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Real Estate & Construction News Roundup (06/06/23) – Housing Woes, EV Plants and the Debate over Public Financing

July 10, 2023 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
In our latest roundup, we look at the increasing difficulty of purchasing a home, potential international fallout from a new trade deal a renewed commitment by one American automaker to electric vehicles, and more! It’s becoming increasingly more difficult for house hunters to find homes, specifically in certain major cities. (Khristopher J. Brooks, CBS) Due to years of overuse and a decades-long drought, Arizona has halted new housing construction of parts of metro Phoenix. (AP via NBC) After several claims by the FTC over privacy concerns regarding its voice assistant Alexa and doorbell camera Ring, Amazon has agreed to pay over $30 million in fines. (Ayana Archie, NPR) Read the court decision
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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Real Estate & Construction News Round-Up 04/20/22

May 02, 2022 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
Construction defects emerge in pandemic-era buildings, investor confidence is improving in China’s real estate market, the proptech field continues to show significant signs of growth, and more.

• Investor confidence in China’s real estate market is improving, with bond trading volumes and prices rising over the last few weeks, but the market is not projected to resume its high growth rate of the past. (Weizhen Tan & Evelyn Cheng, CNBC)
• The economic shock caused by soaring mortgage rates over the past few weeks has dramatically increased mortgage payments for new homebuyers. (Lance Lambert, Fortune)
• With the metaverse economy projected to be worth between $8 and $13 trillion by 2030, blockchain technology serves as a key driver for virtual real estate sales, allowing for “true” ownership of a property. (Robert Koonin, Dan Jasnow, & Kinnon McDonald, TFL)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Specific Source of Water Not Relevant in Construction Defect Claim

June 28, 2013 — CDJ STAFF
The Nebraska Court of Appeals has concluded that a lower court came to the correct conclusion in a construction defect case involving water intrusion. The Hiatts built a home in North Platte, Nebraska, in in 2004 which they sold to the Oettingers in May, 2006. Shortly thereafter, the Oettingers started experiencing problems with water intrusion and contacted the Hiatts. The Hiatts responded by replacing the septic lift. Subsequently, the Oettingers landscaped their yard, which they allege was done with the assistance of the Hiatts. The water problems continued and “the parties took substantial remedial measures, including excavating the sidewalk and inspecting the downspouts.” The water problems continued, getting worse and requiring increasingly aggressive responses. The Oettingers then had a series of inspections, and they hired the last of these inspectors to actually fix the water intrusion problem. At that point, they filed a lawsuit against the Hiatts alleging that the Hiatts “breached their contact by constructing and selling a home that was not built according to reasonable construction standards,” and that they “were negligent in the repair of the home in 2009.” During the trial, Irving Hiatt testified that they “tarred the outside of the basement and put plastic into the tar and another layer of plastic over the top of that.” He claimed that the problem was with the Oettingers’ landscaping. This was further claimed in testimony of his son, Vernon Hiatt, who said the landscaping lacked drainage. The Oettingers had three experts testify, all of whom noted that the landscaping could not have been the problem. All three experts testified as to problems with the Hiatts’ construction. The court concluded that the Hiatts had breached an implied warranty, rejecting the claim that the water intrusion was due to the landscaping. The Hiatts appealed the decision of the county court to the district court. Here, the judgment of the lowest court was confirmed, with the district court again finding a breach of the implied warranty of workmanlike performance. The Hiatts appealed again. They alleged that the district court should not have held a breach of implied warranty existed without proving the source of the water intrusion, and that damages should have been apportioned based on the degree to which the Oettingers’ landscaping and basement alterations were responsible. The appeals court dispensed with the second claim first, noting that “they do not argue this error in their brief nor do they explain how or why the trial court should have apportioned damages.” The court also noted that although the Oettingers made a negligence claim in their suit, the case had been decided on the basis of a breach of implied warranty. The appeals court upheld the Oettingers’ claim of a breach of implied warranty. In order to do this, the court noted that the Oettingers had to show that an implied warranty existed, that the Haitts breached that warranty, damage was suffered as a result, and that no express warranty limited the implied warranty. That court noted that “the record is sufficient to prove that the Hiatts breached the implied warranty in the method in which they constructed the basement” and that “this breach was the cause of the Oettingers’ damages.” The court concluded that the Oettingers “provided sufficient evidence that the Hiatts’ faulty construction allowed water, whatever its source, to infiltrate the basement.” The court rejected the Hiatts’ claim that the Oettingers’ repairs voided the warranty, as it was clear that the Hiatts were involved in carrying out these repairs. The court’s final conclusion was that “the evidence in the record supports the trial court’s factual finding that the Hiatts’ flawed construction caused water damage to the Oettingers’ basement.” Read the court decision
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Is the Removal and Replacement of Nonconforming Work Economically Wasteful?

September 19, 2022 — David Adelstein - Florida Construction Legal Updates
There are times a contractor installs the wrong material or system contrary to the plans and specifications. A nonconformity. The owner wants the already-installed material or system to be replaced in conformity with the plans and specifications. However, what was installed is functionally equivalent to what the plans and specifications required and would be cost prohibitive, i.e., economically wasteful. If the contractor elects to remove and replace the nonconforming work, it may seek a change order because it is economically wasteful. Or, the contractor may refuse (typically, not the best approach) in furtherance of taking on the fight based on the economic wastefulness associated with the removal and replacement. A recent case, David Boland, Inc. v. U.S., 2022 WL 3440349 (Fed.Cl. 2022), talks about this exaction situation and the economic waste doctrine. This is an important doctrine for contractors to understand when faced with a similar predicament. Here, a contractor was hired by the government to construct a wastewater collection system that was to be owned and operated by a private company. The contractor’s work was going to be incorporated into a larger sewer system that the private company already operated. The contractor was required to install sewer manholes reinforced with steel in accordance with an ASTM standard. The manholes could be rejected if they did not conform to the ASTM standard. Compliance with this ASTM standard was also required by the private company’s construction protocol for the infrastructure, which was incorporated into the contractor’s contract with the government. The contractor was required to strictly comply with the contract. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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Ex-Engineered Products Firm Executive Convicted of Bid Rigging

March 06, 2022 — James Leggate - Engineering News-Record
A federal jury convicted a former executive at an engineered construction products firm Feb. 1 for his role in a bid-rigging scheme that targeted the North Carolina Dept. of Transportation. Reprinted courtesy of James Leggate, Engineering News-Record Mr. Leggate may be contacted at leggatej@enr.com Read the full story... Read the court decision
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Connecticut District Court to Review Proposed Class Action in Defective Concrete Suit

July 13, 2017 — Tiffany Casanova - Saxe Doernberger & Vita, P.C.
Thousands of Connecticut homeowners have fallen victim to a defective concrete epidemic. Over the last thirty years, the foundation in many homes, particularly in the Northeast region of the state, was built with a concrete aggregate that contained the mineral pyrrhotite. When exposed to the elements, including water and air, pyrrhotite oxidizes, resulting in cracking and disintegration over time. For Connecticut homeowners, this has resulted in disaster, both financially and to the foundations of their homes. Previously, many homeowners insurance policies provided coverage for a “collapse” caused by the “use of defective material . . . in construction, remodeling or renovation.” As the pyrrhotite epidemic became more prevalent, insurers altered the coverage afforded for a “collapse” in several ways that potentially minimized or eliminated coverage for these types of claims. Primarily, coverage for a “collapse” is now restricted to collapses that are “abrupt,” and coverage is excluded for buildings in danger of falling down or those that are still standing, even if evidence of cracking or settling is demonstrated. The insurers did not notify homeowners of the change. Thus, homeowners who renewed policies were not informed of a coverage reduction nor were they provided with a corresponding reduction in the amount of premium. Read the court decision
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Reprinted courtesy of Tiffany Casanova, Saxe Doernberger & Vita, P.C.
Ms. Casanova may be contacted at tlc@sdvlaw.com

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Insurer's Attempt to Limit Additional Insured Status Fails

December 01, 2017 — Tred R. Eyerly - Insurance Law Hawaii
The court disagreed with the insurer's attempt to limit additional insured status based upon the contract between the parties. Mays v. In re All C-Dive LLC, 2017 U.S. Dist. LEXIS 185874 (E.D. La. Nov. 9, 2017). Five employees of C-Dive LLC filed a lawsuit after belng injured in a pipeline explosion aboard a vessel servicing a pipeline owned by Gulf South Pipeline Company. During the work, there was a release of gas that caused an explosion and injured the employees. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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DoD Testing New Roofing System that Saves Energy and Water

October 08, 2014 — Beverley BevenFlorez-CDJ STAFF
Builder reported that the Department of Defense (DoD) is hosting a new “dynamic roofing system, installed at the Security Forces Building at Goodfellow Air Force Base in San Angelo, Texas,” which “uses a combination of technologies that heat and cool air and water, produce electricity, and collect rainwater.” If the project is successful, it “could be replicated at thousands of DoD buildings throughout the country in the near future.” Builder described the process: “A retrofitted metal roof is installed over the existing roof, which creates a cavity between the existing and new roofs. Within that cavity insulation, solar thermal heating systems and cooling of air and water for the building can be installed. The roofing, insulation, hydronic solar thermal systems, engineered air pathways, and photovoltaic cells are designed to work symbiotically.” Read the court decision
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