Justia California Court of Appeals Opinion Summaries

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

The Department of Industrial Relations determined that plaintiff Vector Resources, Inc. failed to pay the appropriate prevailing wages to its workers on a public works project for the San Diego Unified School District. The Department's director's decision was based on regulatory language in a document entitled "Important Notice To Awarding Bodies And Other Interested Parties Regarding Shift Differential Pay In The Director's General Prevailing Wage Determinations," which was posted on the Department's Web site. The Important Notice addresses shift differential pay for various crafts used on public works projects, and was augmented by additional regulatory language in a "Note" that the Department placed on the cover page of prevailing wage shift provisions ("the Stamp"). Vector filed a declaratory relief action against the Department, seeking a declaration that the Important Notice and Stamp were invalid and unenforceable as "underground regulations" because they were not promulgated in compliance with the notice and hearing requirements of the Administrative Procedure Act (APA). Vector and the Department filed cross-motions for summary judgment. The trial court granted the Department's motion on the ground that under Government Code section 11340.9, subdivision (g), the Important Notice and the Stamp were exempt from the notice and hearing requirements of the APA because they were part of an overall prevailing wage determination process that constituted "rate setting." Vector argued on appeal that the grant of summary judgment to the Department was made in error because: (1) the Department admitted that the shift premium rule is a regulation; (2) the Department admitted that that regulation was not adopted in compliance with the APA; (3) the Department failed to prove that the shift premium regulation establishes or fixes rates within the meaning of Government Code section 11340.9, subdivision (g); (4) the court erred in failing to specifically cite the evidence it relied on to grant summary judgment; (5) the court's written order ignored the law and the admissible evidence; and (6) the Department's motion relied upon inadmissible evidence. Finding no reversible error, the Court of Appeal affirmed. View "Vector Resources, Inc. v. Baker" on Justia Law

At issue in this case was an insurance coverage dispute arising from underlying construction defect litigation in which Corona homeowners sued the developer, plaintiff-appellant Centex Homes for work performed by Centex’s subcontractors. One of the subcontractors, Oak Leaf Landscape, Inc., was insured by defendants-respondents, St. Paul Fire & Marine Insurance Company and St. Paul Mercury Insurance Company (Travelers). Centex was named as an additional insured on the Travelers’s policy. Centex appealed an order and judgment sustaining without leave to amend defendants’ demurrer to the seventh and eighth causes of action of the original complaint filed by Centex. The seventh and eight causes of action for declaratory relief centered on coverage and Centex’s right to independent counsel pursuant to Civil Code section 2860. Upon review of the dispute, the Court of Appeal agreed with the trial court’s ruling that the claims were neither “ripe” nor “actual”, and affirmed the judgment. View "Centex Homes v. St. Paul Fire & Marine Ins. Co." on Justia Law

Pacific appealed the Board's suspension of its license as the sanction for failing to notify the Board that a judgment had been entered against Pacific. Jerry McDaniel and his wife Delma own two corporations, Pacific and Gold Coast Drilling, Inc. The trial court found that Pacific did not substantially comply with the requirement that the contractor be licensed while performing work. Pacific argued that the judgment was not “substantially related” to its “construction activities” within the meaning of Bus. & Prof. Code 7071.17, and so Pacific’s license should not have been suspended. The court concluded that Gold Coast was obligated to notify the Board of the unsatisfied stipulated judgment where the stipulated judgment falls within the ambit of section 7071.17 and the stipulated judgment was unsatisfied; the evidence supports the trial court’s finding that Gold Coast did not “act[] reasonably and in good faith” to maintain its license; and, therefore, the court affirmed the judgment of the trial court. View "Pacific Caisson & Shoring v. Bernards Bros." on Justia Law

Shortly before the collapse of the housing market, the Gavras, Agam, and Cohen formed a partnership to purchase, subdivide, and build two or three houses for resale in Los Altos Hills. They purchased and subdivided the property into three lots, but financial issues and personality conflicts derailed their plans. Between 2009 and 2011, they sold the vacant lots, losing close to $1.3 million on the project. In 2009, Agam and Cohen sued the Gavras for breach of the Partnership Agreement and breach of their fiduciary duties to the partnership. The Gavras filed a cross-complaint alleging breach of contract. Cohen reached a settlement with the Gavras and the cross-actions between Agam and the Gavras proceeded to trial. The court rejected the Gavras’ breach of contract claim and concluded they had breached both the Partnership Agreement and their fiduciary duties. The court awarded Agam more than $700,000 in reliance damages on the breach of contract claim, no damages on the breach of fiduciary duty claim, and about $245,000 in attorney fees. The court of appeal affirmed, rejecting the Gavras’ argument the trial court misallocated the burden of proof on Agam’s breach of contract claim and challenge to the sufficiency of the evidence. View "Agam v. Gavra" on Justia Law

After Rio School District’s new school was completed, the District and its general contractor (FTR) engaged in a decade-long legal battle, resulting in a judgment for FTR exceeding $9 million. Public Contract Code section 7107 allows a public entity to withhold funds due a contractor when there are liens on the property or a good faith dispute concerning whether the work was properly performed. The trial court assessed penalties against District because it did not timely release the retained funds. The court of appeal affirmed in part. A dispute over the contract price does not entitle a public entity to withhold funds due a contractor; the doctrine of unclean hands does not apply to section 7107; the trial court properly rejected the District's action under the False Claims Act, Government Code section 12650 and properly assessed prejudgment interest, subject to adjustment for any extra work claims found untimely on remand. The trial court erred in its interpretation of a contract provision imposing time limitations to submit the contractor's claims for extra work as requiring a showing of prejudice and erred in awarding fees for work not solely related to FTR's section 7107 cause of action. View "East West Bank v. Rio School Dist." on Justia Law