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 BlogIn 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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Pillsbury's Construction & Real Estate Law Team
Arizona Contractor Designs Water-Repellant Cabinets
September 09, 2011 —
CDJ STAFFDubbing his product “Baltic Duck,” a Mesa, Arizona building contractor is offering household cabinets made with specially treated water-repellent plywood instead of the usual particle board. Pete Celano calls his product Baltic Duck because the plywood is made in the Baltic region of Eastern Europe. To further protect the cabinets from moisture, a silicone-based sealant is applied to the corners and edges.
Celano’s cabinets use standard decorative fronts. The design of the cabinets allows spilled liquids to drain away without encountering the decorative wood.
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Congratulations to San Diego Partner Johnpaul Salem and Senior Associate Scott Hoy for Obtaining a Complete Defense Verdict!
November 13, 2023 —
Dolores Montoya - Bremer Whyte Brown & O'Meara LLPPartner Johnpaul Salem and Senior Associate Scott Hoy just concluded a 4-week trial defending a local renowned hotel in San Diego. Plaintiff alleged premises liability against BWB&O’s client arguing plaintiff was injured while riding in an elevator due to alleged negligent maintenance and inspection. Plaintiff brought in a “hired gun” elevator expert from Missouri and sought $25 million in damages for two fractured ankles, a compound tibia fracture, and lifelong CRPS/PTDS/anxiety. BWB&O argued any injuries sustained were a direct result of Plaintiff’s actions. After a passionate and powerful closing argument by Mr. Salem, attacking the foundation of Plaintiff’s expert’s opinions and presenting vigilance of the hotel in the safety of its guests, the jury unanimously ruled in BWB&O’s client’s favor.
Reprinted courtesy of
Dolores Montoya, Bremer Whyte Brown & O'Meara LLP
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BIM Legal Liabilities: Not That Different
February 10, 2020 —
Christopher G. Hill - Construction Law MusingsFor this week’s Guest Post Friday here at Musings, we welcome Scott P. Fitzsimmons. Scott is an attorney with the construction law firm Watt, Tieder, Hoffar & Fitzgerald, where he represents contractors, subcontractors, owners, and engineers. He is also a LEED AP and an instructor for AGC of D.C., where he teaches BIM Contract Negotiation and Risk Allocation as part of AGC’s Certificate of Management, Building Information Modeling program.
When a new technology is introduced to the construction industry, contractors inevitably ask themselves one question “Great, how can this new gadget get me into trouble?” Building Information Modeling (BIM) is exactly the kind of technology that raises this fear. But, BIM has been around for a few years now, and the construction industry has done a good job of curtailing the fear of unanticipated legal liability.
Nevertheless, contractors should be aware of the pitfalls BIM introduces and should know how to limit their risk arising from this new “gadget.”
Often described as “CAD on Steroids,” BIM is truly much more than a simple design program. Along with early clash detection, BIM provides time and cost integration; calculates energy efficiency; and assists building maintenance long after project completion. Unlike CAD, BIM also modifies the collaborative nature of a construction project. Thus, subcontractors no longer review a design, submit shop drawings, and go to work. Rather, subcontractors are brought into the design process early in the project and often are asked to contribute to the design long before construction begins.
Asking a contractor or subcontractor to provide design services appears to shift the roles of an architect and a contractor. So, the questions abound: Is a contractor now responsible for design? Can the contractor be held responsible for defective design? Do not fret. To date, there has been only one advertised case addressing BIM liability. The reason is simple. For almost a hundred years, the United States Supreme Court has held that contractors are not responsible for defective design on a traditional design-bid-build project. Using BIM, therefore, should not modify a contractor’s responsibility. But, to ensure that your obligations do not extend beyond construction, all BIM requirements should be in writing and made part of your contract.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Is the Construction Industry Actually a Technology Hotbed?
August 19, 2024 —
Andrew Silver - Construction ExecutiveTechnology has always been a driving force behind progress, and the construction industry is no exception. Over the years, technological advancements have revolutionized the way companies design, plan and build structures, leading to increased efficiency, safety and sustainability. From virtual-reality simulations to drones and 3D printing, technology has transformed every aspect of the construction process. However, the construction trades still lag behind other sectors in adoption of digital technologies. With a lack of skilled labor continuing to be an impediment to growth and profitability in the construction industry, technological developments could have significant implications for successful adopters.
Already, the industry is seeing a huge difference in valuation between traditional engineering and construction firms and construction software companies. As labor shortages continue to hinder growth in the industry, consolidation is likely, as is the probability that companies with the greatest tech capabilities will be the most highly valued. There are several areas of technology that are of the greatest interest in the current marketplace.
BIM
Building information modeling with computer-aided design software now allows architects and engineers to create detailed and accurate 3D models of buildings and infrastructure projects, integrating data about every aspect of the building, from materials and costs to energy efficiency and maintenance schedules. These models not only help in visualizing the final product; they also enable better communication and collaboration among project stakeholders.
Reprinted courtesy of
Andrew Silver, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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No Indemnity After Insured Settles Breach of Implied Warranty of Habitability Claims
June 09, 2016 —
Tred R. Eyerly – Insurance Law HawaiiApplying Illinois law, the federal district court ruled that there was no coverage for the insured's settlement of claims based upon breach of the implied warranty of habitability. Allied Prop. & Cas. Ins. Co. v. Metro North Condo. Ass'n, 2016 U.S. Dist. LEXIS 43452 (E.D. Ill. March 31, 2016).
Metro North sued the developer of its condominium and a number of its contractors and subcontractors for defective construction that caused various problems, including water infiltration. One subcontractor, CSC, was to provide window and glazing services. After a rainstorm, water infiltrated the project due to CSC's work. Metro North claimed that CSC was liable for breach of the implied warranty of habitability.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
The Montrose Language Interpreted: How Many Policies Are Implicated By A Construction Defect That Later Causes a Flood?
March 17, 2011 —
Shaun McParland BaldwinThe Court of Appeals of Indiana recently addressed the “Montrose” language added to the CGL ISO form in 2001 in the context of a construction defect claim where a fractured storm drain caused significant flooding a year after the drain was damaged. The insuring agreement requires that “bodily injury or “property damage” be caused by an occurrence and that the “bodily injury or “property damage” occur during the policy period. The Montrose language adds that the insurance applies only if, prior to the policy period, no insured knew that the “bodily injury or “property damage” had occurred in whole or in part. Significantly, it also states that any “bodily injury” or “property damage” which occurs during the policy period and was not, prior to the policy period known to have occurred, includes a continuation, change or resumption of that “bodily injury” or “property damage” after the end of the policy period.
In Grange Mutual Cas. Co. v. West Bend Mut. Ins. Co., No. 29D04-0706-PL-1112 (Ct. App. IN March 15, 2011), http://www.ai.org/judiciary/opinions/pdf/03151109ehf.pdf, Sullivan was the General Contractor for a school construction project. Its subcontractor, McCurdy, installed the storm drain pipes. One of the storm pipes was fractured in 2005 while McCurdy was doing its installation work. More than a year later, the school experienced significant water damage due to flooding. It was later discovered that the flooding was due to the fractured storm drain. Sullivanrsquo;s insurer paid $146,403 for the water damage. That insurer brought a subrogation claim against McCurdy and its two insurers: West Bend and Grange. West Bend had issued CGL coverage to McCurdy while the construction was ongoing, including the date in which the storm pipe was fractured. Grange issued CGL coverage to McCurdy at the time of the flooding. Those two carriers jointly settled the subrogation claim and then litigated which insurer actually owed coverage for the loss. Significantly, the loss that was paid included only damages from the flooding, not any damages for the cost of repairing the pipe.
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Reprinted courtesy of Shaun McParland Baldwin of Tressler LLP. Ms Baldwin can be contacted at sbaldwin@tresslerllp.com
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Yet ANOTHER Reason not to Contract without a License
October 25, 2021 —
Christopher G. Hill - Construction Law MusingsRemember when I stated that you cannot lawfully perform construction work in Virginia without a contractor’s license? Remember when I said that you risk non-payment if you do so? If you needed another reason, a relatively recent Virginia Court of Appeals decision upholding a criminal conviction for performing construction work without a license should be that reason.
In Riddel v. Commonwealth, the Court took up an appeal from the conviction of Jeff Riddel where Mr. Riddel was verbally asked by homeowners to inspect and then repair their septic system. Mr. Riddel then contracted with Fairfax Suburban Septic to pump out and repair the system. Mr. Riddel then delivered the homeowners an invoice from Fairfax Suburban Septic and instructed the homeowners to pay Fairfax Suburban Septic directly. After payment, the homeowners became aware that the work was not completed and that neither Mr. Riddel nor his subcontractor was licensed to perform septic work in Virginia.
During the trial, Mr. Riddel argued on a Motion to Strike the Commonwealth’s evidence that (1) he merely arranged for licensed contractors to perform the repairs to the septic system, arguing that Virginia Code §§
54.2-801 to 802 permitted Riddel to arrange the work without a contractor’s license and (2) no written contract to perform a septic inspection or repairs existed. The Circuit Court denied the motion and Mr. Riddel was convicted under Va. Code 54.1-111 for performing the work without a license. Needless to say, he appealed.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
