Commercial Construction Growing in California

November 5, 2015

Who says the economy is stagnant? California's commercial construction industry shows the highest level of activity since 2001, and further growth is expected over the next three years, according to an article published in L.A. Biz.

This promising news originated in a study conducted by Allen Matkins, a California law firm, and UCLA's Anderson School of Management. The study examined seven of California's major markets for indicators of future commercial construction. More easily accessible financing and low cap rates, along with increased demand from technology, advertising, media and information companies has helped spur the commercial construction growth.

Getting a construction project approved, permitted, and properly zoned breeds an environment in which litigation could be just around the corner.

If a construction project hits a financial snag or there is a serious accident at the construction site, legal troubles are likely to arise. Disputes over performance or payment can result in additional legal claims for the defense or indemnification against third parties or insurance companies. Construction litigation can be quite complex and include claims for defects or breach of warranty along with multi-party actions involving developers, contractors, subcontractors, guarantors, and insurers.

There are three things you should do immediately if you are served with a lawsuit.

• Contact your California real estate lawyer.
• Contact your insurance company agent.
• Find your job file.

If you or your business does not have a lawyer on staff, speak to a real estate lawyer right away. You only have a short period of time in which to respond to a lawsuit once you are served with the complaint. If you fail to provide a timely answer, the suing party can get a default judgment against you or your company, even if you did nothing wrong.

You need to speak to your insurance company immediately since contacting them may actually solve the issue of legal counsel. In many instances, your insurance company will hire a lawyer for you or pay for a lawyer you decide to retain to defend against the suit. Of course, they need to be notified before any action can be taken.

Once you have contacted your insurance company and taken steps to retain an attorney, find your job file. This file is the best source of information about what happened at the construction site, the blueprints, the relevant parties, etc. It is important to have this file on hand since your lawyer, insurance carrier, and the lawyer for the suing party will ask for a copy.

If you or your company is sued and you have multiple sources of insurance coverage, it is important to notify all of them because an insurance company has no responsibility to pay for a claim it does not know about. If you choose to notify only one insurance carrier, and for some reason that carrier fails to cover the claim, the other carriers have no responsibility until they are notified.

You may have three insurance policies each with a $20,000 deductible. You may be asking yourself, "Do I need to spend $60,000 in deductibles before the policy coverage kicks in?" If you are in California, have no worries. Insurance companies are prohibited from "stacking" deductibles. You also have the right to make an "Armstrong Election." This allows you to choose which policy you want to defend the claim if there are multiple insurance policies that could cover it. This means only one deductible will need to be paid.

When a lawsuit is filed regarding a contract dispute with a construction project, or there is an on-the-job accident, you need to be proactive and get legal consultation. Kristina Reed is here to help. She is an experienced real estate attorney based in Sacramento, California. Put her knowledge and skill to work for you.