Judge: Armen Tamzarian, Case: 22STCV06022, Date: 2024-03-08 Tentative Ruling

Case Number: 22STCV06022    Hearing Date: March 8, 2024    Dept: 52

Defendant The People of the State of California, acting by and through the Department of Transportation (Caltrans), moves for summary judgment of this action by plaintiffs Scott Miller and Melissa Miller.

Requests for Judicial Notice

            Defendant requests judicial notice of six exhibits.  Exhibits A, B, D, E, and F are documents filed in a bankruptcy proceeding, In re: Melissa Mosich Miller (Case No.1:10-bk-19870-MT).  Exhibit C is the transcript of a hearing in that proceeding.  All six exhibits are court records subject to judicial notice.  (Evid. Code, § 452(d).) 

Defendant’s requests for judicial notice of exhibits A-F are granted. 

            Plaintiffs request judicial notice of two exhibits: 14 and 18.  Exhibit 14 is a stipulation between these parties in a prior case, No. BC444991.  But, as defendant notes, the document does not indicate it was filed with the court.  Plaintiffs therefore have not established exhibit 14 constitutes a court record.  Exhibit 18 is a minute order issued in this case.  It is a court record subject to judicial notice. 

            Plaintiffs’ request for judicial notice of exhibit 14 is denied.  Plaintiffs’ request for judicial notice of exhibit 18 is granted.     

Evidentiary Objections

            Defendant makes 39 objections to plaintiffs’ evidence.  Objection Nos. 7-14, 16, and 17 are sustained.  Objection Nos. 1-6, 15, and 18-39 are overruled.

Legal Standard for Summary Judgment

A defendant moving for summary judgment must show “that one or more elements of the cause of action… cannot be established, or that there is a complete defense to the cause of action.”  (CCP § 437c(p)(2).)  Once the defendant does so, the burden shifts to the plaintiff to show a triable issue of at least one material fact.  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.)  Courts use 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.)  Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.”  (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.) 

Summary of Allegations and Undisputed Facts

            Plaintiffs’ complaint alleges two causes of action against defendant: (1) breach of contract, and (2) breach of the implied covenant of good faith and fair dealing. 

A. The Settlement   

The complaint alleges defendant breached an agreement settling prior lawsuits between the parties in November 2015.  (Comp., ¶ 27, Ex. B.)  The agreement requires plaintiffs “to perform and complete the grading project as provided for in prior discussions between Robert Hollingsworth and employees of the State and as provided for in the concept grading plans furnished to the State, by the Millers’ counsel and their experts.”  (Comp., Ex. B & Hahn Decl., Ex. A, § 2.4.) 

The agreement further provides: “The State will build a wall, with tie backs (the ‘Wall’), on the same side of Pacific Coast Highway as the Millers’ real property located at 27036 Sea Vista Drive, Malibu, California (the ‘Property’), within the easement already acquired by the State, as provided for in prior discussions.  The Parties agree that the improvements in the State’s Right of Way (including the construction of the Wall) and the improvements to be performed on the Property are independent and separate projects.  Parties and their consultants, including but not limited to engineers and contractors, agree to act reasonably to accommodate the two separate improvements.  The timing and course of construction for both projects shall be coordinated in a way to facilitate recognized design and construction practices and to facilitate the successful completion of each individual project.”  (Comp., Ex. B & Hahn Decl., Ex. A, § 3.)

In June 2016, the parties executed an “amendment to settlement agreement.”  (Comp., ¶ 28, Ex. C & Hahn Decl., Ex. B.)  They agreed to extend the deadline for defendant to complete its wall.  (Id., p. 2.)  They further agreed, “Subject to the design of the Wall having been approved by the Millers, the Millers hereby agree to grant an additional, permanent easement to the State to accommodate the tiebacks for the Wall if necessary.”  (Id., p. 3.)

B. Disputes About the Wall in 2017

On February 15, 2017, Melissa Miller filed a Debtor’s Report in her bankruptcy proceeding regarding “the status of the settlement” between her and defendant.  (D. RJN, Ex. B, p. 2.)  The report states, “During the last status conference, the Court ordered Cal Trans to make the plans for the design of the wall that is part of the Settlement (the ‘Wall’) available to the Debtor and her expert for their review.  After much delay, the Debtor, her expert and the Debtor’s counsel Mr. Wright were finally given access to view the design for the Wall on February 14, 2017.  The Debtor and her expert had some issues with the design of the Wall.  Since the Settlement requires the parties’ experts to work together to resolve any such issues, the Debtor and/or her expert hope that those issues will be able to be resolved before the status conference.”  (Ibid.)

At a status conference on March 1, 2017, Melissa Miller’s counsel stated, “The disagreement with respect to the design of the wall, I believe, has to do with the height.”  (D. RJN, Ex. C, p. 3.)  Another attorney representing Melissa Miller stated, “[T]he Debtor … said that the wall should be two feet higher … based on the slope as presently exists now. …  [T]he plans say seven feet.  The permits say seven feet.  And they want it higher to take into account the changed circumstances.”  (Id., p. 6.)  Counsel for Caltrans responded, “We've based” the plans for the wall “on their approval from their expert that we got a year-and-a-half ago, and we went ahead.  Now the ball is in their court to provide us with grading plans consistent with that wall design.”  (Id., p. 8.)  The bankruptcy court proposed having an evidentiary hearing about the wall.  (Id., pp. 18-19.) 

On March 31, 2017, plaintiffs’ counsel wrote to defendant: “I have been informed by my client as to the following.  She has not been provided with sufficient information to approve the design of the wall.  Notwithstanding this, in order to accommodate the Court’s wishes for the expedited completion of the wall, and given the endless delays caused by Cal Trans, she feels that she has no choice but to instruct Cal Trans to proceed with the project (including the wall) as designed and to be built by Cal Trans.  As you can imagine this was a hard decision for her to make as Kevin Keegan has stated in his report that the wall should be at a greater height at various places and Cal Trans should have agreed to modify its wall accordingly but has refused to do so.  Please confirm that Cal Trans will proceed to take whatever steps are necessary in order to complete the wall as quickly as possible.”  (Hahn Decl., Ex. E.) 

C. The Alleged Breaches

Plaintiffs’ complaint alleges defendant breached this settlement agreement because defendant “did not construct a retaining wall” (Comp., ¶ 44.c) and “did not obtain the Millers’ consent to relieve it of its obligation to construct a retaining wall” (¶ 44.d).  It further alleges defendant breached the provision that the parties “agree to act reasonably to accommodate the two separate improvements” by “failing to construct a wall that supports, and is compatible with, the Hollingsworth Plan, and by failing to confirm that the tiebacks were at a minimum depth of 75 feet as specified by Hollingsworth and agreed to by Caltrans before the mediation and/or by failing to consult with the Millers engineers to design/build an alternative type of wall that would facilitate the Hollingsworth plan.”  (¶ 44.e.)  The complaint also alleges defendant breached the provision about reasonable accommodation because it failed to “provide plans and calculations for the Wall.”  (¶ 44.f.)

The complaint alleges defendant breached the implied covenant of good faith and fair dealing “by: i) failing to provide Plaintiffs or the City of Malibu with any plans, drawings or engineering calculations for the Wall it constructed, thus preventing Plaintiffs from performing the Hollingsworth Plan; ii) failing to construct the type of Wall that would be compatible with the Hollingsworth Plan; and iii) otherwise frustrating Plaintiffs’ efforts to restore the bluff on their Property pursuant to the Hollingsworth Plan as contemplated by the express language of the Settlement Agreement.”  (Comp., ¶ 52.)

1st Cause of Action: Breach of Contract

Defendant establishes it is entitled to judgment on this cause of action as a matter of law.  The elements of 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.) 

The undisputed facts establish defendant did not breach any term of its contract with plaintiffs.  The settlement agreement required defendant to “build a wall, with tie backs (the ‘Wall’), on the same side [north] of Pacific Coast Highway as the Millers’ real property.”  (Hahn Decl. Ex. A, § 3.)  It is undisputed that defendant built a wall with tie backs adjacent to plaintiffs’ property.  (UMF No. 21; Schott Decl., ¶¶ 4-8.)  (Plaintiffs purport to dispute UMF No. 21 as to whether the wall was “designed to accommodate the Millers’ proposed grading project” and that “Caltrans had the good faith belief that the wall was compatible with the Millers’ grading plan.”  But the fact that defendant built the is not disputed.) 

Plaintiffs rely on the theory that defendant breached the provision that “Parties and their consultants, including but not limited to engineers and contractors, agree to act reasonably to accommodate the two separate improvements.”  (Hahn Decl., Ex. A, § 3.)  Plaintiffs’ theory depends on an incorrect interpretation of that provision.  “The interpretation of a contract is a judicial function.  [Citation.]  In engaging in this function, the trial court ‘give[s] effect to the mutual intention of the parties as it existed’ at the time the contract was executed.  [Citation.]  Ordinarily, the objective intent of the contracting parties is a legal question determined solely by reference to the contract’s terms.”  (Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432.)  “The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.”  (Civ. Code, § 1641.) 

The sentence immediately following the provision requiring the parties “to act reasonably to accommodate the two separate improvements” provides crucial context on what that means.  It states, “The timing and course of construction for both projects shall be coordinated in a way to facilitate recognized design and construction practices and to facilitate the successful completion of each individual project.”  (Comp., Ex. B & Hahn Decl., Ex. A, § 3.)  The only reasonable interpretation of the provision that the parties will “act reasonably to accommodate the two separate improvements” means that they will not obstruct one another in matters like the “timing and course of construction.”  Not that they would modify the substance of their improvements to suit one another, such as requiring defendant’s wall to “stabilize the deep-seated landslide.”  (Opp. Separate Statement, No. 48.)  Instead, this provision means, for example, that defendant could not park a truck blocking plaintiffs’ access to the property during plaintiffs’ construction.

Assuming plaintiffs correctly interpret this provision, the undisputed facts show defendant did not breach it.  On March 31, 2017, plaintiffs’ counsel wrote to defendant that, even though plaintiffs had “not been provided with sufficient information to approve the design of the wall,” they chose “to instruct Cal Trans to proceed with the project (including the wall) as designed and to be built by Cal Trans.”  (Hahn Decl., Ex. E.)  Building the wall as designed after plaintiffs instructed defendants to do so constituted “act[ing] reasonably to accommodate the two separate improvements.”  No valid interpretation of “act[ing] reasonably to accommodate the two separate improvements” would require defendant to build a different wall than it planned to build, after plaintiffs told defendant to build it.

This cause of action also fails for another reason.  The settlement required plaintiffs to complete a “grading project as provided for in prior discussions between Robert Hollingsworth and employees of the State and as provided for in the concept grading plans furnished to the State, by the Millers’ counsel and their experts.”  (Hahn Decl., Ex. A, § 2.4.)  That was the “separate improvement[]” defendant agreed to “act reasonably to accommodate.”  (Id., § 3.)  Engineer Kevin Keegan provided those initial plans to Caltrans in February 2015 (Keegan Decl., ¶ 8, Ex. 10) and revised plans in December 2015 (id., ¶ 11, Ex. 11). 

Plaintiffs do not dispute that they never attempted to construct the improvement pursuant to those plans.  The undisputed facts show they instead proceeded with a plan by Leonard Liston III, which they refer to as the “Liston Plan #1.”  (Opp. Separate Statement, Nos. 44-48.)  Plaintiffs argue defendant was obligated to “act reasonably to accommodate” that plan because it is “substantially similar” to the initial plan.  Even if “substantially similar” to the initial plan, defendant did not agree to accommodate any “substantially similar” plan.  The parties specifically bargained for defendant to accommodate the “grading project as provided for in prior discussions between Robert Hollingsworth and employees of the State and as provided for in the concept grading plans furnished to the State, by the Millers’ counsel and their experts.”  (Hahn Decl., Ex. A, § 2.4.) 

Plaintiffs’ cause of action for breach of contract thus seeks to hold defendant liable for (a) failing to build its wall in a way other than specified in the plans plaintiffs expressly approved, and (b) failing to accommodate an improvement other than the one defendant specifically agreed to accommodate.  The contract did not require defendant to do either of those things.    

2nd Cause of Action: Breach of Implied Covenant of Good Faith and Fair Dealing

            Defendant establishes it is entitled to judgment on this cause of action as a matter of law.  “Every contract imposes on each party a duty of good faith and fair dealing in contract performance and enforcement such that neither party may do anything to deprive the other party of the benefits of the contract.” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 76.)  The implied covenant cannot impose “substantive duties or limits beyond” (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 350) or “at variance with” (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 412) the express terms of the contract.  Doing something “expressly permitted by the” contract “can never violate an implied covenant of good faith and fair dealing.”  (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 376.)

            Plaintiffs allege the same breaches discussed above also constitute breach of the implied covenant of good faith and fair dealing.  That defendant built the wall pursuant to the design plaintiffs approved in March 2017 cannot constitute breach of the implied covenant.  The settlement agreement and addendum permitted defendant to do so.  The addendum to the settlement agreement provides, “Subject to the design of the Wall having been approved by the Millers, the Millers hereby agree to grant an additional, permanent easement to the State to accommodate the tiebacks for the Wall if necessary.”  (Hahn Decl., Ex. B, p. 3.)  Defendant presents undisputed evidence that the Millers approved the design of the wall via their attorney’s email on March 31, 2017.  (Hahn Decl., Ex. E.)  Moreover, requiring defendant to (a) build a wall other than the one plaintiffs specifically agreed to or (b) accommodate an improvement other than the one defendant agreed to would impose substantive duties beyond the parties’ agreement. 

In addition to the breaches discussed above, plaintiffs assert that “Caltrans’ failure to provide the requested information” about the stability for the deep-seated slide “constitutes a breach of the implied covenant of fair dealing.”  (Opp., p. 12.)  Plaintiffs present no evidence that defendant acted in subjective bad faith or that its conduct was objectively unreasonable.  “ ‘The essence of the good faith covenant is objectively reasonable conduct.’ ”  (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 796.)  “ ‘A party violates the covenant if it subjectively lacks belief in the validity of its act or if its conduct is objectively unreasonable.’ ”  (Moore v. Wells Fargo Bank, N.A. (2019) 39 Cal.App.5th 280, 291.) 

The declaration of Leonard Liston III, a civil engineer hired by plaintiffs (Liston Decl., ¶¶ 1, 3), states that in June 2019, someone else working for plaintiffs asked defendant to provide a “report which ‘defines and/or substantiates the “code conforming stability” for the Caltrans repair of the deep-seated landslide currently in progress.’ ”  (Id., ¶ 20, Ex. 5.)  Defendant responded by providing a 2005 report that “does not provide any stability analysis or factor of safety for either the North or South Wall.”  (Id., ¶ 20., Ex. 6.)  Defendant also provided a 2016 report that “does not include a stability analysis or factor of safety for the deep-seated slide.  It only includes a calculated factor of safety for the shallow 2005 landslide.”  (Id., ¶ 21, Ex. 7.)

Plaintiffs’ evidence shows defendant provided information to them—just not all the information they needed.  But plaintiffs present no evidence defendant had that information.  There is no evidence defendant withheld any information from plaintiffs. 

Furthermore, the emails between the parties’ representatives indicate plaintiffs did not ask them for additional information beyond the 2005 and 2016 reports.  On June 5, 2019, Steve Montoya of Santos Planning wrote to Caltrans engineer Paul Shin: “Can you provide us with a copy of the geotechnical report used for the cal trans work currently underway which fronts our client’s property?”  (Liston Decl., Ex. 5, p. 2.)  Rachel Yoo, an attorney for Caltrans, wrote to Montoya 12 minutes later: “Paul is with the permit section.  He does not have access to other materials related to the project.  If you need additional documents, please send an email to me.  Regarding the Geotech report referenced below, the only Geotech report that I am aware of related to the project is attached.  But I’ll talk to our geologist [to] see if we have another one.  And if we do, I’ll send it to you.”  (Id., p. 1.)  Six minutes after Yoo’s email, Montoya replied, “Thank you for clarifying and the report.  I’ll discuss with my team and let you know if we need anything else.”  (Ibid.)  The next day, Yoo sent another email stating, “Attached is a more recent Geotech report.”  (Ibid.)  Plaintiffs provide no evidence they let defendant know they needed anything else. 

Liston’s declaration states, “Eventually, after analyzing the materials provided by Caltrans, and after meetings between LC Engineering, CalWest, and Landphases, it was determined that: i) Caltrans had failed to provide any stability analysis or calculations for the South Wall.”  (Liston Decl., ¶ 22.)  The declaration of Jake Holt, an engineering geologist (Holt Decl., ¶ 1), attests to the same facts (id., ¶¶ 14-15).  Neither Liston, Holt, nor any other witness states someone asked Caltrans to provide stability analysis or calculations after plaintiffs’ engineers determined those were necessary.  Liston continues to describe “several round of submittals, spanning many, many months and involving additional back and forth between the City of Malibu and the Millers’ consultants.”  (Liston Decl., ¶ 24.)  He never states that, during this process, plaintiffs asked Caltrans for the stability analysis or factor of safety of the deep-seated landslide. 

The record thus shows defendant did not do anything objectively unreasonable with respect to providing information about stability analysis or factor of safety.  It was not objectively unreasonable for defendant not to have that information in the first place.  The contract did not require defendant to build a wall to stabilize the deep-seated landslide.  The parties could not have reasonably expected defendant would need to acquire or provide information demonstrating that either of their walls stabilized the deep-seated landslide.  And, given that plaintiffs’ representative told defendant they would “let you know if we need anything else” (Liston Decl., Ex. 5, p. 1)—and never did so—it was not objectively unreasonable for defendant to not provide extra information.

Moreover, the settlement agreement required defendant to “build a wall, with tie backs (the ‘Wall’), on the same side [north] of Pacific Coast Highway as the Millers’ real property.”  (Hahn Decl. Ex. A, § 3.)  It required the parties “to act reasonably to accommodate the two separate improvements.”  (Ibid.)  The two improvements were: (1) the grading project (id., § 2.4), and (2) the “wall, with tie backs … on the [north] side of Pacific Coast Highway” (id., § 3).  When they entered the settlement, the parties could not have reasonably expected that preserving plaintiffs’ benefits under the contract would require defendant to conduct or provide a “stability analysis” or “factor of safety” for its wall on the opposite side of Pacific Coast Highway. 

Finally, like the first cause of action, this claim also fails because the record shows plaintiffs did not proceed with the plan described in the settlement agreement.  Assuming defendant’s conduct otherwise breached the implied covenant of good faith and fair dealing, plaintiffs’ evidence shows only that defendant interfered with their ability to complete the improvement in the “Liston Plan #1.”  That was not one of the benefits plaintiffs reasonably expected under the contract. 

Government Claims Act

            Defendant argues plaintiffs did not timely submit their claim under the Government Claims Act.  Because the court grants the motion for other reasons, the court declines to reach this argument. 

Equitable Estoppel

            Defendant also argues equitable estoppel bars plaintiffs’ causes of action.  Defendant relies on the email dated March 31, 2017, in which plaintiffs’ counsel acknowledged that, though Melissa Miller “has not been provided with sufficient information to approve the design of the wall,” she chose to “instruct Cal Trans to proceed with the project (including the wall) as designed and to be built by Cal Trans.”  (Hahn Decl., Ex. E.)  The court notes that, in addition to estoppel, this may constitute waiver: voluntarily relinquishment of a known right.  Because the court grants the motion for other reasons, the court declines to reach this argument. 

Disposition

Defendant The People of the State of California, acting by and through the Department of Transportation’s motion for summary judgment is granted.