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This case was last updated from Los Angeles County Superior Courts on 07/26/2021 at 11:47:35 (UTC).

AMERICAN/BCEGZ, ET AL., VS SHORES, LLC., ET AL.

Case Summary

On 03/04/2014 AMERICAN/BCEGZ, filed a Property - Other Real Property lawsuit against SHORES, LLC . This case was filed in Los Angeles County Superior Courts, Santa Monica Courthouse located in Los Angeles, California. The Judges overseeing this case are TERESA SANCHEZ-GORDON, GERALD ROSENBERG, NANCY L. NEWMAN, LISA HART COLE and BOBBI TILLMON. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****8363

  • Filing Date:

    03/04/2014

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Real Property

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Santa Monica Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

TERESA SANCHEZ-GORDON

GERALD ROSENBERG

NANCY L. NEWMAN

LISA HART COLE

BOBBI TILLMON

 

Party Details

Petitioners, Plaintiffs, Cross Defendants and Cross Plaintiffs

AMERICAN MULTIFAMILY INC.

AMERICAN/BCEGZ

BCEGI-USA INC.

AMERICAN MUTLIFAMILY INC.

PATTERSON-PALM BUILDERS HARD

LARGO CONCRETE INC.

SHORES LLC

NADEL ARCHITECTS INC.

THE INS. CO. OF THE STATE OF PENNSYLVANIA

NADEL RESIDENTIAL AND COMMERCIAL INC.

DICKERSON DONALD F. ASSOCIATES

GROUP M ENGINEERS INC.

LIGHTING DESIGN ALLIANCE INC.

LRM LTD

WISS JANNEY ELSTNER ASSOCIATES INC.

Petitioners, Plaintiffs, Appellants, Cross Plaintiffs and Cross Defendants

AMERICAN/BCEGZ

BCEGI-USA INC.

AMERICAN MUTLIFAMILY INC.

SHORES LLC

NADEL RESIDENTIAL AND COMMERCIAL INC.

WISS JANNEY ELSTNER ASSOCIATES INC.

Defendants, Respondents, Cross Defendants and Cross Plaintiffs

DOES 1 THROUGH 100

LARGO CONCRETE INC.

PACIFIC STAIR CORPORATION

RED MORTGAGE CAPITAL LLC

SHORES LLC

NADEL ARCHITECTS INC.

PACIFIC STAIR CORP.

THE INS. CO. OF THE STATE OF PENNSYLVANIA

NADEL INC.

DICKERSON DONALD F. ASSOCIATES

LIGHTING DESIGN ALLIANCE INC.

LRM LTD

WISS JANNEY ELSTNER ASSOCIATES INC.

NADEL RESIDENTIAL AND COMMERCIAL INC.

GROUP M ENGINEERS INC.

PATTERSON-PALM BUILDERS HARD

149 More Parties Available

Attorney/Law Firm Details

Petitioner and Plaintiff Attorneys

CASTLE & ASSOCIATES A PROF. LAW CORP.

CASTLE & LAX LAW OFFICES OF

LISKA ANDREW J.

CASTLE & ASSOCIATES

PYLE SIMS DUNCAN & STEVENSON

ROMYN DAVID C.

Cross Defendant and Defendant Attorneys

COLLINS COLLINS MUIR & STEWART LLP

ROBINS KAPLAN MILLER & CIRESI

RODARTI GROUP THE

THE RODARTI GROUP

SPACH CAPALDI & WAGGAMAN LLP

MANNING & KASS ELLROD RAMIREZ TRESTER

RODARTI JOSEF M.

MONTELEONE & MCCRORY

CLARK HILL LLP

GORDON & REES

HAHN ADRIENNE R.

RESUICK & LOUIS

WOOD SMITH HENNING & BERMAN

GORDON & REES LLP

Cross Defendant and Cross Plaintiff Attorneys

GORDON & REES LLP

RODARTI GROUP THE

THE RODARTI GROUP

SPACH CAPALDI & WAGGAMAN LLP

60 More Attorneys Available

 

Court Documents

Case Management Statement

1/22/2019: Case Management Statement

Declaration - PART ONE OF REQUEST FOR JUDICIAL NOTICE OF EXHIBITS TO DECLARATION OF GREG PARKER AND DAVID ROMYN IN SUPPORT OF AMERICANS MOTION FOR SUMMARY JUDGEMENT AND/OR ADJUDICATION

7/12/2021: Declaration - PART ONE OF REQUEST FOR JUDICIAL NOTICE OF EXHIBITS TO DECLARATION OF GREG PARKER AND DAVID ROMYN IN SUPPORT OF AMERICANS MOTION FOR SUMMARY JUDGEMENT AND/OR ADJUDICATION

Objection - OBJECTION OBJECTION

7/1/2021: Objection - OBJECTION OBJECTION

Declaration - DECLARATION OF DANIEL J. BRAST, ESQ. IN SUPPORT OF EX PARTE APPLICATION BY REDROCK SECURITY AND CABLING, INC.

4/1/2021: Declaration - DECLARATION OF DANIEL J. BRAST, ESQ. IN SUPPORT OF EX PARTE APPLICATION BY REDROCK SECURITY AND CABLING, INC.

Declaration - DECLARATION OF GEOFFREY T. SAWYER IN SUPPORT OF DEMURRER BY CROSS-DEFENDANT RAILCRAFT INTERNATIONAL (2010) INC.

1/19/2021: Declaration - DECLARATION OF GEOFFREY T. SAWYER IN SUPPORT OF DEMURRER BY CROSS-DEFENDANT RAILCRAFT INTERNATIONAL (2010) INC.

Reply - REPLY CROSS-DEFENDANT AND CROSSCOMPLAINANT NADEL RESIDENTIAL AND COMMERCIAL INC.S COMBINED REPLY IN SUPPORT OF ITS MOTION FOR LEAVE TO FILE ITS SECOND AMENDED CROSS-COMPLAINT IN RESPONSE TO O

12/2/2020: Reply - REPLY CROSS-DEFENDANT AND CROSSCOMPLAINANT NADEL RESIDENTIAL AND COMMERCIAL INC.S COMBINED REPLY IN SUPPORT OF ITS MOTION FOR LEAVE TO FILE ITS SECOND AMENDED CROSS-COMPLAINT IN RESPONSE TO O

Request for Judicial Notice

12/2/2020: Request for Judicial Notice

Declaration - DECLARATION DECLARATION OF DAVID C. ROMYN

9/22/2020: Declaration - DECLARATION DECLARATION OF DAVID C. ROMYN

Legacy Document - LEGACY DOCUMENT TYPE: EX-PARTE APPLICATION

2/3/2017: Legacy Document - LEGACY DOCUMENT TYPE: EX-PARTE APPLICATION

Case Management Order

5/22/2017: Case Management Order

Legacy Document - LEGACY DOCUMENT TYPE: PROOF-SERVICE/SUMMONS

9/7/2017: Legacy Document - LEGACY DOCUMENT TYPE: PROOF-SERVICE/SUMMONS

Legacy Document - LEGACY DOCUMENT TYPE: Cross-Compl fld - Summons Issued

6/7/2018: Legacy Document - LEGACY DOCUMENT TYPE: Cross-Compl fld - Summons Issued

Certificate of Mailing for - Certificate of Mailing for Minute Order (Court Order Re Defendant Shores, LLC's Peremptory Challenge P...) of 12/03/2018

12/3/2018: Certificate of Mailing for - Certificate of Mailing for Minute Order (Court Order Re Defendant Shores, LLC's Peremptory Challenge P...) of 12/03/2018

Notice - Notice Notice of Continuance

2/5/2019: Notice - Notice Notice of Continuance

Joinder

2/15/2019: Joinder

907 More Documents Available

 

Docket Entries

  • 01/13/2022
  • Hearing01/13/2022 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion for Summary Judgment

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  • 12/14/2021
  • Hearing12/14/2021 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion for Summary Judgment

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  • 10/25/2021
  • Hearing10/25/2021 at 09:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Jury Trial

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  • 10/18/2021
  • Hearing10/18/2021 at 09:00 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Final Status Conference

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  • 10/07/2021
  • Hearing10/07/2021 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion for Summary Adjudication

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  • 09/29/2021
  • Hearing09/29/2021 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion for Summary Judgment

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  • 09/27/2021
  • Hearing09/27/2021 at 09:00 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Status Conference

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  • 08/11/2021
  • Hearing08/11/2021 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion - Other Joinder to Motion to Designate Action Complex and Long Cause - (Trademark Construction co., Inc.)

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  • 08/11/2021
  • Hearing08/11/2021 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion - Other Designate Action Complex and Long Cause - (American/BCEGZ;American Multifamily, Inc. and BCEGI-USA Inc.)

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  • 08/10/2021
  • Hearing08/10/2021 at 08:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Hearing on Motion to Dismiss

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1,507 More Docket Entries
  • 03/24/2014
  • DocketNotice; Filed by Plaintiff/Petitioner

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  • 03/06/2014
  • DocketDeclaration; Filed by American Multifamily, Inc. (Plaintiff)

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  • 03/06/2014
  • DocketDECLARATION OF GREG PARKERIN SUPPORT OF PLAINTIFFS MOTION TO STAY LITIGATION PENDING ARBITRATION

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  • 03/06/2014
  • DocketMotion; Filed by Plaintiff/Petitioner

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  • 03/06/2014
  • DocketMotion; Filed by American Multifamily, Inc. (Plaintiff)

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  • 03/06/2014
  • DocketNOTICE OF MOTION AND MOTION OF PLAINTIFFS TO STAY LITIGATION PENDING ARBITRATION; MEMORANDUM OF POINTS AND AUTHORITIES

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  • 03/04/2014
  • DocketComplaint Filed

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  • 03/04/2014
  • DocketComplaint; Filed by American Multifamily, Inc. (Plaintiff); American Mutlifamily, Inc. (Plaintiff); AMERICAN/BCEGZ (Plaintiff) et al.

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  • 03/04/2014
  • DocketCOMPLAINT FOR FORECLOSURE OF MECHANICS LIENS 1. FIRST CAUSE OF ACTION FORECLOSURE OF MECHANICS'LIEN; ETC

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  • 03/04/2014
  • DocketSUMMONS

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Tentative Rulings

b"

Case Number: BC538363 Hearing Date: July 15, 2021 Dept: M

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CASE NAME: American/BCEGZ et al. v. Shores LLC et al.

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CASE NO.: BC538363

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MOTION: Plaintiff’s Motion for Terminating Sanctions,\r\nor In the Alternative, Evidentiary and Issue Sanctions

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HEARING DATE: July 15, 2021

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BACKGROUND

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On March 4, 2014, American/BCEGZ\r\n(“Plaintiff”) filed the instant action against numerous defendants, including,\r\nbut not limited to, Shores, LLC (“Defendant”). \r\nPlaintiff’s action arises out of the design and construction of a\r\n544-unit apartment complex owned by Defendant. \r\nIn pertinent part, Defendant retained Plaintiff, a general contractor,\r\nto perform all work associated with the construction of the subject property,\r\nincluding the installation of fire alarms and smoke detectors. Plaintiff\r\nalleges that Defendant failed to pay for services rendered relating to the\r\nconstruction of the subject property.

\r\n\r\n

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On March 6, 2014, Plaintiff\r\nfiled a Motion to Compel Arbitration pursuant to the contractual agreement\r\nbetween Plaintiff and Defendant. (Romyn\r\nDecl., ¶ 3.) The Court thereafter\r\nordered the parties to arbitration, wherein the issues before the Arbitrator\r\nincluded Plaintiff's allegation that Defendant failed to pay for work\r\nperformed, as well as Defendant’s alleged defense that the work performed was\r\ndefective. (Id., ¶¶\r\n4-6.) Relevant here, the Arbitrator agreed\r\nto withdraw Defendant’s claim regarding Plaintiff’s installation of an alleged\r\ndefective fire alarm system on the grounds that the claim constituted a\r\nwarranty claim. (Id., ¶\r\n7.) This issue is still of dispute\r\nbetween the parties and subject to litigation.

\r\n\r\n

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On April 27, 2021,\r\nPlaintiff filed a Motion for Terminating Sanctions, or In the Alternative,\r\nEvidentiary and Issue Sanctions against Defendant. On July 1, 2021, Defendant filed an\r\nOpposition. On July 8, 2021, Plaintiff\r\nfiled a Reply.

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LEGAL STANDARD

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Code of Civil Procedure §\r\n2023.030 empowers the Court to impose terminating, issue, and evidentiary\r\nsanctions in the event an individual engages in conduct which constitutes a\r\n“misuse of the discovery process”. (Code\r\nCiv. Proc., § 2023.030, subd. (b), (c), (d).) \r\nWhile Section 2023.010 outlines an array of acts which would constitute\r\n“misuses of the discovery process”, the acts constituting such are “not limited\r\nto” those acts explicitly outlined therein. \r\n(Code Civ. Proc., § 2023.010.) In\r\naddition to those acts outlined by Section 2023.010, the “spoliation of\r\nevidence” has been determined to be a misuse of the discovery process. (Williams v. Russ (2008) 167\r\nCal.App.4th 1215,1223 [“[a] terminating sanction is appropriate in the first\r\ninstance without a violation of prior court orders in egregious cases of\r\nintentional spoliation of evidence”].)

\r\n\r\n

\r\n\r\n

Spoliation occurs when evidence is destroyed or significantly altered\r\nor when there is a failure to preserve property for another's use as evidence\r\nin current or future litigation. (Hernandez\r\nv. Garcetti (1998) 68 Cal.App.4th 675, 680.) “A party moving for discovery sanctions based\r\non the spoliation of evidence must make an initial prima facie showing that the\r\nresponding party in fact destroyed evidence that had a substantial probability\r\nof damaging the moving party's ability to establish an essential element of his\r\nclaim or defense. [Citations.]”. (Williams, supra, 167 Cal.App.4th at p.\r\n1227.) Once the moving party has done\r\nso, the burden shifts to the opposing party to show that there is no prejudice\r\nfrom the destruction of evidence. (See id., at 1225-1226.)

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REQUEST\r\nFOR JUDICIAL NOTICE

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Plaintiff’s Request for\r\nJudicial Notice is GRANTED. While the\r\nCourt takes judicial notice of the existence of these court records, the Court\r\ndoes not take judicial notice of the truth of the matter asserted in these\r\nrecords.

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EVIDENTIARY\r\nOBJECTIONS

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Defendant makes seven\r\nevidentiary objections to the Declaration of Greg Parker, submitted in support\r\nof Plaintiff’s Motion. Objection Nos. 1\r\nthrough 7 are OVERRULED.

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Defendant makes ten evidentiary\r\nobjections to the Declaration of Timothy Connelly, submitted in support of\r\nPlaintiff’s Motion. Objection Nos. 1, 2,\r\n5, and 9 are OVERRULED. Objection Nos. 3,\r\n4, 7, 8 and 10 are SUSTAINED. Objection No. 6 is SUSTAINED, in part as to\r\n“replacement.”

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Plaintiff makes thirty-one\r\n(31) evidentiary objections to the Declaration of Bethany G. Lukitsche,\r\nsubmitted in support of Defendant’s Opposition. \r\nObjection Nos. 1 through 13, 15 through 31 are OVERRULED. Objection No. 14 is SUSTAINED.

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ANALYSIS

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Plaintiff argues it is\r\nentitled to terminating sanctions, or alternatively, issue and evidentiary\r\nsanctions due to Defendant’s failure to notify and, in actuality, invite\r\nPlaintiff to attend and inspect the removal of the fire alarm system in the\r\nsubject property prior to its removal. Specifically,\r\nPlaintiff argues Defendant entered into a contract to remove the subject fire\r\nalarm system on April 13, 2015, and failed to notify or invite Plaintiff to an\r\ninspection of the actual removal in approximately December of 2015. (Romyn Decl., ¶ 9, Ex. 6.) Plaintiff further argues Defendant’s failure\r\nto notify or invite Plaintiff to the removal of the fire alarm system\r\nconstitutes a “spoliation of evidence” because an issue in the present\r\nlitigation is whether the subject fire alarm system was properly installed and/or\r\ndefective.

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In opposition, Defendant\r\nargues the removal of the fire alarm system does not constitute spoliation of\r\nevidence because Defendant has retained all defective components of the fire\r\nalarm system which has been removed. (Opposition\r\n(“Opp.”), at p. 13:7-9.) The defective\r\ncomponents have been and remain available for inspection by Plaintiff, upon\r\nrequest. (Id.)

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Here, as an initial matter,\r\nthe Court finds that Defendant did indeed fail to notify Plaintiff of the date\r\nand time in which the subject fire alarm system would be removed and\r\nreplaced. The parties go into painful detail\r\nabout the correspondence between the parties and counsel in order to assist the\r\nCourt in determining whether or not Defendant notified Plaintiff of when the\r\nremoval of the fire alarm system would take place. The Court recognizes that Defendant\r\nmaintained communication with Plaintiff regarding its intent to remove and\r\nrepair the system, however, based on the review of the evidence submitted, the\r\nCourt finds it undisputed that Defendant failed to notify Plaintiff of the\r\nexact date and time in which the removal would occur.

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The Court next addresses\r\nwhether or not Defendant’s removal of the fire alarm system, and Defendant’s failure\r\nto notify Plaintiff of said removal, constitutes “spoliation of evidence.” Here, the Court is unpersuaded that the\r\nremoval and repair of the fire alarm system constitutes spoliation of evidence. In their motion, Plaintiff contends that two\r\nacts committed by Defendant constitutes the spoliation of evidence -- the\r\nremoval of the fire alarm system and Defendant’s failure to inform and\r\nprovide Plaintiff with an opportunity to inspect the removal of the fire alarm\r\nsystem. That conduct does not rise to\r\nthe level of spoliation because Plaintiff fails to explain how these acts have\r\ndamaged Plaintiff’s ability to establish an essential claim or defense with\r\nregard to whether the fire alarm system was defective or whether they were\r\nproperly installed. Defendant states,\r\nand Plaintiff recognizes, that the subject defective components of the fire\r\nalarm system are available for inspection as Defendant chose to retain all\r\nparts removed and repaired. (Opp., at p.\r\n13:7-9.) As a result, Plaintiff fails to\r\nmeet their burden of explaining how its discovery goals could not be achieved\r\nby inspecting the components that Defendant has retained. While that might true, Plaintiff has failed to\r\nprovide the Court with the necessary evidence to support that conclusion. The mere statement that these acts “deprived\r\n[Plaintiff], its experts and consultants, of the opportunity to observe the\r\nremoval process and the installation, testing, and functionality of the new\r\nsystem” (Reply, at p. 2:26-27) is insufficient. \r\nPlaintiff fails to establish that this alleged deprivation would prevent\r\nit from establishing a claim or defense, or how any issues could not be\r\nresolved by inspecting the new fire alarm system which has been installed and\r\nthe defective parts that Defendant is willing to make available for\r\ninspection. Accordingly, for these\r\nreasons, the Court is unpersuaded that Defendant’s activities constitute the spoliation\r\nof evidence.

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Finally, Plaintiff has not\r\nsubmitted evidence suggesting the removal of the fire alarm system was\r\nperformed in order to intentionally destroy evidence or deprive Plaintiff of\r\nsuch evidence. Rather, the evidence presented\r\nsuggests that Defendant was motivated to remove and repair the fire alarm\r\nsystem in order to protect its residents. \r\n(Opp., at p. 2:19-20.) There has\r\nbeen no evidence presented that suggests Defendant’s acts were motivated by\r\nefforts to conceal or destroy evidence to the detriment of Plaintiff.

\r\n\r\n

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For these reasons, Plaintiff’s\r\nMotion for Terminating Sanctions, or In the Alternative, Evidentiary and Issue\r\nSanctions is DENIED.

\r\n\r\n"

Case Number: BC538363    Hearing Date: May 19, 2021    Dept: M

CASE NAME: American/BCEGZ et al v. Shores LLC, et al.

CASE NO.: BC538363

MOTION: Trademark’s Demurrer to Nadel’s Residential and Commercial, Inc.’s Second Amended Cross-Complaint (“SACC”)

HEARING DATE: 5/19/2021

Background

The Court granted Nadel Leave to file a second amended cross-complaint (“SACC”), which was filed on December 18, 2020. As to Trademark, Nadel alleges three causes of action: (1) Ninth Cause of Action – Declaratory Relief (regarding the indemnity clause); (2) Tenth Cause of Action – Breach of Contract; and (3) Eleventh Cause of Action – Contractual Indemnity. (SACC ¶¶ 78-111.) On January 21, 2021, Trademark filed a demurrer to the SACC. Trademark demurs to the ninth, tenth, and eleventh causes of action.

Legal Standard

“Before filing a demurrer . . . the demurring party shall meet and confer . . . by telephone with the party who filed the pleading . . . for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41.) To properly file a demurrer with the court, the party must also file a declaration noting that he or she “met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer. [or] (B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.” (Code Civ. Proc., § 430.41(A) & (B).)

A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220. The court “may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.  (Young v. Gannon (2002) 97 Cal.App.4th 209, 220 (citing Moore v. Conliffe Montclair Parkowners Assn. v. City of Montclair The court treats all facts alleged in the complaint to be true. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732.)

When considering demurrers, courts “are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733 (citing Rogoff v. Grabowski (1988) 200 Cal.App.3d 624, 628.)) “The burden is on the plaintiff to demonstrate the manner in which the complaint can be amended.” (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 748.)

request for judicial notice

Trademark requests judicial notice of various pleadings in this case. Nadel objects to Trademark’ request for judicial notice, arguing that Trademark is improperly attempting to contradict the cross-complaint. Nadel contends that its cross-complaint accurately represents the contract provisions at issue and therefore Trademark does not have adequate grounds to support it request for Judicial Notice of its Subcontract. The Court denies Trademarks’ first request for judicial notice. Nadel’s request for judicial notice is GRANTED. Trademark submitted a supplemental request for judicial notice. Trademark seeks judicial notice of this Court’s ruling on the prior demurrer and this Court’s ruling on the cross-MSAs The Court GRANTS the request for judicial notice with respect to the prior ruling on the demurer but DENIES it as to the prior ruling on the MSAs.

Analysis

Cross-Defendant Trademark demurs to the ninth, tenth, and eleventh causes of action in the SACC filed by Nadel on sufficiency and uncertainty grounds.

Meet and Confer

The Court finds that the parties complied with the meet and confer requirements of Code of Civil Procedure section 430.41. (Vizzie Decl. ¶ 3.)

Sufficiency

Trademark argues that the ninth, tenth, and eleventh causes of action fail to set forth sufficient facts to state a cause of action against Trademark. As with Redrock, Trademark argues that Nadel lacks standing to enforce a written contract, namely, the construction contract between Shores and American, because it is not a party to that contract. Trademark also argues that Nadel’s contract-based claims fail because Nadel does not set forth the contract provisions verbatim and failed to include these contracts with the SACC. Trademark also argues that Nadel has not supported its breach of contract claim with facts. Finally, Nadel argues that the declaratory relief claim fails because it is duplicative of the tenth and eleventh causes of action.

As an alternative argument, Trademark argues that the cross-complaint is untimely. The Court addresses Trademark’s alternative argument first. Trademark raised Code of Civil Procedure section 583.210 as a bar to the SACC. In opposition Nadel argues that the Court already considered this argument when it granted Nadel leave to file the SACC. Here, the Court already considered this argument when it granted Nadel leave to amend and found that section 583.210 did not apply. Therefore, the demurrer is overruled on this basis.

Like Redrock, Trademark also cites The Ratcliff Architects v. Vanir Construction Management, Inc. (2001) 88 Cal.App.4th 595 (“Ratcliff Architects”) in support of its argument that Nadel cannot state a claim for breach of contract, and thus the ninth through eleventh causes of action fail. Trademark argues that this case is similar to Ratcliff Architects. The Court addressed Ratcliff Architects in its previous demurrer order. (See 05/11/2021 Minute Order on submitted matter at 5.) The Court’s reasoning on the prior demurrer with respect to Ratcliff Architects is equally applicable here. The Court cannot say as a matter of law that Nadel cannot state a claim for breach of contract on this basis because the contracts, or at least the material terms of the contracts, have not been attached to the SACC.

Trademark further argues that Nadel has not plead the legal effect of the contract and has not plead the contract in haec verba, making the claims insufficient. Trademark contends that Nadel has not alleged that it is a party to the contract with Trademark or that there is an exception that applies to the requirement of privity of contract. Trademark also argues that Nadel openly acknowledges it is a non-party to the Subcontract between American and Trademark, and as such, Nadel cannot enforce an indemnity obligation against Trademark based on the Ninth (Declaratory Relief), Tenth (Breach of Written Contract) and Eleventh (Contractual Indemnity) causes of action.

In opposition, Nadel argues that its interpretation of the ambiguous contract is controlling on demurrer, so long as that interpretation is not clearly wrong. Nadel also argues that it is not required to attach all of the contracts. Nadel also contends that its claims against Trademark are sufficient under Four Star Electric, Inc. v. F & H Construction In reply, Trademark argues that the complaint is insufficient under Gilmore v. Lycoming Fire Ins. Co. (1880) 55 Cal. 123.

“Where a party relies upon a contract in writing, and it affirmatively appears that all the terms of the contract are not set forth in haec verba, nor stated in their legal effect, but that a portion which may be material has been omitted, the complaint is insufficient.” (Gilmore v. Lycoming Fire Ins. Co. (1880) 55 Cal. 123, 124.) An “indemnitee seeking to recover on an agreement for indemnification must allege [(i)] the parties' contractual relationship, [(ii)] the indemnitee's performance of that portion of the contract which gives rise to the indemnification claim, [(iii)] the facts showing a loss within the meaning of the parties' indemnification agreement, and [(iv)] the amount of damages sustained. (Piggly Wiggly Yuma Co. v. Indemnity Co.  Witkin, Cal.Procedure (3d ed. 1985) Pleading, §§ 479–482, pp. 515–519; 14 Cal.Jur.3d, Contribution and Indemnification, § 65, p. 727.)” (Four Star Electric, Inc. v. F & H Construction (1992) 7 Cal.App.4th 1375, 1380, reh'g denied and opinion modified (Aug. 4, 1992).)

Trademark argues that the declaratory relief claim fails because the claim is derivative of the breach of contract claims. (See Ball v. FleetBoston Financial Corp. Trademark also argues that there is no controversy between Nadel and Trademark. Nadel argues that since it has standing to pursue the breach of contract claims, it too has standing to assert the declaratory relief claim. Here, the Court found that Nadel’s breach of contract claims against Trademark are insufficiently plead because Nadel did not include all relevant language of the at issue contracts. Therefore, the declaratory relief claim also fails. The demurrer to the ninth, tenth, and eleventh causes of action is sustained.

Nadel is granted five days leave to amend the pleadings in order to include the contracts at issue.

Case Number: BC538363    Hearing Date: May 11, 2021    Dept: M

CASE NAME: American/BCEGZ et al v. Shores LLC, et al.

CASE NO.: BC538363

MOTION: Redrock Security and Cabling, Inc.’s Demurrer to Nadel’s Residential and Commercial, Inc.’s Second Amended Cross-Complaint (“SACC”)

HEARING DATE: 5/11/2021

Background

The Court granted Nadel Leave to file a second amended cross-complaint (“SACC”), which was filed on December 18, 2020. Nadel was the architect on the Shores’ 544-unit apartment complex. (See SACC ¶¶ 1, 57.) Redrock was the fire alarm subcontractor. (See SAC ¶¶ 85.) As to Redrock, Nadel alleges three causes of action: (1) Ninth Cause of Action – Declaratory Relief (regarding the indemnity clause); (2) Tenth Cause of Action – Breach of Contract; and (3) Eleventh Cause of Action – Contractual Indemnity. (SACC ¶¶78-111.) On January 20, 2021, Redrock Security and Cabling, Inc. filed a demurrer to the SACC. Redrock demurs to the ninth, tenth, and eleventh causes of action.

Legal Standard

“Before filing a demurrer . . . the demurring party shall meet and confer . . . by telephone with the party who filed the pleading . . . for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41.) To properly file a demurrer with the court, the party must also file a declaration noting that he or she “met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer. [or] (B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.” (Code Civ. Proc., § 430.41(A) & (B).)

A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220. The court “may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.  (Young v. Gannon (2002) 97 Cal.App.4th 209, 220 (citing Moore v. Conliffe Montclair Parkowners Assn. v. City of Montclair The court treats all facts alleged in the complaint to be true. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732.)

When considering demurrers, courts “are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733 (citing Rogoff v. Grabowski (1988) 200 Cal.App.3d 624, 628.)) “The burden is on the plaintiff to demonstrate the manner in which the complaint can be amended.” (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 748.)

request for judicial notice

Redrock seeks judicial notice of four documents that are part of the Court’s record in this case. The request is granted as to Exhibits 1-3. The Court does not take judicial notice of the declaration of Daniel J. Brast, Esq. Redrock filed an amended request for judicial notice on April 20, 2021, seeking judicial notice of the Court’s ruling on the summary adjudication motions. The amended request is granted.

Analysis

Cross-Defendant Redrock demurs to the ninth, tenth, and eleventh causes of action in the SACC filed by Nadel on sufficiency grounds.

Meet and Confer

The Court finds that the parties complied with the meet and confer requirements of Code of Civil Procedure section 430.41. (Brast Decl. ¶¶ 3 - 5.)

A. Sufficiency

Redrock argues that the tenth and eleventh causes of action fail to set forth sufficient facts to state a cause of action against Redrock.

Supplemental arguments

Redrock submitted a supplemental brief without the Court’s prior permission. Parties are not to submit supplemental briefing in this action unless the Court directly requests supplemental briefs. Here, Nadel addressed that arguments raised in the supplemental brief and Redrock reiterated the argument in reply. Therefore, the Court considers that argument this time.

In a supplemental brief, Redrock argued that the Court’s ruling on American’s and Shores’ summary adjudication motions render Nadel’s allegation at paragraph 60 of its SACC conclusively false, namely that all covenants and conditions in the Construction Contract were performed. Redrock further argues that Nadel cannot establish a claim for express indemnity under the Construction Contract.

In opposition, Nadel argues that Redrock misinterprets the Court’s ruling on the summary adjudication motions to argue that the Arbitrator’s finding of breach by Shores is dispositive to Nadel’s claim for indemnification. Nadel further correctly argues that the collateral estoppel argument does not apply because Nadel was not a party to the underlying arbitration and therefore cannot be bound by the Arbitrator’s ruling. Here, the summary adjudication ruling is not a bar to the cross-complaint because the Shores/American cross-motions for summary adjudication related to whether or not a condition-precedent applied to the claim of liability on the surety’s bond. Moreover, much like how the Insurance Company of the State of Pennsylvania was unable to argue collateral estoppel in their motion for summary adjudication of these same claims by Shores and American, Nadel was not a party to that arbitration and as a result, there is no collateral estoppel argument. For these reasons, the demurrer is overruled on this basis.

Insufficient facts

Redrock contends that Nadel selectively included terms of the agreements in the SACC and failed to include a provision in the contract on third party beneficiaries to mislead the Court. This contention is outside of the pleadings and the Court does not consider it at the demurrer stage.

Redrock argues that Nadel has not plead the legal effect of the contract and has not plead the contract in haec verba, making the claims insufficient, citing, Gilmore v. Lycoming Fire Ins. Co. Nadel argues that the breach of contract claim is sufficient under Four Star Electric, Inc. v. F & H Construction (1992) 7 Cal.App.4th 1375. In Gilmore, the Supreme Court provided that “Where a party relies upon a contract in writing, and it affirmatively appears that all the terms of the contract are not set forth in haec verba, nor stated in their legal effect, but that a portion which may be material has been omitted, the complaint is insufficient.” (Gilmore v. Lycoming Fire Ins. Co. (1880) 55 Cal. 123, 124.)

In Four Star Electric, Inc. v. F & H Construction An “indemnitee seeking to recover on an agreement for indemnification must allege [(i)] the parties' contractual relationship, [(ii)] the indemnitee's performance of that portion of the contract which gives rise to the indemnification claim, [(iii)] the facts showing a loss within the meaning of the parties' indemnification agreement, and [(iv)] the amount of damages sustained. (Piggly Wiggly Yuma Co. v. Indemnity Co.  Witkin, Cal.Procedure (3d ed. 1985) Pleading, §§ 479–482, pp. 515–519; 14 Cal.Jur.3d, Contribution and Indemnification, § 65, p. 727.)” (Four Star Electric, 7 Cal.App.4th at 1380, reh'g denied and opinion modified (Aug. 4, 1992).)

Here, Nadel seeks to be indemnified. Nadel has not alleged facts of its own performance of that portion of the contract which gives rise to the express indemnification claim. As a result the breach of contract and the express indemnity claims fail. Furthermore, Nadel did not attach any of the contracts to the complaint and only pleads portions of the contracts. Under both Gilmore and Four Star Electric, the breach of contract claims are insufficiently plead.

Third-party beneficiary

Nadel argues that it seeks pass-through indemnification via the General Contractor’s Contract with Shores and the existence of that contract. Redrock argues that Nadel does not allege that it is a party to the Redrock Subcontract, citing paragraph 97 of the SACC. The Court agrees that Nadel has not alleged in the complaint that it is a party to the Redrock contract. Redrock argues that since Nadel is not in privity of contract with Redrock, the only way Nadel could enforce the Redrock subcontract is through third-party beneficiary status.

Redrock cites The Ratcliff Architects v. Vanir Construction Management, Inc. (2001) 88 Cal.App.4th 595 (“Ratcliff Architects”) in support of its position. In opposition, Nadel argues that the subcontract at issue does allow for a third party rights. (See Opp. at 5:9-16.). Nadel also argues that there is extrinsic evidence that shows that the contract allows for third party rights. The Court notes once again that it does not consider facts outside of the pleadings or facts that are not subject to judicial notice on demurrer.

In Ratcliff Architects, the architect tried to enforce an indemnity provision in a contract between the school district (BUSD) and the two construction managers. (Ratcliff Architects v. Vanir Construction Management, Inc. (2001) 88 Cal.App.4th 595, 601.) The architect was not a party to the contract with the indemnity provision. (Id.) The parties disputed that the indemnity provision allowed the architect to seek indemnification; the constructions managers arguing that the contract had to be interpreted as a whole and was unambiguous that the contract did not create third party rights. The architect argued that the contract contained contradictory terms and that the indemnification clause, which the architect argued was more specific, should be given effect of the general third party exclusion provisions. The Court of Appeal concluded that the construction managers’ “construction of the contract [was] more persuasive and accords with the well-settled law of contract construction.” (Id. at 603.) The Court concluded that the architect “had no right to enforce the indemnification provision in the contract, and therefore the court properly sustained the demurrers to the two contract claims.” (Id. at 604.)

The Court notes that, unlike here, the architect in Ratcliff Architects had plead substantially more of the language of the contract. The Ratcliff’s court’s ruling was based on the inclusion of this language, which allowed the court to determine at the demurrer stage whether the indemnification provision applied to the architect. In contrast, Nadel’s SACC does not contain the entire contract, including any third party beneficiary waiver that may be present. The Court cannot conclude as a matter of law that Nadel cannot bring these claims, because the Court does not have the benefit of the entire contract.

Civil Code section 2782

Redrock argues that contract provisions which require indemnity for design defects are void and unenforceable under Civil Code Section 2782(a). Redrock argues that Nadel is barred

from recovering anything under the indemnity clause because some or all of Shores’ damages would be attributable to Nadel’s sole negligence and/or design defects. In opposition, Nadel argues that the Civil Code section 2782 determination is improper at the demurrer stage because that is a question of fact for the jury. “Whether the negligence is active or passive in nature is generally a question of fact for jury determination.” (Baldwin Contracting Co. v. Winston Steel Works, Inc. Since this determination necessarily involves a question of fact, it is an improper basis for demurrer.

Declaratory relief

Redrock argues that the declaratory relief claim fails for the same reasons as the breach of contract claims. Nadel incorporated all allegations into its breach of contract claims. The declaratory relief claim against Redrock seeks a declaration that Redrock is required to indemnify Nadel. (See SACC ¶¶ 104.) Nadel did not address the declaratory relief claim in its opposition. Here, the court found that Nadel’s breach of contract claims against Redrock are insufficiently plead because Nadel selectively included language of the contract. Therefore, the declaratory relief claim also fails.

For these reasons, the demurrer to the ninth, tenth, and eleventh causes of action is sustained.

Leave to amend

Plaintiff or cross-complainant must show in what manner the pleading can be amended and how that amendment will change the legal effect of the pleading. (See Goodman v. Kennedy Nadel will be given the opportunity to explain how it can remedy these defects at the hearing.

Case Number: BC538363    Hearing Date: April 8, 2021    Dept: M

CASE NAME: AMERICAN/BCEGZ ET AL v. SHORES LLC ET AL

CASE NO.: BC538363

MOTION: American/BCEGZ, American Multifamily, Inc., and BCEGI- USA, Inc.’s MSA of the Fifth and Fifteenth Causes of Action in Shores, LLC’s Third Amended Cross-Complaint; Shores’ MSA on Fifth and Fifteenth Causes of Action

HEARING DATE: 4/8/2021

Background and Procedural history

In 2011, American/BCEGZ a Joint Venture, as general contractor (“American”) entered a construction contract with project owner Cross-Complainant Shores, LLC (“Shores”) to build an apartment complex in Marina Del Rey, California (“Project”). American posted a construction performance bond to provide security for the work to be performed, bond Number 879889 (the “Bond”), issued by Cross-Defendant The Insurance Company of Pennsylvania (the “Surety”).

On March 23, 2018, the Court denied the Surety’s Motion for Summary Adjudication on Shores’ second amended cross-complaint. (See 03/23/2018 Minute Order.)

On September 5, 2018, in its third amended cross-complaint (“TACC”, attached to the Romyn declaration), Shores seeks through the Fifth Cause of Action (Recovery on Performance Bond) and Fifteenth Cause of Action (Declaratory Relief) a judgment that it is entitled to recover against the Bond.

The fifth cause of action is against Surety, American, American Multifamily, Inc., BCEGI-USA, INC. and Roes 1-100. (See TACC at pp. 28.) The fifth cause of action states:

Shores is informed and believes and thereon alleges that, pursuant to The JV Contract, Contractor Cross-Defendants AMERICAN/BCEGZ, a Joint Venture, AMERICAN MULTIFAMILY, INC., a California corporation, and BCEGI-USA, INC., a Texas corporation, were required to purchase a Performance Bond insuring the JV's faithful performance of the scope of work set forth in the said Contract.

(TACC ¶ 85.)

Shores is informed and believes and thereon alleges that, Surety issued a Performance

Bond, with The JV as principal. Joseph S. Schuelke, as Secretary and COO of BCEGZ-

USA, Inc., a Texas corporation, executed the Performance Bond on its behalf and Gregory A Parker, President and CEO, of American Multifamily, Inc., a California corporation executed the Performance Bond on its behalf. The Performance Bond names Shores and the Lender as obligees.”

(Id. ¶ 86.)

Contractor Cross-Defendants, and each of them, have failed to faithfully perform their obligations under the contract requiring the Surety Cross-Defendant to pay the full amount of Shores' damages, the precise amount of which is unknown at this time.”

(Id. ¶ 87.)

The Fifteenth Cause of action is an action for declaratory relief against Cross-Defendants, Surety, American/BCEGZ, AMERICAN MULTIFAMILY, INC., BCEGI-USA, INC. and ROES 1-100. (See TACC ¶¶ 136 – 150.) The Court includes the allegations here for convenience:

136. Shores has certain rights under the payment provisions of the Construction Contract. Included among them are Shores' right to rely on the Architect to certify American's payment applications and to approve American's proposed change orders, as well as Shores' right to withhold disputed amounts pending resolution of the arbitration process and to retain 10 % of each progress payment ("Retention") until final payment is owed, as determined pursuant to the arbitration process required by the Construction Contract. Under the Construction Contract, Retention in the amount of $11,5000,000 was not due until HUD deemed the Project to have achieved Final Completion. The Construction Contract required that HUD and RED approve all change orders to the Construction Contract. Moreover, the Loan Disbursement Agreement provided that the Title Company would make no payments if mechanic's liens were recorded against the Project (§4(b)(2)) and that the Final Advance (i.e., Retention) would be advanced by RED to the Title Company for disbursement to American only "after completion of construction and any required cost certification and final approval by HUD."

137. American recorded a mechanic's lien against the Project in the amount of $21,391,114.79 on December 9, 2013, the same date that American submitted to Shores the Application for Payment seeking retention (Shores did not receive the Application for Payment until December 10, 2013, the day after American had already recorded its $21 million mechanic's lien). On January 3, 2014, American recorded a second mechanic's lien, also in the amount of$21,391,1143.79, against the Project, but did not release its first mechanic's lien (recorded on December 9, 2013). Thus, American liened the Project for over $42 million, which was far more than American was entitled to be paid under the Construction Contract (and far more than awarded by the Arbitrator in the Award) resulting in the payment dispute between American and Shores.

138. By recording its mechanic's liens, American prevented payment under §4(b)(2) of the Loan Disbursement Agreement and §7.7.1 of the Supplementary Conditions, forcing the payment dispute to be resolved in arbitration as required by the Construction Contract. Additionally, the Architect did not certify the disputed claims, nor did RED and HUD approve the disputed change orders. Shores, by right, disputed amounts claimed by American, which were not certified as owed by the Architect, not approved by HUD or RED, and not approved by the Title Company because American had recorded premature liens against the Project before Final Payment was due.

139. The Construction Contract, Supplementary Conditions, §7.7.1 states in pertinent part: "Owner will not pay the disputed millions of the costs of directed work until they have been resolved through either mutual agreement or the dispute resolution procedures set forth in these Supplementary Conditions."

140. The Construction Contract, A201 General Conditions, §15.1.3 states: "Pending final resolution of a Claim including arbitration, unless otherwise agreed in writing, the Contractor shall proceed diligently with performance of the Contract and Owner will pay the undisputed portion of the Claim. The Owner shall continue to make payments in accordance with the Contract Documents and retains the right to retention or partial retention of payments as provided in Article 9."

141. The Construction Contract, Supplementary Conditions, § 15.3.1, states ... [A]ny remaining Claims, disputes, and other controversies between Contractor and owner shall be subject to and decided by binding arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association currently in effect..."

142. As alleged herein, Shores and American submitted their legitimate payment disputes to arbitration.

143. Shores and American resolved their legitimate payment dispute in arbitration in accordance with the Construction Contract.

144. Shores paid all amounts due and owing American pursuant to a full and final settlement agreement following completion of the arbitration, resulting in dismissal, with prejudice, of all claims asserted by American against Shores in this lawsuit.

145. As is customary, the Construction Contract is incorporated in and made part of the Bond by reference.

146. Shores respectfully asks the Court to construe the terms of the Construction Contract and the Bond to give effect to and reconcile the related provisions of both agreements. Shores moves the Court to order and declare as follows:

147. The Construction Contract, A201 General Conditions, §15.1.3, Supplementary Conditions, §7.7.1, and the Construction Loan Disbursement Agreement, §4(b)(2), prohibited Shores from making any payment of disputed amounts to American pending final resolution of all payment disputes in arbitration;

148. The Construction Contract, A201 General Conditions, §15.1.3, and Supplementary Conditions, §§15.2.1 and 15.3.1, required the parties to resolve all payment disputes in arbitration;

149. Pursuant to Cal. Civ. Code § 8152, and because the Construction Contract prohibited Shores from making payment to American of disputed amounts prior to final resolution of all payment disputes in arbitration, the Bond cannot be construed to condition the Surety's liability on payment of disputed amounts prior to or during an arbitration, in direct contravention of the Construction Contract incorporated into the Bond;

150. Any such condition does not extinguish Pennsylvania Insurance's liability because, even if the provision could (it cannot) be construed as a condition precedent, Shores' satisfied any such condition by following the terms of the Construction Contract (incorporated into the Bond and made a part thereof) and by paying American all monies owed following the mandatory arbitration.

(See TAC ¶¶ 135-150.)

On September 6, 2018, Shores filed an MSA on its fifth and fifteenth causes of action in its TACC. On September 22, 2020, American filed a cross-motion for summary adjudication on the fifth and fifteenth causes of action in Shores’ TACC.

SUMMARY OF American’s MSA[1]

American argues that it is entitled to summary adjudication of the fifth cause of action as a matter of law because the undisputed material facts establish that an event or performance which is an express condition precedent to liability under the Bond issued by the Surety did not occur. American contends that the Surety’s bond provided that Surety shall not be liable under the bond unless Shores complied with the terms of the Construction Contract including, but not limited to, making payment to the principal on the bond, American/BCEGZ JV strictly in accordance with terms of the bonded Contract and otherwise performs as required under said Contract.

In their MSA, American argues that it is now res-judicata as established by collateral estoppel, that Shores failed to pay American as required by its Contract with American and failed to approve valid requests for change orders for additional project costs and time extensions. Further, Shores failed to comply with the terms of the Construction Contract which mandated that all disputes arising out of the Construction Contract be resolved by arbitration. Hence, the condition precedent to potential liability on the Bond did not occur and Shores is estopped to deny otherwise. Accordingly, American is entitled to judgment on Shores’ bond enforcement action as a matter of law because the express condition to potential liability on the Bond did not occur.

SUMMARY OF Shores’ MSA

Shores moves for summary adjudication on its 5th and 15th Causes of Actions arguing:

As an initial matter, Surety cannot be released from liability on the Bond pursuant to California Civil Code § 8152. Section 8152 states that a surety cannot be released from a bond by relying on a condition precedent or if there was a change or modification to the terms of payment. Shores submits that there is no condition precedent in the Bond absolving Surety from liability. But to the extent the terms of the Bond are construed to contain a condition precedent, Section 8152 prohibits Surety from being released from liability on the Bond. Moreover, because the payment dispute between Shores and American was subsequently resolved through a final settlement agreement following completion of the arbitration, the Settlement Agreement is a change or modification to the terms of payment that also precludes Surety from being released from the Bond. The surety cannot assert collateral estoppel.

Shores moves the Court to determine the legal meaning of certain payment and dispute resolution provisions of the Construction Contract and Construction Loan Disbursement Agreement, together with the Alleged Condition Precedent in the Bond.

In addition, Shores seeks a declaratory judgment on the following five issues:

  1. The Alleged Condition Precedent cannot be construed as a waiver or forfeiture of Shores’ rights under the Bond and/or Construction Contract, thereby completely disposing of the Cross-Defendants’ affirmative defense;

  2. The Construction Contract, A201 General Conditions, §15.1.3, Supplementary conditions, §7.7.1, and the Construction Loan Disbursement Agreement, §4(b)(2), prohibited Shores from making any payment of disputed amounts to American pending final resolution of all payment disputes in arbitration;

  3. The construction contract, A201 general conditions, §l5.1.3, and supplementary conditions, §§15.2.l and 15.3.1, required the parties to resolve all payment disputes in arbitration

  4. Because the construction contract prohibited shores from making payment to American of disputed amounts prior to final resolution of all payment disputes in arbitration, the bond provision cannot be construed as a condition precedent to the surety’s liability in direct contravention of the construction contract incorporated into the bond, thereby completely disposing of cross-defendants’ affirmative defense;

  1. The alleged condition precedent does not extinguish Pennsylvania Insurance’s liability because, even if the provision could (it cannot) be construed as a condition precedent, Shores’ satisfied any such condition by following the terms of the construction contract (incorporated into the bond and made a part thereof) and by paying American all monies owed following the mandatory arbitration, thereby completely disposing of Cross-Defendants’ affirmative defense.

The Court notes that Issue 1 is not an allegation of the TACC for the declaratory relief claim. Issue 2 is paragraph 147 of the TACC, Issue 3 is paragraph 148, Issue 4 is paragraph 149 and Issue 5 is paragraph 150.

Legal Standard

The purpose of a motion for summary judgment or summary adjudication “is to provide courts with a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact necessary to resolve their dispute.”  (Aguilar v. Atl. Richfield Co(2001) 25 Cal. 4th 826, 843.)  “Code of Civil Procedure section 437c, subdivision (c), requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) 

“The supporting papers shall include a separate statement setting forth plainly and concisely all material facts which the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with this requirement of a separate statement may in the court's discretion constitute a sufficient ground for denial of the motion.” (Code Civ. Proc., § 437c(b)(1); see also Cal. Rules of Court, rule 3.1350(c)(2) & (d).)

“The opposition papers shall include a separate statement that responds to each of the material facts contended by the moving party to be undisputed, indicating if the opposing party agrees or disagrees that those facts are undisputed. The statement also shall set forth plainly and concisely any other material facts the opposing party contends are disputed. Each material fact contended by the opposing party to be disputed shall be followed by a reference to the supporting evidence. Failure to comply with this requirement of a separate statement may constitute a sufficient ground, in the court's discretion, for granting the motion.” (Code Civ. Proc., § 437b(b)(3) (emphasis added).)

“On a motion for summary judgment, the initial burden is always on the moving party to make a prima facie showing that there are no triable issues of material fact.”  (Scalf v. D. B. Log Homes, Inc(2005) 128 Cal.App.4th 1510, 1519.)  The moving party is entitled to summary judgment if they can show that there is no triable issue of material fact or if they have a complete defense thereto. (Aguilar v. Atlantic Richfiend Co. (2001) 25 Cal.4th 826, 843.)  

In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) Pursuant to Code of Civil Procedure section 437c(p)(2):

A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if that party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to that cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. The plaintiff or cross-complainant may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.

When deciding whether to grant summary judgment, the Court must consider all of the evidence set forth in the papers, except evidence to which the Court has sustained an objection, as well as all reasonable inferences that may be drawn from that evidence, in the light most favorable to the party opposing summary judgment.  (Avivi, 159 Cal. App. 4th at 467.)   

“A moving defendant now has two means by which to shift the burden of proof under subdivision (o)(2) of section 437c to the plaintiff to produce evidence creating a triable issue of fact. The defendant may rely upon factually insufficient discovery responses by the plaintiff to show that the plaintiff cannot establish an essential element of the cause of action sued upon…. Alternatively, the defendant may utilize the tried and true technique of negating (‘disproving’) an essential element of the plaintiff's cause of action.” (Brantley v. Pisaro (1996) 42 Cal.App.4th 1591, 1598. See also Code Civ. Proc., § 437c(p)(2).) A moving defendant must show that plaintiff cannot reasonably obtain evidence to prove a cause of action, which is more than simply arguing that there is an absence of evidence. (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.)  

A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty. (Code Civ. Proc., § 437c(f)(1).)

REQUEST FOR JUDICIAL NOTICE

American requests judicial notice of Exhibit 1 in support of its motion for summary adjudication. Exhibit 1 is a prior ruling in this case denying summary adjudication to the surety. The Court takes judicial notice of the court’s prior order but does not take judicial notice of the truth or facts asserted therein.

EVIDENTIARY OBJECTIONS

American submits 25 evidentiary objections to the Levine Declaration and 15 objections to the Rodarti Declaration submitted in support of Shores’ motion for summary adjudication.

Objection nos. 1 and 20 to the Levine Declaration – overruled.

Objections nos. 2 – 6, 8 ­– 12, 14 – 19, and 21 – 25 to the Levine Declaration – sustained.

Objection no. 7 – sustained in part as to “which was far more than American was entitled to be paid under the Construction Contract”

Objection no. 13 -- sustained in part as to “legitimately disputed American’s claims.”

Objection nos. 1, 3, 5, 6-10, and 13-15 to Rodarti Declaration – sustained.

Objection no. 2, 4, and 11 to Rodarti Declaration – overruled.

Analysis

American’s MSA

COA 5: Breach of Performance bond

Shores’ fifth cause of action is for breach of a performance bond. A performance bond is a contract. (Pacific Employers Ins. Co. v. City of Berkeley (1984) 158 Cal.App.3d 145, 150.) The elements of a cause of action for breach of contract are: (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) “[A]s a general rule, a contract performance bond will be read with the contract.” (Pacific Employers Ins. Co. v. City of Berkeley, supra, 158 Cal.App.3d at 150.) “However, “The liability on a bond may be enforced by civil action. Both the principal and the sureties shall be joined as parties to the action.” (Code Civ. Proc., § 996.430(a).)

American argues that this Court previously found that the language in the performance bond contained a condition precedent when it denied the Surety’s motion for summary adjudication. As to this issue, the Court notes that a “[d]enial of a motion for summary judgment [or summary adjudication] does not establish any fact or resolve any issue; it merely determines that the issues will be decided later, at the time of trial.” (Emerald Bay Community Assn. v. Golden Eagle Ins. Corp.

American also argues that it is entitled to summary adjudication as to the fifth cause of action because a condition precedent, which American refers to as a savings clause, did not occur. American argues that the findings in the Arbitration between American and Shores serves as collateral estoppel because the arbitrator found that Shores materially breached the contract and American was excused from performing.

In opposition, Shores argues that the condition precedent is unenforceable due to conflicting terms in the construction agreement. Shores also argues that the condition violates Civil Code section 8152(d). Shores contends that to the extent that the clause is a condition precedent, the provision is not triggered because Shore strictly complied with the construction contract by bringing its claims to arbitration. Shores also argues that American has not met all of the elements of collateral estoppel and that Civil Code section 854(b) prohibits the Surety from escaping liability. Finally, in reply, American argues that Civil Code sections 8152 and 8154 do not apply to performance bonds and that Shores’ case law does not support the contention that the at-issue clause is not a condition precedent. American also argues that Shores’ payments under the settlement agreement cannot be construed as compliance with the construction agreement.

Do Civil Code sections 8152 and 8154 apply to performance bonds?

Section 8152 begins by stating, “None of the following releases a surety from liability on a bond given under this part . . .” which refers to Part 6 Works of Improvement of Division 4 General Provisions of the Civil Code. (Civ. Code, § 8152.) Part 6, Chapter 1 entitled General Provisions expressly provides for and includes “Payment Bonds,” but does not include performance bonds. (See Civ. Code, §8000, et seq.) Moreover, a Payment Bond is further defined depending on the title of Chapter 6, specifically Title 2 or Title 3. (See Civ. Code, § 8030.) Section 8154(b) provides, “A surety is not released from liability to those for whose benefit the bond has been given by reason of a breach of the direct contract or on the part of any obligee named in the bond.” (Civ. Code, § 8154(b). Both Sections 8152 and 8154 are contained within Title 1, and Title 1 does not explicitly state that it applies to performance bonds. As a result, the Court concludes that these sections do not apply to performance bonds.

The Terms of the Performance Bond

“A suretyship obligation is to be deemed unconditional unless its terms import some condition precedent to the liability of the surety.” (Civ. Code, § 2806.). The “primary purpose of a performance bond is to protect the obligee against the risk of the principal's default on the construction contract. [Citation omitted.]” (Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 57.) “[P]arties to a contract may, if they think proper, agree that any matter shall be a condition precedent; and if words are used in the contract so precise, express, and strong that such intention only is compatible with the terms employed, a court can only give effect to such declared intention of the parties.” (Schwab v. Bridge

The performance bond was for $111,110,580.00. (See Ex. 2 to Parker Decl. ISO American MSA.) The performance bond incorporates the Construction Contract[2] by reference. (See Ex. 2 at p. 1 to Parker Decl. ISO American MSA [PDF page 152].) The performance bond states “whereas, lender has agreed to lend to Owner-Obligee a sum of money to be secured by a mortgage on said project and to be used in making payments under said Contract, and desires protection as its interests may appear, in event of default by Principal[3] under said Contract, said protection to be subject to the performance by the Obligee, or either of them, of the obligations to Principal in connection with said Contract.” (See Ex. 2 at p. 1 to Parker Decl. ISO American MSA [PDF page 152].) The next paragraph reads, “Now, Therefore, the condition of this obligation is such that, if Principal shall well and truly perform all the undertakings, covenants, terms, conditions and agreements of said Contract on its part, and fully indemnify and save harmless Obligees[4] from all costs and damage which they may suffer by reason of failure so to do, and fully reimburse and repay Obligees all outlay and expense which Obligees may incur in making good any such default, the this obligation shall be null and void; otherwise it shall remain in full force and effect.” (See Ex. 2 at p. 1 to Parker Decl. ISO American MSA [PDF page 152].) however, the performance bond is further states, “The foregoing, however, is subject to the following further provisions:

The Surety[5] shall not be liable under this Bond to the obligees [Shores, LLC and Red Mortgage], or either of them, unless said obligees, or either of them, shall make payment to the Principal [American] strictly in accordance with the terms of said Contract as to payments, and shall perform all other obligations to be performed, under said Contract at the time and in the manner therein set forth.

. . . .

(See Ex. 2 at p. 2 to Parker Decl. ISO American MSA [PDF page 152] [emphasis added].)

The Court finds that the performance bond has a condition precedent. The condition explicitly states that the surety will not be liable on the performance bond unless the obligees on the bond make payments as provided under the construction contract and also perform all other contractual obligations when required to do so. Therefore, in order for Shores to prevail, Shores must demonstrate that it timely performed.

Whether the clause is enforceable

Shores does not dispute the existence of the above language in the agreement as described by American, or that it is not a condition precedent. Instead, Shores argues that the condition precedent is unenforceable because it contradicts terms in the Payment Terms in the Construction Contract. Shores cites section 15.1.3, and 7.7.1 in support of this argument. Shores argues that these sections prohibited payments. Section 15.1.3 deleted the original subparagraph in the form contract and modified it to state, “Pending final resolution of a Claim including arbitration, unless otherwise agreed in writing, the Contractor shall proceed diligently with performance of the Contract and Owner will pay the undisputed portion of the Claim. The Owner shall continue to make payments in accordance with the Contract Documents and retains the right to retention or partial retention of payment as provided in Article 9.” (See Ex. 2 at [pdf page 147].) Section 7.7.1 was also added to the Construction Agreement. (See Ex. 1 at pdf page 133].) Section 7.7.1 added new paragraphs and subparagraphs as to Change Order Adjustments and does not mention mechanic’s liens. Shores argues that the payment provision of the Construction Contract were modified by the Construction Loan Disbursement Agreement. American did not address this issue. Shores included the Loan Disbursement Agreement as Exhibit “4” to the Levine Declaration. (See Ex. “4” to Levine Decl.) The Loan Disbursement Agreement merely provides the process for which to obtain final payment. (See Ex. “4” at ¶¶ 3-4.) Here, there is nothing in the Construction Loan Disbursement Agreement that states that it is explicitly modifying the Construction Contract, or the amendments to the Construction contract. In a footnote, Shores argues that it legitimately disputed American’s claims that were not certified by HUD, RED, or the Title Company, citing the Loan Disbursement Agreement, section 4(b)(2). Neither Section 15.1.3 nor the language in section 7.7.1 prohibited payment as Shores contends.

Shores also argued the condition precedent is a forfeiture. “A condition involving a forfeiture must be strictly interpreted against the party for whose benefit it is created.” (Civ. Code, § 1442.) American argues that that condition precedent does not create a forfeiture and that Shores’ contention is not supported by facts or law. The Court understands Shores to be arguing that the condition precedent creates an implied forfeiture by allegedly preventing Shores from invoking the arbitration procedures in the Construction Contract. “A forfeiture can never take place by implication, but must be effected by express, unambiguous language.” (Conolley v. Power (1924) 70 Cal.App. 70, 75 [quoting Cullen v. Sprigg (1890) 83 Cal. 56, 64, 23 P. 222].) The Court finds that the condition precedent does not create a forfeiture.

Whether American has shown that Collateral estoppel applies

In addition to condition precedent, American raised collateral estoppel as an affirmative defense. American argues that the Arbitration Award serves as collateral estoppel against Shores in that it is now undisputed that the condition precedent (Shores’ performance) to liability under the Bond did not occur.

Some cases in California “have concluded that findings made during arbitrations may be given collateral estoppel effect in a subsequent lawsuit. (See, e.g., Gordon v. G.R.O.U.P., Inc. (1996) 49 Cal.App.4th 998, 1010, 56 Cal.Rptr.2d 914 [uninsured motorist arbitration]; Sartor v. Superior Court (1982) 136 Cal.App.3d 322, 327–328, 187 Cal.Rptr. 247 [commercial arbitration].)” (Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1335–1336.) “To determine whether particular arbitration proceedings provided a full and fair opportunity to litigate, courts typically proceed case-by-case, assessing multiple factors including the extent to which the arbitration resembled a court trial.” (Vandenberg v. Superior Court

It is . . . appropriate to give collateral estoppel effect to findings made during an arbitration, so long as the arbitration had the elements of an adjudicatory procedure. (See Rest.2d Judgments, § 84, subd. (3)(b).) [For Example,] [f]indings made during an administrative hearing may collaterally estop a party from relitigating issues in a later action when the hearing possessed a “judicial character.” (People v. Sims (1982) 32 Cal.3d 468, 479, 186 Cal.Rptr. 77, 651 P.2d 321.) Parties to an arbitration, like parties to administrative hearings, are often afforded the opportunity for a hearing before an impartial and qualified officer, at which they may give formal recorded testimony under oath, cross-examine and compel the testimony of witnesses, and obtain a written statement of decision. When an arbitration has these attributes, it is not unjust to bind the parties to determinations made during the proceeding. [Footnote Omitted.]

(Kelly v. Vons Companies, Inc. (1998) 67 Cal.App.4th 1329, 1336–1337.) The party asserting claim preclusion must show “(1) A claim or issue raised in the present action is identical to a claim or issue litigated in a prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the party against whom the doctrine is being asserted was a party or in privity with a party to the prior proceeding.” (Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal.App.4th 550, 556 [Citations omitted].)

In opposition, Shores argues that American has not shown that collateral estoppel is applicable because the Arbitrator did not decide the issue of whether the Surety’s liability on the bond.

Here, American presents evidence that the issue of whether or not Shores performed its duties under the contract was litigated in the arbitration between itself and Shores. American presented evidence that the Arbitrator specifically found that Shores materially breached the Construction Contract by, among other things, failing to approve change orders, failing to grant delays, and failing to make timely payments. Shores does not dispute this finding, and as such, it is undisputed for the purpose of this MSA. The arbitration resulted in a final arbitration award that was reduced to a final judgment. In addition to Shores’ timely performance as to payments, Shores’ timely performance of the Construction Contract as to the non-payment terms was part of the terms of the condition precedent on the performance bond. American presented evidence that the arbitration was adversarial in nature, and that both parties had the opportunity to present evidence to the arbitrator in the form of percipient and expert witnesses that were subject to cross-examination.

The Court concludes that American has shown that the Arbitrator found Shores to have been in material breach of the Construction Contract. Shores is therefore collaterally estopped from arguing that it did not materially breach the Construction Contract, eliminating an element of Shores’ cause of action for liability on the performance bond. Therefore, American is entitled to summary adjudication on the fifth cause of action.

COA 15: Declaratory relief

American argues that it is entitled to summary adjudication on the 15th cause of action because the allegations are related to payment disputes that were resolved by the Arbitrator, and Shores is collaterally estopped from seeking such a declaration. American argues that paragraphs 136 – 146 pertain to payment disputes under the Construction Contract, which were previously addressed in arbitration, and as such, are subject to collateral estoppel. American also argues that the allegations in paragraph 147 and 149 are also about a payment dispute. As to paragraph 148, American argues that this allegation is undisputed and further contends that the contract provided that all disputes be resolved through arbitration. American argues that as to paragraph 150, Shores seeks a reversal of the Arbitrator’s finding which American is estopped from seeking.

As noted above in the background section, the allegations pertaining to the judicial declaration that Shores seek are in paragraphs 147 – 150 of the TACC. Under Code of Civil Procedure section 1060, for declaratory relief, the party seeking declaratory relief must show “(1) a proper subject to declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.” (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.). American notes that there is no controversy over paragraph 148 in the TACC.

The Court agrees that American has shown that Shores is collaterally estopped from seeking to relitigate the payment issues. The Arbitrator found that: “the various ‘requirements’ of HUD Capital or RED Capital were not contractual requirements between Shores and American.” (See Arbitration Final Award at 78 (PDF p. 286.)) The fact that Shores had different obligations to HUD or Red Capital did not mean that Shores was prevented from complying with its separate obligations under the Construction Contract. American has shown that it is entitled to summary adjudication on this cause of action.

Shores’ MSA

Shores sought summary adjudication on its fifth cause of action against the Surety and not the principal of the performance bond arguing that the surety cannot be released pursuant to Civil Code section 8152. The Court previously denied the Surety’s motion for summary adjudication on the fifth cause of action when the surety attempted to assert nonmutual collateral estoppel. It is not clear why Shores brings this motion against the Surety when the Court already denied the Surety’s motion for summary adjudication on the basis of collateral estoppel. To the extent that Shores seeks summary adjudication on the fifth cause of action, Shores has not presented evidence as to each element of the cause of action. Therefore, the motion for summary adjudication by Shores is DENIED.

Shores also moved for summary adjudication on its fifteenth cause of action. As noted above, Shores framed the motion for summary adjudication as one of affirmative defenses. Shores also generally referred to “Cross-Defendants’ affirmative defenses.” On a motion for summary adjudication, Shores needs to be more specific as to which affirmative defenses and which Cross-Defendants it is referring to. American opposes, arguing that conduct complained of in the cause of action is all backward looking and does not actually assert a present controversy. The Court above granted American’s motion for summary adjudication on the fifteen cause of action. The issues that Shores seeks to be adjudicated were addressed by the Arbitrator and as a result Shores does not allege a present controversy. Since the Court addressed this cause of action above, the motion for summary adjudication is DENIED.


[1] The Court notes that American’s MSA was over the page limit. Shores filed a motion to strike the additional pages to the MSA. The Court reminds that parties to adhere to future page limits and excuses this oversight this time. The Court denies Shores’ request to strike the additional pages.

[2] The Construction Contract was later amended.

[3] Defined as American / BCEGZ, a Joint Venture. (Id.)

[4] Defined as Shores, LLC and Red Mortgage Capital, LLC. Owner-Obligee is defined as Shores, LLC (Id.)

[5] Defined as The Insurance Company of the State of Pennsylvania. (See Ex. 2 at p. 2 to Parker Decl. ISO American MSA [PDF page 152].)

Case Number: BC538363    Hearing Date: October 02, 2020    Dept: M

CASE NAME: American/BCEGZ et al v. Shores LLC et al

CASE NO.: BC538363

MOTION: Redrock Security and Cabling’s Motion For Terminating Sanctions Or, In The Alternative, Evidentiary Sanctions Or Issue Sanctions

HEARING DATE: 10/2/2020

On March 4, 2014, American filed an action against numerous defendants, including Shores, LLC, but not including Redrock Security and Cabling (“Redrock”) for foreclosure of a mechanic’s lien. On May 2, 2014, Shores, LLC filed a cross-complaint against several defendants but not Redrock. On March 16, 2016, American filed a cross-complaint against Redrock and other defendants. Shores, LLC is not a party to the March 2016 cross-complaint filed by American against Redrock.

Cross-Defendant/Cross-Complainant Redrock brings a motion for terminating sanctions, or in the alternative evidentiary and issue sanctions against Defendant Shores, LLC. Redrock argues that terminating sanctions are warranted because Shores failed to provide notice to Redrock of the removal and replacement of the fire alarm system. Redrock further argues that Shores spoliated evidence when Shores replaced the fire alarm system without notice to any party and then concealed the fact.

Legal Standard

Where a party engages in misuse of discovery process, the court may impose monetary, issue, evidence, terminating, or contempt sanctions. (Code Civ. Proc., § 2023.030.)

“Misuses of the discovery process include, but are not limited to, the following: [¶] (a) Persisting, over objection and without substantial justification, in an attempt to obtain information or materials that are outside the scope of permissible discovery[;] (b) Using a discovery method in a manner that does not comply with its specified procedures[;] (c) Employing a discovery method in a manner or to an extent that causes unwarranted annoyance, embarrassment, or oppression, or undue burden and expense[;] (d) Failing to respond or to submit to an authorized method of discovery[;] (e) Making, without substantial justification, an unmeritorious objection to discovery[;] (f) Making an evasive response to discovery [;] (g) [d]isobeying a court order to provide discovery[;] (h) Making or opposing, unsuccessfully and without substantial justification, a motion to compel or to limit discovery[;] [or] (i) Failing to confer in person, by telephone, or by letter with an opposing party or attorney in a reasonable and good faith attempt to resolve informally any dispute concerning discovery, if the section governing a particular discovery motion requires the filing of a declaration stating facts showing that an attempt at informal resolution has been made.” (Code Civ. Proc., § 2023.010 (emphasis added).)

“The trial court may order a terminating sanction for discovery abuse ‘after considering the totality of the circumstances: [the] conduct of the party to determine if the actions were willful; the detriment to the propounding party; and the number of formal and informal attempts to obtain the discovery.’” (Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 390 (quoting Lang v. Hochman (2000) 77 Cal.App.4th 1225, 1246).) “Generally, ‘[a] decision to order terminating sanctions should not be made lightly. But where a violation is willful, preceded by a history of abuse, and the evidence shows that less severe sanctions would not produce compliance with the discovery rules, the trial court is justified in imposing the ultimate sanction.’” (Los Defensores, supra, 223 Cal.App.4th at p. 390 (citation omitted).)

“A terminating sanction is appropriate in the first instance without a violation of prior court orders in egregious cases of intentional spoliation of evidence.” (Williams v. Russ (2008) 167 Cal.App.4th 1215, 1223 [citing R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 497].) “[T]he intentional destruction of evidence after litigation has commenced, it is a misuse of the discovery process.” (Ibid.)

Evidentiary objections and motion to strike

There are four objections to O’Dell Declaration; Objections nos. 1-4, OVERRULED.

There are 52 objections to the Levine declaration.

Objection nos. 2-8 ,12, 14, 17, 18, 20, 22, 23, 25, 26-28, 30, 31-32, 36, 38, 39, 40, 41, 42, 44, 47 – SUSTAINED

Objection nos. 9, 10, 13, 16, 19 , 21, 35, 37, 43, 45, 46, 48, 49, 51, 52 – OVERRULED.

Objection no. 1, sustained in part as to lines 3:6-10

Objection no. 11, sustained in part as to 4:23-26

Objection no. 24, sustained in part as to “sent a self-serving and factually inaccurate.”

Objection no. 29, sustained in part as to 8:25-9:1.

Objection no. 33, sustained in part as to 9:18-19.

Objection no. 34, sustained in part as to 9:24-10:2.

Objection no. 43, sustained in part as to “and after American . . . Shores environment” and “undertake proper repairs to comply with HUD’s notice to.”

Objection no. 50, sustained as to “properly.”

Objection no. 53, sustained as to 13:9-12.

Redrock requests that the Court strike pages 21-24 of the opposition to the motion for sanctions. Redrock argues that Shores violated Judge Tillman’s October 25, 2018 order denying Shores’ order which permitted Shores to file a 20-page opposition. (See 10/25/2018 at 2 [“Shores, LLC orally requests to allow it to exceed the page limit for its opposition to the aforementioned motion. The Court allows Shores, LLC to exceed the page limit for its opposition by 5 additional pages.].). Here, the opposition is 24 pages, excluding the table of contents, notice of motion, and proof of service. Since Shores violated the October 25, 2018 order, the Court GRANTS the motion to strike page 21-24 of the opposition. The Court only considers the first 20 pages of the opposition.

Analysis

Terminating Sanctions

Shores, LLC argues that the court cannot impose a terminating sanction because Redrock has not shown that Shores violated a court order, citing New Albertsons, Inc. v. Superior Court (2008) 168 Cal.App.4th 1403 (New Albertsons). Shores is incorrect and New Albertsons is distinguishable. (See Williams v. Russ (2008) 167 Cal.App.4th 1215.) New Albertsons arose out of a party seeking to withdraw an admission made in a request for admission, arguing that their admission was a mistake. (New Albertsons 168 Cal.App.4th at 1414.) The trial court denied the motion to withdraw the admission, and after hearing a motion for reconsideration, imposed evidence sanctions. On appeal, the appellate court concluded “[t]he circumstances here involve neither the failure to comply with a discovery obligation nor the destruction of particularly probative evidence.” (New Albertsons, Inc. v. Superior Court The court then distinguished the conduct present in that case from the conduct in Williams, explaining that the “trial court made several factual findings ‘[i]n a detailed minute order,’ including findings that the plaintiff had intentionally caused the destruction of critical evidence and that the loss was highly prejudicial to the defendant. The trial court concluded that lesser sanctions would not cure the harm and that a terminating sanction was appropriate.” (Id. at 1433 [quoting Williams 167 Cal.App.4th at 1222.)

As explained by the court in Williams, “A terminating sanction is appropriate in the first instance without a violation of prior court orders in egregious cases of intentional spoliation of evidence.” (Williams 167 Cal.App.4th at 1223 [citing R.S. Creative, Inc. v. Creative Cotton, Ltd. (1999) 75 Cal.App.4th 486, 497].) “[T]he intentional destruction of evidence after litigation has commenced, it is a misuse of the discovery process.” (Id.) Spoliation occurs when evidence is destroyed or significantly altered or when there is a failure to preserve property for another's use as evidence in current or future litigation. (Hernandez v. Garcetti “First party spoliation occurs when the spoliator is a party to the lawsuit. Third party spoliation occurs when the spoliator is not a party to the action.” (Strong v. State of California (2011) 201 Cal.App.4th 1439, 1458 [citing Lueter v. State of California (2002) 94 Cal.App.4th 1285, 1293].)

“A party moving for discovery sanctions based on the spoliation of evidence must make an initial prima facie showing that the responding party in fact destroyed evidence that had a substantial probability of damaging the moving party's ability to establish an essential element of his claim or defense. [Citations.]”. (Williams v. Russ (2008) 167 Cal.App.4th 1215, 1227.) Once the moving party has done so, the burden shifts to opposing party to show that there is no prejudice from the destruction of evidence. (See id. at 1225-1226.)

Pursuant to Section 2023.030(d), the court may impose a terminating sanction by one of the following orders:

(1) An order striking out the pleadings or parts of the pleadings of any party engaging in the misuse of the discovery process.

(2) An order staying further proceedings by that party until an order for discovery is obeyed.

(3) An order dismissing the action, or any part of the action, of that party.

(4) An order rendering a judgment by default against that party.

(Code Civ. Proc., § 2023.030(d) [emphasis added].)

Courts can only impose terminating sanctions against parties. (See Code Civ. Proc., § 2023.030(d). Redrock seeks a terminating sanction dismissing all claims Shores has pled that are related to the fire alarm system installed by Redrock. Cross-complaints are obviously separate pleadings from complaints. (See Bertero v. National General Corp. Here, Redrock has failed to identity any complaint or cross-complaint in which it is a party to a suit with or against Shores, LLC. Redrock is a Cross-Defendant in the cross-complaint filed by American/BCEGZ. Shores, LLC is not a party to that cross-complaint. Furthermore, Redrock is not a party to the March 4, 2014 suit between American and Shores, LLC nor the May 2, 2014 cross-complaint between Shores, LLC and American and other defendants. Shores, LLC is a third-party that is not in direct litigation with Redrock. Here, Redrock seeks a terminating sanction against Shores, LLC in an action that it is not a party to. Since terminating sanctions are only proper against parties in the same action, the motion is DENIED.

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