What a nice sized crowd we had for the May Meeting of the Sacramento Claims Association and there was NO RAIN to worry about! A beautiful spring day in our beautiful capitol city, Sacramento!

As always, we were greeted by our president, Don Sams who was as gracious as ever in bringing us up to date on the June Golf Tournament and other items of importance to the SCA. We are fortunate to have such a dynamic and caring leader.

Steve McDonald, our SUPER LAWYER was introduced by this writer and as he came up to take the microphone, his first comment was that he wished he had brought his super lawyer cape. Well, that certainly set the tone and as Steve began to make his presentation, it should have become abundantly clear to everyone that this is an attorney with a great sense of humor in addition to a critical topic to discuss. Steve McDonald is a partner in the law firm of de la Pena & McDonald and had agreed to travel from the Bay Area to make this timely presentation. If you happened to be a CD adjuster attending the luncheon, you were paying very close attention to this SUPER LAWYER.

Steve very kindly had prepared a thoroughly interesting paper version of his presentation which he entitled INDEMNIFY THIS! That allowed all of us in the audience the chance to follow along as he discussed risk allocation and management after Crawford, AB 2738. Steve took us through the history of different negligence theories; starting with contributory negligence which can also be referred to as the phone book defense. As tort revolution occurred over the years, comparative negligence (comparative fault) became the prevailing negligence theory and this allowed for multiple defendants in CD litigation. As Steve asked, “How do you analyze all of this?” The answer became something like, “well, it depended on the weather.” Steve went on to explain that analyzing the verbiage in the contracts is extremely important. Does the contract refer to the indemnitee’s negligence or is it silent? Is the negligence passive or active? Steve also went on to explain that it is imperative to look at the intention of the contract stating that a simplified and straightforward contract is best but not always what is reality. In Steve’s discussion, it was clear that his sympathies certainly rested with the subcontractor’s. The subcontractors simply seemed to be getting “railroaded” in the myriad and massive numbers of litigated construction defect cases. Subcontractors were being named no matter how remote their involvement may have been in any given construction project. Furthermore, subcontractors could be found liable irrespective of fault! Indemnification issues ran amuck in this litigation.

AB 2738 was signed into law effective January 1, 2009. The objective of this legislation was to make each party liable to the respective degree to which it is found to be at fault. Contracts (or revisions) to contract becoming effective after January 1, 2009 may not contain provisions purporting to require a subcontractor to indemnify for CD claims (on residential projects) if the claims arise out of the negligence of the indemnities; builders, developers, General Contractors. The burden has been shifted back to the General Contractors. Nonetheless, Steve highly recommends that any defendants evaluate the cost of the risk as early as possible; avoid being towed along as the litigation progresses. One suggestion is to use the 998 offer more aggressively.

At the end of Steve’s remarks, we were treated to more of his great sense of humor. Does everyone remember Steve’s “Jerry Lewis” act of walking into the podium? Only to be followed by his final comment to me, “Make sure you say that I make a great paper airplane!” And that should explain the title choice made at the beginning of this article!

The Sacramento Claims Association enjoyed having Steve McDonald, SUPER LAWYER as our speaker last month.