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The Year 2010 In Review: Design And Construction Defects Litigation

February 25, 2011 — Candace Matson, Harold Hamersmith, and Helen Lauderdale

This 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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Floating Crane on Job in NYC's East River Has a Storied Past of Cold War Intrigue

January 04, 2018 — Nadine M. Post - Engineering News-Record
Originally Published by CDJ on March 22, 2017 The complex maneuver of lifting heavy prefabricated modules out of New York City's East River to build a university laboratory took careful planning and the work of one particular floating crane with a complicated past. Read the court decision
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Reprinted courtesy of Nadine M. Post, ENR
Ms. Post may be contacted at postn@enr.com

Don MacGregor of Bert L. Howe & Associates Awarded Silver Star Award at WCC Construction Defect Seminar

May 24, 2018 — CDJ STAFF
The staff of the Construction Defect Journal would like to extend their congratulations to Don MacGregor of Bert L. Howe & Associates, Inc., in recognition of his receipt of the Silver Star Award as “Best Expert” at the 25th Anniversary of the West Coast Casualty Construction Defect Seminar, hosted at the Disneyland Resort Hotel, in Anaheim CA. Recipients of the Silver Star Awards were nominated and voted on by their peers, colleagues, and the Construction Defect Community at large, as represented by the 25,000 members who received emails on the subject. Along with “Best Expert,” recognition was also given to the best judge, mediator, plaintiff attorney, developer attorney, subcontractor attorney, coverage counsel, and insurance claims professional. Awards were handed out last Thursday during a special ceremony at this year’s Seminar. To Don, and all the worthy awardees, congratulations again! Read the court decision
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Shaken? Stirred? A Primer on License Bond Claims in California

July 14, 2016 — Garret Murai – California Construction Law Blog
Shaken? Stirred? A bit hot under the tuxedo collar perhaps? Maybe it’s time for a martini. Or two. When your project’s a mess, your contractor isn’t returning your calls, and you don’t have a license to kill it’s only natural that you would want to go after that other license: the contractor’s license bond. However, except for smaller claims, or situations where you discover that the contractor is or might be judgment-proof, going after a contractor’s license bond isn’t necessarily the panacea many might hope it to be. Read on to learn why. What is a license bond? First, a license bond is not insurance. While insurance is typically limited to property damage and personal injury, a license bond covers a contractor’s violation of the Contractors State License Law. All California contractors are required to have on file a license bond (or, alternative, such as a cash deposit) with the California Contractors State License Board (“CSLB”). Read the court decision
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

Deadlines. . . They’re Important. Project Owner Risks Losing Claim By Failing to Timely Identify “Doe” Defendant

December 21, 2020 — Garret Murai - California Construction Law Blog
Earlier this year I filed a complaint in a court which I won’t identify other than to say that it wasn’t the San Francisco Superior Court. Immediately upon filing the complaint the Court gave notice of a trial date. As counsel for the party bringing the action, I appreciate this, as it eliminates the back and forth jostling that can sometimes occur when trying to get a trial date. Here’s the kicker though. While I appreciate getting a trial date straight out of the gate. The date I got was . . . wait for it . . . not until 2022! Those who litigate in California state courts know that the courts are understaffed and overworked. But you’ve got to give this un-named court credit for being upfront. Forget the “well, let’s see where this goes” niceties. Trial within a year? Fugetaboutit. Trial within a year and a half. Don’t even think about it. Trial within two years. It’s about as good as you’re going to get. Read the court decision
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Reprinted courtesy of Garret Murai, Nomos LLP
Mr. Murai may be contacted at gmurai@nomosllp.com

Orchestrating Bias: Arbitrator’s Undisclosed Membership in Philharmonic Group with Pauly Shore’s Attorney Not Grounds to Reverse Award in Real Estate Dispute

June 21, 2017 — Lyndsey Torp - Snell & Wilmer Real Estate Litigation Blog
The California court of appeal recently issued an unpublished decision in Knispel v. Shore, 2017 WL 2492535, affirming a judgment confirming an arbitration award in a real estate dispute involving Pauly Shore. The court of appeal held that the arbitrator’s failure to disclose her membership in the Los Angeles Lawyers Philharmonic Group with the attorney representing Pauly was not grounds to overturn the judgment. The underlying arbitration involved a dispute between Michael Scott Shore, on the one hand, and his brother, Pauly, among others, on the other hand, regarding certain residential property located on Sunset Boulevard near The Comedy Store in West Hollywood (owned and operated by their mother, Mitzi Shore). The parties agreed to arbitrate their dispute before Judge Aviva K. Bobb (Ret.) of the Alternative Resolution Center. Judge Bobb issued an award in favor of Pauly, and he petitioned the trial court to affirm the award. Michael opposed, contending the arbitrator failed to disclose that she and Pauly’s attorney had both been members of the Lawyers Philharmonic, for which they had been practicing and performing together since November 2010. Read the court decision
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Reprinted courtesy of Lyndsey Torp, Snell & Wilmer
Ms. Torp may be contacted at ltorp@swlaw.com

Construction Defects and Warranties in Maryland

November 27, 2013 — CDJ STAFF
Nicholas D. Cowie, a partner with Cowie & Mott, P.A., has started a blog focusing on construction defect claims in Maryland condominium complexes. In his first post, he writes about the statutory remedies in Maryland law for condominium owners. He notes that “four separate statutory warranties apply to the sale of condominiums.” He further discusses the varying duration of these warranties and when they come into effect, saying that “associations and unit owners are often incorrectly informed that their construction defect-related problems (such as leaks around windows) are ‘out of warranty’ because the problems did not occur during the warranty period.” Read the court decision
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Construction Contract Clauses Only a Grinch Would Love – Part 4

November 30, 2016 — Garret Murai – California Construction Law Blog
Scope, time and cost provisions may be the most important clauses in your construction contract but they’re not the only ones which can impact your bottom line. The fourth and final part in a multi-part series, here are some other important construction contract clauses that can put a damper on your holidays.

Provision: Warranty Provisions

Typical Provision: “Subcontractor warrants to Contractor that all materials and equipment furnished shall be new unless otherwise specified and that all Work performed shall be performed in a good and workmanlike manner, of good quality and free from defects, and in conformance with industry standards, manufacturer’s recommendations and the Contract Documents. All work not conforming to these requirements, including substitutions not properly approved, shall be considered defective. Subcontractor agrees to promptly make good any and all defects due to faulty workmanship, materials and/or equipment which may appear within the Contract Documents, and if no such period is stipulated in the Contract, then for a period of one year from the date of acceptance by the Owner. Nothing herein shall shorten or limit any applicable periods of limitations including, but not limited to, those set forth in Civil Code, Part 2, Title 2, Chapter 3.”
What it Means: Warranty periods are subject to the agreement of the parties. However, warranties are different than limitations periods, such as California’s 4 year statute of repose for patent defects and 10 year statute of repose for latent defects (note: a statute of repose is different than a statute of limitation. A statute of repose sets a deadline based on an event. So, for example, under the 10 year statute of repose for latent defects a claimant must bring a latent defect claim within 10 years following substantial completion even if the latent defect wasn’t discovered until 10 years and 1 month following substantial completion. A statute of limitation, in contrast, sets a deadline based on the occurrence of an injury or damage. So, for example, California has a 2 year statute of limitation for personal injuries, which sets a deadline of 2 years from the date of injury to bring a personal injury claim). Warranty periods are also different from limitations periods because most warranties require work to be corrected at no cost, and because many contracts include attorney’s fee provisions, breach of a warranty can give rise to claim for attorney’s fees as well.
What You Can Do: Lower-tiered parties should examine warranty provisions to see if they are reasonable, and if not reasonable, should seek to either eliminate or limit those provisions, such as by reducing the warranty period or providing different warranty periods for different components of work, etc.

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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com

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