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Delays in Filing Lead to Dismissal in Moisture Intrusion Lawsuit

September 09, 2011 — CDJ STAFF

The Alabama Court of Civil Appeals has upheld a summary judgment in the case of Franklin v. Mitchell. Walter Mitchell, doing business as Southern Classic Construction built a new home for the Franklins. The Franklins moved into the home in October 2001. In April 2006 they discovered sagging floors in both the bathroom and kitchen. They contacted Mitchell who suggested the flooring might be defective. The Franklins spent eight months attempting to contact the flooring manufacturer.

In March 2007, the Franklins had the home inspected. The sagging was determined to be due to a loss of strength in the decking because of condensation from the air conditioning system. Air returns were not properly sealed and drawing moisture into the structure. There was mold on the decking and floor joints.

When Mitchell was contacted by the Franklins, he told them his one-year warranty had expired but had the HVAC subcontractor, Southern Mechanical Heating & Air (owned by Mitchell’s father, Jim Mitchell), look at the situation. SMHA replaced and braced subfloors. Later, they entered the crawl space to tape ducts, seal the air return, and insulate the air vent housing. The Franklins were not satisfied with the repairs, as not all the ducts were taped, nor were the air vent housings insulated.

Franklin complained to Walter Mitchell who again cited his one-year warranty. Jim Mitchell said he would not report complaints to his insurer, stating that the repairs were unnecessary, that the work had been done correctly in the first place, and it was only done at the request of Walter Mitchell.

In February 2009, the Franklins sued Walker Mitchell. Mitchell denied the claims, citing in part the statute of limitations. Mitchell also filed complaints against three subcontractors, including his father’s firm. Mitchell received a summary judgment as the case started after Alabama’s six-year statute of limitations.

The appeals court rejected the Franklin’s argument that the claim of damage did not start until they were aware it was due to a construction defect. The court noted that as Walter Mitchell was licensed as a “residential home builder, the statute the Franklins cite did not apply, as it concerns architects, engineers, and licensed general contactors.”

Nor did they feel that Mitchells’ claim that his warranty had expired were sufficient to override the statute of limitations, quoting an earlier case, “Vague assurances do not amount to an affirmative inducement to delay filing suit.” Their claim of subsequent negligent repairs was rejected because Mitchell did not direct the specific actions taken by his father’s firm.

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Construction Defects Not Occurrences under Ohio Law

November 07, 2012 — CDJ STAFF
Concluding the “claims of defective construction or workmanship brought by a property owners are not claims for ‘property damage’ caused by an ‘occurrence’ under a commercial general liability policy,” the Supreme Court of Ohio has ruled in Westfield Insurance Co. v. Custom Agri Systems, Inc. In the underlying case, Custom Agri Systems, Inc. built a grain bin as a subcontractor to Younglove Construction, LLC. Younglove had been contracted by PSD Development, which withheld payment, claiming it had suffered damages due to defects in Custom Agri System’s work. Younglove filed a complaint against Custom Agri, which filed complaints against its subcontractors. Custom Agri also requested that its insurer, Westfield Insurance Company, defend and indemnify it. Westfield claimed that it had no such duty. The Ohio Supreme Court concurred. The decision notes that “Custom was being sued under two general theories: defective construction and consequential damages resulting from the defective construction.” Westfield argued that none of the claims were “for ‘property damage’ caused by an ‘occurrence” and therefore none of the claims were covered under the CGL policy.” Further, Westfield argued that “even if the claims were for property damage caused by an occurrence, they were removed from coverage by an exclusion in the policy.” The case was filed in the US District Court which issued a summary judgment for Westfield. The plaintiff appealed and Sixth Circuit Court of Appeals certified the questions to the Supreme Court of Ohio. The court noted that “all of the claims against which Westfield is being asked to defect and indemnify Custom relate to Custom’s work itself.” And so, the court concluded that they “must decide whether Custom’s alleged defective construction of and workmanship on the steel grain bin constitute property damage caused by an ‘occurrence.’” However, the court noted that under the terms of the insurance contract, an occurrence is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” and the court noted that the “natural and commonly accepted meaning” of “accident” is something “unexpected, as well as unintended.” The Ohio Supreme Court also looked at court decisions in other places, and found that in many similar cases, courts have concluded that construction defects are not occurrences. In a dissenting opinion, Justice Pfeifer argues that “if the defective construction is accidental, it constitutes an ‘occurrence’ under a CGL policy.” Justice Pfeifer characterized the majority’s definition of “accidental” as “broad, covering unexpected, unintentional happenings.” Read the court decision
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The Problem with One Year Warranties

June 10, 2015 — Craig Martin – Construction Contractor Advisor
Contractors often ask if they should include a one year warranty in their subcontracts. I tell them that they can, but it may be more effective to include a one-year correction period. If a contractor does include a warranty in the contract, it may actually extend the time in which a contractor may be sued. I recommend instead a Correction Period. Typical Construction Warranties Form construction contracts, like the AIA forms, often times contain warranty language. The AIA A201, General Conditions, contains a warranty section that covers materials, but it does not address how long the work is warranted: “3.5 WARRANTY The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit.” Instead, the AIA A201, section 13.7, limits the time by which claims must be brought to 10 years or the applicable statute of limitations. Read the court decision
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Reprinted courtesy of Craig Martin, Lamson, Dugan and Murray, LLP
Mr. Martin may be contacted at cmartin@ldmlaw.com

New Jersey Courts Speed Up Sandy Litigation

September 03, 2014 — Beverley BevenFlorez-CDJ STAFF
In order to deal with the thousand plus property damage cases related to Hurricane Sandy the “U.S. District Chief Judge Jerome Simandle of the District of New Jersey, who sits in Camden, N.J., issued a standing order dated Aug. 13 that, in effect, cuts in half the amount of time that arbitrators and mediators will have to hear disputes over coverage and issue rulings,” the New Jersey Law Journal reported. “John O’Brien, chief deputy of operations for New Jersey’s federal courts, said that, as of Wednesday, 1,240 Sandy-related lawsuits had been filed in New Jersey and that 1,051 of those cases are still pending,” according to the New Jersey Law Journal. “Sixty of those pending cases have been referred to mediation and another six have been sent to arbitration panels, according to O’Brien.” Read the court decision
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Public Contract Code 9204 – A New Mandatory Claims Process for Contractors and Subcontractors – and a Possible Trap for the Unwary

March 22, 2017 — Alex R. Baghdassarian & Joseph S. Sestay – Peckar & Abramson, P.C.
New California legislation affecting public works contractors was adopted pursuant to Assembly Bill 626, sponsored by the Union Trade Contractors Association of California and endorsed by various trade and contractor associations including the AGC. AB 626, which was intended to assist contractors in presenting claims against public agencies, affords new opportunities, and some potential pitfalls, to contractors and subcontractors submitting claims to public owners. The legislation, codified at California Public Contract Code (PCC) section 9204, is effective for public works contracts entered into after January 1, 2017. All public entities (including the CSUS and the UC system), other than certain Departments of the State (CalTrans, High-Speed Rail Authority, Water Resources, Parks and Recreation, Corrections and Rehabilitation, General Services and the Military) are bound by the provisions of PCC Section 9204. PCC 9204 establishes a mandatory pre-litigation process for all claims by contractors on a public works project. It is an attempt to address the reluctance of public owners to promptly and fairly negotiate change orders on projects, putting some teeth to the mandate of existing law under PCC Section 7104, which precludes public owners from shifting to the contractor the risk of addressing differing subsurface and/or concealed hazardous site conditions. Reprinted courtesy of Alex R. Baghdassarian, Peckar & Abramson, P.C. and Joseph S. Sestay, Peckar & Abramson, P.C. Mr. Baghdassarian may be contacted at abaghdassarian@pecklaw.com Mr. Sestay may be contacted at jsestay@pecklaw.com Read the court decision
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Homebuilder Predictions for Tallahassee

October 10, 2013 — CDJ STAFF
The cost of putting up a new home in Tallahassee has risen, but Joe Manausa thinks that builders might be putting up homes that will cost more than home buyers are able to pay. He notes that permits and sales are up, but numbers are still well below those in 2006. Mr. Manusa thinks that Tallahassee could face “a need (demand) for homes priced below $300,000, but a glut of supply for those priced above $300,000.” He says that home builders “need to target construction opportunities below that price point.” He notes that average price of new construction is $272,000, but resales are going for $161,000, which puts quite a premium on a new home. Read the court decision
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Know Whether Your Course of Business Operations Are Covered Or Excluded By Your Insurance

December 27, 2021 — David Adelstein - Florida Construction Legal Updates
It is a good idea to know what your insurance covers and does not cover. This way, if your course of business has you performing a certain (risky) operation, you know whether that operation is covered or excluded under your policy. If you are not sure, discuss with your insurance broker — this is important. There is little value performing an operation that is NOT covered by your insurance policy, as you are now performing a risk that is not covered by insurance. If you know it is not covered by insurance you may elect to change your operations or see if there is insurance to cover the risk. Below is a case study of this occurrence dealing with a commercial automobile liability policy where an insured’s operations using a crane mounted to a super duty truck was not covered under their automobile liability policy. In People’s Trust Ins. Co. v. Progressive Express Ins. Co., 46 Fla. L. Weekly D262a (Fla. 3d DCA 2021), homeowners hired a company to install a shed. The company hired another company to deliver and install the shed using a crane; the company used a crane mounted to a Ford F-750 super duty truck. This company improperly operated the crane resulting in the shed falling and damaging the homeowner’s roof. The homeowners submitted a claim to their property insurer and their property insurer subrogated to their rights and sued. The company operating the crane’s commercial automobile liability insurer denied coverage, and thus, denied the duty to defend. As a result, a Coblentz-type agreement was entered into where the company operating the crane consented to a judgment in favor of the property insurer (subrogee) and assigned its rights under its commercial automobile liability policy to the property insurer. The property insurer then sued the automobile liability carrier for coverage. The trial court granted summary judgment in favor of the automobile liability insurer finding there was no coverage and this was affirmed on appeal. Why? Read the court decision
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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

Nuclear Fusion Pushes to Reach Commercial Power Plant Stage

August 05, 2024 — Mary B. Powers, Debra K. Rubin, Peter Reina & David Godkin - Engineering News-Record
The quest to develop nuclear fusion—the process that energizes the sun and other stars—as an earth-based power source dates back more than a century when Albert Einstein and other scientists theorized how enormous amounts of energy could be produced when atoms fuse. That research was partly diverted for wartime weapons priorities but later targeted to develop fusion for commercial-scale energy—what sector proponents have called the “holy grail” for decades since. Reprinted courtesy of Mary B. Powers, Engineering News-Record, Debra K. Rubin, Engineering News-Record, Peter Reina, Engineering News-Record and David Godkin, Engineering News-Record Ms. Rubin may be contacted at rubind@enr.com Mr. Reina may be contacted at reina@btinternet.com Read the full story... Read the court decision
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