Did the Court of Appeals Just Raise the Bar for California Contractors to Self-Report Construction-Related Judgments?
June 10, 2015 —
Garret Murai – California Construction Law BlogAn interesting construction case just came out from the California Court of Appeals for the Second District this past month – Pacific Caisson & Shoring, Inc. v. Bernards Bros., Inc., California Court of Appeals for the Second District, Case No. B248320 (May 19, 2015) – which discusses a number of intertwining issues that can be faced by contractors in California and concludes with a result that I’m not sure I quite agree with.
Among the issues discussed by the Court of Appeal were:
- The application of the dreaded Business and Professions Code section 7031 which: (1) precludes a contractor from making a claim for payment for work performed; and (2) requires a contractor to disgorge all monies received for work performed, if the contractor was not properly licensed at all times that work was performed;
- The impact of an unsatisfied judgment against one contractor on the license of another “related” contractor; and
- Whether a stipulated judgment providing for payments over time is an unsatisfied final judgment under the Licensing Law.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Tariffs, Supply Snarls Spur Search for Factories Closer to U.S.
February 21, 2022 —
Laura Curtis - BloombergSmall businesses looking for a factory that can make some stylish orthopedic shoes, chairs or construction materials may have an easier time finding a closer-to-home alternative to waiting for the supply-chain snarl in the Pacific Ocean to work itself out.
Zipfox, an online platform that links businesses up with factories in Mexico, launched this week, enabling near-shoring of production and the chance to get goods into the U.S. more quickly than if businesses were sourcing from manufacturing hubs in China.
“People are feeling the pain from sourcing from China right now but they aren’t really aware of the manufacturing capability and capacity that Mexico already has,” Zipfox founder Raine Mahdi said Tuesday.
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Laura Curtis, Bloomberg
Court Rules in Favor of Treasure Island Developers in Environmental Case
July 09, 2014 —
Beverley BevenFlorez-CDJ STAFFA California court ruled that the Environmental Impact Report (EIR) that had been approved by the city of San Francisco was adequate for the proposed 8,000-home development on Treasure Island, according to the San Francisco Business Times.
The suit had been brought by Citizens for a Sustainable Treasure Island back in 2011. However, in December of 2012, “a lower court affirmed the EIR and the citizens’ group appealed that decision.”
The project was proposed by partners Lennar Corp. and Wilson Meany. The development would “add thousands of new housing units along with retail, hotel and office space in addition to renovating historic buildings and creating 300 acres of open space.”
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COVID-19 Impacts on Subcontractor Default Insurance and Ripple Effects
April 20, 2020 —
Smith CurrieSubcontractor default insurance (“SDI”) may be described as an alternative to bonding subcontractors. SDI is first-party insurance that compensates the general contractor insured in the event a covered subcontractor fails to fulfill its contractual obligations. Under SDI policies, general contractor insureds are obligated to develop and implement rigorous subcontractor prequalification procedures.
Basic questions and answers about how SDI might come into play and impact the construction industry in response to COVID-19 follow:
Who may make a claim on an SDI policy?
The general contractor may make a claim. An Owner may make a claim if the general contractor becomes insolvent in many cases. Subcontractors may not make claims on SDI policies.
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Smith CurrieThe Smith Currie firm may be contacted at
info@smithcurrie.com
A Homeowner’s Subsequent Action is Barred as a Matter of Law by way of a Prior “Right to Repair Act” Claim Resolved by Cash Settlement for Waiver of all Known or Unknown Claims
February 26, 2015 —
Richard H. Glucksman, Esq., Jon A. Turigliatto, Esq., and David A. Napper, Esq. – Chapman Glucksman Dean Roeb & Barger BulletinDavid Belasco v. Gary Loren Wells et al. (2015) B254525
OVERVIEW
In a decision published on February 17, 2015, the Second District Court of Appeal made clear that settlement agreements containing waivers of unknown claims in connection with a construction of a property, absent fraud or misrepresentation, will be upheld. In brief, the homeowner plaintiff had made a claim against the builder pursuant to California Code of Civil Procedure Section 896 (“Right to Repair”) and settled for a cash payment and obtained a Release of all Claims including for all known and unknown claims. The court held that homeowner’s subsequent construction defect claim was barred pursuant to the terms and conditions of the earlier release.
DISCUSSION
Plaintiff and Appellant, David Belasco ("Belasco"), purchased a newly construction home in Manhattan Beach from builder Gary Loren Wells ("Wells"). Two years after purchasing the property, Belasco filed a Complaint for construction defects, which eventually resulted in settlement between the parties. The settlement agreement included a California Civil Code Section 1524 waiver of all known or unknown claims with the word "claims" defined in part as “any and all known and unknown construction defects." Six years later in 2012, Belasco filed a Complaint alleging a claim, amongst others, that the defective and leaky roof breached the statutory warranty on new construction under California Civil Code section 896 ("Right to Repair Act").
Relying on San Diego Hospice v. County of San Diego (1995) 31 Cal.App.4th 1048, Wells and Wells' surety, American Contractors Indemnity Company (collectively "Wells"), filed a motion for summary judgment contending that the 2012 action was barred by the settlement of Belasco’s prior Complaint against Wells for construction defects to his home. When the trial court ruled in favor of Wells, Belasco appealed. Belasco, a patent attorney, made the following contentions:(1) the general release and section 1542 wavier in the settlement agreement for patent construction defects is not a "reasonable release" of a subsequent claim for latent construction defects within the meaning of section 929 and the “Right to Repair” Act; (2) a reasonable release can only apply to a "particular violation" and not to a latest defect under the language of section945.5, subdivision (f), and the settlement was too vague to be valid because it does not reference a "particular violation;" (3) section 932 of the California Civil Code specifically authorizes an action on "[s]subsequently discovered claims of unmet standards;" (4) public policy prohibits use of a general release and section 1542 waiver to bar a subsequent claim for latent residential construction defects; and (5) a genuine issue of material fact exists concerning Belasco's fraud and negligence claims that would have voided the settlement pursuant to section 1668.
Pursuant to the "Right to Repair Act" Section 929 subsection (a), a builder can make a cash offer in lieu of a repair and the homeowner is free to accept or reject such offer. Section 929subsection (b) goes on to state that
"[t]he builder may obtain a reasonable release in exchange for the cash payment. The builder may negotiate the terms and conditions of any reasonable release in terms of scope and consideration in conjunction with a cash payment under this chapter."
The Second District Court of Appeal ruled that the prior cash settlement, with a release and section 1524 wavier, was a "reasonable release" under the language of California Civil Code Section 929.
On multiple occasions, the Court noted that Belasco is an attorney and was represented by an attorney during the negotiation of the settlement agreement. By executing the agreement with express language regarding what claims were to be release, Belasco released Wells of "any and all claims" due to "any and all known and unknown construction defects." The Court reasoned that because Belasco is an attorney in his own right, he should have understood the import of the Section 1542 waiver and had the opportunity to reject or revise the settlement agreement prior to binding himself to it. The Court further found that the agreement "could not have been more clear" regarding the waiver of all unknown and known construction defect claims and therefore was not vague. Belasco's additional contentions were found to be without merit because Belasco availed himself of the statutory remedy of a cash settlement in lieu of repairs and voluntarily entered into a negotiated settlement agreement. Lastly, Belasco failed to present any evidence regarding his misrepresentation claim.
When a homeowner files a "Right to Repair Act" claim, often it seems that only two options exist: either repair the alleged defects or go to court. However, Belasco is a reminder to builders that the "Right to Repair Act" does offer an avenue for settlement. The Second District Court of Appeal presented a clear, unqualified opinion regarding the validity and enforceability of settlement agreements releasing all known or unknown construction defects in a single family home case. The Court will hold parties to the settlements they agree to. This is especially so when one of the parties is an attorney and provides deposition testimony expressly acknowledging that he understood the scope of the agreement. Attorneys for builders should always include a waiver of all known and unknown claims, which pursuant to Belasco and San Diego Hospice, will ensure that any future claims at the property will be effectively barred by the terms of the settlement agreement.
Reprinted courtesy of Chapman Glucksman Dean Roeb & Barger attorneys
Richard H. Glucksman,
Jon A. Turigliatto and
David A. Napper
Mr. Glucksman may be contacted at rglucksman@cgdrblaw.com
Mr. Turigliatto may be contacted at jturigliatto@cgdrblaw.com
Mr. Napper may be contacted at dnapper@cgdrblaw.com
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Time to Repair Nevada’s Construction Defect Laws?
February 10, 2012 —
CDJ STAFFThe Builders Magazine writes that during the previous session of the Nevada legislature, reforms sought by the building industry were stopped by the Speaker of the Nevada Assembly. The new session brings a new speaker and new hope for construction defect reform in Nevada.
Pat Hickey, a member of the Assembly and a small business owner told The Builders Magazine that “we need to apply pressure on the legislators to fix the law.” He also recommended that people “go to Governor Sandoval and ask for his help.” Builders seeks legislation that will include right to repair and it should “define construction defect in such a way that it allows for a fair process.”
Read the full story…
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Bert L. Howe & Associates to Join All-Star Panel at West Coast Casualty Seminar
March 26, 2014 —
Beverley BevenFlorez-CDJ STAFFDon MacGregor of Bert L. Howe & Associates, a consulting firm, will join fellow panelists Hon. Peter Lichtman (ret), Hon. Nancy Wieben Stock (ret), Peter S. Curry, Brian Kahn, Esq., and Paul R. Kiesel, Esq in a break-out discussion entitled “Working Smarter with Technology” at this year’s West Coast Casualty Construction Defect Seminar being held May 15th-16th at the world-famous Disneyland Hotel in Anaheim, California.
West Coast Casualty's Construction Defect Seminar is the largest seminar of its kind worldwide focusing on all of the elements of the prosecution, defense, coverage and technologies of construction defect claims and litigation from a national perspective.
With offices in California, Nevada, Colorado, Florida and Texas (Houston & San Antonio), Bert L. Howe & Associates provides construction consulting and expert witness services to insurance professionals and lawyers specializing in construction defect litigation, construction risk analysis, and property claims arising from construction-related activities.
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Is Performance Bond Liable for Delay Damages?
October 20, 2016 —
David Adelstein – Florida Construction Legal UpdatesThere is an argument that a performance bond is not liable for delay damages UNLESS the bond specifically allows for the recovery of such damages. Keep this in mind when requiring a performance bond so that the bond covers the associated risks (and damages) you contemplate when requiring the bond. This argument is supported by the Florida Supreme Court’s 1992 decision in American Home Assur. Co. v. Larkin General Hosp., Ltd., 593 So.2d 195, 198 (Fla. 1992):
The language in the performance bond, construed together with the purpose of the bond, clearly explains that the performance bond merely guaranteed the completion of the construction contract and nothing more. Upon default, the terms of the performance bond required American [performance bond surety] to step in and either complete construction or pay Larkin [obligee] the reasonable costs of completion. Because the terms of the performance bond control the liability of the surety, American’s liability will not be extended beyond the terms of the performance bond. Therefore, American cannot be held liable for delay damages.
However, the Eleventh Circuit in National Fire Ins. Co. of Hartford v. Fortune Const. Co., 320 F.3d 1260(11th Cir. 2003), also analyzing an issue relating to the recoverability of delay-type damages against a performance bond, did not narrowly interpret the Florida Supreme Court’s decision in Larkin General Hospital.
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David Adelstein, Katz, Barron, Squitero, Faust, Friedberg, English & Allen, P.A.Mr. Adelstein may be contacted at
dma@katzbarron.com
