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Martin A. Torres v. Seaberg Construction

October 12, 2011

MARTIN A. TORRES, PLAINTIFF AND RESPONDENT,
v.
SEABERG CONSTRUCTION, INC. ET AL., DEFENDANTS AND APPELLANTS.



(Super. Ct. No. SCV20482)

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

Torres v. Seaberg Construction

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NOT TO BE PUBLISHED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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

In this case a subcontractor sued the owner of a development project for tortiously interfering with a contract between the subcontractor and the contractor and sued the contractor for failure to pay him monies due on the contract. The court awarded the subcontractor damages for breach of contract against the contractor and damages for tortious interference with the contract against the developer. We will affirm the judgment.

The contractor does not contest the award of contract damages. Rather the principle question is whether defendants John Foggy (Foggy) and Rocklin 65, L.L.C. (Rocklin 65) were strangers to the contract as that term is clarified in Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344.*fn1 The trial court rejected the arguments that Foggy and Rocklin 65 were agents of the contractor, Seaberg, either for purposes of reviewing invoices or for purposes of obtaining payment from the construction financer. We find substantial evidence to support the conclusion and will affirm the judgment.

A stranger to a contract may be held liable for the tort of intentionally interfering with the performance of the contract. A stranger is a noncontracting party. (Applied Equipment Corp. v Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 513-514; Woods v. Fox Broadcasting Sub., Inc., supra.) That is what occurred in this case.

Defendant Rocklin 65 was the owner of a real estate development project in the city of Rocklin, California, known as Rocklin 65, involving the construction of 28 commercial buildings. Defendant Foggy was the manager of Rocklin 65. The general contractor on the project was defendant Seaberg Construction, Inc. (Seaberg). Seaberg subcontracted with plaintiff Martin Torres (Torres) to complete work on the installation of water, sewer and fire lines when the original subcontractor left the jobsite.

The subcontract provided that Torres was to "present receipts or releases of lien(s) satisfactory to Contractor" for work performed and Seaberg was obligated to "pay or cause [them] to be paid" upon receipt of payment from the owner. (Italics added.) Nonetheless, Foggy engaged Stephen Long to review and approve payment requests from Torres and most of the payments to the subcontractors, including Torres, were made from a Rocklin 65 account.*fn2 When Rocklin 65 failed to pay invoices submitted by him, Torres sued defendant Seaberg for breach of contract and defendants Foggy and Rocklin 65 for interference with his contractual relations with Seaberg.

The case was tried to the court. It found that "Foggy/Rocklin 65 interfered with Seaberg's responsibilities for oversight and payment approval, and set up a process for payment which was not contemplated by the contract, erroneously calculated the amount of money to which Torres was entitled, withheld payment on the contract as a bargaining position, and consequently forced Torres to terminate the contract with Seaberg." The court awarded Torres $306,011.48 on the contract claim against Seaberg and $150,000 in general damages and $306,011.48 in special damages on the interference claim against Foggy and Rocklin 65. Since the special damages on theinterference claim are the same as the damages awarded on the contract claim, the defendants are jointly liable for that amount.

On appeal the defendants argue that a stranger to a contract does not include an owner of the project who has an economic interest in the performance of the contract.*fn3 They rely on Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594. Mintz is not on point. It involved an agent of a party to the contract. The court found that Blue Cross, the party charged with interfering with a contract of medical insurance between CALPERS and a beneficiary, was "an agent of CALPERS in administering the contract of [medical] insurance." (Id. at p. 1603.)

The defendants then claim the owner "was an agent of Seaberg" because Rocklin 65 "was vested with the power, by the terms of the subcontract agreement, to administer and oversee the receipt of draws from the construction lender, and to pay the subcontractors working on the project, on behalf of Seaberg Construction." The contract says no such thing. It recognizes the obvious, that the owner has secured the money for the construction project from a lender.

The defendants then rely upon a provision of the subcontract that the subcontractor was not entitled to payment from the contractor until the contractor was paid by the owner and imply that the provision authorizes the owner to stand in the shoes of the contractor as its agent. The implication is not warranted. Moreover, as the trial court held, the provision was unenforceable as in violation of the California lien laws. (Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882.)

Lastly, the defendants claim the owner was an agent of the contractor on the ground that the money that funds the subcontract came from a lender with whom the owner had a contractual relationship. Not so. The subject of the claim of interference was the contract between Seaberg and Torres, not the contract between the owner and the lender. Nor was the owner an agent of Seaberg for purposes of the owner's contract with the lender since Seaberg was not a party to that contract.

For these reasons we shall affirm the judgment.*fn4

FACTS

The following facts taken from the Statement of Decision of the trial court or from the record are undisputed.

The Rocklin 65 project is a commercial development project which consisted of 28 separate buildings including commercial, retail, and office condominium space. Rocklin 65 hired Seaberg as the general contractor on the project. Foggy is an individual in the business of real estate development and is the manager of Rocklin 65.

When the Rocklin 65 project was in its initial construction phases, the underground work, consisting of the installation of water, sewer, and fire lines, was performed by a company known as Down Under Construction pursuant to a subcontract with Seaberg. Down Under left the jobsite in 2006 having failed to complete the underground work.*fn5 Seaberg then hired Torres, a civil engineer, as subcontractor, to perform the work that Down Under failed to complete. Seaberg and Torres signed a written time and materials contract but orally agreed to the terms of payment.

Although Seaberg was the general contractor on the project, and the only person responsible for payment of the Torres invoices, Seaberg did not control the funds which were used to pay them. Seaberg's agreement with the owner, Foggy and Rocklin 65, was that Seaberg would accept the invoices, work out any discrepancies on the invoices with Torres, and forward the invoices to the owner to pay Seaberg. Seaberg did not bid the project for a sum certain. He was paid a monthly salary as the general contractor. Nearly all of the payments for materials and equipment were made by John Foggy/Rocklin 65 to the subcontractors and Seaberg was to receive a bonus on the basis of his performance.

The invoices were initially reviewed and approved by Seaberg and forwarded to Foggy and Rocklin 65 for their review and payment and the invoice for the work performed in July of 2006 was paid in full. After the initial payment of invoices Rocklin 65 balked at paying the invoices as presented. Foggy assigned an associate, Stephen Long, to review, approve, disapprove or adjust the invoices for payment. When Long reviewed the invoices on behalf of Foggy/Rocklin 65, he refused payment for overtime. Disputes also arose over the Torres' time records and equipment charges. In October 2006, $50,000 was paid on an invoice leaving $100,000 due and unpaid. In December 2006 an invoice for $110,075 went unpaid. The billing for February 2007 in the amount of $32,068.06 also remained unpaid. As a consequence of these failures Torres was put out of business.

The trial court concluded: "In terms of the work which Torres did on the project, Seaberg was unable to pinpoint any mistakes made by Torres. The failure to pay Torres' invoices was not due to any problems with the work which Torres had done." "There is no evidence that Seaberg provided any input into Rocklin 65's determination not to make any payments on the invoices. [¶] There are no issues . . . whether Torres General Engineering failed to perform its obligations to perform work on the project or whether there was substandard work performed by Torres General Contracting on the project." Lastly, the court said that "defendants have failed to prove [claimed] offsets by a preponderance of the evidence, and that Seaberg is not entitled to any offsets." For these reasons the court concluded that defendants were attempting to coerce Torres into lowering the amounts claimed.

The court awarded Torres $306,011.48 on the contract claim against Seaberg and $150,000 in general damages and $306,011.48 in special damages on the interference claim against Foggy and Rocklin 65.

DISCUSSION

I

Interference with Contractual ...


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