LAW OFFICES OF DAVID L. BRAULT

Think you do not have to give a 20 day preliminary notice if you have a direct contract with owner? Think again.

The California Court of appeal just ruled that unless you are the general contractor, you have to properly serve a 20 day preliminary notice on the construction lender even if you have a direct contract with the owner. (See Shady Tree Farms v. Omni Financial (2012 DJDAR 6614)). Shady Tree's failure to serve the 20 day preliminary notice invalidated its lien against the construction lender. Shady Tree's $2,000,000.00 claim was wiped out when the construction lender foreclosed on a project. The moral of this story is WHEN IT DOUBT GIVE EVERYONE A 20 DAY PRELIMINARY NOTICE. IT IS INEXPENSIVE INSURANCE.

You might be surprised what your insurance policy covers.

A clothing manufacturer sued a retail ladies clothing store claiming the retail store did not provide the support if agreed to provide in marketing a high end brand of women's clothes. The manufacturer claimed the retailer threatened and began a fire sale of the high end clothes at close out prices. The retailer tendered the claim to its carrier, Travelers, for defense and indemnity under a commercial general liability policy. Travelers then sued the retailer, asking a court to determine that Travelers had no duty to either defend or indemnify the retailer under the CGL policy.

The court began by reviewing the insurance policy. The Traveler's policy covered claims for the publication of material that slanders or libels a person or organization or disparages a person's or organization৯ods, products or services. The court then looked at the manufacturer's complaint. The complaint contended selling the clothes at severely discounted prices would cause significant and irreparable harm to and diminish the value of the brand. In turn this would harm "the marketability and salability of the brand." Travelers contended the complaint did not allege the seller disparaged or slandered the brand. Therefore, Travelers did not believe it had to defend the lawsuit. The court disagreed. It stated it was enough that the complaint by inference claimed the seller disparaged or slandered the brand. Based upon this, the court held Travelers had to defend the lawsuit.

The court did not determine if Travelers had to pay for any losses the retailer might owe the manufacturer. However, as a particular matter, once a carrier has to defend an action, it wants to settle the lawsuit if it can to avoid paying legal fees.

Travelers v. Charlotte Russe 2012 DJDAR 9673.