Justia Construction Law Opinion Summaries

Articles Posted in California Courts of Appeal
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The Contractors’ State License Law (Bus. & Prof. Code 7031), allows any person who utilizes the services of unlicensed building contractors to sue for disgorgement of all compensation paid for the performance of any act or contract, even when the work performed is free of defects. CDC brought a section 7031(b) claim for disgorgement against Obayashi in 2017, more than eight years after the completion of construction of the InterContinental Hotel in San Francisco. The issue of licensure came to light during litigation concerning construction defects.The trial court dismissed, citing Code of Civil Procedure 340(a), the one-year limitations period for statutory forfeiture or penalty causes of action. The court of appeal affirmed. The one-year statute of limitations applies to disgorgement claims brought under section 7031, and the discovery rule and other equitable doctrines do not. Even if such doctrines applied to statutory disgorgement claims, they would not apply under the circumstances presented under the pleadings. The court also upheld the trial court’s award of $231,834 in contractual attorney fees; the parties’ agreement contemplated the recovery of attorney fees for non-contractual causes of action that are initiated because of an alleged breach of the parties’ contract. View "San Francisco CDC LLC v. Webcor Construction L.P." on Justia Law

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A construction worker was killed when concrete formwork toppled over at a worksite. Plaintiffs, the worker's surviving family members, brought a wrongful death action against the general contractor, Swinerton Builders, and formwork supplier, Atlas Construction Supply, Inc. Atlas cross-complained against Swinerton for equitable indemnity, contribution and declaratory relief. The trial court entered summary judgment in favor of Swinerton as to the wrongful death complaint. Swinerton, in lieu of seeking entry of judgment on the summary judgment order, settled with plaintiffs, wherein plaintiffs agreed to dismiss their case against Swinerton, and Swinerton waived its costs. Apparently under a shared belief that the good faith settlement determination barred Atlas' cross-complaint against Swinerton, Atlas and Swinerton stipulated to the dismissal of Atlas' cross-complaint against Swinerton. Atlas appealed the summary judgment order, the good faith settlement determination, and dismissal of its cross-complaint. Atlas argued that the trial court erred in ruling Atlas lacked standing to oppose Swinerton's motion for summary judgment. Furthermore, Atlas argued if the trial court had considered its opposition brief, the court could have reasonably denied Swinerton's motion, and Swinerton would have never settled the wrongful death complaint, never made the good faith settlement determination, and Swinerton and Atlas would never have stipulated to the dismissal of Atlas' cross-complaint. After review, the Court of Appeal determined Atlas was not aggrieved by the trial court's exoneration of Swinerton in the wrongful death action. Therefore, Atlas lacked standing to appeal the summary judgment order. With respect to the good faith settlement and dismissal of the cross-complaint, the Court determined Atlas waived its challenge by failing to make substantive legal arguments specific to those orders. Therefore, the appeal was dismissed as to the summary judgment motion, and judgment was affirmed as to all other orders. View "Atlas Construction Supply v. Swinerton Builders" on Justia Law

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The Right To Repair Act codifies a comprehensive reform to construction defect litigation applicable to residential dwellings in California. In McMillin Albany LLC v. Superior Court (2018) 4 Cal.5th 241, the California Supreme Court held that the Act was intended to displace the common law and was the "virtually exclusive remedy not just for economic loss but also for property damage arising from construction defects." In this case, plaintiff raises the same argument in McMillan, contending that the Act applies to bar State Farm's complaint.The Court of Appeal explained that McMillan was distinguishable from this case because the court is dealing with a lawsuit against an individual product manufacturer whose allegedly defective part failed after it was incorporated into the structure, causing damage to the residence. Although non-builders such as product manufacturers are subject to the Act under certain circumstances, the Act treats builders and non-builders differently. Therefore, the court held that, as applied to non-builders such as plaintiff, the Act covers claims based on negligence and breach of contract, but not those based on strict liability and breach of implied warranty. Furthermore, because the statute of repose applies, State Farm's negligence cause of action is time-barred. Thus, the court reversed and remanded with directions to allow the claims based on strict liability and implied warranty to proceed. The court remanded to the trial court with directions to vacate the order granting summary judgment without prejudice to a motion for summary adjudication on the negligence cause of action. View "State Farm General Insurance Co. v. Oetiker, Inc." on Justia Law

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Plaintiff filed suit against Fresno Unified and the Contractor, alleging that they violated California's competitive bidding requirements, the statutory and common law rules governing conflicts of interest, and Education Code sections 17406 and 17417. Based on the Court of Appeal's review of the four corners of the construction agreements and resolution of Fresno Unified’s board, the court concluded that plaintiff properly alleged three grounds for why Education Code section 17406's exception to competitive bidding did not apply to the purported lease-leaseback contracts. The court also concluded that California's statutory and common law rules governing conflicts of interest extended to corporate consultants and plaintiff alleged facts showing Contractor participated in creating the terms and specifications of the purported lease-leaseback contracts and then became a party to those contracts. After remand, the further proceedings included defendants' motion for judgment on the pleadings, which argued the lawsuit had become moot because the construction was finished and the contracts terminated. The trial court agreed.The Court of Appeal reversed, holding that defendants and the trial court erroneously interpreted plaintiff's lawsuit as exclusively an in rem reverse validation action. Rather, plaintiff is pursuing both a validation action and a taxpayer action. In this case, plaintiff asserts violations of California's competitive bidding laws and Education Code sections 17406 and 17417 along with conflicts of interest prohibited by Government Code section 1090 and common law principles. The remedy of disgorgement is available under these counts asserted in plaintiff's taxpayer's action even though the Construction Contracts are fully performed. Therefore, the counts in plaintiff's taxpayer's action seeking disgorgement are not moot. The panel remanded for further proceedings. View "Davis v. Fresno Unified School District" on Justia Law

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This appeal stemmed from the school district's action against defendants for breach of contract arising out of the renovation of school cafeterias. The school district ultimately prevailed on its claims for breach of contract and was awarded $3,941,829 in damages; Defendant Western was found liable on its bonds; the parties settled Defendant Torres's offset claims for withheld payments on other jobs; and the school district was awarded prejudgment interest and costs, as well as attorney fees against Western.The Court of Appeal affirmed the trial court's judgment and held that defendants' motion for summary judgment was properly denied because a job order contract (JOC) is an enforceable contract, not just an agreement to negotiate; Western has forfeited its claims challenging denial of defendants' motion for summary judgment; the school district's motions for summary adjudication were properly granted in whole and in part; to prevail on its motions, the school district was not required to disprove Western's boilerplate affirmative defenses; the trial court properly awarded the school district prejudgment interest; the trial court properly denied Western's motions for directed verdict; and the trial court did not abuse its discretion awarding attorney fees to the school district. View "Los Angeles Unified School District v. Torres Construction Corp." on Justia Law

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Subcontractor Ehmcke Sheet Metal Company (Ehmcke) recorded a mechanic’s lien to recoup payment due for sheet metal fabrication and installation work done on a luxury hotel project in downtown San Diego. Project owner RGC Gaslamp, LLC (RGC) secured a bond to release the lien. Thereafter Ehmcke filed three successive mechanic’s liens, each identical to the first, prompting RGC to sue it for quiet title, slander of title, and declaratory and injunctive relief. The trial court granted Ehmke’s special motion to strike under the anti-SLAPP statute. The trial court found that Ehmcke met its moving burden because the filing of even an invalid lien was protected petitioning activity. Thereafter, the court found that RGC failed to make a prima facie showing that its sole remaining cause of action for slander of title could withstand application of the litigation privilege. RGC appeals both findings, arguing that the duplicative filing of mechanic’s liens after the posting of a bond was not protected activity. The Court of Appeal concluded after review that RGC erroneously imported substantive requirements of the litigation privilege into the first step of the anti-SLAPP inquiry. Ehmcke met that moving burden once its erroneously excluded reply declarations were considered. With the burden shifted on prong two, RGC failed to make a prima facie showing that the litigation privilege did not bar its slander-of-title cause of action. The anti-SLAPP motion was thus properly granted, and Court likewise affirmed the subsequent attorney’s fees and costs award. View "RGC Gaslamp v. Ehmcke Sheet Metal Co." on Justia Law

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In 2014, a single Riverside County, California Superior Court judge signed 602 orders authorizing wiretaps, which was approximately 17 percent of all wiretaps authorized by all the state and federal courts in the nation. In 2015, the same judge and one other authorized 640 wiretaps, approximately 15 percent of all wiretaps in the country. Plaintiff-appellant Miguel Guerrero was targeted by a wiretap that a Riverside County judge authorized in 2015. Guerrero, who had never been arrested or charged with a crime in connection with the wiretap, wanted to know why he was targeted, and he believed the sheer number of wiretaps in those years raised significant doubts about whether the wiretaps complied with constitutional requirements. Relying on California's wiretap statutes and the First Amendment, he asked a trial court to allow him to inspect the wiretap order, application and intercepted communications. The trial court denied this request. After review, the Court of Appeal determined the trial court applied the wrong standard in considering Plaintiff's application under wiretap statutes, which closely paralleled statutes under federal law. The matter was remanded so that the trial court could properly exercise its discretion, and the Court provided guidance on the appropriate standard. Given this holding on the statutory issue, the Court declined to address the contention, advanced by Guerrero and an amicus brief, that the public had a First Amendment right of access to the wiretap materials. View "Guerrero v. Hestrin" on Justia Law

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Defendants were performing road construction work, implementing a “reversing lane closure” traffic control, reducing traffic to one lane. A flagger to control northbound traffic was positioned at the south end of the reversing lane closure on Latrobe Road, north of where it intersected with Ryan Ranch Road. Because the flagger was positioned north of the intersection, when the flagger stopped northbound traffic, that traffic could back up, extending south into the intersection. Plaintiff Kevin Shipp was driving south on Latrobe Road when he came to a stop behind two other vehicles. The vehicle two cars ahead of plaintiff was attempting to turn left onto Ryan Ranch Road, but it could not because northbound traffic, stopped by the flagger at the south end of the reversing lane closure, was stopped in the intersection. Seconds after plaintiff stopped, a vehicle driven by George Smithson rear-ended plaintiff’s vehicle. This case presented the question of whether a highway contractor controlling traffic on a public highway owed a duty of care to a motorist who was rear-ended when forced to stop behind a vehicle that was unable to turn left at an intersection that was blocked by stopped traffic controlled by the contractor. The Court of Appeal concluded the contractor here did indeed owe a duty of care. View "Shipp v. Western Engineering, Inc." on Justia Law

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The California Contractors’ State License Board (CSLB) sought revocation or suspension of Sieg’s contractor’s license and restitution. The Accusation alleged that Sieg failed to follow spacing and fastening requirements when installing a hardwood floor, departing from trade standards in violation of Business & Professions Code 7109(a), and failed to complete a construction project for the agreed contract price in violation of section 7113. Sieg filed a Defense and filed a civil lawsuit against the homeowners, which was subsequently dismissed. After a hearing, the ALJ issued a proposed decision recommending a 65-day suspension and a three-year probation term including payment of $27,884.21 restitution. The Registrar adopted the ALJ’s proposed decision but eliminated the 65-day suspension term and required Sieg to obtain a disciplinary bond of $30,000.00 (section 7071.8), for three years.The trial court denied Sief relief. The court of appeal affirmed the decision as supported by substantial evidence, rejecting a due process claim. Sieg had the opportunity to cross-examine each of the CSLB’s witnesses, to present witnesses of his own, and to testify on his own behalf. The court noted that private agreements to depart from statutorily imposed workmanship standards provide no defense to an alleged violation of section 7109(a), in disciplinary enforcement proceedings. View "Sieg v. Fogt" on Justia Law

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Caliber Paving Company, Inc. (Caliber) sued Rexford Industrial Realty and Management, Inc. (Rexford) for intentional interference with a contract between Caliber and Steve Fodor Construction (SFC). The trial court granted Rexford’s motion for summary judgment on the ground that Rexford, although not a party to the contract, had an economic interest in it and therefore could not be liable in tort for intentional interference with contract. Caliber appealed. In a case of first impression, the Court of Appeal held that under Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503 (1994), a defendant who is not a party to the contract or an agent of a party to the contract is a noncontracting party or stranger to the contract and, regardless whether the defendant claims a social or economic interest in the contractual relationship, may be liable in tort for intentional interference with contract. Applied Equipment did not confer immunity for intentional interference with contract on noncontracting parties having a social or economic interest in the contractual relationship from liability. The Court also concluded Caliber submitted admissible evidence sufficient to meet its burden of raising a triable issue of fact as to whether Rexford interfered with the contract between SFC and Caliber. Judgment was reversed and the matter remanded for further proceedings. View "Caliber Paving Co. v. Rexford Industrial Realty and Management" on Justia Law