Law Offices of David L. Brault

Statute of Limitations I recently received a question from a client asking if the Statute of Limitations (SOL) for latent (undiscovered) construction defects wa...s still ten (10) years. He asked this because he received a press release from a plaintiffs lawyer claiming to have overcome the 10 year statute of limitations and secure money for a condo homeowner’s association claiming defective construction. We have litigated similar issues in recent cases. However, what we encountered is an apartment building built in 1998. It is minimally renovated and converted to condos in 2006. In 2009 the HOA sues the developer. The developer and anyone involved in the renovation have exposure. The subcontractors performing the original work have no exposure because of the 10 SOL. Another scenario is the HOA decides to sue in year 9.5 after the notice of completion and starts the right to repair / pre-litigation process with the developer. The developer does not contact the subs. Then at year 10.5 the HOA files suit. The SOL was stayed as to the developer because of its involvement with the right to repair / pre-litigation. However, the SOL was not stayed as to the subs that were not contacted / did not participate in the right to repair / pre-litigation. The developer had to pay for all damages (real or imagined) caused by those subcontractors work. The moral of this story is twofold: First, don’t work on apartment to condo conversions. You’ll get sued and potentially stuck paying for the prior sub’s potentially defective work. Second, if you get a Calderon notice (right to repair / pre-litigation notice of an HOA claim) and you are near the 10 years after you completed your work then don’t participate! The statute of limitations may very well run leaving you with a complete defense.

Do Contractors Still Have the Right to Repair Construction Defects? In 2002, the California Legislature enacted the Right to Repair Act. The Right to Repair Ac...t created a system for homeowners and builders to resolve defects in residential buildings. The Act was written to make major changes to the substance and process of the law governing construction defects. One thing the Act did was require homeowners to allow contractors to inspect and repair any defects if the contractors wanted to. The Act is organized in the following manner: Chapter 2 of the Act sets out building standards, the violation of which constitutes a deficiency in construction for which the builder may be held liable to the homeowner. (Civil Code 896, 897.) Chapter 3 of the Act imposes obligations on the builder, including an obligation to furnish an express limited warranty. (Civil Code 900907.) Chapter 4 of the Act prescribes nonadversarial prelitigation procedures a homeowner must initiate prior to bringing a civil action against the builder seeking recovery for alleged construction deficiencies. (Civil Code 910938.) Chapter 5 of the Act sets out the applicable statute of limitations, burden of proof, damages that may be recovered, and the affirmative defenses that may be asserted; it also makes the Act binding on subsequent home purchasers. (Civil Code 941945.5.) The Act was written to allow recovery of damages where construction defects were discovered before any actual damage had occurred. (An extreme example would be improper electrical wiring was discovered but no electrical fire started. The homeowner could and should be compensated to correct the electrical problems. The homeowner should not be forced to wait for a fire to start before he can make a claim!) So, what happens when the homeowner suffers actual damages because of construction defects? Does the homeowner still have to provide notice to the contractor and allow the contractor the opportunity to repair the defects? Or can the homeowner simply file a lawsuit and ignore the requirements Right to Repair Act? It turns out the homeowner can go straight to court bypassing the Right to Repair Act according to Liberty Mutual v. Brookfield Crystal Cove LLC (2103). That case involved a single-family home built and sold by Brookfield in 2004. In 2008 a fire sprinkler burst, flooding the home. Brookfield acknowledged its liability and repaired the home. The home was insured by Liberty Mutual. Liberty paid a significant amount of money to relocate and rehouse the homeowner while Brookfield made repairs. Neither Liberty nor the homeowners proceeded under the Right to Repair Act. Liberty went straight to court to recover from Brookfield. Brookfield challenged the lawsuit claiming Liberty must proceed under the Right to Repair Act. The trial court agreed with Brookfield and dismissed Liberty’s complaint. Liberty appealed. The appellate court held the Act does not eliminate a property owner's common law rights and remedies when actual damage has occurred. This ruling may signal the end for The Right to Repair Act. I have yet to see a construction defect case where there is no damage. Every case I have been involved with has a mix of actual damages (leaking windows) and defects that have not caused damage (plumbing that violates the code but is not leaking). I cannot envision a judge allowing part of a lawsuit to proceed (leaky windows) while requiring the plumbing issues to proceed under the Right to Repair Act. The most likely scenario I envision is the Judge allowing everything to proceed in one lawsuit with no right to repair being offered.

Contractors Beware: Homeowners Can Challenge Your Lien With a Simple Motion You signed the contract, ordered materials, gave your 20-day preliminary notice, performed your work and did not get paid. You record your lien and still no payment. You file your lawsuit and serve it on the recalcitrant homeowner. In response, the homeowner files a simple Lambert motion contesting the validity of your lien. That motion requires you to prove the probable validity of your claim ...to the court. If not, the court can summarily cause your lien to be expunged and whatever leverage your lien gave you has now evaporated! These challenging economic times require sophisticated and experienced lawyers for your construction claims. Please contact us if you have such a need.

Important Legal Update: A Federal Court Clarified When is the Last Day a Subcontractor Can File Its Lawsuit Against a Miller Act Bond A subcontractor was worki...ng on a federal project. The GC terminated the sub in 2009. The sub sued the CG in 2011, naming the Miller Act bond as a defendant. The GC moved to dismiss because the lawsuit was filed more than a year after the sub last performed work on the project. The Court held the lawsuit was timely filed because the one year deadline starts on the last day anyone performs work on the project, not the last day the subcontractor filing suit worked on the project. The Court’s ruling removed any confusion as to when the Miller Act lawsuit must be filed. It is important to promptly file your lawsuits if you are owed money. However, you may have more time than you thought to file suit if you are owed money on a Federal project. Please feel free to call me if you wish to discuss this. Sincerely, David L. Brault Air Control Technologies, Inc. v. Pre Con Industries, Inc. (2013 DJDAR 8543).

It is very likely you have a commercial general liability (CGL) insurance policy to protect your business. Many insurance carriers use a standard policy provided by the Insurance Services Office (ISO). Every so often the ISO reviews and revises its forms. It just revised its CGL form this March. Any policy placed after February 2013 should be carefully reviewed as some changes will expand insurance coverage while others will limit coverage. One such change has a major impact upon additional insured rights. This revision was made to address the recent changes in California indemnity law. Other changes may delete or minimize coverage for construction defect claims. Please call me for a fee consultation if you have any questions about your new or existing insurance policy.

BUDGET CUTBACKS IN LOS ANGELES SUPERIOR COURT WILL MOST LIKELY DELAY YOUR CASE. THIS COULD BENEFIT DEFENDANTS IN DELAYING AN ADVERSE DECISION AND HARM PLAINTIFF...S IN DELAYING THEIR RIGHTS TO COMPENSATION. In a recent announcement, Los Angeles Superior Court summarized its coming consolidation into the following bullet points: The Court will close 8 courthouses completely (Beacon Street, Huntington Park, Kenyon Juvenile, Malibu, Pomona North, San Pedro, West Los Angeles, Whittier) and remove most court work from two locations (Beverly Hills, Catalina); Criminal and traffic workload presently located in eight courthouses to be closed will be moved to nearby courthouses; Juvenile cases now heard at Kenyon Juvenile Justice Center will be moved to other courthouses; Small claims cases will be heard only at courthouses in: Alhambra, Downey, Inglewood, Lancaster, Van Nuys and downtown Los Angeles (Mosk); Unlawful detainer (landlord-tenant) cases will be heard only in: Lancaster, Long Beach, Pasadena, Santa Monica and downtown Los Angeles (Mosk); Limited Civil Collections-related cases will be heard only in: Chatsworth and Norwalk; Other Limited Civil Cases will be heard only in downtown Los Angeles (Mosk); Personal Injury-related cases will be heard in Lancaster and downtown Los Angeles (Mosk), expect for exceptional cases; Many general civil cases going to trial may be moved to dedicated trial courts located around the county; The Court plans to eliminate its alternative dispute resolution center, further reduce the use of court-employed court reporters, and lay off all Juvenile Referees. According to Chief Justice Tani Cantil-Sakauye "Justice requires a court. But, what we once counted on - that courts would be open, available and ready to dispense prompt justice - no longer exists in California." [Quoted from her annual State of the Judiciary speech.] "This is our last-ditch effort to save access to justice in Los Angeles County," added Presiding Judge Wesley. "the impacts of years of draconian cuts in state court funding can no longer be delayed. We are now forced to bring our court operations into line with the resources provided by the Governor and Legislature. The result will be reduced services, long lines and travel distances that may well deter people from seeking and getting the justice they deserve. It is a sad irony that, as our economy is turning the corner, our justice system is going downhill."

Attorney David L. Brault has Achieved the AV Preeminent Rating - the Highest Possible Rating from Martindale-Hubbell.

Happy Holidays!