Blog

If a property owner claims there is a construction defect, that not only brings the project’s integrity into question but also your business’s reputation. So, how can you take steps to prevent these claims from causing such damage? Here are three things to know before beginning a project to effectively protect it and manage construction defect claims. 1. DOCUMENTATION IS KEY California and Los Angeles County require certain permits and documents in order for a construction project to move forward. Los Angeles County will also conduct plan checks to ensure everything is up to code. Detailed documentation will be important while making your plans. However, keeping notes throughout every step of the project will also be essential. Documenting all aspects of the project helps you: Stay updated and aware of the project’s progress Proactively catch and handle issues that could result in disputes Create a record of evidence that can help manage defect claims Maintaining an organized file for each project has many more benefits than managing defect claims. It is a good practice to have in place to protect the business against various risks. 2. COMMUNICATION IS JUST AS IMPORTANT Documentation is critical – but so is communication. Keeping the relevant parties in the loop on any project updates will help to reduce the risk of misunderstandings. Consistent communication during the project encourages parties to address and resolve issues as they arise. 3. QUALITY CONTROL STRATEGIES SHOULD BE IN PLACE All professionals in the construction industry understand the importance of quality control. It is essential at every step, from designing to building. You should establish several levels of quality control and quality assurance programs for each portion of the project, so you can stay ahead of any potential issues that could result in defect claims. Of course, it will also help to obtain guidance from an attorney experienced in construction and business law. A professional can help construction businesses create strategies before defect claims become a serious issue.

Back in 2021, we discussed the difference between trademark infringement and trademark dilution. Business and trademark owners know that both issues can have a considerable impact on their reputations. However, the main concern when it comes to dilution often lies in determining whether or not it is truly a dilution of a trademark or a parody. In that previous blog post, we addressed the particular case involving Jack Daniels’s trademark whiskey bottle design. This case – and the effect parodies have – remains at the center of this complex matter. ONGOING BATTLE OVER DILUTION WENT TO THE SUPREME COURT This legal battle has gone back and forth over the last few years. Some courts determined that the dog toy shaped like the well-known whiskey bottle is indeed a parody, and therefore the company that created it has First Amendment protections. However, in 2023 the Supreme Court ruled that it is not quite a parody. The Supreme Court determined that the toy reflects the trademark enough that it violates trademark protections and rules. The different opinions on this matter illustrate just how complicated it is. So, what must business owners consider? TAKE A CLOSER LOOK AT DILUTION The definition of trademark dilution is quite broad. The federal Trademark Dilution Revision Act of 2006 does not actually consider the risk of confusion or negative economic impacts – as trademark infringement does. The law defines dilution as the use of a mark that might tarnish the mark itself or the reputation tied to it. In short, this law focuses only on protecting the trademark. It is not necessary to prove that consumers may be confused when it comes to a claim of dilution. This allows businesses to protect their image. After all, a business’s public image is an important factor in gaining and maintaining consumer approval. Any mark that would sully or degrade that image the business worked hard to build could be a considerable concern and risk. DILUTION V. PARODY: A SUBJECTIVE ISSUE Of course, the law also explicitly states that parodying is not dilution. These cases are often quite subjective, as the differing opinions also indicate. This subjectivity can just as easily work in favor of businesses trying to safeguard their intellectual property, as it can against them. Protecting a trademark requires vigilance. However, it is also beneficial to obtain skilled legal counsel in order to effectively protect the brand and business in such subjective situations.

It should be simple: you provide a service, and your customer pays you for that service. Unfortunately, it is not always so simple. Not getting paid for your work can be one of the most frustrating issues, especially for small businesses. It also does not take much for money matters to lead to larger disputes. So, what should small business owners do in these cases? 1. START WITH A REMINDER NOTICE Most sources, including the U.S. Chamber of Commerce, agree that business owners should not begin by escalating the situation. Take time to review and fully understand the circumstances of this individual case. Then, begin with resending the invoice or sending reminders to pay. 2. BE OPEN TO NEGOTIATIONS After sending any reminders – and depending on the response you receive – you should then consider scheduling time for negotiations. As much as obtaining that income is important, you do not want to lose a customer or have this issue impact your business’s reputation. Moving forward with a negotiation can show you are serious about obtaining proper payment, but also understanding a customer’s situation. For example, you can arrange a meeting or a call with the customer to discuss the payment. It is not uncommon for customers and other businesses to face financial troubles, especially in today’s market. If this is the case, you could establish a payment plan that will work for both parties. 3. OBTAIN HELP If there is no response to any reminders or offers to negotiate, then you can and should explore the other options to obtain payment. This could involve working with a collections agency to recover the debt owed. However, it is also critical to speak with a knowledgeable California attorney to ensure you understand your rights, as well as the customer’s rights. 4. REVIEW YOUR PROCEDURES Small businesses new and old work hard to gain customers. You may want to protect the relationships you build with them. However, you must also protect your business. It will often help to take another look at your payment policies. Perhaps you make them stricter, to prevent the risk of non-payment issues. A business attorney can also help craft policies to secure finances and the business’s future.

Many challenges can crop up when working on a construction project. Among these challenges, errors are the last thing that contractors or project owners want to face. Yet, they are not uncommon as you navigate the process. Design errors or mistakes are one such issue that can result in seriou s construction disputes and delays. It is important to determine who is liable when it comes to defects and design errors. SO, WHO IS RESPONSIBLE FOR DESIGN ERRORS? Many might assume the architect – or the person who created the project design – is responsible for design errors. That is not necessarily true. Architects might indeed be responsible for an error or omission in certain cases. However, liability may also fall to: The project owner The contractor or subcontractors Engineers or other third parties involved Responsibility might span across more than one party as well. Determining the origin of the error will help determine liability. The project owner is often the one funding the project overall, but who pays to fix the error will depend on the details of the project. Regardless, generally the contractor must highlight the changes required to repair the error in a change order request. BUT YOU MUST CONSIDER THE FACTORS OF THE SITUATION As it is with the majority of construction issues, the answer to who is responsible often depends on various factors, including, but not limited to: The details of the contract The process of the project The source of the error The terms of liability are different for all of the parties involved in a project – and they often change depending on the details of the project as well. In these cases, it is often critical to seek legal guidance before moving forward to mitigate the impact on the project and avoid an escalating dispute.

Construction projects are subject to many internal and external factors. Due to this, delays are not an uncommon occurrence. Whether delays are the result of bad weather conditions or supply chain issues, contractors and their clients cannot control every aspect of the project. Delay issues are very common construction disputes. Therefore, new and experienced contractors alike need to know when their clients may have a reason for a delay claim. 2 PARTICULAR TYPES OF DELAYS THAT POSE A RISK Common obstacles that contractors faced during the height of the COVID-19 global pandemic involved supply chain issues. The lack of materials put various projects on hold across California and the country. This widespread issue was out of contractors’ and clients’ control, meaning they were excusable delays. However, there are situations when clients may have a claim, including if the reasons for delays are: Inexcusable: As mentioned above, one example of an excusable delay is the disruption in supply chains. Force majeure clauses in contracts also cover many excusable delays – and protect the contractor. However, a customer may have a delay claim for inexcusable delays. If the contractor’s or company’s actions extend the project, it could be an inexcusable delay. For example, if contractors are negligent or fail to follow proper permitting procedures, then a customer may have a legal claim to collect damages. Foreseeable: If the customer argues that a delay was the result of a foreseeable issue, they might also have grounds for a claim. These situations can be rather subjective – and complex. Yet, issues about foreseeability play a large role in many construction disputes. Delay claims might be common in the construction industry, but a customer’s claim must meet specific conditions to be successful. Contractors should seek knowledgeable legal guidance as soon as possible if facing claims. That way they can protect their bottom line and business reputation. This also highlights how critical it is for contractors to take extra care in crafting contracts before the project begins. An attorney can also provide counsel on how to establish a protective and effective contract.

Taking time to update a commercial property is often a critical step to attract appeal from potential tenants, increase the value of the property, and comply with building codes and market trends, but perhaps most importantly to avoid potential liability from harm to people or the property. UPDATES ARE INEVITABLE Some updates are cosmetic to meet market demands. In other cases, parts of the property might be out of date or noncompliant with the California Building Standards Code or federal laws, such as the Americans with Disabilities Act (ADA). Older buildings in particular often require significant updates to be safe and functional. The most common types of property updates generally include: New lighting or electrical Adding or removing interior walls Updating the HVAC system Replacing the roof New plumbing Updating a property may not involve renovating the structure of the building, but it could affect it. Issues – or even damages – could result from improper updates to the property, such as water damage from faulty plumbing. WHO TAKES RESPONSIBILITY? Whoever takes responsibility for property updates usually depends on two factors: The specific issue or root cause of the damage The terms of the lease Workmanship of contractors Property owners carry the general responsibility for repairs and updates unless the renting business owner caused the damage. However, if the tenant causes damage to the building, the owner may try to hold them responsible for the cost of repairs. Finally, in the case of a situation where repairs were made but fail, the contractors could be held responsible for both faulty workmanship and the damages resulting from their work. Ultimately, these can become big, complicated disputes with everyone pointing fingers at one another, so all three entities should arm themselves with photos, documentation and an attorney who specializes in leaseholds and construction.

According to California law – and under the terms of the Right to Repair Act – builders have the option to manage and fix alleged defects before property owners can file a legal claim or take matters to court. Regardless of how builders approach these claims, there are a few steps that they must take to protect their business. BUILDERS MUST OBTAIN AN INSPECTION OF THE DEFECT This is the first – and often most important – step that builders should take in these situations. Property owners must generally allow builders to examine and document the alleged defect. The primary reasons this step is so critical is it can help builders: Determine the cause of the alleged defect Assess who could potentially be liable, if anyone Compare findings with their existing project records Finding the answers in these situations is essential. After all, latent defects can develop, but an inspection of the property owner’s claim could reveal that builders are not liable for the damage at all. Therefore, builders should make sure they document the damage detailed in the claim and take pictures to add to their records. It is important to note that it is often helpful if builders have an attorney and professional inspector present as well. They can help builders with documentation, as well as limit direct contact between the property owner and builder. WHY IS THIS IMPORTANT? In previous blog posts, we discussed the important role that expert witnesses play in construction defect cases. Certified inspectors fall into this category. Property owners will likely have an inspection of their own done. While the findings of inspections are not definitive, they can carry a lot of weight in a construction defect case. That is why builders should obtain their own inspection. Then they can properly defend themselves – and their reputations – against these claims. It is also critical to consult experienced legal counsel in these matters, but evaluating the evidence and validity of the claim is fundamental to build a defense.

For developers, contractors and specialty trades, getting complaints of a construction defect can be stressful and costly. They often immediately think of the damage their reputation – and their business – could suffer in this situation, but with certain safeguards in place such pitfalls will be easier to resolve. The mantra should be: act quickly, say nothing, and seek the advice of a construction attorney. WHY IS IT SO IMPORTANT TO ACT FAST? Defect claims often involve a series of other legal issues that multiply challenges and risks, including: Breaches of contract – If the alleged defect, or resulting damage from the defect, goes against the terms of the contract. Breaches of warranty – Specifically if the defect contravenes an express or implied warranty, or guarantee, regarding quality that the parties outlined in the contract. Negligence – If workers do not uphold the standard of care required of them under the law and the individual contract. Strict liability – Which is only a risk for mass developers in California, but is a risk nonetheless. CRITICAL STEPS TO TAKE AGAINST DEFECT CLAIMS As we have discussed in previous blog posts, California law provides an avenue for dispute-resolution before taking matters to court. Even so, business owners must take great care as they move forward to handle these claims. If a construction defect claim is brought to their attention, business owners should: Carefully review the claim Reevaluate the documents and records from that specific project Seek legal advice regarding the options and obligations under California law Many business owners might wish to respond to the claim as soon as possible to defend their reputation. And while it is critical to act quickly, owners must still act strategically.

California lawmakers passed the Right to Repair Act back in 2003, but it remains one of the most important laws for builders to understand if they face a construction defect claim. A 2018 case, McMillin Albany LLC et al. v. the Superior Court of Kern County, solidified this act’s relevancy. The case determined that this law was the only avenue homeowners could take to seek damages for certain construction defects. This decision has both benefits and drawbacks for builders. HOW DOES THE RIGHT TO REPAIR ACT WORK? The Right to Repair Act is incredibly complex. It is often beneficial to consult an experienced attorney to fully understand the regulations of this law, but here is a brief overview. The three main functions of the act include: It defines a homeowner’s rights when they pursue damages for a construction defect. It also prescribes a builder’s liability for construction defects. It outlines the specific process of these claims. On one hand the act offers some benefits for builders. The act essentially requires homeowners to engage in a dispute resolution process when they file a claim. Homeowners must give builders plenty of notice about their claim before they can pursue litigation. Additionally, it gives builders a chance to repair the defect and resolve matters out of court. However, the drawback is that it essentially forces builders or construction companies to implicitly admit fault. The law might govern the dispute resolution process over construction defects, but builders must still approach these cases carefully. PROPER DOCUMENTATION IS NECESSARY UNDER THIS ACT To protect the company’s reputation, most builders, contractors and designers wish to avoid admitting fault. In many cases, the builders might not be at fault for a defect at all. So, how can builders proactively protect their business against the risk of construction defect claims? One of the best strategies is to ensure the company has an organized and thorough record-keeping system. The statute of limitations on many construction defect cases can extend up to 10 years. And the Right to Repair Act requires builders to provide property owners with copies of several documents pertaining to the project, including: Building plans; Grading plans; Soils reports; Engineering calculations; and Department of Real Estate public reports. Keeping extensive and detailed records is not only essential under the Right to Repair Act, but it can help builders navigate these cases efficiently and even prove they were not at fault for the defect.

When property owners claim they found defects in the construction or remodel of their home, it is common for them to try to hold the contractor liable to repair them. However, the builders are not the only parties who could be responsible for a construction defect. Property owners might also try to blame the architect. Architecture firms must prepare for this risk, but they also must be aware: when could they face legal action over a construction dispute? IT TYPICALLY DEPENDS ON THE CONTRACT It is important to note that the architect’s liability for construction defects often depends on the contract. Since written contracts are required in California for construction projects, there will be a written record of the architect’s responsibilities – whether between the owner and the architect or the contractor and the architect. The contract should define the architect’s scope of work and responsibilities regarding a particular project, such as: The timeline and procedure of the project; What services the architect must provide; and The process for payment. SO, WHEN COULD ARCHITECTS FACE LIABILITY? If the contract lacks an outline of an architect’s responsibilities or liability, architecture firms could face legal issues stemming from: The design itself; Failure to find defects during inspections; or Noncompliance with the city or state codes. Essentially, if a defect results from architects failing to fulfill the responsibilities specified in the contract, then they could face liability. Even if there are no errors in the design, any issues pertaining to the architect’s responsibilities could lead to possible claims. Like any construction defect case, issues in the design or other concerns might not appear until later, i.e., “latent defects.”  Architecture firms should ensure they keep careful documentation of their designs, inspections and any issues of note from each project. Firms should also consult an experienced attorney to protect their best interests and minimize the risks they face.

Every construction project carries a risk, whether severe weather delays work, or the parties dispute terms of the contract. However, defect claims possibly pose the greatest risk. Even when builders follow all of the plans down to the last detail, mistakes can happen. Builders know that construction defects can often lead to time-consuming and expensive litigation, but it can also put the company’s reputation in jeopardy. That is why construction companies must always be mindful of the risk of construction defects – especially the ones that occur most often. STUDY: WHAT ARE THE MOST COMMON CONSTRUCTION DEFECTS? LJP Construction Services recently completed a four-year study regarding construction defects. The study determined the most common sources of defects in residential construction projects. These included issues with: Weather barriers; Framing; Mechanical and plumbing systems; Window and door installations; and Fire-resistant components. The study also found that these defects commonly resulted from the misinterpretation or deviation from manufacturer plans. There is some good news. There were fewer defects reported in California, which also held a lower deficiency rate than many other states and the national average. Even so, builders face the risk of liability for any defects found in a finished project. Construction companies must always be diligent when inspecting their work and be on the lookout for these common defects in particular. IS IT POSSIBLE TO PREVENT THESE DEFECTS? Construction companies must be proactive, but it is a difficult task to completely eliminate the risk of defects. In many cases, defects do not manifest until long after the project is completed. However, there are several steps that construction companies can take to mitigate the risk of defects and defect claims, including: Completing a thorough review of manufacturer guidelines; Performing careful and continuous inspections of work completed; Maintaining quality control policies; Evaluating individual workers’ labor; and Documenting the entire process of the project. Builders should also review California law and all contract information.

Business owners work hard for what their company has achieved. Everything from the purpose of the business to the carefully cultivated clients is a valued and protected asset for entrepreneurs. Even the logo or branding represents a hard-fought victory full of symbolism, dedication, pride – and perhaps most importantly crucial brand identity and value. Consequently, when another company or individual misappropriates these important assets, either intentionally or not, it can seem like a direct attack on the livelihood of the business. Upon learning of such a misappropriation, the business owner should retain an attorney to write an impactful cease-and-desist letter to the offending party identifying the unlawful conduct and demanding that they immediately stop. CEASE-AND-DESIST LETTER BASICS There is an art to writing a cease-and-desist letter. Too strong, and it may incite resistance which may result in having to file a lawsuit to enforce your rights. Too weak and it will likely be ignored. Firmly encouraging compliance and cooperation rather than seeking punitive remediation if often preferred. For example, in 2012, the popular whiskey brand Jack Daniel’s sent a cease-and-desist letter to an author who used a likeness of their whiskey label as a cover for his book. Instead of immediately threatening legal action, the liquor mogul politely asked him to change the cover for the next printing. They even offered to help pay for a redesign. The author immediately acquiesced, declining the extra funds and making the changes. LEGAL COUNSEL PROVIDES A PROFESSIONAL EYE The Jack Daniel’s approach may not work for every company. Those looking for a more professional voice can hire a local lawyer familiar with intellectual property law. An attorney can draft a professional letter that lays out legal claims clearly and concisely.