CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - TUESDAY, NOVEMBER 3, 2026

Group each holding a puzzle piece

Colorado’s new right-of-access statute may help address one of the unintended consequences of individually owned townhome developments, but it does not solve every problem associated with repairing interconnected building systems.

One Building, Six Owners, One Defective Stucco System: How Do You Coordinate Repairs?

November 2, 2026
David McLain - Colorado Construction Litigation Blog

The Problem: Six Homes, One Building Envelope
Consider a hypothetical six-unit townhome building in Colorado. Each residence is individually owned. There is no homeowners association responsible for maintaining the building’s exterior, no commonly owned building envelope, and no association empowered to pursue construction defect claims on behalf of all six homeowners. Instead, the development relies on individual ownership, recorded easements, and party wall agreements to govern relationships among neighboring owners.

Although the residences are separately owned, they share a continuous exterior stucco system, including interconnected flashing, waterproofing, and architectural transitions.

One homeowner discovers water intrusion and retains an expert who identifies defects in the stucco installation. The expert recommends removing and replacing the stucco on the homeowner’s residence. However, because the exterior cladding and waterproofing systems are interconnected, the proposed repair may require work extending beyond the boundaries of that homeowner’s property.

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

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

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CDJ NEWS THIS WEEK



Roof repair

The dispute arose from hail damage to the roof of a commercial property in Irving, Texas.

Old Storm, New Claim: A Fifth Circuit Notice Reminder

November 2, 2026 — Koorosh Talieh & Torrye Zullo - Hunton Insurance Recovery Blog

In a recent decision, the US Court of Appeals for the Fifth Circuit affirmed summary judgment for a commercial property insurer in a dispute involving the timing of notice for a hail damage claim. In Gann v. Depositors Insurance Co., No. 25-11291 (5th Cir. Oct. 5, 2026), the policyholder reported a claim after discovering interior water damage in 2022, but its consultant later attributed all of the claimed roof damage to a hailstorm that occurred in 2018. The court concluded that the delay in identifying and reporting the 2018 loss was unreasonable and prejudiced the insurer’s ability to investigate the circumstances of the loss in a timely manner. The decision is an important reminder for policyholders of the need for timely notice under property insurance policies. Such issues can arise, as they did in Gann, even where damage is not immediately apparent, its cause is not initially known, or the cause of loss may implicate a different policy period than the one under which the claim was first made.

The Dispute
The dispute arose from hail damage to the roof of a commercial property in Irving, Texas. After discovering interior water damage, the policyholder reported a claim to the insurer in September 2022, specifying August 9, 2022, as the date of loss. The insurer inspected the property and determined that a portion of the roof had sustained hail-related damage and issued payment.

Reprinted courtesy of Koorosh Talieh, Hunton Andrews Kurth LLP and Torrye Zullo, Hunton Andrews Kurth LLP

Mr. Talieh may be contacted at ktalieh@hunton.com
Ms. Zullo may be contacted at tzullo@hunton.com

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Contract

Because the subcontractor contained no termination language or basis to withhold retainage / contract sum language, the general contractor had to pay the subcontractor the retainage.

Don’t Forget to Include Termination Language in Your Contract

November 2, 2026 — David Adelstein - Florida Construction Legal Updates

A recent case explains why termination language or a basis to withhold contract sums is important in your contract. Don’t neglect this language or the negotiation that goes into having this language.

In a recent dispute, GSD Contracting, LLC v. All American Builders & Debris Removal, Inc., 2026 WL 3068422 (Fla. 4th CA 2026), a subcontract included language that said that 10% retainage would be paid 90 days after final completion of the project. The subcontract did NOT include termination for cause language; it only included termination for convenience language. Towards the end of the project, mold was discovered warranting mold remediation. The subcontractor refused to perform until the mold was remediated. The general contractor claimed it was remediated but the subcontractor argued the remediation was insufficient because the contractor did not engage an industrial hygienist. After the subcontractor refused to complete its work, the general contractor terminated the subcontractor for cause. The subcontractor then sued the general contractor for its 10% retainage claiming the general contractor breached the subcontract. The trial court, as affirmed by the appellate court, agreed. The appellate court found that the contract required the general contractor to pay the subcontractor’s retainage 90 days after final completion and the project had long been completed. “Significantly, the subcontract does not contain a termination for cause provision or any pertinent provision permitting [the general contractor] to withhold or retain [the subcontractor’s] retainage following a termination…Nothing in the subcontract provides that [the general contractor] may thereafter withhold the retainage based on an alleged default by [the subcontractor].” GSD Contracting, supra, at *2.

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

Reprinted courtesy of David Adelstein, Kirwin Norris

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Happy construction worker

This “all-or-nothing” rule has yielded results that, some may argue, are disproportionate to the harm inflicted.

SB 342 Eliminates the “All-or-Nothing” Rule Under Dreaded Business and Professions Code Section 7031

November 2, 2026 — Garret D. Murai - California Construction Law Blog

Most California contractors are aware of dreaded Business and Professions Code section 7031 which has been described even by courts – who typically veer away from ascribing judgment to legislation – as being “harsh[ ],” “draconian” and “unjust.”

For those less familiar with Section 7031, the statute provides two remedies, described as a shield and a sword, against unlicensed contractors who perform work requiring a license. The first, the “shield” also referred to as the “claim preclusion” provision, precludes unlicensed contractors from suing for payment when performing work requiring a license. The second, the “sword” also referred to as the “disgorgement” provision, allows a property owner to sue an unlicensed contractor for disgorgement of all money paid to the unlicensed contractor.

Mr. Murai may be contacted at gmurai@nomosllp.com

Reprinted courtesy of Garret D. Murai, Nomos LLP

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Construction worker paperwork

A recent Tennessee construction case provides an important reminder: the best contract in the world may not save you from bad project facts.

Your Construction Contract Won’t Always Save You From a Bad Project Record

November 2, 2026 — Matthew J. Devries - Best Practices Construction Law Blog

Construction contracts are full of protections. No-damage-for-delay clauses. Consequential damage waivers. Rights to supplement a subcontractor’s work. Broad scheduling provisions. But a recent Tennessee construction case provides an important reminder: the best contract in the world may not save you from bad project facts.

In Commercial Painting Company, Inc. v. The Weitz Company, LLC (TN Ct. App. Oct. 28, 2026), the dispute involved a general contractor and its drywall subcontractor on a multi-building retirement community. The subcontract was originally worth more than $3.2 million, and the parties eventually disagreed about delays, scheduling, supplemental work, backcharges, and unpaid applications for payment. What began as a fairly typical construction dispute became anything but typical. A jury ultimately found that the general contractor had intentionally misrepresented material facts and awarded the subcontractor $3.9 million in punitive damages. (The case has a lengthy procedural history involving multiple appeals, but this post focuses only on the practical lessons from the most recent decision.)

Mr. Devries may be contacted at mdevries@buchalter.com

Reprinted courtesy of Matthew J. Devries, Buchalter

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House on fire

After a fire damaged the property, the insured submitted a claim to State Farm.

Insurer’s Motion to Dismiss Bad Faith Claim Denied

November 2, 2026 — Tred R. Eyerly - Insurance Law Hawaii

The court denied the insurer’s motion to dismiss the insured’s claim for breach of the covenant of good faith and fair dealing, but granted the motion to dismiss the claim for declaratory judgment. Jimenez v. State Farm Fire & Cas. Co., 2026 U.S. Dist. LEXIS 182079 (D. Conn. Aug. 15, 2026).

The insured owned a two-family property which was insured by State Farm. After a fire damaged the property, the insured submitted a claim to State Farm. The policy provided for Fair Rental Value coverage “[w]hen a loss insured causes that part of the residence premises rented to others or held for rental by you to become uninhabitable.”

Before the fire, the insured alleged that he rented part of the property under an oral lease agreement. In support of his claim for Fair Rental Value, the insured alleged that he provided State Farm with bank deposit receipts demonstrating that he collected rent in cash. The insured further alleged that his rental ledger was destroyed in the fire.

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

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

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Arbitration Award

RV Holdings offers a pointed reminder that arbitration is not immune from judicial oversight, even though courts vacate or modify awards only in narrow circumstances.

When Arbitrators Overreach: Utah Supreme Court Trims an Award Built on an Unpled Claim

November 2, 2026 — Tyson J. Prisbrey & Mark O. Morris - Snell & Wilmer

Construction industry participants have long favored arbitration to resolve disputes, prizing its speed, confidentiality, and finality over traditional litigation. That finality, however, depends on arbitrators staying within the bounds of what the parties actually put before them. In RV Holdings 4, LLC, et al. v. Standard Fiber Investors, LLC, the Utah Supreme Court issued a rare rebuke of an arbitration award, holding that the arbitrator exceeded their authority by awarding damages on a claim the prevailing party never submitted for decision.

The dispute arose from a management-fee relationship between Standard Fiber, a bedding manufacturer, and several affiliated “Ridgeview” entities that provided financial and accounting oversight services. After Standard Fiber stopped paying management fees in 2020, the parties pursued their claims in arbitration. Ridgeview’s arbitration demand sought recovery under two specific theories: that a 2006 management services agreement remained in effect, and alternatively, that an oral “50/50 Agreement” entitled it to a share of fees paid to an affiliated entity. Notably, Ridgeview never asserted a claim for breach of a separate 2014 fee arrangement, and affirmatively disavowed reliance on it. The arbitrator rejected both of Ridgeview’s submitted theories and instead awarded Ridgeview $725,000 based on that unpled 2014 agreement. The district court confirmed the award, concluding that the arbitrator’s decision was rationally related to the parties’ arguments, including evidence Standard Fiber itself introduced about the 2014 arrangement.

Reprinted courtesy of Tyson J. Prisbrey, Snell & Wilmer and Mark O. Morris, Snell & Wilmer

Mr. Prisbrey may be contacted at tprisbrey@swlaw.com
Mr. Morris may be contacted at mmorris@swlaw.com

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Chess Victory

Partner Daniel Crespo and Associate Soyoun K. McConnell secured summary judgment for their Hotel client in a premises liability action seeking $1 million for injuries allegedly requiring surgery.

A Million-Dollar Claim. A Decisive Defense Victory.

November 2, 2026 — Dolores Montoya - Bremer Whyte Brown & O'Meara LLP

Partner Daniel Crespo and Associate Soyoun K. McConnell secured summary judgment for their Hotel client in a premises liability action seeking $1 million for injuries allegedly requiring surgery.

Through targeted photographic evidence and expert analysis, Mr. Crespo and Ms. McConnell successfully persuaded the court that the curb at issue was ordinary, plainly visible, and presented no actionable dangerous condition. They convincingly countered the plaintiff’s expert’s contention that yellow warning paint was required.

Reprinted courtesy of Bremer Whyte Brown & O'Meara LLP

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Lightning strike on construction site

Recognizing the early signs of heat or cold stress is critical to preventing small problems from becoming serious incidents.

Beyond the Forecast: Managing Extreme Weather Risks on Construction Sites

November 2, 2026 — Jordan Graustark - Construction Executive

Construction leaders would never downplay or dismiss a fall, struck-by incident or equipment failure as “just part of the job.” Yet, some temperature-related conditions, such as heat exhaustion, frostbite and hypothermia, are often accepted as unavoidable consequences of working conditions. Temperature-related incidents likely won’t command the same attention as a crane collapse, but understating their seriousness can be a costly mistake. As extreme weather becomes more frequent and unpredictable, that mindset is becoming increasingly difficult to defend.

Extreme weather is not simply a seasonal inconvenience; it’s a serious occupational hazard. Heat waves, cold snaps and rapid temperature swings can contribute to serious injuries and fatalities—or SIFs—productivity losses and costly project disruptions. A single temperature-related incident can quickly become an OSHA recordable and project management challenge. Reduced physical and impaired cognitive performance from heat or cold stress can increase the risk of workplace incidents long before a medical emergency occurs.

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

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Nuclear clean up

As the U.S. embarks on a new era of nuclear power construction supported by billions of dollars in federal grants and loans, the agency still supervises about 15 cleanups of old plants that became too costly to maintain.

A Nuclear Power Hangover: Controversies Plague New York's Indian Point Plant Cleanup

November 2, 2026 — Richard Korman - Engineering News-Record

Michael Tromblee was in for a late night. Of the many after-business-hour duties he performs as superintendent of the Hendrik Hudson school district about 25 miles north of New York City, attending meetings of a board overseeing cleanup of the Indian Point nuclear power plant, located in Buchanan, N.Y., was an infrequent but necessary chore. Since the plant shut down in 2021 and gradually stopped paying taxes to support the school district's students, between one-fourth and one-third of its annual budget funding vanished, and state transitional funds provided to bridge that gap will expire after the 2027-28 school year. Last year, Tromblee described the lost power plant tax revenue, about $25 million annually, as “a financial hit that no school district is built to withstand.”

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

Reprinted courtesy of Richard Korman, Engineering News-Record

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Hurricane

The case related to a claim for damage caused by Hurricane Milton, which was reported more than ten months after the date of loss.

Traub Lieberman Partner Ryan Parker and Associates Robert Biferie and Matthew Groteke Win Final Summary Judgment on Behalf of Homeowner’s Insurance Company

November 2, 2026 — Ryan S. Parker, Robert Biferie & Matthew Groteke - Traub Lieberman

Traub Lieberman Partner Ryan Parker and Associates Robert Biferie and Matthew Groteke won final summary judgment on behalf of their client, a homeowner’s insurance company. The case related to a claim for damage caused by Hurricane Milton, which was reported more than ten months after the date of loss. The homeowner’s insurance company reviewed historical aerial photography of the roof and determined that there was no evidence of damage immediately after the Hurricane, which was inconsistent with the condition of the roof when it was inspected more than ten months later. Additionally, the homeowner’s insurance company was unable to determine when the interior water damage occurred due to the delay in reporting the claim. After a lawsuit was filed, the Traub Lieberman team took depositions of the Plaintiffs and the opposing expert and eventually filed a Motion for Summary Judgment based on the failure to timely report the claim and resulting prejudice to their client. The Court granted the Motion for Summary Judgment finding that notice of the claim was untimely as a matter of law and that the Plaintiffs failed to rebut the legal presumption of prejudice to the insurance company. As a result of the ruling, the insurance company has a valid claim for attorney’s fees.

Reprinted courtesy of Ryan S. Parker, Traub Lieberman, Robert Biferie, Traub Lieberman and Matthew Groteke, Traub Lieberman

Mr. Parker may be contacted at rparker@tlsslaw.com
Mr. Biferie may be contacted at rbiferie@tlsslaw.com
Mr. Groteke may be contacted at mgroteke@tlsslaw.com

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Construction workers happy

Beginning on January 1, 2027, the licensee will be thrown a lifeline on this issue.

Meaningful Change to Contractors License Law Disgorgement Rule of Business and Professions Code Section 7031

November 2, 2026 — Garret Mandel - Porter Law Group

California Business and Professions Code section 7031 has historically imposed a severe and unforgiving penalty on any licensed contractor or subcontractor (“licensee”) performing any construction work after its contractor’s license becomes suspended or is revoked. The penalty for many years has been a prohibition against the licensee bringing an action to collect payment owed and a draconian penalty allowing the party who paid the licensee to recover, or cause the licensee to “disgorge,” any payment the licensee received for the entire contract. This strict penalty could apply to funds received for the entire contract even when the license was suspended or revoked for only a short period of time during the project. This meant, for example, that a licensee who was paid $10 million under a contract for a project that took a year to build could have to disgorge the entire $10 million it received under that contract as a result of performing work while its license was suspended for only a week of the entire project duration. Draconian indeed. A limited statutory substantial-compliance exemption could provide relief, but it requires a court determination that the statutory conditions have been met.

Beginning on January 1, 2027, the licensee will be thrown a lifeline on this issue. Under California Senate Bill 342, becoming effective on January 1, 2027, California contractors on qualifying projects will no longer face the same severe penalties – but there are limitations.

Mr. Mandel may be contacted at gmandel@porterlaw.com

Reprinted courtesy of Garret Mandel, Porter Law Group

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Data center interior

An exclusive breakdown of estimated expenses to construct an AI data center in Texas reveals why developers face billions of dollars in expenses.

Why AI Data Centers Cost Billions to Build

November 2, 2026 — Lynn Doan – Bloomberg

Roughly $750 billion. That’s how much Meta Platforms Inc., Amazon.com Inc., Microsoft Corp. and Google owner Alphabet Inc. are expected to devote to capital expenditures this year alone.

That’s more than the entire gross domestic product of Ireland or Belgium. More than half of what all of the companies in the S&P 500 Index spent in total last year. Enough to cut a $5,500 check for every household in the US.

There was a time when John McWilliams, part of the research group at real estate services firm Cushman & Wakefield, would’ve found it impossible to imagine four companies spending that much, primarily on data centers, in a single year. “We’ve never seen it,” he said.

Reprinted courtesy of Lynn Doan, Bloomberg

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Illustration of rebound trend

US New-Home Sales Rise to Fastest This Year as Prices Drop

November 2, 2026 — Michael Sasso – Bloomberg

US new-home sales climbed in August at the fastest pace this year, suggesting a mix of price cuts and sales incentives is helping ease affordability constraints.

Reprinted courtesy of Michael Sasso, Bloomberg

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Magnifying glass on charts and trends

Backlog Holds Strong

November 2, 2026 — Construction Executive

Associated Builders and Contractors’ Construction Backlog Indicator fell to 8.8 months in June, down 0.3 months from May but up 0.1 months from June 2025, according to an ABC member survey conducted June 22-July 8.

Only the Middle States region posted monthly backlog growth, while the Northeast experienced a sharp decline and now sits more than a month below its year-ago level.

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

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Pen lying on contract

Court Untangles Which of Three Insurers Should Defend

November 2, 2026 — Tred R. Eyerly - Insurance Law Hawaii

The federal district court sorted out which of three insurers were obligated to defend the insured after a bodily injury. Travelers Prop. Cas. Co. of Am. v. Arch Ins. Co., 2026 U.S. Dist. LEXIS 197942 (S. D. N. Y. Sept. 1, 2028).

LP Ciminelli, Inc. (LPC) was the contractor for a construction project. LPC hired Franco Associates as a subcontractor. The parties entered a subcontract requiring Franco to indemnify LPC for bodily injury “arising out of or resulting from . . . any acts or omissions on the part of” Franco or its employees. Franco was also required to procure insurance coverage that was “primary over and apply on a non-contributory basis to any other collectible insurance providing coverage to [LPC].”

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

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

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Webinar laptop

Webinar: The Cost of Schedule Changes: Understanding New York’s New Construction Reporting Pay Act

November 2, 2026 — Meghan Douris, Howard Wexler & Kyle Winnick - The Construction Seyt

Cost
There is no cost to attend, however, registration is required.

REGISTER HERE

Thursday, November 12, 2026
12:00 p.m. to 1:00 p.m. Eastern
11:00 a.m. to 12:00 p.m. Central
10:00 a.m. to 11:00 a.m. Mountain
9:00 a.m. to 10:00 a.m. Pacific

About the Program
Beginning December 8, 2026, New York construction employers will face new reporting pay and shift-cancellation pay obligations under recently enacted legislation signed by Governor Kathy Hochul. The law generally requires covered construction employers to provide employees with up to four hours of pay when they report to work but are not provided work, and two hours of pay when a scheduled shift is canceled with less than 12 hours’ notice.

Reprinted courtesy of Meghan Douris, Seyfarth, Howard Wexler, Seyfarth and Kyle Winnick, Seyfarth

Ms. Douris may be contacted at mdouris@seyfarth.com
Mr. Wexler may be contacted at hwexler@seyfarth.com
Mr. Winnick may be contacted at kwinnick@seyfarth.com

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Huntington Beach Homeowners Left with Cleanup and Insurance Battles After Coastal Flooding

According to the city, approximately 114 homes and structures have sustained damage. Amber Frias reports for the NBC4 News at 11 p.m. on Thursday, Oct. 29, 2026.

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Record-Breaking High Tides Swamp Patios, Private Docks in Newport Beach

Record-breaking high tides continued to impact low-lying areas of Newport Beach on the third consecutive day of flooding, ABC7 News reported.

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