Addenda to Construction Contracts Can Be an Issue
March 30, 2016 —
Christopher G. Hill – Construction Law MusingsWe’ve all been there. Your client either has a well drafted standard subcontract (with any luck in consultation with an experienced construction attorney) that it presents to its subcontractors and suppliers or your client is presented with a construction contract that has some provisions that it would prefer were either different or gone altogether.
In the first of these scenarios, your client often gets push back from a subcontractor to change certain provisions. Such a response is not necessarily a bad thing depending on the provisions that the potential subcontractor may have. The construction contract documents will govern the way that the project moves forward and will be strictly enforced in Virginia and elsewhere so some early give and take is not unusual or unwanted.
In the second scenario, your client is likely to be reading a fairly one sided document. The General Contractor has drafted the contract and is “north” of your client in the payment chain. Like it or not, they will in most instances leave it to you and your attorney to root out the particularly egregious on sided terms and seek to negotiate them to some sort of equality.
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Christopher G. Hill, Law Office of Christopher G. Hill, PCMr. Hill may be contacted at
chrisghill@constructionlawva.com
Steps to Curb Construction Defect Actions for Homebuilders
June 15, 2017 —
Jason Daniel Feld – Kahana & Feld, LLPThe homebuilding and construction industries in California are at a record high in 2017 according to the National Homebuilders Association. While there is finally prosperity and growth for builders, developers and contractors after suffering from the recession of 2008, there is also a growth in construction defect claims. As with every industry and especially with construction, there are several risk prevention methods that can help curb this litigation.
Time Frames for Pursuing Construction Defect Claims
It is important to know and understand the time frames for which construction defect claims can be pursued by homeowners. There is a hard cut-off for construction defect litigation in California known as the Statute of Repose of 10 years. California Code of Civil Procedure (“CCP”) §337.15 provides a statute of repose that bars actions to recover damages for construction defects more than 10 years after substantial completion of the work of improvement. This provision is limited to property damage claims and does not extend to personal injuries (See, Geertz v. Ausonio, 4 Cal.App.4th 1363 (1992) and willful misconduct or fraudulent concealment claims. (See, Acosta v. Glenfed Development Corp., 128 Cal.App. 4th 1278 (2005).
There are also interim statutes of limitations for “patent” and “latent” defects discovered at the home also from the date of substantial completion. CCP §337.1(e) provides for a four year window to bring suit for deficiencies that are apparent by reasonable inspection (patent deficiencies). CCP §337.15(b) provides for deficiencies that are not apparent by reasonable inspection or hidden defects that require invasive testing to become apparent (latent deficiencies). A latent defect can become patent after it “manifests itself” (i.e. becomes observant – for example a roof leak) for which the four year window from the date of discovery would become the applicable statute of limitations.
The discovery rule effectively acts to toll the statute of limitation period on construction defect claims until they become reasonably apparent. (See, Regents of the University of CA v.Harford Accident & Indemnity, Co., 21 Cal.3d 624, 630 (1978). This is similar to a breach of contract claim, also a four year statute of limitation. Finally, the California Right to Repair Statute (SB800) – Civil Code §§895, et seq. specifically Civil Code §896 sets forth the “Functionality Standards” or a list of actionable defect items, including items affecting the component’s “useful life” and a catch-all provision for all items not expressed listed as defects in the statute. (Civil Code §897). The majority of the defects alleged have a 10 year statute of limitations. However, there are shortened statute of limitations for the following items:
| Functionality Standards | Statute of Limitations |
|---|
| Noise Transmission |
1 year from original occupancy of adjacent unit |
| Irrigation |
1 year from close of escrow |
| Landscaping Systems & Wood Posts (untreated) |
2 years from close of escrow |
| Electrical systems, pluming/sewer systems, steel fences (untreated), flatwork cracks |
4 years from close of escrow |
| Paint/Stains |
5 years from close of escrow |
| All other functionality standards (Civil Code §941(a)) |
10 years after substantial completion(date of recordation of valid NOC) |
Preventative Measures to Curb Construction Defect Litigation
Once the builder knows the time frames for construction defect claims, the following are some preventive measures to limit construction defect claims. As a reminder, homeowners are less likely to bring construction defect action if they feel that the builders are taking care of them.
1. Communicate With Homeowners Prior to Claims
It is imperative to communicate with the homeowners throughout the ten years statute of repose period. For example, most builders provide a limited warranty to the homeowners at the time of purchase. Homeowners are generally confused as to the length of the warranty and what the warranty covers. A practical tip to help curb construction defect claims is for the builder to send postcards or letters to the homeowners at the six month, one year and nine-year marks to advise the homeowner of: (1) the existence of the warranty and what is covered at each time frame; (2) the maintenance obligations of the homeowner at the various time frames; and (3) the fact that the home is approaching the ten-year mark. Most builders would rather deal directly with the homeowners through customer service than defend a construction defect litigation action where the costs to defend the claim will vastly exceed the cost to address the individual homeowner issues. The more the builder communicates with the homeowner in advance, the less likely it is that the homeowner engages in litigation against the builder.
2. Timely Response to Homeowner Claims
During the purchase process, provide the homeowners instructions on how to send in a customer service or warranty requests. Provide multiple methods for notification to the builder by the homeowner when issues arise in their home (fax, email, website forms, etc.). The builder should provide a timely response – within 48 hours of the notice if possible. The homeowner wants to receive some notification from the builder that they received their request and, at the very least, will investigate the claim. Even if it is determined to be a maintenance item or homeowner caused damage, the homeowner should receive: (1) an acknowledgement of the claim; (2) an investigation report of the issue; and (3) an action plan or conclusion statement – this can be a declination of repairs with an explanation as to the cause not being the result of original construction. Sometimes even sending a customer service representative to the home to listen to the homeowner claims and explaining that there are not repairs required is sufficient to satisfy the homeowner. The goal is to make sure the homeowner’s claims are acknowledged and that the builder is standing behind its product. In my experience, the fact that the builder failed to respond in a timely fashion to the homeowner is a significant motivating factor as to why the homeowner elected to enter formal litigation against the builder.
3. Be Proactive When Litigation Ensues Despite the fact that the homeowner has engaged an attorney and joined a construction defect action, the builder is not precluded from continuing to communicate with its homeowners. Several builders send letters to the non-plaintiff homeowners reminding them to contact the builder should they have issues at their homes rather than join the ongoing construction defect action. Under the law, clients can always talk to clients even if they are represented by counsel. While the attorneys for the builders cannot speak to the represented construction defect homeowners, the builder can communicate directly with its homeowners offering to honor its warranty and customer service procedures in lieu of the homeowner proceeding with the litigation. Both of these builder attempts to communicate with homeowners post-litigation have a dual effect – some homeowners elect to contact the builder to effectupate repairs and drop the litigation; while others elect to continue with the litigation. So proceed cautiously in this regard.
It is noted, there are many motivating factors for homeowners to bring a lawsuit against homebuilders that have nothing to do with the construction practices or customer service and are merely economically driven. However, these small steps in addition to providing solid construction practices should help curb construction defect litigation by homeowners.
Jason Daniel Feld is a founding partner of Kahana & Feld LLP, an AV Preeminent boutique litigation firm in Orange County specializing in construction defect, insurance defense, employment and general business litigation matters. The firm was founded with the goal of providing high-quality legal services at fair and reasonable rates. The firm believes that what defines attorneys is not their billing rates, but their record of success, which speaks for itself. For more information, please visit: www.kahanafeld.com.
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New Jersey Supreme Court Hears Insurers’ Bid to Overturn a $400M Decision
January 25, 2021 —
Lawrence J. Bracken II, Michael S. Levine & Daniel Hentschel - Hunton Andrews KurthNew Jersey’s highest court heard arguments Monday in the appeal of a ruling that the New Jersey Transit Corp.’s (“NJ Transit”) insurers are required to insure $400 million of water damage loss caused by Hurricane Sandy.
The matter stems from an insurance claim NJ Transit made after the super storm rocked the East Coast in 2012. NJ Transit claimed over $400 million in losses as a result of damage to its tracks, bridges, tunnels and power stations. In response, its tower of property insurers took the position that a $100 million flood sublimit applied to limit NJ Transit’s recovery under its insurance tower, not the policy’s $400 million overall limits.NJ Transit filed a coverage action in state court. The trial court granted summary judgment to NJ Transit, holding that NJ Transit was entitled to full coverage of $400 million under the tower’s named windstorm coverage. The insurers appealed, again arguing that the flood sublimit applied to the claim.
Reprinted courtesy of
Lawrence J. Bracken II, Hunton Andrews Kurth,
Michael S. Levine, Hunton Andrews Kurth and
Daniel Hentschel, Hunton Andrews Kurth
Mr. Bracken may be contacted at lbracken@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Hentschel may be contacted at dhentschel@HuntonAK.com
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Understand the Dispute Resolution Provision You Are Agreeing To
September 20, 2021 —
David Adelstein - Florida Construction Legal UpdatesWhen negotiating a contract, do not overlook the dispute resolution provision. It is one of the more important provisions in your construction contract. This provision will come into play and have ramifications if there is a dispute, which is certainly not uncommon on a construction project.
In dispute resolution provisions in subcontracts on federal projects, it is not unusual for that provision to include language that requires the subcontractor to STAY any dispute that concerns actions or inactions of the owner pending the resolution of any dispute between the owner and prime contractor relating to that action or inaction. A provision to this effect should be included for the benefit of the prime contractor. For instance, the provision may say the subcontractor agrees to stay any such claim against the prime contractor or prime contractor’s surety pending the outcome of any pass-through claim (or otherwise) submitted under the Contract Disputes Act.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Newmeyer Dillion Partner Louis "Dutch" Schotemeyer Named One of Orange County's 500 Most Influential by Orange County Business Journal
January 25, 2021 —
Newmeyer DillionProminent business and real estate law firm Newmeyer Dillion is pleased to announce that partner
Louis "Dutch" Schotemeyer has been selected to the Orange County Business Journal's fifth annual "OC 500 Directory of Influence" list. The 2020 list recognizes the 500 most influential leaders who have made a positive mark on Orange County's business community over the last year.
Located in the Newport Beach office, Schotemeyer's practice areas include, Real Estate Litigation, Construction Operations and Litigation, Business Litigation and Labor & Employment. Additionally he provides risk management and legal advice to companies without dedicated in-house legal counsel. A seasoned litigator, he leverages his litigation experience to advise clients, including C-Level executives, regarding potentially litigious situations that touch their business operations and his practice areas.
"Dutch's deep knowledge and experience as in-house counsel has informed his business-first approach to complex legal disputes and made him an invaluable resource to the Orange County business community," said Firm Managing Partner Paul Tetzloff. "We are pleased that Dutch's contributions to the community have been recognized by Orange County Business Journal."
Schotemeyer
rejoined the firm in September after serving as Vice President and Associate General Counsel for William Lyon Homes, Inc., and Vice President and Deputy General Counsel for Taylor Morrison. While at William Lyon Homes, he was named 2019 "General Counsel Rising Star" by the Orange County Business Journal.
The full "OC 500 Directory of Influence" list was distributed in a special December supplement.
About Newmeyer Dillion
For over 35 years, Newmeyer Dillion has delivered creative and outstanding legal solutions and trial results that achieve client objectives in diverse industries. With over 60 attorneys working as a cohesive team to represent clients in all aspects of business, employment, real estate, environmental/land use, privacy & data security and insurance law, Newmeyer Dillion delivers holistic and integrated legal services tailored to propel each client's operations, growth, and profits. 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 Nevada, 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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Staffing Company Not Entitled to Make a Claim Against a Payment Bond and Attorneys’ Fees on State Public Works Payment Bonds
August 12, 2024 —
Garret Murai - California Construction Law BlogIt’s not quite Baskin Robbin’s “31 Flavors” but the panoply of statutory construction payment remedies available to contractors, subcontractor and material suppliers in California, from mechanics liens to stop payment notices to payment bond claims, can be tempting to reach for when you are not paid. However, some flavors are more readily available than others, as a staffing agency discovered in
K & S Staffing Solutions, Inc. v. The Western Surety Company, Case Nos. C096705 and C097987 (January 2, 2024).
The K & S Staffing Case
The California Department of Transportation awarded VSS International, Inc. two public works construction contracts for road maintenance. Each involved an expenditure of over $25,000 and VSSI obtained a payment bond from Western Surety Company.
Titan DVBE Inc. was a subcontractor on both projects. For most years, Titan employed its own workers. However, when it learned that its insurance carrier would no longer be offering workers’ compensation insurance in California it switched to K & S Staffing Solutions, Inc. to fulfill its staffing needs.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
LaGuardia Airport Is a Mess. An Engineer-Turned-Fund Manager Has a Fix
May 26, 2019 —
Sree Vidya Bhaktavatsalam - BloombergThierry Déau’s engineering training in France led him early in his career to building government-funded infrastructure. But it was his entrepreneur father back home in Martinique who inspired him to strike out on his own in 2005. He started Paris-based Meridiam to finance, build, and manage long-term projects. Now, with €7 billion ($7.83 billion) in seven funds and nine offices across Europe, the Middle East, Africa, and North America, Meridiam is playing a key role in high-profile projects such as the upgrade of New York’s LaGuardia Airport and a road tunnel under the Port of Miami. Déau describes Meridiam’s investment approach in an interview with Bloomberg Markets.
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Sree Vidya Bhaktavatsalam, Bloomberg
New Executive Order: Revitalizing Our Nation’s Commitment to Environmental Justice for All
May 08, 2023 —
Anthony B. Cavender - Gravel2GavelThe White House has released the text of the President’s new Executive Order strengthening the Federal Government’s commitment to taking new actions to enhance and promote environmental justice. The Order was published in the Federal Register on April 26, 2023 at 88 FR 25251. President Clinton’s pioneering 1994 Executive Order remains effective, but the Federal Government must, as part of a whole-of-government approach to environmental justice, “build upon and strengthen its commitment to deliver environmental justice to all communities across America.”
Unlike that Order, this Order defines “environmental justice.” For purposes of this new Order, “environmental justice” takes into account all adverse human health and environmental effects and hazards, including those related to climate change, the cumulative impacts of environmental and other burdens, and the legacy of racism or other structural or systematic barriers, and ensures equitable access to a healthy, sustainable and resilient environment in which to live, play, work, learn, worship and engage in cultural and subsistence practices.
“Federal activity” is now broadly defined as “any agency rulemaking, guidance, policy, program, practice or action that affects or has the potential to affect human health and the environment, including any agency action related to climate change.” This Order references the seven previous Executive Orders devoted to climate change, clean energy and the Inflation Reduction Act.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
