Justia Construction Law Opinion Summaries

Owner and developer, Stratton Corporation and Intrawest Stratton Development Corporation, sued a condominium construction project's general contractor Engelberth Construction, Inc., who in turn filed a third-party claim against subcontractor Evergreen Roofing Company. A jury found that Engelberth Construction breached its contract with developer and breached an express warranty, which proximately caused developer to sustain damages related to roof repairs. The jury also found that Evergreen Roofing breached its subcontract with Engelberth Construction, and that Evergreen Roofing was obligated to indemnify Engelberth Construction. Evergreen Roofing appealed, arguing that the court erred in denying a pretrial motion for summary judgment filed by Engelberth Construction on various issues, including the scope of the contract between developer and Engelberth Construction and whether proof of non-insurance or lack of availability of insurance coverage was a prerequisite to developer's recovery against Engelberth. The Supreme Court affirmed, finding that Evergreen Roofing failed to preserve its argument. View "Stratton Corp. v. Engleberth Construction, Inc." on Justia Law

Realtor Willis planned Southgate, involving the purchase of 68 acres on St. Croix, re-zoning, subdivision, building infrastructure, and selling individual lots. Willis worked with defendants Cheng and Dubois and their entities (OMEI, Ocean View) for financing, but the defendants did not actually intend to develop the property. Pollara, a 47-year veteran of the construction industry, was hired to create the subdivision’s entrance. Ultimately Cheng and Dubois stopped paying Pollara and locked him out of his site office. Pollara was never paid for repair work to the roadway after flooding. Defendants, standing on both sides of the financing, refused any extension of the financing terms; they withheld their consent to selling the land at a profit to a buyer whom Willis had found. They caused Ocean View to foreclose, acquiring the property free of Willis’s and Pollara’s interests. The jury found that Ocean View and Cheng had made intentional misrepresentations and that OMEI had made negligent misrepresentations and that Dubois had made negligent misrepresentations with respect to the building permit and proposals for the development plan, and intentional misrepresentations as to the other three subjects. The jury awarded Pollara compensatory damages of $391,626 from all of the defendants and punitive damages of $90,000 against Cheng. The Third Circuit affirmed. View "Frank C Pollara Grp. LLC v. Ocean View Inv. Holding, LLC" on Justia Law

At issue in this case was the effect of a subordination agreement between fewer than all of the creditors who hold an interest in the same collateral. Appellant VCS, Inc. provided labor and materials to improve real property located in a planned unit development. The developer, Acord Meadows, secured funding for the project from America West Bank and Utah Funding Commercial. The loans were secured with trust deeds to the development properties, and the lenders entered into subordination agreements among themselves that altered the priority arrangement of their trust deeds. Because VCS was never paid for its work, it filed a mechanic’s lien covering several lots of the development, four of which were sold through a foreclosure sale after Acord defaulted on its loans from Utah Funding. VCS claimed it was entitled to payment of its mechanic’s lien because its lien had priority over Utah Funding’s liens. The district court ruled that VCS’s mechanic’s lien was extinguished by the foreclosure of Utah Funding’s liens. The Supreme Court affirmed after adopting the partial subordination approach to the issue in this case, holding that under the partial subordination approach, VCS’s mechanic’s lien was extinguished once Utah Funding’s lien was foreclosed upon. View "VCS Inc. v. Countrywide Home Loans, Inc." on Justia Law

Roland and Sandra Crouch appealed the grant of summary judgment in favor of North Alabama Sand & Gravel, LLC, now operating as Alliance Sand & Gravel, LLC, and Austin Powder Company ("Austin Powder") on the Crouches' claim asserting property damage resulting from Alliance Sand & Gravel's blasting operations. The Crouches sued Alliance Sand & Gravel and Austin Powder (collectively, "Alliance"), seeking compensation for damage to their property, which, they say, was caused by Alliance's blasting operations. Upon review, the Supreme Court affirmed the trial court's summary judgment in favor of Alliance on the Crouches' trespass claim. The Court reversed the summary judgment in favor of Alliance on the Crouches' claims alleging an abnormally dangerous activity, wantonness, and nuisance, and the case was remanded to the trial court for further proceedings. View "Crouch v. North Alabama Sand & Gravel, LLC" on Justia Law

The issue this case presented for the Tenth Circuit's review centered on whether the developer of a master-planned subdivision (master developer) was liable under the Interstate Land Sales Full Disclosure Act when a different developer sells units in a condominium project in the subdivision without providing a property report or making a statement of record available, as required by 15 U.S.C. 1703(a)(1)(A)-(B). RP Steamboat Springs, LLC was formed for the purpose of developing a mixed-housing, master-planned subdivision in Steamboat Springs, Colorado, called Wildhorse Meadows. RP entered into an agreement with the City of Steamboat Springs to develop Wildhorse Meadows. As master developer and initial owner of the Trailhead parcel, RP engaged in a variety of marketing activities through its listing agent, S&P Properties, for the development as a whole and for Trailhead Lodge specifically. A group of investors formed Trailhead Lodge at Wildhorse Meadows, LLC for the purpose of developing the Trailhead Lodge condominiums. Trailhead LLC hired Resort Ventures as its management company and S&P Properties as its listing and marketing agent. S&P Properties and Trailhead LLC's unsuccessfully tried to negotiate a separate project agreement for the Trailhead Lodge. RP entered into a project agreement with S&P Properties concerning Trailhead Lodge and then assigned all of its rights, title, and interest in the Trailhead Project Agreement to Trailhead LLC. RP transferred the Trailhead parcel to Trailhead LLC by special warranty deed. Two days before Trailhead LLC officially obtained ownership of the Trailhead parcel, several Buyers entered into (substantially identical) preconstruction purchase and sale agreements with Trailhead LLC. RP was not a signatory to the Contracts, but it was mentioned as the master developer. Buyers each paid a deposit toward the purchase of their respective Trailhead Lodge units. At the time Trailhead LLC entered into the Contracts with Buyers, no one had filed a statement of record with the Department of Housing and Urban Development for Trailhead Lodge, nor were Buyers provided a property report, as required by the Interstate Land Sales Full Disclosure Act. As a result of this failure, Buyers had the right to rescind the Contracts within two years after signing, which they did. The now-insolvent Trailhead LLC did not return the deposits Buyers paid under the Contracts. Buyers filed this action Trailhead LLC, RP, and S&P Properties. Among other claims, Buyers alleged Trailhead LLC, RP, and S&P Properties all qualified as developers under the Land Sales Act and that they violated the Land Sales Act by failing to file a statement of record and failing to provide a property report when Buyers purchased the condominium units. The district court subsequently granted Buyers' motion for summary judgment against Trailhead LLC on the Land Sales Act claims. Buyers later settled all claims against S&P Properties, and S&P Properties was dismissed from the case. Buyers and RP agreed to submit those Land Sales Act claims to the district court on written briefs, supporting affidavits, and stipulated facts. In its ultimate findings of fact and conclusions of law, the district court ruled that RP was not liable under the relevant provisions of the Land Sales Act. Buyers timely appealed. The Tenth Circuit concluded that because the master developer in this case, RP Steamboat Springs, LLC (RP), neither directly nor indirectly sold the condominium units at issue, it was not liable under the Land Sales Act. The Court therefore affirmed the district court's ruling in favor of RP. View "Dalzell v. Trailhead Lodge at Wildhorse" on Justia Law

Defendants, Keith McNamara, Shirley Benton, and Jerel Benton, appealed: (1) a jury verdict in favor of the plaintiffs, Richard and Mary Murray, on their claim that the defendants breached the implied warranty of workmanlike quality; (2) a Superior Court order denying their motion to dismiss the plaintiffs' New Hampshire Consumer Protection Act (CPA) claim; and (3) a Superior Court order finding that the defendants violated the CPA when they built the plaintiffs' home with latent structural defects that caused mold growth. Defendants argued that, because plaintiffs' claim was exempt from the CPA, the trial court erred by denying their motion to dismiss. Defendants added that the trial court erred by denying their motion for a judgment notwithstanding the verdict (JNOV) on the plaintiffs breach of implied warranty claim. There is no dispute that the transaction at issue here is the defendants alleged construction of the house with latent structural defects, not any representations that the defendants made to others during or after construction. The New Hampshire Supreme Court affirmed, finding that because the house was completed in 2004 and was purchased by the plaintiffs five years later and the allegedly wrongful transaction occurred more than three years before the plaintiffs "knew or reasonably should have known" of it, the construction of the house was an exempt transaction pursuant to RSA 358-A:3, IV-a and that plaintiffs' CPA claim should have been dismissed. Thus, the Court reversed the trial court's ruling on the CPA claim. However, the Court was not persuaded that defendants were insulated from liability on the breach of the implied warranty of workmanlike quality claim. Because the Court reversed the trial court's judgment on the CPA claim, defendants failed to show that they were prejudiced with respect to the breach of warranty claim. View "Murray v. McNamara" on Justia Law

A large commercial development in Kansas City, Missouri was aborted in the middle of construction due to cost overruns. When the developer would not cover the shortfall, the construction lender stopped releasing committed loan funds, and contractors filed liens against the property for their unpaid work on the unfinished project. Bankruptcy followed, and the contractors’ liens were given priority over the lender’s security interest in the failed development, leaving little recovery for the lender. The lender looked to its title insurer for indemnification. The title policy generally covers lien defects, but it also contains a standard exclusion for liens “created, suffered, assumed or agreed to” by the insured lender. The Seventh Circuit affirmed judgment in favor of the title company. The exclusion applies to the liens at issue, which resulted from the lender’s cutoff of loan funds, so the title insurer owed no duty to indemnify. The liens arose from insufficient project funds, a risk of loss that the lender, not the title company, had authority and responsibility to discover, monitor, and prevent. View "BB Syndication Servs, Inc. v. First Am. Title Ins. Co" on Justia Law

In 2004, Berkeley issued a use permit for construction of a building with 51 residential rental units and ground floor commercial space. Permit condition 10 provides: “Before submission for building permit, the applicant shall submit floor plans and schedules … showing the location of each inclusionary unit and the sales or rental prices…. and that the unit rent or sales price complies with Chapter 23C.12” (Inclusionary Housing Ordinance). The Ordinance was designed to comply with Government Code section 65580, requiring a general plan to contain a housing element stating how the local agency will accommodate its share of regional need for affordable housing. The ordinance requires that 20 percent of all newly constructed residential units be reserved for households with below-median incomes and rented at below-market prices. The development took more than seven years. The city sought a declaration that the condition was valid, conceding that the ordinance has been preempted by the Costa-Hawkins Rental Housing Act (Civ. Code, 1954.50), but arguing that it may enforce the condition, the validity of which was not previously challenged. The court of appeal affirmed judgment in favor of the city. View "City of Berkeley v. 1080 Delaware, LLC" on Justia Law

Metropolitan National Bank agreed to finance construction of a residential subdivision. As security for the note, Ruskin Heights executed a mortgage on the real property in favor of Metropolitan. The afternoon after construction commenced, Metropolitan filed its mortgage. Approximately two years later, Crafton, Tull, Sparks & Associates, Inc. (CTSA) filed an engineering lien against the property. Metropolitan filed a foreclosure complaint against Ruskin Heights and others. CTSA then filed a complaint asserting an engineer’s lien against Ruskin Heights and an amended complaint against Ruskin Heights and Metropolitan, requesting that its lien be declared superior to Metropolitan’s mortgage lien. The cases were consolidated. The circuit court concluded that CTSA’s lien was second in priority to Metropolitan’s lien. CTSA appealed, arguing that its lien should relate back to the commencement of construction and have priority over Metropolitan’s mortgage pursuant to Ark. Code Ann. 18-44-110. The Supreme Court affirmed, holding that Metropolitan’s lien did not have priority over CTSA’s engineer’s lien because section 18-44-110 does not allow for an engineer’s lien to relate back to the date of construction. View "Crafton Tull Sparks & Assocs., Inc. v. Ruskin Heights, LLC" on Justia Law

In building their home, Plaintiffs purchased SuperFlex, a stucco-like material, to cover the house’s exterior. GrailCoat Worldwide, LLC and GrailCo, Inc. (collectively, GrailCoat), the manufacturers of SuperFlex, provided an express twenty-year warranty for the product. Several years after the construction of their home was completed, the product failed. Plaintiffs brought suit against GrailCoat and Hartley Construction, Inc., the company that had designed and built the home, for damages. Hartley moved for summary judgment under N.C. Gen. Stat. 1-50(a)(5), North Carolina’s six-year statute of repose for claims arising out of improvements to real property. The trial court granted summary judgment for Defendants. The Supreme Court reversed the trial court’s dismissal of Plaintiffs’ claim for breach of express warranty against GrailCoat, holding that GrailCoat knowingly and freely entered into a valid contract of sale with Plaintiffs that provided for a warranty term that exceeded the repose period, and therefore, GrailCoat waived the protections provided by the statute of repose. View "Christie v. Hartley Constr., Inc." on Justia Law