CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - WEDNESDAY, MARCH 19, 2025

Rocket next to upward red arrow

H.B. 25-1261 dramatically shifts the legal landscape in favor of plaintiffs’ attorneys and against homebuilders.

Colorado House Bill 25-1261 Will Skyrocket Housing Costs — Here’s Why You Should Oppose It

March 18, 2025
David McLain - Higgins, Hopkins, McLain & Roswell, LLC

Colorado lawmakers have introduced House Bill 25-1261, a measure that, while ostensibly aimed at protecting homeowners from construction defects, will ultimately drive up the cost of housing, particularly for affordable condominiums and townhomes. This bill makes it easier to sue builders, extends the statute of limitations, and will have long-term negative consequences for housing development in Colorado. H.B. 25-1261 has been assigned to the House Transportation, Housing, and Local Government committee and is scheduled for hearing on March 11th.

If the state wants to encourage home construction — especially in the affordable housing sector — this bill is not the answer. It will hurt, not help, Colorado homeowners and prospective buyers. For that reason, we encourage anyone interested in increasing Colorado’s housing stock or in making housing more affordable to reach out to their legislators to urge opposition to H.B. 25-1261.

Mr. McLain may be contacted at mclain@hhmrlaw.com

Reprinted courtesy of David McLain, Higgins, Hopkins, McLain & Roswell

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CDJ NEWS THIS WEEK



Checks on yellow background

In Moss & Associates v. Daystar Peterson, a condominium unit owner sued the condominium association and general contractor in a lawsuit grounded on construction defects.

Make Sure You Comply with Florida’s Pre-Suit Notice Requirements for Construction Defects

March 18, 2025 — David Adelstein - Florida Construction Legal Updates

Welcome to Florida! If you deal with construction defects in Florida, then you know, or certainly should know, about Florida Statutes Chapter 558. Chapter 558 contains the pre-suit notice requirements before instituting a construction defect lawsuit. They are a “must know” if you practice in the construction defect world. While I may not be a huge proponent for the Chapter or view it as value-added when you factor in numerous considerations, how I feel is of no moment. The pre-suit requirements are still the governing “law of the land” for Florida construction defects lawsuits. A recent case demonstrates this point.

In Moss & Associates v. Daystar Peterson, 50 Fla.L.Weekly D509a (Fla. 3d DCA 2025), a condominium unit owner sued the condominium association and general contractor in a lawsuit grounded on construction defects. The unit owner claimed his unit was damaged by water intrusion due to the contractor’s faulty workmanship regarding renovations and repairs to common areas of the condominium. There was not a dispute as to the unit owner’s failure to comply with the pre-suit notice requirements of Florida Statues Chapter 558. The general contractor moved to stay the lawsuit pending the unit owner’s compliance with the pre-suit notice requirements. The trial court denied the stay request. On appeal, the Third District Court of Appeal held that Chapter 558’s pre-suit notice requirements were a statutory requirement that the unit owner had to comply with in order to institute a construction defect lawsuit. Thus, the Third District quashed the trial court’s order and granted the stay. (“By [the trial court] instead concluding that no stay was yet required, the trial court failed to apply the plain language of section 558.003, thereby departing from the essential requirements of the law.”).

Mr. Adelstein may be contacted at dma@kirwinnorris.com

Reprinted courtesy of David Adelstein, Kirwin Norris, P.A.

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Terminated stamp on contract

When building in Florida, you may encounter a contractual provision that allows the owner or general contractor to terminate a contractor’s work “for convenience.”

Changing Your Mind, for Whatever Reason – Terminating a Construction Contract for Convenience in Florida

March 18, 2025 — Troy Mainzer - The Dispute Resolver

Owner: “You're FIRED! Please remove all equipment and leave the premises.”

Contractor: “You can’t do that. We signed a contract and have done everything that has been asked – we are performing ahead of schedule, under budget, and the work quality is superb.”

Owner: “Yes, but another company can do it cheaper and the contract we entered into has a termination for convenience provision.”

This scenario is a common one in private and public construction in Florida. When building in Florida, you may encounter a contractual provision that allows the owner or general contractor to terminate a contractor’s work “for convenience.” What this means is that, depending on the language of the contract, one or both parties in a construction contract may have the right to terminate the agreement even in the absence of fault or breach by the other party, hence the name “termination for convenience,” or “T4C.” The reason could be that the owner found someone cheaper, that the owner or general contractor is simply not satisfied with a contractor’s work, circumstances changed, such as budget constraints, changes in project or scope, or shifts in business priorities, or for various reasons other than a default or breach of the contract. Understanding termination for convenience is critical for both contractors and project owners, as its financial and legal consequences can be significant.

Mr. Mainzer may be contacted at tmainzer@carltonfields.com

Reprinted courtesy of Troy Mainzer - Carlton Fields

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Claim Denied

On August 27, 2020, the insured notified Mt. Hawley of a claim for damage to the Properties caused by Hurricane Laura.

Court Denies Insurer's Motion for Summary Judgment on Breach of Contract Claim and Further Denies Motion to Exclude Insured's Expert

March 18, 2025 — Tred R. Eyerly - Insurance Law Hawaii

The court denied the insurer's Motion for Summary Judgment seeking to dismiss the insured's breach of contract claim. The court also denied the insurer's Daubert motion to exclude the insured's expert witness. Ram Krishana Inc. v. Mt. Hawley Ins Co., 2025 U.S. Dist. LEXIS 18912 (S.D N.Y Feb. 3, 2025).

The insured owned property in Louisiana operated as a Motel 6 (Hotel Property). A restaurant was located at an adjoining address (Restaurant Property) owned by ANK Holdings, LLC, with two members: the same Mukesh and Kailash Zveri who owned the Hotel Property. Mt. Hawley issued a policy covering the Hotel Property and the Restaurant Property.

On August 27, 2020, the insured notified Mt. Hawley of a claim for damage to the Properties caused by Hurricane Laura. Mt. Hawley retained Engle Martin to inspect the Properties. Engle Martin spoke with Roger Newman, one of the insured's public adjusters, who informed Engle Martin that he "estimated the necessary repairs will exceed $2,000,000 Engle Martin submitted reports to Mt. Hawley, which included Mr. Newman's loss estimate. Mt. Hawley also hired JS Held, a building consultant, to help with the adjustment of the claim. During this time, the Properties were further damaged by Hurricane Delta.

Mr. Eyerly may be contacted at te@hawaiilawyer.com

Reprinted courtesy of Tred R. Eyerly, Damon Key Leong Kupchak Hastert

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Hand picking cherry from row of five

This article discusses the implications and application of this theory to arbitration agreements, and it also provides several examples to better describe the application of this theory.

No Cherry Picking: Direct Benefits Estoppel and Binding Non-Parties to Arbitration

March 18, 2025 — Jordan Heath - ConsensusDocs

General contractors appreciate the importance of understanding the provisions in their own contracts. However, understanding the provisions contained in other parties’ contracts on the same Project can be just as important at times.

For example, in some circumstances, a person or company that did not sign a contract with an arbitration clause may still be subject to that clause if certain conditions are met. This can happen under a legal principle known as “direct benefits estoppel.”[1] Under this theory, a non-party to a contract can still be held subject to certain terms of the contract, including arbitration provisions. As a general matter, this can occur when the non-signing party acts as if it was a party to that agreement—for example, by trying to direct work under that agreement—and does so directly for its own benefit. In other words, the non-signing party behaves as if it is actually a party to the contract in an effort to directly benefit from the terms of that contract.

Mr. Heath may be contacted at jheath@joneswalker.com

Reprinted courtesy of Jordan Heath, Jones Walker LLP

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New York Manhattan Aerial Photo

The Rockefeller case confirms that New York policyholders are not limited to breach of contract claims when an insurer acts in bad faith.

Start Spreading the News: Appellate Division Case Highlights How Policyholders Should Plead Claims Under New York’s Consumer Protection Statute

March 18, 2025 — Bethany L. Barrese & Michael A. Amato - Saxe Doernberger & Vita, P.C.

When a policyholder feels their insurance claim has been mishandled or denied unfairly, pursuing recovery for the insurer’s bad faith is often front of mind. While many states recognize a common law and/or statutory cause of action for bad faith, the circumstances that constitute bad faith vary amongst jurisdictions.

As prescribed in The Rockefeller Univ. vs. Aetna Cas. & Sur. Co., et al.,[1] New York recognizes a claim for breach of the implied covenant of good faith and fair dealing – otherwise known as bad faith – involving three elements of proof: (1) the facts establishing the insurer’s bad faith conduct must be separate from the facts giving rise to the breach of contract claim, (2) the damages sought as a result of the insurer’s bad faith must be distinct from the damages sought in the breach of contract claim, and (3) the facts must demonstrate that the insurer grossly disregarded its policyholder’s interests.

Reprinted courtesy of Bethany L. Barrese, Saxe Doernberger & Vita, P.C. and Michael A. Amato, Saxe Doernberger & Vita, P.C.

Ms. Barrese may be contacted at BBarrese@sdvlaw.com
Mr. Amato may be contacted at mamato@sdvlaw.com

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News

Pillsbury's Real Estate and Construction Law Team discusses recent industry news.

Real Estate & Construction News Roundup (2/26/25) – Uncertainty for Renters, a Record-High Hotel Project Pipeline and Hybrid Hopes for Office Leasing

March 18, 2025 — Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law Blog

In our latest roundup, hybrid work creates hope for the office sector, Texas lawmakers ease office-to-residential conversations, service-based tenants are expected to lease more retail space, and more!

  • While demand is expected to remain strong, policy uncertainty and interest rates could pose problems in the coming year for renters. (Mary Salmonsen, Multifamily Dive)
  • As closures accelerate, service-based tenants are expected to lease more retail space in the coming year than goods-based tenants. (Nate Delesline III, Retail Dive)
  • The U.S. continues to lead for hotel project counts by country, with a record 6,378 projects in the pipeline at year-end. (Noelle Mateer, Hotel Dive)

Reprinted courtesy of Pillsbury's Construction & Real Estate Law Team

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Construction materials

Rising prices can convert a profitable venture into a catastrophic financial failure. How are contractors and subcontractors to protect themselves?

Protecting Yourself From Building Materials Price Increases in Construction Due to Tariffs – Three Options

March 18, 2025 — William L. Porter - Porter Law Group

With the looming possibility of tariffs causing sudden and significant increases in the prices of building materials within the construction industry, contractors, subcontractors and others who contract to perform construction work can suffer significant losses. This is particularly true when the prices they must pay for materials rise significantly between the time they sign a contract to provide materials and actually purchase the materials necessary to meet contractual obligations. The general rule is that, unless there exists a contract clause allowing contractors or subcontractors to pass significant price increases for materials on to others, contractors and subcontractors are stuck with the price they stated in the contract or subcontract. When prices rise, the contractor or subcontractor must eat the difference when they purchase materials at a much higher price than anticipated. Rising prices can convert a profitable venture into a catastrophic financial failure. How are contractors and subcontractors to protect themselves?

Once a contract is executed, there is usually little that can be done to change the contract to address rising prices. Effort must therefore turn to establishing protection before a contract is signed. The best technique for dealing with increasing future prices for building materials is by adding a price escalation clause to contracts and subcontracts. While this will not help for past contracts or subcontracts, it can certainly offer significant protection going forward.

Mr. Porter may be contacted at bporter@porterlaw.com

Reprinted courtesy of William L. Porter, Porter Law Group

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Person slipped and fell on sidewalk

Therese Ellis argued that the client had no duty to perform landscaping services on the date of loss, had no notice of any dangerous condition, and that Plaintiff assumed the risk of such condition.

Congratulations to Newport Beach Partner Tyler D. Offenhauser and Associate Therese M. Ellis for Securing a Dismissal on a Premises Liability and Negligence Case!

March 18, 2025 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

Tyler D. Offenhauser and Therese M. Ellis forced adverse counsel to dismiss their Cross-complaint by filing a pro-active Motion for Summary Judgment involving a premises liability and negligence case. In this case, Plaintiff filed a Complaint against the Defendant HOA alleging a slip and fall accident as a result of slipping on a pile of leaves and debris on the sidewalk at the subject property. The property was owned and managed by the Defendant HOA. The Defendant HOA filed an Answer and Cross-complaint against BWB&O’s client for Comparative Negligence, Implied Indemnity, Contribution, and Declaratory Relief.

Through meticulous preparation, thorough research, and strategic advocacy, Therese Ellis prepared and filed a Motion for Summary Judgment arguing that the client had no duty to perform landscaping services on the date of loss, had no notice of any dangerous condition, and that Plaintiff assumed the risk of such condition.

Reprinted courtesy of Dolores Montoya, Bremer Whyte Brown & O'Meara LLP

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Tariffs note on money

This article focuses on three important clauses in direct federal contracting that dictate contractors’ rights and responsibilities when it comes to price escalation, increased costs, and taxes imposed after contract execution.

Preparing for the Threat of New Tariffs: Three Clauses to Look for in Your Federal Construction Contracts

March 18, 2025 — Abby Bello Salinas & Michael A. Branca - Peckar & Abramson, P.C.

The Trump administration’s imposition of new tariffs is anticipated to have large-scale effects on costs in the construction industry. This article focuses on three important clauses in direct federal contracting that dictate contractors’ rights and responsibilities when it comes to price escalation, increased costs, and taxes imposed after contract execution. P&A has previously provided similar insights in the context of private contracts here and here.

Newly Imposed Tariffs
On February 1, 2025, the Trump administration issued executive orders imposing 25 percent tariffs on Canadian and Mexican goods, a 10 percent tariff on imports from China, and a 10 percent tariff on Canadian energy resources. Two days after the announcement, President Trump paused the tariffs on Canadian and Mexican imports for one month to conduct negotiations with these ally nations. The tariff on Chinese imports went into effect on Tuesday, February 4, 2025. In response, China announced it was implementing counter-tariffs against the United States, including a 15% tariff on coal and liquified natural gas products, as well as a 10% tariff on crude oil, agricultural machinery, and large-engine cars exported from the United States to China.

Reprinted courtesy of Abby Bello Salinas, Peckar & Abramson, P.C. and Michael A. Branca, Peckar & Abramson, P.C.

Ms. Salinas may be contacted at asalinas@pecklaw.com
Mr. Branca may be contacted at mbranca@pecklaw.com

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Congratulations

The publication’s annual Top Professional Responsibility Lawyers list honors the top-performing attorneys in the areas of legal malpractice and ethics.

Brian Slome Named to the Daily Journal’s List of Top Professional Responsibility Lawyers for 2025

March 18, 2025 — Brian Slome - Lewis Brisbois

San Diego/San Francisco, Calif. (March 5, 2025) - San Diego and San Francisco Partner Brian Slome has been named one of the Daily Journal’s Top Professional Responsibility Lawyers for 2025.

The publication’s annual Top Professional Responsibility Lawyers list honors the top-performing attorneys in the areas of legal malpractice and ethics. The Daily Journal’s profile of Mr. Slome, who serves as a Vice Chair of Lewis Brisbois’ Professional Liability Practice, details his career path over the past two decades. Inspired by a family full of legal professionals, Mr. Slome has been practicing law since 2005.

He told the Daily Journal that he has been honored to represent several members of the state bar.

Mr. Slome may be contacted at Brian.Slome@lewisbrisbois.com

Reprinted courtesy of Brian Slome, Lewis Brisbois

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Wildfire smoke on plains

Wet weather in November helped grasses grow and thrive, but a dry winter has parched vegetation and raised the prospect for damaging blazes.

Wildfire Risks Elevated for US Plains Due to Drought Conditions

March 18, 2025 — Brian K Sullivan, Lauren Rosenthal & Mary Hui - Bloomberg

Fuel for Flames
A rainy autumn followed by a dry winter is raising wildfire risks for the US Great Plains and Texas.

Wet weather in November has helped grasses to grow and thrive across the Plains, but since then nature’s spigot has turned off, leaving dried-out plants that are potential fuel for blazes, said Brad Rippey, a meteorologist with the US Department of Agriculture.

All that’s needed is a spark and high winds, and a situation could develop similar to the devastating fires that killed 29 people and devastated neighborhoods across Southern California in January, he said.

The western half of Oklahoma and most of Texas are among the places at above-average risk of “significant” wildfires going into March, according to the National Interagency Fire Center. Roughly a year ago, Texas was scorched by its largest fire in history. The Smokehouse Creek blaze in the state’s Panhandle left two people dead and destroyed homes and livestock.

Reprinted courtesy of Brian K Sullivan, Bloomberg, Mary Hui, Bloomberg and Lauren Rosenthal, Bloomberg

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Worker with fall protection

Fatal falls continue to account for the greatest number of construction deaths, stubbornly staying in the 250-300 range each year from 2018-22, according to U.S. Labor Dept. data.

Why Death Follows Faulty Edge Fall Protection–And How to Fix It

March 18, 2025 — Richard Korman - Engineering News-Record

The last earthly contact Siarhei Marhunou had with a construction material was with a 2 x 4 that was part of a protective guardrail on the balcony where he had been installing siding. The barrier had been erected by a prior contractor that worked at 2330 Sansom Street, a Philadelphia residence undergoing renovation, some time before Marhunou’s arrival at the job in December 2021. The guardrail apparently was too low to meet the federal standard for edge barriers where a ladder was in use and lacked a midrail, an expert witness for Marhunou’s widow reported in her negligence lawsuit against the companies on the project.

Mr. Korman may be contacted at kormanr@enr.com

Reprinted courtesy of Richard Korman, Engineering News-Record

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Supply chain ship port jet

US Homebuilders Face a Supply Chain Snarl From Tariff Battles

March 18, 2025 — Thomas Seal & Prashant Gopal - Bloomberg

President Donald Trump’s push for tariffs on Canada — and his administration’s subsequent delays and exemptions — are frustrating efforts to import lumber from the country and putting the building supply market on edge.

The back-and-forth over whether tariffs will be imposed or not has businesses unable to trust price stability, and risks backing up the supply chain for US homebuilders. The reluctance to pay a tariff, which could be changed or canceled any day, “freezes these markets up,” according to Don Magruder, who runs a building material company based in Florida.

Reprinted courtesy of Thomas Seal, Bloomberg and Prashant Gopal, Bloomberg

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Price fluxuating

Construction Materials Prices Increase 1.4% in January, Up 40.5% Since February 2020

March 18, 2025 — ABC - Construction Executive

WASHINGTON, Feb. 13—Construction input prices increased 1.4% in January compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices increased 0.9% for the month.

Overall construction input prices are 1.3% higher than a year ago, while nonresidential construction input prices are 0.7% higher. Prices increased in all three energy subcategories last month. Crude petroleum prices increased 14.8%, while natural gas and unprocessed energy material prices increased 13.7% and 13.0%, respectively.

Reprinted courtesy of ABC, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

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Extreme weather tornado fire storms

Cascading Extreme Weather Events Unleash Billions in Damages Globally

March 18, 2025 — Brian K Sullivan, Mary Hui & Joe Wertz - Bloomberg

First came a dry spell that parched the land, then a spark, followed by some wind. Suddenly, swaths of South Carolina were consumed by voracious flames.

More than 100 fires ignited in the state last weekend — an unusually high total even in the heart of fire season. It was the perfect combination of arid air, dry fuels and gusting winds that combined to spread the flames, said Doug Wood, a spokesman for the state’s Forestry Commission.

Reprinted courtesy of Brian K Sullivan, Bloomberg, Mary Hui, Bloomberg and Joe Wertz, Bloomberg

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Seminar

Join Traub Lieberman Co-Chair and Partner Lisa Shrewsberry for the NYSBA Legal Malpractice 2025 Seminar

March 18, 2025 — Lisa L. Shrewsberry - Traub Lieberman

Please join Traub Lieberman Co-Chair and Partner Lisa Shrewsberry on Friday, March 28, 2025 from 9:00 AM - 1:00 PM EDT for the NYSBA Legal Malpractice 2025 Seminar.

Lawsuits against lawyers arising from errors and/or omissions in the performance of legal services continue to rise. It is an essential part of a law firm's business practice to evaluate its legal risk and malpractice insurance needs. This program is designed to educate attorneys on how to prosecute and/or defend a legal malpractice action. In addition, this program will educate attorneys about their legal malpractice exposures, what they should do in the event that a lawsuit or a grievance complaint is filed against them, and what they should do when situations arise that indicate that a legal malpractice claim is likely. Both solo practitioners and members of larger firms would benefit from knowing how to assess professional liability risk and manage legal malpractice litigation.

March 28th, 2025
Virtual Event

Ms. Shrewsberry may be contacted at lshrewsberry@tlsslaw.com

Reprinted courtesy of Lisa L. Shrewsberry, Traub Lieberman

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At Least 34 Dead, Dozens Injured as Severe Storms, Tornadoes Hit Multiple States

ABC7 Chicago reported at least 34 people are dead after severe weather hit parts of Missouri, Kansas, Texas, Arkansas, Oklahoma and Mississippi overnight, officials said.

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Dozens of Tornadoes Leave Path of Destructions Across 7 States

Parts of the Northeast were drenched in rain and hail after deadly storms and dozens of tornadoes ripped across seven states in the South and Midwest over the weekend, killing at least 40 people. NBC’s Kathy Park reports and TODAY’s Al Roker tracks the latest forecast.

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