Insurer Must Defend Contractor Against Claims of Faulty Workmanship
May 30, 2018 —
Tred R. Eyerly - Insurance Law HawaiiThe magistrate judge recommended that the insurer's motion for summary judgment seeking to determine there was no coverage for claims of faulty workmanship be denied. Greystone Multi-Family Builders v. Gemini Ins. Co., 2018 U.S. Dist. LEXIS 56770 (S.D. Tex. Feb. 26, 2018).
TPG (Post Oak) purchased an OCIP policy to cover construction of an apartment complex. TPG was sued by the contractor, Greystone, after TPG cancelled the construction contract. TPG filed a counterclaim against the contractor, alleging that Greystone had failed to properly perform in building a luxury apartment complex which resulted in monetary damages to TPG. The complaint further alleged that the project was nine months behind its substantial completion date, far from complete, and over budget when TPG cancelled the contract. The cost to fix the mismanagement caused by Greystone was $18.9 million.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Start-up to Streamline Large-Scale Energy Renovation
August 07, 2018 —
Aarni Heiskanen - AEC BusinessAn app from software provider GenieBelt will facilitate communications and strengthen cooperation when DGI-Byen, a 30,000 m2 business and leisure center in central Copenhagen, undergoes a large-scale energy renovation. SustainSolutions CEO Christian Niepoort expects that the tool will contribute to quality, safety, and time and cost savings.
Electricians, carpenters, painters, masons, consultants, and architects; the more parties are involved, the more difficult it becomes to stick to the schedule when coordinating a whole host of supplier and contractor activities.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
Will a Notice of Non-Responsibility Prevent Enforcement of a California Mechanics Lien?
March 05, 2015 —
William L. Porter – Porter Law Group, Inc.The “Notice of Non-Responsibility” is one of the most misunderstood and ineffectively used of all the legal tools available to property owners in California construction law. As a result, in most cases the answer to the above question is “No”, the posting and recording of a Notice of Completion will not prevent enforcement of a California Mechanics Lien.
The mechanics lien is a tool used by a claimant who has not been paid for performing work or supplying materials to a construction project. It provides the claimant the right to encumber the property where the work was performed and thereafter sell the property in order to obtain payment for the work or materials, even though the claimant had no contract directly with the property owner. When properly used, a Notice of Non-Responsibility will render a mechanics lien unenforceable against the property where the construction work was performed. By derailing the mechanics lien the owner protects his property from a mechanics lien foreclosure sale. Unfortunately, owners often misunderstand when they can and cannot effectively use a Notice of Non-Responsibility. As a result, the Notice of Non-Responsibility is usually ineffective in protecting the owner and his property.
The rules for the use of the Notice of Non-Responsibility are found in California Civil Code section 8444. Deceptively simple, the rules essentially state that an owner “that did not contract for the work of improvement”, within 10 days after the owner first “has knowledge of the work of improvement”, may fill out the necessary legal form for a Notice of Non-Responsibility and post that form at the worksite and record it with the local County Recorder in order to prevent enforcement of a later mechanics lien on the property.
What commonly occurs however is that early in the process the owner authorizes or even requires its tenant to perform beneficial tenant improvements on the property. This authorization is often set forth in a tenant lease or other written document. The dispositive factor for determining whether the Notice of Non-Responsibility will be enforceable though is that the owner knows that these improvements will be made to the property and intends that they be made, usually long before the work begins. Indeed, the owner has usually negotiated these very terms into the lease contract. The owner then mistakenly believes that once work on the property commences it has 10 days to post and record a Notice of Non-Responsibility and thereby protect itself from a mechanics lien.
The usual error is two-fold. First, the statute states that the Notice is available when the owner “did not contract for the work of improvement”. The fact though is that the owner did contract for the work of improvement. It did so through the lease contract. This is true even though the owner’s contract was not with the contractor or supplier directly. Secondly, the 10 day period to post and record the Notice begins when the owner first “has knowledge” of the work of improvement. This knowledge was of course gained when the lease was negotiated and signed, providing knowledge typically many days before the work has begun. Thus, the 10 day period can also seldom be met. The Notice of Non-Responsibility will therefore fail both rules because the owner has in fact contracted for the improvement and because he does not act within 10 days of gaining this knowledge.
The next event in the typical scenario occurs when the tenant does not pay its contractor. The contractor then has nothing to pay its subcontractors. Material suppliers also go unpaid. Mechanics liens are then recorded by the unpaid claimants, followed by foreclosure actions within ninety days thereafter. Owners will typically point to the Notice of Non-Responsibility they posted and recorded, claiming its protection. Claimants then in turn point to the lease or other evidence that the owner knew of the pending improvements and contracted in some way that the improvements be performed, often also more than 10 days before they posted the Notice. Judges generally agree with the unpaid mechanics lien claimants and the Notice of Non-Responsibility is deemed ineffective.
The fact that the Court does not enforce the Notice of Non-Responsibility under these circumstances is not an unfair result. Since the owner authorized the work to be performed and it received a substantial benefit in the form of those improvements, it is not unfair that the owner should pay for those benefits. It would be inequitable for the owner to obtain the benefit of the improvements which it authorized but for which it did not pay, while allowing those who provided the benefit to go unpaid. Moreover, without such a system in place the door would be open to owners setting up sham “tenants” who would enter into contracts to have work performed, only to disappear when the work is completed, leaving the contractor without a source of payment. The system in place as described above prevents such duplicity. Owners would do well to arm themselves with proper knowledge of when the Notice of Non-Responsibility will and will not protect them and then responsibly use the Notice of Non-Responsibility.
For the legal eagles among you, the following cases illustrate the view of the courts, consistent with the above: Baker v. Hubbard (1980) 101 Cal.App.3d 226; Ott Hardware v. Yost (1945) 69 Cal. App.2d 593 (lease terms); Los Banos Gravel Co. v. Freeman (1976) 58 Cal.App.3d 785 (common interest); Howard S. Wright Construction Co. v. Superior Court (2003); 106 Cal.App.4th 314 (participating owner).
William L. Porter of
Porter Law Group, Inc. located in Sacramento, California may be contacted at (916) 381-7868 or bporter@porterlaw.com
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The Law Clinic Paves Way to the Digitalization of Built Environment Processes
February 11, 2019 —
Aarni Heiskanen - AEC BusinessThe Law Clinic offers legal advice on digitalization to built environment innovators and experimenters and in the process helps lawmakers find the pain points in legislation.
In April 2018 the Finnish Ministry of the Environment launched an experimental legal service for real estate and construction professionals, municipalities, and lawmakers.
The cost-free service is like a helpdesk for anyone who has questions about real estate and construction laws and regulations and their interpretation as it applies to new digital processes. The Law Clinic is part of the national KIRA-digi project, which includes 138 experiments, many of which need legal advice for their execution.
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Aarni Heiskanen, AEC BusinessMr. Heiskanen may be contacted at
aec-business@aepartners.fi
That’s Common Knowledge! Failure to Designate an Expert Witness in a Professional Negligence Case is Not Fatal Where “Common Knowledge” Exception Applies
June 03, 2019 —
Lyndsey Torp - Snell & Wilmer Real Estate Litigation BlogIn reversing summary judgment for defendants, the California Fourth District Court of Appeal recently held that homeowners suing their real estate broker for negligence did not need an expert witness to establish the elements of their causes of action. Ryan v. Real Estate of the Pacific, Inc. (2019) 32 Cal. App. 5th 637. Typically, expert witnesses are required to establish the standard of care in professional negligence cases. But in Ryan, the court of appeal held that the “common knowledge” exception applied despite this general rule, because the conduct required by the particular circumstance of the case was within the common knowledge of a layman. The conduct in question here? The broker’s failure to disclose to his client that the client’s neighbor told him that she planned extensive renovations that would obstruct the client’s property’s ocean views.
Ryan and Patricia Ryan (the Ryans) hired defendant Real Estate of the Pacific, Inc., doing business as Pacific Sotheby’s International Realty (Sotheby’s) and defendant real estate broker to sell their residence in La Jolla, California. During an open house at the residence, a neighbor informed the Ryan’s real estate broker that she planned extensive renovations at her home that would, among other things, permanently obstruct the Ryan’s westerly ocean views and take several years to complete. The real estate broker never informed the Ryans of this, nor the subsequent buyer. The subsequent buyer purchased the property for $3.86 million, and defendants received $96,500 as commission for the sale. The day after escrow closed, the buyers learned of the renovations, and sought to rescind the purchase. Based on advice of defendants, the Ryans refused, and the dispute proceeded to arbitration. The buyer obtained a rescission of the purchase, with the Ryans order to pay damages, interest, and attorneys’ fees and costs in excess of $1 million. The Ryans then sued Sotheby’s and the real estate broker to recover these amounts and damages caused by defendants’ alleged negligence.
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Lyndsey Torp, Snell & WilmerMs. Torp may be contacted at
ltorp@swlaw.com
Haight Brown & Bonesteel Attorneys Named Super Lawyers in 2016
February 16, 2016 —
Haight Brown & Bonesteel LLPHaight is pleased to announce that the following lawyers have been named 2016 California Super Lawyers ®:
William G. Baumgaertner
Bruce Cleeland
Peter A. Dubrawski
Angela S. Haskins
Michael J. Leahy
Michael C. Parme
Jennifer K. Saunders
Additionally, Gregory M. Smith has been named a 2016 Super Lawyers ® Rising Star. Super Lawyers ® is a rating service of outstanding lawyers who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations.
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Haight Brown & Bonesteel LLP
Implementation of CA Building Energy Efficiency Standards Delayed
February 25, 2014 —
Beverley BevenFlorez-CDJ STAFFIn his California Construction Law blog, Garret Murai published the recent Industry Bulletin released by the California Contractors State License Board (CSLB) regarding the delayed implementation of the California Building Energy Standards. CSLB has delayed implementation from January 1st, 2014 to July 1, 2014 due to “unanticipated delays in developing complete performance compliance software for 2013 Public Domain Residential and Nonresidential California Building Energy Code Compliance guidelines, necessitating the CEC action to change the effective date of energy related provisions.”
The Industry Bulletin summarized changes regarding various codes including 2013 California Energy Code, Part 6; 2013 California Administrative Code, Chapter 10, Part 1; and, 2013 CALGreen, Part 11. According to the bulletin, as reported by the California Construction Law blog, “Contractors are encouraged to contact their local building enforcement agencies for assistance and/or clarification.”
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World’s Biggest Crane Gets to Work at British Nuclear Plant
October 07, 2019 —
Jeremy Hodges - BloombergThe world’s largest crane is getting ready to hoist more than 700 of the heaviest pieces of the first new nuclear plant being built in Britain in decades.
The machine, affectionately known as “Big Carl” after an executive at Belgian owner Sarens NV, is in place at Electricite de France SA’s 19.6 billion-pound ($24.1 billion) Hinkley Point C project in southwest England. It can carry as much as 5,000 tons, or the same weight as 1,600 cars, in a single lift and arrived on 280 truck loads from Belgium. It has taken about three months to build.
Nuclear power makes up about a fifth of Britain’s electricity. Most of those plants are near the end of their lives and will close in the next decade. Replacing them won’t be easy—as the scale of the project shows.
Earlier this year, EDF poured 9,000 cubic meters of cement, the biggest single biggest pour of concrete ever recorded in Britain. It was reinforced by 5,000 tons of steel built into a nest 4 meters high that’ll serve as the base of the first new reactor in the U.K. since 1995.
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Jeremy Hodges, Bloomberg
