Largo Concrete, Inc. v. SBI Builders

Case Name: Largo Concrete, Inc. v. SBI Builders
Case No.: 2014-1-CV-271082

After full consideration of the evidence, the separate statements submitted by the parties, and the authorities submitted by each party, the court makes the following rulings:

San Jose 3rd Street Associates was the owner of property on which a construction project (“project”) was constructed, and executed a contract with Pacific West Builders, Inc. dba Idaho Pacific West Builders, Inc. (“Pacific West”) to perform certain work. (See evidence cited by Pl.’s separate statement in opposition, undisputed material facts nos. (“UMFs”) 2-3.) Pacific West entered into a subcontract with defendant SBI Builders, Inc. (“SBI”) with a subcontract price of $2,168,216.00 related to work performed by SBI at the project pursuant to the Pacific West/SBI subcontract. On July 15, 2013, defendant Travelers Casualty and Surety Company of America (“Travelers”) issued a payment and performance bond, under which SBI was designated as the contractor as principal, and the bond related to the Pacific West/SBI subcontract. (See evidence cited by UMFs 5-6).)

According to the allegations of the first amended complaint (“FAC”), plaintiff Largo Concrete, Inc. (“Plaintiff”) entered into a Subcontract Agreement dated October 7, 2013 with defendant SBI, under the terms of which Plaintiff agreed to provide labor, services, equipment and materials at the construction project, including certain concrete podium work. (See FAC, ¶¶ 9-10, exh. A; see also evidence cited by UMF 7.) Plaintiff performed pursuant to the agreement; however, SBI did not pay for the labor, services, equipment, materials on work of improvements on the property under the agreement, in an amount of at least $471,343.68. (See FAC, ¶¶ 11-13, 25.) On July 29, 2014, Plaintiff timely recorded a mechanic’s lien, setting forth the amount due Plaintiff for the labor, services, equipment and/or materials it provided on the work of improvements on the property, listing Plaintiff as the subcontractor, SBI as the party to whom work was provided with a demand of $471.343.68, Pacific West as the owner, SBI as the direct contractor and California Bank and Trust as the construction lender. (See FAC, ¶ 26, exh. B.) On September 26, 2014, SBI recorded a mechanic’s lien on the property claiming that San Jose 3rd Street Associates owed $674,759.53 for work performed on the site, and that that amount included the amount SBI owed Plaintiff for work and materials supplied to the project. (See evidence cited by Pl.’s separate statement in opposition, undisputed material facts nos. (“UMFs”) 19-20.) On November 13, 2014, defendant Hartford Fire Insurance Company (“Hartford”) issued a mechanic’s lien release bond pursuant to Civil Code section 8424, with the principal as Pacific West, and conditioned for the payment in full of the claims of Plaintiff. (See FAC, ¶¶ 27-29, exh. C.) On November 19, 2014, Plaintiff filed its FAC, asserting causes of action for:

1) Breach of contract (against SBI);
2) Reasonable value (against SBI);
3) Recovery on payment (against SBI and Travelers Casualty and Surety Company of America); and,
4) Enforcement against Mechanic’s Lien Release Bond (against SBI and Hartford).

On January 26, 2015, Hartford issued a bond for release of the mechanic’s lien related to SBI’s mechanic’s lien recorded against the property, and the lien release bond was recorded on February 17, 2015. (See evidence cited by UMF 21.) SBI and Plaintiff entered into a Settlement Agreement and Mutual Release related to this litigation dated March 16, 2015, signed on April 16 and 17, 2015, and pursuant to this agreement, SBI agreed to pay Plaintiff the total amount of $560,816 pursuant to an installment payment schedule set forth in the agreement. (See evidence cited by UMFs 22-23.)

The total amount due Plaintiff from SBI under the agreement included Plaintiff’s legal fees and interest, and pursuant to the settlement agreement, upon receipt of the final settlement payment, Plaintiff was required to deliver to SBI an executed, unconditional waiver and release upon final payment for the Project and releases of any and all rights against SBI’s Payment Bond that Plaintiff had pertaining to the project, and agreed to mutually release and discharge each other from all compensation claims, including claims for compensation directly or indirectly arising out of the litigation, the subcontract agreement, and the project. (See evidence cited by UMFs 27-28.) The settlement agreement also provided that Plaintiff was required to assign, transfer, convey to SBI all its claims, rights, title and causes of action of any kind or nature that Plaintiff has or may have against San Jose 3rd Street Associates, LP, Pacific West Builders, Inc. dba Idaho Pacific West Builders, Inc., Travelers Casualty and Surety Company of America, Hartford Fire Insurance Company and any related or successors entities, for compensation for Plaintiff’s services provided to the project, including all the rights alleged in Plaintiff’s FAC. (See evidence cited by UMF 29.) Hartford was not a signatory to the SBI/Largo Settlement Agreement. (See evidence cited by UMF 30.) On April 11, 2016, Plaintiff received the final payment due pursuant to the Settlement Agreement, and on May 17, 2016, Plaintiff filed a request for dismissal of its FAC as to SBI and Travelers, but not Hartford. (See evidence cited by UMFs 31-32.)

Hartford moves for summary judgment on the ground that the fourth cause of action for enforcement against mechanic’s lien release bond lacks merit as a matter of law because Plaintiff’s claims against the lien release bond were extinguished as a matter of law upon payment by SBI; the purported assignment of Plaintiff’s lien claim to SBI is ineffective/void; Hartford, as surety, is exonerated from liability under the bond due to the Settlement Agreement and payments by SBI of amounts Plaintiff agreed to accept thereunder; the dismissal of SBI and Travelers requires dismissal of Hartford; and, SBI did not purchase anything, it paid a debt owed to Plaintiff.

Defendant’s burden on summary adjudication

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action. … The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.” (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; internal citations omitted; emphasis added.)

“The ‘tried and true’ way for defendants to meet their burden of proof on summary judgment motions is to present affirmative evidence (declarations, etc.) negating, as a matter of law, an essential element of plaintiff’s claim.” (Weil et al., Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2007) ¶ 10:241, p.10-91, citing Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 334; emphasis original.) “The moving party’s declarations and evidence will be strictly construed in determining whether they negate (disprove) an essential element of plaintiff’s claim ‘in order to avoid unjustly depriving the plaintiff of a trial.’” (Id. at § 10:241.20, p.10-91, citing Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107.)

“Another way for a defendant to obtain summary judgment is to ‘show’ that an essential element of plaintiff’s claim cannot be established. Defendant does so by presenting evidence that plaintiff ‘does not possess and cannot reasonably obtain, needed evidence’ (because plaintiff must be allowed a reasonable opportunity to oppose the motion.) Such evidence usually consists of admissions by plaintiff following extensive discovery to the effect that he or she has discovered nothing to support an essential element of the cause of action.” (Id. at ¶ 10:242, p.10-92, citing Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.)

Defendant meets its initial burden

Plaintiff’s cause of action against defendant Hartford in Plaintiff’s FAC is for enforcement against mechanic’s lien release bond. Hartford’s motion for summary judgment is as to Plaintiff’s FAC. Here, Hartford presents evidence that on April 11, 2016, Plaintiff was paid $560,816 (see evidence cited by UMF 31; Lewis decl., exh. B) in exchange for the “assign[ment], transfer and convey[ance] to SBI all its claims, rights, title and causes of action of any kind or nature that Largo has or may have against San Jose 3rd Street Associate, LP, Pacific West Builders, Inc. dba Idaho Pacific Builders, Inc., Travelers Casualty and Surety Company of America, Hartford Fire Insurance Company, and any related or successors entities, for compensation for Largo’s services to the Project, including all the rights alleged in Largo’s First Amended Complaint in the Litigation (the ‘Assignment’).” (Lewis decl., exh. C, p.2, § 2.2.) SBI shall have exclusive rights to the assigned Litigation, including sole discretion to settle or dismiss such Litigation upon whatever terms SBI may determine are appropriate.” (Id.)

Hartford meets its burden to demonstrate that Hartford, is not liable as to Plaintiff on a cause of action for any enforcement against the mechanic’s lien release bond, pursuant to the Settlement Agreement and payments by SBI under the Settlement Agreement as Plaintiff transferred all of its rights regarding the fourth cause of action to SBI. Plaintiff therefore lacks any standing to pursue any cause of action against Hartford.

In opposition, Plaintiff fails to demonstrate the existence of a triable issue of material fact

In opposition, Plaintiff asserts that “3rd St/PWB, through their bonding entity Hartford, now seek to have the court deny SBI the benefits of its mitigation efforts while simultaneously reaping the reward of SBI’s efforts.” (Pl.’s opposition to Hartford’s motion for summary judgment (“Opposition”), p.1:18-21.) Plaintiff argues that a mechanic’s lien is assignable. (See Opposition, pp.11:1-28, 12:1-14.) Plaintiff asserts that “[i]f the Court determines that Hartford offered admissible evidence sufficient to meet its initial burden, there nonetheless exists a triable issue of fact as to whether there was an assignment or whether SBI ‘paid’ a debt ‘owing’ to Largo.” (Opposition, pp.12:15-28, 13:1-18.) However, the asserted fact that Plaintiff indeed assigned its rights on the mechanic’s lien does not help Plaintiff; rather, the assignment of its rights on the mechanic’s lien demonstrates that Plaintiff is not the party that has standing to pursue the cause of action. Citing Civil Code section 8434, Plaintiff further argues that “[t]here will not be any double recovery here… [because] the Court is specifically authorized to make proper allocations of the various lien claimants in order to eliminate such an occurrence.” (Opposition, p.15:1-8.) Again, however, Plaintiff lacks standing to enforce a lien after it has assigned all of its rights regarding that lien to a different party. The motion seeks summary judgment on Plaintiff’s complaint, not any other party’s complaint. The Court makes no statement regarding any cause of action by SBI or any other party against San Jose 3rd Street Associates, Pacific West or Hartford regarding any mechanic’s lien or mechanic’s lien release bond. As Plaintiff fails to demonstrate the existence of a triable issue of material fact on this ground, Hartford’s motion for summary judgment of Plaintiff’s FAC is GRANTED. As summary judgment is appropriate on this basis, it is unnecessary to address the remaining bases for the motion—whether Plaintiff’s claims were extinguished upon payment, whether the dismissal of SBI requires dismissal of Hartford, and whether SBI paid a debt owed to Plaintiff.

Plaintiff objects to various UMFs. As a preliminary matter, UMFs are not evidence. Additionally, Plaintiff’s objections do not comply with Rule of Court 3.1354, subdivisions (b) and (c); accordingly, Plaintiff’s objections are OVERRULED.

Hartford submitted certain evidence with its reply brief. The Court did not consider this evidence. (See Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-38; see also Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 252 (stating that evidence submitted with a reply is not generally allowed); San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 316 (stating that considering evidence in connection with a reply violated the opposing parties due process rights because the opposing party was “not informed what issues it was to meet in order to oppose the motion”).)

Hartford’s objections to evidence are not the basis for the Court’s ruling.

The Court will prepare the order.