The motion of Defendant Bond Safeguard Insurance Company to strike portions of the complaint of Plaintiff Granite Construction Company is GRANTED in part and DENIED in part, as follows:

1. The motion of Defendant Bond Safeguard Insurance Company to strike portions of the complaint involving BP §7108.5 penalties and attorney fees of Plaintiff Granite Construction Company is DENIED, specifically as to the portions found in Complaint ¶¶14, 19 and Prayer ¶2.

2. The motion of Defendant Bond Safeguard Insurance Company to strike portions of the complaint involving CC §8800 penalties and attorney fees of Plaintiff Granite Construction Company is GRANTED, specifically as to portions found in Complaint ¶15 and Prayer ¶3.

Defendant’s evidentiary objection as to Plaintiff’s Exhibit B is SUSTAINED.

Defendant Bond Safeguard Insurance Company is ordered to file an Answer on or before April 9, 2014.

PROPOSED STATEMENT OF DECISION:

The Court bases its Order upon the following Statement of Decision:

3. On November 28, 2013, Plaintiff Granite Construction Company filed the complaint against Defendants Andrewglen Development, LLC, Andrewglen Holdings, LLC; Glen A. Tulk; Bond Safeguard Insurance Company and Does 1 through 100, inclusive, alleging three causes of action for (1) Breach of Contract, (2) Quantum Meruit and (3) Enforcement of Payment Bonds.

4. On January 30, 2014, Defendant Bond Safeguard Insurance Company filed this motion pursuant to CCP §§ 435 thru 437; BP §7108.5 and CC §8800(c) to strike portions of ¶¶ 14, 15 and 19 and Prayer ¶¶2 and 3 for relief. Defendant contends that late penalties and attorney fees can only be awarded against contractors and subcontractors (BP §7108.5) and penalties can only be awarded against owners (CC §8800(c)). Defendant is not a contractor, subcontractor or owner.

5. On March 11, 2014, Plaintiff filed their opposition to Defendant’s motion to strike. Plaintiff contends that late penalties and attorney fees are awardable against Defendant based upon contractual terms. Defendant is in contractual privity with the City of Palmdale for construction of street improvements and therefore a contractor liable to Plaintiff.

6. On March 13, 2014, Defendant filed its Reply and Objections to Plaintiff’s Exhibit B. Defendant’s Reply re-asserts that penalties under BP §7108.5 are inapplicable because Defendant is not a contractor and penalties under CC §8800 are inapplicable because Defendant is admittedly not the owner.

7. Standard for motion to strike – The proper procedure to attack false allegations in a pleading is a motion to strike. Cal. Code Civ. Proc., § 436(a). In granting a motion to strike made under Code of Civil Procedure § 435, “[t]he court may, upon a motion made pursuant to Section 435 [notice of motion to strike whole or part of complaint], or at any time in its discretion, and upon terms it deems proper: [¶] (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” Cal. Code Civ. Proc., § 436(a). Irrelevant matters include immaterial allegations that are not essential to the claim or those not pertinent to or supported by an otherwise sufficient claim. Cal. Code Civ. Proc., § 431.10. The court may also “[s]trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” Cal. Code Civ. Proc., § 436(b).

8. BP §7108.5 – Business and Professions Code §7108.5 provides for a penalty of 2% per month for a prime contractor’s failure to make timely payment to a subcontractor and provides for attorney fees to a prevailing party. The surety under a payment bond is held liable for this statutory penalty and attorney fees because it is part of the claim against the principal. National Technical Systems v. Sup.Ct. (United Pac. Ins. Co.) (2002) 97 Cal App 4th 415, 427. Complaint ¶¶5 and 21 expressly allege that Defendant is the surety on the construction contract at issue. Defendant’s argument that penalties and attorney fees herein are not awardable because Defendant is only the surety and not the contractor is contradicted by case law. Case law provides that Defendant is liable for the statutory penalty and statutory attorney fees because it is part of the claim against the principal.

9. The Motion to Strike the allegations and prayers regarding statutory penalties and attorney fees under BP §7108.5 is DENIED.

10. CC §8800 – Civil Code §8800 provides for a penalty of 2% per month for an owner’s failure to make timely payment to a “direct contractor” and provides for attorney fees to a prevailing party. The express language of the statute shows that the penalties and attorney fees herein apply to a failure to pay between an owner and a “direct contractor”. The allegations of the Complaint show that Plaintiff is a contractor that entered a construction agreement with the “construction manager”, Co-Defendant Andrewglen Development LLC. (Complaint ¶¶10; Exhibit A) Plaintiff agrees, for the sake of the instant motion, that Defendant is not an “owner” of the property but the City of Palmdale is the owner. As such any claim for non-payment per CC §8800 would necessarily be against Palmdale, assuming Plaintiff characterizes itself as a direct contractor, which it has not. Plaintiff has not alleged that it is a “direct contractor” with the City of Palmdale because there are no facts showing any agreement for construction with Palmdale.

11. Further, under Plaintiff’s skewed logic in the Opposition, it would be Defendant Bond Safeguard Insurance Company that would allegedly have a claim for non-payment under CC §8800. Plaintiff argues that Defendant is in contractual privity with Palmdale. If Palmdale were the owner of the property, then as the contracting party with Palmdale, Defendant would be the “direct contractor”. Thus, Defendant would be the party herein to be entitled to CC §8800 penalties and attorney fees for any alleged non-payment. The argument does not support Plaintiff’s contention herein. As such, the citation to CC §8800 and the allegations requesting penalties and attorney fees per the statute are irrelevant and improper.

12. Therefore, the Motion to Strike statutory penalties and attorney fees under CC §8800 is GRANTED.

13. Based on the foregoing, the motion of Defendant Bond Safeguard Insurance Company to strike portions of the complaint involving BP §7108.5 penalties and attorney fees of Plaintiff Granite Construction Company is DENIED, specifically as to Complaint ¶¶14, 19 and Prayer ¶2

14. Based on the foregoing, the motion of Defendant Bond Safeguard Insurance Company to strike portions of the complaint involving CC penalties and attorney fees of Plaintiff Granite Construction Company is GRANTED, specifically as to Complaint ¶15 and Prayer ¶3.

15. Defendant’s evidentiary objection to Plaintiff’s Exhibit B is SUSTAINED.