CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - THURSDAY, JANUARY 30, 2025

Insurance Adjuster Investigating

Hunton has prepared critical action items to help policyholders navigate the claim process.

Handling Insurance Claims in the Wake of the Los Angeles Wildfires

January 28, 2025
Yosef Itkin & Michael S. Levine - Hunton Insurance Recovery Blog

Los Angeles continues to be devastated by wildfires, and our thoughts are with those who have been affected. Tragically, lives have been lost. Homeowners and businesses ordered to evacuate have left behind properties that suffered enormous property damage and loss. At this time, more than 15,000 structures have been burned and counting. Landmarks, places of worship, schools and notable business are among the structures that have been damaged or destroyed. Recent estimates have pegged insured losses in the $20 billion to $30 billion range with some estimates coming in even higher.

Safety is the number one priority. At some point, though, the focus will shift as the fires seize and those affected rebuild and replace their property. There has already been much talk of insurance availability and maximizing insurance recoveries will be a key component of the recovery process. For those who will go through the insurance claims process, we have prepared critical action items to help policyholders navigate the claim process. We also invite you to visit our Wildfire Insurance Resource Center for additional helpful resources and materials, including a seven-part wildfire insurance coverage series that includes an overview on handling the claims process.

Reprinted courtesy of Yosef Itkin, Hunton Andrews Kurth LLP and Michael S. Levine, Hunton Andrews Kurth LLP

Mr. Itkin may be contacted at yitkin@HuntonAK.com
Mr. Levine may be contacted at mlevine@HuntonAK.com

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CDJ NEWS THIS WEEK



Crane to fix fire building

Even as crews have begun rebuilding utility backbones in the impacted communities, new fires have formed in the county and in San Diego.

LA County Begins Arduous Cleanup, Rebuild Effort in Altadena as New Fire Flares

January 28, 2025 — Scott Blair - Engineering News-Record

During a survey of fire-damaged neighborhoods and business districts in Altadena, Calif., LA County Public Works Director Mark Pestrella highlighted to ENR the Herculean effort to come to mitigate hazards, clean up debris and rebuild entire neighborhoods lost in the Eaton and Palisades fires.

Mr. Blair may be contacted at blairs@enr.com

Reprinted courtesy of Scott Blair, Engineering News-Record

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Mudslide

Recently burned land is susceptible to mudslides, debris flows.

California Storm Raises Mudslide Risk, Closes Interstate

January 28, 2025 — Brian K Sullivan - Bloomberg

Southern California will clock a few more tense hours as showers continue to soak the burn-scarred landscape around Los Angeles.

While the rains are helping fight wildfires that have killed at least 28 and destroyed more than 16,000 structures, they’re also raising the risk of deadly landslides and debris flows that can inundate a house with mud in seconds. A flood watch remains in force through 10 a.m. local time, the National Weather Service said.

Skies over Los Angeles will start to clear Monday afternoon and Tuesday promises to be clear, the weather service said.

Reprinted courtesy of Brian K Sullivan, Bloomberg

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Illustration of man running away from clock

The plaintiff owner filed its full repair claim for damages with its insurer six years after the fire and four years after the expiration of the contractual limitation period.

Suit Limitation Provisions in New York

January 28, 2025 — Bill Wilson - Construction Law Zone

New York law generally enforces a contractual suit limitation that specifies a “reasonable” period of time (usually shorter than the applicable statute of limitations) within which an action must be commenced. The contractual suit limitation needs to be fair and reasonable, given the circumstances of each particular case. The New York Court of Appeals recently examined this precedent in the context of an insurance policy enforcing an insurance contract’s two-year suit limitation period in Farage v. Associated Insurance Management Corp., 2024 N.Y. Slip Op. 05875 (Nov. 26, 2024).

In Farage, a Staten Island multi-unit apartment building was damaged in a fire. The plaintiff owner filed its full repair claim for damages with its insurer six years after the fire and four years after the expiration of the contractual limitation period. The insurer denied the claim. The plaintiff filed suit for breach of contract and breach of the covenant of good faith fair dealing. The insurer moved to dismiss the action based on the two-year limitation provision in the insurance contract.

Mr. Wilson may be contacted at wwilson@rc.com

Reprinted courtesy of Bill Wilson, Robinson & Cole LLP

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Gavel

Years after completion of the building, the building's owners and its lender filed a counterclaim agains Cornice in an Iowa federal court for breach of contract and negligence.

Seventh Circuit Finds Allegations of Occurrence and Property Damage Require a Defense

January 28, 2025 — Tred R. Eyerly - Insurance Law Hawaii

The Seventh Circuit reversed the district court's finding that the insured architecture firm was not entitled to a defense. Cornice & Rose International, LLC v. Acuity, 2024 U.S. App. LEXIS 29925 (7th Cir. Nov. 25, 2024).

Cornice, an architectural firm, oversaw the construction of a building in Iowa. Under the contract with the building owner, Cornice agreed to "prepare drawings setting forth in detail the quality levels of materials and systems and other requirements for the construction" of the building. Cornice also agreed to evaluate the project regularly to become "familiar with the progress and quality of the work completed."

Mr. Eyerly may be contacted at te@hawaiilawyer.com

Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert

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Limit

It's important to note that not everything discussed with a client or client representative in preparing for a deposition is going to be protected by privilege.

Understanding the Limits of Privilege When Applied to Witness Prep Sessions

January 28, 2025 — Stu Richeson - The Dispute Resolver

In my last post, Ethical Limits on Preparing a Witness for Deposition or Trial, I took a brief look at the ethical limits on preparing a witness for trial or deposition. This post will continue on that theme and examine the scope of privilege in connection with preparing witnesses for deposition and trial.

Typically, a meeting with a client or client representative to prepare deposition or trial testimony will be covered by attorney-client privilege. Both the communications between an attorney and the client or client representative in preparation to testify are privileged as are the documents provided by the attorney to the client to review in preparation for testify.[i] That privilege will typically apply to all employees of a corporate client, not just the control group or high-level management of the corporation.

Mr. Richeson may be contacted at sricheson@rllaw.com

Reprinted courtesy of Stu Richeson, Riess LeMieux

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Dispute with mediator

If you are in a dispute involving a joint venture relationship, consult with counsel regarding the best claims to assert as well as the evidence you maintain to prove the claims.

Dispute Among Joint Venture Partners and Joint Venture Agreement

January 28, 2025 — David Adelstein - Florida Construction Legal Updates

In a dispute involving joint venture partners and a joint venture agreement, one of the partners sued a third party (which purchased the assets of the other partner). Claims against the third party included tortious interference of the joint venture agreement between the partners, conspiracy to tortiously interfere with the joint venture agreement between the partners, aiding and abetting a breach of fiduciary duty by the other partner, and conspiracy with the other partner to breach a fiduciary duty.

The dispute was tried in a non-jury trial. The other partner and the third party prevailed. A few key points on the above claims asserted against the third party that failed:

  1. Tortious interference of the contract -- Since the trial court found that the other partner did NOT breach the joint venture agreement, the cause of action for tortious interference failed. “No cause of action for tortious interference with a contract can exist in the absence of a breach.”
  2. Conspiracy to tortiously interfere with a contract -- “If an underlying tort [e.g., tortious interference] has not been established, a count for conspiracy to commit that tort will not lie.”

Mr. Adelstein may be contacted at dma@kirwinnorris.com

Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.

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Green highlighter next to legislation in dictionary

Colorado’s recently enacted legislation (HB 24-1472), which significantly increases damages caps for tort actions, is now in effect.

Significant Increase in Colorado Tort Damages Caps Now in Effect Under Recent Legislation

January 28, 2025 — Gordon Rees Scully Mansukhani, LLP

Colorado’s recently enacted legislation (HB 24-1472), which significantly increases damages caps for tort actions, is now in effect. Given the legislation’s January 1, 2025, effective date, an early-2025 increase in new filings is anticipated for cases that otherwise could have been filed in 2024.

The increases include:

  • For noneconomic damages in tort actions (other than against medical professionals), more than double the previous cap to $1.5 million (with future inflation adjustment).[1]
  • In wrongful death actions (other than against medical professionals), a greater than threefold increase from the previous limit to $2.125 million (with future inflation adjustment).[2]
  • In medical professional actions for wrongful death, a 50% increase from the previous overall cap to $1.575 million in 2029 (with future inflation adjustment). For injury claims, more than double the previous cap for noneconomic damages to $875,000 in 2029 (with future inflation adjustment).[3]

Reprinted courtesy of Gordon Rees Scully Mansukhani, LLP

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Money bag cash

The statute tackles both progress payments and final payment, distinguishing between the two and allowing withholding of a progress payment when there is “reasonable cause” to do so.

“You Can’t Make Me Pay!”

January 28, 2025 — Daniel Lund III - Lexology

Several years ago, Louisiana enacted a law prescribing a mandamus proceeding for unpaid contract sums purportedly owed by a public entity to a contractor – Louisiana Revised Statute 38:2191. The statute tackles both progress payments and final payment, distinguishing between the two and allowing withholding of a progress payment when there is “reasonable cause” to do so.

On the other hand, at least one Louisiana appellate decision held on the topic of final payment: once a final payment amount is “due” per the statute – based upon passage expiration of the lien period following “formal final acceptance” – the act of making the final payment is purely ministerial and not subject to defenses. According to that court, a defense to payment based on assessed liquidated damages – because the damages were disputed by the contractor – could not trump the essence of the statute allowing the contractor to pursue mandamus to collect the final payment.

More recently, on a public works levee project in Lafourche Parish, a dispute arose during the work concerning the means to secure material for constructing the levees. The net effect of the dispute entailed a major change in the contract price.

Mr. Lund may be contacted at daniel.lund@phelps.com

Reprinted courtesy of Daniel Lund III, Phelps

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Fire smoke LA skyline

The idea of “managed retreat” has been applied to areas affected by rising sea levels and severe flooding, but fire-prone regions might not be the best candidates for abandonment.

After the Fire, Should Some Parts of Los Angeles Never Rebuild?

January 28, 2025 — Akshat Rathi - Bloomberg

The fires in and around Los Angeles are coming under control. The city’s mayor has already issued an executive order to speed up rebuilding. But equally catastrophic blazes are likely to strike again on a hotter planet, raising the question of whether some parts of the region should still be considered livable.

It’s not an unthinkable notion. There have been a handful of attempts at systematically moving populations away from regions severely affected by climate change. This kind of “managed retreat” has typically been applied to risks from rising sea levels, with recent programs in the US involving relocating tribal populations in Alaska and Washington.

But people affected by wildfires are only just starting to see efforts from governments to help them to move away from high-risk areas, including in LA county. A California program launched last year that offered up to $350,000 in loans to those affected by fires in 2018 and 2020 to shift to safer places fully allocated its funds within weeks.

Reprinted courtesy of Akshat Rathi, Bloomberg

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Malibu beach line homes

The California Court of Appeal recently reversed a judgment entered in favor of real estate brokers who were sued for breaching their fiduciary duties in connection with the sale of residential real estate in Malibu.

In Matter of First Impression, California Appellate Court Finds a Claim for a Real Estate Professional’s Breach of Fiduciary Duty is Assignable

January 28, 2025 — Briane Slome & Pamela Albanese - Lewis Brisbois Newsroom

San Diego, Calif. (January 17, 2025) - The California Court of Appeal recently reversed a judgment entered in favor of real estate brokers who were sued for breaching their fiduciary duties in connection with the sale of residential real estate in Malibu. The Court of Appeal found the trial court erred when it rendered judgment in favor of the brokers on the basis that the plaintiff lacked standing to pursue claims that had been assigned to her. The trial court reasoned that claims for breach of fiduciary duty against real estate brokers are highly personalized tort causes of action, which cannot be assigned. The Court of Appeal disagreed. In a case of first impression, it held that a cause of action for breach of a real estate broker’s fiduciary duties, which seeks damages related to property rights and pecuniary interests, is assignable.

The Court of Appeal’s decision in Lazar v. Bishop, issued December 19, 2024, involved a unique set of facts. The seller bought the property in 2006. His daughter, Laura Lazar, lived at the property. The seller hired a real estate broker to sell the home. The broker listed the property for $4.2 million. Thereafter, she persuaded the seller to drop the listing price to $3.15 million, the price at which it was ultimately sold.

Reprinted courtesy of Briane Slome, Lewis Brisbois and Pamela Albanese, Lewis Brisbois

Mr. Slome may be contacted at Brian.Slome@lewisbrisbois.com
Ms. Albanese may be contacted at Pamela.Albanese@lewisbrisbois.com

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Construction workers repairing siding on building

A Belarus immigrant died at Philadelphia developer's project.

Court Upholds $68M Jury Award Over 2021 Fatal Fall in Philadelphia

January 28, 2025 — Richard Korman - Engineering News-Record

A Pennsylvania Supreme Court judge has reaffirmed a $68.5-million jury verdict in a wrongful death case brought by the wife and child of an immigrant siding-installation worker who fell to his death while working on a small Philadelphia apartment project in late 2021.

Reprinted courtesy of Richard Korman, Engineering News-Record

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Historic building

In light of Notre Dame's restoration and the current wildfires devastating the Southern California region, safeguarding against fire is at the forefront of everyone's construction concerns.

Safeguarding History: Fire Risks in Renovating Historic Buildings

January 28, 2025 — Birgitte Messerschmidt - Construction Executive

The renovation of historic and unique buildings is both a labor of love and a huge responsibility. Rich in stories and architectural beauty, these structures link communities to their past. However, giving new life to these iconic buildings through renovation projects can place them in jeopardy, as fire-related risks remain a significant challenge. This is evidenced by the number of devasting fire tragedies that have happened during work on these structures, including at the Glasgow School of Art in 2014 and 2018 and the Notre-Dame Cathedral in 2019, showcasing how vulnerable these buildings are amid the status quo of renovation protocols.

Preventing these types of fire-related incidents during future historic building renovations, maintaining compliance with codes and standards such as NFPA 241, Standard for Safeguarding Construction, Alteration, and Demolition Operations, and NFPA 914, Code for the Protection of Historic Structures, must be a top priority for all workers on site. These resources provide workers with the proper tools and guidelines to address the intricate challenges that come with these operations.

Reprinted courtesy of Birgitte Messerschmidt, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

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Forensic Architect CA, AZ, NV, CO, TX, UT, FL, NM, OK - NCARB - National Council of Architectural Registration Boards

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Home in hand

Two New Toll Brothers Model Homes Open in Irvine, California

January 28, 2025 — Toll Brothers, Inc.

IRVINE, Calif., Jan. 21, 2025 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE: TOL), the nation's leading builder of luxury homes, has announced the grand opening of two new Southern California model homes at Elevate by Toll Brothers at Great Park Neighborhoods. The professionally decorated Avelina and Vidara model homes will be unveiled during a special event on Saturday, January 25 from 11 a.m. to 2 p.m. at the Elevate by Toll Brothers community located at 105 Apron in Irvine, California.

About Toll Brothers
Toll Brothers, Inc., a Fortune 500 Company, is the nation's leading builder of luxury homes. The Company was founded 58 years ago in 1967 and became a public company in 1986. Its common stock is listed on the New York Stock Exchange under the symbol "TOL." The Company serves first-time, move-up, empty-nester, active-adult, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds in over 60 markets in 24 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Indiana, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Washington, as well as in the District of Columbia. The Company operates its own architectural, engineering, mortgage, title, land development, smart home technology, and landscape subsidiaries. The Company also develops master-planned and golf course communities as well as operates its own lumber distribution, house component assembly, and manufacturing operations.

Construction worker holding hardhat

ABC: Construction Industry Must Attract 439,000 Workers in 2025

January 28, 2025 — Associated Builders and Contractors

WASHINGTON, Jan. 24, 2025 (GLOBE NEWSWIRE) -- The construction industry will need to attract an estimated 439,000 net new workers in 2025 to meet anticipated demand for construction services, according to a proprietary model developed and released today by Associated Builders and Contractors. In 2026, the industry will need to bring in 499,000 new workers as spending picks up in response to presumed lower interest rates.

"While the construction workforce has become younger and more plentiful in recent years, the industry still must attract 439,000 new workers in 2025 to balance supply and demand," said ABC Chief Economist Anirban Basu. "If it fails to do so, industrywide labor cost escalation will accelerate, exacerbating already high construction costs and reducing the volume of work that is financially feasible. Average hourly earnings throughout the industry are up 4.4% over the past 12 months, significantly outpacing earnings growth across all industries."

ABC's proprietary model uses the historical relationship between inflation-adjusted construction spending growth, sourced from the U.S. Census Bureau's Construction Put in Place Survey, and payroll construction employment, sourced from the U.S. Bureau of Labor Statistics, to convert anticipated increases in construction outlays into demand for construction workers at a rate of approximately 3,550 jobs per billion dollars of additional spending. This model also incorporates the current level of job openings, unemployment and projected industry retirements and exits into its computations.

2025 on Road Sunrise

New Year, New D&O Risks: Key Issues in D&O Insurance and Executive Protection

January 28, 2025 — Hunton Andrews Kurth LLP - Hunton Insurance Recovery Blog

Officers and directors must constantly navigate new and emerging risks, and that trend will continue in 2025. Ever-growing use (and misuse) of artificial intelligence, increased geopolitical risk, boardroom fallout following cybersecurity incidents, a new administration in the White House, and many other factors point to another eventful year for D&O exposures. Ensuring adequate protection for company leadership is more important than ever to attract and retain top talent.

Reprinted courtesy of Hunton Andrews Kurth LLP

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Seminar

Cybersecurity: The Evolving Threats and Increased Enforcement Challenges for The Construction Industry and Government Contractors Seminar

January 28, 2025 — Beverley BevenFlorez – CDJ Staff

The American Bar Association presents a one-day webinar to discuss the relevance of cybersecurity to those in the construction industry and general contractors. Panelists Alex Trafton and B. Stephanie Siegmann will cover the threats and enforcement challenges that construction industry professionals and general contractors face.

February 27th, 2025
Virtual Event

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New Video Shows Possible Start of Eaton Fire

A law firm suing Southern California Edison released an edited video that it says appears show electrical arcs and sparking on the night of Jan. 7 at the origin of the deadly Eaton Fire in Altadena.Brittany Hope reports for the NBC4 News at 11 a.m. on Monday Jan. 27, 2025.

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Why the L.A. Fires Are So Hard to Fight, According to an LAFD Captain | WSJ Hindsight

WSJ sat down with a Los Angeles Fire Dept. captain to learn how the Palisades and Eaton fires got out of control.

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