1. © 2006 Gibbs, Giden, Locher & Turner LLP California Public Works Remedies 1. Payment Bond 2. Stop Notice Claim

2. © 2006 Gibbs, Giden, Locher & Turner LLP Stop Notices – California Public Works What is it… A stop notice on public works is a notice to the public agency to withhold construction funds to satisfy the claim

3. © 2006 Gibbs, Giden, Locher & Turner LLP Stop Notices – California Public Works -All subcontractors to the job, and their material suppliers and equipment suppliers Who can serve a stop notice…

4. © 2006 Gibbs, Giden, Locher & Turner LLP Stop Notices – California Public Works - No general/original contractors, supplier to supplier or unlicensed contractors Who can NOT serve a stop notice…

5. © 2006 Gibbs, Giden, Locher & Turner LLP Stop Notices – California Public Works --Preliminary 20 day notice a) Required of claimants who have no contractual relationship with prime contractual relationship with prime contractor contractor b) Within 20 days after claimant first furnishes labor/services or material to the site. labor/services or material to the site. Procedural requirements to enforce:

6. © 2006 Gibbs, Giden, Locher & Turner LLP 20 Days Mailing Date All labor/materials thereafter Stop Notices – California Public Works --Preliminary 20 day notice c) If claimant failed to serve at signing? Procedural requirements to enforce

7. © 2006 Gibbs, Giden, Locher & Turner LLP 1.Certified Mail, return receipt requested 2.Registered mail 3.First-class mail How Should the Preliminary 20-day Notice be Served? 1.Certified Mail, return receipt requested 2.Registered mail 3.First-class mail Stop Notices - California Public Works

8. © 2006 Gibbs, Giden, Locher & Turner LLP Who Must The 20-day Preliminary Notice Be Served upon? 1.Public Agency 2.Original contractor/reputed original contractor

9. © 2006 Gibbs, Giden, Locher & Turner LLP When Should The Stop Notice Be Served? - It can be served at any time The Earliest a Stop Notice Can Be Served:

10. © 2006 Gibbs, Giden, Locher & Turner LLP When Should The Stop Notice Be Served? The Latest a Stop Notice Can be Served: NOC recorded A. A.If a valid notice of completion - All subcontractor/suppliers have 30 days 30 days

11. © 2006 Gibbs, Giden, Locher & Turner LLP Actual Completion 90 days B.If no notice of completion - Subcontractors/suppliers have 90 days from “actual completion” - Subcontractors/suppliers have 90 days from “actual completion” When Should The Stop Notice Be Served? The Latest a Stop Notice Can be Served:

12. © 2006 Gibbs, Giden, Locher & Turner LLP Service is Made By: 1)Registered mail 2)Certified Mail 3)Personal delivery

13. © 2006 Gibbs, Giden, Locher & Turner LLP Stop Notices – California Public Works UNLIKE PRIVATE PROJECTS WITH A CONSTRUCTION LENDER, NO BOND IS EVER REQUIRED BY THE CLAIMANT TO SERVE THE STOP NOTICE ON PUBLIC PROJECTS

14. © 2006 Gibbs, Giden, Locher & Turner LLP Who Should The Stop Notice Be Served On? - Served on the director of the department which let the contract If a State of California Project…

15. © 2006 Gibbs, Giden, Locher & Turner LLP Who Should The Stop Notice Be Served On? - Served on the Officer/Controller/ Auditor who has the duty to make payments - Served on the Officer/Controller/ Auditor who has the duty to make payments All Others …

16. © 2006 Gibbs, Giden, Locher & Turner LLP Other Issues for Stop Notices on Public Works 1. When suit must be filed 2. Priority 3. Notice of Commencement

17. © 2006 Gibbs, Giden, Locher & Turner LLP Shortening the Stop Notice Period Recording and serving a valid notice of completion shortens the time to serve a stop notice from 90 days after completion of the project to 30 days after recording notice of completion after recording notice of completion

18. © 2006 Gibbs, Giden, Locher & Turner LLP - Owner/General disputes validity, post release bond of 125%. - Owner/General disputes validity, post release bond of 125%. Stop Notice Release Bonds

19. © 2006 Gibbs, Giden, Locher & Turner LLP Summary Proceedings - Public Projects Only - If the General contractor dispute validity of stop notice, summary proceeding may be instituted with the public entity Stop Notice Release Bonds

20. © 2006 Gibbs, Giden, Locher & Turner LLP Step 1 1.General contractor serves affidavit on public entity: grounds alleging deficiency of stop notice. Summary Proceeding 2. Demand to release money

21. © 2006 Gibbs, Giden, Locher & Turner LLP Step 2 Public entity serves copy of affidavit on claimant along with a notice that public entity will release funds unless Claimant files with public entity counter affidavit, not less than 10 or more than 20 days after service of affidavit on claimant Summary Proceeding

22. © 2006 Gibbs, Giden, Locher & Turner LLP Step 3 Claimant files/serves counter affidavit within specified time: rebuts allegation of general contractor 1.Claimant serves counter affidavit on contractor: proof of service to agency 2.If claimant fails, public agency can release funds to general contractor Summary Proceeding

23. © 2006 Gibbs, Giden, Locher & Turner LLP Step 4 If claimant files the counter affidavit, the claimant or general contractor may file an action in superior court for a declaration of the rights of the parties. 1.A hearing must be granted within 15 days Summary Proceeding

24. © 2006 Gibbs, Giden, Locher & Turner LLP Step 5 1.Public entity notified of hearing not less than 5 days prior, by moving party 2.Affidavit/counter affidavit filed with court by public entity 3.Burden of proof on general contractor 4.Court may order additional evidence Summary Proceeding

25. © 2006 Gibbs, Giden, Locher & Turner LLP Step 6 1.When hearing concluded court enters order whether money held is to be released or not 2.General contractor must serve order on public entity Summary Proceeding

26. © 2006 Gibbs, Giden, Locher & Turner LLP California Public Works Remedies Payment Bond - Who can make a claim? a)Subcontractors of any tier b)Their suppliers

27. © 2006 Gibbs, Giden, Locher & Turner LLP Procedural Requirements For Making a Payment Bond Claim a)20 Day Notice: Any claimant who has no direct contractual relationship with original contractor must give a 20-Day preliminary notice - Need not go to the surety

28. © 2006 Gibbs, Giden, Locher & Turner LLP Procedural Requirements For Making a Payment Bond Claim b)15/75 day notice: If a claimant fails to give a preliminary 20 day notice, it may still give a 15/75 day preliminary bond notice no later than 15 days after recordation of notice of completion or, if no notice of completion, within 75 days after completion of work 15 Days Actual Completion Last chance to protect payment bond rights if no 20 day notice!

29. © 2006 Gibbs, Giden, Locher & Turner LLP 15/75 Day Notice Must Be Served By: 1)Registered mail 2)Certified Mail 3)Personal delivery

30. © 2006 Gibbs, Giden, Locher & Turner LLP Preliminary 20-day notice Was the preliminary notice served correctly? Stop Notice Was the notice served timely? Payment Bond Did claimant serve 20-day preliminary timely? Did claimant serve 15/75 day notice timely? Analyzing Applicable Service Dates in California

31. © 2006 Gibbs, Giden, Locher & Turner LLP Miller Act Claims – Federal Projects No lien or stop notice rights on federal projects No lien or stop notice rights on federal projects Miller Act requires payment bond for contracts over $100,000 Miller Act requires payment bond for contracts over $100,000 Who can enforce claim under bond? Who can enforce claim under bond? –Prime contractor (1 st tier) –Subcontractor (2 nd tier) –Sub-subcontractor or material supplier (3 rd tier)

32. © 2006 Gibbs, Giden, Locher & Turner LLP Miller Act Claims – Federal Projects Procedural requirements Procedural requirements 1.90-day notice required for claimants not having direct contract with prime contractor a.Served upon prime contractor by any means providing written third-party verification of delivery b.Within 90 days after claimant last furnished labor or material to the project 2.Suit must be filed in federal court (where project located) within 1 year after last furnishing of labor or materials by claimant

33. © 2006 Gibbs, Giden, Locher & Turner LLP Miller Act Claims – Federal Projects Substantive requirements Substantive requirements 1.Materials were supplied for the work identified in the contract 2.Supplier is not paid 3.Supplier had a “good faith belief” that materials were to be used on the project