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February 2015

Construction Law Update

First Quarter 2015

Gordon & Rees’s Construction Group is pleased to publish the latest issue of our Construction Law Update, a quarterly take on trends of interest to design professionals, contractors, and developers throughout the country.

  1. Pennsylvania Supreme Court Rules that the Implied Warranty of Habitability Only Applies to Initial Buyer-Residents

  2. Economic Loss Rule Impacted by Recent Colorado Supreme Court Decision

  3. Gordon & Rees Construction Attorneys Making Headlines

  4. Gordon & Rees Legal Education Conference, Jan. 22, New York, N.Y.

  5. Gordon & Rees Construction Law Blog

  6. About Gordon & Rees's Construction Group

I. Pennsylvania Supreme Court Rules that the Implied Warranty of Habitability Only Applies to Initial Buyer-Residents
By Joshua H. Romirowsky

The Pennsylvania Supreme Court ruled that a builder’s implied warranty of habitability extends only to the initial buyer of a home, and not to subsequent purchasers.  The Court reversed a recent Pennsylvania Superior Court decision that provided more expansive liability for home builders.  Noting that the rationale underpinning the Superior Court’s decision was primarily based on policy grounds, the Supreme Court explained that the allocation of responsibility for defects in residential construction in the absence of privity was better suited for the Legislature to decide.  

To read a full, expanded version of this article, click here.

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II. Economic Loss Rule Impacted by Recent Colorado Supreme Court Decision
By Daniel E. Evans

The Colorado Supreme Court in a recent decision, S.K. Peightal Engineers, LTC v. Mid Valley Real Estate Solutions V, LLC, 2015 Colo. 7, revisited Colorado’s economic loss rule, which in some other jurisdictions is also known as the “independent duty rule.”  The Court specifically analyzed what class of plaintiffs can invoke the “homeowner exception” to the economic loss rule.  Of particular significance are the Court’s statements that the homeowner exception only applies to subsequent—and not original—homeowners.  

To read a full, expanded version of this article, click here.

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III. Gordon & Rees Construction Attorneys Making Headlines

Matthew Hawk, with assistance from Michael Wilson and Jessica Clouse, successfully secured a non-suit for their client in a $10 million personal injury/construction defect jury trial in Santa Clara County Superior Court. After having successfully excluding one of the plaintiff’s key expert witnesses from testifying at trial after a half day 402 hearing, and enduring nine days of testimony from various lay witnesses, the judge was persuaded after oral arguments to change his tentative ruling denying all the defendant’s motions for non-suit and granted the non-suit motion for our general contractor client as to all causes of action pled against it. This concluded an over four year battle with the plaintiff. Due to a strategically made CCP 998 offer early in the case, our client will be recovering a significant amount of costs back from the plaintiff.

Ronan McHugh will be speaking about alternative dispute resolution in international procurement contracts at the International Law Institute's International Procurement Seminar in March.

Ken Strong, Greg Gangitano and Ronan McHugh have been hired by a Spanish engineering and consulting firm to provide transactional support on two high speed rail projects in California and a light rail project in Maryland.  

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IV. Gordon & Rees Legal Education Conference, Jan. 22, 2015, New York, N.Y.

On Jan. 22, Gordon & Rees Construction Group partners Sandy Kaplan, Amy Darby and Ernie Isola presented at the first annual Gordon & Rees Legal Education Conference, a one day legal conference in New York City addressing 10 different areas of law. The Conference was a huge success, with more than 160 attendees, including insurance professionals and representatives from design and construction firms. During the Conference, Sandy, Amy and Ernie presented a one hour panel discussion entitled "Risky Business – Shifting the Risk in Construction Contracts." The panel discussed risk shifting devices such as additional insured endorsements, defense and indemnity obligations, and limitation of liability clauses. This program focused on the effectiveness of those tools in light of emerging anti-indemnity statutes and new endorsements of general liability insurance. The panelists also discussed the newest trends and case law affecting these risk-shifting methods, how they are being applied and the practical implications of contractual and policy language. Using actual case studies and experience of the Gordon & Rees panelists, the program provided an in-depth review of the challenges facing those seeking to shift the risk along with insight from the insurance industry regarding how additional insured policies are being interpreted. Finally, the program delivered strategies for how to effectively shift the risk of liability on construction projects, as well as how to avoid pitfalls in the drafting of construction contracts.

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V. Gordon & Rees Construction Law Blog

The Gordon & Rees Construction Law Blog continues to post new content addressing topical issues affecting the construction industry throughout the country. From analysis of new court decisions, discussions of timely legislation, and commentary on real-world, project-specific issues, Gordon & Rees’s Construction Law Blog provides insight on the issues that affect the construction industry now. 

We invite you to visit the blog at and see for yourself what we are up to. If you like what you see, do not hesitate to subscribe under the “Stay Connected” tab on the right side of the blog. There you can choose how you would like to be informed of new content (Twitter, LinkedIn, email, etc.). If you have any questions about the blog or would like to discuss further any of its content, please do not hesitate to contact us.

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VI. About Gordon & Rees's Construction Group

Gordon & Rees's Construction Group consists of more than 80 lawyers covering the nation in 33 offices. In 2014, the firm opened offices in Oakland, Calif.; Tampa, Fla.; and Birmingham, Ala.

Gordon & Rees’s construction attorneys focus their practice on the comprehensive range of legal service required by all participants in the construction industry – architects, engineers, design professionals, design joint ventures, owners, developers, property managers, general contractors, subcontractors, material suppliers, product manufacturers, lenders, investors, state agencies, municipalities, and other affiliated consultants and service providers.

We serve clients who design, develop, or build all types of structures, including commercial buildings, single and multifamily residential projects, industrial facilities, universities, hospitals, museums, observatories, amusement parks, hotels, shopping centers, high-rise urban complexes, jails, airports, bridges, dams, and power plants. We also have been involved in projects for tunnels, freeways, light rail, railway stations, marinas, telecom systems, and earth-retention systems. Our experience includes private, public, and P3 construction projects.

If you have questions about this issue of the Construction Law Update or our nationwide construction practice, click here to visit our practice group page or contact partner Tom Cronin.

Thomas G. Cronin
Gordon & Rees, LLP
1 North Franklin
Suite 800
Chicago, IL 60606
(312) 980-6770 

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