Motion-Secondary: BEACON RESIDENTIAL COMMUNITY ASSOCIATION VS. CATELLUS THIRD AND KING LLC et al

• 
• 
• 
• 
• 
• 
• 
• 

						
                                
Preview
                                w

SANDY M. KAPLAN (SBN 095065)
GREGORY T. HANSON (SBN 201395)

GORDON & REES LLP ELECTRONICALLY
275 Battery Street, Suite 2000 FILED
San Francisco, CA 94111 Superior Court of California,
Felephone: Gt 3 oRe seer County of San Francisco
acsimile: ~
NOV 09 2012

Attorneys for Defendants, Cross-Defendants and Cross-Complainants Clerk of the Court
WEBCOR CONSTRUCTION, INC.; WEBCOR BUILDERS, INC, BY ANNIEPASCUAL
WEBCOR CONSTRUCTION, INC. dba WEBCOR BUILDERS on eputy Clerk
its own behalf and erroneously sued as WEBCOR CONSTRUCTION

LP dba WEBCOR BUILDERS

SUPERIOR COURT OF CALIFORNIA - COUNTY OF SAN FRANCISCO

BEACON RESIDENTIAL COMMUNITY CASE NO. CGC-08-478453

ASSOCIATION,
WEBCOR CONSTRUCTION, INC;

WEBCOR BUILDERS, INC.; WEBCOR
CONSTRUCTION, INC, dba WEBCOR
BUILDERS on its own behalf and
erroneously sued as WEBCOR
CONSTRUCTION LP dba WEBCOR
BUILDERS’ MEMORANDUM OF
POINTS AND AUTHORITIES IN
SUPPORT OF THEIR MOTION FOR
SUMMARY ADJUDICATION AGAINST
PLAINTIFF BEACON RESIDENTIAL
COMMUNITY ASSOCIATION

Plaintiff,
vs.
CATELLUS THIRD AND KING LLC, et al.,

Defendants.

AND RELATED CROSS-ACTIONS.

[Code of Civil Procedure §§ 437c et seq.]

Accompanying Papers:
1) Notice of Motion and Motion for

Summary Adjudication; 2) Separate
Statement of Undisputed Material Facts;
3) Request for Judicial Notice;

4) Declaration of Sandy M. Kaplan;

5) Declaration of Chet Brians; and

6) [Proposed] Order

Complaint Filed: August 8, 2009

DATE: — January 18, 2013

TIME: 9:30 a.m.

DEPT: 304

JUDGE: Honorable Richard A. Kramer
TRIAL DATE: February 4, 2013

WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFIn.

IV.

TABLE OF CONTENTS

Page No.

INTRODUCTION oo cccseeseessssesscaeseeessseseeecsceresreressereenenesesnenenseeceessmsensasiasteuseeseasseesnaseesteny 1
FACTUAL BACKGROUND... ecccecscsssesssesssrssssesessetesnensssessneesaneesssssnessnnessneessnerserennecenaes 2
A. Brief Procedural History...
B. Relevant Factual History... ..c:ssescccsessessessessressnecssesseessesssseensecesceoeeanensecuenseeenaesaes 2
LEGAL ARGUMENT ....cccscesssecsscessesssneessecsveesssescsssessnscnversnsccenscancneneceenreraegsnectsenssenrecices 3
A. Standard for Summary Adjudication, occ ccesscseceseeeseesesteseneenennsneencesenennsentires 3
B. PLAINTIFF Was Not an Intended Beneficiary of the WEBCOR..
c. The Attorney’s Fee Provision in the WEBCOR Contract Does Not Apply

to Third Party Beneficiaries .......sccscscssescseessneenersnecenrecsrenteneetcssennssarensecsnaesncate 10
D. PLAINTIFF Is Not A Successor-in-Interest to the WEBCOR Contract. .......... 12
CONCLUSION

i

WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFCo Oe NU KR Hh RB WHY

NON NN DY YN KB ND Dm mmm ee
eo WA A F&F YUN SF 5S Ow DDH HW BF Bw YP &

TABLE OF AUTHORITIES
Page No.

Cases

Aguilar y. Atlantic Richfield Company
(2001) 25 Cal. 4th 826 v..ceccceccsecsneceseessteesessseneessssuresssnessueensnesssscsnaestaceeanensacenssnanecennsernsneenaesee 3,4

Bancomer, S.A. v. Superior Court
(1996) 44 Cal.App.4th 1450...

Blickman v. MF Downtown Sunnyvale, LLC
(2008) 162 Cal. App.4th 858 vcceessseccsesccsssssecssesesneessssessecessassaressneesnsennesnnessnneennescentnaneseenerserte 11

Caldwell y. Paramount Unified School Dist.
(1995) 41 Cal App.4th 189 oo ccssssesessssssnecesesssnnmssecesaneccesnnmrrersnemeeneneseceeniinenssssssnannies 3

Gilbert Fin. Corp. v. Steelwork Contracting Co.
(1978) 82 Cal. App.3d 65 vescsssscsssssssssssessnnsesseesessennmeccsaneecnnnerssnescssecsssereeensssenssasssanaaeensanaeten 4,5

Landale-Cameron Court Inc. v. Ahonen
(2007) 155 Cal App.4th 1401 (rev. denied 2008.) eee c ences snsreeesseceeesessnsienneeneenaey 5,10

Loduca v. Polyzos
(2007) 153 Cal.App.4th 334

Perez v. 222 Sutter Street Partners

(1990) 222 Cal. App.3d 938 (rev. denied 1990) ...eeesccceeisecesssseeeersssssareecssnsneeceeersnnnnaaceesaantes 12
Sessions Payroll Management, Inc. v. Noble Constr. Co.
(2000) 84 Cal App.4th 671 .ceesseeccsssssssseeseseesscennmecsuneesssusensnmessvnnrecersnesssessesnsecsnnneeneennsssnants il
Statutes

California Code of Civil Procedure section 437¢
Treatises

Black’s Law Dict. (Sth 6d. 1979) .ccccccsesssssessescsseserseieceesenrersenssassnsssenseassnrrstecnnsacsensaneneencesensenees 12

ii
~~ WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFL INTRODUCTION
WEBCOR CONSTRUCTION, INC.; WEBCOR BUILDERS, INC.; WEBCOR

CONSTRUCTION, INC. dba WEBCOR BUILDERS on its own behalf and erroncously sued as
WEBCOR CONSTRUCTION LP dba WEBCOR BUILDERS (“WEBCOR”) is entitled to
summary adjudication on Plaintiff Beacon Residential Community Association’s
(“PLAINTIFF”) | Seventh Cause of Action for Third Party Beneficiary — Breach of Contracts
and Subcontracts, asserted against WEBCOR in its Third Amended Complaint (“TAC”). The
basis for this motion is that the PLAINTIFF has no supporting facts that demonstrate that
THIRD AND KING INVESTORS, LLC (‘TKI’) and WEBCOR, the parties to the WEBCOR
general contract (hereinafter referred to as the “WEBCOR contract”) intended the PLAINTIFF,
inclusive of the Beacon Residential Community Association (the “BEACON ASSOCIATION”),
the Beacon Commercial Owners’ Association (“COMMERCIAL ASSOCIATION”) and the 595
individual unit owners (the “MEMBERS"”), to be a third party beneficiary nor did WEBCOR
intend that the PLAINTIFF be a third party beneficiary to any of the subcontracts in which
WEBCOR was a party (hereinafter referred to as “SUBCONTRACTS”). Additionally,
PLAINTIFF is not a successor-in-interest to the WEBCOR contract.

The facts show that at the time the WEBCOR contract and the SUBCONTRACTS were
entered into, the construction PROJECT was defined as apartments, no residential or commercial
association was contemplated by the WEBCOR contract or the parties to the WEBCOR contract
or SUBCONTRACTS, and the homeowners were not known potential beneficiaries to either the
WEBCOR contract or SUBCONTRACTS. In fact, the units were sold to individuals some four
years after the WEBCOR contract was entered into, Additionally, there is no evidence to
support a finding that PLAINTIFF is a successor-in-interest to the WEBCOR contract.
Consequently, WEBCOR is entitled to summary adjudication as a matter of law.
if
Mi

' References to PLAINTIFF in this Memorandum of Points and Authorities shall include collectively, the BEACON
ASSOCIATION, the COMMERCIAL ASSOCIATION and the MEMBERS.
1

“WEBCOR'S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFF14
15

I. FACTUAL BACKGROUND

A. Brief Procedural History
‘This lawsuit was initiated by PLAINTIFF against, inter alia, TK] and the CATELLUS

PARTIES’ which had originally developed and owned the PROJECT, that is currently defined as
the property located at 250 and 260 King Street, San Francisco, CA, with 595 condominium
units and commercial spaces, (Statement of Undisputed Facts No. “SSUF” No. 1.) The suit
involves a multitude of claims of claims against TKI and the CATELLUS PARTIES, MISSION
PLACE, LLC and its other related entities (collectively “MISSION PLACE”), the subsequent
owner and seller of the residential units at the property, as well as the architects involved in the
design of the PROJECT and the construction team, including WEBCOR as the general
contractor, (SSUF. No. 2.) PLAINTIFF brings the suit on behalf of (1) itself, referenced herein
specifically as the BEACON ASSOCIATION, (2) the COMMERCIAL ASSOCIATION from
whom BEACON ASSOCIATION claims it was assigned its rights, and (3) on behalf of the
MEMBERS.’ (SSUF No. 3.)

B. Relevant Factual History
The salient historical facts are as follows: Webcor Construction, Inc. dba Webcor

Builders entered into a construction contract (“WEBCOR contract”) with TKI in or around
August 24, 2001. (SSUF No. 5.) The scope of work for the PROJECT was stated in the
WEBCOR contract as comprising of residential, retail and commercial. (SSUF No. 6.) The
residential component was described as 595 residential units for rent. (SSUF No. 7.) At the
time that WEBCOR entered into the WEBCOR contract and the SUBCONTRACTS, it
understood that the intent of the residential portion of the PROJECT was that the units would be
constructed and used as apartments. (SSUF No. 8.) TKI and the CATELLUS PARTIES also

intended that the residential component of the PROJECT would be designed and built as

2 References in this Memorandum of Points and Authorities to the CATELLUS PARTIES include collectively any
of the following related entities, inclusive of Catellus Development Corporation; Catellus Operating Limited
Partnership; Catellus Urban Development Corporation; Catellus Commercial Development Corporation, Catellus
Third and King LLC; and Prologis.
2 A motion for class certification is pending. (SSUF No. 4.) Depending upon the outcome of that motion, the
argument related to the MEMBERS herein may be moot.

2

WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFapartments. (SSUF Nos. 12, 13, 20 through 24.)

While TKI and the CATELLUS PARTIES owned the PROJECT, a substantial portion of
the units were rented as apartments; approximately one entire tower. (SSUF No. 11.) TKI and
the CATELLUS PARTIES had intended and operated the entire PROJECT, including the
commercial spaces and units, as rental properties. (SSUF No. 12.) None of the units were sold
as condominiums by TKI or the CATELLUS PARTIES. (SSUF No. 13.)

MISSION PLACE purchased the PROJECT in December of 2004. (SSUF No. 14.)
MISSION PLACE was the party which sold the units as condominiums. (SSUF No. 15.) In or
around the winter of 2005, MISSION PLACE began selling the units as condominiums to
individuals and sold the last condominium in 2007. (SSUF No. 16.) MISSION PLACE also
sold the commercial spaces to individuals and companies, as well as the parking garage after it
purchased the PROJECT from TKI. (SSUF No. 17.)

There was no common association established for the PROJECT until at least one year

after the effective date of the WEBCOR contract. (SSUF Nos. 5 and 33.)
Hi = LEGAL ARGUMENT

A. Standard for Summary Adjudication.
Summary judgment is deemed a suitable means to test the sufficiency of a plaintiff's

case. (Caldwell v, Paramount Unified School Dist. (1995) 41 Cal.App.4th 189, 203.) A
summary adjudication motion is subject to the same rules and procedures as a summary
judgment motion. (Code Civ. Proc., § 437c(f)(1).) A party’s motion for summary judgment
“shall be granted if all the papers submitted show that there is no triable issue as to any material
fact and that the moving party is entitled to a judgment as a matter of law.” (Code of Civ. Proc.
§ 437e(c).)

In Aguilar v. Atlantic Richfield Company (2001) 25 Cal.4th 826, the California Supreme
Court held that the purpose of summary judgment is to provide courts with a mechanism to cut
through the parties’ pleadings to determine whether, despite their allegations, trial is in fact
necessary to resolve their dispute. Summary judgment [or adjudication] may be granted ifa

moving party defendant shows that a cause of action has no merit and one or more elements of

3
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFco ee YO OH RB BY YD OM

12

the cause of action, even if not separately pleaded, cannot be established. (/d. at 843.) Once the
defendant has met that burden, the burden shifts to the plaintiff to show that there is a triable
issue of one or more materials facts as to that cause of action or a defense thereto. (/d., at 844.)
Here, PLAINTIFF cannot possibly meet this burden.

B. PLAINTIFF Was Not an Intended Beneficiary of the WEBCOR

PLAINTIFF alleges a number of claims against WEBCOR under its cause of action for
breach of contract - third party beneficiary. Specifically, PLAINTIFF asserts that WEBCOR
“knew (a) that principals, agents or employees of ‘PROLOGIS/CATELLUS’ and/or ‘MISSION
PLACE LLC’ would ultimately be the sole shareholders, officers and directors of Plaintiff
Association; (b) that title to the Subject Property would ultimately be transferred to the
Members; (c) that such Plaintiff Association and the Commercial Association would ultimately
be responsible for the maintenance and repair of the various building components that were
being developed, design, constructed and/or supplied ... [T]hese contracts and subcontracts

were, therefore, made for the express and immediate benefit of Plaintiff. Plaintiff was a third

party beneficiary of the foregoing contract under the principles of Gilbert Fin. Corp. v. Steelwark
Contracting Co. (1978) 82 Cal.App.3d 65 and Loduca v. Polyzos (2007), 153 Cal.App.4th 334.".
(SSUF No. 18.) Moreover, PLAINTIFF asserts that the BEACON ASSOCIATION, the
COMMERCIAL ASSOCIATION and the MEMBERS “are successors in interest to
PROLOGIS/CATELLUS and MISSION PLACE, LLC.” in regards to the WEBCOR contract.
(SSUF No. 19.)

Accordingly, the PLAINTIFF is essentially making two arguments — first, that it is a third
party beneficiary to the WEBCOR contract and SUBCONTRACTS and, second that it is a
successor-in-interest to the WEBCOR contract. There is not one scintilla of evidence to support
PLAINTIFF’s claim. Therefore California law requires this court to grant WEBCOR’s Motion.

A third party beneficiary has the ability to enforce a contract which was made expressly
for his benefit. (Civil Code § 1559.) The courts interpret this code such that while a party not
actually named in a contract can qualify as a third party beneficiary to the contract, the

contracting parties must have intended such unnamed party to benefit af the time that the

4
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFwe NH KR HR RB Ww Ye =

RR BM BR YR RR meme
8B RRR RK FS Se AEA EBHeSS

contract was entered and the contract must reflect that intent. (Landale-Cameron Court Inc. v.
Ahonen (2007) 155 Cal.App.4th 1401, 1411 (rev. denied 2008.) (“Landale”) (Emphasis added.).

To quote the seminal case of Landale:

The intent of the third party must appear “on the terms of the contract.”

[Citations] As explained by well-reasoned case law: “A third party should not be

permitted to enforce covenants made not for his benefit, but rather for others. He

is not a contracting party; his right to performance is predicated on the contracting

parties’ intent to benefit him ....” [Citations.] .... The fact that ... the contract, if

carried out to its terms, would inure to the third party’s benefit is insufficient to

entitle him or her to demand enforcement. [Citation.] Whether a third party is an

intended beneficiary or merely an incidental beneficiary to the contract involves

construction of the parties’ intent, gleaned from reading the contract as a whole in

light of the circumstances under which it was entered. [Citation] (Landale, 155

Cal. App.4th at 1410-1411, quoting Bancomer, S.A. v. Superior Court (1996) 44

Cal.App.4th 1450, 1458.)

The holding in Landale is not only instructive to the issue before this Court, but dictates
this Court to grant WEBCOR’s motion. In Landale, the HOA sued the builder-developer for
construction defects. The HOA also sued the decking and flooring contractor Ahonen for
negligence and breach of contract claiming it was a third party beneficiary of the
builder/developer contract with Ahonen. The court held that the HOA’s “breach of third party
beneficiary contract is substantively without merit because the HOA, which was not in
existence at the time of the contract, was not a third party beneficiary” (/d., at 1404.)
(Emphasis added.) The court relied upon the following facts in reaching its apt conclusion: (1)
Ahonen testified that it was not until later that he learned that the project was a condominium
project; (2) the Ahonen contract did not mention the term condominium; and (3) “the project
was not a common development at the time the contract was signed because the CC&R’s
[covenants, conditions, and restrictions] had not yet been recorded.” (d., at 1411.) Itis notable
that Landale is the only reported case involving an HOA claim for third party beneficiary status
to a contract between a developer/builder and contractor.

PLAINTIFF cannot avail itself of the case entitled Gilbert Fin. Corp. v. Steelform
Contracting Co., (1978) 82 Cal.App.3d 65, which it cited in its TAC. In Gilbert, the court held
that Gilbert, the owner, was a third party beneficiary to the subcontract between Steelform and

the general contractor. The obvious distinction between Gilbert and the case at hand, is that the

5
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFcourt found that Steelform unquestionably knew that the ultimate benefit of the subcontract was
to be the Owner, Conversely, in the instant matter, WEBCOR could not have known, and did not
know of any third party beneficiaries, at the time of contracting. Not only did the BEACON
ASSOCIATION and the COMMERCIAL ASSOCIATION not exist at the time the WEBCOR
contract or SUBCONTRACTS were entered into, but WEBCOR understood that the PROJECT
was going to be used as apartment for an unspecified, and potentially, perpetual time period.
Obviously, the MEMBERS who only purchased their units starting in 2005, four years about the
WEBCOR contract was entered into. were not known to WEBCOR.

Additionally, Loduca, supra., is of no help to the PLAINTIFFS. The case is clearly
distinguishable. In Loduca, the court did not have to decide whether the nonsignatory to the
contract was a third party as the signatory to the contract did not dispute that the nonsignatory
was a third party beneficiary. (Loduca, supra., 193 Cal.App.4th 334, 344. (rev. denied 2007)).
The contract at issue actually named the nonsignatory. (/d.) Obviously, WEBCOR disputes that
the PLAINTIFF is a third party beneficiary, and PLAINTIFF was not mentioned in the
WEBCOR contract or SUBCONTRACTS, and was not even in existence until after the contract
and SUBCONTRACTS were entered into, and the PROJECT was near completion.

None of the testimony or documents in this matter support a finding that the BEACON
ASSOCIATION, COMMERCIAL ASSOCIATION or MEMBERS were intended third party
beneficiaries of the WEBCOR contract or SUBCONTRACTS as demonstrated by the following
facts:

1. TKI and the CATELLUS PARTIES understood that the PROJECT was designed
and built to be an apartment project, not condominiums. Specifically, TKI and the CATELLUS
PARTIES’ designated person most knowledgeable on, inter alia, design issues and the
Covenants, Conditions and Restrictions (“CC&Rs”), Seth Bland testified that “there was no point
at which anyone at Cate!lus thought this [Project] would be a condominium project. Catellus ...
and our charge at the Urban Group intended to design, finance and construct an exclusively
rental project.” (SSUF Nos. 9 and 20.)

2. Mr. Bland also testified that it was not until 2004, when the PROJECT was nearly

6
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFowe NDR hh RB WH

RRM NY KY DY NY KR BD ete
eon A A KR ON = SD CO we BS HH BF YW NH |= OD

complete that it was determined that it would be sold. It was at that point that it was understood
that the PROJECT would be used as condominiums. (SSUF No. 21.)

3. When probed more intensely about CATELLUS: intent in building the
PROJECT, Mr. Bland reiterated that despite the fact that CATELLUS prepared the Master
Declaration of Covenants, Conditions, Restrictions and Reservations of Easement for the
Mission Bay - A Master Plan Community (“Master CC&Rs”) which stated that it “intended to
create a condominium project ...”, CATELLUS always intended to rent the entire PROJECT, “it
only created the CC&Rs to make it possible for someone else in the future to create a
condominium project. It wasn’t Catellus’ intention to ever sell the units.” (SSUF No. 22.)
(Emphasis added.)

4, Mr. McCone, the person most knowledgeable for the CATELLUS PARTIES on,
inter alia, construction issues, testified that the PROJECT was not intended to be a for-sale
condominiums. His understanding was that CATELLUS stated in the CC&Rs that its intent was
to create a condominium project was merely to create an opportunity for the PROJECT to
become a condominium project in the future, as prudent developers do to make the sale value of
the property higher. Moreover, he testified that “with a project of this size, [creating a future
condominium project] can only be done during construction. It’s harder to do [that] after it’s
constructed, so it is common that this is done during construction, whether of not a project ever
becomes a condominium or not.” (SSUF Nos. 10 and 23.)

5. Mr. McCone further testified that he did not keep in mind during the construction
of the PROJECT that the residential units might some day have been used as condominiums.
(SSUF No. 24.)

6. CATELLUS rented not only the residential units, but the parking garage and retail
spaces, and did not sell any of the portion of PROJECT prior to the sale of the PROJECT to
MISSION PLACE. (SSUF No. 12.)

7. At the time WEBCOR entered into the WEBCOR contract and
SUBCONTRACTS, WEBCOR understood that the residential portion of the PROJECT was to

be constructed for use as apartments. (SSUF Nos. 7 and 8.)
7

WEBCOR’S MEMORANDUM OF POINTS AND: AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFF8. The “Project Description” contained in the WEBCOR contract describes the
residential portion of the PROJECT as follows: “All 595 residential units are currently intended
to be rental, however, the entire PROJECT will be mapped for condominium purposes,
providing Catellus with the flexibility to convert residential rental units to for-sale units in the
event it becomes financially beneficial to do so.” (Emphasis added.) This quote is the single use
of the term “condominium” in the entirety of the approximately 163-page long WEBCOR
contract. (SSUF No. 25.)

Therefore, not only was the intent of the PROJECT to be apartments at the time the
WEBCOR Contract was entered into, but the conversion to condominiums was speculative at
best.

9, The WEBCOR contract does not mention BEACON ASSOCIATION; its
predecessor association, Mission Place Residential Community Association; any homeowner
association; any CC&Rs; or that any such association or persons would be created or in
existence. (SSUF No. 26.)

10. The WEBCOR contract does not reference the COMMERCIAL ASSOCIATION,
any predecessor commercial association, or that any such associations would be created or were
in existence. (SSUF No. 27.)

11. At the time that WEBCOR entered into the WEBCOR contract and
SUBCONTRACTS, it was unaware of that TKI or the CATELLUS PARTIES were planning to
record the any CC&Rs and create a residential and/or commercial association. (SSUF No. 28.)

12. | WEBCOR had no knowledge when it entered into the WEBCOR contract and
SUBCONTRACTS that TKI or any of the CATELLUS PARTIES would sell the PROJECT to
MISSION PLACE, LLC, (SSUF No. 29.)

13. At the time WEBCOR entered into its contract and the SUBCONTRACTS,
WEBCOR was unaware of any of the identities of the purchasers of the units, the MEMBERS.
(SSUF No. 30.)

14. At the time WEBCOR entered in the WEBCOR contract and SUBCONTRACTS,

WEBCOR was unaware of any of the identities of the purchasers of the commercial spaces, or

8
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFao Oo Rm YD HW BB YW YD

that TKI or the CATELLUS PARTIES, or MISSION PLACE intended to sell any of the

commercial spaces. (SSUF No. 31.)

15. | MISSION PLACE, LLC, the entity which bought the PROJECT, was not even

created until 2004, three years after the date of the WEBCOR contract. (SSUF Nos. 32.)

16. | MISSION PLACE LLC purchased the PROJECT in approximately October 14,
2004, more than four (4) years after the date of the WEBCOR contract. (SSUF Nos. 5 and 14.)

17, It was not until November 15, 2002, that TKI or the CATELLUS PARTIES
recorded the Master CC&Rs which created the Master Association for the entire PROJECT.
(SSUF No. 33.)

18. On December 5, 2003, more than two years after the WEBCOR contract was

entered into, TKI and the CATELLUS PARTIES recorded the Declaration of Covenants,

Conditions, Restrictions, and Reservation of Easements for the Mission Bay (Residential).

(SSUF No. 34.)
19. PLAINTIFF admits in its TAC the following:

On or about December 5, 2003, a Mutual Benefit Agreement Between Joint
Owners of Building (Mission Bay Mixed Use Residential/Commercial Block N2
(MBA”) was recorded ... The parties were defendant CATELLUS THIRD
AND KING, LLC and defendant THIRD AND KING INVESTORS LLC ...
Plaintiff s predecessor, the Mission Place residential Community Association ....

On or about November 9, 2004, the Articles of Incorporation of Mission Place
Residential Community Association were filed with the Secretary of State for the
State of California ....

On or about December 28, 2004, in the official records of the City and County of
San Francisco, said [the Mission Place Residential Community Association]
caused to be record the Amended and Restated Declaration of [CC&Rs] and
Reservation of Easements for Mission Place (Residential) ....

On or about May 2, 2005, an Amendment of Articles of Incorporation was filed to

change the name of the Mission Place Residential Association to the BEACON
ASSOCIATION. (SSUF No. 35.)

All of these activities related to the creation of a common association arose years after the
WEBCOR contract was executed.
20. | MISSION PLACE did not begin selling the units as condominiums until the

winter of 2005, and the last under sold sometime in 2007. (SSUF Nos. 16.)

9
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFSo mw NK

21. MISSION PLACE did not even have any intent to sell the retail and garage when
it purchased the PROJECT from CATELLUS, but ultimately did because an offer was presented
to it. (SSUF No. 17.)

21. WEBCOR did not intend that the BEACON ASSOCIATION, the
COMMERCIAL ASSOCIATION, or the MEMBERS be third party beneficiaries to the
WEBCOR contract. (SSUF No. 36.)

22. | WEBCOR did not intend that the BEACON ASSOCIATION, the
COMMERCIAL ASSOCIATION, or the MEMBERS be third party beneficiaries to any of the
SUBCONTRACTS. (SSUF No, 37.)

The foregoing undisputable facts provide an abundance of evidence that neither of the
contracting parties to the WEBCOR contract nor the parties to the SUBCONTRACTS intended
the BEACON ASSOCIATION, the COMMERCIAL ASSOCIATION or the MEMBERS to be
third party beneficiaries. None of those entities were created, known or contemplated as of the
date that the WEBCOR contract or SUBCONTRACTS were entered. (Compare, Landale, supra,
595 Cal.App.4th 1401.) It is uncontroverted that the PROJECT was intended to be used as
apartments in 2001, when the WEBCOR contract was signed. Accordingly, the BEACON,
ASSOCIATION, COMMERCIAL ASSOCIATION and MEMBERS are not third party
beneficiaries, but merely incidental beneficiaries to the WEBCOR contract and
SUBCONTRACTS. PLAINTIFF is barred from enforcing any terms of the WEBCOR contract
or SUBCONTRACTS.

c. The Attorney’s Fee Provision in the WEBCOR Contract Does Not Apply to
Third Party Beneficiaries

It is obvious that PLAINTIFF’s underlying purpose in claiming to be a third party
beneficiary to the WEBCOR contract so that it can recovery its attomey’s fees if determined to
be the prevailing party. (See TAC at § 104, attached as Exhibit “A” to WEBCOR’s Request for
Judicial Notice (“RIN”).) However, not only is the PLAINTIFF in all of its three capacities not
a third party beneficiary, but the WEBCOR contract unambiguously limits prevailing party

attorney’s fees to TKI and WEBCOR, the parties to the contract.

10

“WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFoD Om YT DH BR YW NY

NY NR RN YN DBD Dm
eo WD A A BR BW NN = BS OD ew DDH HA RB WN =

California has ample case law addressing the issue of whether a third party beneficiary
can enforce an attorney’s fees provision in a contract for which it is a non-signatory. Of course,
before the court gets to that question, it must first establish whether the nonsignatory is indeed a
third party beneficiary (or successor or assignee) to the contract. If the nonsignatory does not
fall within any of those categories, the discussion ends. If, however, the court finds that the
nonsignatory party is indeed a third party beneficiary, the court must examine the attorney’s fee
provision to determine if the signatory parties intended that provision to benefit third parties.

In Blickman v. MF Downtown Sunnyvale, LLC. (2008) 162 Cal.App.4th 858, the court
determined that the nonsignatory party that was claiming to be a third party beneficiary would
not have been able to enforce the attorney’s fees provision in the contract, even if it were
determined that the nonsignatory were a third party beneficiary. The basis for the court’s
conelusion was in its examination of the attorney’s fees provision ~ namely, whether the contract
evidenced an intent of the signatory parties to confer the right to attorney’s fees on a third party.
The attorney’s fees provision stated: “any litigation between the parties hereto to enforce any
provisions of this Agreement ...” (/d., at 896) (emphasis added.) The phrase “between the
parties hereto” demonstrates the intent of the parties - that only the signatories could enforce the
provision. (/d.) Likewise, in Sessions Payroll Management, Ine. v. Noble Constr. Co. (2000) 84
Cal.App.4th 671, the words in the attorney’s fees provision proved that the signatories did not
intend to confer any rights to fees on third party beneficiaries. (Id., at 681.) The fee provision
was expressly limited to enforcement by “either party.” The provision stated in relevant part: “
“[iJn the event it becomes necessary for either party to enforce the provisions of this Agreement
..2" Ud.) (Emphasis added.) The court held that had the parties “wanted to include someone
else, their contract would have referred to ‘any’ party,” instead of “either” party. (/d.)
(Compare, Loduca v. Polyzos (2007) 153 Cal.App.4th 334, 344 wherein the nonsignatory third
party beneficiary could enforce the attorney’s fees clause which stated “[i]f a court action is
brought, prevailing party to be awarded attomey’s fees,” because the provision was so broadly
worded.)

In the instant matter, the WEBCOR attorney’s fee provision is comparable to Blickman

i
WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFF- woh

aD

and Sessions. The attorney’s fee provision in the WEBCOR contract states, in relevant part:
In any proceeding brought by one party hereto against the other to enforce or
interpret the terms of the Contract Document ..., the prevailing party in such

proceeding shall be entitled to an award of the reasonable fees and disbursements
ofits attorneys ....” (SSUF No. 38.) (Emphasis added.)

The WEBCOR provision by its very terms limits recovery of attorney’s fees to “one
party” of the contract to “the other” party. As such, even if PLAINTIFF were somehow able to
convince this Court that it is a third party beneficiary, it could not enforce the attorney’s fees
provision against WEBCOR.

D. PLAINTIEF Is Not A Successor-in-Interest to the WEBCOR Contract,

PLAINTIFF argues that the three entities it represents are successors to the WEBCOR
contract, and as such it gets the benefit of the contract. The law does not support PLAINTIFF’s
argument.

“*Suecessor’ is defined as: ‘One that succeeds or follows; one who takes the place of
another has left, and sustains the like part or character; ... (Black’s Law Dict. (Sth ed. 1979) p.
1283, col, 2.) ‘Successor-in-interest’ is defined as ‘One who follows another in ownership or
control of property. In order to be a “successor in interest,” a party must continue to retain the
same rights as original owner ... and there must be change in form only and not in substance,
..? (bid., italics added.) Perez v. 222 Sutter Street Partners (1990) 222 Cal. App.3d 938, fh. 8.
(rev. denied 1990).)

Here, the WEBCOR contract stated that “this Agreement shall inure to the benefit of and
shall be binding upon the successors and assigns of [Third and King Investors, LLC].” (SSUF
No. 39.) Asa result of this Court’s ruling on MISSION PLACE’s motion for summary
adjudication, it was deemed to be the successor and assignee of the WEBCOR contract. Now,
PLAINTIFF’s argue that they are successors to the WEBCOR contract. This argument is
meritless. The PLAINTIFF cannot show that TK] or the CATELLUS PARTIES assigned the
WEBCOR contract to any of the associations that it created, or that MISSION PLACE assigned
the WEBCOR contract to the PLAINTIFF, or to any entity or persons. Additionally, there is no

evidence that any of the PLAINTIFF entities are successors ~ that is - took the place of
12

WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFoO em ND WwW BB Ww NH —

NN NR MW RY NR RR mm
eo IA A & OY HY = SO wn AH BF WN = S

MISSION PLACE with regards to the WEBCOR contract. MISSION PLACE’s sale of various
and separate portions of the PROJECT to the different PLAINTIFFS was not merely a change in
the form of ownership. MISSION PLACE did not transfer to PLAINTIFF MISSION PLACE’s
operations. The transactions between MISSION PLACE and the PLAINTIFF entitics was not
merely a change in the name of the Owner ~ rights and obligations varied among and between
each of the PLAINTIFFS and those of MISSION PLACE. Additionally, an exemplar of
MISSION PLACE’s Purchase Agreements with one of the MEMBERS did not include any such
assignment of the WEBCOR contract. (See Exhibit “J,” attached to Kaplan Dec.) The benefits
of the WEBCOR contract are not covenants that run with the land. By purchasing a property that
was the subject of a contract, does not make the purchaser a successor to such contract, without
an assignment. Therefore, subsequent owners of any of the property at the PROJECT are not
successors to the WEBCOR contract. Not one reported case, or unreported case for that matter,
has been located which supports the proposition that an HOA, commercial association or
purchaser, with no privity, is a successor to a contract between a developer and the general
contractor, by mere operation of purchasing the property or transfer of responsibility.

From a practical standpoint, if PLAINTIFF’s argument is successful, the result on the
construction industry will be tragic. Unrelated purchasers of real property no matter how far
removed from the original contracting party will be able to claim successor status, merely on the
basis that it purchased the property at issue in the contract. A contractor would unwittingly be
Hable for contract claims to unknown third parties. This would impart contractual ob igations in

excess of what any contractor could expect to have. The burden on contractors would be

overwhelming, and purchasers too. Image if a homebuyer, by virtue of purchasing a home from
a developer, is deemed to be a successor to that developer-contractor contract. If such
homeowner is a “successor” merely by virtue of purchasing the real estate at issue, that
homeowner could be straddled with all of the obligations of the developer under that contract,
even failure to pay claims. The resulting affect of ruling that non-signatory owners, without an
assignment, are successors to all contracts in which the developer is a party is untenable.

Accordingly, the PLAINTIFF has no basis for claiming that the BEACON
13

~ WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFoO 0 Oe ND Hh BRB WON

28

ATOH/1068375/13897700y.1

ASSOCIATION, the COMMERCIAL ASSOCIATION, or the MEMBERS are successors to the
WEBCOR contract.
IV. CONCLUSION

PLAINTIFF cannot maintain its seventh cause of action against WEBCOR. As
explained above in detail, neither WEBCOR nor CATELLUS had any intent to benefit the
PLAINTIFF, which three entities were not even in existence or contemplated at the time the
WEBCOR contract was entered. WEBCOR did not intend PLAINTIFF to be third party
beneficiaries to the SUBCONTRACTS. PLAINTIFF is not a successor to the WEBCOR
contract by virtue of being purchasers of diverse and distinct portions of the PROJECT. Asa
result, this Court should rule in WEBCOR’s favor and grant summary adjudication against

PLAINTIFF’s Seventh Cause of Action.

Dated: November 8, 2012 GORDON & REES LLP
wa
SAN) f-——

Attorneys for Defendant, Cross-Defendant and
Cross-Complainant

WEBCOR CONSTRUCTION, INC.;
WEBCOR BUILDERS, INC; WEBCOR
CONSTRUCTION, INC, dba WEBCOR
BUILDERS on its own behalf and erroneously
sued as WEBCOR CONSTRUCTION LP dba
WEBCOR BUILDERS

14
~~ WEBCOR’S MEMORANDUM OF POINTS AND AUTHORITY IN SUPPORT OF
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFFGordon & Rees LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
a

28

ATUH/1068375/9498167V 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

Iam 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. On November 9, 2012, I served the within documents:

oad

xl

WEBCOR CONSTRUCTION, INC.; WEBCOR BUILDERS, INC.; WEBCOR
CONSTRUCTION, INC. dba WEBCOR BUILDERS on it own behalf and
erroneously sued as WEBCOR CONSTRUCTION LP dba WEBCOR BUILDERS’
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF THEIR
MOTION FOR SUMMARY ADJUDICATION AGAINST PLAINTIFF BEACON
RESIDENTIAL COMMUNITY ASSOCIATION

by transmitting via email the document(s) listed above to the fax number(s) set forth
below 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 below.

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 below.

by electronic service via LexisNexis transmission to the parties’ listed on the
LexisNexis Service List for this matter sent on this date before 5:00 p.m.

[SEE ATTACHED SERVICE LIST]

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

is true and correct.

Executed on November 9, 2012 at San Francisco, California.

C.

Regina C.

.

PROOF OF SERVICEoD Oe ND A BR BY De

he
Bw Nome

27
28

ATUH/1068375/10874770v.¢

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

SERVICE LIST
Attorneys for Plaintiff Co-Counsel for Plaintiff
THE BEACON RESIDENTIAL BEACON RESIDENTIAL
COMMUNITY ASSOCIATION COMMUNITY ASSOCIATION
Ann Rankin, Esq. Kenneth S. Katzoff, Esq.
Law Offices of Ann Rankin Robert R. Riggs, Esq.

3911 Harrison Street
Oakland, CA 94611
Tel: 510-653-8886
Fax: 510-653-8889
arankin@annrankin.com

Sung E. Shim, Esq.

Katzoff & Riggs

1500 Park Avenue, Suite 300
Emeryville, CA 94608

Tel: 510-597-1990

Fax: 510-597-0295
kkatzoff@katzoffriggs.com
triges@katzoffriges.com

sshim@katzoffriggs.com

Attorneys for Defendants Mission Place
LLC; Mission Place Mezz Holding LLC;
Mission Place Mezzanine LLC; Mission
Place Partners LLC; Centurion Real Estate
Investors IV, LLC; and Centurion Real
Estate Partners, LLC

Peter J. Laufenberg, Esq.

Gregory Jung, Esq.

Wendell, Rosen, Black & Dean

1111 Broadway, 24" Floor

Oakland, CA 94607

Tel: 510-834-6600

Fax: 510-834-1928
plaufenberg@wendel.com
GJung@wendel.com

Attorneys Defendants Mission Place LLC;
Mission Place Mezz Holding LLC; Mission
Place Mezzanine LLC; Mission Place
Partners LLC; Centurion Real Estate
Investors IV, LLC; and Centurion Real
Estate Partners, LLC

Steven M. Cvitanovic, Esq.

Robert D. Tobey Jr., Esq.

Haight, Brown & Bonestee!

71 Stevenson Strect, 20th Floor

San Francisco, CA 94105

Tel: 415-546-7500

Fax: 415-546-7505

sevitanovie@hbblaw.com
rtobey@bbblaw.com

Attorneys for Defendants Catellus Third and
King LLC; Cateitus Development
Corporation; Catellus Commercial
Development Corp., Catellus Operating
Limited Partnership; Catellus Urban
Development Corporation; Third and King
Investors LLC; and Prologis

David S. Webster, Esq.

Mark J. D’Argenio, Esq.

Wood, Smith, Henning & Berman, LLP
1401 Willow Pass Road, Suite 700
Concord, CA 94520

Tel: 925-222-3411

Fax: 925-356-8250
dwebster@wshblaw.com
mdargenio@wshblaw.com

Attorneys for Defendants Catellus Third
and King LLC; Catellus Development
Corporation; Catellus Commercial
Development Corp., Catellus Operating
Limited Partnership; Catellus Urban
Development Corporation; Third and King
Investors LLC; and Prologis

Todd J. Wenzel, Esq.

John A. Koeppel, Esq.

Ropers, Majeski, Kohn & Bentley

201 Spear Street, Suite 1000

San Francisco, CA 94105

Tel: 415-543-4800

Fax: 415-972-6301

twenzel@rmkb.com
ikoeppe!@rmkb.com

1

SERVICE LISToo 6e IND HW Bw Ww

Attorneys for Cross-Defendant
Skidmore Owings & Merrill LP
James P. Castles, Esq.

Richard C. Young, Esq.

Robles, Castles & Meredith LLP
492 Ninth Street, Suite 200
Oakland, CA 94607

Tel: 415-743-9300

Fax: 415-743-9305
jim@remlawgroup.com
rick@remlawgroup.com

Attorneys for Cross Defendant Windows
Solutions, Inc.(sued herein as ROE 1)
Kevin P. McCarthy, Esq.

Joseph C. Schultz, Esq.

McCarthy & McCarthy, LLP

The Arlington Building

492 Ninth Street, Suite 220

Oakland, CA 94607

Tel: 510-839-8100

Fax: 510-839-8108
kmecarthy@mecarthyllp.com
ischultzi@mecarthyllp.com

Attorneys for Cross Defendants HKS, Inc
HKS Architects, Inc; HKS, Inc.
Steven H. Schwartz, Esq.

Thomas R. Matteson, Esq.

Schwartz & Janzen, LLP

12100 Wilshire Boulevard, Suite 1125
Los Angeles, CA 90025-7117

Tel: 310-979-4090

Fax: 310-207-3344
sschwartz@si-law.com
tmatteson(@)sj-law.com

Attorneys for Defendant Anning-Johnson
Company

William H. Staples, Esq.

Archer Norris

2033 North Main Street, Suite 800

Walnut Creek, CA 94596-3759

Tel: 925-930-6600

Fax: 925-930-6620

wstaples@archernorris.com

Attorneys for Cross-Defendant Solutia Inc.
Adam Brezine, Esq.

Julien E. Capers, Esq,

Bryan Cave LLP

560 Mission Street, 25" Floor

San Francisco, CA 94105

Tel: 415-268-2000

Fax: 415-268-1999
adam.brezine@bryancave.com
julien.capers@bryancave.com

Attorneys for Defendant Architectural
Glass and Aluminum Co. Inc.

Randel J. Campbell, Esq.

Lynch, Gilardi & Grummer

170 Columbus Avenue, 5" Floor

San Francisco, CA 94133

Tel: 415-397-2800

Fax: 415-397-0937
reampbell@lgglaw.com

Attorneys for Defendants

Cupertino Electric Inc.; Allied Fire
Protection; Van-Mulder Sheet Metal, Inc.;
Blue’s Roofing Company; Creative
Masonry, Inc.; Carefree Toland Pools, Inc.;
JW. McClenahan, Inc.; NV. Heathorn,
Inc.; Critchfield Mechanical, Inc.; West
Coast Protective Coatings, Inc.; F. Rogers
Corporation; and Western Roofing Service
Brent Basilico, Esq.

Sellar Hazard Manning Ficenec & Lucia
1800 Sutter Street, Suite 460

Concord, CA 94520

Tel: 925-938-1430

Fax: 925-256-7508
bbasilico@sellarlaw.com

clucia@sellarlaw.com

dolivieri@sellarlaw.com

Attorneys for Defendant/Cross-Defendant
Shooter & Butts, Inc.

Steven E. McDonald

James L. Shea

Bledsoe, Cathcart, Diestel, Petersen &
Treppa LLP

601 California Street, 16" Floor

San Francisco, CA 94108

Tel: 415-981-5411

Fax: 415-981-0352

Email: smcedonald@bledsoelaw.com
ysoriano@bledsoelaw.com

2

SERVICE LISTOo OW NY DW PB WY &

BO = Ss

1S

Attorneys for Defendant Webcor Builders
Erin R. Dunkerly, Esq.

Collins, Collins, Muir & Stewart

1100 El Centro Street

P.O. Box 250

South Pasadena, CA 91030-5213

Tel: 626-243-1100

Fax: 626-243-1111

Attorneys for Thyssenkrupp Elevator
Corporation

Christopher T. Olsen, Esq.
Clinton & Clinton

100 Oceangate, Suite 1400
Long Beach, CA 90802
Tel: 562-216-5078

edunkerly@eemslaw.com
Fax: 562-216-5001
Document Depository SPECIAL MASTER
Aiken & Welch. Hon. Ronald M. Sabraw (Ret.)
One Kaiser Plaza, Suite 275 Judicial Referee

Oakland, CA 94612
T: 510-451-1580
F: 510-451-3797

Received a copy if checked:

JAMS

Two Embarcadero Center, Suite 1500
San Francisco, CA 94111

Tel: 415-982-5267

Fax: 415-982-5287
rsabraw@jamsadr.com

Received a copy if checked:

[|

3

SERVICE LIST