Seattle Washington Building Expert Directory

Contractor Succeeds At the Supreme Court Against Public Owner – Obtaining Fee Award and Determination The City Acted In Bad Faith

September 20, 2021 — Lindsay T. Watkins - Ahlers Cressman & Sleight PLLC
A contractor won a rare but much-deserved victory at the Supreme Court on July 8, 2021 in Conway Construction Co. v. City of Puyallup, 197 Wn.2d 825, 490 P.2d 221 (2021). The case, which involved an aggressive stance by a public owner:

confirmed that the public owner bears the burden of demonstrating a termination for default is justified,
reaffirmed the requirement to provide an opportunity to cure, and
rejected the public owner’s attempts to escape its own contract language that the contractor relied upon.

John Ahlers and Lindsay Watkins of Ahlers Cressman and Sleight and Jamie Becker of Osborne Construction submitted the Amicus Brief for the Associated General Contractors (AGC) of Washington in support of Conway to the Supreme Court. Read the court decision
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Reprinted courtesy of Lindsay T. Watkins, Ahlers Cressman & Sleight PLLC
Ms. Watkins may be contacted at Lindsay.Watkins@acslawyers.com

Brown Paint Doesn’t Cover Up Construction Defects

April 25, 2012 — CDJ STAFF

In a decision that describes the case as illustrating “the perils that real estate brokers and their agents assume when acting as a dual listing agent to both the buyers and sellers of the same house,” the California Court of Appeals has issued a decision in William L. Lyon & Associates v. The Superior Court of Placer County. Lyon & Associates sought summary judgment to dismiss the claims of the Henleys who bought a home in a transaction where a Lyon agent represented both sides.

The prior owners of the home, the Costas, had used a Lyon agent in purchasing their home. When they later sought to sell it, that agent “became aware of some of the house’s defects and problems.” In response, the Costas sought the help of another agent, Connie Gidal, also of Lyons & Associates. Photos taken in the presence of Ms. Gidal show defects of the paint and stucco. The Costas also took the step of painting the house dark brown. During the sale process, “rain caused many of the painted-over defects to reappear.” The Costas “purchased more dark brown paint and covered up the newly visible damage prior to inspection by the Henleys.”

With the damage concealed, the Henleys bought the home in May 2006. The agreement with Lyons & Associates noted that “a dual agent is obligated to disclose known facts materially affecting the value or desirability of the property to both parties.” Escrow closed on May 9, 2006. The contract with the broker included a two-year limit on the time to bring legal action.

The Henleys moved in during June 2006, and “began to discover construction defects that had been concealed by the Costas.” In addition to the painted-over stucco problems, the Henleys found that the Costas had “installed quartzite stone overlays on the backyard steps in a manner that caused water intrusion on the house’s stucco walls.”

In May 2009, the Henleys sued the Costas, Ron McKim Construction, Lyons & Associates, and Ms. Gidal. Their complaint alleged that Lyons & Associates had committed breach of contact, negligence, fraud, breach of fiduciary duty, and negligent nondisclosure in connection with the construction defects. The Costas named Lyons in a cross complaint. Lyons moved for summary judgments on the grounds that the two-year statute of limitations had expired before the complaint and cross-complaint were filed. Both the Henleys and the Costas opposed this claim. The court denied the motion and Lyons appealed.

The appeals court upheld the denial, noting that the both California Supreme Court decision and later action by the legislature compels real estate brokers and salespersons “to conduct a reasonably competent and diligent visual inspection of the property offered for sale.” The court noted that under California law, brokers have responsibilities to both sellers and buyers. The section of law cited by Lyons applies to seller’s agents. The court rejected the contention by Lyons that they were “cooperating brokers.” The Henleys were “not constrained by the two-year statute of limitations.”

Lyons contended that even if California’s statute did not apply, there was a contractual limit of two years. The court also rejected this, agreeing with the Henleys that “the two-year limitation period must be extended by the discovery rule.”

The court noted that “Lyon & Associates may not reap the benefit of a shortened contractual limitation period when its own alleged malfeasance contributed to the delay in the discovery of the buyer’s injury.” The court found that the Henleys could proceed with their breach of contract claim, because, “when a breach of contract is committed in secret, such as the intentional nondisclosure of a real estate broker regarding a previously visible construction defect, the contractual limitations period is properly held subject to the discovery rule.” The court felt that the interpretation favored by the California Association of Realtors would “halve the applicable statute of limitations period.”

In addition to rejecting Lyon request for summary judgment on the claims made by the Henleys, the court also rejected the request of summary judgment on the claims made by the Costas, concluding that neither claim is time-barred. Costs were awarded to both the Henleys and Costas.

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Delaware “occurrence” and exclusions j(5) and j(6)

June 10, 2011 — CDCoverage.com

In Goodville Mut. Cas. Co. v. Baldo, No. 09-338 (D. Del. June 2, 2011), claimants condominium association and unit owners sued project developer Rehoboth and general contractor Capano seeking damages because of moisture penetration property damage to common elements and individual units resulting from construction defects. Rehoboth and Capano filed a third party complaint against insured property manager Baldo alleging that, if Rehoboth and Capano were liable to claimants, Baldo was also liable because of Baldo’s failure to properly manage, maintain, and repair the property

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Reprinted courtesy of CDCoverage.com

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General Indemnity Agreement Can Come Back to Bite You

October 21, 2019 — Christopher G. Hill - Construction Law Musings
I talk about payment bonds often here at Construction Law Musings. I talk a bit less about performance bonds and even less about the General Indemnity Agreements (GIA) that are signed by companies and their principals as part of the agreement between a construction company and its bonding company for the provision of these bonds. However, this does not mean that these GIA’s are not important. In fact, these are the agreements that allow a bonding provider to recoup any money paid out pursuant to either a payment or performance bond. A 2018 case illustrates their importance. In Allegheny Cas. Co. v. River City Roofing, LLC, the Court considered a claim by Allegheny seeking both specific performance of the collateral agreement and reimbursement of certain expenses and investigative costs expended by Allegheny pursuant to its performance bond. Allegheny sought to be reimbursed for certain payments for siding work, investigative costs, and costs spent enforcing the GIA. Allegheny further sought to force the defendants to post sufficient collateral. To do so, Allegheny sued in the Eastern District of Virginia and then moved for summary judgment stating that the GAI uneuivocally required such a result due to the good faith payment for the siding work and the plain language of the GIA. In response, the Defendants, River City Roofing and its principals that had personally guaranteed the indemnity, argued that the GIA did not apply to the siding work because only the roofing contract was subject to the performance bond and that any bond claims for which collateral was demanded were inchoate and therefore not proper for specific performance. Read the court decision
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Reprinted courtesy of The Law Office of Christopher G. Hill
Mr. Hill may be contacted at chrisghill@constructionlawva.com

The Project “Completion” Paradox in California

April 06, 2016 — Garret Murai – California Construction Law Blog
We’ve written before about why the date of “completion” on a California construction project is important, and why, if I may be blunt, determining that date can be as frustrating as a one-legged man in a game of kickass. You see, in California the deadline to record a mechanics lien, serve a stop payment notice, or make a payment bond claim – important construction payment remedies the California State Legislature saw fit to help you get paid – often depends on when a project is “completed.” So, for example, the deadline for direct contractors to record a mechanics lien is 90 days from completion of the project. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

How Palm Beach Balances Mansion Politics Against Climate Change

July 05, 2021 — Amanda L. Gordon - Bloomberg
It feels like a precipice moment for Palm Beach, a Florida town in the throes of a waterfront mansion-building mania just as the impacts of climate change start pushing in. At the town council’s regular meeting this past week, officials talked about the need to raise the grade of a beloved bike trail—and, at the same time, somehow add height to the privately-owned seawalls running alongside it. Raising both together would help preserve views and accessibility. But if individual sections of the public bikeway and the mansion-fronting seawalls are raised piecemeal and go out of sync, it would weaken the defense against flooding and make for uneven pedaling. As the town’s director of public works Paul Brazil put it, “We don't want our bike trail to become a mountain bike trail.” Read the court decision
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Reprinted courtesy of Amanda L. Gordon, Bloomberg

Zombie Foreclosures Plaguing Various Cities in the U.S.

July 16, 2014 — Beverley BevenFlorez-CDJ STAFF
Many homeowners are simply abandoning their homes before banks have completed the foreclosure process, according to USA Today. Banks are not always in a hurry to take ownership of property, and often will wait until they are ready to dispose of it before doing so: “There are two primary things that can factor into their decision," Eric Eckardt, vice president and general manager of Hubzu.com, told the Mail Tribune. "One, they may have a surplus of REO properties they're trying to move off the balance sheet. The second is, costs associated with foreclosure may be greater than the value. At the end of the day, it's really a case-by-case matter.” USA Today reported that “[t]he length of the entire foreclosure process is a major contributor to vacancy rates because homeowners are more likely to give up on their homes the longer they have to wait for a resolution.” These abandoned homes may have a negative impact on sales of neighboring homes, according to the Mail Tribune. Gary Poulos, a retired Harry & David systems engineer, lives next door to a ‘zombie foreclosure,’ and spent a year trying to get maintenance work completed on the neighboring property so that he could be in a position to sell his own. He created a blog about his experience (myneighborchasebank.blogspot.com). Big Builder analyzed May 2014 data from CoreLogic, and identified the five states with the highest foreclosure inventory: New Jersey, Florida, New York, Hawaii, and Maine. While the five states with the lowest foreclosure inventory were Alaska, Nebraska, North Dakota, Wyoming, and Minnesota. Read the full story, USA Today... Read the full story, Big Builder... Read the full story, Mail Tribune... Read the court decision
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New Change Order Bill Becomes Law: RCW 39.04.360

July 08, 2024 — Brett M. Hill - Ahlers Cressman & Sleight PLLC
A new statute (RCW 39.04.360) became effective on June 6, 2024, and it applies to extra work performed by contractors and subcontractors on public and private projects in Washington State. The intent of the original bill was to allow contractors and subcontractors to get paid sooner for undisputed additional work. The statute does not apply to private residential projects of 12 units or less. The statute allows for recovery of interest for contractors/subcontractors at 1% per month (12% per year) on the value of the additional work if the statute is violated. Here are the requirements of the new statute:

Public and private owners must issue a change order for the undisputed amount of additional work performed by a contractor, subcontractor, or supplier no later than 30 days after the work is satisfactorily completed and the change is requested by the contractor.
General contractors, and subcontractors with lower-tier subs, must issue a change order to their subcontractors impacted by the change within 10 days after receipt of the approved change order from the owner/upper-tier contractor.

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Reprinted courtesy of Brett M. Hill, Ahlers Cressman & Sleight PLLC
Mr. Hill may be contacted at brett.hill@acslawyers.com

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