FAIRFIELD CONNECTICUT BUILDING EXPERT
DIRECTORY AND CAPABILITIES

Negligent Misrepresentation in Sale of Building Altered without Permits

September 30, 2011 — CDJ STAFF

The Supreme Court of New Hampshire has ruled in the case Wyle v. Lees. The Leeses owned a two-unit apartment building in North Conway, New Hampshire. They hired a contractor to add a third, larger apartment, including a two-car garage. The Leeses and their contractor submitted a building permit application. They were informed that site plan review was required. After receiving approval on the site plan, construction started. At no point did they obtain a building permit and the construction was never inspected. The Leeses subsequently added more space to the unit, reducing parking spaces below the minimum required. Again, they did not obtain a building permit.

In 2007, three years after all these changes were complete, the Leeses sold their building to Mr. Wyle. To the question “are you aware of any modifications or repairs made without the necessary permits?” they answered “no.” About six weeks after closing, Wyle “received a letter from the town code enforcement officer regarding the legality of the removal of a garage door from the new unit.” A subsequent inspection revealed “numerous building and life safety code violations.”

Mr. Wyle brought a claim against the Leeses for negligent misrepresentation. The defendants filed a motion “seeking to preclude economic loss damages.” At a two-day bench trial, Mr. Wyle won. The Leeses appealed.

The appeals court found that “the defendants negligently misrepresented that the premises were licensed for immediate occupancy and that the defendants had obtained all necessary permits,” and thus upheld the lower court’s finding of negligent misrepresentation. The appeals court also rejected the Leeses’ argument that damages must be apportioned on all parties, including “the plaintiff himself, the plaintiff’s building inspector, and the defendant’s contractor,” finding a lack of “adequate evidence.”

The Leeses further argued that they were unaware that modifications and repairs were accomplished without the required permits. The appeals court noted that “the trial court found that both the conditional approval and final approval for the site plan stated that a building permit and a certificate of occupancy were required prior to any use.” The court concluded that the Leeses “knew or should have known of the falsity of their representation.”

The appeals affirmed the findings of the trial court.

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The Buck Stops Over There: Have Indemnitors Become the Insurers of First and Last Resort?

September 17, 2015 — Garret Murai – California Construction Law Blog
Insurance and indemnity are the primary risk management strategies on construction projects. Insurance, such as commercial general liability insurance, insures against third party claims for bodily injury and property damage, and in the case of builder’s risk insurance, insures against first party claims during construction. Indemnity, on the other hand, shifts liability from one party to another and can be broader than the types of claims covered by insurance although anti-indemnity statutes can limit the breadth of those claims. Sometimes though insurance and indemnity work in ways you might never have expected, like in the next case, Valley Crest Landscape Development, Inc. v. Mission Pools of Escondido, Inc., Case No. G049060 (July 2, 2015), in which the California Court of Appeals for the Fourth District held a subcontractor liable in the face of both an indemnity claim brought by a general contractor as well as a subrogation claim brought by the general contractor’s insurance company. 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

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Indemnity Clauses—What do they mean, and what should you be looking for?

May 07, 2015 — Craig Martin – Construction Contractor Advisor
It seems that every construction contract now-a-days, contains an indemnity clause. Contractors should be reviewing these indemnity clauses very carefully to understand the potential scope of an indemnity obligation and your opportunity to negotiate changes. What is an indemnity Clause? An indemnity clause transfers risk from one party to another. When a contractor signs an indemnity agreement, it is agreeing to pay for damages for which another party could be liable. Read the court decision
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Reprinted courtesy of Craig Martin, Lamson, Dugan and Murray, LLP
Mr. Martin may be contacted at cmartin@ldmlaw.com

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Replacement of Defective Gym Construction Exceeds Original Cost

January 22, 2013 — CDJ STAFF
Austin, Texas has torn down a school gym, the Turner-Roberts Recreation Center at the Overton Elementary School, due to structural problems which became evident after the gym was completed four years ago. The cost of the new gym is $6.4 million, more than the cost of building the gym in the first place. The city is paying $3 million in repair costs with the rest of the money coming from the companies that designed and built the now demolished gym. According to the Austin Statesman, the total cost to the city will be about $8.6 million. The Turner-Roberts Recreation Center cost $5.6 million to build, but soon after it opened, structural problems were discovered. Cracks formed in walls and glass doors buckled. The settlement with the designer, contractor, and engineering firm did not require the firms to admit fault as they paid $3.4 million to fix the situation. The Statesman was unable to get a breakdown of how much each firm paid. Tom Cornelius, president of the GSC, the architectural firm on the project told the Statesman that "the foundation issues were not caused by design defects." Initially, the city sought to repair the gym, but early excavation determined that the defects were too extensive. In addition to the structural flaws, it was also determined that the HVAC system was faulty. Excavation also damaged plumbing work. Tearing down the gym turned out to be the most cost-effective response. Read the court decision
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No Global MDL for COVID Business Interruption Claims, but Panel Will Consider Separate Consolidated Proceedings for Lloyds, Cincinnati, Hartford, Society

August 24, 2020 — Eric B. Hermanson & Konrad R. Krebs - White and Williams
In a widely anticipated ruling, the Judicial Panel on Multidistrict Litigation has denied two motions to centralize pretrial proceedings in hundreds of federal cases seeking coverage for business interruption losses caused by the COVID-19 pandemic. However, the Panel has ordered expedited briefing on whether four separate consolidated proceedings should be set up for four insurers – Cincinnati, Society, Hartford, and Lloyds – who appear to be named in the largest number of claims. In seeking a single, industry-wide MDL proceeding, some plaintiffs had argued that common questions predominated across the hundreds of pending federal suits: namely, [1] the question of what constituted ‘physical loss or damage’ to property, under the allegedly standardized terms of various insurers’ policies; [2] the question whether various government closure orders should trigger coverage under those policies, and [3] the question whether any exclusions, particularly virus exclusions, applied. Reprinted courtesy of Eric B. Hermanson, White and Williams and Konrad R. Krebs, White and Williams Mr. Hermanson may be contacted at hermansone@whiteandwilliams.com Mr. Krebs may be contacted at krebsk@whiteandwilliams.com Read the court decision
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U.S. Housing Starts Exceed Estimates After a Stronger December

January 04, 2018 — Sho Chandra - Bloomberg
Originally 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. Read the court decision
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Reprinted courtesy of Sho Chandra, Bloomberg

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Contractor’s Claim for Interest on Subcontractor’s Defective Work Claim Gains Mixed Results

April 27, 2020 — John J. Gazzola, Associate, Pepper Hamilton LLP - ConsensusDocs
This case concerns calculation of a damages award to a general contractor, Skanska USA Building, Inc., on its claim for breach of contract against its masonry subcontractor, J.D. Long Masonry, Inc., arising from Long’s faulty construction of a masonry façade at a medical research facility in Baltimore. When the façade collapsed and Long failed to repair it, Skanska hired a replacement subcontractor, C.A. Lindman, to remediate Long’s defective work and filed suit against Long to recover the resulting damages. After the court granted Skanska’s motion for summary judgment as to liability, Skanska moved for summary judgment on the issue of damages, relying on the indemnification provision of the subcontract to seek compensatory damages, pre- and post-judgment interest, and litigation fees. In the subcontract, Long agreed to indemnify and hold Skanska harmless from all claims, losses, costs and expenses, including attorneys’ fees, arising before or after completion of Long’s work, caused by, arising out of, resulting from, or occurring in connection with Long’s performance of the work or breach of the subcontract. The court first applied the terms of this provision to award Skanska compensatory damages, holding that Skanska was, as a matter of law, entitled to recover the amount of the Lindman subcontract and general conditions incurred to supervise remediation of Long’s work. The court, however, denied Skanska’s claim for pre-judgment interest on the entirety of these damages. Skanska asserted that it was entitled to pre-judgment interest on the full award, calculated from the date on which it first paid Lindman. The court disagreed, explaining that, under Maryland law, a claimant is entitled to an award of pre-judgment interest as of right only when the amount due is certain, definite and liquidated by a specific date prior to judgment. The court reasoned that, because much of the Lindman subcontract value was composed of later-executed change orders, an award of pre-judgment interest could not be uniformly calculated back to the date of Skanska’s first payment to Lindman. And moreover, because Skanska continued to withhold sums due to Lindman pending resolution of certain issues, awarding Skanska pre-judgment interest on amounts it had not yet paid would result in a “windfall” to Skanska because there was no “use of income” loss to be compensated. Read the court decision
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Reprinted courtesy of John J. Gazzola, Pepper Hamilton LLP
Mr. Gazzola may be contacted at gazzolaj@pepperlaw.com

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A Closer Look at an HOA Board Member’s Duty to Homeowners

October 10, 2013 — Derek Lindenschmidt — Higgins, Hopkins, McLain & Roswell, LLC.
Whenever a homeowner association (HOA) starts thinking in terms of a construction defect lawsuit against its developer and/or builder, its board members will inevitably be confronted with the purported risk and liability to their homeowners if they do not pursue the alleged defects and deficiencies brought to their attention. Not surprisingly, the board members are on occasion led to believe that pursuing such claims is synonymous with acting in the homeowners’ “best interests.” Further—and unfortunately—board members often feel as though they will breach their obligation to the homeowners if theydon’t agree to proceed with such claims. Nevertheless, how well do we really know what the board members’ duty actually consists of, when it applies, and what potential liability exists for a board member’s breach of same? The answers might surprise you. Read the court decision
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Reprinted courtesy of Derek Lindenschmidt
Derek Lindenschmidt can be contacted at lindenschmidt@hhmrlaw.com

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