What happens after a construction defect suit settles?

After having defended innumerable construction defect lawsuits on behalf of developers, general contractors, and other construction professionals, I find myself wondering more and more often about what happens to homeowners, in particular, those in multi-family developments governed by homeowners associations, after the construction defect case settles and all of the attorneys have gone home. 

While sitting in the back of my local tobacconist's store last week enjoying a cigar, I spent about an hour speaking with a friend of mine, and a fellow attorney, that happens to own a home in a development that had been the subject of a construction defect lawsuit, which settled more than four years ago now.  What made this conversation most interesting to me, other than the general nature of the topic, was that I had been involved in the lawsuit, representing the developer.  My friend relayed to me his frustrations with the overall resolution of the matter and, specifically, the way in which the homeowners association dealt with the settlement and repairs.  When asked what repairs had been done with the settlement proceeds, my friend received absolutely no response. He did know, however, that no repairs had been made to his home, despite the fact that there were allegations of construction defects in his home, which were made a part of a global resolution.  When he pressed for an answer, the homeowners association, presumably through its property management company, showed my friend into a conference room which held over fifty binders of information and expert reports and he was told to find his own answers.  To make matters worse, the exterior my friend's home actually suffered damage at the hands of the repair contractor, probably as it made repairs to the common areas outside.  When he asked whether they would come back to repair his home, he was asked whether he had any photos taken of the location of damage to show that it wasn't already there. When my friend said that he had no such photographs, he was informed that no repairs would be made.

I understand that this is one isolated situation, but the way that I learned about it was so coincidental that I cannot believe that it is an anomalous situation.  This brings me back to my question:  What happens to the homeowners when all of the attorneys leave and the dust settles? 

If you have been involved in a post-settlement repair process, for better or worse, I would like to hear your stories.  Please send me an e-mail at mclain@hhrmlaw.com and let me know the good, the bad, and the ugly.

Is the U.S. Senate's health care reform bad news for builders?

According to a report in today's online version of the Denver Business Journal, the amended version of the U.S. Senate's health reform bill includes a penalty provision for small construction firms that don’t offer insurance to their employees.  Under the original version of the bill, businesses with more than 50 employees would have to pay a $750 per worker penalty to the federal government if any employee purchases employer-subsidized insurance on their own.  Under the amended bill, the threshold number of employees for construction companies is reduced to five employees.  The NAHB has come out to say that this provision, reportedly included at the behest of the AFL-CIO, is not only an unprecedented attack on the housing industry, but could also put many small builders out of business and delay the housing recovery.

Much like the local attacks against builders at the legislature, in the form of construction defect legislation proposed by plaintiffs' lawyers, this seems to be a direct attack on an industry suffering the greatest downturn in the housing industry since the Great Depression.  Talk about bayoneting the wounded!  The thing that I cannot understand is that if everyone concedes that the housing market must be a big part of a revived economy, if not the driving force of the recovery, why is it that the government seems to do everything it can to frustrate a healthy residential construction industry?

The full article can be found here.  If you would like to discuss the prognosis for construction defect legislation in Colorado during the 2010 legislative session, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

Another jury verdict adverse to a builder.

I came across an interesting tidbit in the Jury Verdict Reporter of Colorado today involving a case in which Lennar sued a framing subcontractor in subrogation for money paid out to a homeowner on a personal injury claim.  After a two-day jury trial in Jefferson County, the jury found Lennar to be 100% responsible for the homeowner’s injuries.  While seemingly based on Lennar’s involvement in self-performing repairs to known defects in the framing, presumably without reporting them to D&R Framing or asking the framer to fix its own work, it is another example of juries’ hostilities towards builders.

This is yet another example demonstrating why we work so hard to get every matter into arbitration instead of in front of a jury.  To ensure that a builder has every opportunity to demand arbitration, it is important that all pertinent documents (i.e., the purchase and sale agreement, limited warranties, subcontracts, and subcontractor warranties) have fully-integrated arbitration provisions.

If you would like to discuss what your company can do to best protect itself from construction defect claims, or to minimize their impact if they are made, please contact me at (303) 987-9813 or mclain@hhmrlaw.com.  To learn more about construction defect claims in Colorado, please request a copy of our Overview of Construction Defect Litigation in Colorado, by sending me an e-mail.

A new way to discover parties' insurance policies?

In reviewing cases today through my Westclip service, I came across an interesting case: Colorado Division of Insurance v. Auto-Owner's Insurance Company, 219 P.3d 371 (Colo. Ct. App. 2009). I admit that it takes an odd person to find the case interesting, but these are the types of things that keep my mind working.

In the case, a homeowner obtained a judgment against its homebuilder for construction defects, then sought to recover the judgment from the builder's insurer.  As part of that process, the homeowner complained to the Colorado Department of Insurance regarding the insurer's refusal to pay the judgment. During its investigation, the DOI asked for a certified copy of the policy from the insurer.  When the insurer failed to comply with the request, the DOI levied a fine against the insurer, and the insurer appealed. Ultimately, the Court of Appeals affirmed the DOI's imposition of a fine.

As attorneys litigating construction defect cases in Colorado, one of the things with which we deal on an ongoing basis is the pursuit of all available coverage for our clients, including through carriers who have issued policies naming our clients as additional insureds.  One of the hurdles to obtaining a defense through AI carriers is obtaining the policies necessary to prove to them that they owe such a duty.  To accomplish this, we rely heavily on the disclosure and discovery process, including taking records depositions of the involved carriers and of the insurance producers.  This can sometimes be a combersome and inefficient process.  That is why the Auto-Owner's case appears interesting.  If there is a manner in which to have the DOI request the policies on behalf of the putative additional named insured, that may streamline the process.  Its at least something to think about.



If you would like to read more about additional insured coverage for construction defect cases in Colorado, please read our article on the subject, entitled, "Additional Insured and Insured Contract Liability; Insurance Coverage for General Contractors." If you would like to discuss the topic, please feel free to contact me at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

West Coast Casualty's Construction Defect Seminar.

We learned today that Sheri Roswell and David M. McLain have been invited to speak at West Coast Casualty's 17th Annual Construction Defect Seminar. The seminar will be held May 13 - 14, 2010 at the Disneyland Hotel in Anaheim, CA. It should be a great seminar, as always, and we look forward to seeing you there.  If you have never been to the conference, you should absolutely check it out.

For more information about the seminar, please look here.

2010 Legislative Session.

As we near the end of another year, we begin to look forward to the next legislative session, which will begin on January 13, 2010.  Having been involved in construction defect litigation for close to two decades, HHMR attorneys are often asked to assist the legislative efforts of the Colorado Association of Home Builders, and 2010 will be no different. 

During 2010, David M. McLain will serve as a voting member of the CAHB Governmental Affairs Committee and as a member of it Construction Defect Task Force.  It is sure to be an interesting year. We are waiting to see whether the plaintiffs' bar will be back with proposed legislation to overturn the Goodyear decision, as they tried last year with the Homeowner Protection Act of 2009, or whether they will attempt to legislatively overturn the General Security case and its progeny, such as the recent Greystone decision. 

If you have any questions about the upcoming legislative session, please contact David M. McLain at (303) 987-9870 or mclain@hhmrlaw.com. 

HHMR's Overview of Construction Defect Litigation in Colorado.

Several years ago, the attorneys at Higgins, Hopkins, McLain & Roswell prepared a primer on construction defect litigation in Colorado. Since then, we have updated it from time to time to reflect the current state of the law on various topics, such as Claims Typically Brought in Construction Defect Cases, Defenses Typically Raised in Construction Defect Cases, Damages, and Defense Strategy and Practical Issues.  We wrote this document for use specifically by our clients and their insurers in understanding the current state of construction defect litigation in Colorado.

If you would like to see a preview of this overview, you can check it out here: Overview of Construction Defect Litigation in Colorado.  If you would like a complete copy, please contact David M. McLain.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

Welcome to the new blog.

Welcome to Higgins, Hopkins, McLain & Roswell's new blog.  Our goal is to use this blog as a means by which to share news and updates regarding construction litigation in Colorado. While the firm specializes in litigation of complex construction claims, including construction defect matters, we will also use this blog as a platform to share thoughts and ideas regarding risk management strategies that can be implimented to minimize the risk of construction related claims.

If you have any questions about construction litigation in Colorado or suggestions for topics you would like to see discussed on this blog, please contact David M. McLain at mclain@hhmrlaw.com. For additional information about our firm, visit our website.