CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - FRIDAY, JULY 25, 2025

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In Morningside Ministries v. Koontz McCombs Construction, the Court of Appeals of Texas considered whether the plaintiff’s construction defect claims were “inherently undiscoverable,” thereby tolling the applicable limitations period under the discovery rule.

Out of Sight, Out of Mind: Texas Court Finds Construction Defect Claims Were Inherently Undiscoverable, Tolls Statute of Limitations

July 22, 2025
Gus Sara - The Subrogation Strategist

In Morningside Ministries v. Koontz McCombs Construction, Ltd., No. 08:23-00332-cv, 2025 Tex. App. Lexis 3584 (Morningside), the Court of Appeals of Texas (Court of Appeals) considered whether the plaintiff’s construction defect claims were “inherently undiscoverable,” thereby tolling the applicable limitations period under the discovery rule. The lower court granted the defendants’ summary judgment motions, finding that the plaintiff’s breach of contract and breach of express warranty claims were brought outside of the four-year limitations period. On appeal, the plaintiff argued that the alleged defects were “inherently undiscoverable” as a matter of law, which tolled the applicable limitations period. The Court of Appeals reversed the lower court’s ruling, finding that the alleged defects were “inherently undiscoverable” and the defendants failed to conclusively negate the application of the discovery rule.

The plaintiff owned and operated several senior living facilities and, in 2012, hired defendant Koontz McCombs Construction, Ltd. (Koontz) to construct a 100-apartment addition to one of their facilities. The plaintiff also retained defendant Project Control of Texas, Inc. (Project Control) as the project manager. The defendants substantially completed their work in 2016 and, thus, the certificate of substantial completion was executed on March 31, 2016.

Mr. Sara may be contacted at sarag@whiteandwilliams.com

Reprinted courtesy of Gus Sara, White and Williams

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CDJ NEWS THIS WEEK

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As of July 1, 2025, the new jurisdictional limit for claims in General District Court has increased to $50,000.

Big News for “Smaller” Construction Cases

July 22, 2025 — Christopher G. Hill - Construction Law Musings

As a Virginia construction attorney and solo practitioner, I represent many clients that have construction claims that cover the spectrum from $20,000 (and possibly less) to somewhere in the millions. Back in 2011, the Virginia General Assembly updated the General District Court (the court “not of record” that takes less time and costs less in litigation costs) jurisdictional limit from $15,000 to $25,000. Back then, this was a welcome change and also seemed like enough. These days, between inflation and the general cost of living, I run into a number of cases that are in the $30,000 to $40,000 range that back in 2015 or so may have been in the $20,000 range. Such cases always started a debate between lawyer and construction client as to whether it was worth the additional fees and litigation costs to chase the extra $5,000 to $10,000 in Circuit Court or simply forgo it and use the General District Courts knowing that the limit on recovery would be capped at the $25,000. Such a “Hobson’s Choice” should not have been required, but the rules were the rules.

Luckily, the General Assembly actually did something helpful for the legal system and for both access to justice generally and for the ability to efficiently prosecute legitimate claims that were there at the margins. As of July 1, 2025, the new jurisdictional limit for claims in General District Court will be $50,000. Senate Bill 1291 passed and was signed by Governor Youngkin so there is come cause to celebrate for those subcontractors and general contractors that have legitimate and larger claims that previously would have been subject to that marginal gain discussion I describer previously in this post. This is a general limit increase for all claims where before the $50,000 limit had only been increased for personal injury claims.

Mr. Hill may be contacted at chrisghill@constructionlawva.com

Reprinted courtesy of The Law Office of Christopher G. Hill

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Construction worker worried

The owner claimed the contract was unenforceable under Florida Statute s. 489.128 because the contractor was unlicensed.

Florida Is Not Playing Games with Unlicensed Contracting

July 22, 2025 — David Adelstein - Florida Construction Legal Updates

Lately, Florida is NOT playing any games with unlicensed contractors. And the results are harsh. BE WARY.

This is demonstrated in the recent opinion CAM Bradford Homes, LLC v. Arrants, 2025 WL 1715893 (Fla. 5th DCA 2025).

In this case, an owner hired a contractor to build a house. The contractor’s owner, a licensed contractor, pulled the permit in his own name and supervised the project. However, the owner did not qualify his construction company as a licensed contractor. A dispute arose and the owner terminated the contract. The contractor liened the project and sued the owner. The owner claimed the contract was unenforceable under Florida Statute s. 489.128 because the contractor was unlicensed. This meant the contractor could not enforce its contract (or lien) and was sh*t out of luck. The trial court and appellate court agreed because while the owner of the construction company may have been properly licensed, his construction company was not.

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

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

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Worker calculating documents budgets

The court granted the insurer's motion for summary judgment agreeing that the "increased Cost of Construction" provision limited the amount the appraisers could award.

Court Upholds Appraisers' Use of "Increased Cost of Construction" Provision

July 22, 2025 — Tred R. Eyerly - Insurance Law Hawaii

The court granted the insurer's motion for summary judgment agreeing that the "increased Cost of Construction" provision limited the amount the appraisers could award. Bigfoot Co-Op A, Inc. v. Nationwide Mut. Ins. Co., Case No. 3:24-cv-00022-SMR-WPK (S.D Iowa April 21, 2025).

A hailstorm damaged five apartment buildings owned by insured Bigfoot Co-Op A, Inc. (Bigfoot) Nationwide insured the property. When the parties could not agree on the amount payable for the loss, they invoked the policy's appraisal provision.

The appraisers first issued an initial award valuing the replacement cost at $478,116.42 and actual cash value at $430,043.66. This determination noted that the "decking condition" would be "determined/verified later" pending confirmation from local authorities about applicable building code requirements.

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

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

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Gavel on law books

A construction accident occurred at premises owned by Central Area Equities Associates LLC, insured by Associated. Associated, on behalf of Owner, tenered to Sentinal, who issued a policy of insurance to Venchi US Inc. as the sole named insured.

Federal Court Upholds Privity Requirement in Additional Insured Endorsement; Finds No Equitable Estoppel

July 22, 2025 — Craig Rokuson - Traub Lieberman

In the recent case of Associated Indus. Ins. Co. v. Sentinel Ins. Co., No. 23-CV-10400 (MMG), 2025 U.S. Dist. LEXIS 114423 (S.D.N.Y. June 16, 2025), the United States District Court for the Southern District of New York enforced a privity requirement on an additional insured endorsement in the landlord/tenant context. Further, even though previous denials of coverage dating back almost three years did not mention the privity requirement, due to the fact that the denying insurer had never provided coverage and had all times denied an obligation to provide coverage, no equitable estoppel was found.

A construction accident occurred at premises owned by Central Area Equities Associates LLC (“Owner”), insured by Associated. Associated, on behalf of Owner, tenered to Sentinal, who issued a policy of insurance to Venchi US Inc. as the sole named insured (“Parent Company”). By virtue of a “Who is An Insured” provision in the Sentinal policy, the tenant at the premises, Venchi 2 LLC (“Tenant”) qualified as an insured by virtue of being controlled, more than 50%, by Parent Company. The Sentinal policy also qualified as an additional insured “any person or organization from whom you lease land or premises when you have agreed, in a written contract or written agreement, that such person or organization be added as an additional insured on the Sentinal policy.” The Sentinal policy defined “you” as the named insured under the policy.

Mr. Rokuson may be contacted at crokuson@tlsslaw.com

Reprinted courtesy of Craig Rokuson, Traub Lieberman

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Scissors cutting through curly red tape

Contractors are getting tangled up in the perfect storm of red tape and agency personnel changes.

Time is Money: Escalating Stalled Termination Cost Negotiations

July 22, 2025 — David Timm - Burr & Forman, LLP

Stormy Skies: Internal Audit Delays
Contractors are getting tangled up in the perfect storm of red tape and agency personnel changes. The U.S. Government already struggles to cut through bureaucratic procedures even on its best day. When combined with agency personnel turnover from 2025 DOGE retirements, cuts, and firings, many contractors are waiting months or years to be paid for work already performed. After a Termination for Convenience (“T4C”) contractors submit a Termination Settlement Proposal (“TSP”) documenting costs incurred and associated with wrapping up the contract.

When short staffed agencies meet internal red tape it can leave totally blameless contractors adrift in a sea of uncertainty. In some cases, contractors have even had their TSP costs approved by an agency approved outside auditor. Still the agency tells them the TSP has to go through opaque internal reviews with no communicated deadline. The contractor waits. . . and waits. But payment still does not arrive.

Mr. Timm may be contacted at dtimm@burr.com

Reprinted courtesy of David Timm - Burr & Forman, LLP

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Jury & Judge Illustration Purple Background

The nominal dollar damage award seemed to indicate that the jury did not believe the cost information provided by Black & Veatch, wrote Judge Andrea Wood in her May ruling.

Black & Veatch Appeals After Judge Upholds Jury's Surprise $1 Damage Award From Boldt

July 22, 2025 — Richard Korman - Engineering News-Record

Black & Veatch is appealing a federal court judge's decision in May to stick with the results of a trial late last year after which the jury reached a surprising verdict. In deciding how much money in damages subcontractor Boldt Co. owed to prime contractor Black & Veatch over a troubled Illinois wind energy project in 2019, the jury ordered Boldt to pay Black & Veatch only one dollar.

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

Reprinted courtesy of Richard Korman, Engineering News-Record

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Window half open

In particular, Partners Jennine A. Gerrard and Clare Cunningham held that New York City’s “Window Guard Law," has no application to apartments not occupied by a child ten years of age or younger.

NY Appellate Team Obtains Affirmance of Summary Judgment to Landlord in Tenant’s Lawsuit Alleging Catastrophic Injuries

July 22, 2025 — Lewis Brisbois Newsroom

New York, N.Y. (June 20, 2025) - In Tucker v. All Metro Home Care Servs., Inc., ___ A.D.3d ___, 2025 NY Slip Op 03640 (1st Dep’t 2025), the plaintiff alleged to have been rendered quadriplegic after falling from the window of his second-story apartment in 2013. At the time of his fall, the plaintiff was a mentally disabled adult under the 24/7 care of a home health agency (which was also a named co-defendant). The firm represented the landlord/owner of the building in the action, brought in Supreme Court, Bronx County. The plaintiff’s primary theory of liability was that, given the plaintiff’s known mental infirmities, the landlord had a “heightened duty of care” under the common law to install window guards in the apartment.

After years of discovery, Partners Jennine A. Gerrard and Clare Cunningham cross-moved for summary judgment on the landlord’s behalf. Both argued that neither any statute nor the common law imposed a duty of care upon the landlord to install window guards for the benefit of an adult tenant, regardless of the tenant’s mental condition. In particular, Jennine and Clare cited Milano v. 340 E. 74th St. Owners Corp., 158 A.D.3d 479, 479 (1st Dep’t 2018), where the Appellate Division, First Department, held that New York City’s “Window Guard Law” (24 RCNY 12-10(g)), which requires the installation of window guards under certain circumstances, has no application to apartments not occupied by a child ten years of age or younger. In opposition, the plaintiff largely raised procedural objections to the motion. On the merits, the plaintiff argued that, because, in his view, his fall was foreseeable, the landlord had a “heightened duty of care” at common law to install window guards, irrespective of the inapplicability of the Window Guard Law. The Supreme Court, Bronx County, granted the motion in full, dismissing all claims against the landlord.

Reprinted courtesy of Lewis Brisbois

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The most significant reason for contractor disputes is what I call the “imbalance” in the contractor/client relationship.

8 Secrets About Working with Contractors – Bad Contractor Series Part 5

July 22, 2025 — Jon Grishpul - GreatBuildz

Before diving in, it might be helpful to start with part 1 of our Bad Contractors series: How To Spot a Bad Contractor.

Just like purchasing a home, undertaking a major home renovation and working with contractors is something most people do only a few times in their life. In the case of a home purchase, they would hire an experienced realtor to guide them through the process, but with renovations, people are on their own. They’ll have to do their best with their limited experience to create a budget, envision a design, search for materials, and find, interview, and hire contractors.

All of this is no easy task and can often become an exceedingly stressful experience or even a renovation nightmare. Unfortunately, over 50% of homeowners report having a negative experience with their remodel or complaining of a bad contractor. If you are unfortunate enough to find yourself working with a bad contractor, you could end up in a stressful contractor dispute.

Reprinted courtesy of Jon Grishpul, GreatBuildz

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Taking proactive steps to protect your business from litigation in California is not just smart -- it is essential.

Armor Up: Fortifying Your Business Against California Litigation

July 22, 2025 — Kathryne E. Baldwin - Wilke Fleury

California is a litigious landscape; it is one of the most heavily regulated and litigious states in the country. Businesses both small and large face a complex web of employment laws, consumer protection statutes, environmental regulations, and contractual obligations -- most of which come with heavy-handed penalties for non-compliance. In this environment, the best defense is a robust offense. Businesses that invest internally in thoughtful structuring, clear internal protocols, and regular legal check-ins position themselves well to avoid litigation altogether or, at the very least, to withstand it. Facing litigation can be a reality in today’s world of catchy headlines of big-time judgments, so it is important to follow some time-tested rules to best arm your business if the day comes where it needs to defend itself.

First Rule of Litigation: Documentation -- It will not be surprising to learn the best way to protect your business against what feels like inevitable litigation, is documentation. Whether it is your time clock entries, communications with vendors or clients, clear, written documentation that complies with California law creates a record that can make or break a defense. If you do have something like an employment handbook, do not rest on the laurels of that accomplishment. Have it reviewed regularly to be sure it reflects compliance with current legal standards. Doing so means you close common loopholes that billboard and bus stop plaintiff attorneys are familiar with exploiting.

Ms. Baldwin may be contacted at kbaldwin@wilkefleury.com

Reprinted courtesy of Kathryne E. Baldwin, Wilke Fleury

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Man at three arrow fork in road

Policy is shifting daily, market volatility is acute and general economic instability is making risky what has generally been a rather strong postpandemic construction marketplace.

The Age of Uncertainty: Monitoring Construction Policy Shifts

July 22, 2025 — Anirban Basu - Construction Executive

In both 2023 and 2024, American capitalism shrugged off higher borrowing costs as investors desperately sought higher rates of return. Certain segments, especially those pertaining or adjacent to artificial intelligence were especially strong, often taking the form of data center construction. The supply-chain catastrophes accompanying the pandemic also spawned a desire to simplify logistics and place both manufacturing facilities and distribution centers closer to final consumers. That, along with an acceleration in the role of e-commerce, spawned the construction of fulfillment centers and manufacturing facilities.

But there has been even more than that driving demand for contractor services and expanding backlog. On Nov. 15, 2021, as the pandemic upended daily living, President Biden signed the Infrastructure and Investment and Jobs Act. That $1.2 billion package has helped to fuel demand for construction services in segments like roads and highways, bridges, water/sewer and waste disposal. Not surprisingly, contractors associated with publicly financed segments have experienced among the largest increases in revenues in recent years.

On top of all that was an apartment building boom. A confluence of factors has driven Americans into high-end apartments. With mortgage rates and home prices higher, many millennials (the oldest of which turn 45 this year) opted to rent. Many are approaching their peak earning years. They have sought to live well, frequently opting for apartments in swanky sections of urban centers or emerging edge cities. That has spawned apartment building booms in Denver, Dallas, Austin, Nashville, Charlotte, Tampa and many other communities.

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

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Las Vegas Partner Madeline Arcellana and Associate Reema Hassanieh have been recognized in Nevada Business Magazine as 2025 Top Rank Attorneys in Nevada.

Nevada Business Magazine Ranks Madeline Arcellana and Reema Hassanieh as 2025 Top Attorneys in Nevada!

July 22, 2025 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

Bremer Whyte Brown & O’Meara, LLP is proud to share that Las Vegas Partner Madeline Arcellana and Associate Reema Hassanieh have been recognized in Nevada Business Magazine as 2025 Top Rank Attorneys in Nevada. To view the list, click here.

The top attorneys in Nevada were nominated by their peers, received a sufficient number of votes to qualify for the recognition, and underwent several levels of verification. When the nomination process closed, each ballot was reviewed for eligibility, and every voting attorney was verified with the Nevada State Bar.

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

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Home for sale

No. 1 brokerage Compass is pushing for sellers to market houses exclusively. Rivals and digital giant Zillow are striking back.

Private Real Estate Listings Ignite Fight Over How US Homes Are Sold

July 22, 2025 — Paulina Cachero, Jennifer Epstein & Patrick Clark - Bloomberg

Perched atop San Francisco’s northern hills, Pacific Heights is a bastion of old money, new fortunes and off-market home sales. Here, discretion in real estate isn’t just expected, it’s required.

Butch Haze would know: Real estate is the family business. His late mother was a top Sotheby’s agent. Today, he’s one of the founding agents of Compass Inc.’s San Francisco business and runs a team that ranks among the top 100 across all firms nationwide.

On a bright May morning, Haze unlocks the doors to a sprawling midcentury modern compound he quietly marketed to a select group of agents and would-be buyers. The property, surrounded by manicured foliage and sweeping views of the Golden Gate Bridge, includes a main residence, a lower-level apartment and a guest cottage. Last renovated in 1960, the home is undergoing a complete overhaul to command its almost $10 million price tag.

Reprinted courtesy of Paulina Cachero, Bloomberg, Jennifer Epstein, Bloomberg and Patrick Clark, Bloomberg

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New York Skyline

NYC Mayoral Candidates All Agree on Building More Housing. But Where?

July 22, 2025 — Benjamin Schneider - Bloomberg

It is a truth universally acknowledged that New York City needs to build a lot more housing in order to bring down rents. All of the leading mayoral candidates in the Democratic primary, from Andrew Cuomo to Zohran Mamdani, agree on this general point.

In the mayoral debate on Wednesday night, hosted by NBC New York and Telemundo, the first question for the nine-candidate field was on their one big idea to make the city more affordable. Seven candidates talked about accelerating the rate of homebuilding.

“For the first time, we’re seeing every mayoral candidate recognize our housing shortage and include building more homes as part of their housing plan,” says Annemarie Gray, executive director of Open New York, a pro-housing advocacy group. “Four years ago it would have been inconceivable to see every mayoral platform across the spectrum feature strategies to build more homes, and faster.”

Reprinted courtesy of Benjamin Schneider, Bloomberg

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Trophy Award

HEI Civil's Carolinas Division Honored with the 2025 NUCA of the Carolinas Safety Award

July 22, 2025 — HEI Civil

CHARLOTTE, N.C., June 17, 2025 (GLOBE NEWSWIRE) -- HEI Civil, a leading heavy civil construction company, announced that its Carolinas division was selected as the recipient of the 2025 Safety Award from the National Utility Contractors Association (NUCA) of the Carolinas. This prestigious honor recognizes the company's unwavering commitment to safety and its continued efforts to foster a culture of accountability, education and preventive care across all levels of the operation.

HEI Civil's Carolinas division has consistently demonstrated a proactive and forward-thinking approach to safety. In 2024, the division's 158 employees collectively logged over 335,000 work hours, a testament to the scale and complexity of its operations and the effectiveness of its safety systems.

Founded in 1973, HEI Civil is a privately owned, heavy civil construction general contractor headquartered in Castle Rock, Colorado. The company currently operates in Colorado, Texas and North Carolina. The enterprise's current portfolio comprises daily work on over 70 projects, with more than 800 team members and 500 pieces of equipment. For detailed information, visit https://www.heicivil.com.

Fire insurance symbol

California FAIR Plan Ruled UnFAIR

July 22, 2025 — Michael S. Levine, Geoffrey B. Fehling & Yosef Itkin - Hunton Insurance Recovery Blog

After four years of litigation, key limitations in the California FAIR Plan fire policy were found to be unlawful in Jay Aliff v. California FAIR Plan Association. Originally designed to be California’s insurer of last resort, the California FAIR Plan has increasingly become the default plan for those in California who do not qualify for policies with private insurers.

The decision is significant, not only because of the vast number of individuals who have come to depend on FAIR Plan policies for coverage, but also because so many of these policies have been implicated by the devastating wildfires that engulfed the Los Angeles area in January of this year, especially by those whose properties did not burn but instead were rendered uninhabitable because of smoke, soot and ash. The decision speaks directly to the plight of those policyholders by clarifying that a property insurance policy cannot redefine core property insurance concepts like “direct physical loss” or “smoke damage” in ways that unlawfully restricts coverage.

Reprinted courtesy of Michael S. Levine, Hunton Andrews Kurth LLP, Geoffrey B. Fehling, Hunton Andrews Kurth LLP and Yosef Itkin, Hunton Andrews Kurth LLP

Mr. Levine may be contacted at mlevine@hunton.com
Mr. Fehling may be contacted at gfehling@hunton.com
Mr. Itkin may be contacted at yitkin@hunton.com

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Conference room

IRMI Construction Risk Conference

July 22, 2025 — Beverley BevenFlorez – CDJ Staff

The annual IRMI event “features top-tier speakers focusing on innovative technology, fresh construction risk and insurance content, and excellent networking opportunities.” Attendees will receive “practical tips and future-looking strategies for proactively controlling risks, mitigating losses, negotiating equitable insurance and contract terms, and managing claims.” Three awards will also be presented at the conference: the Gary E. Bird Horizon Award, the Bill McIntyre Leadership Award, and the Words of Wisdom Award.

November 16th-19th, 2025
Indianapolis, IN

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Number Of Missing in Kerr County Plummets to 3 After Texas Floods

NBC News’ Ryan Chandler has the latest on the recovery and the challenges ahead for people still searching for loved ones.

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New Jersey Communities Recovering from Floods

Jaysha Patel of Eyewitness News ABC7NY reports from North Plainfield, New Jersey.

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