Party Notice: BEACON RESIDENTIAL COMMUNITY ASSOCIATION VS. CATELLUS THIRD AND KING LLC et al

• 
• 
• 
• 
• 
• 
• 
• 

						
                                
Preview
                                1 || SANDY M. KAPLAN (SBN 095065)
GREGORY T. HANSON (SBN 201395
2 || GORDON & REES LLP ¢ ) ELECTRONICALLY
275 Battery Street, Suite 2000 FILED
3 || San Francisco, CA 94111 Superior Court of California,
Telephone: (415) 986-5900 County of San Francisco
4 || Facsimile: (415) 986-8054 APR 23 2013
Clerk of the Court
5 || Attorneys for Defendant 3
WEBCOR BUILDERS, INC. ence eputy Clerk
6 || (and related Webcor entities)
7
8 SUPERIOR COURT OF CALIFORNIA - COUNTY OF SAN FRANCISCO
9
10
11 || BEACON RESIDENTIAL COMMUNITY ) CASENO. CGC-08-478453
ASSOCIATION, )
12 ) NOTICE OF ENTRY OF ORDER
Plaintiff, ) GRANTING MOTIONS OF WEBCOR
13 ) AND ANNING-JOHNSON COMPANY
vs, ) FOR SUMMARY ADJUDICATION OF
14 ) PLAINTIFF’S SEVENTH CAUSE OF
6 CATELLUS THIRD AND KINGLLC, etal. ) ACTION
)
Defendants. )
16 )
17
18 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
19 PLEASE TAKE NOTICE that on April 2, 2013, the Honorable Curtis EA. Karnow
20 || entered the attached Order regarding Webcor’s and Anning-Johnson Company’s Motion for
21 || Summary Adjudication of Plaintiff's Seventh Cause of Action, a true and correct copy of which
22 || is attached hereto as Exhibit A.
23 || Dated: April 22, 2013 GORDON & REES LLP
24
25 Ss .
By: meh (07 Ls ¢—
26 SANDY M. KAPLAN
GREGORY T. HANSON
27 Attorneys for Defendant WEBCOR,
28 BUILDERS and related Webcor Entities
-1-
TUR 068375/153281760.1 NOTICE OF ENTRY OF ORDER GRANTING MOTIONS OF WEBCOR AND ANNING-JOHNSON
COMPANY FOR SUMMARY ADJUDICATION OF SEVENTH CAUSE OF ACTIONEXHIBIT Al

FILE

APR 02 2013

CLERIC OF T; RT
BY:
Deputy Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO

BEACON RESIDENTIAL COMMUNITY Case No. CGC ~ 08-478453
ASSOCIATION,

Plaintiff,
ORDER GRANTING MOTIONS OF
vs. WEBCOR AND ANNING-JOHNSON

COMPANY FOR SUMMARY
CATELLUS THIRD AND KING LLC,ET | ADJUDICATION OF SEVENTH CAUSE

AL. : OF ACTION
Defendants.
The captioned motions came on regularly for a hearing March 29, 2013, and the
parties appeared through counsel.
Introduction

This construction defect case relates to a residential and commercial complex
located at 250-260 King Street in Mission Sy. Beacon was originally owned by
Prologis/Catellus and related entities. Webcor Builders, Inc. (and related entities) was
the project's general contractor. Webcor in turn hired a number of subcontractors,
Catellus rented out Beacon’s residential and commercial units, but eventually sold the

building to Mission Place which in turn sold units to the public.Plaintiff, Beacon Residential Community Association, alleges that Beacon is
plagued by defects that have resulted in substantial “solar heat gain” inside the residential
units. Plaintiff sued Catellus, Mission Place, Webcor, the project architects, and the
subcontractor defendants.

Webcor, Anning-Johnson Company (a subcontractor), and another group of
subcontractor defendants (Cupertino Electric, Inc., Creative Masonry, Inc., Carefree
Toland Pools, Inc., J.W. McClenahan, Inc., Van-Mulder Sheet Metal, Inc., N.V.
Heathorn, Inc., Critchfield Mechanical, Inc., Blue’s Roofing Company, West Coast
Protective Coatings, Allied Fire Protection, and Western Roofing Service) now move for
summary adjudication of Plaintiff's seventh cause of action alleging breach of contract on
the basis of third party beneficiary status. Moving parties assert that there is no evidence
that the homeowners association and the commercial owners association are third party
beneficiaries of the “prime” construction contract between Catellus and Webcor or the
subcontracts entered into between Webcor and the subcontractor defendants. (Together I

will call these the ‘contract,’ as the issues do not differ.}

Preliminary Matters

Plaintiff noted that the February 8, 2013 Bledsoe declaration had not been filed
with the moving papers. I noted that other declarations had apparently not been filed, and
that courtesy copies of them were unsigned and undated. These defalcations affected the
evidentiary record as it pertained to moving parties aside from Webcor and Anning-
Johnson, and the at the request of plaintiffs I postponed the hearing on those motions to
April 10, 2013 and moved ahead to treat the merits of the motions brought by Webcor

and Anning-Johnson. Although this ought not to have been necessary, I have instructedparties never to provide courtesy copies of motion papers unless the original is signed and

filed.

Discussion

1 provided an oral tentative decision on the record (including rulings on
evidentiary issues) at the hearing, and for the reasons stated there and as amplified here,
the motions for summary adjudication as to the seventh cause of action are granted.

As I noted at the outset of the hearing, the motions are uncontested insofar as they
seek a ruling on the ‘successor-in-interest’ basis for liability.

I tum to the third party beneficiary theory of contractual liability. The issue is
whether there is a disputed issue of material fact regarding the plaintiff's status as a third
party beneficiary in the contract. C.C. § 1559 permits such status on a showing that that
the contract was made “expressly for the benefit of a third person”.

I first look at the language of the contract, which is plain on its face that the
parties contemplated renting the premises; they did not intend to build for owners at all,
much less owners as a beneficiary of the agreement. Indeed, none of the parties to the
contract sold any units to owners; rather, the units were, as the contract expressly
contemplated, rented. Some of the plaintiffs here—and, specifically, the one opposing
this motion, i.e., the Association—did not even exist at the time the contract was made.
To be sure, as the Association points out, the specific person or entity need not be
expressly called out in the contract to be a beneficiary, Johnson v. Superior Court, 80
Cal.App.4" 1050, 1064 (2000), and so we may look to see if owners generally, or as a

group, are called out; but nevertheless we do need something that, in the language of thestatute, “expressly” makes the group or class beneficiaries. We do not find it.'

Plaintiffs notes Ex. A-1 to the prime contract, which suggests that the parties
thought that in the future there might be sales of condominiums, if market conditions
were favorable.” The recognition of a possibility is not equivalent to an expectation that
the possibility will occur with any likelihood, and much less is it the expression of an
intent that, were the possibility to eventuate, the future owners are meant to be
beneficiaries of the contract. Contracts make provisions all the time for highly
undesirable or unlikely eventualities such as impacts from regulators, taxing authorities,
municipalities, and so on, but that does not ipso facto make those parties beneficiaries of
the contract. Even a recognition that someone might benefit from a contract (and we do
not have even that here), such neighbors’ enjoyment of a renovation project, is not
enough to have them actually be third party beneficiaries with the power to compel
performance of the agreement. The point here is that those incidentally benefitted cannot
sue; the deal has to have been entered into for the benefit of the third party. 1 B. Witkin,
SUMMARY OF CALIFORNIA Law, Contracts § 689 (10th ed. supp. 2009). Here, the parties
to the agreement entered into it to make money for themselves; there is no evidence they
cared one whit for future owners.

As I said at the hearing, plaintiffs provided me with no argument as to why I
should look outside the contract, but even were I to do so, the result would not change.
The only extrinsic fact noted is that Catellus purchased an Owner Controlled Insurance

Program (OCIP) or “wrap-up” insurance policy covering the project and that Webcor and

' Plaintiffs respond that in effect there was @ covert intent to sell, presumably to shield the originally
contracting parties from the claims of the future owners, hidden behind devices to sell to intermediaries
who would later sell to owners including those now represented by the plaintiff here. Such seems quite at
odds with an original contractual provision “expressly for the benefit” of these owners.

? The “Project Description” contained in the prime contract states: “All 595 residential units are currently
intended to be rental, however, the entire project will be mapped for condominium purposes, providingthe subcontractor defendants agreed to pay a portion of the costs of that policy. This is
purportedly explained, and inferences made from the event, by the declaration of Shim,
but I have sustained the objections to the declaration: it is without foundation, including
any foundation that the declarant is qualified to render an opinion in the area, and it
merely speculates as to the reasons these parties had for securing the insurance.’ Neither
the Shim declaration, nor the OCIP policy, gives rise to the inference that the contract
contemplated the owners as third party beneficiaries.

Plaintiffs cite Gilbert Financial Corp. v. Steelform Contracting Co., 82
Cal.App.3d 65, 69-70 (1978). But here, as opposed to Gilbert, the homeowners
association is not the original building owner; it is far removed from the original owners
in the chain of sales. Defendants note Landale-Cameron Court, Inc. v, Ahonen, in which
the court rejected a homeowners association’s claim that it was a third-party beneficiary
of a contract between a builder-developer and a contractor. 155 Cal.App.4th 1401, 1410-
11 (2007). The court emphasized that the homeowners association was not in existence
when the contract was signed; that the contractor didn’t know the building was intended
to be a condominium; and that “as a matter of law this project was not a common interest
development at the time the contract was signed because the CC&Rs had not yet been
recorded.” id. It rejects the third party beneficiary argument. So toc here.

Finally, there is plaintiff's invocation of the venerable Schell v. Schmidt, 126
Cal. App.2d 279, 290 (1954), But Schell involved special legislation which manifested

the parties’ intent to benefit the veterans for whom the homes were built. Martinez v.

Catellus with the flexibility to convert residential rental units to for-sale units in the event it becomes
financially beneficial to do so.” (Brians Del. Ex. B at Ex. A-1 (CAT 032323).)

* At argument the Association asked me to allow it to either name another expert, or perhaps provide
further materials on Shim’s qualification, together with making him available for deposition, so as to
buttress their evidentiary showing. This is in effect a request for a continuance to enable the collection ofSocoma Companies, Inc., 11 Cal.3d 394, 403 (1974). There is nothing like that in the

present case.

Conclusion
The motions of Webcor and Anning-Johnson for summary adjudication in their

favor of the seventh cause of action of the third amended complaint are granted.

Dated: April 2, 2013 ee

is E.A. Karnow
Judge Of The Superior Court

additional materials to oppose the motion, and is governed by C.C.P. § 437c(h). None of the predicates for
relief under that section is met by the Association’s oral suggestion, and I reject it._

oe NA HW be YN

Oo odo

Gordon & Rees LLP
—
n

275 Battery Street, Suite 2000
San Francisco, CA 94111
N wo NO ny nN nN nN Ny — _ _
~ an a _ Ww nN _ oO oO oO x

28

ATUH/1068575/94981670,1

PROOF OF SERVICE
Beacon Residential Community Association v. Catellus Third and King, et al.
San Francisco County Superior Court Case No. CGC-08-478453

Tam a resident of the State of California, over the age of 18 years, and not a party to the

within action. My business address is: Gordon & Rees LLP, 275 Battery Street, Suite 2000,
San Francisco, CA 94111, and my email address is rglynn@gordonrees.com. On April 23,
2013, I caused service of the within documents:

x

NOTICE OF ENTRY OF ORDER GRANTING MOTIONS OF WEBCOR AND
ANNING-JOHNSON COMPANY FOR SUMMARY ADJUDICATION OF
PLAINTIFF’S SEVENTH CAUSE OF ACTION

by transmitting via email the document(s) listed above to the email address(es) set
forth on the attached Service List, on this date, before 5:00 p.m.

By transmitting via facsimile the document(s) listed above to the fax numbers set forth
on the attached Service List, on this date, before 5:00 p.m.

by personally delivering the document(s) listed above to the person(s) at the
address(es) set forth on the attached Service List.

by placing the document(s) listed above in a sealed envelope with postage thereon
fully prepaid, in United States mail in the State of California at San Francisco,
addressed as set forth on the attached Service List.

by electronic service via File & Serve Xpress transmission to the parties listed on the
File & Serve Xpress Service List for this matter, sent on this date, before 4:00 p.m.

I declare under penalty of perjury under the laws of the State of California that the above

is true and correct.

Executed on April 23, 2013 at San Francisco, Cali:

Regina C.

PROOF OF SERVICE