Fairfield Connecticut Building Expert Directory

Court Strikes Down Reasonable Construction Defect Settlement

December 20, 2012 — CDJ STAFF
The Court of Appeals of Washington has struck down a construction defect settlement between a building owner and the companies she hired to repair the siding, among other repairs to bring the building up to code. Yuan Zhang hired Hawk Construction LLC to do repair work. Hawk, in turn, hired Ready Construction LLC for some aspects of the project. Hawk and Ready were both insured by Capital Specialty Insurance Corporation. There were several problems with Ready’s work. After removing old siding, they did not protect the building, nor did they remove all of the damaged layers. Ready covered, but did not fix, a mildew problem under the old siding. When new siding was reattached, the nails used were too short to adequately attach it. After paying for an inspection of the work, Zhang had Hawk and Ready begin the repairs again, but the work was abandoned without being completed. Zhang sued Hawk for breach of contract. Hawk then sued Ready, claiming that “Ready was liable to Hawk to the extent that Hawk was liable to Zhang.” Capitol retained defense for both contractors. Zhang settled with Hawk, in an agreement that gave her “the right to collect and/or pursue all costs and attorney fees paid by Hawk or its insurance company defending against the Zhang’s claims and pursuing claims against Ready.” Subsequently, she also settled with Ready. Both companies ceased operations. Zhang had the settlements reviewed by a court, which concluded that the settlements were reasonable. Capital was allowed to appeal, claiming that the settlement included costs that were Zhang’s responsibility. The appeals court did not examine the question of the reasonableness of the settlement, concluding that Capitol’s interests were relevant only to “questions of bad faith, collusion, and fraud.” In the case of Zhang, the court concluded that the relationship between Zhang and her former contractors was collusive. The court noted that “bad faith or collusion may exist when the evidence indicates a joint effort to create, in a non-adversarial atmosphere, a resolution beneficial to both parties, yet highly prejudicial to the insurer as intervener.” The court noted that both companies had minimal assets which were, in any case, exempted from the agreement. Further, the court found that the agreements failed to determine “what amount of the repairs related to preexisting water damage.” Zhang’s calculation of costs also included her expenses for architectural and engineering services, which the court points out, “where always Zhang’s costs to bear.” The court concluded that “the overall structure of the settlements is highly probative of collusion, fraud, or bad faith.” Zhang’s agreements with Hawk and Ready allowed her to collect compensation from Hawk and then collect Ready’s compensation to Hawk for their portion of the settlement, allowing Zhang to collect the monies twice. Further, she was allowed to pursue Capitol for Hawk’s attorney expenses, even though Hawk had none. “The right to recover Hawk’s fees merely set up a windfall recovery for Zhang.” The court described the agreements among Zhang, Hawk, and Ready as “precisely the type of manipulation [the law] is intended to preclude.” Read the court decision
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Lease-Leaseback Battle Continues as First District Court of Appeals Sides with Contractor and School District

August 17, 2017 — Garret Murai - California Construction Law Blog
Earlier, we wrote about Davis v. Fresno United School District (2015) 237 Cal.App.4th 261, a Fifth District California Court of Appeals decision that sent shock waves through the school construction industry and raised questions regarding the use of California’s lease-leaseback method of project delivery (Education Code sections 17400 et seq.). California’s lease-leaseback method of project delivery provides an alternative project delivery method for public school districts than the usual design-bid-build method of project delivery. Under the lease-leaseback method of project delivery, a school district leases its property to a developer, who in turn builds a school facility on the property and leases it back to the school district. One of the benefits of the lease-leaseback method of project delivery is that school districts do not need to come up with construction funds to build school facilities since they pay for the construction over time through their lease payments to the developer. Critics, however, argue that because lease-leaseback projects do not need to be competitively bid, they are ripe for cronyism between developers and school districts. In Davis, a taxpayer successfully brought suit against the Fresno Unified School District challenging the propriety of a lease-leaseback project because the entirety of the District’s “lease payments” occurred while the project was being constructed and thus, successfully argued the taxpayer, there was no “true” lease of a facility since it was under construction. Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

Wilke Fleury Welcomes New Civil Litigation Attorney

January 18, 2021 — Wilke Fleury LLP
Islam Ahmad represents clients on a broad range of civil ligation matters, with a focus on construction, real estate, and commercial disputes. He has represented all sides of construction and real estate cases, including owners, buyers, developers, and general contractors. He possesses superb legal research and writing skills that ensure no stone is left unturned that may improve the chances of victory for his clients. Islam Ahmad has a sophisticated working background and a wealth of experience that make him ideal for taking on clients’ challenging cases and resolving them in their best interest. His intuition makes him versatile and capable of dealing with a wide range of issues. Islam is also capable of incorporating business performance factors into his legal advice by drawing from his prior experience as a business consultant. This comprehensive approach allows him and his clients to develop sound risk management strategies and business plans. Read the court decision
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Reprinted courtesy of Wilke Fleury LLP

Tishman Construction Admits Cheating Trade Center Clients

December 17, 2015 — Erik Larson – Bloomberg
Tishman Construction Corp., builder of One World Trade Center in New York’s financial district, admitted to an overbilling scheme spanning a decade and agreed to pay $20 million in restitution and penalties. The scam included the World Trade Center project, the renovation of the landmark Plaza Hotel on 5th Avenue and the expansion of the Javits Convention Center in Manhattan, the U.S. Attorney’s Office in Brooklyn, New York, said Thursday. Read the court decision
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Reprinted courtesy of Erik Larson, Bloomberg

Insurer's Motion to Dismiss Complaint for Collapse Coverage Fails

March 22, 2018 — Tred R. Eyerly.- Insurance Law Hawaii

The insurer's motion for summary judgment seeking dismissal of the insured's claim for collapse coverage was rejected by the Supreme Court of New York. Parauda v. Encompass Ins. Co. of Am., 2018 N.Y. Misc. LEXIS 269 (N.Y. Sup. Ct. Jan. 25, 2018).

The insureds submitted a claim to Encompass for damage to the brick siding, or façade, of their home, which was bulging near the front door. Encompass hired H2M Architects and Engineers to inspect the home and issue a report. H2M determined that the brick façade near the front door was separated from the house. Photos showed that the bricks had separated, the mortar joints were cracked, and there were cracks and deterioration in the mortar. H2M concluded that the brick façade was in poor condition and need repairs and/or replacement. H2M concluded that the separation of the brick façade was caused by water infiltration behind the wood trim and brick façade, occurring over a several year period. Encompass denied the claim based upon exclusions for "freezing, thawing," "wear and tear," and "inadequate maintenance."

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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

New World to Demolish Luxury Hong Kong Towers in Major Setback

August 04, 2021 — Shawna Kwan - Bloomberg
New World Development Co. will demolish two towers at Hong Kong’s most popular housing development in decades and compensate buyers after finding unexpected defects, in a major setback for the real estate company. The developer will pull down and rebuild the existing floors of Towers 1 and 8 at its Pavilia Farm III project near Tai Wai station after it found the concrete strength in some areas did not meet design requirements, the Hong Kong-based company said in a statement. Shares of New World fell as much as 4.8% Thursday in Hong Kong, the most in more than seven months, before recovering to close 3.9% lower. Read the court decision
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Reprinted courtesy of Shawna Kwan, Bloomberg

Ninth Circuit Construes Known Loss Provision

August 19, 2015 — Tred R. Eyerly – Insurance Law Hawaii
The Ninth Circuit reversed the district court's award of summary judgment to the insurer after analyzing the known loss provision in the insured subcontractor's policy. Kaady v. Mid-Continent Cas. Co., 2015 U.S. App. LEXIS 10754 (9th Cir. June 25, 2015). The insured was awarded a subcontract to install manufactured stone at the residential project. The stone was affixed to the wall sheathing. The insured also wrapped deck posts with manufactured stone and installed masonry caps on the toe of the stone that was wrapped around the deck posts. After construction was completed, the insured was called back to the project to inspect cracks in the manufactured stone and masonry caps he installed. The insured told the general contractor that the cracks were likely due to settling. Three months after inspecting the cracks, the insured purchased a CGL policy from Mid-Continent. Read the court decision
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

WATCH: 2023 Construction Economic Update and Forecast

January 09, 2023 — Construction Executive
Construction Executive presented its "2023 Construction Economic Update and Forecast" webinar with Associated Builders and Contractors Chief Economist Anirban Basu on Dec. 14, sponsored by Aerotek, Bluebeam, CMiC and Raken. Basu started by announcing the Federal Reserve’s rate increase of 0.5%, the latest in a series of increases aimed at combating inflation. Calling 2022 a “year of tumult and a year of surprise,” Basu further noted that the Russian invasion of Ukraine surprised many, further disrupting global supply chains and causing a shockwave to ripple through global energy prices. Citing the U.S. Consumer Price Index, with 7.1% year-over-year inflation in November, Basu believes we’ve “peaked in terms of inflation for this cycle”; while inflation hit higher-than-expected levels throughout 2022, it leveled off at lower-than-expected rates by the end of the year. Basu predicted inflation will continue to be problematic through 2023 as it has shifted from transitory inflation due to supply-chain disruptions in 2020 and 2022 to broader inflation due to the labor market, noting that the worst of the supply-chain issues seem to be over, reaching a high point in late 2021. Blaming the injection of fiscal stimulus coming from the federal government, monetary stimulus from the Federal Reserve and the fact that inflation has now become ingrained in the economy and in people’s expectations, leading to wage and price increases, Basu calls the economy “overheated.” Reprinted courtesy of Construction Executive, a publication of Associated Builders and Contractors. All rights reserved. Read the court decision
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FAIRFIELD CONNECTICUT BUILDING EXPERT DIRECTORY AND CAPABILITIES