Nevada HOA Criminal Investigation Moving Slowly
January 22, 2014 —
Beverley BevenFlorez-CDJ STAFFSix years have passed since the FBI started investigating “allegations of the sweeping scheme to take over valley homeowners associations” in Nevada, according to Jeff German writing for the Las Vegas Review-Journal, however, “the public still doesn’t have the full story of how the scheme unfolded.” Defendants who plead guilty are still awaiting sentencing and no trial has been set for “former construction company boss Leon Benzer, the accused mastermind of the scheme” despite that he and ten others have already been indicted. The trial had been set for March, however, defense lawyers stated “they were overwhelmed by the massive amount of evidence and won’t be prepared for trial until well into 2015.”
Benzer, Nancy Quon (late construction defect attorney), and others allegedly “funneled more than $8 million through secret bank accounts to land the lucrative legal and construction defect contracts from the homeowners associations,” according to the Las Vegas Review-Journal. Quon committed suicide in 2012, and therefore was never charged in the case.
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Too Late for The Blame Game: Massachusetts Court Holds That the Statute of Repose Barred a Product Manufacturer from Seeking Contribution from a Product Installer
March 21, 2022 —
Gus Sara - The Subrogation StrategistIn State Farm Fire & Cas. Co. v. Wangs Alliance Corp., No. 21-cv-10389-AK, 2022 U.S. Dist. LEXIS 26712, the United States District Court for the District of Massachusetts (District Court) considered whether a product manufacturer was barred by the Commonwealth’s six-year statute of repose for improvements to real property from joining the installer of the product as a third-party defendant. The court denied the defendant’s motion for leave to file a third-party complaint to join the installer, finding that the installer completed its work more than six years prior to the motion being filed. This case reminds us that Massachusetts’ six-year statute of repose for improvement to real property also bars a defendant’s contribution claims against third parties.
The Wangs Alliance case involves a subrogation action filed by State Farm Fire & Casualty Insurance (Insurer) against Wangs Alliance Corp. (Wangs), a manufacturer of rope lighting. Insurer insured the homeowners, who experienced a fire in their home in 2018. The home was originally built in 2002 by Wellen Construction (Wellen). As part of the original construction, Wellen installed rope lighting manufactured by Wangs in the house.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Court Finds That $400 Million Paid Into Abatement Fund Qualifies as “Damages” Under the Insured’s Policies
November 21, 2022 —
Lorelie S. Masters & Yaniel Abreu - Hunton Insurance Recovery BlogIn
Sherwin-Williams Co. v. Certain Underwriters at Lloyd’s London, et al., the Court of Appeals for Ohio’s Eighth District reversed the lower court, finding that money paid by the insured into an abatement fund was “damages” as that undefined term was used in the policyholder’s insurance policies. 2022-Ohio-3031, ¶ 1. Sherwin-Williams is a cautionary tale about how insurers may try to narrow the meaning of undefined terms in their insurance policies.
The dispute in Sherwin-Williams focused on coverage for $400 million that the policyholder and other defendants were ordered to pay into an abatement fund to be used by California cities and counties to mitigate the hazards caused by lead paint in homes. Id. ¶ 1. Although the underlying litigation proceeded in California, Ohio law governed coverage, which raised issues of first impression in Ohio. Id. Among other things, the insurers argued that the money paid into the abatement fund did not qualify as “damages” under the policies. Id. ¶ 57. The insured argued that, because the insurers did not define “damages” in the policies, the term had to be given its ordinary meaning. Id. ¶ 56.
Reprinted courtesy of
Lorelie S. Masters, Hunton Andrews Kurth and
Yaniel Abreu, Hunton Andrews Kurth
Ms. Masters may be contacted at lmasters@HuntonAK.com
Mr. Abreu may be contacted at yabreu@HuntonAK.com
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Increase in Single-Family New Home Sales Year-Over-Year in January
February 26, 2015 —
Beverley BevenFlorez-CDJ STAFFBuilder magazine reported, “Sales of new single-family houses in January 2015 were at a seasonally adjusted annual rate of 481,000, according to estimates released today by the U.S. Census Bureau. This is 0.2% (±22.2%)* below the revised December rate of 482,000, but is 5.3% (±22.1%)* above the January 2014 estimate of 457,000.”
According to Metrostudy (as reported by Builder), builders seem to be getting ready for increased production this year: “An excellent leading indicator for housing starts is the number of lots reaching development (ready for the builder to start building). Our in-field research shows that lot development has doubled in the last two to three years in many markets.”
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Construction Defect Suit Can Continue Against Plumber
June 28, 2013 —
CDJ STAFFThe Kansas Court of Appeals has reversed a district court ruling that a homeowner’s suit against a plumber was barred under the economic loss doctrine. However, subsequently the Kansas Supreme Court “refused to extend the economic loss doctrine to homeowner claims against construction contractors.” In light of this, the appeals court sent the case back to the lower court.
The case, Coker v. Siler, was brought by Gregory Coker, who had bought a home from J.M.C. Construction. JMC purchased an unfinished house from Michael D. Siler in August 2006. As part of the completion process, John M. Chaney, the president of JMC, installed the water line into the residence. Mr. Coker bought the home in September 2007.
Starting in April 2008, Mr. Coker noticed that his water bills had increased. Mr. Coker could find “no evidence of a leak above the ground,” so he contacted JMC Construction. Mr. Chaney had R.D. Johnson Excavation dig up the water line, after which a gap was discovered that had been allowing water to flow under the foundation. In addition to the higher water bills, an engineer determined that the water “resulted in cracks in the wall and uneven doors.”
Mr. Coker sued, Siler, J.M.C. and Chaney for negligence, breach of implied warranty, strict liability, and breach of express warranty. J.M.C. and Chaney requested a summary judgment. The court dismissed Mr. Coker’s claims of negligence, strict liability, and breach of implied warranty on the basis of the economic loss doctrine, rejecting a petition from Mr. Coker to reconsider. The court, however, allowed Mr. Cocker to proceed with his claim of express warranty. In December, 2011, Mr. Coker accepted an offer from J.M.C. of $40,000.
Mr. Coker then appealed the summary judgment, making the claim that while the court’s decision was based on Prendiville v. Contemporary Homes, Inc., this has now been overruled by David v. Hett. In this case, “the court ultimately found the rationale supporting the economic loss doctrine failed to justify a departure from a long time of cases in Kansas that establish a homeowner’s right to assert claims against residential contractors.” The appeals court concluded that “although the district court properly relied on the law as it existed at the time of its ruling, the intervening change in the law necessarily renders the conclusion reached by the district court erroneous as a matter of law.”
In sending this case back to the district court, the appeals court noted that the lower court will need to determine if the “defendant accused of negligence did not have a duty to act in a certain manner towards the plaintiff,” in which case “summary judgment is proper. Mr. Coker claims that Mr. Chaney did indeed have this duty.
Further, Mr. Coker claimed that Mr. Chaney had a duty arising out of implied warranty. The appeals court questioned whether the district court properly applied the economic loss doctrine to this claim, because despite being president of the construction company, Mr. Chaney “in his individual capacity as a plumber performing work for Coker, was not a party to the J.M.C. contract.” The court found that “Coker’s claim that Chaney breached an implied duty within such a contract fails as a matter of law.”
However, the court did uphold Cocker’s claim of a contractor liability for injury to a third party, noting that “Chaney owed Coker a legal duty independent of Coker’s contact with J.M.C.” The appeals court left it to the district court to determine if the defect that caused the damage was present when the house left J.M.C.’s possession.
The case was reversed and remanded “with directions to reinstate Coker’s claim of negligence against Chaney in his individual capacity as a plumber.”
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Don’t Waive Too Much In Your Mechanic’s Lien Waiver
December 22, 2019 —
Christopher G. Hill - Construction Law MusingsIn the past few years, the Virginia General Assembly has, with certain caveats, precluded pre-furnishing waiver of mechanic’s lien rights. While this essentially outlawed the types of mechanic’s lien waiver clauses that pervaded construction contracts in Virginia, the key to the previous sentence is “pre-furnishing.” What the General Assembly left intact were the usual waivers of mechanic’s lien rights typically required to be provided to Owners and others in the payment chain in exchange for payment.
These lien waivers come in a few “flavors” from conditional to unconditional, partial to full. Their terms usually include an acknowledgement of receipt of payment (we’ll get to this later), and a statement that the one seeking payment knows of no possible claims by lower tier subcontractors and then waives all mechanic’s lien rights against the property for work performed and included in the request for payment. Often over my years as a Virginia construction attorney, I have noticed that these waivers are often signed without comment or review. They are just part of the process and more often than not are not even an issue for most projects. Of course, if they are an issue they can be a big one, and their terms can come back to bite a claimant that has not properly vetted them.
The first potential issue is waiving lien rights while acknowledging receipt prior to actual receipt of the check or wire. Many of the waiver forms that are out there list a payment amount, or possibly simply state that the waiver is in exchange for some small payment, and then state “receipt of which is acknolwedged” or something similar. The issue here is that receipt may not have happened yet because these lien waivers are submitted as part of the payment package in order to get paid in the first place. In short, should you sign the waiver prior to payment, you may have acknowledged a non-event and in the event of non-payment have a written document stating that you waived your claim to a lien for that money. What a court would do with this, I am unsure, but why risk it? My advice, be sure your waiver is contingent on actual clearance of payment as well as receipt.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Guessing as to your Construction Damages is Not the Best Approach
November 18, 2019 —
David Adelstein - Florida Construction Legal UpdatesArbitrarily guessing as to your construction damages is NOT the best approach. Sure, experts can be costly. No doubt about it. Having an expert versus guessing as to your construction damages caused by another party’s breach of contract is a no brainer. Engage an expert or, at a minimum, be in a position to competently testify as to your damages caused by another party’s breach of contract. Otherwise, the guessing is not going to get you very far as a concrete subcontractor found out in Patrick Concrete Constructors, Inc. v. Layne Christensen Co., 2018 WL 6528485 (W.D. New York 2018) where the subcontractor could not competently support its delay-related damages or change orders and, equally important, could not support that the damages were proximately caused by the general contractor’s breach of the subcontract.
In this case, the concrete subcontractor entered into a subcontract to perform concrete work for a public project. The project was delayed and the general contractor was required to pay liquidated damages to the owner. Not surprisingly, the subcontractor disputed liability for delays and sued the general contractor for all of its delay-related damages “in the form of labor and materials escalation, loss of productivity, procurement and impact costs, field and home office overhead, idle equipment, inability to take on other work, lost profits, and interest.” Patrick Concrete Constructors, 2018 WL at *1.
The general contractor moved for summary judgment as to the plaintiff’s delay-related damages – the subcontractor’s damages were nothing but guesses and the subcontractor could not prove the general contractor was the cause of the subcontractor’s damages.
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
Tall and Sustainable Is Not an Easy Fix
June 01, 2020 —
Christopher G. Hill - Construction Law MusingsWay back in 2009, I discussed the interaction between taller and taller buildings and sustainable (“green”) building. Back then, the reference was to the construction of skyscrapers in the Middle East and Europe. The initially referenced ENR article was written in the context of an urban retrofit of some of Chicago’s taller buildings to make them more sustainable.
Just this week, ENR published another article relating to sustainability and super tall buildings. The gist of the article is that while many see taller (rather than wider) as the trend to meld an urban population explosion with more sustainable building practices, this goal is not an easy one to meet.
For one, according to the article, energy performance metrics are hard to obtain, both due to the relative newness of these buildings and the seeming reluctance of certain owners to provide the data. Bob Pratt, a managing director in the Shanghai office of developer Tishman Speyer Properties, is quoted in the article, stating
Once we have measuring sticks about performance, we will know what to do” to make buildings sustainable.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrissghill@constructionlawva.com
