California Appeals Court Remands Fine in Late Completion Case
November 18, 2011 —
CDJ STAFFThe California Court of Appeals in Stanislaus County has reversed the decision of the lower court in Greg Opinski Construction Inc. v. City of Oakdale. The earlier court had awarded the city of judgment of $54,000 for late completion, $3,266 for repair of construction defects and interest, and $97,775 in attorneys’ fees. The late completion of the project was due to actions by the City of Oakdale, however, the court rejected Opinski’s argument that the California Supreme Court decision in Kiewit did not allow this, as his contract with the city established a procedure for claiming extensions.
The appeals court noted that the Kiewit decision has been “criticized as an unwarranted interference in the power of contracting parties to shift the risk of delays caused by one party onto the other party by forcing the second party to give the first notice of any intention to claim an extension of time based on delays caused by first.” They cited Sweet, a professor at Boalt Hall, UC Berkeley’s law school, that Kiewit “gutted” the “provision that conditions the contractor’s right to claim an extension of time for delays beyond his control.”
Further changes in California law in response to the Kiewit decision lead to the current situation which the court characterized as “if the contractor wished to claim it needed an extension of time because of delays caused by the city, the contractor was required to obtain a written change order by mutual consent or submit a claim in writing requesting a formal decision by the engineer.”
Opinski also argued that the lower court misinterpreted the contract. The Appeals court replied that “Opinski is mistaken.” He cited parts of the contract regarding the increase of time, but the court rejected these, noting that “an inability to agree is not the same as an express rejection.”
The court also rejects Opinski’s appeal that “the evidence the project was complete earlier than September 30, 2005, is weightier than the evidence to the contrary,” which they describe as “not a winning appellate argument.” The court points out that the role of an appeals court is not to reweigh the evidence, but to determine “whether the record contains substantial evidence in support of the judgment.”
The court did side with Opinski on one question of the escrow account. They rejected most of his arguments, repeating the line “Opinski is mistaken” several times. They decided that he was mistaken on the timing of the setoff decision and on whether the city was the prevailing party. However, the appeals court did find that Opinski was not liable for interest on the judgment.
The appeals court rejected the awarding of prejudgment interest to the city as the funds from which the judgment was drawn was held in an escrow account. The court noted that the city had access to the funds and could “access the funds when it determined that Opinski had breached the contract.” The appeals court noted that the judgment exhausted the escrow balance and remanded the case to the lower court to determine the amount own to Opinski.
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MGM Seeks to Demolish Harmon Towers
September 01, 2011 —
CDJ STAFFCiting public safety concerns and the cost of repair, MGM Resorts International is seeking to demolish the unfinished hotel tower. The company has a few hurdles to go through before they start laying the charges to implode the structure. Any plans would have to be approved by not only Clark County officials, but also the district court has an order blocking any activity during litigation between MGM and the general contractor on the project, Perini Building Company.
Architectural Record reports that MGM states it would take “approximately 18 months to conduct test and come up with an approved, permitted design to fix the Harmon.” MGM feels that repairs would then take another two to three years. Perini contends that they could “provide stamped drawings detailing all necessary repairs within three months.” They attribute MGM’s desire to demolish the building as “buyer’s remorse.”
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Navigating Threshold Arbitration Issues in Construction Contracts
April 29, 2024 —
Daniel D. McMillan and TJ Auner - The Dispute ResolverIncluding an arbitration clause in your construction contract may not mean that your dispute will be confined to arbitration. Instead, parties often find themselves in court litigating threshold issues related to the existence and/or enforceability of an arbitration clause. Common issues include whether the underlying contract containing the arbitration clause is valid, whether the dispute falls within the scope of the clause, whether the parties complied with contractual prerequisites to arbitration, whether issues related to arbitrability are decided by the court or arbitrator, and whether one of the parties has waived their right to arbitrate. This blog post highlights two recent construction cases addressing threshold issues that a party seeking to enforce—or oppose enforcing—an arbitration clause might face.
Seifert v. United Built Homes, LLC: Delegating Issues of Arbitrability to the Arbitrator
In Seifert, an owner sued a homebuilder in Texas federal court for breach of contract and sought damages and declaratory relief. No. 3:22-CV-1360-E, 2023 WL 4826206 (N.D. Tex. July 27, 2023). The builder moved to compel arbitration. The owner opposed and argued that: (1) there was no agreement to arbitrate because the underlying contract was null and void, and (2) its claim for declaratory relief fell outside the scope of the arbitration clause. The court did not address the merits of either argument. Instead, it determined that these were issues for the arbitrator to decide.
Reprinted courtesy of
Daniel D. McMillan, Jones Day and
TJ Auner, Jones Day
Mr. McMillan may be contacted at ddmcmillan@jonesday.com
Mr. Auner may be contacted at tauner@jonesday.com
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Coyness is Nice. Just Not When Seeking a Default Judgment
March 04, 2019 —
Garret Murai - California Construction Law BlogAs Morrissey of the Smith’s sang: Coyness is nice, but Coyness can stop you, from saying all the things in life you’d like to.
It’s not uncommon in litigation to see a complaint asking for “damages according to proof.” Call it laziness. Call it hiding the ball. Call it coy, even. I call it risky.
And here’s why: If a defendant doesn’t appear and you need to seek a default judgment against him, her, or it, you are barred from doing so, since you are limited to recovering the amount you sought. And last I checked, something of nothing is nothing.
In Yu v. Liberty Surplus Insurance Corporation, California Court of Appeals for the Fourth District, Case No. G054522 (December 11, 2018), one plaintiff found this out the hard way, although perhaps not quite in the way they expected it.
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Garret Murai, Wendel RosenMr. Murai may be contacted at
gmurai@wendel.com
The Peak of Hurricane Season Is Here: How to Manage Risks Before They Manage You
September 21, 2020 —
Vincent E. Morgan - Construction ExecutiveThe Atlantic hurricane season runs from June 1 to Nov. 30, but it peaks sharply during August, September and October. The latest forecasts predict this will be one of the most active seasons in history, in terms of frequency and severity, though it is always important to remember that even a single hurricane or tropical storm making landfall can still be a devastating event.
Hurricanes pose unique risks to the construction industry ranging from project and labor force disruptions to concerns about the availability and price of construction materials. This is even more true this year, which requires merging hurricane preparedness and response plans with the realities of COVID-19. Because hurricanes cannot be avoided, preparing for them is the only way to manage these risks. Ensuring the personal safety and wellbeing of affected individuals is the first priority. After that, here are some key issues, and suggestions for handling them, that may help guide construction companies through the storm.
SITE PROTECTION
Construction contracts often place responsibility for site protection on contractors. Where those duties exist, failing to properly carry them out can lead to enormous losses that then turn into liability claims. This could be anything from removing materials that can become projectiles, covering exposed ventilation shafts, and sealing electrical conduits to ensuring that key equipment such as generators and pumps can remain functional in a storm. One way to approach it is to imagine sustained 100-mph winds and relentless water, and then make sure preparedness efforts are likely to survive that kind of test. This is not the time for guessing. It is far better to go through a rigorous analytical process now than in a courtroom years later.
Reprinted courtesy of
Vincent E. Morgan, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Newark Trial Team Secures Affirmance of ‘No Cause’ Verdict for Nationwide Housing Manager & Developer
January 07, 2025 —
Lewis Brisbois NewsroomNewark, N.J. (December 30, 2024) - Newark Partner Afsha Noran and Managing Partner Colin Hackett recently obtained a ruling by a New Jersey Appellate Division panel affirming a unanimous "no cause" defense verdict obtained on behalf of a nationwide housing developer and manager.
In this case, the plaintiff and her two minor children brought suit against the firm's client. They appealed a unanimous no-cause jury verdict rendered in May 2023 that found the defendants not liable for mold exposure in their apartment. The plaintiffs argued that several trial errors, including improper jury instructions, a confusing verdict sheet, and prejudicial remarks by defense counsel led to an unjust result. However, the appellate court affirmed the trial court's decision, concluding that there was no miscarriage of justice and that the trial court properly exercised its discretion in handling the case.
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Lewis Brisbois
Contractors and Owners Will Have an Easier Time Identifying Regulated Wetlands Following Recent U.S. Supreme Court Opinion
August 01, 2023 —
David Scriven-Young - ConsensusDocsContractors appreciate how difficult it often is on a technical level to perform work in or near wetlands or other environmentally sensitive areas. Such work is even more difficult due to the complex, and ever-changing regulations issued by the United States Environmental Protection Agency (“EPA”) under the Clean Water Act (“CWA”). The CWA applies to “navigable waters”, which are defined as “the waters of the United States.” To determine whether certain wetlands are in fact “the waters of the United States”, contractors and owners have had to engage in a fact-intensive “significant-nexus” determination dependent upon a lengthy list of hydrological and ecological factors found in the regulations. Recently, the U.S. Supreme Court struck down the applicability of those regulations and instituted a simpler test to determine whether wetlands on an owner’s property fall within them.
In
Sackett v. EPA, the Sacketts purchased property near a lake in Idaho. In preparation for building a home, they began backfilling the site with dirt and rocks. A few months later, the EPA sent the Sacketts a compliance order informing them that their backfilling violated the CWA because their property was part of protected wetlands. The EPA demanded that the Sacketts immediately undertake activities to restore the site and threatened the Sacketts with penalties of over $40,000 per day if they did not comply. According to the EPA, the wetlands on the Sacketts’ lot fell under the jurisdiction of the CWA because they were “adjacent to” (i.e., in the same neighborhood as) an unnamed tributary on the other side of a 30-foot road, which fed into the nearby lake. The EPA concluded that the Sacketts’ wetlands, when considered together with a large nearby wetland complex, significantly affected the ecology of the lake. Thus, the EPA charged that the Sacketts had illegally dumped soil and gravel into “the waters of the United States.”
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David Scriven-Young, Peckar & Abramson PCMr. Scriven-Young may be contacted at
dscriven-young@pecklaw.com
Identifying and Accessing Coverage in Complex Construction Claims
September 29, 2021 —
Jeffrey J. Vita & Michael V. Pepe - Saxe Doernberger & Vita, P.C.I. Introduction
First-party, third-party, builder’s risk, professional liability, commercial general liability, wrap-ups, and additional insured status are all potential sources of insurance coverage for a large construction loss. Therefore, it is critical for construction industry participants, from owners and developers to general contractors and their subcontractors, to have a functional knowledge of the different types of insurance coverage available to them and how those coverages intersect to respond to a loss. This paper presents a brief overview of the various types of coverage available to contractors, construction managers, and owners in a large construction loss and the risks each coverage is designed to insure.
In general, there are two forms of coverage: (1) First-party liability coverage, which protects an insured’s own losses on a project during construction; and (2) Third-party liability coverage, which insures the project participants for losses that become the subject of claims or suits brought against the project participants by third parties. When a loss occurs, such as property damage, both types of coverage can be implicated. For example, if a fire burns down a building under construction, the contractor likely would incur first-party losses such as cleanup costs. The contractor may also have third-party exposure if the owner alleges that the contractor was responsible for the fire. On the other hand, when a bodily injury occurs, all losses to the contractor will be third-party losses. A broad overview of each of these policies is provided below.
Reprinted courtesy of
Jeffrey J. Vita, Saxe Doernberger & Vita and
Michael V. Pepe, Saxe Doernberger & Vita
Mr. Vita may be contacted at JVita@sdvlaw.com
Mr. Pepe may be contacted at MPepe@sdvlaw.com
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