Essential Construction Projects In California: Can You Keep Working And How?

Despite the COVID-19 pandemic and its severe impact on the construction industry, work on Essential Projects is permitted in certain instances, depending on the location and the type of the project. The question of what work is “essential” is key. Not surprisingly, the designation of Essential Construction is evolving and different requirements now exist at the state and local level which has led to confusion.

The following provides an overview of the current orders and local regulations affecting major metropolitan areas of California as well as the trends as a result of these orders. Those with additional questions beyond the information presented in this article are recommended to consult with a licensed attorney with construction law experience to achieve your compliance and workplace safety goals.

The Federal Guideline

The Department of Homeland Security for the Federal Government produced Guidelines identifying 16 sectors deemed “Essential” Businesses. These Guidelines are only recommendations – it is up to the individual local jurisdictions to draft their own ordinances.

Under the Guidelines, several areas are clearly covered as “essential” including infrastructure construction and restoration (fiber optic cables, wireless facilities, and other communications-related areas); work supporting the manufacture, distribution and provision and construction of computing-related services); business infrastructure; financial transactions/services; web-based services; and critical manufacturing.

For more information on the federal guidelines, please visit our prior article on this issue.

California State Guideline

On March 19, 2020, Governor Newsom’s Office issued Executive Order N-33-20 ordering all residents to “Stay at Home,” except as needed to maintain continuity of essential critical infrastructure sectors, including those designed by the State Public Health Officer. On March 22, 2020, the State Public Health Officer designated a list of “Essential Critical Infrastructure Workers” to help state, local, tribal, and industry partners as they work to protect communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security. The State Public Health Officer’s list of designated “essential” workers includes but is not limited to:

  • Construction workers who support the construction, operation, inspection, and maintenance of construction sites and construction projects (including housing construction)
  • Workers such as plumbers, electricians, exterminators, and other service providers who provide services that are necessary to maintaining the safety, sanitation, construction material sources, and essential operation of construction sites and construction projects (including those that support such projects to ensure the availability of needed facilities, transportation, energy and communications; and support to ensure the effective removal, storage, and disposal of solid waste and hazardous waste)

San Francisco County and Bay Area (Marin, Alameda, Santa Clara, Contra Costa)

The San Francisco County and City ordinance is instructive as the counties in the Bay Area have worked together and been on the forefront of developing the definitions of Essential Projects. The same standards apply to Marin, Alameda, Contra Costa, and Santa Clara Counties.

The Order provides that only certain, limited types of construction are permitted to continue, including the following:

  • healthcare projects directly related to addressing the COVID-19 pandemic
  • housing and mixed use projects that includes at least 10% affordable housing
  • projects that provide services to vulnerable populations projects required to maintain safety, sanitation, and habitability of residences and commercial buildings
  • construction necessary to secure an existing construction site that must shut down

The Health Officer may issue guidance requiring construction site-specific health and safety plans. The Order also provides for San Francisco to limit public works construction to essential public works projects as determined by the City Administrator in consultation with the Health Officer.

All other construction is prohibited. Essential projects are further defined as:

  • Projects immediately necessary to the maintenance, operation, or repair of Essential Infrastructure;
  • Projects associated with Healthcare Operations, including creating or expanding Healthcare Operations, provided that such construction is directly related to the COVID-19 response;
  • Affordable housing that is or will be income-restricted, including multi-unit or mixed-use developments containing at least 10% income-restricted units;
  • Public works projects if specifically designated as an Essential Governmental Function by the City Administrator in consultation with the Health Officer;
  • Shelters and temporary housing, but not including hotels or motels;
  • Projects immediately necessary to provide critical noncommercial services to individuals experiencing homelessness, elderly persons, persons who are economically disadvantaged, and persons with special needs;
  • Construction necessary to ensure that existing construction sites that must be shut down under this Order are left in a safe and secure manner, but only to the extent necessary to do so;
  • and Construction or repair necessary to ensure that residences and building containing Essential Businesses are safe, sanitary, or habitable to the extent such construction or repair cannot reasonably be delayed.

San Francisco also recently developed guidance for construction “Best Practices” and “Field Safety Guidelines” for COVID-19 job site safety, including submission of Site-Specific Health and Safety Plans that conform to the guidelines. These guidelines are likely to be adopted by the Bay Area counties and beyond. Contractors and construction professionals should consult with an attorney on how to comply and submit the necessary plans to safely resume operations.

Los Angeles County

While the County of Los Angeles has not provided specific construction-related guidance, the City of Los Angeles has developed protocols for COVID-19 Safety for Construction Sites. The City’s plan requires a comprehensive COVID-19 exposure control plan, which includes control measures such as social distancing; symptom checking; hygiene; decontamination procedures, and training. Failure to comply with this guidance shall be deemed as creating unsafe conditions and may result in withheld inspections or shutting down the construction site until corrected.

Unlike the San Francisco ordinance, the City of Los Angeles’s guidance does not distinguish between different types of essential construction and instead relies upon the state and federal guidance principles. However, the protocols for construction sites includes directives to maintain a minimum 6-foot distance from other workers at all times, provide personal protective equipment (PPE) such as gloves, goggles, face shields and face masks, and stagger the trades as necessary to reduce density and maintain minimum 6-foot separation. These types of workplace conditions will continue to affect job sites throughout Los Angeles. Notably, some cities in Los Angeles County are looking at their own, more stringent regulations on construction projects.

San Diego, Orange, Riverside County

San Diego, Riverside, and Orange Counties presently do not have independent guidance or reporting requirements beyond those provided by the State and Federal Guidelines. We continue to monitor for additional updates, but expect these Counties to adopt some standard protocols, reporting requirements, and construction site and job guidance like those from San Francisco or Los Angeles.

Sacramento County

San Diego, Riverside, and Orange Counties presently do not have independent guidance or reporting requirements beyond those provided by the State and Federal Guidelines. We continue to monitor for additional updates, but expect these Counties to adopt some standard protocols, reporting requirements, and construction site and job guidance like those from San Francisco or Los Angeles.

Key Take Away: Keep Up To Date And Monitor Your Projects

Clearly, a high premium has been placed on housing. Originally San Francisco was in line with the Federal Guidelines and was allowing all housing construction to go forward. However, as it has begun tightening up on permissible activities, San Francisco now requires an affordable component to allow the construction to go forward. It will be interesting to watch as other areas make decisions on this issue whether the trend will be towards being more restrictive in allowing residential construction and how “affordable” is defined.

The Federal Guidelines are more developed with respect to Public Works and Infrastructure work. However, the document is meant to give guidance to the local agencies who may choose to follow San Francisco’s lead and specifically designate what projects can go forward rather than leave it open for interpretation.

It is important for the Construction Industry to pay close attention to what work is permissible during this crisis and what work must be delayed. Unfortunately, we anticipate that the trend will continue to be more restrictive until a better comfort level is achieved with the future of the virus. This means close attention should be paid to each project and to carefully evaluate if notices of potential delays should be issued and to evaluate if the contractor can obtain any relief for affirmative extended general conditions, efficiency claims, or other additional compensation or remedies.

Los Angeles Construction Site Safety Guidance, (March 31, 2020)
Orange County Amended Health Order and Guidance, (March 18, 2020)
Sacramento County Stay At Home and Essential Services Order, (March 19, 2020)
Santa Clara County Order of the Health Officer, (March 31, 2020)
Alameda County Order of the Health Officer, (March 31, 2020)
Contra Costa County Order of the Health Officer, (March 31, 2020)
Marin County Order of the Health Officer, (March 31, 2020)
Riverside Essential and Criticial Services Guidance, (March 22, 2020)
San Diego Social Distancing and Sanitation Protocol, (April 2, 2020)
San Francisco Guidance for Construction Related Essential Business, (March 31, 2020)

Six Northern California Counties Have Issued New Shelter-in-Place Orders Impacting Construction Industry

Effective 11:59 p.m. on March 30, 2020, Alameda, Contra Costa, Marin, Santa Clara, San Francisco and San Mateo Counties shelter-in-place rules will be more detailed and restrictive. The construction industry will be significantly impacted. The order only allows the following kinds of construction projects to go forward:

  • Projects immediately necessary to the maintenance, operation, or repair of Essential Infrastructure
  • Projects associated with Healthcare Operations, including creating or expanding Healthcare Operations, provided that such construction is directly related to the COVID-19 response
  • Affordable housing that is or will be income-restricted, including multi-unit or mixed-use developments containing at least 10% income-restricted units
  • Public works projects if specifically designated as an Essential Governmental Function by the lead governmental agency
  • Shelters and temporary housing, but not including hotels or motels
  • Projects immediately necessary to provide critical non-commercial services to individuals experiencing homelessness, elderly persons, persons who are economically disadvantaged, and persons with special needs
  • Construction strictly necessary to ensure that existing construction sites that must be shut down under this Order are left in a safe and secure manner, but only to the extent necessary to do so
  • Construction or repair necessary to ensure that residences and buildings containing Essential Businesses are safe, sanitary, or habitable to the extent such construction or repair cannot reasonably be delayed

A significant amount of construction that is currently ongoing will now have to stop. It will be much more difficult to argue that certain projects should go forward due to ambiguity in the order.

Construction companies should be sure to carefully review the orders and work with counsel to evaluate their options and potential needs to issue notices of delays in order to protect claims for additional time and damages.

Visit our COVID-19 Hub for ongoing updates.

Asbestos Exposure for Contractors

The California Supreme Court has ruled that premises owners and employers owed a duty to the employee’s household to prevent take-home exposure to asbestos. For example, claims that the plaintiff was exposed when a family member came home with asbestos fibers on his work clothes. For a more detailed description of the case, click here.

This ruling is more important to the Construction industry given the ruling in Hernandezcueva v. Brady  243 Cal.App.4th 249 from January of this year. In Hernandezcueva, the court found that E.F. Brady was potentially liable for its use of an asbestos-containing drywall joint compound on the job. The Court held that E.F. Brady was not just a contractor, but played a significant role in the stream of commerce of the asbestos-containing joint compound because it:

  1. “Always” provided materials as part of its drywall contract;
  2. Structured its time-and-materials contract to recoup the costs of materials (even “without necessarily ensuring a profit regarding those costs,” in part because the costs were “substantial, as they ordinarily constituted 25 percent of the amount of a bid”);
  3. Had a relationship with manufacturers of asbestos-containing drywall products “sufficient to command the personal attention of [their] representatives to E.F. Brady’s concerns regarding the products” that placed it “‘in a position to exert pressure on the manufacturer’ to improve product safety;” and
  4. Was a large commercial operation and so was “capable of bearing the costs of compensating for injuries due to the products.”

A more through discussion of that case can be found here.

Copyright Protection for Engineering Plans: What You Need to Know – Part One

5-11Can engineering drawings and plans be protected by copyright? Engineering professionals who create such plans are understandably interested in protecting them. With a few exceptions, the answer is “yes.” This three part series will examine the application of copyright laws to engineering plans. Part one provides an overview of copyright protection available to engineers.

First some background on the subject: Copyright is generally known to apply to expression in literary works (books, manuals), computer programs (source and object code) and artistic forms (photographs or even engineering diagrams, plans). For design professionals, it is worth examining the scope of the protection from copyright as it exists in this framework and more importantly in engineering drawings.

Bear in mind that copyright is created automatically and does not necessarily need to be registered. Sometimes a copyright notice is applied to a work but this does not by itself impart copyright to the work. A copyrighted work can be two dimensional (an engineering drawing) or three dimensional (an actual component).

In 1990, the Architectural Works Copyright Protection Act was created to provide copyright protection for physical architectural works. Since architectural works were not previously protected by the Copyright Act, the AWCPA sought to address this area. In the AWCPA, it defines architectural works as “the design of a building as embodied in any tangible medium of expression, including a building, architectural plans, or drawings.” Keep in mind that the copyright protection afforded to “buildings” is limited and mandates that the building be habitable by humans. Furthermore, the building must be permanent and stationary, such as a house, office, museum or stadium. Structures which cannot typically be protected by copyright as an architectural work may include mobile homes, bridges, dams, recreational vehicles, tent structures, automobiles and boats.

Formal copyright notices are no longer required to be placed on the work but note that a copyright notice does give the owner some benefit in a copyright infringement action: Formal registration of the copyright with the U.S. Copyright Office provides the owner with proof of the date of creation, an important issue in an infringement case. Also, the owner cannot commence a federal copyright infringement action without first registering the copyright.

As for ownership of the copyright, most courts have ruled that the author retains the copyright in the absence of a written agreement assigning the ownership. Accordingly, if a contract does not address ownership of the copyright, then the design professional would typically own the copyright in the plans.

In the next segment we will review the role of ownership and licensing issues as relating to engineering plans.

For some general background on copyrights, click here.

For more specific background on the Copyright Act, and its application to plans, click here.

 

Image courtesy of Flickr by Forgemind ArchiMedia

Post Beacon California Appellate Case Finds No Duty for Designer

In State Ready Mix Concrete v Moffatt and Nichols, 2d Civil No. B253421, the California Court of Appeals found that an engineer did not owe a supplier a duty of care and therefore dismissed the supplier’s cross-complaint.  The course followed the lead of Beacon[1] by applying the Biakanja [2] factors to determine whether a duty existed.

Certainly, the ruling would seem to provide protection to engineers from direct actions brought by contractors and suppliers.  However, as with Beacon itself, the application of the Biakanja factors make it difficult to develop hard fast rules.  While designers would like to argue that they do not owe contractors a duty of care when producing their design, this case will not be particularly helpful.

In State Ready Mix, Moffatt & Nichols did not develop the concrete mix design but only reviewed it for the benefit of the project manager.  More importantly, State Ready Mix produced a non-conforming concrete and failed to test the concrete to make sure it met the specification.  These two factors weighed heavily in the courts analysis.  This decision will be of little value in an instance where the contractor attempts to sue a design professional alleging that the designer’s work caused the contractor increased costs.  The application of Beacon to this scenario and other common situations will be looked at in depth during a panel discussion at West Coast Casualty’s Construction Defect Seminar in Anaheim, California, May 14 & 15, 2015.

 

[1] Beacon Residential Community Assn. v. Skidmore, Owings & Merrill (2014) 59 Cal.4th 568
[2] Biakanja v. Irving (1958) 49 Cal.2d 647

After Beacon: Use of Indemnity Provision in Conjunction With Limitation of Liability Clause

Design professionals in California have often used limitation of liability clauses as an effective risk transfer technique.  Given that a third-party plaintiff’s recovery is not capped by the limitation clause in a contract between the design professional and the developer, we have made it a practice to recommend to our clients that, in addition to the limitation, they attempt to negotiate an indemnity provision in which the owner indemnifies the design professional for any judgment in excess of the limitation of liability.

Even where developers are willing to agree to a limitation of liability provision, they often resist also including indemnification for any judgment in excess of the limitation of liability.   However, the July 3 Supreme Court of California ruling in Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP highlights the purpose of an indemnity provision.

For the limitation to be truly effective, the indemnification agreement is necessary.  In the residential context, the developer is strictly liable for design errors.  Therefore an indemnification agreement only confirms that the developer will be responsible for the design exposure above the limitation of liability.

Design professionals should use the Beacon case as an opportunity to explore the risk transfer inherent in a limitation of liability with their clients and hopefully convince them of the appropriateness of using an indemnity provision in conjunction with a limitation of liability.

Court Focuses on Biakanja Factors in Deciding Homeowner Can Sue Principal Architect for Negligence

The Supreme Court of California issued its ruling in Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP on July 3.  Gordon & Rees’s Greg Hanson discussed the Supreme Court hearing on this case in his June 5 blog post.  Greg’s prediction as to the court’s decision turned out to be true.  Certain architects can be sued by a homeowner for defects in a residence.

The court focused on the Biakanja factors in determining that a “principal architect” can be sued in negligence by a homeowner despite the absence of privity.  Interestingly, the court preserved the ruling in the Weseloh matter, which held that a retaining wall designer retained by a second-tier subcontractor could not be sued by the homeowner for a collapse of a retaining wall.

In his blog post, Greg observed that the court suggested it was foreseeable that a defective design would affect eventual purchasers of units; that the Beacon architects were intimately involved with the project; and that the payment of $5 million to the Beacon architects in comparison to the $2,000 payment to the designers in the Weseloh case was significant.  In its ruling, the court used these factors as a major part of its analysis in finding that the Biakanja factors support a finding that the Beacon architects could be sued by the homeowners association in negligence without a contractual relationship.

The following is the court’s summary of its analysis of the Biakanja factors:

  1. The defendants’ work was intended to benefit the homeowners living in the residential units that the defendants designed and helped construct.
  2. It was foreseeable that these homeowners would be among the limited class of persons harmed by the negligently designed units.
  3. The plaintiff‘s members suffered injury; the design defects made their homes unsafe and uninhabitable during certain periods.
  4. In light of the nature and extent of the defendants’ role as the sole architects on the project, there is a close connection between the defendants’ conduct and the injury suffered.
  5. Because of the defendants’ unique and well-compensated role in the project as well as their awareness that future homeowners would rely on their specialized expertise in designing safe and habitable homes, significant moral blame attaches to the defendants’ conduct.
  6. The policy of preventing future harm to homeowners reliant on architects’ specialized skills supports recognition of a duty of care. Options for private ordering often are unrealistic for typical homeowners, and no reason appears to favor homeowners as opposed to architects as efficient distributors of loss resulting from negligent design.

While the ruling itself is not surprising to most observers, an in-depth reading of the opinion creates an open question as to when a designer’s connection to the project is enough to create liability in negligence.  Where does the line ultimately get drawn between the architects in Beacon and the designers in Weseloh?

It should also be noted that we can expect to hear more from the appellate court regarding Beacon as the court is presently deciding whether the HOA has standing to bring a class action on behalf of the unit owners.

For a more detailed discussion of the case, click here.