Faulty Workmanship Exclusion Does Not Bar Coverage
November 18, 2011 —
Tred R. Eyerly - Insurance Law HawaiiThe court determined that the Faulty Workmanship Exclusion only barred coverage for damages arising from problems with the property under construction itself and not to losses incurred to correct damage from accidents during construction. See 1756 First Associates, LLC v. Continental Casualty Co., 2011 U.S. Dist. LEXIS 117100 (S.D.N.Y. Oct. 3, 2011).
A tower crane collapsed at the construction site, causing damage. First Associates tendered the claim to its insurer, Continental. Continental reimbursed First Associates for certain costs arising from damage to and cleanup of the construction site and building stemming from the crane collapse. Continental refused, however, to reimburse First Associates for costs associated with construction delays resulting from the collapse.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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Court Calls Lease-Leaseback Project What it is: A Design-Bid-Build Project
August 19, 2015 —
Garret Murai – California Construction Law BlogFirst there was “Prince.”
Then there was “The Artist Formerly Known as Prince.”
Then there was “The Artist Formerly Known as Prince (Because he Changed His Name to a Symbol), But Then Realized That No One Could Pronounce the Symbol (and What Good is a Symbol if Everyone Has to Wave Their Hands Wildly at You to Get Your Attention or Scream ‘Hey You!’), and So Changed His Name Back to Prince Again.”
Whatever name (or symbol) he was going by, everyone knew him as the guy who told us to party like it was 1999 (when 1999 still seemed like the distant future), who sang about a girl with a “pocket full of horses” (which totally flew past my junior high school brain at the time), and gave us such great metaphors as “if the elevator tries to bring you down, go crazy, punch a higher floor!”
Like Prince or his symbol, sometimes it doesn’t matter what label you put on something when everyone knows what that something is. In law, we call it looking at the “substance” rather than its “form.” And, in the next case, Davis v. Fresno Unified School District, the California Court of Appeals for the Fifth District made quick work of a purported “lease-leaseback” project – a project delivery method available to school districts whereby a school district leases property it owns to a developer for a minimum of $1, who in turns builds a school facility on the site and leases the facility and the site back to the school district, who in turn takes ownership of the facility and site at the end of the lease – and called it for what it was: a run-of-the-mill “design-bid-build” project.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Construction Defect Suit Can Continue Against Plumber
June 28, 2013 —
CDJ STAFFThe Kansas Court of Appeals has reversed a district court ruling that a homeowner’s suit against a plumber was barred under the economic loss doctrine. However, subsequently the Kansas Supreme Court “refused to extend the economic loss doctrine to homeowner claims against construction contractors.” In light of this, the appeals court sent the case back to the lower court.
The case, Coker v. Siler, was brought by Gregory Coker, who had bought a home from J.M.C. Construction. JMC purchased an unfinished house from Michael D. Siler in August 2006. As part of the completion process, John M. Chaney, the president of JMC, installed the water line into the residence. Mr. Coker bought the home in September 2007.
Starting in April 2008, Mr. Coker noticed that his water bills had increased. Mr. Coker could find “no evidence of a leak above the ground,” so he contacted JMC Construction. Mr. Chaney had R.D. Johnson Excavation dig up the water line, after which a gap was discovered that had been allowing water to flow under the foundation. In addition to the higher water bills, an engineer determined that the water “resulted in cracks in the wall and uneven doors.”
Mr. Coker sued, Siler, J.M.C. and Chaney for negligence, breach of implied warranty, strict liability, and breach of express warranty. J.M.C. and Chaney requested a summary judgment. The court dismissed Mr. Coker’s claims of negligence, strict liability, and breach of implied warranty on the basis of the economic loss doctrine, rejecting a petition from Mr. Coker to reconsider. The court, however, allowed Mr. Cocker to proceed with his claim of express warranty. In December, 2011, Mr. Coker accepted an offer from J.M.C. of $40,000.
Mr. Coker then appealed the summary judgment, making the claim that while the court’s decision was based on Prendiville v. Contemporary Homes, Inc., this has now been overruled by David v. Hett. In this case, “the court ultimately found the rationale supporting the economic loss doctrine failed to justify a departure from a long time of cases in Kansas that establish a homeowner’s right to assert claims against residential contractors.” The appeals court concluded that “although the district court properly relied on the law as it existed at the time of its ruling, the intervening change in the law necessarily renders the conclusion reached by the district court erroneous as a matter of law.”
In sending this case back to the district court, the appeals court noted that the lower court will need to determine if the “defendant accused of negligence did not have a duty to act in a certain manner towards the plaintiff,” in which case “summary judgment is proper. Mr. Coker claims that Mr. Chaney did indeed have this duty.
Further, Mr. Coker claimed that Mr. Chaney had a duty arising out of implied warranty. The appeals court questioned whether the district court properly applied the economic loss doctrine to this claim, because despite being president of the construction company, Mr. Chaney “in his individual capacity as a plumber performing work for Coker, was not a party to the J.M.C. contract.” The court found that “Coker’s claim that Chaney breached an implied duty within such a contract fails as a matter of law.”
However, the court did uphold Cocker’s claim of a contractor liability for injury to a third party, noting that “Chaney owed Coker a legal duty independent of Coker’s contact with J.M.C.” The appeals court left it to the district court to determine if the defect that caused the damage was present when the house left J.M.C.’s possession.
The case was reversed and remanded “with directions to reinstate Coker’s claim of negligence against Chaney in his individual capacity as a plumber.”
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Insurance Attorney Gary Barrera Joins Wendel Rosen’s Construction Practice Group
July 26, 2017 —
Garret Murai - California Construction Law BlogWendel Rosen’s Construction Practice Group welcomes a new member to our band of merry men (and women), Gary Barrera.
Gary, an insurance attorney, has extensive experience with construction defect, property damage, professional liability and environmental claims. He has represented real estate developers and contractors in all aspects of construction defect litigation and has resolved insurance coverage disputes arising out of construction claims on behalf of policyholders. Prior to attending law school, Gary worked as a claims representative and examiner for several insurance carriers and third-party administrators.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Real Estate & Construction News Roundup (1/30/24) – Life Science Construction to Increase, Overall Homeownership Is Majority Female, and Senators Urge Fed Chair to Lower Interest Rates
February 26, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, hospitality and real estate companies create living options, SEC questions some financial institutions on exposure to risks from CRE, renting shows signs of overtaking buying in the housing market, and more!
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Pillsbury's Construction & Real Estate Law Team
Second Circuit Brings Clarity To Scope of “Joint Employer” Theory in Discrimination Cases
May 02, 2022 —
Kevin J. O’Connor, Aaron C. Schlesinger & Lauren R. Davis - ConsensusDocsThe “joint employer” doctrine has been used with increasing frequency by the plaintiffs’ bar to broaden the scope of target defendants in discrimination cases beyond those who would be traditionally regarded as the employer. This is true even in the construction industry, which has seen a rise in cases where general contractors (“GC”) or construction managers (“CM”) are being targeted when discrimination is alleged on a construction project, even when the GC or CM is far removed from the underlying events and had no control over the employees in question.
Examples of this phenomenon are where a claim of harassment or discrimination originates in the lower tier ranks of subcontractors, or even where there is a claim involving an independent contractor on a project and a discrimination lawsuit ensues.
Until now, the Courts in the federal circuit which includes New York City (the Second Circuit) have been left to decipher a patchwork of case law to ascertain the scope and extent of joint employer liability in discrimination cases. In a move that is certainly welcomed by contractors, the Second Circuit Court of Appeals in Felder v. United States Tennis Association, et al., 19-1094, recently issued a comprehensive decision which provides a helpful summary of what must be pled and proven to broaden liability under the joint employer theory in discrimination cases. Felder provides a roadmap for risk mitigation by contractors looking to limit such claims in the future or to meet them head on when they do arise.
Reprinted courtesy of
Kevin J. O’Connor, Peckar & Abramson (ConsensusDocs),
Aaron C. Schlesinger, Peckar & Abramson (ConsensusDocs) and
Lauren R. Davis, Peckar & Abramson (ConsensusDocs)
Mr. O'Connor may be contacted at koconnor@pecklaw.com
Mr. Schlesinger may be contacted at aschlesinger@pecklaw.com
Ms. Davis may be contacted at ldavis@pecklaw.com
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Housing Woes Worse in L.A. Than New York, San Francisco
September 03, 2014 —
Nadja Brandt and John Gittelsohn – BloombergJeanette Cross took out a payday loan to cover her May rent of $1,600 in South Los Angeles. She skipped car and insurance payments to keep a roof over her head.
“I’m further and further behind,” Cross, a 34-year-old single mother of four, said in a telephone interview. “I make a payment on one thing and don’t pay others.”
She isn’t alone. Angelenos use a bigger slice of their paychecks on shelter than people in New York, San Francisco or Miami, studies show. Surging property prices in the second-largest U.S. city are driving up costs in once-impoverished areas while pushing lower-income households into converted garages or to distant suburbs, where the tradeoff is hours stuck in traffic each day.
Reprinted courtesy of
Nadja Brandt, Bloomberg and
John Gittelsohn, Bloomberg
Ms. Brandt may be contacted at nbrandt@bloomberg.net; Mr. Gittelsohn may be contacted at johngitt@bloomberg.net
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Bankruptcy on a Construction Project: Coronavirus Edition
May 25, 2020 —
Garret Murai - California Construction Law BlogExperts are warning of a wave of bankruptcies in the wake of the coronavirus pandemic. In some industries, such as the hard hit retail sector, that rising tide has already begun as J. Crew and Neiman Marcus filed for bankruptcy protection this past week.
While the federal government’s stimulus package, including the $660 billion Paycheck Protection Program which is part of the larger 2.2 trillion CARES Act, may help to stem the tide of bankruptcies, Chapter 11 bankruptcy filings increased 26% in April over the same period last year.
How the pandemic will impact the construction industry is uncertain. Anecdotally, we’ve been hearing from clients that some project owners are stalling projects that are still in the planning stages as they evaluate the situation, which suggests long term impacts that can be ridden out rather than short term impacts that can devastate on-going construction projects.
Nevertheless, with 24-7 coverage of the pandemic, project owners, contractors, material suppliers, and equipment lessors are understandably concerned with the impact a bankruptcy might have on a construction project. So, here’s a primer on bankruptcies on a construction project.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
