2007 Construction Law Legislative Changes

Every year, existing laws are amended and new laws go into effect. The following legislative changes in the field of construction law may affect your business or be of general interest to you and your company: Design Professional Agreements Indemnifying Public Agencies From Liability Are Now Void

Newly enacted California Civil Code § 2782.8 prohibits indemnification by design professionals of public agencies from liability except for claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional. "Design Professional" is defined to include architects, landscape architects, professional engineers, and land surveyors.

Contractor Licensing & Disciplinary Procedures
The Business and Professions Code has been modified and several new licensing provisions have been added:

Newly enacted B&P §7121.6 restricts the following specified individuals from performing regulated acts for or on behalf of a licensee, other than as a non-supervisory employee:

• A member, officer, director, owner, or partner of a license that was revoked.
• Anyone who had knowledge of or participated in any act or omission for which the license was revoked.
  
• Anyone who served in the capacity of a qualifying individual during the commission or omission of acts which resulted in revocation of the license, whether or not he or she had knowledge of or participated in those acts.
• Anyone who furnished the qualifications for a license which was revoked.
• Anyone not eligible for reinstatement for licensure under Section 7102.

As a corollary to this, B&P §7121.65 requires that prior to accepting employment with an entity subject to licensure, an individual described in §7121.6 must provide the prospective employer with written notice of his or her license revocation. B&P §§7121.7-7121.8 prohibits a qualifying individual, officer, partner, or other person named on a license from knowingly employing these prospective employees except as bona fide non-supervising employees. B&P §7133.5 clarifies that no disciplinary action shall be commenced against a licensee for avoiding or settling in bankruptcy under federal law “so long as the licensee satisfies all of those lawful obligations, to the extent the obligations are not discharged under federal law.” Thus, contractors must satisfy their obligations arising out of the bankruptcy in order to avoid disciplinary action under this statute.

B&P §7145.5 adds two new sections regarding failure to resolve outstanding liabilities as grounds for refusal to renew a license:

1. Until the debts covered by this section are satisfied, the qualifying person and any other personnel of record named on the license that has been suspended under this section shall be prohibited from serving in any capacity that is subject to licensure except in the capacity as a non-supervising bona fide employee.
2. The license of any other renewable licensed entity with any of the same personnel of record that have been assessed an outstanding liability covered by this section shall be suspended until the debt has been satisfied or until the same personnel of record disassociate themselves from the renewable licensed entity.

These two provisions were enacted to ensure that any and all personnel associated with a suspended license cannot operate under another license unless and until the debt has been satisfied.

University of California Pilot Program
California Public Contracts Code §10506 et seq. provides for a Competitive Bidding Pilot Program at the University of California at San Francisco. This Best Value Construction Contracting Pilot Program, effective until January 1, 2012, requires that the Regents award all contracts to the lowest responsible "best value" bidder or else reject all bids. A best value determination is "a procurement process whereby the lowest responsible bidder may be selected on the basis of objective criteria with the resulting selection representing the best combination of price and qualifications." Cal. Pub. Contracts Code §10506.5. These criteria must be listed in the University’s request for bids. Upon awarding the contract to the best value contractor, the University is required to publicly announce the award, a description of the project, the project price, and the best value contractor’s score in relation to all other responsive bidders.

The information provided in this issue of "Legal Notice" is general in nature and is not intended to answer every question that may arise under different fact situations and should not be relied on in the place of professional advice in a given case. If you have specific questions please contact Sweeney, Mason, Wilson & Bosomworth.