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Monterey Bay Equity Corporation v. Comerica Bank

July 12, 2011

MONTEREY BAY EQUITY CORPORATION, PLAINTIFF AND APPELLANT,
v.
COMERICA BANK, DEFENDANT AND RESPONDENT.



(Super. Ct. No. 342000800017865CUBCGDS)

The opinion of the court was delivered by: Murray , J.

Monterey Bay Equity v. Comerica Bank CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Plaintiff Monterey Bay Equity Corporation (MBEC), a general contractor, appeals from the grant of summary judgment in favor of defendant Comerica Bank (Comerica), a construction lender, on MBEC's complaint for damages arising out of the failure of a residential real estate development project. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

We begin with a broad overview of the case history, and then provide more detail in discussing the motion for summary judgment.

The Project

In May 2006, MBEC and Dominican Property Company, LLC (Dominican) contracted to build a residential development on a parcel of real property in Sacramento owned by Dominican. MBEC owns 10 percent of Dominican. In August 2006, after work had begun, Dominican obtained a construction loan from Comerica, in return for executing a promissory note and a construction deed of trust.

As a condition of granting the loan, Comerica demanded and obtained a completion guarantee from MBEC, which provided in part: "The Guarantor [MBEC] absolutely and unconditionally guarantees the punctual and complete performance when due of all present and future obligations of the Borrower [Dominican] under the [loan] Agreement to (a) construct and complete the Improvements in accordance with the requirements of the Agreement free and clear of all Lien Claims, (b) pay all costs and expenses relating to such construction, and (c) discharge all Lien Claims arising in connection with the Project or otherwise affecting any of the Collateral[.]" (Italics added.)

Under the terms of the loan agreement and promissory note, the loan became due and payable in September 2007, with the project still far from completion. In February 2008, Comerica determined that Dominican was in default.

On March 6, 2008, Comerica caused a Notice of Default and Election to Sell Under Deed of Trust to be recorded in Sacramento County. On May 6, 2008, MBEC recorded a Notice and Claim of Mechanic's Lien.

The Litigation

On August 1, 2008, MBEC filed a complaint for damages against Comerica.*fn1 MBEC's first amended complaint, filed September 9, 2008, alleged theories of liability (labeled "causes of action") including breach of contract, foreclosure on mechanic's lien, recovery on payment bond, common counts, and fraud and deceit. Because MBEC's opening brief on appeal discusses only the mechanic's lien claim, we focus only on that claim.

In its answer, filed October 31, 2008, Comerica alleged that MBEC waived its mechanic's lien claim by entering into the completion guarantee. Comerica simultaneously filed a cross-complaint for breach of the completion guarantee and declaratory relief.

After filing its answer and cross-complaint, Comerica moved for an order appointing a judicial referee, as provided for in the completion guarantee.*fn2 MBEC opposed the motion.

On March 9, 2009, the superior court granted Comerica's motion. On March 16, 2009, the court appointed the Honorable Fred K. Morrison, retired Associate Justice, as judicial referee to hear and determine all issues between the parties.

On April 30, 2009, the referee issued the following scheduling order: (1) document exchanges in response to production requests previously propounded and service of written responses to the requests were to be completed by May 22, 2009, (2) MBEC was to tender its "person most knowledgeable" for deposition by June 30, 2009, (3) a case management conference would be held on July 15, 2009, (4) dispositive motions were to be heard on or before August 24, 2009, and (5) the discovery cut-off date was September 28, 2009. Comerica proposed this order during a telephonic scheduling conference, at which MBEC, though duly notified, did not appear. On July 6, 2009, MBEC filed a motion in the superior court for expedited proceedings for a judicial determination of liability pursuant to Civil Code section 3260.2.*fn3 The record does not show the disposition of this motion, and MBEC does not raise any appellate claim of error regarding it.

Summary Judgment Proceedings

The Motion

On July 28, 2009, Comerica filed a motion for summary judgment or summary adjudication as to the amended complaint and summary adjudication of issues on its cross-complaint. Comerica again asserted that MBEC had waived its mechanic's lien claim by binding itself in the completion guarantee to "construct and complete the Improvements 'free and clear of all Lien Claims.'" Comerica's motion included a voluminous separate statement of undisputed facts.

The Opposition

MBEC's opposition to the motion, filed on or about August 10, 2009, included legal arguments and exhibits, but no ...


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