Fairfield Connecticut Building Expert Directory

Construction Contract Clauses Only a Grinch Would Love – Part 4

November 30, 2016 — Garret Murai – California Construction Law Blog
Scope, time and cost provisions may be the most important clauses in your construction contract but they’re not the only ones which can impact your bottom line. The fourth and final part in a multi-part series, here are some other important construction contract clauses that can put a damper on your holidays.

Provision: Warranty Provisions

Typical Provision: “Subcontractor warrants to Contractor that all materials and equipment furnished shall be new unless otherwise specified and that all Work performed shall be performed in a good and workmanlike manner, of good quality and free from defects, and in conformance with industry standards, manufacturer’s recommendations and the Contract Documents. All work not conforming to these requirements, including substitutions not properly approved, shall be considered defective. Subcontractor agrees to promptly make good any and all defects due to faulty workmanship, materials and/or equipment which may appear within the Contract Documents, and if no such period is stipulated in the Contract, then for a period of one year from the date of acceptance by the Owner. Nothing herein shall shorten or limit any applicable periods of limitations including, but not limited to, those set forth in Civil Code, Part 2, Title 2, Chapter 3.”
What it Means: Warranty periods are subject to the agreement of the parties. However, warranties are different than limitations periods, such as California’s 4 year statute of repose for patent defects and 10 year statute of repose for latent defects (note: a statute of repose is different than a statute of limitation. A statute of repose sets a deadline based on an event. So, for example, under the 10 year statute of repose for latent defects a claimant must bring a latent defect claim within 10 years following substantial completion even if the latent defect wasn’t discovered until 10 years and 1 month following substantial completion. A statute of limitation, in contrast, sets a deadline based on the occurrence of an injury or damage. So, for example, California has a 2 year statute of limitation for personal injuries, which sets a deadline of 2 years from the date of injury to bring a personal injury claim). Warranty periods are also different from limitations periods because most warranties require work to be corrected at no cost, and because many contracts include attorney’s fee provisions, breach of a warranty can give rise to claim for attorney’s fees as well.
What You Can Do: Lower-tiered parties should examine warranty provisions to see if they are reasonable, and if not reasonable, should seek to either eliminate or limit those provisions, such as by reducing the warranty period or providing different warranty periods for different components of work, etc.

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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

The Small Stuff: Small Claims Court and Limited Civil Court Jurisdictional Limits

June 10, 2024 — Garret Murai - California Construction Law Blog
Sometimes the small stuff matters. And when it comes to legal disputes this can pose a problem for clients as well as their attorneys because litigation and arbitration, the two most frequently utilized venues to resolve legal disputes in the United States, can be and usually are expensive. Data on the cost of civil litigation is sparse. According to a 2013 survey of trial lawyers conducted by the National Center of State Courts, the median cost of litigating a contract dispute – which is the category that most construction disputes would fall under – is $90,575. And this is in 2013 dollars. With inflation, that number rises to nearly $120,000 in 2023, and based upon our experience litigating and arbitrating complex (and even not so complex) construction disputes, it can be many multiples over that. Read the court decision
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Reprinted courtesy of Garret Murai, Nomos LLP
Mr. Murai may be contacted at gmurai@nomosllp.com

Godfather Charged with Insurance Fraud

July 01, 2011 — CDJ STAFF

Texas-based Godfather Construction is a recipient of a fraud suit from the Cook County state attorney’s office. The firm incorporated in Illinois in April 2010, moving there to do business after storms damaged homes in the Chicago suburbs, according to a report in the Chicago Tribune. The state attorney alleges that Godfather brought unlicensed out-of-state workers and the work they performed was “incomplete or shoddy.” Godfather is claimed to have received about $60,000 from Illinois homeowners. The prosecutors are seeking restitution for Godfather’s clients and seek to forbid the firm from doing business in Illinois.

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Applying Mighty Midgets, NY Court Awards Legal Expenses to Insureds Which Defeated Insurer’s Coverage Claims

February 10, 2020 — Anthony L. Miscioscia & Timothy A. Carroll - White and Williams LLP
Is an insured (or putative insured) entitled to recover its legal expenses if it is successful in coverage litigation? In some states, no. In many other states, yes – based on either a statute or the common law. In New York, an insured may recover such expenses if it was “cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations,” and, while forced into that posture, the insured defeats the insurer’s claim. Mighty Midgets, Inc. v. Centennial Ins. Co., 389 N.E.2d 1080, 1085 (N.Y. 1979). As a corollary to that rule, the insured is not entitled to its expenses “in an affirmative action brought by [the insured] to settle its rights. . . .” Id. at 1085. Earlier this week, the New York federal court in United Specialty Ins. Co. v. Lux Maint. & Ren. Corp., 2019 U.S. Dist. LEXIS 201805 (S.D.N.Y. Nov. 20, 2019) became the latest to apply the Mighty Midgets rule, awarding several insureds their legal expenses after defeating the insurer’s declaratory judgment action. In Lux, the CGL insurer of a façade-renovation contractor sued the contractor (its named insured) and several owners of a hospital (putative additional insureds) at which the façade-renovation work took place, claiming that the insurer did not owe a defense or indemnity to any of those companies in connection with an underlying bodily injury action brought by an employee of the contractor who was injured while performing the work. The insurer and the putative additional insureds filed cross-motions for summary judgment on the coverage issues, with the putative additional insureds also seeking to recover their legal expenses for defending against the insurer’s action. The U.S. District Court for the Southern District of New York concluded that, based on the contractor’s agreement to provide coverage for the hospital owners, and a comparison between the underlying allegations and the policy, the insurer owed the hospital owners coverage as additional insureds to the contractor’s policy; the court also concluded that the insurer owed coverage for the contractor’s contractual defense and indemnity obligations to the hospital owners. After concluding that the insurer’s claim that it did not owe coverage lacked merit, the court turned to the additional insureds’ request for their legal expenses. The court examined the “well settled” rule under New York law “that an insured cannot recover his legal expenditure in a dispute with an insurer over coverage, even if the insurer loses and is obligated to provide coverage,” but also New York’s “limited exception” to that rule, “under which an insured who is ‘cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations, and who prevails on the merits, may recover attorneys’ fees incurred in defending against the insurer’s action.’ ” Lux, 2019 U.S. Dist. LEXIS 201805, at *18 (quoting Mighty Midgets, 389 N.E.2d at 1085). Reprinted courtesy of Anthony L. Miscioscia, White and Williams and Timothy A. Carroll, White and Williams Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com Mr. Carroll may be contacted at carrollt@whiteandwilliams.com Read the court decision
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Insurer's Appeal of Jury Verdict Rejected by Tenth Circuit

March 06, 2023 — Tred R. Eyerly - Insurance Law Hawaii
After a jury awarded damages related to the insurer's delayed payment under the claim and the insurer's post trial motions to set aside the verdict were denied, the Tenth Circuit affirmed. US General, LLC v. GuideOne Mut. Ins. Co., 2022 U.S. App. LEXIS 34066 (10th Cir. Dec. 12, 2022). Crossroads American Baptist Church submitted a claim to GuideOne for hailstorm damage. Crossroads hired US General as the general contractor to perform the repairs and later assigned its interest in the insurance policy to US General. Numerous disputes arose between Crossroads and GuideOne regarding the cost of the repairs. There were delayed payments and portions of the repairs were never paid for. The delayed payments meant GuideOne's ability to begin making the repairs was hindered because it was more expensive to start and stop a project. 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

Harborside Condo Construction Defect Settlement Moves Forward

July 09, 2014 — Beverley BevenFlorez-CDJ STAFF
The Harborside Condominium Owners Association in Bremerton, Washington, “has an agreement to pursue $2.8 million in settlement costs for construction defects,” according to the Kitsap Peninsula Business Journal. Back in March of 2013, the association “filed a list of defects in its lawsuit against Kitsap County Consolidated Housing Authority [Housing Kitsap]” including water issues, drywall and foundation cracks, uneven cabinets, leaking showers and pipes, as well as other issues. Housing Kitsap agreed that the association “has the right to pursue a settlement of $2.8 million from the authority’s contractors and insurance companies.” Marlyn Hawkins, the association’s attorney, stated that they have already received a payment for $840,000 from the insurance company “and will be negotiating or filing suit for the rest of the $2.8 million.” Read the court decision
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Housing Starts in U.S. Drop to Lowest Level in Three Months

February 23, 2016 — Michelle Jamrisko – Bloomberg
New-home construction in the U.S. unexpectedly cooled in January, indicating there is a limit to how much gains in residential real estate will boost growth at the start of 2016. Housing starts dropped 3.8 percent to a 1.1 million annualized rate, the weakest in three months, from a 1.14 million pace the prior month, a Commerce Department report showed Wednesday in Washington. The median forecast of 76 economists surveyed by Bloomberg was 1.17 million. Permits, a proxy for future construction, were little changed. Read the court decision
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Reprinted courtesy of Michelle Jamrisko, Bloomberg

Vacation Rentals: Liability of the Owner for Injury Suffered by the Renter

May 13, 2019 — Kevin J. Parker - Snell & Wilmer Real Estate Litigation Blog
With the explosion of the “private” rental business wherein residential property owners rent their house or condo on a short-term basis to third-parties, certain legal issues have arisen with regard to the duties owed by the property owner to the renter. A recent Virginia Supreme Court case, Haynes-Garrett v. Dunn, 818 S.E.2d 798 (Va. 2018), addressed that issue. In that case, the property owners owned a rental house in Virginia Beach. The property was not the owners’ main residence, but rather a vacation home that was sometimes used by the owners, but mostly used as a rental. The issue addressed by the court was whether – for the purpose of evaluating the owners’ duty of care to the renter – the relationship should be classified as a “landlord-tenant” relationship or an “innkeeper-guest” relationship. This classification was important because the duties of the owner to the renter were significantly different depending on the category. In the landlord-tenant arena, under Virginia law, the landlord has no duty to maintain the property in a safe condition because the property is deemed to be under the tenant’s exclusive control. (An exception being concealment or fraud by the landlord as to some defect in the premises that is known to the landlord but unknown to the tenant.) Assuming that exception does not apply, the tenant takes the premises in whatever condition they may be in, thus assuming all risk of personal injury from defects or dangerous conditions. Read the court decision
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Reprinted courtesy of Kevin J. Parker, Snell & Wilmer
Mr. Parker may be contacted at kparker@swlaw.com

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