Volume 6 - Number 31 | August 11, 2008 - Construction Claims Advisor

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You are here: Home » Volume 6 - Number 31 | August 11, 2008

Volume 6 - Number 31 | August 11, 2008

EDITOR'S NOTES | Issue 6-32: In California, the hot topic on legal blogs is a recent decision handed down from the state’s high court. In it, the court ruled that a subcontractor’s duty to defend the prime contractor is not based on the subcontractor’s culpability but whether the sub is implicated in the lawsuit. Exoneration at trial will not excuse the sub’s obligation to pay for attorney fees, the court said. This ruling has significant implications for contractors in the non-residential construction forum.

In Utah, an engineering firm failed in its attempt to push through a timely submitted mechanic’s lien that should have been addressed before the development’s funding went through.

And in Washington, a labor union trust went head to head with the city of Tacoma on who pays for employee benefit contributions associated with the union’s retirement trust after a subcontractor goes out of business and defaults on the benefit payments.

CALIFORNIA HIGH COURT ADDRESSES SUBCONTRACTOR’S “DUTY TO DEFEND”: A subcontract’s “duty to defend” clause is not limited to if the subcontractor is liable for the alleged complaint. The duty (and its associated cost) is obligatory regardless of culpability.

IMPROVEMENTS WERE NOT VISIBLE SO LIEN DID NOT TAKE PRIORITY: An engineering firm stakes a claim against a Utah developer for geotechnical and hydrological services. However, a subsequent mortgage takes priority over the mechanic’s lien because the work was not visible when the mortgage funded.

UNION TRUST COULD NOT RECOVER UNPAID CONTRIBUTIONS FROM PAYMENT BOND: A public works payment bond does not provide relief for a unionized subcontractor’s unpaid employee benefit contributions.