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1 GREGORY K. KLINGSPORN (203649)
JENNIFER A. BEYERS (294679)
2
JORGENSON, SIEGEL,
3
McCLURE & FLEGEL, LLP F Egggfig?; ,
1100 Alma Street, Suite 210 SAN 5‘” ’1 NW
4 Menlo Park, CA 94025
Telephone: (650) 324—9300
5
Facsimile: (650) 324—0227
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I 6 QEFRW‘E'GLEQK
Attorneys for Defendant and Cross—Complainant
RELIANCE MANAGEMENT GROUP, INC., and
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Defendants VOX DESIGN GROUP and
8
FORREST D. LINEBARGER
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9 SUPERIOR COURT OF CALIFORNIA - COUNTY OF SAN MATEO
10 UNLIMITED CIVIL JURISDICTION
. . .
11 ANNAfiBECKY REDLICH, an 1nd1v1dual,
Case No.: CIV5 23 788
12 Plaintiff,
DEFENDANT AND CROSS—
13 vs. COMPLAINANT RELIANCE
MANAGENIENT GROUP, INC. ’8
14 RELIANCE MANAGEMENT GROUP, INC., a
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15 1C: ANNA—BECKY REDLICH AND PAUL
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a a 1 0mm orporatlon’ BURTON’S MOTION FOR SUMMARY
16 DAVID LINEBARGER, an individual, and, ADJUDICATION OF ISSUES
DOES 1 through 20, inclusive,
17 -
Date: October 31, 2017
Defendants. Time: 9:00 am.
18 Dept: Law & Motion
19 Trial Date: November 27, 2017
20
AND RELATED CROSS—ACTION.
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Anomeys at law
Memo Park, CA REDLICH/BURTON MOT. SUMM. AD].
(650) 3249300
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1 TABLE OF CONTENTS
2 I. INTRODUCTION...... .................................................................
.................................. 1
3 II. ARGUMENT ................................. ..... 1
4 A. Redlich’s Issues for Summary Adjudication ................................................. . ............. ....1
5 1. Ms. Redlich is Estopped by Her Complaint From Arguing That the
Reliance Contract is Unenforceable .............................................. . ............ ..............2
2. The Reliance Contract’s Prohibitions on Side Work During the PrOJect
7 Are Enforceable .......................................................
........... . .............. 3
8 3. Business & Professions Code Section 7159 Does Not Void the
Reliance Contract ........ . ................ . ......
..... ...... . .............................................. ..6
9
4. Redlich 1sLiable for Lost Profit & Overhead Resulting From Her
10 Breaches ..... . .............. ....... ................................................................ . ...... ....7
11 B Burton’s Issues for Summary Adjudication...... ..... .............................................. 10
1. Paragraph 4 of the Burton Contract is an Enforceable Non—Solicitation
12
Clause .........................................
...... ................. . ................... 11
13
2. The Burton Contract ValidlV Bars Burton From Exp loitin g Reliance’s
14 Confidential Information for His Own Gain ....... . ........ 12
15 III. CONCLUSION ................................................................................................................
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1 TABLE OF AUTHORITIES
CASES
Am. Credit Indem. Co. v. Sacks
(1989) 213 Cal.App.3d 622 ............................................................................................................
14
'
Am Group,
Kom-QQU‘l—[kbdN
Inc. v. Cher
(2000) 77 Ca1.App.4th 610 ...............................................................................................................
7
Asdourian v. Araj
(1985) 38 Ca1.3d 276 ......................................................................................................... 6,
7, 8, 10
Brandon €99Tibbs 4).George Kevorkian Accountancy Corp.
10 (1990) 226 Ca1.App.3d 442 .............................................................................................................. 9
11 Brown v. Aguilar
12 (1927) 202 Cal. 143, 149 .................................................................................................................. 2
13 Calwood Structures, Inc. v. Herskovic
14 (1980) 105 Ca1.App.3d 519 ............................................................................................................ 10
15 Coulter Dry Goods Co. v.Wentworth
16 (1915) 171 Cal. 500 .....................................................................................................................
2, 3
17 Davenport 59’Co. v. Spieker
18 (1988) 197 CaI.App.3d 566 .......................................................................................................
7, 10
19 Edwards Arthur Andersen LLP
41.
20 (2008) 44 Ca1.4th 937 .....................................................................................................................
14
21 Hendrickson a).Octagon, Inc.
22 (N.D. Cal. 2016) 225 F.Su'pp.3d 1013 ............................................................................................. 5
23 Hinerfeld—Ward, Inc. cu.Lipian
24 (2010) 188 Ca1.App.4th 86 ...........................................
7, 10
25 Johnson v. Comptoir Franco Belege D’Exportation Des Tubes D’ancier
26 (1955) 135 Ca1.App.2d 683 .............................................................................................................. 2
27 Loral Corp. v. Moyes
28 (1985) 174 Ca1.App.3d 268 .......................................................................................................
5, 14
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1 Morlife, Inc. v. Perry
2 (1997) 56 Ca1.App.4th 1514 .................................. . ........... .. .....
....... . ............ . .....
............... 14
3 Muggill v. Reuben H. Donnelley Corp.
4 (1965) 62 Ca1.2d 239 ........ . ....................................
...... 14
5 Neville v. Chudacofi
6 (2008) 160 Ca1.App.4th 1255....... ..........
........... . ........ . ...... 12, 14
7 Retirement Group v. Galante
8 (2009) 176 Ca1.App.4th 1226 ..................................................................... . ......
14, 15
9 Robert L. Cloud (‘5’
Associates, Inc. v.Mikesell
10 (1999) 69 Ca1.App.4th 1141..... ........................................................... . ........... .................... ...........12
.
11 Schaffter v. Creative Capital Leasing Group, LLC
12 (2008) 166 Ca1.App.4th 745 ........ . ....... . ....... . .............................. . .............
........ . ...........
......7
13 South Tahoe Gas Co. v. Hofmann Land Improvement Co.
14 (1972) 25 Cal.App.3d 750 ........... . ............................................................ ..7
............ . .......
15
16 STATUTES
_17 Business & Professions Code § 7031 ................................
..... .................................................. 6
18 Business 81 Professions Code § 7159 ............ . ....................
...... pass1m
19 Business 81 Professions Code § 71595 ............. . ................
........ . ..........
....... . ..... 11
20 Business & Professions Code § 16600 .................................................................. passim
21 Civil Code § 3300 ...... ............................. . ............................
....... 10
22
23
24
25
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1 I. INTRODUCTION
2 This litigation began in October 2013 when Plaintiff Anna—Becky Redlich filed suit against
3 Reliance Management Group, Inc. (“Reliance”), alleging breach of the parties’ Home
4 Improvement Construction Management Contract. (joint Statement of Stipulated Facts (“]SF”)
5 # 1 and Ex. A (“the Reliance Contract”).) Now, four years after she sued to enforce the Reliance
6 Contract, Ms. Redlich claims it is invalid and unenforceable. Ms. Redlich is bound by her
7 pleading, and cannot challenge the enforceability of the Reliance Contract. Even if she could, her
8 argument fails: the Business & Professions Code does not void the Reliance Contract as a matter
9 of law.
10 Similarly, Reliance’s former Project Manager, cross—defendant Paul Burton, now claims that
11 his promises are unenforceable. He asks this Court to rule that his obligation not to use Reliance’s
12 confidential and proprietary business information cannot, as a matter of law, be enforced, and that
13 the Court should hold that Mr. Burton he did nothing wrong when he encouraged and assisted
14 Ms. Redlich to directly solicit and hire Reliance’s subcontractors even as Mr. Burton collected a
15 paycheck from Reliance to manage its work on the Redlich Project. The law does not support Mr.
16 Burton’s arguments, either, and he is not entitled to the summary adjudication he seeks.
17 II. ARGUMENT
18 A. Redlich’s Issues for Summary Adjudication
19 Redlich seeks summary adjudication of three issues: first, that the General Conditions
20 clause 12.9 in the Reliance Contract is void and unenforceable pursuant to Business & Professions
21 Code section 16600 (“Section 16600”); second, that Paragraph 4 of the Reliance contract, which
22 required Redlich to pay “[a] retainer in the amount of IO% of estimated construction costs
23 within 14 days of Commencement of Work” isunenforceable as a matter of law; and third, that
24 Reliance is precluded by law from seeking to collect any amount above the initial estimate of
25 $250,000 plus signed Change Orders. (Memo. of Points & Authorities in Support of Redlich and
26 Burton’s Motion for Summary Adjudication of Issues (“MPSLA”) at 5:16—22.) She is not entitled to
27 such relief, not least because her own pleadings estop her from challenging the enforceability of
28 the Reliance Contract.
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1 1. Ms. Redlich is Estopped by Her Complaint From Arguing That the Reliance
2 Contract is Unenforceable
3 Ms. Redlich seeks summary adjudication of “Whether the Reliance Contract is
4 unenforceable as a matter of law.” (MPSLA at 5:15.) Her motion fails at the threshold because, as
5 Plaintiff, Redlich has plead a cause of action for breach of the Reliance Contract, and thus is
6 barred from arguing that the contract is invalid.
7 The rule iswell settled that a pleader is bound by her pleadings unless they are withdrawn
8 by amendment. (Johnson v. Comptoir Franco Belege D’Exportation Des Tubes D’ancier (1955)
9 135 Cal.App.2d 683, 688 (citing Brown v. Aguilar (1927) 202 Cal. 143, 149).) Thus, where a
10 plaintiff pleads and relies on a contract, she is in no position to question its validity at a later stage.
11 (See, Coulte'r Dry Goods Co. v.Wentworth (1915) 171 Cal. 500, 506).
12 Here, Ms. Redlich’s Amended Complaint alleges that Reliance breached the Reliance
13 Contract; indeed, Ms. Redlich’s Amended Complaint attaches and incorporates the Reliance
14 Contract as an exhibit. (See Reliance’s Responding Separate Statement in Opposition to Motion
15 for Summary Adjudication (“RSS”) # 17—18; Request for Judicial Notice (“RJN”) at Ex. A
16 (Amended Complaint) at 3:19—4:24.) Specifically, Ms. Redlich alleges that “the contracts were for
17 construction and design work on plaintiff’s residence” (RJN at Ex. A at 3:24—25), that “Reliance
18 performed work on plaintiff s residence” (id.at 3:16), that “Plaintiff...performed all conditions,
19 covenants, and promises required to be performed in accordance with the terms and conditions of
20 the...RELIANCE Contract” (id.at 4:4—6), and that Reliance “breached the Contracts by
21 overcharging Plaintiff and refusing to return her retainers.” (id.at 4:8—9). Ms. Redlich’s Amended
22 Complaint has not been withdrawn and is the operative pleading, and she remains bound by her
23 own pleading. Just as the appellant in Coulter Dry Goods, whose claim that the contract was invalid
24 was not available to him because his complaint expressly pleaded and relied on that contract, Ms.
25 Redlich cannot now claim that the Reliance Contract is unenforceable, because her Amended
26 Complaint expressly plead and relied on the Reliance Contract. (See Coulter Dry Goods, 171 Cal. at
27 p. 506.) Ms. Redlich’s Motion for Summary Adjudication should be denied on this basis alone.
28 ///
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1 2. The Reliance Contract’s Prohibitions on Side Work During the Project Are
2 Enforceable
3 Assuming arguendo that Ms. Redlich may attack the validity of the Reliance Contract, her
4 arguments lack merit. Ms. Redlich argues that she was free to contract with Reliance’s Project
5 Manager and its subcontractors for the Additional Construction Work, because General
6 Condition 12.9 of the Reliance Contract is “void and unenforceable” as a restraint on trade in
7 violation of Section 16600. (See MPSLA at 5:23—8:14.) This argument does not entitle her to
8 summary adjudication because it only addresses a portion of Ms. Redlich’s duties under General
9 Condition 12.9, and she has admittedly breached the clause in Condition 12.9 that prohibits her
10 from directing Reliance’s subcontractors. As applied to her, the anti—raiding clause of General
11 Condition 12.9 is not a violation of Section 16600. Moreover, other provisions of the Reliance
12 Contract validly prohibited Redlich’s admitted conduct.
13 a) Redlich Breached General Condition 12.9
14 Ms. Redlich’s conduct breached her contractual duties under General Condition 12.9 in
15 two separate, independent ways. Specifically, Condition 12.9 first states that Ms. Redlich agrees
16 “not to communicate or direct any Subcontractors, Material Men, Employees or other
17 Subordinate Entities without previously coordinating such communications and directions with
18 the CM in writing...” (Emphasis added.) Ms. Redlich does not dispute that she communicated
19 with and directed Subordinate Entities: she hired them separately. 0 SF # 8.) Nor does she dispute
20 that she communicated with them without Reliance’s knowledge, much less its written prior
21 agreement. GSF # 9—12.) Ms. Redlich’s Motion ignores this aspect of 12.9. Moreover, on its face,
22 this provision of Condition 12.9 does not implicate Section 16600.
23 Condition 12.9’s limitations on Ms. Redlich’s directions to and communications with
24 subcontractors are not challenged, are enforceable, and Ms. Redlich has admittedly breached
25 them. Thus, she is liable to Reliance for breach and not entitled to the summary adjudication that
26 she seeks.
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1 b) General Condition 12.9 Validly Prohibits Redlich from Raiding Reliance’s
2 Subcontractors
3 Ms. Redlich’s Motion only challenges the enforceability of the second aspect of Condition
4 12.9, which states that “In no case shall [Redlich] hire any person, employee or company that has
5 worked on the Project at the behest or on behalf of the Contracting Party [Reliance], within two
6 years of any work being performed as a part of the Contract, except by written agreement from the
7 Contracting Party.” Redlich obviously — and admittedly —
broke this promise when she hired
8 Reliance’s subcontractors and paid them directly. (J SF # 8, 19, 21.)
9 Faced with her undisputed breach of this clause of Condition 12.9, Redlich argues that it
10 isunenforceable because it violates Section 16600, which provides that “every contract by which
11 anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that
12 extent void.” While Section 16600 has been broadly enforced by California Courts, its scope has
13 not been stretched to the extent that Ms. Redlich asserts here.
14 Condition 12.9’s prohibition on hiring Reliance’s subcontractors is not a restraint on Ms.
15 Redlich’s “engaging in a lawful profession, trade or business.” Ms. Redlich is not a contractor or
16 otherwise a competitor of Reliance’s. Her ability to conduct a trade or business is not affected by
17 Condition 12.9.
18 Moreover, read as a whole, Condition 12.9 prohibits communications with Reliance’s
19 Subcontractors, or hiring them. Condition 12.9 is thus analogous to an employee anti—raiding
20 provision: it prevents Ms. Redlich from doing exactly what she admits she has done here: soliciting
21 Reliance’s current subcontractors to work for her instead of for Reliance, and then hiring them to
22 cut out Reliance. Although California courts interpreting Section 16600 recognize that an
23 employer may not prohibit its former employees from hiring the employer’s current employees, an
24 employer may lawfully prohibit its former employees from actively recruiting or soliciting its current
25 employees. (See Loml Corp. v. Moyes (1985) 174 Cal.App.3d 268, 279—280 (“Equity will not enjoin a
26 former employee from receiving and considering applications from employees of his former
27 employer, even though the circumstances be such that he should be enjoined from soliciting their
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1 applications”); Hendrickson q).Octagon, Inc.(ND. Cal. 2016) 225 F.Supp.3_d 1013, 1031 (“Such
2 anti— employee raiding provisions accordingly pose no problem under Section 16600”).)
3 Here, it is undisputed that Ms. Redlich, either herself or by directing Mr. Burton, actively
4 solicited Reliance’s subcontractors during the course of the Project. (RRS # 19.) The
5 subcontractors did not come to her, seeking to conduct their trade; rather, she solicited and
6 actively recruited Reliance’s current subcontractors. Section 16600 does not invalidate the
7 Reliance Contract’s prohibition of such conduct.
8 c) The Additional Construction Work is Barred By Other Enforceable
9 Provisions of the Reliance Contract
10 Even if Ms. Redlich could validly attack the enforceability of the Redlich Contract, and
11 even if Condition 12.9 were properly invalidated as a breach of Section 16600, Ms. Redlich still is
12 not entitled to an adjudication that she was not precluded by the Reliance Contract from “hiring
13 Burton and others to perform work that was not specified in the Reliance Contract.” (See MP&A
14 at 11:649.) Other provisions of the Reliance Contract —
specifically, General Condition 12.11 —
15 plainly prohibit the Additional Construction Work from being done while Reliance was still
16 working on the Project.
17 Condition 12.11 states: “All work done during the [Construction Manager’s] tenure on
18 the Project shall be subject to the CM’s authorization and control unless mutually agreed in
19 writing.” (I SF at Ex. A, p. RMG001094.) That 12. 11 unambiguously applies to any construction
20 performed at the property is established by the fact that the word “work” in Condition 12.11 is
21 uncapitalized, distinguishing it from the defined term “Work,” defined in Condition 2.35 as “the
22 services necessary or incidental to fulfilling the obligations for the Project per the Agreement.” (Id.
23 at p. RMG001090.) Thus, by having others perform construction at her residence during
24 Reliance’s tenure on the project GSF # 8,) Ms. Redlich breached her express duty under Condition
25 12.11 to obtain Reliance’s agreement for the Additional Construction Work.
26 Ms. Redlich does not challenge the enforceability of Condition 12.11 in her Motion, but
27 even if she had, its language does not implicate Section 16600’s bar on non—compete provisions.
28 Condition 12.11 does not prohibit Ms. Redlich from having the Additional Construction Work
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1 performed by others, only the timing and sequencing of that that work. To interpret Condition
2 12.11 as a “non—compete” clause in violation of Section 16600 ~ as Ms. Redlich asks this Court to
3 do ~ would strip general contractors and construction managers of any ability to contractually
4 control access to or work on a job site, an absurd result clearly not intended by the Legislature.
5 Given the plain language of the Reliance Contract and the undisputed facts, Ms. Redlich is not
6 entitled to summary adjudication that she was free to contract with Burton and others to do the
7 work simultaneously with Reliance’s tenure on the Project.
8 3. Business 81 Professions Code Section 7159 Does Not Void the Reliance Contract
9 Ms. Redlich also argues that the Reliance Contract as a whole is not enforceable, since, she
10 claims, the contract does not fully comply with the requirements of Business & Professions Code
11 § 7159. (“Section 7159.”) She argues that “[c]ontracts made in Violation of the Section 7159 are
12 generally unenforceable, except in compelling cases.” (MPSLA at 10:14—15.) Her argument misstates
13 the law, and in any event summary adjudication of this issue is not appropriate.
14 Ms. Redlich’s claim that the Reliance Contract is “unenforceable” ignores more than a
15 quarter—century of settled California law. In Asdowrian v. Amj (1985) 38 Cal.3d 276 (superseded on
16 other grounds by Business & Professions Code § 7031), the California Supreme Court found “no
17 indication that the Legislature intended that all contracts made in Violation of section 7 159 are
18 void.” (Id.at 292.) Moreover, Asdourian concluded that a contract made in Violation of Section
19 7159 does not involve the type of illegality which automatically renders a contract void. It is merely
20 malum prohibitum, and not malum in se: not intrinsically illegal, and therefore only voidable. It held,
21 that, absent an express legislative prohibition, courts could apply exceptions to the general rule
22 that illegal contracts are unenforceable. (Id.) Asdowrian’s holding has been broadly applied, even in
23 cases where the contractor and owner had no written contract at all. (See e.g.Hineyfeld—Ward, Inc. 41.
24 Lipian (2010) 188 Cal.App.4th 86 (enforcing oral home improvement contract against “well—
25 educated” homeowners on a “high—end” project); Davenport E? Co. v.Spieker (1988) 197 Cal.App.3d
26 566 (enforcing non-compliant contract against homeowners).) Thus, the Reliance Contract is not
27 “generally unenforceable,” on the contrary, it may be enforced when necessary to avoid unjust
28 enrichment or a disproportionately harsh penalty.
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1 Moreover, the Court cannot properly void the entire Reliance Contract on this record.
“‘In each case,
I
2 Whether a Violation of Section 7159 makes a contract void is a fact—specific inquiry:
3 the extent of enforceability and the kind of remedy granted depend upon a variety of factors,
4 including the policy of the transgressed law, the kind of illegality and the particular facts.”
5 (Asdourian, supra, 38 Cal. 3d at p. 292 (quoting South Tahoe Gas Co. v. Hofmarm Land Improvement
6 Co. (1972) 25 Cal.App.3d 750, 759; see Arya Group, Inc. v.Cher (2000) 77 Cal.App.4th 610, 615
7 (“The issue of whether the instant matter istruly a ‘compelling case’ within the meaning of
8 Asdourian cannot be definitively resolved at the demurrer stage” because of fact—specific analysis).)
9 In sum, “the question of whether a contract isvoid for violating a statute depends on the
10 particular facts.” (Schaffter 42. Creative Capital Leasing Group, LLC (2008) 166 Cal.App.4th 745, 756.)
11 The Court, to determine whether to enforce the Reliance Contract, will have to determine
12 whether Ms. Redlich is “a member of the group primarily in need of the statute’s protection,”
13 whether the statutory policy would be defeated by allowing Reliance to recover, whether Ms.
14 Redlich would be unjustly enriched if the Reliance Contract was not enforced, et cetera. (See
15 Asdourian, 38 Cal.2nd at pp. 292—293.) Ms. Redlich has proffered no undisputed material facts by
16 which the Court could conclude that the Reliance Contract is — as a matter of law — unenforceable
17 under Section 7159. Thus, summary adjudication on this issue is not appropriate or justified.
18 4. Redlich is Liable for Lost Profit Sr. Overhead Resulting From Her Breaches
19 Ms. Redlich argues that she is entitled to summary adjudication that Reliance “is precluded
20 from recovering under the Reliance Contract for work performed by others and materials
21 purchased/provided by others” because “by definition this work was ‘outside the scope of the
22 Reliance Contract.’” (MPSLA at 11:20—27 (emphasis in original).) On the contrary, the Reliance
23 Contract defines the scope of work as all work done during Reliance’s tenure on the Project, and
24 so Reliance is entitled to be compensated for the lost profit and overhead it would have earned
25 had Ms. Redlich not breached.
26 ///
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1 a) The Additional Construction Work is Within the Scope of the Reliance
2 Contract
3 Ms. Redlich does not dispute‘ that the Additional Construction Work was performed at
4 her residence at the same time Reliance was working on the Project pursuant to the Reliance
5 Contract. 0 SF # 8.) General Condition 12.11, “Coordination of Buyer Work,” provides that “All
6 work done during [Reliance’s] tenure on the Project shall be subject to [“Reliance’s]
7 authorization and control unless mutually agreed in writing.” (I SF at Ex. A, General Conditions,
8 at p. RMG001094 (emphasis added).)
9 The plain meaning of General Condition 12.11 isthat, unless otherwise agreed to in
10 writing, all work performed while Reliance was at the property was to be under Reliance’s control,
11 and thus within the contractual definition of “the Work.” It is undisputed that Ms. Redlich did
12 not seek, and thus did not obtain, Reliance’s written agreement to have her directly contract with
13 Mr. Burton and Reliance’s subcontractors to perform the Additional Construction Work. USP
14 #10—12.)
15 Because the parties agreed that all work done during the Project was to be under Reliance’s
16 control, the Additional Construction Work was within the scope of the Reliance Contract, and
17 Reliance is not precluded from recovering damages for Ms. Redlich’s breach of that agreement.
18 b) Ms. Redlich Owes Reliance For Lost Overhead & Profit on The Additional
19 Construction Work
20 Employing the same flawed logic, Ms. Redlich argues that Reliance is not entitled to
21 recover damages because the Additional Construction Work “was not performed, provided, or
22 delivered by Reliance. There is simply no contract theory that would allow Reliance to recover
23 payments from Redlich for Additional Work done by others” (MPSLA at 12: 18—21.) This argument
24 fundamentally misstates basic contract law.
25 As just discussed, that the Additional Construction Work was done by others outside
26 Reliance’s management was a breach of the Reliance Contract. Thus, Reliance isentitled to the
27 Overhead and Profit to which it would be clearly entitled had Redlich not breached the Reliance
28 Contract. Had she not breached General Condition 12.11, then Reliance would have performed
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1 the construction management services for which the parties had contracted, and would have been
2 entitled to the Overhead and Profit called for under the Reliance Contract. This is the hornbook
3 definition of expectation damages. “The basic object of damages iscompensation, and in the law
4 of contracts the theory is that the party injured by a breach should receive as nearly as possible the
5 equivalent of the benefits of performance. The aim is to put the injured party in as good a position
6 as he would have been had performance been rendered as promised.” (Brandon 6? Tibbs 4).George
7 Keoorkian Accountancy Corp. (1990) 226 Cal.App.3d 442, 455; see Cal. Civil C. § 330.) Thus,
8 Reliance is entitled to prove up the amounts it would have invoiced under the Reliance Contract,
9 precisely because Ms. Redlich prevented it from “performing, providing or delivering” those
10 services to Ms. Redlich as the parties had agreed in the Reliance Contract.
11 c) The Reliance Contract Was Not A Fixed Price Contract
12 The Reliance Contract is a cost—plus contract with a guaranteed maximum price. (I SF at
13 Ex. A, at 4, p.
‘J[ RMGOOIO85.) Such contracts are not “illegal and unenforceable in the Home
14 Improvement context,” as Ms. Redlich asserts. (MP&A at 9:25—28.)I Neither the Legislature, nor
15 the California Contractors’ State Licensing Board, nor any California court has held that cost—plus
16 contracts are “illegal and unenforceable.”
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j, 1/" “ x, \\V/ \J) 1 GREGORY K. KLINGSPORN (203649) JENNIFER A. BEYERS (294679) 2 JORGENSON, SIEGEL, 3 McCLURE & FLEGEL, LLP F Egggfig?; , 1100 Alma Street, Suite 210 SAN 5‘” ’1 NW 4 Menlo Park, CA 94025 Telephone: (650) 324—9300 5 Facsimile: (650) 324—0227 ,, " I 6 QEFRW‘E'GLEQK Attorneys for Defendant and Cross—Complainant RELIANCE MANAGEMENT GROUP, INC., and lfi fi 7 Defendants VOX DESIGN GROUP and 8 FORREST D. LINEBARGER by?“ i 9 SUPERIOR COURT OF CALIFORNIA - COUNTY OF SAN MATEO 10 UNLIMITED CIVIL JURISDICTION . . . 11 ANNAfiBECKY REDLICH, an 1nd1v1dual, Case No.: CIV5 23 788 12 Plaintiff, DEFENDANT AND CROSS— 13 vs. COMPLAINANT RELIANCE MANAGENIENT GROUP, INC. ’8 14 RELIANCE MANAGEMENT GROUP, INC., a luf0mg l s Xg¥gWEg¥NOgP1P%HS\IT§€I§¥O rp9ragon’ VO.X DEgEEEgOUP’ 15 1C: ANNA—BECKY REDLICH AND PAUL 33$ ., ~ a a 1 0mm orporatlon’ BURTON’S MOTION FOR SUMMARY 16 DAVID LINEBARGER, an individual, and, ADJUDICATION OF ISSUES DOES 1 through 20, inclusive, 17 - Date: October 31, 2017 Defendants. Time: 9:00 am. 18 Dept: Law & Motion 19 Trial Date: November 27, 2017 20 AND RELATED CROSS—ACTION. 21 ” T 22 — , cwazam "as ' 23 c {M morandum 0| Poinis & Mum“ 758659 24 ' \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\"T 25 26 27 28 RELIANCE MP&A IN OPP TO jorgenson, Siegcl. McClure 5L Flcgel LLP Anomeys at law Memo Park, CA REDLICH/BURTON MOT. SUMM. AD]. (650) 3249300 (* \\ \\ ./V \_/ (\J 1 TABLE OF CONTENTS 2 I. INTRODUCTION...... ................................................................. .................................. 1 3 II. ARGUMENT ................................. ..... 1 4 A. Redlich’s Issues for Summary Adjudication ................................................. . ............. ....1 5 1. Ms. Redlich is Estopped by Her Complaint From Arguing That the Reliance Contract is Unenforceable .............................................. . ............ ..............2 2. The Reliance Contract’s Prohibitions on Side Work During the PrOJect 7 Are Enforceable ....................................................... ........... . .............. 3 8 3. Business & Professions Code Section 7159 Does Not Void the Reliance Contract ........ . ................ . ...... ..... ...... . .............................................. ..6 9 4. Redlich 1sLiable for Lost Profit & Overhead Resulting From Her 10 Breaches ..... . .............. ....... ................................................................ . ...... ....7 11 B Burton’s Issues for Summary Adjudication...... ..... .............................................. 10 1. Paragraph 4 of the Burton Contract is an Enforceable Non—Solicitation 12 Clause ......................................... ...... ................. . ................... 11 13 2. The Burton Contract ValidlV Bars Burton From Exp loitin g Reliance’s 14 Confidential Information for His Own Gain ....... . ........ 12 15 III. CONCLUSION ................................................................................................................ 14 16 17 18 19 20 21 22 23 24 25 26 27 28 RELIANCE MP&A ISO MTN FOR Jorgenson. Sicgcl. McClure 5L Flegcl LLP “WNW SUMMARY ADJUDICATION i Menlo Park. CA (650) 324-9300 {/70 V 6 ‘3 \J 1 TABLE OF AUTHORITIES CASES Am. Credit Indem. Co. v. Sacks (1989) 213 Cal.App.3d 622 ............................................................................................................ 14 ' Am Group, Kom-QQU‘l—[kbdN Inc. v. Cher (2000) 77 Ca1.App.4th 610 ............................................................................................................... 7 Asdourian v. Araj (1985) 38 Ca1.3d 276 ......................................................................................................... 6, 7, 8, 10 Brandon €99Tibbs 4).George Kevorkian Accountancy Corp. 10 (1990) 226 Ca1.App.3d 442 .............................................................................................................. 9 11 Brown v. Aguilar 12 (1927) 202 Cal. 143, 149 .................................................................................................................. 2 13 Calwood Structures, Inc. v. Herskovic 14 (1980) 105 Ca1.App.3d 519 ............................................................................................................ 10 15 Coulter Dry Goods Co. v.Wentworth 16 (1915) 171 Cal. 500 ..................................................................................................................... 2, 3 17 Davenport 59’Co. v. Spieker 18 (1988) 197 CaI.App.3d 566 ....................................................................................................... 7, 10 19 Edwards Arthur Andersen LLP 41. 20 (2008) 44 Ca1.4th 937 ..................................................................................................................... 14 21 Hendrickson a).Octagon, Inc. 22 (N.D. Cal. 2016) 225 F.Su'pp.3d 1013 ............................................................................................. 5 23 Hinerfeld—Ward, Inc. cu.Lipian 24 (2010) 188 Ca1.App.4th 86 ........................................... 7, 10 25 Johnson v. Comptoir Franco Belege D’Exportation Des Tubes D’ancier 26 (1955) 135 Ca1.App.2d 683 .............................................................................................................. 2 27 Loral Corp. v. Moyes 28 (1985) 174 Ca1.App.3d 268 ....................................................................................................... 5, 14 Jorgenson. Sicgcl. McClure & Flegcl LLP RELIANCE MP&A ISO MTN FOR I - Art [ La 12:21:72,3c SUMMARY ADJUDICATION u (650) 324-9300 . C ‘N /\ ‘\,/ «' ) 1 Morlife, Inc. v. Perry 2 (1997) 56 Ca1.App.4th 1514 .................................. . ........... .. ..... ....... . ............ . ..... ............... 14 3 Muggill v. Reuben H. Donnelley Corp. 4 (1965) 62 Ca1.2d 239 ........ . .................................... ...... 14 5 Neville v. Chudacofi 6 (2008) 160 Ca1.App.4th 1255....... .......... ........... . ........ . ...... 12, 14 7 Retirement Group v. Galante 8 (2009) 176 Ca1.App.4th 1226 ..................................................................... . ...... 14, 15 9 Robert L. Cloud (‘5’ Associates, Inc. v.Mikesell 10 (1999) 69 Ca1.App.4th 1141..... ........................................................... . ........... .................... ...........12 . 11 Schaffter v. Creative Capital Leasing Group, LLC 12 (2008) 166 Ca1.App.4th 745 ........ . ....... . ....... . .............................. . ............. ........ . ........... ......7 13 South Tahoe Gas Co. v. Hofmann Land Improvement Co. 14 (1972) 25 Cal.App.3d 750 ........... . ............................................................ ..7 ............ . ....... 15 16 STATUTES _17 Business & Professions Code § 7031 ................................ ..... .................................................. 6 18 Business 81 Professions Code § 7159 ............ . .................... ...... pass1m 19 Business 81 Professions Code § 71595 ............. . ................ ........ . .......... ....... . ..... 11 20 Business & Professions Code § 16600 .................................................................. passim 21 Civil Code § 3300 ...... ............................. . ............................ ....... 10 22 23 24 25 26 27 28 RELIANCE Mpm 150 Mm FOR Jorgcnson.Sicgel.McClure&FlegeILLP . 7411:7253: SUMMARY ADJUDICATION iii (650) 324-9300 f” ’1 r‘\ \I’I (k) 1 I. INTRODUCTION 2 This litigation began in October 2013 when Plaintiff Anna—Becky Redlich filed suit against 3 Reliance Management Group, Inc. (“Reliance”), alleging breach of the parties’ Home 4 Improvement Construction Management Contract. (joint Statement of Stipulated Facts (“]SF”) 5 # 1 and Ex. A (“the Reliance Contract”).) Now, four years after she sued to enforce the Reliance 6 Contract, Ms. Redlich claims it is invalid and unenforceable. Ms. Redlich is bound by her 7 pleading, and cannot challenge the enforceability of the Reliance Contract. Even if she could, her 8 argument fails: the Business & Professions Code does not void the Reliance Contract as a matter 9 of law. 10 Similarly, Reliance’s former Project Manager, cross—defendant Paul Burton, now claims that 11 his promises are unenforceable. He asks this Court to rule that his obligation not to use Reliance’s 12 confidential and proprietary business information cannot, as a matter of law, be enforced, and that 13 the Court should hold that Mr. Burton he did nothing wrong when he encouraged and assisted 14 Ms. Redlich to directly solicit and hire Reliance’s subcontractors even as Mr. Burton collected a 15 paycheck from Reliance to manage its work on the Redlich Project. The law does not support Mr. 16 Burton’s arguments, either, and he is not entitled to the summary adjudication he seeks. 17 II. ARGUMENT 18 A. Redlich’s Issues for Summary Adjudication 19 Redlich seeks summary adjudication of three issues: first, that the General Conditions 20 clause 12.9 in the Reliance Contract is void and unenforceable pursuant to Business & Professions 21 Code section 16600 (“Section 16600”); second, that Paragraph 4 of the Reliance contract, which 22 required Redlich to pay “[a] retainer in the amount of IO% of estimated construction costs 23 within 14 days of Commencement of Work” isunenforceable as a matter of law; and third, that 24 Reliance is precluded by law from seeking to collect any amount above the initial estimate of 25 $250,000 plus signed Change Orders. (Memo. of Points & Authorities in Support of Redlich and 26 Burton’s Motion for Summary Adjudication of Issues (“MPSLA”) at 5:16—22.) She is not entitled to 27 such relief, not least because her own pleadings estop her from challenging the enforceability of 28 the Reliance Contract. Jorgcnson. Sicgel, McClure & Flegel LLP RELIANCE MP&A IN OPP. TO Attorneys at law Menlo Park, CA REDLICI‘I/BURTON MOT. SUMM. AD]. 1 (650) 3249300 \, /\., ,/ \\ “x" l ‘ \J 1 1. Ms. Redlich is Estopped by Her Complaint From Arguing That the Reliance 2 Contract is Unenforceable 3 Ms. Redlich seeks summary adjudication of “Whether the Reliance Contract is 4 unenforceable as a matter of law.” (MPSLA at 5:15.) Her motion fails at the threshold because, as 5 Plaintiff, Redlich has plead a cause of action for breach of the Reliance Contract, and thus is 6 barred from arguing that the contract is invalid. 7 The rule iswell settled that a pleader is bound by her pleadings unless they are withdrawn 8 by amendment. (Johnson v. Comptoir Franco Belege D’Exportation Des Tubes D’ancier (1955) 9 135 Cal.App.2d 683, 688 (citing Brown v. Aguilar (1927) 202 Cal. 143, 149).) Thus, where a 10 plaintiff pleads and relies on a contract, she is in no position to question its validity at a later stage. 11 (See, Coulte'r Dry Goods Co. v.Wentworth (1915) 171 Cal. 500, 506). 12 Here, Ms. Redlich’s Amended Complaint alleges that Reliance breached the Reliance 13 Contract; indeed, Ms. Redlich’s Amended Complaint attaches and incorporates the Reliance 14 Contract as an exhibit. (See Reliance’s Responding Separate Statement in Opposition to Motion 15 for Summary Adjudication (“RSS”) # 17—18; Request for Judicial Notice (“RJN”) at Ex. A 16 (Amended Complaint) at 3:19—4:24.) Specifically, Ms. Redlich alleges that “the contracts were for 17 construction and design work on plaintiff’s residence” (RJN at Ex. A at 3:24—25), that “Reliance 18 performed work on plaintiff s residence” (id.at 3:16), that “Plaintiff...performed all conditions, 19 covenants, and promises required to be performed in accordance with the terms and conditions of 20 the...RELIANCE Contract” (id.at 4:4—6), and that Reliance “breached the Contracts by 21 overcharging Plaintiff and refusing to return her retainers.” (id.at 4:8—9). Ms. Redlich’s Amended 22 Complaint has not been withdrawn and is the operative pleading, and she remains bound by her 23 own pleading. Just as the appellant in Coulter Dry Goods, whose claim that the contract was invalid 24 was not available to him because his complaint expressly pleaded and relied on that contract, Ms. 25 Redlich cannot now claim that the Reliance Contract is unenforceable, because her Amended 26 Complaint expressly plead and relied on the Reliance Contract. (See Coulter Dry Goods, 171 Cal. at 27 p. 506.) Ms. Redlich’s Motion for Summary Adjudication should be denied on this basis alone. 28 /// RELIANCE MP&A IN OFF TO Jorgcnson. Siegel. McClure 6L Flegcl LLP '31" REDLICH/BURTON MOT. SUMM. AD]. 2 3:313:31: (650) 324—9300 / ‘ /\ L , L.) 1 2. The Reliance Contract’s Prohibitions on Side Work During the Project Are 2 Enforceable 3 Assuming arguendo that Ms. Redlich may attack the validity of the Reliance Contract, her 4 arguments lack merit. Ms. Redlich argues that she was free to contract with Reliance’s Project 5 Manager and its subcontractors for the Additional Construction Work, because General 6 Condition 12.9 of the Reliance Contract is “void and unenforceable” as a restraint on trade in 7 violation of Section 16600. (See MPSLA at 5:23—8:14.) This argument does not entitle her to 8 summary adjudication because it only addresses a portion of Ms. Redlich’s duties under General 9 Condition 12.9, and she has admittedly breached the clause in Condition 12.9 that prohibits her 10 from directing Reliance’s subcontractors. As applied to her, the anti—raiding clause of General 11 Condition 12.9 is not a violation of Section 16600. Moreover, other provisions of the Reliance 12 Contract validly prohibited Redlich’s admitted conduct. 13 a) Redlich Breached General Condition 12.9 14 Ms. Redlich’s conduct breached her contractual duties under General Condition 12.9 in 15 two separate, independent ways. Specifically, Condition 12.9 first states that Ms. Redlich agrees 16 “not to communicate or direct any Subcontractors, Material Men, Employees or other 17 Subordinate Entities without previously coordinating such communications and directions with 18 the CM in writing...” (Emphasis added.) Ms. Redlich does not dispute that she communicated 19 with and directed Subordinate Entities: she hired them separately. 0 SF # 8.) Nor does she dispute 20 that she communicated with them without Reliance’s knowledge, much less its written prior 21 agreement. GSF # 9—12.) Ms. Redlich’s Motion ignores this aspect of 12.9. Moreover, on its face, 22 this provision of Condition 12.9 does not implicate Section 16600. 23 Condition 12.9’s limitations on Ms. Redlich’s directions to and communications with 24 subcontractors are not challenged, are enforceable, and Ms. Redlich has admittedly breached 25 them. Thus, she is liable to Reliance for breach and not entitled to the summary adjudication that 26 she seeks. 27 /// 28 /// RELIANCE MP&A IN OPP. TO Jorgcnson.5icge1. McClure 6: Hegel LLP QAMTHLSX REDLICH/BURTON MOT. SUMM. AD]. 3 (650) 324—9300 b O 1 b) General Condition 12.9 Validly Prohibits Redlich from Raiding Reliance’s 2 Subcontractors 3 Ms. Redlich’s Motion only challenges the enforceability of the second aspect of Condition 4 12.9, which states that “In no case shall [Redlich] hire any person, employee or company that has 5 worked on the Project at the behest or on behalf of the Contracting Party [Reliance], within two 6 years of any work being performed as a part of the Contract, except by written agreement from the 7 Contracting Party.” Redlich obviously — and admittedly — broke this promise when she hired 8 Reliance’s subcontractors and paid them directly. (J SF # 8, 19, 21.) 9 Faced with her undisputed breach of this clause of Condition 12.9, Redlich argues that it 10 isunenforceable because it violates Section 16600, which provides that “every contract by which 11 anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that 12 extent void.” While Section 16600 has been broadly enforced by California Courts, its scope has 13 not been stretched to the extent that Ms. Redlich asserts here. 14 Condition 12.9’s prohibition on hiring Reliance’s subcontractors is not a restraint on Ms. 15 Redlich’s “engaging in a lawful profession, trade or business.” Ms. Redlich is not a contractor or 16 otherwise a competitor of Reliance’s. Her ability to conduct a trade or business is not affected by 17 Condition 12.9. 18 Moreover, read as a whole, Condition 12.9 prohibits communications with Reliance’s 19 Subcontractors, or hiring them. Condition 12.9 is thus analogous to an employee anti—raiding 20 provision: it prevents Ms. Redlich from doing exactly what she admits she has done here: soliciting 21 Reliance’s current subcontractors to work for her instead of for Reliance, and then hiring them to 22 cut out Reliance. Although California courts interpreting Section 16600 recognize that an 23 employer may not prohibit its former employees from hiring the employer’s current employees, an 24 employer may lawfully prohibit its former employees from actively recruiting or soliciting its current 25 employees. (See Loml Corp. v. Moyes (1985) 174 Cal.App.3d 268, 279—280 (“Equity will not enjoin a 26 former employee from receiving and considering applications from employees of his former 27 employer, even though the circumstances be such that he should be enjoined from soliciting their 28 & Hegel LLP Jorgenson.5iegel.McC1ure RELIANCE MPSLA IN OPP. TO $31332,” REDLICH/BURTON MOT. SUMM. AD]. 4 (650) 3 24.9300 Kw”, (\/ 1 applications”); Hendrickson q).Octagon, Inc.(ND. Cal. 2016) 225 F.Supp.3_d 1013, 1031 (“Such 2 anti— employee raiding provisions accordingly pose no problem under Section 16600”).) 3 Here, it is undisputed that Ms. Redlich, either herself or by directing Mr. Burton, actively 4 solicited Reliance’s subcontractors during the course of the Project. (RRS # 19.) The 5 subcontractors did not come to her, seeking to conduct their trade; rather, she solicited and 6 actively recruited Reliance’s current subcontractors. Section 16600 does not invalidate the 7 Reliance Contract’s prohibition of such conduct. 8 c) The Additional Construction Work is Barred By Other Enforceable 9 Provisions of the Reliance Contract 10 Even if Ms. Redlich could validly attack the enforceability of the Redlich Contract, and 11 even if Condition 12.9 were properly invalidated as a breach of Section 16600, Ms. Redlich still is 12 not entitled to an adjudication that she was not precluded by the Reliance Contract from “hiring 13 Burton and others to perform work that was not specified in the Reliance Contract.” (See MP&A 14 at 11:649.) Other provisions of the Reliance Contract — specifically, General Condition 12.11 — 15 plainly prohibit the Additional Construction Work from being done while Reliance was still 16 working on the Project. 17 Condition 12.11 states: “All work done during the [Construction Manager’s] tenure on 18 the Project shall be subject to the CM’s authorization and control unless mutually agreed in 19 writing.” (I SF at Ex. A, p. RMG001094.) That 12. 11 unambiguously applies to any construction 20 performed at the property is established by the fact that the word “work” in Condition 12.11 is 21 uncapitalized, distinguishing it from the defined term “Work,” defined in Condition 2.35 as “the 22 services necessary or incidental to fulfilling the obligations for the Project per the Agreement.” (Id. 23 at p. RMG001090.) Thus, by having others perform construction at her residence during 24 Reliance’s tenure on the project GSF # 8,) Ms. Redlich breached her express duty under Condition 25 12.11 to obtain Reliance’s agreement for the Additional Construction Work. 26 Ms. Redlich does not challenge the enforceability of Condition 12.11 in her Motion, but 27 even if she had, its language does not implicate Section 16600’s bar on non—compete provisions. 28 Condition 12.11 does not prohibit Ms. Redlich from having the Additional Construction Work RELIANCE MP&A IN OPP, TO jorgenson. Sicgel. McClure 5L Flegel LLP ’mm‘gx REDLICH/BURTON MOT. SUMM. AD]. 5 (650) 324.9300 l/A ‘ /”\.\ \\—/ ‘K/I 1 performed by others, only the timing and sequencing of that that work. To interpret Condition 2 12.11 as a “non—compete” clause in violation of Section 16600 ~ as Ms. Redlich asks this Court to 3 do ~ would strip general contractors and construction managers of any ability to contractually 4 control access to or work on a job site, an absurd result clearly not intended by the Legislature. 5 Given the plain language of the Reliance Contract and the undisputed facts, Ms. Redlich is not 6 entitled to summary adjudication that she was free to contract with Burton and others to do the 7 work simultaneously with Reliance’s tenure on the Project. 8 3. Business 81 Professions Code Section 7159 Does Not Void the Reliance Contract 9 Ms. Redlich also argues that the Reliance Contract as a whole is not enforceable, since, she 10 claims, the contract does not fully comply with the requirements of Business & Professions Code 11 § 7159. (“Section 7159.”) She argues that “[c]ontracts made in Violation of the Section 7159 are 12 generally unenforceable, except in compelling cases.” (MPSLA at 10:14—15.) Her argument misstates 13 the law, and in any event summary adjudication of this issue is not appropriate. 14 Ms. Redlich’s claim that the Reliance Contract is “unenforceable” ignores more than a 15 quarter—century of settled California law. In Asdowrian v. Amj (1985) 38 Cal.3d 276 (superseded on 16 other grounds by Business & Professions Code § 7031), the California Supreme Court found “no 17 indication that the Legislature intended that all contracts made in Violation of section 7 159 are 18 void.” (Id.at 292.) Moreover, Asdourian concluded that a contract made in Violation of Section 19 7159 does not involve the type of illegality which automatically renders a contract void. It is merely 20 malum prohibitum, and not malum in se: not intrinsically illegal, and therefore only voidable. It held, 21 that, absent an express legislative prohibition, courts could apply exceptions to the general rule 22 that illegal contracts are unenforceable. (Id.) Asdowrian’s holding has been broadly applied, even in 23 cases where the contractor and owner had no written contract at all. (See e.g.Hineyfeld—Ward, Inc. 41. 24 Lipian (2010) 188 Cal.App.4th 86 (enforcing oral home improvement contract against “well— 25 educated” homeowners on a “high—end” project); Davenport E? Co. v.Spieker (1988) 197 Cal.App.3d 26 566 (enforcing non-compliant contract against homeowners).) Thus, the Reliance Contract is not 27 “generally unenforceable,” on the contrary, it may be enforced when necessary to avoid unjust 28 enrichment or a disproportionately harsh penalty. & Flcgel Jorgenson. Siegel. McClure LLP RELIANCE MP&A IN OPP. TO £412?n EX REDLICH/BURTON MOT. SUMM. AD]. 6 (550) 324-9300 k; '11) 1 Moreover, the Court cannot properly void the entire Reliance Contract on this record. “‘In each case, I 2 Whether a Violation of Section 7159 makes a contract void is a fact—specific inquiry: 3 the extent of enforceability and the kind of remedy granted depend upon a variety of factors, 4 including the policy of the transgressed law, the kind of illegality and the particular facts.” 5 (Asdourian, supra, 38 Cal. 3d at p. 292 (quoting South Tahoe Gas Co. v. Hofmarm Land Improvement 6 Co. (1972) 25 Cal.App.3d 750, 759; see Arya Group, Inc. v.Cher (2000) 77 Cal.App.4th 610, 615 7 (“The issue of whether the instant matter istruly a ‘compelling case’ within the meaning of 8 Asdourian cannot be definitively resolved at the demurrer stage” because of fact—specific analysis).) 9 In sum, “the question of whether a contract isvoid for violating a statute depends on the 10 particular facts.” (Schaffter 42. Creative Capital Leasing Group, LLC (2008) 166 Cal.App.4th 745, 756.) 11 The Court, to determine whether to enforce the Reliance Contract, will have to determine 12 whether Ms. Redlich is “a member of the group primarily in need of the statute’s protection,” 13 whether the statutory policy would be defeated by allowing Reliance to recover, whether Ms. 14 Redlich would be unjustly enriched if the Reliance Contract was not enforced, et cetera. (See 15 Asdourian, 38 Cal.2nd at pp. 292—293.) Ms. Redlich has proffered no undisputed material facts by 16 which the Court could conclude that the Reliance Contract is — as a matter of law — unenforceable 17 under Section 7159. Thus, summary adjudication on this issue is not appropriate or justified. 18 4. Redlich is Liable for Lost Profit Sr. Overhead Resulting From Her Breaches 19 Ms. Redlich argues that she is entitled to summary adjudication that Reliance “is precluded 20 from recovering under the Reliance Contract for work performed by others and materials 21 purchased/provided by others” because “by definition this work was ‘outside the scope of the 22 Reliance Contract.’” (MPSLA at 11:20—27 (emphasis in original).) On the contrary, the Reliance 23 Contract defines the scope of work as all work done during Reliance’s tenure on the Project, and 24 so Reliance is entitled to be compensated for the lost profit and overhead it would have earned 25 had Ms. Redlich not breached. 26 /// 27 /// 28 /// & Flcgel LLP Jorgenson, Sicgel. McClure RELIANCE MP&A IN OPP. TO $323,132: REDLICH/BURTON MOT. SUMM. AD]. 7 (650) 324-9300 <3 :: 1 a) The Additional Construction Work is Within the Scope of the Reliance 2 Contract 3 Ms. Redlich does not dispute‘ that the Additional Construction Work was performed at 4 her residence at the same time Reliance was working on the Project pursuant to the Reliance 5 Contract. 0 SF # 8.) General Condition 12.11, “Coordination of Buyer Work,” provides that “All 6 work done during [Reliance’s] tenure on the Project shall be subject to [“Reliance’s] 7 authorization and control unless mutually agreed in writing.” (I SF at Ex. A, General Conditions, 8 at p. RMG001094 (emphasis added).) 9 The plain meaning of General Condition 12.11 isthat, unless otherwise agreed to in 10 writing, all work performed while Reliance was at the property was to be under Reliance’s control, 11 and thus within the contractual definition of “the Work.” It is undisputed that Ms. Redlich did 12 not seek, and thus did not obtain, Reliance’s written agreement to have her directly contract with 13 Mr. Burton and Reliance’s subcontractors to perform the Additional Construction Work. USP 14 #10—12.) 15 Because the parties agreed that all work done during the Project was to be under Reliance’s 16 control, the Additional Construction Work was within the scope of the Reliance Contract, and 17 Reliance is not precluded from recovering damages for Ms. Redlich’s breach of that agreement. 18 b) Ms. Redlich Owes Reliance For Lost Overhead & Profit on The Additional 19 Construction Work 20 Employing the same flawed logic, Ms. Redlich argues that Reliance is not entitled to 21 recover damages because the Additional Construction Work “was not performed, provided, or 22 delivered by Reliance. There is simply no contract theory that would allow Reliance to recover 23 payments from Redlich for Additional Work done by others” (MPSLA at 12: 18—21.) This argument 24 fundamentally misstates basic contract law. 25 As just discussed, that the Additional Construction Work was done by others outside 26 Reliance’s management was a breach of the Reliance Contract. Thus, Reliance isentitled to the 27 Overhead and Profit to which it would be clearly entitled had Redlich not breached the Reliance 28 Contract. Had she not breached General Condition 12.11, then Reliance would have performed RELIANCE MP&A IN OPP To Jorgenson, Sicgel. McClure 5L Flegel LLP $273,233: REDLICH/BURTON MOT. SUMM. AD]. 8 (650) 3249300 (“a x-\‘ Kg - \J ‘ 1 the construction management services for which the parties had contracted, and would have been 2 entitled to the Overhead and Profit called for under the Reliance Contract. This is the hornbook 3 definition of expectation damages. “The basic object of damages iscompensation, and in the law 4 of contracts the theory is that the party injured by a breach should receive as nearly as possible the 5 equivalent of the benefits of performance. The aim is to put the injured party in as good a position 6 as he would have been had performance been rendered as promised.” (Brandon 6? Tibbs 4).George 7 Keoorkian Accountancy Corp. (1990) 226 Cal.App.3d 442, 455; see Cal. Civil C. § 330.) Thus, 8 Reliance is entitled to prove up the amounts it would have invoiced under the Reliance Contract, 9 precisely because Ms. Redlich prevented it from “performing, providing or delivering” those 10 services to Ms. Redlich as the parties had agreed in the Reliance Contract. 11 c) The Reliance Contract Was Not A Fixed Price Contract 12 The Reliance Contract is a cost—plus contract with a guaranteed maximum price. (I SF at 13 Ex. A, at 4, p. ‘J[ RMGOOIO85.) Such contracts are not “illegal and unenforceable in the Home 14 Improvement context,” as Ms. Redlich asserts. (MP&A at 9:25—28.)I Neither the Legislature, nor 15 the California Contractors’ State Licensing Board, nor any California court has held that cost—plus 16 contracts are “illegal and unenforceable.”