August 27, 2007 | Vol. 5 No. 34

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Volume 5 - Number 34 | August 27, 2007

Shop Drawings and Submittals - Legal AND Engineering Perspectives
Nonconforming shop drawings create trouble for everyone - from prime contractors to subcontractors ... architects to engineers ... and EVERYONE in between. But you CAN minimize your exposure - IF you know your way around shop drawing submittal and review.

To help you stay in control, and out of trouble, Construction Claims Advisor has teamed up with attorneys Robert Epstein and EJCDC Counsel Hugh Anderson along with engineer Jim Brown, PE, of Malcolm Pirnie Engineers to steer your operations clear of any controversy. Introducing Shop Drawings and Submittals – Legal AND Engineering Perspectives.

Join us on Wednesday, Sept. 26, 2007 from 1:00-2:30 pm Eastern Time - See full article for details.

EDITOR'S NOTES
In the context of construction, especially home construction, stigma damages may arise from defects associated with mold damage, environmental contaminants, defective work, etc. A stigma may be determined when the fair market value of the structure decreases because of a defect that cannot be reasonably corrected. When it becomes a viable option in determining an award, the biggest question is this: How are damages determined? According to a conglomeration of cases around the country, the amount is usually calculated by comparing the fair market value of the building with the stigma or defect to a similar building without the stigma. Corrective measures are also considered when reaching the final amount, as buildings with corrective construction may still have lower resale values than similar structures with no major defects.

In this week’s first case, homeowners sued their builder for stigma damages, among other things, when they began noticing defects in the construction of their dream home—a slanted floor, windows that wouldn’t shut, cracks in the concrete, tilted pillars, missing expansion joints in the exterior brick walls, a collapsing porte-cochere, etc. A Texas appeals court upheld a jury verdict that awarded $250,000 to the couple for their trouble and another $300,000 to fix the repairable damages.

Next, a payment bond settlement that contains language restricting additional claims does not prohibit a contractor from filing a bad faith claim against the surety, rules a Florida appeals court.

The final case presents an issue seen time and time again. A subcontractor did not meet the deadline for filing more than 60 claims against the owner. In this case, the prime contractor was to present the claims on behalf of the sub, but the contractor could not submit claims for which it had no information. Hence, the subcontractor lost out.

HOMEOWNERS RECOVER FOR “STIGMA” CAUSED BY DEFECTIVE WORK
A Texas court awards “stigma damages” to the homeowner of a house with defective construction, reasoning that the owner will face difficulties getting a fair market value for the house upon resale.

SUBCONTRACTOR SETTLES WITH SURETY, THEN SUES FOR BAD FAITH
Despite a payment bond settlement that releases a surety from any claims from a subcontractor, the subcontractor can still sue the surety for bad faith handling of the claim.

COURT ADDRESSES PRIME’S OBLIGATION TO SPONSOR SUBCONTRACTOR CLAIMS
A subcontractor fails to meet a “pass-through” claims deadline set by the contractor, thereby losing its opportunity to pursue more than 60 claims against the project owner.