Just When You Thought General Contractors Were Necessary Parties. . .
November 30, 2020 —
Christopher G. Hill - Construction Law MusingsDid you think that a subcontractor had to name a general contractor in a mechanic’s lien suit? I did. Did you think that nothing about this changed in the case where a Virginia mechanic’s lien was “bonded off” pursuant to Va. Code Section 43-71? I did.
Well, a recent Virginia Supreme Court case, Synchronized Construction Services Inc. v. Prav Lodging LLC, seems to at least create some doubt as to whether the a general contractor is a “necessary” party to a lawsuit by a subcontractor in the case where a bond is posted for release of a mechanic’s lien.
In Prav Lodging, the facts were a bit unusual. The day after the mechanic’s lien was recorded by Synchronized Construction Services, Inc. (“Synchronized”) the construction manager, Paris Development Group, the construction manager and de facto general contractor, went out of business. Despite this fact, and after the lien was bonded off, Synchronized sued to enforce the lien and for breach of contract against Paris. The wrinkle here is that Synchronized was unable to serve several defendants, among them Paris, within one year of filing suit as required by Virginia statute. In the Circuit Court, the financing bank moved to dismiss the suit for failure to serve necessary parties. The Circuit Court dismissed the breach of contract count but refused to dismiss the mechanic’s lien count on this basis.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
Pollution Created by Business Does Not Deprive Insured of Coverage
November 26, 2014 —
Tred R. Eyerly – Insurance Law HawaiiThe federal district court determined that coverage was properly denied under the pollution exclusion of the policies. Headwaters Resources, Inc. v. Illinois Union Ins. Co., 2014 U.S. App. LEXIS 20060 (10th Cir. Oct. 20, 2014).
Over 400 residents of Chesapeake, Virginia, filed two lawsuits against the insured, Headwaters, alleged property damage and bodily injury due to pollution generated in connection with the development of a golf course. The complaints alleged that between 2002 and 2007, the defendants used 1.5 million tons of toxic fly ash during construction of a golf course. The insured allegedly transported the fly ash to an open pit adjacent to residential neighborhoods. The chemicals from the fly ash leached into the ground water, damaging the private wells. The fly ash pit also released airborne contaminants that produced a strong smell of ammonia. As a result of the alleged contamination, the property values of plaintiffs' homes depreciated and members of the community faced increased risk of serious bodily injuries caused by exposure to the fly ash.
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Tred R. Eyerly, Insurance Law HawaiiMr. Eyerly may be contacted at
te@hawaiilawyer.com
Brief Overview of Rights of Unlicensed Contractors in California
September 10, 2014 —
William M. Kaufman – Construction Lawyers BlogUnder California Contractor’s State License Law enumerated in Business and Professions Code Sections 7000 to 7191, a contractor may not “bring or maintain” any action for compensation for performing any act or contract for which a license is required unless the contractor was duly licensed “at all times” during performance. Bus & Prof Code Section 7031(a).
What does this mean and who does it include?
This is a question that often has to be answered on a case by case basis. Basically, California does not want unlicensed contractors to be able to get paid for work that should be performed by a licensed contractor. The law has set forth some general parameters. General contractors, subcontractors, and master developers must be licensed. However, suppliers, manufacturers, laborers and equipment lessors are exempt and do not need a contractor’s license. Essentially, those parties that merely furnish material or supplies without fabricating them into, or consuming them in the performance of work, do not need to be licensed. Bus & Prof Code Section 7052.
There are sever fines and penalties for those who improperly perform construction work without a license. A contract between any contractor and an unlicensed subcontractor is a misdemeanor. Lack of a license bars all actions in law or in equity for collection of compensation for the performance of work requiring a license. There are very few exceptions to this rule. A “savvy” unlicensed contractor cannot simply avoid these requirements by “subbing” out all the work to licensed contractors. Any person who uses the services of an unlicensed contractor may file a court action or cross-complaint to recover all payments made to the unlicensed contractor. In addition, a person who uses the services of an unlicensed contractor is a victim of a crime and eligible for restitution of economic losses regardless of whether that person had knowledge that the contractor was unlicensed. Bus. & Prof Code Sections 7028, 7028.16. It goes without saying that performing work without a license on projects is a bad idea.
Reprinted courtesy of
William M. Kaufman, Lockhart Park LP
Mr. Kaufman may be contacted at wkaufman@lockhartpark.com, and you may visit the firm's website at www.lockhartpark.com
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Tighter Requirements and a New Penalty for Owners of Vacant or Abandoned Storefronts in San Francisco
June 18, 2019 —
Matt Olhausen - Gravel2GavelOrdinance 52-19 became effective in April 2019 and expands upon existing San Francisco Building Code registration requirements for “Vacant or Abandoned” “Commercial Storefronts.”
A storefront becomes “Vacant or Abandoned” once it has been unoccupied for 30 days (among other earlier triggers for blighted or unsecured storefronts). A “Commercial Storefront” is broadly defined as “any area within a building that may be individually leased or rented for any purpose other than Residential Use as defined in Planning Code.” (See § 103.A.5.1 of the San Francisco Building Code.) So, a building that is 97% leased could still contain a Vacant or Abandoned Commercial Storefront, which would technically require registration under the Building Code.
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Matt Olhausen, PillsburyMr. Olhausen may be contacted at
matt.olhausen@pillsburylaw.com
Tort Claims Against an Alter Ego May Be Considered an Action “On a Contract” for the Purposes of an Attorneys’ Fees Award under California Civil Code section 1717
April 12, 2021 —
Tony Carucci - Snell & Wilmer Real Estate Litigation BlogCalifornia Civil Code section 1717 entitles the prevailing party to attorneys’ fees “[i]n any action on a contract,” where the contract provides for an award of attorneys’ fees to the prevailing party, regardless of whether the prevailing party is the party specified in the contract or not. But what about an action that alleges tort causes of action against an alter ego of a contracting party but that does not include a breach of contract claim against the alter ego? This was the question facing the California Court of Appeal in 347 Group, Inc. v. Philip Hawkins Architect, Inc. (2020) 58 Cal.App.5th 209.
In that case, the plaintiff 347 Group sued and obtained a default judgment for breach of contract against defendant Philip Hawkins Architect, Inc. Id. at 211–12. 347 Group had also sued Philip Hawkins individually as well as Design-Build, Inc., the company Hawkins founded after putting Philip Hawkins Architect, Inc. into bankruptcy. Id. at 212. 347 Group originally alleged claims for breach of contract, fraudulent conveyance, and conspiracy against Hawkins and Design-Build, seeking to establish that Hawkins and Design-Build were the alter egos of the contracting party, Philip Hawkins Architect, Inc., but later dismissed the breach of contract claim. Id. Hawkins and Design-Build eventually prevailed on the tort causes of action, and moved for attorneys’ fees. Id.
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Tony Carucci, Snell & WilmerMr. Carucci may be contacted at
acarucci@swlaw.com
Wilke Fleury Welcomes New Civil Litigation Attorney
January 18, 2021 —
Wilke Fleury LLPIslam Ahmad represents clients on a broad range of civil ligation matters, with a focus on construction, real estate, and commercial disputes. He has represented all sides of construction and real estate cases, including owners, buyers, developers, and general contractors. He possesses superb legal research and writing skills that ensure no stone is left unturned that may improve the chances of victory for his clients.
Islam Ahmad has a sophisticated working background and a wealth of experience that make him ideal for taking on clients’ challenging cases and resolving them in their best interest. His intuition makes him versatile and capable of dealing with a wide range of issues. Islam is also capable of incorporating business performance factors into his legal advice by drawing from his prior experience as a business consultant. This comprehensive approach allows him and his clients to develop sound risk management strategies and business plans.
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Wilke Fleury LLP
Is Privity of Contract with the Owner a Requirement of a Valid Mechanic’s Lien? Not for GC’s
January 04, 2021 —
Christopher G. Hill - Construction Law MusingsAs any reader of this construction law blog knows, mechanic’s liens make up much of the discussion here at Construction Law Musings. A recent case out of Fairfax County, Virginia examined the question of whether contractual privity between the general contractor and owner of the property at issue is necessary. As a reminder, in most situations, for a contract claim to be made, the claimant has to have a direct contract (privity) with the entity it sues. Further, for a subcontractor to have a valid mechanic’s lien it would have to have privity with the general contractor or with the Owner.
The Fairfax case, The Barber of Seville, Inc. v. Bironco, Inc., examined the question of whether contractual privity is necessary between the general contractor and the Owner. In Bironco, the claimant, Bironco, performed certain improvements for a barbershop pursuant to a contract executed by the two owners of the Plaintiff. We wouldn’t have the case here at Musings if Bironco had been paid in full. Bironco then recorded a lien against the leasehold interest of The Barber of Seville, Inc., the entity holding the lease. The Plaintiff filed an action seeking to have the lien declared invalid because Brionco had privity of contract with the individuals that executed the contract, but not directly with the corporate entity.
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The Law Office of Christopher G. HillMr. Hill may be contacted at
chrisghill@constructionlawva.com
One-Upmanship by Contractors In Prevailing Wage Decision Leads to a Bad Result for All . . . Perhaps
July 19, 2021 —
Garret Murai - California Construction Law BlogFights between contractors can be a bit like Mad magazine’s “Spy vs. Spy” with each side trying to out outwit and one-up one another. The next case, Division of Labor Standards Enforcement v. Built Pacific, Inc., Case No. D076601 (March 15, 2021), is a case in point.
The Built Pacific Case
Built Pacific, Inc. was a subcontractor to Austin Sundt Joint Venture on a public works project known as the San Diego Regional Airport Authority Project.
In 2015, following an investigation by the California Division of Labor Standards Enforcement (DLSE), the DLSE issued a Civil Wage Penalty Assessment of $119,319.76 based on Built Pacific’s failure to pay prevailing wages. The DLSE also named Austin Sundt in the Civil Wage Assessment pursuant to Labor Code 1743 which makes contractors and subcontractors jointly and severally liable for wage violations. As a result of the Civil Wage Assessment, Austin Sundt withheld approximately $70,000 in retention from Built Pacific.
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Garret Murai, Nomos LLPMr. Murai may be contacted at
gmurai@nomosllp.com
