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Posts Tagged ‘Construction Law’

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

December 17, 2012 Leave a comment

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

November 12, 2012 Leave a comment

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

November 1, 2012 Leave a comment

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

Charter City can be Exempt from State Prevailing Wage Laws

July 5, 2012 Leave a comment

State Building and Construction Trades Council of CA v. City of Vista was just decided by the California Supreme Court [No. S173586. July 2, 2012.].  This was a dispute involving contracts for the construction of public buildings by a charter city using only local funds, in which their contract did not require compliance with the state Prevailing Wage Laws.  Judgment for the City was granted by the Trial Court, Court of Appeals and now the California Supreme Court, and was affirmed where under California Constitution, art. XI, section 5, the wage matter is a “municipal affair” and therefore governed by its local ordinances.

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

Brannan v. Lathrop cites the Privette-Toland Doctrine

June 13, 2012 Leave a comment

Brannan v. Lathrop Construction Associates, Inc. was just decided ([No. A129695. First Dist., Div. One; May 21, 2012), affirming summary judgment in favor of a general contractor against a claim from an injured worker.  The injured worked was not hired by the general contractor, but was instead hired by a subcontractor.  The Appellate Court cited the Privette-Toland doctrine as outlined recently by the California Supreme Court, which states that: “Generally, when employees of independent contractors are injured in the workplace, they cannot sue the party that hired the contractor to do the work. . . .”  As an employee of a subcontractor, the employee was already covered by the worker’s compensation insurance scheme; he then tried unsuccessfully to pursue a separate tort claim against the general contractor without being able to show that the general contractor affirmatively contributed to his injury.

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

School District Found Responsible for Extra Work Costs

April 13, 2012 Leave a comment

G. Voskanian Construction, Inc. v. Alhambra Unified School District, No. B221005 \

In a recent case of G. Voskanian Construction, Inc. v. Alhambra Unified School District (2012) (B221005), the second district Court of Appeals affirmed a ruling in favor of a general contractor seeking to be paid for extra work performed.  This was a suit by Voskanian Construction as  general contractor to recover for extra work it performed on two public works contracts.  The trial court’s judgment in favor of the contractor was affirmed, where: 1) as to one contract, the defendant school district eventually issued written change orders authorizing the extra work; 2) as to another contract, the contractor’s bid was based on misleading plans and specifications issued by the district; and 3) the trial court correctly determined that the contractor and the performance bond issuer were entitled to recover attorney’s fees pursuant to the performance bonds.  This last point is of interest, as apparently the prime contract actually did not have an attorney’s fee provision.  However, because the district filed a cross-complaint against the contractor and its surety under Performance Bonds, and lost, the Court found the contractor and surety were then entitled to recover attorney’s fees as a prevailing party under the terms of the bond itself and related code provisions.

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

Templo v. Gardner Construction Enforces Arbitration Clause from a Construction Contract

August 22, 2011 Leave a comment

In Templo Calvario Spanish Assembly of God v. Gardner Construction Corp. (2011) ([No. F060838. Fifth Dist. Aug. 16, 2011.] the Court of Appeals enforced an arbitration clause from an interesting factual background. This was a contract dispute involving the enforceability of an arbitration provision contained in a construction contract, where the contractor was unlicensed. So the question was whether the contract, and thus arbitration clause in that contract, were automatically void? The trial court had vacated the arbitration award finding that the construction contract with an unlicensed contractor was automatically void. However. the Court of Appeals reversed this decision. The Appellate Court held that under the case precedent of MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, the construction contract was not automatically void just because the contractor was unlicensed. Instead, it confirmed that the Contractors State License Laws still bars suit to collect compensation for unlicensed work.

All Rights Reserved © 2011 by Michael L. Mau, Esq. & The Mau Law Firm

Hensel Phelps v. San Diego interprets what is a Public Work for the Application of Prevailing Wages.

August 2, 2011 2 comments

In Hensel Phelps Construction Co. v. San Diego Unified Port Dist. (2011) (Cal.App.4th) Case No. D057277, the Fourth District Court of Appeals analyzed the meaning of a public work of construction for a semi-private development built on land leased from a public entity.

This was a labor dispute involving the scope of Section 1771 of the State’s prevailing wage law (PWL), Lab. Code section 1720 et seq., where judgment of the trial court granting a petition for a writ of mandate was reversed. The court held that where: 1) a hotel construction project on land that the defendant leases to a private party qualifies as public work within the meaning of the PWL; 2) construction was done under a contract that was paid for in whole or in part out of public funds; and 3) the lease specifies that the defendant will provide a rent credit during the first 11 years of the lease such that the rent credit was deemed to be the equivalent of public funding that helped pay for the construction. The net result, was that prevailing wages should have been paid on this project as a public work.

All Rights Reserved © 2011 by Michael L. Mau, Esq. & The Mau Law Firm

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