The Letter of the Law: October 2012

IN THIS ISSUE:

BUSINESS: Governor Signs ADA Access Law Reform

LAND USE: Land Use Laws Affecting California Wineries

INSURANCE: Horizontal Stacking of Excess Coverage

Governor Signs ADA Access Law Reform
By: Shane Singh

We are pleased to report that during the week of September 17, 2012, Governor Brown signed a bill reforming Americans With Disabilities Act (ADA) access law. The measure, Senate Bill (SB) 1186, will curb lawsuit abuse regarding the ADA while promoting increased compliance with building codes addressing disabled access.

This new legislation is a culmination of a multi-year, bipartisan effort that included leadership from the state level, Senator Pro Tem Darrell Steinberg (D-Sacramento,) and Senator Bob Dutton (R-Rancho Cucamonga,) as well as federal support from United States Senator Dianne Feinstein (D-CA.)

SB 1186 is being hailed as a comprehensive and significant reform to California's ADA Law. It passed the legislature by a two-thirds vote in the wee hours of Friday night. California currently has 40 percent of the nation's ADA lawsuits, but only 12 percent of the country's disabled population.

Among its provisions, this measure prohibits pre-litigation "demands for money" by unscrupulous attorneys; puts into place new provisions to prevent "stacking" of multiple claims to increase statutory damages; reduces statutory damages and provides litigation protections for defendants who correct violations; and establishes priorities for the California Commission on Disabled Accessibility that promote and facilitate disability access compliance. Other features of this new law include:

  • If a business is in a location that was completed after January 1, 2008, or for any business in California that has received a Certified Access Specialist (CASp) inspection, that business will have 60 days to fix a violation, and its statutory damages may be reduced from $4,000 to $1,000 - a 75 percent reduction.
  • Small businesses with 25 or fewer employees that have not had a CASp inspection will have 30 days to fix a violation, and can see their statutory damages reduced from $4,000 to $2,000 - a 50 percent reduction.
  • SB 1186 ends "demand for money" letters from attorneys. Letters can still be sent to a business alerting them of a potential violation or infraction, but that letter cannot include a "demand for money." Attorneys sending those letters will be required to also send a copy of the letter to the California State Bar, who will examine the letter to make certain that it meets the requirements of the law.
  • Attorneys will also be required to send a copy of letters sent to businesses to the California Commission on Disabilities (CCDA.) CCDA will be required to compile a "Top 10" list of violations to be posted on its website by July 1, 2013, and also a list of those attorneys and law firms who are filing the bulk of the lawsuits.
  • SB 1186 provides an avenue for local cities and counties to expand the CASp program in their communities in order to help bring local businesses into ADA compliance, and to develop tools that will help educate the business community in expanding ADA access.

Land Use Laws Affecting California Wineries
By: Lance A. Adair

Are you contemplating the purchase of vineyard property or looking to establish a winery? It is essential to know the basics of California land use law before proceeding with your planned acquisition. What follows is a brief primer.

Nearly all cities and counties in California have adopted general plans and zoning ordinances. Any land use proposed by a property owner must be consistent with both. Zoning ordinances allow some uses "as of right"--meaning no special permit is required--while prohibiting others, and allowing still others only by application for a permit. Most zoning ordinances in California require a property owner seeking to establish an on-site winery to obtain a special or conditional use permit.

If a permit is required, be aware that the permitting process is a public one, generally requiring one or more noticed public hearings. This means that your neighbors, both friendly and hostile, are permitted to have their say in the permitting process. The permitting agency must, nonetheless, adhere to certain legal requirements in processing a permit application. A qualified land use attorney can assist with this process.

Discretionary permitting decisions undertaken by a California city or county must be analyzed for potential environmental impacts under the California Environmental Quality Act. As a general proposition, the local agency may not approve a winery project if it will cause "significant" adverse environmental impacts that have not been mitigated in the project's design. For the prospective winery owner and operator, this means that the potential environmental impacts of the project (such as increased traffic, water runoff and potential impacts on wildlife, among others) should be considered in determining its feasibility.

If the current zoning for your property does not allow your proposed use, that is not necessarily the end of the story. It is possible for property to be rezoned, although the process is not an easy one. Occasionally, it may be possible to obtain a zoning variance. A qualified land use attorney can provide advice and counseling on the feasibility of a proposed use under the applicable general plan and zoning ordinances, and can assist with the process of obtaining any necessary variances or amendments.

A proposed winery use also may be impacted by the California Land Conservation Act, commonly known as the "Williamson Act." The Williamson Act provides tax incentives to landowners who enter into renewable, ten-year contracts to maintain their land for agricultural and compatible uses. If a Williamson Act contract is in place, it will be necessary to determine whether your proposed winery use is allowable under the contract. Although restricted agricultural land can be removed from the Williamson Act, the process can be both expensive and difficult.

A separate set of issues is involved in determining the feasibility of a residential subdivision on vineyard property. Early consultation with legal counsel is advisable.

Given the rapid growth of the wine industry in recent years, the law is this area will no doubt continue to develop. Having knowledge of the most recent developments will be critical to the success of your grape-growing or wine-making venture.


Horizontal Stacking of Excess Coverage
By: J. Christopher Bennington

The California Supreme Court has issued an important decision concerning general liability insurance policies. In State of California v. Continental Insurance Company, 2012 DJDAR 11033 (August 9, 2012,) the court held that in the case of a progressive property damage loss, all excess carriers on the risk during the period of damage are responsible for the entire loss up to the limits of their respective policies. An insured covered for such a loss may stack the several policies together "horizontally," or over time.

The case involved the cost of environmental clean-up at the notorious Stringfellow Acid Pits waste site. The State designed and operated the site as an industrial waste disposal facility from 1956 until 1972, when it was discovered that toxins leaching from the site were contaminating groundwater in the area. The state sought coverage from its various carriers for the $700 million cost of the clean-up. After settling with a number of its carriers, the State sued a series of carriers providing it with excess coverage between 1964 and 1976.

The trial court held that with regard to the excess carriers, the State could only stack coverage "vertically," i.e. the State was limited to the various layers of coverage available during one policy period of its choosing, subject to an offset for the money already collected from its settlements with other carriers. Because of that offset (roughly $120 million,) the trial court found that the State was not entitled to any further coverage from its various excess carriers.

The Court of Appeal and then the Supreme Court reversed the trial court and held that all carriers with policies in effect during the period of damage were responsible for the loss, and that all of those policies could be aggregated or "stacked" horizontally. Instrumental to the Supreme Court's decision was the fact that the insuring clauses in all of the policies promised to indemnify the insured against "all sums" the insured was required to pay for a covered loss.

This decision can be important in a number of situations where there might be a progressive property loss or even a progressive personal injury over several years. Whether we are discussing a situation of environmental pollution, construction defect, or personal injury from contact with a tainted drug or product, carriers over several years might all have responsibility for the loss or injury. For that reason, it is essential that all insureds retain a comprehensive insurance history and all policy documents available to them. Your attorney needs to be in a position to make tenders to all carriers with a potential responsibility for a given loss.

It should be noted that the decision in State of California involved an older policy form no longer typically in use. But the holding should apply even to the newer standard forms that promise to "pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies." The only exception would be in cases where carriers have issued endorsements or policy forms which specifically exclude coverage for losses beginning prior to the date that a given policy went into effect.

In any event, the Supreme Court has once again underlined its position that in cases of continuing loss or damage, and absent specific exclusionary language concerning ongoing losses, all policies in effect during the course of the loss or damage are potentially a source of coverage for the insured.

Kring & Chung Newport Beach Triathlon
On October 21, 2012 the longest running triathlon in history will be returning for its 35th year. The .5 mile swim course will be in the Back Bay of Newport Beach, CA. The sprint distance race, which was established in 1978, has long been a favorite of both seasoned triathletes and beginners.

This year's Kring & Chung Newport Beach Triathlon will be adding a super sprint distance option. With the well-established sprint distance, a new super sprint distance, and a youth course option, there is something for all skill levels and ages.

Visit www.newportbeachtriathlon.com for more information and to register.

Shane Singh Nominated for Sacramento Business Journal's "40 Under 40" List
Shane Singh, a Partner with Kring & Chung's Sacramento, CA office, has been nominated for Sacramento Business Journal's "40 Under 40″ list. The "40 Under 40″ list honors individuals under the age of 40 who are excelling in their professional fields. The final list will be announced in December.

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