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MP Nexlevel of California, Inc. v. CVIN, LLC

United States District Court, E.D. California

July 19, 2016

CVIN, LLC, et al., Defendants.


          Lawrence J. O’Neill United States Chief District Judge


         Judges in the Eastern District of California carry the heaviest caseloads in the nation, and this Court is unable to devote inordinate time and resources to individual cases and matters. Given the shortage of district judges and staff, this Court addresses only the arguments, evidence, and matters necessary to reach the decision in this order. The parties and counsel are encouraged to contact the offices of United States Senators Feinstein and Boxer to address this Court’s inability to accommodate the parties and this action. The parties are required to reconsider consent to conduct all further proceedings before a Magistrate Judge, whose schedules are far more realistic and accommodating to parties than that of U.S. Chief District Judge Lawrence J. O’Neill, who must prioritize criminal and older civil cases.

         Civil trials set before Chief Judge O’Neill trail until he becomes available and are subject to suspension mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Chief Judge O’Neill is unavailable on the original date set for trial. Moreover, this Court's Fresno Division randomly and without advance notice reassigns civil actions to U.S. District Judges throughout the nation to serve as visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a U.S. District Judge from inside or outside the Eastern District of California.


         This case concerns disputes that arose over a large-scale broadband infrastructure construction project (“the Project”) throughout California’s Central Valley. See Doc. 84, Plaintiff’s Second Amended Complaint (“SAC”), at ¶ 1. The goal of the Project is to create an approximately 1, 371-mile broadband fiber network through 18 Central Valley counties. Id. at ¶ 22. Because of various ongoing disputes that arose during the construction of the Project, MP Nexlevel of California, Inc. (“MP”) brought this suit against CVIN, LLC (“CVIN”) d/b/a Vast Networks, among others.

         In response, CVIN asserts a number of counterclaims against MP. See Doc. 94.[1] In its eighteenth counterclaim, CVIN alleges that MP did not have a proper and valid contractor’s license when perfoming its work on the Project and, accordingly, CVIN is entitled to recover all compensation it paid to MP for its work on the Project under California Business and Professions Code § 7031(b) (“§ 7031(b)”).[2] Id. at ¶¶ 180-83.

         Currently before the Court is MP’s motion for summary judgment on that counterclaim. Doc. 278. The Court took the matter under submission on the papers Local Rule 230(g). For the following reasons, the Court DENIES MP’s motion.


         The Court notes at the outset that the parties have lodged an enormous number of evidentiary objections. See generally Docs. 343-347; 353-366. In fact, there are relatively few pieces of evidence to which the parties do not object. The Court has carefully reviewed the objections and need only consider them to the extent the objected-to evidence is material to the Court’s ruling. See Norse v. City of Santa Cruz, 629 F.3d 966, 973 (9th Cir. 2010) (en banc) (holding district court “must also rule on evidentiary objections that are material to its ruling”). The parties’ objections are OVERRULED unless otherwise indicated, either explicitly or by the Court’s not addressing objected-to evidence below.


         The following facts are undisputed. The Project is divided into 30 geographical “Segments.” SAC at ¶ 28. The Segments were constructed on public road rights-of-way owned and controlled by various state and local governments. Doc. 352, CVIN’s Separate Statement of Disputed Facts (“SSDF”), at ¶ 13. “Significant portions of each of the Segments were constructed in areas subject to the jurisdiction of the California Department of Transportation (‘Caltrans’).” SSDF at ¶ 13.

         MP performed work on Segments 8, 10, 12, 13, 14, 15, 18, 19, 21, 22, 25, 26, 26, and 30 (collectively, “the Segments”). CVIN’s Claims at ¶ 8. Beginning in November 2011, MP and CVIN entered into a separate contract for each Segment, id. at ¶ 7, though “[t]he terms and conditions of each of the written contracts . . . are essentially identical except for the quantities, unit prices, fixed sum to be paid to MP Nexlevel, and dates of execution.” Id. at ¶ 10. The parties entered into contracts for Segments 10, 12, 13, 15, 18, and 30 on November 18, 2011. Doc. 206, Declaration of Anthony Sturtz (“Sturtz Decl.”) at ¶ 3; Sturtz Decl., Exs. A-F. In January 2012, they entered into contracts for Segments 8 and 14. Sturtz Decl. at ¶ 4. On March 23, 2012, they entered into a contract for Segment 22. Id. And on May 2, 2012, they entered into contracts for Segments 19, 21, 25, 26, and 27. Doc. 199, Joint Statement of Undisputed Facts (“JUF”), at ¶ 4.

         Each contract explained that

[CVIN] has been awarded a grant by the Broadband Technology Opportunities Program (“BTOP”) administered by the National Telecommunications and Information Association (“NTIA”) to design and construct the [Project] . . . The [Project], as defined herein, consists of a 1, 371 mile fiber backbone network through 18 Central Valley counties. The network will provide internet backbone service to these counties and will construct 12 new wireless nodes in order to deploy WiMax last mile service to rural portions of Fresno, Tulare, Kings and Kern counties.

Doc. 208, Ex. A, CVIN LLC Construction Agreement (“Project Contract”), at 1. The contracts required that MP be “a licensed California general contractor.” Id.; JUF at ¶ 18. When submitting its bids for the contracts, MP was asked to provide its “California General Contractor License” number. SSDF at ¶ 17. MP stated on the bid form: “California Contractor’s License is #907019, ” referring to its C-7 Low Voltage Systems license (“C-7 license”), which it had obtained from the California Contractors State License Board (“the Board”) in November 2007. See Doc. 201, Ex. A at 1; SSDF ¶ 17.

         On May 2, 2012, MP received a Class A General Engineering Contractor’s license (“Class A license”) from the Board. Id. Louis-George Menard was listed as MP’s “responsible managing employee” (“RME”) for the license. See Doc. 201, Ex. A at 1. Both of MP’s licenses remained effective through July 29, 2014, when MP was no longer performing any work for CVIN. Id.; JUF at ¶ 2.

         The Project had two phases: (1) underground construction and excavation for the installation of conduit (“the Underground Phase”) and (2) the installation of fiber optic cable into the conduit. SSDF at ¶ 3. MP bid to perform work on both phases; however, CVIN awarded contracts to MP for only the first phase. Id. at ¶ 4; see also, e.g., Sturtz Decl., Ex. J at 7 (MP’s bid for both phases on Segment 8). The first phase “constituted only a portion of the work to be performed on the Project in order to successfully complete the installation of the network, ” SSDF at ¶ 8, and had to be completed before the second phase could begin. See SSDF at ¶¶ 3, 9; Doc. 329 at 13. After the first phase was completed, CVIN completed the second phase itself. SSDF at ¶ 9; Doc. 329 at 13.

         “[T]he majority of [MP’s] work for CVIN involved burying conduit underground.” Sturtz Decl. at ¶ 17. Pursuant to the parties’ contracts, MP was required “to perform underground construction, including trenching and [Horizontal Directional Drilling (“HDD”)]/boring, excavate, compact and backfill trenches, and pour over roadway sections where it had trenched.” SSDF at ¶ 5.

         CVIN created specifications for the construction of the Underground Phase. See Doc. 322, Declaration of James Twineham (“Twineham Decl.”), Ex. 7, “CVNGBIP Underground Plant Construction Specifications” (“the Specifications”). The purpose of of the Specifications was to provide “CVIN, consulting engineers, contractors and other interested parties with information on the construction of [the Underground Phase].” Id. at p. 1. The “information and recommendations in [the Specifications] [were] mandatory, ” and explained that “[d]eviations from [them] shall be made only with the prior written approval of the engineer and/or owner.” Id. at ¶ 5.

         For instance, the Specifications provided detailed background and guidance on “Trench Excavating, Grading, and Conduit Laying.” Specifications at ¶ 10. The Specifications defines a trench as including “those conditions in which a conduit is installed in a relatively narrow ditch that has been cut in undisturbed soil and the ditch is backfilled[3] to the original level, ” and explained that “[t]renching is accomplished with the use of some type of mechanical machine, backhoe, trencher, rock saw or plow, operated by a reliable professional operator.” Id. at ¶ 10.1. The conduit depth for the Project was 36 inches unless otherwise specified, with a minimum conduit radius of 30 inches. Id. at ¶ 10.2.

         The Specifications also provided requirements and guidance for HDD. See Id. at ΒΆΒΆ 11, 13.4. Among other ...

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