Category Archives: Construction Claims and Litigation

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Revised Construction Industry Arbitration Rules Adopted by American Arbitration Association

The American Arbitration Association (“AAA”) issued revised Construction Industry Arbitration Rules which took effect July 1, 2015.  There are significant changes in the new rules which are intended to make the arbitration process more efficient and cost-effective.  The changes include several completely new rules which provide expanded authority to the arbitrator to control the course … Continue Reading

Principal Architects on Residential Projects Liable for Construction Defects Outside Their Control; Developers and Owners May Pay the Price

Beacon Residential Community Assoc. v. Skidmore, Owings & Merrill, LLP (Cal. Supreme Court., 07/03/2014, S208173) On July 3, 2014, the California Supreme Court decided the much watched case Beacon Residential Community Assoc. v. Skidmore, Owings & Merrill, LLP.  The court held that the “principal architect” “owes a duty of care to future homeowners in the design … Continue Reading

A Construction Defect Insurance Carrier Need Only Demonstrate That Another Insurance Carrier’s Policy May Potentially Cover The Claim In Order To Recover Equitable Contribution To A Settlement

A California Appellate Court recently clarified the burden of proof for an insurance company seeking contribution from another insurance company in settlement of a construction defect action. When a company involved in construction is sued for allegedly causing property damage to the building or structure it built (i.e. a construction defect), the company typically turns … Continue Reading

New Court Decision Clarifies Mechanic’s Lien Valuation Statute

The amount of a mechanic’s lien in California is generally the lesser of: 1) the reasonable value of the work; or 2) the price agreed upon in the lien claimant’s contract. But does the same measure apply if a lien defendant was not a party to the contract? In Appel v. Superior Court of Los … Continue Reading

“Good Faith” In Prompt Payment Disputes

By Candace L. Matson In California, the payment of contractors is governed by so-called “prompt payment statutes” which are sprinkled through various legislative codes, and which impose sanctions on the paying party for non-compliance. Progress payments by general contractors to their subcontractors on private and most public works of improvement are governed by section 7108.5 … Continue Reading

Contractors Can Recover for Public Agency’s Failure to Disclose Material Information

By Edward Lozowicki In a recent decision the California Supreme Court expanded the implied warranty of specification suitability to include claims for a public agency’s failure to disclose material information. In doing so it resolved a split in the decisions of the lower appellate courts. Notably, the Court adopts virtually the same rationale recognized by … Continue Reading

California Court of Appeal Limits Duties Owed by Construction Managers to General Contractors

By John A. Yacovelle and Matthew W. Holder In a recent case the California Court of Appeal confirmed in an unpublished decision that, when a construction manager is tasked with supervising and managing a general contractor, the construction manager does not owe a duty of care to the general contractor to prevent economic loss. The … Continue Reading

Modified Total Cost Method of Proving Damages: Approved For California Public Works

By Edward B. Lozowicki and Bram Hanono Dillingham-Ray Wilson v. City of Los Angeles, 182 Cal.App.4th 1396 (opinion modified by 106 Cal.Rptr.3d 691, (April 16, 2010, No. B192900)) In Dillingham-Ray Wilson v. City of Los Angeles, the California Court of Appeal signaled its holding in the first sentence of its opinion: "The City of Los … Continue Reading

Courts Uphold Disgorgement Penalty For Unlicensed Contractors

By Candace L. Matson As most construction professionals know, California law requires that any person engaged in the business of a contractor, or that acts in the capacity of a contractor, must be properly licensed by the Contractors State License Board (“CSLB”). Cal. Bus. & Prof. Code § 7028. A contractor is defined broadly, as … Continue Reading

Construction Manager Not Required To Be Licensed Pursuant To The Contractors’ State License Law

The Fifth Day, LLC v. James P. Bolotin, et al., ___ Cal.App.4th ___(March 27, 2009, No KC047712) By Jon E. Maki & Bram Hanono The California Court of Appeal for the Second Appellate District determined that an entity which provided construction management services to a private owner developing commercial real property was not required to be … Continue Reading

Court Of Appeal Finds That A Tolling Agreement Between An HOA And Developer Tolls The Applicable Statute Of Limitations Even As To A Non-Party Subcontractor.

Landale-Cameron Court, Inc. v. Ahonen (Oct. 10, 2007, B190309 [2nd Dist., Div. 2]), ___ Cal. App. 4th ____; http://www.courtinfo.ca.gov/cgi-bin/opinions By Thomas B. Snyder and Andriana Ledesma In Landale-Cameron, the homeowner’s association of a condominium complex ("HOA"), discovered various water leaks to the building and subsequently sued the builder-developers Arnold and Helen Kaufman ("Kaufman") and Petri … Continue Reading

Court Of Appeal Holds General Contractor Is Not Entitled To Indemnity From Subcontractors Under General Indemnity Clause Because General Contractor Was Actively Negligent

McCrary Construction Company v. Metal Deck Specialists, Inc., California Court of Appeal, First Appellate District, November 14, 2004 In McCrary, a general contractor sought indemnity from two of its subcontractors for damages arising from the death of a construction worker who fell through a hole in the metal roof of the project. One subcontractor, Metal … Continue Reading

Federal Circuit Court Rejects Claim That Contractor Violated The False Claims Act By Allegedly Submitting A Fraudulently Low Bid With The Intent Of Later Making Up For The Loss By Submitting Change Orders For Extra Work

United States ex. rel. Bettis v. Odebrecht Contractors of California, Inc. 393 F.3d 1321 (D.C. Cir. 2005) A contractor entered into a contract with the Army Corp of Engineers for construction of the Seven Oaks Dam in San Bernardino County, California. The plaintiff was an alleged “whistleblower” who worked for one of the contractor’s consultants. … Continue Reading
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