“Good Faith” May Not Be Good Enough: California Supreme Court to Decide When General Contractors Can Withhold Retention
March 22, 2018 —
Erinn Contreras and Joy O. Siu – Construction & Infrastructure Law BlogIt is industry standard in California for owners of a construction project to make monthly payments to a contractor for work it has completed, less a certain percentage that is withheld as a guarantee of future satisfactory performance. This withholding is called a retention. Contractors generally pass these withholdings on to their subcontractors via a retention clause in the subcontract. Under such clause, if a subcontractor fails to complete its work or correct deficiencies in its work, the owner and the general contractor may use the retention to bring the subcontractor’s work into conformance with the requirements of the contract.
When and how retention payments must be released are governed by, among other statutes, Civil Code section 8800
et seq. Specifically, Civil Code section 8814, subdivision (a), states that a direct contractor must pay each subcontractor its share of a retention payment within ten days after the general contractor receives all or part of a retention payment. Failure to make payments in accordance with Section 8814 can subject an owner or a contractor to a (1) two percent penalty per a month on the amount wrongfully withheld, and (2) claim for attorney’s fees for any litigation required to collect the wrongfully withheld retention payments. (Civ. Code, § 8818.)
Reprinted courtesy of
Erinn Contreras, Sheppard, Mullin, Richter & Hampton LLP and
Joy Siu, Sheppard, Mullin, Richter & Hampton LLP
Ms. Contreras may be contacted at econtreras@sheppardmullin.com
Ms. Siu may be contacted at jsiu@sheppardmullin.com
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Flood Insurance Claim Filed in State Court Properly Dismissed
October 28, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe insureds' claim for flood coverage filed in state court was properly dismissed by the trial court. Rodriguez-Roble v. Am. Nat'l Prop. & Cas. Co., 2015 La. App LEXIS 1810 (La. Ct. App. Sept. 23, 2015).
The insureds' home was damaged by wind, rain and flood water during Hurricane Isac. The insureds provided to American National what they contended was satisfactory proof of their claim. American National failed to make any offers to resolve the claim.
The insureds sued in state court, seeking damages under the policy and penalties for American National's alleged bad faith in failing to settle or pay the claim. American National moved to dismiss, arguing that the state court did not have subject matter jurisdiction. American National further argued that under the National Flood Insurance Program, the federal courts had exclusive jurisdiction over the denial and adjustment of flood insurance claims. The trial court agreed that the flood insurance policy was governed by federal law.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Homeowner Has No Grounds to Avoid Mechanics Lien
September 01, 2011 —
CDJ STAFFThe California Court of Appeals has rejected a motion by a homeowner in a dispute with the contractor who built an extension to his home. In McCracken v. Pirvulete, Mr. McCracken filed a mechanics lien after Mr. Pirvulete failed to complete payment. The matter went to trial with a series of exhibits that showed “the contractual relationship was strained and the parties disagreed over performance and payment.” As a result of the trial, the court awarded Mr. McCracken, the contractor, $1,922.22.
Mr. Pirvulete appealed, contending that the court had not allowed his daughter to act as a translator, that the court had failed to give him sufficient time to present his case, that the mechanics lien should have been dismissed, and several other claims, all before a formal judgment was issued. After the court formalized its judgment and rejected the appeal, Mr. Pirvulete appealed again.
The appeals court found that Mr. Pirvulete did not provide an adequate record for review. The court dismissed Mr. Pirvulete’s claims. The court notes that Mr. Pirvulete claimed that a request for a discovery period was denied, however, he has provided neither the request nor the denial. The trial court has no record of either.
Nor was there a record of a request that Mr. Pirvulete’s daughter provide translation. The court notes, “so far as we can glean from the record provided, the Register of Actions states, ‘Trial to proceed without Romanian Interpreter for Defendant; Daughter present to interpret if needed.’” Additionally, the court found that “there has been no showing that his facility with the English language is or was impaired in any way or that there was any portion of any proceeding, which he did not understand.”
Further, the appeals court found there were no grounds for a new trial, despite Mr. Pirvulete’s filings. The court concluded, “The owner has failed to provide a record adequate for review of most, if not all, of the claims of error. Some issues are not cognizable because they relate to entirely separate proceedings, and not the trial below. To the limited extent that the claims are examinable, the owner has made no showing of error.” The court affirmed the judgment of the lower court against Mr. Pirvulete.
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Kahana & Feld P.C. Enhances Client Offerings, Expands Litigation Firm Leadership
March 22, 2017 —
Kahana & Feld, P.C.SANTA ANA, Calif., March 9, 2017 – Celebrating 10 successful years of practice, Managing Partner
Amir M. Kahana, Esq. , of Kahana & Feld P.C. (formally Kahana Law), is pleased to announce he has added as name partner
Jason Daniel Feld, Esq., expanding client offerings to include insurance defense and bolstering its construction defect and real estate law practice.
Feld joins the AV Preeminent firm that for the past decade has become known for its prowess in general business litigation matters, including cases involving employment, construction, real estate and intellectual property law. The firm is home to a group of proven trial attorneys who are among Southern California’s top rated counsel.
Feld brings 18 years of experience, with his practice focusing on defending homebuilders, contractors and developers in Arizona, Texas and California. He primarily chooses to represent smaller, family-owned and operated clients, providing the unique opportunity to also assist with overall best practices and risk prevention. In addition, Feld serves on several prominent insurance carrier panels, allowing him to cultivate valuable relationships with the builder and contactor community. A resident of Tustin Ranch, Feld received his juris doctor cum laude from Whittier Law School and a bachelor’s degree from University of Houston.
“Jason’s breadth of experience, leadership and work ethic are qualities I have admired throughout the many years of our friendship. He embodies the integrity and admirable character that are at the core of our firm’s fabric,” said Kahana, a resident of Irvine. “I am thrilled to have Jason join forces with our firm as we enter our second decade and are poised for significant growth. Our clients will benefit from our expanded areas of practice, allowing us to provide counsel and litigation support in a variety of areas.”
Under Kahana’s leadership, the firm has become known for holding its client relationships in the highest regard while providing premier quality legal services and sound risk assessment at a reasonable cost. With integrity always coming first, the firm’s record of success extends well beyond the office as each associate is proudly involved in his or her community, donating time and resources to a variety of worthy community organizations.
“I feel honored to join Amir and this talented and energetic firm,” said Feld. “I feel fortunate to have found a new home with partners and associates who share the same values and commitment to serving the community. I look forward to helping grow the firm in the years ahead.”
About Kahana & Feld, P.C.
Kahana & Feld, P. C. focuses on general business litigation and insurance defense, with particular emphasis on employment, real estate, construction defect and intellectual property litigation. The AV Preeminent firm is led by attorneys who have been named among Southern California’s Top Rated. The firm was founded with the goal of providing high-quality legal services at fair and reasonable rates. The firm believes that what defines attorneys is not their billing rates, but their record of success, and Kahana & Feld’s track record speaks for itself. For more information, please visit: http://www.kahanafeld.com
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No Coverage for Co-Restaurant Owners Who Are Not Named In Policy
August 24, 2017 —
Tred R. Eyerly - Insurance Law HawaiiThe Federal District Court denied two plaintiffs' claims for breach of the policy and for bad faith because they were not insureds under the policy. Tu v. Dongbu Ins. Co., 2017 U.S. Dist. LEXIS 115200 (N.D. Calif. July 24, 2017).
Dongbu, a Hawaii insurance company, issued a two-year policy to Plaintiff Ken Tu for his business. He was the only named insured under the policy.
The waste system at Plaintiffs' restaurant failed, causing fumes to impact neighboring tenants and waste to contaminate the underlying soil. Plaintiffs were forced to close the restaurant. A claim was tendered for damage and repair, loss of business income, and other insured losses. Dongbu denied coverage.
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Tred R. Eyerly - Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
New Executive Orders Expedite the Need for Contractors to Go Green
August 22, 2022 —
Vince Calio - Construction ExecutiveThe importance of going green just became even more crucial for small construction companies, as President Joe Biden signed three executive orders on June 6, 2022, aimed at boosting clean energy construction projects and the use of domestically manufactured clean energy technology.
Specifically, the orders require the U.S. Department of Energy to deploy the use of the Defense Production Act of 1950 to expand American manufacturing of solar panel parts, environmentally friendly building insulation, heat pumps, equipment for making clean power-generating fuels and critical power grid infrastructure. Federal construction contracts will also require local contractors to use eco-friendly materials.
According to an announcement from the White House, the order will encourage the use of project labor agreements that offer wages “above and beyond the prevailing rate and include local hire provisions.” The order will also encourage clean construction projects in low-income areas burdened by legacy pollution.
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Vince Calio, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Florida Extends Filing Time for Claims Subject to the Statute of Repose
June 13, 2018 —
William L. Doerler - The Subrogation StrategistUnder Florida’s construction-related statute of repose, Fla. Stat. § 95.11, actions based on the design, planning or construction of an improvement to real property are barred if not commenced within 10 years after the later of several possible dates, including the date of actual possession by the owner and the date of the issuance of a certificate of occupancy. The Florida Legislature recently amended the statute to extend the time within which defendants subject to a suit filed close to the end of the 10-year period can file claims. Under the revised law, a defendant can file “counterclaims, cross-claims and third-party claims up to 1 year after the pleading to which such claims relate is served.” Regardless of when the cause of action at issue accrued, the law applies to actions commenced on or after July 1, 2018, except that any action that would not have been barred under Fla. Stat. § 95.11(3)(c) prior to the amendment may be commenced before July 1, 2019.
The revised law provides relief to defendants because, under the prior law, they had to file claims against other potentially responsible third parties before the expiration of the statute of repose. Under the new law, defendants can bring third parties into the action after the expiration of the 10-year statute of repose period.
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William L. Doerler, White and Williams LLPMr. Doerler may be contacted at
doerlerw@whiteandwilliams.com
Even Fraud in the Inducement is Tough in Construction
November 06, 2023 —
Christopher G. Hill - Construction Law MusingsI have discussed how hard it is in the Commonwealth of Virginia to make out a claim for fraud when a construction contract is involved. On limited exception is where a claim for “fraud in the inducement” is involved. Essentially, such a claim states that one party was hoodwinked into entering the contract in the first place. Because of the initial fraud (for instance misrepresenting the class or existence of a contractor’s license), the courts may bypass the terms of the contract and allow a claim for fraud to go forward.
While you may think that this would lead to many claims making it past a Motion to Dismiss, at least one court here in Virginia makes it clear that such claims will not be taken lightly and must be supported by specific and substantial allegations that would support more than just “advertising” or opinion. In County of Grayson v. Ra-Tech Services Inc., the U. S. District Court for the Western District of Virginia reviewed an amended complaint from the Plaintiff seeking to make out a claim for fraud in the inducement based upon the defendant’s statements in support of a proposal that certain brands of equipment would be used. The Court further considered general allegations that the Defendant never intended to provide those particular brands of equipment.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
