September 10, 2007 | Vol. 5 No. 36

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Volume 5 - Number 36 | September 10, 2007

EDITOR'S NOTES
California courts take a no-nonsense stance against contractors that operate in the state without a contractor’s license, as we’ve seen numerous times over the past several years. To obtain a license, the basic requirements include filing an application, taking the appropriate exam(s) (depending on the license classification), submitting the application and exam fees, meeting the $10,000 bond requirement and providing proof of workers’ compensation insurance coverage. (For a more comprehensive list of requirements, visit www.cslb.ca.gov/applicants/blueprint.asp.)

In this week’s first case, a subcontractor owner possessed the appropriate license, but because he performed work under his corporation, which did not have a license, he could not recover payment from the surety. With such a ruling, it behooves contractors to make sure they meet all licensing requirements before bidding on projects.

Also this week, we look at a Miller Act bond issue in which a project manager tried to recover fees for his professional services; a reciprocal waiver of claims that came into question after a completed restaurant building went up in flames; and an owner that voluntarily assisted in testing equipment that later proved to be faulty.

OWNER’S FAILURE TO TRANSFER CONTRACTOR’S LICENSE TO CORPORATION RESULTS IN FORFEITURE OF RIGHT TO COLLECT PAYMENT
By James J. Ison
A subcontractor loses its ability to recover payment because the owner, not the corporation, held the contractor’s license. California courts take a narrow view on cost recovery for unlicensed contractors.

MANAGEMENT SERVICES WERE NOT “LABOR” UNDER MILLER ACT
The Miller Act bond protections are designed to protect those performing physical or manual labor on federal projects. Professional services do not automatically meet those criteria.

RECIPROCAL WAIVER APPLIED TO INSURED LOSSES AFTER FINAL PAYMENT
A contract’s reciprocal waiver of claims bars an owner and its subrogated property surety from pursuing action against the contractor after final payment was made on the construction project. The waiver does not expire with final payment.

OWNER INVOLVEMENT DID NOT WAIVE TESTING REQUIREMENT
Contract-mandated testing requirements are not waived when the owner conducts its own tests. The contractor is still responsible to perform the tests. The equipment to be tested was covered by a construction and services contract, not a sale of goods.

SHOP DRAWINGS AND SUBMITTALS - LEGAL AND ENGINEERING PERSPECTIVES
Nonconforming shop drawings create trouble for everyone - from prime contractors to subcontractors ... architects to engineers ... and EVERYONE in between. But you CAN minimize your exposure - IF you know your way around shop drawing submittal and review.

To help you stay in control, and out of trouble, Construction Claims Advisor has teamed up with attorneys Robert Epstein and EJCDC Counsel Hugh Anderson along with engineer Jim Brown, PE, of Malcolm Pirnie Engineers to steer your operations clear of any controversy. Introducing Shop Drawings and Submittals – Legal AND Engineering Perspectives.

Join us on Wednesday, Sept. 26, 2007 from 1:00-2:30 pm Eastern Time - Click here to learn more.
Click here for a conference brochure.