Justia California Court of Appeals Opinion Summaries

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

In 2004, Berkeley issued a use permit for construction of a building with 51 residential rental units and ground floor commercial space. Permit condition 10 provides: “Before submission for building permit, the applicant shall submit floor plans and schedules … showing the location of each inclusionary unit and the sales or rental prices…. and that the unit rent or sales price complies with Chapter 23C.12” (Inclusionary Housing Ordinance). The Ordinance was designed to comply with Government Code section 65580, requiring a general plan to contain a housing element stating how the local agency will accommodate its share of regional need for affordable housing. The ordinance requires that 20 percent of all newly constructed residential units be reserved for households with below-median incomes and rented at below-market prices. The development took more than seven years. The city sought a declaration that the condition was valid, conceding that the ordinance has been preempted by the Costa-Hawkins Rental Housing Act (Civ. Code, 1954.50), but arguing that it may enforce the condition, the validity of which was not previously challenged. The court of appeal affirmed judgment in favor of the city. View "City of Berkeley v. 1080 Delaware, LLC" on Justia Law

Lydig Construction was the general contractor on a large public works project. Martinez Steel was the original steel supply subcontractor on the project. Lydig sued Martinez for additional costs Lydig incurred because Martinez failed to timely supply steel for the project; Lydig, with the public agency's approval, had been required to replace Martinez as the steel supplier. Lydig moved for a right to attach order and a writ of attachment and presented the trial court with its business records and declarations from its employees. Martinez opposed Lydig's motion and presented declarations from one of its employees that set forth its contention Lydig owed it for, among other items, steel Martinez had delivered to the project. Martinez filed a cross-complaint in which it alleged claims that, if successful, would entirely offset Lydig's claims against it. The trial court granted Lydig's motion and issued writs of attachment in the amount of $203,315. The court of appeal affirmed, rejecting Martinez's contentions that its cross-complaint, as a matter of law, prevented the trial court from issuing a writ of attachment against it and that Lydig's application for a writ of attachment was not supported by substantial evidence. View "Lydig Constr., Inc. v. Martinez Steel Corp." on Justia Law

Belasco bought a new Manhattan Beach residence in 2004 from the builder (Wells). In 2006, Belasco filed a complaint with the Contractors State License Board, alleging construction defects. Belasco and Wells settled the dispute in 2006, with Wells paying $25,000 and Belasco executing a release and a Civil Code 15241 waiver of all known or unknown claims. In 2012, Belasco sued, based on an alleged roof defect discovered in 2011. The trial court entered summary judgment, finding the action barred by the settlement. The court of appeal affirmed, rejecting arguments that: the 2006 general release and waiver for patent construction defects is not a “reasonable release” of a subsequent claim for latent defects under section 929 and the Right to Repair Act (section 895); a reasonable release can only apply to a “particular violation” and not to a latent defect under section 945.5(f), and the 2006 settlement was too vague to be a valid; section 932 authorizes an action on “[s]ubsequently discovered claims of unmet standards;” public policy prohibits use of a general release and section 1542 waiver to bar a subsequent claim for latent residential construction defects; and a genuine issue of fact existed concerning fraud and negligence claims that would void the settlement under section 1668. View "Belasco v. Wells" on Justia Law

FTR has constructed buildings for public entities for 15 years. In 1999, FTR submitted the winning bid of $7.345 million to construct a District school. During construction, FTR submitted approximately 150 proposed change orders (PCO). FTR claimed some were necessary because the District’s plans were inadequate or misleading. The District denied most of the PCOs on the grounds that the work was covered under the basic contract, the amounts claimed were excessive, or that a PCO was not timely under the contract. Construction was completed in 2001. Public Contract Code 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 court of appeal held that the trial court properly assessed penalties against District because it did not timely release retained funds; properly rejected the District's action under the False Claims Act, Government Code 12650; and properly assessed prejudgment interest. The court erred in its interpretation of a contract provision imposing time limitations to submit 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 "FTR Int'l, Inc. v. Rio Sch. Dist." on Justia Law

Plaintiff purchased a home from Laux. Almost two years later, she sued the homebuilder, Shapell for strict liability, negligence, and fraudulent concealment, claiming Shapell built the home on unstable and uncompacted “fill” soil and with an inadequate foundation, causing “substantial differential movement” and numerous defects such as cracked floors, walls, and ceilings. The court granted Shappel summary judgment as to fraudulent concealment and later and entered judgment for Shapell on the other claims, concluding plaintiff lacked standing because her claims accrued when Laux owned the home and he did not assign the claims to plaintiff. The court of appeal reversed. Construing the facts in a light most favorable to plaintiff, there is a triable issue of material fact regarding whether Shapell fraudulently concealed information about the property’s soil conditions. Plaintiff was entitled to have a jury determine the disputed factual issues of when and to whom the causes of action accrued. View "Stofer v. Shapell Indus., Inc." on Justia Law

Bellingham Marine hired Major Engineering to construct a travel lift pier at the Channel Islands Harbor. Bellingham hired Moffatt, a civil engineering firm, to prepare the plans, which required that the concrete have a specific air entrainment and that the concrete, when cured, attain a specific compressive strength. Major's contract with Bellingham provided that if the concrete failed to meet the compression strength standard, that it would be removed and replaced at Major's expense. Major hired State, which submitted a concrete mix design. Moffatt, at the request of Major, reviewed and approved the design. It was not part of Moffatt's job duties. State delivered seven truck loads of wet pre-mixed concrete. After the concrete was cast, Major's testing lab took a sample that showed the concrete had inadequate compressive strength. Major demolished and rebuilt the affected portion of the pier. It sued; State filed a cross-complaint for implied equitable indemnity and contribution, alleging that Moffatt failed to use reasonable care in reviewing and approving the mix design. The court dismissed, finding that Moffatt was not in privity of contract with Major or State and that the cross-complaint was barred by the economic loss rule. The court of appeal affirmed. View "State Ready Mix Iv. Moffatt & Nichol" on Justia Law

The School District entered into a construction contract with Amoroso. Pursuant to Public Contract Code 22300, Amoroso elected to have the retention held in an escrow account in the form of securities. The escrow agreement stated that “District shall have the right to draw upon the securities and/or withdraw amounts from the Escrow Account in event of default by Contractor as determined solely by District.” The District gave written notice of material breach on March 30, 2011, based on Amoroso’s failure to complete, timely or at all, any of the three project phases and requested that Amoroso cure by April 4. Amoroso contested the assertions of material breach by letter dated April 1. The District sent notice of termination on April 18 and filed suit. On April 28, the parties entered into an “Exit and Demobilization Agreement,” “in lieu of any final termination or statement of default under the Contract.” The District sent a letter requesting withdrawal of $3.5 million from the escrow account, attaching its attorney’s memorandum as to why withdrawal was permissible. Amoroso unsuccessfully sought an injunction. The court of appeal affirmed, rejecting Amoroso’s claim that a public project owner must await judicial resolution of the underlying contract dispute before it can withdraw retention funds. View "Pittsburg Unified Sch. Dist. v. S.J. Amoroso Constr. Co., Inc." on Justia Law

The Ventura County Board planned a five-story ambulatory care clinic at the 40-acre Ventura County Medical Center. The 1993 Environmental Impact Report (EIR) stated that the building would be up to 75 feet high and included drawings that did not show building height. The Board filed a Notice of Determination (NOD) that mentioned nothing about height. Detailed plans showed the height to the roofline as 72 feet. Parapets rose to 88.5 feet. The county delayed until 2005 when Board decided to relocate the Clinic 200 feet north and 160 feet west, purportedly to reduce environmental impact and to more centrally locate the project around parking. The relocated building would be about 5 feet lower due to topography. The Board prepared an EIR "Addendum" and again filed a NOD that did not mention height. In 2007 the plans were modified to show a height of 90 feet, including parapets. In 2008, a neighbor saw an "auger rig" at the construction site and inquired. He was shocked to learn that the equipment was going to be used to construct a 90-foot high building and joined an organization that unsuccessfully sought an injunction. The court ordered preparation a supplemental EIR. Construction was completed in October 2010. The court of appeal affirmed. View "Ventura Foothill Neighbors v. Cnty. of Ventura" on Justia Law