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The Year 2010 In Review: Design And Construction Defects Litigation

February 25, 2011 — Candace Matson, Harold Hamersmith, and Helen Lauderdale

This article is the first in a series summarizing construction law developments for 2010

1. Centex Homes v. Financial Pacific Life Insurance Co., 2010 U.S. Dist. LEXIS 1995 (E.D. Cal. 2010)

After settling numerous homeowners’ construction defect claims — and more than ten years after the homes were substantially completed — a home developer brought suit against one of the concrete fabrication subcontractors for the development seeking indemnity for amounts paid to the homeowners, as well as for damages for breach of the subcontractor’s duties to procure specific insurance and to defend the developer against the homeowners’ claims. The subcontractor brought a motion for summary adjudication on the ground the developer’s claims were barred by the ten year statute of repose contained in Code of Civil Procedure Section 337.15.

The District Court agreed the developer’s claim for indemnity was barred by Section 337.15. And it held that because the damages recoverable for breach of the subcontractor’s duty to purchase insurance are identical to the damages recoverable through the developer’s indemnity claim, the breach of duty to procure insurance claim also was time-barred. The District Court, however, allowed the claim for breach of the duty to defend to proceed. The categories of losses associated with such a claim (attorneys’ fees and other defense costs) are distinct from the damages recoverable through claims governed by Section 337.15 (latent deficiency in the design and construction of the homes and injury to property arising out of the latent deficiencies).

2. UDC — Universal Development v. CH2M Hill, 181 Cal. App. 4th 10 (6th Dist. Jan. 2010)

Indemnification clauses in construction agreements often state that one party to the agreement — the “indemnitor” — will defend and indemnify the other party from particular types of claims. Of course, having a contract right to a defense is not the same as actually receiving a defense. Any indemnitor attempting to avoid paying for defense costs can simply deny the tender of defense with the hope that when the underlying claim is resolved the defense obligations will be forgotten. In the past, when parties entitled to a defense — the “indemnitees” — had long memories and pressed to recover defense costs, indemnitors attempted to justify denying the tender by claiming their defense obligations coincided with their indemnity obligations and neither arose until a final determination was made that the underlying claim was one for which indemnity was owed.

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Reprinted courtesy of Candace Matson, Harold Hamersmith, and Helen Lauderdale, Sheppard Mullin Richter & Hampton LLP. Ms. Matson can be contacted at cmatson@sheppardmullin.com, Mr. Hamersmith can be contacted at hhamersmith@sheppardmullin.com, and Ms. Lauderdale can be contacted at hlauderdale@sheppardmullin.com.

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MapLab: Why More Americans Are Moving Toward Wildfire

October 24, 2021 — Marie Patino & Laura Bliss - Bloomberg
Climate change is making wildfires more frequent, severe and hard to predict — not to mention more costly, as governments, insurers and local residents pay to pick up the pieces after a blaze. Yet Americans are flocking to areas at high risk for burning, and the pandemic accelerated that trend: During the first year of Covid-19, the number of U.S. households moving into areas with a recent history of wildfire increased 21% over the previous year. Areas without that recent history saw net moves fall by 15%. Those shocking statistics were among the many findings made by my colleague Marie Patino and me in our investigation of recent U.S. migration into the wildland-urban interface, or the edge between highly developed areas and flammable forests and mountains. Between affordability pressures and cultural ideals, our story explores the motivations for why so many people are settling there — in many cases, within the literal footprints of recent wildfires — as well as the staggering cost of this long-term trend. We paired the narrative with rich visuals, including photographs, data visualizations, and maps, with the help of our graphics colleague Jackie Gu. Reprinted courtesy of Marie Patino, Bloomberg and Laura Bliss, Bloomberg Read the court decision
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PATH Station Designed by Architect Known for Beautiful Structures, Defects, and Cost Overruns

October 01, 2013 — CDJ STAFF
The new PATH station at the World Trade Center site in New York is six years behind schedule and its cost has doubled to $4 billion dollars. But maybe New Yorkers shouldn’t be surprised. The New York Times reports that the Port Authority, which operates the PATH trains between New York and New Jersey, hired Santiago Calatrava, an architect whose work has frequently lead to cost overruns and claims of defects. The problems in lower Manhattan are not all Mr. Calatrava’s fault. Auditors described the Port Authority as “a challenged and dysfunctional organization.” (A separate report in the New York Times notes that a former PATH executive may have walked away with the rights to the words “World Trade Center” for $10. The company he subsequently founded, The World Trade Center Association, charges millions for the use of the name.) One problem with Mr. Calatrava’s design for the station is that he insisted that all the mechanical elements of the station be located in other buildings. Further, the Port Authority might want to examine those plans carefully. In the design for a museum in Valencia, Spain, Mr. Calatrava forgot to provide for handicap access or fire escapes. That project, according to the Times tripled in cost as it was built. Read the court decision
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Understanding Lien Waivers

September 03, 2015 — Beverley BevenFlorez-CDJ STAFF
Zlien on their Construction Payment Blog explained how to read a lien waiver. According to Zlien, “Lien waivers are meant to function as a sort of receipt – if a party is paid a certain amount that party waives his or her right to claim a lien for that amount. “ The blog post breaks down the types of lien waivers, including Conditional Waivers, Unconditional Waivers, Final Payment, and Progress Payment. Once the type of waiver has been identified, Zlien suggests checking the length: “Because the party signing the lien waiver may feel obligated to sign whatever document is presented in order to get paid, unscrupulous or oblivious parties may attempt to use the lien waiver as a legal positioning tool and cram all sorts of other language into the lien waiver that really has no legitimate right or reason to be there.” Zlien recommends that if the document is long or confusing to consult an attorney. Read the court decision
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Ensuing Loss Provision Salvages Coverage for Water Damage Claim

September 16, 2024 — Tred R. Eyerly - Insurance Law Hawaii
The Court of Appeals for the D.C. Circuit reversed the district court's finding of no coverage and found that the ensuing loss provision provided coverage for water damage. 3524 East Cap Venture, LLC, et al. v. Weschester Fire Ins. Co., et al., 104 F. 4th 193 (D.C. Cir. 2024). Plaintiff 3534 East Cap Venture, LLC, a real-estate developer, hired plaintiff McCullough Construction, LLC, to build a residential and retail complex. Defendants Westchester Fire Insurance Company and Endurance American Insurance Company issued identical builders' risk policies, which covered the building while it was under construction. Each insurer was responsible for half of any qualifying losses. The policies covered loss caused by or resulting from water damage. The policies, however, excluded loss caused by "dampness of atmosphere" or by "[e]xtremes or changes in temperature." But the exclusions contained an exception if "loss by an insured peril ensues." 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

Citigroup Pays Record $697 Million for Hong Kong Office Tower

June 18, 2014 — Michelle Yun – Bloomberg
Citigroup Inc. (C) paid a record HK$5.4 billion ($697 million) to a unit of Wheelock & Co. for a Hong Kong office tower that will bring most of its 5,000 employees under one roof. The price for the 512,000 square-foot property in Kowloon is the largest ever office transaction in Hong Kong, the New York-based bank said in a statement yesterday. The tower, scheduled for completion by the end of 2015, will be used to house staff currently spread out across offices in the city, said Weber Lo, the bank’s chief executive officer for Hong Kong and Macau. Citigroup joins banks and insurers in buying buildings in the city as falling vacancies pose a challenge for companies looking for large office spaces, realtor CBRE Group Inc., which advised the deal, said in a first-quarter review report. Read the court decision
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Reprinted courtesy of Michelle Yun, Bloomberg
Ms. Yun may be contacted at myun11@bloomberg.net

This New Indicator Shows There's No Bubble Forming in U.S. Housing

April 01, 2015 — Michelle Jamrisko and Nina Glinski – Bloomberg
When a parking space in Manhattan costs $136,000 and only 15 percent of San Francisco's homes are affordable for the middle class, it's easy to worry that another housing bubble is around the corner. The vast majority of American homeowners have little to fear: A new gauge from Nationwide Insurance in Columbus, Ohio, suggests the national market is in its best shape since 2001 and there's no reason to fear a national downturn, no less a bursting bubble. In its first data release, the national Leading Index of Healthy Housing Markets rose to 109.8 in the fourth quarter. Values greater than 100 indicate a robust industry. The index uses local data in 373 metropolitan statistical areas that are underlying drivers of the housing market, including measures on employment changes, demographics and the mortgage market. Reprinted courtesy of Michelle Jamrisko, Bloomberg and Nina Glinski, Bloomberg Read the court decision
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Beginning of the 2020 Colorado Legislative Session: Here We Go Again

February 10, 2020 — David M. McLain – Colorado Construction Litigation
The 2020 Colorado legislative session started on Wednesday, January 8th. It seems like there will be plenty of issues this year to which home builders will want to pay close attention. On January 13th, Senators Fenberg, Foote, and Jackson sponsored SB 20-093, known as the “Consumer and Employee Dispute Resolution Fairness Act.”

Prohibits the waiver of standards for and challenges for evident partiality prior to a claim being filed and requires any waiver of such provisions after the claim is filed to be in writing;
Provides that the right of a party to challenge an arbitrator based on evident partiality is waived if not raised within a reasonable time of learning of the information leading to the challenge but that such right is not waived if caused by the opposing party;
Establishes ethical standards for arbitrators; and
Requires specified public disclosures by arbitration services providers but includes protections for certain confidential information.

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Reprinted courtesy of David McLain, Higgins, Hopkins, McLain & Roswell
Mr. McLain may be contacted at mclain@hhmrlaw.com

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