The Year 2010 In Review: Design And Construction Defects Litigation
February 25, 2011 —
Candace Matson, Harold Hamersmith, and Helen LauderdaleThis article is the first in a series summarizing construction law developments for 2010
1. Centex Homes v. Financial Pacific Life Insurance Co., 2010 U.S. Dist. LEXIS 1995 (E.D. Cal. 2010)
After settling numerous homeowners’ construction defect claims — and more than ten years after the homes were substantially completed — a home developer brought suit against one of the concrete fabrication subcontractors for the development seeking indemnity for amounts paid to the homeowners, as well as for damages for breach of the subcontractor’s duties to procure specific insurance and to defend the developer against the homeowners’ claims. The subcontractor brought a motion for summary adjudication on the ground the developer’s claims were barred by the ten year statute of repose contained in Code of Civil Procedure Section 337.15.
The District Court agreed the developer’s claim for indemnity was barred by Section 337.15. And it held that because the damages recoverable for breach of the subcontractor’s duty to purchase insurance are identical to the damages recoverable through the developer’s indemnity claim, the breach of duty to procure insurance claim also was time-barred. The District Court, however, allowed the claim for breach of the duty to defend to proceed. The categories of losses associated with such a claim (attorneys’ fees and other defense costs) are distinct from the damages recoverable through claims governed by Section 337.15 (latent deficiency in the design and construction of the homes and injury to property arising out of the latent deficiencies).
2. UDC — Universal Development v. CH2M Hill, 181 Cal. App. 4th 10 (6th Dist. Jan. 2010)
Indemnification clauses in construction agreements often state that one party to the agreement — the “indemnitor” — will defend and indemnify the other party from particular types of claims. Of course, having a contract right to a defense is not the same as actually receiving a defense. Any indemnitor attempting to avoid paying for defense costs can simply deny the tender of defense with the hope that when the underlying claim is resolved the defense obligations will be forgotten. In the past, when parties entitled to a defense — the “indemnitees” — had long memories and pressed to recover defense costs, indemnitors attempted to justify denying the tender by claiming their defense obligations coincided with their indemnity obligations and neither arose until a final determination was made that the underlying claim was one for which indemnity was owed.
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Reprinted courtesy of Candace Matson, Harold Hamersmith, and Helen Lauderdale, Sheppard Mullin Richter & Hampton LLP. Ms. Matson can be contacted at cmatson@sheppardmullin.com, Mr. Hamersmith can be contacted at hhamersmith@sheppardmullin.com, and Ms. Lauderdale can be contacted at hlauderdale@sheppardmullin.com.
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California Court of Appeal Vacates $30M Non-Economic Damages Award Due to Failure to Properly Apportion Liability and Attorney Misconduct During Closing Argument
February 08, 2021 —
Krsto Mijanovic, Peter A. Dubrawski, Arezoo Jamshidi & Catherine M. Asuncion - Haight Brown & Bonesteel LLPOn January 20, 2021, the California Court of Appeal, Second District, Division Six (Ventura), in Plascencia v. Deese (B299142), vacated a $30 million non-economic damages award in a highway fatality case because: (1) the award did not properly apportion non-economic damages among everyone at fault in violation of Proposition 51; and (2) the amount of the award appeared to have been influenced by plaintiffs’ counsel’s misconduct and prejudicial remarks during closing argument.
In Plascencia, the plaintiffs sued several defendants for the wrongful death of their daughter arising from a highway fatality accident. All the defendants settled or were dismissed before trial except the trucking defendants. The highway fatality was caused when one defendant driver made an illegal U-turn on a highway as she left another defendant’s fruit stand. The plaintiffs’ daughter swerved to avoid the U-turn driver, lost control of her car, and crashed into the back of the trucking defendants’ diesel tractor-trailer. The truck driver had parked the truck on the side of the highway near the fruit stand, which the trucking defendants’ expert conceded fell below the standard of care.
Reprinted courtesy of
Krsto Mijanovic, Haight Brown & Bonesteel LLP,
Peter A. Dubrawski, Haight Brown & Bonesteel LLP,
Arezoo Jamshidi, Haight Brown & Bonesteel LLP and
Catherine M. Asuncion, Haight Brown & Bonesteel LLP
Mr. Mijanovic may be contacted at kmijanovic@hbblaw.com
Mr. Dubrawski may be contacted at pdubrawski@hbblaw.com
Ms. Jamshidi may be contacted at ajamshidi@hbblaw.com
Ms. Asuncion may be contacted at casuncion@hbblaw.com
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California Ranks As Leading State for Green Building in 2022
February 01, 2023 —
The U.S. Green Building CouncilWashington, D.C. (Jan. 17, 2023) – The U.S. Green Building Council (USGBC) today released its annual ranking of U.S. states leading the way on green building, and California made the top ten at number four. USGBC's ranking is based on LEED-certified gross square footage per capita over the past year. The LEED rating system is the world's most widely used green building program and was created by USGBC as a leadership standard defining best practices for healthy, high-performing green buildings.
"It was a strong year for LEED certifications across the U.S. as companies and governments embrace LEED as a tool for meeting ESG goals and organizational commitments to climate action, occupant wellbeing and resource efficiency," said Peter Templeton, USGBC president and CEO. "In California and beyond, LEED buildings are environmentally friendly, cutting their emissions and waste, and use less energy and water. At the same time, they also help reduce operational and maintenance costs, contributing to the bottom line."
In 2022, California had 386 LEED-certified projects, totaling over 96.4 million square feet or 2.44 square feet per capita. Office buildings, residential apartment buildings, government buildings and schools were among those that were LEED-certified last year.
The states ranking ahead of California were Massachusetts (3.76 LEED-certified square feet per resident), Illinois (3.47 square feet per capita), and New York (3.17 square feet per capita).
Additional information on the 2022 rankings, along with a listing of notable projects, can be found
here.
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Water Seepage, Ensuing Mold Damage Covered by Homeowner's Policy
August 13, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe appellate court reversed the trial court's determination that the policy covered only mold damage, but not damage caused by water seepage. Henderson v. Georgia Farm Bureau Mut. Ins. Co., 2014 Ga. App. LEXIS 539 (Ga. Ct. App. July 16, 2014).
The homeowner's policy covered losses caused by constant seepage or leakage of water or the presence of condensation or moisture over a period of time. The insureds also paid for additional coverage for "ensuing mold . . . caused by or resulting from" one of the covered risks, including water seepage.
Ms. Henderson discovered a puddle of water in her kitchen and contacted Georgia Farm Bureau. The insurer's contractor tore out a section of the floor, but found no other problems of water seepage. Later, the Hendersons removed another part of the floor and discovered standing water and black mold underneath. The Hendersons had to vacate their house for one year.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Landowners Try to Choke Off Casino's Water With 19th-Century Lawsuit
December 17, 2015 —
Edvard Pettersson – BloombergCalifornia’s latest water war is being waged at the edge of wine country against an Indian tribe planning a massive casino expansion as a group of landowners tries to stop them with a lawsuit from 1897.
The Santa Ynez Band of Chumash Indians is spending $170 million to build out its resort, featuring a 12-story tower on a bucolic landscape where only the mountains are higher. The tribe has also snapped up 1,400 more acres to house cramped residents of its reservation.
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Edvard Pettersson, Bloomberg
Arizona Court of Appeals Decision in $8.475 Million Construction Defect Class Action Suit
May 09, 2011 —
CDJ STAFFIn the case of Leflet v. Fire (Ariz. App., 2011), which involved an $8.475 million settlement in a construction defect class action suit, the question put forth to the Appeals court was “whether an insured and an insurer can join in a Morris agreement that avoids the primary insurer’s obligation to pay policy limits and passes liability in excess of those limits on to other insurers.” The Appeals court provided several reasons for their decision to affirm the validity of the settlement agreement as to the Non-Participatory Insurers (NPIs) and to vacate and remand the attorney fee awards.
First, the Appeals court stated, “The settlement agreement is not a compliant Morris agreement and provides no basis for claims against the NPIs.” They conclude, “Appellants attempt to avoid the doctrinal underpinnings of Morris by arguing that ‘the cooperation clause did not prohibit Hancock from assigning its rights to anyone, including Appellants.’ This narrow reading of the cooperation clause ignores the fact that Hancock did not merely assign its rights — it assigned its rights after stipulating to an $8.475 million judgment that neither it nor its Direct Insurers could ever be liable to pay. Neither Morris nor any other case defines such conduct as actual ‘cooperation’—rather, Morris simply defines limited circumstances in which an insured is relieved of its duty to cooperate. Because Morris agreements are fraught with risk of abuse, a settlement that mimics Morris in form but does not find support in the legal and economic realities that gave rise to that decision is both unenforceable and offensive to the policy’s cooperation clause.”
The Appeals court further concluded that “even if the agreement had qualified under Morris, plaintiffs did not provide the required notice to the NPIs.” The court continued, “Because an insurer who defends under a reservation of rights is always aware of the possibility of a Morris agreement, the mere threat of Morris in the course of settlement negotiations does not constitute sufficient notice. Instead, the insurer must be made aware that it may waive its reservation of rights and provide an unqualified defense, or defend solely on coverage and reasonableness grounds against the judgment resulting from the Morris agreement. The NPIs were not given the protections of this choice before the agreement was entered, and therefore can face no liability for the resulting stipulated judgment.”
Next, the Appeals court declared that “the trial court abused its discretion in awarding attorney’s fees under A.R.S § 12-341.” The Appeals court reasoned, “In this case, the NPIs prevailed in their attack on the settlement. But the litigation did not test the merits of their coverage defenses or the reasonableness of the settlement amount. And Plaintiffs never sued the NPIs, either in their own right or as the assignees of Hancock. Rather, the NPIs intervened to test the conceptual validity of the settlement agreement (to which they were not parties) before such an action could commence. In these circumstances, though it might be appropriate to offset a fee award against some future recovery by the Plaintiff Leflet v. Fire (Ariz. App., 2011) class, the purposes of A.R.S. § 12-341.01 would not be served by an award of fees against them jointly and severally. We therefore conclude that the trial court abused its discretion in awarding fees against Plaintiffs ‘jointly and severally.’”
The Appeals court made the following conclusion: “we affirm the judgment of the trial court concerning the validity of the settlement agreement as to the NPIs. We vacate and remand the award of attorney’s fees. In our discretion, we decline to award the NPIs the attorney’s fees they have requested on appeal pursuant to A.R.S. § 12-341.01(A).”
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How To Lock Disputes Out Of Your Project In Construction
July 22, 2019 —
Anastasios Koutsogiannis – LetsBuildDisputes are seen as one of the main threats for the successful completion of a project in construction. There is a plethora of factors which could lead to a construction dispute (e.g. contracts, behavior, environment) but, strangely enough, the industry seems to invest more attention on the resolution of a conflict instead of its prevention.
Thanks to the progress that digital technologies have witnessed during the last few years, there is a good chance that things in construction will change for the better soon. The ability to exchange crucial updates in real time, while keeping a detailed record of everything that happens on the field adds an extra level of protection to your project and ensures that all agents are on the same page.
In an effort to shed some light on the issue of construction disputes, we present below four tips that could help your team to lock conflicts out of your project:
1. Standardize your processes
Before you kickstart your project, it is of paramount importance that you standardize all your systems and processes. In that way, you will be able to add extra clarity to your workflow and eliminate misunderstandings.
Once you have achieved that, you can replicate the same process to your future projects. The more you manage to repeat the same project structure the better your team will become in completing their tasks without ending up in any kind of conflict.
In that sense, standardization could be a long-term investment for your organization.
2. Go digital
As soon as your processes are defined, it is time for the digital journey to begin. Finding the right tool for your project will result in a streamlined construction process where all the members of the team are on the same page without any room for costly mistakes or disagreements.
Furthermore, with the help of digital solutions it becomes easier for project managers to measure the performance on site and monitor the completion of the set benchmarks. Like that, all payments will be on time and the program of the project will reflect reality.
3. Be extra careful with the contracts
A poorly-written contract can have a big impact on the effort to lock disputes out of your construction project. While putting together a new contract, you should always make sure that you have taken into account all the different scenarios for your project.
Either that is a delay due to weather conditions or an accident on site everything should be described in detail in the contracts and be well understood by those in charge.
In any other case, things can get a bit risky and a costly dispute might wait to happen.
4. Hold regular meetings with all stakeholders
Last but certainly not least, meet regularly with all project stakeholders. The frequent contact with the different members of your team will allow you to discuss and resolve any problematic situations before they grow out of proportion.
What is more, regular meetings will help both your field teams and the people in the office to remain aligned and will eliminate the possibility of having people working on outdated versions of the program.
Of course, these meetings don’t need to be time-consuming or even in person. With the help of technology, you can keep these meetings short and to the point. In that manner, everybody involved will be able to get the most out of them.
Final word
All in all, it becomes clear that locking disputes out of your project in construction requires continuous work and a carefully-elaborated plan. Thankfully, the emergence and progress of digital solutions have made this process much easier contributing significantly to the development of the industry far from disputes and project misunderstandings.
About the author: Anastasios Koutsogiannis is Content Marketing Manager at LetsBuild.
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Carin Ramirez and David McLain recognized among the Best Lawyers in America© for 2021
March 15, 2021 —
Colorado Construction Litigation BlogHiggins, Hopkins, McLain & Roswell is pleased to announce that Carin Ramirez and David McLain were recently selected by their peers for inclusion in The Best Lawyers in America© for 2021. Carin Ramirez has been recognized for her work in insurance litigation and David McLain has been recognized for his work in construction law.
Carin Ramirez has over 11 years of experience in civil defense litigation with an emphasis on the defense of construction defect lawsuits on behalf of developers, general contractors, and other construction professionals. She also practices in the areas of personal injury defense, premises liability, environmental torts, wrongful death, negligent design, property damage, subrogation claims, contract disputes, bad faith, and commercial litigation. David McLain has over 22 years of experience and is well known for his work in the defense of the construction industry, particularly in the area of construction defect litigation. He is a member of the Executive Committee of the CLM Claims College - School of Construction, which is the premier course for insurance, industry, and legal professionals.
HHMR is highly regarded for its expertise in construction law and the litigation of construction-related claims, including the defense of large and complex construction defect matters. Our attorneys provide exceptional service to individuals, business owners, Fortune 500 companies, and the insurance industry. The firm is experienced in providing legal support throughout trials and alternative dispute resolution such as mediations and arbitrations.
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