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A 2012 Update on New California Laws that May Impact the Construction Industry
Posted by: Jonathan Bowne
January 17, 2012
Topic: Legislative Developments

In 2011 the California legislature passed and the governor approved new legislation that will impact the construction industry. And some previously approved laws will be coming into effect in 2012. These modifications include several relatively high impact changes.

We have posted to our website an article outlining a selection of these changes. View it here.

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Can a project owner sue a contractor for slander of title on the basis that the contractor's mechanic's lien lacks merit? The answer is no.
Posted by: Jonathan Bowne
January 06, 2012
Topic: Mechanics Liens, Stop Notices and Payment Bonds

Project owners facing mechanic's lien claims they believe lack merit will often threaten to retaliate with a slander of title action against the claimant. But the law generally does not allow a slander claim against a lien claimant, even if the claim lacks merit. In a recent appeals court case a project owner sought to have the court create a lack of merit exception to this rule. The court refused to do so, instead confirming that even unmeritorious lien claims are privileged acts and not subject to a slander claim.

Learn more about this recent case and this issue generally by reading our article on the subject at our website, here.

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Have You Given Proper Notice of The Delay? California Appellate Court Permits Assessment of Liquidated Damages Due to Contractor?s Failure To Give Notice of Delay.
Posted by: Jonathan Bowne
January 03, 2012
Topic: Claims on Public Works Projects

In a recent case entitled Greg Opinski Construction v. City of Oakdale, 199 Cal.App.4th 1107 (2011) a California Appellate Court held that when a construction contract requires notice be given as a condition for getting an extension of time and notice is not given, the contractor cannot later claim that the delay was caused by the owner. This is noteworthy since it refutes prior precedent that allowed a contractor to assert that the liquidated damages should not be assessed since the public entity delayed the project during a period of owner caused delay.

This decision could have a significant impact on disputes concerning project delays and liquidated damages. While most sophisticated construction contracts include claim provisions relative to schedule extensions for non-contractor cause delays, these provisions are often time ignored by the parties. Many contractors operate under the assumption that regardless of the "fine print" in their contracts requiring notice of delay events, that ultimately a change order or favorable court judgment can eventually be secured so long as the contractor can prove that the owner (or non-contractor caused factors) caused the delay. The Opinski decision makes it clear that simply having the facts on your side is not enough, and that the technical requirements of the "fine print" claim provisions must be complied with.

See a more thorough article on this issue at our website, here. 

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Are you Prequalified to be Awarded Small Public Projects not Subject to Formal Bidding Requirements?
Posted by: Jonathan Bowne
January 03, 2012
Topic: Bidding, Mistaken Bids, Withdrawal of Bids, Bid Bond Claims and Bid Disputes

As contractors know, public works projects must be awarded via a public, competitive bidding process (excepting those where expenditures will be $5,000 or less). But in 1983 California legislators passed the California Uniform Public Construction Cost Accounting Act ("Act"), allowing some smaller projects to bypass the formal bidding process and be awarded either by negotiated contract, or via an informal bidding process. The Act also allows some particularly small projects to be self-performed by public agency forces.

The size of projects subject to the Act was recently increased. Until recently, the Act provided that projects anticipated to cost $30,000 or less could be self-performed by public agency forces, and projects anticipated to cost $125,000 or less could be awarded via a negotiated contract or informal bidding process.

In April 2011, pursuant to the terms of the Act, California State Controller John Chaing directed that the negotiated contract/informal bidding threshold be raised from $125,000 to $175,000, effective July 1, 2011. Two assembly bills were forwarded to modify the Act to conform to the Controller's modification (AB 720 and 943), one of which also proposed raising the self-performed work threshold from $30,000 to $45,000. Both of the bills passed, the latter of which was approved by Governor Brown in October 2011.

Accordingly, now projects anticipated to cost $175,000 or less may be awarded by negotiated contract or informal bid.

Contractors must be prequalified to seek these contracts. Interested contractors should inquire with public agencies in their market area for opportunities. Many agencies post applications at their website.

See a more thorough article on this subject at our website, here.

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Class A (General Engineering) licensed subcontractor deemed duly licensed even though the contract required C-12 license (Earthwork and Paving)
Posted by: Jonathan Bowne
November 03, 2011
Topic: California Contractor License Law

Any contractor seeking to assert a claim for payment in a lawsuit or arbitration must show that it was "duly licensed" to perform its work. In Pacific Caisson & Shoring Inc. v. Bernards Brothers, Inc., 198 Cal.App. 681 (2011) (published August 19, 2011) the question was whether a subcontractor was "duly licensed" when it held only a Class A license (General Engineering) even though the contract documents required a C-12 license (Earthwork and Paving).

The case arose from a public works project to construct a medical center. The claimant subcontracted to perform temporary excavation and support work. The subcontractor also agreed to provide certain engineering calculations and design parameters. The prime contract documents (which were incorporated into the subcontract) provided that this work was to be performed by a C-12 (Earthwork and Paving) licensed contractor. The subcontractor did not have a C-12 license but it did have a Class A license (General Engineering).

Eventually the subcontractor filed a lawsuit to collect allegedly unpaid amounts due for its work. At trial the prime contractor sought to invalidate the claim on the basis that the subcontractor was not "duly licensed" because it did not hold the specified C-12 license. The trial court agreed, judgment was entered in favor of the prime contractor, and the subcontractor appealed.

On appeal, the subcontractor argued that the specified C-12 license was essentially a "lesser" license, and would have been superfluous on this project as it is fully encompassed within the Class A license requirements. The prime contractor none of that mattered because the C-12 license was explicitly specified in the contract documents.

The court of appeals agreed with the subcontractor and vacated the trial court's judgment. The court focused its analysis on the formal license classification descriptions for each license (see them here: Class A and C-12), and how they each qualified the subcontractor to perform the scope of work. The court essentially determined that the activities required in the subcontract fell beyond the purview of the C-12 license. The subcontract required specialized engineering knowledge and skill, along with the provision of calculations and temporary shoring work. The court concluded that these tasks were not the expertise of a C-12 contractor, but could be performed by a Class A contractor. Accordingly, the court held that the subcontractor was duly licensed notwithstanding its lack of the specified C-12 license.

The court also addressed the prime contractor's argument that the contract document requirement of a C-12 license should control the analysis. The court discarded this theory, noting that the laws allowing public entities to specify license classifications in contract documents were meant to facilitate the evaluation of bidder qualification not determine proper licensure in third-party payment claims.

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