Court Bars Licensed Contractor From Seeking Compensation for Work Performed by Unlicensed Sub
June 06, 2022 —
Garret Murai - California Construction Law BlogIt all started with a tree.
A eucalyptus tree to be exact.
What followed is one of the more important cases to be decided under Business and Professions Code section 7031 in recent years. Yes, that Section 7031. The statute variously described by the state’s courts as “harsh[ ],” draconian” and “unjust,” but, importantly, nevertheless valid.
Under Section 7031, an unlicensed contractor is barred from seeking compensation for work requiring a contractor’s license. This has been called the “shield.” However, in addition to the “shield,” project owners can also employ Section 7031’s “sword,” and seek disgorgement of all monies paid to an unlicensed contractor. Section 7031’s “shield” and “sword” applies even if the project owner knew that the contractor was unlicensed. They also apply even if the unlicensed contractor’s work was flawless. And they also apply even if a contractor was unlicensed during a portion of its work. This is because, as courts have stated, Section 7031 is a consumer protection statute intended to protect the public from unlicensed contractors and applies irrespective of the equities.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
CAPSA Changes Now in Effect
November 14, 2018 —
Wally Zimolong - Supplemental ConditionsBack in June, I posted about changes coming to the Pennsylvania Contractor and Subcontractor Payment Act (CAPSA), 73 P.S. Section 501, et. seq. The Act applies to virtually all private construction projects in Pennsylvania. As of last week (Oct. 10), those changes are effective. While there is some argument to the contrary, these changes are NOT retroactive and apply to all projects going forward from that date. To recap, here are some of the important changes you need to be aware of:
- Contractual waivers. Parties cannot waive the applicability of the act through contract. Therefore, any clause in a contract purporting to waive the Payment Act’s applicability is void.
- Suspension of work. Unpaid contractors and subcontractors have always enjoyed a common law right to suspend performance until payment was made. Now, they also have a statutory right to do so. Section 5 of the Payment Act ads a subpart (e) which states that an unpaid contractor or subcontractor can suspend performance without penalty if it is not paid.
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Wally Zimolong, Zimolong LLCMr. Zimolong may be contacted at
wally@zimolonglaw.com
Court Concludes That COVID-19 Losses Can Qualify as “Direct Physical Loss”
September 28, 2020 —
Lorelie S. Masters & Jorge R. Aviles - Hunton Andrews KurthIn a victory for policyholders, a federal district court found that COVID-19 can cause physical loss under business-interruption policies. In Studio 417, Inc., et al. v. The Cincinnati Insurance Co., No. 20-cv-03127-SRB (W.D. Mo. Aug. 12, 2020), the court rejected the argument often advanced by insurers that “all-risks” property insurance policies require a physical, structural alteration to trigger coverage. This decision shows that, with correct application of policy-interpretation principles and strategic use of pleading and evidence, policyholders can defeat the insurance industry’s “party line” arguments that business-interruption insurance somehow cannot apply to pay for the unprecedented losses businesses are experiencing from COVID-19, public-safety orders, loss of use of business assets, and other governmental edicts.
The policyholders in Studio 417 operate hair salons and restaurants asserting claims for business interruption. In suing to enforce their coverage, the policyholders allege that, over the last several months, it is likely that customers, employees, and/or other visitors to the insured properties were infected with COVID-19 and thereby infected the insured properties with the virus. Their complaint asserts that the presence of COVID-19 “renders physical property in their vicinity unsafe and unusable.” Unlike some other complaints seeking to enforce such coverage, it also alleges that the presence of COVID-19 and government “Closure Orders” “caused a direct physical loss or direct physical damage” to their premises “by denying use of and damaging the covered property, and by causing a necessary suspension of operations during a period of restoration.”
Reprinted courtesy of
Lorelie S. Masters, Hunton Andrews Kurth and
Jorge R. Aviles, Hunton Andrews Kurth
Ms. Masters may be contacted at lmasters@HuntonAK.com
Mr. Aviles may be contacted at javiles@HuntonAK.com
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Fannie Mae Says Millennials Are Finally Leaving Their Parents' Basements
December 17, 2015 —
Julie Verhage – BloombergParents, rejoice. Your offspring may finally be moving out of the family basement.
A new report (PDF) from Fannie Mae, the U.S. government-backed mortgage company, suggests that the millennial generation is getting a move on.
"According to the ACS [Census Bureau’s American Community Survey], the number of homeowners aged 25-34 fell by more than 250,000 in each year between 2007 and 2012, but has declined by less than 100,000 annually since then," Fannie Mae said. "In fact, the decline between 2013 and 2014 was statistically insignificant, the first indication of stability in the number of young homeowners since the onset of the Great Recession." So while the number of homeowners in that age range is still on the decline, the trend looks poised for a reversal, and Fannie Mae said it won't take much to see positive growth in millennial homeownership in the near future.
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Julie Verhage, Bloomberg
Pandemic-Related Construction Materials Pricing Poses Challenges in Construction Lawsuits
September 20, 2021 —
Nick Stewart - Construction ExecutiveDuring the global pandemic the construction industry saw unprecedented inflation in the cost of building supplies as a result of a myriad of issues. On May 7, 2021, lumber prices hit a record high at $1,670.50 per thousand board feet. This was more than six times their pandemic low in April 2020. This significant price spike was related to closure of sawmills during the height of the pandemic, low supply, soaring demand to expand existing homes or purchase new construction, the western U.S. wildfires and tariffs.
More recently, lumber prices have fallen but they are still up nearly 100% from spring 2020. Some experts believe that the recent wildfires in the western United States and upcoming hurricane season will cause prices to jump back up in the upcoming months.
Additionally, since March 2020, steel prices are up roughly 200%. The increase in steel prices is a result of many of the same factors causing lumber pricing spikes. Many steel mills shut down production or drastically reduced production during the early days of the pandemic expecting a deep recession and/or to comply with restrictive government mandates. Despite these industry expectations, demand for steel -elated products like grills and home appliances soared. These household demands for steel-based products impacted the price of steel for construction projects. Prior to the pandemic, hot-rolled steel traded between $500 and 800 per ton but hit an all-time high of $1,825 per ton in early July 2021.
Reprinted courtesy of
Nick Stewart, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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Mr. Stewart may be contacted at
nstewart@turnerpadget.com
Insurer’s Motion for Summary Judgment Based on Earth Movement Exclusion Denied
October 28, 2011 —
Tred R. Eyerly - Insurance Law HawaiiAfter carefully dissecting the earth movement exclusion, the court denied the insurer’s motion for summary judgment. High Street Lofts Condominium Assoc., Inc. v. Am. Family Mut. Ins. Co., 2011 U.S. Dist. LEXIS 109043 (D. Colo. Sept. 26, 2011).
The City of Boulder performed road repair work near High Street’s property, some of which involved the use of a vibrating compactor to compact and set the roadbed. High Street noticed damage to its building, such as cracks in walls, sloping of floors and separations of porches from the building itself. High Street contacted the City of Boulder, who forwarded the complaint to its contractor, Concrete Express, Inc.
High Street also filed a claim with its business insurer, American Family, who denied the claim. American Family relied on an opinion letter by High Street’s engineer. The letter indicated that the damage was the result of "soil consolidation/settlement," in response to the construction activities. Based on this letter American Family concluded the claim was excluded under the policy’s earth movement exclusion.
High Street sued American Family, who moved for summary judgment.
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Reprinted courtesy of Tred R. Eyerly, Insurance Law Hawaii. Mr. Eyerly can be contacted at te@hawaiilawyer.com
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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
In One of the First Civil Jury Trials to Proceed Live in Los Angeles Superior Court During Covid, Aneta Freeman Successfully Prevailed on Behalf of our Client and Obtained a Directed Verdict and Non-Suit
July 05, 2021 —
Aneta B. Freeman – Chapman Glucksman Dean & Roeb News AlertIn one of the first civil jury trials to proceed live in Los Angeles Superior Court during Covid, Aneta Freeman obtained a rare directed verdict and nonsuit in a complex, high exposure action, after seven days of trial. The dismissal was obtained after the parties rested after the liability phase of the bifurcated trial.
Ms. Freeman represented a general contractor in an action in which Plaintiff alleged that the general contractor and the County of Los Angeles (which was dismissed earlier on statutory immunity grounds) created a dangerous condition when they allegedly allowed mosquitos to breed in 2015 during construction at a flood retention basin in Marina Del Rey.
Plaintiff contracted West Nile Virus, and subsequently developed myasthenia gravis and a myriad of other conditions and ailments. Plaintiff relied heavily on a 2015 report from the Los Angeles West Vector Control District which suggested that the construction was the source of mosquitos which resulted in a “cluster” of West Nile Virus cases in the Marina Del Rey and surrounding areas.
In pretrial motions, Ms. Freeman successfully excluded that report, opinion testimony from the vector control former executive director, narrowed the scope of plaintiff’s entomologist testimony, and excluded Brad Avrit from testifying for the Plaintiff on construction standard of care.
The matter proceeded with a stipulated a 10 person jury, and all participants socially distanced and masked throughout the trial. Witnesses appeared live, with the exception of Plaintiff’s entomologist, portions of whose video deposition were played.
Following seven days of trial after both parties rested, Judge Mark Young granted the general contractor’s nonsuit and also, in the alternative, a directed a verdict for our client.
Plaintiff had demanded $10,000,000 of the County and the general contractor globally prior to trial, and $5,000,000 from the general contractor. The general contractor issued two CCP 998s, which were ignored by Plaintiff.
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Aneta B. Freeman, Chapman Glucksman Dean & RoebMs. Freeman may be contacted at
afreeman@cgdrlaw.com
