Duty to Defend Requires Payments Under Policy's Supplemental Payments Provision
February 16, 2017 —
Tred R. Eyerly – Insurance Law HawaiiThe California Court of Appeal determined there was no duty to indemnify and the insured had to reimburse the insurer's contribution to a settlement. Nevertheless, there was a duty to defend, meaning the insured did not have to reimburse amounts it was entitled to under the supplemental payments provision. Navigators Specialty Ins. Co. v. Moorefield Constr., 2016 Cal. App. LEXIS 1132 (Cal. Ct. App. Dec. 27, 2016).
Moorefield was the general contractor for a shopping center project to be developed by DBO Development No. 28 (DBO). The project included the construction of a 30,055-square-foot building to by used as a Best Buy store. In January 2002, DBO entered a 15-year lease with Best Buy.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Homebuilders Offer Hope for U.K. Economy
August 20, 2014 —
Mark Gilbert – BloombergThe two elements of the U.K. economy that the Bank of England currently finds most worrying are the overheating housing market and the paucity of wage growth. Earnings reports this week from two of the nation's biggest homebuilders make for cheery reading on both counts.
Persimmon Plc, the U.K.'s largest homebuilder by market value, said today it completed 6,408 new homes in the first half of the year, a 28 percent increase from the year-earlier period. Bovis Homes Group, which mostly builds what it calls "traditional" family homes in the south of England outside London, said it sold 1,487 new homes in the first six months, a gain of 54 percent.
"The government has told us that we need 230,000 new homes per annum, and far be it for us to disagree with that," Bovis Chief Executive Officer David Ritchie said on a conference call. He expects to build about 3,650 homes this year, and reckons that "5,000 to 6,000 homes per annum is a very sensible target for the business."
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Mark Gilbert, BloombergMr. Gilbert may be contacted at
magilbert@bloomberg.net
U.S. Housing Starts Exceed Estimates After a Stronger December
January 04, 2018 —
Sho Chandra - BloombergOriginally Published by CDJ on February 16, 2017
Builders started work on more U.S. homes than forecast in January after an upward revision to starts in the prior month, a sign construction was on a steady path entering 2017.
Residential starts totaled an annualized 1.25 million, easing from a 1.28 million pace in the prior month, a Commerce Department report showed Thursday. The median forecast of economists surveyed by Bloomberg was 1.23 million. Permits, a proxy for future construction, increased at the fastest pace since November 2015 on a pickup in applications for apartment building.
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Sho Chandra, Bloomberg
Houston Home Sales Fall for the First Time in Six Months
March 19, 2015 —
John Gittelsohn and Prashant Gopal - Bloomberg(Bloomberg) -- Houston home sales fell in February for the first time in six months, a sign lower oil prices are spooking buyers.
Sales of single-family houses dropped 5.8 percent from a year earlier to 4,521 homes, the Houston Association of Realtors reported Wednesday. Purchases fell among residences costing less than $150,000 because of tight supply, and among properties selling for more than $500,000 as wealthier buyers paused amid economic uncertainty, said James Gaines, research economist at Texas A&M University’s real estate center.
“They don’t know what the real impact of falling oil prices is,” Gaines said in a telephone interview from College Station, Texas. “We’re living in the twilight of uncertainty.”
Reprinted courtesy of
John Gittelsohn, Bloomberg and
Prashant Gopal, Bloomberg
Mr. Gittelsohn may be contacted at johngitt@bloomberg.net
Mr. Gopal may be contacted at pgopal2@bloomberg.net
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California Indemnity and Defense Construction Law Changes for 2013
April 03, 2013 —
William L. Porter, Esq. - Porter Law GroupDeath of “Type 1” Indemnity in California Construction
For many years the prevalence of the “Type 1” indemnity clause has been the subject of fierce debate within the construction industry. Subcontractors have complained that they are saddled with indemnity obligations that require them to indemnify contractors from construction-related claims for which these subcontractors are truly not responsible. In defense, contractors have argued that they must be entitled to the freedom to set contractual terms to best protect themselves and they point out that subcontractors are certainly free to negotiate better terms or turn down work.
After many years of debate and small legislative inroads in prohibiting Type 1 indemnity in residential projects and where it concerns the “sole negligence”, “willful misconduct” or the “design defects” of others, the California legislature has finally spoken broadly and definitively on the issue of Type 1 indemnity clauses in construction contracts. Under new Civil Code section 2782, beginning with contracts entered into on or after January 1, 2013, broad “Type 1” indemnity clauses shall be void and unenforceable in the context of both private and public construction projects in California. Civil Code section 2782 now makes it clear that subcontractors can no longer be required to indemnify against another’s active negligence in connection with construction contracts, whether public or private.
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William L. Porter, Esq.William L. Porter, Esq. can be contacted at
bporter@porterlaw.com
Think Twice Before Hedging A Position Or Defense On A Speculative Event Or Occurrence
July 13, 2020 —
David Adelstein - Florida Construction Legal UpdatesSometimes, hedging a position on a potential occurrence is not prudent. Stated differently, hedging a position on a contingent event is not the right course of action. The reason being is that a potential occurrence or contingent event is SPECULATIVE. The occurrence or event may not take place and, even if it does take place, the impact is unknown.
An example of hedging a defense on such a potential occurrence or contingent event can be found in a construction dispute involving a federal project out of the Eastern District of Virginia, U.S. f/u/b/o Champco, Inc. v. Arch Insurance Co., 2020 WL 1644565 (E.D.Va. 2020). In this case, the prime contractor hired a subcontractor to perform electrical work, under one subcontract, and install a security system, under a separate subcontract. The subcontractor claimed it was owed money under the two subcontracts and instituted a lawsuit against the prime contractor’s Miller Act payment bond. The prime contractor had issued the subcontractor an approximate $71,000 back-charge for delays. While the subcontractor did not accept the back-charge, it moved for summary judgment claiming that the liability for the back-charge can be resolved at trial as there is still over $300,000 in contract balance that should be paid to it. The prime contractor countered that the delays caused by the subcontractor could be greater than $71,000 based on a negative evaluation in the Contractor Performance Assessment Reporting System (“CPARS”). A negative CPARS rating by the federal government due to the delays caused by the subcontractor would result in a (potential) loss of business with the federal government (i.e., lost profit) to the prime contractor. The main problem for the prime contractor: a negative CPARs rating was entirely speculative as there had not been a negative CPARs rating and, even if there was, the impact a negative rating would have on the prime contractor’s future business with the federal government was unknown. To this point, the district court stated:
In this case, [prime contractor’s] claim for damages is wholly speculative. [Prime contractor] has not produced any evidence that its stated condition precedent—a negative CPARS rating—will actually occur and will have a negative impact on its future federal contracting endeavors. Specifically, [prime contractor] has not identified any facts that indicate that it will be subject to a negative CPARS rating or any indication of the Navy’s dissatisfaction with its work as the prime contractor on the Project… Further, a CPARS rating is only one aspect taken into consideration when federal contracts are awarded. In sum, there is no evidence of the following: (1) a negative CPARS rating issued to [prime contractor]; (2) [prime contractor’s] hypothetical negative rating will be the result of the delay [prime contractor] alleges was caused by [subcontractor]; or (3) [prime contractor’s] hypothetical negative CPARS rating will result in future lost profits.
U.S. f/u/b/o Champco, Inc., supra, at *2 (internal citation omitted).
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David Adelstein, Kirwin Norris, P.A.Mr. Adelstein may be contacted at
dma@kirwinnorris.com
California Homeowners Can Release Future, Unknown Claims Against Builders
June 10, 2015 —
Edward A. Jaeger, Jr. and William L. Doerler – White and Williams LLPIn Belasco v. Wells, 183 Cal. Rptr.3d 840, 234 Cal. App. 4th 409 (2015), the California Court of Appeals for the Second District addressed the question of whether a homeowner, when settling an administrative complaint against a licensed homebuilder, can release future, unknown claims. Despite the presence of a California statute, Cal. Civ. Code § 1542, stating that a general release does not extend to claims that the releasor does not know about, the court held that the homeowner’s express release of future claims was enforceable. Thus, the homeowner’s release - signed as part of a 2006 settlement of the homeowner’s construction defect claims against the defendant, a homebuilder - barred the homeowner’s 2012 claims against the builder based on latent defects in the roof of the home that the homeowner discovered in 2011.
Background
The plaintiff, David Belasco, a patent attorney, bought a newly-constructed home from the defendant-builder, Gary Wells, in 2004. Wells holds a Class B General Building Contractor license issued by the Contractors State License Board (the Board). In 2006, Belasco filed a complaint against Wells with the Board based on alleged construction defects in the home.
As a result of Belasco’s complaint to the Board, the parties engaged in arbitration. At the arbitration, both parties were represented by counsel. Wells offered to settle the dispute for the sum of $25,000 and Belasco accepted Wells’ offer.
Reprinted courtesy of
Edward A. Jaeger, Jr., White and Williams LLP and
William L. Doerler, White and Williams LLP
Mr. Jaeger may be contacted at jaegere@whiteandwilliams.com; Mr. Doerler may be contacted at doerlerw@whiteandwilliams.com
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Construction Contract Clauses Only a Grinch Would Love – Part 4
November 30, 2016 —
Garret Murai – California Construction Law BlogScope, 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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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
