
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NIBS Consultative Council Issues Moving Forward Report on Healthy Buildings
July 25, 2021 —
National Institute of Building Sciences(WASHINGTON, DC, July 13, 2021) – The
National Institute of Building Sciences Consultative Council has issued its
2020 Moving Forward Report, looking closely at the importance of healthy buildings.
The report examines how buildings can protect and promote public health, providing recommendations for President Biden and policymakers on three components of healthy buildings: indoor environmental quality, the importance of design in promoting health, and promoting knowledge transfer between building owners and public health officials.
“Ensuring that the spaces where we live and work are healthy and safe for continued occupancy is critical to overcoming the pandemic,” said Lakisha A. Woods, CAE, President and CEO of NIBS. “This is a fundamental pillar of public health and community resilience. The concept of healthy buildings goes well beyond continual sanitation of a building’s indoor environment to eliminate pathogens.”
About NIBS
National Institute of Building Sciences brings together labor and consumer interests, government representatives, regulatory agencies, and members of the building industry to identify and resolve problems and potential problems around the construction of housing and commercial buildings. NIBS is a nonprofit, non-governmental organization. It was established by Congress in 1974. For more information, visit nibs.org or follow @bldgsciences on Twitter and Facebook.
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Roots of Las Vegas Construction Defect Scam Reach Back a Decade
August 05, 2013 —
CDJ STAFFRecent court documents in the Las Vegas HOA scandal reveal that the late Nancy Quon, thought to be a mastermind in the scam was involved with a similar case before 2001. The Las Vegas Review-Journal reports that the Nevada attorney general’s office launched an investigation of the Starfire condominium complex. Claims were made that an architect and a construction company attempted to fill the Starfire board with straw buyers. Quon represented a resident to filed a claim over defective windows.
Chris Rasmussen, the attorney for Edith Gillespie, Leon Benzer’s half sister, has noted that his client was not charged in the Starfire case, but the Review-Journal notes that no one was, as the insurance company settled quickly, which ended the chances for a criminal investigation. The Starfire case is described as “a $6 million lawsuit based on fraudulent construction defect claims.” Quon, Benzer, and their co-conspirators are alleged to have modeled their subsequent actions after Starfire.
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Builders Beware: A New Class Of Defendants In Asbestos Lawsuits
January 06, 2016 —
David J. Byassee, Bremer Whyte Brown & O’Meara, LLP & Timothy A. Gravitt, Ulich, Ganion, Balmuth, Fisher & Feld, LLPResidential, commercial and industrial builders face new and potentially significant liability for construction activities that took place in the 1960s, 1970s and 1980s: personal injury lawsuits filed by construction workers from exposure to building products containing asbestos. After emptying the pockets of manufacturers and suppliers of raw asbestos and asbestos-containing products over the last 20 years, plaintiff lawyers are beginning to set their sights on a new class of defendants in asbestos litigation: residential, commercial and industrial builders who unknowingly allowed asbestos-containing products to be incorporated into their projects.
The men and women who have been involved in the building industry for 40 years or more may remember the subject of asbestos surfacing in the 1970s with the enactment of the Occupational Safety and Health Act (OSHA). At that point builders were just beginning to learn that asbestos was a component of some building materials, and the potential risk of cancer presented by asbestos was being debated in scientific and medical journals. Although the use of building materials containing asbestos was mostly phased out by the 1980s, the health risks associated with exposure to asbestos continue – and in fact increase – for the duration of an exposed person’s life.
Today it is generally accepted that exposure to asbestos increases the risk of developing asbestosis and certain kinds of cancer, including mesothelioma. Cancers associated with exposure to asbestos are typically diagnosed at least 15 years (and sometimes up to 50 years) after a person’s exposure to asbestos, meaning that exposures in the 1960s, 1970s and 1980s might not manifest in disease until now. The class of persons who may be at risk for asbestos-related disease is long and varied: insulators, HVAC installers, pipe fitters, plumbers, drywall installers, painters, plasterers and roofers, to name a few. Long-term exposure history, coupled with the theory that “each and every” exposure during a lifetime is a substantial factor increasing the risk of developing cancer, presents potential liability to builders acting as general contractors and/or property owners, as well as the usual defendants in asbestos lawsuits, which include manufacturers, suppliers, and users of asbestos-containing materials.
In recent years, plaintiff lawyers have set their sights on builders as the financial wherewithal of traditional asbestos defendants has dried up. Plaintiff lawyers have created a new theory of liability which they use to rope builders in as defendants in asbestos lawsuits: that the builder knew – or should have known – that a deadly ingredient (asbestos) was contained in the building materials used in construction, and the builder failed to warn its subcontractors or anyone else on the project that exposure to asbestos could harm them.
Builders have unique legal defenses to claims brought by employees of subcontractors who have developed asbestos-related disease. For example, the California Supreme Court in Privette v. Superior Court (1993) 5 Cal.4th 689, held that an injured employee of a subcontractor cannot maintain a claim against the hirer (builder) for the employee’s injury absent affirmative contribution on the part of the builder to the injury. Thus the first line of defense in an asbestos exposure case is to argue that the developer had no direct role in the plaintiff’s exposure to asbestos and therefore the Privette doctrine precludes the plaintiff from suing the builder. But resourceful plaintiff lawyers are coming up with arguments to get around this so-called Privette defense in asbestos lawsuits by claiming that builders’ activities such as cleanup of asbestos-containing materials, or assertion of control over the work of the subcontractor, directly contributed to the plaintiff’s injuries and therefore provide exceptions to Privette and allow the claim to proceed.
A practical question is raised in asbestos cases: How is a plaintiff able to prove, decades after working on a project, what building materials contained asbestos, or that a builder knew or should have known in the 1960s, 1970s or 1980s that asbestos-containing materials were used on their project, or that asbestos presented a health risk? To answer the first part of the question (what building materials contained asbestos), plaintiff’s experts will say that during the relevant timeframe asbestos was a common ingredient in many building products, e.g., drywall joint compounds, stucco/plaster/gun cement, acoustic ceiling products, cement pipe, insulation, roofing mastic, caulk and plumber’s putty; this can be further proven by reference to product manufacturers’ disclosures made pursuant to the Asbestos Information Act. Also, through the decades of asbestos litigation against product manufacturers and suppliers, resourceful plaintiff lawyers have developed vast banks of data and documentation identifying the manufacturers of asbestos-containing building products, the end-users of those products, and the projects where those products were supplied. With this bank of knowledge, all that is necessary for them to make the claim against a builder is to have the plaintiff identify a construction project where he or she remembers working during the relevant timeframe. Once that identification is made, it is a simple matter for the lawyers to dig and find out who developed the building/project, who then becomes a defendant in an asbestos lawsuit.
The answer to the second part of the question (whether the developer knew or should have known that the products brought to their projects contained asbestos) requires a detailed investigation into the dates at which the products were supplied to the project, the manufacturer of the product, and what information was available in the market place about the material content of the particular product.
The answer to the third part of the question (knowledge that asbestos presented a health risk) is trickier. One of the first standards set by OSHA in 1972 related to permissible levels of exposure to asbestos. It is a common tactic for plaintiff lawyers to argue that the existence of OSHA standards created a presumption of knowledge in the building industry about the dangers of asbestos. But what about pre-OSHA knowledge? Here plaintiff lawyers will argue that well before OSHA, going back as far as 1936, exposure to asbestos was regulated in California under General Industry Safety Orders relating to Dusts, Fumes, Mists, Vapors and Gases. They argue that the General Industry Safety Orders put builders “on notice” of the dangers of asbestos by virtue of being regulated by the State of California, and, by extension, builders had “knowledge” of the health risks associated with asbestos.
There are defenses that skilled defense counsel can utilize to defeat asbestos claims, assuming the Privette defense is not available. The first is to thoroughly investigate and evaluate all of the plaintiff’s potential exposures to asbestos throughout his entire lifetime, and identify those sources that likely were the major contributors to his disease. Next, counsel has to properly investigate the project at which the plaintiff is alleged to have been exposed to asbestos, identify all of the possible sources of exposure, i.e., the products that were used or might have been used at the project, and finally how the plaintiff was allegedly exposed at the project. As most builders do not maintain records of what products were used in their projects dating back 15 years or more, let alone the identities of the trades that worked on the projects, knowledgeable defense counsel can be a valuable partner in unearthing the brands of products typically in use in the locale where the construction took place, and identifying the manufacturers of those products. Defense counsel must analyze the frequency, duration, proximity and intensity of the exposure, as well as the type of asbestos the plaintiff was allegedly exposed to (not all asbestos is created equal – some types are more toxic than others). This will involve careful evaluation of the levels of exposure created by the alleged activity of the builder, to determine, through experts and a thorough understanding of the scientific and medical studies on the subject, whether the levels of asbestos exposure created by the activity could be considered a “substantial factor” in contributing to the risk of the plaintiff’s development of his asbestos-related disease.
Asbestos lawsuits present a significant risk to the unsuspecting and unprepared builder. Money damages available to a plaintiff are substantial. Medical expenses for treatment of asbestos-related disease typically run into the hundreds of thousands of dollars, lost income (including retirement benefits) can also be significant, and jury awards for pain, suffering and emotional distress can be staggering - often millions of dollars. In some cases punitive damages are even awarded.
The bottom line is that a builder runs a big risk if it treats an asbestos claim like any other claim. The level of analysis and investigation to properly defend against the claim requires prompt action by knowledgeable counsel, and frequently there is no insurance coverage.
David J. Byassee is an attorney with the firm
Bremer Whyte Brown & O’Meara, LLP, and is a litigator who has devoted nearly a decade to representation of real estate developers and builders. He can be reached at: dbyassee@bremerwhyte.com.
Timothy A. Gravitt is an attorney with the firm
Ulich, Ganion, Balmuth, Fisher & Feld, LLP who is devoted to defending real estate developers and builders in a variety of litigation. He can be reached at: tgravitt@ulichlaw.com.
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Virginia Decision Emphasizes Importance of Naming All Necessary Parties
June 17, 2015 —
Beverley BevenFlorez-CDJ STAFFNate Budde on the Construction Payment Blog, discussed the potential of mechanics liens, and the pitfalls that occur when not all necessary parties are named. Budde analyzed the case Johnson Controls Inc. v. Norair Eng’g Corp. that involved a “claimant’s failure to name all the necessary parties in his claim against a bond,” resulting “in the claimant losing his claim against the bond, and with it, an opportunity to get paid.”
Budde concluded, “Unfortunately, as was the case here, when the bond claim is not handled correctly procedurally, a party can be left with no recourse for payment. It’s important to understand which of the parties involved should be named in both mechanics lien claims and bond claims.”
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