Sheppard Mullin

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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

Developers May Require That Construction Defect Disputes Be Resolved Through Arbitration

The California Supreme Court recently ruled that developers – by including an arbitration provision under the Federal Arbitration Act (FAA) in Homeowners’ Association Covenants, Conditions and Restrictions (“CC&R’s”) – may require that construction defect actions be resolved through arbitration rather than by jury trial. In Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, … Continue Reading

Charter Cities Are Not Required to Pay Prevailing Wages on Local Public Works Projects

Labor unions have long been at odds with California charter cities over whether such cities must pay prevailing wages on public works projects. While many charter cities have either not exempted themselves from state prevailing wage laws, or have passed their own prevailing wage laws, other charter cities have no prevailing wage laws for public … Continue Reading

Special Advisory: New Mechanics Lien Act in California

In 2010, the California Legislature enacted Senate Bill (“SB”) 189 to reorganize and simplify the laws governing works of improvement. The bill completely re-writes the statutes which provide for mechanics liens, stop notices and certain construction bonds. These revisions took effect on July 1, 2012. In addition to this reorganization, some substantive changes to the … Continue Reading

Court Broadly Defines Subcontractors Who Qualify For Payment Bond Claims

Can a supplier of construction materials be considered a “subcontractor” for purposes of enforcing its claim on a public works payment bond? The answer is “yes” according to a recent decision of the California Court of Appeal. In Eggers Industries v. Flintco, Inc., et al., 201 Cal. App. 4th 536 (3d Dist. 2011), rev. denied … Continue Reading

Federal Courts Overrule GAO and Require Reinstatement of Low Bidder

Contractors who file a bid protest challenging a federal contract award can do so in one of three forums: (1) the agency whose procurement decision is being challenged; (2) the Government Accountability Office (“GAO”); or (3) the Court of Federal Claims (“COFC”). Many federal contractors choose to file protests with the GAO because the GAO … Continue Reading

Public Private Partnership Upheld For Construction of Presidio Parkway

In 2009, the California legislature amended Section 143 of the Streets and Highways Code and greatly expanded availability of the public-private partnership (“P3”) as a mechanism to finance transportation infrastructure projects. In early 2010, under the authority of the newly amended Section 143, the California Department of Transportation (“CalTrans”) began to implement part of the … Continue Reading

Construction Arbitration Clause Calling for Expanded Judicial Review Must be Explicit and Unambiguous

By Robert Sturgeon Parties to construction arbitrations who are disappointed with the arbitrator’s award are often doubly-disappointed to learn that they have very little chance of successfully appealing in a court to overturn the arbitrator’s decision. Because arbitration is intended to be a final and complete alternative dispute resolution process, judicial review of the arbitrator’s … 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

The Year 2010 In Review: Safety and Personal Injury Developments

This article is the eighth, and final, in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale Tverberg v. Fillner Construction, Inc., 49 Cal. 4th 518 (June 2010) The peculiar risk doctrine is a judicially created exception to the common law rule that a person hiring an independent contractor to … Continue Reading

The Year 2010 In Review: Construction Insurance Issues

This article is the seventh in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale Forecast Homes, Inc. v. Steadfast Insurance Co., 181 Cal. App. 4th 1466 (4th Dist. Jan. 2010), rev. denied, 2010 Cal. LEXIS 4356 A home developer, acting as a general contractor, hired subcontractors to build … Continue Reading

The Year 2010 In Review: Prevailing Wage & Employment Law

This article is the sixth in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale Alameda County Joint Apprenticeship and Training Committee v. Roadway Electrical Works Inc., 186 Cal. App. 4th 185 (1st Dist. June 2010) A general contractor and its electrical subcontractor working on the project to rebuild … Continue Reading

The Year 2010 In Review: Public Works Projects

This article is the fifth in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale A. Bidding Great West Contractors Inc. v. Irvine School District, 187 Cal. App. 4th 1425 (4th Dist. Aug. 2010) In Great West Contractors, the Fourth District held that a public agency’s rejection of a … Continue Reading

The Year 2010 In Review: Mechanic’s Liens, Lis Pendens and Construction Bonds

This article is the third in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale A. Mechanic’s Liens 1. New Requirement for Mechanic’s Liens (AB 457) Effective January 1, 2011, Civil Code Section 3084 is amended to require that mechanic’s lien claimants must give notice of certain information included … Continue Reading

The Year 2010 In Review: Contractor Licensing

This article is the second in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale 1. Loranger v. Jones, 184 Cal. App. 4th 847 (3d Dist. May 2010) Jones, a licensed contractor, had a workers’ compensation policy covering his employees. Jones unknowingly used an unlicensed subcontractor and knowingly permitted … Continue Reading

The Year 2010 In Review: Design And Construction Defects Litigation

This article is the first in a series summarizing construction law developments for 2010. By Candace Matson, Harold Hamersmith & Helen Lauderdale 1. Centex Homes v. Financial Pacific Life Insurance Co., 2010 U.S. Dist. LEXIS 1995 (E.D. Cal. 2010)   After settling numerous homeowners’ construction defect claims – and more than ten years after the … Continue Reading

Congress Increases False Claims Liability for Public Works Contractors

By Bram Hanono The Fraud Enforcement and Recovery Act (FERA)[1] was signed into law in May 2009. Among other significant changes, FERA expanded the grounds for liability under the False Claims Act (FCA).[2] Public works contractors who work on projects funded with federal funds now stand an increased risk for potential liability under the FCA. … Continue Reading

Mechanic’s Lien Update: Lien Claimants Must Now Give Owners “Notice of Mechanic’s Lien”

By Edward Lozowicki & James Higgins California contractors and material suppliers beware. Beginning on January 1, 2011, a mechanic’s lien claimant will be required to give notice of a mechanic’s lien to the property owner. The notice must contain specific information, be included on the lien claim and be accompanied by a proof of service … Continue Reading

Architect-Engineer’s Duty to Defend Is Immediate Under Construction Indemnity Clause

By Helen Lauderdale Indemnification clauses in construction contracts often state that one party to the contract – the "indemnitor" – will defend and indemnify the other party from particular types of claims. On construction projects, the "indemnitors" are typically the contractor and architect/engineer ("A-E") who agree to defend and indemnify the owner – the "indemnitee." … Continue Reading
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