$24 Million Verdict Against Material Supplier Overturned Where Plaintiff Failed To Prove Supplier’s Negligence Or Breach Of Contract Caused A SB800 Violation
June 05, 2017 —
Jon A. Turigliatto & Chelsea L. Zwart - CGDRB News & PublicationsThe Fourth District California Court of Appeal published its decision, Acqua Vista Homeowners Assoc. v. MWI, Inc. (2017) 7 Cal.App.5th 1129, holding that claims against a material supplier under SB800 (Civil Code §895, et. seq.) require proof that the SB800 violation was caused by the supplier’s negligence or breach of contract.
In this case, Acqua Vista Homeowners Association (“the HOA”) sued MWI, a supplier of Chinese pipe used in the construction of the Acqua Vista condominium development. The HOA’s complaint asserted a single cause of action for violation of SB800 standards, and alleged that defective cast iron pipe was used throughout the building. At trial, the HOA presented evidence that the pipes supplied by MWI contained manufacturing defects, that they leaked, and that the leaks had caused damage to various parts of the condominium development. The jury returned a special verdict against MWI, and the trial court entered a judgment against MWI in the amount of $23,955,796.28, reflecting the jury’s finding that MWI was 92% responsible for the HOA’s damages.
MWI filed a motion for a directed verdict prior to the jury’s verdict and motion for judgment notwithstanding the verdict following the entry of judgment, both on the grounds that the HOA had failed to present any evidence that MWI had caused a SB800 violation as a result of its negligence or breach of contract, and had therefore failed to prove negligence and causation as required by SB800. MWI relied on the Fourth District’s prior decision in Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, and its interpretation therein of Civil Code §936, which states, in relevant part, that the statute applies “to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract….” (emphasis added.) However, the trial court denied both motions, relying on the last sentence of Civil Code §936, which states in part, “[T]he negligence standard in this section does not apply to any…material supplier…with respect to claims for which strict liability would apply.”
Reprinted courtesy of
Jon A. Turigliatto, Chapman Glucksman Dean Roeb & Barger and
Chelsea L. Zwart, Chapman Glucksman Dean Roeb & Barger
Mr. Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Ms. Zwart may be contacted at czwart@cgdrblaw.com
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Third Circuit Follows Pennsylvania Law - Damage Caused by Faulty Workmanship Does Not Arise from an Occurrence
May 10, 2013 —
Tred EyerlyThe Third Circuit followed Pennsylvania law in determining that damage caused by faulty workmanship did not arise from an occurrence. Zurich Am. Ins. Co. v. R. M. Shoemaker Co., 2013 U.S. App. LEXIS 6093 (3d Cir. March 27, 2013).
The County sued R. M. Shoemaker, alleging faulty construction of an addition to a correctional institution. The County alleged Shoemaker negligently supervised its subcontractor, thereby permitting the subcontractor to engage in willful misconduct, resulting in damage to structural elements of the correctional institution. The County alleged that Shoemaker's negligence permitted water to intrude, damaging the electrical systems, acoustic ceilings and miscellaneous equipment.
Zurich sought a declaratory judgment that it was not required to defend or indemnify Shoemaker. The district court granted Zurich summary judgment. Relying on Pennsylvania law, the district court found that the allegations in the underlying action did not arise from an occurrence.
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Tred EyerlyMr. Eyerly can be contacted at
te@hawaiilawyer.com
Defenses Raised Three-Years Too Late Estop Insurer’s Coverage Denial
February 21, 2022 —
Michael S. Levine & Yaniel Abreu - Hunton Insurance Recovery BlogLiability insurance typically affords broad defense coverage. But insurers sometimes reserve their right to challenge the insured’s right to a defense, or even outright terminate the defense. When this occurs after the insurer has been in exclusive control of the defense, some courts recognize that the consequences can be catastrophic for the insured defendant. Insurers, therefore, may be estopped from denying coverage where doing so will prejudice the insured. This is exactly what transpired in RLI Ins. Co. v. AST Engineering Corp., No. 20-214 (2d Cir. Jan. 12, 2022), where the Second Circuit affirmed the district court’s decision that an insurer’s attempt to withdraw the defense it had provided to its insured for three years would prejudice the insured.
In AST Engineering, RLI sought a declaration that it did not have to defend the insured, AST, in two underlying cases in which AST was sued as a third-party defendant. The underlying cases concerned a construction project in New York City for which AST provided engineering drawings on October 28, 2012.
Reprinted courtesy of
Michael S. Levine, Hunton Andrews Kurth and
Yaniel Abreu, Hunton Andrews Kurth
Mr. Levine may be contacted at mlevine@HuntonAK.com
Mr. Abreu may be contacted at yabreu@HuntonAK.com
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Saved By The Statute: The Economic Loss Doctrine Does Not Bar Claims Under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law
May 10, 2021 —
Gus Sara - The Subrogation StrategistIn Earl v. NVR, Inc., No. 20-2109, 2021 U.S. App. LEXIS 6451, the U.S. Court of Appeals for the Third Circuit (Third Circuit) considered whether, under Pennsylvania law, the plaintiff’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) claims against the builder of her home were barred by the economic loss doctrine. The UTPCPL is a Pennsylvania statute that prohibits “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” 73 Pa. Stat. Ann. § 201-3. The Third Circuit previously addressed the impact of the economic loss doctrine on UTPCPL claims in Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002). In Werwinski, the court held that the plaintiff’s UTPCPL claim was barred by the economic loss doctrine. The Court of Appeals overturned its decision in Werwinski and held that the economic loss doctrine does not bar UTPCPL claims since such claims are statutory, and not based in tort.
In Earl, the plaintiff, Lisa Earl, entered into an agreement with defendant NVR, Inc. (NVR) for the construction and sale of a home in Allegheny County, Pennsylvania. Ms. Earl learned of the home through NVR’s marketing, which described the home as containing “quality architecture, timeless design, and beautiful finishes.” Ms. Earl alleged that during the construction of the home, she had further discussions with agents of NVR, who made representations that the home would be constructed in a good and workmanlike manner and that any deficiencies noted by Ms. Earl would be remedied. The defendant also assured Ms. Earl that the home would be constructed in accordance with relevant building codes and industry standards. After moving into the home, Ms. Earl discovered several material defects in the construction. She provided notice of these defects to NVR, but NVR’s attempts to repair some of the defects were inadequate.
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Gus Sara, White and WilliamsMr. Sara may be contacted at
sarag@whiteandwilliams.com
Massachusetts Pulls Phased Trigger On Its Statute of Repose
December 21, 2020 —
Kyle Rice - The Subrogation SpecialistIn D’Allesandro v. Lennar Hingham Holdings, LLC, 486 Mass 150, 2020 Mass. LEXIS 721, the Supreme Judicial Court of Massachusetts answered a certified question regarding how to apply the Massachusetts statute of repose, Mass. Gen. Laws ch. 260, § 2B, in regards to phased construction projects. The court held that, in this context, the completion of each individual “improvement” to its intended use, or the substantial completion of the individual building and the taking of possession for occupancy by the owner or owners, triggers the statute of repose with respect to the common areas and limited common areas of that building. Additionally, the court held that where a particular improvement is integral to, and intended to serve, multiple buildings (or the development as a whole), the statute of repose is triggered when the discrete improvement is substantially complete and open to its intended use.
In D’Allesandro, the action arose out of the construction, marketing, sale and management of the Hewitts Landing Condominium (the Condominium) project. Ultimately, 150 units were constructed over 24 phases of construction, enclosed in 28 different buildings. Throughout construction, the project’s architect submitted declarations to the Town of Hingham swearing that the individual units were “substantially complete” and could be occupied for their intended use. The Town of Hingham then issued certificates of occupancy for the unit or building.
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Kyle Rice, White and WilliamsMr. Rice may be contacted at
ricek@whiteandwilliams.com
Retrofitting Buildings Is the Unsexy Climate Fix the World Needs
November 19, 2021 —
Marc Champion - BloombergYou may not have noticed unless you live in London, but protesters have been gluing their hands to the asphalt of the city’s thundering eight-lane M25 ring road, to the weirdly technocratic war cry of “Insulate Britain!” Frustrated commuters and the police officers who’ve had to peel these sticky activists from the road find them irritating. Yet they have a point. Among top producers of climate-harming emissions that world leaders plan to address at COP26 in Glasgow in November, buildings are the summit’s largely ignored Cinderella.
Making homes and offices leak less heat and persuading the construction industry to give up its addiction to demolition and to energy-intensive materials such as concrete, plastics, and steel have so far proved less than appealing to governments in search of solutions to the climate challenge. Retrofitting is costly and disruptive for the voters who happen to live, in the U.K. alone, in the 28 million homes that need an upgrade. It also demands the systemic transformation of a fragmented industry that’s riddled with vested interests, says Stephen Good, chief executive of the Construction Scotland Innovation Centre along Glasgow’s southern underbelly.
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Marc Champion, Bloomberg
In South Carolina, Insurer's Denial of Liability Does Not Waive Attorney-Client Privilege for Bad Faith Claim
October 14, 2019 —
Ashley L. Cooper & Bethany L. Barrese - Saxe Doernberger & Vita, P.C.Determining the scope of discovery can be challenging, particularly when an insurance bad faith claim is involved. Courts often face the difficult decision of weighing the importance of preserving attorney-client privilege with the public policy rationale of protecting an insured against their insurer’s bad faith behavior. The Supreme Court of South Carolina recently recognized this dilemma by rejecting a hardline approach to bad faith discovery disputes and adopting a case-by-case analysis.
The case, In re Mt. Hawley Ins. Co.,1 arose out of a construction defect claim. ContraVest Construction Company (“ContraVest”) constructed a development in South Carolina and was later sued for alleged defective construction. ContraVest sought coverage for the lawsuit from its insurers, including Mount Hawley Insurance Company (“Mount Hawley”), which had provided excess commercial liability insurance to ContraVest during the relevant timeframe. Mount Hawley denied the claim, which prompted ContraVest to sue it for bad faith, breach of contract, and unjust enrichment.
Reprinted courtesy of
Ashley L. Cooper, Saxe Doernberger & Vita, P.C. and
Bethany L. Barrese, Saxe Doernberger & Vita, P.C.
Ms. Cooper may be contacted at alc@sdvlaw.com
Ms. Barrese may be contacted at blb@sdvlaw.com
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Can an Owner Preemptively Avoid a Mechanics Lien?
May 25, 2020 —
William L. Porter - Porter Law GroupVarious sections of the California Civil Code, beginning with section 8000, protect the right of contractors, subcontractors and suppliers in the construction industry to obtain payment for work performed and materials supplied to construction projects. Under these statutes, unpaid claimants are entitled to use mechanics liens, stop payment notices and other methods to protect their right to payment. Mechanics liens allow unpaid claimants to sell the property where the work was performed in order to obtain payment. Stop payment notices force the owner or the bank to set money aside to pay unpaid claimants. Article XIV of our California Constitution even elevates the mechanics lien remedy to a “constitutional right”. The system generally works well, and claimants are paid.
As someone who practices and teaches construction law, I have noticed a seldom used statutory tool that seems to provide a mechanism for property owners under certain circumstances to prevent subcontractors and suppliers from imposing enforceable mechanics lien on property where work was performed. Under California Civil Code section 8520, it appears that all that an owner of property need do to avoid a mechanics lien on its property is to give a proper notice (per Civil Code section 8100 et seq.) to a person who has a mechanics lien right (a subcontractor or supplier) that the owner is invoking Civil Code section 8520 and that if the claimant is unpaid for work performed or materials supplied to the owner’s property that the claimant must either provide the owner with a stop payment notice or forfeit the right to a mechanics lien on the owner’s property. This would allow an owner to avoid a mechanics lien on its property if the claimant failed to send a stop payment notice to the owner.
Providing the “notice” under Civil Code section 8100 appears to be easy. It can be sent by “registered or certified mail or by express mail or by overnight delivery by an express service carrier”. It can even be by “hand delivery”. As far as the notice itself, it would seem that it can be very simple and easily performed under the process described below, which can be implemented within the office of any owner or developer.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
