November 2018 Update
Beginning January 1, 2018, the Registrar of Contractors may issue a letter of admonishment to an applicant, licensee, or registrant in lieu of a citation if there is probable cause to believe the applicant, licensee, or registrant has committed acts or omissions that are grounds for denial, suspension, or revocation of a license or registration. The new provisions delineate what must be contained in the letter and the provide the recipient with the opportunity to request a conference to contest the letter. Bus & P C §7124.6(c). See §1.78.
Effective January 1, 2019, Bus & P C §7099.8(b)(3) was added to provide that a person wishing to contest a citation from the Registrar of Contractors must, within 15 days after service of the citation, file a written request for an administrative hearing and may also contest the citation by submitting a written request for an informal citation conference to the chief of the enforcement division. If an informal citation confernece is held, the request for an administrative hearing is deemed withdrawn. See §1.79.
In United Riggers & Erectors, Inc. v Coast Iron & Steel Co. (2018) 4 C5th 1082, 1092, the California Supreme Court held that withholding payment of retention is only permitted for disputes related to the retention payment itself. The court held that CC §8814 requires prompt payment by a prime contractor to a subcontractor once the prime contractor has been paid by the owner for the subcontractor’s work. See §§2.31, 5.64, 5.68, 6.102.
Executive Order 13693 (Mar. 19, 2015), entitled “Planning for Federal Sustainability in the Next Decade,” which directed federal agencies to establish agency-wide energy efficiency and renewable energy targets with the goal of reducing greenhouse gas emissions relative to a fiscal year 2008 baseline, was revoked by Executive Order 13834 (May 17, 2018). Executive Order 13834 stated goals for federal agencies related to energy and environmental performance, such as reducing building energy use and water consumption, meeting statutory requirements for use of renewable energy. Specific guidance implementing the goals of EO 13834 has not yet been issued. See §4.15.
The California Energy Commission updated standards will go into effect on January 1, 2020, and will focus on four key areas:
Smart residential photovoltaic systems;
Updated thermal envelope standards (preventing heat transfer from the interior to exterior and vice versa);
Residential and nonresidential ventilation requirements; and
Nonresidential lighting requirements.
In Global Modular, Inc. v Kadena Pac., Inc. (2017) 15 CA5th 127, the court held that the insurance policy exclusion for damage to property during operations applies only to damage caused during actual construction activities; the exclusion for property that must be repaired or replaced due to incorrectly performed work only applies to the portions of work incorrectly performed, and not to the entire project. See §5.103.
In Oltmans Constr. Co. v Bayside Interiors (2017) 10 CA5th 355, the court held that a general contractor was precluded from recovering indemnity for liability incurred as a result of its own active negligence, but could be indemnified for the portion of liability attributable to the fault of others (e.g., the subcontractor). See §5.112A.
In McMillin Mgmt. Servs., L.P. v Financial Pac. Ins. Co. (2017) 17 CA5th 187, the court held that when a general liability insurance policy provides for coverage of liability “arising out of ongoing operations,” the insurance company has a duty to defend the general contractor in a construction defect action even though the action commences after the homeowners move into the development. See §§5.112A, 12.61, 12.91.
If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees. In determining whether a party has prevailed in a contract dispute, the court must compare the relief awarded on the contract claims with the parties’ demands on those same claims and their litigation objectives. Marina Pacifica Homeowners Ass’n v Southern Cal. Fin. Corp. (2018) 20 CA5th 191. See §5.123.
A nuisance claim that is not based solely on construction defects may not be barred by the 10-year statute of repose under CCP §337.15. Estuary Owners Ass’n v Shell Oil Co. (2017) 13 CA5th 899. See §§5.138, 10.30, 11.9, 11.13, 11.45.
Effective January 1, 2019, Pub Cont C §22032 is amended to authorize public projects of $60,000 or less to be performed by employees of a public agency, and to authorize public projects of $200,000 or less to be let to contract by informal procedures Public projects of more than $200,000 must be let to contract by formal bidding procedures. See §§6.21, 6.26, 6.33.
In addition to designating in the bid the name and address of each subcontractor that will perform work exceeding one half of 1 percent of the prime contractor’s total bid, the bidder on a public project must also designate the California contractor’s license number and public works contractor registration number. Pub Cont C §4104(a)(1). See §6.36.
In West Coast Air Conditioning Co. v Department of Corrections & Rehabilitation (2018) 21 CA5th 453, the court upheld an award of $250,000 in bid preparation costs to a second low bidder under promissory estoppel theory when the second low bidder was not awarded the contract even though the second low bidder had obtained an order that the low bidder’s bid was nonresponsive and a permanent injunction prevented the low bidder from continuing to perform the contract on the project. See §6.52.
In McMillin Albany LLC v Superior Court (2018) 4 C5th 241, the California Supreme Court held that the pre-litigation procedures under the Right to Repair Act apply to all claims, including common law claims, for property damage and economic loss arising from construction defects, but do not apply to common law claims for personal injury, breach of contract, or fraud. See §§8.36A, 8.36D, 9.96, 10.2, 10.10A, 10.29, 11.42, 14.11, 15.2, 15.8, 15.10, 15.11, 15.15, 15.24, 15.31, 15.42, 15.89.
In Curtis Eng’g Corp. v Superior Court (2017) 16 CA5th 542, after an attorney failed to file the certificate of merit under CCP §411.35 within the 60-day window permitted, and instead waited several months after filing the complaint and after the limitations period had expired before filing the certificate, the court held that the relation-back doctrine did not apply, concluding that importing the relation-back doctrine into the statutory certificate of merit procedures would render meaningless the requirements and purpose of the statute. See §8.36B.
In Acqua Vista Homeowners Ass’n v MWI, Inc. (2017) 7 CA5th 1129, the court held that a pipe supplier for a condominium development project could not be held strictly liable to the homeowners under the provisions of the Right to Repair Act because the homeowners had not introduced any evidence at trial showing that the leaky and corroded piping system was caused by the pipe supplier’s negligence or breach of contractual obligation. See §§10.2, 15.8, 15.18.
The California Supreme Court, in Kim v Toyota Motor Corp. (2018) 6 C5th 21, held that evidence of industry custom and practice may be relevant and admissible in a strict products liability action, at the discretion of the trial court, depending on the nature of the evidence and the purpose for which the party seeking its admission offers the evidence. See §10.3.
In People v ConAgra Grocery Prods. Co. (2017) 17 CA5th 51, the trial court ordered defendant lead paint manufacturers (and a successor entity) to pay $1.5 billion into a fund to abate homes in California with interior lead paint. The appellate court reversed and remanded to the trial court to recalculate the amount of the fund by limiting the abatement to pre-1951 homes and hold an evidentiary hearing concerning the receiver, but otherwise rejected defendants’ arguments that the nuisance and abatement findings were improper. See §11.45.
In Global Modular, Inc. v Kadena Pac., Inc. (2017) 15 CA5th 127, 137, the court held that because the phrase “are performing operations” in an exclusion used the active, present tense, the exclusion
applies only to damage caused during physical construction activities. Had the policy drafters intended the exclusion to apply more broadly to damage to any of the insured’s work in progress, we would expect the provision to say something along the lines of, “property damage to that particular part of real property on which your operations are not yet complete” or even “property damage to your work arising out of your operations.”
See §§12.57, 12.60, 12.64, 12.66.
In All Green Elec., Inc. v Security Nat’l Ins. Co. (2018) 22 CA5th 407, allegations in a negligence complaint by a customer that the insured electrical contractor failed to install bolt and other electrical components in an electrical cabinet for the customer’s medical office, leading to the loss of use of the customer’s mammography unit, fell within the impaired property exclusion. See §12.76.
In Pulte Home Corp. v American Safety Indem. Co. (2017) 14 CA5th 1086, the court held that the insurers had a duty to defend under an additional insured endorsement that limited coverage to liability arising out of the named insured’s “ongoing operations” because there was a possibility that some property damage occurred while the named insureds were still working on the project. See §12.91.