Missouri developer jailed for violating Clean Water Act

Wentzille developer sentenced to 15 months for violating Clean Water Act St. Louis Business Journal Eric Johnson was sentenced to 15 months in prison and ordered to pay $100,000 in restitution for violating the Clean Water Act in association with his Wentzville subdivision development, U.S. Attorney Catherine Hanaway said Tuesday. Johnson, 43, of Springfield, Ill.,pleaded guilty in December to one count of violating the Clean Water Act and one felony count of bank fraud. He admitted with his plea that he failed to maintain runoff controls at his building site, resulting in storm water run-off into Dry Branch Creek, and used his building escrow money to pay other obligations, resulting in the foreclosure and losses to his partner and the lender. Johnson was the owner and operator of a construction site known as Providence on Peine and Providence Meadows developments in Wentzville. He obtained construction storm water permits from the Missouri Department of Natural Resources. In August 2004, inspectors with the Environmental Protection Agency observed numerous permit violations at both Providence sites, including lack of inspections and failure to evaluate, maintain, and implement runoff controls, resulting in off-site migration of a significant amount of sediment and accumulation of sediment in Dry Branch Creek, according to a release from Hanaway's office. Johnson was in the business of developing and building residential subdivisions in both St. Charles and Lincoln counties from 2003 to 2006. He had a loan with First Service Bank for $2.6 million to develop a residential subdivision known as Woodsmill Estates. An escrow account was set up at Commonwealth Land Title Insurance Co. to pay subcontractors of the development. However, during the time of this loan, Johnson used the escrow money to pay subcontractors and other bills for other projects, according to the release. The bank ultimately discovered this practice and foreclosed on the loan, which resulted in a loss to the bank in excess of $100,000. Additionally, Johnson's business partner, who co-signed on the loan, saw a loss between $400,000 and $500,000.

An interesting insurance policy interpretation question

Water Damage Exclusion Trumps Wind Cause Argument

Concurrent Causation Policy Language Supports Exclusion

Bao v. Liberty Mutual Fire Ins. Co.,--- F.Supp.2d ---, 2008 WL 542384, (D.Md., Feb. 27, 2008)

This breach of contract claim arose out of a denial of insurance coverage by Liberty Mutual Fire Insurance Company. Theresa Bao had an all-risk home insurance policy with Liberty Mutual when her Baltimore home was damaged during a strong wind and rain storm. Bao’s home inspector concluded that the home was damaged when a wind-blown object broke the sliding glass door and, consequently, rain entered the basement and collected at the basement floor.

Conversely, Liberty Mutual’s inspector claimed that the damage occurred after water accumulated in the outside basement stairwell leading to the glass door, causing the door to break and water to enter the basement. Bao’s insurance plan excluded water damage, and included “surface water” in the definition of water damage. Liberty Mutual denied coverage for damage to Bao’s basement. Bao brought suit with U.S. District Court. Liberty Mutual moved for summary judgment.

The District Court first found that water from rain constituted “surface water” under Maryland case law. Bao then argued that the damage here was the direct result of wind, not water, and thus, should be covered. The Court rejected this argument, because the policy stated that damage from wind was only covered if it was not first excluded by the water damage exclusion. Because the damage fell under a specific exclusion, in these particular facts, the Court found that the policy did not permit Bao to circumvent the water damage clause.

Additionally, Bao argued a matter of first impression before the Court, whether the District should accept the “efficient proximate cause” argument. Under this reasoning, even if the exclusion was applicable and water damage was excluded, the wind damage occurred prior to the water damage, and thus should be considered as the proximate cause of the damage.

The Court rejected the proximate cause reasoning and supported the “concurrent causation” scheme found in the policy language. Under this reasoning, an insurance plan can exclude certain types of damage, and the issue of proximate cause will not affect the exclusions.

The District Court granted summary judgment to Liberty Mutual.

The importance of accurately complying with the Kansas mechanic's lien statute!

Court of Appeals of Kansas.

Douglas BUCHANAN, Appellee,

v.

Jerry W. OVERLEY and Carol J. Overley, Appellants,

and

Community Bank of Wichita, Inc., Appellee.

No. 97,329.

March 7, 2008.

Background: Contractor for construction of single-family home petitioned for foreclosure of mechanic's lien. The District Court, Sedgwick County, Karl W. Friedel, J., ordered foreclosure. Homeowners appealed.

Holding: The Court of Appeals, McAnany, J., held that contractor did not strictly comply with requirement, in mechanic's lien statute, of verifying that the contractor's address, as used by suppliers on a number of the bills in exhibit to lien statement, was sufficient for service of process upon the contractor.

Reversed.

Bankruptcy advise for Contractors

Well, I hate to say it but it is time to start the process of learning about bankruptcy and what to do when this terror shows up at your doorstep......look at these stats from the affluent county outside of Kansas City:

Johnson

County

Appraisers

Update

 

Foreclosures are impacting values in

Johnson

County

            2007 5-10% of sales were foreclosures

            Jan-Feb of 2008 25% of sales were foreclosures

Changes in Property Valuation – instead of using 19 months of sales, the appraisers’ office is now using 10-11 months of sales in 2007 for valuation and only 3 comps instead of 5 – notices were just recently mailed out

Total residential value in

Johnson

County

rose 2.39%, Agricultural Value rose 113.45%

New Construction – Building permits down 25% from 2006-2007 From 3200 permits to 1700 permits current, Douglas County (Lawrence) has issued 2 permits Jan-Feb 2008 – we have 6.9 years worth of vacant lots in Johnson County

Sales prices by area for 2007

• Area 310 up 7.9%
• Area 315 down .9%
• Area 320 up 8.5%
• Area 325 down .5%
• Area 330 up 6.9%
• Area 335 down .5%
• Area 340 up 1.3%
• Area 345 up 3.9%

Old Leawood had the most appreciation – up 4.12% and Lenexa West of I-35 (Falcon Neighborhoods) most deprecation – down 3.08%

Average Sales Price  - Resales $244,041 and New Sales $380,083