Ninth Circuit Decision Approves of Caltrans DBE Program

The Ninth Circuit Court of Appeals just ruled in the case of Associated General Contractors, San Diego Chapter v. Caltrans (AGC v. Caltrans), No. 11-16228, in which it affirmed Caltrans (California Department of Transportation) outreach program to promote fairness and equity in its federal contracting. AGC had brought suit in 2009 challenging Caltrans’ Disadvantaged Business Enterprise (DBE) program, which seeks to ensure that minority and women-owned businesses are on equal footing to compete for federally-funded contracts.  Summary judgment was granted in favor of Cal-Trans in the U.S. District Court in 2011, and AGC appealed.

Caltrans’ Disadvantaged Business Enterprise program establishes a framework for ensuring fair participation in federally funded public works projects in California. In 2007, an extensive disparity study commissioned by Caltrans documented discrimination against small businesses owned by women and minorities in federally funded contracts, which led to the creation of its new DBE program which was challenged in this action.

The Ninth Circuit Court of Appeals found that AGC did not identify any of its members who had or would suffer harm from the DBE program, such that AGC lacked standing.  Nevertheless, even if AGC had standing the appeal would have failed as the Appellate Court noted that the DBE program survived strict scrutiny as there was strong evidence of discrimination in the transportation contracting community, and the program was narrowly tailored to combat that discrimination.

- All Rights Reserved © 2013 by Michael L. Mau, Esq. and The Mau Law Firm

Landlords Cannot Demand Payments by only Electronic Means

Effective January 1, 2013, Civil Code Section 1947.3 was amended, and requires that “…a landlord or a landlord’s agent shall allow a tenant to pay rent and deposit of security by at least one form of payment that is neither cash nor electronic funds transfer.”  The landlord may still demand or require cash as the exclusive form of payment for a maximum period of three months following a dishonored or bounced check, or following a tenant’s instruction to stop payment, as long as the proper notice detailed under Section 1947.3 is followed.  Parties to a rental agreement can still voluntarily agree in a lease to have payments by cash or by an electronic payment method, as long as another form of payment is also stated in the lease.

All Rights Reserved © 2013 by Michael L. Mau, Esq. & The Mau Law Firm

 

Landlord May Dispose of Abandoned Personal Property if Less than $700

Effective January 1, 2013, the value of personal property left behind after the termination of a residential tenant’s tenancy that the landlord must sell at a public auction (as opposed to otherwise disposing of), has increased from $300 to $700.  C.C. Section 1988.  Landlords will be prohibited from assessing any storage cost if the tenant reclaims personal property within two days of vacating the premises.   C.C. Sections 1987 and 1990.  As such, the statutory notices of Right to Reclaim Abandoned Property has been revised to reflect these changes, as shown in C.C. Sections 1984 and 1985.   While the increase from $300 to $700 is a welcome one that will allow landlords to dispose of slightly more value-less property then before, arguably the increase should be higher and/or adjusted annually for inflation.

 All Rights Reserved © 2013 by Michael L. Mau, Esq. & The Mau Law Firm

After January 1, 2013 Type One Indemnity Outlawed for Commercial Construction

Effective on  January 1, 2013, “Type I” indemnity clauses covering an indemnitee’s concurrent active negligence will no longer be enforceable under California law for commercial construction.  On October 9, 2011, California Governor Edmund G. Brown, Jr. signed into law Senate Bill 474 on this indemnity issue.  The new law  broadens the class of indemnity provisions that are unenforceable under California law.

Under the current law as of the date of this blog post, provisions in construction contracts whereby a lower tiered subcontractor indemnifies an owner or general contractor against liability caused by the indemnitee’s “sole negligence or willful misconduct” are unenforceable. See Cal. Civ. Code § 2782(a). Additionally, provisions in construction contracts on public projects are unenforceable if they impose on the contractor, or relieve the public agency from, liability for the public agency’s own “active negligence.” Cal. Civ. Code § 2782(b).  Due to these limitations, owners and general contractors often included “Type I” indemnity provisions in lower tiered agreements, whereby a lower tiered subcontractor would agree to indemnify the owner/contractor, even against liability caused by the owner/contractor’s own “active negligence.”  

Under the new law, such “Type I” indemnity provisions will no longer be enforceable. Newly added California Civil Code Section 2782.05 provides that contract clauses that purport to require a subcontractor to “insure or indemnify” a contractor, construction manager or other subcontractor against claims for damages that relate to the active negligence or willful misconduct of the indemnitee, or for defects in design, or against claims that do not arise out of the scope of work of the indemnitor, are unenforceable. Public agencies and private owners are already essentially prohibited from including Type I indemnity provisions in their agreements. See Cal. Civ. Code § 2782(b)(2) and 2782(c)(1) (newly added under SB 474). The new law expands the coverage of that prohibition to include downstream or lower tiered subcontractors and suppliers of goods.   Please see the full text of Civil Code Section 2782.05 for full details of the law.

All Rights Reserved © 2012 by Michael L. Mau, Esq. & The Mau Law Firm

 

Twenty-Nine Palms v. Bardos remind us of the Importance of a Contractor’s License

In Twenty-Nine Palms Enterprise Corp. v. Bardos (2012), [No. E051769] the Fourth Dist. Court of Appeals issued its ruling affirming a  Judgment against an unlicensed contractor.  This was an Indian tribal corporation’s suit against a construction company seeking to recover money paid for constructing a road and parking lot for a casino, on the ground that defendant was unlicensed at the time of the contract.  Relevantly, B&P Code Section 7031, subdivision (b), provides that an unlicensed contractor must disgorge all compensation earned under a contract.  The Trial Court’s judgment was in favor of the plaintiff owner.  The Court of Appeals affirmed, and found that in relation to contractor licensing:  1) an unlicensed sole proprietor contractor could not use the alter ego doctrine to allow it  to borrow another company’s license as that would be improper use of an equitable doctrine; and 2) there was no triable issue of fact on the issue of substantial compliance with the contractor’s state license laws.  The net result, the owner who paid the unlicensed contractor $751,955.00, now has a judgment to get reimbursed that amount from that unlicensed contractor.  This is a stark reminder to all California contractors, make sure your state contractor’s license is valid and in effect while you are performing construction work.

All Rights Reserved © 2012 by Michael L. Mau, Esq. & The Mau Law Firm

Neiman v. Leo A. Daly Co. affirms Completed and Accepted Doctrine in favor of an Architect

In Neiman v. Leo A. Daly Co., No. B234537, the Second District Court of Appeals ruled on plaintiff’s personal injury action against an architect for sustaining injuries after falling on the stairs at a theater on a community college campus, that was designed by the architect.  The appellate court affirmed the trial court’s summary judgment in favor of the architect.  The Court held that 1) once work has been completed and accepted by the owner, the contractor is not liable to third parties for patent defects; and 2) the defendant met its burden on summary judgment of establishing the affirmative defense of the completed and accepted doctrine.

Under the completed and accepted doctrine, once work as been completed and accepted by the owner, the contractor is not liable to third parties for patent defects.  In this action, the plaintiff did not allege that the architect was negligent in preparing the plans and specifications, but instead claimed the architect was  negligent in failing to see and notify the owner and contractor that the contrast marking stripes required by the plans for the theatre and by the California Building Code, were not placed on a set of stairs.  In this instance, the completed and accepted doctrine was extended from the benefit to a contractor who actually builds a project, to an architect who did no actual construction but instead designed and oversaw the project.

All Rights Reserved © 2012 by Michael L. Mau, Esq. & The Mau Law Firm

New Law can limit Depositions to 7 hours.

Beginning January 1, 2013, depositions in California state court proceedings (with specifically enumerated exceptions) will be limited to 7 hours.  On September 17, 2012, Governor Brown signed Assembly Bill No. 1875, which  amended the Code of Civil Procedure (CCP) to be analogous with the 7-hour limit in Rule 30 of the Federal Rules of Civil Procedure (FRCP).  AB 1875 was backed by the Consumer Attorneys of California (CAOC), which claimed that the new law would reduce litigation costs for everyone.  The new deposition rule will be codified as CCP section 2025.290.

While many litigators concede that the 7-hour limit makes sense, many others will argue that the new restriction takes an important weapon out of the adversarial litigation process.  Under the new law, there are enumerated exceptions from the 7-hour deposition rule, including both the type of case (designated complex cases and employment cases) and the kind of witness (expert witnesses and designated persons most qualified) involved.  The new 7-hour limit appears to apply primarily to individual party witnesses, as opposed to persons most knowledgeable depositions for example.  Additionally, the Court could order a case exempted from this restriction as well.  Although the time limit on depositions in California state court proceedings will now more closely conform with the federal court cases, it will take some time before state court litigators become accustomed to the new rule and the impact it could have on their civil cases.

All Rights Reserved © 2012 by Michael L. Mau, Esq. & The Mau Law Firm

Ragland v. U.S. Bank case could assist a Foreclosed Homeowner

In Ragland v. U.S. Bank Nat’l Ass’n (Case No. G045580), the Fourth District Court of Appeals ruled in a homeowner’s suit against various banking entities, both reversing and affirming the trial court’s grant of summary judgment which had been fully in favor of the bank defendants.  This allows the plaintiff homeowner’s case to continue at the trial level.  The Court of Appeals reversed, as plaintiff had produced evidence creating triable issues of fact as to whether the loan company induced her to miss a loan payment, thereby wrongfully placing her loan in foreclosure, and whether she suffered damages as a result; but affirmed as to summary adjudication of the causes of action for breach of oral contract, negligent infliction of emotional distress, and the claim for rescission, because plaintiff was no longer pursuing those claims.

An interesting aspect of the case, was the Court of Appeals deciding that Civil Code 2924g(d) does create a private right of action and is not preempted by federal law, citing the  reasoning of Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry) approvingly.  The court in Mabry, supra, 185 Cal.App.4th at page 214, concluded Civil Code section 2923.5 may be enforced by private right of action and this court agreed. Section 2923.5 requires a lender to contact the borrower in person or by telephone before a notice of default may be filed to “‘assess’” the borrower’s financial situation and “‘explore’” options to prevent foreclosure. (Mabry, supra, at pp. 213-214.) Section 2923.5, does not  expressly create a private right of action, but implicitly created one because there was no administrative mechanism to enforce the statute.  Further, a private remedy furthered the purpose of the statute and was necessary for it to be effective.  Since there is no administrative mechanism to enforce section 2924g(d), a private remedy is necessary to make it effective.

The court also allowed a claim for intentional infliction of emotional distress to go forward at the trial level, to allow plaintiff the opportunity to prove that the bank’s conduct was so outrageous and caused severe emotional distress by selling her home in a foreclosure sale.  The decision does not mean the cause of action is absolutely valid, but just gives the plaintiff the opportunity to prove her case on this point at trial.

All Rights Reserved © 2012 by Michael L. Mau, Esq. & The Mau Law Firm