Public Works

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By Robert T. Sturgeon

Harper/Neilsen-Dillingham, Builders, Inc. v. United States, 81 Fed. Cl. 667 (2008)

California has long followed a public policy which limits the enforcement of so-called "no damage for delay" clauses in construction contracts on public projects. The policy is embodied in part by section 7102 of the Public Contract Code, which limits the enforcement of such clauses contained in both public contracts between contractors and public entities, and in subcontracts between private parties relating to public projects. The rule against "no damage for delay" clauses is based on the common law principle that courts should strictly construe clauses which work a forfeiture, a policy which arguably applies with equal force to both public and private contracts. In this regard California Civil Code section 1635 provides that public and private contracts are to be interpreted by the same rules. Thus, many California practitioners believe that the rule does or should extend generally to all construction contracts, both public and private. The case of Harper/Nielson-Dillingham Builders, Inc. v. United States is significant because it presents a potential exception to this long-standing rule. In Harper/Nielson-Dillingham, the United States Court of Federal Claims held that under California law, "no damage for delay" clauses in contracts between private parties on federal public works projects are per se enforceable, and that a federal agency may successfully defeat a subcontractor’s pass-through delay claim by relying on a "no damage for delay" clause in the subcontract between the general contractor and subcontractor.
 Continue Reading Federal Court Holds “No Damage for Delay” Clauses Are Per Se Enforceable on Federal Public Works Projects in California

By Edward B. Lozowicki

As residential and commercial construction markets evaporate and contractors fight for survival, new opportunities are appearing in the form of public infrastructure projects. The federal government is pouring money into public infrastructure and construction projects, to the tune of about $143 billion in total. Of that total, about $14 billion is designated for the California market. In addition, the State continues to fund projects from Proposition 1B and 1C bonds, and gas tax revenues. Much of the money will fund infrastructure projects awarded by the state and local government agencies. These new opportunities, however, come with new risks. One such risk is a general contractor’s liability for its subcontractors’ unpaid or under-paid employees on public infrastructure projects.
 Continue Reading General Contractors’ Liability to Subcontractors’ Employees On Public Infrastructure Projects

By James G. Higgins

Prompt payment laws can pose significant risk to owners and contractors.  In S&S Cummins Corp. v. West Bay Builders, Inc. 2008 Cal. App. LEXIS 160, *, a public works general contractor was stung under Public Contract Code section 7107 for delaying retention payments to an electrical subcontractor.Continue Reading Court Clarifies Prompt Payment Risks to Contractor

In a case of first impression, the Court of Appeal in Violante v. Communities Southwest Development and Construction Co. held that employees on public works projects may only sue their own employer for alleged prevailing wage violations.Continue Reading Employees Limited To Claims Against Their Employer For Alleged Failure To Pay Prevailing Wages On Public Works Projects

Greystone Homes, Inc. v. Cake37 Cal. Rptr. 3d 183 (2005)

By Matthew W. Holder

The California Court of Appeal recently affirmed a 2004 Supreme Court decision that impacts when prevailing wages need to be paid on projects where the contract was signed before January 1, 2001. At issue in Greystone Homes, Inc. v. Cake, 37 Cal. Rptr. 3d 183 (2005), was whether a 134-unit housing development project constituted a "public work," and thus required the payment of prevailing wages. The awarding body for the project was the Pleasant Hill Redevelopment Agency (the "Agency"). The Agency had contributed three forms of public funds to the project:

  1. it had conveyed one parcel of property (out of 29 total parcels used) to the developer for use in the project
  2. it paid a $200,000 "Traffic Impact Mitigation Fee" to the developer, and
  3. it reimbursed the developer for upwards of $2.5 million in land acquisition costs. The total estimated cost of the project was $31.3 million.

Continue Reading California Court of Appeal Affirms That Certain Types of Public Contributions Do Not Make Development a “Public Work” Under Former Version of Statute