Real Estate & Construction News Roundup (10/11/23) – Millennials Struggle Finding Homes, Additional CHIPS Act Funding Available, and the Supreme Court Takes up Hotel Lawsuit Case
November 16, 2023 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn our latest roundup, EV charging stations become more prevalent at commercial locations, home ownership becomes more difficult for younger Americans, Macy’s announces plans to build additional stores within strip malls, and more!
- Due to several factors including overpriced housing and student debt, millennials will not have the same level of home ownership as previous generations. (Jordan Rosenfeld, Yahoo)
- With the U.S. being short about 3.8 million housing units according Freddie Mac, 3-D printing may prove to be the answer while also being cost effective and environmentally friendly. (Lesley Stahl, Aliza Chasan, Shari Finkelstein and Collette Richards, CBS)
- The Department Commerce of announced a new initiative to funnel $500 million in CHIPS Act funding to projects with capital investments below $300 million that support the construction, expansion or modernization of semiconductor-related facilities in the U.S. (Sebastian Obando, Construction Dive)
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Best Lawyers Honors 48 Lewis Brisbois Attorneys, Recognizes Four Partners as 'Lawyers of the Year'
August 30, 2021 —
Lewis BrisboisBest Lawyers has selected 48 Lewis Brisbois attorneys across 27 offices for inclusion in its list of 2022 Best Lawyers in America. It has also recognized four Lewis Brisbois partners as "Lawyers of the Year": Cleveland/Akron Partner John F. Hill (Bet-the-Company Litigation); San Diego Partner Marilyn R. Moriarty (Medical Malpractice Law - Defendants); Portland Managing Partner Eric J. Neiman (Medical Malpractice Law - Defendants); and Sacramento Partner Eric J. Stiff (Corporate Law).
Please join us in congratulating these four partners and the following attorneys on their Best Lawyers recognition.
Seattle Partner Randy J. Aliment: Commercial Litigation
Reno Managing Partner Jack G. Angaran: Insurance Law, Litigation - Construction, Litigation - Real Estate
Los Angeles Partner Brian G. Arnold: Litigation - Intellectual Property, Litigation - Patent
Los Angeles/Orange County Partner John L. Barber: Employment Law - Management, Litigation - Labor and Employment Read the court decision
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July Sees Big Drop in Home Sales
August 27, 2013 — CDJ STAFF
The Commerce Department reported a 13.9 percent drop in sale of new homes for July. Over the course of the last 12 months, home sales had risen 7 percent. According to economists, an annual rate of about 700,000 homes would be a sign of a healthy economy. The July sales fell well short of that, at an annual rate of 394,000. New home starts were also down.
Experts attribute the decline in sales and building to increases in mortgage rates, even though the rates remain historically low. Despite the slump in home sales in July, builder confidence rose to a high in August.
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Earthquake Hits Mid-Atlantic Region; No Immediate Damage Reports
November 30, 2017 — The Associated Press (Randall Chase) - Bloomberg
Dover, Del. (AP) -- An earthquake has jolted the Mid-Atlantic region of the East Coast, but there are no immediate reports of damage or injuries.
The U.S. Geological Survey says the 4.1 magnitude quake struck just after 4:45 p.m. Thursday, and was centered about 6 miles (10 kilometers) east-northeast of Dover, Delaware. It was felt as far away as Baltimore. Read the court decision
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How Small Mistakes Can Have Serious Consequences Under California's Contractor Licensing Laws.
February 15, 2018 — Eric Reed - Myers, Widders, Gibson, Jones & Feingold, LLP
In construction, some risks have nothing to do with how well a contractor executes a project. Licensing problems is one of these risks. Even a brief lapse caused by an unintentional administrative error can give the CSLB grounds to discipline a contractor, or enable a customer to seek disgorgement and other remedies provided by Business and Professions Code section 7031. This article discusses five tips for mitigating the liabilities associated with licensing problems.
Tip 1: Take workers' compensation insurance very seriously. Workers’ compensation insurance problems can trigger license suspension in California. Business and Professions Code section 7125.4 calls for automatic suspension if a contractor cannot provide proof of workers’ compensation insurance for any period of time. This is particularly serious for residential remodelers who claim exemption for workers’ compensation but are later discovered – usually during litigation with a homeowner – to have “off the books” workers helping them. Courts can declare the contractor retroactively unlicensed under these circumstances and order it to disgorge, i.e., to pay back, every penny paid by the customer for the entire project (even for materials). (Bus. & Prof. Code, § 7031, subd. (b); Wright v. Issak (2007) 149 Cal.App.4th 1116.) The contractor will also find itself unable to collect any amounts owed to it by the customer. (Bus. & Prof. Code, § 7031, subd. (a).)
Tip 2: Watch out for licensing confusion after a merger or acquisition. The economic downturn of 2008 and 2009 resulted in consolidation throughout the building industry. The newly merged or acquired entities often allowed redundant licenses to expire, assuming they could complete all pending projects under the umbrella of the acquiring company's license. Many learned this was a mistake the hard way. Armed with the California Supreme Court's opinion in MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, customers began refusing to pay invoices and demanding disgorgement under Business and Professions Code section 7031 because the original contractor did not maintain licensure “at all times.” Many of these customers succeeded.
Tip 3: If a license suspension has occurred or is imminent, prepare to prove substantial compliance. Section 7031(a) and (b) give a disgruntled or indebted customer every incentive to capitalize on a contractor's licensing problems. Subdivision (e) is where a contractor must turn to protect its interests if this happens. It allows the contractor to prove “substantial compliance” with licensing requirements and avoid (a)’s and (b)’s sharp edges if it can show the following:
(1) The contractor “had been duly licensed as a contractor in this state prior to the performance of the act or contract”;
(2) It “acted reasonably and in good faith to maintain proper licensure”; and
(3) It “acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure.”
The Court of Appeal confirmed in Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal.App.4th 882 that a contractor, upon request, is entitled to a hearing on these three factors before it is subjected to disgorgement under Section 7031(b). The legislature amended Section 7031 shortly after the Court of Appeal published this case. The Assembly’s floor analysis went so far as to directly quote the opinion’s observation that penalizing a construction firm for “technical transgressions only indirectly serves the Contractors Law’s larger purpose of preventing the delivery of services by unqualified contractors.” (Assem. Com. on Bus. and Prof., Off. of Assem. Floor Analyses, analysis of Sen. Holden's No. 1793 (2015-2016 Reg. Sess.) as amended August 2, 2016, p. 2.) This echoed an industry consensus that clarifying the law was needed to ensure that properly licensed and law-abiding construction firms were not “placed at fatal monetary risk by malicious lawsuits motivated by personal gain rather than consumer protection.” (Assem. Com. on Judiciary, com. on Assem. Bill No. 1793 (2015-2016 Reg. Sess.), pp. 6-7.)
Unfortunately, existing law does not give many examples of what it means to act “reasonably and in good faith to maintain proper licensure” or to act “promptly and in good faith” to fix license problems. A practical approach is for a contractor to work backwards by assuming it will need to prove substantial compliance at some point in the future. Designated individuals within the organization should have clear responsibility over obtaining and renewing the proper licenses and should keep good records. If necessary, these designees can testify about the contractor's internal policies and their efforts to fix licensing problems when they arose. For example, if the suspension resulted from not providing the CSLB proof of workers’ compensation insurance, the designee can testify about the cause (a broker miscommunication, transmission error, etc.) and produce documents showing how he or she worked promptly to procure a certificate of insurance to send CSLB. Saved letters, emails, and notes from telephone calls will provide designees and their successors with an important resource months or years down the line if a dispute arises and the contractor is required to reconstruct the chronology of a licensing glitch and prove its due diligence.
Tip 4: Don't sign new contracts unless all necessary licenses are active and any problems are resolved. A recently-formed contractor should not begin soliciting and signing contracts until all required licenses are confirmed as “active.” The first requirement of substantial compliance – being “duly licensed as a contractor in this state prior to the performance of the act or contract” – cannot be met by a contractor that first obtains its license mid-project. (Bus. & Prof. Code, § 7031, subd. (e)(1); Alatriste v. Cesar’s Exterior Designs (2010) 183 Cal.App.4th 656.) A licensed contractor should also consider refraining from signing new contracts if there is any reason to believe its license might be suspended in the near future – especially if the suspension will be retroactive. Having a suspension on record at the time of contracting may complicate the question of whether the contractor was “duly licensed . . . prior to performance” for the purposes of substantial compliance.
Tip 5: Any judgment against a contractor can cause license suspension if not handled promptly and correctly. The Business and Professions Code authorizes the CSLB to suspend the license of a contractor that does not pay a construction related court judgment within 90 days. The term “construction related” is interpreted to include nearly all types of disputes involving a contractor. (16 Cal. Code Reg. 868; Pacific Caisson & Shoring, Inc. v. Bernards Bros. Inc. (2015) 236 Cal.App.4th 1246, 1254-1255.) This means a contractor should treat a judgment against it for unpaid office rent, for example, as one carrying the same consequences as one arising from a construction defect or subcontractor claim. The contractor should also not assume that filing an appeal, or agreeing with the other side to stay enforcement, automatically excuses the 90-day deadline in the eyes of the CSLB. It does not. A contractor must notify the CSLB in writing before this period expires, then post bond for the amount of judgment, if it wishes to delay payment for any reason. (Bus. & Prof. Code, § 7071.17, subd. (d).) A suspension may result if it does not. This applies even to small claims judgments.
Recent case law and the 2016 amendments to Business and Professions Code section 7031 provide some solace to those caught in the dragnet of California's licensing laws. But avoiding these problems altogether is preferable. Consider licensing the foundation of a successful business and deserving of the same attention as the structures a contractor builds.
Eric R. Reed is a business and insurance litigator in the Ventura office of Myers, Widders, Gibson, Jones & Feingold, LLP.
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Mr. Reed may be contacted at ereed@mwgjlaw.com
Recycling Our Cities, One Building at a Time
December 13, 2022 — Aaron Clark & Erica Yokoyama - Bloomberg
Takumi Osawa kneels on the narrow balcony of a wooden house outside Tokyo and describes how, 140 years ago, workers would have hoisted baskets of mulberry leaves to the second floor to feed silkworms. When they ate, it sounded like rain.
Known in Japan as minka, these locally crafted structures with characteristic pitched roofs were built for hundreds of years to accommodate farmers, artisans and merchants. This one was originally constructed in 1879 and housed a family on the first floor who tended silkworms on the second and third. Minka are typically designed like an interlocking puzzle, without nails or screws, which allowed Osawa and a team of craftsmen to take the building apart, move it about 90 kilometers (56 miles) east and reassemble it closer to Tokyo, where a couple now live in it.
The number of empty homes in Japan is rising as the population shrinks and younger generations gravitate toward the city. Government data suggests as many as 8 million houses, many built during a post-World War II construction boom that lasted into the 1980s, now lie unoccupied.
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California Insurance Commissioner Lacks Authority to Regulate Formula for Estimating Replacement Cost Value
April 15, 2015 — Valerie A. Moore and Christopher Kendrick – Haight Brown & Bonesteel LLP
In Assn. of Cal. Insurance Companies v. Jones ( No. B248622, filed 4/8/15), a California appeals court held that California’s Insurance Commissioner Dave Jones lacked the authority to promulgate California Code of Regulations, title 10, section 2695.183, which set out specific requirements for estimating replacement cost as part of any application or renewal for homeowners insurance.
The regulation was promulgated in 2010 in response to complaints from homeowners who lost their homes in the wildfires in Southern California in 2003, 2007, and 2008, and who discovered that they did not have enough insurance to cover the full cost of repairing or rebuilding their homes because the insurers’ estimates of replacement value were too low when they purchased the insurance.
Reprinted courtesy of Valerie A. Moore, Haight Brown & Bonesteel LLP and Christopher Kendrick, Haight Brown & Bonesteel LLP
Ms. Moore may be contacted at vmoore@hbblaw.com
Mr. Kendrick may be contacted at ckendrick@hbblaw.com
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A Survey of Trends and Perspectives in Construction Defect Decisions
November 27, 2013 — CDJ STAFF
Thomas F. Segella, Ellen H. Greiper, and Matthew S. Lerner, partners at the firm Goldberg Segalia, together with Suzin L. Raso, an associate of the firm, have prepared a wide-ranging survey of cases, in their commentary, “Emerging Trends and Changing Perspectives on Construction Defect Claims.
The authors examine 11 coverage cases, representing decisions from eight states, and 15 cases of litigation, here covering 11 states. In each case, they give a one-sentence summary, a further discussion of the case, and they end with a practice note.
They start with Alabama, noting that the court found that “faulty workmanship is not an occurrence,” looking at the recent case of Owners Insurance Co. v. Jim Carr Homebuilders, LLC. Here they note that under Alabama law, “there was no damage to personal property or property of others; therefore, there was no ‘occurrence.’” They also note that “the policy involved did not contain a ‘subcontractor exception.’”
In Georgia, they noted, the courts concluded that “damage to insured’s completed work is an ‘occurrence.’” Here they cite a recent decision of the Georgia Supreme Court, noting that the court looked at cases from Connecticut, South Carolina, Illinois, Texas, as well as the Fourth and Tenth Circuits.
Under litigation, they look at such aspects of construction defect litigation such as the application of the economic loss doctrine in Kansas and Florida, and how the courts view arbitration agreements in states including New Jersey, Louisiana, and Colorado.
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