TOP TAKE-AWAY SERIES: The 2023 Annual Meeting in Vancouver
May 22, 2023 —
Marissa L. Downs - The Dispute ResolverProgram coordinators Katie Kohm and Peter Marino put together an amazing annual meeting last week in Vancouver. While its impossible to retread all of the ground we covered in discussing the "future of construction law," here are my top 10 take-aways:
10. Public-private partnerships may finally be taking off in the United States. P3s were slow to be pursued within the United States. According to panelists Peter Hahn, John Heuer, Sean Morley, and Lee Weintraub, this was chiefly because of the reticence of public bodies to deviate from the standard vendor model. Looking at the recent trends, it seems as though the United States--the "sleeping giant of public-private partnerships"--may finally be waking up. In 2022, a total of 29 public-private partnership projects were signed or reached financial close within the United States, representing an increase of 16% from the prior year. Thirty-eight states also now have some form of P3 enabling legislation. While we still lag behind our Canadian cousins, the future of P3s in this country is looking a little brighter.
9. The value proposition for the architecture profession is broken. Architects Lakisha Ann Woods (the CEO of AIA) and Phillip Bernstein (Associate Dean & Professor Adjunct Yale University) shared their thoughts with moderator Kelly Bundy on the challenges facing the architecture profession. The biggest issue they noted was the need to recruit qualified (and diverse) candidates into the profession. Unfortunately, this is difficult to do given the long career track (on average, it becomes 13.1 years to become a licensed architect) and the low salaries paid compared to other professions. Phillip shared that the high average starting salary for architecture grads from Yale (one of the leading programs in the country) is just $76,000. If we want to recruit the best and most innovative candidates into the field, the value proposition needs to change.
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Marissa L. Downs, Laurie & Brennan, LLPMs. Downs may be contacted at
mdowns@lauriebrennan.com
5 Ways Equipment Financing is Empowering Small Construction Businesses
August 24, 2017 —
Duane Craig - Construction InformerSmall construction businesses can often get 100% equipment financing, eliminating the down payment, and freeing up cash, according to the Equipment Leasing and Finance Association (ELFA).
Most small businesses need equipment in order to operate and grow, and each business must decide on an acquisition strategy that is right for it. But, a majority of businesses turn to equipment leasing and financing so they can take advantage of a range of benefits.
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Duane Craig, Construction InformerMr. Craig may be contacted at
dtcraig@constructioninformer.com
Courthouse Reporter Series: The Travails of Statutory Construction...Defining “Labor” under the Miller Act
August 01, 2023 —
Brendan J. Witry - The Dispute ResolverIn a recent case—United States ex rel. Dickson v. Fidelity & Deposit Co. of Maryland (“Dickson”)—the U.S. Court of Appeals for the Fourth Circuit recently re-examined and defined what work qualifies as “labor” under the Miller Act.
United States ex rel. Dickson v. Fidelity & Deposit Co. of Maryland, No. 21-160, 67 F.4th 182 (4th Cir. April 26, 2023) (slip op.).
Unlike private projects, unpaid subcontractors cannot encumber the federal government’s property with mechanics liens. Instead, the Miller Act provides a remedy for subcontractors in the form of a payment bond on all federal public works contracts exceeding $100,000. 40 U.S.C. § 3131(b).
In the Dickson case, Claimant Elliot Dickson served as a subcontractor to Forney Enterprises (“Forney”), with whom the Department of Defense (the “DOD”) contracted to renovate several staircases and the fire suppression systems at the Pentagon.
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Brendan J. Witry, Conway & Mrowiec Attorneys LLLPMr. Witry may be contacted at
bjw@cmcontractors.com
Construction Jobs Expected to Rise in Post-Hurricane Rebuilding
November 07, 2012 —
CDJ STAFFBusinessweek reports that construction jobs and materials will see increased demand as property owners in New York and New Jersey rebuild after hurricane Sandy. Tom Jeffery, of Irvine, California-based CoreLogic, a real estate information service, noted that “a high percent of damaged properties are going to be repaired.” Experts estimate property damage to total anywhere from $7 billion to $40 billion.
It is also estimated that about 739,000 properties in the area are underwater in the way that has nothing to do with flooding, with negative equity of 25 percent or more. Many of these homeowners are likely to walk away from their mortgages.
Ken Simonson, chief economist of the Associated General Contractors of America, expects “localized spikes in construction employment throughout November and the winter.” Martin Connor, the chief financial officer of Toll Brothers, expects to see more a rise in labor costs than in materials.
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City Covered From Lawsuits Filed After Hurricane-Damaged Dwellings Demolished
January 15, 2014 —
Tred R. Eyerly - Insurance Law HawaiiThe Fifth Circuit affirmed the District Court's finding that a duty to defend was owed St. Bernard Parish after it was sued for condemning and demolishing housing destroyed by Hurricane Katrina. Lexington Ins. Co. v. St. Bernard Parish Gov't, 2013 U.S. App. LEXIS 24292 (5th Cir. Dec. 6, 2013).
St. Bernard's policies with Lexington provided coverage for "property damage" and "personal and advertising injury." The policies included a $10,000,000 per occurrence and aggregate limit, subject to a $250,000 retained limit.
Lexington denied coverage and filed for a declaratory judgment that the policies' $250,000 retained limit applied separately to each alleged demolition or property damage asserted in the underlying actions. Under this theory, no defense would be owed because no property had a value exceeding $250,000. The District Court found that only one retained limit applied.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Kaboom! Illinois Applies the Anti-Subrogation Rule to Require a Landlord’s Subrogating Property Insurer to Defend a Third-Party Complaint Against Tenants
December 13, 2021 —
Ryan Bennett - White and Williams LLPIn Sheckler v. Auto-Owners Ins. Co, 2021 IL App (3d) 190500, 2021 Ill. App. LEXIS 593, Auto-Owners Insurance Company (Insurer) paid its insured, Ronald McIntosh (McIntosh), for property damage following a fire in an apartment he rented to Monroe and Dorothy Sheckler (the Shecklers). Insurer filed suit against Wayne Workman (Workman), who performed service work on an oven in the Shecklers’ apartment that leaked gas and resulted in a fire. Workman filed a third-party complaint against the Shecklers for contribution and the Shecklers tendered the defense of the claim to Insurer. Insurer refused the tender and the Shecklers filed a declaratory judgment action. In the court below, the Shecklers argued that, as tenants, they were co-insureds on McIntosh’s property insurance policy. Following a liberal interpretation of precedent from the Supreme Court of Illinois in Dix Mutual Insurance Co. v. LaFramboise, 597 N.E. 2d 622 (Ill. 1992), an Illinois appellate court ruled that Insurer – who provided property insurance – must defend the tenants of a rental property from contribution claims if the tenants are co-insureds under the landlord’s policy.
In Sheckler, the Shecklers hired Workman to fix a broken burner on a gas stove. Finding that additional parts were needed, Workman left while the Shecklers waited inside. While waiting—and despite the smell of gas filling the kitchen—Mr. Sheckler lit the stove. “Kaboom!” wrote the appellate court when describing the scene. A fire erupted and caused substantial damage to the apartment.
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Ryan Bennett, White and Williams LLPMr. Bennett may be contacted at
bennettr@whiteandwilliams.com
Latosha Ellis Selected for 2019 Leadership Council on Legal Diversity Pathfinder Program
April 10, 2019 —
Michael S. Levine - Hunton Andrews KurthHunton Andrews Kurth has selected Latosha Ellis, an associate in the firm’s Insurance Coverage practice, for the 2019 Leadership Council on Legal Diversity (LCLD) Pathfinder Program. Pathfinder is a national yearlong program that trains diverse, high performing, early-career attorneys in critical career development strategies, including foundational leadership and building professional networks.
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Michael S. Levine, Hunton Andrews KurthMr. Levine may be contacted at
mlevine@HuntonAK.com
Significant Victory for the Building Industry: Liberty Mutual is Rejected Once Again, This Time by the Third Appellate District in Holding SB800 is the Exclusive Remedy
December 15, 2016 —
Richard H. Glucksman & Ravi R. Mehta – Chapman Glucksman Dean Roeb & Barger Bulletin I. Elliott Homes, Inc. v. Superior Court (Certified for Publication, Cal. Ct. App. Dec. 2, 2016
The California Court of Appeal for the Third Appellate District recently elaborated on the scope of the Right to Repair Act, commonly known as SB-800 (“Act”). In
Elliott Homes, Inc. v. Superior Court of Sacramento County (Kevin Hicks, et al.) (certified for publication, Cal. Ct. App. Dec. 2, 2016), the Court considered whether the Act (and specifically the Act’s pre-litigation procedure) applies, when homeowners plead construction defect claims based only on common law causes of action, as opposed to violations of the building standards set forth in the Act (
Civil Code §896). The Court answered this question affirmatively.
The homeowners of seventeen (17) single-family homes filed a Complaint against the builder of their homes, Elliott Homes, Inc. (“Elliott”), alleging common law causes of action for construction defects. Elliott filed a motion to stay the litigation on the ground that the homeowners failed to comply with the pre-litigation procedure set forth in the Act. The trial court denied the motion, agreeing with the homeowners that this pre-litigation procedure did not apply because the homeowners had not alleged a statutory violation of the Act. Elliott appealed. The Court of Appeal purely considered the question of whether the Act, including its pre-litigation procedure, applies when a homeowner pleads construction defect claims based on common law causes of action, and not on statutory violations of the Act’s building standards.
To answer this question, the Court analyzed a recent case decided by the Court of Appeal for the Fourth Appellate District:
Liberty Mutual Ins. Co. v. Brookfield Crystal Cove, LLC (2013) 219 Cal.App.4th 98. In this subrogation case, a builder’s insurer asserted common law causes of action (but not statutory building standard violations) alleging construction defects against the builder to recover amounts paid to the homeowner after a sprinkler system failure caused extensive damage to the subject property. The trial court sustained the builder’s demurrer to the Complaint on the ground that it was time-barred under the Act. The Court of Appeal reversed the trial court’s order, holding that common law construction defect claims arising from actual damages are not covered by the Act because “the Act does not provide the exclusive remedy in cases where actual damage has occurred.” (
Liberty Mutual, 219 Cal.App.4th 98, 109).
The
Elliott Court declined to follow
Liberty Mutual, finding that that Court failed to properly analyze the language of the Act. The
Elliott Court analyzed both the statutory scheme and the legislative history of the Act to arrive at the conclusion that common law causes of action for construction defects do indeed fall within the purview of the Act.
According to the
Elliott Court, the Act “broadly applies to
any action seeking recovery of damages arising out of, or related to deficiencies in…residential construction and in such an action, a homeowner’s claims or causes of action shall be limited to violation of the standards set forth in the Act, except as specified.” Further, the Act expressly provides that “no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed.”
Civil Code §943(a). In turn,
Civil Code §944 allows for a recovery for the cost of repairing a building standard violation, or for the cost of repairing any damage caused by such a violation, among other things.
The limited exceptions to the Act’s applicability concern the enforcement of a contract, or any action for fraud, personal injury, or violation of a statute. Civil Code §943(a). Additionally, the Act does not apply to condominium conversions. Civil Code §896.
The Elliott Court explains that apart from these exceptions, the Legislature intended the Act to apply to all construction defect claims (regardless of damage) relating to the construction of residential properties whose sales contracts are signed after January 1, 2003. There is no exception in the Act, express or implied, for common law causes of action.
Next, the Court turns to the Act’s legislative history to buttress this conclusion. This history makes clear that the Act is a legislative response to the California Supreme Court’s holding in
Aas v. Superior Court (2000) 24 Cal.4th 627, that construction defects in residential properties are only actionable in tort when actual property damage manifests. Senate Judiciary Committee hearings indicate that the Act was the product of protracted negotiations between varying interested parties, including construction industry trade groups and consumer protection groups. The Legislature intended (1) to promulgate building standards, violations of which would be actionable, even without damage, and (2) to allow homeowners to recover for actual damage caused by construction defects not covered by the building standards. In other words, the Act was intended to provide homeowners redress regardless of whether damage had manifested.
Therefore, the Court concluded that common law causes of action for construction defects, regardless of damage, are subject to the pre-litigation procedure set forth in the Act. The Court issued a writ of mandate directing the trial court to vacate its earlier order, and to enter a new order granting Elliott’s motion to stay the litigation until the homeowners (and Elliott) have satisfied the pre-litigation procedure of the Act.
II. McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132
Similar to the Third Appellate District Court’s ruling in
Elliott, the Fifth Appellate District Court also rejected the holding of
Liberty Mutual in a matter now pending before the California Supreme Court:
McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132 (review granted and opinion superseded sub nom.
Albany v. Superior Court 360 P.3d 1022). Also similar to
Elliott, in
McMillin a group of homeowners filed common law construction defect claims against the builder of their homes. The builder,
McMillin, moved to stay the litigation pending compliance with the Act’s pre-litigation procedure. The trial court denied the motion, holding that the Act does not apply because the homeowners have not asserted statutory building standard violations contained within the Act.
In reasoning substantially similar to that of
Elliott, the
McMillin Court rejected Liberty Mutual’s holding that the Act is not the exclusive remedy for pursuing construction defect claims, with or without damage. Thus, the
McMillin Court issued a writ of mandate to vacate the trial court’s earlier order and to enter a new order granting McMillin’s motion to stay.
On November 24, 2015, the California Supreme Court granted the homeowners’ petition for review. In August of 2016, briefing was completed and the matter is now awaiting the scheduling of arguments. CGDRB will continue to closely monitor the pending appeal of this matter to the California Supreme Court, as well as all related developments.
Reprinted courtesy of
Richard H. Glucksman, Chapman Glucksman Dean Roeb & Barger and
Ravi R. Mehta, Chapman Glucksman Dean Roeb & Barger
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Mehta may be contacted at rmehta@cgdrblaw.com
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