Case Number: BC554385 Hearing Date: March 15, 2018 Dept: 47

Prolien Services LLC v. Pacific Sunshine Investments, LLC, et al.

MOTION FOR SUMMARY JUDGMENT

MOVING PARTY: Defendant Oak River Asset Management LLC

RESPONDING PARTY(S): Plaintiff Prolien Services LLC

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an action to foreclose on a mechanic’s lien arising out of Plaintiff’s assignor’s provision of construction services to the subject property

Oak River Asset Management LLC and Liberty Capital Management Corporation filed a Cross-Complaint alleging that certain Defendants schemed to bill Cross-Complainants for damage to the project caused by Cross-Defendants.

Pioneer General Engineering Contractors, Inc. filed a cross-complaint alleging that the property owners breached the contract with Pioneer to perform construction/remodeling work by ordering Pioneer to cease work and refusing to Pay Pioneer for work it had performed and had prepared to perform on the subject property.

TENTATIVE RULING:

Defendant Oak River Asset Management LLC’s motion for summary judgment is DENIED.

DISCUSSION:

Motion For Summary Judgment

Plaintiffs Evidentiary Objections

Pursuant to CCP § 437c(q), the Court only rules upon the evidentiary objections asserted against evidence which the Court deems to be material to the disposition of this motion.

Gao Decl.

No. 9 OVERRULED

Jamison Decl.

Nos. 10 – 16: OVERRULED

Defendant’s Evidentiary Objections

Pursuant to CCP § 437c(q), the Court declines to rule upon the evidentiary objections asserted against Plaintiff’s evidence, which the Court deems not to be material to the disposition of this motion, as Defendant did not shift the burden to Plaintiff to raise a triable issue of material fact.

Defendant’s Request For Judicial Notice

Defendant requests that the Court take judicial notice of the following: (1) CLSB’s Accusation and Stipulation Settlement and Disciplinary Orders as to Contractor License Nos 828149 and 948924; (2) First Amended Complaint filed in this action; (3) Grant Deed recorded on May 24, 2013.

Request No. 1 is GRANTED. Pursuant to Evid. Code § 452(c), the Court may take judicial notice of official records of an administrative agency. Ordlock v. Franchise Tax Bd. (2006) 38 Cal.4th 897, 912. Request No. 2 is GRANTED per Evid. Code § 452(d)(court records). Request No. 3 is GRANTED. The Court may take judicial notice of recorded documents (Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549; Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 263, 274).

Analysis:

Issue No. 1: “With respect to the entire SAC, Plaintiff cannot establish that Pioneer General Engineering, Inc. was a licensed contractor as a matter of law because it did not obtain or maintain Workers Compensation Insurance as required by Business and Professions Code §§ 7031(a) and (b). By virtue of the above, Plaintiff is not entitled to payment of any work performed on the project by Pioneer General Engineering, Inc. and as such its recorded mechanic lien cannot be enforced through these foreclosure proceedings. As such, the entire SAC for foreclosure of the Mechanic Lien fails and Defendants are entitled to summary judgment.”

The second amended complaint asserts a single cause of action for foreclosure of mechanic’s lien, asserted by Prolien Services, LLC—the assignee of Pioneer General Engineering Contractors, Inc.

Here, Defendant’s evidence demonstrates that G.E.C. (Pioneer General Engineering Contractors) began construction at the Bradbury Property February 12, 2013, but that none of the laborers identified by Nasir Eftekhari at his deposition—Augustin Ramirez, David McMullin, Edwardo Torres, Javiar Mendez, Jose Gonzalez, Diego Bautista, Osvaldo Nunez, Guilermo Rodriguez, Mario Rodriguez and Mehdi Derakhsami (UF No. 17; Nasir Eftekhari Depo., pages 102-114; Pioneer’s Suppl. Response to Special Rog No. 11 (Def’s Exh. D))—worked on the Bradbury Property in February through July of 2013; they only began working on the Bradbury Property after September 20, 2013. Nasir Eftekhari Depo., Page 124:8-18 (Def’s Exh. B). Defendant’s UF No. 14 is that on September 9, 2013, Pioneer was issued a Worker’s Compensation Policy through The Harford bearing Policy No. 41WEGBS8753 for the policy period of September 9, 2013 through September 9, 2014. Nasir Eftekhari Depo. at pages 218-220; Def’s Exh. E.

According to Defendant’s UF No. 12, Pioneer provided construction-related services at the Bradbury property from approximately February 2013 through the summer of 2014. Nasir Eftekhari Depo., Page 124; Lucy Gao Decl., ¶ 5. Defendant vaguely refers to “summer” as the period when Pioneer’s work on the subject property ended. The court take judicial notice that “summer” in the northern hemisphere includes the months of June, July and August. The Court takes Defendant’s vague reference to “summer” to mean that Pioneer’s construction at the Bradbury property did not continue into September, i.e., into autumn, otherwise Defendant would have been forthcoming as to the exact date when Pioneer’s construction activity at the Bradbury property ended[1].

Thus, Defendant’s evidence demonstrates that from the period September 20, 2013 through Summer 2014 (before September 9, 2014), Pioneer was covered by Worker’s Compensation Policy No. 41WEGBS8753. Defendant argues that Pioneer’s policy only covered work classifications of “ENGINEERING-CONSULTING-MECHANICAL, CIVIL ENGINEERING AND MINING ENGINEERS AND ARCHITECTS – NOT ENGAGED IN ACTUAL CONSTRUCTION OR OPERATION” and only covered one employee UF Nos. 15, 16; Nasir Eftekhari Depo., pages 220-221; Def’s Exh. E, Page 000084; Jamison Decl., ¶ 7.

Defendant relies upon Wright v. Issak (2007) 149 Cal.App.4th 1116—a Sixth District opinion—for the proposition that Pioneer’s Worker’s Compensation Policy was based on a misrepresentation that Pioneer only had one employee engaged in work that was not actual construction or operation, and thus, there was an automatic suspension of Pioneer’s license. The Court agrees, however, with the Third District’s observation in Loranger v Jones (2010) 184 Ca.App.4th 847 that the holding in Wright should be limited to its facts—that the contractor failed to maintain any workers’ compensation insurance:

“‘It is the general rule that the language of an opinion must be construed with reference to the facts presented by the case, and the positive authority of a decision is coextensive only with such facts.’” (Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 734–735 [257 Cal. Rptr. 708, 771 P.2d 406], quoting River Farms Co. v. Superior Court (1933) 131 Cal.App. 365, 369 [21 P.2d 643].) In Wright, supra, 149 Cal.App.4th at page 1119, the limited facts before the court strongly suggest the contractor there did not have and never had a policy of workers’ compensation insurance, that he intentionally underreported the wages he was paying (reporting zero or next to zero payroll), and that he did so to be excluded from the requirement of obtaining such insurance. (See § 7125, subd. (b); Lab. Code, § 3352, subd. (h); see generally Heiman v. Workers’ Comp. Appeals Bd. (2007) 149 Cal.App.4th 724, 734–735 [57 Cal. Rptr. 3d 56]; Cedillo v. Workers’ Comp. Appeals Bd. (2003) 106 Cal.App.4th 227, 235–236 [130 Cal. Rptr. 2d 581].) It is in this factual context that we understand the language of the opinion that “underreporting payroll is, by definition, a failure-to-obtain case … .” (Wright, supra, at p. 1122.) The facts before the court in Wright are not the facts of the case before us.

Further, to the extent Wright can be read more broadly, we state our disagreement with the application of its reasoning to conclude that “any” underreporting of payroll is a failure to “obtain” workers’ compensation insurance even though the contractor has in effect a policy of workers’ compensation insurance covering his/her employees. Other than the implication in Wright, supra, 149 Cal.App.4th at page 1122 and footnote 2, we neither have been cited to nor have we found any authority for the proposition that a worker found to be an employee of a contractor (by virtue of Lab. Code, § 2750.5 or otherwise) will not be covered by the contractor’s existing workers’ compensation insurance policy if there is any discrepancy in the contractor’s reporting of payroll. In the absence of any legal authority or evidence supporting such a conclusion, we will not reach it.

Here, Loranger specifically testified he had a policy of workers’ compensation coverage in effect for his construction employees during the period of construction of the Joneses’ home. We conclude this evidence was sufficient to meet Loranger’s burden of proof to show his license was not suspended for failing to obtain workers’ compensation insurance coverage pursuant to section 7125.2. The trial court correctly denied the Joneses’ claim for the sanctions provided by section 7031.

Loranger v. Jones (2010) 184 Cal.App.4th 847, 857-58 (bold emphasis added).

Here, although Pioneer may have underreported its payroll to lower it premiums, as Defendant’s evidence discussed above shows, Pioneer did have a Worker’s Compensation Insurance policy in effect during the entire period that Pioneer performed work at the Bradbury project. The Court notes that a similar analysis applies to Hummer, which also maintained a policy effective September 1, 2013 through February 5, 2014. UF Nos. 22 – 25. As Loranger holds, there was no automatic suspension of Pioneer’s contractor’s license because Pioneer had a workers’ compensation insurance policy in effect.

Accordingly, Defendant has not met its initial burden of demonstrating that Pioneer General Engineering, Inc. was not a licensed contractor during the period it performed construction work on the Bradbury Project due to automatic suspension of its license for failure to obtain or maintain Workers Compensation Insurance. The burden does not shift to Plaintiff to raise a triable issue of material fact.

The motion for summary judgment is DENIED.

Plaintiff to give notice, unless waived.

IT IS SO ORDERED.

Dated: March 15, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court