2012 California Construction Law Update
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Monthly Archives: December 2011
What Property Owners Need to Know About Destructive Testing
Lee A. Weintraub – December 13, 2011
Chapter 558 Fla. Stats. is Florida’s pre-suit notice and right to cure procedure, which applies before property owners may assert a claim against a developer, contractor, subcontractor or design professional for construction and design defects. It expressly provides for “destructive testing” of the defective areas of the property via written request and mutual agreement.
Destructive testing is often performed to establish or refute the existence of defects. For example, sections of drywall may be removed in order to view water damage within a wall, or stucco may be removed to expose the hidden conditions beneath it.
At a minimum, a developer or contractor’s request for destructive testing should describe: (i) who is performing the testing, (ii) the anticipated testing methods and locations, (iii) the estimated anticipated damage and repairs to or restoration of the property resulting from the testing, (iv) the estimated amount of time necessary for the testing and to complete any repairs or restoration, and (v) who will bear financial responsibility for covering the costs of repairs or restoration. Where the owner has retained any consultants to inspect or document defects, he or she should seek their opinions about the proposed testing and repair methods prior to performing any destructive testing.
While many owners are concerned about the potential damage or disruptions that destructive testing may pose, not agreeing to destructive testing could cost the property owner far more in the long run. Owners who ignore the statutory destructive testing procedures or refuse to comply with them altogether, may be barred from pursuing defects claims that could have been mitigated or even avoided had the destructive testing been allowed. However, taking the time to document the parties’ destructive testing obligations in writing should provide property owners with some measure of comfort in proceeding with destructive testing.
For this reason, property owners should have their attorneys prepare a written agreement prior to the commencement of any destructive testing, setting forth the rights and obligations of all participants. For example, such an agreement may include the anticipated timeframes and locations for testing, identify the mutually agreed upon testing methods and indentify which parties will bear the costs for testing, materials, permits, governmental fees, post-testing repairs, consultants’ fees, security costs and the like.
Among other things, the agreement could require the parties who have requested destructive testing to post a bond, provide proof of workers compensation insurance before any destructive testing begins, and maintain liability insurance coverage throughout the destructive testing process. The destructive testing agreement may require the testing parties to indemnify, hold harmless and defend the property owners from any personal injury or property damage which could be caused by the destructive testing. Additionally, it should describe the testing parties’ duties, if any, to share reports or results of the destructive testing with the property owners.
via What property owners need to know about destructive testing – Lexology.
Chinese Drywall Manufacturer to Make Things Right
Advise & Consult, Inc. – December 16, 2011
For some of those people who have suffered for years in the Chinese drywall aftermath, Knauf Plasterboard Tianjin is trying to make it right with them. Unlike many of their counterparts who are ducking the responsibility they have with those who used their toxic and defective drywall, Knauf Plasterboard has reached a significant settlement to provide relief to those that have used their product.
Announced this week by the U.S. District Court Judge Eldon Fallon, the settlement will repair approximately 4500 homes, mostly in the Gulf Coast region that was affected by Hurricane Katrina. The deal is estimated to be worth $800 million to $1 billion, and is based on the number of homes, average size and cost to repair. Knauf attorneys say that the total amount depends on how many homeowners can prove that they have Knauf produced drywall.
The settlement does not only provide money to repair the homes, but also enables relief to those that have suffered foreclosures and short sales. Knauf has also set aside money to help cover health related problems, although according to their attorney Steven Glickstein, there is no evidence that the defective drywall has resulted in personal injuries.
After years of litigation and wondering what will happen, those affected by this settlement will still have to wait until at least late summer to see any money. Lawsuits and settlements with Banner Supply of Florida and Interior/Exterior Building Supply of New Orleans as well as their insurers still need to be sorted out as their money will also go into this pot.
Those property owners that used other Chinese drywall brands are not affected by this settlement. More than two dozen, mostly foreign, defective drywall manufacturers have their product spread across the United States and are not under United States jurisdiction and have thus far not been willing to step up like Knauf and take responsibility for their defective product. This will likely cause an even more sour taste, if that is even possible, for those who have suffered for years, but this may also be a sign to remain hopeful. As Knauf attorney and defendants liaison counsel Kerry Miller states, if his clients settled, others may as well.
It is unfortunate that Chinese drywall has had such a long and deep affect on the already shaky housing market, but it is also commendable that Knauf Plasterboard has stepped up and is doing the right thing. Now if the other manufacturers will start doing the same and bring more relief to those affected by this drywall matter.
Essential Apps for Trial
Robert Ambrogi – December 1, 2011
As we mentioned earlier, many attorneys have turned to iPads to prepare and question experts. Talk to trial attorneys about the apps that enable them to use their iPads in trials and depositions, and you hear a few names repeated over and over again. Among the apps attorneys most often mention are these:
Keynote. Think of Keynote as PowerPoint for the iPad. It lets you create and show presentations on your iPad or import and present PowerPoint files. The cost is $9.99.
Fastcase. When you need to do some quick legal research on the road, there is no more convenient app than this. Research federal and state case law and statutes, directly on your iPad or iPhone and all for free.
The Deponent App. This iPad app lets you outline and prepare questions and exhibits for a deposition. It comes with some 150 questions relating to areas such as qualifying an expert witness or exploring a witness’s educational background. You can customize and arrange these as you like and link them to exhibits. The cost of the app is $9.99.
TrialPad. TrialPad enables attorneys to organize and present evidence using their iPads. Its features include the ability to highlight, annotate, redact and zoom in on documents as you present them; view and compare documents side-by-side; view and edit video; have an expert mark up an exhibit and then save the mark-ups for your closing; and project wirelessly. It costs $89.99.
Exhibit A. Like TrialPad, Exhibit A lets you use your iPad to present documents, photos and videos. You can highlight, mark and call-out key sections of an exhibit in real time. It has fewer presentation options than TrialPad, but is much less expensive at $9.99.
RLTC: Evidence. This is the least expensive of the trial presentation apps, costing $4.99, and also the most basic in its features. It can be used to organize and annotate documents and images on the iPad and then present them using a projector or external display.
GoodReader. GoodReader is a PDF reader and more. In fact, it will read a wide range of files, including Microsoft Office documents, text files, image files and web pages. It lets you organize and annotate documents and is adept at handling large documents. It plays well with a number of document services, such as Dropbox, Box.net and Google Docs. All this for just $4.99.
Dropbox. With Dropbox on your iPad, you can easily synchronize documents with your laptop and with other devices. If you use multiple iPads, you can use Dropbox to share documents between them. The app is free.Tell us: What other apps do you use for litigation?
Lien Away As It’s An Absolutely Protected Right In California – Real Estate & Construction
B. Scott Douglass and Eric C. Tausend – December 6, 2011
The California Court of Appeal recently held that the recording of a lis pendens in connection with a mechanic’s lien foreclosure action is protected by the litigation privilege and cannot support a slander of title claim, even if the underlying lien claim lacked any evidentiary merit. As a practical matter, this holding makes clear that contractors, suppliers and other mechanic’s lien claimants working on private projects should record their mechanic’s liens (and, later, a lis pendens as part of their foreclosure actions) when in doubt about being paid given that their recording of such instruments is an absolutely protected activity that does not give rise to a property owner’s cross-claim for slander of title.
In Alpha & Omega Development, LP v. Whillock Contracting, Inc., 11 C.D.O.S. 13552 (Ct. App., Nov. 2, 2011), a contractor unsuccessfully tried to foreclose on a mechanic’s lien for about $1.5 million owed by the project owner for unpaid work on a condominium project. In connection with its action on the mechanic’s lien, the contractor recorded a lis pendens, which the owner successfully moved to expunge after the trial court determined that the related mechanic’s lien lacked merit.
Following settlement of the underlying payment dispute, the owner filed its own lawsuit against the contractor for slander of title, alleging that the contractor had “willfully, wrongfully, without justification and without privilege” recorded a lis pendens that damaged the owner. In response, the contractor filed an anti-SLAPP motion, asserting that the owner’s slander of title action should be dismissed because the contractor’s recording of the lis pendens was protected by the litigation privilege. The trial court granted the contractor’s anti-SLAPP motion, dismissing the owner’s slander of title action, and the owner appealed.
On appeal, the owner contended that the contractor’s anti-SLAPP motion should not have been granted. Specifically, the owner argued it had established a probability of prevailing on its claim for slander of title because it had proved the lis pendens was recorded without privilege – a necessary element for a slander of title cause of action. In ruling, the Alpha & Omega court first discussed California Civil Code section 47, which establishes an absolute privilege for publications filed in judicial proceedings (the litigation privilege). Section 47(b)(4) provides that “[a] recorded lis pendens is not a privileged publication unless it identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property, as authorized by law.” The court summarized this subsection as follows: “the litigation privilege codified in Civil Code section 47, subdivision (b) applies if the lis pendens (1) identifies an action ‘previously filed’ in a court of competent jurisdiction that (2) affects title or right to possession of real property.”
The Alpha & Omega court then ruled that the contractor’s lis pendens met the requirements of Civil Code section 47(b)(4), because the lis pendens properly identified the underlying foreclosure action and also “clearly affected title to real property.” In so ruling, the court rejected as non-binding dicta language in the case of Palmer v. Zaklama, 109 Cal. App. 4th 1367 (2003), that the owner pointed to as creating a further exception to the litigation privilege when the claim underlying the lis pendens “lacked evidentiary merit.”
Thus, the Alpha & Omega court affirmed the trial court’s dismissal of the owner’s slander of title action, holding that the recording of a lis pendens is an absolutely protected right under the litigation privilege, and there is no exception to this privilege “based on the lack of ‘evidentiary merit'[.]”