FAIRFIELD CONNECTICUT BUILDING EXPERT
DIRECTORY AND CAPABILITIES

No Coverage for Foundation Collapse

November 08, 2017 — Tred R. Eyerly - Insurance Law Hawaii
Coverage for the collapse of a foundation was not covered under the contractor's builder's risk policy. Taja Investments LLC v. Peerless Ins. Co., 2017 U.S. App. LEXIS 19855 (4th Cir. Oct. 11, 2017). Taja Construction LLC was renovating a row house owned by Taja Investments LLC when the east wall of the property collapsed. Taja submitted a claim for repair costs in the amount of $400,000. Peerless denied coverage because the collapse was caused by Taja's failure to support the building's foundation properly while excavating the basement. The policy excluded coverage for defects in construction or workmanship. The claim was also denied under the earth movement exclusion. Read the court decision
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Reprinted courtesy of Tred R. Eyerly - Insurance Law Hawaii
Mr. Eyerly may be contacted at te@hawaiilawyer.com

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More Construction Defects for San Francisco’s Eastern Bay Bridge Expansion

October 01, 2014 — Beverley BevenFlorez-CDJ STAFF
According to SF Gate, almost “every one of the 423 steel rods that anchor the tower of the new Bay Bridge eastern span to its base has been sitting in potentially corrosive water, Caltrans officials said Tuesday — one of the most serious construction defects found yet on the $6.4 billion project.” About a year ago, “steel rods crucial to seismic-stabilizing structures on the bridge snapped when they were tensioned.” Fixing those rods cost $25 million, while an additional $20 million had been spent determing if “additional rods and bolts are at risk of failing.” In regards to the latest construction defects discovered, Caltrans’ chief engineer on the project, Brian Maroney, stated, “It’s not acceptable, and we’re going to fix it.” Read the court decision
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One Word Makes All The Difference – The Distinction Between “Pay If Paid” and “Pay When Paid” Clauses

April 06, 2016 — David A. Harris – Haight Brown & Bonesteel LLP
Payment clauses in California construction contracts are often complex and multi-layered. This is especially true in contracts between general contractors and their subcontractors. The general does not want to pay the subs until it receives funding from the owners. The subs, of course, want their progress and final payments as soon as possible. Up until 1997, two different payment provisions were used in California contracts to manage payments by a general to its subcontractors. The first was called a “pay if paid” clause, and provided a contractor did not have to pay its subcontractors for work performed unless the subcontractor was first paid by the owner of the project. The second was the “pay when paid clause.” It required subcontractors to be paid for their work after the general was paid by the owner, or within “a reasonable time” after the subcontractors finished their work if the owner did not pay the general. Read the court decision
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Reprinted courtesy of David A. Harris, Haight Brown & Bonesteel LLP
Mr. Harris may be contacted at dharris@hbblaw.com

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Insurer Able to Refuse Coverage for Failed Retaining Wall

October 28, 2011 — CDJ STAFF

The Eleventh District of the US Court of Appeals has ruled in the case of Nix v. State Farm Fire & Casualty Company. In this case, the Nixes filed a claim after a portion of the retaining wall in their home collapsed and their basement flooded. State Farm denied the claim “on the ground that the policy excluded coverage for collapses caused by defects in construction and for damage caused by groundwater.”

The court reviewed the Nixes’ policy and found that State Farm’s statement did specifically exclude both of these items. In reviewing the lower court’s ruling, the appeals court noted that State Farm’s expert witness, Mark Voll, determined that the retaining wall “lacked reinforcing steel, as required by a local building code, and could not withstand the pressure created by groundwater that had accumulated during a heavy rainfall.” Additionally, a french drain had been covered with clay soil and so had failed to disperse the groundwater.

The Nixes argued that the flooding was due to a main line water pipe, but their opinions were those of Terry Nix and the contractor who made temporary repairs to the wall. “Those opinions were not admissible as lay testimony. Neither Nix nor the contractor witnessed the wall collapse or had personal knowledge about the construction of the Nixes’ home.”

The lower court granted a summary judgment to State Farm which has been upheld by the appeals court.

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The Construction Project is Late—Allocation of Delay

November 17, 2016 — David Adelstein – Florida Construction Legal Updates
The construction project is late. Very late. The owner is upset and notifies the contractor that it is assessing liquidated damages. The contractor, in turn, claims that the project is late because of excusable, compensable delays and, perhaps, excusable, noncompensable delays. This is a common and unfortunate story between an owner and contractor on any late construction project. Now the fun begins regarding the allocation of the delay! Through previous articles, I discussed that in this scenario the burden really falls on the contractor to establish that the liquidated damages were improperly assessed against it and, thus, it is entitled to additional time and/or extended general conditions as a result of excusable delays. Naturally, this requires the contractor to develop a critical path analysis (time impact analysis) allocating the impacts / delays (and the reasons for the impacts/ delays) to the project completion date. The reason the burden really falls on the contractor is because the owner’s burden is relatively easy – the project was not complete on time pursuant to the contract and any approved changed orders. Read the court decision
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Reprinted courtesy of David Adelstein, Katz, Barron, Squitero, Faust, Friedberg, English & Allen, P.A.
Mr. Adelstein may be contacted at dma@katzbarron.com

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Construction Defect Claim Did Not Harm Homeowner, Court Rules

September 30, 2011 — CDJ STAFF

The Minnesota Court of Appeals has ruled in Creswell v. Estate of Howe, a case in which a woman bought a home and then sued the seller’s estate, both sets of real estate agents, and the homeowner’s association over construction defects. A district court ruled against her, granting summary judgment to the other parties.

After buying a townhome “as is,” Catherine Creswell claims to have shared a thought with her agent that the homeowners association was, in the words of her agent, “trying to hide something.” Later, Creswell found that a few days before her closing, the board had discussed problems with “roofs, siding and soundproofing of the townhomes.” The court noted that “it was clear from the documents that appellant [Creswell] received that the association had known about various construction defects for many years, some of which affected [her] unit.”

Creswell initially sued the estate, the man who negotiated the sale for his mother’s estate, the real estate companies and the agents involved, the homeowners association, and four board members. Later she sued for punitive damages, dropped a claim for interference with contractual relations, and dismissed her claims against the individual board members. The court dismissed all of Creswell’s claims awarding costs to those she sued.

The appeals court has affirmed the decision of lower court, noting that Creswell “did not provide us with any argument why the district court erred in dismissing her unjust-enrichment, breach of contract, or rescission claims against the various respondents.” Nor did she provide evidence to support her claims of “breach of duty, fraud, and violation of consumer protection statutes.”

The court noted that Creswell could not sue the homeowners association over the construction defects because she “failed to prove that she was damaged by the association’s nondisclosure.” The court noted that “there are no damages in this case,” as Creswell “was never assessed for any repairs, she had not paid anything out-of-pocket for repairs, and she has presented no evidence that the value of her individual unit has declined because of the alleged undisclosed construction defects.”

The court granted the other parties motion to dismiss and denied Creswell’s motion to supplement the record. Costs were awarded to the respondents.

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Connecticut Supreme Court Finds Duty to Defend When Case Law is Uncertain

October 12, 2020 — Eric B. Hermanson & Austin D. Moody - White and Williams
The Connecticut Supreme Court recently addressed whether an insurer has a duty to defend when faced with legal uncertainty as to whether coverage is owed: for example, when there is no Connecticut case law on point, and courts outside of the state have reached conflicting decisions. The Court suggested that an insurer, in these circumstances, should defend the insured, and should seek a declaratory judgment from a court as to whether coverage is owed. The issue in Nash St., LLC v. Main St. Am. Assurance Co.,[1] arose out of a home collapse in Milford, Connecticut. The owner of the home (Nash) hired a contractor (New Beginnings) to renovate the home. New Beginnings, in turn, retained a subcontractor to lift the house and to do concrete work on the foundation. While the subcontractor was lifting the house, the house shifted off the supporting cribbing and collapsed. Reprinted courtesy of Eric B. Hermanson, White and Williams and Austin D. Moody, White and Williams Mr. Hermanson may be contacted at hermansone@whiteandwilliams.com Mr. Moody may be contacted at moodya@whiteandwiliams.com Read the court decision
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Construction Defect Risks Shifted to Insurers in 2013

December 11, 2013 — CDJ STAFF
Recent court decisions have tended to view construction defects as covered under insurance policies, “allowing construction companies to shift the costs of their faulty workmanship to their insurers, thereby reversing the previous public policy trend against coverage for such claims.” John Husmann and Adam Fleischer of Bates Carey Nicolaides review some of the 2013 decisions that reversed “the previous public policy trend against coverage for such claims.” They note that “for some time, courts have recognized that there is a public policy against allowing construction companies to get paid to perform faulty workmanship, and then force their insurers to be the financers for the repair and replacement costs.” But in 2013, the courts “strayed from those public policy considerations upon which previous decisions relied.” With reference to specific cases and decisions, they discuss three ways in which the courts have change course. The first is whether faulty workmanship is an “occurrence.” The next is if faulty workmanship is covered when it damages non-faulty work of the same project. And finally, whether exclusions for particular parts of the property extend to the work done in that area. Read the court decision
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