Iowa Association of Municipal Utilities hold summit this week!

Ankeny, Iowa Area Summit Highlights Best Practices

CGI (Common Ground Iowa) is holding an Excavation Safety Summit on Thursday, September 3, 2009 in Ankeny, Iowa hosted by the Iowa Association of Municipal Utilities (IAMU).  Live demonstrations, a vendor area, motivational guest speakers, free food and prizes will draw many construction and excavation professionals to the event.

The summit will include keynote speakers from the Common Ground Alliance (President, Bob Kipp), the Iowa Attorney General’s office (Assistant AG, Dave Sheridan), and the Pipeline and Hazardous Materials Safety Administration (Harold Winnie).

 

The Excavation Safety Summit begins at 9 a.m. with a CGI membership meeting. Anyone interested in Damage Prevention and Excavator Safety is invited to participate and become a member. Immediately following the free lunch, a variety of tract and training sessions will take place (including claims and arbitration).

 

For detailed information and registration form, please visit www.commongroundiowa.com 

 

Iowa Supreme Court Extends Implied Warranty of Workmanlike Construction to Subsequent Homebuyers

The Iowa Supreme Court recently held that a subsequent buyer of a home could recover from the home builder for defective construction under an implied warranty of workmanlike construction in the case of Speight v. Walters Development Co., Ltd., 744 N.W.2d 108 (Iowa 2008). The facts revealed that a newly constructed home was sold to the original buyer in 1995. The home was subsequently sold twice, with the plaintiffs purchasing the home on August 1, 2000. Sometime after purchasing the home they noticed water damage and mold which a building inspector determined was the result of a defectively constructed roof and defective rain gutters. The homeowners filed suit against the home builder on May 23, 2005 alleging a breach of the implied warranty of workmanlike construction. The implied warranty of workmanlike construction is designed to protect an innocent home buyer by holding the experienced homebuilder accountable for the quality of construction. This warranty "addresses the inequities between the buyer and the homebuilder-seller by requiring that a building be constructed in a reasonably good and workmanlike manner and . . . be reasonably fit for the intended purpose." Speight, 744 N.W.2d at 111. To successfully make a claim under the implied warranty of workmanlike construction, the homebuyer must show: (1) the house was constructed to be occupied by the buyer as a home; (2) the home was purchased from the builder-vendor, who had constructed it for the purpose of sale; (3) when sold, the house had not been constructed in a good or workmanlike manner; (4) that at the time of purchase, the buyer was unaware of the defect and had no reasonable means of discovering it; and (5) by reason of the defective condition the homebuyer suffered damage. Id. at 111, 114. In extending this warranty to subsequent buyers, the Iowa Supreme Court determined that where a builder already was required to warrant that a home was constructed in a workmanlike manner to the initial buyer, it would be inequitable to allow an original buyer to recover while simultaneously prohibiting a subsequent buyer from recovering for latent, i.e. hidden defects in homes that are the same age. There are two primary limitations on recovery under this warranty. First, Iowa has a 15-year statute of repose which begins to run upon completion of the construction of the building. Second, a claim must be brought within five years of the buyer's discovery of the defect. In short, Iowa will allow any homebuyer to bring a claim under an implied warranty of workmanlike construction as long as the claim is brought within 15-years of the construction of the home and within 5-years of when the buyer has, or should have, knowledge of facts that would support his/her claim. Nebraska, along with 18 other states, already allowed subsequent buyers to bring this kind of claim. This rule, however, is contrary to other jurisdictions, including Kansas and Missouri.

Nebraska Supreme Court Rules Priority of Simultaneously Recorded Documents is Determined By the Intentions of the Parties

The Nebraska Supreme Court recently held that resolution of priority between simultaneously recorded documents is determined by reference to the intentions of the parties. Borrenpohl v. DaBeers Properties, L.L.C., 276 Neb. 426, 755 N.W.2d 39 (2008). The facts revealed that a bank mailed its deed of trust in the same envelope with a notice of commencement regarding construction liens and without any instructions directing in what order to record the two documents. The County Register of Deeds office recorded the notice of commencement five minutes before the deed of trust. Later, two different contractors filed construction liens relative to improvements they made in the property, a week apart, however, because Neb. Rev. Stat. § 52-137(2) provides "if a lien is recorded while a notice of commencement is effective . . . the lien attaches as of the time the notice is recorded," both construction liens attached as of the date the notice of commencement was recorded. The two contractors sued to foreclose their construction liens asserting they had priority over the deed of trust because the notice of commencement was recorded five minutes before the deed of trust. In response, the bank sought a determination its deed of trust was superior to the construction liens. The Court determined that where documents were delivered simultaneously without instructions, the relative priority of the interests represented by the documents is resolved by considering the intentions of the parties. In this case, the bank produced affidavits from the bank and from the landowner stating that it was the intention of the landowner when he sought and obtained the construction loan from the bank that the bank would take an interest superior to the interest of any mechanics liens related to the simultaneously filed notice of commencement. Based on this evidence, the Court ruled the bank's deed of trust had priority over the contractors' liens. The Court noted that Nebraska's notice of commencement provision was primarily adopted to provide notice to persons searching public records of a potential construction lien, thereby alleviating the problem of hidden liens, not to advance the priority of construction liens. In short, while a notice to commence gives all mechanic's liens equal priority, if the notice is filed simultaneously with a deed of trust the Court will look to the intentions of the parties to determine the priority.

OSHA Regulations

We are hearing from multiple sources that the OSHA office in the Omaha, Nebraska metropolitan region is fully staffed with nine (9) enforcement officers and is out in the field actively checking job sites.  Make sure that your site is in compliance with all OSHA regulations.

Nebraska Supreme Court Upholds Subrogation Waiver Clause in Construction Contract

The Nebraska Supreme Court recently upheld a subrogation waiver clause between an owner and contractor despite allegations of gross negligence.  The facts revealed that a television tower under construction collapsed and caused damage to property.  The Court held that the contractor was not liable for damages to the construction and other property to the subrogated insurance company, even when the subrogated insurance company complained that gross negligence caused the accident. Lexington Ins. Co. v. Entrex Comm. Servs., S-06-1452, 275 Neb. 702 (2008).   The Court held "the danger with exculpatory clauses is that a party injured by another’s gross negligence will be unable to recover its losses."  But such danger is not present in cases involving waivers of subrogation because the waiver only applies to losses covered by insurance, so “there is no risk that an injured party will be left uncompensated.”

The Court further held that waivers of subrogation serve to avoid disruption of construction projects and reducing litigation among parties to complicated construction contracts. Concluding that waivers of subrogation cannot be enforced against gross negligence claims would undermine this underlying policy by encouraging costly litigation to contest whether a party’s conduct was grossly negligent. The Court, therefore, concluded that “public policy favors enforcement of waivers of subrogation even in the face of gross negligence [claims] . . . ."  The Court also held that applying the waiver to all losses covered by the owner’s property insurance policy eliminates litigation over liability issues and whether the claimed loss was damage to the Work or non-Work property.  The Court referred to its position as the "majority approach" but acknowledged that other jurisdictions do not follow this same position.   

In short, Nebraska will uphold subrogation waiver clauses between an owner and construction contractor even if the contractor was grossly negligent.  Other jurisdictions, however, may not follow this same rule.