Judge Kerry Bensinger, Case Number: 21STCV22206, Date: 2025-01-21 Tentative Ruling

MOTION FOR JUDGMENT ON THE PLEADINGS AS AGAINST CROSS-COMPLAINANT ATLANTIC SOLUTIONS GROUP, INC.

RESPONDING PARTY: Cross-Complainant/Intervenor Atlantic Solutions Group, Inc.

This is a consolidated action arising from a construction contract dispute. In the lead case, Plaintiffs Greg and Lisa Cassileth (the Cassileths) contracted with defendants JWD Incorporated (JWD) and James Dumas (Dumas) for the construction of the Cassileths’ residence.

On June 14, 2021, the Cassileths commenced its action against JWD and Dumas. On August 11, 2023, Atlantic Solutions Group, Inc. d/b/a Empire Workforce Solutions (Empire) filed a Cross-Complaint in Intervention against JWD and BBVA USA (BBVA) for Enforcement of Private Works Bonded Stop Payment Notice.[1] As alleged in Empire’s Cross-Complaint, JWD is a judgment debtor of Empire. BBVA is the construction lender to the Cassileths with respect to the subject property. On October 27, 2020, JWD served a California Preliminary Notice on BBVA. JWD timely and properly served BBVA with a Bonded Stop Payment Notice, a copy of which is attached to the Cross-Complaint. The Stop Payment Notice was signed on June 23, 2021. However, BBVA has not paid JWD pursuant to the Stop Payment Notice, and at least $217,436.73 remains due and owing, plus interest, fees, and costs. The Bond, which is also attached to the Cross-Complaint, is signed and dated September 10, 2021.

On November 14, 2024, PNC Bank, N.A. (Successor In Interest to, and erroneously sued as BBVA USA) (hereafter, PNC) filed this Motion for Judgment on the Pleadings to Empire’s Cross-Complaint.

“A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed.¿ [Citations.]”¿ (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057 1064.) The court must assume the truth of all properly pleaded material facts and allegations, but not contentions or conclusions of fact or law.¿ (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Wise v. Pacific Gas and Elec. Co. (2005) 132 Cal.App.4th 725, 738.)¿ “A judgment on the pleadings in favor of the defendant is appropriate when the complaint fails to allege facts sufficient to state a cause of action.¿ (Code Civ. Proc., § 438, subd. (c)(3)(B)(ii).)”¿ (Kapsimallis v. Allstate Ins. Co. (2002) 104 Cal.App.4th 667, 672.)¿ “Presentation of extrinsic evidence is therefore not proper on a motion for judgment on the pleadings.¿[Citation.]”¿ (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999.)¿ “The common law ground for a motion for judgment on the pleadings is identical to the statutory ground[.]” (Korchemny v. Piterman (2021) 68 Cal.App.5th 1032, 1055.) Allegations are to be liberally construed. (Code Civ. Proc., § 452.)

If the motion for judgment on the pleadings is granted, it may be granted with or without leave to amend. (Code Civ. Proc., § 438, subd. (h)(1).) “Where a demurrer is sustained or a motion for judgment on the pleadings is granted as to the original complaint, denial of leave to amend constitutes an abuse of discretion if the pleading does not show on its face that it is incapable of amendment.” (Virginia G. v. ABC Unified School Dist.¿(1993) 15 Cal.App.4th 1848, 1852 (emphasis added).)

PNC requests judicial notice of Empire’s Cross-Complaint in Intervention and JWD’s Cross-Complaint filed in this matter. The unopposed request is GRANTED. (Evid. Code, § 452(d).)

The sole issue is whether JWD served BBVA with a bonded stop payment notice. PNC argues Exhibit 4 to the Cross-Complaint establishes that the stop payment notice was not bonded at the time it was served to BBVA. The import being, if the notice were not bonded, BBVA was under no obligation to withhold funds. Empire contends otherwise.

(a) Except as provided in subdivision (b), on receipt of a stop payment notice a construction lender shall withhold from the borrower or other person to whom the lender or the owner is obligated to make payments or advancement out of the construction fund sufficient funds to pay the claim stated in the notice.

(b) The construction lender may, at its option, elect not to withhold funds in any of the following circumstances:

(2) The stop payment notice is given by a claimant other than a direct contractor, and a payment bond is recorded before the lender is given any stop payment notice.

Upon review of the Cross-Complaint and the parties’ filings, the motion lacks merit. Although Empire’s Cross-Complaint is not a “model of clarity,” as Empire concedes, PNC takes the untenable position that once an unbonded stop payment notice is served, a cause of action for enforcement of the stop notice fails as a matter of law. However, PNC does not cite authority, and the court is not aware of any, that a bonded stop notice cannot subsequently and concurrently be served upon the construction lender by the claimant.

Moreover, Empire correctly argues that service of JWD’s cross-complaint constitutes service of both the stop notice and bond on PNC. This is established by PNC’s request for judicial notice which shows that BBVA was served with the stop payment notice and the bond as exhibits to JWD’s Cross-Complaint on September 29, 2021. (Request for Judicial Notice, Ex. B.) Because PNC’s request also embraces these facts, PNC cannot credibly contend that Empire’s arguments exceed the four corners of Empire’s Cross-Complaint. (See Burnett, supra, 123 Cal.App.4th at p. 1064.)

Kerry Bensinger

Judge of the Superior Court

[1] Empire named other defendants and asserted other causes of action in its cross-complaint in intervention, none of which are relevant to the court’s ruling.