New York Construction Defect Litigation
I.
INTRODUCTION
Contrary to the current trend of states enacting legislation to curtail the abuse of construction defect litigation, New York and Alabama rely primarily on their courts to protect against such abuses. Courts within these jurisdictions are without a clear legislative directive to guide them in deciding construction defect cases. As a result, courts often issue conflicting and incongruent opinions, making it difficult to accurately predict how a court will rule in a given case. Examining a broad sampling of cases from each state provides the best analysis to understand the manner in which courts most likely adjudicate construction defect lawsuits.
II.
CONSTRUCTION DEFECT LITIGATION IN NEW YORK
A. Recent Trends in Construction Defect Litigation.
New York construction defect jurisprudence has seen developments recently in two areas. After a 1988 decision, New York courts do not follow the majority of jurisdictions who rule that construction defect exclusions contained in insurance policies are mutually exclusive. In New York, an insurance policy that excludes coverage for latent defects can be enforced simultaneously with an exclusion for a loss caused by design errors or faulty construction. Another recent development involves the remedies a condominium owner has against a builder, and whether the owner is limited to statutory remedies, or common law remedies. While each development appears to favor builders and their insurers, few cases actually apply and discuss these developments.
1. Recent Trends in Insurance Coverage.
New York Courts recognize that it is not unusual for property insurance policies that cover construction projects to specifically, exclude loss caused by errors in design or faulty workmanship, or to exclude for losses caused by a resulting latent defect.[1] Although courts in other jurisdictions hold that each exclusion operates apart from the other, New York Courts hold that a latent defect can be the result of an error in design or faulty construction.
The seminal case is Derenzo v. State Farm Mutual Ins. Co., 533 N.Y. S.2d. 195 (N.Y. Sup. Ct. Sept. 9, 1988). In Derenzo, an insured homeowner’s building sustained damages to its footings due to inadequate concrete reinforcement, lack of expansion and construction joints, and improper preparation of the sub-grade soil. The policy provided by State Farm to the homeowner excluded coverage for losses caused by latent defects. The homeowner argued that the damages resulted from faulty workmanship, which were not excluded by the policy. State Farm moved for summary judgment, arguing that even if caused by faulty workmanship, the defects still constituted “latent” defects and were subject to exclusion under the policy. The court granted State Farm’s motion for summary judgment on the exclusion, holding that “under the circumstances, such construction defects constitute latent defects which are excluded from coverage under the policy.” The Court also noted that the contractor is the entity responsible for these types of latent defects occurring in residential construction.
2. Recent Trends in Condominium Development.
Unique construction issues arise in the context of residential construction in New York City itself. The New York residential market is robust, especially in New York City. From 1989 to 2003, nearly 4,000 new cooperatives and condominium units were built in Manhattan, with an additional 445 condominiums gutted and renovated between 2001 and 2003.[2] The Real Estate Board of New York reported record sales of cooperatives and condominiums in Manhattan in the first quarter of 2004, which nearly doubled the number of sales in the first quarter of 2003.
The New York State Legislature, pursuant to N.Y. Gen. Bus. § 777-a, sets forth New York’s statutory housing merchant implied warranty. The statutory warranties provided therein expressly apply only to new home cooperatives and condominiums, and multi-unit residential structures of five stories or less. Contracts of sale automatically contain the following statutorily implied warranties:
a) that, for one year after the passing of title, the home will be free from defects due to a failure to have been constructed in a skillful manner;
b) that, for two years after the warranty date, the plumbing, electrical, heating, cooling and ventilation systems of the home will be free from defects due to a failure by the builder to have installed such systems in a skillful manner;
c) that, for six years after the warranty date, the home will be free from material defects.
New York courts hold that the statutory warranties provided in § 777-a preempt any implied warranties based on the common law. In Caceci v. DiCanio Construction Corp., 530 N.Y.S.2d 771, 526 N.E.2d 266 (Ct. App. N.Y. 1988), the Court found that homeowners had the ability to recover from builders and developers for their damages relating to construction defects through implied common law warranties. But, in Fumarelli v. Marsam Construction, Inc., 680 N.Y.S.2d 440, 703 N.E.2d 251 (Ct. App. N.Y. 1998), the Court of Appeals, declining to follow Caceci, decided that the statutory housing merchant implied warranty contained in § 777-a removed all common law protection from transactions not identified in the statute. This matter resolved final resolution in Lupien v. Bartolomeo, 799 N.Y.S.2d 161 (N.Y. Sup. Ct. Weschester Co. 2004), where the court noted that there are no longer implied common law warranties in light of § 777-a.
Even though these cases clarify the relief available to certain condo owners, confusion exists as to whether buyers of new or newly converted high-rises that have not yet been constructed or lived in are protected under the statute, or subject to the principal of caveat emptor - “buyer beware.” While sellers of new homes, cooperatives and condominiums of five stories or less may choose to draft written contracts that modify or exclude the housing merchant implied warranty, the seller must then offer the buyer an express limited warranty that does not specify any exception, exclusion or standard which does not meet or exceed the applicable building code or that fails to ensure that a home is habitable.
B. Recent Cases Involving Verdicts or Judgments.
New York has yet to enact a statutory scheme outlining the procedure by which a construction defect lawsuit is initiated and prosecuted. Construction cases decided by New York courts include both defect cases, and cases involving bodily injury to homeowners or contractors. The following cases involve litigation issues in construction defect lawsuits:
1. Pavarini Construction Co., Inc. v. Continental Ins. Co., No. 301034-98 (N.Y. Sup., N.Y. Co. July 10, 2001). Pavarini had been retained to build an office complex for General Insurance. After discovering defects including water intrusion, General Ins. and Pavarini entered into a corrective work agreement. After Pavarini failed to comply with the terms of the agreement, General Ins. sued Pavarini and its insurers, including Continental. Because the insurance policy at issue predated the construction project, the court dismissed the construction defect claims alleged against Continental.
2. Gorsky v. Triou’s Custom Homes, Inc., No. 51329 N.Y. Sup., Wayne Co. (January, 2003). Gorsky hired Triou to install shingles on his residence, which proved to be defective. Although the installer admitted to the defects, and agreed to replace the shingles, this did not cover the cost to install a new roof. Gorsky sued seeking recovery of costs for a new roof. Triou sought dismissal on statute of limitations grounds, arguing that the defect had been discovered within 6 years of filing the suit. The court refused to grant summary judgment as issues of fact existed
3. Baker Residential Ltd. Ptsp. v. Travelers Ins. Co., No. 4167, N.Y. Sup., App. Div., 1st Dept. (October, 2004). Travelers insured Baker with regard to the construction of a development at the Oak Ridge Hanover Condominium complex. After the HOA filed suit for defects to the structural beams of the buildings, Baker asserted that Travelers had a duty to defend Baker. An appellate court affirmed that Travelers, as a CGL insurer, had no obligation to defend and indemnify Baker with respect to damages resulting from its faulty workmanship.
4. Tratoros Construction Inc. v. AIU Insurance Co., No. 33226/01, N.Y. Sup., Kings Co. (April, 2005). Tratoros, as the general contractor for a project for the New York School Construction Authority, obtained coverage from AIU under the Authority’s wrap-up insurance program. After discovery of masonry defects, Tratoros agreed to remediate the defects and provided notice to AIU. AIU disclaimed coverage and sought summary judgment. The court granted summary judgment in favor of AIU, finding that Tratoros agreed to remediate the defects prior to giving notice to AIU of the defects, with the result that Tratoros’ actions arose out of faulty workmanship and constituted a breach of contract claim, and not an “occurrence” under the policy.
5. Hritz v. Great Northern Ins. Co., No. 6180-6180A, 6180B, 6180C, N.Y. Sup., App. Div., 1st Dept. (July, 2005). Hritz alleged construction defects that gave rise to mold contamination in the residence. Great Northern claimed that its policy excluded the total loss of a home due to mold contamination. The court upheld Great Northern’s position, and also found that Great Northern could recoup the extra living expenses advanced to the homeowner.
6. Kramer v. Zeckendorf, No. 12801402 (N.Y. Sup. Ct. N.Y.C., 2006). Kramer and his family claimed that construction defects at his condominium unit suffered from mold contamination which caused the constructive eviction of his family. Kramer sued the developer and its subcontractors. The court rejected Kramer’s request to add a fraud claim relating to the mold contamination against the HOA, ruling that if it allowed the claim, it would expand the disclosure requirements beyond what is required under current state laws.
The following cases involve bodily injury issues in construction lawsuits:
1. Mark Kaczmarek v. Broadway Palace Theatre, No. 021904/91 (N.Y. Sup. Ct. N.Y.C., Sept. 14, 2000). Plaintiff, a 47 year old construction worker, alleged that he suffered injuries while working on a catwalk. Plaintiff alleged that he stepped off the catwalk onto a two inch steel bar, lost his balance, and in an attempt to regain his balance, injured his knee. Plaintiff’s injuries consisted of a torn meniscus of the knee which required arthroscopic surgery. Prior to trial, Defendants offered $75,000, and Plaintiff demanded $350,000. The jury, after deliberating for three hours after a three day trial, awarded Plaintiff $184,000.
2. Buckley v. F.G. Rayburn Masons, Inc., No. 9840/98 (N.Y. Sup. Ct. Erie, Sep. 6, 2001). Plaintiff, a 27 year old carpenter, claimed that he had been struck on the head by a piece of falling masonry debris. An engineer hired by Plaintiff determined that the amount of force of masonry debris was approximately 14,000 lbs of force. Plaintiff suffered injuries including a herniated cervical and lumbar discs. Plaintiff under went conservative treatment for two years before undergoing a fusion. Plaintiff’s biomechanical expert testified that approximately 1,000 pounds of force is required to cause a herniated disc. Prior to trial, Defendants offered $125,000, and Plaintiff demanded $900,000. At closing arguments, Plaintiff asked the jury to award him $2,600,000. The jury awarded Plaintiff $340,000, comprised of $60,000 for past pain and suffering; $140,000 for future pain and suffering; $120,000 for future lost earnings; and $20,000 for future medical expenses.
3. Miraglia v. H&L Holding Corp., No. 25228/00 (N.Y. Sup. Ct. Bronx, Sep. 13, 2004). Plaintiff, a 42 year old laborer, was injured while removing pins from a temporary foundation wall. Plaintiff fell after planks supporting him over an open trench collapsed, causing him to land on a five foot steel reinforcement bar, which impaled his body and severed his spinal cord. Plaintiff’s injuries included a severe torso impalement, including posterior epidural blood collection, a fractured sacrum, a thecal-sac collapse, a rectal tear and a bowel perforation. Plaintiff suffered from complete paralysis and neurological dysfunction. During closing arguments, Plaintiff asked the jury to award $48,516,897. The jury, after deliberating for two days, awarded Plaintiff $86,765,134.
4. Gordon v. St. Francis Hospital, No. 6242/00 (N.Y. Sup. Ct. Orange, Sept. 15, 2004). Plaintiff a 53 year old electrician, was running wire when he tripped and fell. Plaintiff injured his shoulder and biceps, and sustained a torn rotator cup with impingement syndrome. Plaintiff also sustained a ruptured left tendon, where upon he underwent arthroscopic surgery. After a six day trial, the jury deliberated for two and half hours before awarding the Plaintiff nothing. The jury based its decision on evidence that Defendants had no notice of the condition causing Plaintiff’s injuries and that Plaintiff had fallen due to his own negligence. Plaintiff also suffered from credibility issues as his testimony was inconsistent.
5. Urbina v. 26 Corp. Associates, LLC, No. 111632/01 (N.Y. Sup. Ct. N.Y.C., April 13, 2005). Plaintiff, a 31 year old electrician’s assistant, had been performing work upon an eight foot scaffold, which collapsed. Plaintiff fell to the ground and sustained a leg fracture and a knee injury. Plaintiff sustained an intra-articular fracture of his right patella and a tear of his right knee’s lateral meniscus. Plaintiff’s treating orthopedist testified that Plaintiff’s injuries constituted a permanent partial disability, and Plaintiff’s economist estimated that Plaintiff would lose $5 million in earnings. Defendant’s expert contended that Plaintiff’s injuries were not related to the accident, and further contended that Plaintiff’s injuries were sustained during Plaintiff’s two post-accident attempts to resume work. Defendant’s expert testified that Plaintiff could perform sedentary work and earn wages considerably greater than the wages earned as an electrician’s assistant. After a five day trial, a jury deliberated for three and a half hours before awarding Plaintiff $8,962,471. Plaintiff sought recovery of $12 million.
6. Gavitt v. Citnalta Construction Corp., No. 120689/03 (N.Y. S. Ct., N.Y.C., May 10, 2005). Plaintiff, a 47 year old iron worker, attempted to remove a rivet that had been inserted into a steel girder. During this process, the rivet ricocheted off the girder and struck Plaintiff’s right eye. Plaintiff sustained traumatic detachment of his right eye’s iris, lens and retina. Defendants contended that Plaintiff exaggerated the number of surgeries that he underwent, and also contended that Plaintiff could recover his eye’s vision. Although Defendants conceded that Plaintiff could no longer serve as an iron worker, they claimed that he could perform other types of work. After a four week trial, the jury deliberated for two days before finding that Defendants were not liable for Plaintiff’s injuries as the safety glasses Plaintiff wore at the time of the accident had been approved by the American National Standards Institute, which were suitable for their intended use.
7. Kurti v. Ocean Hill North, LLC, No. 20653/02 (N.Y. Sup. Ct. Bronx, July 1, 2005). Plaintiff, a 31 year old brick layer and day laborer, suffered injuries when a scaffold collapsed. Plaintiff sustained an L1 burst fracture and a fracture of his left ankle neck and talar body. Plaintiff claimed that he suffered from a residual antalgic gate impairment and severe pain, and that the injuries constituted a permanent disability that prevented his resumption of work. Plaintiff sought recover of $4.7 million for past and future medical expenses and past and future lost wages; and also sought recovery of $10 million for past and future pain and suffering. Defendants contended that Plaintiff was not totally disabled, with their expert neurologist testifying that no neurological evidence existed of a spinal-cord injury. Defendants contended that Plaintiff’s damages approximated $1 million. After a twelve day trial, the jury deliberated for four and half hours before awarding Plaintiff $1,615,465.46.
C. Recent Settlements.
The following cases involve settlements of construction defect or construction injury lawsuits:
1. State of New York v. 27 North Moor Association, et al., No. 01400215 (N.Y. Sup., N.Y.C., Feb. 2001). The New York State Attorney General sued the developers of a condominium complex for $7.9 million. The alleged construction-defects included plumbing, foundation, roofing, stucco, and fire safety issues. The parties reached a stipulated settlement agreement that required, reportedly valued between $2 million to $3 million.
2. Peterou v. Whitman Village Housing Fund Corp., No. 16199500 (N.Y. Sup.Ct. Nassau, Oct. 7, 2003). Plaintiff, a 29 year old window installer, had fallen off a scaffold while working on the job site. Plaintiff fractured his pelvis in six locations, which required open reduction and internal fixation with eleven screws and four titanium plates. Plaintiff also sustained a distal-ulna fracture, which required bone-chip implantation and external fixation. Plaintiff was hospitalized for two months and subsequently underwent several months of physical therapy. On the fifth day of trial, during the direct examination of Plaintiff’s expert witness, the parties reached a $1.55 million settlement.
3. Arroyo v. First United Enterprises, No. 125358/99 (N.Y. Sup. Ct. N.Y.C., Nov. 17, 2003). Plaintiff, a 34 year old sheet rock taper/finisher, while performing his normal work, fell approximately five to six feet off a scaffold to the concrete below. Plaintiff suffered injuries to his back. During trial, the parties settled for the amount of $850,000.
4. Dyrmyshi v. Clifton Place Development Group, Inc., No. 8050/00; 75975/00 (N.Y. Sup. Ct. Kings Co., Oct. 19, 2004). Plaintiff, a 29 year old construction worker, was working on the roof of a building when the roof collapsed. Plaintiff fell twelve to sixteen feet. Plaintiff claimed that he sustained a traumatic brain injury and a fracture of his right wrist. Defendants contended that Plaintiff’s post-accident CT scan and MRI were negative for head and brain injuries and that his head-injury claims were greatly exaggerated. Immediately prior to the scheduled start of opening statements, the parties settled for the amount of $1.6 million.
5. Casey v. 42nd St. Development Project, Inc., No. 124628/99; 591027/00 (N.Y. Sup. Ct. N.Y.C., Sep. 16, 2005). Plaintiff, a 34 year old laborer, fell while carrying sheets of plywood. Plaintiff claimed that he sustained a disc herniation, which lead to residual sciatica that radiated to the lower portion of his left leg. Plaintiff claimed that his injuries constituted a permanent partial disability. Defendant’s expert orthopedist contended that Plaintiff’s injuries stem from a pre-existing degenerative condition and were not related to the accident. After four days of trial, the parties settled for $800,000.
III.
CONSTRUCTION DEFECT LITIGATION IN ALABAMA
A. Recent Trends in Legislation.
As in New York, Alabama has yet to enact specific legislation addressing abusive litigation practices in construction defect litigation. Alabama has also failed to enact any “right to repair” statutes. The Alabama Legislature has also declined to enact comprehensive construction defect statutes setting forth a procedure by which construction defects are resolved. The only statutory authority addressing litigation against a builder or developer for construction defects is found in Ala. Code § 6-5-220 through § 6-5-228. The sections address the following areas:
1. Section 6-5-220 – Definitions.
A cause of action accrues or arises at the time a person is injured or when property is damaged as a proximate result of a defect or deficiency in design by an architect or engineer. If the defect is not reasonably discoverable at the time of its occurrence, the claim for relief is deemed to arise or accrue at the time the damage or injury should have been discovered. A cause of action accrues or arises whether the full amount of damage is apparent at the time of the first injury or damage.
2. Section 6-5-221 – Statute of Limitations, Generally.
All claims against an architect, engineer or builder must be commenced after two years after a cause of action arises or accrues. The claims must be for the recovery of the following types of damages: any defect or deficiency in the construction of an improvement, damage to any real property or personal property caused by a defect or deficiency, or an injury to or wrongful death of a person caused by any defect or deficiency. The statute also provides that no relief can be granted for any action that accrues or arises 13 years after the substantial completion of construction.
3. Section 6-5-222 – Statute of Limitations, Computation.
This section is subject to the existing provisions of law relating to the computation of statutory periods of limitation set forth in other sections.
4. Section 6-5-223 – Applicability of Article.
This Article does not apply to civil actions that accrue or arise prior to February 25, 1994.
5. Section 6-5-224 – Actions Barred Under Existing Law.
This section should not be construed to create any cause of action, impose any liability, or revive any cause of action barred under existing law against architects, engineers or builders.
6. Section 6-5-225 – Legislative Findings and Purpose.
The Legislature states that the purpose and intent of the statute is to limit the time of commencement of an action to a period of two years from the date it accrues and to bar all claims which accrue 13 years after the completion of construction. These classifications are rationally and reasonably related to a proper regulatory scheme.
7. Section 6-5-226 – Products Liability, Breach of Warranty, Effective Article.
Nothing in the Article should be construed to abrogate any cause of action for products liability, breach of warranty, or for violation of the Alabama Extended Manufacturers Liability Doctrine.
8. Section 6-5-227 – Written Express Warranty, Contract, Indemnity; Statute of Limitations.
A cause of action for breach of contract against an architect, engineer or builder arising under a written express warranty, contract or indemnity is enforceable for the period specified in writing.
9. Section 6-5-228 – Sale or Disposition of Real Estate, Action against other than architect, engineer, builder.
Nothing in the Article shall be construed as affecting any period of limitations for any cause of action relating to the sale or disposition of real estate.
B. Recent Cases Involving Verdicts or Judgments.
Construction cases decided by Alabama courts include both defect cases, and cases involving bodily injury to homeowners or contractors. The following cases involve litigation issues in construction defect lawsuits:
1. Bolton v. J.T. Duke & Associates General Contractors, Inc., CV-01-3329, Mobile Co. (Sep. 18, 2003). Plaintiff, employed as a painter by a painting subcontractor, had been hired to repair fire, smoke, and water damage to a building in Mobile. During the course of the work, Plaintiff applied a sealant to the wood timbers and framing of the attic space. The sealant, which used an oil-based Kilz, ignited in a flash fire while Plaintiff spray painted the sealant in the attic. Plaintiff suffered third degree burns over sixty percent of his body. Plaintiff sustained severe disfigurement to his hands, arms, torso and legs. Defendant’s own expert testified that Plaintiff did not return to gainful employment. The jury deliberated for approximately 4.5 hours after a 6.5 day trial, and awarded Plaintiff $9,500,000. The award consisted of $8 million in compensory damages and $1.5 million in punitive damages.
2. Rohdes v. Pell City Ace Hardware, CV-02-204, Saint Claire Co. (Sept. 3, 2003). Plaintiff homeowners purchased a residence which was to contain certain building upgrades. During construction, Plaintiff noticed that the wood-based sub-flooring, comprised of wood panels, were inconsistent as certain panels were rough and swollen while others were smooth. Plaintiff claimed they purchased the highest grade version of the wood sub-flooring. The Defendant flooring sub-contractor contended that the grades of wood panels utilized were structurally sound and would continue to perform, but offered to sand the panels before installing the ceramic tiles and hardwood floors. Plaintiff filed suit, claiming that the home contained inferior construction materials which diminished its value, and also incurred additional expenses to remove the inferior sub-flooring and replace it. Defendant contended that it did not act negligently and that no contract existed between it and Plaintiff. After a bench trial, the Court found the Defendant sub-contractor negligent and entered judgment in the amount of $15,000.
3. Homes of Legend, Inc. v. McCollough, No. 1980921 (Sup. Ct., Feb. 2000). McCollough purchased a mobile home, manufactured by Homes of Legend, Inc. McCollough received a limited one-year service warranty from Homes of Legend, which contained a limitation of remedies provision that required arbitration if a dispute could not be settled through direct discussions. McCollough subsequently filed suit alleging his mobile home had manufacturing defects. Homes of Legend filed a motion to compel arbitration under the arbitration provision in the warranty. McCollough opposed arbitration based upon Alabama’s Magnuson-Moss Act, which prohibits a warranter from including a binding arbitration provision in a written warranty. The trial court denied the motion to compel arbitration, which Homes of Legend appealed. The Supreme Court reversed, finding that the written warranty provided for non-binding arbitration. Although the arbitration provision contrasted with the Magnuson-Moss Act, federal law required the inconsistency to be resolved in favor of the arbitration provision.
4. Cunningham v. Fleetwood Homes of Georgia, No. CV-99-PT-2605-E (N.D. Eastern Div. May, 2000). Cunningham sued Fleetwood Homes for defects relating to a mobile home. Fleetwood moved to compel arbitration, which Cunningham opposed contending that Fleetwood was not a signatory to the arbitration agreement Cunningham entered into with the seller of the mobile home. The Court found that Fleetwood was a third-party intended beneficiary of the sales contract, and therefore able to compel arbitration as to all of Cunningham’s claims, except any claims for breach of any written or express warranties.
5. Desouza v. Lauderdale, No. 2031051 (Ct. App. July, 2005). The Desouzas purchased a house from Lauderdale, and their personal corporation, Lauderdale Land Co. The house’s exterior had been covered with EIFS. The EIFS system failed and the exterior of the house became contaminated with mold and mildew. The Desouzas sued, asserting claims for negligence, fraud, breach of contract and breach of warranty. Lauderdale moved for summary judgment which the trial court granted. On appeal, the Court reinstated the negligence claims as several questions existed as to when the Desouzas discovered the defects at the house. The appellate court upheld summary judgment as to the breach of warranty and contract claims as the Desouzas failed to demonstrate the installation of the EIFS violated any applicable government regulations.
6. State Farm Fire and Casualty Co. v. Williams, No. 1030665 (Ala. Sup. Sept., 2005). The Williams purchased a home in which the kitchen floor collapsed after taking possession. State Farm issued a homeowners policy to the Williams and initially paid the Williams’ hotel living expenses before denying coverage for the claim. State Farm discovered that the damage was not the result of fire or a vapor explosion, but that the flooring system failed because of long-term wood rot. The Williams sued for breach of contract and bad faith, with the jury finding in favor of the Williams and awarding damages of $72,000. The Supreme Court reversed the damage award as the Williams failed to offer substantial evidence of their damages. Williams’ damages had been based upon a conversation with a contractor who had not been called as a witness at the time of trial.
7. Employers Mutual Casualty Co. v. Hogg Engineering Corp., No. 1:04-CV-00816-CG-M (S.D. Ala. April 2005). Hogg Engineering Corp. had been sued for failing to properly design and provide consulting services for a water project. Hogg had been accused of negligently designing the system and misrepresenting the condition of the project and performance. Employers Mutual Casualty Co. (“EMCC”) insured Hogg under a CGL policy. EMCC sued Hogg alleging that no coverage was available for the underlying claim. As the underlying complaint alleged that Hogg negligently designed and installed the water system and concealed its faulty work, such occurrences were properly excluded by the provisions of the policy. The Court ruled that EMCC had no duty to defend or indemnify its insured in the underlying suit.
The following cases involve bodily injury issues in construction lawsuits:
1. Coffman v. The Utilities Board of the City of Bridgeport, CV-00-106, Jackson Co. (Nov. 6, 2003). During the process of removing dirt and debris in and around a construction site, excavation was also taking place under the direction and supervision of Defendant R&B Construction Co. During the excavation, Plaintiff was employed by Defendant Bridgeport Utilities. A backhoe broke a natural gas line, causing a natural gas leakage which ultimately caused a natural gas explosion. Plaintiff suffered injuries including the lost of his right eye, cracked teeth, cuts to his head, injuries to his chest and right knee, which resulted in a temporary total disability. Plaintiff’s employer, Bridgeport Utilities, paid Plaintiff’s medical bills and wages while he recovered. The parties ultimately settled for the amount of $39,000.
2. Kidd v. Foster Construction Co., Inc., CV-02-279, Limestone Co. (Jan. 26, 2005). Defendant developed properties around a marina by constructing town homes for sale in the retail market. Plaintiff, a prospective purchaser, inspected an incomplete town home with an agent of Defendant. Plaintiff, urged to follow Defendant’s representative up an unfinished stairwell, tripped and fell approximately one flight of stairs. Plaintiff suffered injuries consisting of a compound left ankle fracture, contusions to hands and lower legs, and required surgery resulting in extreme physical pain and emotional distress. Defendant moved for summary judgment prior to trial, which the court granted, as Plaintiff assumed the risk in inspecting an unfinished town home under construction.
C. Recent Settlements.
The following cases involve settlements of construction defect or construction injury lawsuits:
1. Clinard v. Bobby Terry Co., Inc., CV-01-476, Limestone Co. (April 7, 2003). Plaintiff, an electrician for Bobby Terry Co., have been hired to perform electrical services by Rene Hood Construction & Design, a designer and general contractor constructing new homes in Limestone County. While working in the scope of his employment, Plaintiff fell from a ladder upon which he was working. Plaintiff sustained a serious closed head injury, suffer from severe physical pain and mental anguish and was permanently disfigured, scarred and disabled. The parties settled for $80,000.
VI.
CONCLUSION
New York and Alabama have yet to enact specific litigation aimed at eliminating construction defect litigation abuses. In each state, it is incumbent upon the courts to ensure that abusive practices do not occur until their legislatures follow the majority of other jurisdictions and enact legislation to protect builders and their insurers from frivolous claims. The case law of each state does indicate that courts will strictly enforce construction contracts and insurance policies in favor of contractors and their insurers.
[1] Supplement: Real Estate & Title Insurance Trend, New York Law Journal, Nov. 26, 2001.
[2] Residential New Construction, New York Law Journal, Nov. 10, 2004.
