The Dangers of an Unlicensed Contractor from Every Angle
January 11, 2021 —
William L. Porter - Porter Law GroupThe State of California requires that contractors in the building trades be licensed. Individuals and business entities obtain their contractors licenses by demonstrating to the California Contractors State License Board that they have the requisite knowledge, skill, and experience to be licensed. The CSLB issues licenses to those meeting requirements. As a construction attorney of longstanding tenure, I have witnessed the impact of unlicensed building contractors from every point of view. If you are considering hiring an unlicensed contractor, acting as an unlicensed contractor or even working for an unlicensed contractor as an employee, please consider the following perils:
To the Owner Considering Hiring an Unlicensed Contractor:
On the positive side for owners considering hiring an unlicensed contractor, the general rule in California is that an owner can escape the obligation to pay an unlicensed contractor for work performed and materials supplied because unlicensed contractors are prohibited from bringing legal actions against owners for payment. The law even goes so far as to allow the Owner to bring a legal action against the unlicensed Contractor for reimbursement of anything the owner paid to the unlicensed contractor. This is done through a “disgorgement” action (see, Business and Professions Code 7031. See also, the following article: Disgorgement Article). Despite this, there are a great many negative potential consequences to be considered by any owner who might consider hiring an unlicensed contractor. Among them are the following:
- If you are considering not paying your unlicensed contractor because Business and Professions Code 7031 allows it, please consider that unlicensed contractors, who have clearly demonstrated a disinclination to follow legal obligations in the first place, may resort to “less than socially acceptable” means of exacting retribution against those who do not pay them or who demand the return of money paid through a disgorgement action I am sorry to say this. Let us leave it at that.
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William L. Porter, Porter Law GroupMr. Porter may be contacted at
bporter@porterlaw.com
DC Wins Largest-Ever Civil Penalty in US Housing Discrimination Suit
November 15, 2022 —
Kriston Capps - BloombergThree real estate companies operating in Washington, DC, will pay record-breaking penalties in a suit brought by the city for illegally discriminating against tenants who use Section 8 vouchers and other forms of housing assistance.
The attorney general for the District of Columbia, Karl Racine, announced on Thursday a settlement for $10 million. While fair housing cases involving lenders have resulted in larger compensation payouts, $10 million is the largest civil penalty ever levied in a housing discrimination case.
In 2020, the city sued several entities — DARO Management Services, DARO Realty and New York-based parent company Infinity Real Estate, as well as several executives — over housing practices in the District. DARO Management operates and rents some 1,200 residential units in more than a dozen apartment buildings spread across Wards 1, 2 and 3, which include DC’s more affluent areas. (DARO Realty owns the properties, DARO Management operates them, and Infinity owns both affiliates.)
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Kriston Capps, Bloomberg
Another Colorado Construction Defect Reform Bill Dies
May 07, 2014 —
Beverley BevenFlorez-CDJ STAFFColorado construction defects reform Senate Bill 220 died when “Senate President Morgan Carroll, D-Aurora, declined to call a second committee to hear” the bill, according to Ed Sealover writing for the Denver Business Journal. Sen. Carroll declared that the “bill backers” did not incorporate any of the “suggestions she or House Speaker Mark Ferrandino had given them.”
“SB 220 would have required condo-unit owners to submit to alternative-dispute resolution such as arbitration or mediation if the unit developer required it,” Sealover reported. “And it would have required that a majority of members of a homeowners association agree to file a lawsuit, a standard significantly larger than the two-person bar that now must be met.”
Bill Cosponsor Sen. Mark Scheffel, R-Castle Rock, “believes litigation reform” will become “an election issue and” that it “has strong momentum heading into the 2015 session.”
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Discovery Requests in Bad Faith Litigation Considered by Court
June 10, 2015 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court considered a variety of discovery requests by the insured in a bad faith case against State Farm. Stephens v. State Farm Fire and Cas. Co., 2015 WL 1638516 (M.D. Pa. April 13, 2015).
The insured plaintiff was a quadriplegic. His complaint alleged that he notified State Farm, through its agent, that he would have to leave his residence for medical treatment and intended to rent the home while he received care for his disabling condition. The complaint further alleged that the insured was told by State Farm's agent that his insurance would remain unaffected by his departure while he sought medical care. Nevertheless, when the insured reported loss due to vandalism and water damage at his home, State Farm relied upon his departure from the residence to cancel his insurance.
In discovery, the insured requested three categories of documents from State Farm. First, he requested State Farm's claims manuals, guidelines and instructions materials relating to insurance claims like those made by this insured. Second, the plaintiff requested performance reviews and performance incentive programs for all of State Farm's employees who played a role in decisions in this case from 2009 to the present. Finally, the plaintiff demanded that State Farm compile information relating to other insurance lawsuits brought against State Farm involving theft, vandalism and water damage claims, as well as all lawsuits or complaints regarding the conduct of this particular claims adjuster. When the materials were not produced, plaintiff filed a motion to compel.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Insurer Doomed in Delaware by the Sutton Rule
September 12, 2023 —
Katherine Dempsey - The Subrogation StrategistIn Donegal Mut. Ins. Co. v. Thangavel, No. 379, 2022, 2023 Del. LEXIS 227, the Supreme Court of Delaware (Supreme Court) considered whether the Sutton Rule prevented the plaintiff from pursuing subrogation against the defendants. As applied in Delaware, the Sutton Rule explains that landlords and tenants are co-insureds under the landlord’s fire insurance policy unless a tenant’s lease clearly expresses an intent to the contrary. If the Sutton Rule applies, the landlord’s insurer cannot pursue the tenant for the landlord’s damages by way of subrogation. Here, the Supreme Court affirmed the trial court’s decision that the Sutton Rule applied because the lease did not clearly express an intent to hold the tenants liable for the landlord’s damages.
In Thangavel, the plaintiff, Donegal Mutual Insurance Company (Insurer), provided property insurance to Seaford Apartment Ventures, LLC (Landlord) for a residential property in Delaware. Sathiyaselvam Thangavel and Sasikala Muthusamy (Tenants) leased an apartment (the Premises) from Landlord and signed a lease. Insurer alleged that Tenants hit a sprinkler head while flying a drone inside the Premises which caused water to spray from the damaged sprinkler head, resulting in property damage to the Premises. Landlord filed an insurance claim with Insurer, who paid Landlord $77,704.06 to repair the damage. Insurer then sought to recover the repair costs from Tenants via subrogation.
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Katherine Dempsey, White and Williams LLPMs. Dempsey may be contacted at
dempseyk@whiteandwilliams.com
Homeowners May Not Need to Pay Lien on Defective Log Cabin
July 01, 2011 —
CDJ STAFFThe Idaho Supreme Court has ruled in the case of Perception Construction Management v. Bell. The Bells hired PCM to build a log home, agreeing to play monthly invoices in full within ten days. The Bells paid the first four invoices in full, part of the fifth, and ceased payment after that. Beofre seventh invoice, the Bells terminated the contract and hired a new contractor. PCM filed a claim of lien and ceased work.
The Bells responded that PCM was in breach of contract and had failed to fulfill the contract in a workmanlike manner. They claimed construction defects and in the lien suit, sought to include testimony from an architect and a plumber reviewing PCM’s work. The court only allowed the architect to testify as to whether the amount of the lien was reasonable. No testimony was permitted from the plumber.
The Idaho Supreme Court concluded that the claims of construction defects were important to case and remanded it to the lower court for a new trial taking into evidence that Bell’s contention that PCM’s work was defective.
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Housing Starts Rebound in U.S. as Inflation Eases: Economy
August 20, 2014 —
Lorraine Woellert and Victoria Stilwell – BloombergHome construction rebounded in July and the cost of living rose at a slower pace, showing a strengthening U.S. economy has yet to generate a sustained pickup in inflation.
A 15.7 percent jump took housing starts to a 1.09 million annualized rate, the strongest since November, and halted a two-month slide, the Commerce Department said in Washington. The consumer price index increased 0.1 percent after rising 0.3 percent in June, the Labor Department also reported.
An improving job market and cheaper borrowing costs are helping revive residential real estate, helping boost sales at companies such as Home Depot Inc. (HD) As inflation continues to run below the Federal Reserve’s target, it gives the central bank room to keep interest rates low well after the projected end of its bond-buying program in October.
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Lorraine Woellert and Victoria Stilwell, Bloomberg
Harsh New Time Limits on Construction Defect Claims
April 26, 2011 —
Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq.A recent Colorado Supreme Court decision, Smith v. Executive Custom Homes, Inc., 230 P.3d 1186 (Colo. 2010), considerably shortens the time limit for bringing many construction defect lawsuits. Homeowners and homeowner associations risk losing the right to seek reimbursement from builders, developers and other construction professionals unless they carefully and quickly act upon discovery of evidence of any potential construction defect.
The Statute of Limitations for Construction Defect Claims
Colorado’s construction defect statute of limitations limits the time for homeowners and homeowners associations to bring lawsuits for construction defects against “construction professionals,” including developers, general contractors, builders, engineers, architects, other design professionals, inspectors and subcontractors. The statute requires homeowners and associations to file suit within two years “after the claim for relief arises.” A claim for relief “arises” when a homeowner or association discovers or reasonably should have discovered the physical manifestation of a construction defect.
The two-year time limitation applies to each construction defect separately, and will begin to run upon the appearance of a “manifestation” of a construction defect (which may include, for example, a condition as simple as a roof leak or drywall cracks), even if the homeowner or association does not know the cause of the apparent problem.
The Smith Opinion and its Effect on the Statute of Limitations
In Smith v. Executive Custom Homes, Inc., the plaintiff homeowner, Mrs. Smith, slipped on ice that had accumulated on her sidewalk because of a leaking gutter and suffered injury. When she first noticed the leak, she reported it to her property manager, who reported it to the builder. The builder attempted to repair the gutter, unbeknownst to Mrs. Smith, and she did not notice further problems until approximately one year after she first observed the leak, when she fell and suffered serious injury. She sued the builder within two years of her injury, but nearly three years after she first learned of the leak.
The Colorado Supreme Court dismissed Mrs. Smith’s claims as untimely and held that under the construction defect statute of limitations, the two-year period for suing for injuries due to construction defects begins when the homeowner first observes the physical manifestation of the defect, even if the resulting injury has not yet occurred. The court acknowledged that this ruling could result in “unfair results,” especially if a serious and unforeseeable injury occurs more than two years after the first time the homeowner noticed the problem, and as a result the victim is unable to seek redress from those responsible for the defect.
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Reprinted courtesy of Scott F. Sullan, Esq., Mari K. Perczak, Esq., and Leslie A. Tuft, Esq. of Sullan2, Sandgrund, Smith & Perczak, P.C., and they can be contacted through their web site.
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