Photo of Ted Gropman

Ted has devoted his practice exclusively to construction law for more than 38 years, representing contractors, subcontractors, design professionals and institutional owners on both private and public work projects.

On April 17, the California Court of Appeal decided Crosno Construction, Inc. v. Travelers Casualty & Surety Company of America,1 effectively narrowing the scope of enforceable “pay-when-paid” provisions in construction subcontracts to the extent the subcontractor seeks recovery against a general contractor’s payment bond surety. Although the Crosno case involved a public works project, the rationale and holding should apply with equal force to private works projects. Basing the bulk of its decision on the Wm. R. Clarke Corp. v. Safeco Insurance Co.2 case, the court found that an open-ended “pay-when-paid” provision in a subcontract is not enforceable against a subcontractor that seeks to recover on a public works payment bond claim. This article discusses the Crosno decision and the implications for contractors on both sides of the contract moving forward.
Continue Reading California Appeals Court Provides Guidance on ‘Pay-When-Paid’ Provisions in Construction Subcontracts

This article was originally published on December 3, 2019 on ConsensusDocs. It is reprinted here with permission.

Construction contracts often include a “no damage for delay” clause that denies a contractor the right to recover delay-related costs and limits the contractor’s remedy to an extension of time for noncontractor-caused delays to a project’s completion date. Depending on the nature of the delay and the jurisdiction where the project is located, the contractual prohibition against delay damages may well be enforceable. This article will explore whether an enforceable no-damage-for-delay clause is also a bar to recovery of “acceleration” damages, i.e., the costs incurred by the contractor in its attempt to overcome delays to the project’s completion date.

Continue Reading Does a No-Damage-for-Delay Clause Also Preclude Acceleration Damages?

Pacific Caisson & Shoring, Inc. v. Bernards Brothers Inc., 236 Cal. App. 4th 1246 (Cal. Ct. App. 2015)

In California, a contractor must be licensed by the Contractors State License Board (Board) in order to lawfully perform construction operations. The Board issues three types of licenses: an “A,” or general engineering license[1]; a “B,” or general building license[2]; and a series of “C” specialty licenses for trade contractors (e.g., concrete, electrical, glass and glazing, structural steel, drywall, tile, etc.). California Business & Professions Code (B&P) §§ 7056–7058. In order to qualify for a license, a contractor must provide a responsible managing officer (RMO) or a responsible managing employee as its qualifier. B&P § 7068.

The consequences of contracting without the proper license can be severe. An unlicensed contractor may not sue to recover for the value of its work. B&P § 7031(a). Even more damaging, an owner can seek disgorgement of all monies paid to a contractor, even if there was nothing wrong with the contractor’s construction of the project. B&P § 7031(b); Alatriste v. Cesar’s Exterior Designs, Inc., 183 Cal. App. 4th 656 (Cal. Ct. App. 2010). As the California Supreme Court has observed, B&P § 7031 “represents a legislative determination that the importance of deterring unlicensed persons from engaging in the contracting business outweighs any harshness between the parties, and that such deterrence can best be realized by denying violators the right to maintain any action for compensation in the courts of this state.” MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., 36 Cal. 4th 412, 423; 115 P.3d 41 (Cal. 2005).


Continue Reading Noncompliance with the California Contractor’s License Law Brings Severe Consequences