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IEMA
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Aug-10-2012 2:32 pm
Case Number: CGC-10-498405
Filing Date: Aug-10-2012 2:31
Filed by: RAYMOND K. WONG
Juke Box: 001 Image: 03720942
SEPARATE STATEMENT OF FACTS
PERFORMING ARTS LLC, VS. KILLARNEY CONSTRUCTION CO., INC. et al
001003720942
Instructions:
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Jeffrey H. Lowenthal (State Bar No. 111763)
Edward Egan Smith (State Bar No. 169792)
STEYER LOWENTHAL BOODROOKAS San Francisco County Superior Court
ALVAREZ & SMITH LLP
One California Street, Third Floor AUG 10 2012
San Francisco, California 94111
Telephone: (415) 421-3400 CLERK OF 6 COURT
Facsimile: (415) 421-2234 BY:
Deptly Clerk
Gary A. Angel (State Bar No. 70006)
Frear Stephen Schmid (State Bar No. 96089)
Law Offices of Gary A. Angel
177 Post Street, Eight Floor
San Francisco, CA 94108
Telephone: (415) 788-5935
Facsimile: (415) 788-5958
Attorneys for Plaintiff and Cross-Defendant
PERFORMING ARTS, LLC
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF SAN FRANCISCO
UNLIMITED JURISDICTION
PERFORMING ARTS, LLC, a Delaware Case No. CGC-10-498405
limited liability company,
Plaintiff, PLAINTIFF PERFORMING ARTS,
LLC'S SEPARATE STATEMENT OF
vs. ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR
KILLARNEY CONSTRUCTION CO., INC., SUMMARY JUDGMENT OF
MID-MARKET DEVELOPMENT CO., INC., CONSTRUCTION TESTING
CARDINAL CONSULTING INC.,
CULLINANE CONSTRUCTION, AL
NORMAN MECHANICAL, INC., MICHAEL
MURRAY, and DOES 1 THROUGH 200,
inclusive,
Date: August 24, 2012
Time: 9:30 AM
Dept: 302
Defendants.
Complaint Filed: April 7, 2010
Trial Date: February 4, 2013
AND RELATED CROSS-ACTIONS.
OOOO
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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Pursuant to California Code of Civil Procedure section 437c, Plaintiff PERFORMING
ARTS, LLC hereby submits the following separate statement of additional material facts,
together with references to supporting evidence, precluding summary judgement in favor of
Defendant Construction Testing Services as follows:
MATERIAL FACTS PRECLUDING OPPOSING PARTY’S RESPONSE AND
SUMMARY ADJUDICATION AND SUPPORTING EVIDENCE
SUPPORTING EVIDENCE
1. 973 Market Street Associates, LLC (“973 | 1.
Market”) was the original owner of an
existing seven-story building located at 973
Market Street in San Francisco (the
“Property”), which was the subject of a
renovation and seismic retrofitting project
that included construction of 67 residential
condominium units and 9,500 square feet of
ground floor commercial/retail space (the
“Project”).
(Cassidy Decl., 2-3).
2. Defendants MidMarket Development Co.,
Inc. (“MidMarket”) and Killarney
Construction Co., Inc. (“Killarney”) acted as
the general contractor responsible for all
work on the Project; Defendant Cullinane
Construction (“Culliane”) did the concrete
work on the Project and was responsible for
the defective concrete work, including
required rebar; Construction Testing Services
(“CTS”) was the consultant hired to inspect
and certify completion of Cullinane’s work in
a workmanlike manner and according to the
plans and specifications approved by the
City; and Defendant Cardinal Consulting,
Inc. (“Cardinal”) was retained by UCB as an
expert consultant to perform, among other
things, progress inspections and provide
reports and recommendations with respect to
the borrower’s periodic funding requests.
(Cassidy Decl., J10; Cardinal Exs. A, B;
Smith Ex. D (Cardinal Depo.), at 57:14-
58:10, 86:10-20; Smith Ex. G (Chiu-Yee
Depo.), at 238:9-239:1, 243:5-17, 243:24-
244:7, 250:7-11).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
|OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
'S\GRANITE973 Market-Killamey\Summary Judgment - Card.CTS\SSUF addl.CTS.wpdwow on nA UU fF W DNDN FH
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3. United Commercial Bank (“UCB”) was
the original construction lender for the
Project, agreeing to lend a total of
$20,000,000 for construction of the Project
(“Construction Loan”) pursuant to a
Promissory Note, a Construction Loan
Agreement, and a Construction Deed of Trust
recorded against the Project on August 31,
7.
(Cassidy Decl., §3; Cassidy Exs. 2-3).
4. In addition to pledging the Property as
security for repayment of the Construction
Loan, under the Construction Deed of Trust
and Construction Loan Agreement borrower
973 Market assigned to UCB “{alll
construction, supply, engineering, and
architectural contracts executed and to be
executed by Borrower for the construction of
the Improvements,” and “[a]ll causes of
action, and all sums due or payable to
Borrower for injury or damage to the
Mortgaged Property, . . . including without
limitation causes of action and damages for
breach of contract, fraud, concealment,
construction defects or other torts.”
(Cassidy Ex. 3, §§ 1.3.14, 1.3.12, 1.3.13, at 4;
Cassidy Ex. 4, §14.1, at 22).
5. Borrower 973 Market went into default on
its obligations under the Construction Loan,
and on March 5, 2009, UCB caused a Notice
of Default and Election to Sell to be recorded
under the Construction Deed of Trust.
(Cassidy Decl., 6).
6. On June 25, 2009, Plaintiff purchased
from UCB all of UCB’s right, title and
interest in and to the Construction Loan for
$3.5 million under the terms of a written
Loan Purchase Agreement.
(Cassidy Ex. 1).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
}S:\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpd_ow ost nH UW FF W DNDN HF
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7. As part of Plaintiff's purchase, UCB
endorsed the $20,000,000 Promissory Note
over to Plaintiff and assigned the
Construction Deed of Trust to Plaintiff
pursuant to a Corporation Assignment of
Deed of Trust recorded June 25, 2009,
together with the balance of the Loan Assets
under the Construction Loan Agreement,
“including without limitation causes of action
and damages for breach of contract, fraud,
concealment, construction defects or other
torts.”
(Cassidy Decl., 4-5; Cassidy Ex. 1, at 3;
Cassidy Ex. 4, 914.1, at 22; Cassidy Exs. 5-
6).
8. At the time of Plaintiff's purchase of the
Construction Loan, the defaulted balance
owed by borrower 973 Market was in excess
of $14,000,000, and the estimated cost of
completing the Project was between $11.3
and 12.6 million.
(Cassidy Decl., 6-7; Cassidy Ex. 7).
9. After obtaining relief from the automatic
bankruptcy stay, on January 26, 2010,
Plaintiff caused the Property to be sold at a
non-judicial foreclosure sale under the
Construction Deed of Trust.
(Cassidy Decl., 6).
10. Plaintiff was the high bidder at the
trustee’s sale and purchased the Property with
acredit bid of $100,000, taking title to the
Property under a Trustee’s Deed Upon Sale
recorded March 9, 2010.
(Cassidy Decl., 6; Cassidy Ex. 7).
11. At the time of the sale, the defaulted 11.
balance due on the Construction Loan was
$15,199,856.27. (Cassidy Ex. 7).
/PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
|OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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12. After taking possession of the Property
following the January 26, 2010 foreclosure,
Plaintiff conducted “invasive and
non-invasive inspections and demolition,”
which exposed previously unknown defective
workmanship throughout the Project on a
massive scale, including widespread defects
in the concrete work, window installations
and plumbing.
(Cassidy Decl., 98-10).
13. After taking possession of the Property,
Plaintiff discovered that Defendants installed
unreinforced concrete without the rebar
installation integral to its structural integrity,
improperly placed new concrete and removed
pre-existing concrete, defectively installed
new windows throughout the building
permitting wind and water intrusion and
causing significant moisture damage to the
building.
(Cassidy Decl., 48-10).
14. After taking possession of the Property,
Plaintiff discovered that Defendants had
either destroyed or rendered useless the
building’s pre-existing plumbing through
defective installation of "replacement"
plumbing fixtures and even the insertion of
poured concrete into various pre-existing
pipes throughout the building.
(Cassidy Decl., 498-10).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
|S:\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF addl.CTS.wpd15. Under Plaintiff's Loan Purchase
Agreement with UCB, the “Loan Assets”
purchased by Plaintiff included the sum of
UCB’s rights under the Loan Agreement,
Promissory Note and Construction Deed of
Trust from borrower 973 Market:
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Loan Assets shall mean, in
respect of all the Loans, all
right, title and interest of the
Seller in and to the Loans, all
related Loan Payments, all
Loan Collateral, . . . and other
proceeds of any kind or nature
in respect of such Loan
Collateral, the Loan File, the
Promissory Note, Mortgage,
Security Agreement and all
other Loan Documents
evidencing or pertaining to
such Loans and all other
rights, remedies, privileges,
benefits, causes of action or
claims of Seller (whether
known or unknown) arising
from or related to such Loans.
(Cassidy Ex. 1, at 3).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
|OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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16. the “rights, remedies, privileges,
benefits, causes of action or claims” of seller
UCB purchased by Plaintiff included the
construction defect claims alleged against
Defendants here, which were assigned to
UCB by borrower 973 Market under the
original Construction Loan Agreement:
14. Assignment of Causes of
Action, Awards and Damages
14.1 All causes of
action, and all sums due or
payable to Borrower for injury
or damage to the Mortgage
Property, or as damages
incurred in connection with
the transactions in which the
Loan secured hereby was
made, including without
limitation causes of action and
damages for breach of
contract, fraud, concealment,
construction defects or other
torts, ... are hereby assigned,
and all proceeds from such
causes of action and all such
sums shall be paid to Lender
for credit upon the
Indebtedness secured hereby
or as otherwise provided
herein. ...
(Cassidy Ex. 4, at 22).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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17. The Construction Deed of Trust defines
the Mortgaged Property against which UCB
was given a security interest as including all
“contract rights” and “claims against third
parties,” all “construction, supply,
engineering, and architectural contracts
executed and to be executed by Borrower of
the construction of the Improvements,” and
the following:
... all plans and specifications
for the Improvements; all
contracts and subcontracts
relating to the Improvements,
all soils reports, engineering
reports, environmental reports,
land planning maps, drawings,
construction contracts, notes,
drafts, documents, engineering
and architectural drawings,
letters of credit, bonds, surety
bonds, any other intangible
rights, relating to the Land and
Improvements, surveys and
other reports, exhibits, or
plans used or to be used in
connection with the
construction, planning,
operation, or maintenance of
the Land and Improvements
and all amendments and
modifications thereof, all
deposits . .. , funds, accounts,
contract rights, instruments,
documents, general
intangibles . .. , and notes or
chattel paper arising from or
in connection with the Land
and other property; all
permits, licenses, certificates,
and other rights and privileges
obtained in connection with
the Land and Mortgaged
Property; all proceeds arising
from or by virtue of the sale,
lease, grant of option or other
disposition of all or any part of
the Mortgaged Property ....
(Cassidy Ex. 3, at 4, 1).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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18. The standard of care for CTS as a special
inspector for the concrete work made it
responsible for "Verify(ing) use of required
design mix, . . . Inspection of concrete and
shotcrete placement for proper application
techniques [and] . . . Inspect form work for
shape, location and dimensions of the
concrete member being formed.” (Reeves
Decl. (CTS), 48). Plaintiffs forensic
construction expert Thomas P. Reeves further
explains: “Based upon my review of the CTS
documents pertaining to said project .. . and
my general knowledge of the requirements
and scope of activities required of a special
inspector under the applicable San Francisco
Building Codes and the expectation of the
San Francisco Department of Building
Inspection with reference said special
inspectors, CTS’ obligations were to examine
the manner of the affixing and anchoring of
rebar to the existing structure and preparation
of the existing structure for adhesion of
concrete. .. . The most crucial factors a
special inspector's (such as CTS) obligations
are to assure the structural integrity of the
work that it is inspecting. The structural
integrity of the concrete work is rendered
meaningless and valueless if the fundamental
adhesion of the rebar and applied concrete to
the existing structure is not properly
performed. It also causes the connection to
become damaged and compromises the
structural capacity.”
(id. 99).
19. CTS’s performance on the Project fell
well below the standard of care for a special
inspector thereby causing significant
structural consequences to the pre-existing
structure by weakening the building and the
pre-existing member structural parts of the
building by putting uncalculated stress to the
building and its structural parts, thereby
causing damaging deflection and cracks in
the pre-existing structural parts of the
building.
(Reeves Decl. (CTS), 10).
PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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20. By CTS’ failure to properly and
adequately report the defective manner the
concrete and rebar was executed at the site,
CTS permitted significant structural
consequences to the pre-existing structure by
weakening the building and the pre-existing
member structural parts of the building by
putting uncalculated stress to the building
and its structural parts, thereby causing
damaging deflection and cracks in the pre-
existing structural parts of the building.
(Reeves Decl. (CTS), 10).
21. CTS failed to report on inadequate
spacing and dimensions of the rebar used,
which resulted in structural damage and
water infiltration and damage to the existing
structure.
(Reeves Decl. (CTS), 11).
22. CTS failed to properly inspect the
structural components designed with specific
reinforcing bar requirements. As a result, the
as built conditions show different
installations than required under the
structural design permits, causing the joint
connection to be unstable and defectively
installed and allowing for cracking of the
installed concrete and water infiltration.
(Reeves Decl. (CTS), 12).
23. By CTS’ failure to properly and
adequately report the defective manner the
concrete and rebar was executed at the site,
additional problems with the steel reinforcing
include the lack or omission of steel
reinforcing required by the structural design.
The improperly reinforced concrete stressed
the pre-existing concrete and some new
concrete, causing cracks and or deformation
of the concrete in its completed condition.
(Reeves Decl. (CTS), 913).
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/PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
|OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
|S\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF add. CTS.wpd© oO 1 DH UU FF WY DY
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24. Water testing confirms that as a result of
CTS’ failure to properly and adequately
report the defective manner the concrete and
rebar was executed at the site, water can
readily migrate through numerous cracks and
separations in the historic and new slabs, at
the control joints, and into the column slab
interface where new concrete attaches to the
historic elements. The damage was also
confirmed in the columns where horizontal
cracking on an oblique basis is observed in
the bottom third of the numerous column
impacted by this improperly reinforced added
concrete load. Water infiltrated the brick and
mortar through cracks in the new concrete.
In these conditions the water has migrated in
the pre-existing brick mortar and causing the
mortar to become brittle and non bonded as it
supports the brick. The water infiltration,
occurring from the cracked concrete and
voids in the concrete abutments and joints
has saturated the top plates and bottom plates
of the metal stud non-bearing partition walls
that completed for the interior framing.
(Reeves Decl. (CTS), 917, 18, 19).
25. CTS permitted the concrete work at the
Project to be done with inadequate, and at
times non-existent steel rebar reinforcement,
causing very real damage to the pre-existing
structure. Indeed, the Reeves testimony
establishes that had CTS performed its
concrete inspection duties adequately and
reported the defective conditions as it was
obligated to do before the concrete was
poured, the City of San Francisco would have
haulted work on the Project.
(Reeves Decl. (CTS), 20).
26. CTS was acting as a “special inspector”
on behalf of the San Francisco Department of
Building Inspection on the Project. This
means CTS’ activities were in lieu of the City
and County of San Francisco building
inspector who depended on CTS’ reports to
accurately report the activities at a
construction site.
(Reeves Decl. (CTS), 20).
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PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
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27. Instead of a City Inspector doing a
physical on-site inspection, the City relied on
the special inspectors, in this case CTS, to
physically inspect at the Project site and
accurately report its findings.
(Reeves Decl. (CTS), §20).
28. CTS was required to and, in fact in this
case, did submit a copy of its reports for the
Project to the City and County of San
Francisco Department of Building
Inspections.
(Reeves Decl. (CTS), 20).
29. The CTS inspection reports for the
Project became a matter of public record and
were reviewed by the Building Department
personnel.
(Reeves Decl. (CTS), 20).
30. Ifa special inspector, such as CTS,
reports faulty workmanship, improper
workmanship, or non-compliance with the
plans and/or codes, then the City and County
of San Francisco will immediately act
thereon and issue a “stop work order” for the
project.
(Reeves Decl. (CTS), 20).
31. CTS’s failure to promptly inform the
City of the improper concrete/ rebar
workmanship at the subject Project site as
detailed in the Reeves Declaration resulted in
the City not being aware of the defective
workmanship and further not issuing a stop
work order as it would have in the normal
course of its oversight.
(Reeves Decl. (CTS), §20).
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PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
|OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING
SAGRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpdDated: August (0 » 2012 STEYER LOWENT: BOODROOKAS
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PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN
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Preview
IEMA SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Aug-10-2012 2:32 pm Case Number: CGC-10-498405 Filing Date: Aug-10-2012 2:31 Filed by: RAYMOND K. WONG Juke Box: 001 Image: 03720942 SEPARATE STATEMENT OF FACTS PERFORMING ARTS LLC, VS. KILLARNEY CONSTRUCTION CO., INC. et al 001003720942 Instructions: Please place this sheet on top of the document to be scanned.wow oO tN DH UU FF Ww ND FF H o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jeffrey H. Lowenthal (State Bar No. 111763) Edward Egan Smith (State Bar No. 169792) STEYER LOWENTHAL BOODROOKAS San Francisco County Superior Court ALVAREZ & SMITH LLP One California Street, Third Floor AUG 10 2012 San Francisco, California 94111 Telephone: (415) 421-3400 CLERK OF 6 COURT Facsimile: (415) 421-2234 BY: Deptly Clerk Gary A. Angel (State Bar No. 70006) Frear Stephen Schmid (State Bar No. 96089) Law Offices of Gary A. Angel 177 Post Street, Eight Floor San Francisco, CA 94108 Telephone: (415) 788-5935 Facsimile: (415) 788-5958 Attorneys for Plaintiff and Cross-Defendant PERFORMING ARTS, LLC IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO UNLIMITED JURISDICTION PERFORMING ARTS, LLC, a Delaware Case No. CGC-10-498405 limited liability company, Plaintiff, PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF vs. ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR KILLARNEY CONSTRUCTION CO., INC., SUMMARY JUDGMENT OF MID-MARKET DEVELOPMENT CO., INC., CONSTRUCTION TESTING CARDINAL CONSULTING INC., CULLINANE CONSTRUCTION, AL NORMAN MECHANICAL, INC., MICHAEL MURRAY, and DOES 1 THROUGH 200, inclusive, Date: August 24, 2012 Time: 9:30 AM Dept: 302 Defendants. Complaint Filed: April 7, 2010 Trial Date: February 4, 2013 AND RELATED CROSS-ACTIONS. OOOO PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING /S:\GRANITE\73 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpdwow on nu FF W DY FHF BR o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pursuant to California Code of Civil Procedure section 437c, Plaintiff PERFORMING ARTS, LLC hereby submits the following separate statement of additional material facts, together with references to supporting evidence, precluding summary judgement in favor of Defendant Construction Testing Services as follows: MATERIAL FACTS PRECLUDING OPPOSING PARTY’S RESPONSE AND SUMMARY ADJUDICATION AND SUPPORTING EVIDENCE SUPPORTING EVIDENCE 1. 973 Market Street Associates, LLC (“973 | 1. Market”) was the original owner of an existing seven-story building located at 973 Market Street in San Francisco (the “Property”), which was the subject of a renovation and seismic retrofitting project that included construction of 67 residential condominium units and 9,500 square feet of ground floor commercial/retail space (the “Project”). (Cassidy Decl., 2-3). 2. Defendants MidMarket Development Co., Inc. (“MidMarket”) and Killarney Construction Co., Inc. (“Killarney”) acted as the general contractor responsible for all work on the Project; Defendant Cullinane Construction (“Culliane”) did the concrete work on the Project and was responsible for the defective concrete work, including required rebar; Construction Testing Services (“CTS”) was the consultant hired to inspect and certify completion of Cullinane’s work in a workmanlike manner and according to the plans and specifications approved by the City; and Defendant Cardinal Consulting, Inc. (“Cardinal”) was retained by UCB as an expert consultant to perform, among other things, progress inspections and provide reports and recommendations with respect to the borrower’s periodic funding requests. (Cassidy Decl., J10; Cardinal Exs. A, B; Smith Ex. D (Cardinal Depo.), at 57:14- 58:10, 86:10-20; Smith Ex. G (Chiu-Yee Depo.), at 238:9-239:1, 243:5-17, 243:24- 244:7, 250:7-11). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN |OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING 'S\GRANITE973 Market-Killamey\Summary Judgment - Card.CTS\SSUF addl.CTS.wpdwow on nA UU fF W DNDN FH Nb oN NNN NN YN BP PRP BPP BP BP RP Be oP on n UU F Ww DY F OG 6 oO 1TH YH F W DY F OO 3. United Commercial Bank (“UCB”) was the original construction lender for the Project, agreeing to lend a total of $20,000,000 for construction of the Project (“Construction Loan”) pursuant to a Promissory Note, a Construction Loan Agreement, and a Construction Deed of Trust recorded against the Project on August 31, 7. (Cassidy Decl., §3; Cassidy Exs. 2-3). 4. In addition to pledging the Property as security for repayment of the Construction Loan, under the Construction Deed of Trust and Construction Loan Agreement borrower 973 Market assigned to UCB “{alll construction, supply, engineering, and architectural contracts executed and to be executed by Borrower for the construction of the Improvements,” and “[a]ll causes of action, and all sums due or payable to Borrower for injury or damage to the Mortgaged Property, . . . including without limitation causes of action and damages for breach of contract, fraud, concealment, construction defects or other torts.” (Cassidy Ex. 3, §§ 1.3.14, 1.3.12, 1.3.13, at 4; Cassidy Ex. 4, §14.1, at 22). 5. Borrower 973 Market went into default on its obligations under the Construction Loan, and on March 5, 2009, UCB caused a Notice of Default and Election to Sell to be recorded under the Construction Deed of Trust. (Cassidy Decl., 6). 6. On June 25, 2009, Plaintiff purchased from UCB all of UCB’s right, title and interest in and to the Construction Loan for $3.5 million under the terms of a written Loan Purchase Agreement. (Cassidy Ex. 1). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING }S:\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpd_ow ost nH UW FF W DNDN HF bv NNN NNN NN PHB HB BP BP BP BP BP BP ost nu FF WY DN F OG 6 Oo TH HO FPF WwW NYS FF OC 7. As part of Plaintiff's purchase, UCB endorsed the $20,000,000 Promissory Note over to Plaintiff and assigned the Construction Deed of Trust to Plaintiff pursuant to a Corporation Assignment of Deed of Trust recorded June 25, 2009, together with the balance of the Loan Assets under the Construction Loan Agreement, “including without limitation causes of action and damages for breach of contract, fraud, concealment, construction defects or other torts.” (Cassidy Decl., 4-5; Cassidy Ex. 1, at 3; Cassidy Ex. 4, 914.1, at 22; Cassidy Exs. 5- 6). 8. At the time of Plaintiff's purchase of the Construction Loan, the defaulted balance owed by borrower 973 Market was in excess of $14,000,000, and the estimated cost of completing the Project was between $11.3 and 12.6 million. (Cassidy Decl., 6-7; Cassidy Ex. 7). 9. After obtaining relief from the automatic bankruptcy stay, on January 26, 2010, Plaintiff caused the Property to be sold at a non-judicial foreclosure sale under the Construction Deed of Trust. (Cassidy Decl., 6). 10. Plaintiff was the high bidder at the trustee’s sale and purchased the Property with acredit bid of $100,000, taking title to the Property under a Trustee’s Deed Upon Sale recorded March 9, 2010. (Cassidy Decl., 6; Cassidy Ex. 7). 11. At the time of the sale, the defaulted 11. balance due on the Construction Loan was $15,199,856.27. (Cassidy Ex. 7). /PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN |OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING SAGRANITE(973 Market-Killamey\Summary Judgment - Card, CTS\SSUF.addl.CTS.wpdwow ot nA HW F WD PB Nv NN NY NN NY NN PP RP PP BP BP BP BP RB ort nn ®F WKH FPF CO © OY A UH F WN FO 12. After taking possession of the Property following the January 26, 2010 foreclosure, Plaintiff conducted “invasive and non-invasive inspections and demolition,” which exposed previously unknown defective workmanship throughout the Project on a massive scale, including widespread defects in the concrete work, window installations and plumbing. (Cassidy Decl., 98-10). 13. After taking possession of the Property, Plaintiff discovered that Defendants installed unreinforced concrete without the rebar installation integral to its structural integrity, improperly placed new concrete and removed pre-existing concrete, defectively installed new windows throughout the building permitting wind and water intrusion and causing significant moisture damage to the building. (Cassidy Decl., 48-10). 14. After taking possession of the Property, Plaintiff discovered that Defendants had either destroyed or rendered useless the building’s pre-existing plumbing through defective installation of "replacement" plumbing fixtures and even the insertion of poured concrete into various pre-existing pipes throughout the building. (Cassidy Decl., 498-10). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING |S:\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF addl.CTS.wpd15. Under Plaintiff's Loan Purchase Agreement with UCB, the “Loan Assets” purchased by Plaintiff included the sum of UCB’s rights under the Loan Agreement, Promissory Note and Construction Deed of Trust from borrower 973 Market: wo ont Dn HU FF WwW ND KF Yb NNN NY NNN NFP PP BP BP BP BP RP PB ont anu &F Ww Yb F OG 6 ON DH UH FF W DY HF OO Loan Assets shall mean, in respect of all the Loans, all right, title and interest of the Seller in and to the Loans, all related Loan Payments, all Loan Collateral, . . . and other proceeds of any kind or nature in respect of such Loan Collateral, the Loan File, the Promissory Note, Mortgage, Security Agreement and all other Loan Documents evidencing or pertaining to such Loans and all other rights, remedies, privileges, benefits, causes of action or claims of Seller (whether known or unknown) arising from or related to such Loans. (Cassidy Ex. 1, at 3). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN |OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING |S:\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpd_wo on DH TO FF WwW DY KF NN NY NN NN ND ND PHP RP PP RP BP RP RP RP PR oI nn Oo FF WH FH OC Ob ON A UH FW DK KF OO 16. the “rights, remedies, privileges, benefits, causes of action or claims” of seller UCB purchased by Plaintiff included the construction defect claims alleged against Defendants here, which were assigned to UCB by borrower 973 Market under the original Construction Loan Agreement: 14. Assignment of Causes of Action, Awards and Damages 14.1 All causes of action, and all sums due or payable to Borrower for injury or damage to the Mortgage Property, or as damages incurred in connection with the transactions in which the Loan secured hereby was made, including without limitation causes of action and damages for breach of contract, fraud, concealment, construction defects or other torts, ... are hereby assigned, and all proceeds from such causes of action and all such sums shall be paid to Lender for credit upon the Indebtedness secured hereby or as otherwise provided herein. ... (Cassidy Ex. 4, at 22). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING }S:\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpdow oO TT DH UU Fe W ND HF Nb oN YN NN NNN ND PP RP BP BP BP BP Pp RB ory nu F&F Ww NY F OG © oO IH UH FF Ww DY HF OO 17. The Construction Deed of Trust defines the Mortgaged Property against which UCB was given a security interest as including all “contract rights” and “claims against third parties,” all “construction, supply, engineering, and architectural contracts executed and to be executed by Borrower of the construction of the Improvements,” and the following: ... all plans and specifications for the Improvements; all contracts and subcontracts relating to the Improvements, all soils reports, engineering reports, environmental reports, land planning maps, drawings, construction contracts, notes, drafts, documents, engineering and architectural drawings, letters of credit, bonds, surety bonds, any other intangible rights, relating to the Land and Improvements, surveys and other reports, exhibits, or plans used or to be used in connection with the construction, planning, operation, or maintenance of the Land and Improvements and all amendments and modifications thereof, all deposits . .. , funds, accounts, contract rights, instruments, documents, general intangibles . .. , and notes or chattel paper arising from or in connection with the Land and other property; all permits, licenses, certificates, and other rights and privileges obtained in connection with the Land and Mortgaged Property; all proceeds arising from or by virtue of the sale, lease, grant of option or other disposition of all or any part of the Mortgaged Property .... (Cassidy Ex. 3, at 4, 1). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING S\GRANITEW73 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpdwo ot Dn HU FF WD KB bw NN NN NN NN BP PP BP PP BP BP Pp ont nan WU F Ww NY F OO Yb OO SI HH HU FF Ww DY FF SO 18. The standard of care for CTS as a special inspector for the concrete work made it responsible for "Verify(ing) use of required design mix, . . . Inspection of concrete and shotcrete placement for proper application techniques [and] . . . Inspect form work for shape, location and dimensions of the concrete member being formed.” (Reeves Decl. (CTS), 48). Plaintiffs forensic construction expert Thomas P. Reeves further explains: “Based upon my review of the CTS documents pertaining to said project .. . and my general knowledge of the requirements and scope of activities required of a special inspector under the applicable San Francisco Building Codes and the expectation of the San Francisco Department of Building Inspection with reference said special inspectors, CTS’ obligations were to examine the manner of the affixing and anchoring of rebar to the existing structure and preparation of the existing structure for adhesion of concrete. .. . The most crucial factors a special inspector's (such as CTS) obligations are to assure the structural integrity of the work that it is inspecting. The structural integrity of the concrete work is rendered meaningless and valueless if the fundamental adhesion of the rebar and applied concrete to the existing structure is not properly performed. It also causes the connection to become damaged and compromises the structural capacity.” (id. 99). 19. CTS’s performance on the Project fell well below the standard of care for a special inspector thereby causing significant structural consequences to the pre-existing structure by weakening the building and the pre-existing member structural parts of the building by putting uncalculated stress to the building and its structural parts, thereby causing damaging deflection and cracks in the pre-existing structural parts of the building. (Reeves Decl. (CTS), 10). PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING }SAGRANITE\973 Market-Killarmey\Summary Judgment - Card,CTS\SSUF.addl.CTS.wpdwo oN DH WH FF W DY F Rr °o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20. By CTS’ failure to properly and adequately report the defective manner the concrete and rebar was executed at the site, CTS permitted significant structural consequences to the pre-existing structure by weakening the building and the pre-existing member structural parts of the building by putting uncalculated stress to the building and its structural parts, thereby causing damaging deflection and cracks in the pre- existing structural parts of the building. (Reeves Decl. (CTS), 10). 21. CTS failed to report on inadequate spacing and dimensions of the rebar used, which resulted in structural damage and water infiltration and damage to the existing structure. (Reeves Decl. (CTS), 11). 22. CTS failed to properly inspect the structural components designed with specific reinforcing bar requirements. As a result, the as built conditions show different installations than required under the structural design permits, causing the joint connection to be unstable and defectively installed and allowing for cracking of the installed concrete and water infiltration. (Reeves Decl. (CTS), 12). 23. By CTS’ failure to properly and adequately report the defective manner the concrete and rebar was executed at the site, additional problems with the steel reinforcing include the lack or omission of steel reinforcing required by the structural design. The improperly reinforced concrete stressed the pre-existing concrete and some new concrete, causing cracks and or deformation of the concrete in its completed condition. (Reeves Decl. (CTS), 913). 10 /PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN |OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING |S\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF add. CTS.wpd© oO 1 DH UU FF WY DY Nb oN NN NN NN ND PP BP HP BP BP BP BP BP PB on nan wo F Ww NY F OG fb oO IT HH fF WwW DY FH OO 24. Water testing confirms that as a result of CTS’ failure to properly and adequately report the defective manner the concrete and rebar was executed at the site, water can readily migrate through numerous cracks and separations in the historic and new slabs, at the control joints, and into the column slab interface where new concrete attaches to the historic elements. The damage was also confirmed in the columns where horizontal cracking on an oblique basis is observed in the bottom third of the numerous column impacted by this improperly reinforced added concrete load. Water infiltrated the brick and mortar through cracks in the new concrete. In these conditions the water has migrated in the pre-existing brick mortar and causing the mortar to become brittle and non bonded as it supports the brick. The water infiltration, occurring from the cracked concrete and voids in the concrete abutments and joints has saturated the top plates and bottom plates of the metal stud non-bearing partition walls that completed for the interior framing. (Reeves Decl. (CTS), 917, 18, 19). 25. CTS permitted the concrete work at the Project to be done with inadequate, and at times non-existent steel rebar reinforcement, causing very real damage to the pre-existing structure. Indeed, the Reeves testimony establishes that had CTS performed its concrete inspection duties adequately and reported the defective conditions as it was obligated to do before the concrete was poured, the City of San Francisco would have haulted work on the Project. (Reeves Decl. (CTS), 20). 26. CTS was acting as a “special inspector” on behalf of the San Francisco Department of Building Inspection on the Project. This means CTS’ activities were in lieu of the City and County of San Francisco building inspector who depended on CTS’ reports to accurately report the activities at a construction site. (Reeves Decl. (CTS), 20). 11 PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING }S\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpdwo on A HO FF W DY F NON NN NN NNN PPB BP BP BP BP BP BB ont nn uo FF Ww DY FP FO © ODO I HH UH fF W DY FP OO 27. Instead of a City Inspector doing a physical on-site inspection, the City relied on the special inspectors, in this case CTS, to physically inspect at the Project site and accurately report its findings. (Reeves Decl. (CTS), §20). 28. CTS was required to and, in fact in this case, did submit a copy of its reports for the Project to the City and County of San Francisco Department of Building Inspections. (Reeves Decl. (CTS), 20). 29. The CTS inspection reports for the Project became a matter of public record and were reviewed by the Building Department personnel. (Reeves Decl. (CTS), 20). 30. Ifa special inspector, such as CTS, reports faulty workmanship, improper workmanship, or non-compliance with the plans and/or codes, then the City and County of San Francisco will immediately act thereon and issue a “stop work order” for the project. (Reeves Decl. (CTS), 20). 31. CTS’s failure to promptly inform the City of the improper concrete/ rebar workmanship at the subject Project site as detailed in the Reeves Declaration resulted in the City not being aware of the defective workmanship and further not issuing a stop work order as it would have in the normal course of its oversight. (Reeves Decl. (CTS), §20). Mf Mt Ml Mt 12 PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN |OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING SAGRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpdDated: August (0 » 2012 STEYER LOWENT: BOODROOKAS LP 1 2 3 : Jeffrey H. Lowenthal 4 Edward Egan Smith Attorneys for Plaintiff and Cross-Defendant 5 PERFORMING ARTS, LLC 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 13 28 PLAINTIFF PERFORMING ARTS, LLC'S SEPARATE STATEMENT OF ADDITIONAL MATERIAL FACTS IN OPPOSITION TO THE MOTION FOR SUMMARY JUDGMENT OF DEFENDANT CONSTRUCTION TESTING |S\GRANITE\973 Market-Killamey\Summary Judgment - Card.CTS\SSUF.addl.CTS.wpd