California Case Adds Difficulties for Contractors & Material Suppliers
August 20, 2014 —
Beverley BevenFlorez-CDJ STAFFGarret Murai in his California Law Blog declared that “things just got a lot tougher for contractors and material suppliers in the Golden State.” In his blog, Murai analyzed the recent case Golden State Boring & Pipe Jacking, Inc. v. Eastern Municipal Water District, Case No. E054618 (July 23, 2014), in which “the California Court of Appeals for the Fourth Appellate District found that a subcontractor’s public works payment bond claim was time barred because its stop payment notice was served ‘before’ a notice of completion was recorded.”
Murai explained the importance of the ruling and how it changed the status quo: “Whereas before, it was commonly understood that you could serve a stop payment notice ‘during’ construction (after all, that was the point wasn’t it, to stop construction funds before they are paid out), now you may have only have a 30 day window (probably less) to serve a stop notice within 30 days after a notice of completion or notice of cessation is recorded.”
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Emotional Distress Damages Not Distinct from “Annoyance and Discomfort” Damages in Case Arising from 2007 California Wildfires
November 21, 2017 —
Kirsten Lee Price & Lawrence S. Zucker II - Haight Brown & Bonesteel LLPOriginally published by CDJ on February 16, 2017
In Hensley v. San Diego Gas & Elec. Co., (No. D070259, filed 1/31/17), the California Court of Appeal for the Fourth Appellate District held that emotional distress damages are available on claims for trespass and nuisance as part of “annoyance and discomfort” damages.
In Hensley, plaintiffs sustained fire damage to their home and property during the 2007 California wildfires. The Hensleys were forced to evacuate as the fires advanced. Although their home was not completely destroyed, it sustained significant damage and they were not able to return home permanently for nearly two months. Thereafter, the Hensleys filed suit against San Diego Gas and Electric Company (“SDG&E”) asserting causes of action for trespass and nuisance, among others. Mr. Hensley, who had suffered from Crohn’s disease since 1991, further claimed that as a result of the stress from the fire, he experienced a substantial increase in his symptoms and his treating physician opined that “beyond a measure of reasonable medical certainty... the stress created by the 2007 San Diego fires caused an increase of [Mr. Hensley’s] disease activity, necessitating frequent visits, numerous therapies, and at least two surgeries since the incident.” SDGE moved, in limine, to exclude evidence of Mr. Hensley’s asserted emotional distress damages arguing he was not legally entitled to recover them under theories of trespass and nuisance. The trial court agreed and excluded all evidence of such damages.
Reprinted courtesy of
Kirsten Lee Price, Haight Brown & Bonesteel LLP and
Lawrence S. Zucker, Haight Brown & Bonesteel LLP
Ms. Price may be contacted at kprice@hbblaw.com
Mr. Zucker may be contacted at lzucker@hbblaw.com
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Texas EIFS Case May Have Future Implications for Construction Defects
October 02, 2013 —
CDJ STAFFLennar Homes addressed a problem with EIFS in homes built in Texas in the 1990s by replacing every roof they had built. Some of those homes had problems with leaks, rotting, or termites, but other roofs hadn’t suffered any problems. Lennar’s insurers initially refused coverage. Lennar managed to settle with all but one, Markel American Insurance.
Their dispute formed the case Lennar Corp. v. Markel American Insurance Co. This was first tried before a jury and eventually appealed to the Texas Supreme Court. Brian S. Martin of Thompson Coe Cousins & Irons LLP discusses this case at Insurance Journal.
Markel’s claim was that under the policy language, Lennar could not make voluntary payments without getting Markel’s consent, which they did not. But the Texas Supreme Court disagreed, determining that Lennar took, as Mr. Martin notes, “a reasonable approach to a serious problem.”
Markel also made the claim that the whole amount of the damages was not covered by the policy, as they did not view the policy as covering the cost of determining the extent of the damage. The Court disagreed, noting that “under no reasonable construction of the phrase can the cost of finding EIFS property damage in order to repair it not to be considered ‘because of the damage.’”
Mr. Martin concludes by calling the Texas Supreme Court decision “a frontal assault on several critical provisions of liability policies that will assuredly lead to further litigation.” He also notes that the decision “may indicate a shift in the Court’s approach in insurance cases to a more result-oriented jurisprudence.”
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Third Circuit Affirms Use of Eminent Domain by Natural Gas Pipeline
November 28, 2018 —
Anthony B. Cavender - Gravel2GavelOn October 30, the U.S. Court of Appeals for the Third Circuit decided the case of Transcontinental Gas Pipe Line Co., LLC v. Permanent Easements for 2.14 Acres, et al. , affirming the District Court’s grant of a preliminary injunction to Transcontinental Gas Pipe Line Company, LLC (Transcontinental). This case involves the construction of the “Atlantic Sunrise Expansion Project,” a natural gas pipeline that runs through Pennsylvania, Maryland, Virginia, North Carolina and South Carolina.
Under the Natural Gas Act (NGA), pipeline companies can exercise powers of eminent domain when they are acting in the public interest. The Third Circuit cautions that this is a “standard” eminent domain power, and not a “quick take” that is permitted under another statute.
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
Practical Pointers for Change Orders on Commercial Construction Contracts
December 31, 2014 —
John E. Bowerbank - Newmeyer & DillionConstruction projects pose unique challenges, including keeping costs within budget, meeting project deadlines, and coordinating the work of numerous contractors and subcontractors in the wake of inevitable design revisions and changes to the plans. Anticipating potential project challenges and negotiating contract provisions before commencing work on a project is critical for all parties. Careful planning should reduce the number of contract disputes. This, in turn, can facilitate the completion of a project within budget and on schedule.
“Changes” Clauses in Construction Contracts
Most commercial construction contracts have a clause addressing changes to the contract. A “changes” clause typically requires the mutual agreement of the parties on the scope of any modifications to the contract, as well as the effect on the contract price and timeframe for the work to be performed. This results in what is generally referred to as a “change order.” Many projects have a large number of change orders, which can result in significant cost overruns and delays to the project if the contract contains a complicated change order process. Therefore, in order to minimize cost overruns and project delays, it is crucial to keep the change order process as simplified and streamlined as possible.
In the most basic terms, change orders memorialize modifications to the original contract, and typically alter the contract's price, scope of work, and/or completion dates. A typical change order is a written document prepared by the owner or its design professional, and signed by the owner, design professional, and affected contractors and subcontractors. An executed change order indicates the parties’ agreement as to what changes are taking place, including approval for additional costs and schedule impacts.
While the reasons for change orders and the parties initiating them may vary, all change orders have one feature in common. Effective change orders alter the original contract and become part of the contract. Therefore, from a legal standpoint, change orders must be approached with the same caution and forethought as the original contract.
Practice Pointers for Change Orders
In light of the foregoing, some practice pointers for change orders in commercial construction contracts are as follows:
- Carefully Negotiate and Draft Change Order Provisions in the Original Contract.
A carefully negotiated and drafted “changes” clause that accounts for “unexpected circumstances” or “hidden conditions” can protect the parties from downstream costly disputes.
- Immediately Address Changes by Following the Change Order Process, Including Obtaining Necessary Signatures.
Regardless if you are an owner, general contractor or subcontractor, you should address any proposed change order immediately. Even if a decision maker gives “verbal” approval to go ahead with changed work, the work should not proceed without following the change order process in the original contract. This includes making sure to obtain any necessary signatures for the change order, if at all possible.
- Analyze the Plans and Specifications to Determine Whether “Changes” are Within the Scope of the Original Contract, or Whether They are Extra Work.
Prior to entering an original contract, it is imperative that the parties review the plans and specifications for ambiguities regarding work included in the original contract, versus potential extra work that would require a change order. This is important because a careful review of the plans and specifications sometimes reveals that work believed to be a change order is, in fact, original work, or vice versa.
- Make Sure Requests and Approvals for Change Orders are Done by an Authorized Representative.
When a party requests or gives its approval to a change order, it is important to confirm the request or approval came from an authorized representative.
- Avoid Vague and Open-Ended Change Orders.
Indeed, the vaguer a change order, the more likely it can lead to a dispute. Vague and open-ended change orders, including change orders that provide for payment on a time and materials basis, can be difficult for an owner to budget and schedule. This can lead to disputes as to cost and/or time extensions.
- Oral Assurances for Payment Without a Signed Change Order May Not Be Recoverable.
When a party provides verbal assurances to another party for extra work without following the change order process, there is a much higher likelihood that disputes will occur. Although there is case law that may allow a contractor to recover for extra work in private contracts based on oral promises, the parties should avoid placing themselves in such a legal position. Notably, in public contracts, a contractor may not be able to recover for any extra work without a signed changed order, even with verbal assurances of payment from the owner.
About the Author:
John E. Bowerbank, Newmeyer & Dillion
Mr. Bowerbank is a partner in the Newport Beach office and practices in the areas of business, insurance, real estate, and construction litigation. You can reach John at john.bowerbank@ndlf.com
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Call Me Maybe? . . . Don’t Waive Your Rights Under the Right to Repair Act’s Prelitigation Procedures
March 22, 2017 —
Garret Murai – California Construction Law BlogWe’ve written before about the Right to Repair Act (Civil Code Sections 895 et seq.). The Act, also commonly known as SB 800 after the bill that established it, applies to newly constructed residential units including single-family homes and condominiums (but not condominium conversions) sold after January 1, 2003.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Housing Starts in U.S. Beat 1 Million Pace for Second Month
June 18, 2014 —
Shobhana Chandra – BloombergBuilders broke ground on 1 million U.S. homes in May, indicating the industry is picking up this quarter after a weather-induced slump to start the year.
The number of housing starts last month was in line with the median forecast of economists surveyed by Bloomberg and followed April’s 1.07 million annualized rate that was the most since November, a Commerce Department report showed today in Washington. Permits, a proxy for future construction, decreased, reflecting a decline in the volatile multi family category.
A strengthening job market and a retreat in mortgage costs in recent weeks is helping support residential real-estate following a lull in building in early 2014. Faster sales will prompt developers to step up construction, given supplies of homes on the market remain lean and property values are rising.
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Shobhana Chandra, BloombergMs. Chandra may be contacted at
schandra1@bloomberg.net
Heat Stress Deaths Show Europe Isn’t Ready for Climate Change
August 07, 2023 —
Olivia Rudgard - BloombergMore than 60,000 people died as a result of record-breaking temperatures in Europe last summer, a study has found, raising concerns about multiple countries’ lack of preparation for extreme heat fueled by climate change.
Between May 30 and Sept. 4 of last year, there were 61,672 deaths caused by hot weather across 35 European countries, according to the study by researchers at the Barcelona Institute for Global Health and the French National Institute of Health,
published in the journal Nature Medicine. Last year’s was the warmest summer ever recorded on the continent, breaking a record set just one year earlier. Temperatures were more than 2C above the recent average for countries that included France, Switzerland and Spain.
Last year’s extreme-heat casualties echo an earlier hot summer in 2003, when 70,000 excess deaths were recorded across Europe. The loss of life led several countries to introduce early-warning systems for heat waves, as well as more planning around health care services. But the large number of deaths in 2022 shows the limitations of these measures, the study’s authors noted.
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Olivia Rudgard, Bloomberg
