2009-00042196-CU-MC

Cooper Crane & Rigging Inc vs. Pavex-Myers

Nature of Proceeding:    Motion for Summary Adjudication

Filed By:   Pierce, Timothy L.

Defendants Pavex-Myers (“Pavex”) and Safeco Insurance Company of America, Inc.’s
(collectively “Defendants”) motion for summary adjudication of Plaintiff Cooper Crane
& Rigging, Inc./West Cost Welding, Inc.’s, (“Plaintiff”) claims for prompt payment
penalties and attorney’s fees is ruled upon as follows.

This motion is brought pursuant to CCP §437c(s)(1). The parties have stipulated that
the Court hear the motion and that resolution of this motion will either further the
interests of judicial economy by reducing the time to be consumed in trial or
significantly increase the ability of the parties to resolve the case by settlement.

Pavex is admonished as its separate statement does not comply with CRC 3.1342(h).
Defendant separately identifies 16 undisputed material facts.  Defendant also moves
for summary adjudication on 3 issues.  However, Defendant did not repeat verbatim
the undisputed material facts below each issue.  Rather, Defendant simply identifies
the number of the undisputed fact in support of the issue.
This is an action arising out of a construction contract for the California Department of
Transportation (“Caltrans”).  Pavex was the general contractor on the project.  Plaintiff
was a subcontractor hired to install cast-in-drilled-hole piling, among others items.
Problems arose with the project which resulted in Plaintiff conducting additional work
on contract items 97, 98 and 99.  Plaintiff submitted a claim to Pavex for the additional
work, which Pavex “passed through” to Caltrans per the subcontract agreement.  The
matter then proceeded to an Office of Administrative Hearings.  Pavex was the
Petitioner, Caltrans was the Respondent, and Plaintiff was an interested party.  The
arbitrator found in favor of Pavex and awarded $1,950,853.00, of which $92,898 was
for Pavex’s 5% mark-up on the claim. Plaintiff alleges that pursuant to the force
account payment terms, Pavex failed to timely pay Plaintiff.  (FAC, ¶ 13.) Plaintiff
alleges that “as determined by the arbitrator, Plaintiff was forced to self-finance work
performed to the tune of $1,857,956.00 due to defendant Pavex/Myers’ failure to pay
Plaintiff in accordance with the terms of the Subcontract, its incorporated force account
provisions and its implied terms.”  (FAC, ¶ 15.)

Prompt Payment Penalties

Pavex argues that Plaintiff is not entitled to recover prompt payment penalties
because: (1) the amount claimed by Plaintiff as the basis for the penalties is not
retention or progress payments, (2) the amount that Plaintiff claims Pavex withheld
was never due under the subcontract, and (3) Pavex promptly paid Plaintiff after
Caltrans paid Pavex the pass-through amount pursuant to the arbitrator’s decision.

Public Contracts Code §10262 requires a general contractor to pay its subcontractor,
within seven days of receipt, of each progress payment.  (Pub. Contracts Code
§10262.)

Public Contracts Code §7017 requires a general contractor to pay its subcontractor,
within seven days of receipt, its share of retention proceeds.  (Pub. Contracts Code
§7107.)

Pavex contends that Plaintiff’s verified discovery responses indicate that the
underlying amount on which Plaintiff’s prompt penalties is based ($1,249,000) is
neither a progress payment nor retention proceeds. Plaintiff’s discovery responses
state that the $1,249,000 is the “value that [Pavex-Myers] was paid by Caltrans for
Items 97, 98, and 99 in the amount of $2,422,728 and subtracting the amount [Pavex-
Myers] paid to Plaintiff . . . $1,173,684.”  (Defendant’s separate statement, UMF 12-
13.)  According to Pavex, this amount represents Pavex’s profit and payment for work
beyond the work done by Plaintiff. Pavex also contends that Plaintiff did not bill for
these amounts (Defendant’s separate statement, UMF 14) which is necessary for them
to qualify as progress or retention payments.

Pavex has failed to satisfy its initial burden to demonstrate no triable issue of material
fact.  Here, there is no dispute that Caltrans paid Pavex for contract items 97, 98, and
99 in the amount of $2,422,728.  Despite Pavex’s contention that this amount
represents Pavex’s profit and payment for work beyond the work done by Plaintiff,
Pavex has failed to proffer evidence to support this purported fact.  As noted in
Plaintiff’s opposition, Pavex has not proffered any evidence that the payments Pavex
received for contract items 97-99 during the project were payments for something
other than the work that Plaintiff performed on those contract items.  Indeed, Pavex’s  separate statement does not include the “fact” that the $2,242,728 was paid to Pavex
solely for work done by Pavex.   Thus, Pavex has not shown, on the undisputed facts,
that the payment Caltrans made to Pavex does not fall within Public Contracts Code
§10262.

Accordingly, the motion for summary adjudication on Plaintiff’s entitlement to prompt
payment penalties is DENIED.

Attorneys’ Fees based on Prompt Payment Statutes

Pavex argues that Plaintiff is not entitled to attorneys’ fees pursuant to Pub. Contracts
Code §10262.5 because Plaintiff is not entitled to prompt payment penalties.

The motion for summary adjudication is DENIED.  The Court has denied Pavex’s
motion for summary adjudication on Plaintiff’s entitlement to prompt payment
penalties.

Cooper Crane’s Attorneys’ Fees Incurred during Arbitration

Plaintiff is seeking $320,000 in attorneys’ fees based on the “actual amounts invoiced.”
Pavex argues that given the limited activity in this action, presumably most of these
fees related to the arbitration.

Pavex argues that Plaintiff is not entitled to attorneys’ fees incurred in the arbitration
because: (1) the arbitration was not an action “for collection of funds wrongfully
withheld” (Pub. Contracts Code §10262.5(a)), and (2) Plaintiff did not “prevail” in the
arbitration because the arbitration was between Pavex and Caltrans.

Public Contracts Code §10262.5(a) provides “[i]n any action for the collection of funds
wrongfully withheld, the prevailing party shall be entitled to his or her attorney’s fees
and costs.”  (Pub. Contracts Code §10262.5(a).)  Pavex argues that the arbitration was
not “for the collection of funds wrongfully withheld” because “the arbitration was
designed to determine the merit, and if merit was found, the amount due to Pavex for
Plaintiff’s pass-through claim for additional work related to item nos. 97-99.
(Defendant’s separate statement, UMF, 7.)

There is no dispute that the subcontract has a prevailing party provision entitling a
prevailing party to recover its attorneys’ fees.  The subcontract provides “either party
shall be entitled to all remedies afforded by law to enforce their respective rights under
this Subcontract.  In the event legal proceedings are commenced by either party
against the other to enforce the provision of this subcontract, or for breach thereof, the
prevailing party shall be entitled to the payment of reasonable attorney’s fee.”

In opposition to the motion, Plaintiff argues the motion is premature because Plaintiff
may prevail in this case and that the determination of entitlement to and amount of
attorney’s fees should be made post-judgment and pursuant to a motion for attorney’s
fees.  Plaintiff further argues that Pavex has failed to analyze the various contractual
and statutory fee-shifting vehicles available to Plaintiff.

The Court disagrees with Plaintiff that the motion is premature.  Indeed, Plaintiff
stipulated to summary adjudication of its entitlement to attorney’s fees.  Moreover,
Plaintiff has failed to demonstrate a triable issue of material fact. Here, Plaintiff does              not substantively dispute that the arbitration was not an “action for the collection of
funds wrongfully withheld.”  Plaintiff’s fact in response Pavex’s UMF 7 is not
responsive and does not substantively dispute Pavex’s fact.  Plaintiff also does not
dispute that Pavex was the prevailing party in the arbitration.  (Defendant’s UMF 8.)
Additionally, the prevailing party in the subcontract agreement only applies to legal
proceedings commenced “by either party against the other” (i.e. Pavex and Plaintiff).
Here, the arbitration was not a legal proceeding commenced by Pavex/Plaintiff against
the other.  Lastly, the Court is not persuaded that Pavex’s failure to analyze the
“various contractual and statutory fee-shifting vehicles available to Plaintiff” requires
the Court to deny the motion.  Indeed, Plaintiff has not identified any of the “various
vehicles”, if any, that it contends Pavex should have addressed.

Accordingly, Pavex’s motion for summary adjudication  Plaitniff’s claim for attorney’s
fees incurred in the arbitration is GRANTED.

Pavex’s objections to the Declaration of Anthony Will are OVERRULED.

Pavex’s objections to the Declaration of John Gladych are ruled upon as follows:

Sustained: 5

Overruled: 1, 2, 3, 4

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.