Best Best & Krieger News Feed

Losing Bidders Can Sue When Winners Don't Pay Prevailing Wages

13 Mar 2015 00:00:00 -0800

The second-place bidder on a government contract has a cause of action for intentional interference with prospective economic advantage against the winning bidder if the contract was awarded as a result of -wrongful conduct. In the recent case of Roy Allan Slurry Seal v. American Asphalt South Inc., 2015 DJDAR 2014 (Feb. 20, 2015), the 2nd District Court of Appeal held that plaintiffs could state that cause of action if the winning bidder was able to submit a lower bid because it illegally paid its workers less than the prevailing wage.

Most public works contracts must be awarded to the lowest responsive bidder, provided the lowest bidder meets the minimum qualifications necessary to perform the work. Unlike private developers, public agencies usually have no discretion to choose a preferred contractor or to determine the contractor who is most qualified or provides the best value. Bids must be submitted under seal, with all of the bids opened at once. After the bid opening, a public agency only has two options: award to the lowest responsive, responsible bidder or reject all of the bids. There is no opportunity for further negotiations, and details of each bid, such as the budgeted costs and anticipated profits, are not revealed.

The purpose of this system is to create competition — to give every bidder an equal chance to perform public work, and therefore protect the public's financial interests. Of course, the system only works if everyone plays by the rules.

In Allan, the plaintiffs alleged that another contractor — the winning bidder on 23 separate public works projects — did not play by the rules. The defendant, American Asphalt South Inc., was awarded the 23 contracts, totaling more than $14.6 million, to apply slurry seal to public roads. The second lowest bidder on all 23 contracts was either Roy Allan Slurry Seal, Inc. or Doug Martin Contracting, Inc. The plaintiffs combined their cases and sued American Asphalt in five counties — Los Angeles, Riverside, San Bernardino, Orange and San Diego, yielding different results to various demurrers. The cases were all combined on appeal.

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To read the full article in the Daily Journal, which ran March 13, 2015, click here (subscription required).

All California Contractors and Subcontractors Involved with Public Works Projects Now Required to Register With State by March 1, 2015

10 Jul 2014 00:00:00 -0800

The California Legislature has imposed a new registration requirement for contractors and subcontractors involved with public works projects. Senate Bill 854, passed late last month, created a registration program, effective July 1, 2014, to fund the Department of Industrial Relations’ monitoring and enforcement of prevailing wage laws.

The registration period is open now, and contractors and subcontractors wishing to work on a public works project must be registered by March 1, 2015. For public agencies/awarding bodies, the new law requires that all public works projects with bids due after March 1, 2015, or awarded on or after April 1, 2015, use only registered contractors and subcontractors. The bill also requires awarding bodies to include notice of the registration requirement in their bid invitations and bid documents. In addition, public agencies must also file notice of their public works projects using DIR approved forms.

Registration is completed through an online application and requires a non-refundable $300 fee to be paid by the contractors and subcontractors. The registration process requires contractors to:

provide workers’ compensation coverage to its employees
hold a valid Contractors State License Board license
have no delinquent unpaid wage or penalty assessments
not be subject to federal or state debarment

Contractors must pay an annual renewal fee by July 1 of each year. The registration form is located on the DIR’s website at http://www.dir.ca.gov/DLSE/dlsepublicworks.html.

To help awarding bodies and contractors comply with the new requirements, the DIR will post a database of registered contractors and subcontractors on its website. While non-registered contractors may not be awarded public works contracts after the effective date, inadvertently listing an unregistered subcontractor on a bid will not necessarily invalidate that bid. In addition, the registration requirement does not apply to private jobs that are determined to be public works after the contract has been awarded.

The new registration system replaces the previous requirement that awarding bodies pay for costs to monitor and enforce compliance with prevailing wage laws for certain public works projects. Registration and renewal fees will go into the State Public Works Enforcement Fund, which provides for the administration of contractor registration, monitoring and enforcement of prevailing wage laws, and the enforcement of Labor Code violations on public works projects by the DIR.

For more information on the new public works contractor registration requirement and its potential impact on public works projects, please contact the authors of this e-alert listed at right, an attorney in the firm’s Public Contracts and Construction group or your BB&K attorney.

Disclaimer: BB&K Legal Alerts are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué.

Recent Court Decision Threatens to Expand Home Builders’ Liability for Construction Defects

26 Feb 2014 00:00:00 -0800

By Victor L. Wolf

For more than a decade, contractors and home builders have looked to Senate Bill 800, commonly known as the “Right to Repair Act,” as California’s mandatory process that homeowners must follow before filing a lawsuit over construction defect claims. But a recent state appellate decision appears to unravel that long-held process and, in fact, potentially expands home builders’ liability for construction defects.

Lawmakers passed SB 800 in 2002 as a way to respond to concerns by builders and insurers over the costs associated with construction defect litigation, as well as concerns by homeowners and their advocates over the fall-out of a decision by the California Supreme Court. Two years earlier, the state’s highest court had ruled in Aas v. Superior Court that homeowners could not recover damages in negligence for construction defects that had not yet caused either property damage or personal injury.

Since SB 800’s passage, many builders, insurance companies and legal commentators interpreted the Right to Repair Act as the sole and exclusive means for homeowners seeking recovery of damages for residential construction defects.

Such an interpretation provided builders with several advantages, including:

_ limiting claims for defects to the building standards set out in the Act.

_ requiring homeowners to give notice and follow pre-litigation procedures before filing suit.
That gives the builder the opportunity to inspect the alleged violation, offer to repair it, and either fix the violation or arrange for a repair to be done. Only if the builder fails to respond to the claim, or otherwise fails to comply with the requirements of the Act's pre-litigation procedures, can a homeowner bring a lawsuit for a violation of the Act's standards. A homeowner may also file an action for a violation of the Act's building standards alleging an inadequate repair.

_reducing the statutes of limitation for a number of defects. For example, while the statutes of limitation for construction defects generally is four years for patent (i.e., apparent) defects and ten years for latent (i.e., not reasonably apparent) defects, the Act provides that claims relating to plumbing and electrical work cannot be brought more than four years after close of escrow regardless of whether such defects are latent or not.

But a recent decision by the Fourth District Court of Appeal, in a case involving a pipe that burst in a home and flooded it, threatens to completely undermine the builders’ position and eliminate any advantages the Act granted them.

In Liberty Mutual Insurance Company v. Brookfield Crystal Cove LLC, the appellate court ruled that the Act only applies to defects that had not yet caused damage, and does not bar claims under common law theories of negligence in cases where actual damage has occurred.

As a result, the court held that the shortened statutes of limitations under the Act did not apply to defects that had caused damage. Moreover, by implication, this ruling means that when it comes to damage-causing defects, a homeowner is not limited to the defects set out in the Act, nor is the homeowner required to follow the pre-litigation procedures before filing suit.

While the state Supreme Court in December decided against reviewing the appellate court decision, it remains to be seen whether other state appellate courts will follow the Liberty Mutual decision. As a published appellate decision, Liberty Mutual establishes precedent in the trial courts and raises the specter of significantly expanding home builders’ potential exposure for construction defect claims beyond what builders and insurers had assumed to be the case for more than a decade.

* This article first appeared in The Press-Enterprise on Feb. 23, 2014. Republished with permission.

Charter Cities Challenge Legislation Restricting Access to State Funding Based on Compliance with Prevailing Wage Law

25 Feb 2014 00:00:00 -0800

Several California charter cities challenged the constitutionality of Senate Bill 7 (SB 7) last week by filing a writ of mandate and complaint for declaratory and injunctive relief against the state in San Diego County Superior Court. SB 7 was recently passed by the legislature to require charter cities to adopt and comply with prevailing wage requirements equal to or greater than state standards as a condition of receiving state funding on future public works projects.

The challenge in City of El Centro v. Lanier claims that SB 7 is an unconstitutional restriction on access to state funding based on how charter cities conduct their constitutionally protected municipal affairs involving public works construction, including the setting of wages for public works projects. The charter cities in the suit are seeking a writ of mandate directing the state to cease all efforts to enforce SB 7 against charter cities, a determination that SB 7 is unconstitutional, and an injunction restraining enforcement of SB 7. BB&K will monitor this case and report further details as they become available.

For more information about this case or SB 7, please contact the attorney authors of this legal alert listed at right in the firm’s Municipal Law and Special Districts practice groups, or your BB&K attorney.

The Risks of Sustainable Construction

23 Apr 2013 00:00:00 -0800

By Scott W. Ditfurth

Sustainability and “green” building are becoming commonplace in the construction industry. And why not? Aside from an obvious benefit to the environment, sustainable building provides for potential financial benefits, higher property values and preferential marketability.

While the Leadership in Energy and Environmental Design, commonly referred to as LEED, certification guidelines are not currently required for new construction, it is not uncommon for certain LEED standards to be incorporated into local codes and state regulations such as CALGreen. Despite the prominence of green building, there remains undefined risks in constructing these kinds of structures, insuring their performance and assigning liability to the parties for any failures.

While the benefits of sustainable construction are well documented, the risks associated with it remain somewhat undefined. Generally speaking, the risks include defects in green materials used on a project, the ability to attain LEED certification or comply with local building codes, and whether or not the buildings will qualify for various financial incentive programs.

Thus, developers and insurance companies face potential exposure regarding how the building was constructed and how it will perform long after construction.

Click here to read the complete article on The Press-Enterprise website.

BB&K's Robert Hanna and Shawn Hagerty Named Top Attorneys for 2012

25 Jul 2012 00:00:00 -0800

Best Best & Krieger attorneys Robert J. Hanna and Shawn D. Hagerty were named top 2012 attorneys by the San Diego Daily Transcript. Hanna was recognized in the real estate and construction litigation field, and Hagerty was selected for the municipal/government law field.

The Transcript conducts a peer voting process to determine the best lawyers in private, corporate, academic and government practice in San Diego County in key categories. The categories were selected to represent the main areas of law practiced in San Diego County.

Click here for details on Hanna's recognition.

Click here for details on Hagerty's recognition.

Three Veteran Litigators Join BB&K’s Municipal Law Practice

01 Nov 2010 00:00:00 -0800

For Immediate Release: Nov. 1, 2010

Media Contact: Jennifer Bowles • 951.826.8480 • jennifer.bowles@BBKlaw.com

LOS ANGELES _ Three veteran litigators known for their work with Los Angeles County and other public agencies have joined the municipal and redevelopment practice at Best Best & Krieger LLP, the firm announced Monday.

Nowland C. Hong, Michael M. Mullins and Michael S. Simon came to BB&K from the Los Angeles office of Florida-based Akerman Senterfitt, where they were shareholders and focused on litigation and appellate work for public agencies and private clients. They have worked on a broad range of matters, including contract disputes, public works contracting, employment status, public pension rights, false claims, class actions and inverse condemnation.

Hong said BB&K was a good fit for the three attorneys who have worked together at different firms in the Los Angeles area for some 20 years.

“BB&K is one of the most outstanding and recognized firms in California that represents public agencies and matters related to them,” Hong said. “We are glad to be part of that.”

The three attorneys have worked closely with the City of Los Angeles and County of Los Angeles on a number of cases, including the ongoing, high-stakes litigation for the city on its multi-billion dollar Hyperion wastewater treatment plant and the litigation for the county over the Big Rock Mesa landslide in Malibu – one of the biggest inverse condemnation cases ever.

“It is a pleasure to welcome to the firm a group of high-caliber attorneys with such extensive experience and successes,” said attorney Jill Willis, who is the office managing partner for BB&K's Los Angeles office.

Hong, Mullins and Simon join a practice that is one of the state’s largest. Attorneys in the firm’s municipal and redevelopment law practice serve as city attorney to more than 30 cities in California and provide special counsel work to several more cities. Many of the 19 attorneys from McDonough, Holland & Allen in Sacramento who joined BB&K on Sept. 1 also became members of that practice.

The new attorneys in BB&K’s Los Angeles office and their titles are:

Nowland C. Hong, of counsel: As a litigator who has tried over 50 jury trials to a verdict, Hong holds the rank of “Advocate” before the American Board of Trial Lawyers. He graduated from the University of Southern California Law School in 1959. His father, You Chung Hong, was the first person of Chinese descent to become an attorney in California after passing the bar in 1923. He practiced immigration law in Los Angeles.

Hong's practice covers trial and appellate matters for public agencies and private clients over a wide variety of subjects. These include class actions involving public pension rights, public employment, mass inverse condemnation landslides and large public works claims. On the private side, he has handled fire disasters, reorganizations of insurance companies, re-insurance, eminent domain takings and employment claims.

Hong is a member and former president of the Southern California Chinese Lawyers Association; member and former national president of the Chinese American Citizens Alliance; member of the Los Angeles Chancery Club; and member of the litigation sections of the American Bar, California State Bar and the Los Angeles County Bar Association where he is also on the executive committee of the Senior Lawyers Division Historical Committee.

Michael M. Mullins, of counsel: Mullins focuses on public agency litigation, business and commercial litigation, with an emphasis on appellate law. He has handled a variety of legal issues, including franchise agreements and other public litigation, defense of local taxation, false claims, class actions and constitutional litigation.

He successfully defended a public entity's taxation ordinance against an assault by a prominent anti-taxation organization. He also successfully defended a city's interests connected with its refuse agreements in a number of lawsuits brought against the city by various private entities and the city's refuse hauler. Other matters have included class actions involving public pensions and securities, condemnation and eminent domain, and public and private contract actions.

He is a member of the litigation sections of the American Bar Association and the California State Bar and the appellate courts committee of the Los Angeles Bar Association.

Mullins graduated from the University of Virginia School of Law in 1976.

Michael S. Simon, partner: A commercial litigator, trial lawyer and the former managing shareholder for Akerman Senterfitt’s Los Angeles office, Simon has experience in litigation for public and private clients in contract disputes, insurance claims administration, municipal law, heavy construction, trademark and unfair business practices claims and e-discovery.

He assisted in the design and implementation of new e-Discovery systems and procedures for the nation’s largest water agency so it would meet the mandates of new federal and state e-Discovery laws.

Simon also successfully defended the County of Los Angeles against contractor delay and design defect-related claims exceeding $10 million on the County of Los Angeles' Emergency Operations Center. He also successfully prosecuted cross-claims against the contractor for violation of the California False Claims Act, which ultimately resulted in the contractor dropping its entire claim against the county.

Simon graduated from the University of California, Davis School of Law in 1989.

Mary Beth Coburn Spoke on Contractor Prequalification at LCC Conference

16 Sep 2009 00:00:00 -0800

BB&K partner Mary Beth Coburn participated on a panel at the League of California Cities' Annual Conference on "Contractor Prequalification." Coburn has been involved in dozens of prequalification efforts, including working with agencies that failed to properly complete the prequalification process.

Contractor prequalification can streamline the bidding process and provide cities with added assurance that the lowest bidder will also be a responsible bidder. This session provided a "how to do it right" overview with an emphasis on real-life lessons learned.

For more information on the conference, visit the LCC website.

BB&K Wins Jury Trial In Construction Dispute

05 Jan 2007 00:00:00 -0800

MCP Industries, Inc. v. Fisher Tracks, Inc.

BB&K Partner John Higginbotham represented a contractor, Fisher Tracks, Inc., in protracted litigation culminating in a month long jury trial against one of its material suppliers. After Fisher Tracks refused to pay for allegedly defective material, a polyurethane glue used in the installation of synthetic running tracks, MCP filed a collections action seeking approximately $59,000 in damages. Fisher Tracks filed a cross-complaint seeking several times that amount, representing the cost of tearing out and replacing several running tracks. After a month long jury trial, involving extensive expert testimony on both sides, the jury reached a verdict and completed an 80-question special verdict form in less than four hours, awarding Fisher Tracks the exact amount requested in closing argument. The case settled shortly thereafter for the full amount of the verdict plus an additional nearly $200,000 in recognition of BB&K’s anticipated victory on a pending motion for attorneys' fees. At the end of the day, BB&K’s client achieved a total victory and was made completely whole.

BB&K Achieves Favorable Settlement from Contractor for Fraudulent Billings

02 Jun 2004 00:00:00 -0800

City of Azusa v. Simich Construction Company

BB&K Partner John Higginbotham represented the City of Azusa in City of Azusa v. Simich Construction Company. The case involved fraudulent billings by a contractor, which were later discovered in the course of a contract dispute on a subsequent public works project. As the City’s designated prosecuting authority, BB&K sued the contractor for violations of the False Claims Act. The contractor filed a cross-complaint for breach of contract. The case was ultimately settled on terms highly favorable to the City, which included the contractor receiving nothing and the City retaining a substantial sum of money on the subsequent project which would otherwise have been payable to the contractor.