Account for the Imposition of Material Tariffs in your Construction Contract
March 28, 2018 —
David Adelstein – Florida Construction Legal UpdatesAfter Hurricane Irma, I wrote an article that contractors should revisit the
force majeure provisions in their construction contracts. Not later. But Now.
The force majeure provision is an important provision in a construction contract to account for certain uncertainties that you have NO control over.
Recently, another reason has given rise to contractors needing to revisit their force majeure provisions, as well as any provisions dealing with material escalations. Not later. But now. The
imposition of raw steel and aluminum tariffs (tax on imported goods) and the back-and-forth regarding a potential trade war leads to the kind of uncertainty that should be assessed as a risk.
A risk in both time and cost from material escalations.
Read the court decisionRead the full story...Reprinted courtesy of
David Adelstein, Florida Construction Legal UpdatesMr. Adelstein may be contacted at
dadelstein@gmail.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
Read the court decisionRead the full story...Reprinted courtesy of
Wildfire Smoke Threatens to Wipe Out Decades of Air Pollution Progress
August 28, 2023 —
Linda Poon & Immanual John Milton - BloombergThe US is on track to experience its worst year for smoke exposure in decades, after wildfires in Canada sent toxic plumes drifting across the border to the Midwest and the East Coast earlier this summer.
In June and July, New York and Chicago saw more “very unhealthy” and “hazardous” air quality days for fine particle pollution (PM2.5) than in the same months every year since the Environmental Protection Agency began tracking PM2.5 nationally in 2000, a Bloomberg CityLab analysis of federal data found. In Washington, DC, the number of “very unhealthy” days reached the highest in over a decade.
On the EPA’s air quality index scale, these days correspond with the highest levels of public health concern. Extensive exposure to PM2.5 particles, the main pollutant found in smoke, can increase the risk of a variety of problems, including heart and respiratory disease, as well as premature death.
Reprinted courtesy of
Linda Poon, Bloomberg and
Immanual John Milton, Bloomberg Read the court decisionRead the full story...Reprinted courtesy of
Comparative Breach of Contract – The New Benefit of the Bargain in Construction?
October 26, 2020 —
Steven Hoffman - Florida Construction Law NewsAsk most Florida Construction Law practitioners, and you will likely hear that liability may not be apportioned in “pure” breach of contract cases via the Comparative Fault Act, section 768.81, Florida Statutes (the “Act”). If a material breach is a “substantial factor” in causing damages, the breaching party must answer for all damages that were reasonably contemplated by the parties when they formed the contract. Claimants argue that matters of contract should be governed strictly by the agreement, and risk can be controlled by negotiated terms, including waivers and limitations. Defendants complain that construction projects are collaborative, multi-party affairs, and strict application of contract principles leads to harsh results for relatively minor comparative fault for the same or overlapping damages.
The notion of apportioning purely economic loss contract damages based on comparative fault is not new. Since April 2006, Florida has been a “pure” comparative fault jurisdiction with limited exceptions. Prior to the amendment, tort liability for non-economic damages was purely comparative, but liability for economic damages was typically a combination of joint and several liability with an additional exposure based on comparative fault.
Read the court decisionRead the full story...Reprinted courtesy of
Steven Hoffman, Cole, Scott & KissaneMr. Hoffman may be contacted at
Steven.Hoffman@csklegal.com
Las Vegas’ McCarran Tower Construction Issues Delays Opening
August 13, 2014 —
Beverley BevenFlorez-CDJ STAFFThe Las Vegas Review-Journal reported that an improperly applied chemical coating might delay the opening of McCarran International Airport’s Federal Aviation Administration tower by a year and cost millions of dollars to repair.
The chemical coating was intended “to prevent the spread of toxic fungus,” but was “improperly applied and is ineffective,” workers on the site told the Las Vegas Review-Journal.
“Officials said the” $99 million, 352-foot “tower was expected to be operational by 2015, but the FAA now says it won’t be able to use the facility until late 2016 or early 2017.”
Read the court decisionRead the full story...Reprinted courtesy of
When is a “Willful” Violation Willful (or Not) Under California’s Contractor Enforcement Statutes?
April 17, 2019 —
Garret Murai - California Construction Law BlogThe enforcement statutes applicable to the California Contractors’ State License Board aren’t exactly models in clarity. A few examples:
1. Business and Professions Code Section 7107: Abandonment without legal excuse of any construction project or operation engaged in or undertaken by the license as a contractor constitutes a cause for disciplinary action.
2. Business and Professions Code Section 7109: A willful departure in any material respect from accepted trade standards for good and workmanlike construction constitutes a cause for disciplinary action, unless the departure was in accordance with plans and specifications prepared by or under the direct supervision of an architect.
3. Business and Professions Code Section 7110: Willful or deliberate disregard and violation of the building laws of the state, or any political subdivision thereof, . . . or of the safety or labor laws or compensation insurance laws or Unemployment Insurance Code of the State, or of the Subletting and Subcontracting Fair Practice Act, or violation by any licensee of any provision of the Health and Safety Code or Water Code, relating to the digging, boring, or drilling of water wells, constitutes a cause for disciplinary action.
Read the court decisionRead the full story...Reprinted courtesy of
Garret Murai, Wendel RosenMr. Murai may be contacted at
gmurai@wendel.com
Thanks for Four Years of Recognition from JD Supra’s Readers’ Choice Awards
May 20, 2019 —
Garret Murai - California Construction Law BlogA big thank you to the folks at JD Supra and its readers for recognizing us in its Construction category for its 2019 Readers’ Choice Awards! We’re honored to be among the 228 authors recognize for their visibility, engagement and thought leadership out of more than 50,000 who have published articles on JD Supra this past year.
Congratulations as well to the other JD Supra 2019 Readers’ Choice Award recipients whose hard work encourages us to be better authors.
Read the court decisionRead the full story...Reprinted courtesy of
Garret Murai, Wendel, Rosen, Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Wildfire Insurance Coverage Series, Part 6: Ensuring Availability of Insurance and State Regulations
August 03, 2022 —
Scott P. DeVries & Yosef Itkin - Hunton Insurance Recovery BlogBecause of the potential exposure associated with wildfires, many insurers have attempted to withdraw from the property coverage market in various states. In this post in the Blog’s Wildfire Insurance Coverage Series, we discuss the challenges businesses and individuals face in obtaining wildfire insurance coverage, and the regulatory scheme that is intended to help them secure adequate coverage.
Given the increasing exposures associated with climate change, numerous insurers have sought to withdraw from the wildfire-related coverage market or increase rates to a level where they are effectively unavailable. States have been resistant to their doing so. As one commentator reports, “[e]ven where insurers have tried to withdraw policies or raise rates to reduce climate-related liabilities, state regulators have forced them to provide affordable coverage anyway, simply subsidizing the cost of underwriting such a risk policy or, in some cases, offering it themselves.” At least 30 states have developed regulation, referred to as “Fair Access to Insurance Requirements” (FAIR), to ensure the continued availability of insurance. The FAIR plan provides a channel to insurance for property owners who would be stuck without any reasonable access to insurance without state intervention.
Reprinted courtesy of
Scott P. DeVries, Hunton Andrews Kurth and
Yosef Itkin, Hunton Andrews Kurth
Mr. DeVries may be contacted at sdevries@HuntonAK.com
Mr. Itkin may be contacted at yitkin@HuntonAK.com
Read the court decisionRead the full story...Reprinted courtesy of
