Construction Defects Survey Results Show that Warranty Laws Should be Strengthened for Homeowners & Condominium Associations
March 29, 2017 —
Nicholas D. Cowie - Maryland Condo Construction Defect Law BlogThe Community Associations Institute (“CAI”) recently partnered with its members and industry stakeholders to create a survey about construction deficiencies to learn how they impact homeowners and condominium associations.
Click here to view the Construction Defects Report containing the details of the responses to the survey.
Click here to see a video presentation summarizing the results of the Construction Defects Survey.
This Community Associations Institute (“CAI”)
Construction Defects Report demonstrates that many community associations do not discover construction deficiencies until after warranties have expired and/or fail to take the necessary actions to preserve their claims before the statutes of limitations runs. As a result, many homeowners and Condominium associations ended up using association funds to correct builder construction defects and damages caused thereby.
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Nicholas D. Cowie, Cowie & MottMr. Cowie may be contacted at
ndc@cowiemott.com
Equipment Costs? It’s a Steal!
July 08, 2011 —
CDJ STAFFKCBD reports on the problems of a Lubbock, Texas contractor. It’s hard to do the job when your tools keep getting stolen. Corey Meadows, owner of Top Cut Interiors, told KCBD that he had chained an air compressor to a table saw. Since the thieves couldn’t cut the chain, they cut the table saw “and just took the air compressor and the chain.” Meadows estimates the thieves cost him $2,000 in damaged or stolen equipment and time lost.
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Court Throws Wet Blanket On Prime Contractor's Attorneys' Fees Request In Prompt Payment Case
September 03, 2015 —
Steven M. Cvitanovic & Abigail E. Lighthart – Haight Brown & Bonesteel LLPPrompt payment penalty cases do not come around very often, but when they do, there is bound to be fireworks.
In James L. Harris Painting & Decorating, Inc. v. West Bay Builders, Inc., et al. (No. C072169, filed 8/27/15), the California Court of Appeal for the Third Appellate District upheld the trial court's discretion to not award prevailing party attorneys' fees to the party who won a prompt payment dispute. California Business and Professions Code §7108.5 and Public Contract Code §§7107 and 10262 are the mechanisms for obtaining prompt payment relief in California. As shown by the outcome, it is possible to win and lose at the same time.
West Bay Builders, Inc. (“West Bay”) was the prime contractor on a school construction project for Stockton Unified School District. West Bay entered into a subcontract agreement with James L. Harris Painting & Decorating, Inc. (“Harris”) on the project. During construction there were disagreements between West Bay and Harris regarding the contractual scope of work, and Harris performed work it believed was outside the contract, believing it would be paid for the additional work. After West Bay refused to pay for the additional work, Harris left the project, and West Bay hired another subcontractor to complete the work.
Reprinted courtesy of
Steven M. Cvitanovic, Haight Brown & Bonesteel LLP and
Abigail E. Lighthart, Haight Brown & Bonesteel LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com
Ms. Lighthart may be contacted at alighthart@hbblaw.com
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Arbitration Clause Found Ambiguous in Construction Defect Case
October 28, 2011 —
CDJ STAFFThe California Court of Appeals ruled on September 28 in the case of Burch v. Premier Homes. Ms. Burch bought a home after negotiating various addendums to the contract. The contract was a standard California Association of Realtors contract to which both the buyer and seller made additions. At issue in this case was paragraph 17 of the contract which included that “Buyer and Seller agree that any dispute or claim in Law or equity arising between them out of this Agreement or resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration.”
The seller/defendant’s Addendum 2 “included provisions relating to the arbitration of disputes that may arise.” Ms. Burch’s realtor, Lisa Morrin, told Burch that “she had never seen a proposed contractual provision that would require a home buyer to agree to arbitrate with a builder over construction defects.” Ms. Burch told Morrin that she did not want to buy the property if she would have to give up her rights under California law.
As part of Addendum 2, the buyer had to buy a warranty from the Home Buyers Warranty Corporation. The sale was held up for a while, as Ms. Burch waited for a copy of the warranty. When she received it, she took further exception to Addendum 2. Scott Warren of Premier Homes said he could not sell the property without Addendum 2. Ms. Burch told her realtor that despite the claims made by Mr. Warren that this was for her benefit, she felt it was more to the benefit of Premier Homes. Don Aberbrook of HBW agreed to the clause, contained in the final sentence of Addendum 2, being struck.
Subsequent to buying the home, Burch submitted a claim concerning construction defects. HBW denied the claim and Burch began an action against the defendants. Premier filed a motion to compel arbitration which Burch opposed.
The trial court ruled that the striking out of the arbitration clause at the end of Addendum 2 “created a conflict with respect to the parties’ intent as to the scope of arbitration.” The trial court found that “the parties’ intention was to preserve Burch’s right to make state law claims including her right to a jury trial for any non-warranty claims against the builder.”
The appeals court in their ruling looked at the standard of review and concluded that the purchase agreement was ambiguous and that extrinsic evidence was required to resolve that ambiguity. As the contract contained contradictory provisions as to whether or not arbitration was required, it was necessary for the trial court to examine these claims. The appeals court found that the evidence supported the conclusions of the trial court.
Finally, the appeals court found that “there was no valid agreement to arbitrate disputes.” The court noted that arbitration can only happen by mutual consent and “it is clear that Burch did not enter into an agreement to arbitrate any construction defect disputes she might have.”
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Time is Money. Unless You’re an Insurance Company
December 02, 2015 —
Garret Murai – California Construction Law BlogBenjamin Franklin may never have been President but he’s better known than most of them. Not least of all for his pithy quotes on a wide range of subjects:
On personal finance – “A penny saved is a penny earned.”
On education – “Tell me and I forget, teach me and I remember, involve me and I learn.”
On getting real – “In this world nothing can be said to be certain, except death and taxes.”
On guests – “Guests, like fish, begin to smell after three days.”
On lawyers – “A countryman between two lawyers is like a fish between two cats.”
On beer – “In wine there is wisdom, in beer there is freedom, in water there is bacteria.”
But if you were to pick one theme that seems to recur the most in Franklin’s quotes, it would be productivity:
“Time is money.”
“By failing to prepare, you are preparing to fail.”
“Never leave that till tomorrow which you can do today.”
“Early to bed and early to rise, makes a man happy, wealthy and wise.”
But, as the next case, Grebow v. Mercury Insurance Company, Case No. B261172, California Court of Appeals for the Second District (October 21, 2015), illustrates, sometimes the most efficient way of doing things may not necessarily be the most financially prudent way of doing things.
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Reprinted courtesy of Garret Murai, Wendel Rosen Black & Dean LLP
Mr. Murai may be contacted at gmurai@wendel.com
Insurer’s Discovery Requests Ruled to be Overbroad in Construction Defect Suit
October 28, 2011 — CDJ STAFF
The US District Court has ruled in the case of D.R. Horton Los Angeles Holding Co. Inc. v. American Safety Indemnity, Co. D.R. Horton was involved in a real estate development project. Its subcontractor, Ebensteiner Co., was insured by ASIC and named D.R. Horton as an additional insured and third-party beneficiary. D.R. Horton, in response to legal complaints and cross-complaints, filed for coverage from ASIC under the Ebensteiner policy. This was refused by ASIC. ASIC claimed that “there is no potential coverage for Ebensteiner as a Named Insurer and/or D.R. Horton as an Additional Insured.” They stated that “the requirements for coverage are not satisfied.”
The case same to trial with the deadline for discovery set at March 1, 2011. ASIC stated they were seeking the developer’s “job file” for the Canyon Gate project. D.R. Horton claimed that ASIC’s discovery request was overbroad and that it would be “unduly burdensome for it to produce all documents responsive to the overbroad requests.”
D.R. Horton did agree to produce several categories of documents, which included:
“(1) final building inspection sign-offs for the homes that are the subject of the underlying litigation;(2) an updated homeowner matrix for the underlying actions; (3) the concrete subcontractor files; (4) the daily field logs for D.R. Horton’s on-site employee during Ebensteiner’s work; (5) documents relating to concrete work, including documents for concrete suppliers; (6) documents relating to compacting testing; (7) documents relating to grading; and (8) D.R. Horton’s request for proposal for grading”
The court found that the requests from ASIC were overbroad, noting that the language of the ASIC Request for Production of Documents (RFP) 3-5 would include “subcontractor files for plumbing, electric, flooring, etc. - none of these being at issue in the case.” The court denied the ASIC’s motion to compel further documents.
The court also found fault with ASIC’s RFPs 6 and 7. Here, D.R. Horton claimed the language was written so broadly it would require the production of sales information and, again, subcontractors not relevant to the case.
Further, the court found that RFPs 8, 10, 11, and 13 were also overbroad. RFP 8 covered all subcontractors. D.R. Horton replied that they had earlier complied with the documents covered in RFPs 10 and 11. The court concurred. RFP 13 was denied as it went beyond the scope of admissible evidence, even including attorney-client communication.
The court denied all of ASIC’s attempts to compel further discovery.
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First Trump Agenda Nuggets Hit Construction
January 26, 2017 — Pam Radtke Russell, Mary B. Powers & Debra K. Rubin - Engineering News-Record
President Donald J. Trump began making good on campaign promises to put Americans back to work and reduce the size of government, as he signed orders and memoranda setting in motion approval of the Obama administration-halted Keystone XL and Dakota Access pipelines and streamlining of infrastructure and manufacturing permitting processes. But firms and watchdog groups are concerned how an announced freezing of government hiring and contracting will play out, as well as the future of environmental protection.
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Ms. Rubin may be contacted at rubind@enr.com
Citigroup Reaches $1.13 Billion Pact Over Mortgage Bonds
April 09, 2014 — Dakin Campbell – Bloomberg
Citigroup Inc. (C) agreed to pay $1.13 billion to settle claims from mortgage-bond investors as it seeks to curb liabilities tied to the financial crisis. It took a $100 million first-quarter charge.
The 68 securitization trusts covered by the settlement issued a combined $59.4 billion in mortgage-backed securities from 2005 to 2008, the New York-based bank said yesterday in a statement. The agreement covers 18 investors represented by Gibbs & Bruns LLP and trustees have until June 30 to accept the deal, the law firm said in a separate statement. The accord must be approved by the Federal Housing Finance Agency.
Citigroup, the third-biggest U.S. bank, is resolving a portion of liabilities tied to mortgages it packaged and sold to investors in the run-up to the 2008 crisis. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC), the two largest U.S. lenders, previously agreed to multibillion-dollar settlements with Gibbs & Bruns clients. Read the court decision
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Reprinted courtesy of Dakin Campbell, Bloomberg
Mr. Campbell may be contacted at dcampbell27@bloomberg.net