Justia Construction Law Opinion Summaries

Appellant entered into a lease with a Mall to operate a restaurant. The lease required Mall to pay Appellant a finish allowance when certain provisions had been satisfied. The condition at the heart of this dispute required Appellant to provide the Mall evidence that any liens had been satisfied or waived and that “all work has been paid for” before the finish allowance became due. Appellant hired a general contractor to renovate the space. Appellant paid the general contractor in full, but the general contractor did not pay all of the subcontractors. When the Mall did not pay the finish allowance, Appellant filed this lawsuit alleging, inter alia, breach of contract. The district court granted summary judgment in favor of the Mall. The Supreme Court affirmed, holding that the unambiguous terms of the lease required evidence that the general contractor and subcontractors had been paid in full before the Mall was obligated to pay the finish allowance. View "P & N Investments, LLC v. Frontier Mall Associates, LP" on Justia Law

Education Code section 17406 authorizes school districts to use lease-leaseback agreements for construction or improvement of school facilities: the school district leases its own real property to a contractor for a nominal amount, and the contractor agrees to construct or improve school facilities on the property and lease the property and improvements back to the district. At the end of the lease-leaseback agreement, title to the project vests in the school district. California Taxpayers Network brought a reverse validation action (Code Civ. Proc. 863), challenging a lease-leaseback agreement between Mount Diablo School District and Taber Construction, alleging that the Education Code requires “genuine lease-leaseback agreements,” which “provide for financing of the school facility project over time,” but defendants’ lease-leaseback contracts were “sham leases”; that the contracts were illegal because a public bidding process is required for school construction projects; and that Taber provided professional preconstruction services to the District regarding the project before entering the lease-leaseback contracts. The court of appeals affirmed dismissal of claims "that attempt to engraft requirements on the transaction" that are not part of the Education Code. The court reversed in part, holding that the plaintiff did state a conflict of interest claim against Taber sufficient to withstand a demurrer. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

Plaintiff’s action to recover under an insurance policy for the loss of her house caused when a renter (who had an option to purchase) demolished it. The trial court determined the insurance policy at issue excluded for such a loss. Within two months of renting the property, plaintiff learned the renter demolished the house. The renter agreed to rebuild a house on the remaining foundation. The renter started, but did not finish, rebuilding the house. Plaintiff thereafter made a claim on her insurance policy. The Idaho Supreme Court found after review of this matter, that the words in an insurance policy were to be given the meaning applied by lay people in daily usage. One such clause implicated the intentional destruction of the house as compared to accidental loss or inadequate remodeling. The renter’s actions in demolishing plaintiff’s house down to the foundation would not be considered by lay people as the “remodeling” of the house. He did not make alterations to an existing structure; he demolished that structure. There was no house left to remodel. Plaintiff had authorized the renter to perform some remodeling, such as installing new flooring, countertops, light fixtures, paint and other cosmetic improvements, but there was no evidence in the record that he did any remodeling at all, much less that the direct cause of the loss of the Plaintiff’s house was caused by any remodeling that had been done. Accordingly, the Supreme Court affirmed the trial court’s judgment in favor of the insurance company. View "Fisher v. Garrison Property & Casualty Ins. Co." on Justia Law

This case concerning a general contractor’s attempt to recover on a mechanic’s lien involved two phases. In the first phase, Jordan Construction, Inc. prevailed on its counterclaims against Scott Bell. In the second phase, Federal National Mortgage Association (FNMA) was brought into the action as a third-party defendant. FNMA subsequently succeeded in a series of motions before the district court. FNMA then stipulated to the payment of $126,956.92, the amount of the original mechanic’s lien. The Supreme Court affirmed, holding that the district court (1) did not err in concluding that FNMA is not bound by the earlier judgment rendered against Bell under either the recording of the lis pendens or the doctrine of res judicata; (2) did not err in ruling that Jordan Construction’s amended notice of lien was untimely; (3) did not err in ruling that, under the 2008 Utah Code, Jordan Construction was not entitled to recover prejudgment interest on its mechanic’s lien claim; and (4) properly awarded FNMA attorney fees under the mechanic’s lien statute. View "Jordan Construction, Inc. v. Federal National Mortgage Ass’n" on Justia Law

The Act makes the builder who sells homes liable for violations without proof of negligence, while general contractors and subcontractors not involved in home sales are liable only if the plaintiff proves they negligently caused the violation in whole or part. The jury found the grading subcontractor, defendant Gerbo Excavating, was not negligent in any respect. The trial court, not the jury, found the builder/seller, Knotty Bear Development, Inc. and Knotty Bear Construction, Inc. (collectively Knotty Bear), liable after Knotty Bear failed to appear for trial. Plaintiffs sought redress from Gerbo under common law negligence theories for the tree damage, because they argued tree damage was not covered by the Act. The Court of Appeal found that plaintiffs failed to show tree damage was not covered by the Act: the jury found Gerbo was not negligent in any respect, even when the jury found building standards were violated. Finding no other basis for reversal, the Court affirmed the trial court’s judgment and post-trial orders. View "Gillotti v. Stewart" on Justia Law

In 2009, Jacquelyn Jacks bought a manufactured home from CMH Homes, Inc., on an installment plan. The purchase was financed through CMH Homes under a manufactured home retail installment contract. The contract contained an arbitration agreement, which provides that all disputes arising from, or relating to, the contract would be resolved by binding arbitration. By its terms, the agreement also covered all co-signors and guarantors, and any occupants of the manufactured Home (as intended beneficiaries of the arbitration agreement. Jacks moved into the home with her husband and their children. Five years later, the Jacks family sued CMH Homes, CMH Manufacturing, and Vanderbilt Mortgage and Finance (not a party to this appeal). They claimed: (1) CMH negligently installed and repaired the manufactured home’s water system, which caused toxic mold to grow; (2) the manufactured home was unreasonably dangerous at the time it left the control of CMH; (3) the manufactured home was not fit for habitation. Jacks also sought to rescind her purchase of the manufactured home, along with her agreement to pay Vanderbilt Mortgage and Finance the indebtedness incurred to purchase the home. The CMH defendants removed the case from state to federal court and moved to compel arbitration and stay the court proceedings. The district court granted the motion to compel as to the claims of Jacks, but denied the motion as to the remaining plaintiffs who were not parties to the installment contract. Defendants had argued that Jacks’ husband and their children were likewise bound by the arbitration agreement, even though they never signed the contract. The district court held that “the single sentence in the Arbitration Agreement generically referencing ‘any occupants of the Manufactured Home (as intended beneficiaries of this Arbitration Agreement)’ was not sufficient to make the nonsignatory plaintiffs third party beneficiaries of the Arbitration Agreement and subject to being compelled to arbitration. The district court also rejected Defendants’ contention that the nonsignatory plaintiffs were “bound to arbitrate their claims” under “the doctrine of equitable estoppel.” Defendants timely appealed the district court’s partial denial of their motion to stay and to compel arbitration. The Tenth Circuit found no reversible error in the district court’s judgment and affirmed it. View "Jacks v. CMH Homes" on Justia Law

In this home construction contract dispute, the Supreme Court (1) affirmed the district court’s decision awarding contractual damages to Contractor and dismissing Homeowners’ counterclaims for damages and attorney’s fees; but (2) reversed the district court’s denial of Contractor’s right to foreclose its construction lien placed on Homeowners’ property and the court’s decision to deny Contractor attorney’s fees pursuant to the lien foreclosure statute. The Court held that the district court erred as a matter of law when it reasoned that Contractor was not entitled to a favorable judgment for the foreclosure of the construction lien on the basis of Homeowners’ dissatisfaction with the work performed. Remanded. View "Vintage Construction, Inc. v. Feighner" on Justia Law

The Supreme Court ruled that the Nebraska Workers’ Compensation Court did not err in determining that Bennett Construction, a sole proprietorship owned and operated by Mark Bennett, was neither Robert Kohout’s direct employer nor his statutory employer under the facts of this case. Kohout was injured as a result of falling from the roof of a barn on the property of Brian Shook and sought workers’ compensation benefits from Bennett Construction. The Supreme Court affirmed, holding (1) Nick Bennett, Mark’s son, lacked apparent authority to enter into a contract with Shook on behalf of Bennett Construction; and (2) Nick did not enter into a joint venture with Mark or Bennett Construction concerning the Shook job. View "Kohout v. Bennett Construction" on Justia Law

Aliant Bank, a division of USAmeribank ("Aliant"), sued various individuals and business entities involved in a failed effort to develop the Twelve Oaks subdivision in Odenville, alleging that, as a result of those defendants' conspiracy and wrongful actions, Aliant's security interest in the property upon which the Twelve Oaks subdivision was to be built had been rendered worthless. The Circuit Court ultimately entered a number of orders either dismissing Aliant's claims or entering a summary judgment in favor of the various defendants. Aliant filed three appeals. In appeal no. 1150822, the Alabama Supreme Court reversed summary judgment against Aliant: (1) on the negligence and breach-of-fiduciary duty claims asserted against the Board members in count four of Aliant's complaint; (2) on the fraudulent-misrepresentation and fraudulent-suppression claims asserted against Bobby Smith and Twelve Oaks Properties in count seven of Aliant's complaint; and (3) on the conspiracy claims asserted against Smith, Twelve Oaks Properties, Four Star Investments, Mize, and Billy Smith in count seven of Aliant's complaint. The Court affirmed summary judgment against Aliant and in favor of the various Twelve Oaks defendants in all other respects. In appeal no. 1150823, the Court reversed the summary judgments entered against Aliant on the fraudulent misrepresentation and conspiracy claims asserted against Pfil Hunt, and his management company Wrathell, Hunt & Associates, LLC, in count seven of Aliant's complaint; however, the Court affirmed those summary judgments with regard to all other claims asserted by Aliant against Hunt and WHA. Finally, in appeal no. 1150824, the Court affirmed summary judgment against Aliant and in favor of the Engineers of the South, LLC defendants on all counts. View "Aliant Bank v. Four Star Investments, Inc." on Justia Law

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