Articles Posted in Supreme Court of California

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A direct contractor’s timely payment to its subcontractors may be excused under Cal. Civ. Code 8814(c) only when the direct contractor has a good faith basis for contesting the subcontractor’s right to receive the specific monies that are withheld. United Riggers & Erectors, Inc. (United Riggers) sued Coast Iron & Steel Co. (Coast Iron) alleging failure to make prompt payment of monies owed United Riggers for its work on a project. See Cal. Civ. Code 8814, 8818. Coast Iron paid United Riggers, but the payments did not moot United Riggers’s statutory claim because the statutory scheme imposes a penalty for delay. The trial court entered judgment for Coast Iron. The court of appeal reversed on the statutory claim for failure to make timely retention payments, holding that Coast Iron could not use the parties’ dispute over project mismanagement to justify withholding United Riggers’s pay. The Supreme Court affirmed, holding that Coast Iron did not present a good faith argument for why the withheld monies were no longer due to United Riggers. View "United Riggers & Erectors, Inc. v. Coast Iron & Steel Co." on Justia Law

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At issue was whether this common law action alleging construction defects resulting in both economic loss and property damage was subject to the prelitigation notice and cure procedures set forth in the Right to Repair Act, Cal. Civ. Code 895-945.5. After noting that the answer depended on the extent to which the Act was intended to alter the common law, the Supreme Court held that the Legislature intended that the Act was to supplant the common law with new rules governing the method of recovery in actions alleging property damage rather than to supplement common law remedies with a statutory claim for purely economic loss. Thus, the court held that the present suit for property damage was subject to the Act’s prelitigation procedures, and the court of appeal properly ordered a stay until those procedures were followed. View "McMillin Albany LLC v. Superior Court of Kern County" on Justia Law

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Charges that constitute compensation for the use of government property are not subject to Proposition 218’s voter approval requirements. To constitute compensation for a property interest, however, the amount of the charge must bear a reasonable relationship to the value of the property interest, and to the extent the charge exceeds any reasonable value of the interest, it is a tax and requires voter approval. Plaintiffs contended that a one percent charge that was separately stated on electricity bills issued by Southern California Edison (SCE) was not compensation for the privilege of using property owned by the City of Santa Barbara but was instead a tax imposed without voter approval, in violation of Proposition 218. The City argued that this separate charge was the fee paid by SCE to the City for the privilege of using City property in connection with the delivery of electricity. The Supreme Court held that the complaint and stipulated facts adequately alleged the basis for a claim that the surcharge bore no reasonable relationship to the value of the property interest and was therefore a tax requiring voter approval under Proposition 218. The court remanded the case for further proceedings. View "Jacks v. City of Santa Barbara" on Justia Law