Tenth Circuit Reverses District Court's Ruling that Contractor Entitled to a Defense
October 24, 2023 —
Tred R. Eyerly - Insurance Law HawaiiAfter the district court granted the insured contractor's motion for judgment on the pleadings on the duty to defend, the Tenth Circuit found there was no coverage and reversed. Owners Ins. Co. v. Greenhalgh Planning & Development, Inc., 2023 U.S. App. LEXIS 20137 (10th Cir. Aug. 4, 2023).
Greenhalgh remodeled a house and barn for Michelle and Steven Pickens. After completion of the project, the Pickens sold the property to Teague and Michelle Cowley. The Cowleys later sued the Pickenses asserting various fraud and breach of contract claims. The complaint alleged that the Pickenses misled them into reasonably believing that the barn was a habitable structure, even though it did not qualify as such under the applicable building code because it lacked a fire-sprinkler system.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Texas Legislature Puts a Spear in Doctrine Making Contractor Warrantor of Owner Furnished Plans and Specifications
May 31, 2021 —
Paulo Flores, Timothy D. Matheny & Jackson Mabry - Peckar & Abramson, P.C.The Texas Legislature has just sent Senate Bill 219 (“S.B. 219”) to the Governor for signature; if this legislation is signed by the Governor, it will further erode the Texas legal doctrine that makes the contractor the warrantor of owner-furnished plans and specifications unless the prime contract specifically places this burden on the owner.
Background
49 states follow what is known as the Spearin doctrine (named after the U.S. Supreme Court case of United States v. Spearin) in which owners warrant the accuracy and sufficiency of owner-furnished plans and specifications. Texas, on the other hand, follows the Texas Supreme Court created Lonergan doctrine, which has been an unfortunate presence in Texas construction law since 1907. In its “purest form,” as stated by the Texas Supreme Court, the Lonergan doctrine prevents a contractor from successfully asserting a claim for “breach of contract based on defective plans and specifications” unless the contract contains language that “shows an intent to shift the burden of risk to the owner.” Essentially, this then translates into the contractor warranting the sufficiency and accuracy of owner-furnished plans and specifications, unless the contract between them expressly places this burden on the owner. Over the years some Texas courts of appeal had ameliorated this harsh doctrine, but in 2012, the Texas Supreme Court indicated Lonergan was still the law in Texas, in the case of El Paso v. Mastec. In 2019, the Texas Legislature took the first step toward hopefully abrogating the Lonergan doctrine by implementing a new Chapter 473 to the Texas Transportation Code with respect to certain projects undertaken by the Texas Department of Transportation, and Texas political subdivisions acting under the authority of Chapters 284, 366, 370 or 431 of the Transportation Code, adopting, as it were, the Spearin Doctrine in these limited, transportation projects. Now, the legislature has further chipped away at the Lonergan doctrine with the passage of S.B. 219.
Reprinted courtesy of
Paulo Flores, Peckar & Abramson, P.C.,
Timothy D. Matheny, Peckar & Abramson, P.C. and
Jackson Mabry, Peckar & Abramson, P.C.
Mr. Flores may be contacted at PFlores@Pecklaw.com
Mr. Matheny may be contacted at tmatheny@pecklaw.com
Mr. Mabry may be contacted at jmabry@pecklaw.com
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Be Sure to Bring Up Any Mechanic’s Lien Defenses Early and Often
November 27, 2023 —
Christopher G. Hill - Construction Law MusingsAs those of you who regularly read Musings are aware, mechanic’s liens are a big part of my law practice and a big issue here at this construction law blog. I’ve discussed the picky requirements of the mechanic’s lien statutes in Virginia and how the 90 and 150-day rules are strictly enforced. However, a recent case out of the City of Norfolk Virginia Circuit Court cautions that while failure to meet these strict requirements may invalidate a lien, it only does so if the owner or general contractor seeking to invalidate the lien argues the invalidity and/or presents evidence of that invalidity either pretrial or during trial.
In Premier Restoration LLC v. Barnes, the Court considered the following facts. The defendant homeowners had a house fire and the resulting damage was the subject of an insurance claim that was paid and checks sent to the homeowners. Premier filed a mechanic’s lien in response to Barnes’s failure to pay for Premier’s restoration construction services after Barnes’s home was destroyed by fire. Premier seeks a decree to enforce the lien, asking the court to order the sale of Barnes’s property to recover its damages or, alternatively, a judgment in its favor. With the Complaint seeking enforcement of the lien and damages for breach of contract, and this is a key point, Premier provided a copy of the mechanic’s lien along with the affidavit that is part of the statutory form swearing that the Owner was justly indebted to Premiere. The homeowners filed a counterclaim for unfinished work, including unfinished punch list work. After a trial during which no evidence regarding either the timeliness of the lien recording or whether any of the work sought to be encompassed in the lien was performed outside of the statutory 150-day window was presented by either side, the defendants filed a post-trial motion seeking to invalidate the lien as including sums for work outside of the 150-day window.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
New York Court Holds Insurer Can Recover Before Insured Is Made Whole
October 24, 2023 —
Gus Sara - The Subrogation StrategistIn State Farm Fire & Cas. Co. v. Tamagawa, Index No. 510977/2021, 2023 N.Y. Misc. Lexis 5434, the Supreme Court of New York considered whether an insurance carrier can settle its property subrogation lawsuit with the defendant, and discontinue the lawsuit, while the carrier’s insured still had pending claims with the carrier and claims for uninsured losses against the defendant. The court held that the carrier’s claims for the amount paid are divisible and independent of the insured’s claims and that the carrier’s settlement did not affect the insured’s right to sue for any unreimbursed losses. The court’s decision reminds us that, in New York, a carrier can resolve its subrogation claim before the insured is made whole.
In June 2018, a water loss occurred in an apartment owned by Malik Graves-Pryor (Graves-Pryor). Graves-Pryor reported a claim to his property insurance carrier, State Farm Fire & Casualty Company (Carrier). Investigation into the water loss revealed that the water originated from failed plumbing pipes in another apartment unit owned by Taku Tamagawa (Tamagawa). Carrier paid its insured over $600,000 for repairs. In May 2021, Carrier filed a subrogation lawsuit against Tamagawa, alleging improper maintenance of the plumbing pipes.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
U.S., Canada, Mexico Set New Joint Clean-Energy Goal
June 30, 2016 —
Tom Ichniowski – Engineering News-RecordThe U.S., Canada and Mexico have agreed to boost their combined clean-energy generation to 50% of electricity production by 2025, from 37% last year.
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Tom Ichniowski, Engineering News-RecordMr. Ichniowski may be contacted at
ichniowskit@enr.com
Miller Act CLAIMS: Finding Protections and Preserving Your Rights
November 29, 2021 —
Diana Lyn Curtis McGraw - ConsensusDocsThe Miller Act (the “Act”), which requires the prime contractor to furnish a performance bond and a payment bond to the government, protects “all persons supplying labor and materials carrying out the work provided for in the contract.”[1] Despite its broad language, courts have limited the parties who may actually assert a claim under the Act. This article introduces general background of the Act, identifies subcontractors who may qualify for protections under the Act, and suggests ways to preserve the rights as prime contractors.
Brief Background of the Miller Act
Under the Miller Act, there are two types of bonds the prime contractor furnishes to the government in a federal construction contract of more than $100,000[2]
1. Performance Bond
A performance bond protects the United States and guarantees the completion of the project in accordance with the contract’s terms and conditions.[3] This bond must be with a surety that is satisfactory to the officer awarding the contract and in the amount the officer considers adequate for government protection.[4] If a contractor abandons a project or fails to perform, the bond itself will cover the government’s cost of substitute performance. Thus, the performance bond disincentivizes contractors from abandoning projects and provides the government with reassurance that an abandonment will not create delays or additional expenses.
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Diana Lyn Curtis McGraw, Fox Rothschild LLPMs. McGraw may be contacted at
dmcgraw@foxrothschild.com
AAA Revises its Construction Industry Arbitration Rules and Mediation Procedures
April 02, 2024 —
Garret Murai - California Construction Law BlogThis one is for the lawyers. Or for those of you who are claims-minded . . .
Effective March 1, 2024, the American Arbitration Association (“AAA”) revised its Construction Industry Arbitration Rules and Mediation Procedures. For those involved in construction, this is important since the AAA Rules are the default arbitration rules contained in AIA form contracts and are often the arbitration rules referenced in other construction contracts as well.
So, what are the changes?
- General: Fax numbers have gone the way of the Dodo bird and replaced by email addresses for all parties. Also, while already done in practice, preliminary hearings may now be held via videoconference in addition to telephone and in-person (Rule R-23).
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
West Coast Casualty’s 25th Construction Defect Seminar Has Begun
May 16, 2018 —
Beverley BevenFlorez-CDJ STAFFThe first day of this year’s West Coast Casualty Seminar has concluded, with two more days ahead to learn, network, and discuss the construction defect industry’s current trends.
Don’t forget to stop by the Bert L. Howe & Associate’s exhibit so that you can participate in their Sink a Putt for Charity Golf Challenge. As in the past, attendees can participate for free in the BHA golf challenge and win a $25 Amazon gift card, and for every successful putt made, BHA will make a $25 cash donation in the golfer’s name to be distributed equally between each worthy organization. This year, participant’s efforts on the green will help benefit three cancer fighting institutions that are dedicated to treating and eradicating children’s cancer: Hawaii’s Children’s Cancer Foundation, St. Jude Children’s Research Hospital, and Shriners Hospital for Children. BHA is also raffling Dodger’s tickets, so you won’t want to miss their exhibit. You may read more about this year’s exhibit at
BHA HAS A NICE SWING and take a look back at previous exhibits,
20 YEARS OF BHA AT WEST COAST CASUALTY'S CD SEMINAR: CHRONICLING BHA'S INNOVATIVE EXHIBITS.
Want some help maximizing your work-play schedule? Check out
CDJ’s Sample Itinerary to get the Most out of West Coast Casualty’s Construction Defect Seminar that includes the seminar schedule as well as dining and event suggestions. We also have included suggestions for exploring the Greater Anaheim area:
BEYOND THE DISNEYLAND RESORT: DINING,
BEYOND THE DISNEYLAND RESORT: SPECIAL EVENTS,
BEYOND THE DISNEYLAND RESORT: MUSEUMS, and
BEYOND THE DISNEYLAND RESORT: WORLD CLASS SHOPPING EXPERIENCES.
Last week, Don MacGregor wrote a not-to-be-missed piece on
THE EVOLUTION OF CONSTRUCTION DEFECT TRENDS AT WEST COAST CASUALTY SEMINAR.
Thursday, this year’s West Coast Casualty awards will be presented. To learn more about these coveted awards, please see
A LOOK BACK AT THE OLLIES and
AN ERA OF LEGENDS.
We hope you enjoy days two and three of the seminar!
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