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DIRECTORY AND CAPABILITIES

Oregon Supreme Court Confirms Broad Duty to Defend

January 13, 2017 — Theresa A. Guertin - Saxe Doernberger & Vita, P.C. Blog
The Supreme Court of Oregon issued a decision at the end of last year which perfectly illustrates the lengths to which a court may go to grant a contractor’s claim for defense from its insurer in a construction defect suit. In West Hills Development Co. v. Chartis Claims, Inc.,1 the Court held that a subcontractor’s insurer had a duty to defend a general contractor as an additional insured because the allegations of a homeowner’s association’s complaint could be interpreted to fall within the ambit of coverage provided under the policy—despite the fact that the policy only provided ongoing operations coverage, and despite the fact that the subcontractor was never mentioned in the complaint. The decision is favorable to policyholders but also provides an important lesson: that contractors may avoid additional insured disputes if those contractors have solid contractual insurance requirements for both ongoing and completed operations risks. Read the court decision
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Reprinted courtesy of Theresa A. Guertin, Saxe Doernberger & Vita, P.C.
Ms. Guertin may be contacted at tag@sdvlaw.com

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Seller Cannot Compel Arbitration for Its Role in Construction Defect Case<

March 01, 2012 — CDJ STAFF

The buyer of a leaky home in Venice, California cannot be compelled to arbitration with the seller in a construction defect lawsuit, according to a decision in Lindemann v. Hume, which was heard in the California Court of Appeals. Lindemann was the trustee of the Schlei Trust which bought the home and then sued the seller and the builder for construction defects.



The initial owner was the Hancock Park Trust, a real estate trust for Nicholas Cage. Richard Hume was the trustee. In 2002, Cage agreed to buy the home which was being built by the Lee Group. Cage transferred the agreement to the Hancock Park Trust. Hancock had Richard Nazarin, a general contractor, conduct a pre-closing walk through. They also engaged an inspector. Before escrow closed, the Lee Group agreed to provide a ten-year warranty “to remedy and repair any and all damage resulting from water infiltration, intrusion, or flooding due to the fact that the door on the second and third floors of the residence at the Property were not originally installed at least one-half inch (1/2”) to one inch (1”) above the adjacent outside patio tile/floor on each of the second and third floors.”



Cage moved in and experienced water intrusion and flooding. The Lee Group was unable to fix the problems. Hume listed the home for sale. The Kamienowiczs went as far as escrow before backing out of the purchase over concerns about water, after the seller’s agent disclosed “a problem with the drainage system that is currently being addressed by the Lee Group.”



The house was subsequently bought by the Schlei Trust. The purchase agreement included an arbitration clause which included an agreement that “any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration.” The warranty the Lee Group had given to Hancock was transferred to the Schlei trust and Mr. Schlei moved into the home in May 2003.



Lindemann enquired as to whether the work done would prevent future flooding. Nazarin sent Schlei a letter that said that measures had been taken “to prevent that situation from recurring.” In February, 2004, there was flooding and water intrusion. Lindemann filed a lawsuit against the Lee Group and then added the Hancock Park defendants.



The Hancock Park defendants invoked the arbitration clause, arguing that Lindemann’s claims “were only tangentially related to her construction defect causes of action against the Lee Group.” On June 9, 2010, the trial court rejected this claim, ruling that there was a possibility of conflicting rulings on common issues of law. “With respect to both the developer defendants and the seller defendants, the threshold issue is whether there was a problem with the construction of the property in the first instance. If there was no problem with the construction of the property, then there was nothing to fail to disclose.” Later in the ruling, the trial court noted that “the jury could find there was no construction defect on the property, while the arbitration finds there was a construction defect, the sellers knew about it, and the sellers failed to disclose it.” The appeals court noted that while Hancock Park had disclosed the drainage problems to the Kamienowiczs, no such disclosure was made to Sclei.



The appeals court described Hancock Park’s argument that there is no risk of inconsistent rulings as “without merit.” The appeals court said that the issue “is not whether inconsistent rulings are inevitable but whether they are possible if arbitration is ordered.” Further, the court noted that “the Hancock Park defendants and the Lee Group have filed cross-complaints for indemnification against each other, further increasing the risk of inconsistent rulings.”



The court found for Lindemann, awarding her costs.

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Seven Trends That Impact Commercial Construction Litigation in 2021

March 29, 2021 — Jeffrey Kozek & E. Mitchell Swann - Construction Executive
2021 stands to bring sizeable change to the commercial construction industry as trends that had been on the horizon meet the impact of the pandemic. That means it will be even more important for architects, engineers, contractors and owners to prioritize revisiting their project plans as the industry adapts so that they can better reduce their likelihood of facing litigation down the line. While many in the industry will struggle to react to the ongoing environment, building stronger contractual understanding and preparedness to adapt could be the difference in being able to complete the work and move onto the next project in a timely manner. Meanwhile, contractors are using a wider usage of technologies for improved project communication and efficiency. In the coming year, there are seven trends will have the greatest impact on commercial construction. Reprinted courtesy of Jeffrey Kozek and E. Mitchell Swann, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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Vermont Supreme Court Reverses, Finding No Coverage for Collapse

May 18, 2020 — Tred R. Eyerly - Insurance Law Hawaii
The Vermont Supreme Court reversed the trial court's decision for collapse coverage. Commercial Constr. Endeavors, Inc. v. Ohio Sec. Ins. Co., 2019 Vt. LEXIS 173 (Vt. Sup. Ct. Dec. 13,2019). Commercial Construction Endeavors, Inc. (CCE) built a livestock barn. By late December 2014, the barn was partially complete, with the foundation laid, wood framing erected, and roof trusses installed. In late December, strong winds caused the structure to collapse. CCE started clearing debris and rebuilding the barn, incurring additional labor and material costs. CCE reported the collapse to Ohio Security. The policy covered loss to "Covered Property." Ohio Security determined that the loss was covered for "Off-Premises Property Damage Including Care, Custody or Control." This endorsement provided coverage for damage to real property upon which CCE was performing operations where the damage resulted from those operations. Ohio Security paid CCE $24,750, the full amount available under the endorsement, less a $250 deductible. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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Recent Bribery and Anti-Corruption Enforcement Trends in Global Construction Industry

August 26, 2019 — Ralph A. Finizio & Anthony Finizio - ConsensusDocs
Bribery and corruption have long plagued the construction industry, particularly in the developing world and emerging markets. Large contracts often trickle down through layers of subcontractors, presenting opportunities for corruption at each level. The risk is enhanced in certain foreign jurisdictions, where large corporations may be wholly or partially state-owned enterprises and public officials may expect payment in exchange for state-issued licenses or government contracts. Recent enforcement trends indicate that both the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are increasingly targeting the construction industry for anti-bribery and corruption actions under the Foreign Corrupt Practices Act (FCPA). Several former DOJ officials also recently commented that the construction industry has become a focus of anti-corruption enforcement efforts. The FCPA is a formidable tool for regulators, making it unlawful to influence a foreign government official with any type of payment or personal reward. While certain safe harbors apply — including de minimis payments made to expedite routine governmental action or the payment being lawful in the foreign jurisdiction — these exceptions are construed narrowly and can be difficult to apply in practice. Reprinted courtesy of Ralph A. Finizio, Pepper Hamilton LLP and Anthony Finizio, Pepper Hamilton LLP Mr. Finizio may be contacted at finizior@pepperlaw.com Mr. Finizio may be contacted at finizioa@pepperlaw.com Read the court decision
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Power to the Office Worker

September 03, 2019 — Aarni Heiskanen - AEC Business
Modern offices consist of variable spaces that cater to personal preferences and functional needs. The indoor air quality is typically not as adaptive to various tasks, which can lead to suboptimal worker performance and dissatisfaction. A pilot project led by Senate Properties used BIM and building data to develop an operational model that helps workers get a better grip on indoor conditions. Around 55,000 government employees work in the 9,000 premises managed by Senate Properties, a Finnish, state-owned enterprise. For decades, Senate has been at the forefront of digitalizing construction and property management. They routinely use BIM both in new building projects and in retrofitting. Over the last few years, Senate Properties has developed and piloted the use of BIM for the purpose of maintenance and operations. Testing BIM as a Property Management Platform “We want to improve the work conditions of office users, and consequently employee satisfaction and work productivity,” says Esa Halmetoja, Senior Expert at Senate Properties. “In this pilot project, we wanted to demonstrate how to use a building information model as a platform for locating service requests and performance monitoring in a three-dimensional environment.” Read the court decision
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Reprinted courtesy of Aarni Heiskanen, AEC Business
Mr. Heiskanen may be contacted at aec-business@aepartners.fi

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A New Way to Design in 3D – Interview with Pouria Kay of Grib

August 24, 2017 — Aarni Heiskanen - AEC Business
In this podcast interview with Pouria Kay, CEO and Co-founder at Grib, we talk about the startup’s new, intuitive 3D design tool. Grib® is a cloud–based software that turns a mobile device into a universal controller. With Grib, both young and professional designers can sketch complex objects without first having to learn cumbersome 3D software. You work intuitively in actual 3D space and interact with your environment using augmented reality. All you need is pen, paper, and your mobile device. You can share models with friends, order a print, or export them if needed. Read the court decision
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Reprinted courtesy of Aarni Heiskanen, AEC Business
Mr. Heiskanen may be contacted at info@aepartners.fi

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U.S. Homeownership Rate Falls to Lowest Since Early 1995

October 29, 2014 — Prashant Gopal – Bloomberg
The homeownership rate in the U.S. fell to the lowest in more than 19 years as the market shifted toward renting and tight credit blocked some potential buyers. The share of Americans who own their homes was 64.4 percent in the third quarter, down from 64.7 percent in the previous three months, the Census Bureau said in a report today. The rate was at the lowest level since the first quarter of 1995. Entry-level buyers have been held back by stringent mortgage standards and slow wage growth. The share of first-time buyers was 29 percent in September for the third straight month, compared with about 40 percent historically, according to the National Association of Realtors said. Read the court decision
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Reprinted courtesy of Prashant Gopal, Bloomberg
Mr. Gopal may be contacted at pgopal2@bloomberg.net

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