Builders Beware: A New Class Of Defendants In Asbestos Lawsuits
January 06, 2016 —
David J. Byassee, Bremer Whyte Brown & O’Meara, LLP & Timothy A. Gravitt, Ulich, Ganion, Balmuth, Fisher & Feld, LLPResidential, commercial and industrial builders face new and potentially significant liability for construction activities that took place in the 1960s, 1970s and 1980s: personal injury lawsuits filed by construction workers from exposure to building products containing asbestos. After emptying the pockets of manufacturers and suppliers of raw asbestos and asbestos-containing products over the last 20 years, plaintiff lawyers are beginning to set their sights on a new class of defendants in asbestos litigation: residential, commercial and industrial builders who unknowingly allowed asbestos-containing products to be incorporated into their projects.
The men and women who have been involved in the building industry for 40 years or more may remember the subject of asbestos surfacing in the 1970s with the enactment of the Occupational Safety and Health Act (OSHA). At that point builders were just beginning to learn that asbestos was a component of some building materials, and the potential risk of cancer presented by asbestos was being debated in scientific and medical journals. Although the use of building materials containing asbestos was mostly phased out by the 1980s, the health risks associated with exposure to asbestos continue – and in fact increase – for the duration of an exposed person’s life.
Today it is generally accepted that exposure to asbestos increases the risk of developing asbestosis and certain kinds of cancer, including mesothelioma. Cancers associated with exposure to asbestos are typically diagnosed at least 15 years (and sometimes up to 50 years) after a person’s exposure to asbestos, meaning that exposures in the 1960s, 1970s and 1980s might not manifest in disease until now. The class of persons who may be at risk for asbestos-related disease is long and varied: insulators, HVAC installers, pipe fitters, plumbers, drywall installers, painters, plasterers and roofers, to name a few. Long-term exposure history, coupled with the theory that “each and every” exposure during a lifetime is a substantial factor increasing the risk of developing cancer, presents potential liability to builders acting as general contractors and/or property owners, as well as the usual defendants in asbestos lawsuits, which include manufacturers, suppliers, and users of asbestos-containing materials.
In recent years, plaintiff lawyers have set their sights on builders as the financial wherewithal of traditional asbestos defendants has dried up. Plaintiff lawyers have created a new theory of liability which they use to rope builders in as defendants in asbestos lawsuits: that the builder knew – or should have known – that a deadly ingredient (asbestos) was contained in the building materials used in construction, and the builder failed to warn its subcontractors or anyone else on the project that exposure to asbestos could harm them.
Builders have unique legal defenses to claims brought by employees of subcontractors who have developed asbestos-related disease. For example, the California Supreme Court in Privette v. Superior Court (1993) 5 Cal.4th 689, held that an injured employee of a subcontractor cannot maintain a claim against the hirer (builder) for the employee’s injury absent affirmative contribution on the part of the builder to the injury. Thus the first line of defense in an asbestos exposure case is to argue that the developer had no direct role in the plaintiff’s exposure to asbestos and therefore the Privette doctrine precludes the plaintiff from suing the builder. But resourceful plaintiff lawyers are coming up with arguments to get around this so-called Privette defense in asbestos lawsuits by claiming that builders’ activities such as cleanup of asbestos-containing materials, or assertion of control over the work of the subcontractor, directly contributed to the plaintiff’s injuries and therefore provide exceptions to Privette and allow the claim to proceed.
A practical question is raised in asbestos cases: How is a plaintiff able to prove, decades after working on a project, what building materials contained asbestos, or that a builder knew or should have known in the 1960s, 1970s or 1980s that asbestos-containing materials were used on their project, or that asbestos presented a health risk? To answer the first part of the question (what building materials contained asbestos), plaintiff’s experts will say that during the relevant timeframe asbestos was a common ingredient in many building products, e.g., drywall joint compounds, stucco/plaster/gun cement, acoustic ceiling products, cement pipe, insulation, roofing mastic, caulk and plumber’s putty; this can be further proven by reference to product manufacturers’ disclosures made pursuant to the Asbestos Information Act. Also, through the decades of asbestos litigation against product manufacturers and suppliers, resourceful plaintiff lawyers have developed vast banks of data and documentation identifying the manufacturers of asbestos-containing building products, the end-users of those products, and the projects where those products were supplied. With this bank of knowledge, all that is necessary for them to make the claim against a builder is to have the plaintiff identify a construction project where he or she remembers working during the relevant timeframe. Once that identification is made, it is a simple matter for the lawyers to dig and find out who developed the building/project, who then becomes a defendant in an asbestos lawsuit.
The answer to the second part of the question (whether the developer knew or should have known that the products brought to their projects contained asbestos) requires a detailed investigation into the dates at which the products were supplied to the project, the manufacturer of the product, and what information was available in the market place about the material content of the particular product.
The answer to the third part of the question (knowledge that asbestos presented a health risk) is trickier. One of the first standards set by OSHA in 1972 related to permissible levels of exposure to asbestos. It is a common tactic for plaintiff lawyers to argue that the existence of OSHA standards created a presumption of knowledge in the building industry about the dangers of asbestos. But what about pre-OSHA knowledge? Here plaintiff lawyers will argue that well before OSHA, going back as far as 1936, exposure to asbestos was regulated in California under General Industry Safety Orders relating to Dusts, Fumes, Mists, Vapors and Gases. They argue that the General Industry Safety Orders put builders “on notice” of the dangers of asbestos by virtue of being regulated by the State of California, and, by extension, builders had “knowledge” of the health risks associated with asbestos.
There are defenses that skilled defense counsel can utilize to defeat asbestos claims, assuming the Privette defense is not available. The first is to thoroughly investigate and evaluate all of the plaintiff’s potential exposures to asbestos throughout his entire lifetime, and identify those sources that likely were the major contributors to his disease. Next, counsel has to properly investigate the project at which the plaintiff is alleged to have been exposed to asbestos, identify all of the possible sources of exposure, i.e., the products that were used or might have been used at the project, and finally how the plaintiff was allegedly exposed at the project. As most builders do not maintain records of what products were used in their projects dating back 15 years or more, let alone the identities of the trades that worked on the projects, knowledgeable defense counsel can be a valuable partner in unearthing the brands of products typically in use in the locale where the construction took place, and identifying the manufacturers of those products. Defense counsel must analyze the frequency, duration, proximity and intensity of the exposure, as well as the type of asbestos the plaintiff was allegedly exposed to (not all asbestos is created equal – some types are more toxic than others). This will involve careful evaluation of the levels of exposure created by the alleged activity of the builder, to determine, through experts and a thorough understanding of the scientific and medical studies on the subject, whether the levels of asbestos exposure created by the activity could be considered a “substantial factor” in contributing to the risk of the plaintiff’s development of his asbestos-related disease.
Asbestos lawsuits present a significant risk to the unsuspecting and unprepared builder. Money damages available to a plaintiff are substantial. Medical expenses for treatment of asbestos-related disease typically run into the hundreds of thousands of dollars, lost income (including retirement benefits) can also be significant, and jury awards for pain, suffering and emotional distress can be staggering - often millions of dollars. In some cases punitive damages are even awarded.
The bottom line is that a builder runs a big risk if it treats an asbestos claim like any other claim. The level of analysis and investigation to properly defend against the claim requires prompt action by knowledgeable counsel, and frequently there is no insurance coverage.
David J. Byassee is an attorney with the firm
Bremer Whyte Brown & O’Meara, LLP, and is a litigator who has devoted nearly a decade to representation of real estate developers and builders. He can be reached at: dbyassee@bremerwhyte.com.
Timothy A. Gravitt is an attorney with the firm
Ulich, Ganion, Balmuth, Fisher & Feld, LLP who is devoted to defending real estate developers and builders in a variety of litigation. He can be reached at: tgravitt@ulichlaw.com.
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Preparing Your Business For Internal Transition
October 14, 2019 —
Stephen P. Katz, Esq. - ConsensusDocsWhen is it right to start thinking about succession planning and preparing a construction company for transition? Many would agree – in concept, at least – that serious thought regarding succession and transition planning should begin at a company’s inception and be revisited throughout its lifecycle, but as a practical matter, it is frequently not part of the mindset when growing a business. This article explores issues that construction company owners should consider in order to achieve smooth transition of ownership and control. We will address three critical questions:
- What happens to the business when an owner retires;
- In the event an owner(s) become disabled; and,
- Unplanned exit/owner pre-deceases her/his exit from the company
Owners who do not plan carefully for transition are often faced with the less than appealing option of liquidating their business for much less than its value, or by closing the business with no return upon that event. However, those who plan carefully can realize the value of their life’s work, pass the business to the next generation and see their legacy continue.
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Stephen P. Katz, Esq., Peckar & Abramson, P.C.Mr. Katz may be contacted at
skatz@pecklaw.com
Zombie Foreclosures Plaguing Various Cities in the U.S.
July 16, 2014 —
Beverley BevenFlorez-CDJ STAFFMany homeowners are simply abandoning their homes before banks have completed the foreclosure process, according to USA Today. Banks are not always in a hurry to take ownership of property, and often will wait until they are ready to dispose of it before doing so:
“There are two primary things that can factor into their decision," Eric Eckardt, vice president and general manager of Hubzu.com, told the Mail Tribune. "One, they may have a surplus of REO properties they're trying to move off the balance sheet. The second is, costs associated with foreclosure may be greater than the value. At the end of the day, it's really a case-by-case matter.”
USA Today reported that “[t]he length of the entire foreclosure process is a major contributor to vacancy rates because homeowners are more likely to give up on their homes the longer they have to wait for a resolution.”
These abandoned homes may have a negative impact on sales of neighboring homes, according to the Mail Tribune. Gary Poulos, a retired Harry & David systems engineer, lives next door to a ‘zombie foreclosure,’ and spent a year trying to get maintenance work completed on the neighboring property so that he could be in a position to sell his own. He created a blog about his experience (myneighborchasebank.blogspot.com).
Big Builder analyzed May 2014 data from CoreLogic, and identified the five states with the highest foreclosure inventory: New Jersey, Florida, New York, Hawaii, and Maine. While the five states with the lowest foreclosure inventory were Alaska, Nebraska, North Dakota, Wyoming, and Minnesota.
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Court of Appeal Holds That Higher-Tiered Party on Construction Project Can be Held Liable for Intentional Interference with Contract
December 07, 2020 —
Garret Murai - California Construction Law BlogIn
Caliber Paving Company, Inc. v. Rexford Industrial Realty and Management, Inc., Case No. G0584406 (September 1, 2020), the 4th District Court of Appeal examined whether a higher-tiered party on a construction project can be held liable for intentional interference with contract when it interferes with the contract between lower-tiered parties even though the higher-tiered party has an economic interest in the contract between the lower-tiered parties.
The Caliber Paving Case
Project owner Rexford Industrial Realty and Management, Inc. owns and operates industrial property throughout Southern California. In 2017, Rexford hired contractor Steve Fodor Construction to perform repaving work at Rexford’s property in Carson, California.
Fodor Construction in turn hired subcontractor Caliber Paving Company, Inc. to perform the repaving work. The subcontract divided the parking lot into four areas, with separate costs to repave each area, and Caliber completed its work in one area in June 2017.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Real Estate & Construction News Roundup (3/6/24) – Steep Drop in Commercial Real Estate Investment, Autonomous Robots Being Developed for Construction Projects, and Treasury Department Proposes Regulation for Real Estate Professionals
April 08, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, major league sports franchises turn to real estate to increase their value, the Associated Builders and Contractors releases a guide on artificial intelligence, New York City helps landlords convert empty office space into housing, and more!
- The Treasury Department proposed a regulation that would require real estate professionals to report information to the agency about all-cash sales of residential real estate to legal entities, trusts and shell companies. (Fatima Hussein, AP)
- For decades, major league teams depended on ticket sales, concessions and TV deals to generate revenue, but team owners in recent years have turned to real estate development to bring in extra cash and drive up the values of their franchises. (Nathaniel Meyersohn, CNN)
- The U.S. commercial real estate market saw a steep drop in investment last year, with the market plummeting by more than 50% to the lowest level since 2012 and CBRE noting a 91% year-over-year drop in direct real estate company investments. (Yuheng Zhan, Business Insider)
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Pillsbury's Construction & Real Estate Law Team
Fraudster Sells 24-Bedroom ‘King’s Speech’ London Mansion
May 20, 2015 —
Neil Callanan – BloombergEdward Davenport, jailed for fraud for his role in a fake lender, sold a 24-bedroom mansion in London’s Marylebone district that was featured in the film “The King’s Speech.”
The money raised from the sale will be used to repay 13 million pounds ($20 million) from a confiscation order by Her Majesty’s Courts and Tribunals Service, the Serious Fraud Office said in a statement Wednesday.
Davenport was jailed for more than seven years in October 2011 for his role in Gresham Ltd., a company that said it offered to provide commercial funding in return for advance fees, the SFO said. After securing the payments, employees would make deceptive assertions to extract further fees, the SFO said in 2011.
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Neil Callanan, Bloomberg
Business Insurance Names Rachel Hudgins Among 2024 Break Out Award Winners
April 22, 2024 —
Hunton Insurance Recovery BlogWe are pleased to announce that counsel
Rachel E. Hudgins has been recognized as one of Business Insurance’s 2024 Break Out Award winners. The magazine’s Break Out Awards honor 40 top professionals each year from a competitive field of nominees who have under 15 years’ experience in the insurance and risk management sector and are “on track to be the next leaders in the risk management and property/casualty insurance field.”
Clients describe Rachel as their “chief contact for high-exposure coverage work.” She meets clients where they are with a curiosity and interest in their business strategies, as well as an ability to distill complex insurance concepts into digestible terms. Rachel also has depth of experience in coverage litigation. She has litigated hundreds of insurance coverage and bad faith claims in state and federal courts across the country and US territories.
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Hunton Andrews Kurth LLP
New Defendant Added to Morrison Bridge Decking Lawsuit
March 26, 2014 —
Beverley BevenFlorez-CDJ STAFFThe Morrison Bridge in Multnomah County, Oregon, has added a new company to their lawsuit regarding problems with the slip-resistant FRP decking, according to The Oregonian. The county has already named the installer, the supplier, and the manufacturer. Now, they have added Hardesty & Hanover, LLP, the company “that contracted with the decking manufacturer to provide engineering and design for the project.”
The Oregonian reported that “the county has identified a construction design professional who can testify that Hardesty & Hanover made errors that contributed to the Morrison Bridge's damage,” according to the amended complaint.
First, Conway construction (the deck installer) filed suit against the decking manufacturer and supplier. Then, the “county inserted itself into the suit last fall,” stated The Oregonian, and “is seeking more than $2 million to repair or replace the decking, plus damages.” A trial is scheduled for February 2015.
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