When is a “Notice of Completion” on a California Private Works Construction Project Valid? Why Does It Matter for My Collection Rights?
January 27, 2020 —
William L. Porter - Porter Law GroupWhat is a Notice of Completion?
A “notice of completion” is a document recorded by the owner of property where construction work was performed. Specifically, it is recorded at the Office of the County Recorder in the County where the work was performed. The notice of completion tells the world at large that the construction project is complete. It also triggers the deadlines for those who have not been paid to make their claims for payment.
Is an Owner of a California Private Works Project Required to Record a Notice of Completion?
No, there is no requirement that an owner of a California private works construction project record a Notice of Completion. However, there are consequences which depend on whether an Owner elects to record the notice or not.
For My Collection Rights, Why Does it Matter Whether a Notice of Completion Has Been Recorded?
The date of recording of a valid notice of completion sets the deadline for those who have not been paid for work performed and materials supplied to a California construction project to pursue such important collection remedies as the “mechanics lien”, the “stop payment notice” and the “payment bond claim.” These are very powerful collection remedies for those who have not been paid. If the deadline to pursue these remedies is missed by a claimant, then the claimant’s right to pursue these remedies is also missed. One of these remedies, the mechanics lien, will enable the claimant to sell the owner’s property where the work was performed in order to get paid.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
Risk Spotter Searches Internal Data Lakes For Loaded Words
October 11, 2017 —
Tom Sawyer - Engineering News-RecordA tech start-up recently announced that it has been granted seven U.S. patents for a system that applies a “deep learning” algorithm to examine corporate e-mail databases and flag those with message fields or attachments containing language that might increase risk for a company involved in a federal discrimination lawsuit.
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Tom Sawyer, ENRMr. Sawyer may be contacted at
sawyert@enr.com
AGC’s 2024 Construction Outlook. Infrastructure is Bright but Office-Geddon is Not
February 12, 2024 —
Garret Murai - California Construction Law BlogThe Associated General Contractors of America has issued its
2024 Construction Outlook. According to its survey of construction contractors throughout the United States, contractors have a mixed outlook for 2024 with firms predicting transitions in the demand for projects, the types of challenges they will face and technologies they plan on embracing. According to the survey, contractors continue to cope with significant labor shortages, the impact of higher interest rates and input costs and a supply chain which, while better than in past few years, is still far from normal.
Of the 17 categories of construction types included in the survey, respondents expected a net positive growth in 14 of those categories, with infrastructure projects leading the net positive readings following the passage of the
Infrastructure Bill in 2021, and commercial retail and office leading the net negative readings as a result of the continuing
office-geddon:
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
Delaware District Court Finds CGL Insurer Owes Condo Builder a Duty to Defend Faulty Workmanship Claims — Based on the Subcontractor Exception to the Your Work Exclusion
October 04, 2021 —
Anthony L. Miscioscia & Laura Rossi - White and WilliamsOn September 7, 2021, in one of the few decisions addressing the scope of coverage for faulty workmanship under Delaware law, the Delaware District Court denied an insurer’s motion seeking a declaration that it neither needed to defend nor indemnify an insured-builder under a commercial general liability policy.
In this declaratory judgment action, Pennsylvania National Mutual Casualty Insurance Company v. Zonko Builders, the insurer argued that the ongoing underlying action failed to properly plead an “occurrence” in a case alleging damages to a condominium caused by faulty workmanship involving subcontractors.* Zonko Builders (Zonko) served as the general contractor, supervising subcontractors. The Condominium Association sued Zonko for damages allegedly resulting from design and construction deficiencies. The motion was opposed by the Condominium Association, which cross-moved for partial judgment on the pleadings.
In AE-Newark Associates, L.P. v. CNA Insurance Companies, 2001 Del. Super. LEXIS 370 (Del. Super. Ct. Oct. 2, 2001), the Delaware Superior Court found that an insured was entitled to coverage for damages arising from a faulty roof system installed by a subcontractor on behalf of the insured general contractor.
Reprinted courtesy of
Anthony L. Miscioscia, White and Williams and
Laura Rossi, White and Williams
Mr. Miscioscia may be contacted at misciosciaa@whiteandwilliams.com
Ms. Rossi may be contacted at rossil@whiteandwilliams.com
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Bert L. Howe & Associates Brings Professional Development Series to Their Houston Office
May 19, 2014 —
Beverley BevenFlorez-CDJ STAFFBHA’s Professional Development Series provides seminar attendees with a heightened level of knowledge and understanding on a wide range of subjects covering construction and construction defect litigation, tailored to the unique needs of local counsel and insureds.
The next seminar in this series, THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION, will be presented on June 13th.
This course has been approved for Minimum Continuing Legal Education credit by the State Bar of Texas Committee on MCLE in the amount of 1.0 credit hours, of which 0.0 credit hours will apply to legal ethics/professional responsibility credit.
The seminar will be presented by Don MacGregor, general contractor and project manager, at BHA’s Houston office during the noontime hour, and luncheon will be provided. As with all BHA Professional Development activities, there is no cost for participation.
Water intrusion through doors, windows and roofing systems, as well as soil and foundation-related movement, and the resultant damage associated therewith, are the triggering effects for the vast majority of homeowner complaints today and serve as the basis for most residential construction defect litigation.
The graphic and animation-supported workshop/lecture activity will focus on the residential construction process, an examination of associated damages most often encountered when investigating construction defect claims, and the inter-relationships between the developer, general contractor, sub trades and design professionals.
Typical plaintiff homeowner/HOA expert allegations will be examined in connection with those building components most frequently associated with construction defect and claims litigation.
The workshop will examine:
* Typical construction materials, and terminology associated with residential construction
* The installation process and sequencing of major construction elements, including interrelationship with other building assemblies
* The parties (subcontractors) typically associated with major construction assemblies and components
* The various ASTM standard testing protocols utilized to field test buildings
* An analysis of exposure/allocation to responsible parties
Attendance at THE RESIDENTIAL CONSTRUCTION PROCESS & CONSTRUCTION DEFECT LITIGATION seminar will provide the attendee with:
* A greater understanding of the terms and conditions encountered when dealing with common construction defect issues
* A greater understanding of contractual scopes of work encountered when reviewing construction contract documents
* The ability to identify, both quickly and accurately, potentially responsible parties
* An understanding of damages most often associated with construction defects, as well as a greater ability to identify conditions triggering coverage
* Assistance in the satisfaction of important continuing education requirements.
Course #: 901290467
Sponsor #: 14152
BHA Houston Office
800 Town & Country Blvd.
Suite 300
Houston, TX 77024
To register for the event, please email Don MacGregor at dmac@berthowe.com.
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New York Court Discusses Evidentiary Standards for Policy Rescission Based on Material Misrepresentation
August 10, 2020 —
Robert S. Nobel - Traub LiebermanOn July 27, 2020, in the case of Mt. Hawley Ins. Co. v. AKI Renovations Group, Inc., (Sup. Ct. NY Co. 2020), Index No. 159421/2017 (unpublished), the trial court issued an Order granting summary judgment permitting rescission of a CGL policy based upon material misrepresentations in a policy application. The insured submitted an application in which it failed to disclose its demolition operations despite specific questions seeking this information. Mt. Hawley issued a primary and excess policy for the period of December 29, 2016 to December 29, 2017 (collectively, the policy).
Subsequently, the insured sought coverage for a claim in which it was alleged that the insured was acting as a general contractor for demolition of a three-story building when the plaintiff was injured. The insurer advised the defendants that it was rescinding the policy ab initio, and also returned defendants’ premium in its entirety. The insurer asserted that it would not have issued the policy had defendants disclosed their demolition operations, then filed the coverage action seeking a judicial declaration ratifying its rescission of the policy.
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Robert S. Nobel, Traub LiebermanMr. Nobel may be contacted at
rnobel@tlsslaw.com
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
What You Need to Know About Enforcement Actions by the Contractors State License Board
April 15, 2015 —
Garret Murai – California Construction Law BlogI questioned whether to even write this post.
Because, of course, YOU would never find yourself hightailing it out of town with the California Contractor’s State License Board (“CSLB”) sniffing down your tail pipes.
Then again, mistaken identities occur all the time. So, here’s what you need to know if the CSLB mistakes you for one of “those” contractors.
What violations are subject to CSLB enforcement actions?
The CSLB can take enforcement actions based on any one of numerous violations set forth under the California Business and Professions Code (“B&P Code”), including:
1.
B&P Code §7107: Abandonment of a construction project or operation without legal excuse.
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Garret Murai, Wendel Rosen Black & Dean LLPMr. Murai may be contacted at
gmurai@wendel.com
