Construction Defects Lead to Demolition of Seattle’s 25-story McGuire Apartments Building

According to a story published last Thursday in Seattle PI: " The 25-story McGuire Apartments, at Second Avenue and Wall Street, would cost more to fix than the building is worth, according to its owners. Its most serious defect involves steel cables that are corroding inside of concrete slabs because the ends weren’t properly treated with a rust-proof coating and a pocket in the edge of the concrete that wasn’t properly sealed"

The report by Aubrey Cohen outlines the demolition plans which are expected to take between 12 and 18 months, and will utilize robotic Brokk Machines. The demolition plan calls for one story at a time to be demolished, with the debris to be trucked offsite. Demolition plans aim to minimize disruption to residents and businesses in the area by Limiting work 7 a.m. to 6 p.m. on weekdays and 9 a.m. to 6 p.m. Saturdays with "impact and percussive activities" limited to 8 a.m to 5 p.m weekdays.

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El Paso Increases Surety Bond Requirement on Contractors

The city of El Paso has recently increased surety bonds required of contractors from $10,000 to $50,000, according to the El Paso Times. Proponents of the increase believe it was necessary to protect homeowners from fly-by-night builders, while opponents argue that the increase will have an adverse effect on an industry in that is already suffering due to the economic slowdown.

Arguments for and against the increase have been flooding the blogosphere with their views. Christian Dorobantescu on the Small Business Entrepreneur Blog claims that “only about 15% of the city’s 2,500 contractors had been able to secure a higher bond to remain eligible for work after the new requirements were announced.” However, insurance companies have a different take. “From a surety broker standpoint, most contractors will be able qualify for the bond; some will just have to pay higher premium rates to obtain it,” a recent post on the Surety1 blog argues.

While the increased bond may help homeowners deal with construction defect claims, it is not clear what effect it will have on builders in El Paso.

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State Audit Questions College Construction Spending in LA

A state audit of the Los Angeles Community College District found many problems with their construction spending. Their report, as described in the Los Angeles Times, found construction money spent for other purposes, such as promotional photography and public relation tours, $28.3 million spent on projects that were later cancelled, and oversight committees that provided no oversight.

Earlier this year, the LA Times ran a series of articles detailing problems with the Los Angles Community College District’s construction program. The LA Times reported that the State Controller’s audit reached many of the same conclusions.

The Community College District disputed the findings.

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Who Is To Blame For Defective — And Still LEED Certified — Courthouse Square?

Remember Courthouse Square? I sure do. We have talked about the closed and evacuated LEED certified building a couple of times here on Builders Counsel. Well, it’s back in the news. This time building professionals are pointing fingers — but there is some talk about a fix. Still, its LEED certification remains.

If you read my past articles about Courthouse Square, you can get caught up on this mess. The short of it is that Salem, Oregon had the five-story government building and bus mall completed in 2000 for $34 Million. It was awarded LEED certification during the USGBC’s infancy. Last year, it became public that the building had significantly defective concrete and design. The Salem-Keizer Transit District worked with the City of Salem to shut the building down, and it has not been occupied since.

Last fall, Courthouse Square failed thorough forensic testing leading to a lengthy bout with a number of insurers.  The contractors and designers had been hauled into court, but the Transit District was able to settle with the architect and contractors. The only remaining party involved in the lawsuit appears to be the engineering firm, Century West Engineering. Most expert reports have pinned the responsibility for the poor design and materials on Century West’s shoulders.

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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com

Ohio Court Finds No Coverage for Construction Defect Claims

Charles and Valerie Myers hired Perry Miller to build their home. Myers v. United Ohio Ins. Co., 2012 Ohio App. LEXIS 287 (Ohio Ct. App. Jan. 26, 2012). After completion of the home, Miller was again hired to construct an addition which included a full basement, staircases, bathroom, bedroom, hallway and garage.

After the addition was completed, one of the basement walls began to crack and bow. Miller began to make repairs, but eventually stopped working on the project. Other contractors were hired to make repairs, but further problems developed. A second basement wall began to bow and crack, allowing water into the basement. The wall eventually had to be replaced. Subsequently, the roof over the addition began to leak in five or six places before the drywall could be painted. The leaks caused water stains on the drywall and cause it to separate and tear. It was discovered the roof needed to be replaced.

The Myers sued Miller and his insurer, United Ohio Insurance Company. The trial court ruled that the policy did not provide coverage for faulty workmanship, but did provide coverage for consequential damages caused by repeated exposure to the elements. United Ohio conceded liability in the amount of $2,000 to repair water damage to the drywall. United Ohio was also found liable for $51,576, which included $31,000 to repair the roof and ceiling and $18,576 to replace the basement wall.

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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com

A Performance-Based Energy Code in Seattle: Will It Save Existing Buildings?

The City of Seattle has one of the most stringent energy codes in the nation. Based upon the Washington State Energy Code (which has been embroiled in litigation over its high standards), the code demands a lot from commercial developers. But, does it prevent developers from saving Seattle?s classic and old buildings? Perhaps.

The general compliance procedure requires buildings to be examined during the permitting process. This means that buildings are examined before they begin operating. The procedure is not malleable and is applicable to all buildings, old and new, big and small.

The downside of this procedure is that it eliminates awarding compliance to those buildings exhibiting a number of passive features, such as siting, thermal mass, and renewable energy production. This problem has prevented a number of interesting and architecturally pleasing existing building retrofits from getting off the ground. The cost of complying with the current system can be 20% more, and it might prevent builders from preserving a building?s historical integrity.

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Reprinted courtesy of Douglas Reiser of Reiser Legal LLC. Mr. Reiser can be contacted at info@reiserlegal.com

California Construction Bill Dies in Committee

AB 20, which its sponsor, Linda Halderman (R-Fresno), stated would discourage class action lawsuits against builders and protect jobs in the construction industry, has died in committee. Although the Business Journal reported in June that Haldeman was promoting the bill during a talk in her district and the bill is still on her web site, the California Assembly reports that the bill failed in committee on March 15, 2011. It is possible that the bill could be reconsidered, but the Assembly Committee on Judiciary sees the bill as responding to issues quieted by SB 800 which gives builders the right to repair alleged defects before any suit can be filed.

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South Carolina “occurrence” and allocation

In Crossman Communities of North Carolina, Inc. v. Harleysville Mutual Insurance Co., No. 26909 (S.C. Aug. 22, 2011), insured Crossman was the developer and general contractor of several condominium projects constructed by Crossman’s subcontractors over multiple years. After completion, Crossman was sued by homeowners alleging negligent construction of exterior components resulting in moisture penetration property damage to non-defective components occurring during multiple years.  Crossman settled the underlying lawsuit and then filed suit against its CGL insurers to recover the settlement amount.  Crossman settled with all of the insurers except for Harleysville.  Crossman and Harleysville stipulated that the only coverage issue was whether there was an “occurrence.”  The trial court subsequently entered judgment in favor of Crossman, determining that there was an “occurrence.” The trial court also ruled that Harleysville was liable for the entire settlement amount without offset for the amounts paid by the other insurers.  

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Reprinted courtesy of CDCoverage.com