Case Updates Archive

The Washington State Court of Appeals held on August 10, 2015, that a termination for convenience provision in a private construction contract is enforceable where there is adequate consideration in the form of partial performance of the contract and payment for such work.

This case is important to builders in the State of Arizona because it effectively eliminates any claim that a subsequent homeowner may bring for negligence. Before this case, subsequent homeowners arguably had more rights than original homeowners for construction defects because the economic loss doctrine prevents original homeowners from suing for construction defects sounding in negligence absent personal injury or property damage, and the Statute of Repose is not applicable to tort causes of action. This case, coupled with the recent changes to Arizona’s Purchaser Dwelling Act, underscore a trend of making it more difficult for the plaintiff bar to successfully prosecute a claim for construction defect against the homebuilder.

Hospitals may not escape liability for its emergency room physicians and other independent contractor practitioners, despite giving notice of independent contractor status through admission papers, signage in emergency room, and insignia on clothing.

Starting January 1, architects and engineers will enjoy a shorter exposure period to tort claims arising from large commercial projects. Oregon Senate Bill No. 46 amends ORS 12.135, shortening the repose period for claims against architects and engineers from ten years to six years on large commercial structures, effective January 1, 2014.

This case recognizes and reinforces the burden plaintiffs must meet when claiming negligence in a slip-and-fall case.  

Every year at this time we look back at the cases, studies and other developments which have impacted mold personal injury litigation over the last twelve months. It has now been more than twelve years since the Ballard case in Texas first focused the media's attention on mold as the subject of civil litigation. The $32 million dollar jury verdict in that case, based on injuries allegedly caused by a commonly occurring organism, was striking. But like much of what is reported regarding mold claims, the truth was in the details. Ballard was an insurance bad faith case against the plaintiffs' homeowners' insurance carrier, not a traditional third party injury lawsuit. Less than two years after the $32 million dollar verdict was reached, a Texas appeals court cut it to $4 million.

Each year at this time we look back at the cases, studies and other developments which have impacted mold personal injury litigation over the last twelve months. After more than a decade of legal battles over which personal injuries can be attributed to mold exposure, and the type of evidence required to prove causation, Courts still struggle with these issues. This update highlights a key 2014 decision by New York’s Court of Appeals regarding the evidence necessary to prove causation, related decisions by other appellate courts which take contrary positions and a discussion of so-called “home brew” medical tests that are often the starting point for mold personal injury claims. Finally, we analyze how mold fits in with another litigation trend, the filing of so-called “habitability” lawsuits.

This case demonstrates that a builder can protect itself from all future claims under the Right to Repair Act for latent construction defects by negotiating a waiver of unknown claims (Civil Code 1542) in return for a cash settlement. As the Belasco court stated, plaintiff “and his attorney could have rejected the agreement to the extent it included a waiver of unknown claims, and their failure to do so in the face of express language referencing section 1542 establishes [plaintiff's] willful acceptance of the waiver.” Thus, after the settlement, plaintiff assumed the risk of unknown construction defects in his home.

Division Two of the Washington Court of Appeals offers vague direction regarding the requirement that a nexus exist between construction services provided after substantial completion and a construction defect claim, when determining whether the claim is stale.

On July 24, 2014, the Colorado Court of Appeals ruled in the matter of Minturn v. Definitive Renovations, upholding the trial court’s entry of Summary Judgment in favor of Wood, Smith, Henning & Berman’s client, Definitive Renovations.

This case expands the scope of design professionals' liability under California common law. The Supreme Court of California has held that, where a design professional plays a primary role in the design and construction of a project, a design professional may be held liable to ultimate purchasers even if the professionals lack privity with those third parties. A homebuyer or third party may now bring claims against such a principal design professional for negligence under common law tort theories and potentially for violations of the construction standards set forth in SB 800. On a larger scale, businesses should take note that the Supreme Court's action in this matter is representative of the growing trend in California to sideline privity as a requirement in negligence based actions.

Contractors and their counsel should take note of these two decisions, as they will affect the duration of contractors' exposure to construction defect claims under Oregon's statute of repose. In the absence of written acceptance, the ten year limitations period of Oregon Revised Statute ("ORS") 12.135 begins to run on the date on which the contractee accepts construction as "fully complete" as opposed to accepting the construction as "sufficiently complete for its intended use or occupancy."

In response to Colorado's lack of new owner-occupied, multi-family housing (i.e. condominiums) being built, it appears legislation will be introduced that, if passed into law, may affect not only how condominiums are developed, but may affect the entire landscape of construction defect litigation.

On February 11, 2014, the California Court of Appeal issued its decision in Prakashpalan v. Engstrom, Lipscomb and Lack, holding that two homeowners could sue their former attorneys for alleged mishandling of funds received from settlement of claims involving the 1994 earthquake. Significantly, the court held that despite the fact the alleged fraudulent conduct by the law firm occurred 16 years earlier, the statute of limitations does not bar late-discovered fraud claims.

On February 19, 2014, the California Court of Appeal, Second Appellate District, Division Three issued its opinion in Burch v. Superior Court, supporting the much criticized decision of the Fourth Appellate District, Division Three (Orange County) in the case of Liberty Mutual Insurance Co. v. Brookfield Crystal Cove, LLC (2013) 219 Cal.App.4th 98, holding that the Right to Repair Act (California Civil Code § 895 et seq.) is not the exclusive remedy and does not limit or preclude common law claims for damages for construction defects that have caused property damage.

The most recent session of Colorado's general Assembly began on January 8, 2014. This is a highlight of the bills that have been introduced so far which we thought would be of interest to our construction clients

The Ninth Circuit Court of Appeals vacated a $9.3 million asbestos verdict, holding that the US District Court for the Western District of Washington erred in admitting expert testimony without undergoing a Daubert hearing and without making the necessary findings of relevancy and reliability under Federal Rule of Evidence 702.  It also held that a reviewing court can properly make findings related to expert testimony admissibility if it "decides the record is sufficient to determine whether expert testimony is relevant and reliable…"

On January 30, 2014, the Colorado Court of Appeals issued its decision in Taylor Morrison of Colorado, Inc. f/k/a Morrison Homes of Colorado, Inc. v. Bemas Construction, Inc. and Terracon Consultants, Inc.  The key issue in this opinion was whether the limitation of liability clause in the contract between Morrison Homes and Terracon was unenforceable pursuant to Colorado's Homeowner Protection Act of 2007 (the "HPA").  

On December 11, 2013, the Supreme Court of California denied the closely watched Petition for Review in Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC as well as the Requests for Depublication of the lower court's decision

When a planned residential development is created, the owners' association is governed by a Declaration of Conditions, Covenants and Restrictions ("CC&Rs").  Very often, the developer who creates the CC&RS will include an alternative dispute resolution procedure in the CC&Rs so that if the owners' association has claims against the developer, for example a construction defect claim, the owners' association has to follow a specific procedure, such as mediating the claim first, or file the claim in a specific forum, such as arbitration. 

This case further expands the independent duty doctrine in the professional liability context. The Supreme Court of Washington increased the scope of remedies available to plaintiffs in claims against design professionals finding that a tort duty arises independently of any contractual duties.

On August 28, 2013, the California Court of Appeal, Fourth Appellate District, Division Three, filed its opinion in the matter of Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC.  A focus of intense controversy over the interpretation of Senate Bill 800, this appeal concerns the breadth of California’s “Right to Repair” Act. 

The United States Supreme Court has issued two rulings in separate cases which have resulted in higher standards for the maintenance of employment lawsuits.

The Colorado Supreme Court has ruled that Colorado's premises liability statute is not, as a matter of law, restricted solely to activities and circumstances that are directly or inherently related to the land. Rather, the premises liability statute may extend to any conditions, activities, and circumstances on the property for which the landowner is liable in its legal capacity as a landowner, thereby requiring a fact-specific, case-by-case inquiry in all premises liability matters.

In this decision, the Second District Court of Appeal concluded the trial court abused its discretion by admitting into evidence a "class A" citation and a statement of deficiencies issued by the Department of Public Health (DPH).

This case sets the precedent that when a plaintiff has made two unaccepted and unrevoked statutory 998 offers to compromise, and the defendant fails to obtain a judgment more favorable than either offer, the trial court retains discretion to order payment of costs incurred from the earliest date of the 998 offers.

California Court of Appeal upheld and enforced standard AIA contract language effectively shortening to four years the ten year statute of limitations for bringing claims for latent construction defects.  The Court held that a waiver of the delayed discovery rule and shortening of the statute of limitation is permitted where there are two sophisticated parties in a commercial context that occupied equal bargaining positions.

In the latest missive in the battle to define the scope of the duty to defend and the duty to indemnify a construction professional in the construction defect context, the United States District Court ruled on March 31, 2013 in favor of the construction professional.  The facts of the case are outlined below.

The Washington State Supreme Court underscores in this matter that the duty of work site safety lies in the hands of the entity in the best position to keep a work site safe, regardless of whether an employer-employee relationship exists.  The Court extended these duties beyond the context of a general contractor controlling a job site to the scenario of the Port of Seattle("Port") controlling worker safety in the highly complex multi-employer work site of Sea-TacAirport.   However, job site owners and licensors may take some comfort in the Court’s assurances that the holding is intended to be narrow and not to apply to every situation in which an owner or licensor simply asks on-site workers to comply with safety rules. 

Colorado has been abuzz with several recent decisions regarding additional insured obligations.  These are just a few of the orders that are getting a lot of attention lately.  The TCD case in particular evidences the ongoing tension between the courts and the legislature with regard to insurance policies.  The courts are continuing to marginalize the 2010 law that was passed in Colorado regarding interpretation of commercial general liability policies.  As these decisions evidence, there remain many unresolved in Colorado related to additional insured obligations.  We expect much more from the courts, and possibly even the legislature, on these issues.

Each year at this time we prepare an update for our clients and colleagues, summarizing the trends in mold personal injury litigation from the past twelve months. This year, although the number of reported verdicts throughout the country appeared to decline, the news, case results and appellate decisions which did occur favored plaintiffs. One possible explanation is that Plaintiff's attorneys rarely solicit these claims anymore. As a result, only the "good" cases get filed and reported.

In a closely watched employment case, the California Supreme Court unanimously ruled that employees are not entitled to damages when discrimination factors into a termination if the termination would have occurred regardless of the discrimination.

In the Ahdout case, the Second District, Division Four, of the California Court of Appeal held that the plaintiff's claims under California Business & Professions Code § 7031 against a general contractor for lack of licensure fell within the "public policy" exception to the general prohibition of judicial review of arbitration awards, because "section 7031 constitutes a clear-cut and explicit legislative expression of public policy mandating the disgorgement of compensation received by an unlicensed contractor."  

Despite the passage of Proposition 30, California courts continue to operate under substantial fiscal constraints.  As a result, Los Angeles County Court officials have announced sweeping cuts in the judicial system.  Significant changes in the Los Angeles County judicial system are planned to be implemented over the next six months.  The impact of these cuts is expected to be considerable and will surely affect case management in a variety of ways.

SB 1186 reduces statutory damages and provides litigation protections for Defendants who timely correct construction‐related accessibility violations of the Unruh Civil Rights Act. The new reform bans the practice of "demand for money" letters, deters Plaintiffs from forcing quick settlements by stacking claims based on alleged repeat violations, and provides incentives for businesses to comply with ADA law. 

In a case where a tribal corporation sought to disgorge profits from an unlicensed contractor, California's Fourth District Court of Appeal affirmed summary judgment and rejected the contractor's efforts to assert reverse sovereign immunity as well as its efforts to utilize the active license of its related corporation.

On December 13, 2012, the California Court of Appeal, First District, Division 5, filed its opinion in the matter of Beacon Residential Community Association v. Skidmore, Owings & Merrill, LLP.  The case involves whether a design professional owes a duty to a homeowners' association and its future residents in the design of a residential project.  The lower court initially sustained a demurrer by design professional Skidmore, Owings & Merrill, LLP, to the homeowner's association's Third Amended Complaint on the basis that a design professional owes no duty of care to the homeowner's association or its members under common law or Senate Bill 800.  The trial court found that a homeowner's association may not base a claim against a design professional on negligent design but rather must show the design professional had "control" in the construction process.  The Court of Appeal disagreed and reversed, holding that a design professional does owe a duty of care to the third party purchasers of condos.

On October 9, 2011, California Governor Jerry Brown signed Senate Bill 474 into law, which significantly impacts commercial and public construction contracts in California.  SB 474 amended California Civil Code Sections 2782 and 2783 and, most notably, added Section 2782.05 to the California Civil Code.

Following the Arizona Supreme Court's ruling in Richards v Powercraft permitting subsequent purchasers to pursue implied warranty claims even in the absence of privity, Arizona courts have had a difficult time determining whether to categorize this creature of public policy as a tort or a contract claim.  

For years, plaintiffs and defendants have battled over the standards for admission of expert witness opinions in California courts. Defendants frequently argue that the opinions of plaintiffs' experts on issues ranging from damages to causation are speculative and lack an evidentiary foundation. Plantiffs respond that California trial judges do not play the same role as federal district judges, who are directed under the Daubert standard to act as gatekeepers, weighing the evidentiary basis of expert opinions before they are admitted in Court.

Last week, the California Court of Appeals handed down a huge victory for home builders.  In a case of first impression, the court affirmed the clear legislative intent and purpose of SB 800: providing a builder notice and the right to repair prior to a homeowner initiating construction defect litigation.

In legal malpractice cases governed by California Code Civ. Proc., § 340.6, actual injuries accrue – and the one year statute of limitations is not tolled – because plaintiffs' loss or diminution of a right or remedy is an "actual injury", caused in this case by an attorney's failure to timely recover a judgment.

Every year at this time, we review developments in mold litigation from the past twelve months, with an emphasis on personal injury claims. A decade ago we saw widespread media interest in "toxic" mold and an uptick in lawsuits. That was followed by a series of defense victories in the courtroom, largely built on scientific studies which properly framed the nature and extent of injuries and illnesses which could result from mold exposure. The number of mold personal injury cases declined, but they never went away and in the last several years we have seen a number of multi-million verdicts and settlements, contrary to our own expectations that mold personal injury cases were a dying trend.

On February 2, 2012, the Colorado Court of Appeals answered two previously unanswered questions under Colorado's Construction Defect Action Reform Act ("CDARA"): 1) whether notice of construction defects to one party under the statute tolls the running of the statute of limitations as to parties not included in the notice; and 2) whether the statute of repose (i.e. the outside time limit for bringing a construction defect claim) begins to run on a multi-phase construction project at substantial completion of the entire project, or as discrete improvements /components are completed. 

The California Court of Appeal, Second District, held that based upon the exception found within CCP § 340.6(a)(1), the statute of limitations for a legal malpractice action is tolled until an actual injury is suffered.  The Court concluded that the determination of actual injury is a fact specific analysis.  The Court in this instance held that the actual injury sustained did not occur when a partnership agreement was negligently drafted, but rather when the effect of such negligence was realized in the dissolution of a client's partnership due to a lawyer's failure to include provisions dealing with succession in the event of incapacitation.  

Chinese drywall was first introduced to the United States in 2000 or early 2001. The use of this material increased markedly between 2004 and 2006 as the result of a shortage of domestically produced drywall. Nearly 60 percent of Chinese drywall imported during this time frame came in through Florida ports.

A new mass tort faces America's residential builders, their underwriters and others with an interest in the construction industry: Personal injury claims resulting from chronic exposure to the alleged off-gassing of sulfur compounds from imported Chinese drywall. This issue has now been the subject of numerous features on network television and articles in newspapers.

Architects and engineers must be aware when entering agreements to perform design work that a variety of potential claims may be asserted against them. These may be attributed to alleged design flaws, budget overruns, on-site accidents or even building collapse. With the economic down-turn, problems of delay claims and cost over-runs and claims of construction defects and consequential damages are increasing dramatically.

Two recent decisions from the California Court of Appeal have created uncertainty regarding the defenses that defendants can rely on in asbestos and other toxic tort cases. In the most recent case, O'Neil v. Crane Co., Case No. B208225 (September 18, 2009), the Court of Appeal reversed the granting of a motion for non-suit in an asbestos-wrongful death case. Decedent Patrick O'Neil died of mesothelioma in 2005. His wife and children sued the manufacturers of pumps and valves that were installed on an aircraft carrier on which O'Neil had served as a Naval officer in the 1960s. Following the close of plaintiffs' evidence, the trial court granted the manufacturer's motion for non-suit.