I am not an attorney.
But I was a three decade commercial general contractor, and now a 10 year independent PM/CM committed to making the development and construction process work better for all participants.
My primary takeaway of your expert summary and analysis is focused on this short paragraph I copied from above:
“During the course of litigation, Pulte and several of the subcontractors settled with the plaintiffs for approximately $80,000. The defense costs leading up to the settlement totaled approximately $253,000.”
So the agreed upon actual “fix” was $80,000, but the legal fees to get to that fix cost $253,000 (before the appeals) – i.e. over three times the cost to actually fix the problem(s).
In my reading as a former contractor, that ratio is a horrible return on cash investment, not to mention the emotional and business distraction investments. In hindsight, I bet that both sides may have settled much quicker on a $160,000 fix to avoid that litigation – but . . . maybe not.
Construction, even when performed by the best and most qualified companies, is a human endeavor subject to mistakes (e.g. are you familiar with “punch lists?”).
In my experience (my former company averaged 100 completed projects per year over our last 10 years) and opinion, it was always more productive to recognize our mistakes, own up to them and fix them, even when it meant “over-fixing” them, to avoid residual disappointments or litigation.
In summary, I recommend:
1. Insurance is complicated; talk to your agent to be sure you have sufficient coverage to deal with the unanticipated (e.g. nobody plans to get in a car accident one block from their home).
2. Fixating on being “right” doesn’t always (or usually) yield the best outcome. You’re in business for the long haul. Analyze and weigh the upsides and downsides of every dispute as a business return on investment, not an emotional one. Your accountant and balance sheet doesn’t care or reflect that you “caved” to limit your potential loss and moved on.
3. Find and retain attorneys who advise and know how to keep you out of litigation.

Or so I think . . .
Marty Wilson
MDW Group, Inc.