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DIRECTORY AND CAPABILITIES

Texas “Loser Pays” Law May Benefit Construction Insurers

June 07, 2011 — CDJ STAFF

Under a new law, Texas HB 274, the Texas Supreme Court will be making rules for motions to dismiss and to expedite suits of less than $100,000. The law also contains two “loser pays” provisions. If a lawsuit is found dismissed for having “no basis in fact or law,” the losing side must pay attorney costs. The other provision caps award of attorney fees if plaintiffs reject settlement offers. Texas Lawyer quotes Houston attorney Mike Gallagher as saying this will affect “the practice of everyone who handles significant lawsuits.”



Gregory Marcum, whose practice includes construction defect litigation, plans to contact insurance companies, as the new law may save them money. “It will definitely be a factor in the defense strategy for handling a case.” He notes that “any insurance carrier would want that done.”



Marcum notes that the offer-of-settlement rules only apply when cases go to trial. “Almost all cases settle.”



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A Duty to Design and Maintain Reasonably Safe Roadways Extends to All Persons. (WA)

February 25, 2014 — Natasha Khachatourians – Scheer & Zehnder LLP Liability Newsletter
Case: Lowman v. Wilbur, et al., 178 Wn.2d 165, 309 P.3d 3.87 (2013). Issue: If a passenger’s injuries are in fact caused by the placement of a utility pole too close to a roadway, can the injuries be deemed too remote for purposes of legal causation? NO. Facts: Plaintiff was a passenger in a vehicle that lost control and collided with a utility pole that was 4.47 feet from the edge of the roadway. The vehicle’s driver was under the influence of alcohol. Plaintiff sued the driver as well as the utility company and Skagit County for negligence. The trial court granted the utility company and Skagit County’s summary judgment motion, finding that the negligent placement of the utility pole was not a legal cause of plaintiff’s injuries. The issue before the Supreme Court was whether a negligently placed utility pole could be the legal cause of a resulting injury. Read the court decision
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Reprinted courtesy of Natasha Khachatourians, Scheer & Zehnder LLP
Ms. Khachatourians may be contacted at natashak@scheerlaw.com

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Real Estate & Construction News Round-Up (02/08/23) – The Build America, Buy America Act, ESG Feasibility, and University Partnerships

February 27, 2023 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog
This week’s round-up explores President Joe Biden’s recent State of the Union address and plans for the Build America, Buy America Act, the feasibility of real estate companies achieving their ESG goals, and how developers, lenders, and tenants are partnering with universities to solve real estate challenges.

• During his annual State of the Union address, President Joe Biden detailed his Build America, Buy America plans and standard to require all construction materials on federal infrastructure projects to be made in the United States. (Jennifer Goodman & Zachary Phillips, Construction Dive)
• Speculation surrounding the economic environment and real estate stability is testing the feasibility and resilience of the environmental, social and corporate governance (ESG) framework used by corporations to measure their societal impact. (Anna Staropoli, Commercial Observer)
• Adopting Web3 and decentralization in the real estate industry is projected to bring about significant changes and improvements. (David Bitton, Forbes)

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CGL Coverage Dispute Regarding the (J)(6) And (J)(7) Property Damage Exclusions

April 18, 2023 — David Adelstein - Florida Construction Legal Updates
A new insurance coverage opinion dealing with a commercial general liability’s (CGL) duty to defend involved exclusions commonly known as the (j)(6) and (j)(7) property damage exclusions (and in certain policies known as the (j)(5) and (j)(6) exclusions). These are the exclusions that apply during ongoing operations. Exclusion (l), or the “your work” exclusion, applies post-completion, i.e., it is an exclusion for “property damage” to “your work” included in the “products-completed operations hazard.” Exclusions (j)(6) and (j)(7) in the policy at-issue exclude coverage for property damage to:

(j)(6) That particular part of real property on which any insured or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the “property damage” arises out of those operations; (j)(7) That particular part of any property that must be restored, repaired or replaced because “your work” was incorrectly performed on it.

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Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.
Mr. Adelstein may be contacted at dma@kirwinnorris.com

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Construction Litigation Roundup: “It’s None of Your Business.”

May 22, 2023 — Daniel Lund III - Lexology
“It’s none of your business.” So said a construction surety resisting discovery of its underwriting file in the context of the surety’s affirmative $2 million indemnity claim (on a $25M bond), and a Missouri federal court agreed. In response to the surety’s indemnity suit, the defaulted principal contractor and additional corporate indemnitors offered up defenses of “lack of consideration and the doctrine of unclean hands, laches, waiver and/or estoppel, among others.” The indemnitors also issued written discovery to the surety seeking to obtain the surety’s underwriting file – which would reveal the underpinnings of the surety’s decision to issue the bond to the contractor – asserting “that the underwriting and due diligence documents are relevant to the[] lack of consideration defense. [Indemnitors] claim that ‘[t]his defense is based on Defendants' belief that Plaintiff did not conduct any reasonable inquiry into any Defendants' ability to pay or financial resources and therefore Plaintiff did not rely on the financial condition of each Defendant in determining whether to issue the bonds.’" Read the court decision
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Reprinted courtesy of Daniel Lund III, Phelps
Mr. Lund may be contacted at daniel.lund@phelps.com

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Arbitrator May Use Own Discretion in Consolidating Construction Defect Cases

September 01, 2011 — CDJ STAFF

The Mississippi Court of Appeals has ruled in the case of Harry Baker Smith Architects II, PLLC v. Sea Breeze I, LLC. Sea Breeze contracted with Harry Baker Smith Architects II, PLLC (HBSA) to design a condominium complex, which would be built by Roy Anderson Corporation. All parties agreed to arbitration.

Subsequently, Sea Breeze alleged defects and sought arbitration against the architectural firm and started a separate arbitration proceeding against the contractor. The special arbitrator appointed by the American Arbitrators Association determined that it would be proper to consolidate the two actions “since they arose from a common question of fact or law.” HBSA filed in chancery court seeking injunctive relief and a reversal of the decision. Sea Breeze and Roy Anderson filed a motion to compel the consolidated arbitration.

The court noted that the special arbitrator “established that the contract between Sea Breeze and Roy Anderson expressly allowed for consolidation of the two cases.” Further, the arbitrator “concluded that HBSA expressly agreed to consolidation by written consent through its 2008 letter, through which it insisted upon Roy Anderson’s involvement ‘in any mediation and/or arbitration.’”

The court concluded that the chancery court “did not have the power to fulfill HBSA’s request.” The court affirmed the chancery court’s judgment.

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Good and Bad News on Construction Employment

February 10, 2012 — CDJ STAFF

The construction industry hit a two-year high in January, with 21,000 jobs added that month. The mild winter is assumed to have helped. According to the General Contractors of America, the construction industry currently employs about 5.57 million people. This is a 21 percent gain over January 2010. Ken Simonson, the chief economist of GCA, noted that “the unemployment rate in construction is still double that of the overall economy.” He said it was not currently clear if “the recent job growth reflects a sustained pickup or merely acceleration of homebuilding and highway projects that normally halt when the ground freezes in December and January.”



Stephen Sandherr, the chief executive officer of the GCA, said that the federal government had to make infrastructure funding a top priority. “Without adequate long-term funding for infrastructure, competitive tax rates and fewer costly regulatory hurdles, the construction industry may lose some of the jobs it gained in the last year.”

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Warranty of Workmanship and Habitability Cannot Be Disclaimed or Waived Under Any Circumstance

May 01, 2023 — Jason Feld & Stephanie Wilson - Kahana & Feld LLP
Arizona residential construction and single-family home production is growing at a rapid pace. And just as fast as the homes are sold, homeowners are constantly seeking warranty repairs from their homebuilders. Despite having strong purchase documents with express warranty language, the Arizona Supreme Court in Zambrano v. M & RC, II LLC, 254 Ariz. 53 (2022) adopted a bright line rule that regardless of the contract, the implied warranty of workmanship and habitability (“implied warranty”) cannot be disclaimed or waived under any circumstance. The Arizona Supreme Court opinion provides clear guidance of the law in this area on the scope of the implied warranty in contracts between homebuyers and builder/vendors, specifically on the issue of whether an express warranty can negate and effectively waive the common law implied warranty – which is a definitive violation of public policy. The Zambrano decision involved a licensed real estate broker who bought a new single family home for herself in a newly constructed master planned community in Surprise, AZ. Zambrano entered into a valid sales contract with Scott Homes (homebuilder) which contained a stand-alone 45-page pre-printed form express warranty. The express warranty was to be the “only warranty applicable to the home.” The contract further clarified that the buyer was expressly disclaiming (and, thus, waiving) the implied warranty. The sales documents and express warranty were signed and authorized by Zambrano. A short time later, the home developed alleged “design and construction defects” that were “either time barred or outside the coverage” of the express warranty. Zambrano filed suit for the alleged defects based on the implied warranty. Scott Homes filed summary judgment based on the Zambrano’s waiver and disclaimer of the implied warranty in the purchase agreement. The trial court granted summary judgment and the matter was appealed up to the Arizona Supreme Court. Reprinted courtesy of Jason Feld, Kahana & Feld LLP and Stephanie Wilson, Kahana & Feld LLP Mr. Feld may be contacted at jfeld@kahanafeld.com Ms. Wilson may be contacted at swilson@kahanafeld.com Read the court decision
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