Justia Construction Law Opinion Summaries

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At issue in this case was the applicability of a broad, absolute insurance pollution exclusion clause to a claim based on negligent installation of a hot water heater that led to the release of toxic levels of carbon monoxide in a residential home. Zhaoyun "Julia" Xia purchased a new home constructed by Issaquah Highlands 48 LLC. Issaquah Highlands carried a policy of commercial general liability insurance through ProBuilders. Soon after moving into her home, Xia began to feel ill. A service technician from Puget Sound Energy investigated Xia's home and discovered that an exhaust vent attached to the hot water heater had not been installed correctly and was discharging carbon monoxide directly into the confines of the basement room. The claims administrator for ProBuilders, NationsBuilders Insurance Services Inc. (NBIS), mailed a letter to Xia indicating that coverage was not available under the Issaquah Highlands policy. As a basis for its declination of coverage, NBIS rested on two exclusions under the policy: a pollution exclusion and a townhouse exclusion. NBIS refused to either defend or indemnify Issaquah Highlands for Xia's loss. When a nonpolluting event that was a covered occurrence causes toxic pollution to be released, resulting in damages, the Washington Supreme Court believed the only principled way for determining whether the damages are covered or not was to undertake an efficient proximate cause analysis. Under the facts presented here, the Court found ProBuilders Specialty Insurance Co. correctly identified the existence of an excluded polluting occurrence under the unambiguous language of its policy. However, it ignored the existence of a covered occurrence negligent installation-that was the efficient proximate cause of the claimed loss. Accordingly, coverage for this loss existed under the policy, and ProBuilders's refusal to defend its insured was in bad faith. View "Xia v. Probuilders Specialty Ins. Co." on Justia Law

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In 1990, after Denver determined that it needed a new airport, a group of citizens formed the Stapleton Redevelopment Foundation to develop the former Stapleton International Airport. The Stapleton Redevelopment Foundation created a master plan to convert the former airport site. In 1995, the private, nonprofit Stapleton Development Corporation (“SDC”) was formed to lease and sell the former airport property. SDC selected Forest City as the master developer for redevelopment of the property. Forest City sold the vacant residential lot at issue here to a professional home builder, Infinity Home Collection at Stapleton, LLC (Infinity), with whom Respondent/Cross-Petitioner Tad Rogers had contracted to build a home. When Infinity purchased the lot from Forest City, the lot was vacant, did not have utilities, and still needed to be graded to its final configurations. Rogers ultimately purchased the lot and the home from Infinity. The home included a foundation drain system designed to collect ground water into a sump pit and to pump that water into the yard by way of a sump pump. Because of the high water table beneath his house, coupled with calcite leaching from the recycled concrete aggregate base course used to construct the roads, calcite built up in the foundation drain around Rogers' house. In turn, this water and calcite buildup made his basement uninhabitable and caused his sump pump to run and discharge more water. This case presented an issue of whether contractual privity was necessary for a home buyer to assert a claim for breach of the implied warranty of suitability against a developer. The Colorado Supreme Court held that, because breach of the implied warranty of suitability was a contract claim, privity of contract was required in such a case. Here, because the home buyer did not have contractual privity with the developer, he could not pursue a claim against the developer for breach of the implied warranty of suitability. View "Forest City v. Rogers" on Justia Law

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Escobar was an employee of O’Donnell, a sub-subcontractor of Bayside, which was a subcontractor of Oltmans, the general contractor on a Menlo Park construction project. Escobar sued Oltmans and the property owner, alleging that Oltmans negligently cut and left unsecured a skylight opening in the building under construction, through which Escobar fell while installing scaffolding that O’Donnell was erecting for Bayside. Oltmans filed a cross-complaint against the subcontractors, alleging a right to contractual indemnity and breach of Bayside’s contractual obligation to provide certificates of insurance certifying that Oltmans was covered as an additional insured under liability policies the subcontractors were obligated to obtain. The subcontract provided indemnity to Oltmans for injury claims arising out of the scope of the subcontractor’s work “except to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct” of Oltmans. Reversing the trial court, the court of appeal ruled in favor of Oltmans. Under such a provision the general contractor is precluded from recovering indemnity for liability incurred as a result of its own active negligence but may be indemnified for the portion of liability attributable to the fault of others. The court noted the same question arises as to the meaning of Civil Code section 2782.05, which renders unenforceable an indemnity provision “to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor.” View "Oltmans Construction Co. v. Bayside Interiors, Inc." on Justia Law

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Plaintiff was working as an employee of DCM Erectors at the 1 World Trade Center construction site when he received a workplace injury. Plaintiff commenced this action against the owner of the premises and the general contractor, alleging violations of N.Y. Labor Law 240(1) and 241(6). Supreme Court denied the parties’ cross-motions for summary judgment on Plaintiff’s section 240(1) claim but granted Plaintiff’s motion for partial summary judgment on the section 241(6) claim. The Appellate Division modified the order by granting Plaintiff’s motion for partial summary judgment on the section 240(1) claim and denying Plaintiff summary judgment on the section 241(6) claim. The Court of Appeals modified the order of the Appellate Division by denying Plaintiff’s motion insofar as it sought summary judgment not he issue of liability on his section 240(1) claim, holding that there were triable issues of fact that precluded summary judgment. View "O'Brien v. Port Authority of New York & New Jersey" on Justia Law

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Suppliers sold electrical materials to Linear, which Linear incorporated into construction projects. The developers did not pay Linear for its work and Linear did not pay Suppliers. In July 2015, Linear filed a voluntary Chapter 11 bankruptcy petition; two weeks later, Suppliers filed construction liens on the developments into which Linear had incorporated the materials purchased from Suppliers. The bankruptcy court discharged the liens as violating the automatic stay that resulted from the bankruptcy petition. Linear then collected the full amounts owed by the developers. The bankruptcy court held that the construction liens were void ab initio for violation of the automatic stay. The district court and Third Circuit affirmed. Under New Jersey law, if a supplier sells materials on credit to a construction contractor and the contractor incorporates those materials into property owned by a third party without paying the supplier, the supplier can file for a lien on the third-party property. The courts rejected Suppliers’ argument that the liens attached to the third-party properties, not to the property of the bankruptcy estate. The courts reasoned that, under state law, the ability to create and the value of the liens depend on the amount that the contractor owes the suppliers--the value of the contractor’s accounts receivable--and fall within the definition of property of the estate, 11 U.S.C. 541. View "In re: Linear Electric Co., Inc." on Justia Law

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Lend Lease (US) Construction was the general contractor on a project, and Rossi Electric Company, Inc. was a subcontractor. An employee of Rossi’s subcontractor was injured while working on the project and filed a negligence claim against Lend Lease. Lend Lease filed a third-party complaint against Rossi, alleging that, under the terms of a contract between the parties, Rossi was required to defend and indemnify Lend Lease. The superior court entered an order granting summary judgment for Rossi. The Supreme Court vacated the judgment of the superior court, holding that issues of material fact remained to be determined, and therefore, this case was not ripe for summary judgment. Remanded. View "Walsh v. Lend Lease (US) Construction" on Justia Law

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Contractor and Homeowner entered into an agreement whereby Contractor agreed to furnish materials and supply labor in connection with renovations to Homeowner’s residence. After the renovation project was largely complete, the parties began to dispute the amounts that Homeowner owed Contractor. Contractor then brought this action claiming, inter alia, breach of contract and unjust enrichment. Homeowner raised the special defense that Contractor’s claims were barred because the agreement did not comply with the Home Improvement Act. In response, Contractor argued that Homeowner was precluded from relying on the Act because his refusal to pay Contractor was in bad faith. The trial court agreed with Contractor and rendered judgment for Contractor. The Appellate Court affirmed. The Supreme Court reversed, holding that Homeowner did not act in bad faith, and therefore, the trial court improperly found that Homeowner was barred from invoking the protection of the Act. Remanded with direction to render judgment for Homeowner. View "Burns v. Adler" on Justia Law

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This case concerned the design and construction of a single-family residence in Pitkin County, Colorado. Heritage Builders, Inc. (“Heritage”) was retained as the general contractor by the original owners of the property, Karen and Courtney Lord. Pitkin County issued a certificate of occupancy for the home in September 2006. In November 2011, Richard Goodman purchased the property from the Lords. Then, sometime between March and June 2012, Goodman discovered the alleged construction defects in the home. Goodman gave Heritage informal notice of his construction defect claims in July 2013. In this original proceeding, the issue presented for the Colorado Supreme Court’s review was whether the statute of repose in section 13-80-104(1)(a), C.R.S. (2016), barred a general contractor’s third-party claims brought in response to a homeowner’s claim for construction defects discovered in the fifth or sixth year following substantial completion of an improvement to real property. The Court held that such claims are timely, irrespective of both the two-year statute of limitations in section 13-80-102, C.R.S. (2016), and the six-year statute of repose in section 13-80-104(1)(a), so long as they are brought at any time before the ninety-day timeframe outlined in section 13-80-104(1)(b)(II). View "In re Goodman v. Heritage Builders" on Justia Law

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When this case came before the Mississippi Supreme Court on interlocutory appeal, the Court reversed in part. Because it was undisputed that neither sub-subcontractor Ground Control, LLC nor subcontractor Capsco Industries, Inc. (both Alabama companies) had a statutorily required certificate of responsibility to work in Mississippi, the Court agreed that the subcontract was void. But the Court found, despite the void contract, "Ground Control should not be precluded from having the opportunity to proceed in court under a claim for the value of what it expended in labor and supplies on the project." The case was remanded to the trial court so Ground Control could pursue the nonbarred "claims of unjust enrichment and quantum meruit." Despite this holding, Ground Control argued in this appeal that the trial court erred by limiting its claims on remand to unjust enrichment and quantum meruit. The Supreme Court found no error in the trial court so limiting Ground Control's claims. The Supreme Court did, however, find W.G. Yates and Sons Construction Company (Yates) and Capsco raised reversible errors in their cross-appeals. Based on the evidence presented at trial, the Supreme Court found Yates was entitled to a directed verdict because Ground Control failed to prove Yates’s liability for quantum meruit damages. The Court also found the quantum meruit damages award against Capsco was against the overwhelming weight of the evidence. Consequently, Capsco was entitled to a remittitur. The Court affirmed on Ground Control’s and Ground Control owner Frank Beaton’s direct appeals. On cross-appeal, the Court reversed a $36,644.69 judgment against Yates and rendered a judgment in Yates’s favor. The Court also reversed a $825,583.31 judgment against Capsco. The quantum meruit claim against Capsco was remanded, instructing the trial court to conduct a new trial on damages alone, unless a remittitur of $626,407.31, making the damage award $199,096, was accepted by Ground Control and Capsco. View "Ground Control, LLC v. Capsco Industries, Inc." on Justia Law

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A subcontractor, CSC, installed the windows defectively at Metro's Chicago condominium. The building sustained significant water damage following a 2006 storm. The unit owners incurred personal-property damage. In 2009 Metro sued the developer, which was insolvent; in 2013 it added a claim against CSC for breach of the implied warranty of habitability. Metro and CSC reached a settlement. Metro dismissed its state court lawsuit; CSC assigned to Metro CSC’s rights to up to $700,000 of insurance coverage from Allied, arising out of the claims asserted against CSC in the lawsuit. The only pending claim against CSC in that lawsuit was for breach of the implied warranty of habitability. The settlement specified that it was not intended to compensate for the cost of repairing or replacing CSC’s defectively installed windows, but rather for the resultant damage to the remaining parts of the condominium and to the unit owners’ personal property. Allied obtained a declaratory judgment that it was not liable under CSC’s standard commercial general liability policy. The Seventh Circuit affirmed. The measure of damages for a breach of the implied warranty of habitability is the cost of repairing the “defective conditions,” here the defectively installed windows. Illinois courts have concluded that CGL policies like Allied’s do not cover the cost of repairing the insured’s defectively completed work; the Allied policy specifically excludes the cost of repairing CSC’s defective work. View "Allied Property & Casualty Insurance Co. v. Metro North Condominium Association" on Justia Law