Justia California Court of Appeals Opinion Summaries

The Army Corps of Engineers retained JMR as general contractor for construction of a dental clinic at the Presidio of Monterey. JMR entered into separate electrical and plumbing subcontracts with EAR. SureTec issued separate bonds guaranteeing EAR’s performance. While the project was ongoing, JMR communicated with EAR about alleged delays, deficient and late submittals, and improper work, and retained certain funds otherwise due EAR. After the project was completed, JMR sued EAR and SureTec for breach of contract and for foreclosure of the bonds. EAR filed a cross-complaint to recover retention funds withheld under the subcontracts. JMR was awarded $315,631, which included an offset for retention funds. The court held that JMR was entitled to attorney fees for its successful defense of the cross-complaint; awarded JMR $90,644.07 in expert witness fees, concluding that JMR’s recovery exceeded its $375,000 pretrial settlement offers. The court of appeal affirmed the judgment but reversed the award of expert fees. The court upheld utilization of the Eichleay method to calculate extended home office overhead damages; use of the modified total cost method of calculating JMR’s disruption and delay damages; and finding SureTec liable under the bonds because formal notice of default was not a condition precedent to recovery. View "JMR Constr. Corp. v. Envtl Assessment & Remediation Mgmt., Inc." on Justia Law

This case arose out of a payment dispute between Coast, a contractor, and United, Coast's subcontractor. On appeal, United challenged the trial court's finding in favor of Coast, arguing that the trial court erred in finding that Coast was not liable for extra payments, as well as for failing to assess penalties and attorney’s fees against Coast for its delay in forwarding the retention payments. The court held that, pursuant to Civil Code section 8814, subdivision (c), a contractor is entitled to withhold a retention payment only when there is a good faith dispute regarding whether the subcontractor is entitled to the full amount of the retention payment. Accordingly, the court reversed the judgment of the trial court as to this issue. On remand, the trial court is directed, pursuant to section 8818, to award United penalties. Consequently, the court reversed the award of attorney fees as to the retention payments and remanded the issue. The court need not reach the merits of the breach of contract claims because United has failed to show that the trial court erred in its determination that United failed to prove damages. Accordingly, the court affirmed in part, reversed in part, and remanded. View "United Riggers & Erectors v. Coast Iron & Steel" on Justia Law

The California Department of Transportation (CalTrans) and Papich Construction Company, Inc. appealed a trial court’s issuance of a writ of mandate to vacate the award of a public works contract to Papich. DeSilva Gates Construction submitted the second-lowest bid (the first bidder was disqualified for a non-responsive bid), and included the names and description of work by all subcontractors slated to perform work exceeding one-half of one percent of the bid amount. DeSilva later sent a letter to CalTrans noting DeSilva had inadvertently supplied CalTrans with additional information on the subcontractor list "above and beyond what was required." DeSilva explained it had not listed "All Steel Fence" as a subcontractor in its bid because the value of the bid items it would perform was less than one-half of one percent of the bid and the information for All Steel Fence (submitted within 24 hours of the bid) was additional information that was not required. Papich challenged DeSilva’s bid as having changed the subcontractor list. CalTrans rejected DeSilva’s bid as nonresponsive. DeSilva protested CalTrans’s determination that its bid was nonresponsive and protested Papich’s bid. The trial court granted the writ on grounds CalTrans erroneously rejected DeSilva's bid, and erred by awarding the contract to Papich despite Papich’s failure to comply with a material requirement of the information for bids. On appeal, CalTrans and Papich argued DeSilva’s bid was nonresponsive. Appellants also argued CalTrans had discretion to waive Papich’s mistake in failing to acknowledge the addendum to the information for bids. After review, the Court of Appeal concluded the trial court did not err. DeSilva’s disclosure of a subcontractor performing work amounting to only one-tenth of one percent of the total value of the contract was not required by the Public Contract Code or CalTrans’s information for bids. The additional information was accurate, albeit unnecessary, and did not render DeSilva’s bid nonresponsive. By contrast, CalTrans initially declared Papich’s bid to be nonresponsive and then waived Papich’s mistake and determined the bid to be responsive. The Court concluded CalTrans abused its discretion by awarding Papich the contract. Accordingly, the Court affirmed the trial court’s issuance of the writ of mandate. View "DeSilva Gates Construction, LP v. Dept. of Transportation" on Justia Law

HKS a Texas architecture firm, provided services for a luxury hotel in Mammoth Lakes under an Agreement that contained a Texas forum selection clause, requiring mediation, and a Texas choice of law provision.The Agreement authorized HKS to hire “[c]onsultants.” Vita, a California landscape design firm, submitted to HKS a Contract incorporating the terms of the Agreement. Neither Vita or HKS signed the Contract, but Vita performed work in 2008, during the “design phase” and sent invoices to HKS. Owner began having financial problems before construction commenced, leaving HKS with unpaid bills for its own services and those provided by “consultants.” HKS obtained a judgment against Owner in 2010 in Texas for $1,617,073.70 but was unable to recover anything. In 2013, Vita sued HKS, alleging breach of contract; unjust enrichment; quantum meruit; and breach of the implied covenant of good faith and fair dealing, seeking $370,650.53. After answering the complaint, HKS moved to enforce the forum selection clause and dismiss. The court of appeal reversed dismissal. HKS established the existence of a contract between HKS and Vita containing a forum selection clause, but Code of Civil Procedure 410.42 prohibits enforcement of construction contract provisions requiring disputes between contractors and California subcontractors to be litigated outside California. View "Vita Planning & Landscape Architecture, Inc. v. HKS Architects, Inc." on Justia Law

The trial court found that a general contractor, Jeff Tracy, Inc., doing business as Land Forms Construction, did not have a valid license while performing work on a project for City of Pico Rivera. Therefore, the court ordered Land Forms to disgorge all compensation paid to it by the City. Land Forms appealed, contending that the trial court improperly denied it a jury trial. The court concluded that Land Forms was entitled to a jury trial on these issues, and therefore reversed the judgment. However, the court found that Land Forms is not entitled to any apportionment where Business and Professions Code section 7031, subdivision (b) does not allow apportionment as a matter of law. Accordingly, the court reversed the trial court's judgment. View "Jeff Tracy, Inc. v. City of Pico Rivera" on Justia Law

West Bay Builders, Inc. and Safeco Insurance Company of America (Safeco) appealed the trial court’s denial of their motion for attorney fees under Business and Professions Code section 7108.5 and Public Contract Code sections 7107 and 10262.5 (prompt payment statutes). West Bay and Safeco were sued by James L. Harris Painting & Decorating, Inc. for breach of contract and violation of the prompt payment statutes. In turn, West Bay filed a cross-complaint against Harris for breach of contract arising out of the same construction project. After years of litigation, the jury found both West Bay and Harris had failed to perform and thus did not award damages to either side. Safeco also did not recover because it was sued only in its capacity as issuer of a bond to West Bay for the construction project. Although West Bay and Safeco did not recover any damages, they moved for attorney fees under the fee shifting provisions of the prompt payment statutes. The trial court denied their motion, finding there was no prevailing party in this case. On appeal, West Bay and Safeco argued the trial court lacked discretion to refuse an award of mandatory attorney fees under the prompt payment statutes because they prevailed at trial. After review, the Court of Appeal disagreed, finding that under the prompt payment statutes, the trial court has discretion to determine there is no prevailing party in an action. And in this case, the trial court did not abuse its discretion in concluding there was no prevailing party. View "James L Harris Painting v. West Bay" on Justia Law

Real parties filed an action against the builders of their homes for recovery of damages allegedly resulting from defects in the construction of the homes. Petitioners moved to stay the litigation until real parties complied with the statutory nonadversarial prelitigation procedures of the “Right to Repair Act”, Cal. Civil Code 895 et seq., which applies to construction defect litigation involving certain residential construction. After the trial court denied the stay, petitioner sought a writ of mandate compelling the trial court to vacate its order denying the motion and enter a new order granting the stay as requested. The court concluded that, in light of petitioner's showing that at least one court in this district reached the opposite result in a situation similar to that before the trial court here, and the presentations of amici curiae indicating the issues are of widespread interest in the building industry, the case is not moot. The court also concluded that petitioner is entitled to a stay of the action because real parties did not comply with the requirements of Chapter 4 and accommodate petitioner’s absolute right to attempt repairs. Accordingly, the court granted the writ. View "McMillin Albany LLC v. Super. Ct." on Justia Law

The Judicial Council of California, (JCC) entered into a contract with Jacobs Facilities, a wholly owned subsidiary of Jacobs. Performance of the contract required a license under the Contractors’ State License Law. Facilities was properly licensed when it commenced work. Later, Jacobs, as part of a corporate reorganization, transferred the employees responsible for the JCC contract to another subsidiary and caused the new subsidiary to obtain a contractor’s license, while permitting the Facilities license to expire. Facilities remained the signatory on the JCC contract until a year later, when the parties entered into an assignment to the new, licensed subsidiary. JCC sued under Bus. & Prof. Code 7031(b), which requires an unlicensed contractor to disgorge its compensation. Defendants contended that Facilities had “internally” assigned the contract to the new subsidiary prior to expiration of its license; JCC ratified the internal assignment when it consented to the assignment to the new subsidiary; and Facilities had “substantially complied” with the law. After the jury found for defendants on the other defenses, the substantial compliance issue was not decidedd. The court of appeal reversed, concluding Facilities violated the statute when it continued to act as the contracting party after its license expired, and remanded for a hearing on substantial compliance. View "Judicial Council of Cal. v. Jacobs Facilities, Inc." on Justia Law

A homeowner sued a general contractor for allegedly shoddy and incomplete work in connection with a major home remodeling contract. The homeowner’s complaint also contained a cause of action against the general contractor’s license bond company, seeking to recover for the contractor’s having “grossly deviated” from the plans and specifications for the job. To support his action, the homeowner explicitly alleged in the complaint that the contractor was licensed at all times. The contractor cross-complained against the homeowner for unpaid work. The cross-complaint included a copy of their written contract which showed the contractor’s license number. To that, the homeowner simply filed a general denial of all allegations. When the case came to trial, the homeowner (contrary to the applicable local rule requiring plaintiffs to identify all controverted issues) did not identify licensure as a controverted issue. The contractor’s attorney did not obtain a verified certificate from the Contractors’ State License Board showing the contractor was licensed at all times during his performance. But when the contractor was about to rest his case on the cross-complaint, the homeowner’s attorney made a motion for nonsuit based on the absence of such a verified certificate as required under Business and Professions Code section 7031, subdivision (d). The trial judge deferred immediate ruling on the homeowner’s nonsuit motion. "As the contractor learned to his chagrin, it [...] takes at least six days to obtain a verified certificate from the License Board even if one drives overnight to Sacramento to pick it up in person." While the contractor was eventually able to obtain a verified certificate of licensure from the License Board, he could not do so until after the close of the trial, in which he prevailed on his claim for unpaid work from the homeowner. Because no certificate of licensure could be produced, the trial judge reluctantly granted the homeowner’s nonsuit motion, by judgment notwithstanding the verdict (JNOV). This appeal followed. After review, the Court of Appeal reversed that judgment in favor of the homeowner, with instructions to the trial judge to grant judgment in favor of the general contractor as against the homeowner. "We conclude this is one of those relatively rare cases where a party can be bound by a judicial admission made in an unverified complaint. Here, the judicial admission that the general contractor was licensed, compounded by the homeowner’s failure to comply with the local rule requiring identification of all controverted issues, rendered the question of licensure assuredly uncontroverted for purposes of section 7031. Because of the judicial admission, the rule of 'Advantec Group, Inc. v. Edwin’s Plumbing Co., Inc.' (153 Cal.App.4th 621 (2007)) does not apply." View "Womack v. Lovell" on Justia Law

Plaintiff filed suit challenging a noncompetitive bid contract between Fresno Unified and Contractor for the construction of a middle school, alleging that the project should have been competitively bid because the lease-leaseback arrangement did not create a true leaseback or satisfy the criteria for the exception in section 17406 of the Education Code. The trial court sustained demurrers filed by Fresno Unified and Contractor. The court concluded that the competitive bidding process required by section 17417 is subject to the exception contained in section 17406 and plaintiff adequately alleged three grounds for why section 17406’s exception did not apply to the lease-leaseback arrangement. The court also concluded that Government Code section 1090’s prohibition of such conflicts extends to corporate consultants. Plaintiff has stated a violation of Government Code section 1090 by alleging facts showing Contractor, as a consultant to Fresno Unified, participated in the making of a contract in which Contractor subsequently became financially interested. Accordingly, the court reversed the judgment. View "Davis v. Fresno Unified Sch. Dist." on Justia Law