CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - THURSDAY, NOVEMBER 13, 2025

Blueprints

This blog post looks at the question of when a project owner, who has a contract with the design professional, may assert an action against a design professional in negligence for purely economic losses.

The Economic Loss Rule and Tort Claims by Owners against Design Professionals

November 9, 2025
Stu Richeson - The Dispute Resolver

This blog post looks at the question of when a project owner, who has a contract with the design professional, may assert an action against a design professional in negligence for purely economic losses. Actions against design professional can arise under a number of legal theories, but the two most common are contract and tort. Tort claims focus on duties imposed by law, while contract claims center on obligations agreed upon by the parties. The distinction often determines whether a plaintiff can recover purely economic losses and whether privity of contract is required.

The distinction between contract and tort is significant due to the availability of different remedies, limitations periods, and burdens of proof. It is normally to a plaintiff's advantage to get both tort and contract claims before the trier of fact when the same facts will sustain either cause of action, because access to multiple theories of recovery may permit a plaintiff to avoid legal or remedial pitfalls which may apply to one cause of action but not another. Niagara Mohawk Power Corp. v. Stone & Webster Eng'g Corp., 725 F. Supp. 656 (N.D.N.Y. 1989).

Mr. Richeson may be contacted at sricheson@rllaw.com

Reprinted courtesy of Stu Richeson, Riess LeMieux

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CDJ NEWS THIS WEEK



Person pointing at contract

A termination for convenience clause is an important provision in construction contracts, particularly for the owner.

Substantiating Termination for Convenience Costs

November 9, 2025 — David Adelstein - Florida Construction Legal Updates

A termination for convenience clause is an important provision in construction contracts, particularly for the owner. An owner needs the contractual right to terminate a contractor for convenience. This means the owner does NOT need a reason to exercise a termination. This is night-and-day different from a termination for cause (or default) wherein an owner must have a material basis to exercise that right. Sometimes, the relationship is not where it should be, or not what was expected, or performance does not rise up to the level you require but does not rise up to a material breach. The termination for convenience clause gives the owner the discretion to just end the relationship.

As a contractor, you need to understand the types of damages (costs) you are entitled if an owner exercises the termination for convenience. Don’t overlook this, because if an owner exercises the termination for convenience, you want to make sure you feel like you are protected. This could include a termination for convenience fee. There are a number of ways this can be accomplished, but you need to be sure you are entitled to costs incurred through the date of termination with reasonable overhead and profit, demobilization costs, early return fees, and costs incurred due to the termination. Regardless, keep in mind that it is your burden, as the contractor, to prove these costs with a reasonable degree of certainty.

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

Reprinted courtesy of David Adelstein, Kirwin Norris

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Chessboard

In 2019, the Claimant, a wealthy homeowner, filed an arbitration demand against both LG and the luxury brand architecture firm that she hired to construct a multi-million-dollar lakefront home in Wilmette, Illinois.

Traub Lieberman Partner Jessica Kull Obtains Favorable Arbitration Award In Year-Long High-Stakes Construction Defect Case

November 9, 2025 — Jessica N. Kull - Traub Lieberman

Traub Lieberman Partner Jessica Kull and the Traub Lieberman litigation team obtained an extremely favorable outcome in a highly contentious construction defect arbitration hearing on behalf of their client, a well-known general contractor, LG Construction Group LLC (“LG”). The litigation lasted a total of 6 years, with the arbitration evidentiary hearing portion continuing for 12 months.

In 2019, the Claimant, a wealthy homeowner, filed an arbitration demand against both LG and the luxury brand architecture firm that she hired to construct a multi-million-dollar lakefront home in Wilmette, Illinois. The Claimant alleged construction defects totaling approximately $13 million in damages. Her claims included alleged defects to the exterior and interior of the home. In turn, Jessica filed third-party claims against approximately 20 subcontractors involved in performing the work.

Ms. Kull may be contacted at jkull@tlsslaw.com

Reprinted courtesy of Jessica N. Kull, Traub Lieberman

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Arbitration Agreement

The most important point for everyone in the construction process to understand before signing an arbitration clause: once an arbitrator decides, that decision is almost always final.

When Logic Doesn’t Matter: Why ‘Irrational’ Isn’t a Ground to Overturn an Arbitration Award in Tennessee

November 9, 2025 — Matthew DeVries - Best Practices Construction Law

Arbitration has long been viewed as a faster, more efficient alternative to litigation. But anyone involved in construction disputes today knows that is not always the case. The process can be just as costly, sometimes taking as long as a court case. Yet one thing remains consistent, and it is the most important point for everyone in the construction process to understand before signing an arbitration clause: once an arbitrator decides, that decision is almost always final.

That reality was reinforced in a recent Tennessee Court of Appeals decision, MidSouth Construction, LLC v. Burstiner (June 12, 2025) (pdf). The case involved a homeowner who tried to overturn an arbitration award following a dispute about defective deck construction. The homeowner argued that the arbitrator’s decision was “fundamentally irrational.” The court rejected that argument.

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

Reprinted courtesy of Matthew DeVries, Buchalter

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Hail on roof

A hailstorm damaged the insureds’ property, including the roof. The insureds filed a claim (Claim One) with American Family.

Allegations in Insured’s Complaint Sufficient to Survive Motion to Dismiss

November 9, 2025 — Tred R. Eyerly - Insurance Law Hawaii

The insured’s complaint sufficiently pled breach of contract and bad faith to survive the insurer’s motion to dismiss. Macias v. Am. Family Ins. Co., 2025 U.S. Dist. LEXIS 148628 (D. Colo. Aug. 1, 2025).

A hailstorm damaged the insureds’ property, including the roof. The insureds filed a claim (Claim One) with American Family. An adjuster assigned by American Family found storm-related damage to the gutters, window screens and lattice work, but only non-storm-related damage to other items, such as the roof. American Family determined the losses amounted to $1,104.97, which was below the deductible.

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

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

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Shattered crack

Immunity laws insulate government contractors from risk. Can they withstand legal challenges?

Texas Case Exposes Cracks in the Government Contractor Immunity Shield

November 9, 2025 — Elaine Silver - Engineering News-Record

It started with a horrific crash.
Pedro Alfonso Castaneda, the mainstay of a Texas family of five, had finished shopping at a plumbing supply store on an August afternoon in 2019, when he pulled up in his Toyota Tacoma pickup at an intersection adjacent to a busy highway overpass construction project in Pinehurst, Texas.

ENR may be contacted at enr@enr.com

Reprinted courtesy of Elaine Silver, Engineering News-Record

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Arizona aerial view of community

The Ninth Circuit recently held that property owners’ unclaimed property is not taken in violation of the Fifth Amendment where it is held in trust by the State.

Ninth Circuit Clarifies Viability of Takings Claims Under Arizona’s Unclaimed Property Act

November 9, 2025 — Ed J. Hermes, Jeremy J. Stewart, Benjamin J. Mills & Emily Statham - Snell & Wilmer

In a decision cementing a split with the Tenth Circuit, the Ninth Circuit recently held that property owners’ unclaimed property is not taken in violation of the Fifth Amendment where it is held in trust by the State. See Garza v. Woods, No. 24-1064, 2025 WL 2435221 (9th Cir. Aug. 25, 2025). The district court dismissed plaintiffs’ claims because sovereign immunity barred suit against the Arizona Department of Revenue (“Department”). See Garza v. Woods, No. CV-22-01310-PHX-JJT, 2023 WL 5608414 (D. Ariz. Aug. 30, 2023). The Ninth Circuit reversed this portion of the district court decision and allowed plaintiffs’ takings and due process claims because they plausibly alleged that the Department unconstitutionally seized their property under Arizona’s Unclaimed Property Law (“UPA”).

Arizona’s Unclaimed Property Law
Arizona’s UPA presumes that certain types of property have been abandoned if unclaimed within a statutory period. See Ariz. Rev. Stat. 44-302(A). Holders of presumably abandoned property must send a written notice to the apparent owner, provide a report to the Department, and ultimately deliver the unclaimed property to the Department. Id. 44-302(E), 44-308(A). Though the Department need not provide actual notice to apparent owners that it is in possession of their property, the UPA requires the Department to operate a website that lists the unclaimed property in its possession. See id. 44-309 (A), 44-309(B). The UPA further requires the Department to deposit all unclaimed money in the state’s general fund. Id. 44-313(A).

Reprinted courtesy of Ed J. Hermes, Snell & Wilmer, Jeremy J. Stewart, Snell & Wilmer, Benjamin J. Mills, Snell & Wilmer and Emily Statham, Snell & Wilmer

Mr. Hermes may be contacted at ehermes@swlaw.com
Mr. Stewart may be contacted at jjstewart@swlaw.com
Mr. Mills may be contacted at bemills@swlaw.com
Ms. Statham may be contacted at estatham@swlaw.com

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Hand holding up gold star

Benchmark’s Litigation Star recognizes individuals who possess a strong case record and are consistently recommended by clients and peers as reputable and effective litigators.

Hunton Insurance Coverage Attorneys Top Benchmark Litigation 2026 Guide

November 9, 2025 — Hunton Andrews Kurth LLP - Hunton Insurance Recovery Blog

Benchmark Litigation has recognized the following members of Hunton’s insurance coverage team as Litigation Stars: practice head Syed S. Ahmad, partner Walter J. Andrews, and special counsel Lorelie (Lorie) S. Masters. Benchmark’s Litigation Star recognizes individuals who possess a strong case record and are consistently recommended by clients and peers as reputable and effective litigators.

In addition, Benchmark named partner Geoffrey Fehling on its Future Stars list, which recognizes individuals who are consistently referenced by peers and clients as litigators who are building their reputations in the market.

Reprinted courtesy of Hunton Andrews Kurth LLP

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Star trophy award

Honorees are recognized for creating meaningful change through mentoring, advocacy, thought leadership, and the development of inclusive policies and initiatives that broaden opportunities for underrepresented groups.

GRSM New York Founding Partner Mercedes Colwin Honored with 2025 Excellence in Diversity Award by PLUS Foundation

November 9, 2025 — Gordon Rees Scully Mansukhani

The Excellence in Diversity Award is presented annually to a member of the insurance industry who has demonstrated exceptional leadership and commitment to advancing diversity, equity, and inclusion within the profession. Honorees are recognized for creating meaningful change through mentoring, advocacy, thought leadership, and the development of inclusive policies and initiatives that broaden opportunities for underrepresented groups.

Colwin was selected for her longstanding dedication to fostering inclusive workplace cultures, her active mentorship of diverse attorneys and professionals, and her visible role as a thought leader on the national stage. In addition to her leadership within GRSM, she has made a significant impact on the broader insurance and professional liability industries by raising awareness of equity issues, supporting educational initiatives, and championing the next generation of diverse talent.

Reprinted courtesy of Gordon Rees Scully Mansukhani, LLP

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Texas capitol building

Governor Abott signed Senate Bill 17 into law on June 20, 2025, amending Chapter 5 of the Texas Property Code to add Subchapter H.

Texas Restricts Foreign Ownership of Real Property

November 9, 2025 — Anna Luczkow - Lewis Brisbois Newsroom

Houston, Tex. (October 9, 2025) - Effective September 1, 2025, certain foreign individuals and entities are no longer able to purchase or acquire an interest in real property in Texas. Governor Abott signed Senate Bill 17 into law on June 20, 2025, amending Chapter 5 of the Texas Property Code to add Subchapter H.

The new legislation targets governmental entities of and companies, organizations, and individuals from “designated countries,” which Subchapter H defines as countries that the U.S. Director of National Intelligence identifies as posing a risk to United States national security, or additional countries that the governor designates after determining that the purchase or acquisition poses a risk to national security. Subchapter H initially designates China, Russia, Iran, and North Korea as posing such risk. “Companies” and “organizations” collectively include not only associations, corporations, partnerships, and limited liability companies, but real estate investment trusts, joint ventures, insurance companies, and non-profit organizations.

Ms. Luczkow may be contacted at Anna.Luczkow@lewisbrisbois.com

Reprinted courtesy of Anna Luczkow, Lewis Brisbois

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Recognition medal curling ribbon

Attorney Andrea Vosough will also be a finalist for CLM’s Young Professional of the Year award.

Kahana Feld Attorney Andrea Vosough Named to 2026 Claims and Litigation Management Alliance (CLM) Phenoms Under 40 List

November 9, 2025 — Eva Paulson - Kahana Feld

IRVINE, CA - Oct. 22, 2025 - Kahana Feld is pleased to announce that attorney Andrea Vosough was named as one of 10 Claims and Litigation Management Alliance (CLM) Phenoms Under 40 for 2026. She will also be a finalist for CLM’s Young Professional of the Year award, with the winners announced at the CLM Annual Conference in Orlando in March 2026.

Vosough is a member of Kahana Feld’s General Liability practice group, primarily representing local and national restaurants, trucking companies, public entities, small businesses, and individuals. She serves on CLM’s Young Professional Advisory Board, which provides resources and guidance for emerging professionals, encourages participation in professional development, and helps shape the next generation of attorneys.

Ms. Paulson may be contacted at epaulson@kahanafeld.com

Reprinted courtesy of Eva Paulson, Kahana Feld

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Construction worker holding clipboard

Lowering TRIR remains a worthwhile goal, but it only tells part of the story.

Why the Total Recordable Incident Rate Doesn’t Tell the Whole Safety Story

November 9, 2025 — David Tibbetts - Construction Executive

TRIR - total recordable incident rate - has long served as the standard metric for tracking workplace injuries. However, events with the potential to result in a serious injury and fatality - or SIF-potential - demand more attention than standard metrics provide. While TRIR has long been used as a benchmark for safety performance, it doesn’t reflect the presence of high-risk exposures that could lead to life-altering or fatal outcomes. TRIR remains a key safety metric, but recognizing and responding to SIF-potential events is essential for organizations committed to true safety excellence.

A Tale of Two Projects
For example, look at how an overreliance on TRIR can impact two separate jobsites. Both projects have worked 150,000 hours with a significant amount of high-risk activities including site work, steel erection, precast concrete and curtain wall installation.

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

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Freeways intersecting

Why do US highway projects cost so much? A researcher finds some surprising sources of infrastructure inflation, and points to ways to make road work more affordable.

American Roads Are Paved With Inefficiency

November 9, 2025 — David Zipper - Bloomberg

North Carolina and South Carolina are neighboring southeastern states, but despite their similar climate and terrain, their costs of highway projects are vastly different. For repaving work begun in 2018 or 2019, South Carolina’s Department of Transportation spent an average of $375,500 per mile, more than twice as much as its northern neighbor.

That discrepancy is one of many intriguing findings about state DOTs uncovered by Zachary Liscow, a professor at Yale Law School who is trained as an economist as well as a lawyer. For more than a decade, Liscow has examined how state DOTs pay for infrastructure, and he’s reached a series of striking conclusions about why their costs have risen over time, albeit at very different rates. He also offers suggestions about ways transportation agencies can get more bang for taxpayers’ dollars.

Reprinted courtesy of David Zipper, Bloomberg

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Consulting Design and Architecture Expert Witness

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House sitting on plans

Housing Ballot Measures Ask NYC Voters to Make It Easier to Build

November 9, 2025 — Sarah Holder - Bloomberg

On US Election Day, the closely watched mayoral race isn’t the only thing on New York City voters’ ballots. A set of three ballot measures aim to take down political roadblocks to building new affordable housing. They’re part of the broader national movement to streamline the path for more construction.

NYC’s land use decisions are disproportionately shaped by individual city council members under its policy of “member deference.” When a housing project is up for approval, the whole 51-seat city council votes in lockstep with the representative for the district where it’s proposed. If that representative rejects a proposal, everyone else does, too. That’s led to stark disparities in where housing has been built - and even pitched. Rachel Fee, the executive director of the New York Housing Conference, says some developers avoid districts where council members are most vocally resistant to growth.

Reprinted courtesy of Sarah Holder, Bloomberg

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Brooklyn Water Rocks Bridge Buildings

Brooklyn Resilience Project Shields Against 10-Year Storms

November 9, 2025 — Leslie Nemo - Engineering News-Record

New York City has broken ground on another initiative meant to protect a neighborhood from storm surges. The Red Hook Coastal Resilience Project will spend $218 million knitting flood walls, raised street grades and two kinds of gates into a perimeter around the Brooklyn neighborhood of the same name. When flood gates are active, the continuous border will sit 10 ft above sea level.

ENR may be contacted at enr@enr.com

Reprinted courtesy of Leslie Nemo, Engineering News-Record

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Insurance jenga game

Insured’s COVID-19 Claim Survives Insurers’ Motion for Summary Judgment under Some Policies

November 9, 2025 — Tred R. Eyerly - Insurance Law Hawaii

After the lower court granted summary judgment to Omni Hotels and Resorts’ claim for coverage due to COVID-19 losses, the Texas Court of Appeals reversed, in part, based upon language in some of the insurers’ policies. TRT Holdngs, Inc. v. Ace Am. Ins. Co., 2025 Tex. App. LEXIS 7407 (Texas Ct. App. Sept. 18, 2025).

Omni’s properties were insured through a $250 million commercial property insurance program. The program had a $25 million primary layer and a $225 million xcess layer. Both layers were co-insured. Chubb issued the lead policy and other insurers issued follow-form policies.

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

Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii

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Webinar

New Construction Law Updates in California for 2026

November 9, 2025 — Gordon Rees Scully Mansukhani

This webinar will provide an overview of the major construction law changes taking effect in California in 2026. Attendees will learn about updates to Title 2, the state’s building code, reflecting California’s continued shift toward energy efficiency, sustainability, and climate resilience.

Topics include requirements for all-electric new construction, expanded EV charging infrastructure, wildfire and overheating prevention standards, and increased accessibility in high-rise projects.

November 18th, 2025
Virtual Event

Reprinted courtesy of Gordon Rees Scully Mansukhani, LLP

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