Construction Law Update

August 18, 2005 ; Issue 6

A Message from the Partners

Subcontractor construction defect reform took another huge step forward today when the State Senate voted 28 to 1 to pass out AB 758. For the past two years, Kring & Chung has worked closely with subcontractor trade groups in an effort to bring about legislative reform regarding construction defect litigation. This legislative involvement was one of the driving forces behind the establishment of our Sacramento office. Over the years, we have worked hard to bring various subcontractor associations together to provide a single, stronger voice in Sacramento. We have also met with numerous legislators and provided testimony at various hearings regarding the plight of subcontractors and the toll of construction defect litigation. As indicated below, these efforts are starting to yield results.

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AB 758 Passes out of the Senate

This legislative session, Democratic Assembly Member Ronald Calderon introduced Assembly Bill 758. The aim of the bill is to address the issue of Type I express indemnity which obligates subcontractors to indemnify a builder for all loss except loss attributable to sole negligence or willful misconduct of the builder. Under such a provision, the subcontractor is bound to indemnify the builder for losses which may not be attributable to the subcontractor’s negligence.

The subcontractor trade associations spent an enormous amount of time and effort to achieve legislative support for the bill. In addition, Assembly Speaker, Fabian Nunez, took an active role to bring about bi-partisan support for the bill. After extensive negotiation with the BIA and other builder groups, a consensus was forged and Republican Assembly Member Ray Haynes agreed to co-author AB 758.

AB 758 passed out of the Senate by a vote of 28 to 1. The bill prohibits any contractual provision which requires a subcontractor to indemnify a builder for any loss that is not directly attributable to the subcontractor’s negligence. In addition, amendments to the bill in the Senate limit any defense obligation owed to the builder to be in proportion to the subcontractors’ share of the liability. We worked extensively on this issue with Senator Joe Dunn in the past and he was instrumental in guiding AB 758 through the Senate.

This is a huge step toward providing equality and fair apportionment of loss in construction defect litigation. We have attached a copy of AB 758 as amended by the Senate. The bill now moves back to the Assembly for a concurrence vote on the Senate amendments and then to the Governor for signature. If you have any questions regarding this bill, another bill, or our other legislative efforts  please contact any one of the firm’s partners.

To receive a copy of this bill, please email your request to info@kringandchung.com

Kring & Chung, LLP is one of California’s fastest growing full-service law firms. With over forty attorneys, the firm practices business, corporate and securities, construction, real estate, labor & employment, insurance, estate planning and family law. The construction department of the firm serves the construction industry in relation to construction and design defect litigation, mechanic’s liens, stop notices, construction bonds, public works construction disputes, change orders, bid protests and delay claims.
 

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