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Regency Midland Construction, Inc. v. Legendary Structures Inc..

California Court of Appeals, Second District, Eighth Division

November 7, 2019

REGENCY MIDLAND CONSTRUCTION, INC., Plaintiff and Respondent,
v.
LEGENDARY STRUCTURES INC., Defendant and Appellant.

          APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC629322 Howard Halm, Judge. Affirmed.

          The Soni Law Firm, M. Danton Richardson, Leo E. Lundberg, Michael A. Long for Defendant and Appellant.

          Law Office of Parham Hendifar, Parham Hendifar, Michael Diaz for Plaintiff and Respondent.

          WILEY, J.

         A general contractor named Regency Midland Construction, Inc. hired subcontractor Legendary Structures, Inc. to do the concrete work for a new apartment building. Legendary quit halfway through. Regency and Legendary sued each other. Their dispute turns on the “retention” clause in the contract. The trial court properly granted summary judgment for Regency and dismissed Legendary's cross-claims. We affirm.

         First is background. The deal was for about $2 million of concrete work for a new 71-unit apartment building. After Legendary quit, Regency got ANM Construction to finish the concrete job. Regency and Legendary fell to feuding about who owed whom what.

         The fight was about retention. Regency withheld money from Legendary, citing the retention clause. Before Legendary quit, Regency had paid Legendary about $1 million for its work. That sum was 90% of Legendary's billings because the contract allowed Regency to withhold 10% of the amount due Legendary as security to ensure Legendary properly completed the job. Regency withheld from Legendary about $125, 000, which we call the retention sum. Regency insisted on keeping that sum. Legendary demanded it. That is the main dispute.

         The trial court granted Regency's motion for summary judgment, thus allowing Regency to keep the retention sum. Legendary appeals, saying the contract language entitles it to the sum.

         Our review of this summary judgment ruling is independent. (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1249.) Summary judgment is not disfavored, but rather a good way to test the merits without the burdens of trial. (Perry v. Bakewell Hawthorne, LLC (2017) 2 Cal.5th 536, 542.) The usual rules governing this procedure apply. (See, e.g., Code Civ. Proc., § 437c, subds. (c) & (p)(2).)

         This summary judgment appeal is purely a duel over contract interpretation, with no disputed issues of fact. The key sentence in the contract between Regency and Legendary specified “Ten percent (10%) of Subcontractor's contract amount shall be withheld and will be released 35 days after completion of subcontractors work.” This 10% withholding created the retention sum.

         Felix Frankfurter reputedly said the three rules of statutory interpretation are to read the statute, read the statute, and read the statute. The same wise counsel applies to interpreting every text. So we read read read the contract, which we now describe.

         The contract is two pages, with a two page attachment. It begins by listing the date as “AUGUST/13/2015.” (The oddity of this usage will later assume significance.) The contract lists the lending bank and other preliminary information for the construction project. It then announces the agreement is between Regency “hereafter called ‘CONTRACTOR'” and Legendary “hereafter called ‘SUBCONTRACTOR'....” It specifies the concrete work for Legendary to perform. Next it states the total sum of $2, 165, 000 for the whole project is “TO BE PAID EACH MOTH [sic] ACCORDING TO THE PROGRESS OF THE WORK ACCORDING TO THE BANKS [sic] SCHEDULE.”

         We pause to emphasize that these preliminary lines of text contain odd stylistic usages and spelling and punctuation errors, some of which we have just noted. There also is a varying and apparently random pattern of capitalization, with some words in all capitals, some words with initial capitals, and some words with no capital letters. These points too later become significant.

         Now comes the vital sentence: the retention clause. This clause is one of the primary recitals of the contract. It is one sentence long. It includes strikeout wording, a typed substitute insertion that replaces the strikeout words, and two sets of ...


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