Gravel2Gavel Construction Law Blog

Posted February 15, 2013
By John A. Fedun

Ah, Paris - arguably the most romantic place in the world (although my vote would be for MetLife Stadium). In a recent twist on Parisian public displays of affection, locals and tourists alike have taken to affixing locks to some of the city's bridges and throwing the keys into the Seine. While city leaders debate whether the "lovelocks" are graffiti or a boon to tourism, one thing is absolutely certain - they represent a lot of dead load (or would they be considered live load?) that was never factored into the bridge design. Let's hope these bridges don't collapse under the weight of all that love.

The smell of love is in the air - or is it raw sewage? Take your special someone on this Valentine's Day tour and they're one and the same. Just remember the hand sanitizer. And, if anyone actually proposes during the tour, please upload it to YouTube!

Finally, for all you cynics out there, here's a story that has absolutely nothing to do with love. Leave it to the hometown of Microsoft (and grunge music) to build a bridge that has record-setting brawn and a whole lot of electronic brains. Seventeenth century physics will keep the world's largest floating bridge from sinking to the bottom of Lake Washington but its remote sensors and construction methods will sport a decidedly more modern feel. The new pontoons will be affixed with over 1,000 water sensors which will send a signal through a programmable logic controller to the 24 hour maintenance facility whenever water leaks are detected. Rebar will be protected from corrosion by low-voltage DC electricity. And, in a nod to security concerns, the bridge will be outfitted with multiple security cameras, intrusion detectors and sharks with laser beams attached to their backs will patrol the depths below - just kidding about that last one - or am I?

Posted February 14, 2013
By Daniel S. Herzfeld

In January, President Obama signed the National Defense Authorization Act for Fiscal Year 2013 ("NDAA"), which includes numerous new procurement policies directed at contractors and how they bid on and perform government contracts.

To learn more about this, click here to read the client alert.

Posted February 11, 2013
By Amy L. Pierce

To learn more about the ways investors and new market entrants are attempting to develop what is emerging as a new single-family asset class, the regulatory changes that have caused banks to retreat from participation in the mortgage servicing business, and compliance challenges for existing and new servicers, click here to read the client alert entitled Trends in Single-Family Housing written by Craig A. deRidder, Peter G. Freeman and Joseph T. Lynyak, III.

Posted February 5, 2013
By Laura P. Bourgeois

On January 29, 2013, a final rule was issued prohibiting the award of contracts to inverted domestic corporations. The final rule requires an offeror to represent that it is not an inverted domestic corporation and creates potential liability if the contractor's legal status changes after the contract is awarded.

To learn more about this, click here to read the client alert that was written by John Jensen and Evan Wesser.

Posted February 5, 2013
By David L. Beck

An insured's duty to cooperate with its insurer in the investigation and potential payment of claims is essential to the insurance relationship and is often a condition precedent to coverage. As the Supreme Court for the State of Washington recently affirmed, however, an insurer's ability to deny coverage based on lack of cooperation is limited. Staples v. Allstate Ins. Co., No. 86413-6 (Wash. Jan. 24. 2013). To do so, the insurer must demonstrate a substantial and material breach by the insured of the cooperation clause that results in actual prejudice to the insurer. In other words, where the insured has substantially complied with the cooperation clause or there has been no prejudice to the insurer, a denial of coverage for breach of cooperation will not stand.

Posted February 1, 2013
By Amy L. Pierce

Recently, the California Contractors State License Board (CLSB) issued an Industry Bulletin confirming that contractors may not perform abestos removal or abatement work if the work is not performed within the contractor's license classification(s). An asbestos abatement certification by itself is not a CSLB contractor's license classification. To obtain such a certification, the applicant is not required to have four years of experience, the minimum experience requirement for the CSLB to issue a contractor's license.

Contractors who want to become certified to perform asbestos removal and/or abatement must be tested by CSLB and also register with the Department of Industrial Relations' Division of Occupational Safety and Health (Cal OSHA). Once registered, the contractor must submit verification of the Cal OSHA registration to the CSLB. The CSLB will then add "ASB" on the license to indicate that asbestos removal/abatement can be performed within the contractor's license classification(s).

To read the CSLB's Industry Bulletin, click here, and to read the related legal opinion, click here.

Posted January 25, 2013
By Michael S. McNamara

On January 14, 2013, the U.S. Court of Appeals for the Federal Circuit ("Federal Circuit") held that an offeror had standing to challenge the exclusion of its proposal from a competition even prior to a competitive range, despite the offeror's submission of an incomplete proposal. In Orion Technology, Inc. v. United States, the Federal Circuit clarified that a disappointed offeror that has been eliminated from a competition can show that it has standing as an "interested party."

To learn more about this, click here to read the client alert that was written by Daniel Herzfeld and Evan Wesser.

Posted January 22, 2013
By Robert A. James, Noa L. Clark and Amy L. Pierce

Assembly Bill 2237, which took effect January 1, 2013, confirms that anyone, including a consultant to an owner-builder, who provides or oversees bids for construction, arranges for subcontractor work and schedules, and/or has oversight for a home improvement project is, in fact, acting in the capacity of a contractor and must be state-licensed for any project that is more than $500 in combined labor and material costs. "Consultant" is defined as "a person, other than a public agency or an owner of privately owned real property to be improved, who meets any either of the following criteria as it relates to work performed pursuant to a home improvement contract as defined in [Business & Professions Code section] 7151.2: (A) Provides or oversees a bid for a construction project. (B) Arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project." To read A.B. 2237, click here.

The CSLB sponsored the bill as "a valuable consumer protection measure." CSLB Registrar Steve Sands commented: "All too often, people who don't have a state contractor license call themselves construction consultants and encourage property owners to take on a home improvement project as the owner-builder. The so-called consultant collects a fee and many times leaves the homeowners with all of the project responsibility and liability."

The new law addresses to some extent California's Second District Appellate Court's decision in The Fifth Day, LLC v. Bolotin, 09 C.D.O.S. 4019 (March 30, 2009), clarifying the definition of "consultant." The Fifth Day court, in a case of first impression, considered whether an entity that provided construction management services to a private owner was required to be licensed under the California Contractor's State License Law, Business & Professions Code section 7026. In a 2-to-1 decision, the Fifth Day court concluded that the services contemplated under the agreement in question did not cause the construction management company to fall under section 7026's definition of "contractor." To read our Client Alert entitled California Appellate Court Confirms that Certain Construction Managers Need Not Be Licensed Contractors, click here.

For additional information about several other laws affecting consumers, contractors, and the construction industry take that took effect January 1, 2013 click here.

Posted January 14, 2013
By Robert A. James and Amy L. Pierce

With the passage of Assembly Bill 1794, effective January 1, 2013, accurately and timely reporting new employees is now even more important. The new law authorizes the Employment Development Department (EDD), until January 1, 2019, to provide the specified new employee information to the Joint Enforcement Strike Force on the Underground Economy, the Contractors' State License Board (CSLB), and the State Compensation Insurance Fund (SCIF).

Efficient information-sharing among state offices is expected to ensure that employers are accurately reporting their employee payroll to their insurance carriers for establishing their workers' compensation insurance premiums.

This new law specifically enables the EDD, the CSLB, and the SCIF to establish a memorandum of understanding to audit, investigate, and prosecute those who violate tax withholding requirements and commit premium insurance fraud. With the newly shared information, the CSLB is expected to take disciplinary action against contractors who fail to accurately report new employee information within 20 days of the established hire date, as required by California Unemployment Insurance Code section 1088.5(d). To read the CSLB's Press Release on A.B. 1794, click here, and to read A.B. 1794, click here.

Posted December 20, 2012
By Michael S. McNamara

On December 7, 2012, the U.S. Court of Appeals for the Federal Circuit issued its first decision determining that government contractors need to challenge any obvious errors, improprieties, or ambiguities on the face of a solicitation amendment before award (extending its previous rule that such challenges to the initial solicitation generally must be challenged before award). In COMINT Systems Corp. & Eyeit.com, Inc., JV v. United States, the Federal Circuit found that Comint missed an opportunity to challenge an obvious - or patent - error in an amendment to the solicitation. By signing the amendment and waiting until after award to protest the allegedly problematic amendment, the government contractor waived any right to challenge the terms of the amendment to the solicitation.

To learn more about this, click here to read the client alert that was written by Daniel Herzfeld.

Posted November 29, 2012
By Michael S. McNamara

The 22nd edition of Pillsbury's Newsletter: Perspectives on Real Estate features articles on energy consumption data reporting (AB1103 and 531), construction and risk management, new foreign tax withholding forms, chapter 9 and public-private partnerships.

Articles include:

• Energy Consumption Data Reporting in California -- AB 1103 and 531


• Real Estate and Construction Risk Management: Tips to Ensure Your Status As An Additional Insured


• Attention: New Foreign Tax Withholding Forms


• Resolving Municipal Distress: Chapter 9 and Public-Private Partnerships

Posted November 26, 2012
By Amy L. Pierce

On November 20, 2012, the California Contractors State License Board posted an Industry Bulletin alerting licensees and applicants alike to a recent scam involving fraudulent calls asking licensees or applicants for their credit card information over the phone in connection with renewing their licenses, obtaining continuing education credits, or taking licensing exams. CSLB Registrar Steve Sands has confirmed that at least one "unscrupulous company" has used information from the CSLB's website to contact licensees or applicants "to mislead and scam them." The CSLB confirmed that it "will never ask for credit card information over the phone, nor will they process any payment over the phone." CSLB fees are only payable through the mail via check or at CSLB headquarters via cash, check, or credit card. Moreover, there are no continuing education requirements to renew a CA CSLB license.

The CSLB confirmed that although California Business and Professions Code § 7080.5 requires it to make public the name and address of every accepted application for a license, and that it intends to continue to post this information, it could change its process if applicants continue to be preyed upon by unscrupulous companies. To read a copy of the Industry Bulletin, click here. To read additional CA CSLB 2012 Industry Bulletins, click here.

Posted November 11, 2012
By Laura Freid-Studlo

In deciding Westfield Insurance Company v. Custom Agri Systems, Inc., 2012 Ohio 4712, the Ohio Supreme Court recently held that defective construction or workmanship is not a covered "occurrence" under a commercial general liability ("CGL") insurance policy, even if the defective work was performed by a subcontractor of the insured contractor. In that case, a contractor sought defense and indemnity from its insurer related to allegations of damages arising from a steel grain bin which had been defectively constructed by a subcontractor. The insurer argued that the claims against the contractor were not for "property damage" caused by an "occurrence," or, alternatively, that the claims were removed from coverage by the policy's contractual liability exclusion.

In rendering its opinion, the court stated that faulty workmanship was not fortuitous and therefore not an accident or occurrence under a CGL policy. Because it held that defective construction was not an occurrence, the court did not address question of whether such claims were excluded by the contractual liability exclusion. The dissent, however, noted a "strong recent trend in the case law" which interprets the term occurrence to include unanticipated or unintentional damage to non-defective property resulting from faulty work. The dissent went on to criticize the majority opinion as being too broad because it foreclosed the possibility of defective workmanship constituting an occurrence under any circumstance.

Courts throughout the country are split on whether defective workmanship is an occurrence under a CGL policy. Ohio is simply latest state to weigh in on the debate. The Westfield decision will not be well-received by contractors but is likely to be celebrated by insurance companies who may rely on it in refusing to defend claims.

Posted November 2, 2012
By William S. Hale

The replacement of the eastern span of the Bay Bridge is a process many here in the San Francisco Bay Area have had a first-hand view of, as the new span is being built next to the old span. According to Caltrans, the new span will be the longest Self-Anchored Suspension span in the world. Here CalTrans explains the fascinating process by which the weight of the new bridge is transferred from the falsework which has supported it during construction to the new suspension cable. The load transfer process is scheduled for completion this month, with the new span slated to open Labor Day 2013.

Wish the election were over already? This little girl does too.

Do parking structure designs account for loads generated by large numbers of dancing people? Maybe they should. [Audio NSFW]

Posted October 24, 2012
By Andrew M. Argyris

There is no doubt that Public-Private Partnerships will play an integral role in improving this country's infrastructure in the coming years. By leveraging private investment, P3s have the ability to bridge the funding gap in many state and local governments. States are slowly recognizing that they can tackle critical infrastructure needs by partnering with the private sector. Some states, however, are still hesitant to commit to P3s.

Pillsbury's P3 practice has created a chart that lists which states have enacted significant P3 enabling legislation. This P3 Enabling Statutes chart is available on Pillsbury's P3 practice homepage. The statutes include links to the full text of the enacted legislation so that you can learn more about how you can take advantage of these P3s. In addition to listing the agencies and types of projects authorized, the chart also lists whether the statutes encourage unsolicited proposals. To promote ingenuity and entrepreneurialism, P3 legislation should continue to welcome unsolicited proposals from the industry.

We will of course continue to update this chart as more states pass P3 enabling legislation.