Apartment Construction Increasing in Colorado while Condo Construction Remains Slow
March 12, 2014 —
Beverley BevenFlorez-CDJ STAFFDennis Huspeni writing for the Denver Business Journal reported that Colorado is having a surge of new apartment construction, but very little condominium building. According to Huspeni, “some business leaders and government officials worry that Colorado’s construction defect laws” are the reason for the lack of condominium construction.
Huspeni in the Denver Business Journal alleged that there is a large “liability risk for builders, developers and subcontractors” because current state laws “make it easier for homeowners’ associations to file large, class-action lawsuits against builders for construction problems associated with new condominiums.”
Huspeni spoke with John Batug, senior vice president and regional manager of Wells Fargo’s community banking real estate group, who stated that condo development usually occurs at the same rate as apartment development. Batug alleged that construction defect litigation “seems to have pushed that component of the market out.”
A bill that is supposed to “jump-start” the “condominium construction sector will be introduced this session, but its sponsor said he remains unsure what types of legal reform will be a part of it,” reported Ed Sealover in the Denver Business Journal.
Lakewood Mayor Bob Murphy told Sealover that “city and business leaders would like to see two particular changes in the law: 1.They want to require a super-majority of condo owners to have to agree to legal action before any lawsuit is filed — instead of just needing two of them to move forward. 2.They want a requirement to attempt some sort of alternative dispute resolution before a suit can be filed.”
However, not everyone is in favor of the proposed suggestions. Jonathan Harris, vice president of The Point Homeowners Association, told Sealover that the “bill that the Metro Mayors Caucus wants ignores the fact that arbitration can be an expensive process for property owners.”
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Echoes of Shutdown in Delay of Key Building Metric
November 27, 2013 —
CDJ STAFFAmong the important measures of the U.S. economy are housing starts and completions. The data on these are collected by the U.S. Census Bureau, which is itself part of the Commerce Department. Due to the October government shutdown, the Census Bureau was unable to complete timely collection of housing starts, among other data collected by the bureau.
Estimates of housing permits issued during September and October will be released on November 26. However, the data on housing starts and completions will be delayed until December 18. This report will include September through November.
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Business Solutions Alert: Homeowners' Complaint for Breach of Loan Modification Agreement Can Proceed Past Pleading Stage
October 08, 2014 —
Krsto Mijanovic, Annette Mijanovic, Blythe Golay - Haight Brown & Bonesteel LLPIn Fleet v. Bank of America, N.A. (No. G050049, published 9/23/14, filed 8/25/14), a California Court of Appeal held that the trial court erred in sustaining the demurrer of a lender, where the homeowners had adequately alleged causes of action for breach of contract, fraud, and promissory estoppel. The homeowners alleged that they made timely payments during the trial period plan under the modification program, but before the last payment was due, the lender foreclosed and their house was sold.
The homeowners had applied for a loan modification and were approved for a trial period plan under the modification program. They were required to make three monthly payments and verify financial hardship to permanently modify their loan. The homeowners made two payments and were told that foreclosure proceedings had been suspended. But before the third payment was due, the lender foreclosed. The trial court found that the trial period plan was not a binding loan modification agreement, so the homeowners had no right to any guaranteed loan modification.
Reprinted courtesy of Haight Brown & Bonesteel LLP attorneys
Krsto Mijanovic,
Annette Mijanovic and
Blythe Golay
Mr. Mijanovic may be contacted at kmijanovic@hbblaw.com
Ms. Mijanovic may be contacted at amijanovic@hbblaw.com
Ms. Golay may be contacted at bgolay@hbblaw.com
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Another Exception to Fraud and Contract Don’t Mix
January 18, 2021 —
Christopher G. Hill - Construction Law MusingsHere at Construction Law Musings, we’ve discussed the fact that, in Virginia, the “economic loss rule” generally renders claims of fraud and construction contracts like oil and water. This is true in most states, including Florida.
What this means is that as a general rule where any party is supposed to perform under a contract, and fails to do so, the Virginia courts will dismiss a fraud claim out of a desire to avoid turning any breach of contract (read “broken promise”) case into a claim for fraud. As you have likely gathered by the title of this post, there are exceptions. One is a properly plead Virginia Consumer Protection Act (“VCPA”) claim.
Another, found in a recent Loudoun County, VA Circuit Court opinion in Madison v. Milton Home Systems Inc., is so called fraud in the inducement (in other words, inducing a person to enter the contract under false pretenses). In Madison the Court analyzed several counts based upon a modular home contract and so called “performance agreement” guarantying that the home would be installed by the manufacturer in the event that it’s installer failed to perform.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Recent Statutory Changes Cap Retainage on Applicable Construction Projects
March 11, 2024 —
Patrick McKnight - The Dispute ResolverRecent reforms to certain state retainage laws have reduced the lawful amount of withholding permitted on construction projects. In theory, retainage allows an owner to mitigate the risk of incomplete or defective work by withholding a certain portion of payment until the construction project is substantially complete. Recent statutory developments in Washington, New York, and Georgia represent significant changes in how much an owner may retain on applicable construction projects in those jurisdictions. The details of each state’s retainage laws vary in many important respects. Most states set caps at 5% or 10%, with important variations depending on the type of project and the amount of progress completed. Some states require retainage to be held in an escrow account, but most do not. Many federal construction projects allow up to 10% retainage, while other federal agencies do not require any retention. See 48 CFR § 52.232-5(e) - Payments Under Fixed-Price Construction Contracts.
The ongoing motivation for retainage reform is typically framed in terms of reducing delays in getting payment to subcontractors who complete their scope of work on time and free from defects.
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Patrick McKnight, Fox Rothschild LLPMr. McKnight may be contacted at
pmcknight@foxrothschild.com
Homeowners Should Beware, Warn Home Builders
November 20, 2013 —
CDJ STAFFIn the aftermath of a tornado in central Illinois, home builders are warning homeowners to be wary of scam artists. “We need to protect consumers from repair scams,” said Lisa Scott, the executive director of the Home Builders Association of Greater Peoria. “After a devastating storm, people come in from outside the area to offer help,” she said, noting that some will be offering help they won’t actually provide.
“This isn’t about supporting our members,” she said, “this is about having somebody who stands by their work instead of paying cash for a roof job and having no one to call when a few months later, it starts leaking.” She further warns, “you shouldn’t be paying cash. You should have a contract.”
One home builder, David Whitehurst, owner of P & W Builders, noted that “there will be a lot of people out there trying to make a quick buck that aren’t qualified to do the work.”
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Legislative Update – The CSLB’s Study Under SB465
March 22, 2018 —
John Castro - Construction Law BlogFollowing the tragic Berkeley balcony collapse in 2015, the Legislature enacted California Senate Bill 465 which commissioned the Contractors State License Board (“CSLB” or “Board”) to perform a study regarding the efficacy of having contractors report settlements to the Board. In December 2017 the CSLB released their findings in a report. The ultimate conclusion of the report is to recommend to the Legislature that the ability of the CSLB to protect the public “would be enhanced by regulations requiring licensees to report judgments, arbitration awards, or settlement payments of construction defect claims for rental residential units.” Senator Jerry Hill authored SB465, and his office is presently now drafting legislation on settlement reporting based in part on this study.
The most troubling concern about the study is transparency. The report references nine exhibits, all of which have been withheld from publication under purposes of confidentiality. Therefore, much of the CSLB’s study must be taken at face value because much of the data they rely on to formulate their conclusions cannot be independently verified.
One of the factors that the CSLB undertook in its study was to determine criteria for when a settlement was “nuisance value,” and therefore less important for reporting purposes. The CSLB acknowledged there was no industry-wide definition for “nuisance value,” whether it be in the insurance industry, construction industry, or otherwise. Insurer survey respondents reached a general consensus on
aspects of what can constitute a “nuisance value” settlement, including the amount of the settlement and the size of the case. However, the response rate to the insurer survey was only 3.3 percent. In general, the concern with using settlement amount and size of the case as indicative factors is the fact that a large settlement size, for instance, may still constitute a “nuisance value” settlement. One example would be a large settlement figure in a case involving hundreds of homes in multiple subdivisions.
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John Castro, Gordon Rees Scully Mansukhani LLPMr. Castro may be contacted at
jcastro@grsm.com
Court Makes an Unsettling Inference to Find that the Statute of Limitations Bars Claims Arising from a 1997 Northridge Earthquake Settlement
April 15, 2015 —
David W. Evans and Stephen J. Squillario – Haight Brown & Bonesteel LLPIn Britton v. Girardi (No. B249232 – Filed 4/1/2015), the Second Appellate District upheld the trial court’s dismissal due to the statute of limitations based on an inference it drew from a letter attached to the complaint, while reaffirming its prior application of the limitations period in Probate Code section 16460 for fraud claims in the related case of Prakashpalan v. Engstrom, Lipscomb & Lack (2/27/2014) 223 Cal.App.4th 1105.
In Britton, just as in Prakashpalan, the plaintiffs sued the attorneys who had represented them in connection with claims against their insurer arising out of the Northridge earthquake. In 1997, the attorneys had settled that litigation for more than $100 million. The plaintiffs allege that the attorneys breached their fiduciary duty by (1) failing to provide an accounting for the settlement, (2) failing to obtain their informed consent to the settlement, and (3) concealing their misappropriation of the settlement funds. They claim that they did not discover this wrongdoing until nearly fifteen years later, in 2012, when the Prakashpalans contacted them about their settlement. Significantly, the plaintiffs attached as an exhibit to the complaint a page of the November 3, 1997 letter to the Prakashpalans (rather than the plaintiffs), which stated that a retired judge who presided over the settlement had determined the allocations and the attorneys could not distribute the proceeds until the plaintiffs signed the “Master Settlement Agreement” by which the plaintiffs agreed to its terms and to give up all claims against the insurer.
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David W. Evans, Haight Brown & Bonesteel LLP and
Stephen J. Squillario, Haight Brown & Bonesteel LLP
Mr. Evans may be contacted at devans@hbblaw.com
Mr. Squillario may be contacted at ssquillario@hbblaw.com
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