Category Archives: Litigation

Beware: In a Settlement Silence on Fees is Not Golden

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In DeSaulles v. Community Hospital (March 10, 2016) case no. S219236, the Supreme Court has weighed in with what it calls a “default” rule regarding which party may be entitled to costs when an action is dismissed by way of settlement.  Such a “default” rule in effect overturns the prior holding in Chinn v. KMR Property Management (2008) 166 Cal. App.4th 175, at 185–190.

 

The settlement in Desaulles was made and put on the record during trial as a result of rulings by the Court and included a monetary payment plus the Defendant to prepare a Judgment of Dismissal with prejudice with respect to certain adverse rulings that Plaintiff wanted to appeal.  The settlement preserved the right to seek costs after the appeal was complete:  “The Parties shall defer seeking any recovery of costs and fees on this Judgment coming final after the time for all appeals.”  Plaintiff filed an appeal and lost.  Upon remand, Plaintiff filed for costs as prevailing party and the Supreme Court reversed the trial court’s ruling that Plaintiff was not the “prevailing party” under CCP 1032(a)(4), holding that under the statute, the monetary payment was a “net monetary recovery” which made the Plaintiff the prevailing party entitled to costs.

 

By referring to this as a “default” rule, the Court’s opinion applies to cases where the parties have not addressed “costs” in the settlement agreement or in a CCP 998 offer.

 

The  Supreme Court indicated this “default” may be altered by express agreement of the parties and that trial courts may look to such agreement of the parties when considering the issue of who is the prevailing party for purposes of costs when there has been a settlement. The Court stated:  “. . . settling parties are free to make their own arrangements regarding costs,”  and “Section 1032 merely establishes a default rule, and a settling defendant is in a far better position to calibrate the terms of a settlement, including allocations of costs, with appropriate provisions in the settlement.”

 

Costs, including defense fees as costs pursuant to a statute or contract, should be addressed in a written Settlement and Release Agreement which expressly provides either that costs are included in the settlement amount and/or that each side is waiving and releasing all claims, including costs. If there is an attorney fees provision at issue in the case, then a 998 offer should either include or exclude recoverable costs (which can include attorney fees).  If costs are excluded and Plaintiff accepts the 998 offer of money, plaintiff can then file a motion for recovery of fees as costs.  The same is true if a defendant accepts a Plaintiff’s 998 offer that is silent on the issue of costs.

 

For more information contact:

MICHAEL_GEIBEL_0309

Michael B. Geibel, Esq.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP

1880 Century Park East 12th Floor

Los Angeles, CA 90067

 

email: mgeibel@gibbsgiden.com

The content contained herein is published online by Gibbs Giden Locher Turner Senet & Wittbrodt LLP (“Gibbs Giden”) for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel.

Copyright 2016 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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Increased Strict Products Liability Exposure for Contractors

In Hernandezcueva v. E.F. Brady Company, Inc. (2015) 243 Cal.App.4th 249, the California Second District Court reversed a jury finding that a drywall subcontractor was not negligent, and held for the first time that under the “stream-of-commerce theory,” a contractor who uses, installs or furnishes defective products is subject to “strict products liability” even if the product is merely incidental to its work.  E.F. Brady was a drywall subcontractor who bid to install drywall.  Only 25% of its bid was allocated to materials and 75% was allocated to labor.  Unknown to the subcontractor, the joint compound contained asbestos.  The subcontractor was held liable under “strict products liability” law based on exposure occurring in 1995 for a mesothelioma diagnosis in 2011, since it had a “participatory connection” to the stream of commerce.

Almost all major manufacturers of asbestos containing products have filed for bankruptcy and established “trusts” to compensate persons suffering from mesothelioma, but under California law, partial payment by a manufacturer’s trust as a joint tortfeasor does not relieve the subcontractor from strict products liability for the unpaid balance of plaintiff’s total personal injury claim.  Under strict products liability, joint and several liability still applies.

The 25% allocation to material costs is not a bright line which will cutoff potential strict products liability. The Hernandezcueva decision is not limited to asbestos litigation, and the  decision is a reminder that contractors and subcontractors should carry increased liability limits with policies that afford completed operations and products coverage.  The increased risk exposure can be expected to increase insurance costs and the costs of construction, and may put small subcontractors at risk of insolvency since the average mesothelioma case can be in multiples of a million dollars.

For more information about this topic please contact:

 

MICHAEL_GEIBEL_0309

Michael B. Geibel, Esq.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP

1880 Century Park East 12th Floor

Los Angeles, CA 90067

 

email: mgeibel@gibbsgiden.com

The content contained herein is published online by Gibbs Giden Locher Turner Senet & Wittbrodt LLP (“Gibbs Giden”) for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel.

Copyright 2016 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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Contractors Risking More Than What They Bargained For?

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A couple of years ago, I co-authored a featured article for The Construction Lawyer(the Journal of the ABA Forum on Construction Law, Vol. 32, Issue 4, Fall 2012) entitled Is the Construction Manager Holding Any of the Cards? (A Critical Look at Construction Management at-Risk and Where it is Headed) and co-presented the topic at the 2012 ABA Forum on Construction Law’s Annual Meeting in Las Vegas at the Bellagio Hotel with Tishman Construction Senior Vice-President and General Counsel, Judy Herman, and Assistant General Counsel at Kiewit, John Carpenter. In both the paper and presentation, we discussed the role of construction manager at-risk (CMAR) in the modern construction industry, and the differences between the role of a CMAR and that of a classic general contractor. We also discusses the evolving legal risks faced by CMARs, including the potential risk of intentionally (or unintentionally) assuming the design of a project.

The Massachusetts Supreme Judicial Court is now reviewing a potentially seminal CMAR case, Coghlin Electrical Contractors, Inc. v. Gilbane Building Co. and Travelers & Surety Company of America, Docket No. SJC-11778.  The case will eventually mark one of the few appellate decisions (especially from a state supreme court) concerning a CMAR’s rights, duties and responsibilities on a private or public work of improvement.

Gilbane had entered into a public works contract for both preconstruction and construction services for the construction of a psychiatric facility. The public agency also entered into a separate agreement with the “Designer” of the project, Ellenzweig Associates, Inc. (“Ellenzweig”).  Gilbane’s involvement in the design of the project was limited to review of design documents prepared by Ellenzweig.  Interestingly, the contract specifically stated that in reviewing the design, Gilbane did not assume Ellenzweig’s responsibility for design.

Gilbane subcontracted with Coghlin Electrical Contractors, Inc. (“Coghlin”) to perform the electrical work on the project pursuant to the plans and specifications prepared by Ellenzweig. Coghlin submitted design related change order requests (“CORs”) to Gilbane who submitted them to the public agency. Coghlin sued Gilbane (who, in turn, asserted a third party (cross-complaint) against the public agency), seeking recovery for the CORs relying upon the public agency’s implied warranty of plans and specifications.

The trial court granted the public agency’s motion to dismiss Gilbane’s cross-complaint, specifically noting that the CMAR is project delivery method distinct from traditional design-bid-build and concluding that:

  • the public agency’s implied warranty of plans and specifications is “simply inapplicable” to the CMAR alternative project delivery method;
  • Gilbane assumed “additional duties and responsibilities for the project, including . . . an ongoing duty to ‘review the design documents for clarity, consistency, constructability, maintainability/ operability and coordination among the trades, coordination between drawings and specifications. . .’ ” due to its role as CMAR;
  • Gilbane assumed “additional financial exposure…in the event that something [went] wrong, including . . . a broad obligation to indemnify and defend the Owner from and against ‘all claims, damages, losses and expenses . . . arising out of or resulting from the performance of the Work[.]’ “;
  • Though the indemnity clause in contract documents did not extend to the liability of the Designer arising out of the preparation of the plans and specifications, that limitation did not limit Gilbane’s obligation to indemnify the public agency; and
  • even a change in the design of the walls and ceilings could not be a change in “scope” since the project, as initially planned, included wall and ceilings, thereby rendering those items within the original “scope” of the project.

Gilbane directly appealed the trial court’s order to the Massachusetts Supreme Judicial Court. Amicus briefs were filed by several interested parties, including the AIA, AGC of America and the American Council of Engineering.  If affirmed, contractors will rethink and/or certainly re-price CMAR opportunities (at least in Massachusetts) since they are likely to assume at least a significant portion of design liability for such a CMAR project even when the owner procures the design from an independent design professional.  Though oral argument was held exactly three months ago, the construction industry in Massachusetts (and around the country) anxiously awaits this important decision from the high court for the Commonwealth.

To review the court docket and case information, go to http://www.ma-appellatecourts.org/display_docket.php?dno=SJC-11778

For more information about this topic please contact:

Christopher E. Ng, Esq.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP

1880 Century Park East 12th Floor

Los Angeles, CA 90067

email: cng@gibbsgiden.com

The content contained herein is published online by Gibbs Giden Locher Turner Senet & Wittbrodt LLP (“Gibbs Giden”) for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel.

Copyright 2015 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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Hotels Fall Down and Go Boom in Vegas

What do famed Las Vegas hotels The Dunes, Stardust, Sands, Aladdin, El Rancho, Riviera and Desert Inn have in common?  They have all been imploded to make room for (hopefully) more profitable projects on and around the Las Vegas Strip. They also help to make Vegas the “implosion capital of the world.”   Ever wonder how demolition contractors prepare for controlled implosions? Check out today’s article in the Las Vegas Sun.  

For more information about this topic please contact:

Christopher E. Ng, Esq.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP

1880 Century Park East 12th Floor

Los Angeles, CA 90067

email: cng@gibbsgiden.com

The content contained herein is published online by Gibbs Giden Locher Turner Senet & Wittbrodt LLP (“Gibbs Giden”) for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel.

Copyright 2015 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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