Nevada Bill Aims to Reduce Legal Fees For Construction Defect Practitioners

Assemblyman Ira Hansen and twelve additional members of Nevada’s Assembly are sponsoring Assembly Bill 285. AB 285 Revises provisions governing an award of attorney’s fees in causes of action for constructional defects. Existing law generally provides that a claimant may recover reasonable attorney’s fees as part of the claimant’s damages in a cause of action for constructional defects. (NRS 40.655)

This bill removes this provision and instead authorizes a court to award reasonable attorney’s fees to a prevailing party involved in such a cause of action if an independent basis for the award exists pursuant to existing law which authorizes a court to award attorney’s fees in certain circumstances, or Rule 68 of the Nevada Rules of Civil Procedure, which provides for the payment of reasonable attorney’s fees by an offeree who rejects an offer and subsequently fails to obtain a more favorable judgment.

In an AP report published in Business Week it is suggested that the target objective of legislators centers on what it refers to as Nevada’s "Rampant construction defect lawsuits".

According to Business Week "The suits bring in hundreds of millions of dollars for lawyers and have put construction companies out of business. Hansen says fewer construction firms mean higher prices for Nevada consumers."

Click Here To Read Full Text and Revisions of Assembly Bill 285

Dust Infiltration Due to Construction Defect Excluded from Policy

A summary judgment was affirmed in the case of Brown v. Farmers Group, by the California Court of Appeals. The Browns bought a new home in Oakley, California. At the time, they signed disclosure statement “acknowledging that the area around their home experienced gusty winds and would be in development for years to come, which might result in dust and airborne mold.”

The Browns found an unusual amount of dust in their home, which became worse when they ran their heating and air conditioning system. Shelia Brown was later diagnosed with chronic valley fever, which was attributed to airborne mold. The Browns contacted Farmers which investigated the house. Although the adjustor from Farmers said the Browns would be covered, Farmers denied the claim.

After the Browns moved out of the house, an inspector found that the HVAC line in the attic was disconnected, sending dust into the home. The Browns brought action against Mid-Century Insurance, which managed the policy, and Farmers. The identified the HVAC defect, window problems, and valley fever as causes, suing for breach of contact, breach of implied covenant of good faith and fair dealing, and the intentional infliction of emotional distress.

The court rejected all these claims. The policy with Farmers excluded losses due to defective construction. This ruled out the faulty HVAC system and any problems there might have been from the windows. The policy also specifically excluded losses from contamination, fungi, pathogens, and noxious substances. The court further found that the adjustor’s opinion was irrelevant to the question of what the policy actually covered. Finally, the court found no evidence of intentional infliction of emotional stress.

On review, the appeals court upheld the trial court’s conclusions and affirmed the summary judgment.

Read the court’s decision…

Ohio “property damage” caused by an “occurrence.”

In JTO, Inc. v. State Automobile Mut. Ins. Co., No. 2010-L-062 (Ohio Ct. App. March 25, 2011), general contractor JTO was sued by hotel project owner Marriott for breach of contract and warranties seeking damages for the repair of construction defects resulting in moisture penetration property damage to interior components. JTO filed a third party complaint against subcontractor Farizel and also tendered its defense as an additional insured under Farizel’s State Auto CGL policy.

Read the full story…

Reprinted courtesy of CDCoverage.com

Census Bureau, HUD Show Declines in Residential Construction

May 17, 2011 – CDJ Staff

The U.S. Census Bureau and the Department of Housing and Urban Development released their summary of residential construction for April 2011 on May 17.

Building permits for privately owned housing units were down 4% from last month and 12% from last year. Similarly, privately-owned housing starts were down 10% from March and 23% below the previous year.

For further details, read the Census Bureau/HUD report

Appeals Court Upholds Decision by Referee in Trial Court for Antagan v Shea Homes

In the case Antangan v. Shea Homes Ltd. Partnership (Cal. App., 2012), Plaintiffs appealed “an order vacating a judgment and entering a modified judgment in their construction defect action against defendants Shea Homes, Inc. and Shea Homes Limited Partnership,” while the Defendant, Shea Homes Limited Partnership (Shea Homes) appealed “an order of the judicial referee denying its motion to strike and tax costs.”

On the Antagon issue, the appeals court concluded that “the trial court did not err by vacating and modifying its judgment so that the cost of referee’s fees would be equally divided by the parties and consistent with a prior stipulation they filed in court.”

On the Shea Homes issue, the appeals court concluded: “1) the judicial referee did not err by ruling that plaintiffs’ offers to compromise (§ 998) were validly served on Shea Homes’ counsel, 2) the offers substantially complied with statutory requirements, 3) the offers were not required to be apportioned, and 4) the referee’s award of $5,000 as costs for a person assisting plaintiffs’ counsel was not an abuse of discretion.” The appeals court affirmed the judgment.

Here is a brief history of the trial case: “Plaintiffs Chito Antangan, Jimmy Alcova and other homeowners brought an action against defendants Shea Homes, Inc. and Shea Homes Limited Partnership for damages alleging that the properties they purchased from these ‘developer defendants’ were defective. Plaintiffs claimed numerous construction defects required them ‘to incur expenses’ for ‘restoration and repairs’ and the value of their homes had been diminished.”

In response, Shea Homes filed a motion for an order to appoint a judicial referee. The motion was granted and it was ruled that “a referee would ‘try all issues’ and ‘report a statement of decision to this court.’”

On May 10, 2010 the judicial referee (Thompson) “awarded plaintiffs damages and various costs, and ruled that ‘Shea Homes shall bear all of the Referee’s fees.’” The latter ruling would become a matter for contention later on.

In July of 2010, the plaintiffs “sought, among other things, $54,409.90 for expert fees, and $14,812.50 for the services of Melissa Fox for ‘exhibit preparation & trial presentation.’ Shea Homes filed a motion to strike and/or tax costs claiming: 1) Fox was a paralegal, 2) plaintiffs were not entitled to attorney’s fees, and 3) the fees for Fox’s services were an indirect and improper method to obtain attorney’s fees. The referee disagreed and awarded $5,000 for Fox’s services. The referee also ruled that plaintiffs had properly served valid offers to compromise (§ 998) on Shea Homes’ counsel in 2009. He said those offers to defendants in the case at that time did not have to be apportioned.”

“Antangan contends the trial court erred when it vacated and modified its original judgment, which ordered Shea Homes to pay all the referee’s fees. We disagree.”

Antagon contended that the trial court erred when it vacated and modified its original judgment regarding Shea Homes paying the referee’s fees. The appeals court disagreed: “A trial court has inherent authority to vacate or correct a judgment that is void on its face, incorrect, or entered by mistake. (§ 473; Rochin v. Pat Johnson Manufacturing Co. (1998),67 Cal.App.4th 1228; Olivera

Read the court’s decision…

Washington Court Limits Lien Rights of Construction Managers

A newly filed, yet unpublished, court opinion opines that a construction manager cannot file a construction lien in Washington state. So, how far reaching is this opinion?

In the case of Blue Diamond Group Inc. v. KB Seattle 1, Inc., et al, a New York construction manager filed a lien against the Westfield Southcenter Mall in Tukwila, Washington. The lien was filed after the owner of a coffee stand failed to pay Blue Diamond for consulting services used in the construction of a kiosk.

Blue Diamond served as the owner’s agent, assisting with managing subcontractors, vendors and other tasks. The manager’s tasks also included paying invoices, managing deliveries, setting schedules and other site managerial tasks. Blue Diamond was not registered as a contractor under Washington’s RCW 18.27.

Read the full story…

Read the court’s decision…

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

Alaska Supreme Court Dismisses Claims of Uncooperative Pro Se Litigant in Defect Case

The Alaska Supreme Court found that in the case of Khalsa v. Chose, Ms. Khalsa? failure to cooperate with the courts has obligated them to dismiss her claims against Mr. Chose. Ms. Khalsa bought a home kit from Mandala Custom Homes of Nelson, British Columbia, Canada. Mr. Chose, one of the owners of Mandala was paid by Ms. Khalsa to supervise assembly in Fairbanks. After construction, the roof developed leaks. Ms. Khalsa stated that when climbing a ladder to inspect a skylight leak, she fell and injured herself.

During the subsequent suit, Khalsa proved uncooperative. She skipped a pretrial conference. She attended a hearing that set discovery deadlines but then did not comply with discovery, including her failure to provide medical records documenting her injuries. She eventually said that she would only be able to travel from Arizona to Alaska if the defendants paid for her and her caretaker?s expenses.

When finally deposed, Khalsa terminated the deposition after five minutes, alleging the deposition was “intentionally designed to cause [her] to endure further emotional distress, due to the psychological trauma . . . that was caused or contributed to by the defendants.”

Eventually, the lower court sanctioned her twice. In July, 2008, the court concluded that her failure to provide medical records required dismissal of her injury lawsuit. In October of that year, the court dismissed all remaining claims due to her “pattern of excuses and long delays in providing information for discovery culminating in her refusal to participate in her deposition by the defendants.” Further, Khalsa has argued that the trial court displayed “prejudice and bias toward the pro se plaintiff.”

The Alaska Supreme Court rejected all of Ms. Khalsa?s claims, dismissing her case. They did, however, note that she has thirty days to file an appeal.

Read the court’s decision…

Homebuilders Go Green in Response to Homebuyer Demand

McGrawHill Construction reports that 17 percent of new homes and remodels in 2011 were done with green building practices. Their report estimates that by 2016, this will rise to 29 to 38 percent of the market for home construction and remodeling.

Consumers see the green buildings as more desirable, particularly where they are more energy efficient. Two thirds of builders noted their customers were interested in features that would lower the energy use of their homes. Consumers also feel that green building materials are more durable and see green homes as higher quality.

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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.

Read the full story…

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