Diggin’ Ain’t Easy: Remember to Give Notice Before You Excavate in California

If you are reading this blog, my guess is that you know what excavation is and why it is important to the construction process. However, what you may not know is the complicated California law that governs this process. The statute for an excavation contractor to be familiar with is California Government Code section 4216, et seq. However, like most things worth pursuing, that is easier said than done. Section 4216 contains several layers of prerequisites and requirements. This article will explore the notice requirement.

According to an environmental law attorney, section 4216.1 requires “every operator of a subsurface installation” to share costs of a regional notification center. This is necessary because Section 4216.2(b) requires “an excavator planning to conduct an excavation shall notify the appropriate regional notification center of the excavator’s intent to excavate” before beginning that excavation. The statute lists two regional notification centers: the Underground Service Alert—Northern California and the Under Ground Service Alert—Southern California.

In practice, an excavator must contact one of the regional notification centers and initiate a ticket. While an online notification is available, picking up the telephone and calling “8-1-1” is preferred because there are quite a few limitations to giving notice online. If your excavation involves any use of explosives, you may not provide notification online. If your work is taking place at multiple addresses or the location is without any street address, you are barred from notifying online and must call 8-1-1 to provide excavation notification.

It is also important to note that excavation cannot start earlier than two full working days from the time the ticket is submitted. Tickets may not be submitted more than 14 calendar days in advance of the start of excavation. There are no exceptions. Moreover, an excavation ticket is only valid for 28 days from the date of issuance. If work continues beyond 28 days, the law requires the excavator to renew the ticket by accessing the notification center’s website or by calling 8-1-1 by the end of the 28th day. If a ticket expires but the work is ongoing, the excavator must contact the notification center and get a new ticket and wait a minimum of two working days before restarting excavation.

The notification requirement’s teeth are found in Section 4216.6(b), which outlines the punishment for an excavator that violates these requirements. The punishment, as you can guess, is fairly harsh: up to $10,000 for any negligent violations, and up to $50,000 for any intentional violations. It is important to note that other civil penalties may apply if the excavator’s violation caused personal injury and/or property damage.

Excavation has a number of important applications including exploration, environmental restoration, mining and construction. It is almost always required on a construction job. As usual, an attorney familiar with the law can help you navigate this process and stay compliant.

Mr. Peng is a construction attorney with Gordon & Rees. Mr. Peng represents general contractors, developers, architects, engineers, and specialty subcontractors in litigation and arbitration. Ph.: 415-875-3124 | Email: MPeng@GRSM.com

Learning from the Mistakes of Others: Follow the Claims Procedure in Public Contracts

It is not every day that a court throws a $10 million dollars lawsuit out of court on procedural grounds. Unfortunately, that’s what happened to a Northern California prime contractor. The Alameda Superior Court granted Defendant’s (the “City”) Summary Judgment Motion (the “Motion”) as to the Contractor’s First Amended Complaint, effectively terminating the Contractor’s $10 million dollar claim against the City.

The City awarded the Contractor a construction contract for improvement work on various city streets in 2010 (the “Project”). The Contractor completed work on the Project in spring of 2014, filed its initial complaint for breach of contract against the City in May of 2015, and amended that complaint in July of 2015. The Contractor sought an award of more than $10 million. The crux of the Contractor’s allegations was that the City owed it more than $10 million dollars for work and materials that were outside of the scope of the contract, as reflected in numerous change order requests. The Contractor also alleged that the City’s “incompetence or lack of diligence” caused numerous construction delays and the Contractor should be reimbursed for the costs associated with those delays.

The City paid the Contractor over $11 million dollars in negotiated changes to the scope of the work, but the Contractor contended that the payments were not sufficient. However, the focus of the Motion was not on the merits of the Contractor’s request. Rather, the City’s Motion focused on the discrete issue of whether the Contractor exhausted its administrative remedies pursuant to California Government Code sections 930.2 and 930.4 before filing the action. In other words, did the Contractor follow the claims process set forth in its contract with the City?

The Court found the answer to be an unequivocal “no.” The Court noted that Section 9-1.04 of the contract between the parties unambiguously required the Contractor to present its claims against the City for additional payment by using Caltrans Forms CEM-6201 A, 6201 B, and 6201 C. The specifications also contained language that directed the Contractor to review the claims procedure outlined in Section 9-1.04. However, the Contractor never followed this process before making the claim. In fact, the Court found that the Contractor’s project manager admitted during his deposition that the Contractor did not substantially comply with the Section 9-1.04 procedure.

The Court did not spend much time considering the Contractor’s arguments, shutting down all five of them in half a page. Two of those arguments were purely procedural issues that are unrelated to construction issues. Of the remaining three arguments, the Court disposed of the Contractor’s attempt to liken this matter to the issue in G. Voskanian Construction, Inc., noting that unlike the matter at issue, the claims procedure was followed in the Voskanian case. The Court then dismissed the Contractor’s last two arguments—that the claims procedure section in the contract was eliminated and the doctrines of waiver and estoppel allowed the Contractor to not comply with the claims procedure—without much discussion.

The Court’s decision is only two pages long, but it conveyed one point with crystal clarity: if you have a contract with a public entity, the best practice is to strictly follow that contract. The Court’s holding in that regard is both direct and blunt:

“[T]hose who do business with public entities must know the ground rules and are charged with the knowledge of the provision of their own contract.”

Experienced contractors (and construction attorneys) understand that this is easier said than done when faced with contract documents that are hundreds of pages long, filled with convoluted legalese, and sometimes call for contractors to give notice of claims and delays before the contractor could reasonably ascertain the existence or magnitude of either. However, the benefits of following the Court’s advice cannot be overstated, and in this case, the Contractor’s failure to strictly adhere to the contractual claims procedure cost the Contractor a chance to fight for $10 million dollars. One way to ensure compliance is get a legal professional that is familiar with public contracts involved early and involved throughout the public project. The upfront legal cost will not only buy you a piece of mind, but might also buy you a day in court.

Smart Homes Market Picks Up Steam

The “smart home” movement has been brewing for quite some time. But, what exactly is a smart home? Generally, a smart home refers to a house or residence loaded with advance technological devices that aim to do one thing: make the residents’ lives a little easier. For example, a basic function of a smart home is the owner can easily monitor and control a wide range of applications such as lighting control, access control, fire and leak detection, energy efficiency from anywhere in the world, no matter how far away, via his/her smartphones or internet. Some smart homes have replaced the conventional locks with key cards or fingerprint identification, making it harder for someone to break-in.

Recently, technology companies—­namely Google—has taken the not-so-old smart home concept to whole new level. Meet “Google Home,” set to be introduced in late 2016.1 Google Home’s motto is “Always on call.”2 Indeed, in addition to doing everything a conventional smart home does, Google Home will allow you to tell it to change your dinner reservations and then it will adjust your dinner plans accordingly.3 Moreover, if your child is staying up passed his/her bedtime, you can tell Google Home to “turn the lights off in [your child’s] room” to get them to go to bed. Of course, you can do the opposite to wake your oversleeping child as well.4 And Google Home will help (or at least try to help) your kids with their homework by answering questions using other Google functions, such as Google Search and Google Translate.5

A lot of money and investment are projected to pour into the smart homes market. In fact, a report by Region, Competition Forecast and Opportunities for 2011-2021, projects investment in the global smart homes market to cross $60 billion by 2021.6 With all the smart homes that are already in the market and many more to come, these changes force a construction attorney like me to ponder: How will this affect construction litigation as we know it? For instance, for a window leak case, in addition to the general parties—window installer, window manufacturer, and stucco subcontractor—will we also need to sue the installer/manufacturer of the device that allows the homeowner to remotely open or shut the windows? Will we need to add to the typical standard of care experts? Perhaps add someone that can testify to how the malfunction of the device caused or contributed to your window leakage? Needless to say, but the answer will likely be: It depends. Construction litigation, like other types of litigation, is very case and fact specific; but one can only assume that (and be excited about) construction litigation involving smart homes will bring forth some new and interesting factual and legal challenges.

_______________________________________________________________________
1 Tsukayama, Google Home, Google Assistant and other big announcements from Google’s developer conference (May 18, 2016). (as of July 1, 2016).
2 Google Home, Always on call(as of July 1, 2016).
3 Tsukayama, supra.
4 Id.
5 Id.
6 Technology By Region, Competition Forecast and Opportunities, 2011-2021, Global Smart Homes Market By Application. (June 2016).