Defending against construction defect claims totaling $3.1 million, Jim Thomson and Joyce Hemmer obtained a binding arbitration decision that the claimant take nothing by way of its claims against the general contractor. After a seven-day hearing, a three-arbitrator panel issued its decision on April 4, 2011, finding the claimant failed to show the contractor’s work was defective or materially breached the contract. Six years after completion of an apartment complex, the claimant alleged defects including faulty construction of a mechanically stabilized earth retaining wall, improper stucco and masonry application, insufficient attic venting, improper window installation, framing deficiencies and inadequate site drainage. Mr. Thomson and Ms. Hemmer presented evidence showing the work complied with the contract and the designers’ instructions. Where details for the manner of construction were lacking in the plans, construction was completed in a workmanlike manner and conformed to local practices. Additionally, many of the alleged defects were the result of design defects, and were not the contractor’s responsibility. Agreeing with Mr. Thomson and Ms. Hemmer’s interpretation of the parties’ AIA contract (AIA Document A201-1997), the arbitrators found the contractor was entitled to rely upon approval of the work by the claimant’s representatives, including the architect and engineers. Even if a condition was not expressly approved, general inspections and certifications without comment or reservation could be considered to determine whether the work met the claimant’s expectations. Also, the contract provided it was the designers’ job to interpret and apply the building code in the plans; the contractor had no duty to ensure the design met code. The panel further found that if the alleged defect was not material and caused no damage or adverse consequence to the object of the contract, there was no breach by the contractor.

On March 22, 2011, Jim Thomson and Mark Orler obtained a favorable decision from the Idaho Supreme Court in Farm Bureau Mut. Ins. Co. of Idaho v. Schrock, No. 45 (filed Mar. 22, 2011). The Schrock decision establishes new law in Idaho on two important issues. First, the Court held that Idaho Code § 49-2417(2) (imputing liability to the owner of a vehicle being operated with the owner’s permission to the extent of the amounts set forth under Idaho Code § 49-117 ($25,000/$50,000) or the limits of the liability insurance maintained by the owner, whichever is greater) does not extend to supplemental liability policies like umbrella policies, but, rather, is limited to primary motor vehicle policies. The Supreme Court also held that an umbrella policy can lawfully exclude household members from coverage. In doing so, the Court declined to extend its decision in Farmers Ins. Group v. Reed, 109 Idaho 849, 712 P.2d 550 (1985) (effectively invalidating household exclusions in automobile policies) to mandate coverage for household members in umbrella policies, reasoning that the Idaho Legislature had not identified a clear policy requiring coverage for all household members in an insured’s umbrella policy.