Construction Law Update

June 8, 2005; Issue 4

Message from the Partners

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 and provided testimony to numerous legislators regarding the plight of subcontractors and the toll of construction defect litigation.  As indicated below, subcontractor construction defect  reform took a huge step forward with the recent passage of AB 758 by the State Assembly.

John R. Blakely

AB 758 Passes out of the Assembly

By John R. Blakely, Esq. Kring & Chung, LLP

This session Democratic Assembly Member Ronald Calderon introduced Assembly Bill 758. The aim of the bill was to address the issue of Type I express indemnity. Under a Type I contractual provision, the subcontractor is obligated to indemnify the 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 are not 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.

We are please to report that on June 2, AB 758 passed out of the Assembly by a vote of 73 to 0. As amended, 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, the builder groups have agreed to limit the defense obligation to the subcontractors’ proportionate share of the liability. While somewhat ambiguous, we hope to clarify the defense obligation when the bill moves to the Senate. We have worked extensively on this issue with Senator Joe Dunn in the past and will look to him for support on AB 758.

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 and a press release from Assembly Member Calderon’s office. If you have any questions regarding this bill, another bill, or our other legislative efforts  please contact any one of the firm’s partners.

About The Author

John R. Blakely, Esq. is a partner of Kring & Chung, LLP. Mr. Blakely specializes in serving the legal needs of the construction industry. For more information or with questions regarding this article, please contact Mr. Blakely at (909) 941-3050 or via email at jblakely@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, 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.