CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - WEDNESDAY, NOVEMBER 20, 2024

Maui Fire

Hawaiian Electric Industries formalized a $2 billion agreement to settle damage claims.

Hawaiian Electric Finalizes $2 Billion Maui Fire Settlement

November 18, 2024
Mark Chediak - Bloomberg

Hawaiian Electric Industries formalized a $2 billion agreement to settle damage claims from a wildfire that razed the historic town of Lahaina and killed more than 100 people.

The utility-owner had reached a tentative agreement in August in which it, along with other defendants including the state of Hawaii, Maui County and landowners, would pay $4 billion to resolve hundreds of lawsuits stemming from last year’s wildfire, according to a filing Tuesday.

The settlements don’t resolve claims with insurers that are part of separate lawsuits.

Reprinted courtesy of Mark Chediak, Bloomberg

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CDJ NEWS THIS WEEK



People meeting over contract

The appellate court found the defect claims raised by the subsequent buyer were NOT covered by the limited warranty agreement, where the only warranty remaining was structural (load bearing) in nature.

Consider Arbitration Provision in Homebuilder’s Warranty and Purchase-and-Sale Agreement

November 18, 2024 — David Adelstein - Florida Construction Legal Updates

When you enter into a contract with a homebuilder, particularly a tract homebuilder, please consider two things when it comes to dispute resolution: (1) your purchase-and-sale agreement likely contains an arbitration provision, and (2) your limited warranty agreement you get in connection with closing likely also reinforces the arbitration provision, especially with warranty claims governed by the limited warranty agreement. This dispute resolution is important because it means the homebuilder wants disputes resolved through the arbitration process and NOT through the litigation process (where the nature of disputes and allegations are public).

Look, there are pros and cons with arbitration, no different than litigation. Arbitrating a dispute is not necessarily a bad thing, and with certain disputes, ideal. There is no right to appeal in arbitration, but the dispute should resolve itself quicker than litigation, and you’ll have more control over the decision maker, i.e., the arbitrator.

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

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

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Court exterior

The Nebraska Court of Appeals found that an arbitrator’s conduct warranted the partial vacatur of the award, which granted relief to a subcontractor who filed a counterclaim after the arbitration hearing had closed.

Courthouse Reporter Series: Nebraska Court of Appeals Vacates Arbitration Award for Misconduct

November 18, 2024 — Brendan J. Witry - The Dispute Resolver

Vacating an arbitration award is often seen as an uphill battle. Indeed, the U.S. Supreme Court has stated that “courts may only vacate an arbitrator’s decision ‘only in very unusual circumstances.’” Oxford Health Plans, LLC v. Sutter, 569 U.S. 564, 568 (2013). The Federal Arbitration Act provides limited grounds to seek the vacatur of an arbitration award. In Lund-Ross Constructors v. Duke of Omaga, LLC, ___ N.W.3d ___, 33 Neb.App.73, the Nebraska Court of Appeals found that an arbitrator’s conduct warranted the partial vacatur of the award, which granted relief to a subcontractor who filed a counterclaim after the arbitration hearing had closed.

Lund-Ross contracted with Duke of Omaha to build an apartment complex in Omaha. Lund-Ross, in turn, sub-contracted with A Raymond Plumbing. Following completion of the building, Owner withheld payment from Lund-Ross, who in turn, withheld payment from Raymond. Both Lund-Ross and Raymond filed mechanics liens and initiated suits; Raymond’s suit ultimately was dismissed for want of prosecution. Lund-Ross proceeded to arbitration with Owner, naming Raymond as a respondent. Raymond did not participate in the arbitration as a claimant at the time of the hearing.

Mr. Witry may be contacted at bwitry@lauriebrennan.com

Reprinted courtesy of Brendan J. Witry, Laurie & Brennan LLP

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Hurricane

Many contractors in western North Carolina found their projects halted, and their schedules thrown off by this force majeure event.

Recovering Time and Costs from Hurricane Helene: Force Majeure Solutions for Contractors

November 18, 2024 — Matthew DeVries - Best Practices Construction Law

When Hurricane Helene struck North Carolina, it caused severe disruptions to construction projects across the state. Baxter International’s North Cove facility in Marion, N.C., was completely shut down after floodwaters damaged the site and bridges leading to it. Elsewhere, landslides and floods wiped out large sections of Interstate 40, making transportation of materials and equipment nearly impossible. Many contractors in western North Carolina found their projects halted, and their schedules thrown off by this force majeure event.

In situations like these, contractors and subcontractor need a plan to mitigate the impact of such natural disasters on their projects. Here are five practical tips to help you secure time extensions and/or compensation for delays:

1. Include a Robust Force Majeure Clause in Your Contract
When disaster strikes, your contract is your first line of defense. A well-drafted force majeure clause can make the difference between bearing the costs yourself and getting an extension or compensation. The clause should clearly list specific events such as hurricanes, floods, and road closures as qualifying force majeure events.

Mr. DeVries may be contacted at mdevries@buchalter.com

Reprinted courtesy of Matthew DeVries, Buchalter

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Rule Exception Signs

Should the Hooker exception to the Privette doctrine apply where a landowner directs a contractor to perform work that is at odds with legal requirements?

The Privette Doctrine and Its Exceptions: Court of Appeal Grapples With the Easy and Not So Easy

November 18, 2024 — Garret Murai - California Construction Law Blog

In CBRE v. Superior Court, 102 Cal.App.5th 639 (2024), the 4th District Court of Appeal grappled with a thorny and not-so-thorny issue involving injured parties under the Privette doctrine. The less thorny issue was whether application of the Privette doctrine depends on whether a written contract exists between the parties. Spoiler: It does not. The thorny issue was whether the Hooker exception to the Privette doctrine – which applies when a landowner exercises control over a project – should apply where a landowner directs a contractor to perform work that is at odds with legal requirements.

The CBRE Case
Property Reserve, Inc. owns an office building managed by CBRE in San Diego, California. On April 9, 2019, PRI entered into a lease agreement with a new tenant for a suite in the building. The lease required that PRI perform certain tenant improvements.

Mr. Murai may be contacted at gmurai@nomosllp.com

Reprinted courtesy of Garret Murai, Nomos LLP

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Greenhouse gas pollution

The City and County of Honolulu and the County of Maui sued several fossil fuel companies, including Aloha Petroleum, Ltd., for climate change-related harms.

Hawaii Supreme Court Reaffirms an "Accident" Includes Reckless Conduct, Finds Green House Gases are Pollutants

November 18, 2024 — Tred R. Eyerly - Insurance Law Hawaii

Answering certified questions from the federal district court, the Hawaii Supreme Court reaffirmed its prior holding that reckless conduct is an "occurrence' or accident. The court further held that green house gas (GHG) emissions were pollutants under liability policies. Aloha Petroleum, Ltd. v. National Union Fire Ins. Co. of Pittsburg, PA., et al., 2024 Haw. LEXIS 179 (Haw. Oct. 7, 2024). [Disclosure - our office was co-counsel on an amicus brief in this case filed on behalf of the United Policyholders].

The City and County of Honolulu and the County of Maui sued several fossil fuel companies, including Aloha Petroleum, Ltd., for climate change-related harms. The suits alleged that the fossil fuel industry knew beginning in the 1960s that its products would cause catastrophic climate change. Rather than mitigate their emissions, defendants concealed their knowledge of climate change, promoted climate science denial, and increased their production of fossil fuels. Defendants' actions, the complaints alleged, increased carbon emissions, which caused significant damage to the counties.

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

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

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Testifying Construction and Building Industry Standard of Care Expert Witness

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Policies Update

Below is a brief description of several amendments to the Federal Rules of Civil Procedure and Evidence that will take effect December 1, 2024.

Changes to the Federal Rules – 2024

November 18, 2024 — William L. Doerler - The Subrogation Strategist

Unless Congress moves quickly, several amendments to the Federal Rules of Civil Procedure and Evidence will take effect December 1, 2024. Below is a brief description of the amendments.

Rules of Evidence
Rule 107 is a new rule. This rule addresses illustrative aids, stating that, if such aid helps the trier of fact to understand the evidence or an argument, a party may use the aid if its utility is not substantially outweighed by the danger of, among other things, unfair prejudice. As noted under the discussion of Rule 1006, below, an illustrative aid - offered only to help the trier of fact understand the evidence - is generally not admissible into evidence.

Rule 613 currently states that extrinsic evidence of a witness’s prior inconsistent statement is admissible only if the witness is given an opportunity to explain or deny the statement and the adverse party is given an opportunity to examine the witness about it, or if justice so requires. As amended, the court has the discretion to forego this requirement.

Mr. Doerler may be contacted at doerlerw@whiteandwilliams.com

Reprinted courtesy of William L. Doerler, White and Williams LLP

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House on plans

A wireless carrier rebuffed in Jennings, Louisiana, on an application to rezone residential property to site a monopole cell tower sought relief from the federal court for the Western District of Louisiana.

Run Spot...Run!

November 18, 2024 — Daniel Lund III - Lexology

"The 'classic' definition of spot zoning is 'the process of singling out a small parcel of land for a use classification totally different from that of the surrounding area for the benefit of the owner of such property and to the detriment of other owners.’ Anderson’s American Law of Zoning, 4th Edition, § 5.12 (1995)” (from plannersweb.com).

A wireless carrier rebuffed in Jennings, Louisiana, on an application to rezone residential property to site a monopole cell tower sought relief from the federal court for the Western District of Louisiana. The city lacked any wireless tower provisions in its ordinances, and the carrier asserted that existing “commercial property within the appropriate range” was unavailable.

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

Reprinted courtesy of Daniel Lund III, Phelps

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Mediation

Mediation allows the parties to come up with a way for both sides to “win” in a creative way.

More Musings on Why I Mediate

November 18, 2024 — Christopher G. Hill - Construction Law Musings

Whew! I’m back. And yes, I know it’s been a while (it has been a busy year, both personally and professionally). Hopefully, this will be the first of at least a few more consistent posts here at Construction Law Musings. Now, on with the post:

Over the last few weeks, I’ve had a surge in mediation, both in my capacity as a mediator and as counsel for construction industry clients. These recent events have reaffirmed what I have always believed to be true, namely that no construction case is impossible to settle and avoid the cost and expense of litigation. I was also reminded of why I became a certified mediator and of the satisfaction that I get from helping individuals and construction companies find a business solution and closure.

Mr. Hill may be contacted at chrisghill@constructionlawva.com

Reprinted courtesy of The Law Office of Christopher G. Hill

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Gavel illustration

The plaintiff worked as a clerk for several years in the 1970s in a 19-story office building that opened in 1963.

Cross-Office Team Secures Defense Verdict in Favor of Client in Asbestos Case

November 18, 2024 — Lewis Brisbois Newsroom

St. Louis/Kansas City, Mo. (October 23, 2024) - St. Louis Partners Tracy J. Cowan and Karen M. Volkman, along with Kansas City Partner Vincent Gunter, secured a defense verdict in a Jackson County, Missouri matter on behalf of a Lewis Brisbois client, which was the successor-in-interest to a life, health and reinsurance firm, against claims brought by an individual who worked in the corporate headquarters and was diagnosed with mesothelioma.

Background
The plaintiff was 62 years old when she was diagnosed with mesothelioma. She worked as a clerk for several years in the 1970s in a 19-story office building that opened in 1963. The plaintiff claimed construction work being performed in the areas where she worked exposed her to asbestos from above the suspended ceiling. The beams and girders in the building were fireproofed with sprayed-on insulation. Although the plaintiff did not perform any maintenance work, she relied on evidence from several operating engineers who worked above the ceiling near the fireproofing to establish the presence of asbestos in the building. The plaintiff submitted claims for negligence and unsafe workplace. At the beginning of trial, the LBBS client had a pending motion for summary judgment on the grounds that the plaintiff’s exclusive remedy was governed by the Missouri Workers’ Compensation Law. The Court denied a motion to continue the trial and submitted the workers’ compensation issue as an affirmative defense.

Reprinted courtesy of Lewis Brisbois

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News and Coffee

Pillsbury's Real Estate and Construction Law Team discusses recent industry news.

Real Estate & Construction News Roundup (10/23/24) – Construction Backlog Rebounds, Real Estate Sustainability Grows, and Split Incentive Gap Remains Building Decarbonizing Barrier

November 18, 2024 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog

In our latest roundup, construction output decreased, office utilization unchanged, September apartment starts fell 15% from a year ago as developers pulled permits, and more!

  • Developers pulled permits for a seasonally adjusted rate of 398,000 apartments in buildings with five units or more, a 17.4% YOY drop and a 10.8% decrease compared to August 2024. (Leslie Shaver, Multifamily Dive)
  • Construction input prices decreased 0.9% in September due to dips in two of three energy subcategories, reflecting the trend of overall material price stabilization over the past 12 months. (Sebastian Obando, Construction Dive)
  • Thanks in part to the Federal Reserve’s lowering of the interest rate, construction backlog rebounded in September after slumping at the end of the summer. (Joe Bousquin, Construction Dive)

Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Pen lying on Insurance document

The average loss from email-based fund diversion frauds in all industries is less than $175,000, but many are way above average cost and far above claim payout limits set by insurers trying to limit their own risks.

When Cyber Crooks Steal Payments, Think Insurance Makes Up The Loss? Think Again.

November 18, 2024 — Richard Korman - Engineering News-Record

In Summer 2023, the payment system for a small office and warehouse project that Beck Properties was developing for itself in South St. Paul, Minn., seemed to be running smoothly. Emails were criss-crossing back and forth and paper checks were landing in mailboxes.

Reprinted courtesy of Richard Korman, Engineering News-Record

Mr. Korman may be contacted at kormanr@enr.com

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Legal books

The Court found the Station met the criteria for design immunity and granted Summary Judgment in BWB&O’s Client’s favor.

Case Dispositive Motion for Summary Judgment Granted for BWB&O’s Client in Wrongful Death Case!

November 18, 2024 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

Congratulations to San Diego Partner JohnPaul Salem on his recent MSJ victory in a wrongful death case!

Plaintiffs, the family of a pedestrian who was struck and killed by a train at a San Diego trolley station when he walked onto the tracks while warning lights and bells were active, filed suit for (i) dangerous condition of public property; and (ii) negligence arising out of the accident. Plaintiffs alleged BWB&O’s Client had created a dangerous condition and failed to warn of the alleged danger.

Reprinted courtesy of Dolores Montoya, Bremer Whyte Brown & O'Meara LLP

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Consulting Design and Architecture Expert Witness

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

California Architectural Registration Board Supplemental Examination Commissioner

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Seminar

Oregon Land Use Law Seminar

November 18, 2024 — Beverley BevenFlorez – CDJ Staff

The 28th annual event features Oregon land system professionals in a blend of individual speakers, topics, and informative panel presentations. The two-day seminar is relevant for “land use practitioners, planners, federal, state and local government employees, land use decision makers, developers, citizens and anyone who works and participates in the Oregon land use system—whether it be the private or public sector.”

December 5th-6th, 2024
Royal Sonesta Portland Downtown
506 SW Washington St
Portland OR, 97204

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Insurance policy

The Rise of Captives: How They Are Changing the Insurance Landscape

November 18, 2024 — The Hartford Staff - The Hartford Insights

In today’s increasingly complex and unpredictable business environment, companies are facing heightened risks that challenge traditional insurance models. As a result, many businesses are turning to captive insurance as a solution. Captive insurance, once considered a niche tool for large corporations, is gaining popularity among businesses seeking more control over their risk management strategies.

What Is a Captive?
A captive is an insurance option that provides insurance to, and is controlled by, its owners. Captives allow the insured entities to benefit from better-than-expected loss experience and potentially reduce the total cost of risk. They are unique, are formed and licensed by many domiciles and are regulated either onshore or offshore.

Reprinted courtesy of The Hartford Staff, The Hartford Insights

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Penalty with gavel

OSHA Penalties in Fort Lauderdale Crane Crash Target Rigging Contractor

November 18, 2024 — Richard Korman - Engineering News-Record

Federal safety officials have proposed penalties against a crane rigging contractor and a tower crane owner related to the April tower crane accident in Fort Lauderdale, Fla., in which a rigger died in a long fall from a high-rise apartment building and a tower crane section came crashing down on motorists.

Mr. Korman may be contacted at kormanr@enr.com

Reprinted courtesy of Richard Korman, Engineering News-Record

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Star Trophy Award

K. Hovnanian® Homes Recognized with Department of Energy Housing Innovation Award

November 18, 2024 — K. Hovnanian Homes

PHOENIX, Oct. 21, 2024 (GLOBE NEWSWIRE) -- K. Hovnanian® Homes is proud to announce the U.S. Department of Energy (DOE) recognized their Phoenix Division as a 2024 Housing Innovation award winner for homebuilding excellence at their Edgewood Estates project.

This prestigious national award is given to leading homebuilders for their achievements in crafting Zero Energy Ready Homes (ZERH). A home built to the DOE ZERH standard is designed to reduce energy consumption so that if a homeowner decided to add a renewable energy system, the amount of energy produced would offset the amount of energy used in that home.

These homes must meet the DOE ZERH National Program Requirements' rigorous efficiency and performance criteria and be verified by a qualified third-party as part of their certification process; with their meticulous approach to energy efficiency in new-construction homebuilding, K. Hovnanian's Phoenix Division was determined to exemplify industry-leading energy efficiency, indoor air quality, comfort, and construction quality.

Learn more about K. Hovnanian's energy-efficient homes in Arizona at www.khov.com/az.

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Northeast Wildfires Prompt New Evacuations

The dry conditions across the Northeast are going from bad to worse with a new round of wildfires and evacuations, NBC News' George Solis reports from Greenwood Lake, New York.

CDJ Video Channel

Trunk Tower: Louis Vuitton's Luxury Fix to Mask Construction at Fifth Avenue Flagship | NBC New York

A luxurious trunk tower has taken up residence on Fifth Avenue, but it is actually a snazzy solution to hide construction going on at Louis Vuitton's flagship store, NBC New York's Gus Rosendale reports.

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