CONSTRUCTION DEFECTS LITIGATION:

HOT TOPICS 2009

 

SPEAKERS

 

Jonathan Margolis

Jonathan Margolis, PC

2 Lower Ragsdale Drive, Suite 100

Monterey, CA 93940

(831) 646-3100  

jm@jonathanmargolis.com

 

Donald L. Sullivan

P.O. Box 320368

San Francisco, CA 94132

(650) 799-7629

donlsullivan@yahoo.com

 

Scott Williams

Flynn / Williams, LLP

1010 B Street, Suite 200

San Rafael, CA 94901

(415) 461-1000

swilliams@flynn-williams.com

 

 

 

PANEL OUTLINE

 

 

A.        PRELITIGATION PROCEDURE

 

            1.         Calderon statute (Civil Code §1375) – applicable to actions brought by homeowners’ associations forconstruction defects in common interest developments (CIDs)

                        a.         Requires notice to “builder” before filing suit; notice tolls all applicable statutes of limitation for 180 days and triggers meet and confer procedures designed to resolve dispute

                        b.         Statute mandatory as to all suits filed on or after July 1, 2002; becomes inoperative July 1, 2010

                        c.         Written tolling agreement (Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401; El Escorial Owners Assoc. v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337 [applicable to subcontractor not party to tolling agreement])

1.                   Civil Code §1368.5 – requires written notice by HOA to members before filing suit for construction defects

2.                   SB 800 (Civil Code §§895 et seq) – applicable to all residential construction “located on a lot or within a common area” sold after January 1, 2003

                        a.         Creates new substantive and procedural law applicable to defective construction

                        b.         Provides developers with right to repair

                                    1)         Feasibility of statutory time limits: 30 days to produce documents; inspection and testing within 14 days; mediation within 2 weeks of request by parties

                                    2)         Evidentiary admissibility

                                    3)         Subcontractor issues: (a) notice of inspections; (b) any input into nature and scope of repair? If not, are developer payments “voluntary”?

                                    4)         Insurance coverage issues: property damage; definition of “claim”; feasibility – sufficient time for tender and response?

                        c.         Impacts of SB 800 are addressed where applicable below 

            4.         Action for defects in CID sold after January 1, 2003

                        a.         Which statute applies, Calderon or SB 800?

                        b.         Civil Code §935 provides: To the extent that provisions of this chapter are enforced and those provisions are substantially similar to provisions in Section 1375 of the Civil Code, but an action is subsequently commenced under Section 1375 of the Civil Code, the parties are excused from performing the substantially similar requirements under Section 1375 of the Civil Code.

 

                        c.         Builders indemnity right for economic loss - indemnity v. direct action (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App. 4th 1194)

 

            5.         Clause in home purchase contracts requiring dissatisfied homebuyers to submit to judicial reference

 

                        a.         Conflict with Calderon or SB 800?

 

                        b.         Enforceability

 

                                    1)         Reference provision was not unconscionable, but only enforceable against original purchasers in privity with seller notwithstanding multiplicity of actions (Greenbriar v. Superior Court (2004) 117 Cal.App.4th 337)

 

                                    2)         Reference agreement not unconscionable (Trend Homes, Inc. v. Superior Court (2005) 131 Cal.App.4th 950)

 

                                    3)         Reference agreement not prohibited predispute waiver of right to jury trial (Woodside Homes of California v. Superior Court (2006) 142 Cal.App.4th 99)

 

                                    4)         Arbitration provision was adhesive and, even if enforceable, could not be severed (Baker v. Osborne Development (2008) 159 Cal.App. 4th 884; Adajar v. RWR Homes, Inc. (2008) 160 Cal.App. 4th 563; Bruni v. Didion (2008) 160 Cal.App.4th 1272; Thompson v. Toll Dublin (2008) 165 Cal.App. 4th 1360)

 

            6.         Referees and mediators

 

                        a.         Statutory regulation

 

                                    1)  CCP §638 – appointment of referee by agreement of parties

 

2)      CCP §639 – appointment of referee by court order

 

3)      CRC 3.900 et seq (adopted effective 1/1/07, replacing former CRC 244.1 & 244.2)

 

4)      CCP §128 – court’s inherent power to control proceedings

 

5)      CCP §187 – court’s power to accept suitable methods of practice

 

b.                   Mediators vs. referees (Lu v. Superior Court (1997) 55 Cal.App.4th 1264)

 

                        c.         Court’s authority to order mediation; settlement conferences vs. mediations (Jeld-Wen, Inc. v. Superior Court (2007) 146 Cal.App.4th 536) 

 

i.Admissibility of communications made during mediation;                          arbitration clause in settlement agreement (Fair v.                                     Bakhtiari (2006) 40 Cal.4th 189)

 

ii.Other recent decisions: Eisendrath v. Superior Court                    (2003) 109 Cal.App.4th 351; Woodside Homes v. Superior                      Court (2003) 107 Cal.App.4th 723; Rojas v. Superior Court         (2002) 102 Cal.App.4th 1062; Pardee Construction Co. v.                Superior Court (2002) 100 Cal.App.4th 1081; Villa Milano               HOA v. Il Davorge (2000) 84 Cal.App.4th 819; Foxgate            Homeowners Association v. Bramalea California (2000) 78         Cal.App.4th 65

 

c.      

 

a.                   Class actions (Hicks v. Kaufman and Broad (2001) 89 Cal.App.4th 908)

 

b.                   Homeowners’ associations  

 

i.Civil Code §1368.3 (formerly CCP §383) – express statutory standing;         areas of damage that association is obligated to maintain or repair                                  (Windham at Carmel Mountain Ranch  Association v. Superior Court                    (2003) 109 Cal.App.4th 1162)

 

ii.CCP §382 – representative standing; areas of damage that association is        not obligated to maintain or repair (Raven’s Cove Townhomes v. Knuppe        Development (1981) 114 Cal.App.3d 783)

 

c.                   Sale of defectively constructed property by original owner to new owner – who                owns cause of action vs. builder?

 

i.Owner who discovers damage retains cause of action; claim for cost to         repair becomes claim for loss on sale at reduced value (Vaughn v. Dame             Construction Co. (1990) 223 Cal.App.3d 144) 

 

ii.Assignment necessary to transfer cause of action to new owner (Siegel v.                        Anderson Homes, Inc. (2004) 118 Cal.App.4th 994; Krusi v. S.J. Amoroso                         Construction Co., Inc. (2000) 81 Cal.App.4th 995; Keru Investments v.        Cube Company (1998) 63 Cal.App.4th 1412)

 

iii.Transfer of damaged property by developer to HOA – assignment not                             required (The Standard Fire Insurance Company v. The Spectrum                             Community Association (2006) 141 Cal.App.4th 1117)

 

d.      

 

a.                   Contractors – licensing issues

 

i.Business and Professions Code §7031

 

ii.Recent decisions: Performanc Plastering v. Richmond American Homes         (2007) 153 Cal.App.4th 659; Banis Restaurant Design v. Serrano (2005)           134 Cal.App.4th 1035; M.W. Erectors, Inc. v. Niederhauser Ornamental                       and Metal Works Co., Inc. (2004) 115 Cal.App.4th 512; Slatkin v. White                          (2002) 102 Cal.App.4th 963; Pacific Custom Pools, Inc. v. Turner                            Construction Co. (2000) 79 Cal.App.4th 1254; Ranchwood Communities                   Ltd. Partnership v. Jim Beat Construction Co. (1996) 49 Cal.App.4th                    1397

 

iii.Code of Civil Procedure §1029.8 – treble damages for injury caused by               unlicensed persons

 

b.                   Construction managers (Ratcliff Architects v. Vanir Construction Management,               Inc. (2001) 88 Cal.App.4th 595)

 

c.                   Suspended corporations

 

i.Revenue and Taxation Code §§19719 and 23301

 

ii.Corporate plaintiff – statutes of limitation continue to run

 

iii.Corporate defendant 

 

1.                   Special appearance/motion to intervene by insurer (Garamendi v.             Golden Eagle (2004) 116 Cal.App.4th 694)

 

2.                   Insurer required to intervene (Kaufman & Broad v Performance             Plastering (2006) 136 Cal.App.4th 212)

 

3.                   Insurer authorized to appear on behalf of suspended corporate                 contractor (El Escorial Owners Assoc. v. DLC Plastering, Inc.            (2007) 154 Cal.App.4th 1337)

iv.Substantial compliance (Sade Shoe Co., Inc. v. Oschin & Snyder (1990)          217 Cal.App.3d 1509)

 

d.                   Shareholders of corporate defendants (Michaelis v. Benavides (1998) 61                                      Cal.App.4th 681 (review denied))

 

e.                   Broker’s disclosure obligation (Michel v. Palos Verdes Network Group, Inc.                     (2007) 156 Cal.App.4th 756)

 

e.      

 

a.                   RULE: The plaintiff in a construction defect suit may not recover the cost to                    repair, or the diminished value attributable to construction defects that have not                 caused property damage (Aas v. Superior Court (2000) 24 Cal.4th 627) 

 

b.                   Supreme Court applied rule to negligence in Aas, then extended it to strict                        liability in Jimenez v. Superior Court (2002) 29 Cal.4th 473 

 

c.                   Recent pre-Aas decisions: Stearman v. Centex Homes (2000) 78 Cal.App.4th                  611; Zamora v. Shell Oil Co. (1997) 55 Cal.App.4th 204; Fieldstone Co. v. Briggs                    Plumbing Products, Inc. (1997) 54 Cal.App.4th 357

 

d.                   ISSUE: Does rule establish a substantive element of the cause of action or is it a              rule of damages? 

 

i.Defense view – the rule determines what damages are recoverable,                    establishing a recovery filter; only physical injuries are recoverable in                      negligence and strict liability actions, not associated economic loss

 

ii.Plaintiffs’ view – the rule establishes a threshold for recovery; upon                     proving physical injury, the plaintiff is entitled to recover both physical             injuries and associated economic loss

 

1.                   Civil Code §3333 – “all the detriment sustained” (Raven’s Cove              Townhomes v. Knuppe Development (1981) 114 Cal.App.3d 783)

 

2.                   Economic loss allowed (Collins Development Co v. DJ Plastering         Inc (2000) 81 Cal.App.4th 771; Transwestern Pipeline Co v.                      Monsanto Co (1996) 46 Cal.App.4th 502)

 

e.                   Post-Aas issues

 

i.What if the only property damage is to the defective work itself?

 

1.                   Component part analysis

2.                   Published decisions: KB Home v. Superior Court (2003) 112                Cal.App.4th 1076; Jimenez v. Superior Court (2002) 29 Cal.4th           473; Carrau v. Marvin Lumber and Cedar Co. (2001) 93                                      Cal.App.4th 281; Aas v. Superior Court (2000) 24 Cal.4th 627;                Stearman v. Centex Homes (2000) 78 Cal.App.4th 611

 

3.                   Depublished decisions: Mesa Vista South Townhome Assn. v.                             California Portland Cement Co. (2004) 118 Cal.App.4th 308;                  Nash v. MacDonald (2001) 92 Cal.App.4th 847

 

ii.Does Aas preclude recovery for cost of repair of a defect           that causes consequential damage?  i.e. is recovery limited                      to the consequential damage or does it include the defect             that caused the damage? (Collins Development Co v. DJ          Plastering Inc (2000) 81 Cal.App.4th 771)

 

iii.Does Aas preclude recovery for access repairs? (F&H                           Construction v. ITT Hartford Insurance Company of the              Midwest (2004) 118 Cal.App.4th 364)

 

iv.What degree of damage is required? E.g. improper                      construction of structural components causing crack in                         sheetrock

 

v.Property owner sustains physical damage to property, then                      sells property with damage fully disclosed at discounted                     value, thus incurring economic loss

 

f.                    SB 800 – §942: physical injury not required

 

f.       

 

a.                   Negligence 

 

i.Contractor’s standard of care (El Escorial Owners Assoc. v. DLC                     Plastering, Inc. (2007) 154 Cal.App.4th 1337; Stonegate Homeowners                         Assoc. v. Staben (2006) 144 Cal.App.4th 740)

 

ii.Early decisions: Sabella v. Wisler (1963) 59 Cal.2d 21; Stewart v. Cox                (1961) 55 Cal.2d 857

 

iii.Negligence per se – violation of building code (Huang v. Garner (1984)               157 Cal.App.3d 404 [disapproved on other grounds])

 

b.                   Strict/products liability   

 

i.Products liability law extended to sale of mass produced homes (Kriegler           v. Eichler Homes (1969) 269 Cal.App.2d 224) 

 

ii.Defendants

 

1.                   Developers – mass producer vs. occasional builder (Fleck v.                                Bollinger Home Corp. (1997) 54 Cal.App.4th 926; Oliver v.                     Superior Court (1989) 211 Cal.App.3d 86)

 

2.                   Subcontractors (La Jolla Village Homeowners Association, Inc. v.                       Superior Court (1989) 212 Cal.App.3d 1131)

 

3.                   Manufacturers and suppliers (Crawford v. Weather Shield Mfg.,                          Inc. (2006) 136 Cal.App.4th 304 [review granted 05/24/06]; Mills             v. Forestex Co. (2003) 108 Cal.App.4th 625; Jimenez v. Superior                        Court (2002) 29 Cal.4th 473; Monte Vista v. Superior Court                                   (1991) 226 Cal.App.3d 1681)

 

4.                   Marketing activities (Bay Summit Community Assoc. v. Shell Oil                         Co. (1996) 51 Cal.App.4th 762)

 

iii.Liability of subsequent owner/converter who acquires completed project            and sells units

 

1.                   Stream of commerce/retail liability (Kriegler v. Eichler Homes                 (1969) 269 Cal.App.2d 224; Greenman v. Yuba Power Products                           (1963) 59 Cal.2d 57)

 

2.                   Timing and method of acquisition: (i) middle of chain of title vs.               sale to public; (ii) property obtained by foreclosure vs. arm’s                             length purchase

 

3.                   Civil Code §1134 – apartment conversions; detailed disclosure                             requirements; “actual damages suffered by buyer”

 

iv.Commercial developer (Gentry Construction Co. v. Superior Court (1989)              212 Cal.App.3d 177) 

 

v.Trivial defect doctrine (Kasparian v. Avalonbay (2007) 156 Cal.App.4th          11 [recessed drain in walkway; trip and fall injury])

 

vi.Restatement (Third) of Torts: Products Liability, approved 1997

 

c.                   Breach of warranty   

 

i.Application of warranty law to sales of homes/condos (Mills v. Forestex         Co. (2003) 108 Cal.App.4th 625; Pollard v. Saxe and Yolles Development            Co (1974) 12 C3d 374)

 

ii.New construction – condominium conversions? (East Hilton Drive HOA          v. Western Real Estate Exchange (1982) 136 Cal.App.3d 630)

 

iii.Recovery for economic loss (Hicks v. Kaufman and Broad (2001) 89                               Cal.App.4th 908)

 

iv.Privity requirement

 

1.                   Breach of express warranty (Evraets v. Intermedics Intraocular              (1994) 29 Cal.App.4th 766)

 

2.                   Breach of implied warranty (Mills v. Forestex Co. (2003) 108          Cal.App.4th 625; All West Electronics, Inc. v. M-B-W, Inc. (1998)          64 Cal.App.4th 717; Huang v. Garner (1984) 157 Cal.App.3d 404)

 

3.                   HOA privity (Windham at Carmel Mountain Ranch Association           v. Superior Court (2003) 109 Cal.App.4th 1162)

 

4.                   SB 800 – privity not required; successor owners may sue

 

v.Notice requirement (Fieldstone Co. v. Briggs Plumbing (1997) 54                    Cal.App.4th 357; Pollard v. Saxe and Yolles Development Co (1974) 12                    C3d 374; Greenman v. Yuba Power Products (1963) 59 Cal.2d 57)

 

vi.Does express warranty preclude implied warranty claims? (Hicks v.                 Superior Court (2004) 115 Cal.App.4th 77 [review granted then dismissed               when parties settled])

 

vii.Opportunity to remedy (Mocek v. Alfa Leisure, Inc. (2003) 114                      Cal.App.4th 402)

 

viii.Future performance/statute of limitations (Mills v. Forestex Co. (2003)          108 Cal.App.4th 625; Carrau v. Marvin Lumber and Cedar Co. (2001) 93                        Cal.App.4th 281)

 

ix.Magnuson-Moss Act (Atkinson v. Elk Corp of Texas (2006) 142                       Cal.App.4th 212)

 

x.SB 800 – express warranty (§§900 – 906)

 

d.                   Breach of contract 

 

i.Economic loss recoverable for breach of contract (Aas v. Superior Court            (2000) 24 Cal.4th 627)

 

ii.Plaintiff as third party beneficiary of construction contracts 

 

1.                   Homeowner was entitled to attorney fees as TPB of subcontract             with cabinet contractor (Loduca v. Polyzos (2007) 153                         Cal.App.4th 334)

 

2.                   HOA was not TPB of subcontract with flooring contractor                                  (Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th             1401)

 

3.                   Earlier decisions: Gilbert Financial Corp v. Steel Form                         Contracting Company (1978) 82 Cal.App.3d 65; Shell v. Schmidt             (1954) 126 Cal.App.2d 279

 

iii.Do code violations constitute breach of contract? Applicable law                                      (Business and Professions Code §§7109 and 7110) incorporated in                      contract (Mulder v. Casho (1964) 61 Cal.2d 633)

 

d.         Tort liability for breach of contract (Erlich v. Menezes (1999) 21           Cal.4th 543)

 

e.                   Fraud and deceit 

 

i.Economic loss recoverable in fraud action (Robinson Helicopter Co. v.          Dana Corp. (2004) 34 Cal.4th 979)

 

ii.Types of fraud: Intentional and affirmative misrepresentations, negligent                           misrepresentations, false promises, affirmative acts in concealing or             covering up the matter complained of, or nondisclosure between parties              not in a confidential relationship (Lingsch v. Savage (1963) 213                            Cal.App.2d 729, 734, 8 ALR 3d 537)

 

iii.Reliance requirement

 

1.                   Restatement (Second) of Torts, §§310 and 311

 

2.                   Recent decisions: Gawara v. United States Brass Corp. (1998) 63          Cal.App.4th 1341; Randi W. v. Muroc Joint Unified School                     District (1997) 14 Cal.4th 1066

 

3.                   Not applicable to concealment or nondisclosure claims (Lovejoy v.          AT&T Corporation (2001) 92 CA4th 85)

 

iv.Civil Code §3294 – “conscious disregard”

 

v.Negligent misrepresentation and nondisclosure (Michel v. Palos Verdes Network              Group, Inc. (2007) 156 Cal.App.4th 756; Newhall Land & Farming v. Superior                      Court (1993) 19 Cal.App.4th 334) 

 

f.                    Breach of fiduciary duty (Michel v. Palos Verdes Network Group, Inc. (2007) 156                       Cal.App.4th 756; Raven’s Cove Townhomes v. Knuppe Development (1981) 114               Cal.App.3d 783)

 

g.                   Nuisance (El Escorial Owners Assoc. v. DLC Plastering, Inc. (2007) 154                                    Cal.App.4th 1337)

 

h.                   Statutory causes of action – not subject to economic loss rule

 

                        a.         Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. §2301 (Atkinson v. Elk Corporation (2006) 142 Cal.App.4th 212 [roof shingles are “consumer products” under Act])

 

b.         Song Beverly Consumer Warranty Act, CC §§1790 (Atkinson v. Elk Corporation (2003) 109 Cal.App.4th 739; Mills v. Forestex Co. (2003) 108 Cal.App.4th 625)

 

c.         Consumers Legal Remedies Act, Civil Code §§1750 et seq

 

d.         Unfair Business Practices Act, B & P Code §§17200 et seq

 

i.                     SB 800 – creates new substantive law for defective construction            

                       

i.Section 942 – exclusiveness of title 

 

1.                   Limits substantive claims to those stated in Chapter 2; i.e. replaces          negligence, strict liability and implied warranty claims with new                      statutory claims  

 

2.                   Exceptions – existing law applies to causes of action for breach of                       contract, fraud, violation of statute and personal injury 

 

ii.Chapter 2 – functionality standards 

 

1.                   Section 896 – itemization of actionable defects; no consequential              damage required

 

2.                   Impact on economic loss rule: Windham at Carmel Mountain                  Ranch Association v. Superior Court (2003) 109 Cal.App.4th            1162

 

3.                   Standard of proof – strict liability? (“shall not cause water to pass                                    through” vs. “shall be designed and constructed so as not to permit water            to pass through”)

 

4.                   Section 897 – catchall category for other defects causing consequential                damage

 

g.      

 

a.                   Parties subject to joint and several liability

 

i.Architects (Bobrow/Thomas & Associates v. Superior Court (1996) 50          Cal.App.4th 1654; Alexander v. Hammarberg (1951) 103 Cal.App.2d 872

 

ii.Successor developers (Gem Developers v. Hallcraft Homes of San Diego,                       Inc.  (1989) 213 Cal.App.3d 419; Gentry Construction v. Superior Court                (1989) 212 Cal.App.3d 177)

 

iii.Post-construction repair contractors (Newhall Land and Farming Co. v.           McCarthy Construction (2001) 88 Cal.App.4th 769)

 

b.                   Joint and several liability not applicable in indemnity actions (Expressions at                      Rancho Niguel Association v. Ahmanson Developments, Inc. (2001) 86 Cal.App.                  4th 1135)

 

c.                   Predicate tort claim required (BFGC Architects Planners, Inc. v. Forcum/Mackey            Construction, Inc. (2004) 119 Cal.App.4th 848

 

d.                   Derivative vs. active negligence (Bayer-Bel v. Litovsky (2008) 159 Cal.App.4th               396 [auto accident case])

 

h.      

 

a.                   Diminution in value vs. cost of repair

 

i.General rule – cases involving injury to real property: Cost of repair or          diminution of value, whichever is less (Rovetti v. City and County of San              Francisco (1982) 131 Cal.App.3d 973; Ferroro v. Southern California                        Gas (1980) 102 Cal.App.3d 33)

 

ii.Personal reason exception (Orndorff v. Christiania Community Builders          (1990) 217 Cal.App.3d 683; Heninger v. Dunn (1980) 101 Cal.App.3d               858; CACI 3039F)

 

iii.Exception not applicable where cost of repair “vastly exceeds” harm done            (Housley v. City of Poway (1993) 20 Cal.App.4th 801)

 

iv.CACI 3903F – stating general rule and personal reason exception

 

b.                   Loss of use – CACI 3039G: Reasonable cost to rent similar property during                      relevant period

 

c.                   Emotional distress not recoverable (Erlich v. Menezes (1999) 21 Cal.4th 543)

 

d.                   Collateral source rule applies in construction defect actions, including assigned                  indemnity claims (El Escorial Owners Assoc. v. DLC Plastering, Inc. (2007) 154                     Cal.App.4th 1337)

 

e.                   Expert fees for investigation of claims

 

i.Investigation costs recoverable (El Escorial Owners Assoc. v. DLC                                 Plastering, Inc. (2007) 154 Cal.App.4th 1337; Stearman v. Centex                           Homes (2000) 78 Cal.App.4th 611; Regan Roofing Co. v. Superior Court           (1994) 21 Cal.App.4th 1685)

 

ii.Proof requirement – must be pleaded and proved; not recoverable as costs          (Carwash of America v. Windswept Ventures (2002) 97 Cal.App.4th 540)

 

f.                    Punitive damages (State Farm v. Campbell (2003) 538 U.S. 408)

 

g.                   Prejudgment interest

 

i.            Civil Code §3287(a) – recoverable where damages are certain, or capable                                   of being made certain by calculation

 

ii.Repair cost estimates by experts (Leff v. Gunter (1983) 33 Cal.3d 508;          Levy-Zentner Co. v. Southern Pacific (1977) 74 Cal.App.3d 762) 

 

h.                   Attorney fees

 

i.Contractual rights

 

1.)    Reciprocal under Civil Code §1717

 

2.)    Claims arising under contract (El Escorial Owners Assoc. v. DLC  Plastering, Inc. (2007) 154 Cal.App.4th 1337; Xuereb v. Marcus & Millichap (1992) 3 Cal.App.4th 1338)

 

3.)    Determining prevailing party (Wakefield v. Bohlin (2006) 145  Cal.App.4th 963; Crawford v. Weather Shield Mfg., Inc. (2008) 44 Cal. 4th 541; M. Perez Company, Inc. v. Base Camp Condominiums  Association No. One (2003) 111 Cal.App.4th 456)

 

4.)    Effect of CCP §998 settlement offer on contractual rights to attorney fees (Goodman v. Lozano (2008) 155 Cal.App. 4th 132;  Vick v. DaCorsi (2003) 110 Cal.App.4th 206; Scott Co. of                      California v. Blount, Inc. (1999) 20 Cal.4th 1103)

 

5.)    Silver Creek, LLC v. Blackrock Realty Advisors, Inc. (2009)          Cal.App. 4th                 .

 

i.Recovery of fees as third party beneficiary – homeowner recovery of fees  from subcontractor as TPB of contract with general contractor (Loduca v. Polyzos (2007) 153 Cal.App.4th 334)

 

ii.Can HOA recover attorney fees when representing members with attorney                      fees provisions in their purchase agreements?

 

iii.CCP §1021.6 – recovery of attorney fees on implied indemnity claim

 

iv.Civil Code §1354 – action to enforce governing documents of HOA 

 

6.)   

 

a.                   Kelly-Frye test (People v. Kelly (1976) 17 Cal.3d 24; Frye v. United States (DC               Cir 1923) 293 Fed. 1013)

 

b.                   Toxic mold tests not generally accepted in relevant scientific community                           (Geffcken v. D’Andrea (2006) 137 Cal.App.4th 1298)

 

c.                   Expert testimony on subcontractor’s standard of care (Stonegate Homeowners                 Assoc. v. Staben (2006) 144 Cal.App.4th 740)

 

d.                   Recent decisions: Roberti v. Andy’s Termite & Pest Control, Inc. (2003) 113                   Cal.App.4th 893; Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993) 509 U.S.                    579

 

7.)   

 

a.                   Fundamental principles

 

i.Object of indemnity provision interpretation is to further the manifest          intentions of the parties to the contract; what did the parties bargain for?                    (Rossmoor Sanitation, Inc. v. Pylon Inc. (1975) 13 Cal.3d 622)

 

ii.Indemnity clause must be clear and explicit to provide indemnity for          indemnitee’s negligence (MacDonald & Kruse, Inc. v. San Jose SteelCo.,                 Inc. (1972) 29 Cal.App.3d  413)

 

iii.The indemnity clause will be strictly construed against the party seeking        indemnity (Goldman v. Ecco-Phoenix Electric Corporation (1964) 62                Cal.2d 40, 41)

 

iv.Indemnity should always be afforded when to do so furthers the manifest          intent of the parties and where the loss sustained would not have occurred                     without the indemnitor’s negligence (Morton Thiokol, Inc. v. Metal                      Building Alteration Co. (1987) 193 Cal.App.3d 1025)

 

b.                   Civil Code §2782

 

i.Indemnity clause invalid if it provides indemnification for sole negligence          or willful misconduct of indemnitee

 

                                                                                    b.         2008 amendments (AB 2738)

 

                                                                        1)         Applies to residential contracts entered into after January 1, 2009

 

                                                                        2.)        Subcontractor has right to defend with counsel of its choice or pay no more than a reasonable allocated share of the general contractor’s fees and costs

 

                                                                        3)         Wrap policies - disclosure of premium calculations

 

                                                c.         2005 amendments (AB 758)

 

1.                   Applies to residential construction contracts entered into after                  1/1/06

 

2.                   Does not prohibit joint defense agreements

 

3.                   Does not affect obligations of liability insurer under Presley                    Homes, Inc. v. American States Insurance Company (2001) 90                   Cal.App.4th 571

 

c.                   Contractual indemnity vs. equitable indemnity (Crawford v. Weather Shield Mfg.,             Inc. (2008) 44 Cal. 4th 541; Regional Steel Corp. v. Superior Court  (1994) 25                        Cal.App.4th 525; People ex rel. Dept. of Public Works v. Daly City                                            Scavenger Co. (1971) 19 Cal.App.3d 277)

 

d.                   Comparative contractual indemnity (Hernandez v. Badger Construction                           Equipment Co. (1994) 28 Cal.App.4th 1791)

 

e.                   Characterization of conduct by indemnitor and indemnitee

 

i.Type I, Type II and Type III provisions (McCrary Construction Company         v Metal Deck Specialists, Inc. (2005) 133 Cal.App.4th 1528; Heppler v.                 J.M. Peters Co. (1999) 73 Cal.App.4th 1265) 

 

ii.Is the active/passive distinction still valid?  (Maryland Casualty Co. v.           Bailey & Sons, Inc. (1995) 35 Cal.App.4th 856)

 

iii.Is finding of fault by indemnitee required? Distinction between                           commercial and residential contexts?

 

1.                   Continental Heller Corporation v. Amtech Mechanical Services,               Inc. (1997) 53 Cal.App.4th 500

 

2.