Construction Defect News You May Have Missed

Canadian Home Builders Are on Pace for Best Year Since Recession

August 10, 2017
Theophilos Argitis - Bloomberg

Canadian home construction is on pace for its best year since the 2008-2009 recession, with builders showing no sign of being slowed by rising interest rates or fears of a housing correction.

Work began on an annualized 222,324 homes in July, the third-fastest monthly pace since 2012, the Canadian Mortgage and Housing Corp. reported Wednesday. Starts have averaged about 215,000 in 2017, which puts the industry on track for the most new residential construction since 2007 if the current pace continues.

Australia Pitches Trump on a Plan to Fix America’s Roads and Bridges

August 10, 2017
Mark Niquette - Bloomberg

Among his many campaign promises, Donald Trump pledged to fix America’s crumbling roads and bridges with $1 trillion in infrastructure spending. Almost seven months into office, though, and two months removed from his vaunted “infrastructure week,” the president has revealed few details for how to pay for it. As his advisers look for ideas, a group of Australian politicians and executives has been lobbying for the administration to adopt a controversial policy of selling or leasing airports, toll roads, and other public facilities to raise money for infrastructure projects.

Nobody Knows What Lies Beneath New York City

August 10, 2017
Greg Milner - Bloomberg

Before a single raindrop fell, Alan Leidner knew the waters could rise and throw the city into darkness. On this point, the maps were as clear as a crystal ball. All you had to do was look.

It was 2010, and Leidner was consulting for the government services company Booz Allen Hamilton Inc., contracted by the U.S. Department of Homeland Security to identify potential threats and vulnerabilities in the nation’s critical infrastructure. Leidner was examining a region that included New York and New Jersey. One day he was thinking about the area’s electrical power grid. He consulted some flood projection maps the Federal Emergency Management Agency had prepared. Then he stared at a map of the grid maintained by Consolidated Edison Inc., the region’s power supplier. And it just jumped out at him: The substation at East 13th Street, on the banks of the East River, was smack in the middle of a flood zone.

Leidner voiced his concerns with utilities, hospitals, and other major facilities. “The reaction was mostly, ‘Eh,’ ” he recalls, as we sit in the Tribeca offices of the Fund for the City of New York, where he directs the nonprofit organization’s Center for Geospatial Innovation.

Savannah Homeowners Win Sizable Judgment in Mold Case against HVAC Contractor

August 10, 2017
David R. Cook Jr. - Autry, Hanrahan, Hall & Cook, LLP

Two Savannah homeowners filed a complaint against a local air conditioning contractor and its insurer, asserting claims of professional negligence and fraud. The couple alleged that in March 2009, the contractor replaced the duct system of their home’s air conditioning unit. The following June, the couple discovered mold growth on the vent covers. They hired an independent contractor who upon inspection concluded that the duct system, which contained holes, gaps, loose connections and insufficient mastic, had been defectively installed in violation of the applicable city ordinances, resulting in excessive moisture and mold contamination throughout the residence. The homeowners alleged that they grew ill with respiratory problems as a result and were subsequently forced to vacate the residence and abandon their personal belongings. Their complaint sought to recover repair costs, moving costs, expenses associated with rental property, costs of living, costs related to the replacement of personal property, medical expenses, punitive damages, attorney’s fees, and costs of litigation.

Mr. Cook may be contacted at

The Regulations on the Trump Administration's Chopping Block

August 2, 2017
Pam Radtke Russell - Engineering News-Record

The Trump administration's next big step toward repealing the controversial Waters of the U.S. (WOTUS) rule is official, with a proposal to rescind the Obama-era regulation appearing in the Federal Register on July 27, setting off a relatively short comment period that will end Aug. 28.

Mr. Russell may be contacted at

The Metaphysics of When an Accident is an “Accident” (or Not) Under Your Insurance Policy

August 2, 2017
Garret Murai - California Construction Law Blog

As an undergrad, I remember taking an introductory philosophy class. When we came to the chapter on metaphysics our professor asked what makes an apple an apple? “We have a specific name for it, presumably, to distinguish it from other things,” she said. “But what makes an apple an apple?”

From there we went into a rabbit hole. With some students describing an apple by its colors, shape, size, smell and that it grows on trees and others trying to distinguish an apple from other things, which in turn led to further discussions such as why we believe apples come in red, green and yellow, whether an apple is still an apple if a person was colorblind, etc. In the end, we were questioning whether we were even in existence and sitting in a university classroom.

Insurance can be a bit like that sometimes. When is an accident an accident? If you engage in an intentional act that results in an unintended consequence, is it an accident? In Navigators Specialty Insurance Company v. Moorefield Construction, Inc. (December 27, 2016) 6 Cal.App.5th 1258, the Court of Appeals for the Fourth District, while not answering the question of the nature of existence, did shed some light on when an accident is an accident.

Mr. Murai may be contacted at

Tesla Finishes First Solar Roofs—Including Elon's House

August 2, 2017
Tom Randall - Bloomberg

First the Model 3 electric car. Now the solar roof. In just one week, Tesla has challenged two distinct industries with radically new products.

Tesla has completed its first solar roof installations, the company reported Wednesday as part of a second-quarter earnings report. Just like the first Model 3 customers, who took their keys last week, the first solar roof customers are Tesla employees. By selling to them first, Tesla says it hopes to work out any kinks in the sales and installation process before taking it to a wider public audience.

“I have them on my house, JB has them on his house,” Musk said, referring to Tesla’s Chief Technology Officer J.B. Straubel. “This is version one. I think this roof is going to look really knock-out as we just keep iterating.”

Use It or Lose It: California Court of Appeal Addresses Statutes of Limitations for Latent Construction Defects and Damage to Real Property

August 2, 2017
Omar Parra & Jesse M. Sullivan - Haight Brown & Bonesteel LLP

The First Appellate District of the California Court of Appeal recently confirmed California’s latent defect statute of limitations, codified in California Code of Civil Procedure section 337.15, bars only claims based on construction defects. Estuary Owners Association v. Shell Oil Company, No. A145516, (Cal. Ct. App. July 26, 2017). The Court also reemphasized that under California’s three-year statute of limitations for damage to real property, delineated in California Code of Civil Procedure section 338(b), the actual and constructive knowledge of the prior landowner is imputed to the current landowner.

Estuary Owners Association concerned the development and construction of a 100-unit condominium by Signature at the Estuary, LLC (“Signature”) on land Shell Oil Company (“Shell”) previously used as a fuel distribution terminal. Construction of the condominiums was completed in 2006. In 2008, it was discovered that residual concentrations of petroleum related chemicals remained in the soil, soil gas, and groundwater beneath the development. Later that year, Signature revealed that the condominiums had been constructed with moisture barriers beneath the building slabs instead of the vapor/gas barriers called for in the corrective action plan.

Reprinted courtesy of Omar Parra, Haight Brown & Bonesteel LLP and Jesse M. Sullivan, Haight Brown & Bonesteel LLP
Mr. Parra may be contacted at
Mr. Sullivan may be contacted at

No Conflict in Successive Representation of a Closely-Held Company and Its Insiders Where Insiders Already Possess Company’s Confidential Information

August 2, 2017
Renata L. Hoddinott, David W. Evans, & Howard M. Garfield - Haight Brown & Bonesteel LLP

In Beachcomber Management Crystal Cove, LLC v. Superior Court (Salisbury) (No. G054078, filed June 28, 2017; pub. and mod. order July 28, 2017), the Fourth Appellate District granted a writ of mandate vacating a trial court’s order disqualifying defendants’ counsel.

In Beachcomber, plaintiffs filed a shareholder derivative action against defendants Beachcomber Management and Douglas Cavanaugh (collectively, “defendants”) alleging defendants abused their position and mismanaged nominal defendant and similarly named Beachcomber at Crystal Cove (“Beachcomber”). Between 2009 and 2011, defendants and Beachcomber had each hired Kohut & Kohut LLP (“Kohut”) to represent them on at least four different occasions. In the underlying action, defendants hired Kohut again to represent them, while Beachcomber hired another law firm to represent it.

Reprinted courtesy of Haight Brown & Bonesteel LLP attorneys Renata L. Hoddinott, David W. Evans and Howard M. Garfield

Signed, Sealed and (Almost) Delivered: EU Council Authorizes Signing of U.S. – EU Bilateral Insurance Agreement

August 2, 2017
Stella Szantova Giordano - Saxe Doernberger & Vita, P.C.

On July 14, 2017, the Trump administration released a statement indicating that the United States intends to sign the U.S. – EU bilateral insurance agreement. The announcement came several weeks after the Council of the European Union adopted a decision authorizing the signing of this agreement. The agreement attempts to “level the playing field for U.S. insurers and reinsurers operating in the EU.”[1] This U.S. – EU bilateral agreement is a direct response to EU’s January 2016 enactment of Solvency II. Solvency II is a legislative program implemented in all twenty-eight Member States, aimed at codifying EU insurance regulations in an attempt to protect policy holders and to incentivize risk management. We previously wrote about this comprehensive program of insurer regulatory requirements here.

Mr. Giordano may be contacted at

Can a Non-Union Company Be Compelled to Arbitrate?

August 2, 2017
Wally Zimolong - Supplemental Conditions

Some of the most viewed topics on this blog are those concerning double breasted company. That is a two separate firms, commonly owned, one that is a signatory to a union and the other that is merit shop.

An issue frequently encountered with double breasted construction companies is an union arbitrator’s jurisdiction over the non-signatory firm. The issue usually goes something like this. A signatory employer’s collective bargaining agreement contains language prohibiting double breasting (which could be invalid). The collective bargaining agreement also contains an arbitration provision requiring all disputes concerning a breach of the agreement (a grievance) be decided by an arbitrator in private arbitration. The union files a demand for arbitration claiming that the union signatory has breached the collective bargaining agreement’s anti-dual shop provision. The union names the non-union firm as a party to the arbitration based on its status as an alleged “single employer.”

Mr. Zimolong may be contacted at

Don’t Forget to Mediate the Small Stuff

August 2, 2017
Christopher G. Hill - Construction Law Musings

It’s been a while since I talked mediation here at Construction Law Musings. Those that read regularly (thanks) have likely missed my musings on the topic. Those who read this construction blog regularly also know that I am both a Virginia Supreme Court certified general district court mediator and a huge advocate of mediation as a method to resolve construction disputes. While many of us think of mediation as a method to resolve the major disputes or litigation that occasionally rear their heads in the course of running a construction law practice or construction business, my experience as both a construction attorney and a mediator has taught me something: mediation works for all sizes of cases.

As an advocate for my construction clients, I know that proper trial preparation requires the same diligence and attention to detail for a smaller case as it does for a larger case. While a smaller case in the Virginia general district court may not have the depositions, written discovery and motions practice that a Virginia circuit court case may have, it still requires witness preparation, document processing and review and many of the other aspects of a larger case. While construction litigation is never a money maker in the best of circumstances, in the smaller cases the attorney fees often total a larger percentage of the total potential recovery. For this reason, the small cases are almost better suited for a quick mediated resolution than the larger ones. The larger cases may cost more to prosecute or defend, but the fees are less likely to eat up such a large percentage of any recovery.

Mr. Hill may be contacted at

Risk Allocation: What AIA's New Standard Form Agreements Say

August 2, 2017
Richard Korman - Engineering News-Record

As the managing director of the American Institute of Architect's Contract Documents program, Ken Cobleigh was responsible for the once-per-decade review-and-rewriting process that culminated in the release in April 2017 of the updated A201—the General Conditions for the Contract for Construction—and other related contract documents. The changes reflect in many ways the fast-changing methods of design and construction, including contract exhibits related to building-information modeling, sustainability and insurance. Cobleigh, who studied law at the University of Maryland, was a construction litigation attorney before joining AIA 11 years ago. He spoke with Deputy Editor Richard Korman about the new insurance exhibit and other matters related to the new AIA standard form agreements and risk allocation.

Mr. Korman may be contacted at

Be Sure to Dot All of the “I’s” and Cross the “T’s” in Virginia

August 2, 2017
Christopher G. Hill - Construction Law Musings

As a construction company from outside of Virginia that wants to work here in the Commonwealth, there are numerous “hoops” that you need to jump through to be able to perform work and most importantly get paid. Among these are obtaining a Virginia contractors license, find a registered agent here in Virginia, hopefully find a local construction lawyer to help with your contracts, and (the subject of this post), register with the Virginia State Corporation Commission for the authority to do business in the Commonwealth of Virginia.

Aside from it being a requirement of state law, the real world consequence of failing to register to do business is that, while you could file a lawsuit to enforce a claim (such as a mechanic’s lien), failure to register could cost you the ability to enforce or obtain any judgment on that lien. In other words, you could go through the costly litigation process, “win” and then be barred from any recovery simply because you did not follow this step.

Mr. Hill may be contacted at

IRMI Construction Risk Conference

August 2, 2017
Beverley BevenFlorez-CDJ STAFF

The 37th annual Construction Risk Conference (CRC) presented by the International Risk Management Institute (IRMI) will be held in Indianapolis this November. The IRMI CRC “brings nearly 2,000 leading project owners, general contractors, subcontractors, developers, insurers, and insurance agents and brokers together to explore and convey state-of-the-art ideas and techniques for improving insurance coverages, controlling insurance costs, and fine-tuning risk management programs.”

November 5th-8th, 2017
JW Marriott
10 S West Street
Indianapolis, IN 46204

Tests After Grenfell Tower Fire Show Flaws in 82 UK Towers

August 2, 2017
Peter Reina - Engineering News-Record

Fire tests prompted by the June 14 fire that caused at least 80 known deaths at London's 24-story Grenfell Tower suggest that 82 apartment blocks around the U.K. have external aluminum cladding systems that do not comply with current building regulations.

Mr. Reina may be contacted at

June Construction Spending Dips from May, Up Year over Year

August 2, 2017
Tom Ichniowski - Engineering News-Record

Construction spending in June slipped 1.3% from the previous month’s level, to an estimated $1.206-trillion annual rate but the total rose 1.6% year over year, the Commerce Dept. has reported.

Mr. Ichniowski may be contacted at

No Coverage for Hurricane Sandy Damage

August 2, 2017
Tred R. Eyerly - Insurance Law Hawaii

The magistrate recommended that summary judgment be entered in favor of the insurer, thereby eliminating coverage for property damage incurred during Hurricane Sandy. Madelaine Chocolate Novelties, Inc. v. Great Northern Ins. Co., 2017 U.S. Dist. LEXIS 103015 (E.D. N.Y. June 30, 2017).

Madelaine Chocolate owned a facility three blocks form the Atlantic Ocean and one block from the Jamaica Bay section of Long Island Sound. Hurricane Sandy arrived October 29, 2012. Madeline Chocolate's facility sustained significant damage to its inventory, production machinery and premises, as storm surge from both bodies of water hit the property. Operations ceased during the 2012 holiday season and beyond, resulting in millions of dollars in lost income.

Mr. Eyerly may be contacted at

Good Ole Duty to Defend

August 2, 2017
David Adelstein - Florida Construction Legal Updates

The good ole duty to defend. Certainly, a duty that should not be overlooked.

A commercial general liability insurer has two duties to its insured when it comes to third-party claims: 1) the duty to defend its insured and 2) the duty to indemnify its insured.

The insurer’s duty to defend its insured will always be broader than its duty to indemnify because this duty is triggered by the allegations in the lawsuit. (For this precise reason, insurers will oftentimes defend their insured under a reservation of rights.) The duty to defend is a very important duty as it is the first duty that typically comes into play when a third-party claim / action is initiated against the insured. Getting the insurer on board to provide a defense is an initial focus. One that cannot be neglected or overlooked.

Mr. Adelstein may be contacted at

Chinese Billionaire Developer Convicted in UN Bribery Case

August 2, 2017
Bob Van Voris - Bloomberg

A Chinese developer was convicted of charges he paid bribes to win backing for a United Nations conference center that he hoped to build in Macau.

A jury in Manhattan on Thursday found the developer, billionaire Ng Lap Seng, guilty of all six charges he faced, including conspiracy, bribery and money laundering, in the biggest UN corruption scandal since the oil-for-food program in the early 2000s. Prosecutors claimed Ng funneled hundreds of thousands of dollars to former UN General Assembly President John Ashe and other officials.


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