Developer’s Fraudulent Statements Are His Responsibility Alone in Construction Defect Case
February 10, 2012 —
CDJ STAFFThe Texas Court of Appeals ruled on December 21 in the case of Helm v Kingston, a construction defect case. After purchasing what was described as “an extremely well-built” two-bedroom townhouse, Mr. Kingston made complaints of construction defects. Greenway Development did not repair the defects to Kingston’s satisfaction, and he filed notice of suit. In his suit, he claimed that GDI and its president, John Helm, had committed fraud and negligent misrepresentation. Kingston claimed that Helm “fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of workmanship was atrocious.” Helms brought a counterclaim that Kingston’s suit was frivolous.
About four years after Kingston purchased the townhome, the suit proceeded to trial. The trial court determined that Helm was not “liable in his individual capacity,” but this was reversed at appeal.
A second trial was held ten years later on the question of whether Kingston’s unit was a townhome or an apartment. A jury found that Helm “engaged in a false, misleading or deceptive act or practice that Kingston relied on to his detriment.” Kingston was awarded $75,862.29 and an additional $95,000 in attorney fees by the jury. Helms made an unsuccessful appeal to the Appeals Court, after which Kingston was awarded an additional $10,000. Helms then made an unsuccessful appeal to the Texas Supreme Court, which lead to an additional $3,000 for Kingston. There was also a verdict of $48,770.09 in pre-judgment interest and “five percent post-judgment interest accruing from the date of the judgment until the time the judgment is paid. Helm appealed.
In his appeal, Helm raised seven issues, which the court reorganized into five Kingston raised one issue on cross-appeal.
Helms’ first claim was that Kingston “failed to satisfy the requirement of” Texas’s Residential Construction Liability Act and that by not filing under the RCLA, Kingston’s fraud and misrepresentation claims were preempted. Further Helms claimed that the RCLA limited Kingston’s damages. The court rejected this, as the RCLA deals with complaints made to a contractor and not only did Helm fail to “conclusively establish” his “status as a ‘contractor’ under the statutory definition,” Helm testified that he was “not a contactor” at the pre-trial hearing.
Helms’s second claim was that Kingston’s later claim of a misconstructed firewall should be barred, claiming that Kingston “‘had knowledge of a defect in the firewall’ as early as 1997 but did not assert them until 2007.” The court rejected this because Kingston’s claim was that “Helm ‘fraudulently induced Kingston to believe that the townhouse evidenced the highest quality of workmanship when in fact the quality of the workmanship was atrocious.’”
Helms also challenged whether his statements that the residence was of “good quality” constituted fraud and misrepresentation under Texas’s Deceptive Trade Practices-Consumer Protection Act. The court concluded that Helm was in a position to make knowledgeable statements and further that “residential housing units are not artistic works for which quality is inherently a matter of subjective judgment.” Helm also claimed that Kingston could have avoided certain repair expenses through the “exercise of reasonable care.” Helms argued that the repairs could have been made for $6,400. The court disagreed, as these claims were cited only to invoke the DTPA, and that later petitions established additional defects.
Helms’s next claim was that he was not allowed to designate responsible third parties. The court rejected this because there GDI represented matters concerning the residence only through Helm’s statements. The court noted that “Helm is correct that?third parties may be liable for fraud if they ‘participated in the fraudulent transactions and reaped the benefits,’” but they note that “Helm never specifically alleged that GDI or CREIC participated in Helm’s alleged fraudulent transactions.
The final issue in the decision was about court costs, and here the court denied claims on both sides. Helm argued that the award of legal fees were excessive, as they exceeded the actual damages. The court noted that they “may not substitute our judgment for that of the jury,” and also that “the ratio between the actual damages awarded and the attorney’s fees is not a factor that determines the reasonableness of the fees.” But the court also rejected Kingston’s claim for post-judgment interest on $10,312.30 that Helm had deposited in the trial court’s registry. The court noted that the monies were to be paid out upon final judgment, but the mandate did not include any reference to interest.
Read the court’s decision…
Read the court decisionRead the full story...Reprinted courtesy of
Neighbor Allowed to Remove Tree Roots on Her Property That Supported Adjoining Landowners’ Two Large Trees With Legal Immunity
July 14, 2016 —
Paul R. Cressman, Jr. – Ahlers & Cressman PLLC BlogA recent Washington Court of Appeals opinion addressed the rights of a neighbor to destroy roots and branches on her property that belonged to trees located on an adjoining landowner’s property.[1]
Mustoe had two large Douglas-fir trees located entirely on her property, about two and one-half feet from the property line with her neighbor Ma. Ma caused a ditch to be dug on her property along the border with Mustoe’s lot. The ditch was 18-20 inches deep. In the process, Ma exposed and removed the trees’ roots, leaving them to extend only three-four feet from the trunks of the trees. This resulted in a loss of nearly half of the trees’ roots, all from the south side, exposing them to southerly winds with no support. The damaged trees posed a high risk of falling on Mustoe’s home. The landscape value of the trees was estimated to be $16,418. The cost of their removal was estimated to be $3,913.
Mustoe filed suit against Ma asserting that Ma had negligently, recklessly, and intentionally excavated and damaged her trees, along with other property, and also sought emotional distress damages. The trial court dismissed Mustoe’s suit. The Court of Appeals affirmed.
Read the court decisionRead the full story...Reprinted courtesy of
Paul R. Cressman, Jr., Ahlers & Cressman PLLC Mr. Cressman may be contacted at
pcressman@ac-lawyers.com
Why’d You Have To Say That?
October 09, 2023 —
Daniel Lund III - LexologyA surety seeking collateral from indemnitors filed suit in federal court in Louisiana pursuant to a forum selection clause in the indemnity agreement between the parties.
The indemnitors were being called upon to provide collateral as a result of defaults on two Louisiana Department of Transportation projects. Seeking to move the dispute to Louisiana state court from federal court, the indemnitors filed a forum non conveniens motion.
Among the arguments of the indemnitors removing the case out of federal court was the doctrine of “direct-benefits” estoppel – a policy which “‘holds a non-signatory to a clause in a contract if it “knowingly exploits the agreement” containing the clause.’ In re Lloyd's Reg. N. Am., Inc., 780 F.3d 283, 291 (5th Cir. 2015) (quoting Bridas S.A.P.I.C. v. Gov't of Turkmenistan, 345 F.3d 347, 361-62 (5th Cir. 2003)).”
Read the court decisionRead the full story...Reprinted courtesy of
Daniel Lund III, PhelpsMr. Lund may be contacted at
daniel.lund@phelps.com
Gillotti v. Stewart (2017) 2017 WL 1488711 Rejects Liberty Mutual, Holding Once Again that the Right to Repair Act is the Exclusive Remedy for Construction Defect Claims
June 05, 2017 —
Richard H. Glucksman, Esq. & Chelsea L. Zwart, Esq. - Chapman Glucksman Dean Roeb & Barger BulletinBackground
In Gillotti v. Stewart (April 26, 2017) 2017 WL 1488711, which was ordered to be published on May 18, 2017, the defendant grading subcontractor added soil over tree roots to level the driveway on the plaintiff homeowner’s sloped lot. The homeowner sued the grading subcontractor under the California Right to Repair Act (Civil Code §§ 895, et seq.) claiming that the subcontractor’s work damaged the trees.
After the jury found the subcontractor was not negligent, the trial court entered judgment in favor of the subcontractor. The homeowner appealed, arguing that the trial court improperly construed the Right to Repair Act as barring a common law negligence theory against the subcontractor and erred in failing to follow Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98. The Third District Court of Appeal disagreed and affirmed the trial court’s judgment in favor of the subcontractor.
Impact
This is the second time the Third District Court of Appeal has held that Liberty Mutual (discussed below) was wrongly decided and held that the Right to Repair Act is the exclusive remedy for construction defect claims. The decision follows its holding in Elliott Homes, Inc. v. Superior Court (Hicks) (2016) 6 Cal.App.5th 333, in which the Court of Appeal held that the Right to Repair Act’s pre-litigation procedures apply when homeowners plead construction defect claims based on common law causes of action, as opposed to violations of the building standards set forth in the Right to Repair Act. Elliott is currently on hold at the California Supreme Court, pending the decision in McMillin Albany, LLC v. Superior Court (2015) 239 Cal.App.4th 1132, wherein Liberty Mutual was rejected for the first time by the Fifth District. CGDRB continues to follow developments regarding the much anticipated McMillin decision closely, as well as all related matters.
Discussion
The Right to Repair Act makes contractors and subcontractors not involved in home sales liable for construction defects only if the homeowner proves they negligently cause the violation in whole or part (Civil Code §§ 911(b), 936). As such, the trial court in Gillotti instructed the jury on negligence with respect to the grading subcontractor. The jury found that while the construction did violate some of the Right to Repair’s building standards alleged by the homeowner, the subcontractor was not negligent in anyway. After the jury verdict, the trial court found in favor of the grading subcontractor.
The homeowner moved for a judgment notwithstanding the verdict or a new trial on the grounds that the trial court improperly barred a common law negligence theory against the grading subcontractor. The trial court denied the motions on the grounds that “[t]he Right to Repair Act specifically provides that no other causes of action are allowed. See Civil Code § 943.” The trial court specifically noted that its decision conflicted with Liberty Mutual, in which the Fourth District Court of Appeal held that the Right to Repair Act does not eliminate common law rights and remedies where actual damage has occurred, stating that Liberty Mutual was wrongly decided and that the Liberty Mutual court was naïve in its assumptions regarding the legislative history of the Right to Repair Act.
In Gillotti, the Third District Court of Appeal stated that the Liberty Mutual court failed to analyze the language of Civil Code § 896, which “clearly and unequivocally expresses the legislative intent that the Act apply to all action seeking recovery of damages arising out of, or related to deficiencies in, residential construction, except as specifically set forth in the Act. The Act does not specifically except actions arising from actual damages. To the contrary, it authorizes recovery of damages, e.g., for ‘the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards....’ ([Civil Code] § 944).”
The Court also disagreed with Liberty Mutual’s view that because Civil Code §§ 931 and 943 acknowledge exceptions to the Right to Repair Act’s statutory remedies, the Act does not preclude common law claims for damages due to defects identified in the Act. The Court stated: “Neither list of exceptions, in section 943 or in section 931, includes common law causes of action such as negligence. If the Legislature had intended to make such a wide-ranging exception to the restrictive language of the first sentence of section 943, we would have expected it to do so expressly.”
Additionally, the Court of Appeal rejected the argument that Civil Code § 897 preserves a common law negligence claims for violation of standards not listed in Civil Code § 986. It explained that the section of Civil Code § 897, which provides, “The standards set forth in this chapter are intended to address every function or component of a structure,” expresses the legislative intent that the Right to Repair Act be all-encompassing. Anything inadvertently omitted is actionable under the Act if it causes damage. Any exceptions to the Act are made expressly through Civil Code §§ 931 and 934. The Court concluded in no uncertain terms that the Right to Repair Act precludes common law claims in cases for damages covered by the Act.
The homeowner further argued that she was not precluded from bringing a common law claim because a tree is not a “structure,” and therefore the alleged tree damage did not fall within the realm of the Right to Repair. The Court of Appeal also rejected this argument, holding that while the tree damage itself was not expressly covered, the act of adding soil to make the driveway level (which caused the damage) implicated the standards covered by the Right to Repair Act. The Court explained that since under the Act a “structure” includes “improvement located upon a lot or within a common area” (Civil Code § 895(a)), as the driveway was an improvement upon the lot, the claim was within the purview of the Right to Repair Act. As the soil, a component of the driveway, caused damage (to the trees), it was actionable under the Act.
Reprinted courtesy of
Richard H. Glucksman, Chapman Glucksman Dean Roeb & Barger and
Chelsea L. Zwart, Chapman Glucksman Dean Roeb & Barger
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Ms. Zwart may be contacted at czwart@cgdrblaw.com
Read the court decisionRead the full story...Reprinted courtesy of
Construction defect firm Angius & Terry moves office to Roseville
January 09, 2013 —
CDJ STAFFThe law firm Angius & Terry LLP has closed its office on River Park Drive in Sacramento and opened a Roseville office that will allow for growth. The new office at 3001 Lava Ridge Court provides more usable space in a nice area for less money, said Brad Epstein, a local partner with the firm.
Five attorneys and three staff moved to the new space in Roseville on Jan. 2. “It can house three additional attorneys — and we plan to grow,” Epstein said. The firm specializes in construction defect litigation and general corporate work for community associations.
There are about 800 community associations in the Sacramento area and a handful of small firms that divvy up the work.
“Condominium developments and homeowners’ associations never die and always have legal issues,” Epstein said.
Angius & Terry has a total of 20 lawyers in six offices, four in California and two in Nevada.
Besides Roseville, the firm has offices in Walnut Creek, Manteca, Newport Beach, Reno and Las Vegas.
Read the court decisionRead the full story...Reprinted courtesy of
Judicial Panel Denies Nationwide Consolidation of COVID-19 Business Interruption Cases
October 05, 2020 —
Tred R. Eyerly - Insurance Law HawaiiThe Judicial Panel on Multidistrict Litigation denied motions to centralize pretrial proceedings in pending COVID-19 business interruption claims. In re COVID-19 Business interruption Protection Insurance Litigation, 2020 U.S. District. LEXIS 144446 (Aug. 12, 2020).
Plaintiff policy holders sought consolidation, contending their policies provided coverage for business interruption losses caused by the COVID-19 pandemic and the related government orders suspending, or severely curtailing, operations of non-essential businesses. The Panel considered 15 actions on the pending motions, but had notice of 263 related actions.
Some plaintiffs opposed centralization or sought to be excluded from any MDL. Some argued the Panel should centralize the coverage actions on a state-by-state, regional, or insurer-by-insurer basis.
The Panel did not accept consolidation of all cases. There was little potential for common discovery across the litigation because there was no common defendant as the actions involved either a single insurer or insurer-group. The various cases involved different insurance policies with different coverages, conditions, exclusions, and policy language, purchased by different businesses in different industries located in different states.
Read the court decisionRead the full story...Reprinted courtesy of
Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Thanks for the Super Lawyers Nod for 2019!
May 20, 2019 —
Christopher G. Hill - Construction Law MusingsIt is with humility and a sense of accomplishment that I announce that I have been selected for the third straight year to the Virginia Super Lawyers in the Construction Litigation category for 2019. Add this to my recent election to the Virginia Legal Elite in Construction and I’ve had a pretty good year. As always, I am thrilled to be included on these peer elected lists.
So without further ado, thank you to my peers and those on the panel at Virginia Super Lawyers for the great honor. I feel quite proud to be part of the 5% of Virginia attorneys that made this list for 2019.
The full lists of Virginia Super Lawyers will appear in the May edition of Richmond Magazine. Please check it out.
Read the court decisionRead the full story...Reprinted courtesy of
The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
No Friday Night Lights at $60 Million Texas Stadium: Muni Credit
March 26, 2014 —
Darrell Preston and Aaron Kuriloff – BloombergPervasive cracking has shuttered the $60 million home of a high-school football championship team in Texas after less than two years. Investors in the tax-free bonds that paid for the stadium are unscathed.
Taxpayers in Allen Independent School District north of Dallas and the $29 billion Texas Permanent School Fund, a state bond insurer, are responsible for $119 million of debt that paid for the venue and other facilities, leading officials to find a new site for graduation and possibly games after closing 18,000-seat Eagle Stadium last month.
The development suggests the fund, created in 1854 to help pay for education, shouldn’t be used for stadiums, said Colby Harlow, president of hedge fund Harlow Capital Management. The Permanent Fund has top credit ratings and secures about $55 billion of bonds, according to the Texas Education Agency. The pool has at times reached the limit of debt it can back, preventing districts from accessing it. The guarantee is still a boon to bondholders.
Mr. Merelman may be contacted at smerelman@bloomberg.net; Mr. Sillup may be contacted at msillup@bloomberg.net
Read the court decisionRead the full story...Reprinted courtesy of
Darrell Preston and Aaron Kuriloff, Bloomberg
