Electrical Subcontractor Sues over Termination
November 13, 2013 —
CDJ STAFFMillennium Plus, Inc. has sued the contractor for the Efrain A. Duran Water Treatment Plant Facility and Rio Grande City for failing to pay money due to them and terminating the contract. According to the lawsuit, Millennium is claiming that they are owed $161,781 for their work on the water treatment facility.
According to the city, the project’s contractor was “very unsatisfied with Millennium’s work.” Although the city disclaims any involvement, Millennium claims it was a “joint enterprise.”
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Gen Xers Choose to Rent rather than Buy
February 05, 2014 —
Beverley BevenFlorez-CDJ STAFFDavid Crowe reported in Big Builder that the rate of home purchases by Gen Xers is low due to “challenges” they face caused by the recent recession. According to the article, “The headship rate rises from 16 percent to 48 percent in this age group—known as Generation X—as they finish college and become financially independent. There are 42.5 million people in this age range, and they are followed by 43.9 million in the 15 to 24 age cohort.” However, the recession forced many Gen Xers to postpone “independent living, marriage, and children. Birth rates hit all-time lows in 2012 (half the level of the baby boom), and marriage rates are the lowest they’ve been in a century.”
Unemployment seems to be the major factor in why many Gen Xers are choosing to live with parents or rent instead of buying a home. Crowe stated, “Young adults continue to express the goal of owning their own homes, but many are faced with challenges such as job availability, tight credit standards, inadequate savings for a down payment, student debt, and careers that are likely to require moves.” However, the “employment picture is expected to improve.”
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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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Nine Firm Members Recognized as Super Lawyers and Rising Stars
July 14, 2016 —
Ahlers & Cressman PLLC BlogAhlers & Cressman PLLC attorneys have again been recognized as “Super Lawyers” and “Rising Stars” (attorneys under 40 years of age, or practicing under 10 years) in Washington for 2016.
Six Ahlers & Cressman attorneys were recognized as Super Lawyers: John P. Ahlers, Paul R. Cressman, Jr., Scott R. Sleight, Bruce A. Cohen, Lawrence S. Glosser, and Brett M. Hill. Additionally, three of the firm’s attorneys have been recognized as Rising Stars: Ryan W. Sternoff, James R. Lynch, and Lindsay K. Taft.
Super Lawyers selects attorneys using a multiphase selection process, involving peer nominations, evaluations, and third-party research. Each attorney candidate is evaluated on 12 indicators of peer recognition and professional achievement. Only five percent of the total lawyers in Washington State are selected for the honor of Super Lawyer, and no more than 2.5 percent are selected for the honor of Rising Star.
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Ohio Court Finds No Coverage for Construction Defect Claims
March 01, 2012 —
Tred R. Eyerly - Insurance Law HawaiiCharles and Valerie Myers hired Perry Miller to build their home. Myers v. United Ohio Ins. Co., 2012 Ohio App. LEXIS 287 (Ohio Ct. App. Jan. 26, 2012). After completion of the home, Miller was again hired to construct an addition which included a full basement, staircases, bathroom, bedroom, hallway and garage.
After the addition was completed, one of the basement walls began to crack and bow. Miller began to make repairs, but eventually stopped working on the project. Other contractors were hired to make repairs, but further problems developed. A second basement wall began to bow and crack, allowing water into the basement. The wall eventually had to be replaced. Subsequently, the roof over the addition began to leak in five or six places before the drywall could be painted. The leaks caused water stains on the drywall and cause it to separate and tear. It was discovered the roof needed to be replaced.
The Myers sued Miller and his insurer, United Ohio Insurance Company. The trial court ruled that the policy did not provide coverage for faulty workmanship, but did provide coverage for consequential damages caused by repeated exposure to the elements. United Ohio conceded liability in the amount of $2,000 to repair water damage to the drywall. United Ohio was also found liable for $51,576, which included $31,000 to repair the roof and ceiling and $18,576 to replace the basement wall.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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DIR Public Works Registration System Down, Public Works Contractors Not to be Penalized
July 15, 2024 —
Garret Murai - California Construction Law BlogIn a bit of a major freak-out this past Friday, June 28, 2024, public works contractors with Department of Industrial Relations (“DIR”) registrations expiring on June 30, 2024 were unable to renew their public works registrations. Those who had submitted checks were not receiving responses, DIR was not accepting online payments, and there was no telephone number or address to contact the DIR about the issue.
This, of course, could have been a big deal since Labor Code section 1725.5 prohibits contractors and subcontractors from bidding on, being listed in a bid, or being awarded a public works contract unless registered with the DIR.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Global Emissions From Buildings, Construction Climb to Record Levels
November 28, 2022 —
Gautam Naik - BloombergCarbon-dioxide emissions from building construction and operations hit an all-time high in 2021, according to the most recent data, a sign that the push to decarbonize the industry by 2050 may be slipping out of reach.
Energy-related emissions from the operation of buildings reached 10 gigatonnes of CO2 equivalent, 5% higher than 2020 levels and 2% more than the pre-pandemic peak in 2019, according to data compiled by the Global Alliance for Buildings and Construction. Operational energy demand in buildings for heating, cooling, lighting and equipment rose about 4% from 2020 levels, the group said.
While investments in building energy efficiency increased 16% last year to $237 billion, the growth in floor space outpaced efficiency efforts. As a result, “the gap between the climate performance of the sector and the 2050 decarbonization pathway is widening,” the report concluded.
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New York Restaurant and Bar Fire Caused by Electric Defect
February 04, 2014 —
Beverley BevenFlorez-CDJ STAFFA fire at McGill’s Restaurant and Bar located in Schuyler, New York, resulted in “a total loss” according to the Little Fall Times. Schuyler Fire Chief Don Kane told the Little Fall Times, “no one was inside the building at the time of the fire, as the bar had closed at 2:30 a.m.” and the fire was reported at 3:52 a.m. Weather hindered the firefighters abilities to deal with the situation as “a small squall moved through the area.”
An investigation concluded that an “electrical malfunction is to blame,” reported the Utica Observer-Dispatch. The Herkimer County Office of Emergency Services stated that the “fire was caused by an electrical defect within the base of the front wall.”
The restaurant owner, who leased the building, “did not carry fire loss insurance for his business,” though the “building owner was insured,” according to the Utica Observer-Dispatch.
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