No Occurrence Found for Damage to Home Caused by Settling
October 22, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe Nebraska Supreme Court found the insurer properly denied coverage to the general contractor for damage to a home caused by settlement. Cizek Homes, Inc. v. Columbia Nat. Ins. Co., 2014 Neb. LEXIS 152 (Neb. Sept. 9, 2014).
The general contractor built and then sold the residence. Subsequently, the homeowners complained that the soil beneath their residence was settling and causing damage to their home. The homeowners presented a draft complaint to the general contractor, alleging that negligence and faulty workmanship had caused damage to the home.
The general contractor notified its carrier, Columbia. Coverage was denied.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Owners and Contractors Beware: Pennsylvania (Significantly) Strengthens Contractor Payment Act
June 13, 2018 —
Wally Zimolong – Supplemental Conditions Yesterday, Governor Tom Wolf signed into law House Bill 566 which make major changes to Pennsylvania’s Contractor and Subcontractor Payment Act. Owners and General Contractors that fail to take head of the changes could face significant financial consequences.
The Pennsylvania Contractor and Subcontractor Payment Act, known as CAPSA or simply the Payment Act, was passed into law in 1994. The intent was “to cure abuses within the building industry involving payments due from owners to contractors, contractors to subcontractors, and subcontractors to other subcontractors.” Zimmerman v. Harrisburg Fudd I, L.P., 984 A.2d 497, 500 (Pa. Super. Ct. 2009). In reality, abuses still occurred. While the Payment Act purportedly dictated a statutory right to payment within a certain amount of time and imposes stiff penalties for failure make payment, including 1% interest per month, 1% penalty per month, and reasonable attorneys fees, the language of the Payment Act left recalcitrant contractors with wiggle room. Particularly, the Payment Act allowed owners and higher tier subcontractors to withhold payment “deficiency items according to the terms of the construction contract” provided it notified the contractor “of the deficiency item within seven calendar days of the date that the invoice is received.” 73 P.S. Section 506. The problem was that the Payment Act did not expressly state where the notice must be in written, what it must say, and what happened if notice was not given.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Arizona Supreme Court Confirms a Prevailing Homeowner Can Recover Fees on Implied Warranty Claims
August 30, 2017 —
Rick Erickson - Snell & Wilmer Real Estate Litigation BlogOn August 9th, in Sirrah Enterprises, L.L.C. v. Wunderlich, the Arizona Supreme Court settled the question about recovery of attorneys’ fees after prevailing on implied warranty claims against a residential contractor. The simple answer is, yes, a homeowner who prevails on the merits can recover the fees they spent to prove that shoddy construction breached the implied warranty of workmanship and habitability. Why? Because, as Justice Timmer articulated, “[t]he implied warranty is a contract term.” Although implied, the warranty is legally part of the written agreement in which “a residential builder warrants that its work is performed in a workmanlike manner and that the structure is habitable.”
In other words, a claim based on the implied warranty not only arises out of the contract, the claim is actually based on a contract term. Since, in A.R.S. § 12-341.01, Arizona law provides for prevailing parties to recover their fees on claims “arising out of contract” and because the implied warranty is now viewed by the courts as a contract term, homeowners can recover their fees after successfully proving breach of the implied warranty.
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Rick Erickson, Snell & WilmerMr Erickson may be contacted at
rerickson@swlaw.com
Finding of No Coverage Overturned Due to Lack of Actual Policy
March 18, 2019 —
Tred R. Eyerly - Insurance Law HawaiiThe Appellate Division overturned a verdict for the insurer when the actual policy was never introduced at trial. Pennsylvania Lumbermens Mut. Ins. Co. v. B&F Land Dev. Corp., 2019 N.Y. App. Div. LEXIS 264 (N.Y. App. Div. Jan 16, 2018).
The decedent was killed when he fell through a skylight while working on a premises owned by B&F Land Development Corporation. The estate sued B&F for wrongful death.
B&F tendered to its carrier, Pennsylvania Lumbermens Mutual (PLM). PLM issued a reservations of rights. It later denied coverage because the location of the loss was not a location listed on the policy, an exclusion barred coverage for bodily injury arising out of B&F's ongoing operations conducted by it or on its behalf, and the loss was not reported to PLM as soon as practicable.
PLM sued B&F and the estate for a declaratory judgment that it had no duty to defend or indemnify. A default judgment was entered against B&F after it failed to answer. Trial proceeded against the estate
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Construction Contract Basics: No Damages for Delay
May 06, 2024 —
Christopher G. Hill - Construction Law MusingsAfter WAY too long a hiatus, I am back with another in my series of “Construction Contract Basics” posts. In past posts, I’ve covered venue provisions, attorney fee provisions, and indemnity clauses. In this post, I’ll share a few thoughts (or “musings”) on the topic of so-called “no damages for delay” clauses. These clauses essentially state that a subcontractor’s only remedy for a delay caused by any factor beyond its control (including the fault of the general contractor), after proper notice to the owner or general contractor, is an extension of time to complete the work.
These types of clauses generally make it impossible for a subcontractor (if found in a Subcontract) or Contractor (if found in a Prime Contract) that is delayed through no fault of its own to recover any damages relating to the expenses that are inevitably caused by such delays. Such expenses/damages could include additional supervisory time (including more high-dollar superintendent payments), acceleration costs, demobilization/mobilization costs, and other related expenses. These can add up to real money. Couple that with the inevitable liquidated damages or delay damages that will occur should a contractor or subcontractor cause any delay, and this becomes a very one-sided proposition.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Blackstone Suffers Court Setback in Irish Real Estate Drama
August 20, 2014 —
Donal Griffin and Dara Doyle – BloombergAt 11:15 a.m. on July 29, Irish property developer Michael O’Flynn realized that Blackstone Group LP (BX) was trying to gain control of his real estate empire, which includes the country’s tallest residential tower.
Ten weeks earlier, the private equity firm had bought 1.8 billion euros ($2.4 billion) of loans to O’Flynn’s companies and the developer personally. Coming out of a meeting, he learned Blackstone was demanding the immediate repayment of 16 million euros of personal loans secured on his shareholdings -- even though he wasn’t in default. By the end of the day he had lost control of the business he’d spent more than 30 years building.
“I was shocked that they’d made this demand,” O’Flynn, 57, said in an interview. “It took time to understand the gravity of it because I’ve never been served with a demand in my 36 years of business. I was very recently transferred to Blackstone and I was doing my damnedest to work with them.”
Mr. Doyle may be contacted at ddoyle1@bloomberg.net; Mr. Griffin may be contacted at dgriffin10@bloomberg.net
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Donal Griffin and Dara Doyle, Bloomberg
2017 California Construction Law Update
December 15, 2016 —
Garret Murai – California Construction Law BlogTo say it’s been an exciting year in politics would be an understatement.
While most of the nation’s attention was focused on the presidential election, state legislatures, including California’s, were busy at work. The California State Legislature introduced 3099 bills during the second session of the 2015-2016 session of which 808 bills were signed into law. 2016 saw the enactment of several bills of interest to the construction industry including bills related to alternative project delivery methods, prevailing wages, and licensing. Each of the bills discussed below takes effect on January 1, 2017.
Project Delivery
AB 2126 – Amends Public Contract Code section 6701 to increase the number of projects the Department of Transportation may use the construction manager/general contractor method of project delivery from no more than 6 projects, to 12 projects, of which 8 of the 12 projects would be required to use Department employees or consultants under contract with the Department to perform all project design and engineering services.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Court finds subcontractor responsible for defending claim
May 18, 2011 —
CDJ STAFFIn an unpublished decision, the California Fourth Appellate District Court has reversed the judgment of Judge Linda B. Quinn of the Superior Court of San Diego. In the case Inland California, Inc. v. G.A. Abell, Inland, a general contractor had subcontracted with Apache Construction and Precision Electric Company (G.A. Abell).
Apache alleged that extra demolition and drywall work was needed due to Precision’s electrical work. Inland tendered a defense of Apache’s claims. However, Precision did not provide any defense. Inland withheld payment from Precision.
At trial, Inland “conceded Precision earned the $98,000 in progress payments Inland withheld.†They were obligated to additionally pay Precision’s costs and attorney fees.
The Fourth Appellate District court has overturned this and remanded the case back to the lower court. The judges determined that Precision was obligated to defend itself against the claims raised by Apache and therefore vacated the judgment against Inland.
Read the court’s decision…
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