Recent Events and Cases
"Bona Fide Dispute" Broadly Defined by Court of Appeal January 26, 2010 12:25pm The Court of Appeal, in the case entitled Martin Brothers Construction, Inc. v. Thompson Pacific Construction, Inc., 2009 WL 4456380 (Cal. App. 3rd Dist.), has held that a general contractor on a public works project can withhold retention from a subcontractor, even in those instances where the subcontractor fully performs its contract in a timely manner, if the subcontractor presents extra work claims that are disputed by the general contractor, under the exception to Business and Professions Code Section 7107(e). The Court held that the statute does not narrowly construe "bona fide dispute" to performance issues by the subcontractor, but also includes claims by the subcontractor against the general contractor. This Court also held that a subcontractor can waive by contract the provisions of the prompt pay statutes set forth within Business and Professions Code Section 7107 and 7108.5. This decision is seen as having a substantial damaging effect upon subcontractors, if it is not overturned by the California Supreme Court, or in the alternative, the statute is not modified by the legislature. It is expected that further clarification will be forthcoming from one or the other branches of governement on this issue in the near future. Posted by Administrator The Removal of Buildings by itself is Lienable July 31, 2009 10:44am The Fifth Appellate District of the State of California recently issued a published opinion confirming that the removal of buildings on a site is included within the definition of a "work of improvement" for purposes of recording a mechanic's lien, and logically, for serving a stop notice on a private work of improvement. The Appellate Court explained that included within Section 3106 under the definition of "work of improvement" is the phrase "the demolition of buildings", and that there was, and is, no requirement that the contractor performing the demolition portion of the work has to also perform any subsequent new construction work, or that there has to be any new subsequent construction work at all. This should help those demolition contractors out there that had been questioning if, and to what extent, they had lien and stop notice rights on a private improvement (United Rentals Northwest, Inc. v. Snider Lumber Products, Inc., filed June 18, 2009). Posted by Administrator Substantial Compliance with Licensing Law July 31, 2009 10:43am Where licensed general contractor and responsible managing employee disassociated himself from partnership with defendants before defendants entered into a contract with plaintiff to perform home repairs and began work, defendants were not acting in substantial compliance with licensing requirements because defendants were never licensed prior to time contract was entered into and work commenced. [Oceguera v. Cohen (March 24, 2009) Cal. 2nd App.District]. Posted by Administrator Unlicensed Contractors May Not Assert Offsets July 31, 2009 10:42am The California Court of Appeal, Fifth Appellate District, has recently confirmed what many unlicensed contractors had feared, in ruling that a violation of Business and Professions Code Section 7031 not only (1) subjected the contractor to being barred from further recovery of contract sums otherwise due for material and labor provided to a project, and (2) provided for complete disgorgement of all compensation received from an owner for the work performed to date, but also now (3) barrs an unlicensed contractor from asserting a claim for offset for the material and services provided in connection with the unlincesed work. The Court wanted to make it clear that there will be no tolerance for unlicensed contractors operating within the State and that alll licensing issues must be cleared up prior to entering into the contract, and at all times during the course of the life of the project. [White v. Cridlebaugh (July 29, 2009) Cal. 5th App. District, Case No. F053843]. Posted by Administrator Charter Cities and Prevailing Wage Laws June 19, 2009 10:56am The California Court of Appeal, 4th District, recently issued an opinion that California's prevailing wage laws do not address matters of statewide concern, and therfore, charter cities are not required to comply with prevailing wage laws for public contracts financed solely by city revenues. The Court went on to say that such contracts are municipal affairs over which the charter city has paramount power under the California Constitution. This case arose when labor union sought Writ of Mandate forcing city to comply with prevailing wage law, after city adopted a charter specifically for the purpose of building its planned capital improvements without complying, and specifically enacted an ordinance that provided that the city need not comply. State Building and Construction Trades Council of California v. City of Vista, filed April 28, 2009. Posted by Administrator M & M Contractor Client Prevails Against Developer at Trial June 19, 2009 10:45am On January 16, 2009, a Riverside County Superior Court jury found in favor of Monteleone & McCrory’s client, an engineering contractor, on a breach of construction contract claim against the developer of a private residential construction project in Southern California. After a two-week trial, the jury deliberated for only four hours before returning a unanimous verdict in favor of the contractor in excess of $843,000. That verdict consisted of contract retention, unpaid time and material work, and a 2% per month penalty for wrongfully withholding the contractor’s retention for more than 25 months. The jury also found against the payment bond surety and the mechanic’s lien release bond surety. In addition to the amount awarded by the jury, the contractor is entitled to recover attorneys’ fees, expert fees, and court costs. The total judgment will likely exceed $1 million. To discuss the case in further detail, please contact Diana M. Dron at (714) 565-3170 or at dron@mmlawyers.com. . Posted by Administrator M & M Client Prevails at Trial re Cogeneration Plant June 19, 2009 10:45am On March 13, 2009, an Orange County Superior Court jury found in favor of Monteleone & McCrory’s client who sells energy from cogeneration systems. The trial involved reciprocal breach of contract claims regarding the performance of a cogeneration system and the defendant’s failure to pay for a portion of the power generated by that system as well as an issue of first impression in the State of California, by which the defendant sought to recover the $396,000 paid to our client for the energy used over several years. This complicated issue of first impression was based on whether our client was required to possess a contractor’s license from the State of California before it entered into the agreement to sell power. The argument was that our client, by hiring a licensed electrical contractor to place a concrete pad on defendant’s property and place the system on that pad, acted as a general contractor and was therefore, required to be licensed. Our trial briefs on this issue convinced the judge that our client had not acted as a contractor and was not required to be licensed. The jury deliberated for less than a day and returned a unanimous verdict in favor of our client and denied the defendant any recovery. The verdict was for more than $289,000. Our client will be entitled to recover attorney’s fees and allowable court costs pursuant to the terms of the contract, perhaps raising the total recovery to over $500,000. To discuss the case in further detail, please contact Patrick J. Duffy, III at (213) 612-9900 or Diana M. Dron at (714) 565-3170. Mr. Duffy and Ms. Dron may also be reached via their respective email addresses: duffy@mmlawyers.com and dron@mmlawyers.com. Posted by Administrator | Categories Recent Posts January 26, 2010 12:25pm Administrator July 31, 2009 10:44am Administrator July 31, 2009 10:43am Administrator July 31, 2009 10:42am Administrator June 19, 2009 10:56am Administrator June 19, 2009 10:45am Administrator |
