Category Archives: Construction Law

California Court of Appeal Holds a Tenant Owes No Duty to Protect a Social Guest From a Defective Sidewalk Leading to a Condominium Unit

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Garrett A. Smee and Lawrence S. Zucker II | Haight Brown & Bonesteel

On May 5, 2023, the California First District Court of Appeal, Division One, issued an opinion in Moses v. Roger-McKeever (A164405), holding that a condominium tenant owes no duty to a social guest using a walkway that leads to the unit.

Eleanor Moses fell on a walkway outside a condo rented by Pascale Roger-McKeever. Moses would not have used the walkway but for Roger-McKeever’s invite to a small gathering for members of a political activist group. Upon entering the condo for the event that night, Moses brought to Roger-McKeever’s attention the poor lighting in the entryway. Roger-McKeever apologized, and stated that her landlord had delayed repairing the porch light. The accident supposedly happened on a short walkway that had three steps leading away from a street sidewalk. Supposedly, Moses tripped on the second step while leaving the social gathering because of the poor lighting.

Moses first argued that Roger-McKeever owed a duty of care because Roger-McKeever “impliedly adopted” the sidewalk by inviting Moses to the gathering, knowing that Moses would need to use the sidewalk to come and go from the event. Moses also argued that Roger-McKeever, at the very least, had a duty to warn. The Court rejected both arguments, affirming the trial court’s decision to grant summary judgment: “A defendant cannot be held liable for the defective or dangerous condition of property which it does not own, possess, or control.” (Citing Isaacs v. Huntington Memorial Hospital (1985) 38 Cal. 3d 112, 134.) The Court also summarized prior cases to determine that “where the lease does not confer upon him or her a right to control that portion of the land that caused the plaintiff’s injury, there must be a showing that the tenant took some affirmative action to assume responsibility for the safe condition of that portion of the land.” (Citing Contreras v. Anderson (1997) 59 Cal. App. 4th 188, 200.) The Court also analogized to commercial settings, where businesses owe a duty to patrons to protect from danger even away from the business premises. The Court determined that businesses do in fact owe a duty in such settings because they have a “special relationship” with the patrons who they invite to their business premises. By contrast, Roger-McKeever simply invited Moses to a “small gathering” as an informal social host, and not for commercial profit. Moses and Roger-McKeever had no “special relationship.”

The Court reasoned: “Imposing a duty of care in this case simply because Roger-McKeever invited Moses to her condominium, would essentially create a rule making all tenants responsible for hazardous conditions in surrounding public spaces, even when such spaces are not under their control.”

The take away here is (1) courts impose a clear distinction between social host liability and the liability of commercial enterprises, and (2) a tenant has no duty to protect from danger away from her rented space, even if the tenant occasionally performs “minimal, neighborly maintenance of property owned by another.”

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

ChatGPT: US lawyer admits using AI for case research

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Kathryn Armstrong | BBC

A New York lawyer is facing a court hearing of his own after his firm used AI tool ChatGPT for legal research.

A judge said the court was faced with an “unprecedented circumstance” after a filing was found to reference example legal cases that did not exist.

The lawyer who used the tool told the court he was “unaware that its content could be false”.

ChatGPT creates original text on request, but comes with warnings it can “produce inaccurate information”.

The original case involved a man suing an airline over an alleged personal injury. His legal team submitted a brief that cited several previous court cases in an attempt to prove, using precedent, why the case should move forward.

But the airline’s lawyers later wrote to the judge to say they could not find several of the cases that were referenced in the brief.

“Six of the submitted cases appear to be bogus judicial decisions with bogus quotes and bogus internal citations,” Judge Castel wrote in an order demanding the man’s legal team explain itself.

Over the course of several filings, it emerged that the research had not been prepared by Peter LoDuca, the lawyer for the plaintiff, but by a colleague of his at the same law firm. Steven A Schwartz, who has been an attorney for more than 30 years, used ChatGPT to look for similar previous cases.

In his written statement, Mr Schwartz clarified that Mr LoDuca had not been part of the research and had no knowledge of how it had been carried out.

Mr Schwartz added that he “greatly regrets” relying on the chatbot, which he said he had never used for legal research before and was “unaware that its content could be false”.

He has vowed to never use AI to “supplement” his legal research in future “without absolute verification of its authenticity”.

Screenshots attached to the filing appear to show a conversation between Mr Schwarz and ChatGPT.

“Is varghese a real case,” reads one message, referencing Varghese v. China Southern Airlines Co Ltd, one of the cases that no other lawyer could find.

ChatGPT responds that yes, it is – prompting “S” to ask: “What is your source”.

After “double checking”, ChatGPT responds again that the case is real and can be found on legal reference databases such as LexisNexis and Westlaw.

It says that the other cases it has provided to Mr Schwartz are also real.

Both lawyers, who work for the firm Levidow, Levidow & Oberman, have been ordered to explain why they should not be disciplined at an 8 June hearing.

Millions of people have used ChatGPT since it launched in November 2022.

It can answer questions in natural, human-like language and it can also mimic other writing styles. It uses the internet as it was in 2021 as its database.

There have been concerns over the potential risks of artificial intelligence (AI), including the potential spread of misinformation and bias.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Different Types of Indemnity and Their Relative Enforceability in Construction Litigation

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Elizabeth Leonard | Cranfill Sumner

Indemnification is a term often thrown about in construction litigation, and you will see it in most standard form construction contracts. But what actually is it, and how useful is it to have when it comes to litigation in the construction context?

Indemnification is a means to shift the risk to some other party, regardless of who is at fault, such that one party, the indemnitor, is required to pay for the damages and costs incurred by another party, the indemnitee. You will often see indemnification clauses in contracts between project owners and general contractors, general contractors and subcontractors, and even owners and subcontractors via flow-down provisions in subcontracts.  

There are three main types of indemnity, any one of which can provide indemnification.

EXPRESS INDEMNITY

Express indemnity, also sometimes called express contractual indemnity or simply contractual indemnity, is an indemnity clause that is specifically set out in a written contract. Based upon general contract principles, express indemnity is the most common type of indemnity. For example, a contract between a general contractor and a subcontractor may include an express indemnification provision whereby the subcontractor agrees to hold harmless the general contractor for all claims arising out of the contract, regardless of who is at fault.

There are three main types of express indemnity clauses: broad form, intermediate form, and limited form.

Broad Form Express Indemnity Clauses

Broad form express indemnity clauses require the indemnitor to hold the indemnitee harmless for all liability, even if the indemnitee is solely at fault. For example, a contract between a general contractor and a subcontractor may state that the subcontractor “shall indemnify the general contractor for claims arising out of the contract, whether caused in whole or in part by the negligence of the general contractor. It is specifically understood that this indemnity shall be interpreted as indemnifying the general contractor from its own sole and/or partial negligence.” Note that most states, including North Carolina, have statutes prohibiting this type of express indemnity clause.

Intermediate Form Express Indemnity Clauses

Intermediate form express indemnity clauses require the indemnitor to indemnify the indemnitee unless the indemnitee is solely at fault. In other words, if the indemnitor is 1% liable and the indemnitee is 99% liable, the indemnitor is still required to cover the entire loss. An example of an intermediate form express indemnity provision may state that the subcontractor “shall indemnify the general contractor for claims arising out of the contract, whether caused in whole or in part by the negligence of the general contractor. This clause is not intended to indemnify the general contractor for claims, damages, etc. caused by the sole negligence of the general contractor.” Approximately 50% of states, including North Carolina, statutorily prohibit the use of this type of express indemnity clause. 

Limited Form Express Indemnity Clauses

Limited form express indemnity clauses require the indemnitor to indemnify the indemnitee, but only to the extent of the indemnitor’s own negligence. For example, a contract between a general contractor and a subcontractor may state that the subcontractor “shall indemnify the general contractor for claims arising out of the contract, but only to the extent caused in whole or in part by the negligent acts or omissions of the subcontractor.” Importantly, limited form express indemnity clauses are the most likely of the three types of express indemnity clauses to be enforceable, and most states, including North Carolina, allow them.

Practice Pointer: Because not all express indemnity clauses are legally enforceable, one way to ensure your client’s express indemnity clause is likely to be enforceable is to make sure it is a limited form indemnity clause.

INDEMNITY IMPLIED-IN-FACT

Even if a written construction contract between two parties does not include an express indemnity provision, one party may still be entitled to indemnification if there is indemnity implied-in-fact, also known as a contract implied-in-fact. Indemnity implied-in-fact stems from the existence of a binding contract (although it lacks an express indemnity clause) that necessarily implies the right to indemnification based upon the contracting parties’ relationship, the circumstances of their conduct, and their intent to create an indemnitor/indemnitee relationship.

For example, in McDonald v. Scarboro, the North Carolina Court of Appeals found there was indemnity implied-in-fact when, after Defendant Scarboro breached his contract with Plaintiff McDonald to begin working for co-Defendant McCrary, Scarboro testified that McCrary had verbally agreed to provide an attorney if McDonald sued Scarboro for breaching his contract. 370 S.E.2d 680, 91 N.C. App. 13 (N.C. Ct. App. 1988). Additionally, Scarboro was an employee of McCrary, and the establishment of the indemnification relationship was “at the essence of their intent to formulate their contractual master-servant relationship.” Kaleel Builders, Inc. v. Ashby, 587 S.E.2d 470, 474, 161 N.C. App. 34, 39 (N.C. Ct. App. 2003); 370 S.E.2d 680, 91 N.C. App. 13.

Practice Pointer: In reality, indemnity implied-in-fact is rarely pled or pursued in construction litigation. More often, indemnity is pursued based upon an express contractual provision or indemnity implied-in-law. So if you are assisting a client with contract drafting, make sure to discuss and include an express indemnity clause in the contract if the client so desires.

INDEMNITY IMPLIED-IN-LAW

The third type of indemnity, called indemnity implied-in-law, arises from equitable concepts. For indemnity implied-in-law to exist, there must be an underlying injury sounding in tort, such as negligence; it cannot be based upon a breach of contractual obligations. In North Carolina, Courts have declined to recognize claims in tort where there was an underlying contract that governed the rights and duties of the parties. See, e.g., 587 S.E.2d 470, 474, 161 N.C. App. 34; Frye Regional Medical Center, Inc. v. Hostetter & Keach, Inc., 753 S.E.2d 741, 231 N.C. App. 170 (N.C. Ct. App. 2013) (unpublished disposition); Crescent Univ. City Venture, LLC v. AP Atlantic, Inc., 2019 WL 3765313 (N.C. Sup. Ct. Aug. 8, 2019) (unpublished). Thus, generally, indemnity implied-in-law is not available when there is an express written contract.

For there to be indemnity implied-in-law, the indemnitee must have imputed or derivative liability for the tortious conduct for which indemnity is sought. If a Court determines there to be indemnity implied-in-law, a passive tortfeasor will be required to pay the judgment owed by an active tortfeasor, to the injured party. 

Practice Pointer: Usually claims for indemnity implied-in-law are brought by means of a third-party Complaint. Thus, if you are representing a client in construction litigation, make sure to evaluate the facts to determine if your client may be able to assert a claim for indemnity implied-in-law against any other parties.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Florida’s Tort Reform and its Impact on Subrogation

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Matthew Peaire | Butler Weihmuller Katz Craig

HB 837 was introduced to the Florida House of Representatives on February 15, 2023.  The bill went quickly through the House of Representatives and Senate and was signed into law on March 24, 2023, by Governor Ron DeSantis.  The bill was 39 pages long and addressed many aspects relating to Tort and Insurance related litigation.  From a subrogation perspective, the bill will have two significant impacts on subrogation litigation in the state of Florida.

First, HB 837 has shortened the statute of limitations for negligence actions from 4 years to 2 years.  The amendment to Florida’s Statute of Limitations (95.11 FSA) applies to causes of action accruing after the effective date of the law.  Other than the obvious fact that lawsuits now must be filed two years sooner for negligence actions, one impact this amendment may have on subrogation litigation is that it may require lawsuits to be filed before the underlying adjustment of the claim is finalized.  There are other states that have short negligence statutes of limitations (for example Louisiana 1 year or Texas 2 years), so shortened tort statutes of limitations are not unique.  However, all attorneys who handle subrogation matters in Florida will now need to be aware of this change and the impacts that it may have on filing suit on a matter that has not been fully adjusted. 

Second, the bill changes Florida’s comparative negligence standard from “pure comparative negligence” to a “modified comparative negligence” standard.  Previously, in Florida, in a negligence action, a Plaintiff’s recovery is reduced by their percentage of fault.  HB 837  now reads “In a negligence action to which this section applies, any party found to be greater than 50 percent at fault for his or her own harm may not recover any damages.”  This in effect shifts Florida from a pure to a modified comparative fault standard.  While the insured’s potential comparative fault was something the subrogation attorney/professional would always analyze, Florida subrogation handlers must now analyze whether the comparative fault is more than fifty percent of the cause of the event such that it now bars any recovery. 

In the coming weeks/months, there will be much written by individuals for and against these changes.  For subrogation professionals, it is important that you are aware of the changes as they will impact the pursuant of negligence actions going forward.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Are You Prepared to Avoid Spoliation? The Duty to Preserve Begins Sooner Than You Might Think.

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Michael Delulis | Burns & Levinson

Few terms make litigators shudder like the dreaded spoliation; and for good reason. The consequences of a company’s failure to preserve evidence that might be relevant in prospective litigation can be severe.  What many non-litigators (including in-house counsel) may not realize, however, is that decisions made before litigation counsel is engaged can profoundly affect the chances that spoliation will later become a significant issue during litigation. A recent decision in the Business Litigation Session, JFF Cecilia LLC v. Weiner Ventures, LLC, highlights that very risk.

In JFF Cecilia, Weiner Ventures and its principals, Stephen and Adam Weiner, agreed to partner with Suffolk Construction owner, John Fish, to develop a luxury, high-rise tower on Boylston Street over the Massachusetts Turnpike in Boston.  Just as construction was set to begin, the Weiners abruptly backed out of the project, which had been over a decade in the making.  Four days later, on August 20, 2019, Fish sent the Weiners a formal notice, claiming that they had breached their agreement and stating that he was reserving all rights.  While Fish ultimately filed suit, he did not do so until two months later.  During the period between Fish’s August 20th notice letter and the commencement of litigation in October, the Weiners not only failed to implement document preservation measures, but they actively deleted emails and text messages, and performed a “factory reset” to wipe data from their cellphones.

After Fish learned through discovery about the defendants’ conduct, he moved for sanctions.  Judge Salinger initially denied that motion based on his finding that Fish’s August 20th letter did not put the Weiners on notice that litigation was “likely.”  Fish appealed, and a single justice of the Appeals Court determined that the issue was not whether litigation was likely, but whether the August 20th letter put the Weiners on notice that litigation was “possible.”  Not surprisingly, when Judge Salinger reconsidered Fish’s motion in light of that standard, he found that the August 20th letter had put the Weiners on notice that litigation was possible, and therefore, triggered their obligation to preserve evidence going forward.  Because the Weiners failed to do so, and their spoliation of evidence was prejudicial to Fish, Judge Salinger ruled that:

The appropriate sanction is to permit plaintiffs to offer evidence at trial of the Weiners’ alleged spoliation of emails and text messages, and to order that plaintiffs are entitled to a jury instruction that the jury may, but are not required to, infer from the Weiners’ deletion of emails and texts that the message contents were unfavorable to the defendants.

As JFF Cecilia highlights, failing to take pre-litigation measures to prevent the destruction of evidence can be costly.  When rumblings of a dispute first arise, rather than quibble over whether litigation is “possible” versus “likely,” in-house counsel  should strongly consider (i) circulating an internal “litigation hold” notice to business colleagues, instructing them to retain all hard-copy and electronic files relevant to the business deal at issue, and (ii) ensuring that routine auto-delete functions related to emails and other electronic files concerning the substantive matter are at least paused. Waiting to take such steps until litigation has formally commenced may be too little too late.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.