The Public Works Affidavit vs. Counteraffidavit Process
In some cases, when a California Stop Payment Notice is served, the direct contractor will serve an “Affidavit” on the public entity, demanding that the public entity release all funds withheld. Upon receipt of such an Affidavit, the public entity will serve the subcontractor or supplier who served the Stop Payment Notice with a copy of the Affidavit, along with a Demand For Release of Funds. If the Stop Payment Notice claimant does not respond with a “Counteraffidavit” by the date stated on the notice sent by the public entity, then the public entity will release the funds to the direct contractor and the Stop Payment Notice claimant will relinquish its Stop Payment Notice rights. If the Stop Payment Notice claimant is served with such an Affidavit and Demand For Release of Funds, the claimant should fill out the “Counteraffidavit” form (available at www.porterlaw.com) and serve it on the public entity and the direct contractor. This should at least temporarily stop release of the funds by the public entity and preserve the Stop Payment Notice remedy. (See Civ. Code §§ 9400-9414.)
Construction Project “Stop Work Notice” Unintended Trap for Prime Contractors
California law provide “original”, “prime” or “direct” contractors with apparent relief from their contractual obligations when owners of property on which the original contractor works fail or refuse to pay them. This law can be found in the “10 Day Stop Work Notice” specified in Civil Code sections 8830-8848. Unfortunately, the applicable statutory procedures have a number of important shortcomings of which contractors, subcontractors and suppliers should be aware.
When Service of a “Payment Bond Notice” is Required Before Bringing a Lawsuit on a Payment Bond Claim on California Construction Projects
The payment bond is a valuable source for payment to subcontractors and suppliers who have not been paid for work performed on California construction projects. Although a payment bond is typically associated with public works projects, payment bonds can also be used on private works projects. If there is a payment bond on the project there are important deadlines which must be followed. If the original contractor was required to post a payment bond for the project, then follow the deadlines described below. (See California Civil Code sections 8600 – 8614 for private works and §§ 9550-9566 for public works).
Federal Public Works Construction Collection Remedies: The Miller Act Payment Bond Claim
Federal public work construction projects are unique in that there are no Stop Payment Notice or Mechanics Lien remedies available. Furthermore, although a remedy is available by proceeding against the original contractor’s payment bond under a federal law known as the “Miller Act” and its corresponding Federal Regulations (40 USCS 3131 et seq. and 48 CFR 28.101-1 et seq.), this remedy is not available to all subcontractors or suppliers. In addition, there are circumstances where a different form of security can be substituted for the payment bond (40 USCS 3131(b)(2)).
Sacramento Superior Court Supports Disgorgement from Building Contractor Lacking License During Any Part of a Construction Project; Contractor Compelled to Refund All Payments Received During Entire Project
This is a follow-up to my August 2008 article advising that, based on a series of recent cases, California courts would be entitled to order any building contractor or subcontractor who performed construction work with a contractor’s license that was suspended during part of the project to refund all sums the contractor was paid for all work on the entire project. This rule would apply not only to work performed by the contractor while the license was suspended, but also to work performed while the license was properly in place. This follow up article is to inform you that the Sacramento Superior Court has clearly adopted this doctrine.
Contractor Lacking License at Any Time During Construction Project Can be Compelled to Refund All Payments Received During Entire Project; A Prejudgment Writ of Attachment May Secure Refund
The above title would tend to trigger a “double take” and at least a few questions: Did I read that correctly? Do you mean that if my contractors’ license is suspended at any point during a construction project, I could be required to repay every penny I received for my work throughout the entire project? Even for work done while my license was properly in place? Contractors and Subcontractors may be surprised to learn that the answer to all of these questions is “Yes.” Here is why…
After Sixty Years, Subcontractors are Back in the Driver’s Seat in Bidding on California Construction Projects
In virtually every complex construction project, the general contractor will submit a competitive bid for the work, and in doing so will rely on underlying bids from prospective subcontractors in particular trades. One of the enduring legal issues in this scenario is the justifiable reliance that a bidding general contractor places in a subcontractor’s bid. If the general uses the sub’s bid, does that automatically lock in the price stated by the subcontractor? What about the other items that may be buried within the subcontractor’s bid? A recent decision from the court of appeal sheds much needed light on these issues.
Understanding Mold and Mold Lawsuits
Recent years have seen an explosion of mold litigation with the publication of several multimillion dollar jury verdicts in toxic mold lawsuits. While large plaintiff’s verdicts are well publicized, defense verdicts in mold cases rarely, if ever, receive public notice. Prior to 2000, relatively few mold claims were pursued, and claims were routinely settled for nominal amounts – $5,000 or less. Since then highly publicized seven and even eight figure jury verdicts have led to a proliferation of mold litigation. U.S. insurers paid $1.3 billion in mold-related claims in 2001 and more than $3 billion in 2002¹ Medical opinion on mold related disease is evolving, and many mold injury cases are pursued without solid medical or scientific support.
