California's Favorite Color is Green!

20% reduction in indoor water usage! Reusing or recycling construction debris! Mandatory bicycle changing facilities! "Smart" irrigation systems! California is already a green state and we are getting greener! As of January 2011, new buildings within the state will be required to comply with the applicable provisions of California's new Green Building Code - or "CALGreen". CALGreen is a new section within the state's current Building Code and applies to all new residential, commercial, hospital and school buildings. This kind of "green" building code is the first of its kind in the nation. In 2006, the Governor signed Assembly Bill 32 which required the state to reduce its greenhouse gas emissions to 1990 levels by 2020 - and the CALGreen Code is another way for the state to meet AB 32's "green" goals. CALGreen's mandatory provisions set the "floor" for buildings to go green but also provide two tiers of additional voluntary suggestions if you want your buildings to be extra green. Meeting CALGreen's minimum mandatory provisions will result in your building being labeled as CALGreen certified - and the only cost to be certified is obtaining the certificate of occupancy! Check out the current draft of CALGreen and tell us your thoughts...

By Karina Terakura

The Search Continues for an Arbitration Agreement that a Court Can Love

A court has invalidated another arbitration clause contained in a condo project’s CC&Rs and purchase agreements, as an “unconscionable” violation of the right to a jury trial and as an agreement that was never actually agreed upon. In that case, Pinnacle Museum Tower Association v. Pinnacle Market Development (UC) LLC, the court found that the project’s CC&Rs did not constitute an agreement with the owner’s association to waive a jury trial, and would not enforce the arbitration clause in the condo purchase agreements because they were “unconscionable.” The court suggested that the arbitration clause would be enforceable if approved by the owner’s association after control had passed from the developer to the homeowners.

Since the California Supreme Court ruled in 2005 in the Grafton Partners case that the right to a jury trial was “inviolate,” “fundamental,” and “sacred” under the California Constitution, it has been difficult to get a court’s approval of an arbitration agreement which is signed before a dispute has arisen. The Legislature, on the other hand, has been going the opposite way in construction defects disputes by requiring the elaborate SB 800 dispute resolution procedure before those cases may go to court.

While this may seem to be merely a technical issue of interest only to lawyers, it is actually a big dollar issue in the construction industry. Builders tend to prefer to resolve construction defect claims in the businesslike atmosphere of arbitration rather than the more unpredictable environment of a jury trial. That is why mandatory arbitration clauses are commonly found in purchase agreements and CC&Rs for new homes. Consumer attorneys generally dislike these arbitration requirements, preferring to try their construction defect cases before juries which are more open to emotional appeals and large damage awards.

In the meantime, the construction industry will continue its efforts to find a pre-litigation arbitration agreement that the courts can embrace.

By Jon Goetz