David Moreno Construction, Inc. v. Frontier Steel Buildings Corp., No. 1:2008cv00854 - Document 118 (E.D. Cal. 2010)
Court Description: MEMORANDUM DECISION on the Parties' Cross-Motions For Summary Judgment, signed by Judge Oliver W. Wanger on 11/2/2010. (Plaintiff shall submit a form of order consistent with this Memorandum Decision within five (5) days of entry of this order.) (Gaumnitz, R)
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David Moreno Construction, Inc. v. Frontier Steel Buildings Corp. Doc. 118 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 9 1:08-cv-00854-OWW-SMS DAVIS MORENO CONSTRUCTION, INC., Plaintiff, MEMORANDUM DECISION ON THE PARTIES’ CROSS-MOTIONS FOR SUMMARY JUDGEMENT 10 v. 11 12 13 FRONTIER STEEL BUILDINGS CORP., Defendant. 14 15 I. 16 17 18 Plaintiff 21 22 23 26 27 Construction, Inc. (“Plaintiff”) Frontier Steel Buildings Corp. (“Defendant”). Plaintiff filed a motion for summary judgment and motion to dismiss Defendant’s counterclaim on May 17, 2010. Defendant filed opposition judgment on August 16, 2010. to Plaintiff’s (Doc. 101). motion (Doc. 91). for summary Defendant also filed a cross-motion for summary judgment on August 16, 2010. 24 25 Moreno proceeds with this diversity action for damages against Defendant 19 20 Davis INTRODUCTION. (Doc. 100). Plaintiff filed a reply to Defendant’s opposition on August 23, 2010. (Doc. 102). /// /// 28 1 Dockets.Justia.com II. FACTUAL BACKGROUND. 1 2 This action concerns a contract between Plaintiff and 3 Defendant related to a public works project for the Kern Unified 4 School District for the construction of its Records Retention 5 Facility (the “Project”) in Kern County, California. Plaintiff 6 submitted a bid to the School District and was awarded the prime 7 contract in connection with the Project. 8 Plaintiff 9 Defendant. engaged subcontractors As the prime contractor, and suppliers, including 10 On October 8, 2007, Defendant submitted a bid to Plaintiff 11 quoting a price for delivery of “the steel structure for the KUSD 12 Office Record Retention Facility.” (Stephen Davis Decl., Ex. A.). 13 The 14 contained a representation by Defendant that “all components in our 15 bid will meet or exceed your specifications and codes for this 16 project.” 17 structure was $145,494.00. (Id.). Defendant’s bid also stated “We 18 can 19 70,750.00.” 20 drawing. 21 under the heading “Standard Notes and Conditions:” facsimile (Id.). assist you in (Id.). addressed to “contractors/estimators” and The price quoted by Defendants for the steel erecting this structure for this price $ The last page of the bid contained a design Defendant’s bid also contained the following provision 22 6. Quotation is not a contract, but an offer to sell, which can only be accepted by a timely execution of a purchase order contract. 23 24 was (Id.). 25 By letter dated December 6, 2007, Plaintiff notified Defendant 26 of its intent to award Defendant a contract for the steel 27 structure. 28 Moreno Construction, Inc. to issue a subcontract to Frontier Steel Plaintiff’s letter stated: “It is the intent of Davis 2 1 Building Corp. in the amount of $145,494.00 for Pre-Engineered 2 Metal Building in accordance with the Plans and Specifications by 3 BFGC Architects Planners Inc., and Addendums No. 1 thru 5. 4 should receive a contract within the next ten (10) days.” (Id., Ex. 5 B). You 6 On or about December 11, 2007, Plaintiff sent Defendant a 7 Purchase Order for pre-fabricated steel to be used in constructing 8 the Project. 9 on January 10, 2008 which contained a version of Plaintiff’s 10 purchase order modified by interlineation as well as a separate 11 purchase order authored by Defendant. (Id., Ex. D).1 12 responded to Defendant’s modified Purchase Order in a letter dated 13 January 10, 2008 that indicated which provisions of the modified 14 Purchase 15 Plaintiff’s 16 modified Purchase Order signed on behalf of Plaintiff; the signed 17 purchased order contained a handwritten notation which incorporated 18 Plaintiff’s January 10, 2008 letter into the agreement. (Id., Ex. C). Order Plaintiff letter was Defendant sent Plaintiff a facsimile was agreeable accompanied by to. a copy Plaintiff (Id., of Ex. E). Defendant’s (Id). 19 Pursuant to the Purchase Order signed by Plaintiff, Defendant 20 agreed to generate “anchor bolt and structural drawings,” “shop 21 drawings and engineering calculations,” “fabrication drawings,” and 22 to deliver the fabricated materials to the job site within time 23 periods specified in the Purchase order. 24 materials 25 secondary steel, roof panels, steel framing, and other materials. 26 The Purchase Order contains a provision which states: Defendant agreed to provide (Id., Ex. E). included primary The and 27 1 28 The date on Defendant’s letter is January 10, 2007–-this appears to be a typographical error in light of the sequence of the parties’ correspondence. 3 1 2 3 the supplying of sealed engineering and drawings by FSBC does not imply or constitute an agreement that FSBC or its building design team is acting as the engineer of record or the design professional for any construction project. 4 (Id. at 3). The Purchase Order further provides: 5 6 7 It is the building purchaser’s responsibility to obtain experienced personnel, proper tools, and equipment to erect this building in a safe competent and professional manner. 8 (Id. at 4). The Purchase Order also contains the following 9 provision: 10 11 12 13 Any corrections of mis-fabrication or material purchases for shortened material must be approved by and/or performed as directed by FSBC in writing prior to work being done or material being purchased. FSBC may, at its option, authorize the work to be performed or material purchased by the metal building purchaser or it may perform the work or provide the material itself. 14 (Id.). 15 Defendant performed various obligations under the contract, 16 and Plaintiff made several payments to Defendant. In total, 17 Plaintiff paid Defendant $168,025.90. 18 III. LEGAL STANDARD. 19 Summary judgment/adjudication is appropriate when "the 20 pleadings, the discovery and disclosure materials on file, and any 21 affidavits show that there is no genuine issue as to any material 22 fact and that the movant is entitled to judgment as a matter of 23 law." Fed. R. Civ. P. 56(c). The movant "always bears the initial 24 responsibility of informing the district court of the basis for its 25 motion, and identifying those portions of the pleadings, 26 depositions, answers to interrogatories, and admissions on file, 27 together with the affidavits, if any, which it believes demonstrate 28 4 1 the absence of a genuine issue of material fact." Celotex Corp. v. 2 Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 3 (1986) (internal quotation marks omitted). 4 Where the movant will have the burden of proof on an issue at 5 trial, it must "affirmatively demonstrate that no reasonable trier 6 of fact could find other than for the moving party." 7 Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). 8 respect to an issue as to which the non-moving party will have the 9 burden of proof, the movant "can prevail merely by pointing out 10 that there is an absence of evidence to support the nonmoving 11 party's case." Soremekun, 509 F.3d at 984. Soremekun v. With 12 When a motion for summary judgment is properly made and 13 supported, the non-movant cannot defeat the motion by resting upon 14 the 15 "non-moving party must set forth, by affidavit or as otherwise 16 provided in Rule 56, 'specific facts showing that there is a 17 genuine issue for trial.'" Soremekun, 509 F.3d at 984. (quoting 18 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 19 2505, 91 L. Ed. 2d 202 (1986)). "A non-movant's bald assertions or 20 a mere scintilla of evidence in his favor are both insufficient to 21 withstand summary judgment." FTC v. Stefanchik, 559 F.3d 924, 929 22 (9th Cir. 2009). "[A] non-movant must show a genuine issue of 23 material fact by presenting affirmative evidence from which a jury 24 could find in his favor." Id. (emphasis in original). "[S]ummary 25 judgment will not lie if [a] dispute about a material fact is 26 'genuine,' that is, if the evidence is such that a reasonable jury 27 could return a verdict for the nonmoving party." 28 U.S. at 248. In determining whether a genuine dispute exists, a allegations or denials of 5 its own pleading, rather the Anderson, 477 1 district court does not make credibility determinations; rather, 2 the 3 justifiable inferences are to be drawn in his favor." Id. at 255. 4 IV. DISCUSSION. 5 "evidence of the non-movant is to be believed, and all A. Summary Judgment on Plaintiff’s Second Cause of Action 6 1.Legislative Framework 7 California’s a Contractors’ comprehensive State 8 establishes 9 construction business in California. License legislative scheme Law (“CSLL”) governing the See CAL . BUS . & PROF . CODE § 10 7000 et seq.; Alatriste v. Cesar's Exterior Designs, Inc., 183 Cal. 11 App. 4th 656, 664 (Cal. Ct. App. 2010). 12 contractors performing construction work to be licensed at all 13 times during the performance of such work. See, e.g., MW Erectors, 14 Inc. v. Niederhauser Ornamental & Metal Works Co., 36 Cal. 4th 412, 15 425 (Cal. 2005) (contractor violates CSLL if, “at any time during 16 performance of an agreement for contractor services, he or she was 17 not duly licensed.”) (emphasis in original). 18 “contractor” in pertinent part as follows: 19 20 21 22 23 24 25 The CSLL requires The CSLL defines ‘Contractor,’ for the purposes of this chapter, is synonymous with ‘builder’ and, within the meaning of this chapter, a contractor is any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith, or the cleaning of grounds or structures in connection therewith 26 CAL. BUS. & PROF . CODE § 7026 (2010). 27 the term “contractor” includes: 28 6 Section 7026.1(b) provides that 1 2 3 Any person, consultant to an owner-builder, firm, association, organization, partnership, business trust, corporation, or company, who or which undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid, to construct any building or home improvement project, or part thereof 4 5 CAL. BUS. & PROF . CODE § 7026.1(b)(2010). 6 The CSLL is intended to protect the public by providing 7 “minimal assurance that all persons offering contractor services in 8 California have the requisite skill and character, understand 9 applicable local laws and codes, and know the rudiments of 10 administering a contracting business.” 11 4th at 12 interests underlying the CSLL, Hydrotech Systems, Ltd., v. Oasis 13 Waterpark, 52 Cal. 3d 988, 995 (Cal. 1991), the California Supreme 14 Court has given a broad, literal interpretation to the CSLL’s 15 enforcement provisions, White v. Cridlebaugh, 178 Cal. App. 4th 16 506, 518 (Cal. Ct. App. 2009) (citation omitted). 664. Alatriste, 183 Cal. App. Because of the strength and clarity of the policy 17 The CSLL shields a person who utilizes the services of an 18 unlicensed contractor from lawsuits by that contractor to collect 19 payment for unlicensed work. 20 Section 7031(a) provides: E.g. White, 178 Cal. App. 4th at 518. 21 22 23 24 25 26 27 Except as provided in subdivision (e), no person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that he or she was a duly licensed contractor at all times during the performance of that act or contract, regardless of the merits of the cause of action brought by the person, except that this prohibition shall not apply to contractors who are each individually licensed under this chapter but who fail to comply with Section 7029. 28 7 1 CAL . BUS. & PROF . CODE § 7031(a). 2 shield created by section 7031(a) by adding a sword that allows 3 recovery of all compensation paid to a contractor for performing 4 unlicensed 5 pertinent part: 6 Id. at 519. Section 7031(b) provides in a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover all compensation paid to the unlicensed contractor for performance of any act or contract. 7 8 9 work. The Legislature complemented the CAL. BUS. & PROF . CODE § 7031(b) (2010). “Section 7031(b) was 10 designed to treat persons who have utilized unlicensed contractors 11 consistently, regardless of whether they have paid the contractor 12 for the unlicensed work.” White, 178 Cal. App. 4th at 520. 13 The language contained in section 7031 embodies an “all-or- 14 nothing” philosophy aimed at deterring persons from offering or 15 providing 16 Erectors, 36 Cal. 4th at 426, 430. 17 unlicensed entity to recover partial compensation by narrowly 18 segmenting 19 performance. 20 section 21 compensation for any work performed in connection with an agreement 22 for 23 licensure 24 performance. 25 section 7031(a)(citation omitted). unlicensed the 7031 services was contractor licensed and services for a unlicensed requiring in place person a at E.g. MW Section 7031 does not permit an portions MW Erectors, 36 Cal. 4th at 426. bars pay. from all times license during their Where applicable, recovering contractor's of or retaining unless such proper contractual See White, 178 Cal. App. 4th at 518 (discussing 26 2. Defendant’s Status Under the CSLL 27 Whether an entity performed or undertook to perform the work 28 of a contractor depends in part on the nature and scope of 8 1 contractual obligations the entity assumed in connection with a 2 project. 3 948 (Cal. Ct. App. 2009) (reviewing contract’s terms to determine 4 whether entity was a contractor for purposes of the contract); see 5 also 6 Contractors, 7 (2008)(same); Banis Restaurant Design, Inc. v. Serrano, 134 Cal. 8 App. 4th 1035, 1044 (Cal. Ct. App. 2005) (same); Scientific Cages, 9 Inc. v. Banks, 81 Cal. App. 3d 885, 888 (Cal. Ct. App. 1978 (same). 10 Acts performed by an entity outside of, but related to, a contract 11 are also relevant to the issue of whether the entity performed or 12 undertook to perform the work of a contractor. 13 327 Fed. Appx. 718, 720 (9th Cir. 2009) (unpublished) (evaluating 14 “parties' conduct, including the course of negotiations” in order 15 to 16 Erectors, 36 Cal. 4th at 427-28) (noting that “parties do sometimes 17 operate without, or beyond the boundaries of, a formal contractual 18 arrangement” 19 contractors to operate exclusively by formal contract; it simply 20 seeks to deter them from offering or performing unlicensed services 21 for pay”). See The Fifth Day, LLC v. Bolotin, 172 Cal. App. 4th 939, WSS Industrial determine Inc., 162 whether and Construction, Cal. section affirming App. Inc. 4th 7031(a) that “the V. 581, Great 590 n.6, 592 See Nash v. Taylor, applied); CSLL Western does see not also MW require 22 It is beyond doubt that Defendant was a contractor as defined 23 by sections 7026 and 7026.1 when it submitted its initial bid to 24 Plaintiff on October 8, 2007, as the bid offered to “assist 25 [Plaintiff] in erecting this structure for this price: $70,750.00.” 26 (Plaintiff’s MSJ, Ex. A at 3); CAL . BUS . & PROF . CODE §§ 7026, 7026.1 27 (“a contractor is any person who...submits a bid to...construct, 28 9 1 ...any building...or part thereof”).2 2 contractor for the purposes of performance of the parties’ ultimate 3 contractual agreement presents a separate question, because the 4 contract indicates that Plaintiff is responsible for erecting the 5 structure. 6 Whether Defendant was a (Plaintiff’s MSJ, Ex. E). Contract interpretation on undisputed facts is a question of 7 law. E.g. The Fifth Day, 172 Cal. App. 4th at 946. “A contract 8 must be so interpreted as to give effect to the mutual intention of 9 the parties as it existed at the time of contracting.” Cal. Civ. 10 Code. § 1636. A contract’s meaning must be ascertained from the 11 contract's language if it is clear and explicit. 12 § 1638. 13 contract's words are to be understood in their ordinary and popular 14 sense. 15 Inc., 44 Cal. 4th 541, 552 (Cal. 2008). 16 must be construed in the context of the instrument as a whole and 17 in light of all the circumstances between the parties. 18 Cities Paving & Grading v. Lawyers' Mutual Ins. Co., 5 Cal. 4th 19 854, 867 (Cal. 1993). Cal. Civ. Code. Unless the parties have indicated a special meaning, the Cal. Civ. Code. § 1644; Crawford v. Weather Shield Mfg., Language in a contract E.g. Bay 20 The parties’ contract is comprised of a purchase order, bill 21 of values, and a letter Plaintiff returned with the executed 22 purchase 23 agreement. 24 included in an acceptance become part of the contract unless (1) 25 offer expressly limited acceptance to terms of offer; (2) terms order and bill of values purporting to clarify the See CAL . COM . CODE § 2207 (2010) (additional terms 26 27 28 2 Although Defendant’s bid did not create a contractual obligation, under California law, the bid was irrevocable, and Plaintiff could have held Defendant to its offer to erect the building for the specified price. Norcross v. Winters, 209 Cal. App. 2d 207, 216 (Cal. Ct. App. 1962). 10 1 materially alter the contract; (3) notification of objection to the 2 terms is given within a reasonable time). 3 provides the following payment schedule: 4 5 6 7 The bill of values 1. 8% of building cost due upon receipt of anchor bolt and structural drawings 2. 10% of building cost due upon approval of shop drawings and engineering calculations 3. 8% of building cost upon delivery of detail fabrication drawings to manufacturer 4. COD payment due upon delivery of building materials to job site. 8 9 (Stephen Davis Decl., Ex. E). The purchase order indicates that 10 Defendant promised to provide design engineering for the Project 11 and to provide the following materials: 12 13 14 15 16 1. Primary and Secondary Steel 2. Standing Seam Roof Panels 3. Metal Panels at the Roof Mechanical Screen 4. Steel Framing for Mechanical Screen 5. Mansard Rigid Frames 7. Softfit Structure at Overhangs 8. Metal Stud and Parapet Framing 9. Internal Gutters 10. Gutters and Downs 11. Full Trim Package 17 (Id.). The purchase order also sets forth additional terms and 18 conditions; these terms and include, inter alia, the following: 19 20 ¶10- Special field inspections may be required, these inspections must be done by a third independent third [sic] party 21 22 23 24 25 26 27 28 ¶11- Purchaser is to review the shipping manifest with the truck driver at the time of delivery and is responsible at that time to verify all material received is correct as to type and quantity listed on the shipping manifest...if FSBC has not shipped all items indicated on the shipping manifest; or if some items necessary to provide the building system as approved and released to fabricate in writing were not provided or were not listed on the shipping manifest, then FSBC will provide these items at no charge, F.O.B. jobsite ¶13- Any corrections of mis-fabrication or material purchases for shorted material must be approved by and/or performed as directed by FSBC in writing prior to work 11 1 being done or material being purchased. FSBC may, at its option, authorize the work to be performed or material purchased by the metal building purchaser or it may perform the work or provide the material itself. FSBC is not liable for any consequential damages incurred due to mis-fabrication, shorted material or delays in schedules caused by other agencies. 2 3 4 5 ¶14- It is the building’s purchaser’s responsibility to obtain experienced personnel, proper tools and equipment to erect this building in a safe [sic] competent and professional manner 6 7 8 (Id.). 9 and bill of values clarified that “the basis of this purchase order 10 is that Frontier Steel will provide all the components required of 11 specification section 13122 metal building systems.” 12 The letter Plaintiff sent with the executed purchase order Plaintiff cites WSS Industrial for the (Id.). proposition that 13 Defendant’s submission of shop plans was sufficient to bring 14 Defendant within the purview of section 7026. 15 Industrial, a general contractor accepted a steel subcontractor’s 16 bid to perform steel work on a construction project. 17 App.4th at 585-86. 18 other tasks, preparation of shop drawings and procurement of anchor 19 bolts. 20 drawings and ordered the anchor bolts, it was unlicensed. 21 steel subcontractor later obtained a license. 22 denied the general contractor’s motion for nonsuit pursuant to 23 section 7031, holding that the work performed while the steel 24 subcontractor was unlicensed– preparation of the shop drawings and 25 procurement of the anchor bolts –did not require a license. 26 585. 27 improper for the trial court to segregate the steel subcontractor’s 28 completion of shop drawings and ordering of anchor bolts from the (MSJ at 8). In WSS 162. Cal. The steel subcontractor’s bid entailed, among At the time the steel subcontractor prepared the shop The The trial court Id. at The California Court of Appeal reversed, holding that it was 12 1 overall purpose of the contract, which unquestionably required a 2 contractor’s license. 3 Industrial on the grounds that, in addition to preparing shop 4 drawings, the steel subcontractor in WCC Industrial also contracted 5 to 6 Industrial, 162 Cal. App. 4th at 592-93. build the Id. at 592-93. structures depicted Defendant distinguishes WCC in the drawings. See WCC 7 WCC Industrial did not concern the threshold question of 8 whether the plaintiff was a “contractor” for purposes of the 9 project. Rather, the central issue in WCC Industrial was whether 10 work the plaintiff performed before it obtained its contractor’s 11 license was severable from the tasks which required licensure and 12 thus 13 Plaintiff’s assertion, WCC Industrial does not resolve the issue of 14 whether shop drawings for structural components of a building 15 require a contractor’s license. compensable notwithstanding section 7031. Contrary to 16 Although WCC Industrial does not establish that completing 17 shop drawings, without more, is sufficient to establish that an 18 entity is a “contractor,” the WCC Industrial Court’s reasoning and 19 the authorities cited in the opinion suggest that an entity that 20 prepares 21 composition and fabricates materials purportedly fit for erecting 22 the 23 specifications and applicable state laws meets the definition of a 24 contractor. The WCC Industrial Court reasoned that “the public has 25 a right to expect the party designing [shop drawings]...will, at a 26 minimum, have the qualifications required and to possess a valid 27 contractor's license;” this language recognizes that the policy 28 interest underlying the CSLL would be thwarted if unlicensed shop structure drawings in pertaining compliance to with 13 a a building’s project’s structural engineering 1 entities are permitted to design buildings and provide custom- 2 fabricated 3 California building codes. materials purportedly in compliance with relevant Id. at 593. 4 WCC Industrial’s citations to Banis Restaurant Design, Inc. v. 5 Serrano, 134 Cal. App. 4th 1035, 1044 (Cal. Ct. App. 2005) and 6 California Business and Professions Code sections 6737.3 and 6731 7 focused on design services, not physical erection of the building. 8 In Banis, the California Court of Appeal held that an entity that 9 prepared shop drawings and provided building materials, but did not 10 perform or offer to perform any physical construction tasks, was 11 acting as a contractor within the meaning of section 7026: 12 Plaintiff's complaint and contract describe work that comes within the statutory definition of a contractor. According to plaintiff's complaint, it provided more than $ 1.7 million of labor, materials, equipment, and services to defendant Serrano for its restaurant project. The contract specified this work as including drawings for electrical and plumbing plans, drawing plans for a reflected ceiling, and coordination of the architect, electrical engineers, mechanical engineers and structural engineers. Through its own efforts and those of others, plaintiff thereby undertook to “construct,” “alter,” “add to,” “subtract from” and/or “improve” defendant's project. (See § 7026.) In short, plaintiff was a contractor, and section 7031 bars plaintiff's suit for compensation. 13 14 15 16 17 18 19 20 134 Cal. App. 4th at 1044. 21 proposition that design services “reflect[] coordination of the 22 architect 23 contractor. 24 25 and and thus constitute the work of a 162 Cal. App. 4th at 591-92.3 Similarly, engineering engineers” WCC Industrial cited Banis for the WCC statutes Industrial’s shows that reference Court’s to focus California’s was on design 26 27 28 3 Subsequent to Banis, the California Court of Appeal held that certain construction management services do not require a contractor’s license. See Bolotin, 172 Cal. App. 4th at 948. 14 1 services. WCC Industrial noted that, pursuant to California 2 Business and Professions Code section 6730 et seq., design drawings 3 for buildings generally must be prepared by licensed engineers. 4 CAL. BUS. & PROF CODE . §§ 6730, 6731 (civil engineering), 6731.5 5 (electrical 6 Section 7 drawings without obtaining the requisite mechanical or 8 engineering licenses in certain situations. 9 § 6737.3.5 engineering), 6737.3 permits 6731.6 licensed (mechanical contractors to engineering).4 prepare shop electrical CAL . BUS . & PROF CODE . As the WCC Industrial Court’s citation to section 10 6737.3 implies, it would be anomalous for California law to permit 11 an entity that is neither a licensed engineer nor a licensed 12 contractor to design structures that the public relies on to be 13 safe.6 14 The reasoning and analysis of WCC Industrial and Banis suggest 15 that an entity that contracts to prepare shop drawings depicting a 16 building’s structural design and to fabricate building materials 17 that are designed to be incorporated into a structure in compliance 18 with the requisite architectural and engineering specifications of 19 20 21 22 23 24 25 26 27 28 4 At oral argument, Defendant represented that a licensed engineer prepared the design drawings for the Project. There is no record evidence of this assertion. Defendant cites no authority for the proposition that an entity that is a licensed engineer is exempt from the licensure requirements of the CSLL where the entity also meets the definition of a contractor. 5 An exemption for civil engineering tasks is conspicuously absent from section 6737.3. In WCC Industrial, the contractor’s preparation of shop drawings constituted the practice of civil engineering. See Cal. Bus. & Prof. Code 6731 (“Civil engineering embraces...the preparation or submission of designs, plans, and specifications” in “connection with fixed works for framed and homogenous structures [and] buildings”). 6 WCC Industrial’s suggestion that Section 6737.3 provides exemptions for civil engineering tasks is curious, as section 6737.3 only contains express references to mechanical and electrical engineering tasks. No published California authority holds that section 6737.3 exempts licensed contractors from licensing requirements related to civil engineering tasks. 15 1 the project is a contractor within the meaning of section 7026. 2 But see Steinbrenner v. J. A. Waterbury Constr. Co., 212 Cal. App. 3 2d 661, 665-65 (Cal. Ct. App. )(entity that prepared shop drawings 4 and manufactured custom doors, trim, and cabinets held exempt from 5 licensure pursuant to Cal. Bus. & Prof. Code § 7052: “This chapter 6 does not apply to any person who only furnishes materials or 7 supplies without fabricating them into, or consuming them in the 8 performance of, the work of the contractor”) .7 9 that something more is required in order for an entity hired to 10 prepare structural shop drawings and manufacture custom steel 11 framing components to be considered a contractor, the record 12 demonstrates that Defendant’s rights and obligations under the 13 parties’ contractual agreement establish that Defendant was acting 14 as a contractor on the Project. Assuming arguendo 15 Pursuant to paragraph 13 of the purchase agreement, in the 16 event “any corrections of mis-fabrication” were required, Defendant 17 had the right to “perform the work...itself” or to authorize 18 Plaintiff to 19 (emphasis added). 20 corrections of mis-fabrication be approved by Defendant in writing 21 and “performed as directed” by Defendant prior to the work being 22 done. 23 meanings, Defendant retained broad authority to perform repairs to 24 the Project’s structure and to direct performance of such work by perform Affording the work. Further, the words (Stephen the of Davis contract this Decl., required provision their Ex. that E) any ordinary 25 26 27 28 7 Defendant belatedly contends, in its supplemental brief ordered by the court on a discrete issue, that it is entitled to the exemption embodied in section 7052. (Supplemental Brief at 12-13). As discussed below, the parties’ agreement establishes that Defendant contracted to “perform work” in connection with “any corrections of mis-fabrication” and thus is not entitled to the exemption provided in section 7052. 16 1 others. See California State Auto. Asso. Inter-Insurance Bureau v. 2 Warwick, 17 Cal. 3d 190, 195 (Cal. 1976) (“the word ‘any’ is broad, 3 general, and all embracing”). 4 perform work or direct the performance of work on the Project, 5 Defendant undertook by contract to alter, repair, or improve 6 portions of a building within the meaning of the CSLL. 7 PROF. CODE § 7026 (2010). 8 effect alterations or repairs to the materials it provided was not 9 merely incidental to the parties’ agreement, as a fundamental 10 purpose of the contract was for Defendant to provide materials fit 11 for constructing the building in compliance with the Project’s 12 engineering specifications. 13 4th at 592-93 (holding that preparation of shop drawings and 14 procurement of materials before contract were tasks integrally 15 related to purpose of construction contract and could not be 16 severed) with Johnson v. Mattox, 257 Cal. App. 2d 714, 719 (Cal. 17 Ct. 18 construction contract held incidental to fundamental purpose of the 19 contract and thus severable). 20 license at the time it performed work under a contract which 21 required 22 compensation it paid to Defendant for such work. 23 CODE § 7031(b). 24 cause of action for disgorgement under section 7031(b) is GRANTED. 25 B. Summary Judgment on Defendant’s Counterclaim App. 1968) (sale licensure, By retaining broad authority to CAL . BUS . & Defendant’s contractual authority to of Compare WSS Industrial,162 Cal. App. tractors and mowers provided in As Defendant lacked a contractor’s Plaintiff is entitled to recover all CAL . BUS . & PROF . Plaintiff’s motion for summary judgment on the its 26 Defendant’s counterclaim seeks compensation for amounts owed 27 for “design and engineering services” rendered by Defendant to 28 Plaintiff in connection with the Project. 17 (Doc. 89 at 8-9). 1 Because, as discussed above, Defendant entered into a contract that 2 required a contractor’s license, and because it is undisputed that 3 Defendant was not a duly licensed contractor at all times relevant 4 to 5 compensation. 6 Defendant’s motion for summary judgment on its counterclaim is 7 DENIED, 8 counterclaim is GRANTED. this action, and Plaintiff is not entitled to CAL . BUS . & PROF . CODE § 7031(a). Plaintiff’s motion for summary recover Accordingly, judgment on 9 ORDER 10 11 For the reasons stated, IT IS ORDERED: 12 1) Plaintiff’s motion for summary judgment on Plaintiff’s 13 second cause of action pursuant to section 7031(b) is 14 GRANTED; 15 2) Plaintiff’s motion for summary judgment on Defendant’s 16 counterclaim is GRANTED; 17 3) Defendant’s motion for summary judgment is DENIED; and 18 4) Plaintiff shall submit a form of order consistent with 19 this Memorandum Decision within five (5) days of entry of 20 this order. 21 22 IT IS SO ORDERED. 23 Dated: hkh80h November 2, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 24 25 26 27 28 18 any the
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