February 2009 – Construction Law

Court Declines to Find Construction Company “Statutory Employer” of Injured Worker, Denies Construction Company’s Motion for Summary Judgment

Feb 17 2009

Baugh v. Gale Lim Holdings, Inc., 2009 WL 33149 (D. Idaho Jan 5, 2009)

In this case, Gale Lim Construction contracted with the State of Idaho to repair portions of the Tin Cup Highway. Lim contacted Silver Star Communications before excavating, as required, and Silver Star then sent its employee, John Baugh, to the jobsite to mark its fiber optic cable. Baugh was injured and brought a tort action against Lim.

Lim filed a motion for summary judgment claiming that worker’s compensation law made it a "statutory employer" of Baugh and therefore immune from tort claims. Baugh defended the motion by arguing that immunity was not applicable in this case where there was no contract between Lim and Silver Star. Holding that a question of fact remained as to the existence of a contract, the court denied the motion.

Court Determines That A Builder May Seek Equitable Indemnity Against A Manufacturer Under California’s Right to Repair Act

Feb 03 2009

Greystone Homes, Inc. v. Midtec, Inc. 168 Cal.App.4th 1194 (Cal. Ct. App. 2008)

California’s Right to Repair Act (Civil Code section 895 et. seq. or the “Act”) establishes a set of standards for residential construction and provides tort liability for failing to meet those standards. The Act was enacted in response to the California Supreme Court’s decision in Aas v. Superior Court, 24 Cal.4th 627, 636 (2000), which held that “[i]n actions for negligence, a manufacturer’s liability is limited to damages for physical injuries; no recovery is allowed for economic loss alone.” In other words, under Aas, the “economic loss rule” precluded recovery for damages such as “the difference between price paid and value received, and deviations from standards of quality that have not resulted in property damage or personal injury.” The Act, however, abrogated the Aas decision by permitting a homeowner that established a violation of the Act to recover economic losses from a builder, among others, without having to show that violation caused property damage or personal injury.

In the recent case of Greystone Homes, Inc. v. Midtec, Inc., the California Court of Appeal ruled on the following two issues that had not been previously addressed under the Act: (1) whether a builder may recover for economic loss caused by a product manufacturer’s violation of the Act through a claim for equitable indemnity against that manufacturer; and (2) whether that builder may bring a direct action for negligence against the manufacturer to recover its economic losses. As discussed below, the court concluded that a builder may bring an action for equitable indemnity to recover economic loss as a result of a manufacturer’s violation of the Act, but a direct claim for negligence is not permitted.

Archive:February 2009