How to Determine the Deadline for Recording a California Mechanics Lien
September 17, 2015 —
William L. Porter, Esq. – Porter Law Group BulletinThe California Mechanics Lien is one of the most valuable collection devices available to contractors, subcontractors and suppliers who are unpaid for work performed and materials supplied in relation to a California private works construction project. The mechanics lien allows the claimant to sell the property where the work was performed in order to obtain payment. As noted below, in order to pursue this remedy, certain deadlines must be met.
Know Your Mechanics Lien Filing Deadlines Generally
Working within deadlines is absolutely crucial to preserving mechanics lien rights under California law. The deadlines differ, depending on whether you are a ”direct” contractor, also known as “original” or “prime” contractor (one who contracts directly with the property owner) or a subcontractor or material supplier. The primary differences are that the direct contractor is only required to serve the “Preliminary Notice” on the Construction Lender (Civil Code section 8200-8216), whereas the subcontractor and material supplier must serve not only the Construction Lender, but also the Owner and Direct Contractor (see Civil Code section 8200(e)). Another difference is that a direct contractor has a longer period of time in which to record a mechanics lien after a valid “notice of completion” or a “notice of cessation” has been recorded (Civil Code sections 8180-8190), (60 days for original contractors as compared to 30 days for subcontractors and suppliers – See Civil Code sections 8412 and 8414).
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William L. Porter, The Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Impact of Lis Pendens on Unrecorded Interests / Liens
September 15, 2016 —
David Adelstein – Florida Construction Legal UpdatesIn a previous article, I discussed the importance of recording a lis pendens in a construction lien foreclosure action.
There is another noteworthy point relating to the impact of lis pendens that can provide quite a bit of consternation.
Florida Statute 48.23(1)(d) provides:
Except for the interest of persons in possession or easements of use, the recording of such notice of lis pendens, provided that during the pendency of the proceeding it has not expired pursuant to subsection (2) or been withdrawn or discharged, constitutes a bar to the enforcement against the property described in the notice of all interests and liens, including, but not limited to, federal tax liens and levies, unrecorded at the time of recording the notice unless the holder of any such unrecorded interest or lien intervenes in such proceedings within 30 days after the recording of the notice. If the holder of any such unrecorded interest or lien does not intervene in the proceedings and if such proceedings are prosecuted to a judicial sale of the property described in the notice, the property shall be forever discharged from all such unrecorded interests and liens. If the notice of lis pendens expires or is withdrawn or discharged, the expiration, withdrawal, or discharge of the notice does not affect the validity of any unrecorded interest or lien.
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David M. Adelstein, Kirwin NorrisMr. Adelstein may be contacted at
dma@kirwinnorris.com
Sixth Circuit Affirms Liability Insurer's Broad Duty to Defend and Binds Insurer to Judgment Against Landlord
September 07, 2020 —
Michael V. Pepe & Janie Reilly Eddy - Saxe Doernberger & VitaIn a victory for policyholders, the Sixth Circuit affirmed that a landlord’s insurer owed a duty to defend the landlord in a bodily injury claim arising out of a fire that killed three and injured one. The Court held that the insurer breached its duty to defend and was bound to the insured’s $3 million consented judgment.
Transition Investments LLC, an owner of three properties in the Detroit area, purchased a general liability insurance policy with Hamilton Specialty Insurance Company to insure its properties. At one of the properties, a faulty stove started a fire, destroying the building, injuring one person and killing three others. The estates of the deceased and the injured party sued Transition in Michigan state court. In their complaint, the plaintiffs contended that Transition failed to provide a habitable premise and neglected to maintain the property’s stove, which allegedly caused the fire. The plaintiffs argued that Transition’s negligent maintenance of the property led to the fire and the resulting injuries. Transition subsequently tendered the claim to Hamilton. Hamilton claimed that the insurance policy did not cover the fire’s damages and refused to participate in the state court litigation. Ultimately, Transitions entered into a consent judgment with the plaintiffs for $3 million.
Reprinted courtesy of
Michael V. Pepe, Saxe Doernberger & Vita and
Janie Reilly Eddy, Saxe Doernberger & Vita
Mr. Pepe may be contacted at mvp@sdvlaw.com
Ms. Eddy may be contacted at jre@sdvlaw.com
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Revisiting the CMO; Are We Overusing the Mediation Privilege?
November 19, 2021 —
Michael T. Kennedy Jr. - BERDING|WEILOne of the most common features in construction defect cases is the Case Management Order (“CMO”) or Pre-Trial Order (“PTO”) to govern pre-trial and mediation procedures. CMOs and PTOs arose in the days when the HOA would sue the developer, the developer would cross-complaint against the subcontractors, and each defendant and cross-defendant might have 2 or 3 insurance carriers defending, each of whom may retain their own panel counsel. In a large case there may have been 20 parties and 30 defense attorneys. In order to avoid the cost and chaos of all of those parties propounding their own discovery, and in order to prepare these cases for mediation well before trial and the associated costs, it became standard practice in California to include provisions in the CMO to stay all discovery until just before trial.
Plaintiff would provide a Defect List or Statement of Claims and the parties experts would meet and exchange information as part of the mediation process. All of the information exchanged would be subject to mediation privileges and inadmissible at trial. The benefit of this practice was that the parties (and carriers) would avoid the cost of formal discovery and allow the experts to discuss compromised scopes of repair to help settle the case while being able to take a more aggressive position at trial. The disadvantages are that each party uses its privileged initial expert reports to stake out negotiating positions more extreme than what they would put on at trial, with each side losing credibility with the other in assessing the value of the case, and for those cases that did not settle, the parties would be faced with having to do all of the depositions and discovery in the last 60 days, or delaying trial, or both.
Over the last 10 or 15 years with the advent of wrap-up insurance policies, these cases now usually involve 2 sides instead of 20; only the HOA and the developer remain in the case. However, old habits die hard, and the standard CMO/PTO hasn’t evolved with other aspects of these cases. The practice of staying all discovery and exchanging information only under mediation privileges remains, and as a result insurance carriers don’t receive the admissible evidence that they need to determine coverage and evaluate the real settlement value of the case until just before trial. On the plaintiff’s side, if most of the experts’ work is done under the guise of mediation privilege, those costs may not be recoverable. Outside the context of mediation, costs incurred in investigation of the defects and preparation of a scope and cost of repair are recoverable.
This reflexive claim of mediation privilege over all information exchanged during the case has outlived its usefulness. The CMO can and should remain to regulate formal discovery and to help the parties prepare for mediation, but regulated discovery should be opened early in the case. In California, the SB800 process already provides for the exchange of admissible information during the prelitigation right to repair process. Continuing that exchange during the early litigation allows the parties to continue to prepare for mediation, but waiving privileges had advantages for both sides.
A senior claims manager once commented that Plaintiff’s mediation-protected Statement of Claims “might as well be a stack of blank paper” for all of its usefulness to the carrier in assessing the value of the case. If the Plaintiff and it expects are free to inflate their claims early in the case without having to worry about every supporting those claims in front of a jury, they have little or no credibility. And if those claims are inflated or not “real,” not only can the carrier not properly assess the verdict range and settlement value of the case, but it may also be hampered in making a coverage determination. Simply put, if the exchange of real information through formal discovery is put off until just before trial, the defense cannot be ready to settle until then. Worse, the cost of defense goes through the roof in the last 60 days before trial as the lawyers’ scramble to take all of the depositions and to all of the other work that had been stayed for the previous year or two.
The Plaintiff is faced with the same question of credibility of defense experts where they are free to take a “low ball” negotiating position without having to support that position through cross-examination in front of the jury. Just as the carrier behind the defense attorney needs the Plaintiff’s “real” evidence to assess the claim, so does the HIOA Board of Directors behind the Plaintiff’s counsel. Additionally, in California as in most states, the cost of experts’ preparation for mediation may not be recoverable as costs or damages, but investigation of the defects and preparation of the scope and cost of repair is recoverable.
The biggest challenge is resolving construction defect claims for both sides is how to resolve these cases quickly while keeping costs under control. Practices that worked 20 years ago are no longer applicable with changes in insurance, and in light of some of the bad habits that arise when all of the information exchanged was confidential.
The CMO/PTO process can still be useful to regulate the discovery and mediation schedule given the volume of documents and other information to be exchanged but exchanging “real” information in a form that may come into evidence at trial should foster earlier resolution, resulting in cost savings for the parties. The CMO can provide for the parties to respond to controlled discovery, and the exchange of expert reports and potentially depositions can and should be done earlier in the case, well before the eve of trial. The parties can then assess the true value of each case and prepare for more substantive mediation without waiting until they are on the figurative courthouse steps.
Construction defect cases have a pattern, and it is tempting for busy lawyers to just put each case through the same algorithms that they have used for years. However, these cases have evolved and those of us handling these cases need to reevaluate our approach to these cases. Taking aggressive negotiating positions that no longer have any credibility with the other side has become counterproductive, and the exchange of real evidence earlier in the case would better serve our clients and carriers.
BERDING|WEIL is the largest and most experienced construction defect and common interest development law firm in California. For more information, please visit https://www.berding-weil.com
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Michael T. Kennedy Jr., BERDING|WEILMr. Kennedy may be contacted at
mkennedy@berdingweil.com
Five New Laws to Know Before They Take Effect On Jan. 1, 2022
December 27, 2021 —
Amy R. Patton & Blake A. Dillion - Payne & FearsGov. Gavin Newsom closed California’s 2020-2021 Legislative Session with a flurry of bill signings, many of which created and/or updated employment-related laws. A few of these bills were “emergency bills” which became effective immediately (such as the COVID-related right to rehire and sick pay laws), while others do not become effective until Jan. 1, 2022. Employers should ensure that their policies, procedures, and systems comply with these new and updated laws.
California’s Regulation of Quotas in Warehouse Distribution Centers
On Sept. 22, 2021, Governor Newsom signed AB 701, aimed at regulating quotas in warehouse distribution centers, into law. Effective Jan. 1, 2022, employers with 100 or more employees at a single warehouse distribution center or 1,000 or more employees at one or more warehouse distribution centers in the state must provide to each nonexempt employee, upon hire, or by Jan. 31, 2022, a written description of each quota to which the employee is subject. This bill also sets certain standards for what constitutes an enforceable quota and for the employer’s obligation to respond to information requests.
Employers should carefully review their quota systems to first determine if the quotas are necessary, and if so, ensure compliance with this new law by preparing clear written descriptions for each and every quota. A more in-depth discussion of the provisions of the AB 701 can be found
here.
Reprinted courtesy of
Amy R. Patton, Payne & Fears and
Blake A. Dillion, Payne & Fears
Ms. Patton may be contacted at arp@paynefears.com
Mr. Dillion may be contacted at bad@paynefears.com
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Florida’s Construction Defect Statute of Repose
August 24, 2017 —
David Suggs – Bert L. Howe & Associates, Inc.Butler Weihmuller of Katz Craig LLP discussed Florida’s 10-year statute of repose law: “Under § 95.11(3)(c), the action must commence within 10 years after the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.”
However, Weihmuller explains that parties may disagree on the specific date For instance, in Busch v. Lennar Homes, LLC, Florida’s 5th DCA recently “reversed a trial court’s dismissal of a homeowner’s construction defect claim that was filed just beyond 10 years after the closing date on the property.” The previous decision had been based on the notion that the contract had been completed upon the date of closing. The 5th DCA declared that “a contract is not completed until both sides of a contract have been performed” and “pointed to the ‘inspection and punch-list clause’ of the contract.” The clause indicated that “[a]ny remaining items that Seller has agreed to correct will be corrected by Seller at Seller’s sole cost and expense prior to closing or at Seller’s option within a reasonable time after closing.” Since not all punch-list items had been completed prior to closing, the 5th DCA held that the contract had not been completed at closing, and therefore the statute of repose did not begin until the punch-items had been accomplished.
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Vacation during a Project? Time for your Construction Documents to Shine!
October 09, 2023 —
Melissa Dewey Brumback - Construction Law in North CarolinaHappy Lazy Day Everyone! What’s that? You didn’t know that August 10th is considered National Lazy Day? Well, it is. And it ties nicely in with today’s theme: how to take a vacation during the thick of the construction project.
Everyone needs a break. You are no different. It can seem, however, that it is impossible to disconnect from the ongoing onslaught of questions, requests for information, change orders, pay applications, and the like. But you can. The key to taking–and enjoying–your vacation is to plan ahead. This is the time for your construction documents to shine. Make sure that your designs are on schedule; make sure that the change orders and RFIs have been processed so there is no backlog. And make sure that your second in command is familiar enough with the day to day details to step into your shoes for the duration.
Then– be sure to give everyone notice. Is it any of their business that you are taking some time off? No. However, everyone procrastinates. So, if you give the entire team advance notice that you will be “off grid” starting on X date, they will be more inclined to get pending issues to you sooner rather than later. They won’t want to be stalled on progress, and with a heads up on when you are out of pocket, they will make it a priority to get requests to you ahead of your departure date.
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Melissa Dewey Brumback, Ragsdale LiggettMs. Brumback may be contacted at
mbrumback@rl-law.com
Motion to Dismiss Insureds' Counterclaim on the Basis of Prior Knowledge Denied
September 04, 2018 —
Tred R. Eyerly - Insurance Law HawaiiThe insurer unsuccessfully moved to dismiss portions of the insureds' counterclaim based upon prior knowledge. Hudson Spec. Ins. Co. v. Talex Enter., 2018 U.S. Dist. LEXIS 105598 (S. D. Miss. June 25, 2018).
The insureds' building collapsed in McComb, Mississippi. Pubic utilities were damaged and traffic disrupted. The City sued the insured, alleging that the building collapsed because there was too much water gathered on its roof. The City further alleged that the insureds knew too much water was on the roof because they had been told by someone hired to clean the drain that it was clogged and by a contractor that the roof was so damaged that it could not safely be repaired.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
