Can a Receiver Prime and Strip Liens Against Real Property?
September 20, 2021 —
Ben Reeves - Snell & Wilmer Real Estate Litigation BlogCourts overseeing receivers generally enjoy broad discretion in directing and approving a receiver’s proposed actions. But does that authority extend to a receiver not only granting a super-priority lien ahead of existing liens, but also selling the real property free and clear of all liens? In County of Sonoma v. Quail, 56 Cal.App.5th 657 (Ct. App. 2020), the California Court of Appeals answered that question in the affirmative.
Quail involved a 47,480 square-foot lot with two houses, a few garages, several outbuildings, and numerous trailers surrounded by a veritable junk yard. Despite many of these structures being uninhabitable, unsanitary, and dangerous, multiple families resided on the lot. Although Sonoma County (the “County”) ordered the owner to remediate the property several times, he failed and refused to do so. After several years of these violations going unabated, the County ultimately sought and obtained the appointment of a receiver over the real property.
To obtain funds necessary to repair the property, the receiver asked the court for permission to borrow money through the issuance of a receivership certificate to be secured by a super-priority lien—i.e., a lien ahead of all other liens—against the real property. Although the trial court initially declined to prime existing liens, when the receiver could find no one to lend money (since the land lacked equity), the trial court relented and approved a super-priority lien despite the senior secured lender’s objection (the “lender”).
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Ben Reeves, Snell & WilmerMr. Reeves may be contacted at
breeves@swlaw.com
The Moving Finish Line: Statutes of Limitation and Repose Are Not Always What They Seem
June 01, 2020 —
Kenneth E. Rubinstein & Nathan Fennessy - Construction ExecutiveHaving an end date for risk is important to construction professionals who need to know when they can close their books and destroy files relating to old projects. While professionals typically look to the statute of limitations and repose, these deadlines can sometimes be harder to determine than one might think.
State Laws Prohibiting Alteration of Statutes of Limitation
Many contractors seek to control the extent of their risk by negotiating the length of their liability period. In some instances, contractors may seek to shorten the statute of limitations to protect against stale claims. While in other instances, owners periodically negotiate for longer periods to ensure that they will not be time barred from pursuing valid claims. While the majority of states enforce such contractual provision, a number of states hold such clauses unenforceable. In these instances, the state’s original statute of limitations will apply regardless of what the contract says.
Reprinted courtesy of
Kenneth E. Rubinstein & Nathan Fennessy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
Mr. Rubenstein may be contacted at krubinstein@preti.com
Mr. Fennessy may be contacted at nfennessy@Preti.com
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Sanibel Causeway Repair: Contractors Flooded Site With Crews, Resources
November 15, 2022 —
Derek Lacey - Engineering News-RecordAfter Hurricane Ian slammed into southwest Florida, washing out the Sanibel Causeway and cutting off thousands of Sanibel Island residents, another flood hit the area: construction crews and resources that swarmed the area to rebuild two roadway sections and five washed-out approaches to restore access.
Reprinted courtesy of
Derek Lacey, Engineering News-Record
Mr. Lacey may be contacted at laceyd@enr.com
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Supreme Court of New York Denies Motion in all but One Cause of Action in Kikirov v. 355 Realty Assoc., et al.
April 28, 2011 —
Beverley BevenFlorez CDJ STAFFIn the construction defect suit Kikirov v. 355 Realty Associates, LLC, et al., the Supreme Court of the State of New York granted a dismissal of the plaintiff’s fourth cause of action, but denied the defendants’ motion in all other respects. The plaintiff alleged breach of contract, among other claims. “355 Realty was the sponsor of 355 Kings Highway Condominium, a condominium project located at 355 Kings Highway, in Brooklyn, New York. The condominium units were allegedly marketed as ‘ultra luxury condos,’ and a ‘Manhattan style condominium building,’ which would be the ‘epitome of luxury and quality.’ The construction of the six-story 28 unit residential condominium building began in approximately November 2003. […] Plaintiff entered into a purchase agreement, dated December 21, 2005, with 355 Realty (which was executed on behalf of 355 Realty by Michael Marino, as its member) for the purchase of Unit 2G in the building.”
The plaintiff alleged that construction defects emerged soon after moving into the unit: “After taking occupancy of his condominium unit, plaintiff allegedly experienced serious leakage and moisture problems in his unit, which caused a dangerous mold condition to develop, in addition to causing actual damage to the structural elements of his unit. According to plaintiff, the walls, moldings, and wood floors of his unit are constantly wet and moist, and there is severe buckling of the wood floors. Plaintiff claims that these problems have caused his unit to be uninhabitable. Plaintiff alleges that he has been forced to remove all of his personal belongings from his unit and has been unable to occupy his unit.”
According to the plaintiff, Foremost attempted to repair the defects, but only made the situation worse: “Specifically, plaintiff asserts that Foremost’s contractors opened his walls to remove the stained drywall, but never corrected the cause of the leaks, destroyed the walls, and never properly taped and painted the sheet rock. Plaintiff alleges that Foremost repaired the openings in a defective manner. Plaintiff also claims that his floor was repaired at that time by a subcontractor hired by Foremost, but the basic structural problem was never resolved and the leaks continued, compromising the beams and causing the mold conditions, in addition to all of the physical damage present in the unit. On or about July 16, 2009, plaintiff allegedly sent a notice of the defects to 355 Realty and to the managing agent designated by the condominium board, by certified mail, return receipt requested. Plaintiff asserts that defendants have failed and refused to repair and remedy the defective condition, and that the damage is extensive and requires major structural repairs.”
The plaintiff filed suit on May 4, 2010, and the original complaint asserted eight causes of action. “By decision and order dated September 13, 2010, the court granted a motion by defendants to dismiss plaintiff’s second cause of action for breach of implied covenants of good faith and fair dealing, his third cause of action for breach of implied warranties, his fifth cause of action for negligence as against 355 Realty, Michael Marino, Anthony Piscione, Ahron Hersh, and Toby Hersh, his seventh cause of action for negligence as against Vision, Foremost, and MMJ, and his eighth cause of action for violations of General Business Law § 349 and § 350, and granted plaintiff leave to replead his first cause of action for breach of contract as against 355 Realty, Michael Marino, Anthony Piscione, Ahron Hersh, and Toby Hersh, his fourth cause of action for breach of statutory warranties, and his sixth cause of action for breach of contract as against Vision, Foremost, and MMJ.”
The plaintiff amended their complaint on October 18, 2010, and “has repleaded these three causes of action by asserting a first cause of action for breach of contract as against 355 Realty, Michael Marino, Anthony Piscione, Ahron Hersh, and Toby Hersh, a second cause of action for breach of statutory warranties, and a third cause of action for breach of contract as against Vision, Foremost, and MMJ. In addition, plaintiff, in his amended complaint, has added a fourth cause of action for fraud.”
The defendants, on the other hand, “argue that each of the four causes of action alleged by plaintiff in his amended complaint fail to state a claim upon which relief may be granted, and that plaintiff’s amended complaint must be dismissed pursuant to CPLR 3211 (a) (7). Defendants also cite to CPLR 3211 (a) (1), and (5), asserting that dismissal is also required based upon documentary evidence and the Statute of Limitations contained in the limited warranty.” The defendants’ motion to dismiss the first cause of action, breach of contract against 355 Realty, was denied: “While defendants dispute that the alleged defects are actually structural in nature, plaintiff’s allegations as to their structural nature are sufficient, at this juncture, to withstand defendants’ motion to dismiss. Thus, dismissal of plaintiff’s first cause of action must be denied.”
Next, the court reviewed the second cause of action, which was breach of statutory warranties: “Defendants’ motion also seeks dismissal of plaintiff’s second cause of action for breach of statutory warranties, which alleges that, under applicable law, including General Business Law § 777-a, et seq., the sponsor warranted to purchasers of units that the units would be constructed in a skillful, careful, and workmanlike manner, consistent with proper design, engineering, and construction standards and practices, and free of material latent, design, and structural defects. Defendants argue that General Business Law § 777-a, known as the housing merchant implied warranty, is inapplicable to this case because it is limited to the construction of a ‘new home,’ defined in General Business Law § 777 (5) as ‘any single family house or for-sale unit in a multi-unit residential structure of five stories or less.’ As noted above, the building in which plaintiff’s condominium unit is located is a six-story building.”
The motion to dismiss the second cause of action is denied. The court provided this reasoning: “the full text of the offering plan has not been provided, the court is unable to examine the entire written agreement so as to determine the purpose of the inclusion of the text of General Business Law § 777.”
In the third cause of action, the plaintiff alleges “a breach of contract claim as against Vision, Foremost, and MMJ based upon their contract with 355 Realty, pursuant to which they agreed to be the general contractors/construction managers for the condominium, to undertake oversight responsibility for the design and construction of the condominium, to prepare and/or review drawings, plans, and specifications for the condominium, and to otherwise manage and oversee the project. Plaintiff alleges that Vision, Foremost, and MMJ breached their contractual obligations in that the condominium units were improperly and inadequately designed and constructed, and completed in an incompetent and unworkmanlike manner, with material design and construction defects.”
The motion to dismiss the third cause of action was denied as well: “Plaintiff alleges, in his amended complaint, that Vision, Foremost, and MMJ have acknowledged notice of the defects and have not denied that they are responsible for providing a warranty to plaintiff. Plaintiff also refers to this warranty, in his amended complaint, by noting that paragraph 16 of the purchase agreement stated that the ‘[s]eller shall not be liable to . . . the [p]urchaser for any matter as to which an assignable warranty . . . has been assigned . . . to [p]urchaser and in such case the sole recourse of such . . . [p]urchaser . . . shall be against the warrantor . . . except that in the event a contractor or subcontractor is financially unable or refuses to perform its warranty . . . [s]eller shall not be excused from its obligations enumerated in the [offering p]lan under Rights and Obligations of Sponsor.’ Consequently, the court finds that dismissal of plaintiff’s third cause of action as against Foremost and MMJ must also be denied.”
In the fourth cause of action, the plaintiff alleges “that defendants made false statements and representations orally, in advertisements, and in the purchase agreement, that the condominium was properly and adequately designed and constructed and completed in a competent and workmanlike manner, in accordance with the condominium plans and specifications and proper design, engineering, and construction standards and practices consistent with applicable standards for a first class, luxury condominium in Brooklyn.”
The court dismissed the fourth cause of action stating, “it must be dismissed because it is duplicative of his first cause of action for breach of contract.” Therefore, “defendants’ motion to dismiss plaintiff’s amended complaint is granted to the extent that it seeks dismissal of plaintiff’s fourth cause of action, and it is denied in all other respects.”
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10 Answers to Those Nagging Mechanics Lien Questions Keeping You Up at Night. Kind of
November 05, 2014 —
Garret Murai - California Construction Law BlogConstruction lawyers may not ponder the great questions in life.
We leave that to the estate planning attorneys.
But ponder we do.
And the next case, as I’ll explain below, “kind of” answers 10 important mechanics lien questions we construction attorneys toss and turn over at night.
Background
In Palomar Grading & Paving, Inc. v. Wells Fargo Bank, Case Nos. G049907 and G049910 (October 14, 2014), developer Inland-LGC Beaumont, LLC (“Inland”) hired general contractor 361 Group Construction Services, Inc. (“361″) to construct a Kohl’s department store in Beaumont, California.
The Kohl’s department store was to be constructed on one parcel of a three-parcel tract. Inland later sold the parcel on which the Kohl’s department store was to be located to Kohl’s and the two other parcels were later acquired by Wells Fargo who foreclosed on the construction loan for the project.
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Garret Murai, Kronick Moskovitz Tiedemann & GirardMr. Murai may be contacted at
gmurai@kmtg.com
What You Need to Know About Enforcement Actions by the Contractors State License Board
April 15, 2015 —
Garret Murai – California Construction Law BlogI questioned whether to even write this post.
Because, of course, YOU would never find yourself hightailing it out of town with the California Contractor’s State License Board (“CSLB”) sniffing down your tail pipes.
Then again, mistaken identities occur all the time. So, here’s what you need to know if the CSLB mistakes you for one of “those” contractors.
What violations are subject to CSLB enforcement actions?
The CSLB can take enforcement actions based on any one of numerous violations set forth under the California Business and Professions Code (“B&P Code”), including:
1.
B&P Code §7107: Abandonment of a construction project or operation without legal excuse.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Insured's Expert Qualified, Judgment for Coverage Affirmed
December 15, 2016 —
Tred R. Eyerly – Insurance Law HawaiiAddressing a host of issues on appeal, the Texas Court of Appeals affirmed the trial court's judgment against the insurer for property damage caused by Hurricane Ike. Nat'l Sec. Fire & Cas. Co. v. Henriquez, 2016 Tex. App. LEXIS 11391 (Tex. Ct. App. Oct. 20, 2016), withdrawn and substituted by 2016 Tex. App. LEXIS 12766 (Tex. Ct. app. Dec. 1, 2016).
The insureds alleged property damage to their home caused by the hurricane. The roof was damaged, resulting in interior water damage. Sheetrock, exterior bricks, windows, walls cabinets and insulation throughout the entire home were damaged. The insureds also alleged that the home shifted during the storm, causing the foundation to not be level and the ceilings and walls to crack. Personal property within the dwelling was also damaged.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
In Search of Cement Replacements
October 19, 2017 —
Aarni Heiskanen - AEC BusinessCould we replace cement as the vital element in concrete some day? We look at two alternative answers to this question.
The Problems with Cement
Portland cement dominates in the construction and road building industries. From an environmental point of view, cement is not the perfect solution. The cement industry accounts up to 7% of the world’s carbon dioxide emissions. For every 600 kg of cement, approximately 400 kg of CO2 is released into the atmosphere.
It is possible to recycle concrete by crushing it and using the gravel e.g. in road construction. However, the demand for new concrete is huge and increasing. According to The Washington Post, China used more cement between 2011 and 2013 than the U.S. used in the entire 20th Century. The worldwide production of cement has increased from 3.3 billion tons in 2010 to 4.2 in 2016. Even that is not enough; shortage of cement is a real problem in some countries.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
info@aepartners.fi
