In Cell-Crete Corp. v. Fed. Ins. Co., a California court awarded a surety attorneys’ fees and costs that its principal incurred defending the surety against a claim on a public-works payment bond.[1] This is good news for sureties and their principals, who commonly defend sureties against such claims pursuant to a general indemnity agreements (“GIA”). 

The payment bond and related litigation

Granite Construction Company (“Granite”) entered into a contract with the County of Riverside to complete a roadway project (“Project”). Granite subcontracted with Cell-Crete Corporation (“Cell-Crete”) for installation of light weight concrete at the Project. Granite obtained a payment bond (the “Bond”) from Federal Insurance Company (“Federal”) pursuant to the California Little Miller Act,[2] which requires payment bonds for any public project in excess of $25,000. As Granite’s surety, Federal required that Granite sign a GIA obligating it to defend, indemnify, and hold Federal harmless against claims made against the Bond. Continue Reading California Court Confirms Surety’s Right to Recover Attorney Fees and Costs Incurred by Its Principal

On September 18, 2019, California Governor Gavin Newsom signed California’s Assembly Bill 5 (“AB 5”). This landmark bill takes effect on January 1, 2020, and will require gig economy workers to be reclassified as employees instead of independent contractors. As it relates to the construction industry, AB 5 provides that the “relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry” shall be governed by pre-existing law, provided that the contractor satisfies seven new criteria set forth in AB 5.[1]  AB 5 also includes an exception for certain construction trucking services performed prior to January 1, 2022,[2]  as well as active California licensed architects and engineers.[3]
Continue Reading Update on California Assembly Bill 5 and its Potential Impact on Construction Contractors and Subcontractors