Articles Posted in California Courts of Appeal

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In 2004, Hesperia began acquiring vacant property in its downtown for development of a Civic Plaza, with a city hall, public library, other government buildings and “complimentary retail, restaurant, and entertainment establishments.” Cinema West articulated a plan to develop a cinema immediately west of the Civic Plaza Park: the city would convey 54,000 square feet of real property to Cinema for $102,529, the property‘s fair market value; Cinema would construct a 38,000-square foot, 12-screen digital theatre; the city would construct the necessary parking lot, develop a water retention system for the theater and the parking lot, and install off-site improvements including curb, gutter and sidewalks. Cinema would execute a 10-year operating agreement with the city. The city later made a $250,000 forgivable loan to Cinema to aid with a $700,000 anticipated shortfall. As development of the theater and parking lot was nearing completion, the Electrical Workers Union requested a public works coverage determination under California‘s prevailing wage law (Lab. Code, 1720–18611 ) The State Department of Industrial Relations concluded that the project was subject to the prevailing wage requirement. The court of appeal affirmed, noting that Cinema received the benefit of a new, publicly-funded parking lot adjacent to the theater, which, though owned by the city, is Cinema‘s to use for as long as it operates the theater. View "Cinema West v. Baker" on Justia Law

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Phoenix Pipeline filed a second amended complaint (SAC) alleging breach of contract claims related to SpaceX's failure to pay for its services from 2010 to October 2013. The trial court subsequently granted SpaceX's demurrer, which argued that the license issued to Phoenix Plumbing was not sufficient to satisfy the requirements of Business Code section 7031. The Court of Appeal held that Phoenix Pipeline's SAC failed to state a claim for construction related services because it did not allege that Phoenix Pipeline was a licensed contractor. The court explained that Phoenix Pipeline may not rely upon a license issued to another and that section 7031 was not limited to contracts with unsophisticated persons or homeowners. The court held, however, that Phoenix Pipeline adequately alleged that it provided some services for which no contractor license was necessary. Finally, the trial court acted within its discretion in declining to permit an amendment alleging that Phoenix Pipeline was an employee. Accordingly, the court reversed and remanded. View "Phoenix Mechanical Pipeline, Inc. v. Space Exploration Technologies Corp." on Justia Law

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Education Code section 17406 authorizes school districts to use lease-leaseback agreements for construction or improvement of school facilities: the school district leases its own real property to a contractor for a nominal amount, and the contractor agrees to construct or improve school facilities on the property and lease the property and improvements back to the district. At the end of the lease-leaseback agreement, title to the project vests in the school district. California Taxpayers Network brought a reverse validation action (Code Civ. Proc. 863), challenging a lease-leaseback agreement between Mount Diablo School District and Taber Construction, alleging that the Education Code requires “genuine lease-leaseback agreements,” which “provide for financing of the school facility project over time,” but defendants’ lease-leaseback contracts were “sham leases”; that the contracts were illegal because a public bidding process is required for school construction projects; and that Taber provided professional preconstruction services to the District regarding the project before entering the lease-leaseback contracts. The court of appeals affirmed dismissal of claims "that attempt to engraft requirements on the transaction" that are not part of the Education Code. The court reversed in part, holding that the plaintiff did state a conflict of interest claim against Taber sufficient to withstand a demurrer. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

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The Act makes the builder who sells homes liable for violations without proof of negligence, while general contractors and subcontractors not involved in home sales are liable only if the plaintiff proves they negligently caused the violation in whole or part. The jury found the grading subcontractor, defendant Gerbo Excavating, was not negligent in any respect. The trial court, not the jury, found the builder/seller, Knotty Bear Development, Inc. and Knotty Bear Construction, Inc. (collectively Knotty Bear), liable after Knotty Bear failed to appear for trial. Plaintiffs sought redress from Gerbo under common law negligence theories for the tree damage, because they argued tree damage was not covered by the Act. The Court of Appeal found that plaintiffs failed to show tree damage was not covered by the Act: the jury found Gerbo was not negligent in any respect, even when the jury found building standards were violated. Finding no other basis for reversal, the Court affirmed the trial court’s judgment and post-trial orders. View "Gillotti v. Stewart" on Justia Law

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Escobar was an employee of O’Donnell, a sub-subcontractor of Bayside, which was a subcontractor of Oltmans, the general contractor on a Menlo Park construction project. Escobar sued Oltmans and the property owner, alleging that Oltmans negligently cut and left unsecured a skylight opening in the building under construction, through which Escobar fell while installing scaffolding that O’Donnell was erecting for Bayside. Oltmans filed a cross-complaint against the subcontractors, alleging a right to contractual indemnity and breach of Bayside’s contractual obligation to provide certificates of insurance certifying that Oltmans was covered as an additional insured under liability policies the subcontractors were obligated to obtain. The subcontract provided indemnity to Oltmans for injury claims arising out of the scope of the subcontractor’s work “except to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct” of Oltmans. Reversing the trial court, the court of appeal ruled in favor of Oltmans. Under such a provision the general contractor is precluded from recovering indemnity for liability incurred as a result of its own active negligence but may be indemnified for the portion of liability attributable to the fault of others. The court noted the same question arises as to the meaning of Civil Code section 2782.05, which renders unenforceable an indemnity provision “to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor.” View "Oltmans Construction Co. v. Bayside Interiors, Inc." on Justia Law