What is it with Provo politicians? First Chris Cannon (who should have been gone loooooong ago), and now Curtis Bramble, the sponsor of this bill. Com’on Provoites!

Well, I can tell you one thing. The imposition of limits on malpractice lawsuits DOE NOT result in lower malpractice insurance premiums for doctors.

In both the sample states I heard of (Nebraska and Florida) where such legislation was passed. After the political victory was won, the insurance companies essentially flipped everyone the bird and kept their premiums right where they were – in spite of earlier sincere promises to lower them following favorable legislation.

Also, I honestly think our nation’s “litigation problem” is largely imaginary and based mostly on snopes.com anecdotes.

Well, we should all e-mail against Chris Buttars’ bill legislating secrecy in the case of police misconduct. I think this guy is not only racist, he’s dangerous.

I will need to look into this bill further, John, but if I find I agree, I’ll just chew them out royal

Being in the development/planning field in Utah has opened my eyes to quite a few issues like this. This one reminds me of the billboard lobby pushing a law through that took cities’ rights to approve or zone out signage. IMO, Utah politics are very corrupt.

I think we can only honestly call the housing market a “market” when builders and developers begin to internalize costs in the form of impact fees and bonding for future impacts, just like industries are so heavily regulated to do. We might see a better supply-demand balance and more redevelopment of old home models.

#2 Seth R.,

I don’t know about Nebraska and Florida, but whatever the politicians did in Texas as far as tort reform is working:

Adding to the state’s allure for doctors, Mr. Opelt said, was an average 21.3 percent drop in malpractice insurance premiums, not counting rebates for renewal.(Source)

Ditto what John said. I’m in favor of some tort reform. But the point of tort reform is to eliminate frivolous lawsuits. This bill, however, intentionally eliminates meritorious lawsuits. When someone is clearly wronged by the negligence of another, we want the wronged party to be able to recover from the negligent party. A builder that builds a home which is falling apart two years after construction has clearly acted negligent. This bill will let that negligent builder of the hook.

Your post misstates the effect of the bill. Your comparison with Medical malpractice is errant, and patently false.

This bill eliminates the ability of subsequent owners of a home to sue on the basis of construction defects alone. It does not eliminate the ability of the purchaser of a home to sue for construction defects, based upon privity of contract.

Currently law allready limits the ability of a homeowner to sue, based upon statutes of repose and statutes of limitation (I confess, I don’t know Utah’s current statutes vis a vis CD actions). In Nevada, the owner of a 10 year old home can currently sue for cracks in the drywall. Is this the optimal situation?

ARJ – in your situation, the original owner would still be able to sue, as would any owner on a products liability claim (ie kitec). They would also be able to sue for personal injury, or damages to personal property, such as furniture, clothing, etc.

Also, your Homeowner’s insurance may or may not cover damages. Policies vary, and I have seen policies cover losses. It all depends.

Additionally, mold is not the horrible deadly thing it is made out to be. It can be a problem, sure. But only certain kinds, ie Stachybotrys, are really harmful. And even the presence of these is not a horrible thing, as it is present in our atmosphere. The problem comes when the spore count is significantly higher than the exterior air.

Ryan – you said “A builder that builds a home which is falling apart two years after construction has clearly acted negligent. This bill will let that negligent builder of the hook.”

First, what is your definintion of falling apart? Even a 1 year old home requires some maintenance.

Second, this bill will not let that builder off the hook. It simply means that a subsequent owner is not able to sue. The original owner is able to sue on the basis of breach of contract all day long.

Jay S,

Admittedly, I know nothing about this statute. Most states have a statutory warranty period after a home is built during which time any owner may sue for breach of that warranty. Typically structural components of the home have a longer warranty period than asthetic components. Does Utah have such a regime?

It doesn’t make sense that someone who buys a home 6 months after it is built but before a defect in construction is discovered would be out of luck, while a person who bought the home 2 years ago but who hasn’t sold would have recourse.

This statute sounds like a way for builders to limit their warranties to original purchasers. That has nothing to do with “tort reform.”

Jay,

Falling apart = dry rot, leaky roofs, settling, balconies that are falling off of the building etc. I am aware of developments that have these problems, which began only two or three years after construction was completed. These developments now have millions of dollars worth of damage, and their lawsuits will be barred if this bill passes.

Yes, one year old homes need some maintenance. but remember Jay, there is no financial incentive to sue for a few thousand dollars in tort, as the litigation costs will be prohibitive. You need significant damage to make this kind of tort lawsuit worthwhile. Thus, I do not expect we will see a flood of frivolous lawsuits if this bill does not pass.

Jay, it simply isn’t true that a the original purchaser will be able to sue under the contract “all day long.” You are assuming that the defects are covered under the original purchaser contract and that the contract is in effect. Most contracts are written by the builder and developer and are very favorable to these parties. In fact, I have never seen a Utah builder’s warranty that covers a home for more than one year. Yet serious construction defects, like dry rot and settling, are not immediately apparent, and will not manifest themselves until these minimal warranties have long expired.

Do you think that the average homeowner has the savvy or bargaining power to get a contract that actually represents their interests and expectation? That’s like expecting a car owner to negotiate the terms of his auto insurance. Most purchasers have no idea what they are doing. They simply sign the builder’s or or developer’s form contact on the dotted line.

Jay, I am not sure what you mean when you say homeowners insurance covers “losses.” I am no insurance expert, but I have talked to many HOA lawyers, and I am reliably informed that homeowners insurance almost never covers construction defect damages. I cannot speak to other kinds of losses.

Lastly, Jay, what do you do if you live in an homeowners association? The HOA is the only entity with the authority and responsibility to fix these kind of construction defects, yet it has no contract with the the builder or developer. Even if the homeowner’s contract is in full force, the owner cannot fix the defects. What do you do in that context if this law passes?

annegb,

Are you saying that nobody has ever tested for it in Utah or that they test and have never found any?

No – not a builder. But I have been involved with Construction Defect claims on both sides. I am not saying this statute is a great idea, but it isn’t as one sided as you initially claimed. Construction Defect claims are a complicated beast, as illustrated by the complicated and varied approaches many states have taken, such as Chapter 40 in Nevada, California’s Calderon Process, Oregon’s Prelitigation Statute for Class Actions and
Arizona’s Prelitigation Process.

ARJ – you said “The bill limits the ability to sue to what is specifically negotiated in the purchase contract. If you have a 1 year warranty (most are a joke) and find that all the houses in your development have a severe defect after 13 months what recourse do you have?”

This is incorrect. The bill provides that your ability to sue under the contract. that being the contract between the parties, with all statutory and other rights imbued. Thus you have an implied warranty of habitability and a warranty of merchantability embedded in the contract. Thus if a window was misflashed at the time of construction, and leaked, this would be a violation of the implied warranty of merchantability. A prematurely wearing shingle would not necessarily, but could be pursued under a products liability claim. There is more to the contract than the paper you signed when you bought the home.

A homeowners association DOES have privity with the builder. There are special protections and guidelines in the statutes primarily regarding condo associations. Essentially a condo association is a legal entity like a corporation, and has the ability to sue on its own behalf. In many ways condo owners are better off under the bill than single family homeowners, as the condo association would always have the necessary connection to the builder, while the SFH is more likely to change hands.

I admit that the bill is not about maintenance. What my point was, which was not fully fleshed out, is that if you have to recaulk a bathroom, or a window, or fix a broken roof tile or shingle in the first year or two does not make a defective house.

Ryan – I agree those are significant problems, and they warrant a lawsuit. I don’t necessarily agree that this bill will bar those actions. I don’t know that this bill is the best way to reform Utah’s system either. I just responded to show that it isn’t chicken little time.

As to “frivolous or not”, lets just say that a homeowner won’t sue over a few minor things. But you get 30-50 of the neighbors together, and a few thousand adds up to six figures. Especially considering that there are attorney’s fees provisions. The problem really isn’t that the homeowners are greedy and will file frivolous lawsuits, its that the system creates an incentive for attorneys to drum up lawsuits. Thus on 100k in damages they can get 30k plus for attorneys fees. Add to this the incentive for construction experts to find damages (to thus justify their fees), and you get a snowball effect. The system, on both sides, must perpetuate itself. That is why general builders in calif and nevada can pay 750k annually for their premium on a $1 million general liability policy.

As to the insurance policy, once again, you have to look at the language of the policy. A savvy consumer should shop around for this, making sure that the types of coverage they would need are there. I helped a woman whose house was sinking, and had homeowners, which paid for the defective pipe which broke, but disclaimed coverage for the collapsing soil which resulted from the broken pipe, based upon the type of policy they issued.

They may not cover a “construction defect”, but will cover a damaged roof, or a broken pipe. And a HOA lawyer is not the best person to address this issue. An insurance adjuster, or coverage attorney is the way to go.

Ryan, see my comments above about the contract issue. Its not JUST about the contract signed between the consumer and the builder. There are additional protections built in. A thorough discussion of contract law will not be forthcoming here, but suffice it so say, there is more to the issue.

Also, a HOA has certain issues, as it is usually established by the builder, and then at some point turned over. At this point the building must be in good shape, with sufficient cash reserves, etc.

While I don’t know if this is necessarily the best thing. It certainly adds protections to builders, but that is not necessarily a horrible thing (see economic theory, passing along costs of CD actions to subsequent owners). It most certainly does not cut off all remedies available for incorrectly built housing.

Jay,

I appreciate your response, but I have to disagree with most of what you write.

You write that there is privity between an HOA and a builder. I do not know what you mean by that. There is certainly no contract between the two, and that is what this bill requires. You need to read the Utah case, American Towers. This was the law until recent cases retrenched slightly. The senator who introduced this bill said that the bill was an effort to return to American Towers. That case says the HOA does not have a contract with the builder, and is not a third party beneficiary to the homeowner-builders contract or the builder-developer contract. It goes on to say that any tort cause of action is barred by the economic loss doctrine. The lobbyists behind this bill have basically admitted that the goal of this bill is codify the economic loss doctrine and bar any claims by HOAs.

I also do not know of any statutory protections in Utah. There are some statutory protections for HOAs in Oregon, for example, but, as far as I’m aware, there are none in Utah. If you can point of the statute you have in mind, I look forward to reading it.

Perhaps, without the economic loss rule, there will be some frivolous suits. Although I’m not sure the scenario you lay out is necessarily frivolous, Lets not get into the weeds of that particular example. let me just say that, until recently in Utah, you just could not win a construction defect lawsuit. Even though these cases have millions of dollars worth of damage, no lawyer would take them on a contingency fee, because the lawyers knew they were all losers. I’d prefer to have a few frivolous lawsuits than to have no construction defect lawsuits at all.

You say a savvy customer should shop around for good homeowners insurance. That’s fine, but I’m worried about the other 99% of homeowners that aren’t savvy enough to know that their builder and developer has zero negligence liability, and that, therefore, they need a rare form of homeowners insurance. Also, in your example where the homeowners insurance covered the damage, you don’t explicitly say that the pipe broke because of a construction defect. If it was not cause by such a defect, it would seem to me that you are talking about a different fact senario than the rest of us.

Certainly homeowners insurance covers some damage to the home, but my understanding is it almost always specifically excludes damage caused by the builder’s negligence. I have already pleaded ignorance on this specifics of this issue, and I’m not sure whether HOA lawyers are the best people to consult on the insurance question. I do know that the HOA lawyers where I work usually screen the claims before they submit them on behalf of the HOA, and that the lawyers have a pretty good idea which claims an insurance company will countenance and which claims the company will will reject based on what the insurance companies have done in the past.

Jay, you punt when you say, it is not just the contract between the purchaser and builder/developer. The bill says your claims are limited to the contract. What other protections do you have in the non-HOA context(I address fiduciary duty below) besides the warranties contained in the builder-written contract? I’d like to know what other protections there are because I really don’t think there is anything else.

You claim that the developer has a fiduciary duty to turn the HOA over to the homeowners in good financial condition. In most states, you would be correct. But again, not in Utah! There is no authority saying the HOA’s finances must be in order at turnover. In fact, a few months ago, a judge dismissed our firm’s breach of fiduciary duty cause of action because the judge said that the developer was the HOA pre-turnover, and owed no fiduciary duty to himself!

Yes, the builders are well protect by this bill–too well protected. Jay, there must be a balance somewhere. If California has gone to far, Utah had definitely not gone far enough. We need to balance homeowners rights and with builder protections. That means the homeowners must actually have some rights. If this bill passes, I’m telling you, Utah is returning to the days when no lawyer would touch a construction defect case.

This is why trial lawyers exist, to help bring justice.

My reading of the bill is that it completely limits any claims brought on the theory of negligence and limits it to just a breach of contract. Typically, the elimination of liability for negligence is very severe and against public policy. Public policy demands that persons are held accountable for their negligent, careless acts, not just breach of contracts.

Utah’s business law is a business person’s dream. Auto insurance companies love the fact that there is no statutory unfair claims practices act where insurers can act in bad faith and get away with it. I thought an act like that might get passed when State Farm v. Campbell came down, but the act in its current form is not mandatory and merely “encourages”

Here’s an example of the harm this bill will do from the SL Trib forums:

Utah homeowners will be significantly harmed should this bill pass. In our condominium building, we have discovered egregious defects in the construction, which are costly to repair, several years after the building was completed. Many of our homeowners are elderly and living on fixed incomes. This “builder protection bill” will offer such homeowners as us no recourse to hold negligent builders responsible.

This situation gives a lie to the bill’s statement of Individual, Business and/or Local Impact: “Enactment of this bill likely will not result in direct, measurable costs, and/or benefits for individuals, businesses, or local governments.” Clearly, that is not the case for us. The bill, if passed, will have a similar impact on many homeowners throughout the state and prevent them from seeking a fair remedy. S.B. 220 must be defeated in order to protect all property owners in Utah against builders who would slip responsibility for their errors of commission or omission.

I believe the rally has been changed to 9 am on Monday.

Gun Owners vs Doctors and How it Relates to SB220

NUMBER OF PHYSICIANS IN THE UNITED STATES 700,000

ACCIDENTAL DEATHS CAUSED BY PHYSICIANS 120,000

ACCIDENTAL DEATHS PER PHYSICIANS 0.171

NUMBER OF GUN OWNERS IN THE UNITED STATES 80,000,000

NUMBER OF ACCIDENTAL GUN DEATHS PER YEAR (ALL AGE GROUPS) 1,500

ACCIDENTAL GUN DEATH PER OWNER 0.0000181

STATISTICALLY, DOCTORS ARE APPROXIMATELY 9,000 TIMES MORE DANGEROUS THAN GUN OWNERS. NOT EVERYONE HAS A GUN, BUT MOST PEOPLE HAVE AT LEAST ONE DOCTOR

PLEASE ALERT YOUR FRIENDS TO THIS ALARMING THREAT. WE MUST BAN DOCTORS BEFORE THIS GETS OUT OF HAND. AS A PUBLIC HEALTH MEASURE I HAVE WITHHELD THE STATISTICS ON LAWYERS FOR FEAR THAT THE SHOCK COULD CAUSE PEOPLE TO SEEK MEDICAL ATTENTION!

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SB220 would most likely result in every common interest development owner to seek medical attention sooner or later! SB220 is a perfect example of bad law proposed by bad lawyers!