“To model how flames turn buildings into ashes, the nation’s leading fire researchers don’t play with matches over the sink. Instead they burn down entire homes, cubicles and warehouses.

“At the National Institutes of Standards and Technologies, researchers set huge fires under a 40-foot-long by 30-foot-wide exhaust hood that is connected to an $8 million control unit.

Link to Article

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California’s residential construction industry is approaching uncharted waters as a housing slump, tight liability insurance coverage and new laws for handling construction defect litigation all collide.

The collision makes an already challenging business environment fraught with even more danger. Some attorneys, especially those representing subcontractors, say they fear for their clients’ future.

“This is going to be a big problem,” said Blane Smith, an insurance-coverage attorney.

Link to Article

“In a case that is being closely watched in the multi-family housing industry, the Ninth Circuit Court of Appeals yesterday released its opinion affirming the lower court’s holding that the 2-year statute of limitations for a private civil action alleging violation of the Fair Housing Act’s accessibility requirements for design and construction is triggered, i.e., the violation is complete, at the conclusion of the design and construction phase, which occurs on the date the last certificate of occupancy is issued.”

It seems that for the foreseeable future, accessibility claims under Fair Housing Act will be subject to a two year statute of limitations after all. This means that plaintiffs only have two years from the occupancy date to file a claim for such violations. This is quite favorable for developers, contractors and designers but may go against the intent of the Fair Housing Act, as illustrated by dissenting Circuit Court Judge, Hon. Judge Fisher:

“The majority erroneously treats a building’s improper design and construction as the event that triggers the Fair Housing Act’s (FHA) two-year statute of limitations. It does so by finding an ambiguity in the statute and then resolving that ambiguity contrary to the overall purpose and structure of the FHA and its legislative and judicial history.

“I believe instead that the most plausible reading of the statute is that the limitations period begins (at the earliest) when a disabled person actually experiences discrimination — either in attempting to buy or rent a noncompliant housing unit, in “testing” such a unit or upon moving in as a tenant.

In other words, Fisher feels that the two year statute should begin following discovery of such a violation. However the majority opinion from the Ninth Circuit felt that this two year statute should begin once the work is done. So what happens if a property is completed, but nobody moves in for two years? According to this decision, if there is a violation of the Fair Housing Act that creates a situation that is discriminatory, nothing happens at all.

Link to Article, Link to Post from Ninth Circuit Opinions Blog, Link to Opinion (PDF)

1. Umm Said Qatar – April 3, 1977 (Weld Failure, Gas Processing Plant, 3 killed, US$ 76,350,000/179,000,000)
2. Abqaiq Saudi Arabia – April 15, 1978 (Corrosion, Gas Processing Plant, US$ 53,700,000/117,000,000)
3. Ekofisk Norway – March 27, 1980 (Weld Failure, Offshore Platform, 123 killed)
4. Edmonton Canada – April 18, 1982 (Fatigue, Petrochemical Plant, US$ 21,000,000/33,000,000)
5. Remeoville Illinois US- July 23, 1984 (Weld Failure, Refinery, 17 killed, US$ 191,000,000/273,000,000)
6. San Juan Ixhuatepec Mexico City Mexico – November 19, 1984 (Pipe Leaking, LPG Terminal, 650 killed 64,000 injured, US$ 19,940,000/29,000,000)
7. Las Piedras Venezuela- December 13, 1984 (Hydrogen Embrittlement, Refinery, US$ 62,076,000/89,000,000)
8. Norco Louisiana- US May 5, 1988 (Erosion-Corrosion, Refinery, 4 killed, 20 injured, 4500 evacuated US$ 254,700,000/336,000,000)
9. Piper Alpha North Sea UK – July 8, 1988 (Gas Leaking, Offshore Platform, 167 killed, US$965,000,000/1,270,000,000)
10. Antwerp Belgium – March 7, 1989 (Fatigue/Weld Failure, Petrochemical Plant, US$ 77,000,000/99,000,000)
11. Richmond California US – April 10, 1989 (Weld Failure, Refinery, 8 injured,US$87,170,000/112,000,000)
12. Baton Rauge Louisiana US – December 24, 1989 (Brittle Fracture, Refinery,US$ 68,900,000/89,000,000)
13. Coatzacoalcos Mexico – March 11, 1991 (Pipe Leaking, Petrochemical Plant,US$ 91,300,000/112,000,000)
14. Dhaka Bangladesh – June 20, 1991 (Weld Failure, Petrochemical Plant, US$ 71,000,000)
15. North Rhine Germany – December 10, 1991(Erosion-Corrosion, Refinery, US$ 50,500,000/62,000,000)
16. Guadalajara Mexico – April 22, 1992 (Corrosion, Fuel Pipeline, 206 killed, 500 injured, 15,000 evacuated, US$ 300,000,000)
17. Westlake Louisiana US – July 28, 1992 (Weld Failure/Corrosion, Petrochemical Plant, US$ 25,000,000/30,000,000)
18. Wilmington California US – October 8, 1992 (Erosion-Corrosion, Refinery, US$ 73,300,000/96,000,000)
19. Sodegaura Japan- October 16, 1992 (Fatigue, Refinery, 10 killed, 7 injured, US$ 160,500,000/196,000,000)
20. La Mede, France November 9, 1992 (Pipe Leaking, Refinery, US$ 260,000,000/318,000,000)
21. Baton Rouge Louisiana US – August 2, 1993 (Creep, Refinery Plant, USD 65,200,000/78,000,000)
22. Simpsonville Sacramento US- June 6, 1996 (Pitting Corrosion, Fuel Pipeline, USD 27,000,000/33,000,000)
23. Rio Piedras San Juan Puerto Rico – November 21, 1996 (Wrong Material in HCA, Gas Distribution Pipeline, 33 killed, 69 injured, USD 5,000,000)
24. Martinez California US – January 27, 1997 (Creep, Refinery, USD 80,000,000/82,000,000)
25. Yokkaichi Mie Japan – May 2, 1997 (Erosion-Corrosion, Petrochemical Plant)
26. Visakhapatnam India – September 14, 1997 (Pipe Leaking, Refinery,50 killed, 27 injured, 100 evacuated, USD 64,000,000)
27. St Helena California US – December 2, 1997( Corrosion-Pitting, Fuel Pipeline, USD 14,000,000/17,000,000)
28. Bintulu Serawak Malaysia -December 25, 1997 (Gas Processing Plant, High Temperature Failure, 12 injured, USD 275,000,000/294,000,000)
29. Longford Victoria Australia -September 25, 1998 (Brittle Fracture, Gas Processing Plant, 2 killed, 8 injured, USD 160,000,000/171,000,000)
30. Berre l’Etang France – October 6, 1998 (Corrosion, Refinery,USD 22,000,000/23,000,000)
31. Idjerhe Niger Delta Nigeria – October 17, 1998 (Pipe Leaking,Fuel Pipeline,100 killed)
32. Knoxville Tennesse US – February 9, 1999 (Brittle Fracture, 15 evacuated, USD 8,100,000)
33. Martinez Caifornia US – February 23, 1999 (Corrosion, 4 killed, 1 injured)
34. Winchester Kentucky US – January 27, 2000 (Crude Oil Pipeline, Fatigue, USD 7,100,000)
35. Hunt Texas US- March 3, 2000 (Corrosion, Fuel Pipeline, USD 40,000,000)
36. Prince Georges US – April 7, 2000 (Pipe Leaking, Fuel Pipeline, USD 50,000,000/ 57,000,000)
37. Mina Al-Ahmadi Kuwait – June 25, 2000 (Erosion-Corrosion, Refinery, 5 killed, 50 injured, USD412,000,000/ 433,000,000)
38. Carlsbad New Mexico US – August 19, 2000 (Corrosion-Pitting, Gas Pipeline, 12 killed, USD 100,000,000)
39. Roncador Brazil – March 15, 2001 (Tank Leaking, Offshore Platform, 2 killed, 8 missed, USD 515,000,000)
40. Carson City California US – April 23, 2001 (Pipe Leaking, Refinery, USD 120,000,000/124,000,000)
41. Rawdhatain Kuwait – January 31, 2002 (Pipe Leaking, Refinery, 4 killed,18 injured, USD 200,000,000)
42. Brookdale Manitoba Canada- April 14, 2002 (Stress Corrosion Cracking, Natural Gas Pipeline, USD 13,000,000)
43. Moomba Australia – January 1, 2004 (Liquid Metal Embrittlement, Gas Processing Plant, USD 5,000,000)
44. Skikda Algeria – January 19, 2004 (Liquid Metal Embrittlement, LNG Plant, 27 killed 72 injured, USD 30,000,000)
45. Humber Estuary Killingholme UK – April 16, 2001 (Erosion Corrosion, Refinery, USD 82,400,000)
46. Ghislenghien Belgium- July 30, 2004 (Pipe Leaking, Natural Gas Pipeline, 24 killed, 120 injured)
47. Mihama Japan August 9, 2004 (Erosion-Corrosion, Power Plant, 6 killed, 5 injured)
48. Texas City Texas US – March 23, 2005 (High Temperature Hydrogen Attack, Refinery, 15 killed, 170 injured, USD 30,000,000)
49. Sidoarjo East Java Indonesia- November 22, 2006 (Pipe Leaking, Natural Gas Pipeline,11 killed)
50. Free Town Sierra Leone – December 21, 2007 (Pipe Leaking, Natural Gas Pipeline, 17 killed)

Links to Part 1, Part 2, Part 3, Part 4, Part 5

The number of local construction-defect lawsuits has risen alongside the valley’s population. And one reason for this may be the heavy regulatory burden assumed by the area’s building and safety officials who oversaw all the area development.

County officials say that at the height of the building boom some inspectors were doing as many as 70 inspections a day. In response to reports that county building inspectors were conducting as many as 120 inspections a day during 2004 and 2006, Clark County Director of Development Services Ron Lynn said those numbers never got higher than between 60 and 70.

This article seems to echo the sentiments of many outsiders to the construction defect industry – that it is the responsibility of the local building departments (i.e.: the government) to prevent construction defects by policing contractors. In order for such a situation to exist, the local official would have to be on site at all times, or at least on a daily basis, at every single project. Instead, officials perform periodic inspections at certain key points in the construction of a project. For this reason, it is almost unheard of to see successful legal action taken against building officials for construction defect claims. Although some forward-thinking developers employ third party consultants to maintain an active presence during construction, this is not commonplace, especially in the production housing segment. Those developers that have relied upon such quality control consultants, have very little exposure in terms of construction defect claims, as problems are corrected as they arise. Until this practice becomes more widespread, homeowners will continue to rely upon construction defect consultants, such as SHCC, Inc., to aid in resolving these issues.

Link to Article

The billable hour is the dandelion of law practice: pervasive and not so popular.

So, when seeking to avoid the neg ative effects of a system that provides the profits for many a firm, there can be as many approaches as there are landscapers in the phone book.

Three law firms were among those changing the billable equation last year in hopes of reducing associate and client dissatisfaction. Each took a different approach, and though it’s still early, each firm’s leaders like the current results.

In summary, the concepts largely relate to reducing requirements for first-year attorneys, not billing clients for work by first-year attorneys, and flat-fee billing. This last concept is not discussed at much length in the article, but is worth exploring further. 

The Shepard Law Group, an employment law firm out of Boston, ditched billable hours completely in favor of flat fees. They call this “Up-Front Pricing” on their website, explaining that for the client, “You will always know how much our work is going to cost before we do it.” As they also state, “you don’t pay for our time — you pay for the work we do and the value you receive.” What a concept. 

Link to Article, Link to Shepard Law Group

The secret room in the old mill home on Whitten Street in Greenville’s Dunean section contained a handwritten letter from the previous owner titled, “You Found It!”

“Hello. If you’re reading this, then you found the secret room. I owned this house for a short while and it was discovered to have a serious mold problem. One that actually made my children very sick to the point that we had to move out,” Kerri Brown read from the letter.

According to the note, there was so much mold, it made the last family who lived there sick, and they were forced to move out.

This story received quite a bit of press, but not everyone told the same story. After further research here is a brief summary:

• George and Tricia Leventis purchased a home at Number 6 Whitten Street in Greenville, South Carolina. After living in the home, several members of the family became very ill. Mold was found in the home, and doctors blamed the mold on the medical conditions.
• The family could not afford to remediate the mold condition, so they walked away from the home. Foreclosure ensued.
• Before leaving, George Leventis left a note in a concealed area describing the condition. His reasoning: once the house went back on the market, the bank/realtor/other interested parties would not want such a serious mold problem readily visible, so leaving the note in the open would have been fruitless.
• Jason and Kerri Brown later bought the home. As Mr. Leventis suspected, the Browns never received disclosure regarding any mold condition. The pre-purchase inspection likewise did not turn up any mold concerns, as the problem was somewhat concealed. (Don’t take the word of a pre-purchase home inspector as final!)
• The Browns, upon discovering the mold and the letter from Leventis, hired Hendrix Consulting Engineers to evaluate the home. Samples came back with elevated levels of various mold species including the infamous Stachybotrys – the so-called toxic mold of lore. According to the company’s principle, Steve Hendrix, the house was “probably a seven,” on a scale of one to ten, in terms of infestations.
• The estimated remediation costs allegedly exceed the purchase price of the home.
• The Browns filed a lawsuit against the realtors and the lender, Fannie Mae.
• Fannie Mae has recently agreed to purchase back the home at the original price of $75,000, and have thus been released from the litigation.
• The lawsuit against the real estate firm and the agent that sold the home.

Link to Article, from Boing Boing and BLDGBLOG

Link to Video

“The court specifically found that the seller could not have been unaware of the serious water problems and resulting mold throughout the house. Carpet which had been installed just before the sale was soaking wet when lifted. There was black mold in the utility closet, obscured by boxes and storage items. Wood support beams were visibly stained and rotted through, in areas where sheet rock was missing from the walls, so the seller could not have missed it. The evidence appears to have been overwhelming that the house was in terrible condition. The court did not discuss the contents of the home inspector’s report. It appears that the defendant’s deception and untruthfulness was hugely significant and overcame any argument that the home inspector should have noted these deficiencies.”

The Connecticut Superior Court judge that heard the case ordered the seller to compensate the buyers for not only the repairs but additional money. Sounds good, right – justice was served. The reason that this is surprisingly not too common has to do with what we like to refer to as the Construction Defect Lawsuit Life-cycle. Most homeowners join construction defect lawsuits because they have genuine concerns over the construction of their home. The first step in the process is for the attorney representing the homeowner to pay for an expert to thoroughly investigate the home to produce a preliminary defect list. The next step is the investigation and mediation phase whereupon myriad attorneys, insurance adjusters, experts and others representing plaintiffs (homeowners or HOA generally) and defense (developer, architects, general contractors, subcontractors, etc.) evaluate and debate the nature and extent of any construction defects. Following this, the case is eventually resolved through one of (at least) three ways: either the case is dropped, settled out of court, or decided in trial. If the homeowner comes out ahead and receives money at the conclusion of the case (their attorney usually gets 30 – 40%), what happens next? That is the part that hasn’t been addressed in any meaningful way yet.

Here is the homeowner with a fairly large check (depending on the plaintiff attorney and various factors the homeowner will average $10,000 up to about $60,000) and a home that according to many experts, is riddled with construction defects. Does the attorney provide the homeowner with a punchlist of items to be addressed by a reputable contractor with references to contractors specializing in those types of repairs? I should think not. Does the expert that testified on behalf of the homeowner oversee repairs to the home that they recommended under oath perhaps? Hardly ever. Following a trial, the homeowner could theoretically obtain transcripts and try to piece together the testimony and reports of the various experts, but ultimately, the homeowner is usually left with nothing but a check and a vague notion of the major defects. Without a lot of direction, addressing truly defective or improperly installed components and associated damages is very difficult. Often times homeowners try to address some of the major issues as best as possible. Often they end up upgrading some of the finishes. Sometimes they spend the money on other things (or so we’ve heard). According to many Southern California realtors, rarely if ever do homeowners disclose during a sell that their home was involved in a construction defect lawsuit – especially if it was settled out of court. The homeowners that were plaintiffs in a construction defect lawsuit have profited, their attorneys profited, the experts hired by their attorney profited, often (strange as it seems) the defense attorneys profit (they are paid by the hour), the experts for the defense profit and even the mediators profit. Insurance carriers recoup their expenses by raising premiums, developers charge more for their homes and the cycle begins anew at a different location. And the house is still defective, no repairs have been made, and yet for some reason, none of this is disclosed to future buyers.

Perhaps this scenario will change in the future, but regardless it is clear that there is a definite gap in the life-cycle. And just to clarify: this isn’t the fault of anyone in particular, and the integrity of the industry as a whole (both the construction defect industry and residential construction itself) has definitely improved over time.

Link to Article

Don Neff is president of La Jolla Pacific Ltd., an Irvine-based consulting firm that advises homebuilders on ways to improve the quality of their construction and avoid construction-defect claims. The firm operates in 10 states and claims to have assisted 1,000 clients in the building of more than 50,000 homes. Register reporter Jeff Collins spoke with Neff (not related to prior Insider Q&A guest Doug Neff of IHP Capital) about the state of the housing market and the current quality of homebuilding.

This question and answer session is interesting on a number of levels. La Jolla Pacific provides quality assurance and quality control risk management services to builders. The key to understanding such a firm is that risk management component. Risk is the quotient upon which the entire insurance industry is built upon. Insurance carriers are almost universally responsible for financing the construction defect litigation industry. If a developer/general contractor is sued by a group of homeowners or a homeowner association, usually the first thing that happens is that the builder’s insurance company is notified. The insurance company (after checking that the policy is still good!) hires a law firm to represent the builder. The law firm representing the builder then hires a team of experts and at the same time, files cross-complaints against the subcontractors that worked on the project in question. Now there are certainly exceptions to the rule, but that is the general method of operation in the CD industry.

From the moment the case is filed against the builder, their insurance company begins paying out money. Defense attorney firms bill by the hour. The experts designated bill by the hour. Documents have to be copied and organized and submitted. Even if the case is settled out of court, and even if the subcontractors and their respective insurance carriers pay the lion’s share of the settlement amount, the carrier for the builder will pay substantial amounts of money to their lawyers and experts. If the case goes to trial, the trial preparation costs for defending the builder will often run well over $100,000 alone. The only time that the builder’s insurance carrier recoups any of those costs is in the rare occasion that a jury finds in favor of the defense. So how does the insurance company remain solvent and return a profit to shareholders? Pretty easily, actually.

The insurance carrier reduces pay out on claims by reducing risk in the first place. One way of reducing risk is to insure builders with excellent track records – not unlike auto insurers providing better rates to drivers with fewer accidents. In construction, the high cost of litigation has prompted the carriers to go a step farther. On larger developments (more risk), the carriers are requiring better quality control/assurance (QA/QC) and are sometimes even requiring third party consultants to assist in that process. The cost of such services is prohibitively expensive to smaller developers, but the offset in insurance premiums is advantageous to the larger builders. (Builders that have seen numerous construction defect claims pay much higher premiums and as a result, some developers have resorted to insuring themselves.)

So what does this have to do with the article? Don Neff is asked by the reporter to weigh in on the relationship between the real estate market slow down and the potential for construction defect litigation. Mr. Neff asserts that even though the profit margin is decreasing due to significantly less demand, the construction quality overall will be better. He insists that builders will be more likely to spend more money for better quality control (i.e.: hiring firms like his) even though the profit is less. Economics must not have been offered at his school. History has shown us time after time that when profits go down, companies cut costs in order to boost the profit margin. The U.S. auto industry responded to decreased demand for domestic vehicles by cutting jobs – tens of thousands of jobs. Without such cutbacks, many of those companies would probably not be in place today. The auto industry did not increase quality control practices which would therefore increase labor costs and charge more to the consumers.

I guess we shall see whether Mr. Neff’s optimistic outlook is correct or not.

Link to Article

The word stucco is Latin with Germanic roots, whatever that means. The Italian use of the word actually translates best as “filler”, but the conjugated verb stuccare refers generically to plaster. Thus the typical definition of stucco in modern English is refined lime cement plaster.

Today in construction there are many products that contain the word stucco and below are a few of them:

• Stucco – Most of the time that the word stucco is used in modern construction it refers to a 3-coat exterior cladding that is found in residential and commercial applications throughout the U.S. and in many countries around the world. The most common installation over wood framing consists of one or two layers of building paper (a vapor permeable weather barrier), metal lathing, a scratch coat of portland cement plaster, a brown coat of portland cement plaster, and a final finishing coat of portland cement plaster usually containing pigment to provide the final color and texture of the surface. The scratch coat is applied with sufficient force at an approximate thickness of 3/8-inch to become embedded into the metal lath which creates a metal reinforced cementitious base coat which is then “scratched” using a special tool. The “scratched” surface of the base coat provides a mechanical “key” to aid in the bonding of the “brown” coat which is also applied at a thickness of 3/8-inch. The final color coat is applied at 1/8-inch and depending on technique employed, can allow for a variety of textures. The final thickness of the 3-coat stucco system is ideally 7/8-inch. Portland Cement Association
• One-Coat Stucco – According to the National One Coat Stucco Association (NOCSA), “the term One Coat Stucco refers to a blend of Portland cement, sand, fibers, special proprietary chemicals and water. One Coat Stucco combines the scratch and brown coat into a single application of 3/8″ to 1/2″ thick.” On top of the base coat, a finish coat is applied – so really, “one coat stucco” is actually two coat stucco. The Evaluation Service, ICC-ES, is a non-profit corporation that evaluates various building products and methods of application. According to the various building code bodies in the U.S., now consolidated into the International Code Council, the evaluation reports issued by ICC-ES determine the compliance of given products and systems with accepted codes. As such, there is an evaluation report (ER-3899) that addresses one coat stucco products by several manufacturers available for download. The products listed in that specific report are Western 1-Kote Exterior Stucco System, Master Wall One Coat Stucco System, Dryvit Stucco Plus System and Sto One-coat Stucco System. There are many manufacturers of one coat stucco products today and accordingly, several more evaluation reports. NOCSA Technical Information
• EIFS – Exterior Insulating Finish System. Also called EFIS or Exterior Finish Insulation System. EIFS can also be called Synthetic Stucco. EIFS assemblies consist of an EPS foam substrate, a reinforced layer of adhesive and fiberglass reinforcing mesh, with a final topcoat of a polymer-based or polymer-modified finish material. These products also require an evaluation report for use. There are numerous reports under the 07240 division at the ICC-ES website for various EIFS products. Unfortunately, many in the industry have found it difficult to differentiate between various products and often one hears the terms “one coat stucco” and “EIFS” used interchangeably because often a manufacturer makes both types of products. To add to the confusion, there are hybrid systems that used portland cement or modified portland cement over EPS foam substrates. In fact, EPS foam is often used as a form for 3-coat systems at windows, and other openings. And Ultrakote manufactures a one coat stucco system that according to ER-4658 can be used in an open framing system over an EPS foam substrate. So even though EPS foam is used as a base for the finishing material, only EIFS is really EIFS. Article from forensic expert Brian Erickson, Wikipedia entry on EIFS
• Stucco Panels – These are prefabricated panels installed similar to hardboard siding that are composed of fiber reinforced portland cement. So this product is stucco, but it is siding, so it isn’t exactly stucco, depending on how one defines the term. Fiber Cement Siding at Wikipedia.
• Liquid Stucco – This isn’t stucco at all. “Liquid Stucco is a highly unique, permanent, ceramic-based exterior coating system designed to beautify, protect and insulate your home.” [Liquid Stucco, Inc.] The product is installed over a number of substrates including wood, siding, metal and, well – stucco. Liquid is definitely not stucco.
• Stucco Veneziano – This is the fancy name for Venetian Plaster which is a decorative paste plaster for interior applications that delivers a highly decorative, glossy finish that resembles marble. Marmorino Venetian Plasters USA

There can be a lot of variation in terms of material composition, application and installation of many products that people refer to as stucco. Many people also refer generically to sugary carbonated beverages as “coke”. But that doesn’t necessarily mean that it is the proprietary trademarked product of The Coca-Cola Company.

Answer: A “coyote labor broker” is a human trafficker. In the residential construction world they organize “crews” of individuals to build most new US homes (paint, frame, roof,etc). They often work in crews of 10 to 20 men. Typically the crews have a crew chief who keeps track of hours, and gets a check (typically weekly) from the “residential construction labor coyote”. The check is then cashed and the cash is distributed to the undocumented workers. In most cases, no taxes ever get paid. Over 50%+ of all new residential construction in the US has been built by undocumented workers.

Where do the workers come from?

Answer: Typically the workers come from Mexico.

Who Organizes The Labor Crews?

Answer: The labor coyote puts out the word in Mexico, or the labor coyote recruits existing undocumented workers or crews, already here in the US. This often involves Mexican organized crime. If an undocumented worker from Mexico or Central America complains about working conditions, or threatens to tell about the “coyote’s” schemes to get him/her into the US, he or his family, could be put at risk.

How Do The Home Builders Get Away With It?

Answer: The homebuilder tax fraud scheme is simple. The National or Regional Homebuilders hire legitimate regional or local subcontractors. The local sub contractors then use the “labor coyotes” to staff residential job sites. The actual sub contractor gets a check from the homebuilder for work done at the job site. The sub contractor then pays the labor coyote with another check (1099). The labor coyote then pays their workers with typically one check that has a tax classification as a 1099 subcontractor payment. The check gets cashed and the workers receive cash for the work they did. In most instances workers are not paid overtime or allowed federal work place protections as provided by the Federal Labor Standards Act (FLSA). The workers do not complain about the tax fraud, or poor working conditions, out of fear of reprisal.

Do The Homebuilders Know This Is Going On?

Absolutely. There is no way that you could visit almost any residential job site and not know your workers were undocumented workers. There is also no way that homebuilders would not know that their workers or their subcontractors, did not pay any taxes. For members of the press it is recommend they visit any larger residential construction sites in Las Vegas, Arizona, California (Palm Springs), etc. Note: Bring an individual who speaks Spanish, or talk to representatives of the Carpenters or Painters Unions in the Southwest, Texas, Colorado, The West Coast, or Florida.

Does This Tax Fraud Represent The Majority of National Or Regional Homebuilders?

Yes.

Homebuilders are worried about immigration reform

According to Americas Watchdog, “the intent of the “homebuilders” is to perpetuate the largest cases of tax fraud in US history so that they can continue to “1099″ illegal workers with their “coyote labor schemes” because they get cheap labor and greater profits”. Two days before the most recent failed vote on Immigration Reform, Homebuilders from around the US flooded Washington, DC with check books in hand.

So where do we go from here? Americas Watchdog supports President Bush’s efforts to create a legal pathway for undocumented workers to obtain a legal way to work or to obtain citizenship in the United States. Aside from successful passage of the legislation, Americas Watchdog supports the following:

1. Its time for a National Identification Card for all US Citizens and documented workers. The card will have the holders picture and their Social Security number. This card will also either have a fingerprint or retina print that can be easily scanned for positive identification. In a post 9-11 world, this is a must. A National ID card would also be much cheaper than an ineffective wall.

2. It should be a felony to employ any worker unless they have a National ID card. This would ease pressure on the border.

3. Labor Unions should be allowed to openly recruit what are now undocumented or illegal workers, in order to insure these workers are not being mistreated by their employers, as is now the case. There has never been a time in our nations recent history where organized labor was more needed than they are today.

4. Any US Senator that took a campaign “donation” from a Homebuilder or a Homebuilder lobbyist prior to the failed immigration vote should be held accountable for his/her vote.

5. There needs to be a meeting of organized labor, legal experts with experience in labor laws and others who have an interest in human rights and dignity for the individuals who come to the United States, to do the jobs that many Americans will not do. Construction defect experts should also be included in this meeting, as there may be millions of defective homes in the US because a greedy homebuilder cut corners to make more money. This meeting should occur as soon as possible.

For members of the press, organized labor, & legislative investigators, Americas Watchdog will provide more information about its on-going investigation. Americas Watchdog would welcome the opportunity to work with organized labor to insure that up to 15 million undocumented workers living a shadow existence in the US are afforded the same rights as US citizens doing the same job. Americas Watchdogs Media Contact Number is 866-714-6466. Americas Watchdog’s Corporate Whistle Blower web site is located at http://AmericasWatchdog.Com

Link to Article

StructuredRisk, Inc. was honored as the recipient of the Risk and Insurance Management Society, Inc. (RIMS) Arthur Quern Quality Award at RIMS 2007 Annual Conference & Exhibition in New Orleans on April 30.

“This year, StructuredRisk, Inc. stood out among the pool of nominees for developing risk management software designed to refine and improve construction best practices and reduce litigation,” says Karen Beier, ARM, RIMS member of the board of directors and vice president of risk management at Shaklee Corporation. “The Arthur Quern Quality Award is given to an organization that showcases an initiative within the risk management industry that has contributed to increased quality in products, services and enterprise risk management. It is with great pleasure that RIMS presents this prestigious honor to StructuredRisk, Inc.”

Link to Article

Summer time is the season of vacations, fun and, for many Community Associations, construction.  Most Managers are very thorough and knowledgeable, and have assisted Associations with construction projects. Some Board members have worked in the construction industry and have valuable insights. So why is it wise to involve an independent engineer, architect, or construction expert (here called “engineer”) in your Association’s repair projects (such as painting, roofing, siding or asphalt projects).

Stan Jezierski at the Colorado Homeowners Association Law Blog, offers some sound advice for HOAs in regards to the inevitable summer association maintenance projects. Hiring a qualified expert can be a valuable asset and can offer additional protection for the board when addressing repairs and the various contractors, insurance agencies, building officials, and others that come along for the ride.

Link to Article

Throwing a pie in someone’s face is good. Throwing food at pi is better. Believe it or not, of all the countless ways to approximate the most prolific irrational number in the universe, there are none quite as interesting or as surprisingly satisfying as throwing perfectly good food around your kitchen. In fewer steps than it takes to circumscribe your house in a circle of baguettes, you, too, can easily add a slice of pi into your dinner menu tonight. The best part is…it really works!

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Executive Hubris: How to Check Your Ego and Avoid Ruining Your Company and Your Career By Mathew Hayward

Hayward lays it out plainly: “If you are going to have a successful career and life, you are going to have to learn to check your ego.” Using examples such as Buffett and Welch to show that CEOs don’t have to have huge egos to succeed (and Dean Kamen of Segway as an example of hubris at work), Hayward offers ways to keep an eye on your ego while pushing the limits of success.

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A leaky window isn’t going to mean the difference between life and death for entire families. Fire-resistive construction does. And the point that Brenner makes is salient: it is a mistake to use fire code defects as a “throwaway” during defect settlement negotiations, because lives hang in the balance.

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Presentation Zen is a site that anyone involved in public presentation of information should visit on a regular basis. (For more insight into graphical presentation of information and reports, see Edward Tufte.) Reynolds’ website couldn’t have a more appropriate name as he truly espouses a “Zen”-like approach to presenting. In the defect industry, many cases are mediated and ultimately settled based upon the information and evidence that is presented by the experts. In the situation of a mediation, the more effectively an expert can present his evidence to the experts representing opposing parties, the easier it is to discuss the valid points of the case. The easier it is to discuss the actual matters at hand, the more likely that settlement will occur. But no matter how effective or snazzy an expert’s presentation is, if there is no mutual respect, the mediation process will go nowhere. Publicly questioning the credibility of another expert or attacking their opinions is no way to gain support.

“If one bad mouths a competitor in Japan they shame not only themselves but the group to which they belong. One who speaks poorly of others is not to be trusted…. When one remembers that there is no end to mastery — that one can and must be better the next day and the day after that (and the day after that) — then it is foolish indeed to ever look down one’s nose to anyone, especially our rivals. Ultimately, the real rival is within us anyway.”

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Where this might really make an impact is on roofing consultants that are involved as experts on construction defect cases. There are many consulting firms with no employees – SHCC is one. But if that firm relies upon a C-39 Roofing contracting license, they must obtain worker’s comp coverage or show proof of self-insurance, or face losing their license.

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A lot of careful thought has to be given to what claims are worth fighting about, because the association will likely have scarce resources available to it. Much of the value that counsel brings to this process is counsel’s experience and judgment and counsel’s relationships with experts who are particularly skilled in disciplines that are responsive to the needs of the association.

Some key questions that need to be addressed in any CD case are:

• “How good are plaintiff’s experts?”
• “How strong are plaintiff’s proofs on liability and damages–especially consequential damages as is discussed in detail below?”
• “Can the proofs be understood by the jury?”

How good are your experts? How strong is their evidence? How will they stand up in front of a jury if the case goes to trial?

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Cyntia Scharf brings up a New Jersey case that shows just how crucial this issue can be:

If you are planning to sue to recover damages relating to construction defects, don’t destroy the evidence of the defects before the defendants have had a reasonable opportunity to inspect and document them. Such premature destruction of evidence could destroy the strength of your case.

The plaintiffs in the case destroyed evidence in the form of a failing greenhouse that was causing damage to their home. The defense argued that they did not have the opportunity to inspect the evidence and would have to rely upon the plaintiff’s expert. They convinced the judge that the plaintiff expert’s photos and reports should be excluded. Without evidence, and without the plaintiff expert’s documentation to rely upon, the case was pretty much over.

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YUCAIPA – After years of living in brand-new houses plagued with leaking windows and cracked stucco, 14 homeowners in Whisper Ranch have been awarded $1.3 million for construction defects.

Calimesa-based developer E. Wayne Simmons and builder Whisper Ranch Ltd. were ordered in July by a San Bernardino Superior Court judge to pay the 14 plaintiffs for construction defects ranging from slab leaks to slope failures.

The 200-home Whisper Ranch development off Mesa Grande Drive was built in the late 1990s. House prices ranged from $190,000 to $650,000.

Nikki Snelson, who bought her house in 1997, said she is satisfied with the award and is relieved to have repairs started on her home.

“There’s been a sense of instability through it all,’ the 39-year-old said. “I couldn’t clean and be done, I couldn’t sit and relax without seeing a mess. For women and kids trying to maintain a household, it was just havoc.’

After dealing with plumbing leaks and discovering her wedding dress had been ruined by resulting mold, Snelson contacted the law firm of Anderson & Kriger in Riverside.

The law firm sent out questionnaires to the project residents asking them to check off any construction problems with the houses. A lawsuit was filed in July 2004.

“We are very pleased that our clients are being appropriately compensated because it will cost them a lot of money to fix the things the developer should have done right in the first place,’ attorney Codette Wallace said.
This is one of the largest per-homeowner lawsuits in recent California history, said attorney Laurie Twitchell.
She said the average homeowner settlement is $15,000 to $25,000.

Wayne Simmons, owner of E. Wayne Simmons Inc., said the lawsuit was unnecessary because his company offered to make all necessary repairs and most of the problems were minor and could easily be repaired by the builder.

He said homeowners refused repairs and instead filed a lawsuit.

However, many residents said they sued because the builder was unwilling to make repairs in a timely manner.

Homeowners have to arrange and pay for the repairs themselves because the builder ceded responsibility with the judge’s ruling.

“Had they (the builder) taken care of the things wrong on the property, it would never have come to this,’ said Betty Chirrick, 69, who bought her home in 1999.

She said workers often failed to keep appointments to fix problems such as insufficient gutters and lack of a gas meter.

“My husband and I planned to make this our home for life, and I’m sorry it had to come to this. But they shouldn’t have dismissed us with such disregard.’