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Real Estate & Construction News Roundup (10/23/24) – Construction Backlog Rebounds, Real Estate Sustainability Grows, and Split Incentive Gap Remains Building Decarbonizing Barrier

November 18, 2024 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
In our latest roundup, construction output decreased, office utilization unchanged, September apartment starts fell 15% from a year ago as developers pulled permits, and more!

• Developers pulled permits for a seasonally adjusted rate of 398,000 apartments in buildings with five units or more, a 17.4% YOY drop and a 10.8% decrease compared to August 2024. (Leslie Shaver, Multifamily Dive)
• Construction input prices decreased 0.9% in September due to dips in two of three energy subcategories, reflecting the trend of overall material price stabilization over the past 12 months. (Sebastian Obando, Construction Dive)
• Thanks in part to the Federal Reserve’s lowering of the interest rate, construction backlog rebounded in September after slumping at the end of the summer. (Joe Bousquin, Construction Dive)

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Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Wisconsin Court of Appeals Holds Economic Loss Doctrine Applies to Damage to Other Property If It Was a Foreseeable Result of Disappointed Contractual Expectations

January 15, 2019 — Gus Sara - The Subrogation Strategist
In Kmart Corp. v. Herzog Roofing, Inc., 2018 Wisc. App. Lexis 842, the Court of Appeals of Wisconsin considered whether the economic loss doctrine barred the plaintiff’s negligence claims against the defendant roofer for damages resulting from the collapse of a roof. The Court of Appeals held that, while some of the plaintiff’s property damages were unrelated to the scope of the contract, the economic loss doctrine still applied to those damages because they were a foreseeable result of the defendant’s breach of the contract. This case establishes that in Wisconsin, the economic loss doctrine bars tort claims for damage to property unrelated to the contract if those damages were a reasonably foreseeable risk of disappointed expectations of the contract. Read the court decision
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Reprinted courtesy of Gus Sara, White and Williams LLP
Mr. Sara may be contacted at sarag@whiteandwilliams.com

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No Coverage for Faulty Workmanship Causing Property Damage to Insured's Product Only

October 07, 2016 — Tred R. Eyerly – Insurance Law Hawaii
The Nebraska court found there was no coverage for rebar that did not meet specifications and did not cause property damage to other portions of the construction project. Drake-Williams Steel, Inc. v. Cont'l Cas. Co., 2016 Neb. LEXIS 116 (Neb. Aug. 5, 2016). The general contractor was hired by the city to build an arena. Drake-Williams Steel, Inc. (DWS) was hired to supply rebar for the arena. The rebar was improperly bent when it was fabricated by DWS and did not conform to the terms of the contract. The rebar was incorporated into three components of the arena: the columns, the grade beams, and the pile caps. The pile caps were made of concrete with reinforcing rebar and were installed below ground level on top of the concrete piles that extended to the bedrock. The grade beams were also made of concrete and rebar. The beams formed an oval around the arena and connected different pile caps together and were also installed below ground level. No corrections were made to the grade beams. 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

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Forget the Apple Watch. Apple’s Next Biggest Thing Isn’t for Sale

May 20, 2015 — Garret Murai – California Construction Law Blog
Apple released its much anticipated Apple Watch this past month. The Apple Watch is significant for Apple, not only because its profit and loss statement has a lot riding on it, but because it’s the company’s first foray into consumer “wearables.” This isn’t the first time the Cupertino company has ventured into new areas, through. Since its first consumer product, the Apple I, was released in 1976, Apple has gone from personal computers – and its iterations, including, desktops, laptops and tablets – to music players, cell phones and now watches. Today, Apple is less a computer company than a consumer electronics company, and even that doesn’t quite seem to go far enough, as it has become a lifestyle brand for many. Comparisons can be drawn to Sony during the mid-1980s when everyone aspired to a home filled with Sony televisions, Sony receivers and Sony Walkmans. Part of Apple’s success is that it sells a lifestyle that transcends its products, in which a glossy, sophisticated minimalism and simplicity, are among its most recognizable characteristics. It goes beyond their products, and is embodied in their advertising, their online and retail stores, and their packaging. And while the Apple Watch may be Apple’s latest “big” thing, I think something even bigger is underfoot at Apple, and it’s something you can’t buy. 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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Supreme Court Rejects “Wholly Groundless” Exception to Question of Arbitrability

February 06, 2019 — Justin Fortescue - White and Williams LLP
In newly appointed Supreme Court Justice Brett Kavanaugh’s first opinion, the United States Supreme Court held that the “wholly groundless” exception to arbitrability, which some federal courts had relied on as justification to decide questions of arbitrability over the express terms of a contract, was inconsistent with the Federal Arbitration Act and Supreme Court precedent. Based on this decision, where a contract delegates the question of arbitrability to an arbitrator, courts must respect the parties’ contract and refer the question to the arbitrator. Schein v. Archer & White, 586 U.S. __ (2019). In Schein, Archer & White brought a lawsuit against Henry Schein alleging violations of federal and state antitrust laws and seeking both monetary damages and injunctive relief. The relevant contract between the parties contained an arbitration provision that provided:

“Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief . . .) shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association.”

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Reprinted courtesy of Justin Fortescue, White and Williams LLP
Mr. Fortescue may be contacted at fortescuej@whiteandwilliams.com

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Bridges Crumble as Muni Rates at Least Since ’60s Ignored

June 26, 2014 — William Selway and Brian Chappatta – Bloomberg
No state is needier than West Virginia when it comes to fixing crumbling highways, airports and water works, with annual repair needs of $1,035 per resident that’s three times the national average. Yet even with borrowing costs hovering close to four-decade lows, lawmakers rejected a January proposal to sell $1 billion of bonds to repair roads that run through the Appalachian Mountains. Budget cuts were a more immediate concern, they said. Across the U.S., localities are refraining from raising new funds in the $3.7 trillion municipal-bond market after the worst financial crisis since the Great Depression left them with unprecedented deficits. Rather than take advantage of Federal Reserve (FDTR) policy that’s held benchmark interest rates at historic lows since December 2008, they’re repaying obligations by the most on record. Mr. Selway may be contacted at wselway@bloomberg.net; Mr. Chappatta may be contacted at bchappatta1@bloomberg.net Read the court decision
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Reprinted courtesy of William Selway and Brian Chappatta, Bloomberg

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LA Lakers Partially Survive Motion to Dismiss COVID-19 Claims

June 13, 2022 — Tred R. Eyerly - Insurance Law Hawaii
While the appellate court affirmed dismissal of a majority of the claims submitted by the Los Angeles Lakers for closure of the Staples Center and other properties due to COVID-19, a portion of their claims survived. L.A. Lakers v. Fed Ins. Co., 2022 U.S. Dist. LEXIS 31503 (C.D. Calif. March 17, 2022). Government orders closed the Staples Center in March 2020. The Lakers alleged they lost tens of millions of dollars in revenue. They further alleged that the presence of coronavirus particles on fixtures and building systems caused physical alterations to the covered properties. The Lakers had to upgrade their properties to include new air filters, touchless light switches, toilets and sinks; sleeves or coatings for high-touch surfaces; and plexiglass dividers. The Lakers also alleged that five Metro stations within a mile of the Staples Center, that was used to get to games, were closed by civil authorities due to the presence of COVID-19. The Lakers submitted a claim for property damage and business interruption to Federal. The claim was denied and the Lakers filed suit. In February 2021, the court granted Federal's motion to dismiss without prejudice, after concluding that the Lakers' allegations of direct physical loss or damage were mere legal conclusions and not sufficient to state a claim. 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

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No Coverage For Wind And Flood Damage Suffered From Superstorm Sandy

July 27, 2020 — Tred R. Eyerly - Insurance Law Hawaii
The court found that the policy's anti-sequential clause barred coverage for damage caused by Hurricane Sandy. Estate of Doerfler v. Fed. Ins. Co., 2020 N.J. Sup. Unpub. LEXIS 920 (May 14, 2020). The insureds held identical homeowners policies from Chubb and Federal Insurance Company. Damage resulting from flood was not covered. The policies' "surface water exclusion" stated,

[W]e do not cover any loss caused by: flood, surface water, waves, tidal water, overflow of water from a body of water . . . or spray from any of these even if driven by wind.

The insureds also had separate flood insurance policies, insuring the structure of each home for $250,000. Superstorm Sandy created wind gusts as high as eighty miles per hour. A severe storm surge caused tides to rise between nine and eleven feet. The storm surge caused surface water to flood onto plaintiffs' properties and their homes ultimately collapsed. 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

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