Doctrine of Merger Not a Good Blend for Seller of Sonoma Winery Property
April 15, 2015 —
Kristen Lee Price and Lawrence S. Zucker II – Haight Brown & Bonesteel LLPIn Ram’s Gate Winery, LLC v. Joseph G. Roche, et al. (No. A139189 & A141090, filed 4/9/15) (Ram’s Gate), the California Court of Appeal for the First Appellate District held the doctrine of merger did not extinguish a seller’s contractual duty to disclose potentially hazardous seismic conditions on a Sonoma winery property.
In Ram’s Gate, the buyer of the property filed a lawsuit alleging the seller failed to disclose information relating to earthquake issues prior to the close of escrow. In the parties’ “Purchase and Sales Agreement” (Purchase Agreement) the seller agreed to disclose any information known to it regarding “known geological hazards . . . soil reports . . . geotechnical reports” and other facts “having effect on the value of the ownership or use of the property.” The seller, however, argued this disclosure warranty did not survive the escrow period because it did not expressly provide for survival while other provisions in the Purchase Agreement did.
Reprinted courtesy of
Kristen Lee Price, Haight Brown & Bonesteel LLP and
Lawrence S. Zucker II, Haight Brown & Bonesteel LLP
Ms. Price may be contacted at kprice@hbblaw.com
Mr. Zucker may be contacted at lzucker@hbblaw.com
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Construction Contract Clauses That May or May Not Have Your Vote – Part 3
November 23, 2016 —
Garret Murai – California Construction Law BlogScope, time and cost provisions may be the most important clauses in your construction contract but they’re not the only ones which can impact your bottom line. The third in a multi-part series, here are some other important construction contract clauses that may determine whether you come out a winner.
Provision: Supervisory Personnel, Employees, and Authority to Bind Provisions
- Typical Provision: ”At all times during performance of the Work, Subcontractor shall have at the job site a competent supervisor approved by Owner. Subcontractor’s supervisor shall be deemed a representative of Subcontractor and all communications given to Subcontractor’s supervisor shall be as binding as if such communications were given to Subcontractor. Should Contractor object to Subcontractor’s supervisor’s presence at the job site, or the presence at the job site, or the presence at the job site of any other employee or agent of Subcontractor or any employee or agent of Subcontractor of Subcontractor, Subcontractor shall cause such persons to be replaced immediately as directed by Contractor.”
- What it Means: Higher-tiered parties have a legitimate interest in ensuring that only competent individuals are allowed to perform work on a project and in ensuring that there are peaceable relations at a job site. Higher-tiered parties also have an interest in ensuring that directives and agreements made and reached in the field are followed. However, it is unreasonable for higher-tiered party or to require that such personnel be able to bind that lower-tiered party to agreements best decided by others.
- What You Can Do: Lower-tiered parties should seek to include language which provides that only “reasonable” changes to personnel are allowed and, as necessary, limit by category or issue the types of items on-site personnel can bind the lower-tiered party to.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
Pennsylvania Supreme Court Rules that Insurance Salesman had No Fiduciary Duty to Policyholders
July 19, 2017 —
Austin D. Moody - Saxe Doernberger & Vita, P.C.On June 20, 2017, the Pennsylvania Supreme Court ruled that a life insurance salesman had no fiduciary duty to his customers where the customers retained decision-making authority regarding which policies to purchase. In Yenchi v. Ameriprise Fin., Inc., the Court returned a 4-2 verdict, overturning the lower court’s finding that it was possible that a fiduciary relationship existed between the parties.
The suit arose from a series of transactions between Eugene and Ruth Yenchi and Bryan Holland, a financial advisor for IDS Life Insurance Corporation.
The relationship began when Holland cold-called the Yenchis and asked to meet with them regarding their “financial stuff.” For a fee of $350, Holland met with the Yenchis on several occasions and counseled them regarding their insurance needs. On Holland’s advice, the Yenchis cashed out several existing polices and purchased a whole-life policy for Mr. Yenchi and a deferred variable annuity in Mrs. Yenchi’s name.
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Austin D. Moody, Saxe Doernberger & Vita, P.C.Mr. Moody may be contacted at
adm@sdvlaw.com
State Farm Too Quick To Deny Coverage, Court Rules
July 22, 2011 —
CDJ STAFFOn July 13, 2011, Judge Sarah S. Vance of the US District Court issued a rule in the case of Travelers Cas. & Surety Co. of Am. v. Univ. Facilities, Inc. (E.D. La., 2011). In this case, Stanley Smith Drywall was contracted by Capstone Building Corporation to “perform undisclosed work at the facility believed to involve the installation of drywall.” The project involved the design and construction of student residences for the Southeastern Louisiana University in Hammond, Louisiana. In May, 2009, University Facilities, Inc. (UFI) sued Capstone Development Corporation and Capstone On-Campus Management.
State Farm insured Stanley Smith Drywall and they sought a declaration that they have no duty: “(1) to insure Stanley Smith or CBC, or (2) to defend or indemnify any party against UFI's claims in the pending arbitration.” State Farm contends “(1) there is no "occurrence" to trigger coverage under the policy; (2) only breach of contract claims are asserted; (3) there is no property damage alleged; and (4) various coverage limitations and exclusions apply to prevent coverage.’
The court concluded that “whether State Farm has a duty to defend in the arbitration must be determined by considering the claims asserted in the arbitration.” However, the arbitration claims were not made part of the record. There, “, the Court cannot determine as a matter of law State Farm's duty to defend on the present record.” The same was true of State Farm’s duty to indemnify. “Stanley Smith and CBC assert that State Farm's motion for summary judgment was filed before any discovery was conducted in the arbitration proceeding or in this case. The Court finds that State Farm has failed to develop the record sufficiently to establish that there is no genuine issue of material fact as to its duty to indemnify Stanley Smith or CBC in the arbitration.’
The court denied State Farm’s motion for a summary judgment on its duty to defend and indemnify.
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Best Lawyers Honors 48 Lewis Brisbois Attorneys, Recognizes Four Partners as 'Lawyers of the Year'
August 30, 2021 —
Lewis BrisboisBest Lawyers has selected 48 Lewis Brisbois attorneys across 27 offices for inclusion in its list of 2022 Best Lawyers in America. It has also recognized four Lewis Brisbois partners as "Lawyers of the Year": Cleveland/Akron Partner John F. Hill (Bet-the-Company Litigation); San Diego Partner Marilyn R. Moriarty (Medical Malpractice Law - Defendants); Portland Managing Partner Eric J. Neiman (Medical Malpractice Law - Defendants); and Sacramento Partner Eric J. Stiff (Corporate Law).
Please join us in congratulating these four partners and the following attorneys on their Best Lawyers recognition.
Seattle Partner Randy J. Aliment: Commercial Litigation
Reno Managing Partner Jack G. Angaran: Insurance Law, Litigation - Construction, Litigation - Real Estate
Los Angeles Partner Brian G. Arnold: Litigation - Intellectual Property, Litigation - Patent
Los Angeles/Orange County Partner John L. Barber: Employment Law - Management, Litigation - Labor and Employment Read the court decision
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Could This Gel Help Tame the California Fires?
November 28, 2018 — Gordy Megroz - Bloomberg
In 2009, Jeff Denholm was making a living as an adventure athlete, competing in stand-up paddleboard races and riding giant waves at Mavericks, the famous surf break near his home in Santa Cruz, Calif. Denholm was sponsored by Patagonia Inc., but to generate extra cash—“Adventure athletes don’t make a ton of money,” he says—he had a side gig leasing a fire truck to state and county crews that had run out of equipment battling wildfires.
One firefighting tool that Denholm kept onboard was retardant, which helps tamp down existing fires and can prevent them; he used a type known as a foam suppressant. Last year the U.S. Forest Service spent about $72 million on retardants, but in researching them, Denholm discovered some discouraging information. Read the court decision
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Seller Cannot Compel Arbitration for Its Role in Construction Defect Case<
March 01, 2012 — CDJ STAFF
The buyer of a leaky home in Venice, California cannot be compelled to arbitration with the seller in a construction defect lawsuit, according to a decision in Lindemann v. Hume, which was heard in the California Court of Appeals. Lindemann was the trustee of the Schlei Trust which bought the home and then sued the seller and the builder for construction defects.
The initial owner was the Hancock Park Trust, a real estate trust for Nicholas Cage. Richard Hume was the trustee. In 2002, Cage agreed to buy the home which was being built by the Lee Group. Cage transferred the agreement to the Hancock Park Trust. Hancock had Richard Nazarin, a general contractor, conduct a pre-closing walk through. They also engaged an inspector. Before escrow closed, the Lee Group agreed to provide a ten-year warranty “to remedy and repair any and all damage resulting from water infiltration, intrusion, or flooding due to the fact that the door on the second and third floors of the residence at the Property were not originally installed at least one-half inch (1/2”) to one inch (1”) above the adjacent outside patio tile/floor on each of the second and third floors.”
Cage moved in and experienced water intrusion and flooding. The Lee Group was unable to fix the problems. Hume listed the home for sale. The Kamienowiczs went as far as escrow before backing out of the purchase over concerns about water, after the seller’s agent disclosed “a problem with the drainage system that is currently being addressed by the Lee Group.”
The house was subsequently bought by the Schlei Trust. The purchase agreement included an arbitration clause which included an agreement that “any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration.” The warranty the Lee Group had given to Hancock was transferred to the Schlei trust and Mr. Schlei moved into the home in May 2003.
Lindemann enquired as to whether the work done would prevent future flooding. Nazarin sent Schlei a letter that said that measures had been taken “to prevent that situation from recurring.” In February, 2004, there was flooding and water intrusion. Lindemann filed a lawsuit against the Lee Group and then added the Hancock Park defendants.
The Hancock Park defendants invoked the arbitration clause, arguing that Lindemann’s claims “were only tangentially related to her construction defect causes of action against the Lee Group.” On June 9, 2010, the trial court rejected this claim, ruling that there was a possibility of conflicting rulings on common issues of law. “With respect to both the developer defendants and the seller defendants, the threshold issue is whether there was a problem with the construction of the property in the first instance. If there was no problem with the construction of the property, then there was nothing to fail to disclose.” Later in the ruling, the trial court noted that “the jury could find there was no construction defect on the property, while the arbitration finds there was a construction defect, the sellers knew about it, and the sellers failed to disclose it.” The appeals court noted that while Hancock Park had disclosed the drainage problems to the Kamienowiczs, no such disclosure was made to Sclei.
The appeals court described Hancock Park’s argument that there is no risk of inconsistent rulings as “without merit.” The appeals court said that the issue “is not whether inconsistent rulings are inevitable but whether they are possible if arbitration is ordered.” Further, the court noted that “the Hancock Park defendants and the Lee Group have filed cross-complaints for indemnification against each other, further increasing the risk of inconsistent rulings.”
The court found for Lindemann, awarding her costs.
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"My Bad, I Thought It Was in Good Faith" is Not Good Enough - Contractor Ordered to Pay Prompt Payment Penalties
February 23, 2016 — David A. Harris & Jesse M. Sullivan – Haight Brown & Bonesteel LLP
Retention clauses are almost always included in California construction contracts and permit an Owner to withhold a portion of what is owed to the General Contractor as security to ensure the proper completion of the work. General Contractors pass the withholding of retention down to the subcontractors. Thus, if the subcontractor fails to complete its work, or fails to correct deficiencies, the Owner/General Contractor can use the retention to pay the costs of completing or correcting the subcontractor’s work.
The contractor must release any retention it receives from the owner within ten days unless a “good faith dispute exists between the direct contractor and the subcontractor.” (Civil Code section 8814.) Where there is a good faith dispute, the contractor “may withhold from the retention to the subcontractor an amount not in excess of 150 percent of the estimated value of the disputed amount.” (Civil Code section 8814(c).) If the contractor wrongfully withholds retention, it must not only pay the retention but must also pay the subcontractor “a penalty of 2 percent per month on the amount wrongfully withheld.” The contractor must also pay the subcontractor’s costs and reasonable attorney’s fees incurred in collecting the retention. (Civil Code section 8818.)
Reprinted courtesy of David A. Harris, Haight Brown & Bonesteel LLP and Jesse M. Sullivan, Haight Brown & Bonesteel LLP
Mr. Harris may be contacted at dharris@hbblaw.com
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