Justia Construction Law Opinion Summaries

In 2012, the Campbell Union School District (CUSD) Governing Board enacted a fee on new residential development under Education Code section 17620. The fee, $2.24 per square foot on new residential construction, was based on a study that projected that “it will cost the District an average of $22,039 to house each additional student in new facilities.” This figure was based on a projected $12.8 million cost to build a new 600-student elementary school and a projected $24.4 million cost to build a new 1,000-student middle school. SummerHill owns a 110-unit residential development project in Santa Clara, within CUSD’s boundaries. In 2012 and 2013, SummerHill tendered to CUSD under protest development fees of $499,976.96. The trial court invalidated the fee and ordered a refund of SummerHill’s fees. The court of appeal affirmed, holding that the fee study did not contain the data required to properly calculate a development fee; it failed to quantify the expected amount of new development or the number of new students it would generate, did not identify the type of facilities that would be necessary to accommodate those new students, and failed to assess the costs associated with those facilities. View "SummerHill Winchester LLC v. Campbell Union School District" on Justia Law

The Court of Appeal affirmed the trial court's judgment denying Acco's petition for writ of mandamus seeking review of an administrative decision adopted by the Registrar, finding Acco in violation of Business and Professions Code section 7110 for failing to obtain a building permit before replacing a boiler. The court held that the Legislature's use of the term "willful" in section 7110 only requires a showing of general intent. The court also held that there was substantial evidence to support the Administrative Judge's determination that Acco willfully violated the applicable building laws. The court noted that the fact that an individual employee may not have been aware of a specific local permit requirement does not excuse a corporate licensee from complying with the building laws. View "Acco Engineered Systems v. Contractors' State License Board" on Justia Law

Plaintiffs Travelers Property Casualty Company of America, the Travelers Indemnity Company of Connecticut, and St. Paul Fire and Marine Insurance Company (collectively, Travelers) filed this action against certain subcontractors to recover attorneys’ fees and costs Travelers incurred in defending developers Westlake Villas, LLC and Meer Capital Partners, LLC (collectively, Westlake) in a prior construction defect action. Travelers' claims were based on alleged subrogation to the rights of its additional insured, Westlake. The Westlake entities were suspended corporations under Revenue and Taxation Code section 23301, and could not assert these claims on their own behalf. Defendant Engel Insulation, Inc. moved for judgment on the pleadings on the basis that Travelers was also barred under this statute from prosecuting these claims. On appeal, Travelers contended the trial court erred in granting Engel’s motion without leave to amend. The Court of Appeal disagreed: an insurer could not file its own action to assert claims solely as a subrogee of a suspended corporation. View "Travelers Property Casualty Co. of Amer. v. Engel Insulation, Inc." on Justia Law

Plaintiff Jose Sandoval was severely burned by an "arc flash" from a live circuit breaker while working with contractor TransPower Testing, Inc. and its principal Frank Sharghi, at a cogeneration plant owned by defendant Qualcomm Incorporated (Qualcomm). The jury returned a special verdict finding that Qualcomm retained control over the safety conditions at the jobsite; that it negligently exercised such control; and that its negligence was a substantial factor in causing Sandoval's harm. The jury found Sandoval's employer, ROS Electrical Supply (ROS), not liable, and apportioned fault between the defendants. Following the verdict, Qualcomm moved for judgment notwithstanding the verdict (JNOV) and for a new trial. The trial court denied the JNOV motion but granted the motion for new trial on the theory the jury had improperly apportioned liability. Qualcomm appealed order denying its JNOV motion, arguing Sandoval failed to proffer any evidence to show that Qualcomm, as the hirer of an independent contractor, "affirmatively contributed" to Sandoval's injury under the "retained control" exception to the general rule that a hirer is not liable for the injuries of an independent contractor's employees or its subcontractors; the order only partially granting its new trial motion; and the original judgment. Sandoval appealed the order granting Qualcomm a new trial on the apportionment of fault issue. The Court of Appeal concluded substantial evidence supported the jury's finding that Qualcomm negligently exercised retained control over the safety conditions at the jobsite. Therefore, the Court concluded the trial court properly denied Qualcomm's JNOV. Furthermore, the Court concluded the trial court properly exercised its discretion when it granted Qualcomm a limited new trial only on the issue of apportionment of fault as between Qualcomm and TransPower. View "Sandoval v. Qualcomm Incorporated" on Justia Law

The underlying action was initiated by homeowners from two residential developments in Rocklin against appellants Centex Homes and Centex Real Estate Corporation (Centex) for alleged defects to their homes. Centex and cross-defendant and respondent St. Paul Fire and Marine Insurance Company (St. Paul) have a history of insurance coverage disputes. St. Paul was an insurer for subcontractor Ad Land Venture (Ad Land), and agreed to defend Centex as an additional insured subject to a reservation of rights. Centex filed a cross-complaint against its subcontractors and St. Paul that sought, as the seventh cause of action, a declaration that Centex was entitled to independent counsel under Civil Code section 28601 because St. Paul’s reservation of rights created significant conflicts of interest. Centex appealed after the trial court granted St. Paul’s motion for summary adjudication of Centex’s seventh cause of action. Centex argued any possible or potential conflict was legally sufficient to require St. Paul to provide independent counsel. The Court of Appeal disagreed. Alternatively, Centex contended independent counsel was required because counsel appointed by St. Paul could influence the outcome of the coverage dispute and St. Paul controlled both sides of the litigation. The Court of Appeal concluded that because Centex failed to establish a triable issue of material fact regarding these assertions, the Court affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

McMillin Management Services, L.P. and Imperial Valley Residential Valley Residential Builders, L.P. (collectively "McMillin") filed suit against numerous insurance companies, including respondents Lexington Insurance Company (Lexington) and Financial Pacific Insurance Company (Financial Pacific). McMillin alleged that it had acted as a developer and general contractor of a residential development project in Brawley and hired various subcontractors to help construct the Project. As relevant here, McMillin alleged that Lexington and Financial Pacific breached their respective duties to defend McMillin in a construction defect action (underlying action) brought by homeowners within the Project. McMillin alleged that Lexington and Financial Pacific each owed a duty to defend McMillin in the underlying action pursuant to various comprehensive general liability (CGL) insurance policies issued to the subcontractors that named McMillin as an additional insured. The trial court granted Lexington's motion for summary judgment, reasoning, that there was no possibility for coverage for McMillin as an additional insured under the policies "[b]ecause there were no homeowners in existence until after the subcontractors' work was complete[ ] . . . ." On appeal, McMillin contended that the fact that the homeowners did not own homes in the Project at the time the subcontractors completed their work did not establish that its liability did not arise out of the subcontractors' ongoing operations. The trial court granted Financial Pacific's motion for summary judgment, finding McMillin did not establish homeowners in the underlying action had sought potentially covered damages arising out of the subcontractors' drywall installation. The Court of Appeal reversed as to Lexington, and affirmed as to Financial Pacific. View "McMillin Management Services v. Financial Pacific Ins. Co." on Justia Law

Liu was a Fremont licensed general contractor. Defendant, Liu's assistant, was not a contractor. The final plans for Liu's client's hillside home required excavation. Liu hired a licensed contractor, who cut into the hill, creating a 12-foot-high dirt wall with an overhanging soil ledge, with no sloping or benching, or support. Defendant oversaw construction. By December 2011, the foundation was not complete. The contractor walked off the job, which was behind schedule. Defendant hired a carpenter, rather than a licensed contractor, who understood that he was being hired as an employee of Liu’s company, and others, including Zapata. In January 2012, a city inspector handed defendant a “Stop Work Notice” based on “Excavation without required shoring and/or excavation.” Defendant did not tell the workers. Defendant consulted an engineer but never sought city approval to continue construction. He instructed the workers to work in the excavation area. The excavation wall collapsed on Zapata, killing him. Defendant was convicted of involuntary manslaughter (Pen. Code, 192(b)), and willfully violating safety orders (Lab. Code 6425(a)). The court of appeal affirmed defendant’s conviction, rejecting claims of insufficient evidence; that the court committed instructional error and improperly limited cross-examination; that he was not given adequate notice of the charges; that the prosecution failed to elect a particular criminal act; and that the statute prohibiting the willful violation of occupational safety orders was unconstitutionally vague. View "People v. Luo" on Justia Law

This case arose out of an insurance dispute between a general contractor, its subcontractor, and the subcontractor’s general liability carrier over water damage to a construction site caused by heavy rains. The United States Department of Veterans Affairs (VA) hired Kadena Pacific, Inc. as the general contractor to oversee construction of a building in Menlo Park. Kadena hired Global Modular, Inc. to build, deliver, and install the 53 modular units that would comprise the building. Because Kadena had hired a different subcontractor to install the roofing, Global agreed to deliver the units covered only by a roof deck substrate. Kadena originally scheduled delivery in the summer months, but delivery was delayed until October and November. Despite Global’s efforts to protect the units by covering them with plastic tarps, the interiors suffered water damage from October through January. In February, Kadena and Global mutually agreed to terminate their contract and Kadena oversaw the remediation of the water-damaged interiors and completion of the project. Global sued Kadena for failure to pay and Kadena countersued, alleging Global had breached the contract in various ways, including by failing to repair the water-damaged interiors. Before trial, the parties entered a partial settlement. Global paid Kadena $321,975 to release all of Kadena’s claims arising from the VA project except for claims covered by Global’s insurance policy with North American Capacity Insurance Company (NAC), and Global received $153,025 to dismiss its failure-to-pay claims. At trial, Kadena presented evidence on the scope and cost of its water remediation and argued Global was contractually responsible for the damage. The jury agreed and awarded Kadena slightly over $1 million. In a separate suit brought by NAC, Kadena and NAC filed competing motions for summary judgment on the issue of whether NAC’s policy required it to indemnify Global for the jury’s damage award. The trial court ruled in favor of Kadena, finding the damage award covered under NAC’s policy as a matter of law. The court also ruled that the award must be offset by the $321,975 Global paid in settlement and that Global was liable to Kadena for $360,000 in attorney fees. The Court of Appeal concluded the trial court properly determined NAC’s policy covered the water damages and Kadena was entitled to fees. However, the Court reversed the offset order because Global’s settlement payment did not compensate Kadena for the costs of its water remediation; the parties agreed to reserve that issue for litigation. View "Global Modular v. Kadena Pacific, Inc." on Justia Law

Defendant-appellant American Safety Indemnity Company (“ASIC”) challenged a judgment awarding over $1.4 million in compensatory and punitive damages to plaintiff-respondent Pulte Home Corporation (Pulte), who was the general contractor and developer of two residential projects in the San Marcos area. ASIC issued several sequential comprehensive general liability (CGL) insurance policies to three of Pulte's subcontractors, and during 2003 to 2006, it added endorsements to those policies that named Pulte as an additional insured. The projects were completed by 2006. In 2011 and 2013, two groups of residents of the developments sued Pulte for damages in separate construction defect lawsuits. After American Safety declined to provide Pulte with a defense, Pulte filed this action, asserting that the additional insured endorsements afforded it coverage and therefore required ASIC to provide it with defenses on the construction defect issues. After review, the Court of Appeal concluded the trial court was correct in ruling that the language of ASIC’s additional insured endorsements on the underlying insurance policies created ambiguities on the potential for coverage in the construction defect lawsuits, thus requiring it to provide Pulte with a defense to them. Additionally, the Court upheld the court's decision that Pulte was entitled to an award of punitive damages that was proportional, on a one-to-one basis, to the award of compensatory damages in tort. Although the Court affirmed the judgment as to its substantive rulings, the Court of Appeal was required to reverse in part as to the award of $471,313.52 attorney fees: the trial court abused its discretion in implementing an hourly attorney fee arrangement that Pulte did not arrive at until after trial, to replace the previous contingency fee agreement in a manner that Pulte intended would operate to increase its demand. Since the trial court calculated its $500,000 award of punitive damages by appropriately utilizing a one-to-one ratio to the compensatory, the trial court had to recalculate not only the fees award but also to adjust the amount of punitive damages accordingly. View "Pulte Home Corp. v. American Safety Indemnity Co." on Justia Law

In 2004, Hesperia began acquiring vacant property in its downtown for development of a Civic Plaza, with a city hall, public library, other government buildings and “complimentary retail, restaurant, and entertainment establishments.” Cinema West articulated a plan to develop a cinema immediately west of the Civic Plaza Park: the city would convey 54,000 square feet of real property to Cinema for $102,529, the property‘s fair market value; Cinema would construct a 38,000-square foot, 12-screen digital theatre; the city would construct the necessary parking lot, develop a water retention system for the theater and the parking lot, and install off-site improvements including curb, gutter and sidewalks. Cinema would execute a 10-year operating agreement with the city. The city later made a $250,000 forgivable loan to Cinema to aid with a $700,000 anticipated shortfall. As development of the theater and parking lot was nearing completion, the Electrical Workers Union requested a public works coverage determination under California‘s prevailing wage law (Lab. Code, 1720–18611 ) The State Department of Industrial Relations concluded that the project was subject to the prevailing wage requirement. The court of appeal affirmed, noting that Cinema received the benefit of a new, publicly-funded parking lot adjacent to the theater, which, though owned by the city, is Cinema‘s to use for as long as it operates the theater. View "Cinema West v. Baker" on Justia Law