Indemnity Provision Prevails Over "Other Insurance" Clause
December 06, 2021 —
Tred R. Eyerly - Insurance Law HawaiiThe Second Circuit predicted that the New York appellate courts would find the contractual indemnity provision prevailed over the application of an "other insurance" provisions. Cent. Sur. Co. v. Metro. Transit Auth., 2021 U.S. App. LEXIS 29860 (2nd Cir. Oct. 5,2021).
Long Island Railroad (LIRR) contracted with general contractor Rukh Enterprises, Inc. to complete a railroad bridge lead paint removal and repainting project on Metropolitan Transit Authority property. Rukh hired subcontractor, East Coast Painting & Maintenance to complete certain lead-related work on the project.
An employee of East Coast suffered an injury while working on the project. The employee sued LIRR and Rukh. A settlement in the underlying case was reached, implicating three of four policies - Admiral (primary for LIRR), Arch (CGL for Rukh), and Harleysville (primary for East Coast). Century Surety (excess liability for Rukh) did not contribute to the settlement and disclaimed all coverage.
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Tred R. Eyerly, Damon Key Leong Kupchak HastertMr. Eyerly may be contacted at
te@hawaiilawyer.com
Resilience: Transforming the Energy Sector – Navigating Land Issues in Solar and Storage Projects | Episode 3 (11.14.24)
December 17, 2024 —
Pillsbury's Construction & Real Estate Law Team - Gravel2Gavel Construction & Real Estate Law BlogIn the latest
episode of the Resilience podcast, colleague
Shellka Arora-Cox and Laura Pagliarulo, CEO and founder of SolaREIT, get down to the nitty-gritty in a discussion of the interplay of solar power capacity, generation and land use.
(Editor’s note: The following transcript has been edited for clarity.)
Welcome to Resilience, the vodcast where we talk about the most pressing challenges and the biggest opportunities in the energy sector. I’m your host, Shellka Arora-Cox, a partner at Pillsbury Winthrop Shaw Pittman. I’m thrilled to have Laura Pagliarulo, the CEO and founder of SolaREIT, with me today.
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Pillsbury's Construction & Real Estate Law Team
How Small Mistakes Can Have Serious Consequences Under California's Contractor Licensing Laws.
February 15, 2018 —
Eric Reed - Myers, Widders, Gibson, Jones & Feingold, LLPIn 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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Eric Reed, Myers, Widders, Gibson, Jones & Feingold, LLPMr. Reed may be contacted at
ereed@mwgjlaw.com
Message from the Chair: Kelsey Funes (Volume I)
November 06, 2023 —
Marissa L. Downs - The Dispute ResolverI am so honored to assume the Division 1 mantle from my friend, Tom Dunn, and look forward to carrying on his good work.
For those of you who don’t know me, I’d like to take this opportunity to share a bit about my background. I grew up in New Orleans and went to LSU for undergraduate and law school. (Geaux Tigers!) I started my practice in 1997 at Phelps Dunbar LLP in Baton Rouge, where I still practice today. I manage the litigation group in the Baton Rouge office of the firm. I practice as a construction lawyer full time and serve on the Construction Panel of the American Arbitration Association and serve as a mediator in construction cases.
I am married to Dr. Chris Funes (the world’s best pediatrician) and we are the parents to two high schoolers. My son is a high school senior and my daughter is a sophomore. So, when I am not lawyering, I have been spending my time lately touring colleges, prepping for homecoming, and helping to teach my daughter to drive (all very relaxing!!). We also have a very sweet (and very hairy) rescue dog, Maggie, who makes sure we get lots of walks.
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Marissa L. Downs, Laurie & Brennan, LLPMs. Downs may be contacted at
mdowns@lauriebrennan.com
Hawaii Federal Court Grants Insured's Motion for Remand
January 12, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court, district of Hawaii, recently granted the insured's motion for remand. Catholic Foreign Mission Society of Am., Inc. v. Arrowood Indem. Co., Civ. No. 14-00420, Order Granting Plaintiff's Motion for Remand and Denying Defendants' Motion to Dismiss or Transfer (D. Haw. Dec. 30, 2014) [Order here]. [Full disclosure - our office represents the insured, Maryknoll].
Maryknoll was sued in several lawsuits filed in Hawaii state court by victims of alleged sexual abuse occurring as far back as the 1950s by members of the clergy. Maryknoll was insured during these periods under liability policies issued by various carriers. The successor of Royal Globe Insurance Company, Arrowood Indemnity Company, agreed to defend some of the underlying lawsuits, but declined to defend others. The Travelers Companies, Inc. refused to defend.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Herman Russell's Big Hustle
May 20, 2024 —
Maggie Murphy - Construction Executive“Any person that I knew of in the city of Atlanta who did anything ran it by Herman before they did anything else.”
These are the words of Anthony Dixon, senior project manager and 47-year veteran employee with H. J. Russell & Company. But ask anyone who knows anything about H. J. Russell, and they’ll say the same thing: The story of the company is the story of Herman J. Russell himself.
From humble beginnings in Atlanta’s Summerhill neighborhood came a young man with an unbreakable entrepreneurial spirit, who used that drive to forge an unlikely path to success in the Jim Crow–era South. What began as a plastering company in 1952 is today one of the largest Black-owned contractors in the United States, with Herman’s children—Donata Russell Ross, H. Jerome Russell and Michael B. Russell Sr.—at the helm (a natural fit for the family-focused firm).
Over its 72-year history, H. J. Russell has grown exponentially, contracted when necessary and persevered through segregation, the turbulence of the Civil Rights Movement and multiple economic downturns. Now, in the next five years, they’re poised to become a billion-dollar company.
But long before any of that, there was just a boy and a dream.
Reprinted courtesy of
Maggie Murphy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Turkey Digs Out From a Catastrophe
April 18, 2023 —
Pam McFarland - Engineering News-RecordIn what’s left of Antakya, a once-thriving and cosmopolitan tourist destination in the southeastern edge of Turkey, the streets seem weirdly quiet. Buildings stand askew at odd angles or are completely toppled, and the rubble from the homes of people who lived inside of them is neatly collected into piles and mounds.
Reprinted courtesy of
Pam McFarland, Engineering News-Record
Ms. McFarland may be contacted at mcfarlandp@enr.com
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EPA Announces Decision to Retain Current Position on RCRA Regulation of Oil and Gas Production Wastes
June 03, 2019 —
Anthony B. Cavender - Gravel2GavelAfter much study, EPA has decided against changing its current RCRA Subtitle D rules affecting the state regulation of oil and gas exploration & production waste. Since 1988, EPA has determined that most such wastes should be regulated as only non-hazardous wastes subject to RCRA Subtitle D, and not the more onerous hazardous waste provisions of RCRA Subtitle C. (See the Regulatory Determination of Oil and Gas and Geothermal Exploration, Development and Production Wastes, 53 FR 25,446 (July 6,1988).)
As a result, under the Subtitle D rules, the primary regulators of such waste are state regulatory agencies, which follow the state plan non-hazardous waste guidelines developed by EPA. This regulatory disposition has proven to be fairly controversial, and it was recently challenged in a lawsuit filed in the U.S. District Court for the District of Columbia: Environmental Integrity Project, et al. v. McCarthy. To settle this lawsuit, EPA and the plaintiffs entered into a consent decree by which EPA was to make certain determinations about the future of the program after conducting an appropriate study. That study, Management of Exploration, Development and Production Wastes: Factors Informing a Decision on the Need for Regulatory Action, has been completed, and it concludes, after a fairly comprehensive review of these state regulatory programs, that “revisions to the federal regulations for the management of E&P wastes under Subtitle D of RCRA (40 CFR Part 257) are not necessary at this time.” In a statement released on April 23, 2019, EPA accepted these findings and promised that it would continue to work with states and other stakeholders to identify areas for improvement and to address emerging issues to ensure that exploration, development and production wastes “continue to be managed in a manner that is protective of human health and the environment.”
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Anthony B. Cavender, PillsburyMr. Cavender may be contacted at
anthony.cavender@pillsburylaw.com
