Court of Appeal holds indemnity allowed for arbitration awards under Lab. Code § 1781: Nabors Corporate Services, Inc. v. City of Long Beach

In Nabors Corporate Services, Inc. v. City of Long Beach,           Cal.App.5th           (Feb. 4, 2025), the Court of Appeal (Second Appellate District, Division Five) held that subcontractors may seek indemnity under Lab. Code § 1781 for arbitration awards in prevailing wage disputes. The court also held that the Legislature did not intend for Lab. Code § 1784 to apply retroactively.

Read more

Plaintiff entered a subcontract with Defendants, but Defendants failed to inform Plaintiff that the subcontracted work was public work subject to prevailing wage laws. Plaintiff’s employees subsequently prevailed in wage arbitrations against Plaintiff. Plaintiff then sued Defendants for indemnity under Lab. Code §§ 1784 and 1781. The trial court sustained Defendants’ demurrer to the § 1784 cause of action without leave to amend, finding that the statute did not apply retroactively. It sustained the demurrer to the the § 1781 cause of action with leave to amend. Plaintiff filed a first amended complaint, but the trial court sustained Defendants’ subsequent demurrer, concluding that § 1781 does not permit losses related to arbitration awards and settlements. Plaintiff appealed.

On appeal, the Court of Appeal affirmed the dismissal of the § 1784 claim but reversed dismissal of the § 1781 claim. Plaintiff argued the trial court erred in interpreting § 1781 to exclude arbitration awards. The Court of Appeal agreed, holding per NTCH-WA, Inc. v. ZTE Corp. (9th Cir. 2019) 921 F.3d 1175 that a judgment confirming an arbitration award has the same force and effect as a court judgment. However, the court rejected Plaintiff’s argument for retroactive application of § 1784, which was enacted after the conduct underlying Plaintiff’s claims. The court reasoned that § 1784 created new rights, not merely clarified existing ones, and that legislative history did not indicate an intent for retroactive application.

Full opinion

Scroll to Top