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Archive for the ‘Construction & Design Professional’ Category

Lawfully Constructing or Lawful Construction: A Question for Another Court

Posted on: November 17th, 2020

By: Brittany Kurtz and William H. Catto

The Pennsylvania Superior Court kicked the can down the road on deciding recent contentions regarding the Statute of Repose defense that many general contractors and subcontractors rightfully assert in the voluminous stucco litigation occurring throughout the country and the Commonwealth. The competing interpretations of the Statute of Repose are keeping alive many faulty stucco installation matters, which could otherwise be dismissed based upon the defense. Pennsylvania’s legislature enacted a statue of repose related to new construction which bars recovery against any person lawfully performing or furnishing the design, planning, supervision or observation or construction of any improvement to real property unless brought within twelve (12) years after the completion of construction. 42 Pa. C.S.A. §5536.

In Calabretta v. Guidi Homes, Inc., a builder and seller moved for summary judgment against some of the homeowners on the basis their construction defect claims were barred by the Statute of Repose as the building took place more than twelve years prior. The trial court denied the builder and seller’s motion. The court stated that the current state of law is “somewhat unclear” as to the term “lawfully” within the statute and that a genuine issue of material fact exists as to whether the homes were constructed “lawfully.” The legislature and judiciary have not yet weighed in as to whether the term “lawfully” requires compliance with (1) all prerequisites necessary to obtain municipal permission to engage in various activities mentioned with the statute or (2) all local and state ordinances, regulations, and statutes. Instead of shining a light on this dilemma, the Superior Court determined it lacked jurisdiction to address the question at this time since the denial against some of the homeowners was not clearly separable from the main action nor would trial constitute irreparable harm to the builder and seller as required for a collateral order to be appealable.

Despite the Superior Court not yet addressing directly the meaning of “lawfully,” they did appear to indicate that “lawfully” is a factual determination. The Court points out that regardless of the definition of “lawfully,” evidence is required to demonstrate either the home was built with all appropriate permits in place or the home was built and complied with all building codes, statutes and regulations at the time. The homeowners in this matter produced an expert report which opined the home was not constructed in compliance with certain building codes, thus demonstrating a material issue of fact. 

As stucco litigation in Pennsylvania continues on, it appears the higher courts are not yet ready to provide clear direction as to a strong defense provided by the state’s legislature. 

If you have questions or would like more information, please contact Brittany Kurtz at [email protected] or William Catto at [email protected].

[1] Calabretta v. Guidi Homes, Inc., 2020 Pa. Super. 251 (Pa. Super. Ct. Oct. 19, 2020).

Proposed Executive Order Regarding Design of Federal Buildings Stirs Up Architecture Community

Posted on: October 29th, 2020

By: Matt Foree

Earlier this year, a draft Executive Order was leaked to an architectural publication and quickly spread across the architecture community. The Executive Order, entitled “Making Federal Buildings Beautiful Again,” discussed guidelines for the design of Federal buildings. The Executive Order criticized the abandonment of traditional, classical designs in favor of the adoption of mid-century modernism, including brutalism, for Federal buildings. The draft Order went as far as to say that the criticized designs “ranged from the undistinguished to designs the public widely considered uninspiring, inconsistent with their surroundings and the architectural heritage of a region, and even just plain ugly.” The Executive Order specifically called out for criticism recent Federal buildings including the new San Francisco Federal building, the Austin U.S. Courthouse, and the Wilkie D. Ferguson, Jr. U.S. Courthouse in Miami (see photo), claiming that these buildings have “little aesthetic appeal.”

The draft Executive Order proposed making “Federal buildings beautiful again” through encouragement of classical and traditional architectural styles. Among other things, the Executive Order set forth a policy in which special regard for the classical architectural style is preferred for applicable Federal public buildings. It stated that in the National Capital Region and for all Federal courthouses the classical architectural style shall be the preferred and default style absent special extenuating factors necessitating another style. Additionally, the Executive Order established a Committee on the Re-Beautification of Federal Architecture and its responsibilities, which included a report recommending updates to the Guiding Principles of Federal Architecture.

The draft Executive Order created a stir within the architectural community. The American Institute of Architects (“AIA”) issued an immediate response. The AIA expressed strong and unequivocal opposition to the draft Executive Order, noting that it would dictate a specific architectural style for Federal courthouses and certain other Federal buildings. The AIA stated, “we always work with the communities to assess the most appropriate architecture for projects within those communities. A one-size-fits-all mandate simply ignores needed input from impacted parties.” The AIA asserted that “it does not, and never will, prioritize any type of architectural design over another.” Furthermore, it noted that there are many examples of beautiful and innovative buildings in all styles of architecture, including the styles explicitly mentioned in the draft executive order Classicist, Brutalist, Spanish Colonial. America has proven uniquely able to incorporate, modify, and advance architectural traditions from a variety of other eras and places. Furthermore, it stated that the community should continue to have the right and responsibility to decide for itself what architectural design best fits its needs. Finally, the AIA closed by reiterating its staunch opposition to the proposed Executive Order, imploring, “Please ensure that this order is not finalized or executed.”

The latest salvo in the debate was provided by the publication of the results from a survey suggesting that the public prefers traditional designs for U.S. courthouses and office buildings. The National Civic Arts Society, a non-profit organization on whose behalf the survey was conducted, claimed that in a survey conducted among over 2000 Americans of various demographic groups that “Americans strongly prefer a more traditional look when it comes to the architecture of U.S. courthouses and federal office buildings.  Furthermore, the group stated that “the data suggests that the character and historical influence of the style may have an impact on preferences.” More information about the results of that survey can be found here

The proposed Executive Order has yet to be signed.

If you have questions or would like more information, please contact Matt Foree at [email protected].

Economic Damages May Now Be in Play for Construction Defect Claims Alleging Express Misrepresentation

Posted on: October 23rd, 2020

By: Matthew Wachstein

The recent New Jersey Supreme Court decision in Sun Chemical put defense counsel on notice of the potential for valid Consumer Fraud Act (“CFA”) claims to arise in cases involving allegations of express misrepresentation regarding the sale of defective products. Sun Chemical Corporation v. Fike Corporation, 2020 N.J. LEXIS 880 (N.J. July 29, 2020). Previously, almost all such claims were subsumed by New Jersey’s Product Liability Act (“PLA”). N.J. Stat. §2A:58C-2. This development is particularly worrisome to litigants facing similar allegations – including product manufacturers sued for construction defect claims as their exposure may now include treble damages and attorneys’ fees in addition to the enumerated recovery permitted under the PLA.

Prior to Sun Chemical, the trend of the courts was towards preclusion of CFA claims where the essence of a claim stemmed from harm caused by an allegedly defective product. As stated by the Court in Sinclair, where “[t]he language of the PLA presents a clear legislative intent that, despite the broad reach we give to the CFA, the PLA is paramount when the underlying claim is one for harm caused by a product. Sinclair et. al. v. Merck & Co. Inc., 195 N.J. 51, 66 (2008). There, the heart of the claim was the alleged harm caused by Merck’s prescription drug, and therefore, the CFA did not apply. The rationale of the various court holdings that preceded and followed Sinclair was in part to ensure that the right to recover economic damages provided by the CFA was not extended to PLA claims. In enacting the CFA, the Legislature specifically provided for such a right to recovery of damages; that was not the case under the PLA.

With the backdrop of that ongoing trend, the Third Circuit Court of Appeals presented the New Jersey Supreme Court with a question of law regarding the interplay between the CFA and PLA in Sun Chemical. The facts at issue involve the sale/installation of an explosion suppression system by Fike Corp in Sun Chemical’s facility. Sun Chemical alleged that a fire occurred on the first day the suppression system was operational. Id. at 11-12. Moreover, the suppression system’s alarm was inaudible, resulting in an explosion that caused injuries to seven employees of Sun Chemical and damage to its facility. Id. In its complaint, Sun Chemical included a single allegation under the CFA based on certain affirmative misrepresentations made by Fike Corp. directly related to the performance of its suppression system. The Court held that the CFA claim was therefore valid, and could proceed even in the same pleading as a PLA claim. 

Although the holding in Sun Chemical eliminated an almost automatic preclusion of plaintiffs’ ability to raise CFA and PLA theories of liability in one pleading, the exception carved out by the Court was narrowly defined. In particular, the Court limited the type of CFA claims brought in a PLA action to those “alleging express misrepresentations – deceptive, fraudulent, misleading, and other unconscionable commercial practices – [which] may be brought in the same action as a PLA claim premised upon product manufacturing, warning, or design defects.” Sun Chemical, 2020 at 30. In such instances, “the PLA will not bar a CFA claim alleging express misrepresentations.” Id.  

While the decision in Sun Chemical is a diversion from the previous trend in New Jersey and may open the door for the inclusion of more CFA claims in cases involving product defects, all is not lost for defense litigants. The threshold question required to properly assert such a claim includes a showing of express misrepresentation and/or fraud to sustain a CFA claim. However, the lessons from Sun Chemical provide a clear warning to practitioners that the days of reliance on the PLA as a shield to CFA claims is no more. The Sun Chemical decision reinforces the need for construction industry manufacturers to use best practices when making representations about their products.

If you have questions or would like more information, please contact Matthew Wachstein at [email protected].

Weathering the Storm: When Hurricane Damage Leads to Construction Defect Claims

Posted on: October 22nd, 2020

By: Jennifer Adair

With recent decades bringing an uptick in hurricane activity and increasingly strengthening storms, builders must brace for a swell of claims. Insurers typically anticipate the traditional claims for property damage caused by wind and water. However, such weather events may spin off a host of other concerns for builders who are already struggling with storm-related delays and labor shortages.

Construction defect claims tend to follow big storms, as owners and insurers look for reasons to attribute damages to defects in design, faulty construction, or improper building materials. Owners and insurers contend that storm damage was actually caused by – or at least worsened by – building inadequacies and that a properly constructed building would have withstood the force of wind or prevented water intrusion. Such claims are often grounded in allegations that builders failed to meet the stricter building codes enacted to combat storm damage.

When allegations of construction defects appear possible, builders should work with counsel to gather and preserve evidence to combat such claims in a timely manner. In the aftermath of a storm and in the haste to rebuild, critical documents, communications and physical evidence can be lost. This may involve engaging inspectors or other experts early, before clean-up and reconstruction begins. Further, builders facing such contentions should explore any steps available to mitigate damages, whether that means protecting storm-damaged structures from further damage caused by exposure to the elements or remediating water or mold damage. By adopting proactive approach in the immediate aftermath, builders place themselves in the best position to minimize exposure for construction defect claims down the line.

For more information, please contact Jennifer Adair at [email protected]. Jennifer grew up in South Alabama, and knows what it means when Jim Cantore is in town.

Federal Court Rules No “Insured” Status for General Contractor and Subcontractor under Builders Risk Insurance Policy

Posted on: September 17th, 2020

By: Ben Dunlap

A recent ruling by the United States District Court for the District of Massachusetts underscores the importance of confirming the effectiveness of coverage for contractors and subcontractors on construction projects. In Factory Mut. Ins. Co. v. Skanska United States Bldg., No. 18-cv-11700-DLC, 2020, the Court ruled that a general contractor and subcontractor were not entitled to insured status under the project owner’s Builders Risk insurance policy (“the Policy”). The case arose from the construction of a biomedical facility in Cambridge, Massachusetts. During construction, a threaded cleanout plug at the project allegedly failed and released water into the construction site, causing substantial damage. The project owner submitted a claim for the property damage to the Builders Risk insurer, which paid the claim. The insurer then filed a subrogation action against the general contractor and subcontractor, alleging their negligence caused the damage.

The general contractor and subcontractor sought to dismiss the suit against them by filing motions for summary judgment, arguing they were insureds under the Policy and therefore could not be liable in subrogation, based on the “anti-subrogation” doctrine. The anti-subrogation doctrine provides that an insurer has no right of subrogation against its own insured, and thus may not seek indemnification against a third party if the third party also happens to qualify as an insured under the policy.

The general contractor and subcontractor argued they qualified as insureds because the Policy’s “Property Damage” provision “also insures the interest of contractors and subcontractors in insured property during construction at an insured location. . . to the extent of the Insured’s legal liability for insured physical loss or damage to such property,” “limited to the property for which they have been hired to perform work.”

The Court denied the motions for summary judgment, concluding that the  general contractor and the subcontractor were not entitled to insured status under the Policy.  The Court reasoned that an “insured” under the Policy would be one whose liability would be purely vicarious “to the extent of the insured’s legal liability for insured physical loss or damage.” The suit alleged the contractor and subcontractor were directly liable, not vicariously liable, and the named insured project owner was not alleged to have any legal liability for the loss, so the contractor and subcontractor were not “insured” with respect to the alleged damage.  Further, the language of the Policy itself indicated that it applied to only one insured, meaning only the project owner. As a result, the Court concluded that the anti-subrogation doctrine did not apply, and the subrogation lawsuit could proceed.

The ruling offers lessons for contractors and subcontractors evaluating litigation risk on construction projects.  When considering coverage under another party’s insurance policy, interested parties must proceed with care, including having that insurance policy reviewed by a professional and obtaining an opinion as to whether such insurance coverage is afforded.

If you have questions or would like more information, please contact Ben Dunlap at [email protected].