It is an all-too-common scenario in California construction: Nine and a half years after completion of a major California construction project, immediately before the 10-year “statute of repose” for suing on “latent” construction defects expires, a lawsuit claiming damages for “recently discovered” latent construction defects is filed. The property owner sues the contractor for the alleged defects. The direct contractor sues all its subcontractors for indemnity and defense. The attorneys spontaneously generate. Experts proliferate. Claimed defects are extrapolated. Four or five years later, after a few dozen attorneys earn a small fortune in fees, the insurance companies make payments. Attorneys collect more fees. The owners take what remains. They repair nothing... and buy vacation homes.
When working on federal public works construction projects there are no Stop Payment Notice or Mechanics Lien remedies available to protect subcontractors’ and suppliers’ right to payment. Instead, unpaid subcontractors and suppliers must resort to making a claim for payment under a federal law known as the Miller Act (40 USCS 3131 et seq.). Many […]
Running a successful contracting business in California requires more than just skill and dedication to your craft. To truly safeguard your business assets, you must consider the future — not just for day-to-day operations, but for the long-term continuity of your business. Business succession planning is a critical tool to ensure your contracting business continues […]
Many contractors and owners believe that if they hire an independent contractor to perform work and that independent contractor causes injury to others during the performance of that work, then it is the independent contractor alone who will be liable for those injuries. In most circumstances, this is correct. The owner or the contractor will not be held liable for injuries caused by his or her independent contractor. However, this is not always the case.
One of the most overlooked methods of asset protection for small businesses is found in the registration of trademarks and service marks with the United States Patent and Trademark Office (“USPTO”). Many business owners might presume that their legal rights are fully protected by the mere use of their business name for years. After all, if you’ve been using the name for decades without issue, no one can suddenly come along and force you to stop using the name, right? Well...not necessarily.
The recording of a valid “Notice of Completion” with the County Recorder is an event of significance to owners, contractors, subcontractors and suppliers alike. The recording of a Notice of Completion is one of several methods used to trigger the time period for the recording of mechanics liens and service of stop payment notices. Although the recording of a Notice of Completion is not absolutely required on any given project, all those working in the construction industry should understand its significance.
Time and time again I receive calls from subcontractors and suppliers who find themselves faced with a customer who is either unwilling or unable to pay for labor or materials supplied for a private works project. As an attorney, the first question I usually ask is “did you serve a Preliminary Notice?” The second question I usually ask is “did you serve the Notice within twenty (20) days after first furnishing labor, service, equipment or materials to the job site?” The answers to these questions will often determine the ability to collect on the claim.
In the California building and construction industry, the “Preliminary Notice” is an absolute prerequisite for Subcontractors and Suppliers to protect their right to be paid for work performed and materials provided to a construction project. Without the proper drafting and service of a Preliminary Notice, Subcontractors and Suppliers cannot protect their right to payment using such indispensable collection remedies as the Mechanics Lien, Stop Payment Notice and Payment Bond Claim.
