New California "Construction" Legislation
November 08, 2018 —
Richard H. Glucksman, Esq. & Chelsea L. Zwart, Esq. - Chapman Glucksman Dean Roeb & BargerGovernor Jerry Brown signed two potentially impactful Senate Bills relating to the construction of apartment buildings late last month. These Bills, discussed further below, were introduced, in part, in response to the Berkeley balcony collapse in June 2015, which was determined by the California Contractors State License Board to be caused by the failure of severely rotted structural support joists the repair of which were deferred by the property manager, despite indications of water damage.
SENATE BILL 721 ESTABLISHES HEIGHTENED “LOAD-BEARING” INSPECTION REQUIREMENTS
On August 21, 2018, the California State Senate passed SB 721, one of two bills by Senator Jerry Hill introduced this year seeking to address the safety of multifamily rental residences. Now that the Governor has signed the Bill, a new section will be added to the California Health and Safety Code, requiring that every 6 years, destructive testing be performed on at least 15% of each type of load-bearing, wood framed exterior elevated element (such as balconies, walkways, and stair landings) in apartment buildings with 3 or more units. Interestingly, prior to being passed by the State Senate, SB 721 was revised in June 2018, such that the inspection requirements do not apply to common interest developments (i.e., condominiums).
As set forth in the new Health and Safety Code Section 17973:
"the purpose of the inspection is to determine that exterior elevated elements and their associated waterproofing elements are in a generally safe condition, adequate working order, and free from any hazardous condition caused by fungus, deterioration, decay, or improper alteration to the extent that the life, limb, health, property, safety, or welfare of the public or the occupants is not endangered."
The inspection must be paid for by the building owner and performed by a licensed contractor, architect, or civil or structural engineer, or a certified building inspector or building official from a recognized state, national, or international association. Emergency repairs identified by the inspector must be made immediately. For non-emergency repairs, a permit must be applied for within 120 days and the repair completed within 120 days of the permit’s issuance. If repairs are not completed within 180 days, civil penalties of $100-$500 per day may be imposed.
The required inspection must be completed by January 1, 2025 and every 6 years thereafter, unless an equivalent inspection was performed during the 3 years prior to January 1, 2019, the effective date of the new law. For a building converted to condominiums that will be sold after January 1, 2019, the inspection required by Health and Safety Code Section 17973, must be performed prior to the first close of escrow.
SENATE BILL 1465 SETS CONTRACTOR REPORTING REQUIREMENTS
The Governor also signed SB 1465, adding Sections 7071.20, 7071.21, and 7071.22 to the California Business and Professions Code. The new law requires that a contractor licensed with the Contractors’ State License Board "report to the registrar in writing within 90 days after the licensee has knowledge of any civil action resulting in a final judgment, executed settlement agreement, or final arbitration award in which the licensee is named as a defendant or crossdefendant, filed on or after January 1, 2019," that meets certain and specific criteria, including that it is over $1 million and arises out of an action for damages to a property or person allegedly caused by specified construction activities of the contractor on a multifamily rental residential structure.
Where more than one contractor was named as a defendant or cross-defendant, each of the contractors apportioned more than $15,000 in liability must report the action. Importantly, the new statute also imposes similar reporting requirements on insurers of contractors. SB 1465 also addresses an impacted party’s failure to comply with the reporting requirements.
COMMENT
Both SB 721 and SB 1465 are potentially significant and seek “legislative reform” to address construction issues by placing a greater burden on apartment owners as well as builders and subcontractors. How pragmatic and what impact they will have on the industry is obviously developing. If you are interested in receiving further detail concerning the Bills, please contact us. We are analyzing the new legislation and its intent and will be providing our ongoing comments.
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RICHARD H. GLUCKSMAN, ESQ. CHELSEA L. ZWART, ESQ., CGDRBChelsea L. Zwart may be contacted at
czwart@cgdrblaw.com
Who's Who Legal Recognizes Two White and Williams Lawyers as Thought/Global Leaders in Insurance and Reinsurance
August 28, 2023 —
White and Williams LLPWho's Who Legal (WWL), in association with Thought Leaders: USA - Insurance and Reinsurance 2023, has recognized two White and Williams lawyers as leading practitioners in their field. WWL’s research process uses a combination of proprietary digital and in-person qualitative techniques and interviews.
WWL named Patricia B. Santelle and Randy J. Maniloff as Thought Leaders in Insurance and Reinsurance 2023. Thought Leaders base their results on recommendations and feedback from private practitioners in the industry, as well as from corporate counsel or other clients who have worked closely with the nominees. Both Patricia and Randy have also been recommended as Global Leaders in their field.
Patti is recognized by her clients and peers as a leading attorney in the field of complex insurance coverage, having devoted more than 30 years to the representation of insurance company clients. She is also a leader in the legal and business community, having served as the first female chair of a major law firm in Philadelphia. An advocate of community engagement, Patti supports a large number of business, community, law school and pro bono/volunteer initiatives in the region.
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Get Your Contracts Lean- Its Better than Dieting
January 13, 2020 —
Brian Perlberg, Esq. - ConsensusDocsI recently took the AGC Lean Construction Educations Program Units 1-7. After studying diligently, I’m happy to say that I passed the exam and earned my CM-Lean credential. Surprisingly, this makes me the first attorney to earn this distinction out of over 1,200 CM-Lean holders. So why is a construction attorney learning about lean? After all, this was my first exam in 20 years since I took the bar.
Well, according to McKinsey Global Institute, construction actually became less productive from 1995 through 2009. When it comes to efficiency, construction still lags significantly behind the manufacturing sector and the overall economy. Construction contracts – what we sign and the way in which we negotiate them, or lack thereof – is a principal reason why construction productivity is stagnant.
Contracting under an integrated lean project delivery method (ILPD) and incorporating Lean construction tools is the most powerful means to increase efficiency and add-value to owners. Owners are the client’s end-users of construction projects. ConsensusDocs has taken a leadership role in publishing the first standard ILPD contract which is an integrated form of agreement (IFOA). The ConsensusDocs 300 Integrated Project Delivery (IPD™) provides an off-the-shelf solution to contract utilizing lean tools. Not every owner can or is comfortable using an IPD approach. Consequently, ConsensusDocs produced the ConsensusDocs 305 Construction Lean Construction Addendum last year to provide an option for contracting for lean on Construction Management at-Risk and design-build projects. Some people call this approach IPD-lite or IPD’ish. Some disfavor such terms, because those terms have been used loosely on projects that aren’t very Lean.
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Brian Perlberg, Esq., Executive Director and Senior Counsel of ConsensusDocsConsensusDocs may be contacted at
support@consensusdocs.org
To Bee or Not to Bee - CA Court Finds Denial of Coverage Based on Exclusion was Premature Where Facts had not been Judicially Determined
November 28, 2018 —
Philip B. Wilusz - Saxe Doernberger & Vita, P.C.While I typically discuss cases concerning pollution, today I will change a few letters around and discuss pollination. The case, Unigard Insurance Co. et al. v. George Perry and Sons Inc. et al., asks whether there is coverage for a lawsuit brought against a commercial farm that is alleged to have killed off bee colonies used for pollination. The farm, owned by George Perry & Sons Inc. (“Perry”), allegedly used a pesticide that killed off the bee colonies that Perry had hired from Gary Mattes (“Mattes”) pursuant to an oral agreement. The bees, operating well outside of their weight class, were hired to pollinate Perry’s crops of watermelons and pumpkins. Interestingly, the bees would be brought to the farm in either large hives or “nukes,” which are smaller versions of hives.
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Philip B. Wilusz, Saxe Doernberger & Vita, P.C.Mr. Wilusz may be contacted at
pbw@sdvlaw.com
Margins May Shrink for Home Builders
November 06, 2013 —
CDJ STAFFHome builders are worried that the rising prices of new homes might not rise enough and be caught by the rising costs of building them, cutting into the profit margin. “If builders say the trajectory of margins is beginning to peak, then in a cyclical business, people tend to go from thinking the best to thinking the worst,” Stephen Kim, a Barclays analyst told the Wall Street Journal. As of the end of October, the U.S. Home Construction Index was 21% below its highest point in 2013, set back in May.
Margins are still over those of last year. Meritage Homes saw a gross margin of 22.8% in 2013’s third quarter, when the same quarter in 2012 had a gross margin of 18.6%. Steven Hilton, the firm’s Chairman and CEO, predicted little or no growth and a decline toward 20% or 21%. On the other hand, with margins at 20.6%, Ryland Homes sees itself at a normal point. Larry Nicholson, the President and CEO of Ryland, said “there’s not a lot of room for it to grow.”
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Fort Lauderdale Partner Secures Defense Verdict for Engineering Firm in High-Stakes Negligence Case
June 10, 2024 —
Lewis Brisbois NewsroomFort Lauderdale, Fla. (June 3, 2024) - Fort Lauderdale Managing Partner Cheryl Wilke recently secured a defense verdict for civil engineering firm Gulfstream Design Group and its owner, Matthew Lahti, in a high-stakes professional negligence case in which the plaintiff sought more than $20 million. The verdict by a six-person jury in St. Augustine followed a nine-day trial.
The case involved a 100-acre tract of land in St. Johns County, Florida, owned by the plaintiff, Cynthia Taylor. The land was zoned for rural farming, and she wished to sell the property for development. She entered into a contract with Southeast Georgia Acquisitions (“SGA”) to sell the property with the goal of creating a 200-home subdivision. SGA hired Doug Burnett as land use counsel and our client, Gulfstream Design Group, as the civil engineer to design the project.
In St. Johns County, only a property owner can submit a Planned Unit Development Plan (“PUD”) for the purpose of rezoning. In this case, Burnett and Gulfstream created text and a proposed map for the PUD and submitted it for approval. The PUD was approved first at the staff level, then by planning and zoning and then by the County Commission. All the services were provided prior to closing with PUD approval, a condition of sale.
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Third Circuit Holds No Coverage for Faulty Workmanship Despite Insured’s Expectations
November 21, 2018 —
Brian Margolies - TLSS Insurance Law BlogIn its recent decision in Frederick Mut. Ins. Co. v. Hall, 2018 U.S. App. LEXIS 31666 (3d Cir. Nov. 8, 2018), the United States Court of Appeals for the Third Circuit had occasion to consider Pennsylvania’s doctrine of reasonable expectations in the context of a faulty workmanship claim.
Hallstone procured a general liability policy from Frederick Mutual to insure its masonry operations. Notably, when purchasing the policy through an insurance broker, Hallstone’s principal stated that he wanted the “maximum” “soup to nuts” coverage for his company. Hallstone was later sued by a customer for alleged defects in its masonry work. While Frederick agreed to provide a defense, it also commenced a lawsuit seeking a judicial declaration that its policy excluded coverage for faulty workmanship. The district court agreed that the business risk exclusions applied, but nevertheless found in favor of Hallstone based on the argument that Hallstone had a reasonable expectation that when applying for an insurance policy affording “soup to nuts” coverage, it this would include coverage for faulty workmanship claims.
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Brian Margolies, Traub Lieberman Straus & Shrewsberry LLPMr. Margolies may be contacted at
bmargolies@tlsslaw.com
Unrelated Claims Against Architects Amount to Two Different Claims
July 30, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe Second Circuit found that two claims arising from the same project were unrelated, creating two separate payments by the insurer for the two separate claims. Dormitory Auth. of New York v. Continental Cas. Co., 2014 U.S. App. 12088 (2nd Cir. June 23, 2014).
In 1995, the State agency contracted with the insured architectural firm to design and oversee the construction of a new dormitory at City University of New York. Plans drawn by the architects erred in their estimate of the steel requirement. To recover losses from the resulting delay and expense, the agency sent a demand letter in May 2002 to the architects detailing the Steel Girt Tolerance issue.
After the project was finished in 2001, another problem was discovered: excess accumulations of snow and ice were sliding off the building onto sidewalks a considerable distance away. The Ice Control Issue was studied during the winter of 2003-04. The conclusion was that the design of the facade failed to account for temperature variations appropriate for a building in New York. The problem could not be resolved by adding canopies, which would have been a cheaper fix. Study of the problem continued into 2005.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
