Articles & Insights

Any owner or general contractor who has a few projects under his or her belt has likely had this thought: “My contractor (or subcontractor) is not performing the way I expected; should I replace him?” The other side of the termination coin is: “This project is not going the way I expected; should I get out?”

While there may be an emotional high that immediately comes from terminating a contractor or subcontractor (or leaving a project, in mid-stream), there are many factors to be weighed, before making that decision.

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.

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.

It has become much easier for trade contractors and their attorneys to follow the herd and plod along in a wasteful and costly construction defect matter. Challenging the norm is all too rare in this business. However, there can be great advantages to being the pot-stirrer. Trade contractors and their attorneys (insurance retained or private) should plan out a meaningful strategy at the outset of every case, including exploring motions challenging the pleadings. The outcome, if successful, can save the trade contractor (and its insurer where applicable) tens of thousands of dollars in defense costs owed to its own attorney, the attorneys for the general contractor, the Special Master, and others who feed at the trough of the mass defect actions.

New civic and infrastructure projects have spurred secondary private investment, further reinforcing the current swell of economic development. While the economy is starting to regain its former stability and construction demand is picking up, employers see the opportunity for business expansion. For those who are willing to grow, it is the perfect time to invest in the systems that will protect your business now and for years to come.

In a difficult economy employee terminations are inevitable. Unfortunately, even when employers must terminate employees out of economic necessity, these employers are not immune from lawsuits brought by these terminated employees. All an employee requires to file a lawsuit is a willing attorney. Fortunately, there are a few steps employers can take prior to downsizing to discourage post-termination lawsuits. We suggest the following…

If you are an employer in the State of California and use a written contract of employment to define the terms of employment with your employees, there is a good chance that, as a result of a decision of the California State Supreme Court, the contract you are currently using with your employees will not be enforced by the Courts of this state. It may therefore be necessary for you to consider revising your employment contract.

The amount of workers’ compensation that may be awarded to an injured worker may be increased if the injury was brought about by the serious and willful misconduct of the employer or the employer’s managing representative. Serious and willful misconduct is best defined as any intentional act, or failure to act, coupled with the knowledge that serious injury will be the probable result from that act or failure to act.