Because losses impacting the critical


path tend to be immediately associated with project delays, contractors naturally tend to focus on the delay in completion endorsement when putting claims to- gether. However, the delay in completion endorsement is an owner-only coverage, meaning that the contractor will only recover such costs through the owner, who must, in turn, submit the costs as part of its own claim. Tis must happen despite an owner-contractor relationship that is often rapidly deteriorating due to the same delays leading to the claim.


Untangling the Claim Submission When contractors submit additional general conditions such as delay-based loss, insurers seize the opportunity and take advantage of that characterization, quickly pointing out that the delay in completion endorsement is an owner-on- ly coverage. Te contractor is left to try to untangle its own claim submission, which is usually riddled with references to “delay in completion” and “delay costs,” and usually winds up either leaving the full general conditions claim on the table or accepting an unfavorable settlement. Reconceiving general conditions as a scope-based cost, comprising part of the core cost to repair or replace the damaged property, is one of the most impactful changes a general contractor can implement to increase its builder’s risk claims success. As a function of the policy’s main insuring agreement, these costs should be fully recoverable. Simply by framing general conditions


correctly from the outset, we have observed significantly greater claims success.


Will Bennett is a Partner with Saxe Doernberger & Vita, P.C. in its West Coast office. He can be reached at WBennett@sdvlaw.com.


CHANGING LEGAL LANDSCAPE


A Twist on the Government Code Claim Pre-Filing Requirement


BY JUSTIN A. GELZAYD, ESQ., SMTD LAW LLP


C


ontractors must be cautious when contemplating filing a claim against a public/government entity. The pre-filing presentation (California Government Code claim) requirement analyzed below mandates all


claims for monetary damages be first presented to the entity prior to initiating legal action. Otherwise, you may run the risk of getting your lawsuit dismissed before it even starts. There is at least one exception, however – a declaratory relief action. Te case of Stronghold Engineering v. City of Monterey1


involves the inter-


pretation of Government Code Section 810’s requirement that before filing a lawsuit asserting a claim for money or damages against a public entity, a claim must be presented to the entity. Stronghold filed its initial complaint for declaratory relief only (no claim for money or damages) seeking the interpretation of contract language within the construction contract and the change order at issue. Te trial court grant- ed summary judgment in favor of the City because it found that Stronghold violated the Government Code by not first presenting its claim for declaratory relief to the City. On appeal, the court of appeals held that the complaint was not a claim for money or damages, so the Government Code requirement did not apply, and reversed the summary judgment. “Government Code section 905 requires that ‘all claims for money or


damages against local public entities’ be presented to the responsible public entity before a lawsuit is filed.” Te claim presentation requirement does not


1 Unless stated otherwise, all citations and quotations are to Stronghold Engineering v. City of Monterey (2023) 96 Cal.App.5th 1203.


CALIFORNIA CONSTRUCTOR MAY/JUNE 2024


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