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October 2012

Changes for Liens and Other Remedies in Works of Improvement

By Thorsten J. Pray of the San Francisco Office

The Civil Code sections governing construction liens, stop payment notices and bond remedies have been revised and thoroughly re-numbered as of July 1, 2012.  All such provisions still reside in the Civil Code, but now are set forth beginning with Section 8000.  These new provisions govern the remedies for mechanic’s liens, design professionals’ liens, stop payment notices, construction bond remedies and defenses based upon notices dated July 1, 2012 or later.  The provisions for disputes arising from notices dated before July 1, 2012 are still subject to the old code sections set forth in the Civil Code beginning with section 3081.1. 

Although there are no major changes, and the statutory time periods for enforcement remain the same, there are some procedural changes that merit discussion.  There are new statutory forms that must be used by the claimant and the defendant, most notably related to Preliminary Notices (formerly known as “Preliminary 20-day Notices”) and “Conditional” as well as “Unconditional Waivers and Releases.”   

Unfortunately, the new Conditional Progress Payment Waivers and Releases still suffer from the same substantive shortfalls as the old forms did.  They leave the potential claimant with a wide-open opportunity to submit new claims in two ways, despite having executed the statutorily prescribed waiver and release forms.  These forms still retain the very same language that allows claims based upon “…extras for which the claimant has not received payment” and also “… the right to recover compensation for work not compensated by the payment” after execution of the form.  Nonetheless, the forms should still be used as part of a general contractor’s or owner’s risk management package for a project.

Other notable changes include the requirement that “direct” contractors (formerly “original” contractors) must now furnish a preliminary notice to any construction lender.  The former $2,000 ceiling on recoverable attorneys’ fees for successful petitions to release unenforceable liens has been removed such that “ reasonable attorneys fees” may now be recovered.  Design professional liens now need to be converted to mechanic’s liens in certain instances by an appropriate filing with the county recorder. 

Make sure to consult an attorney knowledgeable in this area for complete advice on managing these new code provision changes. 

New Time Limits on Non-Expert Depositions

Effective January 1, 2013, California depositions will be limited to seven (7) hours.  The time limit applies to examination by all counsel, other than the witness’ counsel of record.  The new rule is set forth in Code of Civil Procedure section 2025.290.       Certain types of witnesses are exempt.  The time limit does not apply to expert depositions, or to depositions of persons designated most qualified to testify (“Person Most Knowledgeable”) under Code of Civil Procedure section 2025.230.

Certain types of cases are exempt.  The time limit does not apply to complex civil cases (but if there exists significant doubt a deponent will survive beyond six (6) months, the time limit is extended to two days of no more than seven hours each).  The time limit does not apply to cases brought by an employee or applicant for employment against an employer for acts or omissions relating to an employment relationship.

Section 2025.290 provides the court shall allow additional time if needed to fairly examine the deponent, or if the deponent, another person, or any other circumstance impedes or delays the examination.  The parties may stipulate the time limit does not apply to any particular deposition, or to the entire proceeding.  Any party who appears in an action after a deposition has concluded may notice a deposition of the previously deposed witnesses.