Fairfield Connecticut Building Expert Directory

Subcontractor Not Liable for Defending Contractor in Construction Defect Case

February 10, 2012 — CDJ STAFF

The California Court of Appeals has ruled on January 9, 2012 in Hensel Phelps Construction Company v. Urata & Sons Cement, upholding the judgment of the lower court.

Hensel Phelps was the general contractor for a high-rise in Sacramento. They were sued by the owners of the building after problems were discovered in the concrete slabs of the building’s parking garage. Instead of welded steel wire mesh, the slabs had been constructed with fiber mesh. Hensel Phelps filed a cross-complaint against Urata Cement, the subcontractor that had performed the cement work. Urata refused to defend Hensel Phelps. The owners’ case was subsequently dismissed due to the statute of limitations.

Although the original case was over, Hensel Phelps continued in their claims against Urata. “Urata argued that a handwritten interlineation required Hensel Phelps to prove Urata was at fault for the injury alleged in the building owners’ complaint before Urata was obliged to defend Hensel Phelps in that action.”

The lower court concluded that Urata would have been obligated to defend Hensel Phelps if the owners’ lawsuit had alleged that the damage was due to the subcontractor’s work or if evidence at trial established this. The lower court found neither of these true. Instead, the use of the fiber mesh was a design issue and “that decision was outside the scope of the subcontractor’s work.”

During the trial, Hensel Phelps conceded that Urata was not at fault. The appeals court could find no reading of the contract that would cause Urata to be obligated to defend Hensel Phelps, calling Hensel Phelps’s reading of the contact as “grammatically infeasible.”

Judges Nicholson, Raye, and Butz upheld the decision of the lower court and awarded costs on appeal to Urata.

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Joint Venture Dispute Over Profits

January 27, 2020 — David R. Cook - AHC Construction and Procurement Blog
A recent Georgia Court of Appeals case demonstrates the risk of joint ventures failing to carefully define accounting rules in their joint venture agreement. Two trade contractors teamed up to accomplish certain tasks on a job at a wastewater lift station at Fort Gordon. A joint venture agreement provided for an equal split of the profits and losses. Unfortunately, the parties did not define “profit,” and particularly did not define what cost would be deducted in calculating profit. They disputed in particular whether certain large payments to individuals and 15% overhead charges should be deducted in calculating profits. One party presented the expert testimony of an accountant while the other did not. The party presenting expert testimony asked the court to dismiss the other party’s claim because it was not supported by expert testimony of an accountant. The trial court granted the motion and dismissed the claim. Read the court decision
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Reprinted courtesy of David R. Cook, Autry, Hall & Cook, LLP
Mr. Cook may be contacted at cook@ahclaw.com

Court of Appeals Invalidates Lien under Dormancy Clause

January 05, 2017 — Chadd Reynolds – Autry, Hanrahan, Hall & Cook, LLP
On October 27, 2016, the Georgia Court of Appeals determined whether the Dormancy Statute, which bars the enforcement of judgments after seven years, applied to a lienholder’s action to foreclose its lien. A property owner (“Owner”), contracted with a contractor Contractor (“Contractor”) to build a home in January 2006. Contractor purchased building materials from a supplier (“Supplier”). In September 2006, Contractor failed to pay for the materials, and Supplier filed a lien on Owner’s property in November 2006. Supplier filed a claim of lien and instituted a lien action against Contractor. In March 2007, a default judgment was entered in favor of Supplier for the lien amount. It was not until November 2014 that Supplier sued Owner, seeking a declaration of a special lien in the amount of $14,655.65. The trial court granted Supplier’s motion for summary judgment and awarded Supplier a special lien in the amount of $14,655.65 plus $8,305 in accrued interest. Owner appealed, arguing that the lien was rendered unenforceable by the Dormancy Statute. Read the court decision
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Reprinted courtesy of Chadd Reynolds, Autry, Hanrahan, Hall & Cook, LLP
Mr. Reynolds may be contacted at reynolds@ahclaw.com

Subcontract Requiring Arbitration Outside of Florida

August 07, 2018 — David Adelstein - Florida Construction Legal Updates
Have you entered into a subcontract that requires you to arbitrate disputes? If so, does the arbitration provision require you to arbitrate your dispute outside of Florida? If so, the case of Sachse Construction and Development Corp. v. Affirmed Drywall, Corp., 43 Fla. L. Weekly D1622e (Fla. 2d DCA 2018) applies and reinforces the notion: Read and consider what you sign! In Sachse Construction, a drywall subcontractor entered into a subcontract for a construction project in Miami with an arbitration provision. The subcontract provided that it shall be construed in accordance with Michigan law and required that arbitration shall take pace in Michigan per the Construction Industry Rules of the American Arbitration Association. Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris
Mr. Adelstein may be contacted at dma@kirwinnorris.com

U.S. Stocks Fall as Small Shares Tumble Amid Home Sales

September 24, 2014 — Joseph Ciolli and Callie Bost – Bloomberg
U.S. stocks fell, led by a plunge among small companies, as sales of existing homes unexpectedly dropped and China’s finance minister damped stimulus hopes. The Russell 2000 Index of small-cap stocks sank 1.6 percent, the most since July. Yahoo! Inc. (YHOO) dropped 2.3 percent to lead the Dow Jones Internet Composite Index to a one-month low. Alibaba Group Holding Ltd. slid 2.1 percent after surging in its trading debut Sept. 19. The Standard & Poor’s 500 Index dropped 0.7 percent to 1,997.37 at 11:24 a.m. in New York, after closing at a record Sept. 18. The benchmark gauge hasn’t had a four-day slide this year and hasn’t fallen 10 percent in three years. The Dow Jones Industrial Average slid 58.40 points, or 0.3 percent, to 17,221.34. Mr. Ciolli may be contacted at jciolli@bloomberg.net; Ms. Bost may be contacted at cbost2@bloomberg.net Read the court decision
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Reprinted courtesy of Joseph Ciolli and Callie Bost, Bloomberg

Third Circuit Holds That Duty to Indemnify "Follows" Duty to Defend

December 27, 2021 — Jeffrey J. Vita - Saxe Doernberger & Vita, P.C.
In a win for policyholders, the Third Circuit Court of Appeals recently affirmed a District Court’s 2018 ruling, which held that the duty to indemnify follows the duty to defend where a settlement precludes a determination on the facts of the case relative to liability and apportionment. In Liberty Mutual Insurance Co. v. Penn National Mutual Casualty Insurance Co.,1 a large concrete panel collapsed and killed a construction worker at a construction site in New Kensington, Pennsylvania. Cost Company (“Cost”), Liberty Mutual’s insured, was a masonry subcontractor on the project and had further subcontracted with Pittsburgh Flexicore Co. (“Flexicore”), Penn National’s insured, for the concrete panels. Cost’s subcontract agreement required Flexicore to name Cost as an additional insured under its general liability policy issued by Penn National. When the construction worker’s widow filed a wrongful death lawsuit against Cost and Flexicore, Cost demanded that Penn National defend and indemnify it as an additional insured under the policy. Penn National refused, arguing that any additional insured status had terminated at the conclusion of Flexicore’s work for Cost. As a result, Liberty Mutual defended Cost in the lawsuit, which was ultimately settled. Read the court decision
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Reprinted courtesy of Jeffrey J. Vita, Saxe Doernberger & Vita, P.C.
Mr. Vita may be contacted at JVita@sdvlaw.com

Guarantor’s Liability on Partially Secured Debts – The Impacts of Pay Down Provisions in Serpanok Construction Inc. v. Point Ruston, LLC et al.

October 24, 2021 — Margarita Kutsin - Ahlers Cressman & Sleight
In Serpanok Construction, Inc. v. Point Ruston, LLC, Division Two of the Washington Court of Appeals decided an issue of first impression in Washington—whether a guarantor of a partially secured debt remains liable until the last dollar of the entire debt is paid off. After examining cases from other jurisdictions, the court held that that a guarantor is liable until the underlying debt is paid in full unless the agreement contains an express pay down provision. A pay down provision sets forth the guarantor’s right to reduce its obligation to the extent of any payment toward the debt, and it establishes that the guaranty applies only until an amount equivalent to the guaranteed amount is paid off. The Serpanok decision addressed several other issues, but the published portion of this part-published case focused on whether an entity involved in a real estate development, Point Ruston LLC, was discharged from its guaranty obligation following a foreclosure sale where the proceeds did not cover the entire debt owed to a subcontractor. Point Ruston LLC, Point Ruston Phase II LLC (“Phase II”), and Century Condominiums (“Century”) were affiliated entities (collectively “Point Ruston parties”) that constructed retail and residential structures on a site in Point Ruston. Serpanok Construction Inc. (“Serpanok”) entered into subcontract agreements with Phase II and Century to perform concrete and steel work on a parking garage and movie theater for the project. Point Ruston LLC was not a party to either subcontract. Read the court decision
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Reprinted courtesy of Margarita Kutsin, Ahlers Cressman & Sleight
Ms. Kutsin may be contacted at margarita.kutsin@acslawyers.com

Real Estate & Construction News Round-Up (03/08/23) – Updates on U.S. Mortgage Applications, the Inflation Reduction Act, and Multifamily Sector

March 20, 2023 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
This week’s round-up explores the cooling housing market and plummeting mortgage applications, potential tax-savings as a result of the 2022 Inflation Reduction Act (IRA), and new developments in the multifamily sector.

Rising interest rates are impacting affordability and cooling the U.S. housing market, driving mortgage applications to lowest levels in decades. (Nicole Friedman, The Wall Street Journal)
A number of companies are going all out to entice workers back to the office, and as new data on New York City emerges, upscale offices might help do the trick. (Emily Peck, Axios)
For real estate developers and investors across the U.S., tax-saving opportunities are popping up as a result of the Inflation Reduction Act of 2022. (David Harlan & Laura Theiss, Dallas Business Journal)

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

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