Construction Litigation Blog
Labor Commission Cracking Down on California Labor Violations
By Patty League
The California Labor Commission is taking a hard stance on what it calls “wage theft” by general contractors working on public projects. In some of the cases noted by the Commission, the violations were egregious and intended; however, we know that many well-meaning employers often mis-classify employees by sheer misunderstanding of the law. With this [...]
Design Professionals’ Duties To Third Party Purchasers and Homeowners Associations Expanded
By Iman Reza
It used to be pretty simple. A design professional, such as an architect, had very limited duties to a third party purchaser of a home or a homeowners association (HOA). However, following a recent California appellate decision, that may no longer be the case. In its decision, the court recently expanded those duties. In Beacon [...]
Making a List and Checking It Twice: The Subcontractor Listing Law
The Subletting and Subcontracting Fair Practices Act (Public Contract Code (“PCC”) §§4100-4114), also known as the Subcontractor Listing Law (“Listing Law”), was enacted by the California Legislature to prevent the unconscionable business practices of bid shopping and bid peddling by contractors. The Listing Law applies to all public works projects within the State of California. [...]
Subcontractor’s Default Insurance A Viable Option to Performance Bonds
Most professionals in the construction industry are familiar with payment bonds and completion bonds. Completion bonds are typically purchased by the contractor, and it guarantees to the owner that if the contractor defaults, the surety (insurance company) will pay to complete the construction project. Sureties always require collateral. In the cases of smaller contractors the [...]
The Gamble of Working with Indian Tribes
By Patty League
The largest gaming club in the state of California is the Pechanga Resort and Casino in Temecula, with more than 3,000 slot machines and approximately 200,000 square feet of gaming space. Other famous gaming operations in California include the Morongo Casino, Resort & Spa, and the Chumash Casino Resort. These noted casinos are owned by [...]
Responsible Managing Officer (RMO) Abuse
We have written in other blogs the perils of doing work as an unlicensed contractor. There are obviously potential criminal penalties if a prosecutor determines that an unlicensed contractor intentionally misrepresented his licensure. But the single biggest threat to an unlicensed contractor is not getting paid for the labor and materials he or she put [...]
When to Claim the Miller Act Bond
By Patty League
Although there are remedies to collect what is owed on a private or public works project, when a party is not paid after providing work to a federal project, it only has the right to file a claim against the payment or construction bond. This is known as the Miller Act Bond. When we think [...]
Disadvantaged Business Enterprises
Potential Problems for the Unwary The United States, California, and many municipalities have published regulations that require general contractors to make good faith efforts to employ qualified Disadvantaged Business Enterprises (DBE) in construction projects in certain situations. A DBE is typically defined as a small for-profit business that is at least 51 percent owned by [...]
General Contractor Liability under the Privette Doctrine
What happens if a general contractor hires an independent contractor to perform dangerous work and one of the contractor’s workers is injured on the job? Is the general contractor liable for the worker’s injuries? In accordance with the case of Privette v. Superior Court (1993) 5 Cal.4th 689 and its progeny, the answer is “no,” [...]
Mechanics Lien Extension
By Patty League
If you’ve attended a Cummins & White’s construction seminar or listened to one of its webinars recently, you are well aware that after the recording of your mechanics lien, you have ninety (90) days in which to perfect that lien. After that ninety-day period, by operation of law, your lien is null and void if [...]
Barking Up The Wrong Tree – Contractor Arrested For Invalid Contractor’s License
A recent case in Sacramento highlights the necessity of being a licensed contractor when performing construction work that requires a license. The Contractor’s State License Board (CSLB), after receiving a tip, joined with law enforcement investigators and arrested a tree trimmer “contractor” for being an unlicensed contractor. Admittedly his story was quite egregious. He held [...]
To Bond or Not to Bond
It is no secret that in today’s economy, an increasing number of subcontractors and material suppliers are not being paid for work performed or materials supplied on construction projects. If a preliminary notice was properly served, the unpaid subcontractor or material supplier may serve a Stop Payment Notice on the property owner or lender. The [...]
How to Avoid Collection Issues When Dealing with Multi-Resident Projects
Most people in the construction industry who furnish labor, service, equipment, or material to a private work of improvement know that service of a 20-day preliminary notice is a prerequisite to the enforcement of both mechanics lien and stop payment notice rights. They know that typically they must record their mechanics lien if they are [...]
How Contractors Can Avoid Elder Abuse Accusations
By Patty League
We have all heard or read about unlicensed contractors who scam the elderly. I recently read an article from the Contractor’s State License Board’s (“CSLB”) website pertaining to this subject matter and quite frankly, it broke my heart. As our beloved parents and other family members age, they unfortunately become easy targets for these shameful [...]
Understanding Important Changes to Construction Laws
Part One: Preliminary Notices & Releases A major overhaul to mechanics lien laws will take effect July 1, 2012, and will greatly impact financial recovery efforts for construction trade professionals. Being aware of changes in the Preliminary Notice and Mechanics Lien process, and understanding new responsibilities for contractors and material suppliers, will help you avoid [...]
Bankruptcy in Construction—Never Give Up, Never
The owner/developer (owner) of the job that you provided $50,000 worth of materials and labor just filed for Bankruptcy. You have not been paid and now there is no money to pay contractors or material suppliers. You are out $50,000 right? That is the conventional “wisdom.” But it is not necessarily so. It is true [...]
Judgements
By Patty League
SMALL CLAIMS COURTS AND YOUR MECHANICS LIENS We’ve all heard how expensive it is to file a lawsuit in the California superior courts. On many occasions, a contractor may have a mechanics lien for less than $5,000 and think that he or she can save money by filing a lawsuit in the California small claims [...]
Lien Solutions for Tenant Improvements
When improvements, alterations, or repairs are made to real property, the owner of the property is usually involved in the process. But what happens when work is done on behalf of a lessee without the owner’s knowledge, approval, or participation, and the owner issues a valid notice of non-responsibility? In this situation, does a contractor [...]
California Ruling on Employee Meal & Rest Breaks
By Iman Reza
California Employers Must Provide Meal & Rest Periods, But Do Not Have to Ensure They Are Taken The California Supreme Court released its much anticipated decision regarding the requirements for meal and rest breaks for non-exempt employees. The decision in Brinker Restaurant Corp. v. Superior Court, No. D049331 (April 12, 2012) provides employers some needed [...]
Homeowners Beware—Make Sure That All Contractors, Sub-Contractors, and Material Supply Companies Are Paid
By Patty League
Homeowners who pay a contractor for construction work, including landscaping, may be held financially liable if the contractor fails to pay the subcontractors and material supply companies who also worked or provided product for your project. According to California law, subcontractors and material suppliers who are not paid by the contractor are able to record [...]
Supervisors of Companies May Now be Held Personally Liable in Wage & Hour Cases
By Iman Reza
The Importance of Complying with California Wage and Hour Laws The California Supreme Court expanded the definition of “employer” to include supervisors who “exercise control over the wages, hours or working conditions” or “suffer or permit to work” their employees (Martinez v. Combs (2010) 49 Cal.4th 35). Yes, that means supervisors of companies may now [...]
Tips To Avoid LLC License Application Delays
By Patty League
According to the California Contractors State License Board (CSLB), its Licensing division has processed about three dozen limited liability company (LLC) license applications; to date, five licenses have been issued. The LLC business classification became authorized to hold a California contractor license beginning January 1, 2012. The causes for the high rejection rate, include two [...]
Bonded Protection for Subcontractors and Material Suppliers
In California, a general contractor must file a payment bond on all public works projects over $25,000. Payment bonds are a form of guarantee ensuring that a subcontractor or supplier will be reimbursed for costs incurred on a public works project, including interest and attorney’s fees if a lawsuit becomes necessary. In the event a [...]
When Does Insurance Cover Faulty Workmanship?
Usually, commercial general liability (“CGL”) policies do not cover a contractor for property damage due to the contractor’s own faulty workmanship. As one California court summarized: “Generally liability policies … are not designed to provide contractors … with coverage against claims their work is inferior or defective…. Rather liability coverage comes into play when the [...]
Subcontractor Protection in Federal Projects—Miller Act
By Patty League
The Miller Act protects persons who have furnished labor or materials to contractors engaged in the construction, alteration, or repair of any public building or public work of the United States. Prior to 1894, the agreements or contracts that the U.S. Government awarded to direct contractors rarely had clauses that required the direct contractor to [...]
Limited Liability Companies (LLCs) Can Now Be Licensed California Contractors!
By Iman Reza
Based on the passing of SB 392 in 2010, the Contractors State License Board can now process applications by LLCs for contractor’s licenses. However, you should know that there are some additional requirements for an LLC to obtain a contractor’s license. For example, the LLC application must include as Personnel of Record all directors, [...]
Bankruptcy Can Take A Toll On A Mechanics Lien Claim
Generally, once a mechanics lien is recorded, a lien claimant must file an action to foreclose on the lien within 90 days of the recording date. If a claimant fails to file an action within that time period, his or her lien rights are automatically forfeited. But what happens if a mechanics lien is recorded [...]
New Law Affecting California Employers (Effective January 2012)
Labor Code Section 2810.5 (AB 469) requires employers to issue a notice to all new non-exempt employees effective January 1, 2012. The notice should contain all of the following information: “At the time of hiring, an employer shall provide each employee a written notice, in the language the employer normally uses to communicate employment-related information [...]
You Say Mechanic’s Lien, We Say Mechanics Lien
By Patty League
The big buzz and concern in the construction industry are the new laws, some of which have already taken effect and the balance or bulk taking effect July 1, 2012. The complete Mechanic’s Lien Law has been recodified under Senate Bill 189. By the way, that apostrophe I used in the word Mechanic’s that we’ve [...]
The Participating Owner — Leased Responsibility
Under California law, contractors and materialmen may record a mechanics’ lien against real property when improvements are made “at the instance” of the owner or his agent. But what happens if the improvements are made “at the instance” of a landlord’s tenant and the tenant is later unable to pay? Generally, if the property is [...]
Preliminary Notices — The Devil is in the Details
By Iman Reza
In order for a subcontractor or material supplier (who does not have a contractual relationship with a general contractor on a public works project) to collect unpaid invoices through a stop notice or payment bond, they must have served the general contractor and the owner (public agency) with a timely Preliminary 20-Day Notice (“Notice”) [1]. [...]
Like Many in California, Construction Laws Receive a Face-Lift
By Patty League
As many of you construction fans know, Governor Schwarzenegger signed into law Senate Bill 189 (“SB 189”) in 2009. Many may be wondering, “What in the world is this?” Well, the answer is simple: SB 189 is a comprehensive face-lift regarding the filing and enforcement of mechanic’s liens and stop notices. It presents noteworthy and [...]
“Stuff You Already Know”
When my youngest daughter was about five years old, I recall one morning I gave her some parental “advice” about something. While my “advice” has been long forgotten by all parties concerned, my wife and I will never forget her response. She looked up with some frustration from her breakfast and asked me, “Are you [...]
Don’t Stamp Out Your Lien Rights!
Over the past few months, proof of service affidavits have come across my desk bearing signatures that were obviously the product of a rubber stamp. In fact, one “signature” was stamped in block letters. Clearly, the purpose of the stamped signatures is to streamline the preparation and service of the preliminary notices and reduce writer’s cramp.
