Judge Daniel S. Murphy, Case Number: 23STCV05811, Date: 2025-01-10 Tentative Ruling

On March 15, 2023, Plaintiffs BFF Construction, Inc. (BFF) and RB Realty Management, LLC (RB) filed this action against Defendants R&M Bro’s Construction Inc. (R&M) and Miguel Duarte Olmos (Duarte). Plaintiffs filed the operative First Amended Complaint on March 5, 2024, alleging (1) breach of contract, (2) implied indemnity, (3) negligence, (4) conversion, (5) fraud, (6) money had and received, (7) breach of contract, (8) conversion, and (9) money had and received.

The case involves a construction project that took place in Ventura County. The property is owned by RB. BFF was the general contractor on the project, and R&M was the subcontractor. Duarte owns and operates R&M. The complaint alleges that R&M performed its work negligently, causing multiple shutdowns and delays. BFF terminated R&M from the project, and Duarte allegedly retaliated by vandalizing the property and destroying or stealing certain materials. R&M also allegedly absconded with money meant for paying BFF’s vendors.

On April 26, 2023, R&M and Duarte filed a lawsuit in Ventura Superior Court (Case No. 2023CUBC008227). R&M and Duarte filed the first amended complaint in that action on July 11, 2023 (R&M Complaint). The R&M Complaint was asserted against RB, BFF, Arixa Enhanced Income Fund (Arixa), Hudson Insurance Company (Hudson), Bahram Fata (Fata), and Roes 1-120. The R&M Complaint alleged that R&M was not paid for the work it performed on the project and sought, among other things, to foreclose on a mechanics lien. The R&M Complaint also alleged that Duarte suffered physical injuries while working on the project.

R&M and Duarte thereafter filed a motion to transfer this case to Ventura Superior Court. The Court denied this motion on September 1, 2023. On November 28, 2023, R&M and Duarte filed a cross-complaint in this Court, essentially mirroring the R&M Complaint that was filed in Ventura, with a few added causes of action.

On October 24, 2024, BFF and RB filed the instant motion for summary judgment or adjudication against the cross-complaint. Arixa and Jet Insurance Company (Roe 41) filed joinders to the motion on October 25, 2024. R&M and Duarte filed separate oppositions on December 27, 2024. BFF and RB filed their reply on January 3, 2025.

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic 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 function of the pleadings in a motion for summary judgment is to delimit the scope of the issues; the function of the affidavits or declarations is to disclose whether there is any triable issue of fact within the issues delimited by the pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima (1991) 231 Cal. App. 3d 367, 381-382.)

As to each claim as framed by the complaint, the defendant moving for summary judgment must satisfy the initial burden of proof by presenting facts to negate an essential element, or to establish a defense. (Code Civ. Proc., § 437c, subd. (p)(2); Scalf v. D. B. Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1520.) Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce “substantial responsive evidence.” (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 163.) 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.)

“A claim of mechanics lien shall be a written statement, signed and verified by the claimant . . . .” (Civ. Code, § 8416(a).) Cross-Defendants argue that the liens at issue were not signed by the claimant (R&M) but by Salina Morales, an employee of Easy Law Construction Notices (Easy Law). (Cross-Def.’s Compendium of Exhibits (COE), Ex. 2-1, 2-2.) Ms. Morales executed the liens under a verification stating the following: “I, the undersigned, declare that I am the attorney in fact for R&M Bro's Construction Inc. the Claimant named in the foregoing claim of mechanics lien; I am authorized to make this verification for the Claimant; I have read the foregoing claim of mechanics lien and, based upon my information and belief, know the contents thereof to be true.” (Ibid.)

Cross-Defendants argue that Duarte never signed a power of attorney authorizing Ms. Morales to act as R&M’s attorney-in-fact. (Cross-Def.’s Stmt. of Undisputed Facts (UF) 1-4.) However, Cross-Defendants’ own caselaw indicates that a lien does not have to be executed by an attorney-in-fact. (See Sunset Lumber Co. v. Smith (1928) 95 Cal.App. 307, 316 [“the verification to claims of lien . . . may be made by any person who knows the facts”]; Parke & Lacy Co. v. Inter Nos Oil & Development Co. (1905) 147 Cal. 490, 494 [“the claim of lien may be verified by any person who is possessed of sufficient knowledge upon the subject to make the verification, and the particular relation that he bears to the claimant is immaterial”].)

Cross-Defendants present no evidence precluding the possibility that Ms. Morales was R&M’s authorized representative or agent. Agency means “manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.” (Hoffmann v. Young (2022) 13 Cal.5th 1257, 1274, internal citations omitted.) “[A]n agency relationship may . . . be created informally, based on the circumstances and the parties' conduct.” (Ibid.)

The verifications here state that Ms. Morales was authorized by R&M to execute the liens and knew the contents to be true. (Cross-Def.’s COE, Ex. 2-1, 2-2.) Ms. Morales avers that Duarte authorized her to execute the liens through phone calls and email correspondence. (Morales Decl. ¶ 7.) Additionally, Duarte signed and returned the draft liens that Ms. Morales had sent him, indicating his approval. (R&M’s COE, Ex. 58, 59.) A reasonable trier of fact may find that Duarte consented to Ms. Morales executing the claims of lien on behalf of R&M.

Cross-Defendants also argue that the liens are improper because Ms. Morales did not have “sufficient knowledge upon the subject to make the verification.” (See Parke & Lacy, supra, 147 Cal. at p. 494.) Cross-Defendants cite to Duarte’s deposition testimony, which revealed that Duarte “sent to [Easy Law] . . . the amount that was owed and on the job that [BFF and RB] didn’t pay.” (Cross-Def.’s COE, Ex. C at 184:14-17.) Duarte also testified that he could not remember whether Easy Law asked questions about the sum. (Id. at 184:19-21.) Cross-Defendants use this testimony to support their contention that Ms. Morales “never received any of the invoices issued by R&M and never received other information about the work that was performed but was allegedly unpaid.” (UF 7.)

However, the cited evidence does not support that contention. Duarte did not testify that Ms. Morales never received the invoices or any other information about the work. Cross-Defendants cite no evidence of Ms. Morales’ knowledge at the time she executed the claims of lien. Ms. Morales avers that she executed the liens based on information obtained from her correspondence with Duarte. (Morales Decl. ¶ 7.) Thus, there is a triable issue over whether Ms. Morales had adequate knowledge to execute the liens.

“A preliminary notice shall be given not later than 20 days after the claimant has first furnished work on the work of improvement. If work has been provided by a claimant who did not give a preliminary notice, that claimant shall not be precluded from giving a preliminary notice at any time thereafter. The claimant shall, however, be entitled to record a lien, give a stop payment notice, and assert a claim against a payment bond only for work performed within 20 days prior to the service of the preliminary notice, and at any time thereafter.” (Civ. Code, § 8204(a).)

Cross-Defendants argue that R&M only issued one preliminary notice on December 29, 2022 even though the first invoice for work performed was in September 2021. (UF 9-10.) However, Civil Code section 8204(a) does not preclude a claim from being made on a late notice; it merely limits the claimable amount. Thus, the cause of action does not fail for this reason.

“[E]rroneous information contained in a claim of lien relating to the claimant’s demand, credits and offsets deducted, the work provided, or the description of the site, does not invalidate the claim of lien” unless “the court determines either of the following: (1) The claim of lien was made with intent to defraud. (2) An innocent third party, without notice, actual or constructive, became the bona fide owner of the property after recordation of the claim of lien, and the claim of lien was so deficient that it did not put the party on further inquiry in any manner.” (Civ. Code, § 8422(a), (b).) “Any person who shall willfully include in a claim of lien labor, services, equipment, or materials not furnished for the property described in the claim, shall thereby forfeit the person’s lien.” (Id., § 8422(c).)

Cross-Defendants’ evidence at most establishes that R&M’s liens were inaccurate, not that they were made with intent to defraud. (See UF 11-19.) Additionally, Duarte demonstrates his calculation of the amount owed through invoices. (Duarte Decl. ¶¶ 14-16; R&M’s COE, Ex. 3-42.) The actual amount owed and whether the liens were willfully inaccurate are factual questions for trial.

Cross-Defendants also argue that the preliminary notice was not made with “substantial accuracy” as required by Rental Equip. v. McDaniel Builders (2001) 91 Cal.App.4th 445, 451-52. However, Rental Equipment acknowledged that “the estimate called for can be in compliance with the statute even though it badly misses the mark with reference to the total charges as finally tallied.” (Id. at p. 450.) “[T]he statutory requirement of substantial accuracy was designed to avoid prejudice to the party claimed against, and . . . in the absence of prejudice, recovery [is] not limited to the amount stated in the notice.” (Id. at p. 451.) As discussed above, erroneous information in a lien does not invalidate it unless the lien was made with fraudulent intent. (Civ. Code, § 8422.) Thus, inaccuracy in the liens does not invalidate the claims as a matter of law.

In sum, because triable issues remain as to the validity of the mechanics liens, summary adjudication is unwarranted. The motion is DENIED as to the second, fourth, and fifth causes of action.

“At common law, a person who hired an independent contractor generally was not liable to third parties for injuries caused by the contractor's negligence in performing the work.” (Privette v. Superior Court (1993) 5 Cal.4th 689, 693.) “The reasoning was that the work performed was the enterprise of the contractor, who, as a matter of business convenience, would be better able than the person employing the contractor to absorb accident losses incurred in the course of the contracted work.” (Ibid.) “When a person or organization hires an independent contractor, the hirer presumptively delegates to the contractor the responsibility to do the work safely.” (Sandoval v. Qualcomm Incorporated (2021) 12 Cal.5th 256, 269.)

When it comes to “the duty to provide the contractor's employees with a safe working environment,” there is an especially strong “policy in favor of delegation of responsibility and assignment of liability” to the contractor, “principally because of the availability of workers' compensation.” (Kinsman v. Unocal Corp. (2005) 37 Cal.4th 659, 671.) Thus, even where a contractor’s employee is injured during work involving a peculiar risk or inherent danger, the employee is limited to recovering in worker’s compensation and cannot pursue the party that hired the contractor. (Privette, supra, 5 Cal.4th at pp. 692. 696.)[1] Additionally, “even where workers' compensation is not available, [courts] have refused to let an independent contractor personally sue a hirer under a vicarious liability theory, reasoning that society can readily expect a competent contractor to have both good reason and knowledge to exercise responsibility over the contractor's own personal safety.” (Sandoval, supra, 12 Cal.5th at pp. 270-71, citing Tverberg v. Fillner Construction, Inc. (2010) 49 Cal.4th 518, 521.)

Nonetheless, “when the hirer does not fully delegate the task of providing a safe working environment, but in some manner actively participates in how the job is done, and that participation affirmatively contributes to the employee's injury, the hirer may be liable in tort to the employee.” (Kinsman, supra, 37 Cal.4th at p. 671.)

“[A] hirer of an independent contractor is not liable to an employee of the contractor merely because the hirer retained control over safety conditions at a worksite, but . . . a hirer is liable to an employee of a contractor insofar as a hirer's exercise of retained control affirmatively contributed to the employee's injuries.” (Hooker v. Department of Transportation (2002) 27 Cal.4th 198, 202, emphasis in original.) “A hirer ‘retains control’ where it retains a sufficient degree of authority over the manner of performance of the work entrusted to the contractor.” (Sandoval, supra, 12 Cal.5th at p. 274.) This means that “the hirer's exercise of that authority would sufficiently limit the contractor's freedom to perform the contracted work in the contractor's own manner.” (Id. at p. 275.) “‘Affirmative contribution’ means that the hirer's exercise of retained control contributes to the injury in a way that isn't merely derivative of the contractor's contribution to the injury.” (Id. at p. 277.)

Additionally, “[a] landowner cannot effectively delegate to the contractor responsibility for the safety of its employees if it fails to disclose critical information needed to fulfill that responsibility, and therefore the landowner would be liable to the contractor's employee if the employee's injury is attributable to an undisclosed hazard.” (Kinsman, supra, 37 Cal.4th at p. 674.) Thus, “the hirer as landowner may be independently liable to the contractor's employee, even if it does not retain control over the work, if: (1) it knows or reasonably should know of a concealed, preexisting hazardous condition on its premises; (2) the contractor does not know and could not reasonably ascertain the condition; and (3) the landowner fails to warn the contractor.” (Id. at p. 675.)

“Under the Privette doctrine, there is no legal distinction between a general contractor and a landowner who hires independent contractors; both are ‘hirers’ within the meaning of the doctrine.” (Michael v. Denbeste Transportation, Inc. (2006) 137 Cal.App.4th 1082, 1097.) Thus, the Privette doctrine, if applicable, would immunize both BFF (the general contractor) and RB (the owner). Both are considered to have hired R&M and Duarte. Additionally, as discussed above, the Privette doctrine applies even if worker’s compensation is unavailable. (See Sandoval, supra, 12 Cal.5th at pp. 270-71.) Thus, the fact that Duarte owns R&M and cannot obtain worker’s compensation as an employee (Duarte Decl. ¶ 3) does not defeat Privette in this case. However, as explained below, there are triable issues relating to the exceptions which prevent summary adjudication.

The evidence suggests that Fata retained control over the drilling of holes in a manner that contributed to Duarte’s injury. When Duarte met with Fata onsite in February 2022, Fata informed Duarte that the construction would include embedding concrete cylinders into the soil. (Duarte Decl. ¶ 15.) Fata further stated that this would be done by first drilling holes into the ground, then lowering steel reinforcement cages into the holes, and lastly filling the holes with concrete. (Ibid.) Fata hired a different subcontractor to do the drilling but instructed R&M to move the soil excavated from the drilling. (Id., ¶¶ 16-17.) Fata then directed R&M to assemble the steel reinforcement cages for placement into the holes and provided specific instructions regarding how the steel was to be assembled. (Id., ¶¶ 18-21.)

On March 21, 2022, Fata directed R&M to lower the first cage into a hole, and Duarte fell into the hole, being dragged down along with the cage. (Id., ¶¶ 22-23.) The hole that Duarte fell into was approximately 60 feet deep, but the cage being lowered into it was only 38 feet long. (Duarte Decl. ¶ 24.) Duarte avers that further grading and excavation of the holes could have lessened the depth of the holes and made installation of the steel cages safer. (Id., ¶ 25.)

Cross-Defendants argue that Duarte’s declaration is inconsistent with his deposition testimony, where he stated that he fell into the hole while inspecting it but could not recall how he fell in. (See Cross-Def.’s Ex. C at 129:8-13.) Duarte’s declaration does not contradict this. Falling into a hole while inspecting it, and falling in while a steel cage is being lowered, are not mutually exclusive. And Duarte’s failure to recall how he fell in at the time of his deposition does not preclude him from providing further detail in a later declaration.

Cross-Defendants further contend that they could not have contributed to Duarte’s injury because Duarte admitted that he was responsible for his own safety. (See Cross-Def.’s Ex. 12 at p. 96 [text to Fata stating “I’ll handle safety seriously from now on”].) Duarte’s text to Fata after the incident does not constitute a legal admission regarding the application of the Privette doctrine. The text reveals no facts about the degree of control that Fata exercised over the excavation or how that control may have contributed to Duarte’s injury. Furthermore, “summary judgment should not be based on tacit admissions or fragmentary and equivocal concessions, which are contradicted by other credible evidence.” (Whitmire v. Ingersoll-Rand Co. (2010) 184 Cal.App.4th 1078, 1089.) Thus, the text does not absolve Cross-Defendants from liability as a matter of law.

Ultimately, a reasonable trier of fact may find from the evidence that Fata retained control over the installation of concrete cylinders in a manner that affirmatively contributed to Duarte’s injury. (See Hooker, supra, 27 Cal.4th at p. 202.) Thus, there is a triable issue over the application of the control exception.

Cross-Defendants argue that the concealed hazard exception does not apply because Duarte was aware of the hole being drilled before he fell into it. (Cross-Def.’s COE, Ex. C at pp. 124-129.) This does not preclude a triable issue, because the concealed hazard is not necessarily the existence of the hole itself.

Here, the concealed hazard may have been a vertical depth limit that was known by Fata but not Duarte. Specifically, BFF received a report from Irvine Geotechnical stating that “the bedrock is capable of maintaining vertical excavations up to 12 feet high.” (Duarte Decl., Ex. K.) Duarte was not aware of this limitation at the time of his fall. (Id., ¶ 26.) The unsafe depth of the hole may constitute a hazard which was concealed from Duarte and led to his injury. (See Kinsman, supra, 37 Cal.4th at p. 675.) Cross-Defendants argue that the report refers to above-ground excavations, not below-ground excavations. However, the report does not specify whether it governs above or below ground excavations; it merely states “vertical excavations.” The interpretation of the report is itself a factual issue. Thus, there is a triable issue over the application of the concealed hazard exception.

Because triable issues exist regarding at least one exception to the Privette rule, Cross-Defendants cannot be deemed immune from liability as a matter of law at this stage. The motion is DENIED as to the fourteenth and fifteenth causes of action.

Establishing alter ego “generally requires the proponent to demonstrate two elements: (1) a unity of interest and ownership such that the separate personalities of the corporation and the individual do not exist; and (2) an inequitable result if the corporate identity is not disregarded.” (JPV I L.P. v. Koetting (2023) 88 Cal.App.5th 172, 189.) “The alter ego test encompasses a host of factors,” and “[t]his long list of factors is not exhaustive.” (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 812.) “No single factor is determinative, and instead a court must examine all the circumstances to determine whether to apply the doctrine.” (Ibid.)

This is an inherently factual inquiry unsuited for summary adjudication. Cross-Defendants point out that in his deposition, Duarte did not know whether BFF, RB, and Fata shared bank accounts, commingled assets, failed to maintain adequate records, etc. (UF 36-42.) However, Duarte’s lack of knowledge about this information does not prove as a matter of law that Cross-Defendants are not alter egos. R&M identified documents in its responses to requests for production aimed at the alter ego allegations. (Cross-Def.’s Ex. A, RFP Nos. 69-74.) Cross-Defendants claim that none of the identified documents support a unity of interest but provide no explanation. (See UF 43.) Thus, the Court cannot find as a matter of law that there is no evidence of alter ego. A triable issue remains.

[1] Ordinarily, “[u]nder the peculiar risk doctrine, a person who hires an independent contractor to perform work that is inherently dangerous can be held liable for tort damages when the contractor's negligent performance of the work causes injuries to others.” (Privette, supra, 5 Cal.4th at p. 691.)