Tag Archives: Gibbs Giden Locher Turner Senet & Wittbrodt LLP

The Danger of Unconditional Waivers and Releases in Construction

If you are a specialty trade contractor, material supplier or other potential lien or bond claimant, you’ve undoubtedly faced this dilemma: “The customer will only release payment if we give them an unconditional waiver and releaseEveryone does it!

From a purely legal perspective and without taking into account business considerations, giving an unconditional waiver until you verify clearance of the payment is a very bad idea. There is a reason that most states (including California) offer an alternative: the conditional waiver.

The conditional waiver and release upon final payment is the most underutilized of the 4 statutory release forms in California. It exists, however, to protect contractors, suppliers and other claimants from precisely this situation. Try to educate the owner, lender, construction manager or other party requesting the release that a conditional waiver, coupled with a copy of a check that has successfully cleared, is the equivalent of an unconditional waiver and release. Blame it on your lawyer. Blame it on the dozens of claimants (including some in high profile appellate cases) that have gotten burned. Blame it on this post!

Of course, you will undoubtedly make exceptions from time to time as a business decision. Here is the take of Director of Finance, Thea Dudley, who considers the business aspect of the decision of whether to give an unconditional waiver before clearance of a payment: http://www.prosalesmagazine.com/business/money-management/theas-mailbag-the-lowdown-on-lien-waivers_o

 

For more information 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 2017 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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Beware: In a Settlement Silence on Fees is Not Golden

Businessman offering you to sign a document with focus to the te

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:

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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 ©

New Appellate Case Weighs in on the Technical Requirements for a Proper California Preliminary Notice

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While the facts are interesting, there is nothing particularly groundbreaking in a new appellate case about California preliminary notices (Hub Construction Specialties, Inc. v. Esperanza Charities, Inc. – filed February 8, 2016, Second District, Div. Eight).  The case, however, serves as a good reminder of the pervasive push and pull between “strict compliance” and “substantial compliance” when interpreting mechanics lien law statutes.  In doing so, the case revisits many of the seminal cases that interpret California’s preliminary notice requirement as a prerequisite to the enforcement of a mechanics lien, stop payment notice or payment bond claim.

In Hub Construction, the Court reversed the trial court’s order releasing the contractor’s mechanics lien for failure to provide proof of a certified mail return receipt.  But Hub Construction focuses on statutory interpretation for mechanics lien laws that were in effect prior to July 1, 2012 and, as the Court admits, “[u]nder the current law, this case would not be before us.”  Thus, the Court’s decision that absence of a certified mail return receipt does not bar enforcement of the mechanics lien in certain circumstances is largely irrelevant for future disputes.

The Court, however, reminds construction industry material suppliers, subcontractors, direct contractors, owners, lenders and other industry professionals, that when interpreting mechanics lien law statutes, the judiciary does its best to balance the divergent interests of the industry.  Specifically, the Court acknowledges that the Legislature imposes and requires strict compliance with some aspects of the mechanics lien law (e.g., “transmittal methods” and “notice requirements” as set forth in Harold L. James, Inc. v. Five Points Ranch, Inc. (1984) 158 Cal.App.3d 1, 6 (Harold James)) to fulfill the purpose of alerting owners and lenders to the fact their property or construction funds “might be subject to claims arising from contracts to which they were not parties and would otherwise have no knowledge.”  (Romak Iron Works v. Prudential Ins. Co. (1980) 104 Cal.App.3d 767, 778 (Romak).

In Harold James, the court concluded that “the Legislature’s explicit mandate requires a finding that, as a matter of law, the plaintiff’s use of outdated statutory language in its preliminary notice did not substantially comply with section 3097” (section 3097 was the relevant preliminary notice statute in effect prior to July 1, 2012).  The court noted that the statute required “a bold face alert to the property owner” with “explicit warning of the danger of losing his property in connection with the labor or materials which were or were to be furnished by the subcontractor giving the notice.” (Id. at 7).  The court further noted that claimant’s notice used outdated statutory language “in rather small print” (id. at 3), and observed that the Legislature, in amending the statute in 1976, “unmistakably expressed its dissatisfaction with the former statutory language and the manner of its presentation” and “was concerned with making the notification process as conspicuous to the owner as possible” (Id. at 7).

In addition to Harold James and Romak, the Court noted that IGA Aluminum Products, Inc. v. Manufacturers Bank (1982) 130 Cal.App.3d 699 (IGA) was “the principal case cited for the proposition that notice requirements are to be strictly construed.”  In IGA, the question on appeal was whether the preliminary notice requirement was satisfied by actual written notice delivered by ordinary first class mail.  The appellate court affirmed the trial court’s granting of summary judgment in favor of the owner opining that “[o]bviously[,] the substantial compliance doctrine has no application in the present case”; the preliminary notice  statute was “unambiguous as to its notice requirement, and[,] therefore[,] there is no room for judicial construction, liberal or otherwise.”  (Id. at 703, 704;see also Romak, supra,104 Cal.App.3d at pp. 778, 773 [claimant’s failure to give preliminary notice to the defendant construction lender was fatal since the statute “imposed on [the plaintiff] an absolute obligation (“must”) to give a preliminary 20-day notice to [the construction lender] ‘as a necessary prerequisite to the validity’ of any stop notice given it later”].)

At the same time, however, the Court acknowledged that California courts do not always demand such strict compliance in order to fulfill the long-established principle that the mechanics lien law is “remedial legislation, to be liberally construed for the protection of laborers and materialmen.” (Connolly Development, Inc. v. Superior Court of Merced County (1976) 17 Cal.3d 803, 826-827).  The Court invoked the precedent of cases such as Industrial Asphalt, Inc. v. Garrett Corp. (1986) 180 Cal.App.3d 1001 (Industrial Asphalt), in which the plaintiff served the required preliminary notice on the owner, but failed to serve the required notice on the direct contractor. (Id. at p. 1005.) The Industrial Asphalt court, however, reversed the trial court’s invalidation of the lien, stating:

“To construe the statute strictly would require us to invalidate a lien against an owner who received notice because someone else, the original contractor, did not receive notice. That strict statutory construction would allow a party who received the required notice to be insulated from liability because another party did not receive notice. We do not believe that the statute’s
purpose should, or does, lead to this aridly formalistic result. We hold that the plaintiff‟s notice to the defendant satisfied the prerequisites for a valid lien against the defendant, and we reverse the trial court’s judgment.”

(Id. at 1006).  To hold otherwise, the Industrial Asphalt court held, would “allow the statute to frustrate enforcement of the constitutional remedy instead of to effectuate it.”  (Id. 1008).

At the end of the day, the Hub Construction Court returned to Harold James to distill the following principle reconciling cases requiring strict compliance and cases calling for liberal construction of lien statutes (Harold James, supra, 158 Cal.App.3d at 6):

“The general principles of liberal construction…are still good law, subject to this refinement . . . : where the Legislature has provided a detailed and specific mandate as to the manner or form of serving notice upon an affected party that its property interests are at stake, any deviation from the statutory mandate will be viewed with extreme disfavor….

“[W]e conclude that the transmittal
methods and notice requirements must be strictly construed. However, the issue of minor errors in the body of the notice must be independently addressed on a case-by-case basis, if and when such a case is presented.”

To read the entire case, go to http://www.courts.ca.gov/opinions/documents/B263398.PDF

For more information about this topic please contact:

Ng-Chris-web

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 2016 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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Will Balcony Collapse Lead to New Contractor Reporting Requirements?

balcony

In the wake of last month’s tragic apartment balcony collapse in Berkeley that killed 6 and seriously injured 7 others, two Northern California state senators have introduced new legislation with the stated goal of improving “construction industry disclosure.”  Senate Bill 465 would require contractors to report to the Contractors State License Board (CSLB) if and when they are convicted of a felony “or any other crime substantially related to the qualifications, functions, and duties of a licensed contractor.”  The proposed law would also require that every licensed contractor report “any civil action settlement…resulting in a settlement worth $50,000 or more, or a binding arbitration…worth $25,000 or more, resulting from specified acts.”  Finally, the law would also require insurance carriers to report any payment of all or a portion of a civil action settlement or binding arbitration award against the contractor.

The bill, supported by the City of Berkeley and various public interest groups, has been touted as a public safety measure that would require the disclosure of criminal convictions and civil suits in cases of construction defects, fraud, negligence and incompetence.  The California Building Industry Association and other trade groups oppose the legislation because it is overbroad and fails to take into account the reality of doing business as a contractor in the State of California.  Moreover, opponents of SB 465 argue that the required disclosures are not good indicators of whether a contractor is a bad actor or whether a contractor’s license should be considered for revocation because, for example, contractors are often principally liable for others and settle claims even when they are not primarily or directly at fault.

SB 465 is available for viewing here and more information about SB 465 from the San Jose Mercury News can be viewed here.  We’ll be keeping a close eye on SB 465 as it progresses through the legislative process.

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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Using Apprentices on California Public Works Projects

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New Case Clarifies Use of Apprentices on Public Works:  Use of Craft Labor Rather than Pipefitter Apprentices Is Appropriate On Water Projects When On-Site Journeymen Were Union Laborers.

A group of pipefitter apprentices alleged lost wages and training and violation of Labor Code Section 1777.5 against a prime contractor who, as signatory to a collective bargaining agreement with a laborers union, hired apprentice laborers rather than  apprentice pipefitters to perform process pipe work on dozens of water and sewage treatment systems in Northern California.  The trial court found that the term “craft or trade” in section 1777.5 refers to the journeyman’s trade or occupation, not the work processes in which they engage on any given day.  In the new case, Henson v. C Overaa & Co., the CaliforniaCourt of Appeal agreed with the trial court.  Although subdivision (b) provides that apprentices be employed only at the work of the craft or trade to which he or she is registered, the plain language of subdivisions (g) and (h) refers to employing apprentices in the same craft or trade as journeymen employed at the job site.  The plaintiffs did not dispute that the on-site journeymen laborers were qualified to perform the process pipe work.  Moreover, nothing in the DIR regulations limits a journeyman to performing work processes on which his apprenticeship program has been authorized to train.  The Court saw no harm in labor apprentices receiving training in processes that were not expressly listed in the laborer apprenticeship standards.  The Court reasoned that any other reading of the statute has the potential to place an unreasonable burden on contractors (e.g., choose between violating a collective bargining agreement of the statute).

Barbara R. Gadbois, Esq.
Gibbs Giden Locher Turner Senet & Wittbrodt LLP
1880 Century Park East 12th Floor
Los Angeles, CA 90067
email: bgadbois@gibbsgiden.com

For more information from Barbara R. Gadbois, Esq. visit:

 http://www.gibbsgiden.com/_blog/Construction_and_Public_Contracts

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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Authorization for Hospital to Use Design Build

AB 1290 adds Section 32132.8 to the Health and Safety Code to authorize the Mayers Memorial Hospital District to use this design-build process when contracting for the construction of a building and improvements directly related to a hospital or health facility building.

Text of the bill can be found at  https://legiscan.com/CA/text/AB1290/id/1148199

For more information about this topic please contact:

Barbara R. Gadbois, Esq.
Gibbs Giden Locher Turner Senet & Wittbrodt LLP
1880 Century Park East 12th Floor
Los Angeles, CA 90067
email: bgadbois@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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Using Apprentices on Public Works Projects

pipefitterMedium

New Case Clarifies Use of Apprentices on Public Works: Use of Craft Labor Rather than Pipefitter Apprentices Is Appropriate On Water Projects When On-Site Journeymen Were Union Laborers

A group of pipefitter apprentices alleged lost wages and training and violation of Labor Code Section 1777.5 against a prime contractor who, as signatory to a collective bargaining agreement with a laborers union, hired apprentice laborers rather than apprentice pipefitters to perform process pipe work on dozens of water and sewage treatment systems in Northern California. The trial court found that the term “craft or trade” in section 1777.5 refers to the journeyman’s trade or occupation, not the work processes in which they engage on any given day. The First Appellate division of the California Court of Appeal agreed with the trial court. Although subdivision (b) provides that apprentices be employed only at the work of the craft or trade to which he or she is registered, the plain language of subdivisions (g) and (h) refers to employing apprentices in the same craft or trade as journeymen employed at the job site. The plaintiffs did not dispute that the on-site journeymen laborers were qualified to perform the process pipe work. Moreover, nothing in the DIR regulations limits a journeyman to performing work processes on which his apprenticeship program has been authorized to train. The Court saw no harm in labor apprentices receiving training in processes that were not expressly listed in the laborer apprenticeship standards. The Court reasoned that any other reading of the statute has the potential to place an unreasonable burden on contractors.

For more information about this topic please contact:

Barbara R. Gadbois, Esq.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP

1880 Century Park East 12th Floor

Los Angeles, CA 90067

email: bgadbois@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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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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Contractors: To Avoid License Suspension, Report Judgments to CSLB

Contractors Must Report All Judgments to Contractors State License Board in order to Avoid License Suspension

A new case, Pacific Caisson & Shoring, Inc. v. Bernards Bros., Inc. 2015 DJDAR 5486 was issued by the Court of Appeals, Second District on May 18, 2015, which held that a contractor, whose license was suspended for failing to notify the California Contractors State License Board (“CSLB”) of a judgment against it, was not entitled to recover for work under the substantial compliance exception found in Bus. & Prof. Code §7031(e).      While Pacific Caisson was performing a subcontract for Bernards Bros., the CSLB suspended Pacific Caisson’s license for 77 days.  The suspension was because the qualifier for Pacific Caisson was also the qualifier for another company called Gold Coast Drilling, Inc. (“Gold Coast”) and Gold Coast had an unsatisfied judgment against it for failing to pay union employee benefits.  The union notified the CSLB of the unsatisfied judgment and the CSLB suspended Gold Coast’s license and Pacific Caisson’s license (because both share the same qualifier, both licenses are suspended pursuant to Bus. and Prof. Code §7071.17(j)).

Since Gold Coast failed to notify the CSLB within ninety (90) days of the date of the judgment, the license was automatically suspended pursuant to §7071.17.  On this evidence, the trial court ruled that Pacific Caisson did not qualify for the substantial compliance exception because it had failed to demonstrate under the second prong of the exception that it “acted reasonably in good faith to maintain the proper license.”  The court reasoned that the RMO for both companies was responsible for ensuring full compliance with the laws concerning construction operations and Section 7071.17(b) obligated Gold Coast to report the unsatisfied stipulated judgment within 90 days.  Failing to notify the CSLB was found to be neither in good faith nor reasonable.

The Court found that Gold Coast was obligated to notify the CSLB as soon as the stipulated judgment was entered.  It relied on the old language of §7071.17 which stated that the CSLB required notification of “any entered and unsatisfied judgment within ninety days from the date of judgment.”  Thus, the court concluded that as soon as the stipulated judgment was entered, it was “unsatisfied” regardless of whether Gold Coast thereafter made installment payments.  Section 7071.17(b) has changed since in that it requires “all licensees shall notify the Registrar in writing of any unsatisfied final judgment imposed upon the licensee.  If the licensee fails to notify the Registrar in writing within ninety days, the license shall be automatically suspended on the date the Registrar is informed or is made aware of the unsatisfied final judgment.”  It is less clear in the new code section when the ninety days starts to run, but one has to assume that the time begins to run at the time of judgment.  Therefore, it is prudent to inform the CSLB of any unsatisfied judgment within ninety days of entry of judgment.

It has been argued that if the judgment is on appeal, then the judgment is not considered “final” for the purpose of §7071.17.  Although this issue was not presented to the court, it appears that an appeal does not change the requirement to report the judgment to the CSLB.   Note that under §7071.17, a licensee may post a bond on any unsatisfied judgment; bonds are also required on appeal to stay enforcement of judgments.

Here are the steps that a contractor should take to protect its license from being suspended after an entry of judgment:

  1.                 Inform the CSLB of any judgment within 90 days of entry (unless the judgment has been fully paid in that time period).
  2.              If the judgment will be appealed, post a bond with the CSLB to avoid license suspension.  You have ninety days from the date of notification to provide the bond.
  3.                If you have entered into a payment plan with the creditor, in lieu of filing the bond, you can provide the CSLB with an accord reached with the creditor that is notarized by both parties to avoid license suspension.  Make sure that any installment agreement includes provisions that creditor will agree to notarize this accord.

Failure to follow the steps outlined above will result automatic suspension of the license and will put all projects that are ongoing at the time of suspension at risk.

For more information about this topic please contact:

Marion T. Hack, Esq.

Gibbs Giden Locher Turner Senet & Wittbrodt LLP

1880 Century Park East 12th Floor

Los Angeles, CA 90067

email: mhack@gibbsgiden.com

For more from Marion T. Hack, Esq. visit http://www.gibbsgiden.com/_blog/Construction_and_Public_Contracts.

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. For specific questions about any of the content discussed herein please contact the article attorney author or send an email to info@gibbsgiden.com. The transmission of information by email, or any transmission or exchange of information over the Internet, or by any of the included links is not intended to create and does not constitute an attorney-client relationship. This publication may not be reproduced or used in whole or in part without written consent of the firm.

Copyright 2015 Gibbs Giden Locher Turner Senet & Wittbrodt LLP ©

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