Blog|April 21, 2023

Legal Advisory Committee Q1 Newsletter

Our Legal Advisory Committee (LAC) is made up of an exceptional mix of legal firms, in-house counsel and forensic accountants that works to understand the impact of new laws, regulations and judicial decisions. During the first quarter of 2023, we held three LAC Board meetings where three MCLE (legal continuing education) presentations and three case laws were presented. We urge all member companies, particularly those with general counsel on staff, to join the LAC to network and address pertinent construction industry issues.

If you are interested in joining or learning more about the LAC, contact Mary Alyssa Rancier, Senior Policy Coordinator, at rancierm@agc-ca-org.

JANUARY

“Public Works Apprenticeship:  Current Practices and (Potential) Changes to Regulations Affecting Work Assignments”

In 2019, the California Apprenticeship Council proposed new regulations affecting the employment of apprentices on public works projects, which recently went into effect. This presentation reviewed contractors’ basic apprenticeship compliance obligations under the Labor Code, examined how the work of crafts and trades has been traditionally defined and understood in the industry, and considered how the new regulations will affect how contractors assign work to apprentices on public works.

In addition, Kevin provided a brief update to the Legal Advisory Committee on the status of litigation AGC and other industry groups have brought to challenge the enactment of the new regulations.

Kevin Hannifan, Associate Attorney, Cox, Castle & Nicholson, LLP

Kevin is an associate at Cox, Castle & Nicholson and a member of the firm’s Construction group. Kevin’s practice is focused on construction litigation, business and commercial disputes, and related labor and employment matters. 

“Kail de Leon v. Juanita’s Foods”

This case involved an arbitration provision within an employment agreement and the interpretation of CCP Section 1281.98. Here, the employer (Juanita’s Foods) failed to timely pay the fees with JAMS to continue the arbitration process in violation of CCP 1281.98(a)(1) mandating continuation fees for arbitration to be paid within 30 days after the specified due date.

As such, the employer is in material breach of the arbitration agreement, is in default of the arbitration, and waived its right to compel the employee (De Leon) to proceed with the arbitration. As a result of the material breach, CCP Section 1281.98(b) allows the employee to: (1) withdraw the arbitration and proceed with the lawsuit, (2) continue the arbitration and, if agreeable to the arbitrator, have the arbitrator hold a collection proceeding after the conclusion of the arbitration for the unpaid fees, (3) petition the court for an order to have the breaching party pay all of its unpaid fees, or (4) pay the unpaid fees and recover the amounts fronted after the commencement of the arbitration.

If the arbitration is withdrawn, the employee may bring a motion or separate action to recover attorneys’ fees and costs associated with the abandoned arbitration proceeding. The recovery of said fees and costs are completely independent from the merits and/or results of the case.  Furthermore, the court shall impose sanctions on the drafting party in accordance with CCP Section 1281.99, which may include both monetary non-monetary sanctions. The Appellate Court found the language of CCP Section 1281.98 clear and unambiguous and rejected the employer’s arguments. The Court went on to say that 1281.98’s “language establishes a bright-line rule that a drafting party’s failure to pay outstanding arbitration fees within 30 days after the due date results in its material breach of the arbitration agreement.”

The employee’s motion to vacate the order compelling arbitration as to the employer was granted on appeal. The employee was entitled to costs on appeal.

Justin Gelzayd, Associate Attorney, SMTD Law

Justin Gelzayd focuses his practice on construction and surety litigation. Mr. Gelzayd’s professional experience includes litigating cases involving construction defects, contract and bid disputes, and forming corporations and LLCs. Mr. Gelzayd is licensed to practice law in California and Florida. Before going to law school, Mr. Gelzayd earned an accounting degree from the University of Arizona. Mr. Gelzayd earned his J.D. and LL.M. from the University of Miami School of Law in 2016.

FEBRUARY

“How to Have your Client ‘Win’ at a Mediation with a Good Settlement”

The presentation “Mediation Tips, How To’s, Do’s and Don’ts” focused on mediation as a great way of resolving disputes.  It discussed the following topics: preparation; conduct of mediation; getting the settlement you want; what to have or do if you settle at the mediation; and after mediation.

Mahyar Ghassemian, Founding Attorney, Ghassemian Law Group

Mahyar Ghassemian has over 23 years of experience in Construction law. She started her legal career representing prime contractors in large size construction defect litigation.She has a master’s degree in physics, which is why she was recruited into construction law. Ghassemian Law Group is a boutique form that focuses in all issues in business and construction law. From litigation to preventative measures, the firm protects and defends contractors. 

“Vascos Excavation Group LLC v. Gold”

For the second time in calendar year 2022, the Court of Appeal of California has found California Contractors State Licensing Laws bar contractors from collecting for work performed. (See Smith, Currie & Hancock LLP Partner Daniel McLennon’s Law Note on Kim v. TWA Construction, Inc. (2022) 78 Cal.App.5th 808, finding that licensed contractor could not collect payment for work performed by an unlicensed subcontractor notwithstanding that the contractor was itself licensed to perform that work.)

In an opinion that should be a warning to all contractors in California, the Court of Appeal upheld a trial court’s decision to vacate an arbitration award of over $100,000 to a contractor because the contractor did not carry its burden to prove that its purported Responsible Managing Employee was in fact a bona fide Responsible Managing Employee. (Vascos Excavation Grp. LLC v. Gold (2022) 87 Cal.App.5th 842, 852.)

All corporate contractors in California should be aware that failure to have a bona fide Responsible Managing Employee automatically suspends the contractor’s license, resulting in the inability to collect for the work performed.

Click here to access the full article.

Ross Steinbach, Associate Attorney, Smith, Currie & Hancock LLP

Ross Steinbach is an associate attorney at Smith, Currie & Hancock LLP. He represents general contractors, construction managers, subcontractors, material suppliers, design professionals, and owners in all aspects of construction law. He draws on a deep and broad knowledge base to serve clients in this complex arena and helps them with conflicts stemming from a range of issues, including licensing, cost escalation, delays, and non-payment on public and private construction projects.

MARCH

“Cal/OSHA and COVID-19—The Saga Continues”

On December 15, 2022, the California Occupational Safety and Health Standards Board (“Board”) voted to adopt a non-emergency COVID-19 Prevention regulation. The new regulation was submitted to the Office of Administrative Law (OAL) for approval. The OAL approved the proposed regulations and they became effective on February 3, 2023. The regulations will remain in effect for two years after the effective date.

While many of the requirements of the Emergency Temporary Standards (“ETS”) remain in effect, there are new provisions. The new regulation incorporates definitions from the California Department of Public Health (CDPH). Cal/OSHA updated the Frequently Asked Questions on the website to reflect the new regulation.

Jonathan Vick, Atkinson, Andelson, Loya, Ruud & Romo, a PC

Jonathan S. Vick is a partner at Atkinson, Andelson, Loya, Ruud & Romo. Mr. Vick has been practicing construction law for more than 30 years and has an emphasis on advising clients in all industries, including the construction industry, with compliance with health and safety regulations. His practice includes representing employers in administrative hearings before the Cal/OSHA and Fed/OSHA Appeals Boards as well as the Workers Compensation Appeals Board.

“Armstrong v. Michaels Stores, Inc., 2023 U.S. App. LEXIS 3379”

This case involved an employment arbitration provision where certain employer actions and its delayed motion to compel arbitration were challenged as an implied waiver to compel arbitration.

The employer was found to not have waived its right to arbitrate because it (1) repeatedly reserved its right to arbitration, (2) did not ask the district court to weigh in on the merits, and (3) did not engage in any meaningful discovery. Furthermore, the only significant motion filed was the employer’s motion to compel arbitration.  As such, Armstrong (employee) failed to show that Michaels (employer) acted inconsistently with its right to arbitrate.

Justin Gelzayd, Associate Attorney, SMTD Law

Justin Gelzayd focuses his practice on construction and surety litigation. Mr. Gelzayd’s professional experience includes litigating cases involving construction defects, contract and bid disputes, and forming corporations and LLCs. Mr. Gelzayd is licensed to practice law in California and Florida.  Before going to law school, Mr. Gelzayd earned an accounting degree from the University of Arizona. Mr. Gelzayd earned his J.D. and LL.M. from the University of Miami School of Law in 2016.

 

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