Unpublished Disposition, 937 F.2d 613 (9th Cir. 1991)

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U.S. Court of Appeals for the Ninth Circuit - 937 F.2d 613 (9th Cir. 1991)

REF & ASSOCIATES, Robert France, Lynda France, Plaintiffs-Appellants,v.TEXACO REFINING AND MARKETING, INC., aka T.R.M.I., Texaco,Inc., Texaco Services, Inc., Defendants-Appellees.

No. 90-55519.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 10, 1991.Decided June 28, 1991.

Before HUG, WILLIAM A. NORRIS and LEAVY, Circuit Judges.


REF appeals the district court's entry of summary judgment in favor of Texaco in this diversity action arising out of Texaco's alleged nonpayment of its contractual obligations to REF. We affirm in part, reverse in part and remand.

Applicable Law1 

A federal district court sitting in diversity applies the substantive law of the forum, including its choice of law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Gee v. Tenneco, Inc., 615 F.2d 857, 861 (9th Cir. 1980). California's choice of law rule with respect to the interpretation of contracts provides that the contracting parties' selection of another state's law will ordinarily be upheld "if enforcement of the contract does not result in an evasion of settled public policy or California law protective of the rights of its citizens." Mencor Enters., Inc. v. Hets Equities Corp., 190 Cal. App. 3d 432, 435, 235 Cal. Rptr. 464, 466 (Cal.App.1987).

California's public policy favors the application of its own law to those contracts that are to be performed in California, see Cal.Civ.Code Sec. 1646 (West 1985), and generally requires those who work in California to be licensed by that state. See Cal.Bus. & Prof.Code Sec. 7031(a) (West Supp.1991) (contractors); Hydrotech Sys., Ltd. v. Oasis Waterpark, 52 Cal. 3d 988, 995, 803 P.2d 370, 374, 277 Cal. Rptr. 517, 521 (Cal.1991) (same).

While Texas has little connection with or interest in the outcome of this case, California is the state where REF was incorporated and did business, all of Texaco's properties involved in this litigation are situated, and REF performed all of its work for Texaco. Accordingly, the district court did not err by holding that California law governed the interpretation of the parties' contracts. Cf. Industrial Indem. Ins. Co. v. United States, 757 F.2d 982, 987-88 (9th Cir. 1985) (contracting parties' choice of law provision overridden by forum state's fundamental policy requiring strict adherence to its statutory scheme).

Oral Contract

REF and Texaco orally agreed in late 1985 that REF would store Texaco equipment and supplies in exchange for a monthly rental. Texaco stopped paying, and REF ceased billing, for that storage early the following year. In the absence of a clear showing that the parties agreed to terminate this rent-for-storage arrangement, only those monthly rental installments which fell outside of the two-year limitations period of Cal.Civ.Proc.Code Sec. 339 (West Supp.1991) are time-barred. See Tillson v. Peters, 41 Cal. App. 2d 671, 676, 107 P.2d 434, 437 (Cal.App.1940). Accordingly, we reverse the district court's ruling on this point.2 

REF as Contractor/Equitable Relief

Under California licensing law a contractor is essentially a builder, i.e., one who constructs a new, or works on an existing, building or other structure, including any cleanup of the surrounding grounds or making improvements thereto, while not acting under the direct supervision and control of another. See Cal.Bus. & Prof.Code Sec. 7026 (West Supp.1991); Henning v. Division of Occupational Safety & Health, 219 Cal. App. 3d 747, 753 n. 2, 268 Cal. Rptr. 476, 478 n. 2 (Cal.App.1990).

The contracts identified REF as a contractor3  and referred to, inter alia, "construction work in saervice [sic] stations", "geological and engineering services relating to the cleanup and abatement of subsurface oil spills", and "REMOVAL OR ABANDONMENT OF UNDERGROUND TANKS". They also provided for REF's relative independence from Texaco's direct supervision and control: " [REF] has full power and authority to select the means, method and manner of performing the work ... [and Texaco] shall not have the power or authority to direct, supervise or control [REF]".

While we agree with the district court that such work as the cleanup of subsurface oil spills and the removal of underground storage tanks falls within the purview of section 7026, many if not most of the services REF contracted to perform appear to fall outside of that section. For example, the bulk of REF's duties listed on Addendum A to Form S-240 (appended to REF's complaint as Exhibit B) relate to the installation and servicing of on-site equipment presumably connected with the dispensing of fuel, work for which REF was apparently licensed by the State of California.

Under California law, even an unlicensed person may sue to recover compensation for those activities which require no license. Tenzer v. Superscope, Inc., 39 Cal. 3d 18, 27-28, 702 P.2d 212, 217-18, 216 Cal. Rptr. 130, 135 (Cal.1985) (cited in Hydrotech Sys., Ltd., 52 Cal. 3d at 999 n. 7, 803 P.2d at 377 n. 7, 277 Cal. Rptr. at 524 n. 7). Thus, REF would be entitled to recover for work it performed which either did not require a license or for which REF already possessed a valid non-contractor's license. See id. Accordingly, we must remand for further proceedings on this issue.4 

Intentional and Negligent Interference Claims

With respect to its intentional interference claim, REF opposed Texaco's motion for summary judgment with only Robert France's statement that "it was common knowledge among the employees of [Texaco] that REF & Associates did work for other oil companies...." In light of Texaco's properly supported motion, REF's offering was insufficient to show, inter alia, that Texaco engaged in any intentional acts designed to interfere with REF's other business relationships, see Buckaloo v. Johnson, 14 Cal. 3d 815, 827, 537 P.2d 865, 872, 122 Cal. Rptr. 745, 752 (1975), or that some economic benefit would have accrued to Texaco by virtue of its intentional disruption of those other relationships, see Garter-Bare Co. v. Munsingwear, Inc., 723 F.2d 707, 716 (9th Cir.), cert. denied, 469 U.S. 980 (1984). See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (party who bears burden of proof on claim at trial must adequately oppose motion for summary judgment under Fed. R. Civ. P. 56(e)).

As for REF's negligent interference claim, the district court concluded that REF's status as an unlicensed contractor barred this claim. In light of our ruling on REF's status as a contractor, we must remand for further proceedings on this point as well.

We find no merit to REF's remaining contentions.

The judgment of the district court is AFFIRMED in part, REVERSED in part, and REMANDED for proceedings consistent with this disposition. Each side will bear its own costs on appeal.


This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3


REF asserted nine issues on appeal, largely based on its contention that Texaco was not entitled to summary judgment because genuine issues of material fact existed with respect to the applicable law and the correct definition of contractor. We have rephrased REF's issues for the sake of clarity and brevity


We reject REF's argument that Texaco waived its right to assert its affirmative defense of the running of the relevant limitations period. As long as an affirmative defense is asserted prior to trial, it may be raised in a motion to dismiss, Ledesma v. Jack Stewart Produce, Inc., 816 F.2d 482, 484 n. 1 (9th Cir. 1987), or even in a pretrial order. Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 924 (9th Cir. 1988). Having asserted its defense prior to trial, Texaco did not waive it. See id


That fact is not dispositive. See Wilson v. Steele, 211 Cal. App. 3d 1053, 1062 n. 4, 259 Cal. Rptr. 851, 856 n. 4 (Cal.App.1989) (as modified) (it is the nature of the work performed, rather than the nominal status of the performer, which determines whether one is a contractor)


If on remand the district court finds that the work for which REF seeks to recover in equity falls within the range of activities ordinarily performed by a contractor as defined by section 7026, REF's equitable claims would be barred. See Cal.Bus. & Prof.Code Sec. 7031(a) ("No ... [unlicensed] contractor, may ... recover in ... equity...."); Hydrotech Sys., Ltd., 52 Cal. 3d at 997, 803 P.2d at 376, 277 Cal. Rptr. at 523