Tag Archives: Christopher M. McNichol

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Southwest Super Lawyers honors 9 from Gust Rosenfeld

Gust Rosenfeld announced that nine of its lawyers have been selected for inclusion on the 2013 Southwest Super Lawyers list.  Each year, no more than 5 percent of the lawyers in Arizona and New Mexico receive this honor.

The following Gust Rosenfeld attorneys received this honor in 2013:

Peter Collins Jr. (Insurance Coverage) ­ Mr. Collins, based in Gust Rosenfeld’s Tucson office, concentrates his practice in general litigation with an emphasis on insurance defense and coverage, on construction, personal injury, aviation, medical malpractice and products liability claims, including wrongful death.  He represents insurers, manufacturers, contractors, and a variety of businesses and individuals.  He also represents people with serious injury claims.  Mr. Collins has represented trucking and construction companies in wrongful death and injury litigation since 1990.  He earned his law degree from Ohio State University College of Law in 1978.

Gerald L. Jacobs (Real Estate) ­ Mr. Jacobs has focused almost his entire 47-year legal career on real estate transactions and related areas.  He regularly handles all aspects of the acquisition, financing and development of commercial, multifamily residential, large land parcels and mixed-use real estate projects worldwide. From 1990 through 1992, he served as General Counsel and Senior Vice President and Chairman of the Executive Committee of the Resolution Trust Corporation (RTC) in Washington, D.C.  Beginning in 1998, he spent 19 months in Prague, Czech Republic, as a partner in U.S. law firm, focusing on his international real estate and business practices and handling matters throughout Europe.  Mr. Jacobs is a 1963 graduate of University of Arizona College of Law.

Scott A. Malm (Real Estate) ­ Mr. Malm handles litigation and dispute resolution for businesses and individuals.  He advises and represents title insurance companies and their insureds, escrow companies and escrow agents, lenders, developers, brokers, contractors and similar clients in trial and appellate courts at the state and federal level.  Mr. Malm earned his law degree cum laude from the University of Arizona in 1997.

Christopher M. McNichol (Real Estate) ­ Mr. McNichol’s practice emphasizes commercial and real estate transactions, including sale and purchase, development, lease, title insurance and construction issues, and related litigation in these areas.  He is co-chair of the firm’s real estate section.  Also, he handles creditors’ rights matters, including loan workouts, judicial and non-judicial foreclosures, deeds in lieu, receiverships, deficiency and guarantor actions, and bankruptcy.  He represents banks, savings and loans, mortgage lenders and brokers, title and escrow companies, real estate brokers and agents, developers, contractors, and individuals.  Mr. McNichol writes and lectures frequently at bar and industry seminars on real estate, litigation and creditors’ rights topics, and is a teacher at the Arizona School of Real Estate and Business.  He graduated from Villanova University School of Law in 1986.

Sean P. O’Brien (Bankruptcy & Creditor/Debtor Rights) – As Chair of the firm’s Litigation Practice Group and Co-Chair of the Bankruptcy, Restructuring and Creditors’ Rights Practice Groups, Mr. O’Brien focuses his practice on bankruptcy, restructuring, creditors’ rights, and related litigation and appeals.  Mr. O’Brien represents institutional clients, corporations, partnerships and individuals in all areas of creditor and debtor relations.  Mr. O’Brien is Board Certified in Business Bankruptcy Law by the American Board of Certification, an American Bar Association-accredited program.  He graduated from Valparaiso University School of Law in 1985.

Richard A. Segal (Business Litigation) – Mr. Segal concentrates his practice on commercial, insurance, and antitrust litigation. He represents insurance companies, financial institutions, businesses and individuals. He possesses extensive experience in both jury and non-jury trials of tort and antitrust cases, mediations, arbitrations, and appeals. Mr. Segal graduated from the University of Arizona College of Law in 1956.

Madeleine C. Wanslee (Bankruptcy & Creditor/Debtor Rights) – Ms. Wanslee is a member of the firm’s Executive Committee and Co-Chair of the Bankruptcy, Restructuring and Creditors’ Rights Practice Group. Her practice focuses on creditors’ rights and related state and federal court litigation, including commercial and consumer bankruptcy, foreclosure, replevin, deficiency and guarantor actions, collections, and loan workouts.  She has handled numerous appeals and argued United Student Aid Funds, Inc. vs. Espinosa before the United States Supreme Court in 2009.  She is Board Certified in Consumer Bankruptcy Law by the American Board of Certification, an American Bar Association-accredited program.  Ms. Wanslee graduated from Gonzaga University School of Law in 1988.

Richard H. Whitney (Estate Planning & Probate) – Mr. Whitney’s practice includes estate planning, probate and trust administration, guardianships, conservatorships and nonprofit organizations.  In particular, he represents clients with intergenerational family issues.  Mr. Whitney received his MBA and law degrees from the University of Arizona in 1963.

Charles W. Wirken (Appellate) – Mr. Wirken concentrates his practice on two areas: appeals in all areas and business litigation, much of the latter involving disputes in the franchising context. He is admitted to practice before the United States Supreme Court and the United States Court of Appeals for the Ninth, Tenth and Federal Circuits. Wirken has been a judge pro tem of the Maricopa County Superior Court since 1986, and has also served as a judge pro tem of the Arizona Court of Appeals, Division One.  He is a former president of the State Bar of Arizona, a former chair of the State Bar’s Trial Practice Section, and was a founder and officer of the State Bar’s Appellate Practice Section.  Mr. Wirken is a 1975 graduate of the University of Arizona College of Law.

Founded in 1921, Gust Rosenfeld provides legal counsel to individuals, businesses, and governments. Our firm’s attorneys enjoy thriving practices in public law, litigation, finance, real estate, corporate, environmental, employment, creditors’ rights, franchise law, estate planning, and tax. We maintain offices in Phoenix and Tucson.

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New Owners Of Commercial Buildings Can Enforce Warranties Against Original Contractors

Does the new owner of a commercial property have the same rights as the former owner when pursuing a claim against the original general contractor for construction defects? The Arizona Court of Appeals phrased the question this way:

“We are asked to decide whether a subsequent purchaser of commercial property can sue for breach of the implied warranty of workmanship and habitability pursuant to an express assignment of that warranty by the original owner.”

The answer in Arizona now is yes, if the new owner obtained an assignment of the construction warranties from the seller.

Winning Warranties, Arizona Business Magazine September 2008Case Study
In the case of Highland Village Partners vs. Bradbury & Stamm Construction Co. Inc., the owner hired a general contractor to build a number of separate apartment buildings and related improvements. Years after construction was complete, the owner sold the property and assigned to the new owner its basic warranty rights. The assignment included:

“All presently effective warranties or guaranties in (original owner’s) possession from any contractors, subcontractors, suppliers, servicemen or material men in connection with … any construction, renovation, repairs or alterations of the improvements or any tenant improvements (as well as) all contracts with general contractors, subcontractors and/or specialty contractors for the improvements which are in the possession and/or under the control of (original owner).”

A few months after the sale, the new owner sued the general contractor for alleged building defects, including problems with the flashing and siding.

Defining the Fine Print
The general contractor tried to have the lawsuit dismissed by arguing that the implied warranty of workmanship, which is implied in the law based on a contractual relationship between parties, belonged only to the original owner with whom it contracted, and could not be asserted by a new party such as the new owner.

This defense, often described as a “lack of privacy,” limits the claims that can be made by those who are not direct parties to a contract. In the residential home building context, an Arizona appellate decision had previously expanded this otherwise narrow scope of warranty claims by non-parties to a contract, allowing warranties to be enforced by a purchaser of a home who was not in privity of contract with the original home builder. That decision was based on public policy considerations, where the court noted that large home builders enjoy superior bargaining power and construction knowledge over individual home buyers — that builders know that homes will change hands frequently, and whether a construction defect is suffered by the original home buyer or rather a subsequent homeowner is not a meaningful distinction from a fundamental liability perspective.

But the Arizona courts had declined to expand warranty liability in the commercial field because similar public policy considerations did not apply. Commercial builders and commercial owners were presumed to have comparable sophistication levels.

In the Highland case, the new owner argued there was a key difference in its facts: It obtained an express assignment of the warranties when it bought the property. Therefore, the new owner now explicitly held the benefits of those contractual warranty rights. The general contractor responded that the distinction didn’t matter. There never was a direct contract between the general contractor and this new owner, and essentially there was nothing effective against the general contractor that could be assigned.

In the end, the court sided with the new owner. It reasoned that there was nothing unusual about allowing assignments of contractual rights, including warranty rights, unless the assignment would materially change the duties of the general contractor — or if the assignment was forbidden by statute, was against public policy or otherwise was precluded by contract.

The general contractor contended that extending liability in favor of new owners might encourage owners to take their sweet time in giving notice of a construction problem. The court disagreed, citing the Arizona statute requiring that any claims for defects must be filed no later than eight years after substantial completion of the improvements.

So the statute of limitations already in effect would preclude stale claims.

The Solution
The court pointed out that a general contractor has a straightforward way to limit its exposure by including a clause in the original construction contract that prohibits assignment of the warranties. With that limitation, only the original owner would, by contract, be able to enforce warranty claims against the general contractor. This would essentially insulate the general contractor from remote warranty claims from purchasers down the line.

However, any existing non-assign ability clause now would likely be the subject of a more focused analysis, because any new buyer, in assessing whether to purchase property, will view a lack of ongoing warranties more critically. Similarly, the original owner might evaluate a warranty transfer restriction advanced by a general contractor in the construction contract in terms of its affect on the future marketability of the property.

End ResultsArizona Business Magazine, September 2008
This case represents a significant extension of the potential liability of general contractors and builders of commercial property to subsequent owners, particularly given that prospective buyers will require (if they did not in the past) an express transfer of any warranty rights along with the commercial property from the original owner.

Christopher M. McNichol is a partner with the law firm of Gust Rosenfeld P.L.C. in Phoenix. His practice includes general commercial transactions and litigation, with an emphasis on real property matters. He can be reached at 602-257-7496 or mcnichol@gustlaw.com.